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footwear firms and their workers. He also instructed the Secretaries to file supplementary budget requests for adjustment assistance funds, if necessary, to carry out his program.” [Emphasis supplied.]
Based on the considerations related in this memorandum, it is clear that the United States Department of Commerce budget estimates for TAA are substantially inadequate and do not comport with the intent of Congress as expressed under provisions of the Trade Act of 1974.
It is apparent that present funding requirements for the new TAA programs, under the relaxed eligibility criteria of the Trade Act of 1974, will exceed previous funding requirements for implementation of TAA programs, under the more restrictive criteria of the Trade Expansion Act of 1962.
It is not the purpose of this memorandum to suggest that significant budgetary adjustments should be made at this time, but rather to alert the Committee's attention to prospects that substantially increased funding may be necessary in the near future in order to effectively administer the new TAA programs in accordance with the intent of Congress.
Perhaps an appropriate approach for dealing with this potential problem would involve a present recognition that supplemental appropriations will probably be needed as a growing number of firms, workers and communities o,joined for TAA under the relaxed eligibility criteria of the Trade Act o 4.
PAUL H. DELANEY, Jr.
STATEMENT of THE LEAGUE of WomeN Voters of THE UNITED STATEs, BY RUTH Robbins, INTERNATIonAL RELATIons CHAIRMAN
The League of Women Voters of the United States is a volunteer citizen education and political organization of 1,350 Leagues with approximately 137,000 members in 50 states, the District of Columbia, Puerto Rico and the Virgin Islands. This statement is submitted to reflect the League's concern that the nation's trade policy promote international and domestic interests. The League's advocacy of a liberal trade policy is long-standing and wellknown. League members throughout the country have worked to develop our position on trade which states that “We are convinced that the political and economic interests of this country and of its citizens collectively and individually are best served by [a liberal trade policy] which paves the way for political harmony with other nations, stimulates economic development at home and abroad, and expands consiumer choices.” U.S. trade policy must be considered in conjunction with our foreign relations policies. It is a viable and integral part of our international relations which recognizes U.S. obligations to promote harmony and economic stability among nations in this interdependent world. In our economic aid programs to foreign countries, the U.S. accepts this obligation by providing assistance through grants and loans to developing nations. Are we then to adopt trade restrictions which will undercut the work of our aid programs by denying the products of developing countries a market in the United States? The League of Women Voters adamantly opposes such action for either developing or developed countries, and the League's view was reflected by Congress in 1974 when it adopted our present Trade Act. However, the League and Congress recognize that liberal trade policies may at various times have an adverse effect upon U.S. workers and companies competing with foreign products, and, in view of this Congress provided measures to relieve injury due to imports. Among these measures is a program to grant adjustment assistance to workers, firms and communities, and it is to that program that this statement addresses itself. Opponents of adjustment assistance contend that the program is not working, and that it is in fact unworkable. Proponents of this viewpoint argue that the problems lies not only in overwhelming administrative difficulties, but also and fundamentally, in its concept. They view trade adjustment assistance as nothing more than welfare, which, rather than retraining and reemploying workers, consigns workers to lengthy and perhaps perpetual unemployment.
The League of Women Voters does not agree. Ongoing unemployment of workers who have been certified as eligible for adjustment assistance is not the result of an unworkable program, but rather is the result of a high national unemployment rate. To enroll workers in retraining programs, administrators must be able to certify that there will be a job opening when the worker has completed training. At a time when companies are not hiring and are in fact laying off workers for a variety of reasons (many of which have no relation to increased imports), finding a specific job for a specific employee is not an easy task. Nevertheless, retraining of workers must be central to adjustment assistance, and should be better related to job opportunities by being linked to national training programs, and to a system for identifying employment trends. Job mobility should be enhanced by protecting pension benefits and other fringe benefits. It must be recognized too that the assistance and training needed by workers affected by governmental decisions on trade are the same as what is needed by workers affected by other governmental decisions. For instance, if the government decides not to renew a defense contract, unemployment will result; if a company chooses to close down rather than comply with environmental laws, unemployment will result just as if the need for a company's or industry's products diminishes or disappears, unemployment will result. High unemployment for any reason is unacceptable to the League, and we are as concerned about unemployment resulting from import competition as we are about unemployment resulting from economic instability in the private sector. Over the years we have advocated strong government action to reverse the downward trend in our economy, and to provide training and jobs for those workers who without government action will be left outside the mainstream of our economy and our society. We advocate no less for our trade adjustment assistance program. The League believes strongly that a viable adjustment assistance program and system for delivery of benefits is necessary for a health economy. And we believe that the government must evidence a strong commitment to the program to ensure that it will work. Adequate funding levels must be authorized and appropriated. Failure to do so is to condemn the program to death as surely as if it were abolished tomorrow. In addition to strong congressional support and adequate funding levels, administration of the program can and should be improved. Outreach should be increased. Employees at state and local unemployment offices should be given extensive training and increased information about the program: they are the ones, after all, who have the first responsibility for processing and facilitating the program. The League endorses the pilot project planned by the Department of Labor in which all applicants applying for unemployment benefits in five selected states will automatically receive information about adjustment assistance. We believe that this will increase the flow of information and will be invaluable in reaching those workers eligible for the program. At the national level, the League hopes that more emphasis will be placed on conducting research to project which companies are likely to be affected by import competition in order to get information to companies and workers expeditiously. Moreover, responsibility for the program does not begin and end with the federal government. Companies, unions, and private organizations such as the League must recognize and accept their obligation to help educate the public about adjustment assistance. Central to the success of the program is the dissemination of timely and accurate information to workers. By working closely with the government at all levels, federal, state, and local, efforts by nongovernmental groups can augment outreach and help ensure that adjustment assistance works. Such good faith action and cooperation will be invaluable in counteracting the many inaccuracies surrounding instances of certified or alleged import injury. For example, very often companies closing down or laying off substantial numbers of workers tell employees that the action is due to imports when in fact it is not. By working together we can eliminate such scare tactics. Finally, we must consider the impact of the alternative to a viable adjustment assistance program: increased trade restrictions. The United States has a choice. We can work to implement a strong adjustment assistance program thereby keeping our borders open and encouraging worldwide economic and political stability, or we can impose tariffs, quotas, or both on an increasing variety of imported goods. The impact of such a de facto protectionist trade policy would be felt throughout our society. As we said at the beginning of this statement, U.S. trade policy is a viable and integral part of our international relations; it cannot be considered alone. Imposing trade restrictions will not only invite retaliatory trade policies by other nations, but will also affect our political negotiating power in the international community. This is a fact of life which cannot be ignored. Even if we were to choose to ignore the ramifications trade restrictions would have upon the economies of other nations, and the League of Women Voters does not believe that Congress intends to do this, we cannot ignore the ramifications increased restrictions would have on our domestic economy. Higher prices for consumers and accompanying inflation would result. Unemployment among those workers such as dock workers and sales personnel whose jobs depended upon imports would also result. Moreover, it is dubious whether imposing tariffs and/or quotas would help those companies and workers that need help the most. In many cases, these are smaller firms suffering from economic instability for reasons other than import competition. These reasons may include obsolescence or the inability to meet changing consumer demand. Clearly, in such cases, direct aid through adjustment assistance would be more useful than the uncertain and indirect effect of trade restrictions. For all of these reasons the League of Women Voters supports an expanded and vigorous trade adjustment assistance program as the only real recourse open to the United States. We hope that as a result of the work of this Subcommittee the program will be strengthened.
Volums E Footwear RETAILERs of AMERICA, New York, N.Y., April 4, 1977. Hon. CHARLEs A. WANIK, Chairman, Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, Washington, D.C. DEAR Mr. CHAIRMAN : In response to the March 14, 1977, press release of your Subcommittee, this letter will summarize the views of Volume Footwear Retailers of America (VFRA) concerning adjustment assistance—an issue made all the more immediate by the President's decision last Friday on footwear imports. The members of VFRA sell over half of all the shoes purchased at retail in this country. They obtain their shoes from sources both here and abroad in a constant effort to offer consumers the best available product value. WFRA has participated in both last year's and this year's escape-clause proceedings concerning footwear. One of the major issues in these proceedings was the efficacy of adjustment assistance as an alternative to import restrictions. Certain parts of the domestic footwear manufacturing industry are admittedly in economic difficulty—from a variety of causes, including imports. VFRA has therefore directed considerable thought to the question of adjustment assistance, and has come to the following three basic conclusions. First: The existing programs of adjustment assistance for firms and workers have been passive, not aggressive, and have provided some relief, but not a remedy. This is clearly demonstrated by the record of these programs following President Ford's decision in April of 1976 not to impose restrictions on footwear imports. The Labor Department provided assistance to a certain number of workers—but only in the form of unemployment compensation. There was no effort to retrain or relocate a single worker. The Commerce Department sent out a form letter to about five hundred footwear producers, but there was no aggressive effort to ascertain—much less remedy—the specific problems of individual firms. As a result, only about ten firms have submitted petitions, and even fewer have been certified as eligible to apply. In short, the adjustment assistance programs have failed because they have been passive and nonremedial. Second : In the interest of a rational domestic and international economic policy, the United States Government must have an alternative to import restrictions if it is determined that a domestic indusry is in serious difficulty. In most such cases, the difficulty arises not only from imports but from a number of other factors, such as obsolescent plants, lack of new technology, high quit rate among workers, inadequate marketing skills, unavailability of credit, and competition from other domestic products. In such a case, import restrictions may at best provide only a respite from foreign competition without dealing with the other problems. At worst, it may leave the domestic industry totally unequipped to contend with foreign competition when the restrictions expire. It is therefore imperative that the Government have recourse to other measures.
Third : Instead of adjustment assistance, which has not worked in WFRA's view, structural assistance should be available. By structural assistance, we mean a variety of programs designed to attack the causes and not the symptoms of the difficulties besetting a given industry. Adjustment assistance has proven to be an ineffective response to what is typically only part of the problem. Structural assistance would entail a comprehensive attack upon the entire problem within the context of our overall domestic and international economic policy.
A successful program of structural assistance must consist of at least two components. First, it must yield thorough and accurate data concerning the industry in question. The two escape-clause proceedings concerning footwear have revealed how seriously inadequate the data of the Government is concerning the composition and performance of the domestic industry. Second, it must entail a high-level and coordinated application of the substantive programs of assistance. Structural assistance can readily fail if it is permitted to flounder at the third and fourth levels of the bureaucracy. It must be guided and stimulated by senior officials of the Executive Branch. Moreover, a number of programs that are individually worthwhile will not achieve success unless they are carefully coordinated to ensure their maximum effectiveness.
VFRA is not in a position to suggest the specific components of any program of structural assistance, particularly since they will necessarily differ from industry to industry. But VFRA would urge your Subcommitee to pursue the concept of structural assistance, since it offers the hope of providing a sound and beneficial alternative to import restrictions. And since the enactment of the Trade Expansion Act of 1962, the Congress has consistently supported the concept of such an alternative. - - -
Sincerely yours, -
-- OERMAYER, REBMANN, MAxwell & HIPPEL,
Mr. WILLIAM WAUGHN, -
DEAR BILL : Enclosed please find two copies of a statement by Nick Mastrippolito, Jr., of P. Mastrippolito & Sons, Inc., concerning the Adjustment Assistance Program.
The statement can be summarized as follows:
(1). P. Mastrippolito & Sons, Inc. experienced extreme difficulty being certified for assistance, both because of negative attitudes displayed by Department of Commerce personnel and because of exceedingly stringent proof requirements
as to whether a “significant number or proportion of the workers. . . have become . . . partially separated, or are threatened to become totally or partially separated.”
(2). The Department has advised that a ten-year pay back at market rates would be a prerequisite for any adjustment assistance proposal to be approved. This requirement has two effects: First, it increases the debt and debt service liabilities on a company already facing severe obligations. Second, it severely threatens the family's equity in all holdings, both corporate and personal, since personal guarantors would be required.
(3). Department of Commerce personnel have made it clear that the Mastrippolito family, or P. Mastrippolito & Sons, Inc., would be required to go into a business other than the mushroom business, in which the family has had three
generations of experience, in order to qualify for assistance. This poses problems. First, the area in which the company and family have been located for three generations is one in which business opportunities are virtually non-existent. Thus, going into another business would require severe dislocation and hardship. Second, even if business opportunities were more plentiful, those that can support 100% debt financing are hard to find even in the most expansive of economic circumstances; few prudent businessmen undertake a venture with 100% financing, unless they are looking for tax advantages or some other special twist. Finally, it just doesn't seem to make sense to ask a family that has developed an expertise, and used it to make a living, to ignore their three generations of expertise and go into another business.
In conclusion, you should know something about the Mastrippolito family background. P. Mastrippolito, Sr. immigrated to the United States over a half-century ago. He worked in a rock quarry and for the railroad near Kennett Square, Pennsylvania , and lived in a boxcar on the land he and his family now own. On this land he farmed and built a small mushroom business. His sons later entered that business and it struggled and grew through the Depression and following decades until P. Mastrippolito and Sons incorporated in 1959. The father and sons continued to run and expand the business and by 1970 substantial profits were being made; the American Dream had come true. Since that time, imported mushrooms from Taiwan and South Korea have disrupted the American mushroom market and injured the domestic industry severely, and P. Mastrippolito & Sons, Inc., now including the third generation and author of the enclosed statement, has operated at a loss in recent years. The family has kept the business going through its own hard labor—in a sense a form of personal subsidization. Indeed Phillip Mastrippolito, Sr., now aged 80, continues to work a 10 to 12 hour day on his feet, cutting stems and pieces, in order to help keep the company going.
Surely, such a family business, and the domestic mushroom industry is largely made up of such concerns, deserves better consideration than it has received to date from the U.S. government, not only with respect to Adjustment Assistance, but also with respect to our response to the injury caused by imported mushrooms.
I hope you find the attached statements useful in the Committee's review of the Adjustment Assistance Program. If you would like to meet with the Mastrippolitos to get clarification, or if you would like to discuss their possible testimony, please do not hesitate to contact me.
Thank you for your prompt attention to this matter.
Warm personal regards,
THOMAS R. HENDERSHOT.
STATEMENT of P. MASTRIPPolito & SoNs, INC.
Trade Adjustment Assistance as contained in the Trade Act of 1974. Mr. Chairman and honorable members of this committee, I wish to thank you for providing this opportunity to present testimony for your consideration on behalf of P. Mastrippolito & Sons, Inc. My name is Nick Mastrippolito, Jr. and I am employed by P. Mastrippolito and Sons, Inc., a family owned mushroom growing and canning company, established in 1916 by Philip Mastrippolito, Sr. P. Mastrippolito & Sons, Inc. has been certified as eligible for assistance. But before any assistance will be forthcoming a proposal for a loan must be presented and approved by the United States Department of Commerce. I will explain my concerns about developing an Adjustment Assistance proposal later in this presentation. The following will explain the work and hassle, that I have gone through to get P. Mastrippolito & Sons, Inc. certified for Adjustment Assistance as required by law. I completed form ED 436 which is entitled, “Petition. By A. Firm Certification Of Eligibility. To Apply For Trade Adjustment Assistance.” I was then informed that Mr. S. Cassin Muir would be the Eligibility Examiner, assigned to review P. Mastrippolito and Sons, Inc.'s Petition for Certification (Form ED 436). Mr. Muir was very professional during his entire review, but conveyed the attitude that I was not being truthful and that he was trying to catch me in an untruth and in turn deny Certification for Assistance. My family and I have been hardworking taxpayers and honest respected citizens in our community and we are not accustomed to Mr. Muir's professional battle tactics