"After reviewing all the evidence developed during the course of this investigation, I am persuaded that adjustment assistance would be a more effective remedy to the serious injury than import relief.' Specifically, I have determined 'that adjustment assistance under chapters 2, 3 and 4 can effectively remedy such injury.'' "I have recommended adjustment assistance fully mindful of past criticisms of the program. However, adjustment assistance as now provided for under the Trade Act substantially expands the range of benefits, simplifies filing procedures, and expedites the administrative process attending the disbursement of assistance. [Emphasis supplied.] "I have noted with concern that a total of only $20 million has been appropriated for the firm adjustment assistance program in fiscal year 1976. In my opinion such an amount is not sufficient to carry out the intended mission of the program properly. To date, of the 50 firms that have petitioned the Department of Commerce under the Trade Act of 1974, two have actually received assistance totaling $4 million in direct loan and loan guarantees. Only one petition has been denied. Thus, even if one disregards those firms which will file petitions later this fiscal year, 47 firms could become eligible for assistance before the end of the fiscal year. In view of the financial needs of these firms and bearing in mind the fact that disbursements have averaged $2 million, it is abundantly clear that the remaining funds are insufficient to treat effectively with the problems besetting the petitioning firms. Moreover, the officials administering the program would very likely approve funds on the basis of the amount of money available, rather than on the basis of the actual needs of firms. Clearly, measures should be undertaken forthwith to insure that the firms that meet the requirements of the act, in fact, receive an adequate level of assistance." [Emphasis supplied.] Mushrooms. More recently, in March 1976, the ITC issued an affirmative determination for mushrooms: 2 "[T]hat mushrooms, prepared or preserved, except fresh or dried, provided for in item 144.20 of the Tariff Schedules of the United States, are being imported in such increased quantities as to be a substantial cause of serious injury or the threat thereof to the domestic industry producing articles like or directly competitive with the imported articles." Furthermore, with respect to the appropriate remedy, the ITC recommended TAA : *** pursuant to section 201(d) (1) of the Trade Act, that adjustment assistance as provided in title II, chapters 2, 3 and 4 of that act can effectively remedy the serious injury or the threat thereof to the domestic industry and recommend the provision of such assistance." Chairman Leonard stated: "1 "Adjustment assistance under the provisions of the Trade Act referred to above include the provision of technical management assistance to injured firms, loans or loan guarantees to such firms, and payment of readjustment allowances to and training for workers of such firms. Testimony presented during the course of this investigation indicates that such assistance is likely to permit the domestic industry to adjust successfully to the import competition it has experienced." * "It is also noted that adjustment assistance will probably deliver the necessary assistance to the industry more rapidly than would import restrictions, as import restrictions operate to increase the profit levels of individual members of the domestic industry only over rather long periods of time. In other words, it may take several years after import restrictions are imposed before a member of the domestic industry generates enough increased profits to allow it to take from such profits the capital needed to make its operations more efficient." [Emphasis supplied.] 28 Id. at pp. 73-75. 29 See United States International Trade Commission Report to the President on Investigation No. TA-201-10 Under Section 201 of the Trade Act of 1974, p. 2, USITC Publication 761, Washington, D.C., March 1976. 30 Ibid. 31 Id. at pp. 16-17. United States Department of Commerce Footwear Study 33 In accordance with relevant provisions of the Trade Act of 1974, and the above noted affirmative decision of the ITC on footwear, the Department of Commerce has issued a required study regarding potential beneficiaries under the TAA programs administered by Commerce." This study suggests that TAA funding requirements for the footwear industry might be as high as 120 million (United States dollars). Once again, this assessment appears to be inconsistent with present budget estimates for TAA purposes, i.e., only $14.2 million (including technical assistance) has been requested by the Department of Commerce for the TAA firm program, whereas the Commerce study indicates that perhaps $120 million will be needed for the footwear industry alone. 37 The Department of Commerce concluded: 36 "[T]hat if the President approves the tariff-rate quota system, the demand for adjustment assistance will be minimal, possibly not more than 30 firms being certified eligible to apply for adjustment assistance. If only tariff increases are instituted, about 75 firms may be certified. But if adjustment assistance alone is offered more than 150 firms may be found eligible. "Based on experience with seventeen footwear firms previously found eligible under the Trade Expansion Act of 1962 or the Trade Act of 1974, the Department estimates that between $24 million and $120 million in Government funds could be required to provide financial and technical assistance to those additional footwear firms qualifying for adjustment assistance under the Trade Act." [Emphasis supplied.] Section 201 Presidential Determinations. Retail Slide Fasteners and Parts.— Pursuant to the relevant affirmative decision of the ITC on retail slide fasteners and parts under Section 201 of the TA, on April 14, 1976, President Ford determined that TAA was the appropriate remedy for the retail slide fasteners and parts industry: 38 "The President decided in favor of a finding by three of the six U.S. International Trade Commissioners that imports of these products are not causing or threatening serious injury to the domestic industry, and recommending no import relief. In its evenly-divided report on a petition for 'escape clause' import relief under Section 291 of the Trade Act of 1974, the Commission's three members who found injury, recommended adjustment assistance as the prescribed remedy." Footwear. Pursuant to the relevant affirmative decision of the ITC on footwear under Section 201 of the TA, on April 16, 1976, President Ford determined that TAA was the appropriate remedy for the footwear industry: 39 “President Ford has decided, considering the interests of both American consumers and producers, that expedited adjustment assistance is the most effective remedy for injury to the U.S. footwear industry and its employees as a result of imports. "Import restraints would also have exposed U.S. industrial and agriculture trade to compensatory import concessions or retaliation against U.S. exports. This would have been detrimental to American jobs, and damaged U.S. exports. "The President has directed the Secretaries of Commerce and Labor to give expeditious consideration to any petitions for adjustment assistance filed by 32 See TA Section 264. $3 See United States International Trade Commission Report to the President on Investigation No. TA-201-7 Under Section 201 of the Trade Act of 1974, USITC Publication 758, Washington, D.C., February 1976. 34 See U.S. Department of Commerce Report to the President Prospects for Adjustment Assistance for Footwear Producing Firms, March 5, 1976. 85 Id. at pp. 2 and 9. 36 See Hearings before a Subcommittee of the Committee on Appropriations, House of Representatives, Departments of State. Justice and Commerce, the Judiciary. and Related Agencies Appropriations for 1977, Part 2, p. 370, 94th Cong., 2nd Sess., 1976. See U.S. Department of Commerce Report to the President, Prospects for Adjustment Assistance for Footwear Producing Firms, p. 2, March 5, 1976. 28 See Press Release of the Office of the Special Representative for Trade Negotiations, Executive Office of the President, concerning the Presidential Determination for Adjustment Assistance for Zipper Makers and Workers, Press Release Number 221, April 14, 1976. 30 See Press Release of the Office of Special Representative for Trade Negotiations, Executive Office of the President, concerning the Presidential Determination for Adjustment Assistance for Footwear Industry and Workers, Press Release Number 222, April 16, 1976. 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.] CONCLUSION 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 are certified for TAA under the relaxed eligibility criteria of the Trade Act of 1974. Respectfully submitted, 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. VOLUME FOOTWEAR RETAILERS OF AMERICA, New York, N.Y., April 4, 1977. Hon. CHARLES A. VANIK, Chairman, Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, 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. VFRA 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 |