Trade Adjustment Assistance for Firms: Program Elements and Effectiveness

149 Pages·2013·2.265 MB·English

by  Griffin Hayward

TRADE ISSUES, POLICIES AND LAWS

T A
RADE DJUSTMENT
A F
SSISTANCE FOR IRMS

P E
ROGRAM LEMENTS
E
AND FFECTIVENESS

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TRADE ISSUES, POLICIES AND LAWS

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TRADE ISSUES, POLICIES AND LAWS

T A
RADE DJUSTMENT
A F
SSISTANCE FOR IRMS

P E
ROGRAM LEMENTS
E
AND FFECTIVENESS

GRIFFIN HAYWARD
EDITOR

New York
Copyright © 2013 by Nova Science Publishers, Inc.

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CONTENTS

Preface vii
Chapter 1 Trade Adjustment Assistance for Firms:
Economic, Program, and Policy Issues 1
J. F. Hornbeck
Chapter 2 Trade Adjustment Assistance: Commerce Program
Has Helped Manufacturing and Services Firms,
but Measures, Data, and Funding Formula
Could Improve 15
United States Government Accountability Office
Chapter 3 Trade Adjustment Assistance for Firms Program:
Fiscal Year 2012 Annual Report to Congress 73
Economic Development Administration
Index 131

PREFACE

Trade liberalization can enhance the economic welfare of all trade
partners, but in adjusting to greater competition, many import- competing
firms and workers face difficult problems. Since 1962, Congress has
responded to these adjustment costs by authorizing trade adjustment assistance
(TAA) programs for workers, firms, and farmers, and continues to monitor
their performance and amend the governing legislation. This book discusses
the Trade Adjustment Assistance for Firms (TAAF) program, which provides
technical assistance to trade- affected firms to help them develop strategies to
remain competitive in a dynamic international economy. Legislation has been
introduced in the 113th Congress that would reauthorize TAA programs,
which are set to expire on December 31, 2013. President Obama also has
supported TAA reauthorization, linking it to renewal of Trade Promotion
Authority (TPA).
Chapter 1 – Trade liberalization can enhance the economic welfare of all
trade partners, but it also causes adjustment problems for some import-
competing firms and workers. Congress has responded to these problems with
trade adjustment assistance (TAA) programs for workers, firms, and farmers.
This report discusses the TAA for Firms (TAAF) program and related policy
issues. Congress first authorized TAA in 1962, including a new firm and
industry assistance program administered by the Economic Development
Administration (EDA) of the U.S. Department of Commerce. It provides
technical assistance to help trade-affected firms make strategic adjustments to
improve their global competitiveness. The Trade Adjustment Assistance
Extension Act of 2013 (S. 1357) was introduced in the 113th Congress, which
would maintain current annual funding levels ($16 million for the firms
viii Griffin Hayward
program) through 2020. President Obama also has supported passage TAA
reauthorization, linking it to renewal of Trade Promotion Authorization (TPA).
EDA has released four annual reports under the new statutory
requirements that point to administrative and operational improvements. The
FY2012 TAAF annual report notes that two years after completion of the
program, on average, firm sales increased by 26.8%, employment rose by
13.2%, and productivity increased by 11.9%, better outcomes than the
benchmark manufacturing industry as a whole. This outcome is reported as
being particularly encouraging given TAAF firms have had such a high
“survival rate,” and yet face the additional burden of all having to adjust to
import competition compared to the benchmark. Still these numbers varied
significantly from the year before, and despite the high success rate for firms
that “completed” the TAAF program, it is important to note that they represent
only about half of all firms that had their adjustment proposals approved for
assistance. The rest left the program for numerous reasons without completing
the adjustment plan and were no longer monitored.
To address the evaluation issue more completely, the Government
Accountability Office (GAO) conducted a comprehensive evaluation of TAAF
program in 2012. It found that EDA’s administration and evaluation efforts
had improved markedly because of changes provided in the 2009 legislation.
GAO also confirmed EDA’s assessment that trade-impacted firms benefitted
from specialized attention provided by TAAF assistance, but to a lesser extent.
GAO found a “small and statistically significant relationship between program
participation and sales,” which was particularly relevant to smaller firms,
albeit also highly correlated with firms operating in high-growth industries.
Employment effects were not found to be statistically significant.
Chapter 2 – Over the past decade, U.S. imports of goods and services have
almost doubled, reaching $2.7 trillion in 2011. Although trade expansion can
enhance economic welfare, many firms and workers experience difficulties
adjusting to import competition. The TAA for Firms program assists trade-
impacted, economically distressed U.S. firms in making adjustments that may
enable them to remain competitive in the global economy. The Department of
Commerce’s EDA administers the $15.8 million program through 11 TAA
Centers throughout the United States. In 2009, the Trade and Globalization
Adjustment Assistance Act, as part of American Recovery and Reinvestment
Act, amended the TAA for Firms program and mandated that GAO review its
operation and effectiveness. GAO examined (1) the results of the legislative
changes on program operations and participation, (2) the performance
measures and data EDA uses to evaluate the program and what these tell us