Keeping our Commitments to American Workers on International Trade

In 2002, after a nearly decade-long deadlock, Congress passed the most sweeping international trade legislation in 15 years.

By giving the president authority to negotiate new trade agreements, the United States has begun negotiating free-trade agreements with more than a dozen countries. President Bush has already signed free-trade agreements with Chile and Singapore, and he expects to sign at least two more this year.

In exchange for trade negotiating authority, Congress and the administration committed to assist those workers who lose their jobs due to increased imports and shifts in production. Unfortunately, our commitment to these workers has not received the energy and priority it deserves.

Expanded trade creates new jobs and provides consumers with greater choices at lower cost. At the same time, however, increased imports and the movement of factories from the United States overseas can cost some American workers their jobs.

Many of the more than 3 million manufacturing jobs lost since 1998 can be attributed to increased competition from abroad. But the costs associated with international competition are no longer limited to traditional manufacturing jobs.

Recently, even IBM moved some of its computer programming jobs -- once seen as the "safe jobs" in the new economy -- out of the country.

For those workers and thousands of others, the knowledge that the economy as a whole benefits from trade provides little solace. The inability or unwillingness of the government to respond to the needs of those workers is undoubtedly one reason that Americans appear doubtful of the benefits of free trade.

To address the legitimate and often overlooked needs of workers adversely affected by trade, the authors of the Trade Act of 2002 proposed to revise, expand and reinvigorate Trade Adjustment Assistance (TAA), the nation's largely moribund worker adjustment program. TAA was established 40 years ago, and its record has been spotty, due in large part to its limited resources.

The Trade Act of 2002 expanded TAA eligibility to include workers who lose their jobs due to shifts in production, workers who produce inputs into final products facing international competition, farmers and fishermen. Another important change was the provision of a refundable tax credit to help offset the cost of maintaining health insurance during the period of unemployment. Workers around the country have unanimously praised this provision.

The legislation also launched an innovative approach known as wage insurance. Older workers who qualify for wage insurance can receive half of the difference between their new and old wage. Wage insurance should help workers return to work at a lower cost than current programs. More important, it enables workers to get on-the-job training, which experience demonstrates is the most effective form of training. Wage insurance is a promising new idea in a field largely devoid of innovative thinking.

However, much of the promise of these reforms is yet to be realized. To its credit, the Bush administration requested nearly a tripling of funds for worker adjustment last year, but only a fraction of that amount has been spent. At the same time, numerous states, such as Pennsylvania and Massachusetts, experienced shortfalls in training funds. The healthcare tax credit is in place, but some states have made it difficult for workers to receive it.

A lot more needs to be done to ensure that workers who lose their jobs due to increased imports or shifts in production receive the assistance they need. The nation's ability to pursue further trade liberalization depends on our willingness to provide assistance to all workers who need it. Fully implementing the TAA reforms may cost money. Breaking our commitment to workers may cost the economy the benefits of future trade liberalization.

The TAA reforms adopted in 2002 are slowly being implemented. The administration and the states must move beyond bureaucratic roadblocks and strive to insure that all workers get the assistance they need. Perhaps if TAA received the same priority as new free-trade agreements, workers who lose their jobs because of shifts in international trade and investment would receive meaningful assistance and might be back at work, earning paychecks once again.

Regrettably, free trade and workers' needs are often presented as opposing interests.

An effective worker-adjustment program could go a long way toward reducing worker anxiety over foreign trade. This, in turn, could reduce the opposition to free trade, open the door to new trade agreements, spur new economic growth and ultimately ensure that the benefits of free trade are fairly shared. The first step should be to keep the commitments we made to American workers in the 2002 Trade Act.