RS20210
Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues
March 06, 2009

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Summary:

Economists generally acknowledge that trade liberalization enhances the economic welfare of all trade partners, but in compelling firms and workers to face stiffer global competition, can also cause adjustment problems. Congress responded to this issue by authorizing three trade adjustment assistance (TAA) programs to assist trade-impacted workers, firms, and farmers. This report discusses the TAA for Firms program, which provides technical assistance to trade-affected firms to help them develop strategies to remain competitive in the changing international economy Congressional authorization for the TAA programs lapsed on December 31, 2007, but the 110th Congress extended appropriations through March 6, 2009 to ensure program continuity. In the 111th Congress, debate over TAA reauthorization led to a February 5, 2009 bicameral, bipartisan agreement to expand and extend existing programs for workers, firms, and farmers, and to add a new program for communities. The agreement, struck by the Chairs and Ranking Members of the Senate Finance Committee and the House Ways and Means Committee, became part of the Conference Report on H.R. 1 (H.Rept. 111-16), the American Recovery and Reinvestment Act of 2009 (the Stimulus Bill). The House agreed to the Conference Report on February 13, 2009 by a vote of 246 to 183, followed by the Senate the same day by a vote of 60 to 38. President Obama signed the bill into law on February 17, 2009 (P.L. 111-5). Congress changed the TAA for Firms program in a number of important ways. It extended eligibility for trade adjustment assistance to services firms, reauthorized the program at an annual level of $50 million (compared to the previous $16 million) through December 31, 2010, provided greater flexibility for a firm to demonstrate eligibility for assistance, revised oversight and evaluation criteria, established a new position of Director of Adjustment Assistance Programs at EDA, and required submission to Congress by EDA of a detailed annual report on the TAA for Firms program.