Share the benefits of free trade
WASHINGTON — A little more than a year ago, after a long legislative struggle, Congress passed the most sweeping international trade legislation in 15 years. After a nearly decade-long deadlock, Congress gave the president authority to negotiate new trade agreements. And just before this summer's recess, Congress overwhelmingly passed the first fruits of that authority: new free-trade agreements with Chile and Singapore.
Unfortunately, implementation of the assistance for workers who lose their jobs because of international trade has not been as swift. If the displaced worker-adjustment provisions are not in place soon, the newfound consensus in favor of freer trade may rapidly erode.
There is little doubt that expanded trade creates, on balance, more jobs than it eliminates, and provides consumers with greater choices at lower cost. There is no doubt, however, that increasing imports and the movement of factories from the US to overseas is costing some American workers dearly. The loss of more than 2 million jobs in the manufacturing sector in the current downturn has framed much of the discussion on this topic.
Increasingly, however, these problems are not confined to workers in traditional blue-collar jobs. Even IBM - once seen as the upper crust of the new economy - has recently moved some of its computer-programming jobs out of the US.
For IBM's displaced workers - and thousands like them - the knowledge that the economy as a whole benefits from trade provides little solace. Failure to meet the immediate needs of these workers is undoubtedly one important reason that Americans, including some in Congress, appear dubious of the benefits of free trade.
To address those concerns, the authors of the Trade Act of 2002 attempted to revise, expand, and reinvigorate the nation's largely moribund worker-adjustment programs. These programs have existed in some form since the Kennedy administration, but their record is spotty and their availability to the unemployed workers who need them is quite limited.
The Trade Act of 2002 created the framework for a broad and innovative program to ensure that workers displaced by trade truly have their needs met and are helped back into the workforce as soon as possible.
Eligibility for benefits and training was expanded to include farmers, fishermen, and thousands of other workers who were denied benefits because the jobs they lost weren't previously considered to be directly affected by trade. The legislation also took the historic step of providing a tax credit to help displaced workers purchase health insurance.
Finally, the legislation also launched a truly innovative program - in a field largely devoid of original thinking - 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 will enable workers to get the most effective form of training: training on the job.
Unfortunately, much of the promise of these new programs has yet to be realized.
To its considerable credit, the Bush administration requested nearly a tripling of funds for worker adjustment, but Congress pared back the request even as some states, such as Pennsylvania, began to experience shortfalls in the budget for Trade Adjustment Assistance (TAA) programs. The administration has drafted solid new regulations on eligibility for industrial workers, but the new program for farmers is now months overdue. Health benefits for workers in job training are in place, but still under the shadow of ongoing political wrangling in Congress. Though a statutory deadline has just passed, the wage-insurance program is yet to be implemented.
It is certainly premature to call the new worker-adjustment programs a success, but neither can they yet be termed a failure. Perhaps if the worker-adjustment programs received the same priority as new free-trade agreements, the workers who lose their jobs because of international trade would have a meaningful program in place to get them back to work earning paychecks.
There are other problems Congress should examine. For instance, services are an increasingly large part of US trade, yet service workers, like the IBM programmers mentioned above, are denied assistance under TAA.
Free trade and the needs of workers are often presented as opposing interests. In fact, an effective worker-adjustment program could go a long way toward reducing the anxiety in the workforce 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.
• Howard Rosen and Greg Mastel are the founders of the Trade Adjustment Assistance Coalition at the New America Foundation. Mr. Mastel, now with the law firm of Miller and Chevalier Chartered, was the lead Senate staff member on the Trade Act of 2002.