Order Code RS21078
Updated June 28, 2002
CRS Report for Congress
Received through the CRS Web
Trade Adjustment Assistance for Workers:
Legislation in the 107th Congress
Paul J. Graney
Analyst in Social Legislation
Domestic Social Policy Division
Summary
Trade Adjustment Assistance (TAA) for workers offers extended unemployment
benefits and job training to workers left jobless when imported goods have contributed
importantly to their job loss. A similar program was begun with the adoption of the
North American Free Trade Agreement (NAFTA). This Transitional Adjustment
Assistance Program (NAFTA-TAAP) not only aids trade-affected workers but also helps
those who lose jobs because their firms have relocated production to Canada or Mexico.
The authorizations for both programs expired on January 10, 2002, but the programs
continue to operate normally with the $416 million appropriated for FY2002. The
House approved a reauthorization through FY2003 when it passed H.R. 3008 on
December 6, 2001. The Senate included authorization of a reformed and consolidated
TAA through FY2007 in its version of H.R. 3009 that passed on May 23, 2002. Most
of the bill’s TAA language was based on S. 1209 as reported by the Senate Finance
Committee on February 4, 2002. The House passed a rule (H.Res. 450) on June 26,
2002 that had the effect of amending the Senate amendment to H.R. 3009 and requesting
a conference with the Senate on the bill. The Administration’s FY2003 budget request
includes total funding of $462 million for TAA and NAFTA-TAAP. This report will
be updated as legislative action occurs.
Background
The TAA program was established by the Trade Expansion Act of 1962 (P.L. 87-
794) to provide cash assistance to workers harmed directly by federal trade policies.
Because of difficulties in proving that specific job dislocations were caused by trade
initiatives, little use was made of the program until its overhaul by the Trade Act of 1974
(P.L. 93-618).
The 1974 Act required that workers show that import competition had “contributed
importantly” to their job loss in order to receive weekly cash assistance, thereby easing
the earlier eligibility rules. The program grew substantially following this legislation,
with spending on TAA reaching $1.6 billion in the program’s peak year of FY1980.
Congressional Research Service ˜ The Library of Congress

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Two acts during the 1980s served to reduce TAA’s cost and focus more resources
on job retraining. Under the Omnibus Budget Reconciliation Act (OBRA) of 1981 (P.L.
97-35), TAA benefit amounts were restricted to the level of unemployment compensation
(UC) weekly benefits paid in each state, and training received greater emphasis. Weekly
TAA benefits, termed “trade readjustment allowances” (TRAs), previously had
supplemented UC up to 75% of a claimant’s former wage and replaced 65% of wages
after UC ran out. The 1981 law set TRAs equal to the benefit amount the claimant had
received from the state UC program and made them payable only after the regular UC
benefit had terminated. The second of these acts, the Omnibus Trade and
Competitiveness Act of 1988 (P.L. 100-418), made job training a specific requirement for
program eligibility unless waived by the Secretary of Labor for one of several reasons set
forth in regulations.
Congress acted in the Omnibus Budget Reconciliation Act (OBRA) of 1993 (P.L.
103-66) to extend TAA through September 30, 1998. The only substantive change in law
was to lower the ceiling on annual appropriations for TAA training from $80 million to
$70 million. A new TAA component was added that same year by the North American
Free Trade Agreement (NAFTA) Implementation Act (P.L. 103-182) to assist workers
dislocated by NAFTA. This new component is called the NAFTA transitional adjustment
assistance program, or NAFTA-TAAP. The law entitles workers who lose their jobs
because of NAFTA, including those whose employers shift production to Canada or
Mexico, to the same income support as is available under the regular TAA program.
Waivers of job training are not allowed under NAFTA-TAAP, but workers eligible for
both TAA and NAFTA-TAAP can choose between them.
The TAA and NAFTA-TAAP programs establish individual entitlements to federal
benefits. That is, they create a legal obligation on the part of the U.S. government to
make funds available in the amounts necessary to pay cash benefits and purchase job
training services for all individuals who meet the eligibility criteria established in law.
Although considered to be entitlements, TAA and NAFTA-TAAP do not have dedicated
tax revenue that can be held in reserve to fund them. As with many other entitlements,
these programs obtain their funds through annual appropriations. While the law
establishes annual ceilings on authorized appropriations for training, individuals may also
be eligible for training under other programs such as the Workforce Investment Act of
1998 (WIA).
The most recent law (P.L. 106-113) reauthorizing the programs for more than a year
extended the authorizations for TAA and NAFTA-TAAP through FY2001. Eight
continuing resolutions kept the programs authorized through January 10, 2002. There is
ample precedent for enactment of appropriations in the absence of a spending
authorization, and the programs are currently operating normally with $416 million
appropriated for FY2002.
Current Proposals
During the 107th Congress, legislation has been introduced to reauthorize TAA and
NAFTA-TAAP. H.R. 85 would extend the programs through FY2006 and extend the
period for filing a petition for worker assistance from 1 year to 2 years. The House passed
H.R. 3008, reauthorizing the programs through FY2003 with an added 26 weeks of
benefits and a further 26 weeks for those in need of remedial education, on December 6,

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2001. The Senate included authorization of a reformed and consolidated TAA through
FY2007 in its version of H.R. 3009 that passed on May 23, 2002. The House passed a
rule (H.Res. 450) on June 26, 2002 that had the effect of amending the Senate amendment
to H.R. 3009 and requesting a conference with the Senate on the bill. The TAA
provisions of this amendment are summarized at the end of this report. Other bills
affecting these programs have also been introduced in the 107th Congress for the purpose
of reforming and/or expanding the program.
Reform and Consolidation. Previous efforts to consolidate the job training
programs sponsored by the federal government resulted in the passage of WIA. WIA did
not make any changes to TAA or NAFTA-TAAP, but it does require coordination among
the various federal job training programs. The most comprehensive reform proposal
introduced in the 107th Congress is S. 1209, along with its companion bills (H.R. 3359
and H.R. 3670), which would replace TAA for workers and NAFTA-TAAP with a new
Adjustment Assistance for Workers program. While retaining much of the structure of
TAA and NAFTA-TAAP, the new Adjustment Assistance for Workers would expand on
those programs in significant ways. S. 1209 was reported favorably with an amendment
in the nature of a substitute on February 4, 2002. Most of the bill’s language was included
in S.Amdt. 3401 to the Andean Trade Preference Act (H.R. 3009) proposed by Senator
Baucus and Senator Grassley on May 10 as a substitute amendment with some
compromises discussed below. After some further modifications, the amendment and
H.R. 3009 were passed by the Senate on May 23, 2002. The House-passed amendment
to H.R. 3009 proposes less sweeping changes to the two current programs
Eligibility Expansion. Several bills have been introduced in the 107th Congress
that extend benefits under the adjustment assistance program to workers who are not
currently eligible. Once again, S. 1209, H.R. 3359, H.R. 3670, and the Senate-passed
version of H.R. 3009 include the most comprehensive of these proposals. They would
extend eligibility by reason of production shifts to any country rather than just Canada or
Mexico as under the present NAFTA-TAAP. Workers in secondary industries and certain
groups that are generally ineligible now would be included. The Senate-passed version
of H.R. 3009 excludes truckers and some secondary workers that were included in the
earlier bills as part of the compromise reached in offering S.Amdt. 3401. The House-
passed amendment to H.R. 3009 includes a more specific definition of suppliers whose
workers would be eligible for assistance. S. 1100 would also provide TAA for farmers1.
H.R. 457 would amend the Trade Act of 1974 to establish a transitional adjustment
assistance program for workers adversely affected as a result of the extension of
nondiscriminatory treatment (normal trade relations treatment) to the products of the
People’s Republic of China. H.R. 837 and S. 422 would provide that, for purposes of
making determinations for certain trade remedies and TAA benefits, imported
semi-finished steel slabs and taconite pellets produced in the United States would be
considered to be articles like or directly competitive with each other. S. 2088 would
provide that any worker in an industry would be presumed eligible for TAA benefits for
a 4-year period after the International Trade Commission determines that an article is
being imported into the U.S. in such quantities as to harm the domestic industry
1 For a further discussion of this proposal, see CRS Report RS21182, Trade Adjustment
Assistance for Farmers.

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producing a similar article. H.R. 4550 would clarify the eligibility for benefits of
adversely affected workers who are engaged in self-employment assistance activities.
Benefit Expansion. In addition to the TRAs and training, TAA can also provide
allowances of up to $800 for job search assistance and/or relocation to a new job site. S.
1209, H.R. 3359, and H.R. 3670 would raise these allowance maximums to $1,200 for
job search assistance and $1,500 for relocation, while the Senate-passed version of H.R.
3009 would set the maximum amount at $1,250 each. These bills would also make
available another 26 weeks of cash benefits beyond the TRAs now available. On May 15,
the Senate passed S.Amdt. 3417 to S.Amdt. 3401 adding 26 more weeks of benefits for
those who need remedial education. The bills would establish a ceiling of $300 million
on annual training funds as opposed to the present combined ceiling of $110 million. The
House amendment to H.R. 3009 would provide both increases in the number of weeks of
benefits, but it would only increase the ceiling for TAA training to $110 million while
leaving the NAFTA-TAAP ceiling at $30 million. H.R. 3359 would follow S. 1209 as
originally introduced in providing a refundable credit against the individual income tax
equal to 50% of the health insurance premiums that eligible unemployed workers must
pay if they want their employer-sponsored health coverage continued during periods of
unemployment. S. 1209 as reported and H.R. 3670 would provide a new subsidy that
would pay 75% of health insurance premiums for eligible workers, and states would be
given the option to provide the unsubsidized portion under Medicaid and to provide
temporary Medicaid coverage for certain uninsured individuals. S.Amdt. 3386 would
have changed the 75% subsidy to a 73% refundable tax credit payable in advance and
would also have made it available to retired steel workers. The Senate-passed version of
H.R. 3009 would lower the tax credit to 70% and does not include this benefit for retired
steel workers. The House-passed amendment to H.R. 3009 would provide a means-tested
60% refundable tax credit and would extend this benefit to retired steel workers and any
other retirees who are receiving their retirement benefits from the Pension Benefit
Guaranty Corporation. Only the Senate-passed version of H.R. 3009 retains the wage
insurance provision although another compromise would have it terminate 2 years after
it is implemented in a state. S.Amdt. 3427 that would have removed the wage insurance
provision was tabled by a vote of 58-38 on May 16, 2002. S. 1209, H.R. 3670, and H.R.
3009 also call upon the Small Business Administration to establish a displaced worker
self-employment training pilot program. H.R. 2613 would also increase by 26 weeks the
maximum number of weeks of benefits for workers in need of remedial education, and
H.R. 2810 would provide this increase for all workers eligible for NAFTA-TAAP while
doubling the annual amount authorized for training to $60 million. H.R. 2810 would
further provide an additional 78 weeks of benefits under NAFTA-TAAP for workers with
limited English proficiency or otherwise in need of remedial education, and it would also
remove the prohibition of waivers from training. H.R. 3768 would give both employer
and employee a credit for social security taxes paid for the first year of employment in a
job the worker obtains after completing TAA training. H.R. 3982 would apply half of the
tariffs imposed on imported steel products to help replace the health insurance lost by
those who are eligible for TAA.
Funding. President Bush proposed in his FY2003 budget to extend the TAA and
NAFTA-TAAP programs, and the budget request includes total funding of $462 million
for TAA and NAFTA-TAAP, which represents an increase of $46 million over FY2002
funding levels of $416 million. The breakdown would be $297 million for TAA benefits
and $94.5 million for training with $33 million and $37 million for NAFTA-TAAP.

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Adjustment Assistance for Workers As Passed in the Senate
(H.R. 3009)
! Workers could become eligible either because imported goods
contributed importantly to their unemployment or because of shifts in
production to any country outside the United States. Currently, a shift in
production does not serve to qualify jobless workers under TAA;
production shifts can qualify workers under NAFTA-TAAP, but only if
the destination country is Canada or Mexico.
! Workers in secondary industries (those that supply industries directly
affected by trade or plant relocation) would be covered, but more
restrictive definitions of downstream producer and supplier reduce the
number of workers covered compared to earlier versions. Currently, only
directly affected industries are covered by TAA.
! Certain groups generally ineligible under current law — family farmers,
ranchers, independent fishermen, taconite workers — are specifically
mentioned as groups that could qualify under the new program. The
President or the Senate Finance Committee or the House Ways and
Means Committee would be able to petition the Secretary of Labor to
start the certification process with respect to a particular industry.
! A petition for eligibility from a group of workers would be considered
simultaneously by the Governor of the state and the U.S. Secretary of
Labor. This approach should speed up the current process used by
NAFTA-TAAP, in which the two officials consider petitions serially
rather than simultaneously. The Secretary would have 40 days in which
to act. If a group is eligible, additional workers not covered by the
original petition but who lost their jobs for related reasons could be
covered if their job separations occurred no more than 1 year before the
date of petition.
! The new program would offer an additional 26 weeks of cash benefits
beyond what is now available plus another 26 weeks for those who need
remedial education. Thus, a maximum of 130 weeks of benefits would
be available (26 weeks from UC, 104 weeks from the new Adjustment
Assistance for Workers program).
! The current programs can provide allowances of up to $800 per claimant
to individuals who (a) must search for jobs outside their local area of
residence, and/or (b) must relocate to begin new employment. The
amendment would raise these allowance maximums to $1,250.
! Factors that would permit the Secretary to waive otherwise required
training are spelled out in the bill’s language. Thus, the new program
would operate more like TAA than NAFTA-TAAP in this regard.
! The ceiling on annual training funds would be raised to $300 million.
The combined ceiling for the two current programs is $110 million. It
should be noted that these ceilings have not restricted the Department of
Labor from using available funds from other appropriation accounts
when the demand for TAA training has exceeded a statutory ceiling.
! A new wage insurance feature would be added, which would make up a
portion of the wage difference between the wage on a new job and the
old one for up to 2 years to facilitate speedier transitions into new

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occupations or industries. Eligibility would be limited to those over age
50 whose prior incomes were less than $50,000 yearly, who work at least
30 hours a week, and who found new jobs within 26 weeks after job
separation. Total payments could not exceed $10,000 over 2 years.
Supportive services would be available under WIA. Wage insurance
would not be available to workers who received TRAs.
! A new refundable tax credit for 70% of health insurance premiums for
eligible workers would be added, and states would be given grants and
several options to provide health insurance through COBRA continuation
coverage, high-risk pools, their state employees plan, or by other means.
Summary of Changes to TAA for Workers As Passed by the
House in Its Amendment to H.R. 3009
! Would reauthorize the TAA and NAFTA-TAAP programs through
FY2004.
! Would expand coverage to some secondary workers by covering certain
industries.
! Would call for expedited review of petitions for certification by Secretary
of Labor within 40 days.
! Would offer an additional 26 weeks of cash benefits for those in training
plus another 26 weeks for those who need remedial education.
! Factors that would permit the Secretary to waive otherwise required
training in the TAA program are spelled out.
! The ceiling on annual training funds for the TAA program would be
raised from $80 million to $110 million. The ceiling on training for the
NAFTA-TAAP where there is not available a waiver from training would
remain at $30 million.
! A new tax credit for 60% of health insurance premiums would be added
for eligible TAA and NAFTA-TAAP recipients as well as for eligible
Pension Benefit Guaranty Corporation beneficiaries.

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