Updated July 5, 2023
Trade Adjustment Assistance for Firms
The Trade Adjustment Assistance for Firms (TAAF)
Congress last reauthorized TAAF and other TAA programs
program helps U.S. firms impacted by import competition
in the Trade Adjustment Assistance Reauthorization Act of
to improve their global competitiveness. TAAF is
2015 (TAARA, Title IV, P.L. 114-27), in conjunction with
administered by the U.S. Department of Commerce’s
the latest TPA reauthorization. TPA expired in July 2021,
Economic Development Administration (EDA). On July 1,
and, to date, the Biden Administration has not sought
2022, TAAF termination provisions took effect, meaning
reauthorization.
EDA cannot accept new petitions for TAAF but may
TAARA included “sunset provisions” for TAAF, which
continue to assist firms that submitted a petition prior to the
program’s
ended TGAAA’s expanded measures as of July 1, 2021.
expiration.
TAARA termination provisions took effect on July 1, 2022,
Historically, Congress has reauthorized and expanded
meaning that firms can no longer submit new petitions for
Trade Adjustment Assistance (TAA) programs, including
TAAF, but firms that filed a petition by June 30, 2022 can
TAAF and a larger program for workers (see text box), in
continue to receive assistance.
tandem with trade liberalization legislation, such as for free
trade agreements (FTAs). Congress has also reauthorized
TAAF Overview
TAA programs during periods of high U.S. unemployment.
EDA provides TAAF funding to 11 regional Trade
While most of the policy discussions have focused on the
Adjustment Assistance Centers (TAACs), which provide
TAA for Workers program, the 118th Congress may
technical assistance to firms in the 50 states, the District of
consider whether or not to reauthorize TAAF, or whether to
Columbia, and the Commonwealth of Puerto Rico. EDA
make policy changes to the TAAF program.
does not directly provide funds to firms. The following
entities may apply to operate a TAAC: (1) universities or
affiliated organizations; (2) states or local governments; or
Trade Adjustment Assistance (TAA) for Workers
(3) nonprofit organizations.
provides workforce services and other benefits for trade-
affected workers. It is administered by the U.S. Department of
Phase 1: Certification. TAACs worked with firms at no
Labor (DOL). Under sunset and termination provisions in the
cost to complete and submit their petitions to EDA to be
Trade Adjustment Assistance Reauthorization Act of 2015,
certified as a trade-impacted firm. Most firms that applied
the program began a phaseout on July 1, 2022. Workers who
for TAAF certification have been from the manufacturing
were receiving benefits prior to the termination may continue
sector. EDA had to certify that firms met three conditions:
to do so, but new worker groups are ineligible for the
program. TAA for Workers has continued to receive funding
• Real or threatened negative employment impacts for “a
to support legacy participants. For FY2024, DOL has
significant number or proportion of workers”;
requested $292.9 mil ion for the program.
• Decreases to sales and/or production during a specified
Background
timeframe; and
•
Congress first authorized TAA programs in the Trade
Import competition has “contributed importantly” to the
Expansion Act of 1962 (P.L. 87-794), as amended. TAA
negative impacts on employment and sales and/or
programs were introduced to address domestic concerns
production.
about the localized negative impacts of trade liberalization
Phase 2: Recovery Planning. Once EDA certifies a firm,
without using trade protectionist measures such as tariffs,
the firm works with TAAC staff to develop a business
quotas, or duties. Congress reauthorized and expanded
recovery plan (“adjustment proposal,” or AP) for approval
TAA programs in the Trade Act of 1974 (P.L. 93-618),
by EDA. Firms have two years from certification to submit
which also created “fast track trade negotiating
an AP. TAAF covers 75% of phase 2 costs.
authority”—expedited legislative consideration of trade
agreements, now referred to as Trade Promotion Authority
Phase 3: AP Implementation. Once EDA approves a
(TPA).
firm’s AP, TAACs and firms jointly select and contract
with consultants to assist with AP implementation. Firms
Under the Trade and Globalization Adjustment Assistance
have up to five years to implement projects, unless EDA
Act of 2009 (TGAAA, part of P.L. 111-5, the American
approves an extension. TAAF covers 50%-75% of costs
Recovery and Reinvestment Act), Congress expanded
(up to $75,000) to implement APs, depending on the
TAAF through provisions such as (1) the inclusion of
proposed project costs. Examples of AP projects include
service-sector firms to reflect their increased role in the
improvements to marketing/sales, production processes,
U.S. economy, and (2) extended timeframes for evaluating
financial systems, management, and information systems.
negative impacts of import competition on firm sales and/or
production.
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Trade Adjustment Assistance for Firms
According to EDA, firms receive an average of 57 months
concerns about costs and duplication with other government
of TAAF benefits from the time of petition certification
programs.
until program completion.
Issues for Congress
Table 1. TAAF Program and Participant Information
TAAF reauthorization and trade liberalization.

2018
2019
2020
2021
Members in the 118th Congress may consider whether or
not to renew TAAF and other TAA programs through bills
Appropriations
$13.0
$13.0
$13.0
$13.5
such as H.R. 4276, which would also reauthorize the
(mil ions)
following trade measures that expired on December 31,
2020: (1) the Generalized System of Preferences (GSP),
APs Approved
98
66
64
97
which provides nonreciprocal, duty-free access for certain
Active Firms
530
538
498
538
goods from eligible developing countries, and (2)
Miscellaneous Tariff Bills (MTBs) under the American
Avg, Firm Sales
$12.5
$11.1
$10.1
$18.7
Manufacturing Competitiveness Act of 2016 (P.L. 114-
(mil ions)
159), which temporarily suspend/reduce tariffs on certain
Avg. Firm
67
63
57
59
imports.
Employees
During the 117th Congress, some Members expressed
Source: Department of Commerce EDA, annual TAAF reports.
opposition to reauthorizing TAA without consideration of
Notes: EDA considers a firm “active” if it has an approved AP, has
TPA. Some Members have criticized the Biden
not completed al projects in its AP, and remains engaged in the
Administration’s overall trade policy approach, particularly
TAAF program.
what they describe as a lack of interest in negotiating with
U.S. trading partners to secure new market access and tariff
For FY2024, EDA has requested $13 million in funding to
cuts. Some Members have also expressed concerns over
continue providing technical assistance to firms already in
executive trade agreements that the Administration has
the TAAF program. EDA stated that it expects a need for
indicated do not require congressional approval (e.g., the
continued appropriations through FY2029 to serve firms
March 2023 U.S.-Japan critical minerals agreement,
currently in the program. EDA noted that unless Congress
ongoing negotiations for the Indo-Pacific Economic
reauthorizes TAAF, the “inability to accept new firms into
Framework for Prosperity). Administration officials have
the program will ultimately result in program termination.”
commented that a new model of trade policy is necessary to
promote “equitable economic growth” and build a broader
Impact of TAAF
base of U.S. domestic support for global trade.
The 2009 TGAAA included additional oversight and
Streamlining programs. Members might consider
evaluation criteria for TAAF and required EDA to submit
streamlining TAAF with other federal programs that assist
annual reports on TAAF to Congress. TGAAA also
SMEs facing challenges, such as those operated by the
mandated the Government Accountability Office (GAO) to
Small Business Administration (SBA). For more on SBA
conduct a comprehensive evaluation of the TAAF program.
programs see CRS Report RL33243, Small Business
GAO published this report in 2012, noting that changes
Administration: A Primer on Programs and Funding.
mandated by TGAAA improved operations and led to
Changes to TAAF. If Congress chooses to reauthorize
increased TAAF participation. GAO found that a firm’s
TAAF, Members may consider making changes to the
participation in TAAF was statistically associated with
program. For example, while TAAF has focused on firms
increased sales. At the same time, GAO recommended
improvements to EDA’s performance
that can demonstrate harm from import competition,
measures and data
Congress could consider measures to identify or support
collection. As of 2021, EDA had implemented all of GAO’s
firms before they experience negative impacts. Congress
recommendations.
could consider requiring EDA to prepare a capacity-
In its FY2021 TAAF annual report, EDA stated that self-
building plan to assist industries or regions that the United
reported TAAF participant data collected from FY2010-
States International Trade Commission (USITC) identifies
2021 shows that
as potentially vulnerable or likely to experience a negative
•
impact from implementation of trade liberalizing measures.
From certification to program completion, firms’
average sales increased by 30%, and average
Members may also consider whether or not firms affected
employment decreased by 4%.
by factors other than import competition should qualify for
•
TAAF. It is difficult to disentangle trade-related impacts
For the two years following program completion,
from changes related to technology, the growth of global
average sales increased by 11%, and average
supply chains, labor productivity, consumer preferences,
employment increased by 18%.
and other domestic and global economic factors. In the
Supporters of TAAF have argued that the program has a
117th Congress, H.R. 5289 would have expanded TAAF
significant and positive impact on small- and medium-sized
eligibility to firms whose exports declined due to foreign
enterprises (SMEs), particularly manufacturers. Critics have
tariffs imposed in retaliation for U.S. tariff increases under
questioned the program’s efficacy and noted that other
certain executive authorities.
government programs are available to provide similar
assistance to firms. Previous Congresses and
Kyla H. Kitamura, Analyst in International Trade and
Administrations have considered eliminating TAAF due to
Finance
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Trade Adjustment Assistance for Firms

IF12430


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https://crsreports.congress.gov | IF12430 · VERSION 4 · UPDATED

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