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New TAA Programs Come into Effect Today

May 18th, 2009

Provisions in the stimulus bill expanded eligibility and increased funding to help workers and firms with Trade Adjustment Assistance.

An expanded suite of Trade Adjustment Assistance (TAA) programs—designed to help workers, communities, and firms struggling with trade-related competition—takes effect today.

Trade Adjustment Assistance programs have been around in one form or another since 1974. The stimulus bill, known as the American Recovery and Reinvestment Act of 2009 (ARRA), included provisions that expand support to workers displaced by trade and for firms struggling with competition from import surges. The section of the omnibus spending bill dealing with TAA is called the Trade and Globalization Adjustment Assistance Act of 2009. It primarily takes the form of amendments and improvements to the 1974 Trade Act—and also introduces one new program.

Improvements to TAA came in the form of increased funding, expanded eligibility, an extension of jobless benefits, an increase in the tax credit for health-care coverage, and the creation of an Office of Trade Adjustment Assistance at the Department of Labor.

Funding. ARRA doubled the total funding for TAA to $1.8 billion. The volume of training funds available to states increased by 160%, to $575 million, while providing greater flexibility in the design of training options. The stimulus bill also tripled TAA funding for firms.

Eligibility. Acknowledging the shifting nature of our trade challenges, Congress and the Obama administration incorporated several long-sought changes in the TAA program. Most significantly, the stimulus bill extended TAA benefits to service-industry firms and workers. The new rules should also make it easier for groups of farmers or fishers to petition the Secretary of Agriculture for relief, if they can demonstrate that a 15% or greater decline in the price of a given commodity was due to increased imports.

Another important change is that TAA will now apply when firms relocate anywhere else in the world—including, for example, India and China—whereas before only relocations to free trade agreement partner countries, such as Mexico, would quality under TAA. ARRA recognized that parts suppliers can be just as affected by shifts in production as the manufacturers of finished products. So TAA coverage has been extended to component suppliers.

New Program. ARRA includes a new grant-based program: Trade Adjustment Assistance for Communities. This program allows a community to apply for designation as a community affected by trade.  Communities are eligible to apply for grants if the Secretary of Labor certifies a group of workers in the community as eligible for TAA for Workers benefits and the Secretary of Commerce has certified a firm in the community as eligible for TAA for Firms benefits.  Groups of agricultural producers in a community that has been certified to receive benefits under the TAA for Farmers and Fishermen program may also apply.   

House Report 111-016 clarifies that TAA for Communities can provide technical assistance to a community to diversify and strengthen its economy; identify impediments to economic development that result from the impact of trade; and develop a community strategic plan to address economic adjustment and workforce dislocation.

Health Coverage. A major anxiety of displaced workers was the loss of health benefits. Until now, workers would receive a 65% tax credit to cover medical costs. But even this level of support too often put affordable care beyond reach. The new Health Coverage Tax Credit is 80%. This enhanced benefit has also been made available to cover those workers currently receiving TAA benefits.

Process. All petitions for TAA are filed with the newly-created Office of Trade Adjustment Assistance with the Department of Labor. This office will have responsibility for determining whether eligibility criteria have been met, and will then issue an official notice of its decision no later than 60 days after receiving the petition. Once OTAA issues a Certification Regarding Eligibility, trade-affected workers may apply for benefits under the TAA program.

Two-year time horizon. One little-noticed provision of the expanded TAA programs is that they were only authorized for two years. Congress asked the Congressional Budget Office to score the newly expanded and reformed program only for two years, not ten. For the other eight years, CBO assumed costs reflecting the TAA program at its previous level. If states feel the program is helping their communities and workers, they may need to prepare to defend the increased level of funding found in ARRA after 2011.

Further resources. The Department of Labor has just posted an excellent web resource describing changes to TAA programs, including a chart comparing former programs with the new set of benefits available: www.doleta.gov/tradeact/ChangesFAQ.cfm#3.

The House Ways and Means Committee has published a useful ‘How To’ Manual for TAA. Download it at: waysandmeans.house.gov/media/pdf/111/taa.pdf.

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