which expired in 1968, inspired the first adjustment assistance expe rience. Adjustment assistance was to equitably distribute the burdens of import competition while simultaneously effecting the rapid reemployment of dislocated workers and resources in more profitable and productive endeavors. The program has not attained these goals. Until recently, firms and workers had little hope of qualifying for benefits. Recent Tariff Commission decisions have not significantly altered this prospectus. Uncertainty still pervades the process whereby workers and firms gain access to the program. Uncertainty is primarily caused by the rigid eligibility criteria contained in the TEA. However, the petitioning processes aggravate the problem. Uncertainty of access can be reduced significantly by liberalizing the eligibility criteria and simplifying the petitioning processes. The latter can be achieved by consolidating the responsibility for handling petitions in a single Executive Branch organization. Even if problems of access were solved, severe problems associated with the delivery of benefits to firms and workers would remain to prevent attainment of program goals. Workers and firms who are eligible to apply for adjustment assistance benefits now must traverse a labyrinth of statutory and administrative obstacles before actually receiving benefits. Consequently the TEA must be amended to provide program administrators sufficient with flexibility to effectively deliver firm and worker benefits. The range of benefits available to workers and firms should also be expanded to provide for a broad range of economic situations. The present program cannot effectively deal with economic dislocations that occur in a generally unfavorable employment and business climate. Similarly, an improved program should provide special assistance to communities. There is considerable opportunity for cooperation and coordination with the private sector to ease the burden associated with economic change. Corporate planning anticipates economic dislocations that may have severe consequences for workers and communities. Prior notification of such dislocations could improve administration of the adjustment assistance program. The government also must improve the data system that serves economic policymakers. A data system should provide sufficient early warning of economic dislocations to improve the capability of the adjustment assistance program. A strong case can be made to provide adjustment assistance to victims. of economic dislocations caused by loss of production for export. From the perspective of U.S. trade and investment policy, multinational corporate production shifts and acts of foreign governments that result in unemployment and community distress are not substantively different from those caused by import competition. Finally, an adjustment assistance organization with budgetary control over all aspects of the adjustment assistance program, is an essential Adjustment assistance for those segments of the American economy injured by imports, or threatened with injury, is a relatively recent element of U.S. trade policy; provisions for such adjustment assistance having been contained in the Trade Expansion Act of 1962. This assistance is intended to increase the flexibility and mobility of those elements of our economy injured or threatened by increased imports where the rise in the level of imports is due to a trade agreement entered into by the U.S. Adjustment assistance under this Act is not intended as compensation for injury; instead, it is envisioned as facilitating the movement of capital and labor into more efficient uses. The rationale for making assistance available to those firms injured by imports is that, since freer trade benefits the economy as a whole, the nation should share the cost of any injury resulting from this policy. Furthermore, it is felt that the Government, by removing tariff safeguards against injury from foreign competition, which it had provided earlier in U.S. history, incurred an obligation to provide some form of assistance to those firms and workers now unable to make a satisfactory adjustment. Under the provisions of the Trade Expansion Act of 1962, firms may receive financial assistance, technical assistance, and tax relief, while workers or groups of workers injured by imports may receive allowances for unemployment, relocation, or job retraining. In addition to adjustment assistance, the Trade Expansion Act also permits tariff adjustment in the event of injury or threatened injury to an entire. industry. The Secretary of Commerce is charged with the administration of adjustment assistance to companies; while adjustment assistance for workers, or groups of workers, is administered by the Secretary of Labor. Eligibility for Adjustment Assistance A firm may be certified eligible to apply for adjustment assistance through one of two alternative routes (see Attachment 1): guarantee, and the conformity of the firm's adjustment proposal with legal requirements are determined by the Commerce Department and the Small Business Administration or other appropriate agencies. The applicable interest rate on loans is determined by the Treasury Department; for fiscal year 1971, the interest rate on direct loans ranges between 714 percent and 77% percent depending on the maturity, as shown in Attachment 2. Tax assistance in the form of a net operating loss carryback over a 5-year period is provided by the International Revenue Service when the Secretary of Commerce determines, among other legal requirements, that such tax assistance will materially contribute to the economic adjustment of the firm. Without such a determination by the Secretary, the tax loss carryback is limited to the normal 3 years. Application for Adjustment Assistance To initiate the application process, firms of eligible industries should file Form OTA-1, “Application for Certification of Eligibility to Apply for Adjustment Assistance" (Attachment 3), with the Bureau of Domestic Commerce. Upon receipt of this form, the Trade Adjustment and Assistance Division will conduct an investigation to establish if increased imports have caused serious injury, or threat of injury, to the firm. To determine whether or not the firm has been injured, Commerce considers all relevant factors, including idling of productive facilities, inability to operate at a level of reasonable profit, and unemployment or underemployment. If the firm is found to be seriously injured, Commerce must determine if the injury was caused in major part by increased imports. Based on the investigation, a recommendation that the application be approved or denied must be forwarded to the Assistant Secretary for Domestic and International Business within 60 days. If the Assistant Secretary approves the application, the firm is certified eligible to apply for adjustment assistance on Form OTA-2 (Attachment 4). Alternatively, if the firm applied to the Tariff Commission directly on its own behalf and if the Tariff Commission and the President have made an affirmative finding of injury, these steps may be omitted and the "Certificate of Eligibility," Form OTA-2, may be issued by the Department of Commerce without further investigation. Adjustment Proposals A firm certified eligible to apply for adjustment assistance through either of these alternative routes may file an "Application for Adjustment Assistance," Form OTA-3 (Attachment 5) with the Trade Adjustment and Assistance Division at any time within 2 years from the date of certification. Within a reasonable time, or with Form OTA-3, the firm must also submit the "Adjustment Proposal" on Form OTA-4 (Attachment 6). The adjustment proposal must describe in detail the |