sarily greater than that of all other causes, or greater than any other single cause. This not as strict as the existing criterion of "major factor." Also, it eliminates the necessity to determine the relative order of importance of the separate causes at work. It is the intention of the administration that adjustment assistance be extended to firms and groups of workers when appropriate. In contrast to tariff adjustment relief for entire industries, such decisions do not have nationwide or international impact. Adjustment assistance is concerned with the problems of individual towns, cities, communities, plants, and groups of workers. They do not directly affect international trade relations of trade patterns. Finally, we propose that determinations of eligibility for firms and workers to apply for adjustment assistance be made by the President instead of the Tariff Commission. However, the Tariff Commission would continue to gather and report on the required factual information. The same procedure has been used successfully in carrying out the adjustment assistance provisions of the Automotive Products Trade Act of 1965. Under the act, the President delegated the responsibility for making determinations as to eligibility to apply for adjustment assistance to an interagency board. We assume that a somewhat similar procedure would be adopted under this legislation. Our purpose is to make a clear distinction between escape clause and adjustment assistance findings. Industrywide escape clause findings impinge directly upon our international trade relationships. It is therefore appropriate for such findings to continue to be made by the Tariff Commission, and be subject to Presidential review taking into account the entire international picture. The administration's bill would not change the conditions that individual workers must meet to receive assistance. For example, workers who are members of the group certified as eligible to apply for adjustment assistance, would still be required to meet State standards regarding availability for work; to have been gainfully employed for at least half the preceding 3 years; and to have worked for an adversely affected firm for half the previous year. The proposed changes in the criteria and procedures contained in H.R. 14870 are all in keeping with the objectives of the adjustment assistance program. They will insure speedy and effective relief to individual workers and their employers. That such changes will work can be seen in the results of the Automotive Products Trade Act of 1965. There the criteria and procedures were designed to reflect the particular nature of the United States-Canadian Automotive Products Agreement and the industry involved. Under the terms of that act, between 1965 and 1968, certifications were issued in 14 of 21 cases, covering approximately 2,500 workers. Of the certified workers 75 percent applied for and received benefits. The average benefit period for these workers was 20 weeks. The total cost over 3 years was about $4 million. The special provisions for filing adjustment assistance petitions under that act expired June 30, 1968. It is difficult to estimate the case load that would develop under the standards proposed in the Trade Act of 1969. The pattern of increase in imports and the impact of these imports on individual firms and workers is influenced by many factors including the general level of economic activity. Our best estimate is that about 15,000-20,000 workers will apply for adjustment assistance in the first year of operation under the proposed new criteria. Currently in the Department of Labor we are starting several programs to improve our ability to assist adversely affected workers quickly and efficiently. An "early warning" system to pinpoint problems and adjustment is being developed so that we can alert officials at both the local and national levels about industries from which applications for relief are likely to come. The more we can anticipate problems, the better we can mobilize the manpower services necessary to insure the speedy reemployment of displaced workers. Early notice will also help involve the private sector more deeply in the adjustment process. I believe strongly that private enterprises can do much by providing talent and energy to the task of solving, or preventing, dislocation problems. Those firms with important stakes in foreign trade have special concern to help improve the adjustment process. The problem of adjustment calls for concentrated joint efforts to effect the quick and permanent reemployment of displaced workers. We plan to supplement the early warning system by the use of adjustment teams. These teams would include representatives of the State employement service, of the workers' last employer, and of the workers. As soon as we become aware of an import-generated layoff at a plant, we would send an adjustment team into action with the object, among others, of involving private enterprise and the community in assisting in the readjustment of the workers. It would employ all resources and techniques on behalf of the workers. These would range from advance registration, job banks, and individual reemployment plans, to specially designed training and assistance programs. The administration bill would amend the Trade Expansion Act to provide that sums appropriated for adjustment assistance for workers may be used to pay the cost of training provided to adversely affected workers to the extent that training resources provided under any Federal law would not otherwise be available. I would also propose, in furtherance of the programs to assist adversely affected workers, that the act be amended to provide for various supportive assistance and services to such workers as would facilitate their prompt return to suitable gainful employment. These services would include minor remedial medical or dental assistance, job coaching, educational services, and other services to aid the individual workers. The services would be provided in the same manner as these services are provided under other manpower programs. We will be submitting to the committee and its staff language covering our proposal. (The following letter and attachment were received by the committee :) U.S. DEPARTMENT OF LABOR, Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, Washington, D.C. DEAR MR. CHAIRMAN: When I appeared before your Committee in support of the Administration's proposed Trade Act of 1969, introduced as H.R. 14870, I also proposed that, in furtherance of our programs for adjustment assistance to adversely affected workers, the Trade Expansion Act of 1962 be amended to provide for various supportive assistance and services to such workers as would facilitate their prompt return to suitable gainful employment. At that time, I stated that we would be submitting language covering our proposal. Attached herewith is the text of an amendment to Sec. 304 of the bill, for this purpose. The Bureau of the Budget advises that enactment of the proposed amendment would be in accord with the program of the President. Sincerely, H.R. 14870 GEORGE P. SHULTZ, Amendment proposed to Sec. 304. On page 10, strike out all of lines 23 through 25 and insert in lieu thereof the following: (a) The second sentence of section 326 (a) of the Trade Expansion Act of 1962 (19 U.S.C. 1951 (a)) is amended to read as follows: "To this end, and subject to this chapter, adversely affected workers shall be afforded, where appropriate, the testing, counseling, training, and placement services provided for under any Federal law, as well as supportive assistance and services, such as health and educational services, job coaching, transportation, and other special services found to be necessary and appropriate to facilitate their prompt return to suitable employment. In providing such supportive assistance and services the Secretary of Labor, to the maximum extent feasible, shall assure that they are provided in such manner, through such means, and using all authority available to him under any other Act (and subject to all duties and responsibilities thereunder) as will further the establishment of an integrated and comprehensive program of adjustment assistance to workers and will make minimum use of existing manpower and manpower related programs and agencies." (b) Section 337 of the Trade Expansion Act of 1962 (19 U.S.C. 1977) is amended by inserting after the words "adjustment assistance" a comma and the following words: "Including training and other assistance and services provided for in section 326 not otherwise available,". Secretary SHULTZ. We recognize that in some situations a community may be almost completely dependent upon a single plant for its economic existence. If the adjustment assistance programs for firms and workers are inadequate to keep the community healthy, this administration will undertake coordinated efforts to help it. All departments and agencies will cooperate to supply the expertise and the resources that will enable the community to undertake requisite development activities. EMPLOYMENT AND TRADE We must be responsive, through adjustment assistance and related techniques, to problems which may arise from time to time as a consequence of U.S. trade policy. However, as best we can judge, U.S. foreign trade means more, not fewer, jobs and job opportunities for Americans. The measurement of the relationship between employment and trade is very difficult. In a dynamic and swiftly moving competitive economy such as ours, there are inevitably numerous factors other than, or in addition to, trade which influence employment in any given industry or the availability of job opportunities. For example, movements in productivity which reflect changes in technology, capacity utilization, and the allocation of resources all affect the employment picture as does the general state of the economy and the thrust of domestic and international competition. U.S. merchandise exports and imports each represent in value, less than 4 percent of our gross national product, and as such are important but not dominant influences on the economy. It is worth nothing that in 1968 and 1969, when imports reached new high levels, total employment also reached new highs and unemployment new lows. Bearing these factors in mind, the Department of Labor has tried. to develop data, which at a specific point in time, might give us some order of magnitude of the relationship between trade and employment-assuming, of course, that other relevant factors remain unchanged. On the export side the Bureau of Labor Statistics has estimated that 2.7 million jobs were involved in producing the goods which were actually shipped out of the country in 1969. This estimate includes the direct employment necessary to produce the exported goods, and also the indirect labor necessary to produce the exported goods, and also the indirect labor necessary for all supplies, material, and services incorporated in the exported item. The labor involved in the transportation and handling of the exported item is also included. Almost 4 percent of the total number of jobs in the private sector is represented by these export-related jobs. In addition, there are a number of foreign trade-related jobs involved in the handling and processing of imported goods. This would include activities of longshoremen, customs brokers, coffee processors, and so forth. It is harder to present a realistic picture of jobs related to, or affected by, imports than for exports. There are, for example, some imports which we do not produce domestically, coffee, chromite, cocoa, tea, bananas, and others for which domestic production is not sufficient to meet our domestic needs also bauxite, asbestos, and sugar. Imports of such goods supplement rather than displace domestic supplies and do not raise issues of possible job displacement. The largest part of our imports represents goods which are also produced in the United States. In 1969, if we had attempted to produce domestically goods equivalent in value to such imports, the Bureau of Labor Statistics has estimated that we would have needed 2.5 million additional workers, and the facilities and equipment for these workers to use. It is reasonable to assume that in 1969, unless there had been a concerted effort to transfer resources to this end, we would not have found that number of people with the requisite skills nor the necessary facilities to produce these goods. Rather, the attempt to replace a substantial amount of such imports by domestic production would have placed additional strains on the economy and heightened even further the inflationary pressures. I should add, of course, that if we were to attempt to replace these imports with domestic production, retaliation by our trading partners would follow, and some considerable part of our 2.7 million export jobs would be lost. I do not want to suggest by this analysis that there are not particular cases and particular industries in which the volume and composition of imports do in fact create problems of job displacement for workers and difficulties for producers. Instead, my point is that the mechanisms of the escape clause and adjustment assistance, as proposed in this bill can, in the main, deal with such problems as do arise from time to time. My colleagues are dealing extensively with the other provisions of H.R. 14870. I would like to express my view that the bill, as a whole, is a forward-looking response to the economic realities of the world of the 1970's. The President, in his message, has stressed that world economic interdependence has become a fact along with heightened worldwide competition. The bill is framed in recognition of these facts. It provides modest tariff reduction authority for the President to permit this country to continue to make minor adjustments which are required from time to time in our trading relations with other countries. Since the GATT is the main forum through which these relationships are conducted, the legislation provides authorization for our necessary financial support for that organization. The bill would repeal the American selling price system carrying out agreements developed in the Kennedy round which will operate to the advantage of the American chemical industry and its workers and remove one of the major obstacles to a concentrated attack on the nontariff barriers of other countries. The bill recognizes the importance of nontariff barriers of other countries as impediments to our trade and provides authority for the President to respond appropriately when other countries place or maintain unjustifiable restrictions against U.S. products whether industrial or agricultural. Finally, as I have noted, the legislation would liberalize in a sound an reasonable way the access of industries to the escape-clause procedures, long a necessary and desirable safeguard in U.S. basic trade legislation. The changes proposed for the escape-clause complement the changes in adjustment assistance procedures which I have discussed at some length. In my view, the Trade Act of 1969 represents a consistent continuation of the Nation's reciprocal trade agreement program. This kind of trade policy holds the best promise for expanding employment opportunities in the wide range of industries involved in international trade. Thank you, Mr. Chairman. The Chairman. And thank you, Mr. Secretary, for a very interesting statement. Mr. Burke will inquire. |