Is Adjustment Assistance an Answer?

by Daniel Mitchell



Support for worker adjustment assistance is a strange tale, which underlines the essentially political purpose of the program. The European Economic Community and the looser European Free Trade Association had established relatively free trade among their respective member states. Such economic groupings tend to produce trade diversion effects, which encourage internal trade among member states but make trade with outsiders less attractive. To authorize tariff negotiations, a new piece of legislation was introduced. The resulting Trade Expansion Act of 1962 (TEA) included two key features. First, tariff-negotiating authority was provided to the U.S. President. Second, the escape clause tariff mechanism of the 1940s and 1950s was substantially altered. The TEA adjustment assistance program required petitioners, whether firms or groups of workers, to demonstrate their injury to the U.S. Tariff Commission. The Trade Act's adjustment assistance provisions raised the benefits for which workers were eligible and substantially eased the standards for determining injury.

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