Trade adjustment assistance programs provide federal assistance to dislocated workers, firms, and communities. Economic adjustment assistance programs are also available for distressed communities, regardless of what has caused the adverse economic condition. The TAA and NAFTA-TAA programs assist U.S. workers displaced by foreign trade and increased imports. The current TAA program was created by the Trade Expansion Act of 1962 (P.L. 87-794). It was substantially modified by the Trade Act of 1974 (P.L. 93-618) and the North American Free Trade Agreement Implementation Act of 1993 (P.L. 103- 182). The TAA program covers workers who lose their jobs because of imports from any country, while the NAFTA-TAA program covers only workers who have lost their jobs because of increased imports from or shift of production to Mexico or Canada. These programs provide benefits such as trade readjustment allowances (extended income support beyond normal unemployment insurance benefits), services such as job training, and allowances for job search and relocation. The Department of Labor administers both programs and makes determinations regarding worker group eligibility. Groups of workers or their representatives can petition the Department of Labor for certification of eligibility to apply for services or benefits under the program. The Department then conducts an investigation to determine if increased imports or a shift in production to Canada or Mexico have contributed to their loss of employment. Once a TAA or NAFTA-TAA petition is approved covered workers must meet several tests regarding the timing of their layoff and their length of employment with the trade-impacted firm. Workers can be certified as eligible for both programs but can claim benefits from only one. The states play a major role by providing program services and benefits, such as job training and reemployment services. The TAA and NAFTA-TAA programs together received about $407 million in fiscal year 2001 funding. Generally, TAA and NAFTA-TAA income assistance for a dislocated worker is equal to the weekly benefits of the state’s unemployment insurance program and may be paid for up to 52 weeks after the initial 26 weeks (30 weeks in Massachusetts and Washington State) of unemployment insurance benefits have been exhausted. Thus, eligible dislocated workers may receive up to 78 weeks (18 months) of cash payments if enrolled in approved training. Dislocated workers also are eligible for up to 104 weeks (2 years) of training. Therefore, workers do not necessarily receive income assistance during their entire period of training. The process by which workers receive assistance is often triggered when a company gives 60 days’ notice of plant closure or layoffs. Generally, a state Rapid Response Team, comprised of employment service officials, meets with plant managers to obtain information about the prospective layoff or closure and the profile of the affected workers. If appropriate, the Rapid Response Team will suggest that the company apply for TAA or NAFTA- TAA certification, so that workers can receive these benefits after separation. The Rapid Response Team generally returns to the plant after the layoff or closure announcement to give workers information about available services. In some states, training providers may join the team. After separation, the dislocated workers can receive job placement assistance, and if suitable employment is not found, they can enroll in training. TAA and NAFTA-TAA provide extended income support and pay for training, within certain time limits and restrictions. Figure 1 illustrates the timeline for receipt of TAA and NAFTA-TAA benefits. The federal government has also established programs to assist trade- impacted firms and communities suffering job losses due to changing trade patterns. The TAA program for firms, established in 1962 and administered by the Department of Commerce’s Economic Development Administration (EDA), provides assistance to firms that can demonstrate that increases in imports have contributed importantly to layoffs and declines in sales or production. The TAA for firms program was funded for $10.5 million in fiscal year 2000. The Community Adjustment and Investment Program was established as a result of the 1993 North American Free Trade Agreement Implementation Act. Under the program, loan guarantees, loans, and grants are provided to businesses and grantees in eligible counties to help stimulate private sector employment and growth. An interagency committee chaired by the Department of the Treasury administers this program. Loan guarantees to local businesses have accounted for the preponderance of financing commitments to date. The program was established with an initial capitalization of $22.5 million and has received $20 million in additional appropriations to support and expand program activities. The Congress did not appropriate any additional funds for the program in fiscal year 2001. The federal government also offers assistance programs for any distressed community, regardless of whether the economic problems are trade related, through EDA. EDA’s mission is to help generate jobs; retain existing jobs; and stimulate industrial, technological, and commercial growth in economically distressed areas. EDA assistance is generally available to rural and urban areas of the nation experiencing high unemployment, low income, and severe economic distress. In addition to EDA assistance, a variety of other federal programs provide assistance to economically distressed areas. The six communities we selected for our case studies varied in size, demographics, and location, but they all had experienced major trade- related industry and job losses in the mid- to late-1990s. The firms that these communities lost represent a cross section of the types of industries that have been affected by increased trade, as shown in figure 2. Although many layoffs in these communities occurred gradually as companies downsized to remain competitive with offshore producers, each community experienced at least one major plant closure that had an immediate impact on the local workforce and economy. For example, Tultex, an apparel manufacturer and one of the largest employers in Martinsville, Va., declared bankruptcy in December 1999 without prior notice and immediately closed all operations, leaving more than 2,000 workers without jobs. Likewise, in December 1996, Coushatta, La., lost 500 jobs when the Sunbeam small appliance plant, the city’s only manufacturing concern, closed as part of a corporate restructuring that moved many production operations offshore. Table 1 shows the total number of workers certified under the TAA program when threatened by job loss in these communities, as well as the numbers certified in major layoffs. Trade-related plant closures and mass layoffs had serious economic impacts on these communities. In the short term, their unemployment rates rose dramatically. For example, as a result of the Tultex closure in Martinsville, the city’s unemployment rate went from about 9 percent to almost 20 percent in 1999. Similarly, in Coushatta, the closing of the Sunbeam manufacturing plant in 1996 caused the city’s unemployment rate to rise to almost 24 percent in 1997. Where the layoffs were particularly severe, the communities were not prepared to deal with the workers’ immediate needs, and local social service agencies were overwhelmed with requests for assistance. In Martinsville, many displaced Tultex workers were not eligible for assistance, such as food stamps, because they owned vehicles and other assets and could not meet requirements for assistance. These workers, who had also lost medical coverage as a result of the Tultex bankruptcy, were forced to find employment or seek assistance from charitable organizations such as the Salvation Army. Plant closures and layoffs also impacted local government revenues and hurt local businesses. Government officials in some communities said that they lost significant business tax revenues when companies abandoned their plants. For example, according to Martinsville officials, as a result of its bankruptcy, Tultex defaulted on more than $1 million in property taxes owed in 1999, and the city will continue to lose tax revenue from the property. In addition, Martinsville was forced to raise water and sewer service rates to compensate for the $1.4 million Tultex had paid annually for these services. The loss of income suffered by displaced workers also affected local businesses. Coushatta officials said that Sunbeam’s $10 million annual payroll represented about one-fifth of Red River Parish’s gross income. Such losses of income had a negative impact on retail sales in trade-impacted communities. Businesses that supplied or subcontracted for plants that closed also felt the impact. For example, in Martinsville, a plant that generated steam for the Tultex factory was forced to close after Tultex went bankrupt. Many dislocated workers found new jobs in their area, but most were paid lower wages, according to community officials. In Owosso, Mich., community officials said that many workers who lost their jobs in the trade-impacted automobile accessory industry eventually found lower- paying service sector jobs. In Washington, N.C., some workers who were displaced when Hamilton Beach/Proctor-Silex, Inc. moved its small appliance operation to Mexico found work in the local furniture-making industry, but at significantly lower wages. Similarly, in Coushatta, many former Sunbeam workers who were hired at a nearby compressor plant that had recently opened were paid less. In El Paso, the city had been successful in attracting some new manufacturing businesses, but many displaced apparel workers were not qualified for the jobs and either found employment in the service sector or remained unemployed. Based on available but incomplete Department of Labor data, nationally only 61.5 percent of dislocated workers who responded and entered new employment reported that their new jobs paid at least 80 percent of their old job’s wages. Some communities feared that the loss of relatively well-paying, but low- skilled jobs could lead to a decline in the standard of living for a large segment of the population. Food processing jobs in Watsonville, California, and apparel manufacturing jobs in El Paso, Texas, have been considered a means of upward mobility for recent immigrants with limited English skills. Workers who had these jobs were paid union-scale wages and received fringe benefits, which provided an opportunity to buy homes and send their children to college.