Trade Adjustment Assistance: Industry Certification Would Likely 
Make More Workers Eligible, but Design and Implementation	 
Challenges Exist (29-JUN-07, GAO-07-919).			 
                                                                 
Trade Adjustment Assistance (TAA) is the nation's primary program
providing job training and other assistance to manufacturing	 
workers who lose their jobs due to international trade. For	 
workers to receive TAA benefits, the Department of Labor (Labor) 
must certify that workers in a particular layoff have lost their 
jobs due to trade. Congress is considering allowing entire	 
industries to be certified to facilitate access to assistance.	 
GAO was asked to examine (1) trends in the current certification 
process, (2) the extent to which the proposed industry		 
certification approach based on three petitions certified in 180 
days would increase eligibility and identify potential challenges
with this approach, and (3) the extent to which an approach based
on trade remedies would increase eligibility and identify	 
potential challenges. To address these questions, GAO analyzed	 
data on TAA petitions, mass layoffs, trade, production, and trade
remedies. GAO also interviewed Labor and ITC officials. GAO is	 
not making recommendations at this time. Labor reviewed the	 
report and did not provide comments. The ITC provided technical  
comments that have been incorporated as appropriate.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-919 					        
    ACCNO:   A71694						        
  TITLE:     Trade Adjustment Assistance: Industry Certification Would
Likely Make More Workers Eligible, but Design and Implementation 
Challenges Exist						 
     DATE:   06/29/2007 
  SUBJECT:   Beneficiaries					 
	     Eligibility criteria				 
	     Eligibility determinations 			 
	     Employee training					 
	     Employment 					 
	     Employment assistance programs			 
	     International trade				 
	     Occupational retraining				 
	     Program evaluation 				 
	     Trade policies					 
	     Program implementation				 

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GAO-07-919

   

     * [1]Results in Brief
     * [2]Background

          * [3]TAA Certification Process and Eligibility Requirements
          * [4]Trade Adjustment Assistance Benefits
          * [5]Trade Remedies

     * [6]Labor Certified Two-Thirds of Petitions Investigated and Gen
     * [7]Industry Certification Based on Multiple Certifications Woul

          * [8]Extent of Increase in Eligible Workers Depends on How Additi
          * [9]Potential Design and Implementation Challenges Exist

     * [10]Certifying Industries Subject to Trade Remedies Could Increa

          * [11]Extent of Increase in Worker Eligibility Difficult to Estima
          * [12]Potential Challenges Exist with Using Trade Remedies to Iden

     * [13]Agency Comments

          * [14]Analysis of Labor's Petitions Data to Determine Certificatio
          * [15]Estimate of Extent to Which Industry Certification Based on
          * [16]Analysis of Trade Remedies
          * [17]Interviews with Labor and International Trade Commission

     * [18]GAO Contact
     * [19]Acknowledgments
     * [20]GAO's Mission
     * [21]Obtaining Copies of GAO Reports and Testimony

          * [22]Order by Mail or Phone

     * [23]To Report Fraud, Waste, and Abuse in Federal Programs
     * [24]Congressional Relations
     * [25]Public Affairs

Report to Congressional Requesters

United States Government Accountability Office

GAO

June 2007

TRADE ADJUSTMENT ASSISTANCE

Industry Certification Would Likely Make More Workers Eligible, but Design
and Implementation Challenges Exist

GAO-07-919

Contents

Letter 1

Results in Brief 3
Background 5
Labor Certified Two-Thirds of Petitions Investigated and Generally
Processed Petitions in a Timely Manner 8
Industry Certification Based on Multiple Certifications Would Likely
Increase Eligible Population, but Some Implementation Challenges Exist 13
Certifying Industries Subject to Trade Remedies Could Increase Eligible
Population, but Extent Is Uncertain and Potential Challenges Exist 19
Agency Comments 21
Appendix I Objectives, Scope, & Methodology 23
Appendix II Industries in Which Petitions Were Denied, Fiscal Year 2006 27
Appendix III Industries with Three Petitions Certified in 180 Days, 2003
to 2005 30
Appendix IV Additional Analysis of the 69 Industries 37
Appendix V GAO Contacts and Staff Acknowledgments 38
Related GAO Products 39

Tables

Table 1: TAA Petition Filings and Investigation Decisions, Fiscal Years
2004 to 2006 9
Table 2: Industries in Which Petitions Were Denied Because Workers Did Not
Produce an Article, Fiscal Year 2006 27
Table 3: Industries in Which Petitions Were Denied Due to No Increase in
Imports or Production Shift Abroad, Fiscal Year 2006 28
Table 4: Industries in Which Petitions Were Denied Due to No Employment
Decline, Fiscal Year 2006 29
Table 5: Industries with Trade and Unemployment Data Available to Analyze
30
Table 6: Industries That Could Not Be Analyzed Due to Data Limitations 32
Table 7: Estimated Increase in the Number of Eligible Workers in 69
Industries under Various Criteria, 2003 to 2005 37

Figures

Figure 1: Percent of Petitions Processed within Various Time Frames,
Fiscal Years 2004 to 2006 10
Figure 2: Reasons Petitions Filed in Fiscal Year 2006 Were Denied 11
Figure 3: Appeals of Petitions Filed during Fiscal Years 2004 to 2006 12
Figure 4: Estimated Increase in the Number of Eligible Workers in 69
Industries, 2003 to 2005 16

Abbreviations

ATAA Alternative Trade Adjustment Assistance
HCTC Health Coverage Tax Credit
ITC International Trade Commission
MLS Mass Layoff Statistics
TAA Trade Adjustment Assistance
SIC Standard Industrial Classification
UI Unemployment Insurance
WARN Worker Adjustment and Retraining Notification

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United States Government Accountability Office
Washington, DC 20548

June 29, 2007

The Honorable Charles B. Rangel
Chairman
Committee on Ways and Means
House of Representatives 

The Honorable Adam Smith
House of Representatives

Since 2000, more than 3 million jobs have been lost in the manufacturing
sector due to a range of factors, including international trade. While
international trade has affected a broad range of industries both
positively and negatively, certain industries have been particularly hard
hit, such as textiles, paper products, and automotive parts. Since 2000,
more than 3 million jobs have been lost in the manufacturing sector due to
a range of factors, including international trade. While international
trade has affected a broad range of industries both positively and
negatively, certain industries have been particularly hard hit, such as
textiles, paper products, and automotive parts.

A key federal program serving workers in the manufacturing sector who are
adversely affected by trade is the Trade Adjustment Assistance (TAA)
program. TAA, administered by the Department of Labor (Labor), provided
about $966 million in fiscal year 2006 in income support, job training,
and other benefits to assist these workers.^11 In order for workers to
receive TAA benefits and services, Labor must certify that workers in a
particular layoff have been adversely affected by trade. Over the past 3
fiscal years, about 400,000 workers were certified for TAA, with
approximately 123,000 workers certified in the most recent year, 2006. The
certification process begins when a petition is filed with Labor on behalf
of a group of laid-off workers. Labor then has 40 days to review the
petition and determine whether it meets the criteria for certification,
including determining whether the layoff occurred because of an increase
in imports or a shift in production to another country. To make such a
determination, Labor surveys the firm undergoing the layoff and its
customers and also reviews data on the firm's industry. Once a petition is
certified, state and, in some cases, local workforce agencies notify
workers of their eligibility for TAA and help them to enroll in the
program's benefits and services. A key federal program serving workers in
the manufacturing sector who are adversely affected by trade is the Trade
Adjustment Assistance (TAA) program. TAA, administered by the Department
of Labor (Labor), provided about $966 million in fiscal year 2006 in
income support, job training, and other benefits to assist these workers.
In order for workers to receive TAA benefits and services, Labor must
certify that workers in a particular layoff have been adversely affected
by trade. Over the past 3 fiscal years, about 400,000 workers were
certified for TAA, with approximately 123,000 workers certified in the
most recent year, 2006. The certification process begins when a petition
is filed with Labor on behalf of a group of laid-off workers. Labor then
has 40 days to review the petition and determine whether it meets the
criteria for certification, including determining whether the layoff
occurred because of an increase in imports or a shift in production to
another country. To make such a determination, Labor surveys the firm
undergoing the layoff and its customers and also reviews data on the
firm's industry. Once a petition is certified, state and, in some cases,
local workforce agencies notify workers of their eligibility for TAA and
help them to enroll in the program's benefits and services.

^1Other benefits include wage insurance for workers age 50 and older and
job search and relocation allowances. An additional $80 million was
provided for the health coverage tax credit advance payment benefit in
2006.

While current legislation governing TAA gives the President and the U.S.
Trade Representative authority to request an industrywide investigation
and recommend that workers in an industry injured by trade be provided
assistance through TAA, this provision has never been used, according to
Labor officials. Congress is now considering approaches that would
facilitate certifying entire industries for TAA. One approach being
considered would make an industry eligible to be investigated for possible
certification when Labor certifies three petitions from that industry
within 180 days. An investigation would determine whether the entire
industry has been affected by trade and, therefore, whether workers in any
future layoff in that industry should automatically be eligible for TAA.
Another approach would require certification of an industry with a trade
remedy. Trade remedies include, for example, a duty imposed on an imported
product because the Department of Commerce found the product had been
subsidized and the International Trade Commission (ITC) found that a
domestic industry had been injured by the unfair trade practices. To
better understand the potential effects of certifying entire industries
for TAA, you asked us to assess the implications of having industrywide
certification. Specifically, we examined (1) recent trends in Labor's
certification of TAA petitions, (2) the extent to which industry
certification based on three petitions certified within 180 days would
increase the number of workers eligible for TAA and potential challenges
associated with such an approach, and (3) the extent to which
certification of industries subject to trade remedies would increase the
number of eligible workers and potential challenges.

To address these questions, we analyzed Labor's data on TAA petitions, the
Bureau of Labor Statistics' Mass Layoff Statistics data, and the Census
Bureau's data on trade and production, as well as the International Trade
Commission's data on trade remedies. In examining recent trends in Labor's
certification of TAA petitions, we analyzed data from fiscal years 2004 to
2006. However, in estimating the extent to which industry certification
would increase the number of eligible workers, we analyzed data from
calendar years 2003 to 2005 because it was the most recent time period
that trade, production, and Mass Layoffs Statistics data were all
available. Due to data limitations, our analysis of the impact of an
industry certification approach based on three petitions certified in 180
days is limited to a subset of industries for which we were able to obtain
complete information. Because we are unable to conclude whether the
industries we analyzed are representative of industries that might qualify
for an industrywide investigation, our results are not generalizable to
all industries. Furthermore, they are not predictive of future levels of
eligible workers. We also interviewed officials at Labor and the
International Trade Commission. We conducted our work from January to June
2007 in accordance with generally accepted government auditing standards.
See appendix I for a detailed discussion of our scope and methodology.

Results in Brief

During the past 3 fiscal years, Labor certified two-thirds of petitions it
investigated and generally processed petitions in a timely manner. Labor
certified 4,700, or 66 percent, of the 7,100 petitions it investigated
from fiscal years 2004 to 2006. Over the past 3 fiscal years, the number
of petitions certified has declined 17 percent, from nearly 1,700 in
fiscal year 2004 to 1,400 in fiscal year 2006, paralleling a decline in
the number of petitions filed. Labor took on average 32 days to make a
certification decision and processed 77 percent of petitions within the
required 40-day time frame. Labor most often took only an additional day
to process the remaining petitions, and 95 percent were completed within
60 days. According to Labor officials, when they did not meet the 40-day
time frame, it was often because they did not receive necessary
information in a timely manner from company officials. Labor most commonly
denied petitions because workers were not involved in the production of
articles, a basic requirement of the TAA program. Of the 800 petitions
denied in fiscal year 2006, 44 percent were denied for this reason. Of the
approximately 2,600 petitions initially denied from fiscal years 2004 to
2006, 16 percent were appealed, and the decisions were reversed in about
one-third of these cases.

An industry certification approach based on three petitions certified
within any 180-day period would likely increase the number of workers
eligible for TAA but also presents some design and implementation
challenges. Between 2003 and 2005, 222 industries--out of 515 industries
with at least one TAA certification--met the criteria of three petitions
certified in 180 days and would have been considered for industry
certification. These industries included over 70 percent of workers
estimated to be certified for TAA between 2003 to 2005. However, it is
unlikely that Labor would have certified all of the 222 industries because
some may not have shown industrywide evidence of being adversely affected
by trade. The number of industries receiving certification and the number
of additional workers eligible for TAA would depend on the additional
eligibility criteria industries would have to meet. For example, among the
industries for which we could obtain complete data, we found that the
number of workers eligible for TAA could more than double if no additional
criteria were used, but would expand by less than 10 percent if industries
had to meet more restrictive criteria, such as demonstrated increases in
the import share of the domestic market over a 3-year period. This
industry certification approach presents some potential design and
implementation challenges. Using an industrywide approach raises the
possibility that workers will be certified who have not been affected by
trade. For example, workers in a certified industry could be laid off for
reasons other than trade, such as the work being relocated domestically.
In addition, industry certification presents some potential implementation
challenges, including finding ways to notify all potentially eligible
workers in certified industries, verify their eligibility, and initiate
the delivery of services.

Using trade remedies to certify industries could expand eligibility for
workers in some industries, but the extent is uncertain and some
challenges exist with using trade remedies to identify trade-related job
losses. Such an industry certification approach could expand eligibility
for TAA because some trade remedies may cover areas in which there have
been few or no certified TAA petitions. However, some trade remedies are
for products that may already be covered by TAA petitions, so the number
of workers eligible for TAA may not increase substantially in these areas.
For example, more than half of two common types of trade remedies are for
iron and steel products, industries that have hundreds of certified TAA
petitions. Despite this overlap, eligibility could expand to some
unemployed workers whose firm did not submit a petition or did not qualify
under current TAA certification criteria. It is difficult to estimate the
extent of the impact on worker eligibility for TAA through such an
approach because trade remedies are applied to specific products, and data
on unemployment by product do not exist. In addition, this approach
presents some of the same challenges as an industry certification approach
based on three petitions certified in 180 days. For example, workers who
did not lose their jobs due to international trade could be made eligible
for TAA in part because trade remedy investigations are not focused on
employment. In addition, verifying workers' eligibility could be
particularly challenging because of the narrow product classifications of
some trade remedy products. For example, one product subject to a trade
remedy is a particular dye color--carbazole violet pigment 23--and firms
that produce this pigment may also produce other pigments not covered
under trade remedies. In firms that make multiple products, it may be
difficult to identify which specific workers are involved in making the
product subject to trade remedies.

The Department of Labor reviewed our report and did not provide comments.
The International Trade Commission provided us with technical comments,
which we incorporated into the report as appropriate.

Background

The Trade Adjustment Assistance (TAA) program is the federal government's
primary program specifically designed to provide assistance to workers who
lose their jobs as a result of international trade. In addition, to assist
U.S. domestic industries injured by unfair trading practices or increases
in certain fairly traded imports, U.S. law permits the use of trade
remedies, such as duties on imported products.

TAA Certification Process and Eligibility Requirements

Currently, Labor certifies workers for TAA on a layoff-by-layoff basis.
The process for enrolling trade-affected workers in the TAA program begins
when a petition for TAA assistance is filed with Labor on behalf of a
group of workers. Petitions may be filed by the employer experiencing the
layoff, a group of at least three affected workers, a union, or the state
or local workforce agency. Labor investigates whether a petition meets the
requirements for TAA certification and is required to either certify or
deny the petition within 40 days of receiving it.

The TAA statute lays out certain basic requirements for petitions to be
certified, including that a significant proportion of workers employed by
a company be laid off or threatened with layoff and that affected workers
must have been employed by a company that produces articles. In addition
to meeting these basic requirements, a petition must demonstrate that the
layoff is related to international trade in one of several ways:

           o Increased imports--imports of articles that are similar to or
           directly compete with articles produced by the firm have
           increased, the sales or production of the firm has decreased, and
           the increase in imports has contributed importantly to the decline
           in sales or production and the layoff or threatened layoff of
           workers.

           o Shift of production--the firm has shifted production of an
           article to another country, and either:

                        o the country is party to a free trade agreement with
                        the United States; or
                        o the country is a beneficiary under the Andean Trade
                        Preference Act, the African Growth and Opportunity
                        Act, or the Caribbean Basin Economic Recovery Act; or
                        o there has been or is likely to be an increase in
                        imports of articles that are similar to or directly
                        compete with articles produced by the firm.

           o Affected secondarily by trade--workers must meet one of two
           criteria:

                        o Upstream secondary workers--affected firm produces
                        and supplies component parts to another firm that has
                        experienced TAA-certified layoffs; parts supplied to
                        the certified firm constituted at least 20 percent of
                        the affected firm's production, or a loss of business
                        with the certified firm contributed importantly to
                        the layoffs at the affected firm.
                        o Downstream secondary workers--affected firm
                        performs final assembly or finishing work for another
                        firm that has experienced TAA-certified layoffs as a
                        result of an increase in imports from or a shift in
                        production to Canada or Mexico, and a loss of
                        business with the certified firm contributed
                        importantly to the layoffs at the affected firm.

Labor investigates whether each petition meets the requirements for TAA
certification by taking steps such as surveying officials at the
petitioning firm, surveying its customers, and examining aggregate
industry data. In the surveys, Labor obtains information on whether the
firm is now importing products that it had once produced or whether its
customers are now importing products that the firm produced. They also
obtain information on whether the firm has moved or is planning to move
work overseas and, to identify a secondary impact, whether the layoff
occurred due to loss of business with a firm that was certified for TAA.
When Labor has certified a petition, it notifies the relevant state, which
has responsibility for contacting the workers covered by the petition,
informing them of the benefits available to them, and telling them when
and where to apply for benefits.

If Labor denies a petition for TAA assistance, the workers who would have
been certified under the petition have two options for challenging this
denial. They may request an administrative reconsideration of the decision
by Labor. To take this step, workers must provide reasons why the denial
is erroneous based on either a mistake or misinterpretation of the facts
or the law itself and must mail their request to Labor within 30 days of
the announcement of the denial. Workers may also appeal to the U.S. Court
of International Trade for judicial review of Labor's denial. Workers must
appeal a denial to the Court within 60 days of either the initial denial
or a denial following administrative reconsideration by Labor.

Trade Adjustment Assistance Benefits

Under TAA, workers certified as eligible for the program may have access
to a variety of benefits:

           o Training for up to 130 weeks, including 104 weeks of vocational
           training and 26 weeks of remedial training, such as English as a
           second language or adult basic education.
           o Extended income support for up to 104 weeks beyond the 26 weeks
           of unemployment insurance (UI) benefits available in most states.
           o Job search and relocation benefits fund participants' job
           searches in a different geographical area and relocation to a
           different area to take a job.
           o A wage insurance benefit, known as the Alternative Trade
           Adjustment Assistance (ATAA) program, pays older workers who find
           a new job at a lower wage 50 percent of the difference between
           their new and old wages up to a maximum of $10,000 over 2 years.
           o A health coverage benefit, known as the Health Coverage Tax
           Credit (HCTC), helps workers pay for health care insurance through
           a tax credit that covers 65 percent of their health insurance
           premiums.

In addition, case managers provide vocational assessments and counseling
to help workers enroll in the program and decide which services or
benefits are most appropriate. Local case managers also refer workers to
other programs, such as the Workforce Investment Act, for additional
services.

Trade Remedies

The United States and many of its trading partners have used laws known as
"trade remedies" to mitigate the adverse impact of certain trade practices
on domestic industries and workers, notably dumping--when a foreign firm
sells a product in the United States at a price below fair market
value--and foreign government subsidies that lower producers' costs or
increase their revenues. In both situations, U.S. law provides that if
dumped or subsidized imports injure a domestic industry, a duty intended
to counter these advantages be imposed on imports. Such duties are known
as anti-dumping and countervailing duties. In addition, in the event of an
increase in imports of a certain product, safeguards, such as quotas or
tariffs, may be applied to these products to provide an opportunity for
domestic industries to adjust to increasing imports. As of March 30, 2007,
there were 280 antidumping and countervailing duty orders, and according
to officials at the ITC, there were no safeguard measures in place.

The process for imposing a trade remedy begins when a domestic producer
files for relief or when the Department of Commerce (Commerce) initiates
the process, followed by two separate investigations: one by Commerce to
determine if dumping or subsidies are occurring, and the other by the ITC
to determine whether a domestic U.S. industry is materially injured by
such unfairly traded imports or, in the case of safeguards, experiences
serious injury from a rise in imports. As a result of an affirmative
determination by both Commerce and the ITC in an antidumping or
countervailing duty investigation, a duty is imposed on the imported good
that can reflect the difference in the price in the foreign market and the
price in the U.S. market, known as the "dumping margin," or the amount of
the foreign subsidy. In the case of an affirmative determination in a
safeguard investigation, the ITC provides the President with one or more
recommendations for remedying the situation, such as a tariff or quota on
an imported product. The President may implement or modify the
recommendations, or take no action due to U.S. economic or national
security interests.

Labor Certified Two-Thirds of Petitions Investigated and Generally Processed
Petitions in a Timely Manner

Labor certified two-thirds of petitions that it investigated over the past
3 fiscal years, certifying nearly 4,700 petitions, covering an estimated
400,000 workers (see table 1).^2 Over the past 3 fiscal years, the number
of petitions certified has declined 17 percent, from nearly 1,700 in
fiscal year 2004 to 1,400 in fiscal year 2006. This decline parallels a
decline in the number of petitions filed.

^2In fiscal year 2004, approximately 138,000 workers were estimated to be
certified for TAA. In fiscal year 2005, about 122,000 workers were
estimated to be certified, and in fiscal year 2006, about 123,000 workers
were estimated to be certified. The data used to estimate the number of
workers certified as eligible for TAA is based on estimates of the number
of affected workers submitted by companies at the time TAA petitions are
filed with the Department of Labor. At the time petitions are submitted,
companies may not know exactly how many workers will be affected.

Table 1: TAA Petition Filings and Investigation Decisions, Fiscal Years
2004 to 2006

Fiscal    Number of petitions         Number    Number   Number Percentage 
year                    filed investigated^a certified   denied  certified 
2004                    2,992          2,559     1,689      870         66 
2005                    2,638          2,358     1,589      769         67 
2006                    2,456          2,232     1,407      825         63 
Total                   8,086          7,149  4,685 ^b 2,464 ^c         66 

Source: GAO analysis of Department of Labor TAA petitions data.

aAbout 900 petitions were terminated prior to an investigation by the
Department of Labor during fiscal years 2004 to 2006, accounting for 12
percent of petitions filed. Petitions may be terminated for several
reasons, including that a petition was recently denied for the layoff or a
company official was not available to provide necessary information.

bThe numbers on petitions certified include 12 petitions that were
partially certified.

cLabor initially denied 2,599 petitions, but 135 were reversed upon
appeal.

Labor has generally processed petitions in a timely manner over the past 3
fiscal years. Labor's average processing time has remained relatively
steady, taking on average 32 days to conduct an investigation and
determine whether to certify or deny the petition. Labor met the
requirement to process petitions within 40 days for 77 percent of
petitions it investigated during fiscal years 2004 to 2006 (see fig. 1).
Labor most often took only an additional day to process the remaining
petitions, and 95 percent were completed within 60 days. Labor officials
said that they are not always able to meet the 40-day time frame because
they sometimes do not receive necessary information in a timely manner
from company officials.

Figure 1: Percent of Petitions Processed within Various Time Frames,
Fiscal Years 2004 to 2006

In fiscal year 2006, the most common reason petitions were denied was that
workers were not involved in producing an article, a basic requirement of
the TAA program.^3 Of the more than 800 petitions filed in fiscal year
2006 that were denied, 359 (44 percent) were denied for this reason (see
fig. 2). Of those petitions denied because workers did not produce
articles, most came from two industries, business services, such as
computer programming, and airport-related services, such as aircraft
maintenance (see app. II for the complete list of industries that had
petitions denied by reason for the denial).

^3Fiscal year 2006 was the first year that complete data were available on
the reasons petitions were denied.

Figure 2: Reasons Petitions Filed in Fiscal Year 2006 Were Denied

Note: Other reasons that petitions were denied were that the company did
not experience a decline in sales or production, the predominant cause of
the layoff was unrelated to imports or a shift in production abroad, or
there was no secondary impact. The figure does not include two petitions
that were missing information on reasons they were denied.

During the past 3 fiscal years, workers appealed decisions in 16 percent
of the approximately 2,600 petitions that Labor initially denied, with the
vast majority appealed to Labor. Labor's decisions were reversed in
one-third of the appeals (see fig. 3). Labor officials told us that
appeals are often reversed because Labor receives new information from
petitioners or company officials, as part of the appeals process, that
justifies certifying the petition.

Figure 3: Appeals of Petitions Filed during Fiscal Years 2004 to 2006

Note: Some appeals were still being processed at the time this report was
issued.

Although few denied petitions are appealed to the U.S. Court of
International Trade--42 in the last 3 fiscal years--many of the recent
appeals concern the issue of whether workers were involved in the
production of articles. In fiscal years 2005 and 2006, Labor's original
denial was reversed in 13 cases appealed to the Court, and most of these
cases addressed the issue of whether workers produced articles. Some of
these cases concerned workers who produced software, which Labor had
regarded as a service when the software was not contained in a physical
medium, such as a CD-ROM. In 2006, Labor revised its policy, stating that
software could be considered an intangible article because it would have
been considered an article if it had been produced in a form such as a
CD-ROM. Following this decision, a Labor official reported that Labor had
certified 12 of 21 petitions investigated in the software and
computer-related services industries.

Industry Certification Based on Multiple Certifications Would Likely Increase
Eligible Population, but Some Implementation Challenges Exist

An industry certification approach based on three petitions certified
within 180 days would likely increase the number of workers eligible for
TAA, but presents some design and implementation challenges. For example,
among the industries for which we could obtain complete data, we found
that the number of additional workers eligible for TAA in those industries
could more than double if no additional criteria were used or expand by
less than 10 percent with relatively restrictive criteria. However, such
an approach presents some design and implementation challenges. For
example, designing the specific criteria an industry must meet to be
certified could be challenging due to the possibility of making workers
who lose their jobs for reasons other than trade eligible for TAA. In
addition, it may be challenging to ensure that all workers in certified
industries are notified of their potential eligibility for TAA, verify
workers' eligibility, and initiate the delivery of services to workers.

Extent of Increase in Eligible Workers Depends on How Additional Criteria Are
Set

From 2003 to 2005, 222 industries had three petitions certified within 180
days and therefore would have triggered an investigation to determine
whether an entire industry should be certified, if such an approach had
been in place at that time.^4 These industries represented over 40 percent
of the 515 industries with at least one TAA certification in those 3 years
and included 71 percent of the workers estimated to be certified for TAA
from 2003 to 2005.^5 The 222 are a diverse set of industries, including
textiles, apparel, wooden household furniture, motor vehicle parts and
accessories, certain plastic products, and printed circuit boards (see
app. III for a list of the 222 industries).^6

The proposals for this approach include a requirement that an
investigation be initiated after an industry meets the three
certifications in 180 days criterion. This investigation would use some
additional criteria to determine whether these certifications represent a
broad industrywide phenomenon or just a collection of firms experiencing
similar pressures from foreign trade. As a result, not all 222 industries
would likely be certified industrywide. The additional criteria that an
industry would have to meet to be certified have not yet been specified,
but they could include factors such as the extent to which an industry has
been impacted by imports, changes in production levels in the industry, or
changes in employment levels.^7

^4When companies lay off workers at multiple divisions or locations, they
may file separate petitions for each division or location. In these
situations, we counted the separate petitions as one so that an industry
did not become eligible to be considered for certification when the three
petitions were from the same company.

^5These industries are based on 4-digit Standard Industrial Classification
(SIC) System codes.

^6Increasing the number of certified petitions required in a 180-day
period from 3 to 5 would cut in half--from 222 to 111--the number of
industries that would have met this criterion during 2003 to 2005.

The number of workers that would become eligible for TAA through an
industry certification approach depends on what additional criteria are
established. For example, we analyzed 69 industries in the manufacturing
sector for which we had comprehensive data on petitions, unemployment,
trade and production.^8 These industries represent about one-third of the
222 industries that would have been eligible for industrywide
certification (13 percent of industries with petitions certified). If
there were no additional criteria beyond the 3 petitions criteria and all
of the 69 industries had been certified, the number of workers eligible
for TAA in these industries would have more than doubled over the number
that were actually certified under the current layoff-by-layoff process.
However, if certification were limited to those industries that also had a
10 percent increase in the import share of the domestic market over a
1-year period, we estimated that the increase in eligible workers in these
industries would have been more modest, at roughly 70 percent. Under a
slightly more restrictive criterion--a 15 percent increase in the import
share of the domestic market--the increase in the number of eligible
workers would be less, an estimated 39 percent in those 69 industries (see
fig. 4).^9 If we were able to analyze the program as a whole the magnitude
of the increases would likely be different.^10 This would occur, in part,
because the number of workers would increase only in those industries that
met the three petition criterion and would not increase in those that did
not meet the criterion. Thus the multiplier we developed for the 69
industries could not be applied broadly to all 515 industries with
certified petitions.^11

^7Under the proposal, if Labor determines that an industry should not be
certified, workers who are laid off in that industry could still be
certified for TAA by filing a petition through the layoff-by-layoff
certification process.

^8Of the 222 industries, we analyzed 69 for which we had complete data.
The data available used different classification systems that we matched
to each other, but we only included data for which we had complete and
well-defined matches. In addition, our production data was limited to
manufacturing industries only. Since the 69 industries were not drawn from
a random sample, the results of this analysis are not necessarily
representative of the entire 222 industries, nor are they predictive of
future levels of eligible workers. See appendix I for more information on
our methodology.

^9While we chose these criteria to illustrate the impact that more or less
restrictive thresholds could have on the number of industries and
additional workers that would become eligible for TAA, an investigation
would likely examine a variety of measures, not a single one as we have
shown here.

^10Our analysis applied the same threshold to all industries. In practice,
the criteria could vary by industry in order to take into account
industry-specific patterns in trade and other economic criteria. For
example, it may be difficult for industries with historically large
volumes of imports to meet the criteria of a 10 or 15 percent increase in
import share of the domestic market. These industries could experience
significant increases in the absolute volume of imports, but because the
baseline is large, the increase may not account for a 10 or 15 percent
change.

^11We used the information from the 69 industries we could analyze to
estimate the potential increases in eligible workers programwide. These
estimates are subject to the limitation that the 69 industries may not be
representative of all 222 industries that had 3 petitions certified in 180
days. For example, if there were no additional criteria beyond 3 petitions
certified in 180 days, the overall number of workers eligible for TAA
might have nearly doubled, from 118,000 to 233,000 in 2005. If the trade
threshold were set at a 10 percent increase in the import share, the
number of eligible workers might have increased by approximately 49
percent, from 118,000 to 175,000. If certification were limited to
industries with a 15 percent increase in any 1 year, the number of workers
eligible for TAA might have increased by approximately 27 percent, from
118,000 to 150,000. If the criteria were a 20 percent increase in the
import share in any 1 year, the number of workers eligible for TAA might
have increased by about 22 percent, from 118,000 to 144,000. To obtain
these programwide estimates, we assumed that all 222 industries would have
similar increases in the number of eligible workers as the 69 industries
we analyzed. We then added the number of workers who would have been
eligible for TAA in the 222 industries, where eligibility would expand, to
the actual number of workers certified in the 293 industries that did not
meet the 3 petitions certified criteria. We then compared this to the
original number of workers actually certified for TAA in all 515
industries with at least one TAA certification. This enabled us to
estimate program wide percentage increases in the number of eligible
workers. However, as we noted above, the results of our analysis of the 69
industries are not necessarily representative of the entire 222 industries
because the 69 industries were not drawn from a random sample.

Figure 4: Estimated Increase in the Number of Eligible Workers in 69
Industries, 2003 to 2005

More stringent criteria would result in a smaller increase in the number
of workers eligible for TAA. For example, if over a 3-year period, an
industry were required to have a 15 percent increase in the import share
of the domestic market in 1 year, as well as increases in the import share
during the 2 other years, we estimated that there would have been a 9
percent increase in the number of workers eligible for TAA in the 69
industries we analyzed.^12 (For further analysis of the 69 industries, see
app. IV.)

Potential Design and Implementation Challenges Exist

Although industry certification based on three petitions certified in 180
days is likely to increase the number of workers eligible for TAA, it also
presents several potential design and implementation challenges.

^12Our analysis looked specifically at the time period between 2003 and
2005. We examined whether an industry had a 15 percent increase in the
import share of the domestic market in 1 year and increases in the import
share in 2 other years between 2003 and 2005.

Potential Design Challenges:

           o Designing additional criteria for certification. Any
           industrywide approach raises the possibility of certifying workers
           who were not adversely affected by trade. Even in industries that
           are heavily impacted by trade, workers could lose their jobs for
           other reasons, such as the work being relocated domestically. For
           example, Labor officials told us that they have denied petitions
           in the apparel industry, which has been heavily impacted by trade,
           because the layoff was not related to trade but occurred as a
           result of work being moved to another domestic location. The risk
           of certifying non-trade affected workers increases with more
           lenient criteria for industrywide certification. On the other
           hand, narrow criteria may limit the potential benefits of industry
           certification because few industries would be certified.
           Furthermore, using the same thresholds for all industries would
           not take into account industry-specific patterns in trade and
           other economic factors. For example, the import share of the
           domestic market may be volatile and change significantly from year
           to year in some industries, while other industries may experience
           smaller year-to-year growth in imports that could represent a
           significant impact over time.

           o Determining appropriate duration of certification. Determining
           the length of time that an industry would be certified may also
           present challenges. If the length of time is too short, Labor may
           bear the administrative burden of frequently re-investigating
           industries that continue to experience trade-related layoffs after
           the initial certification expires. In addition, a shorter duration
           may make it difficult for workers to know whether their industry
           is certified at the particular time that they are laid off. As a
           result, workers may not know whether they need to file a regular
           TAA petition to become certified. However, if the time period is
           too long, workers may continue to be eligible for TAA even if
           conditions change and an industry is no longer adversely affected
           by trade.

Potential Implementation Challenges:

           o Defining the industries. How the industries are defined would
           significantly affect the number of workers who would become
           eligible for TAA through an industry certification approach. Our
           analysis defined industries according to industry classification
           systems used by government statistical agencies. However, some of
           these industry categories are broad and may encompass products
           that are not adversely affected by trade. On the other hand,
           certain products within an industry that, as a whole, does not
           show evidence of a trade impact may have been adversely affected
           by trade. For example, the men's footwear industry might not be
           classified as adversely trade-impacted because it did not have a
           15 percent increase in the import share of the domestic market
           over a 1-year period, but it is possible that certain types of
           men's footwear, such as casual shoes or boots, could be adversely
           impacted by trade. More narrow definitions would reduce the
           possibility of certifying workers who are not adversely affected
           by trade, but doing so would cover fewer workers and could
           increase the administrative burden for Labor because it might have
           to investigate more industries.

           o Notifying workers and initiating the delivery of services.
           Notifying workers of their eligibility for TAA has been a
           challenge and would continue to be under industry certification.
           Under the current certification process, workers are linked to
           services through the petition process. The specific firm is
           identified on the petition application, and state and local
           workforce agencies work through the firm to reach workers in
           layoffs of all sizes. However, getting lists of employees affected
           by layoffs and contacting them is sometimes a challenge for states
           and would remain so under industry certification.^13 For industry
           certification, however, there are no such procedures in place to
           notify all potentially eligible workers in certified industries.
           For large layoffs in a certified industry, state and local
           workforce agencies could potentially use some of the processes
           they currently have in place to connect with workers, but it is
           not apparent that there would be a built-in link to workers in
           small layoffs. In large layoffs, firms with 100 or more employees
           are generally required to provide 60-days advance notice to state
           and local workforce agencies, who then work with the firm to
           provide rapid response services and inform workers about the
           various services and benefits available, including TAA.^14
           However, in smaller layoffs in certified industries, or when firms
           do not provide advance notice, workforce agencies would not know
           that the layoff has occurred and therefore would not be able to
           notify the workers of their eligibility for TAA.^15

           o Verifying worker eligibility. Verifying that a worker was laid
           off from a job in a certified industry to ensure that only workers
           eligible for TAA receive TAA benefits may be more of a challenge
           under industry certification than under the current system. For
           example, it may be difficult to identify the specific workers who
           made a product in the certified industry if their employer also
           makes products that are not covered under industry-wide
           certification. In order to realize one of the potential benefits
           of industry certification--reduced processing time--this
           verification process would need to take less time than it takes
           workers to become certified through the layoff-by-layoff
           certification process. As we noted, Labor takes on average 32 days
           to complete its investigation of a petition, but it generally
           takes additional time for individuals to be notified of their
           eligibility. In addition, determining which entity would conduct
           this verification may also present challenges. A centralized
           process conducted by Labor would likely be unwieldy, while
           verification by state or local workforce agencies could take less
           time but ensuring consistency across the nation might prove
           challenging.

^13After a state receives notification from Labor that a TAA petition has
been certified, it obtains from the company a list of the workers affected
by the certified layoff and sends a letter to these workers informing them
of their potential eligibility for TAA. Sometimes companies are unable or
unwilling to provide these lists in a timely manner.

^14The Worker Adjustment and Retraining Notification (WARN) Act requires
employers to give their employees or their representatives, the state's
dislocated worker unit, and local government officials 60 days advance
notice of a mass layoff or plant closure. Generally speaking, the WARN Act
applies to employers with 100 or more full-time workers involved in
layoffs or plant closures that affect 50 or more workers.

Certifying Industries Subject to Trade Remedies Could Increase Eligible
Population, but Extent Is Uncertain and Potential Challenges Exist

Using trade remedies to certify industries for TAA could expand
eligibility for workers in some industries, but the extent is uncertain
and there are challenges associated with using trade remedies to identify
trade-related job losses. Such an approach could expand eligibility
because some trade remedies may cover areas in which there have been few
or no certified TAA petitions. However, some trade remedies are for
products that may already be covered by TAA petitions, so the number of
workers eligible for TAA may not increase substantially in these areas. It
is difficult to estimate the impact of this approach on eligibility
because trade remedies are applied to specific products, and data on
unemployment by product do not exist. In addition, this approach presents
some of the same challenges as with an industry certification approach
based on three petitions certified in 180 days. For example, workers who
did not lose their jobs due to international trade could be made eligible
for TAA in part because trade remedy investigations are focused on injury
to an industry as a whole and not principally on employment impacts.

^15In a 2003 report on the WARN Act, GAO found that employers provided
notice for an estimated 36 percent of mass layoffs or plant closures that
appeared subject to WARN's advance notice requirements. GAO, The Worker
Adjustment and Retraining Notification Act: Revising the Act and
Educational Materials Could Clarify Employer Responsibilities and Employee
Rights, [26]GAO-03-1003 (Washington, D.C.: Sept. 19, 2003).

Extent of Increase in Worker Eligibility Difficult to Estimate Due to Overlap
with TAA Petitions and Lack of Data

Using trade remedies for industrywide certification could result in
expanded worker eligibility for TAA in a number of industries. For
example, 280 antidumping and countervailing duty orders covering over 100
products were in place, as of March 30, 2007.^16 The number of workers
eligible for TAA would increase under this approach in areas in which
there have been few or no TAA petitions. For example, even though the ITC
found that the domestic industry producing certain kinds of orange juice
had been materially injured by imports, there do not appear to have been
any certified TAA petitions for workers producing orange juice.

However, the number of workers eligible for TAA may not increase
substantially in certain areas in part because of overlap between trade
remedies and TAA petitions. For example, over half of outstanding
antidumping and countervailing duty orders are for iron and steel
products, which have also received hundreds of petitions under TAA.
However, even where the products covered by trade remedies and TAA
overlap, eligibility could expand to some unemployed workers whose firms
did not submit a petition or did not qualify under current TAA
certification criteria. In addition, industries with trade remedies may
not necessarily have experienced many trade-related job losses because the
ITC investigates whether an industry as a whole has been injured and does
not specifically focus on employment, according to an ITC official.
Whereas Labor investigates whether increased imports contributed
importantly to a layoff or threat of layoff, the ITC looks at a wide range
of economic factors including but not limited to employment, such as
sales, market share, productivity, and profitability.

It is difficult to estimate the extent that industry certification based
on trade remedies would increase the number of workers eligible for TAA
because trade remedies are imposed on specific products coming from
specific U.S. trade partners, and data are not available on job losses at
such a detailed level. The product classifications for a given trade
remedy can be very narrow, such as "carbazole violet pigment 23" or
"welded ASTM A-312 stainless steel pipe." Estimating the increase in the
number of eligible workers would require unemployment information
categorized by individual product, and these data do not exist.

^16Some products are covered by multiple duty orders. According to ITC
officials, there are currently no safeguard measures in place.

Potential Challenges Exist with Using Trade Remedies to Identify Trade-Related
Job Losses

An approach using trade remedies presents some of the same challenges as
an industry certification approach based on three petitions certified in
180 days. Workers who did not lose their jobs due to trade could possibly
be made eligible for TAA under a trade remedy approach for several
reasons. First, trade remedies are not necessarily an indicator of recent
trade-related job losses, in part because the ITC's process is not
employment-focused and even recent injury determinations can be based on
several prior years of data. For example, officials at Labor told us that
trade remedies have not been useful in their investigations of TAA
petitions because they are based on several years' worth of information
and can be unrelated to current industry and employment conditions.
Furthermore, trade remedies are intended to mitigate the trade-related
factors that caused the injury to the industry, so employment conditions
in an industry could improve after the trade remedy is in place. In
addition, as with the other industrywide approach, notifying workers in
industries with trade remedies and connecting them with services would
also be a challenge, as well as verifying that they were laid off from a
certified industry. The verification process could be particularly
challenging with an approach based on trade remedies because of the narrow
product classifications of some trade remedy products. In firms that make
multiple products, for example, more than one type of stainless steel
pipe, it may be difficult to identify which specific workers worked on the
products subject to trade remedies.

An ITC official also expressed concern that seeking a waiver to share
information collected during injury investigations with Labor could hamper
ITC's ability to collect confidential business information from firms. By
statute, the ITC cannot share with other government agencies business
proprietary information submitted to it in a trade remedies investigation
without a waiver from the submitter.

Agency Comments

We provided a draft of this report to the Department of Labor and the
International Trade Commission. The Department of Labor did not comment.
The International Trade Commission provided technical comments, which we
incorporated into the report as appropriate.

As arranged with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of the report
until 30 days from its issue date. At that time, we will send copies of
this report to the Secretary of Labor, the Chairman of the International
Trade Commission, relevant congressional committees, and other interested
parties. Copies will also be made available to others upon request. The
report will also be available at no charge on GAO's Web site at
[27]http://www.gao.gov .

Please contact me on (202) 512-7215 if you or your staff have any
questions about this report. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of the report. Key contributors to this report are listed in appendix V.

Sigurd R. Nilsen
Director, Education, Workforce, and Income Security Issues

Appendix I: Objectives, Scope, & Methodology

Our objectives were to determine: (1) trends in Labor's certification of
Trade Adjustment Assistance (TAA) petitions, (2) the extent to which
industry certification based on three petitions certified within 180 days
would increase the number of workers eligible for TAA, and (3) the extent
to which certification of industries subject to trade remedies would
increase the number of eligible workers. We also identified potential
challenges with an industry certification approach. To address these
questions, we analyzed Labor's data on TAA petitions, the Bureau of Labor
Statistics' Mass Layoff Statistics data, the Census Bureau's data on trade
and production, and the International Trade Commission's data on trade
remedies. In examining recent trends in Labor's certification of TAA
petitions, we analyzed Labor's petitions data from fiscal years 2004 to
2006. However, in estimating the extent to which industry certification
would increase the number of eligible workers, we analyzed data from
calendar years 2003 to 2005 because that was the most recent time period
that trade, production, and Mass Layoffs Statistics data were all
available. In addition, we interviewed officials at Labor and the
International Trade Commission. We conducted our work from January to June
2007 in accordance with generally accepted government auditing standards.

Analysis of Labor's Petitions Data to Determine Certification Trends

To determine trends in Labor's certification of TAA petitions, we analyzed
Labor's data for petitions filed from fiscal years 2004 to 2006. We
assessed the reliability of key data by interviewing Labor officials
knowledgeable about the data, observing a demonstration of the database,
reviewing our prior assessments of the data, and conducting edit checks.
For a small number of petitions, we identified logical inconsistencies or
missing values in the data. We brought these issues to the attention of
Labor officials and worked with them to correct the issues before
conducting our analysis. Complete data on reasons petitions were denied
were only available for fiscal year 2006 because Labor only began to
collect the data in 2005. As a result, we reported information on reasons
petitions were denied for only fiscal year 2006.

In analyzing the number of petitions denied for TAA that were appealed to
Labor, we did not include in our analysis petitions that were appealed
only for a denial of Alternative Trade Adjustment Assistance (ATAA) wage
insurance benefits. These petitions had been certified for TAA after
Labor's initial investigation but denied for wage insurance benefits. In
analyzing data on petitions that were appealed to the U.S. Court of
International Trade, we compared Labor's data to Court documents. We
determined that Labor's data on appeals to the Court were not complete. As
a result, we supplemented Labor's data with a review of Court documents.
At the time of our review, some petitions filed during fiscal years 2004
to 2006 may still have been undergoing an appeals process. Our analysis of
petition decisions and appeals reflect the outcomes of petitions at the
time of our review.

Despite these limitations, we determined that Labor's petitions data were
sufficiently reliable for the purposes of this report, which was to
provide information on trends in Labor's certification of petitions.

Estimate of Extent to Which Industry Certification Based on Three Petitions
Certified in 180 Days Would Increase Worker Eligibility

To estimate the extent to which industry certification based on three
petitions certified in 180 days would increase the number of workers
eligible for TAA, we first analyzed Labor's data on petitions certified
from calendar years 2003 to 2005 to identify which industries would have
had three petitions certified in 180 days in that time frame. We then
analyzed the Bureau of Labor Statistics' Extended Mass Layoff Statistics
survey to determine the number of workers who had been laid off in those
industries. We used this data as a proxy for the full number of workers
that would have been eligible for TAA had an industrywide certification
process been in place at the time. We also collected Census trade data
(imports and exports) by industry and Census production data.

Of the 222 industries that had three petitions certified in 180 days from
2003 to 2005, we were able to analyze 69 industries for which we had
comprehensive data. The available data sources used different industry
classification systems which we matched to each other. Labor's petitions
data classified industries according to the Standard Industrial
Classification System (SIC), while the Mass Layoff Statistics and Census'
trade and production data classified industries based on variations of the
North American Industry Classification System (NAICS). In addition, our
production data, from Census' Annual Survey of Manufacturers, was limited
to manufacturing industries. We were able to find complete and
well-defined matches (one-to-one NAICS to SIC, or many-to-one NAICS to
SIC) between the SIC- and NAICS-defined industries for 69 of the 222
industries. We could not use data on industries where a NAICS code
corresponded to multiple SIC codes. Because the 69 industries were not
drawn from a random sample, the results of our analysis are not
necessarily representative of the entire 222 industries.

In analyzing Labor's petitions data to identify the industries that would
have met the three petitions certified in 180 days criteria during 2003 to
2005, we added an additional criterion to our analysis, that the three
petitions had to be from three different companies. When companies lay off
workers at multiple divisions or locations, they may file separate
petitions for each division or location. We added the criterion to prevent
an industry from becoming eligible to be considered for certification when
the three petitions were from the same company.

In estimating the number of workers certified for TAA under the current
program, we used estimates from Labor's petitions data on the number of
workers affected by a layoff at the time that TAA petitions are filed with
the Department of Labor. At the time petitions are submitted, companies
may not know exactly how many workers will be affected. The Department of
Labor does not collect information on the number of workers ultimately
certified. We used these data to estimate the increases in the number of
workers who might be eligible for TAA with the addition of an industry
certification approach. They should not be relied upon to support precise
numbers on workers certified for TAA.

In estimating the increase in worker eligibility, we used data from the
Bureau of Labor Statistics' Mass Layoff Statistics program to estimate the
number of unemployed workers in industries that could have been eligible
for industrywide certification. The Mass Layoff Statistics program
collects reports on mass layoff actions that result in workers being
separated from their jobs. Monthly mass layoff numbers are from
establishments which have at least 50 initial claims for unemployment
insurance (UI) filed against them during a 5-week period. Extended mass
layoff numbers (issued quarterly) are from a subset of such
establishments--private-sector nonfarm employers who indicate that 50 or
more workers were separated from their jobs for at least 31 days. We used
Extended Mass Layoffs to reduce the possibility of including workers who
were on temporary layoff and subject to recall.

Several limitations of the Mass Layoff Statistics data are relevant to
this analysis. First, Mass Layoff Statistics only include workers from
larger firms (workers with at least 50 employees). It also only includes
workers laid off through larger layoffs (layoffs of at least 50
employees). In 2003, there were 1,404,331 initial claims in the Extended
Mass Layoffs. In contrast, estimated unemployment due to permanent layoffs
in 2003 was 2,846,000, and total unemployment in 2003 was 8,774,000. Thus,
workers involved in extended mass layoffs represented 49 percent of
permanent layoffs and 16 percent of total unemployment in 2003.

Second, the Bureau of Labor Statistics suppressed MLS data on the number
of layoffs and the number of workers in the data they provided to us, when
the number of layoffs in an industry was less than three. Approximately 40
percent of the data were suppressed. The results reported here reflect the
following imputation criterion. Suppressed values were imputed with the
mean number of laid-off workers per layoff event within the broad industry
group (by year), multiplied by 1.5. We also conducted sensitivity analysis
where we used more conservative imputation criteria; results were not
highly sensitive to the criterion we selected.

In order to identify changes in trade related to individual industries, we
calculated the share of imports in the domestic market for each year
between 2002 and 2005. We defined the domestic market as U.S. domestic
production (measured by shipments) minus exports plus imports. We then
calculated the change in the import share of the domestic market from 2002
to 2003, 2003 to 2004, and 2004 to 2005. We examined the distribution of
these changes annually across industries and calculated sample statistics.
The mean change for the 69 industries was 6.1 percent in 2003, 13.01
percent in 2004, and 3.5 percent in 2005. The standard deviation for these
industries was 11.0 percent in 2003, 30.25 percent in 2004, and 13.74
percent in 2005. We also compared these statistics to those of the entire
population of 222 industries and found that they were similar. Based on
this analysis, we determined that using criteria of annual changes of 10,
15, and 20 percent for the share of imports in the domestic market was
reasonable to illustrate the impact of changing criteria on the number of
potential workers eligible for TAA. We also examined compound annual
changes across all 4 years and found similar results.

Analysis of Trade Remedies

To determine the extent to which eligibility for TAA would expand if trade
remedies were used to certify industries for TAA, we reviewed the
industries and products covered by antidumping and countervailing duties.
To the extent possible, we assessed areas of overlap between TAA petitions
and trade remedies. We also compared the eligibility criteria for TAA with
ITC's process for determining if an industry has been injured.

Interviews with Labor and International Trade Commission

To identify potential challenges with industry certification, we
interviewed officials at the Department of Labor and International Trade
Commission.

Appendix II: Industries in Which Petitions Were Denied, Fiscal Year 2006

Table 2: Industries in Which Petitions Were Denied Because Workers Did Not
Produce an Article, Fiscal Year 2006

                                                          Number of petitions 
SIC Code (2-digit) Industry                                         denied 
73                 Business services                                   119 
45                 Transportation by air                               108 
87                 Engineering, accounting, research,                   27 
                      management, and related services                        
47                 Transportation services                              16 
42                 Motor freight transportation and                     13 
                      warehousing                                             
89                 Miscellaneous services                               12 
76                 Miscellaneous repair services                         6 
36                 Electronic and other electrical                       5 
                      equipment and components, except                        
                      computer                                                
50                 Wholesale trade durable goods                         4 
60                 Depository institutions                               4 
62                 Security and commodity brokers,                       4 
                      dealers, exchanges, and services                        
64                 Insurance agents, brokers, and                        4 
                      service                                                 
35                 Industrial and commercial machinery                   3 
                      and computer equipment                                  
37                 Transportation equipment                              3 
61                 Non-depository credit institutions                    3 
63                 Insurance carriers                                    3 
22                 Textile mill products                                 2 
23                 Apparel and other finished products                   2 
                      made from fabrics and similar                           
                      materials                                               
49                 Electric, gas, and sanitary                           2 
                      services                                                
58                 Eating and drinking places                            2 
72                 Personal services                                     2 
8                  Forestry                                              1 
15                 Building construction general                         1 
                      contractors and operative builders                      
24                 Lumber and wood products, except                      1 
                      furniture                                               
26                 Paper and allied products                             1 
27                 Printing, publishing, and allied                      1 
                      industries                                              
28                 Chemicals and allied products                         1 
30                 Rubber and miscellaneous plastics                     1 
                      products                                                
39                 Miscellaneous manufacturing                           1 
                      industries                                              
48                 Communications                                        1 
51                 Whole trade non-durable goods                         1 
65                 Real estate                                           1 
80                 Health services                                       1 
82                 Educational services                                  1 
                      Total                                               357 

Source: Department of Labor petitions data.

Note: Excludes two petitions missing data on the SIC codes.

Table 3: Industries in Which Petitions Were Denied Due to No Increase in
Imports or Production Shift Abroad, Fiscal Year 2006

                                                          Number of petitions 
SIC Code(2-digit) Industry                                          denied 
35                Industrial and commercial machinery                      
                     and computer equipment                                27 
37                Transportation equipment                              22 
24                Lumber and wood products, except                         
                     furniture                                             21 
30                Rubber and miscellaneous plastics                        
                     products                                              21 
34                Fabricated metal parts, except                           
                     machinery and transportation                             
                     equipment                                             20 
22                Textile mill products                                 16 
36                Electronic and other electrical                          
                     equipment and components, except                         
                     computer equipment                                    16 
26                Paper and allied products                             12 
27                Printing, publishing, and allied                         
                     industries                                             9 
28                Chemicals and allied products                          9 
23                Apparel and other finished products                      
                     made from fabrics and similar                            
                     materials                                              8 
39                Miscellaneous manufacturing                              
                     industries                                             8 
20                Food and kindred products                              5 
25                Furniture and fixtures                                 5 
38                Measuring, analyzing, and                                
                     controlling instruments;                                 
                     photographic, medical, and optical                       
                     goods; watches and clocks                              5 
32                Stone, clay, glass, and concrete                         
                     products                                               4 
33                Primary metal industries                               4 
1                 Agricultural production crops                          3 
73                Business services                                      3 
42                Motor freight transportation and                         
                     warehousing                                            2 
14                Mining and quarrying of nonmetallic                      
                     minerals, except fuels                                 1 
50                Wholesale trade durable goods                          1 
87                Engineering, accounting, research,                       
                     management, and related services                       1 
                     Total                                                223 

Source: Department of Labor petitions data.

Table 4: Industries in Which Petitions Were Denied Due to No Employment
Decline, Fiscal Year 2006

                                                          Number of petitions 
SIC Code (2-digit) Industry                                         denied 
22                 Textile mill products                                17 
23                 Apparel and other finished products                  12 
                      made from fabrics and similar                           
                      materials                                               
73                 Business services                                     9 
35                 Industrial and commercial machinery                   8 
                      and computer equipment                                  
36                 Electronic and other electrical                       8 
                      equipment and components, except                        
                      computer equipment                                      
25                 Furniture and fixtures                                7 
30                 Rubber and miscellaneous plastics                     6 
                      products                                                
37                 Transportation equipment                              6 
34                 Fabricated metal parts, except                        5 
                      machinery and transportation                            
                      equipment                                               
28                 Chemicals and allied products                         4 
32                 Stone, clay, glass, and concrete                      4 
                      products                                                
24                 Lumber and wood products, except                      3 
                      furniture                                               
38                 Measuring, analyzing, and                             3 
                      controlling instruments;                                
                      photographic, medical, and optical                      
                      goods; watches and clocks                               
26                 Paper and allied products                             2 
39                 Miscellaneous manufacturing                           2 
                      industries                                              
87                 Engineering, accounting, research,                    2 
                      management, and related services                        
7                  Agricultural services                                 1 
33                 Primary metal industries                              1 
42                 Motor freight transportation and                      1 
                      warehousing                                             
                      Total                                               101 

Source: Department of Labor petitions data.

Note: Excludes one petition missing data on the SIC code.

Appendix III: Industries with Three Petitions Certified in 180 Days, 2003
to 2005

Tables 5 and 6 list the 222 industries that had three petitions certified
in 180 days from 2003 to 2005. Table 5 lists the 69 industries we were
able to analyze with trade and unemployment data, and table 6 lists the
industries we were not able to analyze due to data limitations.

Table 5: Industries with Trade and Unemployment Data Available to Analyze

                                                  Met 15% increase            
                                                  in import share   Number of 
                                                  of domestic       petitions 
                                                  market threshold certified, 
#  SIC code Industry                           in 1 year         2003-2005 
1  2273     Carpets and rugs                                            12 
2  2435     Hardwood veneer and plywood               X                 16 
3  2493     Reconstituted wood products               X                 15 
4  2521     Wood office furniture                                       13 
5  2522     Office furniture, except wood                                9 
6  2591     Drapery hardware and window blinds        X                  8 
               and shades                                                     
7  2655     Fiber cans, tubes, drums, and                                6 
               similar products                                               
8  2673     Plastics, foil, and coated paper                             5 
               bags                                                           
9  2678     Stationery, tablets, and related          X                 11 
               products                                                       
10 2732     Book printing                                                8 
11 2821     Plastics materials, synthetic and                           33 
               resins, and nonvulcanizable                                    
               elastomers                                                     
12 2822     Synthetic rubber                          X                  9 
13 2824     Manmade organic fibers, except                               7 
               cellulosic                                                     
14 2842     Specialty cleaning, polishing, and                           3 
               sanitation preparations                                        
15 2874     Phosphatic fertilizers                    X                  3 
16 2879     Pesticides and agricultural                                  4 
               chemicals, not elsewhere                                       
               classified                                                     
17 2891     Adhesives and sealants                                       9 
18 3011     Tires and inner tubes                                       12 
19 3052     Rubber and plastics hose and                                11 
               belting                                                        
20 3053     Gaskets, packing, and sealing                               19 
               devices                                                        
21 3081     Unsupported plastics film and             X                 10 
               sheet                                                          
22 3085     Plastics bottles                                             4 
23 3143     Men's footwear, except athletic                             10 
24 3149     Footwear, except rubber, not                                 4 
               elsewhere classified                                           
25 3161     Luggage                                                      7 
26 3229     Pressed and blown glass and                                 13 
               glassware, not elsewhere                                       
               classified                                                     
27 3231     Glass products made of purchased                             9 
               glass                                                          
28 3253     Ceramic wall and floor tile                                  7 
29 3261     Vitreous china plumbing fixtures          X                  8 
               and china and earthenware fittings                             
               and bathroom accessories                                       
30 3264     Porcelain electrical supplies                               14 
31 3334     Primary production of aluminum                               6 
32 3339     Primary smelting and refining of          X                  8 
               nonferrous metals, except copper                               
               and aluminum                                                   
33 3425     Saw blades and handsaws                                      9 
34 3431     Enameled iron and metal sanitary                            11 
               ware                                                           
35 3465     Automotive stampings                                        19 
36 3491     Industrial valves                         X                 12 
37 3511     Steam, gas, and hydraulic                 X                  5 
               turbines, and turbine generator                                
               set units                                                      
38 3532     Mining machinery and equipment,                              5 
               except oil and gas field machinery                             
               and equipment                                                  
39 3541     Machine tools, metal cutting types                          10 
40 3542     Machine tools, metal forming type                           13 
41 3543     Industrial patterns                                          3 
42 3544     Special dies and tools, die sets,         X                 56 
               jigs and fixtures, and industrial                              
               molds                                                          
43 3546     Power-driven handtools                    X                 16 
44 3552     Textile machinery                                            9 
45 3554     Paper industries machinery                                   9 
46 3555     Printing trades machinery and                                6 
               equipment                                                      
47 3562     Ball and roller bearings                                    11 
48 3563     Air and gas compressors                                     10 
49 3564     Industrial and commercial fans and        X                 10 
               blowers and air purification                                   
               equipment                                                      
50 3566     Speed changers, industrial                                   5 
               high-speed drives, and gears                                   
51 3571     Electronic computers                      X                 17 
52 3613     Switchgear and switchboard                X                 15 
               apparatus                                                      
53 3625     Relays and industrial controls            X                 20 
54 3632     Household refrigerators and home          X                  9 
               and farm freezers                                              
55 3641     Electric lamp bulbs and tubes                                8 
56 3643     Current-carrying wiring devices                             28 
57 3669     Communications equipment, not             X                 14 
               elsewhere classified                                           
58 3671     Electron tubes                            X                 17 
59 3672     Printed circuit boards                                      81 
60 3674     Semiconductors and related devices                          78 
61 3675     Electronic capacitors                     X                 16 
62 3676     Electronic resistors                                         7 
63 3677     Electronic coils, transformers,                              7 
               and other inductors                                            
64 3691     Storage batteries                         X                 10 
65 3822     Automatic controls for regulating         X                 10 
               residential and commercial                                     
               environments and appliances                                    
66 3823     Industrial instruments for                                  28 
               measurement, display, and control                              
               of process variables; and related                              
               products                                                       
67 3826     Laboratory analytical instruments         X                  6 
68 3861     Photographic equipment and                X                 22 
               supplies                                                       
69 3931     Musical instruments                                         10 

Source: GAO analysis of Department of Labor petitions data, Mass Layoff
Statistics data, and Census' trade and production data.

Table 6: Industries That Could Not Be Analyzed Due to Data Limitations

                                                          Number of petitions 
#   SIC code Industry                                 certified, 2003-2005 
70  182      Food crops grown under cover                                5 
71  912      Finfish                                                    67 
72  2064     Candy and other confectionery products                     11 
73  2092     Prepared fresh or frozen fish and                             
                seafoods                                                   17 
74  2099     Food preparations, not elsewhere                              
                classified                                                  6 
75  2211     Broadwoven fabric mills, cotton                           100 
76  2221     Broadwoven fabric mills, manmade fiber                        
                and silk                                                   50 
77  2231     Broadwoven fabric mills, wool                              34 
78  2241     Narrow fabric and other smallware mills:                      
                cotton, wool, silk and manmade fiber                       42 
79  2251     Women's full-length and knee-length                           
                hosiery, except socks                                      24 
80  2252     Hosiery, not elsewhere classified                          78 
81  2253     Knit outerwear mills                                       26 
82  2254     Knit underwear and nightwear mills                          5 
83  2257     Weft knit fabric mills                                     25 
84  2258     Lace and warp knit fabric mills                            23 
85  2259     Knitting mills, not elsewhere classified                    5 
86  2261     Finishers of broadwoven fabrics of                            
                cotton                                                     24 
87  2269     Finishers of textiles, not elsewhere                          
                classified                                                 10 
88  2281     Yarn spinning mills                                        61 
89  2282     Yarn texturizing, throwing, twisting and                      
                winding mills                                              29 
90  2284     Thread mills                                               12 
91  2299     Textile goods, not elsewhere classified                    21 
92  2311     Men's and boys' suits, coats, and                             
                overcoats                                                   7 
93  2321     Men's and boys' shirts, except work                           
                shirts                                                     50 
94  2322     Men's and boys' underwear and nightwear                    25 
95  2325     Men's and boys' separate trousers and                         
                slacks                                                     37 
96  2326     Men's and boys' work clothing                              28 
97  2329     Men's and boys' clothing, not elsewhere                       
                classified                                                 33 
98  2331     Women's, misses', and juniors' blouses                        
                and shirts                                                 53 
99  2335     Women's, misses', and juniors' dresses                     22 
100 2337     Women's, misses', and juniors' suits,                         
                skirts, and coats                                          24 
101 2339     Women's, misses', and juniors'                                
                outerwear, not elsewhere classified                        58 
102 2341     Women's, misses', children's, and                             
                infants' underwear and nightwear                           30 
103 2353     Hats, caps, and millinery                                  14 
104 2361     Girls', children's, and infants'                              
                dresses, blouses, and shirts                               10 
105 2369     Girls', children's, and infants'                              
                outerwear, not elsewhere classified                        12 
106 2381     Dress and work gloves, except knit and                        
                all-leather                                                 8 
107 2391     Curtains and draperies                                     15 
108 2392     Housefurnishings, except curtains and                         
                draperies                                                  88 
109 2393     Textile bags                                               10 
110 2395     Pleating, decorative and novelty                              
                stitching, and tucking for the trade                        7 
111 2396     Automotive trimmings, apparel findings,                       
                and related products                                       11 
112 2399     Fabricated textile products, not                              
                elsewhere classified                                       12 
113 2411     Logging                                                     6 
114 2421     Sawmills and planing mills, general                        33 
115 2426     Hardwood dimension and flooring mills                      28 
116 2431     Millwork                                                   16 
117 2499     Wood products, not elsewhere classified                    40 
118 2511     Wood household furniture, except                              
                upholstered                                               124 
119 2512     Wood household furniture, upholstered                      37 
120 2514     Metal household furniture                                  20 
121 2531     Public building and related furniture                       7 
122 2541     Wood office and store fixtures,                               
                partitions, shelving, and lockers                          11 
123 2621     Paper mills                                                35 
124 2671     Packaging paper and plastics film,                            
                coated and laminated                                       10 
125 2672     Coated and laminated paper, not                               
                elsewhere classified                                       14 
126 2679     Converted paper and paperboard products,                      
                not elsewhere classified                                   12 
127 2759     Commercial printing, not elsewhere                            
                classified                                                 13 
128 2782     Blankbooks, looseleaf binders and                             
                devices                                                     8 
129 2819     Industrial inorganic chemicals, not                           
                elsewhere classified                                       27 
130 2834     Pharmaceutical preparations                                 9 
131 2844     Perfumes, cosmetics, and other toilet                         
                preparations                                                7 
132 2851     Paints, varnishes, lacquers, enamels and                      
                allied products                                            13 
133 2865     Cyclic organic crudes and intermediates,                      
                and organic dyes and pigments                              14 
134 2869     Industrial organic chemicals, not                             
                elsewhere classified                                       15 
135 2899     Chemicals and chemical preparations, not                      
                elsewhere classified                                       11 
136 3061     Molded, extruded, and lathe-cut                               
                mechanical rubber goods                                    13 
137 3069     Fabricated rubber products, not                               
                elsewhere classified                                       41 
138 3083     Laminated plastics plate, sheet, and                          
                profile shapes                                             15 
139 3089     Plastics products, not elsewhere                              
                classified                                                 76 
140 3111     Leather tanning and finishing                              13 
141 3151     Leather gloves and mittens                                  3 
142 3291     Abrasive products                                           4 
143 3292     Asbestos products                                           5 
144 3295     Minerals and earths, ground or otherwise                      
                treated                                                     7 
145 3312     Steel works, blast furnaces                                74 
146 3315     Steel wiredrawing and steel nails and                         
                spikes                                                      9 
147 3316     Cold-rolled steel sheet, strip, and bars                    3 
148 3317     Steel pipe and tubes                                       10 
149 3321     Gray and ductile iron foundries                            20 
150 3325     Steel foundries, not elsewhere                                
                classified                                                 11 
151 3341     Secondary smelting and refining of                            
                nonferrous metals                                           5 
152 3356     Rolling, drawing, and extruding of                            
                nonferrous metals, except copper and                          
                aluminum                                                    6 
153 3357     Drawing and insulating of nonferrous                          
                wire                                                       28 
154 3364     Nonferrous die-castings, except aluminum                   11 
155 3365     Aluminum foundries                                         12 
156 3423     Hand and edge tools, except machine                           
                tools and handsaws                                         22 
157 3429     Hardware, not elsewhere classified                         30 
158 3432     Plumbing fixture fittings and trim                         13 
159 3433     Heating equipment, except electric and                        
                warm air furnaces                                           5 
160 3441     Fabricated structural metal                                10 
161 3443     Fabricated plate work                                      16 
162 3444     Sheet metal work                                           17 
163 3452     Bolts, nuts, screws, rivets, and washers                   10 
164 3462     Iron and steel forgings                                    11 
165 3469     Metal stampings, not elsewhere                                
                classified                                                 34 
166 3479     Coating, engraving, and allied services,                      
                not elsewhere classified                                    7 
167 3492     Fluid power valves and hose fittings                       19 
168 3496     Miscellaneous fabricated wire products                     27 
169 3499     Fabricated metal products, not elsewhere                      
                classified                                                 29 
170 3523     Farm machinery and equipment                                5 
171 3524     Lawn and garden tractors and home lawn                        
                and garden equipment                                        9 
172 3531     Construction machinery and equipment                        9 
173 3537     Industrial trucks, tractors, trailers,                        
                and stackers                                                8 
174 3545     Cutting tools, machine tool accessories,                      
                and machinist precision measuring                             
                devices                                                    17 
175 3548     Electric and gas welding and soldering                        
                equipment                                                   6 
176 3549     Metalworking machinery, not elsewhere                         
                classified                                                  6 
177 3559     Special industry machinery, not                               
                elsewhere classified                                       15 
178 3561     Pumps and pumping equipment                                 8 
179 3569     General industrial machinery and                              
                equipment, not elsewhere classified                         9 
180 3575     Computer terminals                                          4 
181 3577     Computer peripheral equipment, not                            
                elsewhere classified                                       26 
182 3585     Air-conditioning and warm air heating                         
                equipment and commercial and industrial                       
                refrigeration equipment                                    35 
183 3592     Carburetors, pistons, piston rings, and                       
                valves                                                     11 
184 3599     Industrial and commercial machinery and                       
                equipment, not elsewhere classified                         6 
185 3612     Power, distribution, and specialty                            
                transformers                                               18 
186 3621     Motors and generators                                      36 
187 3629     Electrical industrial apparatus, not                          
                elsewhere classified                                        9 
188 3634     Electric housewares and fans                               24 
189 3644     Noncurrent-carrying wiring devices                          8 
190 3645     Residential electric lighting fixtures                     18 
191 3646     Commercial, industrial, and                                   
                institutional electric lighting fixtures                    6 
192 3648     Lighting equipment, not elsewhere                             
                classified                                                  7 
193 3651     Household audio and video equipment                        24 
194 3661     Telephone and telegraph apparatus                          20 
195 3663     Radio and television broadcasting and                         
                communications equipment                                   38 
196 3679     Electronic components, not elsewhere                          
                classified                                                 84 
197 3694     Electrical equipment for internal                             
                combustion engines                                         21 
198 3695     Magnetic and optical recording media                        8 
199 3699     Electrical machinery, equipment, and                          
                supplies, not elsewhere classified                          7 
200 3711     Motor vehicles and passenger car bodies                     9 
201 3713     Truck and bus bodies                                        5 
202 3714     Motor vehicle parts and accessories                       200 
203 3721     Aircraft                                                   10 
204 3724     Aircraft engines and engine parts                           6 
205 3728     Aircraft parts and auxiliary equipment,                       
                not elsewhere classified                                   13 
206 3751     Motorcycles, bicycles, and parts                            6 
207 3824     Totalizing fluid meters and counting                          
                devices                                                     6 
208 3825     Instruments for measuring and testing of                      
                electricity and electrical signals                         56 
209 3829     Measuring and controlling devices, not                        
                elsewhere classified                                       14 
210 3841     Surgical and medical instruments and                          
                apparatus                                                  36 
211 3842     Orthopedic, prosthetic, and surgical                          
                appliances and supplies                                    48 
212 3845     Electromedical and electrotherapeutic                         
                apparatus                                                   5 
213 3911     Jewelry, precious metal                                     6 
214 3914     Silverware, plated ware, and stainless                        
                steel ware                                                  9 
215 3944     Games, toys, and children's vehicles,                         
                except dolls and bicycles                                  10 
216 3949     Sporting and athletic goods, not                              
                elsewhere classified                                       38 
217 3952     Lead pencils and art goods                                  6 
218 3991     Brooms and brushes                                          5 
219 3999     Manufacturing industries, not elsewhere                       
                classified                                                 26 
220 7389     Business services, not elsewhere                              
                classified                                                 22 
221 8711     Engineering services                                        4 
222 8741     Management services                                        10 

Source: GAO analysis of Department of Labor petitions data, Mass Layoff
Statistics data, and Census' trade and production data.

Appendix IV: Additional Analysis of the 69 Industries

To assess the sensitivity of the criteria to changes in the trade
threshold, we analyzed the 69 industries for which we had complete data
using a range of thresholds. We found that more stringent criteria
sometimes resulted in appreciable differences in the number of workers
eligible for TAA in those industries. For example, if to be certified, an
industry not only had to have a 10 percent increase in the import share of
the domestic market in 1 year but also had an increase in the import share
during the 2 other years between 2003 and 2005, we estimated that there
would have been a 24 percent increase in the number of workers eligible
for TAA in the 69 industries we analyzed (see table 7). Because the 69
industries for which we had comprehensive data were not selected randomly,
the results cannot be generalized to the entire group of 222 industries
that met the three petitions certified in 180 days criteria nor are they
predictive of future levels of eligible workers.

Table 7: Estimated Increase in the Number of Eligible Workers in 69
Industries under Various Criteria, 2003 to 2005

                                                            Estimated percent 
Additional Criteria for Industry Certification           increase          
10 percent increase in the import share of the domestic  24                
market in 1 year and increases in 2 other years                            
15 percent increase in the import share of the domestic  9                 
market in 1 year and increases in 2 other years                            
20 percent increase in the import share of the domestic  7                 
market in 1 year and increases in 2 other years                            
10 percent in the import share of the domestic market in 97                
1 year or increases of any size in 3 consecutive years                     
15 percent in the import share of the domestic market in 82                
1 year or increases of any size in 3 consecutive years                     
20 percent in the import share of the domestic market in 76                
1 year or increases of any size in 3 consecutive years                     

Source: GAO analysis of Department of Labor petitions data, Extended Mass
Layoff Statistics data, and Census' trade and production data.

Appendix V: GAO Contacts and Staff Acknowledgments

GAO Contact

Sigurd R. Nilsen, Director (202) 512-7215 or [28][email protected]

Acknowledgments

Dianne Blank, Assistant Director Yunsian Tai, Analyst-in-Charge

Michael Hoffman, Rhiannon Patterson, and Timothy Wedding made significant
contributions to all aspects of this report. In addition, Kim Frankena
assisted with research on trade remedies, and Rachel Valliere provided
writing assistance. Christopher Morehouse, Theresa Lo, Mark Glickman, Jean
McSween, and Seyda Wentworth verified our findings.

Related GAO Products 

Trade Adjustment Assistance: Program Provides an Array of Benefits and
Services to Trade-Affected Workers. [29]GAO-07-994T . Washington, D.C.:
June 14, 2007.

Trade Adjustment Assistance: Changes Needed to Improve States' Ability to
Provide Benefits and Services to Trade-Affected Workers. [30]GAO-07-995T .
Washington, D.C.: June 14, 2007.

Trade Adjustment Assistance: Changes to Funding Allocation and Eligibility
Requirements Could Enhance States' Ability to Provide Benefits and
Services. [31]GAO-07-701 , [32]GAO-07-702 . Washington, D.C.: May 31,
2007.

Trade Adjustment Assistance: New Program for Farmers Provides Some
Assistance, but Has Had Limited Participation and Low Program
Expenditures. [33]GAO-07-201 . Washington, D.C.: December 18, 2006.

Trade Adjustment Assistance: Labor Should Take Action to Ensure
Performance Data Are Complete, Accurate, and Accessible. [34]GAO-06-496 .
Washington, D.C.: April, 25, 2006.

Trade Adjustment Assistance: Most Workers in Five Layoffs Received
Services, but Better Outreach Needed on New Benefits. [35]GAO-06-43 .
Washington, D.C.: January 31, 2006.

Trade Adjustment Assistance: Reforms Have Accelerated Training Enrollment,
but Implementation Challenges Remain. [36]GAO-04-1012 . Washington, D.C.:
September 22, 2004.

(130671)

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[43]www.gao.gov/cgi-bin/getrpt?GAO-07-919 .

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Highlights of [44]GAO-07-919 , a report to congressional requesters

June 2007

TRADE ADJUSTMENT ASSISTANCE

Industry Certification Would Likely Make More Workers Eligible, but Design
and Implementation Challenges Exist

Trade Adjustment Assistance (TAA) is the nation's primary program
providing job training and other assistance to manufacturing workers who
lose their jobs due to international trade. For workers to receive TAA
benefits, the Department of Labor (Labor) must certify that workers in a
particular layoff have lost their jobs due to trade. Congress is
considering allowing entire industries to be certified to facilitate
access to assistance.

GAO was asked to examine (1) trends in the current certification process,
(2) the extent to which the proposed industry certification approach based
on three petitions certified in 180 days would increase eligibility and
identify potential challenges with this approach, and (3) the extent to
which an approach based on trade remedies would increase eligibility and
identify potential challenges. To address these questions, GAO analyzed
data on TAA petitions, mass layoffs, trade, production, and trade
remedies. GAO also interviewed Labor and ITC officials.

GAO is not making recommendations at this time.

Labor reviewed the report and did not provide comments. The ITC provided
technical comments that have been incorporated as appropriate.

During the past 3 fiscal years, Labor certified about two-thirds of TAA
petitions investigated and generally processed petitions in a timely
manner. Labor certified 4,700, or 66 percent, of the 7,100 petitions it
investigated from fiscal years 2004 to 2006. Labor took on average 32 days
to make a certification decision and processed 77 percent of petitions
within the required 40-day time frame. According to Labor officials, they
were not always able to meet the 40-day time frame because they sometimes
did not receive information from company officials in a timely manner. In
fiscal year 2006, 44 percent of the petitions that Labor denied were
because workers were not involved in the production of an article.

An industry certification approach based on three petitions certified in
180 days would likely increase the number of workers eligible for TAA but
presents some design and implementation challenges. However, the extent of
the increase in eligible workers depends on the additional criteria, if
any, industries would have to meet to be certified. From 2003 to 2005, 222
industries had three petitions certified within 180 days. Based on our
analysis of 69 of these industries for which we could obtain complete
data, the number of eligible workers in these industries could more than
double if no additional criteria were used, but would expand by less than
10 percent if industries had to meet more restrictive criteria, such as
demonstrated increases in the import share of the domestic market over a
3-year period. Designing the criteria presents challenges due to the
possibility of making workers who lose their jobs for reasons other than
trade eligible for TAA. Implementation challenges include notifying all
workers of their potential eligibility, verifying their eligibility, and
linking them with services.

Using trade remedies to certify industries could also expand eligibility
for workers in some industries, but challenges exist. While basing
industry certification on trade remedies could expand eligibility in areas
where there have been no TAA petitions, some trade remedies are for
products already covered by TAA petitions, such as iron and steel
products. It is difficult to estimate the extent of the impact on worker
eligibility because trade remedies are applied to specific products, and
data on unemployment by product do not exist. This approach presents many
of the same challenges as industry certification based on three petitions
certified in 180 days. For example, workers who did not lose their jobs
due to international trade could be made eligible for TAA because trade
remedy investigations are not focused on employment. In addition,
verifying workers' eligibility may be particularly challenging due to the
narrow product classifications of some trade remedy products, such as
carbazole violet pigment 23. In companies that make multiple products, it
may be difficult to identify which specific workers made the product
subject to trade remedies.

References

Visible links
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1003
  27. http://www.gao.gov/
  28. mailto:[email protected]
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-994T
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-07-995T
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-07-701
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-07-702
  33. http://www.gao.gov/cgi-bin/getrpt?GAO-07-201
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-06-496
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-06-43
  36. http://www.gao.gov/cgi-bin/getrpt?GAO-04-1012
  37. http://www.gao.gov/
  38. http://www.gao.gov/
  39. http://www.gao.gov/fraudnet/fraudnet.htm
  40. mailto:[email protected]
  41. mailto:[email protected]
  42. mailto:[email protected]
  43. http://www.gao.gov/cgi-bin/getrpt?GAO-07-919
  44. http://www.gao.gov/cgi-bin/getrpt?GAO-07-919
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