Trade Adjustment Assistance:

Impact of Federal Assistance to Firms is Unclear

GAO-01-12: Published: Dec 15, 2000. Publicly Released: Dec 15, 2000.

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Concerns about the impact of foreign trade on U.S. manufacturing have focused attention on federal programs designed to help domestic firms that have been harmed by imports. One such program, the Department of Commerce's Trade Adjustment Assistance program, seeks to help U.S. firms adopt strategies to become more competitive. The program is run by the Economic Development Administration (EDA). GAO reviewed the nature and extent of Trade Adjustment Assistance as well as the outcomes of this assistance. GAO found that for fiscal years 1995 through 1999, EDA certified 157 firms annually as eligible for trade adjustment assistance and approved business recovery for about 127 firms each year. An average of $9.8 million dollars was spent by each of the 12 regional Trade Adjustment Assistance Centers operating under cooperative agreements with EDA. The impact of the program on firms is inconclusive because EDA does not formally monitor and track program outcomes of program recipients. Instead, EDA sets annual numerical goals for certifications and approved business recovery plans for each of the centers. As a result, EDA does not have the information necessary to systematically assess center performance in helping firms adjust to import competition.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In our December 2000 report (Trade Adjustment Assistance: Impact of Federal Assistance to Firms Is Unclear, GAO-01-12), we recommended that the Secretary of Commerce (1) establish more effective measures of desired program outcomes; and (2) apply these measures as criteria to evaluate the effectiveness of the Trade Adjustment Assistance Centers to help injured firms adjust to import competition. Commerce agreed with our findings and recommendations. In response, in FY 2002, the Secretary established new measures (the percentage of TAA Center clients taking action as a result of the assistance facilitated by the Center and the percentage of those actions taken by Center clients that achieved the expected results). The Secretary also established benchmarks for FY 2003. In its 2003 Annual Report, Commerce noted that it had established performance targets for two outcome measures for the TAA program and reported that the program had met both of these targets. According to the FY 2004 Annual Performance Plan, the performance measures were established to determine the value-added of the TAA Centers, to further define the relevance of the assistance by the Centers, and to determine if the assistance facilitated by the Centers is market-based.

    Recommendation: To improve the effectiveness of the Trade Adjustment Assistance program in helping firms that are adversely affected by imports, the Secretary of Commerce should establish more effective measures of desired program outcomes.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: In our December 2000 report (Trade Adjustment Assistance: Impact of Federal Assistance to Firms Is Unclear, GAO-01-12), we recommended that the Secretary of Commerce (1) establish more effective measures of desired program outcomes; and (2) apply these measures as criteria to evaluate the effectiveness of the Trade Adjustment Assistance Centers to help injured firms adjust to import competition. Commerce agreed with our findings and recommendations. In response, in FY 2002, the Secretary established new measures (the percentage of TAA Center clients taking action as a result of the assistance facilitated by the Center and the percentage of those actions taken by Center clients that achieved the expected results). The Secretary also established benchmarks for FY 2003. In its 2003 Annual Report, Commerce noted that it had established performance targets for two outcome measures for the TAA program and reported that the program had met both of these targets. According to the FY 2004 Annual Performance Plan, the performance measures were established to determine the value-added of the TAA Centers, to further define the relevance of the assistance by the Centers, and to determine if the assistance facilitated by the Centers is market-based.

    Recommendation: To improve the effectiveness of the Trade Adjustment Assistance program in helping firms that are adversely affected by imports, the Secretary of Commerce should apply these established outcome measures as criteria to evaluate the effectiveness of centers in making the best use of the limited program funding to help trade injured firms adjust to import competition.

    Agency Affected: Department of Commerce

 

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