TRADE ADJUSTMENT ASSISTANCE AND IMPORT COMPETITION: Experience in the U.S. Footwear Industry: 1980–1997
This article analyzes the Trade Adjustment Assistance (TAA) program within NAFTA, the U.S.-Israel Free Trade Agreement (FTA), U.S.-Canada-FTA, and the Orderly Market Agreement (OMA) for the footwear industry. It evaluates costs and benefits as well as factors affecting TAA's certification and denial processes following trade liberalization. A three-stage least-squares (3TLS) model correlates the a priori specifications we developed from the literature and evaluates TAA's enhancement of net consumer surplus. The benefits have significant, independent effects on four census regions of the United States engaged in footwear production. A simulation of the results indicates some robustness in the estimates and supports the Department of Labor (DOL) rule-of-thumb statements of job gains due to trade liberalization. The results are supportive of the bipartisan NAFTA agreement. Due to TAA's benefits to displaced workers, positive net benefits have been substantial from the inception of NAFTA, in 1994, to 1997.
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