Lawmakers agree to expand trade adjustment aid

WASHINGTON (Reuters) - U.S. lawmakers said on Thursday they have reached a deal that for the first time would allow service industry and public sector workers to qualify for federal retraining and extended unemployment benefits if they lose their jobs because of foreign competition.

The deal, which is expected to be wrapped into a mammoth economic stimulus package, removes one obstacle that stood in the way of congressional approval of free trade pacts that President George W. Bush’s administration negotiated with Colombia, Panama and South Korea.

“International trade creates millions of American jobs -- but in the instances when trade has negative effects, American workers and entrepreneurs need to know that someone’s got their back,” Senate Finance Committee Chairman Max Baucus said in a statement announcing the agreement.

Trade Adjustment Assistance (TAA) has long been available to manufacturing workers who have lost their jobs because of import competition or factories being moved overseas.

But Republicans had resisted extending the program to the services sector, which accounts for about 78 percent of the U.S. economy, and to government workers.

Senior House and Senate members from both parties crafted the package -- something they were unable to accomplish before President Barack Obama took office -- even though Bush wanted a deal in the hopes of moving the trade agreements forward.

“This breakthrough represents a bipartisan effort ... to help workers impacted by trade and globalization so they can get back on their feet -- and it could not have come at a better time,” House Ways and Means Committee Chairman Charles Rangel, a New York Democrat, said.

The severe U.S. recession has already pushed the unemployment rate to 7.2 percent and government data on Thursday showed the number of workers filing new claims for jobless benefits to a 26-year high last week.

“While most job losses are unrelated to trade, we believe an effective TAA program that gives displaced workers the tools to adjust and reenter the workforce is a critical component of U.S. trade policy,” said Christopher Wenk, senior director for international policy at the U.S. Chamber of Commerce, one of several business groups that welcomed the deal.

The proposal reauthorizes the TAA program through the end of 2010 and increases funds for worker training by nearly 160 percent to $575 million.

It triples funding to $50 million for a program that helps business cope with foreign competition and authorizes $230 million to help mostly small and medium-sized communities adjust to trade-related job losses.

The reforms also allow coverage for workers whose companies have shifted production to China, India and other countries, even if they do not a have trade pact with the United States which previously had been the requirement.

Republicans said they hoped the deal would set the stage for congressional approval of three pending free trade pacts.

TAA is “a social compact we’ve had on trade for more than 45 years. One part is to address the needs of trade-displaced workers. The other part is to open up new markets for U.S. exports,” said Senator Charles Grassley, the top Republican on the Senate Finance Committee.

“Now that we’ve improved TAA, we need to move forward with our trade agenda to increase our exports and create more jobs here in the United States,” said Representative Dave Camp, the top Republican on the House Ways and Means Committee.

Editing by David Wiessler