Mr. DENT. It is added to the full unemployment compensation being paid.

Mr. SEGALL. That is right.

Mr. DENT. Thank you.

Mr. SEGALL. Funds for the unemployment insurance paid to adversely affected workers come from the unemployment trust fund which derives its revenues from Federal and State taxes on employers. Based on a State unemployment insurance average benefit of $70 a week, we estimate that the 35,000 recipients of the $37 million in Federal payments also received unemployment insurance payments of approximately $51 million. Under the Trade Expansion Act of 1962 such amounts of unemployment insurance would have been reimbursed to the States.

In providing training for adversely affected workers the Department of Labor through State agencies utilizes existing training opportunities under provisions of other laws, such as the Comprehensive Employment and Training Act. When prime sponsors under the Comprehensive Employment and Training Act do not have sufficient resources to provide training, the costs of training may be funded from a reserve of the Secretary's discretionary funds appropriated under the Comprehensive Employment and Training Act. Training funds are requested by State agencies on a need basis. Through March 24, 1976, a total of $2,500,000 in Federal moneys has been approved for training. Since April 3, 1975, the States with the highest incidence of importrelated dislocations, as measured by the estimated number of workers certified to apply for trade adjustment assistance are Pennsylvania, Michigan, Missouri, Virginia, New York, Maryland, California, and Massachusetts. The metropolitan areas with the highest incidence of import-related dislocations, measured in the same way, are Detroit, Mich.; Portsmouth, Va.; Fenton, Mo.; Philadelphia, Pa.; Baltimore, Md.; and Chula Vista, Calif.

Under the TEA program four certifications were issued in cases involving automotive products. To date $3.8 million has been paid to approximately 2,071 workers. Three of the cases, involving about $2.9 million in expenditures and about 1,800 workers, related to imports from Canada. The fourth case did not.

Under the APTA program, $3.8 million was paid to 1,943 workers. All the cases involved Canadian automotive imports.

Under the Trade Act program to date benefits associated with automotive imports amounted to approximately $15.8 million paid to 14.286 workers. The $15.8 million is, of course, supplemental to whatever unemployment insurance was received by the workers. Most, but not all, of the benefits were associated with Canadian imports.

I have excluded administrative costs from the above. In general such costs could add an additional 10 to 15 percent to the benefit costs. Also, training costs have not been included although there is some likelihood that some workers may have received training benefits or will receive such benefits in the future. To date, however, such expenditures appear significant only for the current program.

This concludes my statement. I am submitting for the record five tables providing additional detail. I will be pleased to answer any questions you might have, if you can think of a question I can answer

Mr. DENT. Thank you very kindly, Mr. Segall.

I am sorry if I interrupted your testimony to try to make some points. You notice Chula Vista is the site of the plant that moved across the border into Mexico.

Mr. Erlenborn?

Mr. ERLENBORN. I don't have any questions.

Thank you, Mr. Chairman.

Mr. DENT. Mr. Simon?

Mr. SIMON. I am just curious. Just one question. That is, beside the figures of how many claims have been approved, I am just wondering what the numbers are of those that have been denied. What percentage would it be?

Mr. SEGALL. In terms of petitions, sir, as of March 31, 239 petitions were certified; 186 petitions denied. That is on the order of 60 percent certified and 40 percent denied.

Mr. SIMON. You make a determination for denial in what way?

Mr. SEGALL. If you are talking about the mechanics, we perform a field investigation, and an industry study, which start simultaneously. We call on the firm, the workers and if the union is involved, the union. We have hearings, if requested, and a recommendation as to whether or not this petition meets the eligibility requirements stipulated in the law.

Then there is a certifying officer who will either certify or deny the petition.

We have provision for appeal from that decision. We will in almost any circumstance reopen the case even after the decision if new evidence is offered.

Mr. SIMON. And your feeling is that the present procedure gives adequate protection to the employees faced with this kind

Mr. O'HARA. Yes, I have a question having to do with the arbitrary manner and unrealistic manner in which some of these benefits have been handled. I call your attention particularly to the case of the Bower Roller Bearing Division of Federal-Mogul Corporation, which had, as you probably recall, two adjacent plants but one seniority list. So when the first plant closed down the higher seniority employees were permitted to bump people at the second plant. The second plant closed down too. But the determination said that only the closing of the first plant, only the people who were unemployed by the closing of the first plant, were eligible for benefits.

So we ended up with a crazy kind of situation. In one extreme case there was a fellow that worked his last 12 hours at Bower after bumping someone at the second plant and was denied benefits. That involved some of my constitutents. It is a case I have been aware of now for several years. It has been dragging on. UAW has its legal department representing the workers and so forth. I really do feel that some of the distinctions made in that case certainly are not consistent with the interpretation you give us in your testimony about contributing importantly and the difference that contributing importantly is from the earlier determinations, "major factor" or "primary factor."

Mr. SEGALL. May I ask Mr. Fooks of the Office of Trade Adjustment Assistance to respond.

Mr. Fooкs. That case, Mr. O'Hara, is one we have been wrestling with. The provisions in the Trade Expansion Act applied, since this case was certified under the earlier law, although the situation under the Trade Act hasn't changed with respect to the problem that is posed by Federal-Mogul. The same problem exists. The difficulty was that the injury finding that was made by the Tariff Commission at that time was made on a particular product which was produced in one of the plants but not in the other plant. Consequently only the workers in the plant that was producing the adversely affected product were covered. The law does not recognize the collective bargaining arrangements that exist. This is a weakness in the law. It results in a lot of inequity. But there is no legal way we can go about extending coverage to the workers who obviously took the job by exercising seniority. However, the job extended several months and almost a year in some cases.

What we did was to clarify the provision which allowed workers subject to multiple bumps who had become unemployed to receive

benefits.

Mr. O'HARA. I am reminded of Mr. Bumble's comment. "If that is what the law says, then the law is an ass." I don't think we know it that way.

In any event, I know we want to get on to our next witness and I won't take anymore time. But I didn't want to appear in the room without bringing up my dissatisfaction and unhappiness and dismay about the way the Federal-Mogul case has worked out for so many of those workers who have been without work now for a long, long time. I insist on thinking that the law must operate in a more reasonable fashion than that and there must be some way to make it work better. Thank you.

Mr. DENT. Thank you. We are waiting for the next witness.
Congressman Ford of Michigan just entered the room.

I might ask you a question until our next witness gets here. He was supposed to have been here a half-hour ago. He probably isn't used to the traffic in this area.

I notice you point out the States that are most heavily impacted. Can you name the industries that are most heavily impacted?

Mr. SEGALL. Yes. That would be transportation, apparel, leather and leather products, electrical and electronic machinery, and transportation equipment. Those are the industries where we have had most of the activity.

Mr. DENT. Transportation of course would include the subject matter we are discussing today, the auto pact between the United States and Canada.

Do you have the figures on the unemployment rates in those industries?

Mr. SEGALL. I have some data on unemployment in the automobile industry. In March the unemployment rate-this is not seasonally adjusted-was 6.9 percent. That may be compared with a rate a year ago in March 1975 of 22.2 percent. If we adjust them seasonally the unemployment rate in March of 1976 was 4.5 percent.

Mr. DENT. Isn't it true that you don't take into consideration those who were unemployed a year ago and have since dropped out of the labor market?

Mr. SEGALL. That is right, sir.

Mr. DENT. So then really they haven't found jobs. But they are still unemployed. They have dropped out of the active labor market. Mr. SEGALL. They would not be included.

Mr. ERLENBORN. Maybe they retired.

Mr. DENT. Thank you very kindly.

The next witness is Leonard Woodcock, president, United Auto Workers.

Leonard, do you have anyone with you?

STATEMENT OF LEONARD WOODCOCK, PRESIDENT, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, ACCOMPANIED BY DICK WARDEN, NATIONAL LEGISLATIVE DIRECTOR, AND DR. HELEN KRAMER, PROFESSIONAL AND TECHNICAL ASSISTANT

[Prepared statement of Leonard Woodcock follows:]

PREPARED STATEMENT OF LEONARD WOODCOCK, PRESIDENT UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA My name is Leonard Woodcock. I am President of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW. We represent 1,405,000 UAW members in the United States and Canada. I welcome this opportunity to testify before this Subcommittee on the impact of the Canadian-U.S. auto agreement and to bring to your attention some of the problems UAW members have experienced in the administration of trade adjustment assistance.

The Canadian-U.S. auto agreement had its origins in the efforts of the Canadian Government to stimulate the growth of the Canadian auto industry and redress its imbalance in automotive trade with the United States. Canada's introduction of a duty remission plan in 1963 threatened to trigger an economic confrontation with the United States, which could have responded by imposing countervailing duties. The auto agreement was negotiated by the two governments during the last half of 1964 as a positive alternative to further restrictive action. Congress ratified the agreement in October 1965.

Understandably, the U.S. Big 4 auto producers supported the agreement from the outset, but the UAW's support was conditional upon the inclusion of adjustment assistance provisions for workers. Because of the deplorable record of adjustment assistance under the Trade Expansion Act of 1962 (TEA). the UAW insisted that the eligibility criteria be liberalized and that certification of workers bypass the Tariff Commission. In testimony before the Senate Finance Committee, we stated that we would refuse to support the Automotive Products Trade Act (APTA) if the only forms of relief available for adjustment assistance were those stipulated in the TEA. It was our union's experience that those illusory provisions afforded our members no protection at all.

Implementation of the auto agreement was expected to involve substantial shifts in the location of production. Canada was expected to produce larger numbers of a more limited range of models and the U.S. was expected to increase its parts production for shipment to Canada for assembly. Achievement of economies of large scale was to lower costs and prices in both countries, but especially in Canada, where production was inefficient owing to short production runs.

As rationalization of production took place, it was anticipated that a number of auto plants in the U.S. would be shut down or reorganized. While overall employment in the auto industry might increase, some workers would become unemployed or would have to be relocated.

It has long been the UAW's position that if liberal trade policies benefit the nation as a whole, workers adversely affected by trade should be fully compensated for their losses. This is an ideal that has not even been approached under either the previous or existing adjustment assistance program.

The security of an American worker's family is far more dependent upon his job than is the case for workers in other industrialized countries. In the face of per

sistent high unemployment, lack of a national health insurance program, the inadequacies of social security and the dependence of a worker's job tenure and promotion rights on seniority, it is hardly surprising that many American workers become protectionist when all they are offered as compensation for job loss caused by imports is the right to apply for inadequate adjustment assistance benefits.

The UAW's experience with adjustment assistance under the TEA, the APTA and the Trade Act of 1974 has been an administrative nightmare. Even after the union, acting on behalf of its laid-off members, has succeeded in surmounting the obstacles raised by the eligibility criteria in the legislation, the difficulties encountered in actually obtaining benefits for particular workers among those certified as eligible have been enormous. As an outcome of administrative arbitrariness in the interpretation and application of rules and regulations, many workers have been unjustly denied benefits. Further, the cumbersome bureaucratic procedures involved in the program's administration have resulted in extended lapses of time between the date of certification and the date workers receive their first check. As a result, benefits have to be paid retroactively and very few workers can take advantage of their theoretical eligibility for retraining programs and relocation allowances. In addition, under present laws, payment of retroactive benefits in a lump sum has resulted in loss of eligibility for food stamps. Delays in certification of workers have been reduced under the current adjustment assistance program, but the administration of individual certification and benefit payments by state employment security offices remains a serious obstacle to the actual delivery of what is promised.

During the first years of operation of the Canadian-U.S. auto agreement, the dislocation experienced by UAW members was relatively minor. The APTA did not go into effect until the end of 1965, so there were no adjustment assistance petitions filed that year. In 1966, workers in 5 plants petitioned for benefits, and 4 petitions were granted, covering 319 eligible workers. An average of about $1,080 per worker was paid out. In 1967, a total of 15 petitions were submitted, of which 9 were granted, 4 were denied and 2 were undecided at the end of the year. A total of 1,245 workers were found eligible and received an average of just over $2,000 per worker. Overall, before the adjustment assistance provisions expired in 1968, 1,950 workers, including steelworkers and machinists in other unions, actually received benefits, although 2,500 were theoretically eligible. Over half of the workers who were certified as eligible became unemployed when relatively small plants of major independent automobile and parts producers were shifted to Canada. Other certifications involved assembly operations. The largest case involving the APTA until recently was the termination of auto assembly operations at Chrysler Corporation's plant at Commerce, Calfornia in July 1971, and the plant's closing in June 1972. In October 1970 there were 2,308 workers in the UAW bargaining unit, but by May 25, 1971, when the plant closing was announced, the number had been reduced to 1,188.

The Commerce plant assembled compact and intermediate cars. During the last year of full operation-model year 1971-Valiants, Darts, Satellites and Coronets were produced. Assembly of the same models except the Coronet was begun at Chrysler's Windsor, Ontario plant in model year 1970, and subsequently imports of these vehicles from Canada increased substantially.

Since the adjustment assistance provisions of the APTA had already expired when the plant closing was announced, the union tried to cope with the problem by renegotiating the collective bargaining agreement so that workers could be transferred to other Chrysler plants with full seniority rights. Ultimately 476 workers accepted transfer, and 405 took special early retirement. The remainder received supplemental unemployment benefits and/or separation pay, but lost their company-financed health and life insurance and pension rights.

On December 12, 1972 the UAW filed a petition for adjustment assistance under the TEA provisions. The Tariff Commission made an affirmative determination on February 9, 1973.

Two cases involving plant closings (not related to Canada) which were started by the UAW under the TEA provisions, and one of which is still being appealed, starkly illustrate the bureaucratic arbitrariness from which the current program still suffers, and the overall inadequacy of the concepts governing adjustment assistance.

U.S. Tariff Commission. "New Passenger Automobiles: Former Workers of the Commerce, Calif. Assembly Plant of Chrysler Corp." Report to the President on Investigation No. TEA-W-165. February 1973.