Adjustment Assistance Provisions for Workers Displaced by Imports

Abstract

This paper considers the North American and Australian experience with adjustment assistance policies designed to facilitate the redeployment of labour displaced by imports. The historical record indicates that the implementation of these policies has in practice been far from satisfactory with only the adjust ment assistance provisions of the U.S.-Canadian Automotive Products Trade Act enjoying any measure of success, in the sense of being able to deal reasonably satisfactorily with the resulting displacement so that the policy remained acceptable to the union directly involved. In contrast, the U.S. and Australian policies have not proved lasting satisfactory alternatives to import controls from the union point of view. This has been due to the below- average mobility of the displaced labour which has limited their ability to make use of the retraining and relocation options of the policy, and also to in stitutional opposition from unions solely organized in the import competing sector of the economy. The concentration (and hence visibility) of displacement in these sectors of institutional opposition has in the context of a general fall in aggregate demand acted to undermine the acceptability of the policy to the unions involved. The dimensions of these problems are outlined and some possible reform measures indicated.