Washington Insider - Tuesday

Cruciak Labor Policy Questioned

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Fast-Track Trade Bill Unlikely to be Taken Up This Year

Progress on two major free trade agreements is almost certain to slow until Congress passes so-called "fast track" trade negotiating authority for the administration. Another certainty: Congress will not do this before the mid-term elections and likely will not do so during any lame duck session in November and December.

Capitol Hill and industry sources told the Bloomberg news service that Senate Majority Leader Harry Reid, D-Nev., is unlikely to bring up a pending trade promotion authority bill in September. After that, the Senate will be in session the week of Nov. 17 (before the Thanksgiving break) and perhaps for a few days in December.

TPA, also known as "fast-track," would guarantee that legislation to implement a trade agreement, once submitted to Congress by the administration, would be voted on within strict timelines and not be subject to amendments or delaying tactics. In exchange for these guarantees, the administration would agree to meet the policy objectives and consultation requirements in the bill. Such authority will be needed if the United States is to conclude the Trans-Pacific Partnership (TPP) agreement among 12 Pacific Rim nations and the bilateral Transatlantic Trade and Investment Partnership (TTIP) with the European Union.

Republicans and the business community generally support expanded trade, while organized labor and environmental groups generally oppose it.

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Russia's Import Ban Likely to Pinch Russians

With Russia having banned imports of pork from several Western nations, the country may be on the verge of approving imports of pork from China. Russian state veterinary chief Sergey Dankvert said that over the next few days, nine Chinese companies would be authorized to supply pork to the Russian market.

The need for Moscow to find alternative suppliers has been made somewhat urgent by this month's wider ban on food imports not only from the European Union, but also the United States and Canada, two other important pork suppliers.

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China's ability to satisfy Russian import requirements is likely to be limited. Though the country is home to the world's largest pig herd, it remains a net importer of pork. And it was just over a year ago that officials in China arrested a number of individuals for processing pigs that had died of infectious diseases and selling the inedible pork. Police last year also arrested more than 900 people for selling fake or tainted meat, including a criminal ring that processed meat from rat and fox and sold it as mutton.

If Russia goes ahead with its plans to import pork from China, it will be instructive to see whether Russian food safety officials become a little less strict in the near term future.

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Washington Insider: Crucial Labor Policy Questioned

Support for better global market access and trade is a key aspect of U.S. economic policy — especially since trade provides U.S. producers with ways to look beyond often-saturated domestic markets. The theory, long held dear by economists, is that trade benefits everyone because it allows the economy to better focus its resources in the areas of expertise where they are most efficient.

Increasingly, however, that theory is being questioned because it is clear that trade expansion creates both winners and losers, especially in the short term as competition becomes increasingly intense, and especially for those who face the toughest competition from overseas.

To make policies that support investment in domestic technology, international trade and other growth areas of the economy fairer, the United States operates "retraining programs" as well as loan and grant programs of several kinds intended to make workers more mobile and ease their way into new careers — as the GI Bill did after World War II. One of the most important of these is the $3.1 billion Workforce Investment Act which was begun in 1998, expanded in 2009 as part of the federal economic stimulus package and reauthorized just last month. It funded about 21 million people in retraining programs in 2012 and is a central component of the administration's plan to match the unemployed with job openings.

This week, the New York Times reported some extremely bad news for that effort, possibly with repercussions for other mobility programs. It analyzed a series of cases of workers who participated in the programs and wound up "significantly worse off than when they started, mired in unemployment and debt from training for positions that do not exist, or ... working elsewhere for minimum wage."

"Split between federal and state governments — federal officials dispense the money and states license the training — the initiative lacks rigorous oversight by either. It includes institutions that require thousands of hours of instruction and charge more than the most elite private colleges. Some courses are offered at for-profit colleges that have committed fraud in their search for federal funding," the Times charges.

Perhaps the saddest aspect of the Times report is the snapshots it presents of workers who took the training seriously, completed the courses and then found themselves deeply in debt because they borrowed to pay part of the cost of the courses — to the tune of $20,000 or $30,000. At least some of these individuals now find themselves working at fast-food outlets for minimum wages.

One reason for this, the report says, is that the program includes no mechanism for student counseling. States say they investigate complaints and audit programs with poor outcomes but students say they tend not to register formal complaints about a program's quality.

When the newly unemployed seek government benefits, their skills and education are assessed at a federal employment office. If there are too few jobs in their current field, they are selected for retraining through the Act. They choose from among dozens of professions, with each successful applicant receiving a stipend of up to $3,000 a year to pay for the training. The rest typically comes from federal grants and loans.

Government officials defend the retraining program as useful, and the Times says it clearly does lead some unemployed people to new careers. But, neither federal nor state agencies collect data on the number of people who finish job training or earn professional certificates. As a result, officials acknowledge that they are unable to determine how many students the program has helped find appropriate jobs during the past 15 years.

Nevertheless, the Times said the Labor Department officials interviewed claimed that the program works well, although they noted that assessing the quality of training is up to the states, and that the agency does not regulate tuitions and is unaware of concerns related to prices. "If providers fail to meet the state's requirements and job-placement policies, states have a process in place to revoke their eligibility," Eric Seleznow, a deputy assistant secretary in the Labor Department, told the Times.

And, while the Labor Department said four of five dislocated workers had found jobs after undergoing training, a spokesman acknowledged the figure does not distinguish between people who completed job training and those who quit. And, the Times pointed to state data and studies that suggested that a vast majority of the unemployed may have found work without the help of the Workforce Investment Act.

While the Times report includes a modest number of cases, it certainly supports the conclusion that these retraining programs — and other efforts to aid dislocated workers — need to be examined carefully and in detail, and changes made in the programs' structure and management.

The effectiveness of these programs is important to producers because failures in efforts to ease displaced workers into new and better careers is essential to counter at least some of the current near toxic opposition to trade negotiations. Thus, the success of such programs should be watched carefully by producers as future debates over their role proceed, Washington Insider believes.


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