Full Employment, Trade Expansion, and Adjustment Assistance: Reply

Abstract

inefficient import-competing industries to more efficient lines of production. In cases where resources are relatively immobile, injury may occur. Under an escape clause contained in recent extensions of the Reciprocal Trade Agreements Act, industries could apply for relief and, if successful, be granted increased protection. This escape clause, in modified form, was continued in the Trade Expansion Act of 1962.1 However, Congress provided an alternative to increased protection in the form of adjustment assistance. This provision is designed to help injured parties move to other lines of production or adjust to increased foreign competition. In essence, the escape clause attempts to reconcile the conflict between increased imports (and a more efficient allocation of world resources) and full employment. The conflict arises when increased imports cause injury to domestic import-competing producers resulting in curtailment of domestic production and unemployment or under-