Barriers Still Exist to the Full Development of the Trade Monitoring System Required by the Trade Act of 1974

The Trade Monitoring System was authorized by the Trade Act of 1974, to: (1) provide information on the volume of all foreign imports, (2) compare the volume of specific imports with the changes in volume of specific imports with the changes in volume of domestic production of like goods, and (3) relate this information to changes in employment. The Act requires adequate procedures for safeguarding American industry against unfair or injurious import competition, and to assist industries, firms, workers, and communities to adjust to changes in international trade flows. In its examiniation of the Trade Monitoring System, GAO reviewed reports, studies, memorandums, and other documents from Congress, the Department of Labor (DOL), and the Department of Commerce (DOC). Officials from DOL, DOC, the International Trade Commission, the Office of the Special Trade Representative, and the Office of Management and Budget were also interviewed.

In the 5 years since the Trade Act was enacted, the executive branch has not yet produced a fully developed system, and consequently, only limited use has been made of trade monitoring information. Barriers that exist to a fully developed system include: poor comparability of trade, production, and employment data coding systems; no funding for the Bureau of Labor Statistics (BLS) and limited funding for other agencies to develop trade monitoring systems; limited staffing; and BLS reluctance to disseminate and promote the use of trade monitoring data. Even with its technical limitations, the data now available are useful on comparing some trade, production, and employment data. If the BLS were given the funds it needs, GAO believes that the trade monitoring data could be improved and expanded for future use by threatened U.S. industries. The improved data, further analyzed, could be the basis of an early warning system which would alert domestic manufacturers to potential foreign competition. However, because of the reluctance on the part of the Executive Branch to expand the Trade Monitoring System into an early warning system, the direction must come from Congress.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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