Financial services group urges more assistance for workers displaced by trade

NEW YORK (Associated Press) - A financial industry group on Wednesday recommended a significant increase in government support for unemployed workers to help address growing public skepticism about international trade.

The Financial Services Forum, which represents chief executives from 20 of the largest U.S. financial institutions, issued a white paper that proposes a $22 billion "adjustment assistance program." That dwarfs the federal government's current trade adjustment assistance spending of about $1 billion annually, the paper says.

The white paper comes as trade liberalization efforts have come to standstill. Seven years of negotiations on a new global trade agreement, under the auspices of the World Trade Organization, collapsed Tuesday in Geneva amid acrimony over agriculture tariffs and other issues.

Several bilateral trade agreements, meanwhile, between the U.S. and countries such as Colombia and Panama face a hostile Congress unlikely to approve them this year.

The group's chief executives "are extremely concerned about the rise of protectionism ... and that there's been an erosion of support for openness," said Financial Services Forum President Rob Nichols.

The white paper is intended to address workers' anxieties about job loss and globalization, which it says are "real, widespread and legitimate."

While two-thirds of workers displaced by trade, technological changes or other trends find new jobs, those new positions pay an average of 13 percent to 17 percent less, the paper found.

The Forum's paper proposes a wage insurance program that would pay half the difference between a lower wage at a new job and a previous, higher wage.

The paper also advocates subsidizing employers who continue to pay for laid-off employees' health insurance, and allowing workers to withdraw funds, tax-free, from individual retirement accounts when they are unemployed.

Nichols said the group has distributed the paper on Capitol Hill and hopes it will bear fruit in the fall, when Congress may consider renewing the Trade Adjustment Assistance program.

The next president also will have to revisit the issue. "There's going to be a focus on how the U.S. can remain engaged in the global economy," Nichols said.

The forum's members include the chief executives of Bank of America Corp., Citigroup Inc. and MetLife Inc.

The paper was prepared by Grant Aldonas, a former Bush administration trade official and adviser to the Center for Strategic and International Studies; Robert Lawrence, a former economic adviser to President Clinton and Harvard University professor; and Matthew Slaughter, a former adviser to President Bush and professor at Dartmouth College.