• TABLE OF CONTENTS
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 Front Cover
 Center information
 Introduction
 The research problem
 Empirical estimates
 Concluding comments
 Reference
 Tables
 Figures






Group Title: Policy Brief Series - International Agricultural Trade and Policy Center. University of Florida ; no. 04-1
Title: Trade adjustment assistance by industry : Florida
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Title: Trade adjustment assistance by industry : Florida
Series Title: Policy Brief Series - International Agricultural Trade and Policy Center. University of Florida ; no. 04-1
Physical Description: Book
Language: English
Creator: Emerson, Robert D.
Napasintuwong, Orachos
Walters, Lurleen
VanSickle, John J.
Publisher: International Agricultural Trade and Policy Center, Institute of Food and Agricultural Sciences, University of Florida
Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville, Fla.
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Table of Contents
    Front Cover
        Page 1
    Center information
        Page 2
    Introduction
        Page 1
    The research problem
        Page 2
        Page 3
        Page 4
        Page 5
    Empirical estimates
        Page 6
        Page 7
        Page 8
        Page 9
    Concluding comments
        Page 10
    Reference
        Page 11
    Tables
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
    Figures
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
Full Text

PBTC 04-1


i -ional Agricultural Trade and Policy Center



TRADE ADJUSTMENT ASSISTANCE BY INDUSTRY:
FLORIDA
By
Robert D. Emerson, Orachos Napasintuwong, Lurleen Walters, & John J.
VanSickle
PBTC 04-1 January 2004


POLICY BRIEF SERIES


i~fr


UNIVERSITY OF
FLORIDA


Institute of Food and Agricultural Sciences


"j_









INTERNATIONAL AGRICULTURAL TRADE AND POLICY CENTER


MISSION AND SCOPE: The International Agricultural Trade and Policy Center
(IATPC) was established in 1990 in the Food and Resource Economics Department
(FRED) of the Institute of Food and Agricultural Sciences (IFAS) at the University of
Florida. Its mission is to provide information, education, and research directed to
immediate and long-term enhancement and sustainability of international trade and
natural resource use. Its scope includes not only trade and related policy issues, but also
agricultural, rural, resource, environmental, food, state, national and international
policies, regulations, and issues that influence trade and development.

OBJECTIVES:

The Center's objectives are to:

Serve as a university-wide focal point and resource base for research on
international agricultural trade and trade policy issues
Facilitate dissemination of agricultural trade related research results and
publications
Encourage interaction between researchers, business and industry groups,
state and federal agencies, and policymakers in the examination and
discussion of agricultural trade policy questions
Provide support to initiatives that enable a better understanding of trade and
policy issues that impact the competitiveness of Florida and southeastern
agriculture specialty crops and livestock in the U.S. and international markets









Trade Adjustment Assistance by Industry:
Florida

Robert D. Emerson, Orachos Napasintuwong, Lurleen Walters and John J. VanSickle


Introduction

The economic welfare enhancing benefits of free trade have been recognized by
economists since the work of Ricardo. Although the economy and society gain as a whole with
increased free trade, some groups typically face economic adjustment since there are
distributional effects associated with changes in international trade. Among the groups requiring
adjustment to the new environment are domestic producers who may face greater competition in
the international market, and associated workers who may be displaced as a result of the reduced
demand for their services. As a result, worker groups have often opposed increased international
trade. A government response has been to provide benefits to workers adversely affected by free
trade agreements. Among the benefits typically included are various forms of adjustment
assistance including relocation assistance, job training, and extended unemployment benefits.

Trade adjustment assistance was initiated in 1962 with the Trade Expansion Act. The
most recent version is The Trade Adjustment Assistance Reform Act of 2002 (TAA) (U.S.
Department of Labor). The program provides benefits to workers dislocated from their jobs as a
result of 1) increased importation of goods for the same, or linked, industries where they had
formerly been employed, or 2) relocation of production from the U.S. to other free trade areas.
Eligible worker groups include not only those directly impacted by importation or production
relocation, but also those in secondary industries who are either upstream or downstream from
the directly affected industry and can demonstrate a loss of employment. TAA applies to
international trade under the following agreements: Free Trade Agreements with the U.S.
(FTA),1 Andean Trade Preference Act (ATPA),2 African Growth and Opportunity Act (AGOA),3
and the Caribbean Basin Economic Recovery Act (CBERA).4

This report summarizes a cooperative research effort between the Florida Agency for
Workforce Innovation (AWI) and the International Agricultural Trade and Policy Center at the
University of Florida. The broad purpose of the project was to provide AWI assistance with



* The research on which this report is based was funded in part by the Florida Agency for Workforce Innovation.
The manuscript has benefited from the comments of David Mulkey.
1 Canada, Israel, Hashemite Kingdom of Jordan, and Mexico.
2 Bolivia, Colombia, Ecuador, and Peru.
3 Benin, Botswana, Cameroon, Cape Verde, Central African Republic, Chad, Republic of Congo, Cote d'Ivoire,
Djibouti, Eritrea, Ethiopia, Gabon, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali,
Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra
Leone, South Africa, Swaziland, Tanzania, Uganda, and Zambia.
4 Antigua and Barbuda, Aruba, Commonwealth of Bahamas, Belize, British Virgin Islands, Costa Rica, Montserrat,
El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Dominican Republic, Nicaragua, Panama, St.
Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, Dominica, and Netherlands
Antilles.






2


information to focus staff resources in appropriate areas of the state with an orientation to the
industries most likely to be affected.

The Research Problem

The research had the following three specific objectives:

1. Determination of the Florida industries most likely to be affected by increased levels of
imports from the free trade areas covered under TAA (see above areas and countries);

2. Estimation of the potential job loss impacts of the Florida industries most likely to be
affected by increased imports or relocation of domestic production; and

3. Projection of the geographic areas of Florida most likely to be affected by job losses due
to increased international trade or production relocation.

The extent to which increased international trade results in job loss is a contentious issue
among economists. One set of studies, for example, suggests that import competition accounts
for only a small portion of job loss in trade sensitive industries (Grossman, 1986; Mann, 1988;
Dickens, 1988; and Blanchflower, 2000). However, another set suggests that import competition
has a strong significant influence on displacement and wage inequality (Revenga, 1992; and
Belman and Lee, 1996). The typical debate among economists concerns a longer term
adjustment in contrast to the interest of AWI in assisting with the immediate effects of worker
displacement due to trade effects. Indeed, one could argue that through the efforts of AWI and
their counterparts in other states, worker displacement effects are minimized over the longer
term. AWI's efforts through the TAA are precisely to assist in worker adjustment to the
changing labor market as a result of international trade. Over time workers are expected to
transfer to other industries expanding with increased exports. Nevertheless, the adjustment can
be time-consuming, and it can be costly for the worker as well as the worker's family, both
monetarily and psychologically. The cost typically increases when further training is needed to
upgrade a worker's skills to be more marketable in today's economy, most importantly in terms
of foregone earnings, but also in the direct cost of the training. Older workers having skills no
longer highly valued in the labor market can be among the most severely impacted through
displacement. Since their remaining work life is shorter, the potential for a positive return on job
training and skill development is much lower than with a younger worker. It is noteworthy that
an added feature of the current TAA is that it has special provisions for workers over age 50.

Since the interest in this report is determining the industries likely to be affected by free
trade so that programs can be focused on labor associated with impacted industries as necessary,
the longer term question is not addressed in the report. The very effort of AWI to assist the
workers in reemployment is to mitigate adverse long run impacts of increased international trade.

The Methodology
Evaluation of the employment impacts of free trade areas on Florida would ideally be
done with an empirical model of international trade and employment for the state. Such a model
could form predictions for which industries are most likely to be impacted in the future, and how









workers with various characteristics associated with those industries are likely to adapt to the
resulting changes in the labor market. In addition, a more complete model could account for the
extent of trade and labor market adjustment that has already taken place with the free trade areas
that have been in existence for some time. However, a model of this type would require far more
development time than was feasible under this project.

Given the short-term nature of this research project, a static approach was adopted to
provide indicators of which industries are most likely to be impacted. The approach can be
summarized in three stages:

Identification of the Florida industries with the most significant imports from the trade
areas of interest

Evaluation of the direct Florida employment impacts of the above imported goods

Evaluation of potential secondary employment impacts due to imported goods from the
areas of interest

Florida Industry Identification
The trade areas of interest were identified above (FTA, ATPA, AGOA, and CBERA).
Imports entering Florida under the trade preference arrangements of each of these programs were
identified on the basis of Florida's two customs reporting districts: Miami and Tampa. Imports
under trade preferences for the areas of interest were aggregated for the Miami and Tampa
districts to form the Florida estimate.5 Although one means of determining the industries most
directly impacted is by ranking the industries by value of the imports under trade preferences,
there are equally meaningful alternatives. One alternative is an import penetration ratio formed
as the ratio of trade preference imports to the sum of all Florida imports and Florida production.
The larger is the import penetration ratio, the more significant are trade preference imports in the
industry. Two other alternatives are 1) an import penetration ratio defined as the ratio of all
Florida imports to the sum of Florida production and Florida imports, and 2) the proportion of all
Florida imports represented by trade preference imports from the areas of interest. Each of these
gives somewhat different information, but together they provide a clearer picture of the relevance
of the selected imports for various Florida industries.

Direct Florida Employment Impacts
The direct employment impacts are an estimate of the employment reduction following
from the importation of goods under the trade preference agreements rather than producing the
goods in Florida. These assume a static technology with the simplifying assumption that




5 A serious limitation of the data source is that the port of entry need not reflect the end use destination for the
imported goods. However, given the geography of Florida as a large peninsula, the problem may be considerably
less severe than for other coastal areas of the U.S. Similarly, there are significant imports of commodities that enter
the U.S. market through non-Florida ports, but are also produced in Florida. Important agricultural examples are
orange juice and tomatoes. Likewise, specific commodities produced largely outside Florida are imported through
Florida ports.









employment is proportional to output.6 The procedure is to first determine the employment
coefficient for Florida production by industry (Employment/(Gross output)). The ratio is then
applied to the value of Florida trade preference imports to obtain an estimate of employment that
would be associated with the imports at the industry level as below for the ith industry:
Employment,
Direct Employment Effect, = Imports, x Empl
Gross Output,
These estimates should not be interpreted as measures of employment displacement. They are
retrospective estimates based on existing flows of imports, and are best interpreted as indicators
of the sensitivity of employment to imports across industry. The approach provides an indicator
of the sensitivity of immediate, direct employment impacts of potential changes in industry level
production due to increased flows of imports. The estimates measure the effect only on the
industry in question; they do not account for any secondary employment changes from industries
supplying goods to the industry in question, or further transformation of the product by other
industries. Over the longer term, most workers find alternative employment; in the short term,
many require no assistance in locating alternative employment.

Secondary Employment Impacts
TAA also provides benefits to workers in industries either supplying the industry directly
affected by imports, or in industries supplied by the affected industry. Identification of the
potentially important secondary industries is done with an input-output (IO) analysis. Utilizing
an inter-industry transactions matrix, the secondary impacts on associated industries can be
traced, and the effect on employment calculated. The secondary effects are determined at the
U.S. level for two reasons, and then apportioned to Florida. First, in many cases the supplying
industries and supplied industries may be in different states. For example, most imports of a
particular good may be into areas of the U.S. other than Florida, but Florida may have important
secondary industries associated with the imported good. A second consideration is that the
transactions data to form the IO matrix are readily available at the U.S. level.

The most recent (1999) IO inter-industry transactions matrix from the Bureau of
Economic Analysis, U.S. Department of Commerce was used.7 The IO approach provides a
convenient means of tracing secondary effects in industries other than the industry with
increased imports. IO analysis assumes a static technology linking one industry with another.
Again, although this is an unrealistic assumption for a long run analysis due to input substitution
possibilities and changing technology, it provides a reasonable approach to address short run
impacts as desired in this project.

The basic structure of IO analysis is that the gross output of an industry is distributed to
other industries and to final demand for the good:
q, = q,1 +q +.+q,,, +D, i= 1,...,n




6 Although this is reasonable for a very short run analysis as under consideration here, this is typically a very poor
assumption for a longer time frame when industries can adjust technologies and substitute among various factors of
production, including labor.
7 The specific table used was the use of commodities by industries before redefinition.









where q, is the gross output of the ith good, the q,'s are the uses of the ith good in thejth
industries, and D, is the final demand for the ith good. The fixed proportions production
technology assumption is that:
q, = a, q,
The technical coefficient a,j is the amount of the ith good required in the production of the jth
good. By substituting this relationship in the previous equation, the following relationship is
obtained:
q, -alq1 -aq2 -..-a q, -...-a = D, i = 1,--,n
or,
-a q, -a,2q2 -----(1-a,)q, -----a q = D, i = ,,n
Putting all n equations together, representing all goods and services in the economy, the system
can be written conveniently in matrix form as:
(I- A)q = D
where I is an nxn identity matrix, A is the nxn matrix of technology coefficients, a,,, q is the n-
element vector of industry outputs, and D is an n-element vector of final demands of the n goods.

The secondary industry effects are now conveniently found given a change in final
demands by solving the equation immediately above for q:
q = (I A)' x D
The secondary effects of interest are due to the trade agreement imports. Assuming no change in
consumer demand, an increase (a reduction) in imports is equivalent to a decrease (an increase)
in final demand for an industry's output.

Two approaches could be considered in calculating the secondary effects. The first is a
standard IO approach in which all changes in final demand occurjointly. In this case, D consists
of the values of imports for each of the trade agreement imports. The solution of the above
equation provides the secondary effects with a simultaneous change in all trade agreement
imports, corresponding to a simplified general equilibrium solution. While this is very concise
giving a set of impacts over all changes, it is not very realistic or useful for the current problem.

A scenario more useful for AWI in the context of Trade Adjustment Assistance is the
identification of the secondary industries given an impact from a single industry which may have
just reduced, or ceased, production due to changes in international trade. In this case, the more
relevant analysis is to specify D, the final demand change, as zeros for all goods other than the
good from the industry currently impacted. With this approach, the relevant secondary industries
are readily identified. The analysis is repeated for each of the imported goods.

With the changes in secondary industry output identified, the associated secondary
employment impacts can be estimated. We assume that Florida shares equally with other areas
of the country in the contraction of secondary output due to increased imports of a good. The
short term assumption of fixed proportions of employment to output is also maintained as it was
for the direct effects. The calculation is then as follows:
Secondary Output ChangeJ
Secondary Employment Effe t = x Florida Employment,
U.S. Output,









This is to be interpreted as the change in employment in the ith industry induced by a change in
imports in the jth industry. The secondary output changes in the above equation come from the
earlier IO solution for q.

Empirical Estimates

Data
Four sets of data are required for the analysis. The value of imports is required to gauge
the relevance of imports across industries in the state. The primary source for import data in the
U.S. is the U.S. Department of Commerce, although the data are presented in alternative ways by
a number of different agencies. A convenient source for the data providing detailed imports
according to various trade agreements is the U.S. International Trade Commission. Trade data
are available for various time periods in alternative industry classification schemes. The critical
constraint for this project is the availability of three sets of data with a common classification
scheme: trade data, domestic output data, and employment data. Although current trade data are
available into the current year, the most recent gross state product data by industry are for the
year 2000. The industry classification scheme adopted is the 3-digit SIC. However, the input-
output transactions data from BEA use a modified SIC classification, so the 3-digit SIC trade
data have been grouped as appropriate to match the IO tables. Employment data have also been
grouped according to the BEA IO classifications from the 3-digit SIC classification. State level
output data are available at the 2-digit SIC level.

In the end, data restrictions limit the estimates to the 2-digit SIC level for the direct
employment effects due to trade. Since the indirect employment effect calculations are not based
on the state level output data, more detailed categories are available corresponding to the BEA
IO classification scheme.

Imports
One measure of the significance of imports in an economy is through an import
penetration ratio. The ratio is defined as the ratio of imports for a good to the sum of domestic
production and imports. Table 1 displays imports through Florida ports and Florida production
for the year 2000 by industry.8 The first column of data is the value of production in Florida.
The next three columns are various groupings of imports. The first is the value of all imports
entering through Florida ports, regardless of the source country. The second import column is all
imports from the pertinent trade agreement countries, regardless of whether or not they were
given trade preference. The third of the import columns is the value of imports from trade
agreement countries which entered under trade preference agreements. Considering imports over
all commodities, approximately one-third of all imports through Florida ports are from the trade
agreement countries. However, only 17 percent of the imports from these countries were subject
to trade preferences (2,236/13,530). The two industries with over a billion dollars in imports
from the trade agreement countries were apparel and textiles with $7.0 billion, and agriculture
with $1.2 billion. However, less than two percent of the apparel and textiles were imported
under trade preferences. Agricultural imports were one-third of all trade preference goods


8 SIC sectors above 39 are not included in the table since they are "non-tradable" goods such as transportation,
services, and government.









imported from the trade agreement countries. The next largest was chemicals with less than half
as much as agricultural imports under trade preferences.

The final three columns of the table are import penetration ratios, measures of the relative
importance of imported goods compared to domestic production:
Imports
Ratio, =
Gross State Product + All Imports
where i is alternatively all imports, all imports from trade agreement countries, and trade
preference imports from trade agreement countries. While the values of imports are indicators of
the absolute volumes of imports, the penetration ratios are measures of the relative significance
of imports in the availability of various products in Florida. Eleven of the 27 industries have
import penetration ratios exceeding 50 percent: coal mining, tobacco products, textile mill
products, apparel and textiles, furniture and fixtures, petroleum products, leather products,
primary metals, industrial machinery, transportation equipment, and miscellaneous
manufacturing. Turning to imports from the trade agreement countries, only three of the 27
industries have import penetration ratios exceeding 50 percent: coal mining, textile mill products,
and apparel and textiles. When the imports are restricted to include only trade preference
imports from the trade agreement countries, the highest ratio is 39 percent for tobacco products.
Agriculture is the next highest with 13 percent; all others are less than ten percent.

Direct Employment Impacts
Direct employment impacts have been estimated assuming a constant employment to
output ratio by industry as outlined above. Multiplying this ratio by the level of imports of the
corresponding commodity yields the direct employment effect for the industry. Table 2
summarizes the direct employment impact estimates for Florida by industry. (See figures
for a graphical presentation.) As is apparent from table 2, it is not necessarily the largest
industries in terms of output, employment or imports, each taken individually, that are likely to
have the greatest employment effect. For example, among the industries listed, construction has
the largest gross state output and employment share, but construction is only domestically
produced.9 On the other hand, the apparel and textiles industry has a relatively small domestic
output in Florida, but the labor intensive nature of production suggests a relatively large
employment effect. As is apparent from the employment share column of the table, none of the
industries with imported goods has a very large employment share. The largest employment
share for an industry with any significant level of imported goods is agriculture, but still
representing only 1.19 percent of employment in the state.10

The values of most interest in the table are the last column, the direct employment
impact. The values in this column are the product of the ratio of employment to gross state
product multiplied by the value of imports. The values indicate the magnitude of employment
required had the imported goods been produced in Florida under the same technology as current
domestic production. In interpreting these numbers, it is essential to bear in mind that these are
not in any way indicative of the numbers of employees who might become eligible under TAA.

9 There are additional non-tradable goods and services excluded from the table having SIC codes above 39.
Examples are transportation, wholesale and retail trade, services, and government.
10 Agricultural services, forestry and fishing, and printing and publishing each have a slightly higher percentage than
agriculture, but the level of imports is trivial in each case since the products are largely non-tradable.









At best, they provide a ranking of the industries where employment is most sensitive to increased
levels of imports.

The most sensitive industry by far is agriculture as illustrated in table 2, and more
strikingly in figure 1. The estimated employment effect is over three times that of the next
closest industry. The agricultural commodities most sensitive to import competition from the
countries under TAA are vegetables; fresh flowers, seeds and foliage; non-citrus fruits; and
nursery products and trees. Although citrus is the largest employer of agricultural labor, the
primary source of citrus import competition (Brazil) is not among the countries included under
TAA.

Other than agriculture, the industries with estimates of over 1,000 workers represented by
the level of imports are: apparel and textiles, transportation equipment, miscellaneous
manufacturing, chemicals, tobacco products, rubber and plastics, food and kindred products, and
leather products. With this apparent combination of imports and labor intensity in production,
the above industries, plus agriculture, are judged to be the most likely candidates for further
employment adjustment that would be eligible for TAA.

Regional Allocations
Florida's 67 counties are organized into 24 Regional Workforce Boards as illustrated in
figure 2. The potential employment adjustment is allocated to the Regional Workforce Boards
by the location of employment in affected industries. Table 3 shows the allocations by Regional
Workforce Board; they are also illustrated graphically in figure 3. While figure 3 appropriately
represents the potential for employment assistance in the various regions of the state, the regional
allocation is directly related to the employment share in the various regions. To compensate for
the differences in employment among regions, the employment effects are illustrated in figure 4
relative to total employment in the respective regions. The result is that most sensitive areas are
no longer concentrated in the major metropolitan areas. Figure 3 represents the potential volume
of employee adjustment; figure 4 is more representative of the potential employment sensitivity
relative to total employment.

Many industries are concentrated in a few local areas of Florida. Correspondingly,
regional workforce board personnel can focus their attention on sensitive industries located in
their region. The first and second most sensitive industries for each workforce region are
illustrated in figures 5 and 6, respectively. It is apparent from the figures that the most sensitive
industry varies from one region to another, and that some regions are far more likely to have
impacts than others. In accordance with the statewide importance of farms as shown in figure 1,
the farming industry is the most sensitive industry in 13 of the 24 workforce boards (figure 5).
The next closest industry is the transportation equipment industry as the most sensitive in three
of the 24 workforce boards. Among the second most sensitive industries (figure 6),
transportation equipment appears in six of the 24 workforce boards and farms appear in five of
the workforce boards.

The distribution across the state of the three most sensitive industries is illustrated in
figures 7, 8 and 9. The most sensitive industry statewide, agriculture, is one of the more widely
distributed industries in Florida, although agricultural employment is largely in central and south









Florida. Regional Workforce Boards 12, 15, 21, 23 and 24 are each ranked as having impacts of
more than 1,000 workers in agriculture (figure 7). By contrast, nearly half of the Florida apparel
and textiles industry is located in Regional Workforce Board 23, and that is where any major
employment adjustment effects would be expected with adjustment by that industry due to trade
(figure 8). The third most sensitive industry, transportation equipment, is distributed rather
evenly along the east coast workforce regions, and the Tampa Bay area (figure 9).

Secondary Employment Impacts
Secondary effects have been calculated through the use of an input-output analysis. As
discussed earlier, the input-output analysis is done at the U.S. level and then allocated to Florida
since affiliated industries need not be in the same state to be affected. The allocation is
proportional to the share of Florida production of the commodity relative to total U.S.
production. The changes in imports are introduced as the change in final demand for the input-
output analysis. Although one way to proceed is to include all of the import commodities in the
final demand, this assumes that all imports will change at the same time, a rather unlikely
scenario. The approach taken has been to introduce a single import good at a time, and calculate
the implied inter-industry changes associated with that one import good. The likely scenario is a
plant closure in a particular industry; the issue is what affiliated industries are likely to be
affected. The one-good-at-a-time approach addresses this question.

Given successive changes in each of the imported goods, the secondary changes in output
from the input-output analysis are available at the U.S. level. Although secondary effects were
calculated for each industry, the results quickly yield so much detail that they are not very useful.
A number of the same secondary industries reappeared with each successive individual industry
analysis. Given the commonality in secondary effects across industries, the effects are
accumulated for all industries where the secondary employment impact was 500 or more
workers, or if the industry ranked among the top seven industries in the direct employment
impact.

As illustrated in figure 10, nine of the secondary industries have estimated employment
effects exceeding 1,000 workers, and the largest is over 9,000. Interestingly, the top six
industries are all non-tradable goods: business and professional services, wholesale trade, hotel
and lodging, automotive repair, freight transportation, and legal, engineering, accounting and
related services. It is also noteworthy that the primary industry of transportation equipment
dominated the secondary industry effects (table 4).

Table 5 lists the regional allocations of the secondary effects which are also displayed
graphically in figure 11. These are again apportioned according to the level of employment and
industry mix in each of the workforce board regions. An immediate observation from figure 11
is that the employment effects are much more evenly distributed than is the case for the primary
effects. This is presumably due to the nature of the secondary industries identified: most are
industries that are common to most segments of the economy and are correspondingly evenly
distributed across the state.









Concluding Comments

Trade Adjustment Assistance is an important program for workers needing re-
employment assistance as a result of potential domestic employment changes due to international
trade. The level and distribution of imports across commodities in Florida have been identified
in this report. Since TAA is a program intended to provide immediate assistance, a static
approach has been used to relate the employment changes to the changes in levels of imports.
This assumes no changes in technology as a result of the trade changes. Although there may be
changes in technology over the longer term, the adjustment time period is too brief for
technology to have a significant influence.

The direct employment effects reflect the proportionality of employment to production,
and the employment adjustment reported is determined by the level of imports from free trade
area countries in the year 2000, the most recent year with common data for imports, gross state
product and employment. The industries with the five largest employment effects are
agriculture, apparel and textiles, transportation equipment, miscellaneous manufacturing, and
chemicals. The employment adjustment estimates are best evaluated as indicative of the
probability of workers applying for TAA in a particular industry, or location. The larger the
number, the more likely there would be an application from a particular industry. The numbers
should not be interpreted as the number of workers expected to apply for TAA benefits. This is
because much of the adjustment from the trade agreements has already taken place and is
unlikely to shift dramatically without further significant changes in trade agreements, or longer
term changes in comparative advantage due to technological change.

The secondary effects calculated via an input-output analysis reveal relatively large
employment changes in secondary industries induced by increased imports among tradable
goods. There is no question that a worker displaced from a secondary industry is any less
important or worthy of assistance than a worker displaced from the primary industry. Although
there may be some uniquely direct ties between industries, in many cases the very nature of
secondary industries and effects is that they are far more amorphous and far more difficult to
identify with a particular trade shift. The secondary industries are affected by numerous changes
simultaneously, and this is borne out by the more even distribution across industries than in the
case of the primary effects. Identifying workers from secondary industries for TAA may be very
challenging in practice.

One set of changes not reflected in the data is the African Growth and Opportunity Act
(AGOA) since it became effective after the period for analysis. However, examination of the
trade data for 2001-2002 did not reveal many surprises. Apparel and textiles were significant
among the imports under AGOA, a commodity already significant from the other trade areas. A
future concern is the Free Trade Area of the Americas, FTAA. One of the larger commodity
groups likely to be increasingly imported under FTAA is agricultural commodities, already the
commodity with the largest estimated employment effect.

A more complete analysis, although beyond the scope of this brief project, would attempt
to systematically model employment in the U.S. in response to imports from free trade areas.
Such a model would relax many of the rather stringent assumptions of the current analysis. An









important example is considerations of the type of workers employed in an industry. There is
some evidence that particular types of workers are less likely to have re-employment problems
resulting from increased imports, or they are less likely to be dismissed in the event of a trade
induced lay-off. One example is workers with computer skills (Addison, et al.).


References

Addison, J.T., D. Fox, and C. Ruhm. "Technology, Trade Sensitivity, and Labor Displacement".
.Sani/ti I1 Economic Journal. 66(2000):682-699.

Belman, D., and T. Lee. "International Trade and the Performance of U.S. Labor Markets." U.S.
Trade Policy and Global GI ,i i th. New Directions in the International Economy. R.
Blecker, ed. Armonk, N.Y.: M. E. Sharpe, 1996.

Blanchflower, D. "Globalization and the Labor Market." Paper commissioned by U.S. Trade
Deficit Review Commission, Washington D.C. September. 2000.

Dickens, W. "The Effects of Trade on Employment: Techniques and Evidence." The Dynamics
of Trade and Employment. L. D'Andrea Tyson, W. Dickens, and J. Zysman, eds., pp. 41-
85. Cambridge, Mass.: Ballinger Publishing Co., 1988.

Grossman, G. "The Employment and Wage Effects of Import Competition in the United States."
Journal ofInternational Economic Integration 2(1987): 1-23.

Mann, C. "The Effect of Foreign Competition in Prices and Quantities on the Employment in
Import-Sensitive U.S. Industries." International Trade Journal 2(1988):409-444.

Revenga, A. "Exporting Jobs? The Impact of Import Competition on Employment and Wages
in U.S. Manufacturing." Quarterly Journal of Economics 107(1992):255-284.

Ricardo, David. On the Principles of Political Economy and Taxation. London: Dent, 1957.
(original 1819).

U.S. Department of Commerce. Bureau of Economic Analysis. http://www.bea.gov/bea/dn2/i-
o.htm

U.S. Department of Labor. Employment and Training Administration.
http://www.doleta.gov/tradeact/2002act index.cfm 2003.

U.S. International Trade Commission. USITC Interactive Tariff and Trade DataWeb.
httD ://dataweb.usitc. aov








Table 1. Florida product, imports, and import penetration ratios by sector, 2000
Imports through Florida Portsb Import Penetration Ratios
Gross From Trade Agreement Trade Agreement
Industry SIC State Countries All Countries
Product Al Trade Imports Trade
All Allference
Preference Preference


Total Gross State Product
Farms
Agricultural services, forestry and fishery
Metal mining
Coal mining
Oil and gas
Nonmetalic minerals
Construction
Food & kindred products
Tobacco products
Textile mill products
Apparel and textile
Lumber and wood
Furniture and fixtures
Paper products
Printing and publishing
Chemicals
Petroleum products
Rubber and plastics
Leather products
Stone, clay, glass
Primary metals
Fabricated metals
Industrial machinery
Electronic equipment
Transportation equipment
Instruments and related
Miscellaneous manufacturing


01-02
07-09
10
12
13
14
15-17
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39


--------------Million
472,105' 38,007
4,157 1,396
3,927 1,354
31 0
2 45
81 25
785 91
25,357 0
4,542 1,130
180 277
116 330
593 7,673
1,159 277
486 516
1,016 420
3,236 45
3,044 1,203
343 1,217
907 428
123 709
1,749 626
457 709
2,054 438
2,190 2,374
4,584 2,287
3,589 11,173
1,695 993
526 913


Dollars---------------
13,530 2,246
1,155 744
656 8
0 0
41 0
0 0
62 0
0 0
163 128
184 182
251 6
7,032 108
68 24
50 0
140 16
8 0
595 340
395 16
87 76
116 72
79 26
276 26
26 13
819 5
460 59
257 205
376 40
222 142


0.07
0.25
0.25
0.00
0.95
0.24
0.10
0.00
0.19
0.60
0.74
0.92
0.19
0.51
0.29
0.01
0.28
0.78
0.32
0.85
0.26
0.60
0.17
0.52
0.33
0.75
0.36
0.63


0.02
0.20
0.12
0.00
0.87
0.00
0.07
0.00
0.02
0.40
0.56
0.85
0.04
0.05
0.09
0.00
0.14
0.25
0.06
0.13
0.03
0.23
0.01
0.17
0.06
0.01
0.13
0.15


0.00
0.13
0.00
0.00
0.00
0.00
0.00
0.00
0.02
0.39
0.01
0.01
0.01
0.00
0.01
0.00
0.08
0.01
0.05
0.08
0.01
0.02
0.00
0.00
0.00
0.01
0.01
0.09
continued


v






13
Table 1. Florida product, imports, and import penetration ratios by sector, 2000, continued

aBureau of Economic Analysis, U.S. Department of Commerce, Washington, DC. http://www.bea.gov/bea/regional/gsp/
bU.S. International Trade Commission, Washington, DC. http://dataweb.usitc.gov
"Includes nontradable goods not separately itemized.







Table 2. Direct employment estimates, 2000 Florida imports
Trade
Gross Agreement Florida Employment Direct
Florida Employment
Industry SIC State Imports Employment Share Employment
Product through Impact
Florida Ports
-------Million Dollars------- Percent
Total Gross State Product 472,105 2,246 7,059,980
Farms 01-02 4,157 744 62,749 0.89 11,238
Agricultural services, forestry and fishery 07-09 3,927 9 94,425 1.34 209
Metal mining 10 31 0 398 0.01 0
Oil and gas 13 81 0 489 0.01 0
Nonmetalic minerals 14 785 0 5,473 0.08 2
Construction 15-17 25,357 0 397,903 5.64 0
Food and kindred products 20 4,542 128 41,139 0.58 1,162
Tobacco products 21 180 182 1,951 0.03 1,974
Textile mill products 22 116 7 3,539 0.05 206
Apparel and textile 23 593 109 18,199 0.26 3,335
Lumber and wood 24 1,159 25 22,081 0.31 475
Furniture and fixtures 25 486 0 12,288 0.17 7
Paper products 26 1,016 16 12,842 0.18 208
Printing and publishing 27 3,236 1 64,902 0.92 13
Chemicals 28 3,044 340 21,944 0.31 2,453
Petroleum products 29 343 16 2,112 0.03 99
Rubber and plastics 30 907 76 18,181 0.26 1,526
Leather products 31 123 72 1,911 0.03 1,122
Stone, clay, glass 32 1,749 26 24,358 0.35 363
Primary metals 33 457 26 6,631 0.09 384
Fabricated metals 34 2,054 13 36,211 0.51 235
Industrial machinery 35 2,190 6 36,987 0.52 99
Electronic equipment 36 4,584 60 62,175 0.88 811
Transportation equipment 37 3,589 205 52,857 0.75 3,024
Instruments and related 38 1,695 40 35,536 0.50 847
Miscellaneous manufacturing 39 526 143 10,153 0.14 2,752
Total (above industries only) 66,927 2,244 1,047,434 14.84 32,544
aFlorida Agency for Workforce Innovation, Tallahassee, Florida. http://fred.labormarketinfo.com









Table 3. Direct employment effects by region
Work
Force Counties
Board
1 Escambia and Santa Rosa
2 Okaloosa and Walton
3 Calhoun, Holmes, Jackson, Libe
4 Bay, Franklin and Gulf


Direct
Employment
Effect
842
184
269
143


rty and Washington


Gadsden, Leon and Wakulla
Hamilton, Jefferson, Lafayette, Madison, Suwannee and Taylor
Columbia, Dixie, Gilchrist and Union
Baker, Clay, Duval, Nassau, Putnam and St. Johns

Alachua and Bradford
Citrus, Levy, and Marion
Flagler and Volusia
Orange, Osceola, Seminole, Lake and Sumter

Brevard
Pinellas
Hillsborough
Hernando and Pasco

Polk
Manatee and Sarasota
DeSoto, Hardee and Highlands
Indian River, Martin, Okeechobee and St. Lucie

Palm Beach
Broward
Dade and Monroe
Charlotte, Collier, Glades, Hendry and Lee


477
465
150
3,134

333
908
980
2,817

834
1,666
3,588
296

1,316
1,561
604
1,196

2,356
1,628
5,297
1,988








Table 4. Secondary employment effects
Primary Industry
IO 59A+
Secondary Industry 01+ 20+ 22+ 59 3 Sum
Code 02 28 30 39 36 38 59B+ 31
02 21 23
61


Other business and professional
services, except medical
Wholesale trade
Hotels and lodging places
Automotive repair and services
Motor freight transportation and
warehousing
Legal, engineering, accounting,
and related services
Motor vehicles, trucks, buses,
other transportation equipment
New Construction; Maintenance
and repair construction
Primary metals manfg.; screw
machine products & stampings
Agricultural, forestry, and fishery
services
Eating and drinking places
Rubber and miscellaneous plastics
products
Air transportation
Electronic components and
accessories
Finance
Educational and social services,
and membership organizations
State and local government
enterprises
Farms


73C 355 319 29 5 131


69A
72A
75
65B

73B
59A +
59B+61
11+12
37+38
+41


60 894


257
0
0


7 7,084 303 9,187


5,563
1,317
1,508


74 55 7 1 32 26 171


0 106


7 1 0 0 114


1 1,084

1 1,113


0 0 0 0 0 0 0 0 1,406


0 58 4 1 0 10 138

0 0 0 2 0 0 175


04 841


6,889
1,589
1,508


0 1,450

85 1,427

0 1,406


1 974 100 1,286


0 915


0 1,092


0 0 0 91 0 0 0 0 0 932


74 0 0 3 0 0 0 0 0 861
32 0 0 0 0 0 0 0 0 713


65D


0 0 0 0 0 0 0 0 701


57 0 0 0 0 0 0 0 0 666
70A 0 0 0 0 0 0 0 0 628
77B 0 0 0 0 0 0 0 0 600

79 0 0 0 0 0 0 0 0 590


0 864
0 713
0 701
0 666
0 628
0 600

0 590


0 0 0 0 0 0 0 0 0 424


01+02 424









Table 5. Secondary employment effects by region
Work
Force Counties
Board
1 Escambia and Santa Rosa
2 Okaloosa and Walton
3 Calhoun, Holmes, Jackson, Liberty a
4 Bay, Franklin and Gulf


Secondary
Employment
Effect
592
347
61
264


md Washington


Gadsden, Leon and Wakulla
Hamilton, Jefferson, Lafayette, Madison, Suwannee and Taylor
Columbia, Dixie, Gilchrist and Union
Baker, Clay, Duval, Nassau, Putnam and St. Johns

Alachua and Bradford
Citrus, Levy, and Marion
Flagler and Volusia
Orange, Osceola, Seminole, Lake and Sumter

Brevard
Pinellas
Hillsborough
Hernando and Pasco

Polk
Manatee and Sarasota
DeSoto, Hardee and Highlands
Indian River, Martin, Okeechobee and St. Lucie

Palm Beach
Broward
Dade and Monroe
Charlotte, Collier, Glades, Hendry and Lee


469
104
80
2,759

381
611
645
4,258

1,020
2,346
3,464
319

860
1,483
188
619

2,035
2,991
4,834
1,221












Figure 1. Direct Employment Sensitivity


12,000


10,000


8,000


E
' 6,000
E

4,000


2,000


0


Industry














Figure 2. Regional




Workforce Boards


Workforce Board
1 Escarosa
2- Okaloosa-Walton
3- Chipola
4 Gulf Coast
5' Plu
S 6 Noir FlO,,(a
7 Florida Crown
8 WorkSource
9 Alachua-Bradford
10 Citrus Levy Marion
11 -Flagler-Volusia
- 12 Central Florida
13 Brevard
S14- Pinellas
- 15- Tampa Bay
16* P3aco Mer.rao
S 17 Poll Counlr
la Sun, co-r
19-Heartland
20 Treasure Coast
21 Alliance
22 Broward
S 23- South Florida
24 Southwest Florida







Figure 3.


Direct


Employment Effect


S-a--i 3


Employment Effect
100-200
200 300
300- 500
S500 600
M 600-1,000
S1,000-1,300
M 1,300- 1,700
S1,700-2,400


2,400
3,600


- 3,600
- 5,300









Figure 4. Direct


Employment Sensitivity


Direct Effect: Rate per 1,000 Employed
2
3
-4
5
M6
-7
8 12
S 13 -14


%,W7-/


I21









Figure 5.


Most Sensitive Industry





2





13
17
14


Industry
Farms
Tobacco Products
SApparel & Textiles 22
Chemicals
Transportation Equipment
Misc. Manufacturing








Figure 6.


Second Most


Sensitive Industry




56
7l
4
10




14 315
18 19 20

Industry 2
Farms
Tobacco Products
Apparel & Textiles
Chemicals
Rubber & Plastics
Electronic Equipment
Transportation Equipment
Instruments & Related Equip.
Misc. Manufacturing







Figure 7


SRegional Farm


Employment Effects


Employment Effect
<=100 or Confidential
101-500
501-1,000
M 1,001-1,500
S>1,500





Figure 8.


Regional


Apparel
Employment Effects


Employment Effects
<=100 or Confidential
101-500
>1,500






Figure 9. Regional

Transportation

Equipment

Employment Effects


Employment Effects
<=100 or Confidential
101-500


16
14 15
18


21
22
23












Figure 10. Secondary Employment Effects


10,000

9,000

8,000

7,000

6,000
E
>' 5,000

E
w 4,000

3,000

2,000

1,000

0


Industry






Figure 11. Regional

Secondary Employment


Employment Effect
<500
500 999
1,000- 1,999
2,000 2,999
3,000 3,999
= >=4,000




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