oversight

Assistance to Nonrubber Shoe Firms

Published by the Government Accountability Office on 1977-03-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCUMENT RESUME           C    S A
00594 -   A08916191
Assistance to Nonrubber Shoe Firms. CED-77-51; B-179342.     arch
4, 1977. Released March 7, 1977. 49 pp.

Report to Rep. James A. Burke; by Robert F. Keller, Acting
Comptroller General.
Issue Area: Education, Training, and Employment Programs:
    Programs for Specific Target Groups (1108); Domestic Housing
    and Community Development (2100).
Contact: Community and Economic Development Div.
Budget Function: Communit7 and Regional Development: Area and
    Regional Development (452).
Organization Concerned: Economic Development administration;
    Department of Commerce.
congressional Relevance: Rep. James A. Burke.
Authority: Trade Act of 1974 (P.L. 93-t618). National
    Environmental Policy Act of 1969 (42 U.S.C. 4321). Trade
    Expansion Act of 1962.
          The Trade Adjustment Assistance Program was set up to
provide loans and technical assistance to help firms, hurt by
increased imports of their products, to retool to make new or
different products and to keep from going out of business.
Assistance provided to the nonrubber footwear industry under
this program was investigated.   Findings/Conclusions:   few
administrative problems ay herve kept some nnrukber shoe firs
from getting loans as quickly as possible. Although the
Department of ommserce first thought that more than 200
nonrubber shoe firms ight apply for assistance, only 25 firms
petitioned and 16 were certified. About $3.3 million in loans
was authorized to four of these firms, and technical assistance
costing about $230,000 was provided to one firs and the footwear
industries association. The most prevalent reason given by
nonpetitioning firms for not applying was that they did not need
assistance. The certification and application requirements of
the Trade Adjustment Assistance Program, with few exceptions,
were reasonable and consonant with the Trade Act of 1974 and
other legislation. Recommendations: Administrative delays in
processing both petitions and/or applications should be
corrected. The Economic Development Administraticn should
provide minimal assistance to some firms in preparing their
applications for assistance. (Author/SC)
       ~~~o                                             p/fjS~i
  'i   REPORT OF THE
       COMPTROLLER GENERAL
~? "   OF THE UNITED STATES




       Assistance To Nonrubber
       Shoe Firms
       Department of Commerce

       The certification and application require-
       ments of the T;-ade Adjustment Assistance
       Program, with few exceptions, were reason-
       able and in consonance with the Trade Act of
       1974 and other legislation.

       However, two problems could be corrected:
       administrative delays in processing both peti-
       tions and/or applications and minimal assist-
       ance from the Economic Development Ad-
       ministration to some firms in preparing their
       applications for assistance.




       CED-77-51                                          C   X   .
6*:~.~        COMPTROLLER GENERAL OF THE UNITED STATE
                         WA*glSqINGYON, D.C.
                                       MuDs




B-i79342




The Honorable James A. Burke
House of Representatives

Dear Mr. Burke:

     Pursuant to your request of April 8, 1976, we have
reviewed why the Economic Development Administration
has failed to provide the nonrubber footwear industry
timely trade adjustment financial assistance under he
provisions of the Trade Act of 1974.

     As agreed,-we orally briefed your office on
October 8, 1976, relating the findings of our review
to date and provided a written statement of facts on
November 23, 1976.

     As you requested, the Economic Development Admin-
istration was given opportunity to present oral comments
on the conclusions and recommendations which deal with
ways the program's administration can be improved.

     The Economic Development Administration expressed
general agreement with the facts contained in this
report.  It also expressed agreement with our recom-
mendations. As ou know, section 236 of the Legislative
Reorganization Act of 1970 requires the head of a Fed-
eral agency to submit a written statement on actions
taken on our recommendations to the House Committee on
Government Operations and the Senate Committee on Gov-
ernmental Affairs not later than 60 days after the date
of the report and to the House and Senate Committees on
Appropriations with the agency's first request for ap-
propriations made more than 60 days after the date of
the report. We will be in touch with your office in
the near future to arrange for release of the report
to set in motion the requirements of section 236.
B-179342


     Copies of this report are being sent to Senators
John A. Durkin and Thomas F. McIntyre and Represen-
tative Norm D'Amours.

                         Sincerely yours,




                  ACTING Co     hellftineral
                         of the United States




                         2
 REPORT OF THE                             ASSISTANCE TO
 COMPTROLLER GENERAL                       NONRUBBER SHOE FIRMS
 OF THE UNITED STATES                      Department of Commerce


 DIGEST

            The Trade Adjustment Assistance Program,
            administered by the Economic Development
            Administration at the Department of Commerce,
            was set up to provide loans and technical
            assistance to help firms, hurt by increased
            imports of their products, to retool to
            make new or different products and keep
            from going out of business.

            A few administrative problems, such as proc-
            essing delays and the little help given firms
            in filling out applications for assistance,
            may have kept some nonrubber shoe firms from
            getting loans as quickly as possible.

            The Department of Commerce first thought that
            more than 200 nonrubber shoe firms might pe-
            tition for, and that by December 1976 possibly
            150 would be eligible for, adjustment assist-
            ance under the Trade Act of 1974.  Only 25
            firms petitioned, and 16 were certified.

            The Economic Development Administration au-
            thorized about $3.3 million in loans to four
            of these firms and provided technical assist-
            ance costing about $230,000 to one firm and
            the footwear industries association.
            Why didn't more firms seek assistance? The
            single prevalent response from 102 firms sur-
            veyed was that they did not need assistance.
            Other reasons were

            -- the Trade Adjustment Assistance program
               would not solve their problems,

            -- they did not believe they were eligible,
            -- they did not know enough about the program,
               and
            -- excessive time, money, and paperwork were
               involved. (See p. 9.)

caar sL . Upon moval, the report                           CED-7751
cov     er
        eshould be noted eror.i                            CED-77-51
ADMINISTRATION OF THE PROGRAM

The Trade Adjustment Assistance Program has
two processing stages--certification and ap-
plication.  With few minor exceptions, Depart-
ment of Commerce requirements under these
stages were reasonable and in consonance with
the Trade Act of 1974 or other applicable leg-
islation.  Correcting the problems will not
greatly affect processing time, although it
may help to somewhat reduce the work required
to prepare petitions for certification and
applications for assistance.   (See p. 3.)
Administrative delays occurred in 12 cf 18
nonrubber shoe firms either during the cer-
tification or application processes or both.
Except for the long time taken to screen some
applications and, in one case approve an ap-
plication, the delays were not extensive and
were correctable.  (See p. 12.)
Some firms need help in preparing their appli-
cations for assistance, including economic
adjustment proposals. Although entitled to
such assistance under the act, few nonrubber
shoe firms received any.  (See p. 20.)
The Economic Development Administration,
which was given the opportunity to in-
formally comment on the conclusions and
recommendations, generally agreed with
this report and described actions taken
to correct some of the problems noted.
(See pp. 5, 19, and 27.)

RECOMMENDATIONS

The Secretary of Commerce should direct the
Assistant Secretary for Economic Development
to
-- require applicants to submit for the pre-
 cedirg 2 or 3 years only that financial,
 production, sales, inventory, and workload
 information absolutely necessary for de-
 ciding eligibility for certification;
-- reevaluate whether the Economic Development
   Administration should assess the effects on
   the environment under the Trade Adjustment


                     ii
             Assistance Progiam, since the anticipated
             large volume of trade adjustment assistance
             never materialized;
           -- provide nonrubber shoe firms assistance in
              preparing their application packages, in-
              cluding development of economic adjustment
              plans;
           -- inform such firms of restrictions governing
              approval of assistance projects when work
              on the projects has already been done; and

           --make every effort to advise such firms of
             alternative Federal programs which could
             help them adjust to forrt'n competition.

           To prevent administrative delays, the Secre-
           tary of Commerce should direct the Assist-
           ant Secretary for Economic Development to
           review the Trade Adjustment Assistance in-
           structions and administrative procedures to
           determine whether
           -- regional personnel know about trade adjust-
              ment assistance, including the 5-working-
              day screening requirement, and take measures
              to adjust their work priorities accordingly;

           -- regional offices have procedures, such as
              time stamping applications when opening
              the daily mail, to comply with the
              screening time requirement;

           -- regional offices have uniform procedures
              for processing trade adjustment assistance
              applications--including the screening of
              applications before acceptance; and

           -- regional officials are following the
              Economic Development Administration
              headquarters criteria for approving loans.




Iuar Sht                       iii
                       Contents


DIGEST                                                   i
CHAPTER

   1       INTRODUCTION                                  1
               Scope of review                           2
   2       CERTIFICATION AND APPLICATION REQUIREMENTS
             APPEAR REASONABLE                           3
               Certification process                     3
               Application process                       4
               Agency comments                           5
               Conclusions and recommendations           5
   3       PROGRAM PARTICIPATION NOT AS GREAT AS
             ANTICIPATED                                 7
               Combl:erce study                          7
               Extent of participation                   7
               Results of telephone survey               8
               Conclusions                              11
   4       ADMINISTRATIVE DELAYS IDENTIFIED             12
               Time requirements                        12
               Delays during certification              13
               Delays during application                15
               Conclusions and recommendations          18
    5      NEED TO PROVIDE ASSISTANCE TO FIRMS IN
              PREPARING APPLICATIONS                    20
               Legislative requirements                 20
               Need for assistance in preparing
                 applications                           21
               Limited assistance provided              23
               Need to provide information on other
                 assistance programs                    25
               Conclusions and recommendations          26
APPENDIX

    I      Certification process                        28
   II      Application process                          32
  III      Form ED-435--Petition by a firm for cer-
             tification of eligibility to apply for
             trade adjustment assistance                38
   IV      Form ED-272--Application requirements
             and index-trade adjustment assistance
             for firms                                  44
APPENDIX                                              Pae
       V    Officials' responses to questions
              regarding import injury and reasons
               for not petitioning for trade
               adjustment assistance                   48
      VI    Status of certified nonrrubber footwear
              firms as of December 31, 1976            49
                        ABBREVIATIONS
DAS/P      Deputy Assistant Secretary for Economic
             Development Planning

DIBA       Domestic and International Business
             Administration
EDA        Economic Development Administration
GAO        General Accountina Office
OBD        Office of Business Development
TACD       Trade Act Certification Division
                         CHAPTER 1
                       INTRODUCTION

     Congress has the constitutional authority to levy duties
and in other ways regulate foreign trade. Since 1934, it
has periodically delegated the President specific and limited
authority to conduct negotiations with other countries for
reciprocal tariff and trade concessions.

     The Trade Act of 1974 (Public Law 93-618) gives the
President 5-year authority to engage in multilateral trade
negotiations to promote the development of an open, nondis-
criminatory and fair world economic system to stimulate the
economic growth of the United States. In addition, the act
provides procedures to safeguard American industry and labor
against unfair or injurious import competition and to assist
industries, firms, workers, and communities to adjust to
changes in international trade flows.

     Title II, chapter 3, of the Trade Act of 1974, includes
provisions for trade adjustment assistance for firms. The
objective of the adjustment assistance program is to help
firms injured by increased imports to adjust to changes in
international trade flows. Types of assistance include tech-
nical assistance to develop an adjustment proposal and direct
and/or guaranteed loans to purchase fixed assets or for use
as working capital to implement the proposal. The program
is administered by the Department of Commerce's Economic
Development Administration (EDA).

     The trade adjustment assistance program for firms under
the Trade Act of 1974 differed in several important ways
from provisions of a comparable program authorized in the
Trade Expansion Act of 1962. Most importantly the eligibi-
lity criteria for program assistance are significantly
relaxed. The Trade Act of 1974 eliminated the requirement
that there be any causal link between tariff concessions and
increased imports and that increased imports would not have
to be the major factor causing or threatening serious injury
to the firm. The Secretary of Commerce (Secretary) deter-
mines eligibility (certification) under the new program, and
individual firms can directly petition EDA instead of the
International Trade commission, formally the Tariff Commis-
sion. EDA Headuarters is responsible for certification,
whereas the six regional offices are responsible for processing
applications for loans and technical assistance.




                            1
     In meetings held with your office, we agreed to

     -- identify EDA requirements for firms from the
        time of application to actual disbursement of
        the funds,
     -- evaluate the need for these requirements,

     -- evaluate the assistance EDA gives the firms
        in meeting these requirements,
     -- identify delays from the time the firms are
        certified to actual approval for adjustment
        assistance, and
     -- identify reasons for these delays.
     The Office of Management and Budget allotted $20 million
for the firm's adjustment assistance program both in fiscal
years 1976-77. As of December 1, 1976, EDA had authorized
loans amounting to about $13.5 million to 15 firms--including
$3.3 million to 4 firms--and technical assistance of $250,000--
including $5,000 to 1 footwear firm and $225,000 to the
American Footwear Industries Association.
SCOPE OF REVIEW

     Our review included 18 nonrubber shoe firms which had
petitioned EDA for assistance. As of June 30, 1976, 13 firms
had been certified by EDA. We reviewed the records of firms
at EDA's Washington Headquarters and visited or talked to
officials of 11 firms. We interviewed agency officials at
EDA's Washington headquarters and the Atlantic Regional Office
in Philadelphia. In addition, we telephone surveyed 102 firms
in the major footwear producing States to determine why they
have not requested assistance.




                              2
                         CHAPTER 2
               CERTIFICATION AND APPLICATION

              REQUIREMENTS APPEAR REASONABLE


     The Trade Adjustment Assistance Program administered by
EDA involves two processing stages--certification and appli-
cation. During certification EDA makes a determination as to
a firm's eligibility to apply for program assistance. Once
this decision is reached, the certified firm then may apply
for program assistance by submitting required documentation--
including a detailed explanation of the firm's economic re-
covery plans. Under provisions of the 1974 Trade Act, the
Secretary must make a determination within 60 days of
accepting a firm's petition and approve or disapprove the
application for assistance within another 60-day period. A
detailed explanation of both the certification and applica-
tion processes--including flowcharts--are shown in appendixes
I and II.
     Certification and application requirements, with minor
exceptions, appear reasonable and in consonance with criteria
cited in the 1974 Trade Act and other applicable legislation.
The exceptions noted are discussed below.

CERTIFICATION PROCESS

     During certification, a firm submits five copies of the
petition and supporting documentation to EDA. Information
requested on the petition form includes:

     -- A description of the article(s)--including the
        Standard Industrial Classification numbers--
        produced by th- firm which have been affected
        by import competition.

     --A description--including the Statistical
       Classification numbers listed in the Tariff
       Schedules of the United States Annotated---of
       imported articles like or directly competitive
       with the article(s) mentioned above.
    -- Supporting data on the firm's   sales, production,
       inventory, production workers   and staff-hours
       worked, as well as imports of   like or directly
       competitive articles, for the   past 5 years.




                              3
     -- Copies of the complete auditor's certified
        financial reports for the last 5 accounting
        years, or copies of the firm's own financial
        statements, together with the firm's Federal
        income tax returns for the last 5 accounting
        years.
     Based on our review of selected investigator reports
and discussions with EDA officials, we believe some of the
requirements are unnecessary. Specifically we found that

     -- most nonrubber footwear firms do not know the
        appropriate standard industrial classification
        or statistical classification numbers to insert
        in their petitions,

     -- EDA generally only needs financial, production,
        inventory, workload and import information for
        the preceding 2 or 3 years of a firm's operations,
        and
     -- EDA generally only needs two or three copies of
        the petition and supporting documentation to
        complete the certification process.

APPLICATION PROC.SS

     In compiling the necessary documentation which comprises
the application package, firms are required to provide infor-
mation not only for compliance with the 1974 Trade Act but
also with other legislation as well. For example, applicants
must provide environmental information--current status and
expected impact of the proposed project--on the following
issue areas.

    --Air quality
    -- Water quality
    -- Land use
    -- Solid waste management
    -- Transportation
    -- Natural environment
    -- Human population
    -- Historic and archeological properties
    -- Construction
    -- Other factors (as problems/questions arise
         relative to seismic conditions, fire
         prone areas, flood prone areas, etc.)
    -- Energy impacts
    -- Outside reaction to project
    -- Cumulative impact
    -- Adverse impacts



                             4
     Although officials of several nonrubber footwear firms
told us they felt the above requirements are unnecessary or
troublesome, EDA directives reveal that this information is
required to meet objectives of the National Environmental
Policy Act (42 U.S.C. 4321) of 1969 and is used to determine
whether the firm should submit an environmental impact state-
ment. We noted, however, that applicants for assistance under
EDA's Business Development Loan Program, although required to
include similar environmental information in their applica-
tions, are not required to assess "expected" project impact.
EDA does the assessment. When we asked an EDA official the
reason for the variance in the environmental information
requirements imposed on Trade Adjustment Assistance and
Business Development Loan Program applicants, we were told
that EDA, when initially assuming responsibility for the
Trade Adjustment Assistance Program, anticipated a great deal
of activity. The then current staffing levels would have -
precluded EDA from assessing the expected environmental impact
of Trade Adjustment Assistance Program projects as was being
done for applicants for regular business development loans.

AGENCY COMMENTS
     We allowed EDA program officials an opportunity to pre-
sent oral comments on the findings contained in this chapter.
During our review when these matters were addressed, EDA
notified several interested firms about certain changes in
its procedures. These firms were told that EDA would:
     -- Provide the appropriate statistical classification
        numbers needed on Form ED-435. EDA officials said
        the firms should have known the identifi:ation of
        the standard industrial classifications numbers
        since the firms provide this information to the
        Bureau of the Census.

     -- Need only three copies of the petition and support-
        ing documentation o complete the certification
        process.

     EDA plans to take action regarding its need for finan-
cirl, production, inventory, workload, and import information
foi the preceding 2 or 3 years of a firm's operations in the
near future.

CONCLUSIONS AND RECOMMENDATTONS
     EDA's requirements and Frocedures for both the certifi-
cation and application processes, with few exceptions, appear
reasonable and in consonance with provisions of the 1974




                             5
Trade Act and other applicable legislation. While the
problems we noted were mino:, correction may help to some-
what reduce the effort of firms in preparing petitions for
certification. Accordingly, we recommend that the Secretary
of Commerce direct the Assistant Secretary for Economic
Development to require applicants to submit for the preceding
2 or 3 years only that financial, production, sales, inven-
tory, workload and import information absolutely necessary
for deciding eligibility for certification.

     Additionally, we noted that in EDA's regular business
loan program, environmental impact information is gathered
by EDA rather than the loan applicants. It is the appli-
cant's responsibility to submit this information under the
Trade Adjustment Assistance Program and provide their own
assessment of the potential environmental impact. Therefore,
we recommend also that the Assistant Secretary for Economic
Development reevaluate whether EDA should assess the effects
on the environment under the Trade Adjustment Assistant Pro-
gram, since the anticipated large volume of trade adjustment
assistance never materialized.




                            6
                          CHAPTER 3
                    PROGRAM PARTICIPATION
                 NOT AS GREAT AS ANTICPATED

     Program participation by the nonrubber footwear industry
has been minimal in contrast to that initially anticipated.
Our telephone survey conducted to explain this lack of pro-
gram activity disclosed that the single prevalent response
for not petitioning was that the firm was not in need of
program assistance. Other reasons cited were:   the Trade
Adjustment Assistance Program is not the answer, firms do not
believe they are eligible, lack of program knowledge, and
dissatisfaction with the program. Additionally, 37 of the 74
officials, who believed their firms were injured by imports,
were unable to cite decreases in employment, sales and/or
production necessary to qualify the firm for program
cerfification.

COMMERCE STUDY

     Section 264 of the act sets forth specific action to be
taken by Commerce when the International Trade Commission
investigates an industry to determine eligibility for import
relief. One such action is the initiation of a study to
determine "the number of firms in the domestic industry
producing like or directly competitive articles which have
been or are likely to be certified as eligible for adjustment
assistance..."

     In compliance with the above, Commerce issued a report
to the President on March 5, 1976, entitled "Prospects for
Adjustment Assistance for Footwear Producing Firms." In the
report Commerce concluded that, of the then existing 409
domestic nonrubber footwear firms the International Trade
Commission identified, the number that would seek trade
adjustment assistance would vary according to the type of
remedial measures authorized by the President. Specifically,
the report estimated that if the adjustment assistance loan
were offered, as did occur, more than 200 firms might peti-
tion, of which possibly 150 (75 percent) might be eligible.

EXTENT OF PARTICIPATION

     At the time we initiated our review, the number of firms
having petitioned for program assistance was far less than



                              7
EDA anticipated. Recent program statistics, as shown in the
table below, indicate that there has not been any drastic
change in the number of nonrubber shoe firms petitioning for
assistance.

                               Table I
                   Nonrubber Footwear Firms

                     (oly) Program_Activity

                            As of               As of               As of
                           6/30/76              L30/ 7 6          12/31/76
                                                    (cumulative)
Number of firms
  which petitioned                      19                 22                 25
(Percentage of the
  anticipated 200)      (10)                 (11)               (12.5)
Status:
  Withdrawn and never
    resubmitted                 3                   3                    5
  In process                    3                   2                    2
  Denied                        -                   -                    1
  Rejected (for
    filing)                     -        6          1       6            1     9

Number of firms
  certified                             13              16                   16
(Percentage of petitioning
  firms subsequently
  certified)                        (68)                (73)                 (64)
RESULTS OF
TELEPHONE SURVEY
     During July 29 through October 7, 1976, we telephone
officials--presidents, vice-presidents, administrative assist-
ants, treasurers, and comptrollers--representing 102 nonrubber
footwear firms, to determine their awareness of the Trade
Adjustment Assistance Program and why they had not attempted
to obtain program benefits. The firms, located in nine states,
were selected from listings prov.ded by the American Footwear
Industries Association, the International Trade Commission,
and EDA. Results of this survey are shown below.




                                    8
Extent of injury
     To develop information relative to import injury, we
asked officials the uestion "Do you feel that you have been
injured by imports?" Seventy-three percent (74 officials)
responded affirmatively. Firms who replied "yes" to the
above were then asked two additional questions which relate
to program eligibility criteria:

     -- "Have you had a decrease in production and/or
        sales since January 1975?" and

     -- "Have you had a recent decrease in employment
        or plan to decrease employment within the next
        year?"

Although affirmative responses to both of the questions do
not necessarily mean that the firm would be eligible for
certification (this determination can only be made by EDA
taking into account other factors as well), it does give a
more meaningful indication of the extent of injury. Accord-
ingly, we found that of the 74 officials who believe they
have been injured by imports

     -- 37 responded "yes" to the above two questions,
     -- 10 reported only decreases in production and/or
        sales,

     -- 8 incurred only decreases in employment, and

     -- 19 did not incur decreases in either procuction/
        sales or employment.
Reasons for
not petitioning
     To determine why firms have not petitioned, we first
asked firm officials if they were aware of the program.
Thirteen (13 percent) responded negatively. Of the officials
who were aware of the program, the following reasons were
given for not petitioning.

     -- Do not know the program specifics (where
        and how to apply; what it involves)                6
     -- Not in need of program assistance                 38
     -- Do not believe the firm is eligible               10




                              9
    -- Part of another company, conglomerate
       (entire "firm" may not be injured)                 4

    --Feel the Trade Adjustment Assistance
      frogram is not the answer (need quotas,
      higher tariffs, etc.)                               9

    -- Too much time and/or paperwork involvedt
       do not have time or money to prepare a
       plan                                               8

    -- Do not want a Government loan, object to
       Government involvement                             5

     -- Trying on own, waiting to see what happens        4

     -- In process of deciding if it shot   petition;
        completing petition                               2

     -- Other                                             3

     To develop a better understanding of this data, we have
summarized the above data according to how each firm responded
to the import injury questions in appendix V. In viewing the
data in tis manner, certain inconsistencies become apparent.
For example, 18 officials, while reporting import injury,
also stated that their firms were not in need of assistance.
This inconsistency, in our opinion, may be due to the follow-
ing reasons: (1) either the injury sustained was not con-
sidered serious, (2) the firm took measures to compensate for
the injury, or (3) the firm was just beginning to see the
effect of injury.
Other information obtained
     Officials learned about the program from various sources.
For example, of the 39 officials aware of the program, the
following was citeJ as the source of program information.

     -- Trade associations                                63
     -- Another shoe firm                                 11
     -- EDA letter                                      a/ 2
     -- Various                                           10
     --Do not remember                                     3

a/In compliance with section 264(c) of the 1974 Trade Act, EDA
  stated they mailed information about the program to firms in
  the industry. Although only two officials cited the letter,
  92 firms--including 17 which said they were not aware of the
  program or specifics--were actually on EDA's mailing list.



                             10
CONCLUSIONS
     The number of nonrubber footwear firms petitioning for
certification is far below that anticipated by Commerce.
During oar telephone survey, we found that the single preva-
lent response for this lack of activity was the officials'
belief that their firms were not in need of program assist-
ance. Many other officials indicated they had negative
views toward trade adjustment assistance; excessive time,
money, and paperwork involved; questionable Government
involvement; or feelings that the program is not a solution
to their problems.




                             ii
                          CHAPTER 4
              ADMINISTRATIVE DELAYS IDENTIFIED


     The 1974 Trade Act established time constraints for
processing petitions and applications, and Commerce pub-
lished rules and regulations requiring prompt review of these
documents prior to their acceptance for filing. We noted,
however, that EDA 1/ did not always comply with the act or
regulations in screening and/or processing petitions and
trade adjustment assistance applications. Twelve of the 18
nonrubber footwear firms experienced delays either during
the certification or application process or both. With the
exception of the protracted amount of time taken to screen
some applications, and in one case approve an application,
the delays were not extensive.
TIME REQUIREMENTS
     Section 251 of the act--with reference to a petition for
certification of eligibility--states that
         "A determination shall be made by the Secretary
     as soon as possible after the date on which the
     petition is filed under this section, but in any
     event not later than 60 days after that date."

Similarly, section 252 mandates that the Secretary shall make
a determination relative to an application for adjustment
assistance as soon as possible after the date on which an
application is filed--"but in no event later than 60 days
after such date." 2/ In both above passages--although not
defined in the act--60 days is construed as meaning calendar
days.


1/EDA assumed responsibility for processing applications and
  petitions from the Domestic and International Business
  Administration (DIBA) on June 30, 1975, and November 17,
  1975, respectfully.

2/Authority   for making the approval determination relative to
  petitions   and applications has been delegated to the Deputy
  Assistant   Secretary for Planning and the Deputy Assistant
  Secretary   for Operations.




                               12
     The Department of Commerce has published regulations
which established additional timf. constraints. For example,
"Rules and Regulations" published in the Federal Register on
April 3, 1975, specify that petitions received
         "shall be stamped with the date on which
     received. Within five working days of the
     receipt of said petition the Director shall
     either accept or reject said petition for
     filing".
      Relative to the processing of trade adjustment assist-
alice applications, EDA published regulations on September 26,
1975, and December , 1976, stating that

         "EDA shall have five working days from the
     date on which it receives the application to
     determine whether the application has been
     properly prepared and can be accepted for
     filing. Immediately after the five working
     days have elapsed, the Assistant Secretary
     shall notify the applicant that the application
     has been received * * *"

The regulations further call for the applicant to be advised
either that the application has been accepted for filing or
that it may be resubmitted when specified deficiencies have
been corrected.
DELAYS DURING CERTIFICATION

      We reviewed EDA headquarters files for the 18 nonrubber
shoe firms selected for review--4 firms had been recertified
by DIBA under the transitional provisions of the act--and
noted

     -- two petitions were not screened within 5 working
        days;
     --an eligibility determination was not made within
       60 calendar days, in the case of four petitions;
       and

     -- DIBA generally took a considerable amount of time
        to recertify firms previously certified under the
        Trade Expansion Act of 1962.




                                13
Delays in screenin
petitions for filing

     we noted in 2 of the 14 cases handled by EDA where the
determination as to whether he petition was acceptable for
filing took longer than 5 working days--9 and 10 working
days, respectively. In one ase, the delay resulted from
EDA giving the irm time to provide missing sales and produc-
tion information on a subsidiary rather than rejecting the
petition. We were unable to document the reason for the
other delay. Both delays were, however, minor and it should
be noted that, o an average, EDA screened petitions within
4 working days.

Delays in making
eligibility determination

     Three petitioning firms withdrew before an eligibility
determination was made and prior to elapse of 60 calendar
days. Of the remaining 11 firms--excluding the 4 which were
recertified under the transitional provisions of the 1974
act--4 were not notified as to eligibility within the
required 60 calendar days. The extent of delay was in each
case minor--l or 2 days. However, our review disclosed that
EDA's processing time has improved.

                              TABLE II

                 Certification Processing Time (note a)

                     Through December 31, 1976

     Firm certified                           Firms certified
         by DIBA                                  by EDA
prior to November 17, 1975               since November 17, 1975
         60   days                               62   days
         60   days                               62   days
         61   days                               33   days
         61   days                               58   days
                                                 26   days
                                                 59   days
                                                 42   days
                                                 36   days
a/Does not include four firms recertified by DIBA under the
  transitional provisions of the 1974 act and discussed
  below.




                                14
Time re uired for
recertfication
     While Commerce regulations, as published April 3, 1975,
called for the "prompt" recertification of firms previously
certified under the Trade Expansion Act of 1962, we found
that DIBA generally required a considerable amount of
time to complete this process-39 days, 12 days, 36 days,
and 67 days. Since the files generally did not document
the reasons for the length of time required to recertify
these firms, we cannot comment on its reasonableness.
DELAYS DURING
APPLIAT ION

     We reviewed Washington EDA files and held discussions
with officials to determine if selected nonrubber shoe
firm applications had been processed in compliance
with requirements. At the time we initiated this aspect
of our review, only 6 or 15 certified nonrubber firms
had submitted trade adjustment assistance applications.
Appendix VI summarizes the status of the 15 certified firms
as of December 31, 1976.
     Based on a review of EDA records of the above six firms
submitting applications, we noted
     -- 3 instances where the applications were not screened
        within 5 working days nd

     -- 2 instances where the time reauired for the approval
        determination exceeded 60 calendar days.

Delays in screening
aplications for acceptance
     In three of the six cases where nonrubber footwear firms
submitted applications for adjustment assistance, EDA's deter-
mination to accept the applications for filing was not
made within the stipulated 5 working days. For the remaining
three cases, EDA documentation was such that we could
not establish the exact time involved in this screening
process.

     The following details the circumstances surrounding the
screening delays in the cases noted.

     Firm A_(23 working days' screening time)

     In this case the regional legal counsel checklist was
signed the same day the application was accepted for filing.


                             15
This checklist--see appendix II page 44--itemizes those
regional office assessments, such as the Equal Opportunity
Report which must be completed prior to project approval but
which are not necessary for application acceptance. We
believe that in this case the premature completion of the
checklist was responsible, in part, for the screening
delay.
     Firm B (27 working days' screening time)

     According to EDA officials, the firm submitted an incom-
plete application on August 25, 1975. 1/ Rather than
reject the application, EDA allowed the firm additional
time to provide the required information. According to
correspondence from the firm contained in EDA files,
certain information which EDA considered "missing"
was actually delivered by certified mail in July 1975
and was apparently lost by EDA.
     Firm C (13 working days' screening time)

     There were few records for this case in Washington office
files as the processing was done almost completely by the
western Regional Office in Seattle. The letter of
acceptance did make reference to the application being
"revised," but it could not be determined if it was done
after initial submission or if there was an earlier applica-
tion submitted.
Of the remaining three cases, EDA files do not document the
exact date the application was submitted--only the date it
was accepted.
     In pursuing the matter of compliance with the 5-working
day requirement, we found that two officials--the Office
of Business Development Deputy Director and the Chief
Business Loan Division, Atlantic Regional Office
were not aware of these requirements until we brought
them to their attention. Additionally, discussion with the



1/ It should be noted that, at the time of submission, EDA
   regulations governing the screening of applications
   within 5 working days were not yet published. More
   recent regulations published December 1, 1976, enable
   the Assistant Secretary to terminate processing in the
   event that specified deficiencies have not been corrected
   within a 30-day period or subsequent to aceptance for
   filing if it is apparent that "the application contains
   misrepresentations and/or naccuracies". In either
   event, the firm must submit a new application.

                             .LU
same regional official at a later date disclosed that
his region did not have any means of insuring that
an application is actually screened within the
required period. Specifically, applications are not
time-stamped when received and it is conceivable that, an
application could sit on a desk for several days before it
is opened. 1/
Delays in meeting 60-day
processing requirements
     Of the four nonrubber footwear firms (Firms A, B,
C, D) which had loans approved as of December 31, 1976, two
were processed within the required 60-calendar day period--
39 days (Firm A), 60 days (Firm D).   (This period reflects
the length of time between the acceptance date of the
application for filing and the date the Assistant Secretary
approves or rejects the application.) As discussed below
in the case of Firm B, it appears EDA took 62 days to
arrive at the approval determination. Firm C meanwhile
withdrew its initial application after 73 days elapsed but
had its subsequent application approved within 22 days of
acceptance.
Firm B

     The firm's initial application was accepted on
October 2, 1975, by the Atlantic Regional Office and
final loan approval was made on June 17, 1976--a total of
259 calendar days elapsed time. Although EDA records do
not document the withdrawal of the first application, they
do show that EDA had problems with the initial adjustment
assistance proposal and suggested that the firm first
implement, on its own, certain key elements of the
proposal relative to market growth and sales trend. The
records also show that the firm did submit a new proposal
which was accepted on April 16, 1976, and apparently
constituted a new application. Based on the April 16,
1976, date, the approval determination was made within
62 calendar days of acceptance.




1/ In one case an application was logged in as received
   on the same date it was reviewed for acceptance
   (August 9, 1976). According to a firm official,
   however, the application was actually submitted on
   July 20, 1976.


                             17
Firm C
     This firm had its initial application accepted on
December 12, 1975, and withdrew it on February 23, 1976, a
total of 73 calendar days elapsed time. Although EDA
records do not indicate why the firm's application was not
processed within the 60-calendar day period, we learned that
there had been a problem concerning the firm's past unfair
labor practices, and this issue had to be resolved. Also,
there had been a problem of one partner refusing to meet EDA
requirements for a personal guarantee. The latter problem
prompted the firm's withdrawal. According to the files two
subsequent applications were filed--the last accepted on
June 1, 1976, and approved by the Assistant Secretary on
June 23, 1976.

     In addition to above, there was one firm (Firm E) which
had its application approved subsequent to December 31, 1976.
At the time of approval--January 26, 1977--the application
had accumulated 191 days of processing time since initial
acceptance on July 19, 1976. Review of EDA records indicated
that the regional office had forwarded its recommendations
to Washington on July 21, 1976 (2 days after the application
was accepted). According to a regional Financial Analyst,
the delay in processing was the result of the Washington EDA
staff disagreeing with the region's findings--specifically
over whether the criteria of "reasonable assurance of
repayment" was met. The firm had a $4 million loan out-
standing with a finance company and Washington officials
agreed to the loan approval after arrangements were made with
the finance company to subordinate its claim for repayment
to that of EDA.

CONCLUSIONS AND RECOMMENDATIONS

     Although we have identified a number of administrative
delays in processing both petitions and applications, for the
most part, they were minor. Moreover, in those cases where
the delays were lengthy, the restricted scope of our review--
limited to firms in the nonrubber footwear industry which
had minimal program activity--precludes our reaching a
conclusion as to EDA's overall administration of the Trade
Adjustment Assistance Program. Nonetheless, the Secretary
of Commerce should direct the Assistant Secretary for
Economic Development to review the adequacy of trade adjust-
ment assistance instructions and administrative procedures,
specifically whether




                                  18
-- regional personnel know about trade adjustment
   assistance time requirements, including the
   5-working-day screening requirement, and take
   measures to adjust their work priorities
   accordingly;
-- regional offices have procedures, such as time
   stamping applications when opening the daily
   mail, to comply with the screening time
   requirement;
-- regional offices have uniform procedures for
   processing trade adjustment assistance applica-
   tions--including the screening of applications
   before acceptance; and
--regional officials, are followi   EDA head-
  quarters criteria for approving   ans.
EDA program officials concurred with our recommendations.




                        19
                           CHAPTER 5

             NEED TO PROVIDE ASSISTANCE TO FIRMS

                  IN PREPARING APPLICATIONS

     As a result of the "affirmative finding" of import in-
jury by the International Trade Commission, EDA is respon-
siole for providing nonrubber footwear firms assistance in
the preparation and processing of their trade adjustment
assistance applications.   This assistance for development
and/or implementation of economic adjustment proposals may
re provided by   gency staff or outside consultants.  EDA
also is responsible for advising these firms of other Fed-
eral assistance programs which may facilitate their orderly
adjustment to import competition.

     Despite the above, we found that the assistance pro-
vided nonrubber footwear firms for development of their ad-
justment applications or proposals has been minimal.  Further,
EDA efforts to inform nonrubber firms of the availability of
assistance under other Federal programs has been limited.

LEGISLATIVE REQUIREMENTS

     Section 252(c) of the 1974 Trade Act states that:

     "In order to assist a firm which has been certi-
     fied as eligible to apply for adjustment assist-
     ance under this chapter in preparing a viable
     adjustment proposal, the Secretary may furnish
     technical assistance to such firm."

Tne assistance--consisting possibly of market research or
feasibility studies--may be furnished by Federal agencies or
througn private individuals, firms, and institutions, in which
case not more than 75 percent of the cost of such service may
be borne Dy the United States.

     Additionally, section 264, requires Commerce in the event
of an affirmative International Trade Commission finding of
import injury--which is applicable in the case of the non-
ruboer footwear industry--to make available to the firms in
tne industry of Federal programs "which may facilitate the
orderly adjustment to import competition of such firms" and
to "provide assistance in the  reparation and processing of
petitions and applica ions of such firms for program bene-
fits."




                              20
NEED FOR ASSISTANCE IN
PREPARING APPLICATIONS

     Of tne 15 certified firms reviewed, we identified 6
which had acquired their own technical assistance from con-
sulting firms. The services acquired in five cases in-
cluded assistance in the development of the economic adjust-
ment proposal, assistance in preparing the application, and
in one case, hiring a consulting firm to perform market
research.

     It is difficult to determine the actual cost for these
services.  In several cases only a portion of the consultant
fee has actually been paid--the total amount for technical
assistance is anticipated to be paid from the working capital.
portion of the loan. The matter is further complicated by
the fact that some of the figures--either paid or shown in
the proposal also include fees for work performed on the
petitions. The following table is intended to give only an
indication of the expenses incurred.

                            Table III

                  Cost of Technical Assistance
                  Nonrubber Shoe Firms (note a)

                                        Amount           Amount as
Tye_of services                          paid        shown inpr_2sal

Market research                      b/$15,000        Not available
Preparation of proposal finan-
  cial data, work on petition           c/5,783       $65,000
Financial analysis/development
  of the trade adjustment
  assistance application                 8,060        Not available
Preparation of the roposal               5,000        Not available
Work n petition and application      Not available     25,000
Preparation of application               d/900        Not available

a/Not included are two firms which acquired assistance exclu-
  sively for the preparation of petitions. In one case, all the
  work was performed before the 1974 Trade Act; in the other,
  thure was no additional charge for the service.

b/Also includes some work for preparation of the petition.

c/Tnis amount relates to work done on the petition.

d/The firm used the services of their regular consultant who
  was going' to bill $2,500. At the time the firm decided not
  to submit the application, $900 had already been paid.

                                21
     We found that in two of the above six cases, attempts to
obtain EDA technical assistance had proved fruitless. The
details are discussed below.
     Example A

     This   .  had already initiated some work through a con-
     sultant when the request for technical assistance was
     made. A letter was subsequently received from the Act-
     ing Deputy Assistant Secretary for Operations denying
     the request. The letter, citing EDA regulations, stated
     "technical assistance projects will not be ap-
     proved to pay for work already done....  You
     should also be aware that Government contracting
     regulations require multiple soliciations of
     contractors, with final choice subject to EDA
     approval."
     The firm subsequently told EDA that their request had
been made based on interim regulations which make no men-
tion of an inability to pay for work already done. EDA,
however, again denied the request, stating that their reg-
ulations and

     "the long-standing policy of the Department of
     Commerce do not permit this Agercy to reimburse
     for the cost of work already performed ur serv-
     ices already provided prior to application for
     assistance."
The firm did not pursue the issue further.

     Example B

     This firm was recertified--effective January 3, 1975--
     under the transitional provisions of the 1974 Trade Act.
     On April 17, 1975, according to a firm representative,
     the firm sent a letter to DIBA requesting technical
     assistance. About a month later, DIBA's Office of Ad-
     ministrative Support forwarded to the Commerce Office of
     Administrative Services and Procurement a $25,000 request
     for technical assistance. The request was subsequently
     returned "without action" because April 30, 1975, had
     been established as the deadline for all such requests
     from DIBA.  (As of June 30, 1975, EDA replaced DIBA as
     the Commerce agency responsible for providing trade
     adjustment assistance to firms.)
     In July 1975 the firm contacted EDA to determine the
     procedures for obtaining financial assistance. About


                            22
    a month later, -n application was submitted--and subse-
    quently reject    because it was incomplete. From Octo-
    ber 1975 through May 1976, EDA had almost monthly com-
    munications with the firm, identifying various missing
    documents or information necessary for the application
    to be accepted.   (In June 1976, after reviewing EDA's
    files on this  firm, we commented to an EDA official
    that the firm was in dire need of technical assistance.
    He agreed,and when asked why the firm had not received
    help, he noted that when the firm had first contacted
    EDA, the agency was just beginning to become familiar
    with program operations.)

    On December 23, 1976, the firm submitted a proposal to
    EDA's Atlantic Regional Office. Although the regional
    officials considered the application incomplete, they
    accepted the proposal in terms of having met the 2-year
    filing requirement. Nonetheless, as of January 1977,
    the firm had not yet received assistance and in a tel-
    ephone discussion with the Chief, Loan Processing Divi-
    sion Atlantic Regional Office, we were told that the
    firm needed help in putting their application package
    together and he was "thinking" of going to EDA's office
    of Technical Assistance and asking for assistance.

LIMITED ASSISTANCE PROVIDED

     EDA has not been particularly active in providing assist-
ance to nonrubber footwear firms for development of trade
adjustment applications or proposals.
EDA assistance

     With the exception of one firm--which was in close prox-
imity to an EDA Regional Office and took the initiative to
constantly seek help during each step of the application proc-
ess--EDA has done little to assist in the preparation of ap-
plications for trade adjustment assistance.  EDA has limited
its activities to providing procedural guidance.

Use of outside consultants

      Arrangements for outside consultant assistance, handled
by E)A's Office of Technical Assistance, are generally based
on referrals by the Office of Business Development (OBD).
The office of Technical Assistance also has responsibility
for providing technical assistance under the Public Works and
Econ,)mic Development Act of 1965, as amended.

     As of December 31, 1976, only one nonrubber shoe firm had
obtained proposal technical assistance. This particular case


                              23
was referred to the Office of Technical ssistance by the
Director, OBD, when it became apparent--based on limited
collateral and size of the loan ($1 million)--that an in-
dependent feasibility study was necessary. The technical
assistance was planned in two phases at an anticipated cost
of $5,000 for each:

     -- Phase I

       This consisted of work--including a market feasibility
       study, a production feasibility study, and the develop-
       ment of an external financing plan--to be performed
       within a 4-week period.  At the end of the 4 weeks,
       a Trade Act recovery plan and feasibility analysis was
       due.

     -- Phase II

       Phase II--dependent on the results of Phase I being
       favorable--called for a 4-week assignment to assist
       in the preparation of the assistance plan and er-
       fected application.

      Tne business evaluation project was approved July 7,
1976.   The actual contract award was made September 24, 1976,
at a cost of $5,000.   Based on the results of the consultant's
report--initially issued October 19, 1976, 1/ OBD determined
that the firm's   roposal did not appear feasible, but an offi-
cial determination has not been made.

Reasons for limited use
of outside consutants

     A Department of Commerce study--performed April 1976--
identified the following reasons of limited use of outside
consultant assistance under the program.

     -- "Contracts are extremely unattractive to firms
        because they are governed by the stringent con-
        ditions attached to the Federal procurement
        process;" and

     --"Firms with sufficient resources to expect to
       survive long enough to receive a TAA    [Trade
       Adjustment Assistance Actj loan are usually in
       a position to procure their own consultants on
       the assumption that such initiative will hasten
       the availability of TAAA loan dollars; this


1/A revision was returned to EDA on November 23,   1976.


                              24
       consideration is reinforced by the fact that
       firms receiving Federal technical assistance
       funding must pay at least 25 percent of the
       cost themselves."

     The attitude of certain EDA officials toward use of tech-
nical assistance and--in some cases--toward the Trade Adjust-
ment Assistance Program in general is, in our view, also an
important factor in explaining the limited amount of assist-
ance provided nonrubber shoe firms.       For example, one EDA
official commented  that  DIBA,  when  in charge  of trade adjust-
ment assistance  to firms  under  the  Trade Exoansion   Act, forced
technical assistance  on  every  firm,  regardless  of  need.   He
stated that EDA,  however,  took  the  position  that  the shoe
firms should know what they want to do and how to do it and
that technical assistance is "unnecessary."       A similar senti-
ment was voiced   y a regional   EDA  official.

     During a discussion with still another EDA official, we
were advised that preproposal technical assistance should be
used for market studies and strategies to change styles or
production lines out not to pay consultants to assist firms
in preparing their applications.  He also stated that he is
not "sold' on the provision of the act which provides for
automatic entitlement to assistance, and consequently EDA
has adopted a "passive role" in making firms aware of such
assistance.

NEED TO PROVIDE INFORMATION
ON OTHER ASISTANCE PROGRAMS

     Many nonrubber shoe firms, though expressing a need for
trade adjustment assistance, have been unable to meet cer-
tification criteria and accordingly have been denied help.
For example, 10 nonrubber shoe firms contacted did not
petition for certification under the rogram because they
did not believe they would be eligible, while three others
withdrew petitions when it was apparent they could not meet
certification criteria.

     It should be noted, however, that it is possible that
these firms could obtain assistance under other Federal pro-
grams.   For example, Commerce, in its study Prosoects For
Adjustment Assistance For Footwear Producing -Frms,-ientified
several other programs of potential benefit to nonrubber foot-
wear firms--including the Business Development Loan Program
which is administered by EDA. Other      ossible avenues of
assistance  mentioned  in the Commerce  study included business
loan and management   assistance  programs administered by the
Farmers Home Administration   and  the Small  usiness Adminis-
tration.


                                 25
     Despite the existence of the foregoing assistance
possibilities and the provisions of section 264(c) of the
1974 Trade Act which requires the Secretary of Commerce to
make available, to the extent feasible, full information on
such assistance programs, EDA has not adequately advised
nonrubber footwear firms of these other potential sources
of Federal aid. EDA updated the list of nonrubber shoe
firms from a current list completed by the Trade Association
and mailed letters and brochures to approximately 600 shoe
firms publicizing the Trade Adjustment Assistance Program,
however, the letters did not identify other programs of po-
tential benefit to these firms.  Further, while the Assist-
ant Chief of EDA's Trade Act Certification Division stated
that a summary of Commerce's report identifying the other
programs was published in the Federal Register, he agreed
that this was not adequate notification.

!Applicability of other   rograms
     While we did not evaluate all the programs cited to
determine their applicability to nonrubber footwear firms,
we did note one instance where a nonrubber footwear manu-
facturer received a working capital loan guarantee of
$500,000 under EDA's Business Development Loan Program.
The decision to process the project under this program in-
stead of the trade adjustment assistance program was based
on several factors according to a Regional Business Develop-
ment Chief.

     -- it was unlikely the principals could obtain from the
        previous owners the necessary information for certifi-
        cation under trade adjustment assistance,
     -- the firm did meet the requirements of the Business
        Development Loan Program, and

     --time considerations.
Regarding the latter, EDA's Atlantic Regional OLfice stated
that "even a minimal delay could probably cause the demise
of this company."  In this regard, it took only 96 days
from application acceptance to loan agreement signing, a
considerably shorter time frame than could be expected under
the Trade Adjustment Assistance Program, considering certifi-
cation and application requirements.
CONCLUSIONS AND RECOMMENDATIONS

     Several nonrubber footwear firms have identified a need
for assistance in preparing their applications for trade



                              26
adjustment assistance, including development of economic
adjustment plans. Despite this, and the fact that firms in
the nonrubber footwear industry are entitled to such help
under the 1974 Trade Act, little assistance in being pro-
vided. Further, EDA has only made limited efforts to advise
footwear firms of alternative Federal programs which could
serve to assist in their adjustment to foreign competition--
another provision of the 1974 Act.

     Accordingly, we recommend that the Secretary of Commerce
direct his Assistant Secretary for Economic Development to:

    -    rovide nonrubber footwear firms assistance in pre-
        paring their application packages, including develop-
        ment of economic adjustment plans;
    -- inform sih firms of restrictions governing approval
       of assistance projects when work on the projects
       has already been done; and
    -- make every effort to advise such firms of alternative
       Federal programs which could help them adjust to
       foreign competition.

    EDA program officials concurtrd with our recommendations.




                              27
APPENDIX I                                          APPENDIX I


                    CERTIFICATION PROCESS
     A firm is reguired to return three completed petitions--
including copies of supporting documentation--to EDA's
Trade Act Certification Division (TACD) in Washington. A
copy of the petition form is shown on Appendix III.
ACCEPTANCE FOR FILING

     Before accepting a petition for filing, TACD reviews
the provided information for completeness and adequacy.
Items to be addressed on the petition include:

    -- ! brief narrative on the firm's economic history.

    --A description of the article(s)--including the
      Standard Industrial Classification numbers--
      produced by the firm which have been affected by
      import competition.

    -- A description--including the Statistical Classifica-
       tion Numbers listed in the Tariff Schedules of the
       United States Annotated--of imported articles like
       or directly competitive with the article(s) mentioned
       above.
    --A description of the extent of the actual separation
      or threat of separation of workers.

    -- A description of how increased imports contributed
       importantly to the decline in sales and/or production
       and worker separation.
    -- Information on previous firm petitions under the
       Trade Expansion Act of 1962.
    -- Supporting data on the firm's   sales, production,
       inventory, production workers   and staff-hours
       worked, as well as imports of   like or directly
       competitive articles, for the   past 5 years.
    -- Copies of the complete auditor's certified financial
       reports for the last 5 accounting years, or copies of
       the firm's own financial statements, together with
       the firm's Federal income tax returns for the last
       5 accounting years.



                             28
APPENDIX I                                       APPENDIX I



     Prior to rejecting a deficient petition, EDA gives the
firm the opportunity of either providing necessary information
or withdrawing the petition. Once the petition is determined..
acceptable for filing, TACD notifies the petitioner and
initiates an eligibility investigation. Notice of the peti-
tion filing is published in the Federal Register, after
which the petitioner or any other interested party has 10
days to request a public hearing.
INVESTIGATION AND DETERMINATION

     A TACD investigator reviews the petition and supporting
documentation to determine if the certification criteria
have been met. The documentation must establish
     -- that a significant number or proportion 1/ of the
        workers in such firm have become totally or partially
        separated or are threatened to become totally or
        partially separated;

     -- that sales or production, or both, of such firm have
        decreased absolutely; and

     -- that increases of imports of articles like or
        directly competitive with articles produced by such
        firm contributes importantly 2/ to such total or
        partial separation, or threat-thereof, and to such
        decline in sales or production.
     Much of the investigator's time is spent analyzing the
documentation to assess its validity and to determine whether
it establishes that the legislative criteria have been met.
During this process, the investigator also contacts the firm
to clarify any questionable information, performs calculations


1/ "Significant number or proportion of the workers is
   construed as meaning a total unemploymnent of 5 percent
   of the workers or 50 workers, whichever is less, but with
   as few as 3 workers in cases of a firm employing fewer
   than 50 workers".

2/ "Contributed importantly" is defined as a cause which is
   important but not necessarily more important than another
   cause.

                             29
APPENDIX I                                        APPENDIX I


to verify that absolute decreases in sales and/or production
have occurred, and contacts past customers of the firm to
determine reasons for decreases in their purchases.

     After the investigation is complete, the report findings,
or other documents are submitted to the TACD Division Chief.
A summary of factual data and the Chief's recommendations are
processed through appropriate channels up to the Deputy
Assistant Secretary for Economic Development Planning (DAS/P)
who signs off on the project and sends a letter of approval/
denial to the petitioner. Notification of approval action is
also sent to the congressional delegation and to the State
Governor wherever the firm is located and to the press. The
certification determination by the DAS/P must be made within
60 calendar days of petition acceptance. 1/ In cases where
the petition is denied by agency regulation, the petitioner
is not allowed to reapply for 1 year.

     There is one exception to the procedures as outlined
above. Firms requesting certification under the Trade
Expansion Act of 1962 do not have to submit new petitions.
This is in consonance with provisions of the 1974 Trade Act
which stipulate that:

     "A certification of eligibility of a firm under
     action 302(c) of the Trade Expansion Act of 1962
     made before the effective date of this chapter
     shall be treated as a certification of eligibility
     made under section 251 of this act * * *".

A flow chart of the certification process follows on the next
page.




1/ A firm's application must be made within 2 years of the
   date of certification.



                             30
APPENDIX I                                                                                                 APPENDIX I
                                                    CERTIFICATION PROCESS


                                                FIRM CONTACTS
                                                TACD TO INQUIRE
                                               ABOUT PROGRAM


                                              TACD (WASHINGTON)
                                            SENDSLITERATURE AND
                                              SIX COPIES ED.435


                                             FIRM SENDS PETITION
                                                   TO TACO



                                                TACD RECORDS
                                                 AS RECEIVED
REQUIRED WITHIN 5 WORKING DAYS
(EDA REQUIREMENT - NOT
 SPECIFIED IN ACT)                              TACD SCREENS
                                                  PETITION




              PETITION NOT           NO                            YE 5I        INVESTIGATION INITIATED
                ACCEPTED                                                           (DETERMINE IF FIRM
              IINCOMPLETE                       _MEETS                                    CRITERIA).I




                                                                                   FINDINGS OR OTHER
                                                                                 nCVUMENTS SUBMITTED
         REQUIRED INFORMATION                                                       cMENT SUMTTED
                                                                                     TACODIVISION CHIEF


                                                                               SUMMARYOF FACTUAL DATA
               NFOtAfO
                  MAND                                                            CHIEF'S RECOMMENDATION
                PRovlDED                                                        FORWARD TO DIRECTOR OF
                                                                                OFFICE OF PLANNING AND
                                                                               PROGRAM SUPPORT IOP.'SOD)

          FIRM ENCOURAGED TO
          WITHDRAWPETITION --                                                  DIRECTOR fOPP'SD) REVIEWS
             IF FIRM DOES NOT
                                 WITHDR~W~~            IT~PETITION"PACKAGCE"
                                                           5I~
                REJCCTED Y1                                                      CONCURS. AND INITIALS



                     ( END1                                                I   OFFICE OF CHIEF COUNSE
                                                                                   REVIEWSPACKAGE
                                                                                     AND CONCURS
                                     REQUIRED WITHIN 60 CALENDAR
                                      DAYS CITED 'IN THE ACT)                       i
                                                                                 PACKAGE SUBMITTED TO
                                                                                   DEPUTY ASSISTANT
                                                                               SECRETARY FOR ECONOMIC
                                                                                DEVELOPMENT PLANNING

IFirm may withdraw petition at any                       'P SIGNSLETTER
  time during the process.                              OF DENIL                        FIR TO                 D   P GN ED
2
  Firm is notified by letter; also a                  (NOTIFICATON                       CERTIFIED
                                                      (NOTIFICA TIN                                        L        OTINPV
  notice is published in the Federal                     TO FIRM                                                    TO FIRM
  Register - petitioner, rersons,
 organizations, or groups demonstrating
  substantial interest in the proceedings
 have 10 days after notice is published                                  NOTlFICATION TO
 to   tequaaheaoing.         n                                     nMEMBERS OF CONGRESS,
30nce the investigation begin,   a firm must provide any additional                     GOVERNOR,
 information requested as necessary to make on eligibility deter-                    PRESS
                                                                                         RELEASE
 mination. If a firm does not comply, the firm can either withdraw

'Criteria (eligibility):
    a) decrease in product;on or soles.
    b) decrease in employment.
   c) increase in imports (absolute or relative to domestic production).
   d) causation --     imports contributed impwtantly."


                                                                   31
APPENDIX II                                      APPENDIX II


                        APPLICATION PROCESS
     Certified firms are referred to EDA's Office of Business
Development (OBD) in Washington, where they are in-ited to
send a representative for preapplication counselin . 1/
During this session the firm is provided with a Trade-Adjust-
ment Assistance index form (see app. IV) which identi-
fies the documentary material required by EDA to evaluate
the application. 2/
SCREENING THE APPLICATION

     Once the firm has compiled the necessary documentation,
the application "package" is submitted to the appropriate
regional office for processing. Before the application can
be processed, however, it must first be screened to determine
that all the required documentation as identified on the
index form is included and is complete. EDA regulations as
published in the Federal Register (September 26, 1975) call
for the applicant to be notified within 5   rking days of
receipt that the application was received and that either (1)
it has been accepted or (2) it may be resubmitted when
specified deficiencies are corrected.

ACCEPTANCE FOR FILING
AND PROCESSING

     Once the application is accepted for filing, the project
is assigned a case number, logged on control sheets, and the
Washington Trade Assistance Coordinator notified that the
application is in process.


1/ In the past, OBD/Washington was responsible for the
   processing of Trade Act cases--including all preapplica-
   tion counseling. Although EDA Directive No. 13.01-17,
   effective April 13, 1976, now gives the region authority
   to handle the loan processing and servicing functions,
   EDA officials still encourage firms to meet in Washington
   for preapplication counseling.
2/ Applicants are also required to provide information--
   current status and expected impact of the proposed
   project--on 14 environmental issue areas. This require-
   ment, while not shown on the index, is contained in the
   environmental package provided to the applicant.



                              32
APPENDIX II                                       APPENDIX II


Review by regional loan
development officias
     The entire application package, and especially the
economic adjustment proposal is reviewed and evaluated by
regional loan development officials to insure compliance
with 1974 Trade Act legislative criteria. Specifically, as
mandated by section 252 of the act, approval of an applica-
tion is dependent, in part, that the firm's proposal contains
the following elements
     -- be reasonably calculated materially to contribute
        to the economic adjustment of the firm;

     -- give adequate consideration to the interests of
        the workers of such firm; and
     -- demonstrates that the firm will make all reasonable
        efforts to use its own resources for economic
        development.
Additionally, the application documentation must establish
that the funds requested are not available from the firm's own
resources, that there is "reasonable assurance of repayment" of
the loans, and that agency policy requirements have been met.
     Pursuant to the above, the firm's documentation is
analyzed with respect to the following factors:
     -- Management

         The firm's management team is evaluated as to
         their efficiency and capabilities relative to
         the size of the firm and the industry.
     -- Marketing
         Information such as the firm's current share
         of the market, project share, current product
         lines and plans to penetrate new product lines
         is evaluated.

     -- Raw materials

         The availability of raw materials, energy
         source and unit price of each is considered.




                             33
APPENDIX II                                       APPENDIX II


     -- Sales,   profits, and debt service
         EDA examines data on past sales as well as
         evaluates the soundness of projection
         figures. Pro-forma financial statements
         and projections are used to determine
         whether the firm will have the ability to
         repay the loan from profits. Officials
         also assess whether the firm can pay short-
         term and/or long-term debt.
     -- Collateral

         EDA looks to secure as much of the loan as
         possible in the event the company goes
         bankrupt. In this regard, EDA tries to get
         first lien on all fixed assets, accounts
         receivables, and inventories.
     Approval of assistance is also dependent on the
applicant's compliance with EDA requirements mandated by
legislation other than Trade Act. Such legislation includes:
    -- Title VI of the Civil Rights Act of 1964, as amended

         Applicants are required to summarize their
         present work force according to job category,
         sex, and minority classifications. They are
         also required to sign a statement stating they
         agree to comply with Civil Rights Act
         regulations.
    -- Clean Air Act, as amended and Federal Water Pollution
      Control Act, as amended

         An applicant signs a form attesting that the
         facility is not on EPA's list of violating
         facilities.
    -- National Environmental Policy Act of 1969, as amended

        In keeping with the objectives of the above, an
        applicant must provide information--current
        status and expected impact by the project--on
        14 issue areas.




                               34
APPENDIX II                                      APPENDIX II



     -- Public Works and Economic Development Act of 1965,
        as amended

         In compliance with established EDA policy ard
         the above legislation, name checks are
         normally done on the firm's owners and/or
         officers, and in some cases, are also required
         on certain stockholders. The name check
         investigations are processed by EDA's Investi-
         gations and Inspections (I&I) staff who, in turn,
         checks the names through the Federal Bureau of
         Investigation.

Legal counsel review
and action memorandum
     Before regional office recommendations are formalized,
the application "package" is submitted to regional legal
counsel for review through the use of "legal checklists."
The checklists are used as a control for insuring that EDA
requirements as mandated by the 1974 Trade Act and other
legislation have been met. Upon completion of the legal
checklist, an "Action Memorandum" is formulated and
forwarded to OBD in Washington. This document summarizes the
proposed project, noting all the pertinent specifics, includ-
ing the regional office recommendations.
Approval determination

     OBD reviews the Action Memorandum, including approval
or rejection recommendations, 1/ and forwards it to the Deputy
Assistant Secretary for Operations (DAS/O). The DAS/O signs
off on the memorandum and either notifies the firm of rejection
or--in case of favorable recommendation--forwards the memorandum
to the Assistant Secretary for Economic Development for his
approval and signature. According to the act, this determina-
tion by the Assistant Secretary--as delegated from the Secretary
of Commerce--must be made within 60 calendar days of appli-
cation acceptance.

     Subsequent to application approval, the firm is made an
assistance offer to which it must respond within 10 days.



1/ In some cases, OBD might restructure the project and would
   rewrite the Action Memorandum.


                              35
APPENDIX II                                      APPENDIX II


Following the firm's acceptance of the assistance offer,
the firm and EDA enter into legal proceedings surrounding
the loan closing.
     A flow chart detailing the application process follows.




                             36
 APPENDIX                           II                                                                                                                      APPENDIX II

                                                                                                     APPiCATIOW IROCESS

                                                                                                     llIrl RIceI1vEs NOilltCA tO OF
                                                                                                    RLIGII6LITY ._ RIttIRLO TO IOW



                                                                                               PIM*INVITE T EN 144RISlENTTYVI
                                                                                                TO WlHINOTON FOR lPRIAPPLCATION
                                           IN THE PAST THE PRIA0PLICATION                                 COUNSELING
                                                                                                                   SESSION

                                           VWAUIINGTON.
                                                     ALTHOUGNNOT MANDA.
                                            TOVT. l)i   ILL STILL R   AO                        ToIR#S   LAN Is SOUND .. 0titUSSION
                                                                                                              S SOUND_. OISCUA&E             r"IRNllREO TO OT
                                            TODISCUSS TIIR CASEWITH0R0 '                               OOINROMAL AGIENT                     IR TCNNIICANCL
                                                                                                                                                        AUISTANCE
                                           INCLrUS
                                            PROPOSAL              CLo    RIS                                                                       DTVLOEIT*ET OI
                                                                                                                                                N.ILIRNTATION
                                                                                                    lPi GPIVElCPPLICATION OIIAD --
                                                                                                     APPROPRIATE REGIONALOFFICE
                                                                                                               NOTIFIED


                                                                                                  NEOOTIATIOf TAILS OF LOA 0C
                                                                                                LOANoUAiATEa --.FRlM PREP,    S
                                                                                                         APPLICATION


                                                                                                           *RIODAL STAFF
                                                                                                         REClRlS
                                                                                                               Ai. ICTION
                                                                                                       lREIEt OOCUMIITTION
                                                   J0ECAY
                                                      A   PAN IOI        tDNS                             FORWA
                                                                                                             COUPLEENETS
                                                                                                                                           S OULD       WITHIN I DOATS



    IICLUDI        CIVL              DNIAN'GIOAL STAF                                                                           =NALYSIaICIT                P            0

                                            A      OSTAo*
                                                      L TO OCIRE3CaTT                                                                         ROEICAI                        CNDS
              SI          CM     1135ec.lPe.
                                  IC"'   "AL lLIOL
                                               __*io
                                                   CNIwbI
                                                  !(It A

                                                To WAIIITONiOR
                                                RW --    CONTA
                                                             I
                                                                             3                                                                      I
                                                 RJIi NAALOFFCC
                                                 RICO1eNDAETIO$




      PROJlCT AND                           rovA
                                            i_         ANI
                                                        /PdO
                                                          O PtCOMNDO
                                                            rorrI                   A          PR7OVAL

                                                                                      I         .

                                 42WRITIV           (us)   SW                AND P        |A
                                                                AUST &#T
                                                                       T SECRETAy
                                                                 OERATTLONSISIGNl
                                                                  P            S OF




                                                   OF DINI            ANDA                      CRETARIA            'ON ACCOUNT        |          DEVELOPMENT | tOnOR PERIOD
                                                                                                                                              NCOMIC
                               REAOSl      THEREFOE                                                                   RIlRIe   FUNDS       AND MAKESLOANOFFER
                                                                                                                                                 TO llRM




                                                                       ~~i~~~~~a
                                                                             ~~i                                                       I      ,IONAS
                                                                                                                                              #tbf^;l    ~
                                                                                                                                                      I OA
                                                                                                                                             TO ACCEPT OlPi          |



          * Feel-l     El Nv Iill FridAb5t
                     RZAilVl                        2    1     EDA shlf have   wrrHing days aet
                                                                                             af                                                     tiO    TH
     e I nti1n iu mif        to dmiml       wherthr i hle       poperly preprtnd a soteoinsoil nceswory                                     RElOIONALOI C PoR
 inii"n        Im mANedI phe the 5 veking r            mThAsiflnt Sertory shell neify th4 applicnt tkot                                         CLOSING _
 d,1 opllatrion h          c *ceived en fi:                                                                                                OWanIILOINt AT CLOSINO
   (I)    a licaloin hs been accelaM lf Illil,         r
   (2)   N plicRtl myr        reslltl        he n limir nie l are Coflctoed.
                                             h
'tDA ht heW          *v-LnNlicPrilr to eeenHtllsotlon                   of not cuntin the Rimol tim go *otof hu
  .404l; I*lptlf          li    fl . Thi    i    Libstii        in
                                                                 st    dIy pffe       y    Dtmnt   of CIrbnemo




                                                                                                       37
      APPENDIX              III                                                                                     APPENDIX III

                                                                                    OMB No. 41-R2261; Approval Expires December 31, I978
 FORM ED-435                                                                                             U.S. DEPARTMENT OF COMMERCE
 ,12.7S)                                                                                        ECONOMIC DEVELOPMENT ADMINISTRATION
                              PETITION BY A FIRM FOR CERTIFICATION OF ELIGIBILITY
                                 TO APPLY FOR TRADE ADJUSTMENT ASSISTANCE
                  (Under Certification Trode Adjustment Assistance for Firms and Communities, 15 C.F.R., Port 315,
                  U.S. Deportment of Commerce, pursuant to Section 251 of the Trade Act of 1974, Public Laow 93-.618)

 RETURN TO:                                                                                                For Government U1 Only
                Attention. Wfice of Planning and Program Support                               Project Number             Dte Accepted for
                             Economic Development Administation                                                           Filng
                             6113 Main Commerce Building
                             Washington, D.C. 20230

   'nerral Instructions: This petition required for filing by a frm requesting the Secreary or Commerce to certify the firm's
  dibility to apply for Trade Adjustment Asistance. For purposes of this petition, a '"fin" include an individual proprietor-
  ship, partnership, joint venture, association, corporation (including a development corporation), busine trust, cooperative,
  trustee in bankruptcy, and receiver under decree of any court.

  Statutory criteria for certification include I ) a signifcant number or proportion of the firm's workers have become totally or
  partially searpated, or re threatened with separation, (2) sales or production, or both, of the firm have decreed absolutely,
  and (3) increases of imports of articles like or directly competitive with articles produced by the firm contributed importantly
  to uch total or partial separation, or threat thereof, and to such decline in les or production.

  This Petition subject to the Freedom of Information Act and all information submitted herewith is available to the public,
  except that waich is exempt under 5 U.S.C. 552 8(4) s confidential busine information, including trade secrets and com-
  mercial and financial information.

  Any information which the petitioner desires to be teated as onfidentid should be attached on separte sheets identified
  with the appropriate item number and bearing at the top of each such sheet the clear leind "Confidential Busines
  Information."

  Submnut five executed copies of this petition form and any attachments. Acceptance of this petition will be delayed if the
  form and appropriate attachments are not properly completed in accordance with instructions hereon.



Name and Address of Petitioning lirm Strret Otv. (County Staft, and Z/P CodeJ                                     Telephone Number
                                                                                                                  Iclude Area Cbde




  Legai Form of Orpnization: (Indicte hy an "X'              O Single Proprietorship
  0 Partnership            O ( orporation                    0 Other (Ptearespecify

Name, Address, and Nature of Business of any parent company, subsidiary, ffiliate, predeoeor or succeaor firm, co-venturer or of any other
ftrm comrolled or substantially beneficially owned by the petitioning firm or by its principl shareholders. (If the untwer i "None': so
 tindicate.)




                                                                                                                        USCOMMDC 1B2-f.p7R


                                                                        38
  APPENDIX III                                                                                                           APPENDIX III

  Itm 1 - HNSTORY OF FIRM
  Attach a reparate sheet dentified at the top u "Item I - Hbtory of Firm" td provide brief wrrtive of the fim's conomic history, inudin
  (a)the year founded; (b) type(s) of business menped in; (c) a precise dciption of a ll ods ad services produced; (d) number, losation and
  nature of business of all manufacturing, production and sales facilltis; (e) markets srved; ( names and titles of offerns, directors and manage-
  ment of the firum; (g mjor ownership intereats now In the firm; (h) significant ownershlp of mnanaemnt chages In put S years; and (1)any
  other important events in the recent history of the firm.

  Itm 2 - ARTICLEISI PPIODUCED
  Describe precisely the artie(s) produced by the firm which have been affected by import competition, includingtheStadard Industrial Clsiification
  number(s) for each such article.



  ii.




 iv.


 V.




 vii.

 viii.


 Itam 3- IMPORTED COMPETITIVE ARTICLEISI)
 Describe precisely the importeJ article(s) which are like or directly competitive with the article(s) described in Item 2, including tite Statistical
 Clasification Number listed in the Taruiff Schedules of the Uniteo States Annotated (TSUSA). (Attach     sepelte ert if needed)



 i.




 iv.




 vii,

 viii.

 Item 4 - SEPARATION OF WORKERS
Attach a seplate sheet identified at the top a "Item 4 - Separation of Workers" and desribe the extent of the actual separation, or theat of
separation whether total or partial, or the workers of the firm. Include data on the number and proportion of workers affected, and any
chanes in average weekly hoursn  worked. Ira thret of worker sepration exists explain the nature of the threat and the antidpted cone-
quences thereof, Including the number and proportion of workers threatened with total or prtial separation.
If any group of the firm's employee has petitioned the Secretary of Labor for crtification ofeligibility to apply for Trade Adjustment Aitance
in an effort to obtin benefits for workers, give the date of such petition and a brief summry of the status of the worker cas. (If the answetr is
"none," so indicat.)




                                                                                                                                                     2
FORM ED-436CO-C
            27
                                                                                                                                   USCM39DC IS0o6


                                                                              39
     APPENDIX III                                                                                                          APPENDIX III


    Item S - ASIS OF PTTION
     Attach a separate gheet identified at the top as "Item 5 - Bias of Petition" and wucltethe declie I total ie or productiont
                                                                                                                                      'or both) of the
     firm and relate the Increase in imports to the firm's decline in seles or production and worker eupration, and explaIn how the
                                                                                                                                    Increled Imports
    contributed importantly to the Nu or production decline and actual or threatened worker paration.




    Itam el - PREVIOUS FIRM PETITION
     Did the fini previously petition the Tariff Commission of the United States for a finding of import njury under provilokn
                                                                                                                                of the Trade
     Expansion Act o 1962? If so. give the date of such petition and a brief ummary of the results of the petition. (If the answer
                                                                                                                                    b "No", o
    indicate.)




    Item 7 - SUPPORTING DATA
   Provide data on the firm's ales, production. inventory, production workers and man hours worked, as wet as imports of
                                                                                                                         like or directly comn-
   petiive articles, for the past five years on the attached tabular form.


   Item     - CERTIFIED FINANCIAL REPORTS
    Atta.h copies of the complte auditor's certified financial reports for the petitioning firm and its subsidiaries for the last five accountiUs
                                                                                                                                                  yoas
   If such reports by certified public accountants arecnot available. furnish copies of the complete profit and loss statements.
                                                                                                                                    blance sheets, and
   supporting statements prepared by the petitioning firm's own a'counlants, togiether with copies of the firm's Federal income
                                                                                                                                       tax retur for the
   last live accounting years.


   NAME AD TITLE OF PERSON TO CONTACT FOR ADDITIONAL INFORMATION
   Name                                                 Title



   Address                                                                      Tele-phone
                                                                                        Nu      mber                              Are    ode


   CrntiIsn - The undersigned officer of the firm execuing this certification in behalf of the petitionig firm hereby certifis that the tnfor-
   mation contained in or submitted with thi- petition is correct and complete to the best of his knowledge and belief.


   Nome of firm                                                                Sinature of Authontred Official of the Finn



                                                                               Title                                             Dte

   This form must be certified by ans vorn to before a Notary Public
   CERTIFICATION Y NOTARY: (Coiplete)
   Subscribed and sworn to before me this -                          of       __
                                                     (dey)                  (month;    (yeav,

                                                                                                               Notuary PubliUc

  (SEAL)
                                                                                                              Expiration Date

  The U.S. Code. Titk 18 (Crimes and Criminal Procedure), Section 1001, makes it criminal offense to make
                                                                                                            a wiufuly false Statemst or
  representation to any department or agency of the United States as to any matter within its jurisdiction.
FORM ED-435 t 2-
                                                                                                                                                           76
                                                                                                                                 U40C          182



                                                                              40
APPENDIX III                                                                                                                        APPENDIX III




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                                  p -.                                     1           I



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                                                                                               _       _   _       _            _         _       _   _       _

                                              84
                                                   g   rl]    if   g~~~~~~~~~~~~~~~~




                                                             .sa       j       41
     APPENDIX III                                         APPENDIX III




     rI                            L




       jsr .   C:    j   · ;', . : :f':   4



        JI      II                               l    .   Ii
'T    I                                        _..,
                                                                         i




                                          42
APPENDIX III                                                                                               APPENDIX              III




l'as                                                  A                                    d-r-




       XlX ( I XIX 0,
                   I
                   SI~~~~~~~~~~~~~~~~~~;
                                                                                                                     t




                                                                  i4i,                         i
                                                                                                                I!
                                                                                                                 I
)|
                                                                                                                *1'




                                                                                                                 .:


          %I   "     ii                                           f                                             ii!a,·'
  .31.1                   1           1.I                                                                       i.ri

                   '1~~~~~~~i!         ____________________________


                                                                                 I
                                                                                     IDU   ~       ~
                                                                                                               I
                                                          a                  ~                     ~   a       jj
                                                                                                              ~~


                              _   _   _ _ _ _ _   _           _    _     _            _    _           i         _       _   _     _   _




                                                  43
                                                  43
APPENDIX IV                                                                                                         APPENDIX IV

     Vomes1141_
     tin. ItO-t                                                                                             OlMA       Itl   teql
                                                         UI. NPA#T      NTOPOOIIRC
                                                     000WItc OIILCOtt6IT ADO1IaYLllATiO

          APPLICATION              IQUIIIIMNTS AND INDEX-TRADE ADJUITMENT AIIETANCE FOR FIRMI
     MNO ANOAo1lwN OPr FICAIG
                            T ft0N.                OmP,                                        PNOJc?
                                                                                               No     o.




     PoJiCcT LCAT OMr          vat       -."   I                                               DATE,-




                                        INTUCTIONiS      Or COPLITION AND UL OF             OWl ED4?2
        This fonnrm identfis th documntrmy maerWal
                                                 needed by EDA to vlluate pplication for financial a atnce to busin
        under its tradn ut4junmt swestn prtgran. Many items are included in thi ist, but only thoe Items cacked in Column (B)
        will be rqued to perfect an Aplaton.

       Eachproject ts i;    the specific docmeny rements for it are deterined in              pe-application conferenc with the
       prpethe pplicant, at which tuie n EDA reprsmntatL sallJ:

           I.      acea hk markt In Coluan () to the bft of ach requrd item, except f          thoe with pr-prted chck marks
                  which onerquird fIomnjapplicanta;

           2.     Place the blttn NR. in d of chck mark. nt        to each unnmdd item;
           3. Identify additonal documntry rquiremets on the numbered, but othrwse blank, ltm;

           4.     Execute the fi     endmmesnt to thI form; nd
            . Giw the prospecti        applicant copy of the end   d fo m asthe ndx of the applIcation.
       'Jsinl a copy of the checked form ats naind (which hall b included in the pplication pck4t). the applicant hal uaemble
       in :he order indicated the documntay maril nd mrk ech Itnnm        for idetiicon with its ppprite number/letter fro
       th form. Wen the pplticaon i ra         . n EDA reprehntUtiw sil chck ac ite m to mure tlut it providn thee    ncry
       information andshll indicate its acceptability by initaliq the ppropriate pace in Column (A) and shll execute the second
       endorsement.




                                                                                                                COdUkQ-OC11I)



                                                                   44
APPENDIX IV                                                                                                                          APPENDIX IV

     Al.                                                 A^I.SATIIi IM RUBMIDM AI N                           I
     A     eI                    ~,em,
                    V
                    I Foem D27. "Applletlao for Trade Adjuamnet Ar                                  for FW, r equit
                                                                                                    rtmte                       Prm PA46-3P'

                    2.     Lett       of tramImttal by Applicont firm     ttirn   forth      preposl for T         Adjuatm
                           AituMe         and ncluding narrative hitory of the finn
                           The hIltory of the fim mut Include discuiob of the be of ts certifcation es binl
                           deibla for Tid. Adjuetent Atoetanm. Its finencl poition in yemrprio to bei
                           affcted by foreign competition and in recent years mt be Identified by rferen to atual
                               , profits.   worth. etc. The propal for Te Adjutment Assisan mrut not oeny
                           dicu th rmult expectd from the Proec f which the application Is bein made, but
                           mwit lo dise In dtaill how the propol wtl:
                           I. matsdally coatribute to the economic aunnt o th finn.
                           2. ove adqut coideratlb n to the Intert of the firm worern, ad
                           3. demonstra that the firm will m all reasonabl efforts to Ue its ow re urce for
                              economic development.

                    3. Fom ED-436 or Form DID 346, "'rtfiietsof E                         bilbty"
           -        4      Form ED-272 "Application Requitonu and Index - Ttt Adjustment A                              tance fort
                           Pirm"



                    S. Form ED-220,'*arketing end Capacity Information Report"
                    6.     Form ED223, "Employnent Schedule and Asurances"
                    7. Form ED503. "Aurnces o Complnce with the Depertnt            Commerce ad the
                       Ecoaomic Development Administration Replatiotu under Tide VI of the Civil Right Act
                       of 1964 end Public Law 92.65"
                    8.     Fornm  ED-24. "Certification of Complince with the Clean Air Act and th Federal Water
                           Pollution Control Act"
                    9      Affirmative Action Pan (busnes5O or more employees)
                   10. Foram CD-227. "Request for NUne Check or Identlfication Rortd Check" for ownern and/or
                       officen ('DA rpemen'aie abe lis r qisad persons bow):
                           a.
                           b.

                            d.

                           *.

                           h.



                   11. Mot rcent (not er 9 daysiold) lttd nt.rim fnca statemnt do tppint


                   12. t4t rcnt [] audited        ]              sfned flsci yeuend inanciad statement (uppoted
                       by copy of tax rturn) fo FY
                   13      Pro forms tncon ad rash now projectio (by qtrnr from the dte of the most recent
                           interimn firncial statement, ubmitted in ccordmtne with I I bove. throh the first yusr
                           od operations ubequent : completion       the jropct ind yedrly    the coed ad third
                           yerm o opettlion )thowing cluh requiremmu td dnonttin&applicant's bility to
                             entrc ill debt pinciptl piyMmnt ro nt incoe ater tes flthr ha from ctth flow
                   14. Asumption udrlyifi pro formt projections

               /   15. Pro forNt bnce d hfor
                                          u      rhesrt dtt f lh of th piod covad by the po form
                       pojctions ubmitrd pursuant to 13 bove
                   16.     A oo         rccount pyible

                          .Ain        of ccounuts rceable not fctored

                         d. Stat        t o( t   _fto potion with the_
                                                 rm's

                   19k.         lat    of fbmd       omnunmnint fram th   blow wd lenders nvond                   the project
                                 rcomensI
                           (kIfrtn           t            Itntrmr      Iintindtermount ofn . Inat            rat, rapqimnt
                           bymm  chlefe ta rurn          ostion rqu_
                                                                   _      ):

                                      16.A~g
                                       o acoutspaybl




                   OON I",l            tpam
                                          inac   )           b   tdi                                                                 Ouar:llm[4




                                                                        45
APPENDIX IV                                                                                                      APPENDIX IV


     A   I     Afp1me PI                  P       -.
               20. LIte dofquly emlm t from the below tised sou re for fla id m atdum
                                                                                    w hq
                    ptal requrtmmt. a appropria mfitm o/f cmnm e r mdu       woei     nMWof
                     Atd a          m
                                    or         ta,,t):

                      b.

                     d.
                     _b.                                 __

               21.   Financl tatent (nol nt 90 drys old) of below bated pathll; of a patit corpori-
                     Iti. or ownel.
                                  pi tnr o      n       of a      i hld applicant, or both (Individs u
                     Form ED-273 "P'eronil Fintncil Statement. as of -                        .") AEDA
                     ,omart   itS
                              w      Nott behw ta       ril, regu    to af64t jlnM*i tnmmum,).'




              22.    Litte     of cnrmrint of luaranton         EDA          ta It l t rw       mtam        blow:

                                          R~SWrfd ntm                                Rp,td     A    mt

                     b.
                     C
                     d.
                     e-

              23.    Lett     fa   two bdi ktitutios d      _histo fi      e the pojet eithr dictly,.in
                     participation with EDA o wilh an EDA pematy:


                     b.

              24.     roped La         Documnt (Not and LoAn Agrment) dentifynll trtan mtaet rat.
                     cokterl     to be taken and other key tm and coiltior of ny lon to be gurantld by
                     EDA


              25.    Copih of L()!            volved b prOct:

                     a. From _                                        to
                     b. From                                          tu

              uoma             and OpWiM
              26.    Certificate of pood tandint for corporate applicant

              27.    Copy of prtnship _ureemnt

              23     OrlmniLlton clru ihowlg Coroporu nd manaelment (persol) strIctures

              29. RItd of the flowg named propict admnistlretlve and opralioul peonnel.
                     a. Chief excute offker
                     b. Chief fir_    officer
                     c. COef lm and mnritl offlme
                     d.    lcr i charge of poducion

                     Other:     (Titc and Ne)




              30.    Ltten of comnitmcnt fom blow lited pplrtn of Cer               t and am nuterials, nd
                     frotm critical nars  broker. etc. (EDLA
                                                         I   it nselhe             fY nlst urd eann     fnr


                                     Iae of Suppler or Ctor                                 Iturm




              31.    Inde pednt FeaMbility Study by

              rooam I-I        in". trI                                                                   u
                                                                                                          Lca   oc   tll1'll




                                                                  46
APPENDIX IV                                                                                                                    APPENDIX IV

       A-          ..

        A       IB            ww aY      I

                          32.    Schedul for contrution of raetltit, and acqui tion ad ustalation of M · E

                          33.    Schematic layout of buildin including layout and work flow of bay machinery and eqU-
                                 mnt (ie. prodaction ine) (Reduncto a near iO mie (8-1/2 x 14) rs practicl)

                          34.    Capabiity of machinery anadequipm t to produce the ntpeted quality of quantity of
                                 goods at maxinumn production rat per hour anticipted

                                a. Independent ppraisal of production apacity
                                b. Manufacturer's warrantin (EDA rprmentfire Jikll dlr mequtrad Itemt bebw,




                         3.     Fom ED-267. Tabulation of Total Incurred Coatsto Date" - Applicant ahuld un ths an
                                a detaild projected litifig of specificub-lement of project coat. (For & . , indicate
                                model, capacity, and whether new or ued)

                         36.    Evridence of Q     or Option for   [   purchase of land ncluding decription of land and
                                purchse prce

                         37.    Map of ocal area (city or county) howing precise loction of the project (reler       pertlon
                                thereof not gmater than 8-1/2 14)

                         38.    Site plt (Reduced to u near legal in (8-1/2 x 14)as practical

                         39.    Indepndent bid by contractor or coat estimate by rchitect/enginer for project building.
                                elcludin I description of type of coatructlon, square foot ae nd special feature ad state-
                                mant asaurin that Dres Bacon We will be paid

                        40.     Cot timates by machinery nd equipment supplien and instalen (incluln Davis Bacon
                                statement on cots asocated with major instaliatorr)

                         41. Other Project Cost:

                                a. Architectural and uginri nrvices
                                b. Lali and/or administrtive expenes
                                c. Commitment of interim lender supporting the projected coat of nterest expenss during
                                   construction indicated on Form ED-267 ar ED-271
                                d. Preliminar expenes
                                 . Evidence in support of continluency reaerve

                          Oter Doeabualn Required

                        42.
                        43.
                        44.
                        45.
                        46.
                        47.
                        48.
                        49.


         Flet EG Elsmant
         A pre-ppication conference washed t                                                           on _ I _       I
         at which time the undrigned EDA repeentive explained the item on this form to
         of                                 ·                                    (firm); the underained indicated the fortes,
       documentation and other items of information        quired to aupport an pplication for bu e delopment asistance by pioc-
        n hi nitialtin the ppropriate boxes.
    TYVIEAE A"O TITLE or IDA 06rl"15,Av-                                SIGATUE
                                                                           H                                     |


        Fin IDA ledem t Th undersigd has reviewed the ppication and hasdetermined that the applicant hassubmitted ll
        nrquired item of infonartion. that each item is completed, that ill document requiring applicant's aIsture or certification ar
        prnpriy executed, that the mnti pplicaion is orgapnted asrequired by thit form anC that aII problem inrvolvin required
        items hae beenrsovd.
        It is therefort recommended that the Regional Director in thi pplication a project number tndthat pcreimn commmoa.
    NICOMMaNoEO,     TYst NlAME
                              sI        TITL   O                        5LIOUIATUft                              |AtO
    Ito RIpagamNTATIVZ




    PoAl 1o-1      tlll.N
                       10'-1.                                                                                        ucoMQ      litattsel




                                                                        47
APPENDIX V                                                                                              APPENDIX V


     i!
             F1X1                     -                                                   .   0        -m




        ai               * a n O _                                               "




     0. 101 .                                     .


                     !        II              i                          iI I.



                                          0           nH   4         (       0            0       0
                               fi.4




                 I4~~~~4


                         ,,                       %                                  f        Il48

                          a4                                   llj       f           II           4i
                It         Y
APPENDIX VI                                                APPENDIX VI


              STATUS OF CERTIFIED NONRUBBER FOOTWEAR

              FIRMS AS OF DECEMBER 31, 1976 (note a)

Number which have received
  financial assistance                            b/4
Number which have received
  proposal technical assistance                        1
Number with applications in process                    1            6
Other:
    Have no plans to submit an
       application                                     2
    Have submitted a proposal but
      not the entire application                       2
    Have met with EDA officials but
      have not submitted application              c/2
    Have sold operations to another
      company                                          1
    No contact with OBD; (status
      unknown)                                         2            9
         Total                                                    15
a/ With the exception of one firm in Puerto Rico which we
   omitted from the review because of anticipated difficulty
   in contacting firm officials.

b/ Type of assistance and amount includes:

     Fixed asset                     Working capital
       loan             $250,000       loan                 $1,000,000
     Working capital
       loan              630,000
                                     Working capital
                                       loan                    700,000
    Working capital
      loan               750,000
c/ According to an OBD official, the parent company ceased the
   shoe operations.



                                49