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Senate nears vote on program blocking trade deals

By Doug Palmer

WASHINGTON (Reuters) - The Senate appeared set to approve on Thursday a program to help workers displaced by foreign competition, which business groups hope will pave the way for action on three long-delayed trade deals.

The Senate is expected to pass a revamped Trade Adjustment Assistance program, which President Barack Obama has demanded before sending free trade pacts with South Korea, Colombia and Panama to Congress for votes.

"This program ensures that our workers are not demoralized by unemployment, but that they are energized by the hope of again standing on their own two feet," Senate Finance Committee Chairman Max Baucus, a Democrat, said earlier this week during debate on the bill.

Senate Majority Leader Harry Reid said the Senate would finish its work on the legislation on Thursday.

If senators were to unexpectedly reject TAA, it would derail efforts to approve the trade pacts next month. But supporters said they were optimistic it would pass.

The retraining and income assistance program dates back to 1962 and was expanded in the 2009 stimulus bill to cover more workers and provide more generous health insurance benefits.

However, the expanded provisions expired at the beginning of this year and Republicans bent on reducing government spending balked at renewing them, setting up a fight with Obama and congressional Democrats.

The National Association of Manufacturers, in a letter to senators on Thursday, renewed its support for TAA, which they said "provides workers with the support, training and opportunity to learn new skills that help contribute to the 21st century manufacturing economy."

2009 REFORMS SCALED BACK

The revamped TAA program pending in the Senate renews many of the 2009 reforms through 2013, such as covering service industry workers in addition to manufacturing.

But it reduces the number of weeks of income support to 117 from 156 in the 2009 law, with up to 13 additional weeks available only under certain circumstances.

It also scales back a tax credit to help unemployed workers pay for health insurance, and makes it harder for individuals to receive income assistance if not in a retraining program.

The package costs about $900 million over three years, compared to about $2.1 billion for the 2009 reforms.

During Senate action, Democrats have defeated several Republican attempts to further reduce program costs or explicitly tie TAA to approval of the pending trade deals.

Republican Senator John McCain said he doubted the effectiveness of TAA but recognized it was needed to clear the way for the trade pacts.

"We should authorize it at pre-stimulus levels and not one dollar more," McCain said before offering an unsuccessful amendment to do just that.

Senator Orrin Hatch, the top Republican on the Senate Finance Committee, said he objected to the program on both fiscal and philosophical grounds.

"As the program is expanded to include more and more people and entities ... the myth that trade is bad for the American worker finds ready fodder and continues to build. Instead of helping build the case for trade, TAA certifications are used to show that trade is bad," Hatch said.

The Senate legislation also includes a renewal of the Generalized System of Preferences, which waives duties on thousands of goods from developing countries to help growth in those countries and reduce costs for U.S. manufacturers.

That program, which dates back to the early 1970s, expired at the end of 2010, forcing U.S. companies to pay taxes this year on goods that usually come in duty-free.

The bill would go next to the House of Representatives, where Speaker John Boehner has said it would be considered in tandem with the free trade agreements, which were each negotiated and signed more than four years ago.

(Editing by Mohammad Zargham)

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