The Hindu Business Line : An unfair clamp-down

THE LATEST MOVE by the United States Senate to ban outsourcing of certain federally-funded contracts is along predictable lines. Only a couple of months back a similar clause was inserted in the legislation authorising Federal spending for this year. The scope of the latest restriction is identical to the earlier one. But unlike the earlier legislation, which would have lapsed automatically with the passage of the fiscal year, the latest one can nag as it is incorporated as a standard element in the Federal legal framework. However, the latest legislation will not take effect until the Commerce Department proves that the ban will hurt the economy or lead to more job losses. This, the Commerce Department may find it hard to establish.

On the face of it, these restrictions may not amount to much. For they apply only to those jobs that the Federal Government has offered to the private sector, as part of an exercise in cost reduction. Given that there would be only a few such contracts on offer, the scope for private enterprises winning them and, by extension, getting them done cheap in countries such as India would be limited. But, clearly, the issue goes beyond outsourcing federal contracts. Sooner or later there would be a clamour to have some form of federal restrictions on private corporate sector as well. At the moment, the lawmakers hope the customers themselves would exert enough pressure on the private sector to keep jobs in the US. Consider, for instance, a proposed legislative measure that would require call-centre employees to disclose their location. Evidently, the belief is that if customers are seen as reluctant to have their needs serviced by someone in a distant land, that would pave the way for companies to relocate such call-centres to the US. But should this fail to deliver the goods one cannot rule out more explicit restrictions. For all the lobbying power of Corporate America, it must surely have its task cut out. Clearly, in all this politics has been at work. With State and Federal elections upon the US, nobody wants to be seen as being indifferent to the pain inflicted on the American workforce as jobs get exported to cheaper locations.

For India and other developing countries, the lesson from all this political drama is simply this: No matter what loud noise the US makes about a freer global arrangement for trade in goods and services, it is the first to erect tariff and non-tariff barriers at the first sign of threat to American jobs. It began with punitive trade measures against low-cost imports in textiles, followed it up with similar measures in steel and is now set to do the same in services. It is ironic that Washington, which never loses an opportunity to tell developing countries how they should be prepared for some pain in terms of job losses as their economy moves on to a higher growth path, should be quick to raise barriers to free trade when its economy has to make some adjustments that hurt. But, then, the US has left no one in any doubt that while the principle of `pain today for greater prosperity tomorrow' may be all right for the rest of the world, it has always been `prosperity today and greater prosperity tomorrow' for itself.

More Stories on : Editorial | Outsourcing

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
A stormy passage to India

An unfair clamp-down

Industrial clusters: Kerala adopts the Italian model

A reality check on India Shining

Power bargaining on energy trading

Of missing jobs and outsourcing concerns

How corporate governance rating would help

Passing of a banker-economist

Outstanding dues