The Hindu : U.S. officials link outsourcing ban to market access

Online edition of India's National Newspaper
Friday, Feb 06, 2004

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U.S. officials link outsourcing ban to market access

By Sandeep Dikshit

NEW DELHI, FEB. 5. Senior United States officials today said the Senate bill banning outsourcing of certain American contracts to other countries was unlikely to affect India.

However, the episode held "important lessons" in the conduct of international trade. It would be difficult to reverse the move towards curbing outsourcing of American jobs to other nations till the beneficiaries effectively demonstrated that they were reciprocating in equal measure by opening their markets for American products.

"The issue of jobs in the U.S. is a very sensitive. All of us must understand clearly that international trade is a two-way street. The view in the U.S. is that some other markets are not so open. It is very important for perception and reality to match," David Gross, U.S. coordinator for international communications and information policy, said.

At the same time, he pointed out that the law passed by the U.S. Senate covered a very narrow area.

It seeks to ban outsourcing of services previously handled by Government departments.

Moreover, the ban period ends after nine months.

Another senior official, Michael Gallagher, corroborated his views.

"The U.S. has embraced competition but some countries raise barriers to stall competition. The environment in these countries is thus hostile to products made by American workers. The outsourcing issue is a pressing reminder of the case for two-way free trade," said the U.S. Acting Secretary of Commerce for communications and information.

The two officials are here to interact with policy makers and the industry on issues relating to IT and communications.

Earlier this week, the Charge d' Affaires of the U.S. Embassy, Robert O Blake, had observed that the commitment to and the benefits of trade must be reciprocal. "To succeed, trade must be a two-way street," he had said.

The officials were hopeful that Indo-U.S. international call rates would decline once decision-makers from both countries had finished grappling with the challenges associated with the spread of voice over Internet protocol (VoIP) technology, an alternative to traditional phone services.

The U.S. officials expressed the need for raising the current limits on foreign direct investment (FDI) in telecom.

Their reasoning was that the world telecom industry was entering a new phase of growth after a difficult three-year period. Therefore, the demand for funds was high and capital would flow to the country with the most favourable investment policy.

India stood to lose investment opportunities if it persisted with the current limits on FDI in telecom, they said.

The FDI issue occupied centre-stage during a recent meeting of the Union Cabinet. Opponents to increasing the FDI limit in telecom cited security considerations to stall a proposal to revise the cap. Aware of the controversy, officials prefaced their comments by observing that it was a sensitive issue in India.

"But we did talk about our experience with Government officials. Telecom is capital intensive and even the U.S. does not have the resources to completely meet the funding requirements.

Besides, countries should create conditions for free flow of capital," Mr. Gross said.

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