The Hindu : Politics of protectionism

Online edition of India's National Newspaper
Sunday, Feb 29, 2004

Opinion

Opinion - News Analysis

Politics of protectionism

The storm over outsourcing is unlikely to die down even after the U.S. presidential elections, says Sridhar Krishnaswami.

THE TROUBLE over outsourcing in the United States is not going to go away the day after the November presidential elections. Democrats and Republicans are stuck with this issue as specific legislation is going to come about. The U.S. President, George W. Bush's top economic adviser, Gregory Mankiw, has found few takers for his line that outsourcing was "the latest manifestation of the forces of free trade" and that it was "probably a plus for the economy in the long run."

The White House went about the whole thing rather gingerly. In a political season with high stakes, it cannot openly defend Mr. Mankiw or the economic soundness of his arguments.

The Senate Minority Leader, Thomas Daschle, rushed up with his Job for America Act which saw co-sponsors such as Senators John Kerry and John Edwards who are now seeking the Democratic nomination for President. And Senator Christopher Dodd of Connecticut did not lag too far behind when he introduced his Worker Protection Act.

The proposed legislation stipulate that companies would have to give three months notice to employees whose jobs are being shipped away, and explain when, where and why jobs are being moved. One thing is for sure — this President is highly unlikely to veto any final Bill on outsourcing that reaches his desk.

Senator Kerry — or for that matter Senator Edwards — has not come up with any specifics of how the situation will change under a Democratic administration. Mr. Kerry and Mr. Edwards are focussing on plugging the loopholes in the taxation system that makes companies go overseas. That apart, both law-makers are saying that there will be incentives offered to keep jobs at home.

The trouble is not just at the Federal level. It is estimated that 24 States are looking at as many as 47 laws on different aspects of outsourcing; essentially restricting the movement of jobs outside the U.S.

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