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Politics : Moderate Forum -- Ignore unavailable to you. Want to Upgrade?

To: tsigprofit who wrote (8541)	3/16/2004 12:34:26 PM
From: Dale Baker	Read Replies (1) \| Respond to of 20773

The points are all very true - and very accurate. The question is how you combat the externalities with a workable solution. If you add a tax on any company that shifts jobs overseas, they can simply subcontract to foreign-owned firms. If you block those deals, opening foreign markets to US services gets squashed. Serious problem but the solutions are not simple.

To: tsigprofit who wrote (8541)	3/16/2004 2:01:44 PM
From: Dale Baker	Read Replies (1) \| Respond to of 20773

The stakes: More Work Is Outsourced to U.S. Than Away From It, Data Show By MICHAEL M. PHILLIPS Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- Despite the political outcry over the outsourcing of white-collar jobs to such places as India and Ghana, the latest U.S. government data suggest that foreigners outsource far more office work to the U.S. than American companies send abroad. The value of U.S. exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion from the previous year, the Commerce Department reported Friday. Imports of such private services -- a category that encompasses U.S. outsourcing of call centers and data entry to developing nations, among other things -- hit $77.38 billion for the year, up $7.94 billion from 2002. Measuring imports against exports, the U.S. posted a $53.64 billion surplus last year in trade in private services with the rest of the world. Under government accounting, when a U.S. company opens a technical-support center in India that handles inquiries from the U.S., that is considered a U.S. import of services. When a U.S. lawyer in New York does work for a German auto company or a New York investment banker works on a deal for a Japanese company, that is an export of services. The numbers suggest that congressional efforts to restrict outsourcing by U.S. companies may backfire, if they provoke retaliation by U.S. trading partners. Economists also say that U.S. service exporters -- insurers, for instance -- might lose some competitive edge if they can't use foreign suppliers for call centers or other back-office operations. "If you try to protect and limit outsourcing, you will have a negative impact on the exports of service activities, which generate a lot of jobs," said Catherine Mann of the Institute for International Economics, a Washington policy research group. Despite the developments in services trade, the current-account deficit, the most inclusive measure of the U.S. trade gap, hit another record in 2003, reaching $541.8 billion, or 4.9% of the gross domestic product, up from $480.9 billion in 2002, or 4.6% of GDP. The increase came even though the deficit for the final three months of year narrowed to $127.5 billion, from $135.3 billion in the third quarter. The white-collar trade issue has risen to the top of the political agenda and has led to legislative proposals to prevent outsourcing, or expose it when it occurs. Sen. John Kerry of Massachusetts, the likely Democratic presidential nominee, wants U.S. companies to reveal to callers that their telephone inquiries are going overseas. Others in Congress legislation to restrict government contractors from sending work abroad. Politicians have largely ignored the jobs created in the U.S. when Americans sell white-collar services to foreign customers. "I can understand why members of Congress are responding to what a lot of constituents feel, and I can understand why their constituents feel that way because there has been so much publicity about the potential loss of jobs," said J. Robert Vastine, president of the Coalition of Service Industries. But, he said, "a lot of it is hype, and one of the big problems in this debate is there hasn't been enough analysis." In addition to hiring more U.S. businesses to provide services, foreigners doubled last year the amount of money invested in U.S. companies, plants, offices, stores and other facilities. That foreign direct investment swelled to $81.98 billion in 2003, from $39.63 billion in 2002, the government said. Write to Michael M. Phillips at michael.phillips@wsj.com