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Home > Business > PTI > Report

Fears about outsourcing misplaced: US trade body

T V Parasuram in Washington | April 15, 2004 11:33 IST

The United States Chamber of Commerce has said the fears about outsourcing were "misplaced" and it found little hard data to support claims of an impending exodus of US jobs overseas.

"The American businesses are the most successful competitors in any market and that success has generated a standard of living that is the envy of many others," the chamber president Thomas Donohue said on Wednesday.

"The alarms being sounded about the loss of jobs to foreign countries are motivated by political need rather than facts," he said.

"The US must be able to source around the world to stay competitive in the global economy and the business community will fight any attempts by our government to restrict outsourcing," he said.

The US Chamber, in a report to members of Congress and the administration, noted the significant benefits to the US economy from foreign multinationals operating in the US compared to the relatively small number of American jobs that are moved offshore.

Further, the report outlined the substantial benefits from America's leadership role in the worldwide economy.

The chamber said critics of outsourcing often overlook the benefits and the jobs created here when foreign firms open operations in the US.

"The American economy did not become a world leader in creating wealth, jobs and prosperity by clinging to the past," Donohue said, adding: "Protectionism is a poor substitute for innovation."

State legislatures and the federal government are considering proposals that would punish US multinational companies that outsource, by denying them contracts or changing the tax code.

The government interference would stifle competition, drive up costs, and eliminate more jobs than are ever likely to be outsourced, according to the chamber.

"Building a wall around this country by limiting business options is a failed economic model and a violation of our own trade agreements, which could start a trade war," Donohue said, adding, "Political need cannot change economic reality."

The way to spur job creation here at home is by reducing indirect business costs -- excessive and duplicate regulations; junk lawsuits; lingering tax and accounting uncertainties and by expanding research and development initiatives, according to the chamber.

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