India takes outsourcing protest to Washington

Thu Jan 29, 9:21 PM ET
By Edward Luce in New Delhi

 SENIOR INDIAN MINISTERS SAID on Thursday they would confront their
counterparts in Washington over recent US Senate legislation that bans
certain types of federal work from being outsourced to developing countries,
including India.

 Atal Behari Vajpayee, the prime minister, described the measure, which is
unlikely to have a significant impact on India's $15bn (£9bn, EU122bn)
outsourcing industry, as "unfair".

 Arun Jaitley, India's minister for trade and commerce, said he would raise
the issue with Robert Zoellick, the US trade representative, who had last
year assured him he would oppose similar measures that had been tabled in
some US state legislatures.

 The Senate legislation, which has yet to be signed into law, would stop
private companies using offshore workers to compete against government
workers on some federal contracts.

 India believes that the largely symbolic measure could pave the way for
more substantial protectionist moves unless it is vigorously contested.
"This measure sends a far from insignificant signal," Mr Jaitley told the
Financial Times.

 "Here you have a country whose main mantra [at the World Trade
Organisation] is 'market access' and whose argument is that opening markets
to competition is the solution to poverty in countries like India. And then
they enact something like this."

 Mr Jaitley stopped short of saying that the US move would undermine India's
support for a revival of the Doha round of world trade talks, but he said it
would make it more difficult for New Delhi to sell trade liberalisation
measures to the Indian electorate.

 "We are a mature player in the multilateral negotiating system," said Mr
Jaitley. "But a measure of this nature creates a far more adverse
environment in India [for selling trade liberalisation]."

 Trade unions and politicians in the US and UK have become increasingly
concerned about India's booming information technology and call centre
industry, which they fear will lead to millions of job losses. But India is
acutely sensitive to what it sees as western double standards on free trade.

 The US and European Union  are pushing New Delhi to open markets to greater
agricultural imports. India sees that as a threat to 600m livelihoods.

 Many in the west accept New Delhi's claim that the US and EU should offer
much deeper farm subsidy reductions before large developing countries are
asked to follow suit.