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Trade and Offshoring

ARCHIVE: Outsourcing

The debate now raging over service-sector offshoring (outsourcing jobs overseas) represents the forseeable expansion of concerns first voiced in the early 1990s over the effect of globalization on U.S. jobs. These concerns were widely heard when Congress was faced with two transformational “trade” agreements: the NAFTA and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which established the WTO. The focus then was the future of U.S. manufacturing jobs. The legal protections and rights of these trade agreements have made it easier for U.S. companies to maximize profits by moving operations “offshore,” typically to countries where wages are far below those of U.S. workers and where there are few environmental, health or safety regulations with which they must comply.

Widespread public concern over the growing offshoring of a range of back-office, technological and other professional occupations made this a very hot political issue in the last three elections. Increasingly, policy makers and economists are coming to realize that something dramatic has occurred that cannot be explained by prevailing economic theories and models.

Public Citizen’s 2006 report, Addressing the Regulatory Vacuum: Policy Considerations Regarding Public and Private Sector Service Job Offshoring, proposes two distinct sets of policies that Congress and state legislatures should consider in response to this latest wave of offshoring. The first set of policy options are required to ensure that identity theft, financial fraud, irreversible exposure of sensitive personal medical and financial information, and domestic infrastructure sabotage threats do not increase with the move to shift professional and service sector work overseas to lower-wage countries.

The second set of policies is aimed at protecting the right of state and federal government to invest taxpayer dollars back into the domestic economy. To date, Congress and over 30 states are considering policies that would prevent service work paid for with state and federal tax dollars from being sent overseas.

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