SPECIAL COVERAGE: UNDERSTANDING OUTSOURCING

MARCH 17, 2004

Powell Presses India on U.S. Exports

By DAVID S. CLOUD
Staff Reporter of THE WALL STREET JOURNAL

NEW DELHI -- Secretary of State Colin Powell lobbied India to open its market to more U.S. exports in an attempt to ease the political pressure that the Bush administration faces from the loss of U.S. jobs to India.

In a two-day stop here heavy with U.S. election overtones, Mr. Powell said that outsourcing jobs couldn't be halted, but that expanding trade might make up for the loss of U.S. jobs. "While we have outsourced some jobs to India ... we hope India understands the need for reforms so that we can have more opportunities here," he said after a meeting with Indian Foreign Minister Yashwant Sinha.

His message was intended to prod New Delhi, which has so far resisted U.S. pressure to reduce its agricultural and industrial tariffs and quotas, to liberalize its government-procurement rules and to stiffen intellectual-property protection. But Mr. Powell also seemed to be attempting to inoculate the administration from attacks from likely Democratic Party presidential nominee John Kerry, who is pushing legislative action against outsourcing and imports as part of a broader platform to ease worker anxiety.

Mr. Powell said the number of U.S. workers affected by outsourcing to India was relatively small. But he acknowledged that "until we create new jobs for them and the economy adjusts to this new phenomenon within the economic system, it will be a political issue." In an unusually direct criticism of the Massachusetts Democrat, Mr. Powell implied that Mr. Kerry held varying positions on outsourcing. "I'm not sure what his views are day to day on outsourcing," Mr. Powell said in an appearance on Indian television.

The Bush administration hasn't backed any proposals to limit outsourcing of U.S. jobs, but still to be considered are dozens of bills in Washington and in state legislatures that further aim to hinder U.S. companies from outsourcing computer-programming, accounting and medical work to India. Much of Mr. Powell's message during his two-day visit appeared aimed at reassuring U.S. voters that the Bush administration is paying attention to the issue of job loss. But it is also a burning concern here among Indians worried that the U.S. is looking for ways to curtail the flow of work overseas.

Indian officials said they would not be bullied by threats from U.S. lawmakers. But there were signs that the U.S. pressure might be having an effect. The foreign minister, Mr. Sinha, pledged that trade liberalization "is a process we are determined to move forward on," though he denied that it was the result of "pressures and counterpressures."

New Delhi also may be more compliant because it is hopeful in coming months that the U.S. will ease national-security restrictions that have prevented India from receiving high-technology exports for civilian nuclear and space projects.

Last year, trade between the two countries totaled $18 billion. India had an $8 billion trade surplus with the U.S. last year, a 50% increase in five years.