Powell Reassures India on Technology Jobs

New York Times ^ | March 17, 2004 | STEVEN R. WEISMAN

[MannyP]

Powell Reassures India on Technology Jobs By STEVEN R. WEISMAN

Published: March 17, 2004

EW DELHI, March 16 — Secretary of State Colin L. Powell, encountering the other side of a tempestuous debate in the United States, sought to assure Indians on Tuesday that the Bush administration would not try to halt the outsourcing of high-technology jobs to their country.

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In discussions with Indian leaders and college students, Mr. Powell found that the issue of the transfer of American jobs to India by leading technology companies was as emotional in India as in the United States.

But whereas American politicians have deplored the loss of such jobs, it was clear that the anxiety in India focuses on threats by some members of Congress to try to stop the transfer by legislation.

Responding to a questioner in a session with students who asked if he supported or opposed outsourcing, Mr. Powell said: "Outsourcing is a natural effect of the global economic system and the rise of the Internet and broadband communications. You're not going to eliminate outsourcing; but, at the same time, when you outsource jobs it becomes a political issue in anybody's country."

Mr. Powell told the students what he had said to reporters earlier in the day after a meeting with Foreign Minister Yaswant Sinha: an appropriate American response to outsourcing was to press India to open up to imports of American investments, goods and services.

He said one purpose of his trip was to explain to India that because outsourcing had created a political problem in the United States, India could help by lowering its trade barriers. He said he was making that request, not as a condition for the United States allowing outsourcing to continue, but because it was in India's interest to be more open.

In February, Gregory Mankiw, chairman of the White House Council of Economic Advisers, stirred a political outcry when he called the outsourcing of jobs a long-term "plus" for the economy. While Mr. Powell said Tuesday that "it is the reality of 21st century economics that these kinds of dislocations will take place," he was quick to add that the Bush administration would work to train people for new jobs.

In Washington, the White House endorsed Mr. Powell's comments.

"The secretary made clear in his remarks that we are concerned when Americans lose jobs, and we are focused on creating jobs for American workers, and the best way to do that is to open markets around the world, including in India," said Claire Buchan, a spokeswoman for the White House.

But David Wade, a spokesman for Senator John Kerry, the presumptive Democratic presidential nominee, said Mr. Powell's comments demonstrated how the Bush administration has "failed to fight for American workers."

[phil_will1]

Another advantage of using Fundamental Tax Reform (FTR) to address our jobs/economic problem is that, unlike tariffs, we would not be enciting the wrath of the WTO and inviting retaliation by our trading partners. We could simply point out that we are taxing imports the same way we are taxing our own products purchased for consumption here.

IOW, we would be correcting an imbalance that currently exists in which our tax system handicaps our own producers vs their international counterparts. We would be levelling the playing field. Once people understand that, FTR is a no-brainer.

[iconoclast]

There is no chance for victory by choosing not to play the game.

You free traitors are unreal.

The U.S. is the only country playing your silly game! The rest of the world IS protectionist.

Your so called free trade would better be called economic masturbation.

[dennisw]

The irony of this situation can be seen among the cat's Indian IT co-slaves, green cards, not H1B's, as far as I know, who are beginning to shake under their turbans and saris, afraid that their own jobs might end up being outsourced to, gasp, India!.............

Not a surprise to me!

[dennisw]

Your so called free trade would better be called economic masturbation.

The totalitarian free trade ideology is as failed as Marxism. The market does not solve all problems in a way that's good for the USA. I'm sick of "deep thinkers" who are really nitwits, who think free markets solve all problems in a way compatible with humanity.

[MissouriForBush]

Do you think we have free trade with China?

[WilliamofCarmichael]

There is little utility attempting to debate the "free" traders. It is their wont to name call and not even bother to read our concerns about "free" trade vis-a-vis our national security.

A 2000 report "Finally! Chipmakers Applaud China's WTO Acceptance," Electronic News, Jan 10, 2000, Grant Robert Johnson reported that China agreed to WTO rules. Gone would be the "mandatory requirements that imported goods go through a Chinese agent or middleman" and more importantly gone too is this. "Access to China's domestic market [was] contingent upon a foreign partner's willingness to transfer advanced technologies and Intellectual Property (IP) to the Chinese partner."

Had China lived up to its WTO agreement and true free trade resulted many of us would have no complaints. It would be a good sign that the Chi-com masters were out and Chinese citizens truly were on their way to individual rights. Fact is, the Party members and princelings are the "capitalists."

Still the problems exist. Just plucking something out of the google fishing net I offer this from the Harvard China Review. It is about a panel assembled to discuss Sustaining China's Economic Growth

This panel addressed these issues

* How should the Chinese government promote FDI and protect foreign investors' property rights?

* How to ensure efficient transfer of technologies and management expertise?

* How can foreign enterprises achieve profits while managing the risks of investing in China?

* What actions should the government take to strengthen IP law enforcement?

* How can foreign firms preempt IP infringement and protect themselves?

You see, (actually, I guess "free" traders won't) my concern is about all these things especially our useful idiots worrying about how to "ensure efficient transfer of technologies and management expertise" to communists who have every intent of increasing the number of nuke missiles aimed at us, our forces, and our friends around the world. They make no secret of their feeeeeeeeeeeelings.

These same useful idiots put their intellectual property (IP) in country and fret that the Chinese are stealing it.

I think I am beginning to understand how Lenin came up with "useful idiot." Useful to the communist, idiot is self-explanatory.

[ninenot]

2. US produced goods would stay about the same in price on an after-tax basis, but imports would increase significantly. Once again, the demand for US produced products in our own country would be substantially greater than it is now.

I don't follow your logic here.

I stated that there would not necessarily be a positive impact on US jobs, just to be conservative about it.

I agree with your thought that it would be a BIG BOON to US job-holders--but I don't want to over-promise. I'm not running for office, you know....

[Iscool]

I'm headin' for General Motors...There's going to be a hirin' blitz...When that market gets opened up, those Indian folks that are now doin' our work will be beggin' for some new Yukons and Cadillacs...That's right, ain't it Colon??? Ain't it???

[phil_will1]

"I don't follow your logic here."

The logic is quite simple. If the demand for US produced goods increases, producers will increase production to meet the demand. In most cases that means hiring more people, in some cases, it means building more capacity (which results in even more jobs).

In that regard, a study done by Princeton econometrics a few years ago is instructive. Senior executives of foreign multi-nationals were asked how their strategic plans would be affected if the US were to convert their tax system to a consumption based system similar to the FairTax. Something like 75% said they would build their next plant here and roughly 20 - 25% said they would relocate their corporate HQ here.

Furthermore, when Daimler/Benz and Chrysler merged a few years ago, one of the Daimler/Benz board members was asked about the decision to base the merged company in Stuttgart. His reply was that they had wanted to locate
their HQ in the US, but when they looked at the tax implications, it became obvious that that wasn't a financially sound decision.

The board members of other merging/acquiring companies have reported that a disproportionate amount of time and resources are devoted to figuring out the tax implications of business strategies, leaving less than desired time to analyze the markets, look at redundencies, evaluate the competiton and figure out the best ways to serve customers. If we had a simpler, fairer tax system, those corporate leaders would have a great deal of human resources and intellectual capital freed up for more productive and substantive pursuits.

[Iscool]

I'll consider tax credits and incentives, but NO LEGISLATION...or kiss our leadership good-bye!!!

And what leadership would you be referring to?

[ninenot]

A new jackass for the thread.

And, BTW, O literati extraordinaire: get the real Deutsche script for your screen name.

[ninenot]

Your so called free trade would better be called economic masturbation while using sandpaper gloves.

[ninenot]

"Free" trade, as espoused by these nitwits (and Bushbots, who usually just don't know ANYTHING) and Limbaugh, the WSJ, and Limbaugh's moron replacements, Williams and HedgeHead...

Is China's better warfare against the USA. The PRC cannot win a military confrontation; but they won't have to in 25 years.

[ninenot]

These same useful idiots put their intellectual property (IP) in country and fret that the Chinese are stealing it.

Schadenfreude-sweet. Chrysler, GM/Chevrolet, and Briggs & Stratton learned the hard way.

See my alligator tears.

[ninenot]

Your statement includes the following: but imports would increase significantly

That's what I don't understand.

[WilliamofCarmichael]

This just in! Gee, I'm not trying to upset the friends of the Chi-com like Sen. Feinstein and husband Richard Blum, talk show hosts, and various Freepers, but..

"Yesterday, the Office of the U.S. Trade Representative filed a complaint with the World Trade Organization (WTO) over China's policy of adding a 17% value-added tax (VAT) to chips that are made here but sold in China. Local Chinese makers pay no more than 6% in VAT fees."

OK. Big deal. Big WAPI! Who cares?

WAPI?

"Wired Authentication and Privacy Infrastructure, WAPI is a standard endorsed by the Chinese government for making chips for wireless Internet devices."

All the quotes are from "America's Chip Crusade," Investor's Business Daily, by Tim Beyers, March 19, 2004. Mr. Beyers reveals

"Unfortunately, the documentation for making WAPI-compliant chips is only available to Chinese companies, all but forcing U.S. communications chip suppliers such as Agere Systems (NYSE: AGR.A), Broadcom (Nasdaq: BRCM), Motorola (NYSE: MOT), and PMC-Sierra (Nasdaq: PMCS) to share their intellectual property with local firms to get a cut of the business. Intel (Nasdaq: INTC) has threatened to stop shipping wireless chips to China if WAPI rules aren't changed."

Forces our firms to share their intellectual property with local [Chinese] firms to get a cut of the business. It's only fa-a-a-a-a-air, right radio hosts of America and (some) fellow Freepers?

We've got to sha-a-a-a-a-air with the developing nations don't we?

[Fledermaus]

Close enough for a so-called communist country that recently passed a law allowing private property ownership.

Don't forget the intangibles that go with trade. Do you really want China to become the next Soviet Union? Trade helps us by making China open up.

There are many American companies in China. They go there to make the products they sell them. Doesn't make sense to ship them, cost too much. So a company like, oh, Heinz has 57 (I think it's really 58 or 59 but the idiot press jumped on 57) of their 79 plants overseas. Mostly because it's easier to make ketchup to sell in China in China. Can you imagine the cost of shipping millions of bottles of ketchup from the U.S.? But they sell more ketchup which let's them grow and higher more sales people, IT people, admin people, etc.

Also the biggest barrier to our selling them goods is their income level. Once they raise it they'll start buying American made cars one day. And banking services and insurance services and will come visit increasing tourism.

So I think it's as free as it can be now...but will always change and grow.

[Fledermaus]

Yawn. Can't handle change and competition. Nice traits.

And my screen name is what I want it to be regardless of your demand to change it.

[phil_will1]

"Your statement includes the following: but imports would increase significantly.."

Yes, imports would increase in price (not in quantity) because they would have the sales tax levied on them (just as domestically produced goods would). However, unlike domestically produced goods, they would not enjoy the benefit of the removal of the currently imbedded (US) tax system. Therefore, US produced goods would stay about the same price as they currently are (after-tax) and imports would increase (also after-tax). The 23% difference is more than enough to affect the buying patterns of consumers.

In that regard, the FairTax works like an import tariff, at least relative to the current system. However, unlike a tariff, the FairTax is imminently defensible to the WTO and our trading partners because we can simply point out that we are taxing imports identically to the way we tax our own domestic production. In essence, we are correcting the current imbalance that exists in our tax system which provides an disadvantage to domestic producers vs their international counterparts. We are the ones who are handicapping our own producers and we are the only ones who can fix it.

[ninenot]

Once they raise it they'll start buying American made cars one day. And banking services and insurance services and will come visit increasing tourism.

Should happen by the turn of the century.

In the meantime....