Its Time to Update the Trade Laws

Workers displaced by offshoring services need assistance, and extending the Trade Act of 1974 to cover them is well within the spirit of the original measure.

The argument is as old as Adam Smith. and in this election year, its the issue that just wont go away.

Offshore outsourcing continues to be the focal point of heated debate. In a recent salvo, the ITAA, a voice of technology companies and IT employers, came out with a meticulously crafted study that found moving IT jobs offshore will result in a net gain of 317,387 jobs in the U.S. economy by 2008. The study was prepared by Global Insight, a Lexington, Mass., think tank with a heritage of classical economic thinking.

Offshoring opponents dont always have the means to commission studies, and it will be hard for them to come up with a competing one. In the meantime, groups such as the IEEE-USA, which counts electrical engineers and computer professionals among its members, will have to remain content to decry the short-term tech job loss—a phenomenon that the ITAA admits. In response to the ITAA study, the IEEE-USA issued a statement asserting that the study assumes corporations benefiting from outsourcing will invest profits in the United States rather than offshore and in management bonuses and stockholder dividends.

Its not surprising that the ITAA and the IEEE-USA would look at things differently. But less noticed are the several areas where both groups agree. The most significant of these is support for extending the federal TAA (Trade Adjustment Assistance) programs eligibility guidelines to cover all workers whose jobs move offshore.

TAA, established in the Trade Act of 1974, extends unemployment compensation for up to two years and offers job training, job search and health insurance assistance to eligible U.S. workers who lose their jobs because of foreign competition. The measure was crafted to protect manufacturing workers, but now that we have a service-based economy, the ITAA and IEEE-USA say its time to update the law.

Theyre right. No doubt the act was passed to deal with the influx of foreign appliances and automobiles in the early 70s. There are other needs now. In this election year, its a measure that both sides should favor. Extending the act to cover IT workers displaced due to offshoring is well within the spirit of the original measure.

Thats not all the opposing sides have in common. Both favor spending the $1,000 collected for each H-1B visa issued on retraining the higher-level IT workers who are actually displaced due to offshoring, rather than attempting to train the chronically unemployed to become entry-level tech workers, as has been the practice. "Weve said and the ITAA has said that H-1B training fees need to be redirected to higher-level occupations," said Vin ONeill, senior legislative representative for the IEEE-USA.

The two groups also agree that U.S. science education needs to improve.

/zimages/2/28571.gifFor another view of the offshoring situation as it relates to India, click here.

One suggestion: Now that the ITAA has gone to great pains to prove that principles explained by Adam Smith 200 years ago—that governments should not interfere with free competition and that "mans self-interest is Gods providence"—perhaps its time to launch a study that shows which training and education programs really do provide the greatest benefit.