Outsourcing ban adds twist to Zoellick visit

Even before United States Trade Representative (USTR) Robert Zoellick lands in India on February 16, a controversy has erupted over the discussions on the US ban on outsourcing.

The US administration has conveyed to the commerce and industry ministry that Zoellick's visit will purely focus on multilateral matters and bilateral issues will not be raised.

India, on its part, is keen on communicating its disappointment over the outsourcing ban since the US legislation would adversely affect Indian companies.

Indian officials also said the matter was not a bilateral issue as was being made out by the US but was related to the multilateral aspects since negotiations on services liberalisation were under way at the World Trade Organisation (WTO).

Commerce and Industry Minister Arun Jaitley said the US decision was against the principles of market access, particularly when Washington had always demanded greater market access in all sectors, including services.

"The US Embassy does not want us to raise bilateral issues. But the outsourcing ban is also a multilateral issue since US has always been always demanding greater market access," an official said.

India is also in favour of a Totalisation Agreement that will enable its professionals working in the US on a temporary visa to receive their social security contribution. The US had not agreed to the proposal saying India did not have a social security system in place.

With the government putting in place a pension scheme for the unorganised sector, India is now pushing for signing a Totalisation Agreement.

Controversies apart, the government has set about making preparations for the Zoellick visit. Department of Industrial Policy and Promotion Secretary Lakshmi Chand today met industry associations including Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry.

While India is not against the removal of duties in most sectors proposed by the World Trade Organisation, it is demanding that individual countries should be given the flexibility to choose the sectors in which they want to remove tariffs completely. The US has been demanding zero duty for all industrial products by 2015.

Zoellick is expected to push for the US-European Union joint tariff reduction formula for agricultural commodities, which is not acceptable to India and other developing countries, as the proposal does not provide for reduction in subsidy but proposes high tariff cuts.