Outsourcing (APCAC Position Paper - June 2005)

The Issue

Worldwide sourcing (also known as ‘offshore outsourcing,’ ‘competitive sourcing,’ ‘global sourcing’ and ‘sourcing’) was a key issue for policy makers, the media and the public in the United States throughout 2004. The topic received significant attention primarily as a function of the politics associated with the 2004 U.S. presidential election. Although hundreds of bills were introduced at the state and federal levels, none that would appear to curtail trade or jeopardize the ability of companies to continue to expand globally was signed into law. However, the debate continues into 2005.

Position

Ultimately, worldwide sourcing benefits the United States by allowing American businesses to remain competitive in a progressively global marketplace through lowered costs, new revenue streams, repatriation of earnings, and redeployment of labor. Sourcing also increases the standard of living in emerging markets, resulting in a new class of consumers for U.S. goods and services. These new consumers will grow the U.S. economy in the short and long term through revenue generation, improving the balance of trade, and creation of jobs to support the additional exports.

Rationale

While restriction of trade in services might, on the surface, seem compelling as an effort to ‘save U.S. jobs’ during a period of transition for the U.S. economy, recent data points to the following:

• The pace of the job shift is not as rapid as proponents of restrictive legislation might assert. In fact, foreign competition creates a net positive number of jobs.

• Opponents of worldwide sourcing underestimate the $1.5 trillion investment ‘insourcing’ has brought to the U.S. economy in the last fifteen years.

• The U.S. economy is expected to continue to recover as 2005 progresses.

Recommendations

Rather than work to restrict trade, policy makers in the United States should continue to embrace the benefits associated with free and fair trade and focus on transitional issues such as funding for worker retraining and education, as well as lowering trade barriers in international markets to create additional export opportunities and new jobs in the U.S.