United States: The Ohio Syndrome: India’s Exposure to State Contracting Restrictions

Article by Mark Levey, Senior Researcher and Rami Fakhouri, Senior Editor

On August 6, the Governor of Ohio issued an Executive Order prohibiting the use of State funds for offshore services. This is the first such assertion by a State, and it comes just weeks after the U.S. passed national legislation that sharply increases H-1B and L-1 visa fees, a move that was perceived as discriminatory against the Indian outsourcing industry.

Ohio Gov. Ted Strickland defended his order to ban offshoring of state government work. In a letter to U.S. Trade Representative Ron Kirk, Strickland said that, "Indian officials have admitted they do not have a case in the World Trade Organization because my Executive Order does not violate any trade agreement with them."

India's commerce and industry minister, Anand Sharma, in Washington on talks with U.S. trade officials called the move by Ohio, "ill-advised", according to the Press Trust of India, an Indian news agency.

While the WTO GATT Agreement on Governmental Procurement generally bars discriminatory treatment by governmental entities of signatory nations¹, the U.S. accession to the AGP maintains total exceptions to that commitment for at least 12 States, including Ohio, and allows partial discrimination in state contracting for a number of others.²

News of the Governor's Order, and comments by Indian trade officials and groups, have fanned smoldering expressions of opposition to H-1B workers in the American political net-roots into an expression of outrage against outsourcing.

This focusing of public attention upon trade and immigration issues is ill-timed, coming as it does in the weeks leading up to an American mid-term election in which high unemployment and a stalled economic recovery are the central political issues.

Footnotes

1. See, WTO GATTS, Agreement on Governmental Procurement, (AGP), http://www.wto.org/english/docs_e/legal_e/gpr-94_01_e.h... ; see, related, http://www.wto.org/english/docs_e/legal_e/legal_e.htm.

2. See, Annex 2 of the US Agreement, http://www.wto.org/english/tratop_e/gproc_e/appendices_..., Click: United States, Annex 2.

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