WASHINGTON: American call-centre jobs may be one casualty of a pending Pacific trade deal that would allow US federal contract work to be shifted to Malaysia, Vietnam and Brunei.

Opponents of the 12-nation Trans-Pacific Partnership are seizing on the provision as an example of how the pact may help US companies with overseas operations to cut costs when vying for their own government’s work, and hurt US workers in the process.

“If you can pay workers $2 an hour, it’s a really easy way to achieve cost savings at the expense of American jobs,” said Dan Mauer, a legislative representative for the Communications Workers of America, a labour union with about 700,000 US members.

The trade measure exposes sensitivities about jobs and the economy in a presidential election year. Outsider candidates — especially Republican Donald Trump and Bernie Sanders on the Democratic side — are appealing to populist anti-establishment voters, saying they’ll stand up for workers who risk losing their jobs because of trade agreements. Democratic contender Hillary Clinton also opposes the TPP.

The agreement, signed Thursday in New Zealand, allows companies in Malaysia, Vietnam and Brunei to receive the same treatment as American businesses when competing for many US agency contracts. It may actually be more likely to help US companies that have operations in those countries.

“For global American companies with operations in Malaysia and Vietnam, the benefit would be that they could have the additional flexibility of supplying a US government contract from those locations,” said Marc Mealy, vice president for policy at the US-ASEAN Business Council, an advocacy group for US corporations operating in Southeast Asia.

The US in 2015 awarded contracts totalling as much as $625 million for call-centre work to companies including subsidiaries of General Dynamics Corp and CenturyLink Inc.

The trade pact would also give US companies better access to government contracts in the three Asian countries. The possible beneficiaries include General Electric, Motorola Solutions, Microsoft, Hewlett-Packard and Cisco Systems, according to an Obama administration official involved in negotiating the accord.

Still, the US government procurement market, which typically awards more than $400 billion in contracts each year, dwarfs the roughly $37bn in total contract spending by the national governments of Malaysia, Vietnam and Brunei combined, according to data from Public Citizen, a watchdog group that opposes the trade deal.

“Governments should retain the right to use fiscal policy to create jobs domestically when that is the policy priority,” Celeste Drake, an AFL-CIO trade and globalisation policy specialist, said in an e-mail. The Pacific accord “limits that choice and expands the number of countries whose firms will get equal treatment with US bidders, regardless of whether the US has a verified recession or depression.”

The other countries that are part of the Pacific deal, including Japan, Mexico and Canada, are among more than 50 nations that are already eligible, through other agreements, for equal standing with American suppliers when competing for some US government work.

The accord wouldn’t alter some directive designed to favour US companies, including certain “Buy America” requirements attached to federal money for state and local transit, highway and water projects, sensitive Defence Department purchases, and programmes designed to boost spending with veterans or small businesses.

Also still in place would be areas where the Southeast Asian countries’ cheaper labour markets might pose a significant threat to US workers, such as the production of textiles or footwear for the military. State and municipal government contracting provisions favouring hometown companies would remain, at least initially.

Adelicia Cliffe, counsel for Crowell & Moring in Washington, said many of her firm’s clients are watching the trade accord closely. The contracting clauses would especially help companies that make hardware and software information technology products, she said.

Circuit boards and microcomputers are not typically made in the US, though they are made in many Asian locations including Malaysia, Cliffe said.

“To date, they’re either not selling those products to the US government on contracts, or they’re doing a sufficient amount of work in the US to substantially transform the foreign hardware into domestic products.”

Karan Bhatia, GE’s vice president of global government affairs and policy, and a former Deputy US Trade Representative, said in a 2014 interview that the company made “very clear” to US trade negotiators that domestic preferences are “bad policy.”

The company doesn’t foresee the trade accord affecting its sourcing for US federal contracts, GE spokesman Josef Skoldeberg said in an e-mail Thursday.

Fairfield, Connecticut-based GE received US government contracts valued at as much as $1.7bn during the fiscal year that ended Sept 30, according to data compiled by Bloomberg, including more than $20m for work abroad.

GE has about 1,300 employees in Malaysia, none of whom do manufacturing, Skoldeberg said. Their tasks include aircraft engine maintenance, as well as lighting and power projects, according to its website. In Vietnam, GE employs about 1,000 people to perform tasks including the production of wind turbine generators, Skoldeberg said.

Motorola, based in Schaumburg, Illinois, received $148.3m in US contract work last year, including $142m planned for US locations, with the rest slated for countries including Japan, South Korea and Kuwait.

The communications equipment company makes most of its non-US products in Malaysia, according to its financial statements. It would be “logical” that the company could save money by producing commercial radios or other equipment in that location, said Keith Housum, a senior research analyst with Cleveland, Ohio-based Northcoast Research.

Bloomberg-The Washington Post Service

Published in Dawn, February 7th, 2016