Washington: Measures to curb outsourcing of American jobs to lower-wage countries like India and China may provide temporary relief, but it would backfire on the United States, Federal Reserve Chairman Alan Greenspan has said and warned that restrictions on free trade would also hurt US standards of living.

"A new round of protectionist steps is being proposed (against outsourcing). These alleged cures would make matters worse rather than better," Greenspan said testifying before the House of Education and Workforce Committee yesterday (Mar 11, 2004).

Greenspan acknowledged rising concerns "about the possibility that an increasing number of our better-paying white-collar jobs will be lost to outsourcing, especially to India and China".

But he repeated his warning against protectionism, saying restrictions on free trade would hurt US standards of living.

"As history clearly shows, our economy is best served by full and vigorous engagement in the global economy," Greenspan said. "Consequently, we need to increase our efforts to ensure that as many of our citizens as possible have the opportunity to capture the benefits that flow from that engagement."