The US government should make the States a better place for companies to do business, rather than make it appealing for them to go offshore for tax or cheaper labour, according to the spokesperson for a US Senator.

Yesterday Senator Max Baucus, a ranking member of the US Senate Committee on Finance, told fellow members that protectionism was not the way forward in a global economy.

?There are lots of pieces to the offshoring puzzle ? tax, education, health, research and development ? to name but a few,? said Sen. Baucus.

?But today we should talk about the trade piece. About how to use our trade policy to create and keep good jobs here at home. I think it is a question of priorities.?

And yesterday a spokeswoman for Sen. Baucus said that he was not making a point of being anti-offshore, but was more focused on keeping companies in the US by giving tax cuts and other enticements.

Bermuda has been increasingly under attack from the US in the run up to elections after the loss of American jobs to overseas competition has become a major election campaign theme. Included in this is a new wave of anti-offshore feeling and a wave of patriotism which frowns on companies moving overseas to cut taxes.

?Offshoring? has become a phrase commonly used in the States meaning either leaving the US for tax reasons or placing jobs abroad, say in India or China where labour is cheaper. Yesterday Sen. Baucus spoke to US Trade Representative Robert Zoellick who addressed the Senate Committee.

?Open any newspaper these days and you?ll likely see a story about US services jobs moving overseas,? Sen. Baucus said. ?Offshoring has become the issue of the day and it?s our first instinct to want to throw up barriers and hold our jobs tight.?

?But that?s not how to succeed in this interconnected, international world. We need a vision for America based on embracing open markets, rewarding innovation and risk-taking, while at the same time preparing our workforce to take advantage of the opportunities of the future,? Sen. Baucus added.

Congress is expected this month to debate bills that will lower the corporate tax rate in the US ? making it less attractive for companies to move offshore to places like Bermuda to lower their tax bills.

The impetus behind the new wave of policies is a decision by the European Union to impose taxes on a range of US products in retaliation for a tax break for US exporters which could amount to more than $4 billion.

The World Trade Organisation has ruled that the tax break is illegal, and the EU has said it will keep up the punishment until the tariffs are changed.

The WTO ruled in January 2002 against a section of the US tax code that gives exporters breaks on overseas sales and leases, calling them an illegal subsidy.

The European Union started the sanctions, aimed at hundreds of products, at 5 percent and plans to raise them one percentage point a month for a year, unless the subsidies are repealed.

While companies affected by the sanctions are pressuring Congress to act, election-year politics are complicating efforts to pass legislation.

And if any of the policies become law, it could take the heat of Bermuda and the attacks on offshore jurisdictions in general.

The debate has become especially intense since a top economic adviser for President Bush last month said ?outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past and that?s a good thing.?

The remarks angered lawmakers from both parties worried about the 2.2 million payroll jobs lost since Mr. Bush took office.

Presidential hopeful Senator John Kerry has been fast to use the out-sourcing of jobs issue and tax evasion as two key election issues during his campaign. This week the Ways and Means Committee will debate President George Bush?s ?Trade Agenda? on Thursday, which includes the WTO dispute settlement agreement.

Also later this month a bill called S1637, proposed by the Chair of the Senate Finance Committee, Senator Charles Grassley, is expected to come up for vote.