India is expected to launch a WTO dispute against
the US in the coming days over increased visa fees for skilled workers,
according to top government officials. The announcement comes a month after
Washington lodged its own complaint against New Delhi regarding India’s ban on
imports of US poultry and other farm products, hinting at rising tensions
between the two trading partners (DS430).
The US visa regime is “an unfair trade practice
that runs counter to the WTO’s General Agreement on Trade in Services (GATS),”
an unnamed official with the Indian Ministry of Commerce and Industry commented
to British newspaper Firstpost.
The United States has yet not received a request
for WTO consultations from India regarding visas, a USTR spokeswoman told on
Tuesday. As a result, New Delhi’s WTO claims are not yet known, leaving it to
experts to speculate about the exact legal arguments.
The complaint will be lodged at the global trade
arbiter within the coming week, officials say. “In the next few days we will
inform our ambassador [in Geneva] and then we will file the formal complaint,” Indian
Trade Secretary Rahul Khullar explained to the
Financial Times on Tuesday.
Indian Trade Minister Anand
Sharma brought attention to the issue when US Commerce Secretary John Bryson
visited India late last month. “We had a very frank discussion,” Sharma said
afterward, highlighting concerns over the high rate of visa rejection.
Visa fees to finance US-Mexico border security,
fight “body shop” practice
The subject of India’s complaint
are increased visa fees implemented to finance the Southwest Border Security Bill, which was passed by the US Congress and signed
into law by President Barack Obama in 2010.
Notably, the purpose of the law is to strengthen
border security along the US-Mexican border rather than create immigration
barriers for skilled foreign workers. However, the 2010 law came with a US$600
million price tag.
In order to pay for the bill, Senators Claire McCaskill and Charles Schumer - both Democrats who were
among the bill’s sponsors in that chamber - proposed
raising fees for H1B and L1 visa applications. These
visas, limited to employment with the sponsoring company, allow the temporary
employment of high-skilled foreign workers in the US for specialty occupations.
The McCaskill and Schumer
proposal resulted in an almost 100 percent increase
in visa application fees for firms that have at least 50 employees in the US
and have more than half of their workforce on an H1B or L1 visa. The fee has
nearly doubled for these workplaces to US$4500 per applicant.
These “body shop” companies “try to exploit
loopholes in our immigration system in order to employ the vast majority of
their workers on foreign work visas. [They] staff their foreign workers to
companies in America and take away good-paying jobs that can easily be taken by
Americans,” Schumer argued at the time.
In the US, “body shopping” is often used to refer
to an outsourcing practice whereby foreign nationals are employed in a foreign
IT company based in the US in order to work as short-term on-site consultants
for other US companies.
However, New Delhi rejects this “demonised”
version, arguing that the new visa fee is protectionist in nature,
disadvantaging its services trade by limiting the entry of skilled workers to
the US. In WTO jargon, this is called “mode 4″ services trade - a
situation where services are provided by foreign nationals abroad. India claims that its price advantage in services is adversely
affected by the measure, substantially hurting its competitive position.
According to the US Senate, the increased visa fees
predominantly affect Indian companies, namely the four software giants Tata,
Infosys, Wipro, and Mahindra Satyam.
However, the law does not single out Indian
companies per se - a fact that some trade lawyers note
could make a WTO case difficult for India, as New Delhi would have to prove
that its services are being subjected to de facto discrimination by Washington.
At this stage it is also unclear what type of services trade is affected by the
measure.
Tit-for-tat challenges?
The US brought a separate complaint at the WTO last
month where it asked India to open its market for poultry, meat, and eggs. Some
analysts speculate that the expected complaint on services could be a
tit-for-tat challenge, aimed at bringing Washington to the negotiating table on
the poultry issue.
India has maintained a prohibition on US poultry
and other farm products for five years with the alleged goal of preventing
domestic avian influenza outbreaks. The US has claimed that the ban is not
based on strong scientific evidence.
India is also expected to challenge the US’ import
duty on steel pipes at the WTO in the coming days, an unnamed official told
Reuters on Tuesday. The US Commerce Department set a preliminary import duty of
nearly 286 percent on a certain type of steel pipe
from India in March in order to offset government support, with a final
decision on the duties expected by August.