India Files WTO Challenge Against US Visa Fee Increases

10 March 2016

India has brought a WTO challenge (DS503) against certain measures involving the US’ non-immigrant temporary working visas, filing a request for consultations on Thursday 3 March.

At issue in the complaint are the increased fees imposed on certain applicants for two categories of non-immigrant temporary working visas, specifically “L-1” and “H-1B,” as well as numerical commitments for the latter visas, according to the consultations request.

The L-1 and H-1B visas

Citizens of foreign countries wishing to work temporarily in the US as a non-immigrant must have their prospective employer file a petition with the country’s federal immigration agency.

The types of visa fall under different categories, with these having their own individual qualification requirements. L-1 visas allow a US employer to transfer certain types of high-level employees from an affiliated foreign office to an American one.

The H-1B visa applies to people who wish to work in a specialty occupation, for certain Department of Defence (DOD) projects, or as a fashion model, subject to certain conditions.

Visa fee increases

Under the Consolidated Appropriations Act of 2016, Washington increased fees for L-1 type visas by US$4500 and for H-1B type visas by US$4000 for companies with 50 or more employees in the US, if more than 50 percent of their employees are non-immigrants employed on such visas. It was signed into law by President Barack Obama in December 2015, with the measures in place through September 2025.

India claims that these measures, along with earlier fee increases between August 2010 and September 2015, appear to violate the US’ commitments under its Schedule of Specific Commitments under the WTO’s General Agreement on Trade in Services (GATS) – the set of global rules involving services trade- along with being inconsistent with other GATS provisions.

The GATS distinguishes between four modes of supplying services: cross-border trade, consumption abroad, commercial presence, and presence of natural persons.

Along with a general set of obligations on services trade, ranging from issues such as Most-Favoured-Nation (MFN) treatment, transparency, economic integration, and participation of developing countries, WTO members must also provide a “schedule of specific commitments.” These schedules identify the services for which the member guarantees market access and national treatment with respect to the four different modes of service supply, and any related limitations. Most schedules contain commitments that apply across all scheduled sectors, i.e. horizontal commitments, along with those that apply only to specific sectors.

According to India, the above-mentioned visa fee increases effectively treat Indian services suppliers with a commercial presence in the North American nation in a less favourable way than US entities providing like services, in sectors such as “Computer and Related Services.” Also, the movement of natural persons seeking to supply services is affected in a way that violates Washington’s commitments under its GATS schedule, while nullifying or impairing benefits that should accrue to India.

The Indian IT industry is a major user of these types of temporary visas, with India’s National Association of Software and Services Companies claiming that the changes may put a burden of up to US$400 million annually to India’s export-driven IT outsourcing firms.

Changes to numerical commitments

Furthermore, New Delhi is also claiming that recent US changes to its numerical commitment for H-1B visas – specifically due to modifications Washington has made under FTAs with Singapore and Chile – also are inconsistent with its GATS schedule.

According to the consultations request, the US included under its horizontal commitments regarding mode 4 – that involving the movement of natural persons – that it would permit up to 65,000 people annually on a worldwide basis under the category of fashion models and specialty occupations.

Under the two FTAs mentioned above, these “numerical commitments” have allegedly been changed. According to India, US homeland security officials must now set country-specific limits for both countries, with these numbers taken away from the global total of 65,000 receiving H-1B visas.

Along with allegedly violating the US’ schedule, “these measures also appear to raise the overall barriers for service suppliers from India seeking entry into the United States under section 1101(a)(15)(H)(i)(b) of the [Immigration and Nationality Act], compared to the level applicable prior to the implementation of the United States’ Free Trade Agreements with Singapore and Chile,” says the consultations request.

The request also includes a series of other alleged GATS violations as a result of these measures.

Next steps

The US and India must now hold consultations for a minimum of 60 days in an effort to resolve their differences. Should a mutually agreed solution not be reached during that process, New Delhi may then request that a WTO panel be established to hear the case.

ICTSD reporting; “India files trade complaint against U.S. over temporary work visas,” REUTERS, 4 March 2016; “India moves WTO against US on temporary working visa issue,” THE TIMES OF INDIA, 4 March 2016; “U.S. hikes H1B, L1 visa fee; to hit Indian IT companies,” THE HINDU, 13 January 2016; “US visa fee hike: Tech companies hail India’s plan to move World Trade Organization,” THE ECONOMIC TIMES, 5 March 2016.

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