February 25, 2020. Washington, D.C. Back in March 2016 India had brought a WTO challenge (DS503) against certain measures involving the U.S.’ non-immigrant temporary working visas, filing a request for consultations on Thursday 3 March, 2016. As of today U.S. has not heeded to India’s request for Consultations (see case history). Next steps should have been the U.S. and India to 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.
India had sought consultations claiming that:
- U.S. measures (Public Law 114-113 and Public Law 111-230) appear to: (i) be inconsistent with the terms, limitations and conditions agreed to and specified by the United States in its Schedule of Specific Commitments under the General Agreement on Trade in Services (GATS), (ii) accord to juridical persons of India having a commercial presence in the United States treatment that is less favourable than that accorded to juridical persons of the United States, as well as juridical persons of any other country, engaged in providing like services in sectors such as the Computer and Related Services sector, with respect to which the United States has taken commitments in its Schedule of Specific Commitments, and (iii) affect the movement of natural persons seeking to supply services in a manner that is inconsistent with the United States’ commitments in its Schedule of Specific Commitments. These measures also appear to nullify or impair the benefits accruing to India directly and indirectly under the GATS.
- The Government of India is of the view that these and comparable measures, (as well as any amendments, related measures, or implementing measures), taken by the United States are not in conformity with at least the following provisions of the GATS: Articles II (Most-Favoured Nation Treatment), XVI (Market Access), XVII (National Treatment), XX (Schedules of Specific Commitments), and paragraphs 3 and 4 of the GATS Annex on Movement of Natural Persons Supplying Services. These measures also appear to be inconsistent with Articles III:3, IV:1 and VI:1 of the GATS.
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, U.S. Citizenship and Immigration Services (USCIS).
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 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.
Similarly, some legal experts have also argued that the Trump administration’s Buy American and Hire American Executive Order Executive Order may be against international trade and WTO rules, and this is a protectionist policy of current administration.
Note: This is a blog post by Adhikari Law PLLC and should NOT be construed as a legal advice.
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