India recently filed a complaint in the World Trade Organisation (WTO) against the US’ move to impose high fees on temporary working visas, like L-1 and H-1B.
India has strongly criticised the US, saying that the move would make Indian IT companies less competitive in the American market, as they would be forced to hire local workers. New Delhi argued that it would ultimately increase the Indian companies’ overall cost of operations.
In 2015, President Barack Obama signed into law a USD 1.8 trillion spending package that, among other things, introduces a hefty USD 4,000 fee for certain categories of H-1B visa and USD 4,500 for L1 visa. As per the law, companies, having more than 50 employees and having more than 50% of their US employees on H-1B and L1 visas, will have to pay the new fee from April.
India told the intergovernmental organisation, which regulates international trade, that it had no other option, but to take legal steps against the US as the visa rules favour the American workers. The Narendra Modi administration also made clear that it would never allow Washington to impose increased fees on certain applicants for L-1 and H-1B categories of non-immigrant temporary working visas into the country.
In the past, India raised serious concerns over the issue, stressing that the move would impact Indian IT professionals. New Delhi further said that the US’ measure was inconsistent with the global norms. The measure also contradicts the terms, limitations and conditions agreed to and specified by the US in its commitments under the General Agreement on Trade in Services (GATS).
Meanwhile, India requested the WTO to resolve the issue through consultations so that both the parties could find a satisfactory solution without proceeding further with litigation. In case consultations fail to resolve the dispute, India will request the Dispute Settlement Body to set up a panel of experts for studying the dispute. Washington has 10 days to respond to the trade dispute filed by India.
In 2010, India had opposed the US’ move to hike professional visa fees. India also lost to the US on restricting poultry imports, meant to curb the entry of cheap chicken legs, and another case on local sourcing of solar panels and modules.
A WTO member can drag another country to sort out a trade dispute. It is a multi-stage process and a failure to act on a decision can attract penalty. The WTO usually takes 60 days for consultations and mediation. It also takes 45 days to set up a panel and to appoint panellists. After investigating the case for six months, the panel submits its report to the parties. Three weeks later, WTO members receive the report. A country gets enough time to implement the report by changing rules after losing the dispute.