H1B visa row in WTO may lead to trade retaliation against US: Congressional report

Months after India dragged the US to WTO over imposing increased fees on H-1B and L-1 visas, a Congressional report has warned American lawmakers that if the dispute moves to formal settlement phase it could possibly result in a WTO-authorised trade retaliation against the US.

“If the dispute moves to the formal dispute settlement panel phase, one potential outcome could be a WTO determination that the disputed statutes are inconsistent with GATS obligations and a recommendation that the US should modify its laws to comply with the GATS,” said the Congressional Research Service (CRS) report.

CRS, an independent research wing of the US Congress, warned lawmakers that in such a scenario compliance procedures could subject the US to WTO-authorised trade retaliation if Congress does not amend the pertinent laws.

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The brief two-page report and analysis on India challenging H-1B and L1 visa fee increase before the WTP was provided to American lawmakers on November 16.

In March this year, India dragged the US to WTO’s dispute settlement body against the latter’s measures imposing increased fees on certain applicants for L-1 and H-1B visa categories. India has stated that the move would impact Indian IT professionals.

The CRS said the dispute concerns US immigration laws which increased fees for certain temporary foreign workers and allotted a specific number of temporary worker visas to Chilean and Singaporean nationals.

India has alleged that the US is violating its obligations under General Agreement on Trade in Services (GATS), a binding agreement for all WTO member countries, as well as the GATS Annex on Movement of Natural Persons Supplying Services, to not discriminate against or between non-US service providers.

“Based on CRS records, this appears to be the first time a WTO member has formally filed a dispute challenging the immigration laws of another member as a violation of the GATS,” the CRS said.

With the help of eminent subject experts, CRS periodically prepares reports and analyzes on issues of interest to the lawmakers so that they can take informed decisions. CRS reports are not the official view or report of the US Congress.

In its analysis, CRS said, for several years certain US observers cautioned that fee increases for temporary foreign worker petitions and other immigration changes might be disputed as GATS violations.

Others suggested that this challenge is an attempt to offset India’s loss to the US in another recent WTO dispute over India’s laws regulating solar energy, it said.

CRS said India contends, among other things, that the 2010 and 2015 fee increases do not comply with “most-favoured-nation (MFN) treatment” under the GATS, which generally prohibits a WTO member from treating the services and service suppliers of one WTO member less favorably than it treats comparable services and suppliers of another.

While the fee hike does not specifically mention Indian companies, such a provision has been tailored in such a manner that it impacts only Indian IT companies, many experts alleged, the report said.

“This alleged effect might be relevant to India’s claim because the WTO has recognised that a GATS MFN violation may result when a facially neutral measure has a comparatively disproportionate negative impact on service suppliers of one WTO Member,” the CRS said.