Thursday, April 12, 2012

India takes on the U.S in relation to high Visa fees

Reports of a trade dispute between India and the U.S. were reported (here and here) regarding the hike in US Visa fees for H-1B and L-1 Visas. The WTO website has not yet  reported any request for consultation from India under the Dispute Settlement Mechanism. Nevertheless, the issue of the hike in Visa fees has been one of the prickly points in India-US trade relations. This US Congressional Research Study Report cites the issue of H-1B visas as one of the key trade issues between the countries.

The US law in question is the Public Law 111-230 enacted in August 2010 which raises the visa fees in the case of non-immigrant foreign skilled workers for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant's employees are nonimmigrants.
"SEC. 402. (a) Notwithstanding any other provision of this Act or any other provision of law, during the period beginning on the date of the enactment of this Act and ending on September 30, 2014, the filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a nonimmigrant under section 101(a)(15)(L) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(L)) shall be increased by 2,250 for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant’s employees are nonimmigrants admitted pursuant to section 101(a)(15)(H)(i)(b) of such Act or section 101(a)(15)(L) of such Act. 
(b) Notwithstanding any other provision of this Act or any other provision of law, during the period beginning on the date of the enactment of this Act and ending on September 30, 2014, the filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a nonimmigrant under section 101(a)(15)(H)(i)(b) of the immigration and Nationality Act (8 U.S.C. 1101(a)(15)(H)(i)(b)) shall be increased by $2,000 for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant’s employees are such nonimmigrants or nonimmigrants described in section 101(a)(15)(L) of such Act."
The WSJ had covered the issue well in 2010 with this piece. Not surprisingly, Indian Technology companies are the most affected because of the percentage of employees from India in the U.S.


The main legal issue is whether the US law which increases the visa fees is in violation of US obligations/commitments under the General Agreement on Trade in Services (GATS). The GATS outlines the multilateral rules for trade in services. Apart from general provisions that all members are committed to, there are country specific commitments in various sectors and modes of supply of services.

The Preamble to the GATS, inter alia, states :

"Wishing to establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries"

Article VI (1) of the GATS states that "In sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner."

Further, as regards, U.S' commitments under the GATS with respect to this sector, they allow  the temporary admission of nonimmigrant specialty workers under the H-1B and L-1 visa provisions.  Specifically, the U.S. GATS Schedule states that the United States has no commitments  (i.e., the U.S. is “unbound”) with respect to Mode 4, except for specified market access commitments relating to the temporary entry and stay of certain categories of individuals.

 These commitments include: 

-  Intra-corporate transfers of managers, executive and specialists for a period of up to 5 years (three years initially, with the possibility of a two-year extension); 
-  Managers or executives engaged in establishing a commercial presence, with operations to begin within one year; and 
-  Entry of up to 65,000 persons annually (worldwide) who are engaged in “specialty occupations” as set out in 8 USC § 1101(a)(15)(H)(i).  

This policy brief by Stephen Claeys of the National Foundation for American Policy details out the possible violation of US commitments under the GATS due to the increased fee on specialised visas.

"Significantly increasing the fees for certain H-1B  and L-1 visas may be likely to violate U.S. obligations under GATS.  As discussed above, the United States specifically committed in its GATS schedule to allow the temporary entry and stay of individuals under the H-1B and L-1 visa provisions, as they existed when the United States joined the GATS in 1994.  Accordingly, additionally restricting the availability of H-1B and L-1 visas could violate this commitment. 
An important issue is whether increasing the fees for L-1 visas by $2,250 and for H-1B visas by $2,000 does indeed restrict the availability of these visas.  Before this legislation, the anti-fraud fee was $500 for both L-1 and H-1B visas, and remains so for all employers except those targeted in this legislation.
 Thus, with the new fees, the fees for certain and H-1B and L-1 visas increases by approximately four times. These are significant increases in the fees required for L-1 and H-1B visas and arguably reduce their availability. 
Moreover, reducing the availability of L-1 and H-1B visas to certain employers was the only reason expressed by Congress for increasing the fees. Senator Schumer’s floor statements in support of the higher fees explicitly indicated that the fees would restrict the availability of certain L-1 and H-1B visas.  Thus, Congress certainly intended for the increased fees to reduce the availability of L-1 and H-1B visas. 
Supporters of the increased fees may argue that these increases can easily be borne by those companies applying for the visas, so they do not constitute much of a restriction.  If a WTO Member alleges that the increased fees violate the United States’ GATS commitments, whether or not the higher fees have such a commercial impact as to constitute an additional restriction could be an issue that the WTO Dispute Settlement Body will need to decide.  However, the fact that the increased fees were explicitly imposed to restrict the availability of certain L-1 and H-1B visas makes such a commercial effects analysis less relevant. 
The additional visa fees may also violate the United States’ general commitments under GATS.  GATS Article VI requires Members to ensure that “all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.”   The term “affecting” trade in services has been interpreted broadly.Thus, the increased visa fees could be found to affect the provision of services through the presence of natural persons, or the establishment of a commercial presence.  Such a restriction could be allowed if it has a reasonable justification, but the justification for the fees given on the Congressional floor of restricting the availability of L-1 and H-1B visas is unlikely to be found reasonable."
A more detailed legal analysis is found here by Jochum Shore & Trossevin, PC. While the jury is still out on the violation of GATS violation by the U.S (there is a long way to go before a panel is set up on this issue), the issue raises issues of immigration control, trade and domestic policy space.

1.While the U.S. has committed to certain obligations under GATS, does an increase in fee tantamount to a measure that is unreasonable and partial in its application? Is it disguised "protectionism"? If the US maintains its commitment numerically in terms of the number of visas granted inspite of the rise in fees, would it be a violation of its obligations? 

2. Further, would the evidence of decreased number of visas granted as well as increased rejection of visas be a ground to challenge the law as being violative of its GATS obligations. 

3. Is the request for consultations from India also a sign of increasing readiness to engage with the WTO to seek trade remedies?

4. Going by the time frame of some of the other disputes, it is highly possible that no decision can be expected (including the Appellate Body) before 2013. Would post election America have a different policy on this? 

Since the measure (increased fees) is to stay till September 2015, it would be worthwhile for India to take it to its logical conclusion in the DSM. It will atleast enrichen the interpretation of the GATS Agreement as well as interpretation of country specific commitments and have repercussions for the "outsourcing" controversy that has plagued Indo-US relations for sometime now.

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