Abstract
Indian IT firms and professionals have been one of the primary beneficiaries of the US H-1B visa. However, the new US ‘buy American, hire American’ policy and the consequent suspension of the H-1B visa have resulted in India’s claims that the US measures are discriminatory and not in compliance with various provisions of the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS). The present article aims to assess the consistency of the US measures on H-1B category visa in the context of its specific commitments under Mode 4 of GATS and explore India’s options in finding a suitable solution. Our analysis posits that India’s concerns are well-founded, and the US measures at issue may have direct implications on its commitment under the GATS Schedule of Commitments. At the same time, for India, the option of the invocation of the WTO redressal process to force the well-guarded discretionary sovereign power associated with entry visas could be counterproductive and finding a mutually beneficial solution seems to be the way forward. The article will also help understand and explore India’s options in dealing with the highly sensitive area of entry for foreign nationals that falls under the domain of sovereign prerogative of a State.
Keywords
Introduction
The United States (US) H-1B category visa has been one of the most sought-after entry visas for highly skilled professionals issued under the US Immigrations Act of 1990. The H-1B visa is a temporary non-immigrant category visa that permits US firms to employ highly skilled foreign nationals for a period of up to six years. Used predominantly by information technology (IT) firms, the issuance of H-1B visas is capped at 65,000 per year. An additional 20,000 petitions are allowed under the master’s quota cap for people who have earned a master’s degree or a higher degree from listed US universities. Given the prerequisites of an H-1B visa—technical expertise and minimum bachelor’s degree—applicants from countries such as India, China, Canada and South Korea have a natural advantage. Indian professionals receive a sizeable share, with about 70% of the H-1B visas annually. As of September 2019, there were about 408,394 Indian professionals out of 583,420 worldwide H-1B visa holders in the US (ET Bureau, 2020).
In the US, however, the last few years have seen a rising demand to curb US jobs for foreign workers, in particular the H-1B programme, by various stakeholders who perceive H-1B as discriminatory against US citizens and allows cheap labour in the US at the expense of its local workforce (Chanda, 2020). Interest groups like the US Tech Workers, a not-for-profit organization championing the cause employment of native workers, had petitioned the US president claiming that the burden of unemployment benefits on the GDP has skyrocketed due to the migration of skilled workers from developing countries. This drains the economy as unemployment claims have risen up to three million. Suspending the H-1B programme can relieve some of this stress as the incoming 85.000-plus H-1B workers have further aggravated unemployment amongst the citizens. Firms will be forced to hire more Americans if migrant workers from developing countries are barred (ET Bureau, 2020).
In response to the rising demand and a contraction in the domestic economy, and an overall decline in international trade, the US government has gradually limited the number of H-1B visas since 2015. Incremental steps like a steep increase in the visa fee and allocating numerical commitment to certain country natives were undertaken in 2016. Subsequently, in 2017, the US Presidentissued an executive order of ‘buy American, hire American’ that has fundamentally altered the visa regime against the foreign skilled beneficiary immigrants from other countries, including India (Torres, 2017). Correspondingly, there has been an exponential rise in the rejection and delay of H-1B applications for all firms’ initial and continuing employment. The COVID-19 pandemic has further accelerated the tightening of the H-1B visas and, finally, the US government decided to suspend the H-1B visa programme till the end of 2020 (Trump White House Archives, 2020). The ban was extended till 31 March 2021 and has since lapsed and not been extended by the Biden administration. On 3 August 2020, the US government further decided to bar all federal agencies from hiring H-1B visa holders and other foreign workers instead of US citizens or green cardholders. In addition, since October 2020, substantial visa fees hike (Sanwar, 2020) and narrowing down the definition of what would constitute a ‘specialty occupation’ has been proposed.
Some of these measures, in particular the restrictive practices adopted by the US Citizenship and Immigration Services (USCIS), were subject to legal challenge in the US courts by the Association of American IT companies. Despite some domestic challenges from courts, the Trump administration has ferociously built upon the political rhetoric of immigrants taking away Americans’ jobs and adopting restrictive practices for issuing H-1B visas. This restrictive practice has been well utilized as a tool for electoral campaigns more than any previous administration. So far, it was done through letters and memorandums without any reform in the existing regulation or a new regulation. It seems that in response to these successful litigations that the Office of Management and Budget has been sent a new H-1B visa regulation by the Department of Homeland Security (DHS). The new legislation will not go unopposed and may increase the offshoring of projects and assignment since foreign nationals will face immigration restrictions. Despite a new government in the United States, this issue will continue to a sticky point in India–US relations.
Against this background, the present article aims to assess the legality of the US restrictive measures and the ultimate suspension of the H-1B category in the context of its specific commitments under the World Trade Organization (WTO) agreements and explore India’s options to find a suitable solution. The United States is a member of the WTO, which has undertaken specific General Agreement on Trade in Services (GATS) obligations, the derogation of which would lead to nullification or impairment of benefits of other WTO members like India. While it is the prerogative of the US to determine the entry of foreigners, in particular, to access the US jobs market, it would be pertinent to examine how far the US commitments relating to the supply of services through the movement of natural persons under Mode 4 of the GATS has implications on the current visa regime, in particular, the H-1B visa programme. The analysis would show that India’s concerns are well-founded and that the US measures at issue may have direct implications on its Schedule of Commitments under GATS. At the same time, for India, the option of invocation of the WTO redressal process to force the well-guarded discretionary sovereign power associated with entry visas could be counter-productive and finding a mutually-beneficial solution seems to be the way forward. Moreover, in the backdrop of the return of protectionism and the deadlock in the WTO’s dispute settlement process, there are questions raised on the relevance and effectiveness of the WTO to solve trade disputes. The Globe—Global Governance and the European Union—report states that the WTO’s dispute settlement mechanism has been damaged and that this is an outcome of the US blockage of new appellate body appointments (GLOBE, 2020). The change in the US presidency seems to have had no major impact on the US position in this context.
The GATS and US Commitments on the Movement of Natural Persons (Mode 4)
Granting a visa and determining prerequisites for aliens’ entry into one’s territory falls within the prerogative of a sovereign state. Even within the domestic legal systems, denying entry visas and the remedial recourse against such sovereign decisions is almost non-existent. The State may often trade this right based on reciprocity by guaranteeing to issue a limited number of visas for a particular class of persons of foreign origin. States may also make international commitments, such as commitments made under the WTO GATS in 1994. Few such binding commitments on the movement of natural persons (Mode 4) could be found in the GATS country-specific Schedule of Commitments, the violation of which could result in the nullification and impairment of benefits committed to other WTO member States.
The WTO GATS is one of the first multilateral agreements to discipline trade in services and was signed with the objective of (a) progressively ‘liberalizing trade in services’; (b) encourage ‘economic growth and development through liberalization of trade in services’ and (c) to increase the ‘participation of developing countries in world trade in services and expand their services exports by developing their export capacity and securing export opportunities in sectors of export interest to them’ (GATS Preamble 1994). Though GATS has an extensive scope and attempts to regulate all government measures affecting trade in services (GATS Article 3), the agreement provides considerable leeway for the members and has a limited scope of application (because of the potential for several exceptions that member states can list) compared to the WTO GATT. Unlike for trade in goods, market access (Article XVI) and national treatment (Article XVII) are conditional in GATS but commitments are binding upon WTO members (Article XX GATS). To retain flexibly, the members’ commitments under GATS are not to open specific services sectors or limit, qualify and condition such access. The developed country members have also used ‘in-built flexibility to protect their domestic workforce from competition through foreign workers’ to the detriment of developing countries (Panizzon, 2010, p. 14).
One of the critical modes of service covered under the GATS is the Mode 4 service supplied through the presence of natural persons of a member in the territory of another member (GATS Article 1(2)(d)). As indicated earlier, there is no right to free physical movement of persons from one country to another. Hence, a citizen of a foreign country wishing to enter the US must first obtain a non-immigrant or an immigrant visa for temporary stay or permanent residence as the case may be. Mode 4 of GATS attempts to liberalize the free movement of labour across borders through binding commitments. GATS Mode 4 deals with the delivery of services by physical movement of natural persons who are service suppliers from WTO member country to the territory of another member country. 1 Very restrictive in scope, Mode 4 deals only with those natural persons providing service on a ‘temporary’ or non-permanent basis and covers: (a) persons providing services ‘where a foreign service supplier obtains a contract to supply services to the host country company and sends its employees to provide the services’; (b) independent service providers abroad (independent professionals): an individual ‘selling services to a host country company or an individual’ and (c) persons employed abroad by ‘foreign companies established in the host country (but excluding nationals of the host country)’ (Chanda, 2003). The codification of Mode 4 is coherent with the existing trend pertaining to the movement of natural persons in international trade. Historically, the developed countries have been reluctant to liberalize the movement of natural persons. Globalization has been initiated and perpetuated at the behest of the developed countries, which have benefitted with the opening up of markets in the developing countries. The terms and conditions for free entry and exit of investment have been further codified under the WTO regime. However, the developing countries have not been able to benefit in the same manner from trade liberalization because of the reluctance of the developed countries to open up the borders for natural persons. The current rhetoric of the US is privy to this; immigrants taking away Americans’ jobs is vehemently used a political tool to gain legitimacy for adopting restrictive practices for issuing H-1B visas.
During the Uruguay round of negotiations, WTO members have promised access to their market for GATS Mode 4 service suppliers under the conditions specified in their commitments. As Mode 4 requires mobility, these commitments inherently entail access to, and residence on, the territory of the WTO member state in question. Each member’s ‘market access’ and ‘national treatment’ commitments on all modes of services, the details of which can be found in Article XVI on Market Access, Country-specific Schedule of Commitments, and GATS Annex on Movement of Natural Person Supplying Services. 2 The Annex also explicitly states that ‘Members remain free to apply measures to regulate the entry and temporary stay of natural persons in their territory (including by applying differential visa requirements), provided that these measures do not nullify or impair the benefits accruing under the terms of the commitments’ (Article II Exemptions to the movement of natural persons). The market access commitments for Mode 4 are minimal, following a positive-listing approach and favouring the highly skilled (Dawson, 2013).
In addition to the specific commitments, every WTO member state also has an essential objective of increasing the participation of developing countries in international trade facilitated through negotiating specific commitments (Article IV, GATS). In particular, the emphasis is on the supply of export interests of developing countries, including export of services (professionals for H-1B in this case) and the liberalization of developed countries’ markets in the service sector to allow market access to developing countries (Article IV: 1(c), GATS). In addition, GATS Article VI on domestic regulation clauses calls for implementing the specific commitments in the Schedule of Commitment to ensure objective, reasonable and impartial administration of all measures affecting trade in services.
The US-Specific Commitments
As mentioned earlier, for a Mode 4 rights to the entry of foreign workers to the US or any other WTO members to be legally binding under the WTO, such a commitment must be made in writing in the GATS itself with a specific number of visa slots listed in the US’s schedule of GATS commitments. The US has also made several commitments under Mode 4, and one such specific commitment undertaken by the US was to issue up to 65,000 H-1B visas annually under the category of specialty occupations, subject to wage parity conditions (WTO, 1994b). 3 Indeed, this ‘temporary entry’ of foreign workers from other member states does not confer on them a right to ‘establish permanent residence under immigration laws of the US and confers no rights with respect to citizenship;. Specifically, in the contexts of the Mode 4 ‘Temporary Entry and Stay of Natural Person’, the US commitments on ‘Market Access’ and ‘National Treatment’ are listed as ‘Unbound’, meaning in WTO parlance as ‘non-binding’, that us, the US has not bound itself to any commitment and is free to impose any restriction in terms of restricting market access for foreign workers from other WTO countries and to discriminate between foreign workers vis-à-vis US citizens, once they are within the territory of the US.
In the context of market access commitments under GATS, the US had committed several listed categories of exceptions for foreign nationals from other WTO member countries who may be qualified to access the US job market temporarily. These categories of market access exceptions include the following:
Services salespersons (entry limited to 90 days); Intra-corporate transferees, that is, ‘managers, executives, and specialists who are employees of firms that provide services within the US through a branch, subsidiary, or affiliate established in the US and who have been in the prior employ of their firm outside the US for not less than one year immediately preceding the date of their application for admission (limited to three years extendable to additional two years)’; Fashion models and specialty occupations up to 65,000 persons annually on a worldwide basis in occupations as set out in 8 USC § 1101 (a) (15) (H) (i) (b), consisting of ‘fashion models who are of distinguished merit and ability’ and ‘persons engaged in a specialty occupation, requiring (a) theoretical and practical application of a body of highly specialized knowledge; and (b) attainment of a bachelor’s or higher degree in the specialty (or its equivalent) as a minimum for entry into the occupation in the US’. Entry for persons named in this section is limited to three years.
The H-1B programme, the subject of the present discussion, falls under the third category, ‘specialty occupations’. Entry visas under ‘specialty occupation’ must comply with additional compliance requirements such as (a) prior offer of employment with a US-based firm and (b) persons engaged in a specialty occupation, ‘requiring (a) theoretical and practical application of a body of highly specialized knowledge; and (b) attainment of a bachelor’s or higher degree in the specialty (or its equivalent) as a minimum for entry into the occupation in the US’. Full licensure in a US state must be obtained to practice the occupation if a condition application State requires such licensure. The visa holder and their employers must comply with all labour condition requirements, including ‘conditions of work are such that they will not adversely affect working conditions for those similarly employed’ and ‘there is no strike or lockout in the course of a labour/management dispute in progress at the place of employment affecting the subject occupation’; those admitted must be ‘paid the higher of the prevailing or actual wage paid to similar US workers and require employers to recruit US workers and not lay off Americans in the same job within 90 days of hiring individuals on H-1B visas’ (WTO, 1994a).
The US statutory sanctions of H-1B visa were introduced in their present form by the Immigration Act of 1990 section 101(a)(15)(H), which allowed US employers to invite temporary skilled workers with an annual cap of 65,000. The H-1B Visa Reform Act of 2004 added another 20,000 cap-exempt slots for workers with US Master’s degrees. The statutory provision defines H-1B visa holder as follows:
[An alien (subject to Sec 1182(j)(2)] who is coming temporarily to the US to perform services or as a fashion model, who meets the requirements for the occupation specified in section 1184(i)(2) of this title…and in pursuance of the provisions of an agreement listed in section 1184(g)(8)(A) of this title, who is engaged in a specialty occupation described in section 1184(i)(3) of this title, and concerning whom the Secretary of Labor determines and certifies to the Secretary of Homeland Security and the Secretary of State that the intending employer has filed with the Secretary of Labor an attestation under section 1182(t)(1) of this title.
Furthermore, new legislation mandates that the H1-B dependent employers in the US, before requesting for an H1-B worker, must advertise the positions in the US (Chaudhuri et al., 2004).
This Mode 4 US market access commitments pertaining to the four categories of service suppliers (executives, managers, specialists and specialty occupations) means that foreign persons traveling to the US as professionals (temporary workers) in these categories are technically the ‘service suppliers’ of other WTO members. Since the GATS Annex on MoNP covers both ‘natural persons directly supplying services’ and ‘natural persons employed by service suppliers’, US firms and foreign firms employing foreign professionals are both covered by the US commitments. Thus, a large section of H-1B, L-1 visa holders employed in the IT and management consulting sector would come within the group covered by the US commitment.
Given the US commitment under the GATS to allow up to 65,000 persons annually on a worldwide basis in occupations from WTO members, the policy change affected by the Trump administration has called into question the legality of such restraints and the unilateral withdrawal of the commitment in the context of its market access commitment under the WTO. The US could determine the criteria for such entry of foreign workers through a non-discriminatory process. At the same time, the security and predictability of members’ specific commitments is equally an object and purpose of the GATS (Trachtman, 1998). Imposing opaque criteria, the internal process that leads to arbitrary denial or rejection of visa or high visa fee, lack of transparency, may result from nullification or impairment of benefits of other WTO members guaranteed by the US in the WTO. For instance, if the US introduces an onerous procedural and documentation requirement that increases the resultant cost on the foreign national and the industry, or prefers one country’s national over the other, that would render the concession useless and, thus, nullify or impair the commitment made under the GATS Mode 4. Further, the ‘requirement of transparency is undoubtedly an object and purpose of the GATS—and the WTO in general—and applies equally to GATS schedules of specific commitments’ (WTO, 2004, pp. 6.106–6.108), and a visa administration process that lack transparency leads to arbitrariness and violation of Article III, GATS.
In short, natural persons are permitted to supply services strictly per the specific commitment as scheduled in the GATS. These commitments have to be negotiated by the concerned members and cannot be unilateral, lest they turn restrictive. The government measures must not ‘nullify or impair the benefits accruing to any Member under the terms of a specific commitment’ (GATS Annex on Movement of Natural Persons Supplying Services). Some of the GATS text’s key provisions and their interpretation are riddled with ambiguities that may give members, in this case, the United States, considerable leeway to design its discretionary measures (Chanda, 2003, p. 1573; Lang, 2009, p. 178). For instance, it is unclear what constitutes ‘temporary stay’, and terms such as ‘specialty’ occupation are themselves liable to restrictive interpretation.
Further, the GATS does not provide a ‘multilateral set of criteria to classify service providers according to skill levels, occupations, professions, or commercial activities’ (WTO, 2000), which makes it difficult to assess whether a commitment in Mode 4 covers a service provider or not (Panizzon, 2010, p. 31). In the context of this article, US GATS committed quota for specialty occupations as listed in the Schedule of Commitments is only ‘up to’ 65,000 and not 65,000 itself. The term ‘up to’ provides a maximum limit rather than a minimum obligation, thus, allowing the United States to negate any contestation of violations of WTO commitment on this ground.
Implications for India and the Indian Response
The movement of service supplying personnel, particularly software engineers and programmers, is crucial for the Indian IT industry (Chanda, 2020; Parikh, 2003, p. 163). As the earlier discussion reveals, India is the largest beneficiary of the US H-1B visa programme, allowing Indian professionals to enjoy almost 70% of the total share of the visa issued annually (Table 1). Of the nearly 70% of all H-1B visas issued to Indian professionals, American IT companies’ utilization is much higher than that of the Indian IT firms in the United States. Thus, any decision to restrict or ban the H-1B policy may directly affect the prospects of Indian professionals and of several American and Indian companies for whom the US government issued H-1B visas.
Over the years, particularly under the Trump administration, restrictive immigration policies have augmented the trend of reduction and restrictions on H-1B visa issuance globally. The primary concerns with the emerging policy were the significant increase in the number of arbitrary rejection of visas by the USCIS, a substantial increase in the H-1B visa fees per person and special numerical quotas for specific countries while granting H-1B visas. Table 2 highlights the trend in the rejection of visa applications for initial employment. The denials though not bad for petitions for continuing employment (used by existing employees holding H-1B visa for initial employment, continuing H-1B visa may be issued for amended petitions, change of employer, as well as same employer), nevertheless, the trend of rejections persists. These denials may not have reduced the share of Indian nationals in total H-1B visas, which remained at around 70%, as seen in Table 1. While the rejection rate is 70%, the total number of visas issued has decreased to around 85,000 only. So even if Indians get a 70% share in the total H-1B visas issued, there is a decline in absolute number from 125,528 in 2018 to 61,823 in 2019.
The IT firms have been subjected to more restrictive policies as the denial rates have surged to almost 30 percent from the initial denial rates of 2%–7% in 2015. The trend of denials or rejection rates is considerably more for Indian firms vis-à-vis the American firms. This trend cannot only be attributed to chance, as allocating H-1B visas is done using a computerized lottery system. To bring in specific desired outcomes of this lottery, it is alleged that the USCIS has altered the requirements for allocating H-1B visas. Further, the USCIS has recently considered replacing the computerized lottery system with a wage-based criterion in 2020. Thus, India-based firms such as Tata Consultancy Services Ltd., Infosys Ltd., Cognizant Technology Solution Corp. and Wipro Ltd. have seen a decline in the number of visas granted to their employee petitions. These firms are considered outsourcing firms and hence receive fewer visas as they have moved towards artificial intelligence and cloud computing, which reduces their manpower requirement considerably. Resultantly, these companies are accused of increasing their native workforces in the United States even while they employ more digital services. Compared to this, the American technology giants such as Microsoft Inc., Facebook Inc. and Amazon.com Inc. have all witnessed a surge in the number of their visa petitions granted (D’Souza, 2019).
In addition, the USCIS has made considerable non-statutory modifications and adopted H-1B visa policy practices in violation of the US commitment under the GATS. Broadly, the stipulations under GATS are violated by the suspension of H-1B visa include Article II most favoured nation (MFN) treatment that mandates equal and similarly favourable treatment to like services and service suppliers of all the members (Article II, GATS). The new US measure favours Chilean and Singaporean nationals over Indians and other nationals owing to free trade agreements (FTA)s with these countries. Article XVI also unambiguously forbids numerical quotas and limitations on the number of service providers of any kind.
Further, Article III of GATS containing clauses on transparency necessitate that Members publish ‘all relevant measures of general application which pertain to or affect the operation of this Agreement…or affecting trade in services’ promptly except in emergencies. However, the US visa rejections practices remain to be harsh and opaque. Article VI of GATS on domestic regulation clauses allows for the sovereign prerogative to specific commitments to ensure objective, reasonable and impartial administration of all measures affecting trade in services. Concerning market access, Article XVI of GATS mandates a treatment ‘no less favourable than that provided for under the terms, limitations, and conditions agreed and specified in its Schedule’. Article XVII of GATS pertaining to national treatment directs that a member shall accord services and service suppliers of other Members ‘in respect of all measures affecting the supply of services, treatment is no less favourable than that it accords to its own like services and service suppliers’.
The GATS Annex on Movement of Natural Persons Supplying Services allows a member to adopt measures that regulate the movement and stay of natural persons to the extent that these measures ‘are not applied in such a manner as to nullify or impair the benefits accruing to any Member under the terms of a specific commitment’ (GATS Annex on Movement of Natural Persons). While a State party to the WTO is granted complete freedom under the GATS to regulate and introduce new laws pertaining to the supply of services to assist domestic policy objectives, it is also expected that such policies will not turn discriminatory to international trade in services. The development of developing countries is one of the primary objectives of GATS. Since India is the biggest beneficiary of the H-1B policy, restrictive immigration policies directly hurt the prospects of non-US foreign workers. This regressive trend goes directly against another fundamental objective of GATS: to achieve advanced levels of liberalization of trade in services.
India’s Request for Consultation
In pursuance of the aforementioned concerns, on 3 March 2016, India raised a consultation request with the United States under the WTO DSU regarding specific measures such as (a) ‘increased fees on certain applicants for L-1 and H-1B categories of non-immigrant visas’ and (b) ‘relating to a discriminatory numerical commitment for H-1B visas’ (WTO, 2016a). India claims that these measures are ‘inconsistent with several GATS Articles (Arts II, III:3, IV:1, V:4, VI:1, XVI, XVII, XX) and paragraphs 3 and 4 of the GATS Annex on Movement of Natural Persons Supplying Services.
On the visa fee hike, India had noted that the US Consolidated Appropriations Act, 2016, requires ‘applicants of non-immigrant visas in the L-1 and H-1B visa categories to pay significantly higher filing fees and fraud prevention and detection fees under certain specified circumstances’. The Act had increased the visa filing fee by US$4,500 and US$4,000 respectively for L-1 and H-1B visa categories for companies that employ 50 or more employees in the United States if more than 50% of the applicant’s employees are non-immigrants admitted. In addition, higher filing fees and fraud prevention and detection fee were levied under the Emergency Border Security Supplemental Appropriations Act, 2010 (Sec 402). Both sets of measures have increased the earlier fees twofold, making the enhanced fees applicable for extending the visa status.
India argued that the fee hike is as follows:
Inconsistent with the terms, limitations and conditions agreed to and specified in the US Schedule of Specific Commitments, Accord to Indian companies having a commercial presence in the US treatment that is less favourable than that accorded to US companies engaged in providing like services in sectors such as the computer and related services, and Affect the movement of natural persons seeking to supply services in a manner inconsistent with the US Schedule of Specific Commitments (US–Visa case).
On the issuance of numerical H-1B visa quota, India argued that the numerical US commitment of up to 65,000 persons annually worldwide has been unilaterally modified pursuant to the US FTA with Chile and Singapore by providing their nationals a visa quota of 1,400 and 5,400, respectively. This effectively reduces the worldwide annual numerical commitment under GATS, thereby raising the overall barriers for service suppliers from India seeking entry into the United States. India alleged that these two measures also appear to nullify or impair the GATS benefits that should have been accrued to India directly and indirectly.
The dispute remains in the consultation phase, and neither party has submitted any legal arguments substantiating their claims through the WTO process (PTI, 2016). This is a crucial case since it can have far-reaching consequences on other member countries’ immigration policies, considered mainly within domestic immigration law. The signalling costs associated are immense and can lead to greater scrutiny of immigration policies, which traditionally fall under the sovereign prerogative of border control measures well within the exceptions allowed by the WTO.
The United States has maintained that immigration policy is a sovereign issue and that its visa program is WTO-consistent. However, it has been viewed that the reasonableness of the increase in visa fee may not be justifiable under GATS as the ‘fees are targeted at only those companies with 50 or more employees in the United States and if more than 50 percent of those employees are non-immigrants working on H- 1B or L-1 visas’ (Claeys, 2011, pp. 1_2). This has been reiterated by the US Congressional Research Service (CRS) reports that the visa fee hike is tailored in such a way to impact only Indian IT companies (Chanda, 2020, p. 33; CRS, 2016). The CRS report notes that ‘This alleged effect might be relevant to India’s claim because the WTO has recognized that a GATS MFN violation may result when a facially neutral measure has a comparative disproportionate negative impact on service suppliers of one WTO member’ (CRS, 2019). The report also warns the United States that if the dispute moves to the formal dispute settlement panel phase, WTO could rule that this policy is inconsistent with its GATS obligations.
India’s Options in Finding a Legal or Mutually beneficial Solution
The concerns of India and Indian industry regarding the US H-1B visa policy has been threefold: (a) significant increase in the number of arbitrary rejection of visas by the USCIS, (b) substantial increase in the H-1B visa fees per person and (c) special treatment or numerical quotas for specific countries while granting H-1B visas.
To a large extent, these decisions could ameliorate the concerns of the Indian industry as well. However, if these are credible evidence of de facto or de jure discrimination practiced against Indian firms in the US vis-à-vis the US firms, recourse is available under both the domestic legal system and the WTO dispute settlement system. Most importantly, these decisions of the US courts on the US visa administration regime and their interpretation of key terms lend credibility to the argument of discriminatory practice advanced by India at the WTO and help strengthen its case.
For instance, if the US would require a very high fee for an H-1B visa, the commitment allowing entry of 65,000 highly skilled service providers essentially becomes useless and would nullify or impair the commitment. That would increase the resultant cost on the foreign national and the industry or prefer one country’s national over the other. Further, if India could establish that the categorization of companies that attract higher visa fees based on the total number of employees in the US (in this case 50 or more) and the percentage of non-immigrants employees (in this case 50% or above) is arbitrary and unreasonable restriction in a given context. The same could be contested on the ground that the objective that the measure sought to be achieved is unnecessary and thus not in conformity with the GATS Articles XVI and XVII that mandates a treatment no less favourable than that it accords to its own like services and service suppliers.
According to the National Association of Software and Service Companies (NASSCOM), the association of Indian IT companies, this fee increase may cost India $400 million annually, and the Indian IT industry has been unfairly targeted to fund unrelated US government programmes (Self & Zutshi, 2002). 5 Further, the above said measure may negatively affect developing countries like India, whose access will become significantly limited if the visa fee is charged at a high rate. In particular, the emphasis is on the supply of export interests of developing countries, including export of services (professionals for H-1B in this case) and the liberalization of developed countries’ markets in the service sector to allow market access to developing countries (Art IV GATS).
India also noted that the US cannot deviate from the limitations and conditions agreed and specified in its Schedule (Arts XVI and XX) and paras 3 and 4 of the GATS Annex on Movement of Natural Persons Supplying Services. Specifically, para 4 of the Annex provides that any measure applied by the Member “to regulate the entry of natural persons into, or their temporary stay in, its territory, …, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to any Member under the terms of a specific commitment.” The measures also appear inconsistent with the transparency provision (Art III:3) and the special and differential treatment provision that mandates increasing developing country participation (Art IV:1). Indeed, Article IV(1) does not impose any hard law obligation but necessitates states to facilitate developing country trade in services through “negotiated specific commitments” and undertake positive market access commitments “in sectors and modes of supply of export interest to them” (OECD, 2006). A combined reading of these provisions may build a convincing case of US inconsistency with GATS obligations and presents a reasonably good standing for India to pursue legal recourse at the WTO.
India’s Options
The earlier discussion reveals that India’s case against the US may be legally grounded. It is reasonable to expect a finding of a violation against the US by the WTO panel, if not on all grounds. Given the flexibility that GATS provides and the nature and scope of the US commitments, a find of violations on all the concerns raised by India is unlikely. India may also pursue a non-violation complaint if the US suspension of H-1B visa had persisted or the visa requirement is so prohibitive (fee and process) as it may also have the effect of nullifying or impairing a benefit under a specific commitment promised by the US and thus as an undue market access limitation (Panizzon, 2010, p. 29). If successful, by being bound by the WTO commitments, the US will either have to revert the inconsistent statutes and measures that violate GATS or not comply with the DSB recommendations, thereby granting retaliatory option for India. India can then suspend concessions on US imports as a punitive measure. More stringent WTO-authorized cross-retaliation could also be initiated under intellectual property rights or could disregard other obligations owed to the US under GATT (Mitra, 2017).
As reflected in Table 1, Indian professionals continue to constitute almost 70% of the beneficiaries of H-1B visas, though the same may not be true of the treatment of the Indian IT firms based out of the US. This could be the reason behind India’s reluctance to go beyond the consultation stage at the WTO and request for a panel. India seems to be guarded against perusing a legal recourse at the WTO DSU. In the 2019 statement in the Rajya Sabha (Upper House of the Indian Parliament), the Minister of External Affairs sought a more open diplomatic engagement with the US Administration and Congress on issues related to the movement of Indian professionals, including those pertaining to the H-1B programme. The External Affairs Minister’s engagements with his US counterpart in New Delhi in June 2019 and Washington D.C. in September/October 2019 also emphasized finding a mutually beneficial partnership that needs to be nurtured (Rajya Sabha, 2019). MEA Spokesperson also noted that India is in constant engagement with “the US Government for increasing predictability in the visa regime and to minimize the inconvenience being faced by those in the US or those who need to travel to the US for bona fide reasons.”
At the same time, India has been the main sponsor at the GATS Mode 4 negotiations. India has tabled a proposal on the “Concept Note for an Initiative on Trade Facilitation in Services” in September 2016 (WTO, 2016b), with the objective highlighting the numerous borders and behind-the-border barriers as well as procedural bottlenecks that affect trade in services. To eliminate a considerable de facto barrier to services through Mode 4, India has also proposed a “special GATS visa”, intending to streamline those for temporary entry. India’s proposal requires a two-speed visa application procedure with a fast-track for Mode 4-type workers with strict time frames for obtaining the GATS visa, with easier renewal and transfer procedures (WTO Doc S/CSS/W/12). The proposal also addressed the issues of “recognition of professional qualifications”, “economic necessity tests” and argued for the “participation of developing countries in mutual recognition agreements (MRAs) and evolving multilateral norms for such recognition” (Panizzon, 2010; Self & Zutshi, 2002).
Conclusion
The movement of a natural person, both temporary and permanent, falls solely within the regulatory domain of the national immigration law of a WTO member. Thus, approval or rejection of visa with or without assigning reason and laying down entry processes, terms and conditions for entry, including those measures that are necessary to protect the integrity of, and to ensure the orderly movement of natural persons across its borders, are within the prerogative of the host state. All that the State must guarantee is when the State applies its measures to regulate the entry of natural persons into or their temporary stay in its territory; such measures are applied in a non-discriminatory manner and without nullifying or impairing the benefits accruing to any member under the terms of a specific commitment under the GATS. The moot point is whether the State concerned has made any specific commitment under the GATS Schedule of Commitments and if so, whether the State has implemented the benefit in such a manner that nullifies or impairs the promised benefits. Indeed, it is evident that the US had made specific commitments concerning the H-1B visa of up to 65,000 for fashion models and specialty occupations annually on an MFN basis for nationals of other WTO member states. It is the prerogative of the US to determine the procedure and entry conditions, including the visa fee, which will uniformly apply to all foreign nationals seeking such entry under that category. Simply because a foreign applicant meets the minimum criteria does not entail an automatic visa issuance. The US can reject any application without assigning any reason. This decision is not subject to challenge as this is a sovereign prerogative and beyond the scope of the WTO law.
A ban or temporary suspension or reduction in the number of H-IB visas without fulfilling the promised annual number will attract GATS violation or non-violation claims if there is a specific commitment made under GATS. However, since the specific US commitment is ‘up to’ 65,000 visas, establishing a violation is an onerous task. At the same time, the analysis given earlier also reveals that some of the internal administrative processes adopted by the USCIS led to arbitrary and harsher treatment of select firms, for instance, Indian IT firms operating from the US and making an application compared to some of the American IT companies. Further, while the US can determine visa fees, a significantly higher visa fee may become onerous on the member States, particularly for the developing countries, leading to nullifying or impairing the benefits promised by the US under GATS. The US CRS has already indicated towards de facto MFN violations if the fee hike disproportionately negatively impacts service suppliers of one WTO member. Finally, by permitting H-1B visa quotes or numeral commitment to select members such as Chile and Singapore, the US seems to put other countries, including India, at a disadvantage, thus violating the MFN treatment (CRS, 2019).
India has not, however, moved beyond the 2016 request for consultation or requested the WTO DSB to establish a panel to adjudicate the alleged claims. The rethink on invoking the legal recourse, and preference for a negotiated solution may be because Indian professionals continue to receive favourable treatment in the H-1B visa category with an almost 70% success rate. In other words, India continues to gain substantially from the US visa policy though the Indian firms may have met with a higher rejection rate. Second, any legal recourse to the WTO with an attempt to force change US visa policy may be met with disastrous repercussions and may further strain the India–US relationship. The US might also reject the DSB recommendations safeguarding its sovereign prerogative, and the disproportionate advantages enjoyed by the Indian professionals might also get impacted owing to the adversarial process. Retaliation by India against the US non-compliance, even if granted, will not be effective and may be counterproductive, and India has not been keen on retaliating even when granted on earlier occasions. A weakened WTO dispute settlement system owing to the stalling of the appellate body appointments by the US is also an added concern for India.
Seeking a sustainable, mutually acceptable negotiated solution seems more realistic given the domestic sensitiveness of the issue in the US. The possibility of the current US administration moving significantly away from Trump’s restrictive approach to H-1B visas is suspect. The 2019 statement of the MEA in the Indian Parliament reflects an approach that is conciliatory from the Indian side, and the effort is on towards more engagement with the US administration in finding a mutually beneficial partnership. The effort is also to increase predictability in the visa regime and minimize the inconvenience being faced by those in the US or those who need to travel to the US for bonafide reasons. With the new regime in Washington, and with the election and Trump’s political rhetoric out of the way, India has a high chance to find a negotiated solution that is mutually acceptable and forward-looking.
Footnotes
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
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