Recall the issue with a U.S. law that imposed a fee on visa applications where the companies involved have a high percentage of workers who use the special visas given to skilled foreign workers, discussed here and here. There seemed to be a disparate impact on India, and hence there was talk of a WTO violation. I hadn't heard anything in a while, so I thought things had been resolved, or, at the least, were not being pursued for some reason. However, the issue appears to have returned through the 9/11 responders health care bill, which includes an extension of the original measure (along with an additional charge on procurement involving certain foreign goods and services). As reported by India's Economic Times, India is now talking about WTO dispute settlement again:
India may drag the United States to the World Trade Organization , or WTO, over its decision to raise professional visa fees for an extended period and impose a 2% import levy on goods and services sold to the US government, a senior official has said.
The commerce department is studying details of the James Zadroga 9/11 Health and Compensation Act of 2010 which aims to increase visa fee and import taxes on supplies to government to set up a $4.3 billion fund for sharing the healthcare burden of those affected by 9/11 terror attack in New York.
The Senate passed the bill last week and India will soon take a decision on approaching the WTO, commerce secretary Rahul Khullar told ET on Monday.
The final bill, which is now with US President Barak Obama to be signed into law, spells more trouble for Indian industry than the one initially proposed as it imposes an additional levy of 2% on all goods and services sold by Indian companies to the US government and extends the period for higher visa fees from 2014 to 2021.
India has been trying for months to persuade its third largest trade partner to revoke the proposal to increase H1B and L1 visa fees as it could raise the cost of Indian IT companies operating in the US by $200 million annually.
"We do not rush into disputes, but beyond a point, patience does run out," Dr Khullar said, adding that it may be time for the country to explore the option of settling the issue at the WTO.
See also here.
A WSJ blog reports the visa situation a little differently:
Indian information technology companies should heave a sigh of relief. For now, at least.
The U.S. Congress passed a bill on Wednesday that extended higher fees for skilled-worker visas by one year to 2015. Money from the visa fees, which apply to companies that have more than half their U.S. staff on such visas and deeply affect Indian IT firms, is to go towards a health fund for 9/11 first responders.
The one-year extension is much better than the earlier proposal by New York Senators Kirsten Gillibrand and Charles E. Schumer, to extend the hike by seven years.
A press release on Senator Gillibrand’s Web site says that the senators expected to raise $800 million through this extension, to pay for the proposed bill for Sept. 11 responders. The release said that fee increases would affect “outsourcing companies such as: Wipro, Tata, Infosys, Satyam—but does not affect American companies such as: Microsoft, Oracle, Intel, Apple, etc.”
India’s technology majors are directly impacted because they hire tens of thousands of Indians and other foreign workers in their U.S. offices. While U.S. companies like Microsoft and Oracle also hire thousands of Indians, they are not affected by the fee provision because their U.S. offices are so large that workers on visas don’t count for as large a share of their total workers in America as they do for the Indian firms.
Earlier this year, Indian technology industry trade group Nasscom had estimated that the visa fee increase for a four-year period through September 30, 2014, could cost Indian technology companies as much as $250 million.
By this estimate, an extension of another five years would have raised visa and human resources costs for technology companies by another $250 million at least.
Nasscom president Som Mittal says that partly due to India’s coaxing, the extension was reduced to just one year. However, he worries that U.S. senators could easily decide to extend the fee increase the next time they need to fund another social cause. He says the fee increases are “against the spirit and letter” of the free trade message that U.S. President Barack Obama gave during his visit to India in November.
So, this makes the law sound not quite so bad -- a 1 year extension as opposed to 7. (Section 302 of the final bill seems to confirm the 1 year period.) On the other hand, the law also throws in the new procurement fee. This may not violate WTO rules (India is not a member of the Government Procurement Agreement), but is it enough of a trade irritant to lead to a complaint on the visa issue?
