US—India Visa Fee Controversy before the WTO: A Migration-Mobility Nexus for the WTO?

27.10.2016 , in ((Politics)) , ((No Comments))

Trumping over the US election campaign is also a visa dispute at the WTO. On trial stands a bill by the US Citizenship and Immigration Services to double application fees for H1-B visa. India brought its complaint before the WTO on March 2016, alleging that the US had breached its legally binding market access commitments. The US-India dispute could set a precedent if it were to confirm the WTO’s judicial competence over visa – traditionally considered a national prerogative.

The WTO, Visa and Immigration Law: Dis-Engagement through Caveat

For a long time, GATT 1947 had resisted being associated with “migration”. Yet, with the increased blur between productized services and serviced products, the GATT 1947 Contracting Parties – who established the WTO in 1994 – concluded that if the WTO were to globalize markets, a complete coverage of services trade would be required, which includes human (and capital) as factor of mobility. Consequently, the General Agreement for Trade in Services GATS defines services trade as the mobility of capital (mode 3), e-commerce (mode 1), tourism (mode 2) and temporary movement of natural persons as service providers (mode 4).

“Mode 4” is crucial for economies of developing countries, whose principal export product is surplus labor and labor-intensive services. In practice, mode 4 is limited to highly-skilled service professionals in the categories of “executives, managers, and specialists”, “business visitors and investors, contractual service suppliers”, and “intra-corporate transferees”. Upon insistent lobbying by developing countries in the ongoing Doha Development Round, development-friendly access is being negotiated.

All along, industrialized countries made sure such mobility would not entail the entire spectrum of visa, entry, integration and return clauses linked to “migration”. The immigration law caveat of the Annex on Temporary Movement of Persons (Annex TMNP) ensures that visa, border, integration and return remain under national immigration law, untouched by WTO obligations. As a result of this caveat, trade agreements are a possible means to fast-track foreign worker admission outside regular immigration law channels (for example, Syrian refugees whose employment was facilitated by the EU or the United States-Jordan Free Trade Agreement).

Yet, at the WTO, Members so far have turned down efforts by India and other developing countries to harmonize entry for Mode 4 workers among WTO Members and to create a special GATS visa. Visa practice remains – under WTO narrative – within full national sovereignty over territory and borders. Visa can be used to discriminate among WTO Members without breaching the foundational WTO principle of “Most Favored Nation Treatment”. Most recently, the US has doubled the visa fees it charges for H1-B workers in order to raise money for border securitization towards Mexico. The discriminatory effect is not so much the visa itself (would be carved-out from GATS anyway) but the fee. The fee macro-economically reduces the number of H1-B applicants notably from India – an effect of a barrier to trade, thus falling under the auspices of GATS Art. XIV.

Why Reform the US H1-B Visa Program?

The US installed the H1-B visa for foreign persons with a “specialized body of knowledge” in 1990 – at a time when the US could no longer fill its market demand with US workers. H1-B visa are numerically capped annually at 65’000, a quota out of which 6’500 are reserved for Singapore and Chile – nations, with whom the US signed trade agreements.

The US H1-B visa program is criticized by election candidates such as Donald Trump because it allows for displacing US workers. According to Phil Martin, the H-1Bs are often dispatched from India to the US on a temporary basis as contractual service suppliers of Indian tech companies with subsidiaries in the US. Under H-1B, employers may hire H-1B workers without searching for US workers and even lay off US workers in order to hire a cheaper and potentially better educated foreign worker – as in the case of Disneyland, which has laid off US workers and replaced them with Indian tech workers provided by an outsourcer.

The Dispute: Against Outsourcing or Body-Shopping?

In the complaint United States — Measures Concerning Non-Immigrant Visas of 3 March 2016, India requests consultations under the WTO dispute settlement. India contends that the “combined filing fee and fraud prevention and detection fee” (4’500 USD per applicant) results in a doubling of the visa fees and a reduction of the number of applicants.

The US raised the fees to

  • suppress body-shopping practice by outsourcers [1]
  • generate resources to finance counterterrorist measures, including biometric appliances at the South-Western borders [2]

India argues that the doubling of the visa fees has an adverse trade effect by

India needs to prove that with the introduction of higher visa fees on H1-B visas fewer Indian IT workers have come to work in the US. The US is arguing that raising visa fees, like all issues pertaining to visa policy, falls outside the scope of GATS and does not bear on US GATS commitments.

The dispute marks the first one under WTO where the movement of persons, GATS mode 4, is at stake. If the dispute moves past the consultations phase, ultimately the panel or Appellate Body will have to decide whether raising visa fees qualifies as “measures relating to services trade” or not. If so, visa fee would be considered as barriers to market access and as arbitrary domestic regulation. In both cases, visa fees would refer to “trade measures” (WTO applicable law) and not to “migration law and policy”, which fall under the responsibility of the WTO Members. Such a jurisprudence would clearly signal that the WTO is willing to expand its scope to capture any measure, which remotely touches upon trade, market access, and competitive opportunities – that the WTO will not be blindfolded by a measure, which seemingly resembles visa and migration control.

Towards a Migration-Mobility Nexus in Trade Law?

The WTO distinguishes visa fees from a visa requirement; the latter qualifying as lawful regulation of “migration” carved-out by the Annex TMNP, the former as discriminatory barrier to trade and factor mobility. The number of trade agreements adding “migration” provisions in a way that moves beyond the scope of GATS mode 4 (the EU-Algeria Free Trade Agreement 2002 and its readmission obligations, or the Japan-Philippines Economic Partnership Agreement 2008 and its return clause for nurses and caregivers) evidences how this watertight distinction between mobility and migration has become blurred. And, if the visa fee dispute will be handled by the WTO, we would see even more permeability between migration and labor mobility, at the WTO and elsewhere. [3]

Marion Panizzon
Senior Researcher, nccr – on the move, University of Bern

 

[1] Body-shopping is defined as: “outsourcing practice whereby foreign nationals are employed in a foreign IT company based in the US in order to work as short-term on-site consultants for other US companies” (International Centre for Trade and Sustainable Development ICTSD: Bridges 16(14) 2012).

[2] The new border measures cost USD 600 million and were enacted through the Southwest Border Security Bill, passed by US Congress and signed into law by President Barack Obama in 2010.

[3] Mobility – in legal terminology – has at least two facets: 1) cross-border movement of highly-skilled service suppliers in trade agreements, 2) “secondary” movement of legally admitted migrants and refugees, including job/employer switching, geographic mobility, and skill-upgrading internships.

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