India’s complaint before the World Trade Organization (WTO) against the United States regarding its decision to raise the temporary visa fees has garnered attention from across the globe. In December last year, the US passed a bill (James Zadroga Act) that sought to double the fees for H-1B and L-1 non-immigrant work visas and also place limits on the issuance of such visas (Fees for H-1B visas was doubled to USD 4000 and that for L-1 visas was increased to USD 4500). Under the James Zadroga Act, entities which employ more than 50 people or 50 percent of their employees on non-immigrant visas in the US will be required to pay the increased visa fees. Under the new Act, even the period of applicability of the increased visa fees has been extended.
For a country that is known for sending a sizeable number of IT professionals to the US every year, this decision can have some far-reaching implications. In its complaint, India alleged that the measures taken by US to increase visa fees were inconsistent with the commitments made by US under the WTO; the measures would result in Indian IT professionals being treated in a less favourable manner than their American counterparts. The hike in the visa fees would in all likelihood deter IT firms in the US from hiring Indian professionals as they would have to pay a higher visa fee. This would result in preference being given to hiring people from US.
Although a country has the sovereign right to raise visa fees, the decision to increase visa fees for immigrants can be seen as a violation of the most favoured nation (MFN) principle and the national treatment principle under international law. The MFN principle states that a country cannot discriminate between two nations, and that it should accord the same treatment to one nation as it does to any other nation. According to the ‘national treatment’ principle, a country is required to treat the nationals of other countries in the same manner as it treats its own nationals. This principle is embodied under various international trade agreements such as Article 3 of the General Agreement on Tariffs and Trade (GATT), Article 17 of General Agreement on Trade in Services (GATS) and Article 3 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. India has also alleged that the decision would also affect the rights of Indian firms which have been explicitly laid down under the Trade Related Investment Measures (TRIMs) Agreement.
According to the dispute resolution procedure of the WTO, the first step towards dispute settlement is a consultation between the two countries to amicably resolve the dispute within a period of 60 days. While most disputes get resolved at the stage of consultation, in the event that that does not work, the next step would be to constitute a panel to hear the dispute. This would lead to a full-fledged hearing of the case by WTO’s Dispute Settlement Body.
Since India filed the complaint on 3rd March, the consultation process between India and US is expected to conclude by the 1st week of May. If the two countries fail to come up with a mutually agreed solution by then, India may file a request for the establishment of a WTO panel to conduct subsequent proceedings.
(Written by Radhika Agarwal and Devika Agarwal. Radhika and Devika are lawyers based in Chennai.)