India to seek WTO panel to rule on U.S. visa fees row

VISA WOES:The Indian IT industry would face an annual impact of $400 million from the visa fee increase. Visa applicants wait in queue outside the U.S. Consulate in Hyderabad.— FILE PHOTO  

India will soon ask the World Trade Organisation (WTO) Dispute Settlement Body to establish a panel of experts to adjudicate its dispute with the U.S. over the increase in visa fees, government sources said.

This follows the failure of India and the U.S. to arrive at an amicable solution during the consultations held on May 11 and 12 under the auspices of the WTO, they said. India’s decision — to seek the setting up of the panel — is likely to be announced after Prime Minister Narendra Modi’s June 7-8 visit to the U.S. According to WTO norms, if consultations fail, the complaining country can ask the settlement body to appoint a panel.

As per the WTO rules, India notified the WTO Secretariat on March 3 that it has “initiated a WTO dispute proceeding against the U.S. regarding measures imposing increased fees on certain applicants for two categories (H-1B and L-1) of non-immigrant temporary working visas into the U.S., as well as measures relating to numerical commitments for some visas.” According to India, the measures appear to be inconsistent with the U.S. commitments under the General Agreement on Trade in Services (GATS), the WTO stated.

IT sector

India said the visa fee increase is “discriminatory” against Indian firms as these (H-1B and L-1) are the same categories that are most extensively used by Indian service suppliers, especially in the information technology sector.

India, during the consultation process, categorically stated that the Obama administration’s rationale of using the visa fee hike to raise revenue (in this case, to finance a biometric tracking system and healthcare requirements of the 9/11 terror attack victims) and Washington’s “implicit justification” of this move could “open a Pandora’s Box,” the sources said.

India warned that the U.S.’s decision to continue with the implementation of the visa fee increase could result in other nations deliberately raising customs duties on goods to increase revenue for their domestic programmes. This is because the applied duties on many goods in several countries are much lower than the duty levels on those goods they have legally committed — or bound — in the WTO, giving them ample room to increase their ‘applied ’duties up to the ‘bound’ level.


Such ‘protectionist’ actions (of hikes in visa fees and duties) will in turn further hurt global trade, which is already going through a major slowdown owing to weak demand in many markets.

“The visa fee increase can be equated with hikes in tariffs (customs duties on goods imports). It will hurt the very trade liberalisation process ironically being championed by the U.S. itself,” an official said.

During the talks, the U.S. denied that there was anything in its legislation specifying that the visa fee hike is applicable only to Indian companies. The U.S. said there was nothing discriminatory in the legislation against Indian information technology companies, adding that since the visa fee increase is general in nature, it was not violative of any WTO rule. As per WTO norms, member countries are not allowed to normally discriminate between their trading partners.

Washington also informed that the visa fee hike was part of a legislation (the Consolidated Appropriations Act, 2016), and therefore it would not be possible to make any changes without addressing the legislation as a whole, the sources said.

Indian IT industry body Nasscom said the financial implications of the visa fee increase for the technology sector would be around $400 million a year.