U.S. to rule on whether fee hike for H-1B visas breaks WTO rules

The U.S. is reviewing whether a law that increases some visa fees is compliant with World Trade Organization (WTO) rules, the U.S. Department of State said on Monday. The move follows strong criticism of the law from outsourcers and the Indian government.

U.S. President Barack Obama signed into law on Friday a $600 million bill for increased surveillance for illegal immigrants on the U.S.-Mexican border. The cost of the new measures are to be paid from an increase in H-1B and L visa fees paid by tech workers brought into the country by companies with more than 50 staff, and in which more than 50% of the staff are on these visas.

The new border security law has been criticized as discriminatory by India's National Association of Software and Service Companies (Nasscom), as it singles out companies that have more than 50% of their staff in the U.S. on these visas. The Indian outsourcing model involves deploying a large number of staff temporarily on customer projects in the U.S.

"We are reviewing a suggestion that this bill is not WTO compliant," Philip J. Crowley, assistant secretary in the U.S. Department of State, said at his daily press briefing, a transcript of which is available on the department's website (http://www.state.gov/r/pa/prs/dpb/2010/08/146001.htm). Crowley added that the U.S. is talking to Indian officials about the law and its implications.

India's Commerce Secretary Rahul Khullar told reporters in Delhi on Tuesday that the visa fee hike is incompatible with the WTO.

Nasscom's president Som Mittal warned on Monday in an interview that the hike in visa fees could lead to a trade spat, and could also affect U.S. companies that are negotiating access to Indian markets.

The new law will affect Indian and other outsourcers outside the U.S. who bring staff in large numbers to do work in the U.S., but it will not affect U.S. tech companies who also use workers from abroad, Nasscom said. As U.S. tech companies are based in the U.S., their staff from abroad are typically less than 50% of their total staff in the U.S., it added.

The total cost to all Indian outsourcers from the new measure could be collectively as much as $250 million a year, Mittal said. That is not a very large cost for Indian outsourcers to bear, considering that their revenue runs into billions of U.S. dollars, said Sudin Apte, principal analyst at Forrester Research. But Mittal is worried that the visa fee hike could be just the beginning of other protectionist measures by the U.S.

In the bill, Senator Charles E. Schumer, a New York Democrat, proposed raising the visa fees on H-1B and L visas paid by these companies by roughly $2,000 per visa application. Schumer singled out Indian outsourcers like Infosys Technologies during the course of discussions on the bill.

Copyright © 2010 IDG Communications, Inc.

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