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India & U.S. Spar over Trade

Earlier this month, the Indian government filed suit in the World Trade Organization (WTO) over the U.S. increase in temporary visa fees.

As part of the 1995 Uruguay Round agreement, the U.S. committed to admit at least 65,000 skilled foreign workers each year – still the current level set by U.S. law. Over the past five years, the U.S. Congress has been raising the fees charged to certain companies that employ these workers, and in December 2015, U.S. President Barack Obama signed into law a US $1.8 trillion spending package which, among other things, introduces a US $4,000 fee for certain categories of H-1B visa and US $4,500 for L1 visa, basically doubling the cost.

A group of large Indian outsourcing companies – including Infosys, Tata, and Wipro – is directly impacted by the higher fees. Indian outsourcing companies send tens of thousands of employees to the United States each year under the H-1B and the L-1 working visas. The Indian companies now argue that the high fees have a protectionist effect. Nasscom, the Indian IT industry association, says the new fees could cost its companies as much as $400 million annually.

India’s complaint to the WTO earlier this month started a 60-day negotiation period, following which, India has the right to ask the WTO to establish a panel to review the matter.

Last month, India found itself on the losing side of a WTO case brought by the U.S. against the domestic content requirement in its National Solar Mission, in a loss that is projected will cost the Indian solar industry over $100 billion. India also found itself the loser in a WTO ruling in favor of the U.S. last year, which held that India’s ban on imports of meat, eggs and poultry from the U.S. violated global norms.

 

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