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TWN
Info Service on WTO and Trade Issues (Sep25/14) Geneva, 22 Sep (D. Ravi Kanth) — The Trump administration on 19 September paved the way for upending the US immigration system by announcing a $100,000 fee for certain H-1B visa applications as well as imposing new restrictions. This move appears to target the large number of Indian tech professionals employed by major American IT companies, according to people familiar with the development. The action, detailed in a White House Fact Sheet issued on 19 September, has led to allegations that the United States violated its commitments under Mode 4 of the World Trade Organization’s General Agreement on Trade in Services (GATS). The new proclamation, which took effect early morning of 21 September, appears to have triggered widespread panic. Companies employing H-1B visa holders had urgently asked their employees abroad to return to the US by 20 September to avoid being caught by the new rules. Observers suggest that, in addition to existing tariffs on Indian goods, the disruption of the H-1B visa system aims to deny market access under Mode 4 that the US had committed to in its GATS schedule, said people familiar with the White House announcement. FACT SHEET Signing the proclamation to restrict the entry of certain H-1B aliens as nonimmigrant workers, US President Donald Trump claimed that the $100,000 fee for each new applicant is intended to “curb abuses that displace US workers and undermine national security.” The proclamation outlines several restrictions: A. It “restricts entry for aliens as nonimmigrants to perform services in specialty occupations in the H-1B program unless their petition is accompanied by a $100,000 payment.” B. It “directs the Secretary of Homeland Security to restrict approvals for petitions from aliens that are currently outside the United States that are not accompanied by the payment, and allows case-by-case exemptions if in the national interest.” C. It “requires employers to retain documentation of payment remittance, with the Secretary of State verifying payment during the petition process and the Departments of State and Homeland Security denying entry for non-payment for the relevant aliens and taking other relevant steps needed to implement the Proclamation.” D. It requires “the Departments of Labor and Homeland Security to issue joint guidance for verification, enforcement, audits, and penalties.” E. Further, it “directs the Secretary of Labor to initiate rulemaking to revise the prevailing wage levels for the H-1B program and directs the Secretary of Homeland Security to initiate rulemaking to prioritize high-skilled, high-paid H-1B workers.” COMBATING ABUSES The proclamation elaborated on its goal to combat “H-1B abuses,” claiming that “American workers are being replaced with lower-paid foreign labor, creating an economic and national security threat to the nation.” According to the proclamation, “the share of IT workers with H-1B visas has risen from 32% in FY 2003 to over 65% in recent years.” Consequently, it states that “unemployment among recent computer science graduates has reached 6.1% and 7.5% for computer engineering graduates – more than double the rates for biology or art history majors.” It alleges that the number of foreign STEM (science, technology, engineering, and math fields) workers in the United States more than doubled between 2000 and 2019, while overall STEM employment increased only 44.5% during that time. Further, it claimed that “American companies are laying off their American technology workers and seemingly replacing them with H-1B workers,” and provided the following examples: * One company was approved for 5,189 H-1B workers in FY 2025, while laying off roughly 16,000 US employees this year. * Another company was approved for 1,698 H-1B workers in FY 2025, yet announced it was laying off 2,400 US workers in Oregon in July. * A third company has reduced its US workforce by 27,000 since 2022 while receiving 25,075 H-1B approvals. * Yet another company reportedly cut 1,000 American jobs in February despite receiving 1,137 H-1B approvals for FY 2025. It also said that “American IT workers have even been reportedly forced to train their foreign replacements under nondisclosure agreements.” Thereby, the H-1B program is “creating disincentives for future American workers to choose STEM careers, which threatens our national security.” In short, it said that “President Trump is imposing higher costs on companies seeking to use the H-1B program in order to address the abuse of the program, stop the undercutting of wages, and protect our national security.” According to media reports, major US tech giants, including Google, Amazon, Microsoft, Cognizant, and Oracle warned their H-1B employees not to leave the country and urged those already overseas to return to the US by 20 September, fearing that their re-entry could prove difficult. The companies seemed worried by the significant cost escalation due to the proclamation. “Human-resources staffers divided up lists of workers and tried to determine employees’ locations so they could help them book flights, if needed. Immigration lawyers, meanwhile, sent bulletins to companies and visa holders and tried to address concerns – but often found themselves with few answers,” according to a report in the Wall Street Journal. Amid the widespread panic, the White House clarified on 20 September that the changes do not apply to current visa holders and will not affect their ability to travel. White House press secretary Karoline Leavitt stated that the $100,000 fee is a one-time cost, not an annual fee. TRADE DISPUTE In March 2016, India had raised a major trade dispute (WT/DS503) against the US at the WTO, challenging the restrictive conditions imposed on H-1B and L-1 visas. In its dispute, India argued that the US measures violate several GATS commitments, listing the following inconsistencies of the H-1B visa scheme: (i) The US visa measures seem to be inconsistent with the terms, limitations, and conditions specified in its GATS Schedule of Specific Commitments. (ii) They accord less favourable treatment to Indian companies with a US commercial presence than to US companies providing like services in sectors such as Computer and Related Services. (iii) The measures affect the movement of natural persons inconsistently with US GATS commitments and “appear to nullify or impair the benefits accruing to India.” India maintained that the measures are not in conformity with GATS Articles XVI, XVII, XX, and paragraphs 3 and 4 of the GATS Annex on Movement of Natural Persons Supplying Services, as well as Articles III:3, IV:1 and VI:1. India also complained that in its GATS Schedule, the US specified under Mode 4 that it would allow “up to 65,000 persons annually on a worldwide basis in occupations as set out in 8 U.S.C. section 1101(a)(15)(H)(I) (b),” a provision reflected in 8 U.S.C. section 1184(g)(1)(A) of the INA (the Immigration and Nationality Act). India was of the view that these US measures are not in conformity with GATS Articles II, V:4, XVI, XX, and paragraphs 3 and 4 of the GATS Annex on Movement of Natural Persons Supplying Services, as well as Articles III:3 and IV:1. Surprisingly, India did not press ahead with its complaint in 2016 and chose not to request the establishment of a dispute panel. However, in a detailed proposal to the Working Party on GATS Rules (WPGR) in March 2016, India called for commercially meaningful market access for short-term service providers under Mode 4. It urged major industrialized countries, including the US, to remove regulatory barriers to ensure that their “shallow commitments are not rendered meaningless.” In a six-page restricted proposal on “Mode 4: Assessment of Barriers to Entry,” India cited escalating barriers in the United States, Canada, and the United Kingdom, as well as other complex measures that “act as disincentives for movement of natural persons, or act as barriers for market access.” These barriers include “increased application fees for entry by certain categories of foreign professionals, increased salary thresholds for foreign professionals, or implementation of visa categories in a manner that renders effective market access meaningless and non-portability of social security benefits,” India argued. Despite repeated calls to address Mode 4 barriers following the 2013 Bali ministerial decision, major industrialized countries continued to impose “administrative and other barriers” that “nullify and impair the commitments made by a country.” The WTO Secretariat has shown that Mode 4 commitments are “shallow” compared to Mode 3 (commercial presence). India listed the following Mode 4 obstacles cited by the Secretariat: * Movement is often associated with a commercial establishment in the host country and contingent on prior employment with a home country company. * Numerical quotas and Economic Needs Tests (ENTs) are frequently imposed, with ENTs lacking clearly defined criteria. * Eligibility criteria for visas and work permits tend to bias towards highly skilled, educated persons at elevated functional levels. * Visa and work permit procedures are often cumbersome, costly, administratively complex, time-consuming, and sometimes opaque and arbitrary, with high rejection rates. * A study estimates the worldwide cost of processing visa/work permit applications represents around 0.3% of world GDP. * Nationality/residency requirements and non-portability of social security benefits also act as barriers. * Non-discriminatory regulatory requirements, like complex credential assessment and approval procedures, may seriously affect Mode 4 trade. According to India, the US has imposed measures such as increased fees on L-1 and H-1B visa applicants, which act as barriers. The H-1B category corresponds to US GATS commitments for “specialty occupations,” and the L-1 category corresponds to “intra-corporate transferees.” Close on the heels of its trade dispute, India’s proposal intensified negotiations on the movement of natural persons. Several studies indicate that the US seeks enhanced market access for its goods and services but is unwilling to provide commercially meaningful access for service providers from developing countries. For the Trump administration, however, international and WTO commitments appear to have little sanctity compared to its unilateral actions. +
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