In March this year, India dragged the US to WTO’s dispute settlement body against the latter’s measures imposing increased visa fees on certain applicants for L-1 and H-1B visa categories. India has stated that the move would impact Indian IT professionals.
The dispute concerns US immigration laws which increased visa fees for certain temporary foreign workers and allotted a specific number of temporary worker visas to Chilean and Singaporean nationals.
India has alleged that the US is violating its obligations under General Agreement on Trade in Services (GATS), a binding agreement for all WTO member countries, as well as the GATS Annex on Movement of Natural Persons Supplying Services, to not discriminate against or between non-US service providers. This appears to be the first time a WTO member has formally filed a dispute challenging the immigration laws of another member as a violation of the GATS.
While trade and immigration policies are tied in together, trade policies help create investment and jobs in exchange for labor movement whereas Immigration policy dictate terms for labor mobility. Policies that are interlinked, but are debated individually. While India Inc, seeks a reduction in visa fees with an increase in the work visa quota, America is prudent with the volume of doing trade with India - limiting outsourcing.
In terms of doing business, for almost two decades, India and US have had talks on the totalization agreement, however without much success. Here are some viewpoints about the Totalization Agreement to end dual taxation -
Imagine you pay a fixed percentage of your salary for a certain privilege without ever getting its benefits. It will hurt bad, really bad! Indian guest workers in the US, a majority working in tech companies, pay social security taxes, equivalent to the Indian provident fund, without any benefits. Totalization agreement is your answer to solve this expensive problem.
Under the current setting, an employed Indian worker in the US whose payroll is in India has to pay the provident fund in India. In addition to this, he has to pay towards social security in the US. To reap the benefits of social security, the worker has to stay for at least 10 years, or 40 quarters in the US. However, visas are issued for a maximum of six years and most of the workers come back to India once their overseas assignment is over. The result? Indians contribute a fixed 6.2 percent of the salary as social security to the US government which cannot be repatriated.
Why is this a big deal?
India sends the highest number of temporary workers to the US, who mostly work for tech companies. Nasscom estimates that Indians working through H-1B and L-1 visas contribute almost $1 billion annually to the US. Similarly, Americans living in India face similar problems; however, this number is much smaller than Indians going abroad. The rules for withdrawal of provident funds are the same as it is for Indians.
Currently, India has signed the totalization agreement with 18 countries, of which agreements with 13 countries have been enforced, such as Belgium, Germany, and Switzerland. On the other hand, the US has signed this agreement with 25 countries, such as Australia, Japan, and South Korea...but not India !
If the agreement is signed, Indians will be privy to certain benefits. Indians will not be paying for social security and will be contributing to the Indian provident funds, provided they show a certificate of coverage. Also, contributions in the US may get repatriated to the provident fund in India
The Road Ahead
Indian as well as American work visa laws are employer dependent and spouse visa are coterminous. Both countries permit "dual employment" for its foreign workers. However, with FDI and the related creation of employment opportunities in India, we must ensure an increased exchange of knowledge workers across borders, work visa laws therefore play an important role.
Unfortunately though, under new proposed immigration policies Indian firms with headquarters outside of USA will henceforth be strongly discouraged from petitioning for alien work visas. The rationale being, foreign firms deployed their native born workers to work in American firms by displacing local workers from their jobs. Indian firms as well as their employees are accused of working at a lower prevailing wage and thus driving down wages.
The first bipartisan H-1B and L-1 visa reform bill was introduced by Senators Durbin and Grassley. This was 10 years ago and the digital divide continued to get worse.
Provisions of the Durbin-Grassley bill would change existing law in the following ways:
1) Currently, the H-1B visa program is criticized for failing to protect American workers.
Under current law, only employers that employ H-1B visa holders as a large percentage of their U.S. workforce are required to pledge that they have attempted to find American workers before bringing in foreign workers. The Durbin-Grassley bill would require all employers seeking to hire an H-1B visa holder to pledge that they have made a good-faith effort to hire American workers first and that the H-1B visa holder will not displace an American worker.
2) The Durbin-Grassley bill would require that before an employer may submit an H-1B application, the employer must first advertise the job opening for 30 days on a Department of Labor (DOL) website. DOL would also be required to post summaries of all H-1B applications on its website.
3) The Durbin-Grassley bill would require that H-1B employers may not advertise a job as available only for H-1B visa holders or recruit only H-1B visa holders for a job.
4) The Durbin-Grassley bill would prohibit employers from hiring H-1B employees who are then outsourced to other companies. This is a method that some companies use to evade restrictions on hiring H-1Bs.
5) Currently, so-called “job shops” hire large numbers of foreign workers on H-1B visas for short time periods to train and then outsource these workers offshore.
6) The Durbin-Grassley bill would prohibit companies from hiring H-1B employees if they employ more than 50 people and more than 50% of their employees are H-1B visa holders.
7) Currently, the Department of Labor lacks sufficient oversight and investigative authority over the H-1B program.
8) The Durbin-Grassley bill would give DOL the ability to conduct random audits of any company that uses the H-1B program, and would require DOL to conduct annual audits of companies with more than 100 employees that have 15% or more of those workers on H-1B visas.
9) The Durbin-Grassley bill would give DOL authority to review employers’ H-1B applications for “clear indicators of fraud or misrepresentation of material fact.” Currently, DOL is only authorized to review applications for “completeness and obvious inaccuracies.” The Durbin-Grassley bill would give DOL 14 days to review H-1B applications, instead of the seven days currently permitted.
10) The Durbin-Grassley bill would give DOL more authority to conduct employer investigations and streamline the investigative process by, among other things, permitting DOL to initiate its own investigations and eliminating the requirement that the DOL Secretary personally authorize an investigation.
11) The Durbin-Grassley bill would require the Department of Homeland Security (DHS) to share with DOL any information in H-1B visa applications indicating that an H-1B employer is not complying with program requirements.
12 ) The Durbin-Grassley bill would strengthen existing whistleblower protections for the H-1B program and establish whistleblower protections for the L-1 program.
13) The Durbin-Grassley bill would authorize the hiring of 200 additional DOL employees to administer, oversee, investigate and enforce the H-1B program.
14) Currently, the H-1B and L-1 visa programs are criticized for making it possible for companies to hire foreign workers at lower wages and with fewer rights than Americans, in turn creating incentives for companies to avoid hiring Americans.
The Durbin-Grassley bill would require H-1B and L-1 employers to pay employees the prevailing wage to ensure employers are not undercutting American workers by paying substandard wages to foreign workers.
15) The Durbin-Grassley bill would require the government to provide H-1B visa holders with information about their rights.
16) The Durbin-Grassley bill would require H-1B employers to provide an H-1B employee’s immigration documents to the employee upon request.
Under current law, experts argue that employers can use the L-1 program to evade restrictions on the H-1B program because the L-1 program does not have an annual cap and does not include protections for American workers. As a result, efforts to reform the H-1B program are unlikely to be successful if the L-1 program is not reformed at the same time.
The idea of national solidarity today, is dependent on International Cooperation.True solidarity begins with the solitary (H-1B worker) and Uncle Sam has alienated foreign contract workers for over two decades to create a humongous digital divide between two classes of workers – those without rights, and those without.
Under Mr Trump’s leadership, efforts will be made to restrict foreign companies from petitioning alien workers for a work visa. Because companies have been under paying their sponsored employees; the resulting labor arbitrage has been favourable in displacing american workers from employment.
Donald Trump however, is in favour of the H-1B visa program. He has advocated increasing the prevailing wage paid to the H-1B workers . The idea to increase the minimum prevailing wage of the H-1B workers is to bridge the wage discrimination divide between local and guest workers; thus increasing salaries and making the labor market more competitive. Raising the prevailing wage for foreign workers, would also make the ‘brokerage of talent’ less favourable to companies solely dependant on H-1B workers.
Increasing the prevailing wage will have two immediate benefits on the American labor market – one, it will reward ‘foreign talent not available locally’, thus restoring the original mandate of the H-1B visa program; and will give the entry-level jobs to the existing domestic pool of unemployed native and resident workers in the U.S. allowing African Americans, Hispanic and female workers who have been passed over in favor of the H-1B program.
Mr Trump has also recognized America’s need for high skilled foreign workers, especially in the STEM fields, and has specifically mentioned Indian students, while saying smart foreign students educated in the US should be allowed to remain, work, and be given a path to citizenship.
What can India Inc do?
About the Author:
Rajiv Dabhadkar (1968) was born in Mumbai, India. He has over 25 years of experience in education and technology sectors. He has studied and lived in the United States for more than a decade helping large companies deal in the movement of global talent. Rajiv has been a proponent of migration for over a decade and has actively moved forward the debate on Indo-American work visa related migration policies. He is the Founder of The National Organization for Software and Technology Professionals" since 2004. He is the author of American Work Permit – Official Rules & Regulations of American Work Visa and “Green Carrot – America’s Work Visa Crisis”. He has testified against the work visa program abuse leading to the drafting of the Visa Fraud and Abuse.
Prevention Act of 2007 aimed to prevent visa misuse and document fraud in the immigration process. His research work has been cited by the UK Border Agency as well as the US Homeland Security. He is a KaramVeer Global fellow and is a recipient of the coveted KaramVeer Chakra for Social Justice in 2014, an award initiated by the United Nations.