The US suspending H-1B visas isn’t a bright idea

Pralok Gupta/Shailja Singh | Updated on July 03, 2020 Published on July 03, 2020

By restricting work visas based on faulty assumptions, the US violates global trade commitments and hampers its own economic recovery

Petulance does not always good populism make. President Donald Trump’s blanket order to suspend America’s most important work visas for foreigners is a glaring example. The move risks damaging the few vibrant sectors in a stricken US economy and violates America’s global trade commitments. Tackling this decision will require not just bilateral government efforts but also technology industry heft, which should be brought to bear to soften some aspects of this ban.

The US presidential proclamation suspends new H-1B, J and L non-immigrant visa petitions for foreign workers and their accompanying persons, including family members. While H-1Bs are the most sought after and well-known work visas in this mix, L visas, too, are critical to many companies with a commercial presence in the US. They are also used by several others companies providing myriad services to clients in the US. IT operations of big firms will be substantially affected. Which is why Sundar Pichai of Google was among the first to immediately speak out against the move.

Dodgy reasoning

According to the order, these non-immigrant visa programmes pose ‘an unusual threat’ amidst the economic contraction resulting from the Covid-19 outbreak. This reasoning doesn’t quite hold water. Sketchy unemployment data and incorrect correlations have been used to make it appear that H-1B and L visa workers are responsible for much of the current job losses.

The order cites data from the February-April 2020 period, when more than 20 million Americans lost jobs in key industries where employers are requesting H-1B and L workers. Yet this data provides information only on job losses in these industries as a whole. These persons need not be directly competing with ‘highly skilled’ H-1B and L visa workers. In fact, the proclamation contradicts itself — persons vulnerable to job loss due to Covid-19 are those ‘without college degrees,’ along with other historically disadvantaged groups. A person without a college degree cannot be in competition with H-1B and L workers, who are ‘skilled professionals’ with ‘specialised degrees’.

Similarly, the order provides information on unemployment rates in May 2020 for young Americans competing with certain J non-immigrant visa applicants. It does not provide such information for H-1B and L workers. In the absence of such data, extrapolating J visa unemployment data to H-1B and L visas and thus making any claim of job loss due to H-1B and L workers is not statistically correct. Indian expatriate workers are a vital cog in America’s economic engine. In fact, the Confederation of Indian Industry (CII) points outs that Indian companies have created more than 113,000 jobs in the US and invested nearly $18 billion in 2017.

Violating obligations

In addition to dodgy economic reasoning, the unilateral order also violates America’s global trade obligations. The temporary movement of people across national boundaries is an important aspect of global trade, and something countries have agreed to protect. It is vital to the smooth functioning of the globalised world economy. Which is why this proclamation puts the US on a weak legal footing at the World Trade Organization (WTO), as it specifically violates US H-1B and L1 visas related commitments under the General Agreement on Trade in Services (GATS) of the WTO. The US has made explicit commitments to issuing L1 visas without any numerical ceiling, subject to fulfilling other requirements. Denying L1 visas now is a gross transgression, and something that is open to challenge at this global body.

For H-1B visas, the US had agreed to issue ‘up to 65,000’. In this case, too, denying H-1Bs is a potential violation of its commitments. However, the US could also possibly adopt the position that it would meet the 65,000-visa requirement after December 2020, once this order lapses. Either way, these could now be challenged as breaches of international commitments.

Countries do have leeway to deviate from their WTO commitments, of course. There are two listed exceptions, but these US visa suspensions do not conform even to those. First, ‘General Exceptions’ are available on grounds of public morals/public order; protection of human, animal plant life or health; and prevention of deceptive and fraudulent practices. These exceptions also require that any measure taken for this purpose should not be arbitrary or unjustifiable discrimination, or a disguised restriction on trade in services.

Second, there are ‘Security Exceptions’, which cover measures taken for protection of essential national security interests. Neither of them, however, provides an exception for protection of domestic workers on account of oversupply in the labour market.

The way forward

One way forward is for industry to engage the White House. A recent precedent exists. When the US unilaterally increased tariffs on steel and aluminium imports in 2018, over 350 companies managed to extract exemptions within this order. They were not subject to those revised tariffs. Technology firms could lobby for similar exemptions from visa suspension, subject to certain undertakings that the US government will demand.

Of course, given deepening US-India ties the Indian Government could also engage in talks with the US to either retract this proclamation, or in no event extend it beyond December 2020. However, India should make no concessions for the US withdrawing the proclamation — which is already in violation of international commitments. This will certainly be a challenge for our emissaries. But then again, what is diplomacy but ‘the art of letting someone else have your way’.

The writers are Associate Professors at the Centre for WTO Studies, IIFT, New Delhi. Views are personal

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Published on July 03, 2020
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