India- US WTO Issues

To be read along with the WTO Primer in the package:


·         India may drag the United States to the World Trade Organization, or WTO, over its decision to raise professional visa fees for an extended period and impose a 2% import levy on goods and services sold to the US government. 

·         The commerce department is studying details of the James Zadroga 9/11 Health and Compensation Act of 2010 which aims to increase visa fee and import taxes on supplies to government to set up a $4.3 billion fund for sharing the healthcare burden of those affected by 9/11 terror attack in New York.

Issue 1: Visa Fee hike

·         The final bill, which is now with US President Barak Obama to be signed into law, spells more trouble for Indian industry than the one initially proposed as it extends the period for higher visa fees from 2014 to 2021.

·         India has been trying for months to persuade its third largest trade partner to revoke the proposal to increase H1B and L1 visa fees as it could raise the cost of Indian IT companies operating in the US by $200 million annually.

·         The decision to increase H-1B and L-1 visa fees by at least $ 2,000 for all US-based companies that have more than half of its employees on such visas could be challenged at the WTO, another expert said. But the case would be hard to argue as it is near impossible to collect data of all IT companies in the US to prove that it is only Indian companies such as Infosys and Wipro that will largely be affected. 

Issue 2: 2% Tax On Govt. Procurement

·         The 2% tax will be levied on countries that are not signatories to the government procurement agreement (GPA) of the WTO, including India.

·         Prima facie, the US can give better treatment to domestic suppliers while not giving the same treatment to countries other than the signatories to the GPA as per WTO rules.

Dispute Resolution

·         The first step would be to seek consultations with the US at the WTO on the contents of the bill and if the matter doesn’t get resolved, a dispute settlement panel could be set up.

·         India could, however, use the non-violation track in the dispute settlement to fight the provisions of the bill.