India submits proposal to WTO in wake of protectionist measures by US and Aus

India today expressed concern over moves of certain countries like the US and Australia to tighten their visa regime and pressed for a WTO-backed global framework to facilitate services trade.

Commerce and Industry Minister Nirmala Sitharaman said India has submitted a proposal to the World Trade Organisation (WTO) seeking an agreement on trade facilitation in services.

Citing the examples of the US, the UK, Australia and New Zealand, which are tightening their visa regime for movement of skilled professionals, she said: "Countries are now very clearly raising protectionist walls as regards service trade, and it is time that we have a global framework within which trade in services can happen. We will be actively pursuing our proposal in the WTO," she told reporters here.

The trade facilitation agreement in services proposal is aimed at liberalising rules for movement of professionals and other steps to reduce transaction costs to boost growth of the services sector. India is pitching for this pact in the WTO as the services sector contributes over 60 per cent to the GDP and 28 per cent to total employment. The move is aimed at developing a broader framework governing global services trade, just like a similar pact implemented by the WTO on goods trade.

Sitharaman said, India wants all the member countries to study the proposal before the forthcoming ministerial meeting of WTO in December at Argentina.
Talking about the executive order signed by the US President Donald Trump on H1B visas, she said America has committed certain number of these visas to India and "we would definitely want" America to honour that commitment. However, the minister said, she is in touch with the Indian industry on these issues amid fears that the new American visa regime would make visas more expensive and restrictive.

She further said that Finance Minister Arun Jaitley, who is in the US, would take up the matter with the US administration. "It is not just the US, but several countries now adopting such measures," she said adding the government and the industry need to work together on the issue.

Sitharaman said India would engage with these countries to sort out the visa related matters. The restrictive visa regime would also impact the US companies that are operating in India, she added.

"So it is not an unilateral (issue) where Indian companies would have to face this, there are several US companies in India which are doing business for years here," she said.

When asked whether India would drag the US and Australia to the WTO's dispute resolution mechanism, she said: "At this stage, we will engage constructively. At the same time, India will ensure that it will not accept unfair treatment".

Indian IT companies use temporary work visas to send employees to work on client sites. With visa programmes in these countries becoming more rigorous, domestic technology firms will face challenges in movement of skilled professionals and spike in their operational costs. These companies get over 60 per cent of their revenues from the North American market, about 20 per cent from Europe and the remaining from the other economies.

With the rising protectionism across markets like the US, the UK, Singapore and Australia, domestic companies are beginning to adjust their business models to reduce their dependence on visas by hiring more locals.

The US, under a new executive order, proposes to replace the current lottery system for issuing H-1B work visas with a merit-based approach. The country is reviewing its visa programme for foreign workers to also curb abuse and frauds related to visas. Similarly, Australia has abolished a work visa programme -- 457 visa -- used by over 95,000 temporary foreign workers, majority of them Indians, to tackle the growing unemployment in the country. New Zealand, too, is introducing tougher norms for immigrant workers. One of the changes will need immigrants to get a job in which they earn at least the median income to qualify as skilled.