Close on the heels of Washington’s victory against the Indian government’s local content requirements for solar cells and solar modules, India took the US to task in the area of trade in services, where trade-restrictive measures have multiplied in the past several years.
“We can’t have other countries cheating,” US President Barack Obama had said after securing a comprehensive verdict against India’s solar energy policies. “We can’t have other countries engaged in practices that disadvantage American workers and American businesses,” he said. “We have brought more cases before the World Trade Organization, the WTO, than any other administration... The ones that we’ve brought (at the WTO) we have won. In fact, we just won a case against India.”
So far, the US has launched 109 trade disputes against other WTO members while facing 124 disputes against its allegedly illegal trade policies. Against India, the US raised six trade disputes at the WTO while encountering eight cases from New Delhi.
In its complaint lodged with the dispute settlement body’s chair, ambassador Xavier Carim, India said that the US’s measures on short-term software service providers are inconsistent with the terms, limitations and conditions that the US had agreed to in its Schedule of Specific Commitments under the General Agreement on Trade in Services (GATS).
New Delhi maintained that the treatment accorded to juridical persons of India with a commercial presence in the US under Mode 3 of GATS was less favourable than that accorded to juridical persons of the US engaged in providing similar services, despite the US’s specific commitments in this regard.
Under Mode 3 of GATS, WTO members are allowed to have a commercial presence in member countries, depending on the specific binding commitments made in their schedules.
India argued that the restrictive measures imposed by the US on the movement of natural persons or short-term service providers are inconsistent with the US’s scheduled specific commitments. These measures applied by the US are not only inconsistent with its scheduled specific commitments but appear to “nullify” or “impair” the benefits accruing to India directly and indirectly under GATS, it said.
As a first step to resolving the dispute, India asked the US to enter into what are called Article IV consultations under the dispute settlement understanding. The US will need to address India’s concerns within a month. If the two sides fail to arrive at an amicable agreement during the Article IV consultations, India could ask for the establishment of a dispute settlement panel to adjudicate the issue.
Significantly, India’s dispute comes at a time when several presidential candidates in the US, particularly Texas senator Ted Cruz, have raised the issue of H-1B visas and the danger they pose to skilled jobs in the US. During the Republican Party presidential candidates’ debate on Thursday, Cruz said that he would tighten rules for H-1B visas if elected.
In the run-up to WTO’s 10th ministerial meeting in Nairobi last December, India had called for greater transparency in the implementation of Mode 4 commitments by WTO members. But major industrialized countries opposed the Indian proposal on the ground that it imposes burdensome conditions.
Mode 4 of GATS deals with the movement of natural persons or short-term service providers in areas agreed to by the trading partners.