Barring unforeseen developments, the US border security bill that steeply increases the work visa fees mainly used by Indian infotech firms will soon be at the desk of US President Barack Obama.
Given its populist nature and the fact it is an election year, he is expected to sign it into law before November — just before his first official visit to India.
Derek Scissors, research fellow in Asian economic policy at the Washington-based Heritage Foundation, underscored this point. "I presume this is another element in the agenda that India will have to talk about."
Sanjay Puri, chairman of the Indian-American lobby group USINPAC, agreed: "This bill is targeting the pride and one of the biggest symbols of India's economic resurgence. There will definitely be a lot of political compulsion for retaliation in India, which regards this is as an unfair trade practice. President Obama will have to deal with some hard questions on this issue given that this flies in the face of a stated policy of working closely with India."
The more important issue for US politicians was finding a convenient anti-outsourcing target in Indian companies that use H1-B and L-1 visas at a time when jobs are front and centre in the lead up to the November 2 mid-term polls. Even if the furore over this particular bill plateaus out, there will be enough rhetoric on these matters to keep the overall issue alive when Obama arrives in New Delhi just days after the elections are held.
Amid sharp criticism of the bill in India, Commerce Minister Anand Sharma has already written to the US Trade Representative Ron Kirk.
However, it is unlikely this issue can be resolved through the World Trade Organisation.
As Scissors said, "This bill is a bad idea in general. But it will be very difficult for India to make a formal claim before the WTO as there is no discriminatory language in it." Therefore, he explained, there may be "no formal way to appeal it."
There are still many steps to be taken before the bill becomes formal legislation. The Senate passed the bill on Thursday with the controversial provision put into it by New York Senator Chuck Schumer and Missouri Senator Claire McCaskill. The US House of Representatives passed another bill on Tuesday, though almost identical, still needs to go back to the Senate for another vote due to procedural reasons. The Senate may just convene for a special session, since it is in recess, to pass the bill, perhaps as early as this week. It will reach the White House for signature within days.
Obama’s signature will further impair the administration’s credentials in India. As Scissors said, "It’ll be more complicated for the President. He says the right things but when it comes to trade, he is half way to bring a protectionist."
As far the India stopover is concerned, Puri said, "If the bill passes and is signed into law, it will definitely cast a shadow over the visit of President Obama."