Monday, June 11, 2018

Obama's Latest Protectionist Flap Offends India

India's domination of the outsourcing trade has hardly gone unnoticed among the protectionists and xenophobes in America. A key question for Indian business is if Obama is one of those. His membership in the PRC-bashing "China Currency Coalition" is already well-known; go ask Treasury Secretary Geithner. Moving from goods (PRC) to services (India), we may see the same phenomenon at work with the supposedly "internationalist" Obama. In 2007, he offended many Indians by characterizing his then-opponent for the Democratic presidential nomination Hillary Clinton as representing (D-Punjab). Let's just say that Obama doesn't rub many Indians the right way.

This latest flap is over immigration. Recent news that workers of Indian outsourcing firms are the largest recipients of H-1B visas is causing protectionist hackles. To their line of thinking, Indian companies are not only "stealing American jobs" by receiving outsourced business, but they don't even hire Americans for work that needs to be performed in the US. Hence, it's double jeopardy. Senators Durbin (D-IL) and Grassley (R-IA) have tried to contest the awarding of H1-B visas on such grounds amid efforts by firms to increase yearly H-1B quotas from the current 65,000. These, of course, are filled almost instantly:
“By the end of the day today, all of the H-1B visas for the year will likely be spoken for,” Durbin said. “The H-1B program can’t be allowed to become a job-killer in America. We need to ensure that firms are not misusing these visas, causing American workers to be unfairly deprived of good high-skill jobs here at home.”

Durbin and Grassley have repeatedly raised concerns that the loopholes in the H-1B and L-1 visa programs are allowing for the outsourcing of American jobs. Last year, they introduced the H-1B and L-1 Visa Fraud and Abuse Prevention Act, which would require H-1B applicants to make a good faith effort to hire American workers first and would give the Department of Labor greater oversight authority in investigating possible fraud and abuse.

"I have no doubt that we'll hear arguments all day as to why the cap on H-1B visas should be raised, but nobody should be fooled. The bottom line is that there are highly skilled American workers being left behind, searching for jobs that are being filled by H-1B visa holders," Grassley said. "It's time to close the loopholes that have allowed this to happen and enact real reform."
The emerging point of contention is a stipulation in the ever-controversial stimulus bill dictating that no bailout money be allocated to firms attracting workers on H-1B visas (read: from India). Call it the backdoor revenge of Durbin and Grassley. From the Economic Times:
With the economies in the U.S. and India both struggling and with unemployment rising, the outsourcing of American jobs to Indian workers has become an even more explosive issue. That's leading business leaders, politicians, and ordinary citizens in both countries to focus on a controversial visa program, the H-1B, that allows a limited number of foreigners to work at U.S. companies for up to six years. Critics have long claimed the program allows high-paying software-writing and engineering jobs at companies and state governments to go to foreigners.

On Feb. 23, the H-1B critics got a new round of ammunition. Data released by the U.S. Citizen & Immigration Services showed that in 2008, for the second year running, many of these visas went to Indian IT services companies that were sending engineers to the U.S. temporarily to work. In effect, a visa that had been designed for U.S. corporations to remain competitive at a time of talent shortage had become a blessing for the U.S. operations of global Indian companies, allowing them to send engineers from India, rather than hiring locally.

The news comes at a time when many Indians already suspect the U.S. is trying to put a squeeze on the country's successful outsourcing industry. Each year, the American government hands out 65,000 H-1B visas, and Indian engineers receive many of them. However, as part of President Obama's economic stimulus package, Congress passed provisions to bar any U.S. company that receives bailout dollars from directly hiring workers on these H-1B visas.
Irrational American nationalism is provoking similar responses from India's Hindu nationalist opposition parties, whose bellicose rhetoric includes boycotting American MNCs:
In India, there has been a swift outcry. "This is just irrational protectionism," says Montek Singh Ahluwalia, deputy chairman of India's Planning Commission. "It makes no economic sense at all."

In the 15 years since the H-1B began, a strong U.S.-based Indian diaspora has emerged, in part because of the visa program, to become one of America's most successful minority groups. It has also become politically powerful within India. Many Indians in the U.S. are strong supporters of the Bharatiya Janata Party, leader of the opposition to Prime Minister Manmohan Singh's government; U.S.-based Indians often make donations to BJP causes and lobby through its parent body, the Vishwa Hindu Parishad (Global Alliance of Hindus). Courting nonresident Indians has been a consistent fundraising tactic for the BJP and VHP, especially since a large proportion of the Indian diaspora in the U.S. comes from Gujarat, a state north of Mumbai where the BJP holds power and is more popular than elsewhere in the country.

So as news trickled in about the provision in the stimulus bill, political groups in India swung into action. The VHP first asked India's External Affairs Minister Pranab Mukherjee to see if he could arrange for Indians losing their H-1Bs to have more than the regulated 30 days to leave the U.S., allowing them to sell their houses and settle their affairs with more flexibility. A spokesman for Mukherjee says no action has been taken on that letter.

Then, the VHP decided on a more popular approach, calling for Indian consumers to boycott the goods of 14 U.S. multinationals. Praveen Togadia, general secretary of the VHP, declines to share the list of the companies the group plans on targeting. He says a boycott is justified. "If these policies hurt Indians abroad, then we have to take steps to hurt American companies in India," he says. "The reaction must be strong, or else who knows if the legally resident Indians in the U.S. are one day thrown out."
What more can I say? It's garbage in, garbage out as both sides, ah, talk trash.

3/9 UPDATE: BofA's hand has been forced by this provision. It is now taking away job offers made to international graduates of American MBA programs.

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