A regime of restrictions

Print edition : September 30, 2000

The outcome of the Senate vote on the Hatch Bill, which seeks to raise the cap on the number of H-1B visas for professionals issued by the U.S. government, will be one indicator of the level of success of Prime Minister A.B. Vajpayee's visit to the U.S.

One of the bills pending before the U.S. Senate that is being hotly debated is the Hatch Bill (S. 2045) that seeks to raise the cap on the number of H-1B visas issued by the United States government, a large percentage of which go to Indian computer engi neers, scientists and physicians. It is not clear whether Prime Minister A.B. Vajpayee's apparently successful visit to the U.S. will have any influence over the way Congress votes on the bill.

In 1998, the annual cap of 65,000 H-1B visas was reached in May, more than four months before the end of fiscal year 1998 (October 1, 1997 to September 1998). After a dramatic battle, under the American Competitiveness and Workforce Improvement Act of 19 98, Congress raised the cap for three years. It was raised to 115,000 for FY1999 and FY2000 and 107,500 for FY2001, to be rolled back to 65,000 thereafter. But, even with 115,000 visas, the cap was hit two thirds of the way into FY1999.

In July, the Immigration and Naturalisation Service (INS) announced that it had already issued the 115,000 H-1B visas available for FY2000. In August it announced that no more FY2000 applications were being processed and that it had begun adjusting appli cations against the FY2001 quota. According to the INS, it has almost 30,000 H-1B applications that count toward the FY 2001 cap, which will begin on October 1, 2000. This means that without an amendment to the H-1B programme, there are fewer than 80,000 visas available after the adjustment of this 30,000. The INS expects that without congressional action the cap will be hit even earlier than March next year.

The worst-hit every year by such early caps are the academic institutions where recruitment takes place during spring and summer and the process peaks around July. According to the INS, academic institutions account for only 5 per cent of the number of H -1B visas issued. Academic institutions, therefore, argue that this should make allocations of H-1B quotas to them possible so that their research programmes do not suffer.

In December 1999, the Department of Labour released a report indicating that the U.S. will need a dramatically greater number of computer workers in the next decade than had been projected in earlier reports. According to the report, nearly two million j obs will be created in the computer sector. However, only 46,000 Americans are expected to graduate each year with technology degrees. Those who were critical of the raising of the H-1B cap in 1998 had claimed that reports of a labour shortage in the sof tware sector were exaggerated and that the problem could be addressed with some retraining efforts.

This report suggests that the shortage is indeed real and will only get worse. This gave a shot in the arm to the demand for raising the cap further and formed the basis for the various bills introduced in Congress in this context. Among them is the Hatc h Bill (S. 2045), known after Senator Orrin Hatch who introduced it early this year. Also called the American Competitiveness in the 21st Century Act, the bill proposes an increase in the caps to about 200,000 every year from FY2001.

Whether this raise in the cap is passed or not, the status of a non-resident Indian professional working in the U.S. will remain unaltered with regard to access to high technology. He or she does not have any greater access to technologies that are contr olled for export by the U.S. export administration regulations (EAR) or the so-called "dual-use" technologies. This flows from what is called the "Deemed Export Rule" of the EAR.

The "Deemed Export Rule" states that an export of technology or software source code - this does not include encryption technology and encryption software (both object and source code) - is "deemed" to take place when it is "released" to a foreign nation al within the U.S. That is, the transfer of technology to a foreign national working in the U.S. is "deemed" as an export to the person's home country and all the regulations of the Bureau of Export Administration (BXA) of the Department of Commerce, suc h as export licence requirements for controlled technologies, apply. The "release" is deemed to take place when the technology "is available for visual inspection (such as reading technical specifications, plans, blueprints and so on); is exchanged orall y; or is made available by practice or application under the guidance of persons with the knowledge of the technology". The deemed export rule is not applicable to foreign nationals who hold a permanent resident visa (the 'Green Card') or have been grant ed U.S. citizenship or granted the status of a "protected person" under U.S. law (say, on political grounds).

Therefore, if a licence is required for the export of a given technology (or source code) to India, the employer would have to apply for an export licence if an Indian employee will have access to it. A pertinent question is with regard to the present co ntext of sanctions on export of dual use technologies on Indian entities. In such cases the BXA has clarified that the status of the foreign national will be examined with regard to the person's family, professional, financial and employment ties on a ca se-by-case basis. For example, the "catch all" provision of the Enhanced Proliferation Control Initiative (EPCI) that puts restriction on all persons or organisations suspected to have links with organisations engaged in nuclear or missile development ac tivities, will come into play during such examination. That is, the embargoes and sanctions would apply to the NRI scientist as well if he or she has or had any affiliation or links to an organisation which is on the Entities List.

Indeed, the BXA regulations require that applications for "deemed export" licence (DEL) for controlled technologies provide complete details of the foreign national concerned, including personal background and past employment history, the nature of the j ob in the U.S., the kind of projects and technologies or software he or she is associated with, the forms in which data or software will be provided, the applicability or technical scope of the technology or software in different uses, its availability a broad and so on. In fact, since 1990 (when the EPCI became effective), a system of visa application review by the BXA has been put in place for new immigrant foreign professionals in high-tech areas. Under this, companies are required to go through this licensing exercise before the hiring stage if the nature of the work has entirely to do with controlled technologies.

This detailed personal data to the extent required by the BXA for the purpose of issuing DELs, would even seem to contradict U.S. domestic regulations under the Equal Employment Opportunities Commission (EEOC) rules which do not permit the employer to se ek such detailed personal information. On this apparent contradiction the BXA has clarified as follows: "The information that BXA may request as part of licence application process is required in order to determine whether BXA should authorise the releas e of such controlled technology. The hiring of foreign nationals is not prohibited or regulated by the EAR. The justification for the 'deemed export' rule is that there is no more effective way of disclosing sensitive technical information (for example, design know-how) than to work side by side in a laboratory or on the production floor of a company." This implies that if the requested information is not provided, the DEL may not be approved.

According to Robert Majak, Assistant Secretary for Export Administration, the increase in the numbers of H-1B visas issued over the years has indeed resulted in an increase in the number of applications for DELs for potential employees. According to him, in most cases these licences are approved but conditions and restrictions are imposed upon the activities of those employees, namely, access to specific programmes or technologies of the employer organisation. Those restrictions will generally apply unt il the employee becomes a permanent resident or citizen. He claimed that only about 3 per cent of the applications are rejected. (Of course, post-sanctions, the number of denials are likely to have shot up for India and Pakistan, resulting in visa denial s.)

The "deemed export" rule has, however, seen periodical changes and the recent changes effected (on July 20) have reduced the need for export applications with regard to every employed foreign national for company which hired ten or more foreign nationals under DELs in the past or expect to submit requests to recruit 10 or more foreign nationals in the future. According to this latest revision, the concept of a comprehensive DEL has been introduced which will cover more than one individual foreign nation al. That is, the new DEL will permit the addition or deletion of individual foreign nationals under a single comprehensive licence. Under this, companies can notify the BXA of each proposed release of controlled technology and may proceed unless informed by BXA within 30 calendar days that the release of controlled technology is denied or that more time will be needed to review the request.

Fundamental research, however, does not come under the purview of "deemed export" requirements. For the purpose of applicability of EAR, fundamental research is defined as basic and applied research where the resulting information is published and shared broadly within the scientific community. This is distinguished from proprietory research and from industrial development, design, production and product utilisation which are usually proprietory or restricted for national security reasons. The BXA has a lso clarified that research that is intended for publication, whether or not it is ever accepted for publication by scientific journals, is considered to be "fundamental research". Because any information, technological or otherwise, that is publicly ava ilable is not subject to the EAR, it will not require any DEL.

That is, while being in the U.S. may provide a better work environment, in the matter of access to sophisticated equipment and better basic research facilities, the NRI scientist or IT specialist faces the same restrictions imposed by the EAR on access t o high-tech, controlled data, classified information and software in source code as a scientist or IT professional working in India if he or she is associated with proprietory technologies. In the light of this, it would be interesting to know how sancti ons have affected the situation. But there is no direct way of obtaining such data except by inferring from the increase in the number of DEL denials for NRIs. Disaggregated data of the BXA on DEL denials over the last couple years may give some idea, bu t that is not easy to come by.

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