Is it fair pay or is it supply and demand?

In the region where I am currently working, part of the Middle East, there is a unique pay system that is tide to your nationality. Your pay rate will depend largely on your nationality and not only on your skills set or your educational background. When you question the rational behind this pay system they tell you “it is supply and demand.”

If you come from developed countries, they would offer you higher pay rate since they know you are used to a higher standards of living, on the other hand, if you come from developing countries, your pay rate would be much lower and again they would justify that as “we are giving you more than what you could earn in your country.”

I know in the US, it’s against the law to discriminate based on religion, race or origin. Is it fair for companies to offer lower pay for people who are willing to accept it although their qualifications would get them better paying if they were able to compete fairly?