NAFTA
How to Avoid Uncertainty in Implementing Cross Border Immigration Strategies Between Canada and the U.S
Sign-Up to the Immigration Group

Ronald Zisman & Terry Preshaw
Preshaw & Zisman

I. Introduction

II. B-1 Business Visitors

III. Intracompany Transferees

IV. The NAFTA TN Work Authorization

V. Treaty Investor and Treaty Trader Visas

VI. Conclusion

VII. Footnotes

DISCLAIMER

Prevent Workplace Harassment!
To receive training materials developed by a top labor firm and their fortune 500 clients
that will help your managers and employees prevent workplace harassment,
Click Here

I. INTRODUCTION

How does a Canadian citizen entering the United States to conduct business determine whether she needs work authorization or not? How does an active Canadian corporation transfer personnel to the United States? The purpose of this article is to provide an overview on some of the different types of work authorization and nonimmigrant visas available to Canadian citizens who wish to work in the United States.

The North American Free Trade Agreement (NAFTA) 1) has facilitated the admission of Canadians into the United States. Article 1602 of the NAFTA imposed upon each signatory party, namely, the United States, Canada and Mexico, an obligation to apply the immigration provisions of Chapter 16 "so as to avoid unduly impairing or delaying trade in goods or services or conduct of investment activities." 2)  NAFTA applies to four nonimmigrant categories (1) Business Visitors (B-1); (2) Intracompany Transferees (L-1A/B); (3) TN Professionals and (4) Treaty Investors and Traders (E-1/2).

Over 85% of Canada's exports are exported to the United States and over 25% of US exports are directed toward Canada. Approximately one billion dollars of trade are conducted between the two countries on a daily basis. 3)  This two-way trade, which is larger than the total US merchandise trade with the entire 15-country European Union, has opened the door for thousands of Canadian professionals, business visitors and investors. In Canada, issues regarding the flow of professionals to the United States has become a political hockey puck, focusing on Canada's tax burden on upper income individuals and the 'brain drain.' Trade disputes between the two countries are normally resolved through an organized and centralized process recognized in NAFTA. Unfortunately, many cross-border immigration issues are adjudicated on a local and individual level with US Immigration and Naturalization Inspectors having the final say in the matter.

II. B-1 BUSINESS VISITORS

Most nonimmigrants seeking admission into the US have to go through a two step process. First, they have to apply for a visa at an US Consulate or Embassy abroad. Thereafter, assuming their visa application has been approved, they have to admitted into the US at a border or pre-flight inspection port of entry by an US Immigration and Naturalization Inspector. If admitted, the individual is provided with an I-94 card, which states the terms of his or her stay.

Although I refer to 'work authorization' and 'visa' interchangeably, it should be noted that Canadian citizens are exempt from the requirement for obtaining a visa, with the exception of Treaty Investor Visas (E-1/2) and Fiancée Visas (K-1). Some of these exemptions may apply to "landed immigrants" of Canada and to other nationalities under the "Visa Waiver" program. Thus, Canadian applicants for admission as visitors for pleasure, for example, are exempt issuance of an I-94 pursuant to INS regulations. 4)However, Canadians are issued I-94 cards upon obtaining a NAFTA TN work authorization, for example, and can request that an I-94 be issued if the applicant is seeking a B-1 business entry entry. I-94s are issued for a duration of six months in B-1 applications.

A citizen of Canada may seek temporary entry into the US as a business visitor for the purposes set forth in the NAFTA, who otherwise meets existing requirements under Section 101(a)(15)(B) of the Immigration and Naturalization Act. It is always advisable for the applicant for admission to carry a letter from his or her Canadian employer setting forth the facts supporting a B-1 entry.

Even prior to establishing entry under the provisions of NAFTA, an 'alien' (yes, that is the legal term) must first overcome the presumption of intending immigration and must first establish that he or she:

· Intends to leave the US at the end of the temporary stay;

· Has permission to enter a foreign country at the end of the temporary stay;

· Intends to enter the US for a temporary period of time;

· Seeks admission for the sole purpose of engaging in legitimate activities; relating to business, evidenced by specific facts;

· Has adequate financial resources to carry out the purpose of the visit to the US with the understanding that employment in the US will not be necessary;

· Has a residence abroad that he or she does not intend to abandon;

· The function he or she will perform in the US is a necessary incident to international trade or commerce;

· That no salary or other remuneration from US sources for services rendered in connection with activities in the US will be provided.

The individual must now be able to show that his or her planned activities are acceptable B-1 business activities. Some of those activities include:

· Commercial transactions that do not involved gainful US employment;

· Installation, service, or repair of commercial or industrial equipment purchased from a company outside the US and/or training of US workers to perform such services. Note: The contract of sale must require the foreign seller to provide such services or training and the B-1 visitor must possess specialized knowledge essential to the contract performance;

· Consultation with business associates;

· Contract negotiation for the sale of goods and/or services from abroad;

· Participation in scientific, educational, professional or business conventions, conferences or seminars;

· Litigation;

· Certain athletes who are professional but intend to receive no salary or payment other than prize money.

Please refer to the question section of this article for specific NAFTA entries. The more frequently the applicant visits the US and the longer his or her stays, the more likely the applicant will be questioned on his or her immigrant intent; the nature of the activities in the US and whether those activities involve 'employment' in the US.

A Canadian seeking entry into the US should always consider bringing clearly documented letter from the applicant's employer in Canada setting forth the purpose and temporary nature of the entry. The letter should not be more than one or two pages and should contain any other relevant information as an attachment.

III. INTRACOMPANY TRANSFEREES

The Intracompany Transferee status or "L" visa is one the most common visas utilized by business entities to transfer personnel to the US. The status allows the transfer to the US of foreign personnel who are involved in managerial, executive or specialized knowledge duties. NAFTA eliminated for Canadians one time consuming step in the process. 5) Instead of having to first forward the application to an INS Service Center for adjudication, a process that can take months, the applicant can apply, on a walk-in basis at any designated 'Class A" US INS port of entry. If the application is approved, the applicant receives his or her I-94 on the spot.

The advantages of the L visa are: (1) Prompt adjudication process and (2) The available eligibility of transferees under the managerial or executive category to obtain US permanent residency through the EB-1 immigrant category without going through the byzantine labor certification process.

The disadvantages are: (1) Interaction with the US INS at the port of entry; (2) Limited duration of 7 years for managers or executives and 5 years for specialized knowledge workers; (3) Difficulties in meeting regulatory standards for small corporations with few employees; (4) Uneven adjudication process upon renewal; (5) Impact of mergers and acquisitions and (6) Requirement that the foreign employer continue to do business (regular, systematic and continuous provision of goods and/or services) abroad while the approved US employer employs the L-1 nonimmigrant.

The requirements are as follows:

· The applicant must be continuously employed abroad for one of the past three years by the parent, affiliate or subsidiary of the US company preceding his application for admission. The employment must have been full time;

· Employee can be a majority or substantial stockholder, or sole proprietor, subject to special requirements. Normally, a T-4 is required to show that the applicant was employed by the Canadian entity, although any affiliate or subsidiary in the world can employ the applicant;

· The qualifying organizations must be related as parent and subsidiary, affiliates, branches or joint venture partners;

· The applicant must have been employed abroad as a manager or executive or specialized skill employment position;

· The employment abroad may be by a firm, corporation or any other legal entity or its affiliate or subsidiary;

· That the transfer is 'temporary' in nature. This issue normally applies to owner/operator companies with few employees and marginal revenues;

The employee can be employed full or part time in the US and can be paid by either the US entity or the related foreign entity. The nature and size of the company is irrelevant but in reality, it is difficult to obtain approvals for companies that have few employees or independent contractors because the INS will take the position that the individual being transferred is also the main provider of goods and services and therefore is not performing managerial and/or executive duties. Additionally, the INS will want evidence that the US operation's need for the transferee is not indefinite in owner/operator companies.

For newly established US companies, the work authorization is issued for only one year. Thereafter, the applicant can reapply either at the Port of Entry, or mail the application to the INS Service Center serving that geographic area. For US entities that have been in existence for more than one year, the work authorization will be issued for an initial period of three years. The work authorization is only valid for the petitioning company. Transfers to other US subsidiaries or affiliates will require a new petition amending the underlying application. Spouse and dependent children do not receive work authorization.

Special 'blanket' L regulations apply to companies with sales in excess of US $25 million: The company must have been doing business in the US for at least one year. There must be at least three domestic or foreign branches, subsidiaries or affiliates. At least ten L-1 approvals must have been issued in the past year or US sales are at least $25 million or the US work force has at least 1,000 employees. The regulations streamline the processing of multiple applications.

The L intracompany transferee visa is an effective tool with which to transfer foreign personnel. However, care must be taken to clearly document all the requirements and special care must be taken to properly evaluate small business entities.

On the surface, the documentary and regulatory requirements for the TN work authorization are simple. The applicant must present the following documentation supporting the facts at the Port of Entry at which he or she is applying.

· The applicant must be a Canadian citizen. The applicant should have either his Canadian passport or long form birth certificate which indicates the names of his or her parents;

· The applicant must qualify under Appendix 1603.D.1 profession in which he or she will be employed;(6

· A letter, from his or her perspective US employer setting forth the following:

- A description of his or her professional activities and a brief summary of the assigned daily activities;

- A statement of his or her anticipated stay; the educational qualifications or credentials possessed by the applicant that demonstrate the professional status; the remuneration that the applicant will receive for the professional services rendered and proof that the applicant complies with all applicable laws and/or licensing requirements necessary to perform the relevant professional activity.

· Originals of his or her degrees and credentials and a resume;

· The applicant must maintain nonimmigrant intent;

· The applicant can not be self-employed although he may enter the US pursuant to a pre-arranged contract between his US employer and his Canadian employer (or the applicant).

For many applicants, the reality of the adjudication process, despite the simplicity of the requirements, is often a nerve shattering experience. One reason is that INS inspectors are law enforcement personnel, either inadequately trained or inexperienced in adjudicating written material. Often, a bias exists against Canadians 'taking jobs away from Americans.' As a result, the inspectors often adjudicate the applications strictly. Any deviation from the job title set forth in Appendix 1603.D.1 or (7) confusion regarding the job duties could result in a denial.

Particular issues exist for 'management consultants', 'scientific technicians' 'systems analysts' and 'software engineers'. Applicants tend to use the management consultant category as a catchall when nothing else fits and/or the applicant does not have a specific university degree or diploma. Management consultants who seek renewal of their TNs after more than on or two years employment with the same employer on a full time basis may find their applications denied because management consultants are not considered permanent positions.

Scientific technicians who do not thoroughly document their background, experience and relevancy to the position offered will find their applications denied. NAFTA included only one category in the computer field, systems analyst. Many of today's IT positions did not exist when NAFTA was enacted. Recently, after much lobbying by US business, the position of 'software engineer' has been accepted under the 'engineer' qualification. System analysts with degrees in non-relevant areas such as History or English will have to thoroughly document their experience in the field.

Upon renewal, which is considered a new application, the applicant can reapply either at a Port of Entry or through the INS Service Center in Nebraska. It is important to be aware of the consequences for each choice. If a Port of Entry denies the new application, it is unlikely that the applicant will be readmitted into the U.S., even as visitor in order to retrieve his or her personal effects. If the applicant applies within the US, he or she will not be able to depart the US if the application is not adjudicated by the time the period of stay expires. The applicant can remain in the US and work legally, but if he or she departs the US prior to the adjudication and after the status has expired, the application will have been deemed to have been abandoned and any employment in the US after the expiration will be considered unlawful.

Lastly, the doctrine of 'dual intent' is an important consideration if the applicant's strategy is to obtain US permanent residency through some other means. The dual intent doctrine involves the following scenario: Even though a nonimmigrant must demonstrate that his or her intent is to stay in the US temporarily, he or she may also have short term intent to depart and a long term intent to remain permanently. This doctrine, for example is recognized for L-1 and H-1 visas.8)   Thus under the L-1 category, an applicant can apply for permanent residency under the EB-1 category while at the same time lawfully maintaining the L-1 status. However, the INS has specifically stated that the doctrine of dual intent is inapplicable to persons in TN status. 9)  Thus a TN status holder who has an approved immigrant visa application such as an I-140 petition based on a labor certification may be denied admission at the border as an intending immigrant.

NAFTA introduced the E visa category for Canadians. Unlike the previous applications discussed, the E visa requires the issuance of a visa stamp by the US Consulate in Toronto.

E-1 Treaty Trader nonimmigrant visas require that:

· The applicant must be a national of a treaty country;

· The trading firm for which the applicant is coming to the US must have the nationality of the treaty country;

· Trade means: The international exchange of goods, services and technology;

· The international trade must be "substantial" in the sense that there exists; numerous transactions in addition to a continuing volume of trade;

· More than 50% of the international trade of the trading firm must be between the US and the country of the applicant's nationality;

· The applicant must be employed in a supervisory or executive capacity, or possess highly specialized skills essential to the efficient operation of the firm.

E-2 Treaty Investor nonimmigrant visas permits owners, executives or essential personnel of companies that are in the in the process of investing or have invested substantial amounts of funds in the US to reside in the US in order to develop and direct that trade or investment.

· There is no minimum investment required, but applicants must demonstrate that either the trade or the investment is 'substantial' and that the investment must be at risk in the commercial sense. Financing has to be carefully analyzed in order to determine whether the funds are placed at risk;

· The investment must be in a real and operating enterprise. Uncommitted funds, for example, are not considered an in investment;

· Any investment must also be more than 'marginal' i.e. not simply designed to provide an income for the applicant and family. Thus applications from owner/operator businesses with no or few employees other than the owner himself or his family will be more likely be denied;

· The investor must be coming to the US solely to develop and direct the business. If the applicant is not the principal investor, he or she must be employed in a supervisory, executive or highly specialized skills capacity.

E visas are a very effective cross border strategy. The visa is issued for five year periods, although authorized stay is granted by the INS for two year periods at a time. The applicant can work in the US full or part time. There is no requirement that he or she had worked for a related Canadian entity abroad. The visa can be renewed indefinitely so long as the ownership provisions remain intact. The applicant can work for a subsidiary or affiliate of the US business without having to apply for a new visa. If structured properly, the applicant can still take advantage of the EB-1 immigrant category and apply for US permanent residency.

It is a wise strategy to carefully review from a US immigration point of view an individual or a company's plans for doing business in the US. Too often, I have received calls from stressed out individuals who have been denied entry into the United States and who were unaware of the issues discussed above. A rude shock at the border can be avoided by educating both the human resource department and the individuals involved on US immigration requirements.

1) North American Free Trade Agreement, US-Can.-Mex., Dec. 17, 1992, 32 I.L.M. 296, 612 (entered into force January 1, 1994) {hereinafter NAFTA}. 8 CFR 214.2 et seq.
2) NAFTA Art. 1602
3) Office of Public Affairs, Embassy of the United States, Ottawa, Canada.
4) 8 CFR 212.1(a)
5) 8 CFR 214.2(l)(l)(i); INA 101(a)(15)(L)
6) 8 CFR 214.6
7) NAFTA Appendix 1603.D.1.
8) INA Sec. 214(h)
9) Letter, LaFleur, Business and Trade Services, Benefits Branch, INS HQ 1815-C (June 18, 1996), reprinted in 73 Interpreter Releases 979-80 (July 22, 1996), 8 CFR 214.6(b).

* MCLE * MCLE * MCLE *