Options for Foreign Companies Doing Business in the U.S. - Immigration Perspective (E-1 Treaty Trader)

Published on    30 June 2014     Hits: 566

Many foreign companies that are already doing business in the United States are engaged in some sort of trade. The trade may take many forms such as intangible service and tangible goods. Some companies may want to have a U.S. presence to export raw materials and distribute them to their U.S. customers; some companies export parts and components for their U.S. subsidiaries to put together and sell in the U.S. market place; and other companies trade news, consulting services, technology, etc. Such companies may qualify as E-1 candidates.
The E visa categories were created to encourage international trade and investment by allowing foreign national to enter the United States pursuant to a treaty of commerce and navigation between the United States and the foreign state of which he is a national. Under this category, E-1 visa type is carved out for carrying on substantial trade between the United States and the foreign state of which the alien is a national, and E-2 visa type is for developing and directing the operations of an enterprise in which the corporation, individual entrepreneur, or business owner has invested or actively in the process of investing a substantial amount of capital. Citizens or corporations of nations that have such economic treaties with the United States may utilize either option as long as the U.S. entity shares the same nationality - i.e., it is at least 50 percent owned by such nationals. This article will discuss the characteristics of E-1 visa category and compare it with E-2 visa category in the next article.  
E-1 Trade Requirements Once it has been determined that the US entity and the visa applicant share the same nationality, the next step is to examine the presence of existing trade. Although 'existing trade' is not limited to previous exchanges but also includes successfully negotiated binding contracts, which call for the immediate exchange of items of trade, new entities and young companies, which are still in the process of negotiating without any established trade pattern, may not qualify for E-1. If the company cannot show existing trade, it should consider other options such as E-2 or L-1.  
As for the items of trade, it is obviously easier to establish the transfer of tangible goods, but existing trade can be established for services, technology, monies, international banking, insurance, transportation, tourism, communications, and some news gathering activities, data processing, advertising, accounting, design and engineering, and management consulting, etc. Such trade must be principally between the US and the Treaty country and must originate from or be destined for the treaty country. Therefore, over 50 percent of the volume of 'international trade' of the treaty trader must be conducted between the United States and the treaty country of the treaty trader's nationality. The language of the regulations on the subject of 'international trade' suggest that domestic trade in the Untied States and in the treaty country is completely irrelevant to this calculation, but other guidelines do consider domestic United States trade when considering the issue of international trade. This is to preclude treaty nationals from entering the United States and then engaging primarily in domestic trade within the United States.  
Also, trade must be substantial. Contrary to a common belief, 'substantial trade' is not simply about the monetary value of the trade item, nor can the standard be met with one giant trade; the number of exchanges is more significant than the monetary value for purposes of the 'test' of substantiality. The trade must be a continuous flow of trade items rather than a single transaction. Finally, if the company qualifies for E-1 or is already registered as E-1, the company must ensure that it continues to meet the requirements to maintain such a status. If the ownership structure changes or the international trade volume with the United States falls under 50%, then the company and the employees no longer are in the valid E-1 status and must quickly change to another status even if their E-1 visa has not expired.  
Advantages Then, what are the advantages of utilizing E-1 as opposed to other options? First, there are no specialized degree requirements for the employees of a treaty company, as in H-1B. Some high executives have degrees in Business or Economics or other general degrees and have become top executives through years of dedication and training. Although managerial or executive positions require outstanding background, training and experience, they are often not considered to be positions requiring at entry level specialized degrees for H-1B qualifying purposes, but rather positions based on leadership, experience, and performance. Thus, E-1 is a clearer option for owners, top executives, and managers who are transferred to their U.S. counterpart or affiliates. On the same token, this absence of specialized degree requirement works for other skilled employees. There may be many skilled positions in the company that do not require a Bachelor's degree in a specific field. In real life, Bachelor's degrees open a door for employment but people do not necessarily develop their career in that specific field. Oftentimes, people build expertise in a completely different field and become highly valuable employees. The E-1 option is wonderful in that it allows such experience to be counted instead of making a decision based on a Bachelor's degree only. Second, the E-1 employer does not have to guarantee a prevailing wage or meet the restrictive DOL requirements as in the case of H-1B; which will be explained in my upcoming article.  

Third, the E-1 employees do not have to work for the foreign parent company for the preceding 1 year, or one out of the past three years, or for any time period to qualify for an E-1 visa. They simply have to have the same nationality as the owner(s) of the E-1 entity. Fourth, there are no maximum stay limitations on E-1. In H-1B, the maximum allowed stay is 6 years, in L-1A, one can stay up to 7 years, and in L-1B, only 5 years are allowed. E-1 allows employees and their family members to enjoy a stable status without having to pursue different options to lengthen their authorized stay here. And unlike H-1b, E dependents are granted work authorization. Fifth, E-1 visa applications can be examined and decided by the visa officers at the U.S. Consulates without first getting a petition approved by the U.S. Citizenship and Immigration Services (USCIS) in advance. This helps to avoid delays at the USCIS level and, if one travels, having to submit frequent extension applications.  
Finally, E-1 alien's spouse and children can accompany or follow to join the E-1 treaty trader. Dependent children will have derivative status until they reach 21 years of age and can attend public school. As stated, a dependent spouse can obtain employment authorization from the USCIS based on their derivative status and work. Not having to find a separate sponsor or to be tied to a specific employer makes it a lot easier for the spouse to continue his/her career.
Judy J. Chang, Esq. J Global Law Group. (C)Copyright All Rights Reserved.

Mario Guevara-Martinez