E VISAS FOR TREATY TRADERS & INVESTORS

1. Definition:

   • Person is entering U.S. (for indefinite time).

   • Based upon treaty of friendship, commerce and navigation or Bilateral Investment Treaty or other arrangements (NAFTA-Canada and Mexico) between U.S. and country of which s/he is a national.

   • Person is entering:

     1. Solely to carry on substantial trade which is international in scope principally between U.S. and the foreign state of which s/he is a national (E-l treaty trader), or

     2. Solely to develop and direct the operations of an enterprise in which the alien has invested, or is actively in the process of investing a substantial amount of capital (E-2 treaty investor). Some countries have treaty for E-l but not E-2, or

     3. Key employee from treaty country of either E-l or E-2, including executives and supervisors or persons who make their services "essential to the efficient operation of the enterprise,"  or

     4. Principal employer is: (a) person with nationality of treaty country in or outside U.S.; (b) enterprise or organization that is 50% or more owned by treaty national.

2. General considerations:

   • Need not show proceeding to U.S. for a specific period of time, so long as there is an ultimate intention to depart the U.S. and not permanently remain. 

   • Except as described above, no temporariness or intent to return to foreign residence required.

3. Time of Admission - 2 year admission and extensions of stay up to 2 years.  
   
   

4. E-I Visa:

   • Substantial trade:

     1. Trade is defined as "the international exchange of items of trade for consideration between the U.S. and the treaty country ." Domestic trade is not counted in determining trade and therefore not counted in determining what is substantial trade. Items of trade "include but are not limited to goods, services, international banking, insurance monies, transportation, communications, data processing, advertising, accounting, design and engineering, management consulting, tourism, technology and its transfer, and some news-gathering activities." Goods are "tangible commodities or merchandise having extrinsic value." Services are "legitimate economic activities which provide other than tangible goods." Service is interpreted "in an expansive fashion."  

     2. "Principal" trade.

        • Trade must be principally with treaty country.

        • More than 50% of total volume of international trade between U.S. and treaty country.

        • Domestic trade not counted in calculation of "more than 50%."

        • If business does more than 50%, each E-1owner does not need more than 50% trade.

        • If it is only a U.S. branch office, then the foreign company has to have more than 50% of its trade with the U .S.

     3. "Substantial"

        • "The amount of trade sufficient to insure a continuous flow of international trade between the U.S. and the treaty country."

        • Cannot be based on a single transaction, regardless of how protracted or monetarily valuable.

        • Trade can be binding contracts which call for the exchange of items of future trade.

        • Volume of exchanges is given more weight than the value of the exchanges. No minimum requirement for either .

        • Smaller businesses. Income derived from the value of numerous transactions which is sufficient to support trader and her family constitutes a favorable factor in assessing existence of substantial trade.

        • Sources of proof include, but are not limited to, bills of lading, customer receipts, letters of credit, insurance papers documenting commodities imported, purchase orders, carrier inventories, trade brochures, insurance papers documenting commodities imported, purchase orders, courier inventories and sales contracts. 

     4. How Trade Conducted. By alien on own behalf or as agent of foreign person or organization engaged in trade. 

   • Nationality of Corporation. 

     1. At least 50% of stock owned by nationals of treat) country. Permits joint venture.  Where foreign corporation is owner of the U.S. entity the nationality of the foreign corporation is determined by its owners, not by its place of incorporation or the location of the company's business activity. . However, if it is a publicly traded company where the actual percentage of persons owning stock cannot be ascertained, the firm's nationality is presumed to be that of the country fu which the firm's stock is physically listed and traded 0' the stock exchange.

     2. Nationals owning stock who are not resident abroad must also be Es. If LPR's or non Es in U.S., cannot count their stock in determining nationality .

     3. If employer is not corporation, but individual, must be maintaining E status.

   • Employee's Work. See discussion below.

     1. Unlike L- I, employee can be a new hire and need not have worked for the company previously.

   • Special problems with E- I related to embargoes. Where the U.S. places an economic embargo or sanctions on a country, the country's E-l privileges are often rendered inoperable. For example, U.S. sanctions against Yugoslavia resulted in the suspension of the issuance of E-1 visas. 12 A/LA Monthly Mailing 140-43 (Feb. 1993), Also, embargo against Iran prohibits Es for Iranians, Executive Order 12959 (May 9,1995).

    

5. E-2 Visas:

• Nationality of Investment Enterprise:

  1. Same as E-l - 50% sufficient (joint venture).

• Investment. Has invested or is actively in the process of investing. 22 CFR § 41.5l(b)(l).

  1. Funds in employer's possession/control.

     • Funds must be "at risk." (e.g., collateral for loan must be from personal assets or a personal signature on loan). The capital must be subjected to partial or total loss if investment fortunes reverse. It must be "the investor's unsecured personal business capital or capital secured by personal assets." Mortgage debt or commercially secured loan ( e.g., loan secured by enterprise assets ) not sufficient.  A second mortgage on a home, unsecured or unencumbered loans or assets and loans on the person's personal signature are acceptable. 

     • Intent or prospective plans insufficient. Uncommitted funds in a bank account insufficient. Funds must be irrevocably committed to enterprise and applicant has burden of showing irrevocable commitment.

     • Escrowed Funds. Placing funds in escrow pending approval of E classification with legal mechanism that irrevocably commits funds but also protects investor if application is denied is permissible. 

  2. Funds cannot be obtained directly or indirectly through criminal activity. . Criminal activity includes matters illegal under U .S. law and does not include activity which would be lawful under U.S. law. Thus, the violation of foreign laws restricting the exit of capital from the country would not be considered using funds that came from a criminal activity. 

  3. Valuation of investment. 

     • Rent paid on equipment or property is investment, but limited to funds devoted to item in any month. 

     • Transfer of goods and machinery so long as it is demonstrated they will be or are being put to use in the enterprise.

     • Must establish that funds are the investor's. 

• Commercial Enterprise;

  1. Not passive investment (e.g., stocks, undeveloped land).

  2. Entrepreneurial. Land development as opposed to land investment. 

  3. Nonprofit institutions (schools, associations) are not considered commercial enterprises and therefore investing in a nonprofit will not result in eligibility for 

• Substantiality of investment:

  1. Department of State by statute is charged with the responsibility for defining "substantial."  Currently, the Dept. of State uses relative/proportionality test.

     • Test is: (i) the amount invested weighed against the total cost of purchasing or creating the enterprise; (ii) the amount normally considered sufficient to ensure the investor's commitment to the successful operation of the enterprise; and (iii) a magnitude of investment to support the likelihood that the investor will successfully develop and direct the enterprise. 

     • Small and medium size businesses. The lower the cost of the enterprise, the higher, proportionally, the investment must be to be considered a substantial amount. 

     • Dept. of State recognizes distinction for service industries and views test for such industries under second prong as "amount necessary to establish a viable enterprise." 

• Cannot Be Marginal - .

  1. Enterprise marginal if it does not have the present or future capacity to generate more than minimal living for investor and family. If future capacity at issue must provide 5 year plan. 

  2. Cannot be solely to earn a living for the investor and his family.  Investor's employment as skilled or unskilled labor in business is unrelated to the marginality issue. 

  3. Factors [Memo, Assoc. Comm., Adjudications, CO 214e-C (June 14,1985)]:

     • Investment will expand job opportunities;

     • Generate other sources of income;

     • Investment will generate income substantially above what would be considered a living;

     • Investor will not work simply as a skilled or unskilled worker.

  4. Where INS did not consider record evidence of other income, court reversed finding that investment was marginal.

• Develop and Direct

  1. Must manage business and not compete directly in the market as skilled laborer. "Hands-on" management that is purely incidental to developing business is permissible. 

  2. Has controlling interest in business. Control may be by negative veto and therefore 50% ownership may be sufficient to establish the "develop and direct" criteria so long as s/he is not contractually precluded from taking action. Under regulations, control may be established by: (1) 50% ownership; (2) operational control through managerial position; or (3) other means. What constitutes control may vary depending on factors such as the structure of the enterprise involved. 

  3. Develop and direct only applies to principal investor, not to employees. 

  4. In small corporation, stock ownership is generally indicia of control.

  5. In large corporation look to corporate/stock structure and corporate practice.

Intent to depart:

1. Investor's statement sufficient.

2. Do not need objective criteria (i.e., existing home abroad).

3. May not be denied solely on basis of an approved LC or IV petition.

• Employees of E- 1/E-2 must have same nationality as treaty employer and must be either:

  1. Executives and Supervisors:

     • Position must be principally and primarily, as opposed to incidentally or collaterally, executive or supervisory.

     • Duties must provide the employee ultimate control and responsibility for the enterprise's overall operation or a major component of it.

       1. To determine the requirements control and responsibility , INS/Dept. of State shall consider' (i) whether the executive position provides great authority to determine policy; (ii) whether the supervisory position provides supervision for a significant portion of the operation and does not solely involve supervision over low-level employees; (iii) whether the applicant possesses executive/supervisory skills; (iv) whether salary and position title are commensurate with executive/supervisory position; (v) the relationship of the position to the organizational structure; (vi) the responsibility of the applicant for making discretionary decisions, setting policies, directing and managing business operations, and/or supervising other professional and supervisory personnel; and (vii) if there was the performance of routine staff worker, it was only of an incidental nature;

       2. Non-supervisory person with special qualifications who is an essential employee.

          • In determining essential employees the factors to consider are as follows:

            1. the employee's proven expertise in area of operations;

            2. the availability of others possessing same expertise;

            3. the length of experience/training with the enterprise;

            4. the period of training/experience needed for position;

            5. the relationship of the skill/knowledge to work;

            6. the salary position commands.

          • Knowledge of a foreign language and culture, knowledge of country conditions, or previous employment do not by themselves meet the special qualifications requirement. Need to analyze their essentiality in relationship to the enterprise. 

          • An essential employee's skills do not have to be "unique" or "one of a kind," but rather, "indispensible to the success of the enterprise." 

          • In determining uniqueness/specialization for purposes of essential employee status (E-2) can also look at whether u.s. workers are available. 

          • Whether essential skills are needed or available will vary over the time of an enterprise (after start-up need employee's skills). 

       3. For E-l/E-2 employee to qualify the employer must hold treaty status or be so classifiable. 

• Procedures.

  1. Application for E status filed on Form I-129 if seeking change of status in U.S. If filing application at consular post, most posts use the OF 156E supplemental form. Applicant must provide supporting evidence of the investment. The burden of proof is on the applicant. 

  2. Visa Reciprocity . To determine the length of time of the visa must look to country of nationality to determine the maximum; time they grant to USC's. The maximum time is usually 5 years. Continuously renewable.

  3. Admitted is for 2 years. If E entrant does not leave the U.S. during that time, s/he must file I-129 before the expiration of the time period.

  4. Special qualification/essential employee's responsible for start-up operations only given 2 years absent special circumstances. 

  5. Substantive and no substantive changes in employer.

     • Substantive changes require filing a new I-129 with employer supplement.

     • A change is substantive if there has been a fundamental change in the employer's basic characteristics such as merger, acquisition or sale.

     • Non-substantive change. No I-129 or prior approval necessary . Non-substantive changes include "mere change in name, where one treaty national or when is replaced by another or in some merger and acquisition where there is no effect on the [person's] employment or relationship to the approved treaty activity." 

     • If employer is unsure about the effect of change, s/he may seek INS advice by filing with fee completed I-129 and seeking INS' advice. If employees located in multiple jurisdictions file application with the Northern Service Center in Lincoln, Nebraska.

     • If there is a substantive change, a new visa is also required except: (i) if person is applying for readmission from contiguous territory after absence not exceeding 30 days pursuant to  or (ii) person presents I- 797 at admission demonstrating prior INS approval. 

  6. Subsidiary Employment. May perform work for parent or subsidiary of employer enterprise without it being deemed substantive change of E status if: (a) subsidiary independently qualifies; (b) the work requires an executive, supervisor or essential skill: and ( c ) work consistent with E status.

  7. Multiple Employees. A person is not precluded from hiring multiple employees in E-2 status.

  8. E-l/E-2 in Lieu of H-IB. Notwithstanding Matter of Walsh & Pa/ard , INS will not grant E-2 (essential employee) status to persons who are paid by job-shop to work at another company (that is U.S. owned). Letter, Ho1 Acting Chief, Benefits Division, INS, HQ 70/6.2.5-6 (Au~ 28, 1996), reprinted in  73 Interpreter Releases 1,311-14 (Sep.30,1996)

  9. An E-l applicant generally must demonstrate that trade already in existence at the time of the application.  An exception showing of binding contracts for future trade. An E-2 may have a start up business.

  10. No E visas for Mexico/Canada if there is a labor dispute.

• Family of Es:

  1. Spouse and children accompanying or following to join principal E. Nationality not important.

  2. Can work without being subject to deportation 

  3. Can attend school without change of status.

• Employment discrimination issues. Under traditional "E" treaties relating to friendship, commerce and navigation, the right to hire only foreign nationals for employment may be contrary to Title VII. 

Bilateral Investment Treaties.

1. In prior years, most E-1/E-2 treaty rights arose out of Treaties of Friendship, Commerce and Navigation (FCN's) which governed both trade and investment. The United States currently has treaties according 40 countries E-l status and 30 countries E-2 status. In more recent times, the U.S. has signed treaties directed solely to investment called Bilateral Investment Treaties (BIT). We currently have BIT's with Bangladesh, Cameroon, Egypt, Grenada, Morocco, Senegal, Turkey and, Zaire. These treaties only cover E-2 status; however, they are expanding persons eligible for E-2s by permitting not only those persons who develop and direct a business to apply, but also those who establish, administer or advise an enterprise to apply. 66 Interpreter Releases 59 (Jan. 9, 1989). 

For further information, send your query to Aparna Davé.