Trade Agreements and the Impact on Business Immigration

By Becky Sigmund and John Hill

Renewed concern over the fate of the North American Free Trade Agreement (NAFTA) heightened recently with reports that the White House had drafted an executive order that would give notice of the United States’ intention to withdraw from NAFTA. Many believe that this was simply a negotiating tactic that culminated in a call among the presidents of Mexico and the United States and the Prime Minister of Canada.  Still, these actions confirmed the threat that the Trump Administration may take action on NAFTA as well as other trade agreements, which could significantly impact companies doing business across international borders.  Given that South Carolina is home to 462 international companies that employ a significant number of South Carolinians, many of us will be watching further developments in this area with increased interest.

Trade agreements between countries are intended to encourage trade and commerce between or among the participating countries.  Such agreements will normally include provisions to facilitate and promote the movement of people, and more specifically, certain immigration benefits and processes relating to business travel and company transfers.  Trade negotiators recognize that people directly impact the success of a company’s product, business or process being transferred or duplicated in another country, and in turn the success of the expansion that will create jobs in that other country. For this reason, withdrawal from a trade agreement could negate the immigration benefits offered by that trade agreement with direct and immediate impact on international companies and the immigration status of key employees.

NAFTA, for example, created certain work visa options for citizens for Canada and Mexico that presumably would disappear without the United States’ continued participation, namely:

• The TN (Trade NAFTA), available to certain professionals who are employed in one of the occupations designated by NAFTA;
• The E-1 Treaty Trader, available to key employees of eligible companies and other individuals engaged in significant trade between the United States and a NAFTA country;
• The E-2 Treaty Investor, available to key employees of companies and other individuals making a substantial investment in an eligible U.S. business that creates jobs for U.S. workers;
• L-1 intracompany transfer, although this classification would continue to be available, NAFTA facilitates the process by allowing L-1 applicants from Canada to apply directly at designated Ports of Entry (airport preclearance or land border) rather than through the USCIS service centers. Given the historic processing backlogs at the USCIS Service Centers, border processing is a significant benefit in facilitating commerce and supporting business growth in the U.S.

In addition, questions arise as to the logistics associated with a U.S. withdrawal from NAFTA.  NAFTA provides that a country may withdraw from the trade agreement six months after providing written notice.  But, would there be a transition period, or would U.S. businesses be impacted immediately?  Does the President have the authority to act unilaterally, or is Congressional approval required?  There is little precedence on these questions, but such issues will determine the impact that potential U.S. withdrawal from NAFTA would have on those currently working in the U.S. in a visa status created by NAFTA.

The threat to NAFTA also raises concern whether the Trump Administration may turn its attention to other trade agreements involving the United States – and the U.S. immigration benefits offered by some of those agreements.  For instance, the U.S.-Chile and the U.S.-Singapore free trade agreements created a special allocation of H-1B visas for certain workers from those two countries.  Similarly, the E-3 category for citizens of Australia rose out of the U.S.-Australia free trade agreement and resulting legislation.

Without the benefits offered in many trade agreements, the United States and South Carolina may face challenges in attracting and keeping international businesses and investment.  Regardless, South Carolina companies that employ workers in a NAFTA visa category should monitor these developments and the potential impact on their workforce.

Ogletree Deakins has one of the largest business immigration practice groups in the Carolinas with eight immigration attorneys in South Carolina alone. Contact Rebecca Sigmund at [email protected] or John Hill at [email protected].