Hello Everybody. This is Cyrus Mehta. Welcome to this week’s edition of immigration matters.

With the lowering of the limit of the H-1B worker visas from 195,000 to only 65,000, nationals of countries that extensively use the H-1B visas will soon get affected when the cap is expected to be reached in early 2004. Citizens of India will be the most affected as they are one of the biggest users of the H-1B visa program. Even the L-1 intracompany transfere visa heavily used by Indian companies, is under attack. On the other hand, citizens of countries that have treaties with the U.S. may be able to take advantage of other work visa options.

The Treaty Trader (E-1) and Treaty Investor (E-2) visas result from treaties of Friendship, Commerce and Navigation (FCNs) between the US and another country. With such a treaty in place, nationals of the other country can apply for the E-1 or E-2 visa.

US immigration laws specifically authorize the issuance of E-1 and E-2 visas to nationals of a country that has an FCN treaty with the U.S. The E-1 visa is applicable to a treaty national entering the U.S. solely to carry on substantial trade, which is international in scope and principally between the U.S. and the foreign state. The E-2 visa applies to a treaty national [or an entity owned by the treaty national(s)] to develop and direct the operations of an enterprise in which he or she has invested or is actively in the process of investing a substantial amount of capital.

There is no bright line test of what would constitute a “substantial” amount of capital. The U.S. State Department acknowledges that the costs of investing in a business can vary dramatically, depending on the nature of the business: many millions to buy an automobile factory; and only a relatively small sum to set up a consulting firm.

In recent times, Bilateral Investment Treaties (BITS) negotiated by the U.S. with several countries are also recognized as equivalent to an FCN, but only for purposes of conferring E-2 visa authorization.

At present, India does not have an FCN treaty, BIT or equivalent treaty with the U.S., although it has entered into BITs with several other countries. The Indian government should explore entering into such a treaty agreement with the U.S. If such a treaty is ratified, it will be open up the E visa possibility for Indian citizens who would be able to bring in to the U.S. investment and entrepreneurship for the mutual benefit of both countries.

Unlike the L-1 visa, the E visa categories do not require the setting up of a branch, subsidiary or parent in the U.S. of a foreign entity. Furthermore, the proposed legislation to restrict the L-1 visa category does not include the E visa category.

The E visa category also has less government regulations compared to the H-1B visa category. There is no prevailing wage requirement, labor certification attestation, posting and public access file requirements. An E visa employee must be a national of the treaty country and also must function in an executive or a supervisory role or possess essential skills. One can only avail of the E visa if the employee works for a U.S. company that is owned by treaty country nationals.

In addition to the FCNs and BITs, other treaties have also given broad immigration benefits to certain countries. The best example is the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico that came into effect in 1994. Besides allowing nationals of the treaty countries to have access to E-1 and E-2 visas, NAFTA also created a special TN visa that allows nationals of Canada and Mexico to work in the US in specific occupations that have been designated under NAFTA.

More recently, in 2003, the U.S. entered into free trade agreements with Singapore and Chile. Not only will E visa benefits accrue from these agreements, but 6,800 (or 10%) visas of the H-1B visa cap of 65,000 have been reserved for nationals of Singapore and Chile.

Instead of waiting for U.S. Congress to expand the H-1B visa category, a country such as India may wish to enter into a bilateral treaty out of which additional immigration benefits can accrue to its nationals, such as the E visa categories, which in turn will benefit the economies of both countries.

This segment is brought to you by Cyrus D. Mehta & Associates, PLLC. If you have any questions on this or related matters, please contact us at 212-425-0555. The number once again is 212-425-0555. You can also email us at info@cyrusmehta.com or visit our website at www.cyrusmehta.com. We are located at 67 Wall Street, Suite 1801, New York, NY 10005.

This is Cyrus Mehta wishing you a wonderful weekend. See you again in two weeks.