While there have been news stories and congressional hearings on EB-5 visas (the immigrant investor program), a roughly comparable program that brings in about four times as many aliens has drawn virtually no attention.
This is the Treaty Trader (E-1) and Treaty Investor (E-2) program. It provided nonimmigrant visas for more than 42,000 aliens in 2013, the last year for which we have statistics. Unlike the EB-5 program, it offers only temporary visas for traders and investors, and unlike the EB-5 program its growth in recent years has been steady, but not dramatic.
A few years ago EB-5 visas were counted in the hundreds; now that program — with massive encouragement from the Obama administration — is bumping up against the statutory maximum of 10,000 visas a year. (The E-1 and E-2 program has no numerical ceiling.)
These treaty programs, again unlike EB-5, are run largely by the U.S. Department of State, and require virtually no interaction with U.S. local business organizations or with other U.S. government agencies at any level. If the alien seems to fit the department's image of a treaty trader or investor, he or she gets a visa after an overseas interview. (It is possible to secure a states-side adjustment to E-1 or E-2 status, but the resulting document does not allow its holder to leave the United States and return.)
The only management of the program comes through the visa renewal process. Every two years the visas have to be renewed, but as long as the State Department regards the business as "substantial" there is no limit on the number of renewals.
There are three obvious areas of concern with these E visas: 1) there is absolutely no oversight of the aliens involved within the United States; 2) there is no numerical ceiling on the number of visas that can be granted; and 3) there is no floor on the appropriate amount of money to be invested. In contrast, the fraud-bedeviled EB-5 program looks almost responsible in comparison.
The program is divided into two subcategories, traders and investors. E-1 visas go to persons who engage in international trade and to their family members and employees; it is the smaller of the two subparts of this program. E-2 visas are for treaty investors, their family members, and their employees. In both parts of the program all those described are allowed to work in this country, but as children pass their 21st birthday they "age out", i.e., they must either leave the country or move into another visa status, such as F-1 for students. Treaty traders tend to represent overseas corporations; treaty investors usually run their own companies here.
Statistical Trends. As Table 1 indicates, the two categories have moved in different directions over the last 20 years. Using the measure of visas issued, we see that the trader category has dropped from about 11,000 a year in the mid 1990s to 6,000 or 7,000 in recent years. Meanwhile, the treaty investor portion of the program has moved up from about 19,000 a year in the 1990s to more than 35,000 in 2013.
Table 1. Treaty Trader (E-1) and Treaty Investor (E-2) Visas Issued 1994-2013
Source: U.S. Department of State's Report of the Visa Office for 1994 through 2013.
Table 2. 33 Largest Users of Treaty Trader (E-1) and Trader Investor (E-2) Visas Issued, 1997 and 2013
|2013 E-1||2013 E-2||1997 E-1||1997 E-2|
|Great Britain & N. Ireland||219||2,488||406||2,160|
|Total: 18 Nations||2,429||13,332||2,528||6,717|
|Total: 7 Nations +PRC||3,048||14,682||6,201||11,439|
|North and Central America|
|Total: 3 Nations||1,569||5,661||356||1,600|
|Total: 4 Nations||112||700||140||170|
|Total: 33 Nations||7,198||34,688||9,255||20,108|
Source: U.S. Department of State's Report of the Visa Office for 1997 through 2013.
* The program is not open to Chinese; these are visas issued to people from other countries who applied at one of our consular posts in China.
The United States has treaties of commerce and navigation with 80 nations, some of which are listed above. In 54 cases they relate to both treaty traders and treaty investors; in another 26 cases they involve only treaty investors. (We have many other treaties with the nations of the world, but only these treaties create the E-1 and E-2 visas.)
Whereas the Obama administration has been promoting the EB-5 program in a number of different and sometimes questionable ways it has not taken a similar posture regarding these treaties — no new ones have been signed since 2008. What growth there has been in the program comes from issuing more visas in the countries that are already in the program, with some of these arrangements dating back to the 19th Century.
These treaties are reciprocal in nature; they provide American business people the same set of rights in the treaty countries that the citizens of the other countries enjoy here. The treaties tend to be made with other prosperous countries and Table 2 shows few low-income nations. Two large nations, China and India, are not on the list. The lack of Chinese access to E-1 and E-2 visas explains, to some extent, the interest in the EB-5 program by rich Chinese.
How these programs are used, and sometimes abused, will be the subject of a subsequent blog.
The author is most grateful to Sally Devin who found the data and constructed the tables.