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Three Cheers For The New, Improved TN! On Second Thought…

by Brandon Meyer

The current numbers of H-1B's and Immigrant Visas ("IV's") were established in 1990 and were set at levels that anticipated the future need for highly skilled labor in the United States economy. However, economic growth in the United States accelerated throughout the 1990's, driven by a rapid expansion in certain economic sectors, such as technology, that drew in highly skilled immigrant labor. However, it quickly became apparent that the caps established in 1990 were inadequate to keep up with the demand. Thus, the phenomenon of the 'one-off temporary' patch to ameliorate this increasingly strained system rose to prominence. While these 'one-offs' made sense at the time, the long-term negative consequences these actions would bring were little appreciated at the time.

A classic illustration of this principle can be derived from the temporary increase of H-1B numbers for fiscal years 1999-2003 (As I will discuss below, for better or worse, we are probably stuck with the current H-1B cap until 2018 at the earliest).1 When this temporary increase went into effect, it seemed a wonderful idea, not an unreasonable reaction when faced with a potential threefold increase in business when the 65,000 H-1B cap (really 59,200, since the special Chilean and Singaporean H-1B's conspire to waste 6,800 H-1B's per year)2 increased to 195,000 for fiscal years 2001-2003. A threefold increase in labor certifications, I-140's, and I-485 applications was also imminent. Unfortunately, IV numbers were not increased to match the increase in H-1B numbers, leaving employment-based ("EB") immigrants in retrogression limbo for nearly a decade or that the Department of Labor ("DOL") nearly collapsed under the surge of new labor certification filings that lingered in the system until 2007. Furthermore, these "bonus H-1B's" would be angry about being stuck in limbo for years with few alternatives for breaking out of the morass.

With the above overview of the ultimate, long-term disaster that was the temporary H-1B increase in mind, the immigration bar is likely to greet the Department of Homeland Security's ("DHS") announcement that it is promulgating a rule increasing "the maximum allowable period of admission for TN nonimmigrants from one year to three years" with approval.3 In fact, I received an e-mail early on October 16, 2008 from an attorney of an immigration law firm that I am associated telling me "this is great news."4 Further evidence of this approval can be derived from an analysis of the comments received by DHS after publishing its notice of proposed rulemaking for the three-year TN modification.5 According to DHS, a total of 80 comments were received during the notice and comment phase, with 76 supporting the proposed changes, an approval rate of 95%.6 Thus, the conventional wisdom that the three-year TN must be a good thing was established long before the rule was formally promulgated.

However, while the three-year TN may solve some practical problems (such as the hassles associated with yearly renewals), the underlying problems with the TN still persist. The underlying problems I perceive with the TN are not the standard "Canadians and Mexicans are stealing our jobs under the guise of NAFTA" claptrap generally espoused by the usual anti-immigrationist suspects. Rather, the TN, like all special visa categories created through United States Free Trade Agreements ("FTAs"), distorts immigrant labor flows in favor of Canada and Mexico, regardless of whether these countries are the most efficient exporters of skilled labor to the United States.7 As I explained in my articles "Free Trade Agreements, Visas, and the Art of Suboptimal Outcomes," published in the June 2008 and July 2008 issues of Immigration Briefings, the one-year TN initially seemed like a convenient option for employers and employees, but this convenience quickly faded into inconvenience, soon creating additional pressures on the already over-subscribed H-1B program.8 The lack of dual intent for TN holders also creates practical problems that can be very difficult to overcome when H-1B numbers are otherwise unavailable. How successful is the three-year TN in addressing these issues?

USCIS lists three primary benefits to employers and TN employees in extending TN validity to three years. These include:

  • Providing for a more stable and predictable workforce for TN employers;
  • Making the TN program more attractive to Canadian and Mexican employers and professionals who might otherwise be required to seek admission under the capped H-1B program, thereby possibly freeing up H-1B visa slots; and,
  • Reducing the cost and bureaucratic inconvenience to TN workers by requiring renewal every three years, as opposed to annually.9

Will the three-year TN provide the positive externalities that USCIS predicts? Each of the stated benefits will be analyzed individually. It should be noted that other benefits to employers (a reduction in costs associated in yearly renewals, such as legal and USCIS filing fees and/or employee travel reimbursement) were curiously not included in the list of benefits, unless these cost savings are included under the guise of a "more stable and predictable workforce."

A More Stable and Predictable Workforce for TN Employers

This is probably the strongest argument advanced by USCIS in support of the three-year TN. TN workers and their employees will be spared the annual uncertainty and hassle associated with annual TN renewal. However, this does not mean that employers and TN workers can rest easy and just forget about their immigration status for the next three years. If anything, three years of TN status may encourage a false sense of security, since the new three-year TN does not come with the bonus of dual intent.

Thus, TN workers will still have the problems associated with the one-year TN, including: 1) retaining an unrelinquished domicile in Canada or Mexico; 2) convincing the Customs and Border Protection ("CBP") Officer that the job is temporary (that five-year stock vesting schedule the TN worker inadvertently presents to the CBP Officer undermines this claim just as much for a three-year TN as it does for a one-year TN); and 3) the filing of a Labor Certification, IV petition, and/or an Adjustment of Status application during this three-year period will still complicate any international travel undertaken by the TN worker.10

The Thee-Year TN 'May' Free up H-1B Slots

This argument is perhaps the fatal flaw of the three-year TN. The lack of dual intent provision of the TN will remain as the primary driver for employers and employees to seek the H-1B, and tripling the length of TN authorization does nothing to change this reality. DHS correctly states that it lacks the regulatory authority to extend the dual intent doctrine to TN holders, pointing out that NAFTA Chapter 16; Article 1608 defines temporary entry as "entry into the territory of a Party by a business person of another Party without the intent to establish permanent residence."11

Once TN workers realize the negative, practical implications of the lack of dual intent of the TN still remain with the three-year TN; they will continue to request an H-1B from their employers. Any H-1B numbers 'freed-up' by the three-year TN will be illusory at best. After all, how many H-1B numbers have been freed up by the lightly used E-3 visa program for Australian nationals?

Reduced Costs to TN workers

Many employers, not employees, pay the legal and filing fees associated with renewing a TN through USCIS. Likewise, many TN workers renew their TN at a U.S. Port-of-Entry or Pre-Flight Inspection Facility incident to either a business or personal visit to Canada, rendering cost savings to TN workers minimal at best. The relative lack of Mexican TN workers, who generally renew their TN through USCIS anyway to avoid reapplication through a U.S. Consulate in Mexico, adds very little to the purported cost savings to TN workers advanced by DHS.

Employers, who will save on legal and filing fees, and/or travel reimbursement to Canada, and lost productivity associated with annual TN renewals, will capture most cost savings derived from the three-year TN. However, this cost savings will be diminished, if not exceeded, by the annual H-1B Change-of-Status filings that TN workers often require after being repeatedly capped-out under the de facto 59,200 H-1B cap. TN workers will capture, little, if any, cost savings associated with a three-year TN.

Does All of This Matter?

Probably not. The above may unfortunately be nothing more than a short-lived academic exercise. If a future President Obama follows through on his campaign promise to insist on a renegotiation of NAFTA with Canada and Mexico,12 the TN could be just as easily negotiated out of a revised NAFTA agreement as it was negotiated into the present NAFTA agreement. If unemployment continues to rise (although present unemployment rates are nowhere near the levels of the 1970's and early 1980's), FTAs and EB immigrants will receive increasing and unjustifiable blame for the problem. Lou Dobbs and his fellow travelers are perfecting their outrage as we speak. A President Obama could easily discard the TN program to placate his political base within organized labor and within states where sunsetting industries are predominantly located under the guise of "standing up for the American worker."

Of course, a President Obama or any other President for that matter could always encourage unemployed "American workers" to take advantage of their NAFTA privileges and seek employment in Canada or Mexico, but that would require out-of-the-box thinking rarely associated with the politics of trade and immigration.13 While I have argued elsewhere that the TN should be abolished anyway (yes, I admit that this would require a renegotiation of NAFTA), I also argue that this abolition should occur in tandem with a permanent increase of the H-1B cap to 200,000,14 thus not disrupting the current flow of skilled workers from Canada and Mexico under NAFTA using static analysis assumptions.15 Although the TN was always a sub-optimal, second-best solution for facilitating EB immigrant flows, eliminating the TN to make good on campaign promises and to appear to be tackling problems in the United States labor market would actually cause great harm to the United States economy.

Is CIR Imminent?

More depressingly, we currently seem to be stuck in a 40-year cycle of history, a cycle that is not favorable to the prospects for expanded H-1B or IV numbers. The parallels between today and the late 1960's and 1970's are striking. An almost unbroken two-decade long period of ever-increasing economic growth may be ending. We are currently engaged in an expensive and increasingly unpopular overseas military campaign, although the absence of military conscription means that the Iraq War's direct impact is not felt throughout all strata of American society. Just like the 1970's, oil and commodity prices have risen dramatically over the last two years, although these prices have fallen significantly in recent months.16 Increasing government spending on "guns and butter" brings back the specter of the Great Society, which, in tandem with the Vietnam War, led to expanded government debt and increasing inflationary pressures.17 After all, the so-called "Economic Stimulus Package" of Spring 2008 was grander in scope, reach, and cost than any Great Society program could have ever conceived.18

Additionally, the recent turmoil in global financial markets is system shaking in a manner akin to the collapse of the Bretton Woods system in 1971, which had previously tied the world trading system to the value of the dollar in the aftermath of World War II. The recent 'bank bailout' saga and discussions of a new 'economic stimulus package' have brought government meddling back into the economy in ways not seen since the "Nixon Shock" of 1971. The Nixon Shock signaled the death knell of Bretton Woods through the imposition of wage and price controls, a 10% import surcharge, and a break of the link between the value of gold and the dollar. Additional parallels include an unpopular President with diminishing political influence seeing out his remaining days in office in increasing futility, although I will leave it historians to debate whether President Bush is the new Lyndon Johnson or the new Richard Nixon. The current election reminds one of the 1976 election, with a fresh-faced outsider promising change, running against a tired Washington insider living in the shadows of the previous regime. Only a few die-hard Jimmy Carter supporters look back fondly on this time.

One might wonder what any of this has to do with EB immigration? Everything in fact. The end game of the 1970's was a depressing period of stagflation (slow economic growth combined with soaring inflation) coupled with a growing realization that well-meaning, but ill-conceived regulations and government programs imposed over the previous twenty years were choking economic prosperity. A decade of inflation was killed off only after Federal Reserve Chairman Paul Volker (an economics advisor of Senator Obama) oversaw a concerted period of high interest rates, which also had the effect of slowing economic growth even further. Perhaps we have forgotten the gloom of the past, but 1973-1983 was a ghastly period of American history. Double-digit inflation, double-digit unemployment, and double-digit interest rates, economic life is gloomy when these conditions are present. We have not yet entered this time, as we somewhere between 1973 and 1976 in our cycle of history, but this is where we are headed. Sustained economic growth did not return to the United States until 1984.

During this entire period, EB immigration was moribund. With double-digit unemployment in the United States, the political appetite for EB expansion was non-existent. After all, IRCA, the first comprehensive immigration reform ("CIR") program since 1965, was not enacted until 1986. Thus, if my analysis of our current cycle of history is correct, the next ten years will see no new H-1B numbers, no new IV's, and certainly no earned legalization program or other CIR program, resulting in my prediction in the paragraph two that we will be stuck with the current H-1B cap until 2018.

The three-year TN promises useful benefits, but the actual outcome may be far different.19 Regrettably, this may be the last victory on the EB immigration for the foreseeable future.20

End Notes

1The H-1B cap was increased to 115,000 for FYs 1999 and 2000 and 195,000 for FYs 2001, 2002, and 2003, before reverting to 65,000 in FY 2004. 8 U.S.C.A §1184(g)(1)(A).

2See Pub. L. 107-77, 115 Stat 748 (Nov. 28, 2001) and Pub. L. 108-77, 117 Stat 9098 (Sept. 3, 2003).

3"Period of Admission and Extension of Stay for Canadian and Mexican Citizens Engaged in Professional Business Activities- TN Nonimmigrants." AILA InfoNet Doc. No. 08101560 (Posted 10/15/08), p. 1.

4Private e-mail correspondence between the author and an immigration attorney, October 16, 2008.

573 FR 26340, May 9, 2008.

6"Period of Admission and Extension of Stay for Canadian and Mexican Citizens Engaged in Professional Business Activities- TN Nonimmigrants," p. 3-4.

7Brandon Meyer, "Free Trade Agreements, Visas, and the Art of Suboptimal Outcomes: Was the Theory of the Second Best Ever Good Enough? Part I, Immigration Briefings, June 2008, p. 6-9.

8Brandon Meyer, "Free Trade Agreements, Visas, and the Art of Suboptimal Outcomes: Was the Theory of the Second Best Ever Good Enough? Part II, Immigration Briefings, July 2008, p. 3.

9"USCIS Announces Increased Period of Stay for Trade NAFTA Professional Workers from Canada or Mexico." AILA InfoNet Doc. No. 08101430 (Posted 10/14/08), p. 2.

10Meyer, "Free Trade Agreements, Part II," p. 2-4.

11"Period of Admission and Extension of Stay for Canadian and Mexican Citizens Engaged in Professional Business Activities- TN Nonimmigrants," p. 5.

12See Maria L. LaGanga, Louise Roug and Stuart Silverstein. "Texas and Ohio: the end of the campaign trail?",0,2820720,print.story March 4, 2008, last viewed March 5, 2008.

13Senator John Kerry made much of so-called "Benedict Arnold corporations," in his losing 2004 Presidential campaign, whom he accused of unpatriotically depriving American workers of their rightful jobs by relocating their businesses overseas. Under this logic, are American workers who decide to accept jobs in another country, under NAFTA or any other visa program, "Benedict Arnold workers?"

14Meyer, "Free Trade Agreements, Part I," p. 4.

15This assumes that the estimated 70,000 individuals who apply for TN's annually would each receive an H-1B under a new H-1B cap of 200,000, and that this 70,000-strong applicant pool does not otherwise increase.

16Jad Mouawad, "Oil Prices Slip Below $70 a Barrel," last accessed October 16, 2008.

17Inflationary pressures that have been building in the US economy over the year may be abating, but it is too early to tell whether this is a temporary pause. See Michael M. Grynbaum, "Consumer Prices Show Little Change in September," The recent bank bailout and expansionary fiscal and monetary policies are likely to rekindle inflationary pressures.

18In the interest of full disclosure, the author was appreciative when receiving his stimulus check in the mail from the United States government in June 2008. Unlike the plan's stated intention, the author did not take the proceeds of this cash windfall from the government and engage in an unnecessary shopping spree at the local mall. The author also eagerly awaits the bill for this 'stimulus' in the form of higher taxes in the future.

19While ethical attorneys would never put their own financial interests ahead of their clients, immigration attorneys can expect the new three-year TN to decrease TN revenues by up to two-thirds (assuming a static supply of new TN applicants). DHS estimates a decrease in cumulative TN application fees totaling $2.4 million per year. Conservatively estimating that the three-year TN will decrease annual TN renewals by 20,000 and assuming that the legal fees for a TN are $500 (which I understand is a lowball figure), TN revenues will decrease by a minimum of $10 million per year, a figure I believe is grossly underestimated.

20Immigration attorneys can also look forward to diminishing revenue once the "bonus H-1B's" from the 1999-2003 time period finally work their way through the decrepit US immigration system and achieve lawful permanent residence or give up and leave the United States.

About The Author

Brandon Meyer is a Juris Doctor candidate at the University of San Diego School and a Principal in Meyer Consulting.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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