Foreign Investor Visas: Policies and Issues
Foreign Investor Visas:
Policies and Issues
Updated May 1, 2008
Chad C. Haddal
Analyst in Immigration Policy
Domestic Social Policy
Foreign Investor Visas: Policies and Issues
In the 110th Congress, issues surrounding the entry of foreign investors into the
United States are likely to spark legislative debate as Members contemplate
comprehensive immigration reform. Congress may face decisions regarding the
possible renewal of the immigrant investor visa pilot program, as well as the
expansion of the E-2 nonimmigrant treaty investor visa.
There are currently two categories of nonimmigrant investor visas and one
category of immigrant investor visa for legal permanent residents (LPR). The visa
categories used for nonimmigrant investors are: E-1 for treaty traders; and the E-2 for
treaty investors. The visa category used for immigrant investors is the fifth
preference employment-based (EB-5) visa category. According to Department of
Homeland Security (DHS) statistics, there were 217,148 nonimmigrant treaty trader
and investor visa arrivals in the United States in FY2006. For the same time frame,
DHS reported the arrival of 749 LPR investors.
When viewed from a comparative perspective, the investor visas of the United
States are most closely mirrored by those of Canada. The LPR investor visa draws
especially strong parallels to the Canadian immigrant investor visa, since the latter
served as the model for the former. Comparing the admissions data between these
two countries, however, reveals that the Canadian investor provision attracts many
times the number of investors of its United States counterpart. Yet, both countries
showed an upward trend in immigrant investor visas in the last two years.
The investor visas offered by the United States operate on the principle that
foreign direct investment into the United States should spur economic growth in the
United States. According to the classical theory, if these investments are properly
targeted towards the U.S. labor force’s skill sets, it should reduce the international
migration pressures on U.S. workers. To attract foreign investors, research indicates
that temporary migrants are motivated most significantly by employment and wage
prospects, while permanent migrants are motivated by professional and social
mobility. Theoretically, however, it is unclear to what extent potential migration
provides additional incentive for investment activity. Investors from developed
countries may sometimes lack incentive to settle in the United States since they can
achieve foreign direct investment (FDI) and similar standards of living from their
home country. Yet, in cases where foreign investors have been attracted, the
economic benefits have been positive and significant.
Immigrant investors have been subject to notable administrative efforts in the
past couple of years. In 2005, DHS developed the Investor and Regional Center Unit
(IRCU) to govern matters concerning LPR investor visas and investments to better
adjudicate petitions and coordinate investments. In part because of these efforts,
working with foreign financing from the immigrant investor program has become
highly attractive for many domestic investors, particularly through limited
partnerships. Recent legislation (S. 1639) has sought to reduce the number of
investor visas available. This report will be updated as warranted.
In troduction ......................................................1
Immigrant Investor Pilot Program.............................5
LPR Investor Visa Numbers.....................................6
Nonimmigrant Investor Visas........................................9
E-1 Treaty Trader.............................................12
E-2 Treaty Investor...........................................12
Nonimmigrant Investor Visa Numbers............................14
U.S. and Canadian Comparisons.....................................18
Analysis of the Relationship Between Investments and Migration...........20
Less Economically Developed Countries......................21
Temporary and Permanent Investors..........................23
Current Legislation and Potential Issues for Congress....................27
South Dakota International Business Institute.......................32
List of Figures
Figure 1. LPR Visas Issued by Region and Select Asian Countries
of Origin, FY1992-FY2004......................................9
Figure 2. E Treaty Trader and Investor Visas Issued by Region, FY2007.....15
Figure 3. Nonimmigrant Treaty Traders and Investors Admitted, FY2006....17
Figure 4. Immigrant Investors to Canada and the United States, 1996-2005...19
Table 1. United States LPR Investor Visa Admissions, FY1996-FY2006......7
Table 2. Nonimmigrant Treaty Trader and Investor Admissions, FY2006....16
Table 3. E-Class Visa Privileges by Year of Attainment..................29
Foreign Investor Visas:
Policies and Issues
In the 110th Congress, issues surrounding the entry of foreign investors into the
United States is likely to spark legislative debate. For example, the immigrant
investor visa pilot program, which was created to attract foreign investors to
permanently emigrate to the United States, is set to expire at the end of FY2008.1
Additionally, the government of Denmark has lobbied for legislation that would
allow its nationals eligibility to enter the United States as E-2 nonimmigrant treaty
investors. If such legislation is successful, other governments whose nationals, like
Denmark, are currently only eligible for E-1 nonimmigrant treaty trader visas would
likely seek similar treatment. Granting visas to foreign investors provides many
potential benefits, including increased domestic employment and capital levels. Yet,
extending foreign investor visas provides several potential risks as well, such as visa
abuses, reduced foreign market growth, and security concerns.
The central policy question surrounding foreign investors — and particularly
legal permanent resident (LPR) investors — is whether the benefits reaped from
allocating visas to foreign investors outweigh the costs of denying visas to other
applicant groups. The subsequent analysis provides a background and contextual
framework for the consideration of foreign investor visa policy. After a brief
legislative background, this report will provide discussions of immigrant and
nonimmigrant investors visas, a comparison of U.S. and Canadian immigrant
investor programs, an analysis of the relationship between investment and migration,
and finally a review of current issues.
Since the Immigration Act of 19242 the United States has expressly granted
visas to foreign nationals for the purpose of conducting commerce within the United
States. Although foreign investors had previously been allowed legal status under
several Treaties of Friendship, Commerce and Navigation treaties, the creation in
1924 of the nonimmigrant treaty trader visa provided the first statutory recognition
of foreign nationals as temporary traders. With the implementation of the
Immigration and Nationality Act of 1952 (INA), the statute was expanded to include
nonimmigrant treaty investors — a visa for which trade was no longer a
1 P.L. 108-156.
2 43 Stat 153.
requirement.3 Nonimmigrant visa categories for traders and investors have always
required that the principal visa holder stems from a country with which the United
States has a treaty.4 The nonimmigrant visa classes are defined in §101(a)(15) of the
INA. These visa classes are commonly referred to by the letter and numeral that
denotes their subsection in §101(a)(15) of the INA, and are referred to as E-1 for
nonimmigrant treaty traders and E-2 for nonimmigrant treaty investors.
Unlike nonimmigrant investors, who come to the United States as temporary
admissions, immigrant investors are admitted into the United States as LPRs.5 With
the Immigration Act of 1990,6 Congress expanded the statutory immigrant visa
categories to include an investor class for foreign investors. The statute developed
an employment-based (EB-5) investor visa for LPRs,7 which allows for up to 10,000
admissions annually and generally requires a minimum $1 million investment.
Through the Immigrant Investor Pilot Program, investors may invest in targeted
regions and existing enterprises that are financially troubled. This pilot program was
extended by the Basic Pilot Program Extension and Expansion Act of 20038 to
continue through FY2008.
Foreign investors are generally considered to help boost the United States
economy by providing an influx of foreign capital into the United States and through
job creation. For investor immigrants, job creation is an explicit criterion, while with
the nonimmigrant visa categories economic activity is assumed to spur job growth.
Additionally, foreign investors are often associated with entrepreneurship and
increased economic activity. Critics, however, believe that such investors may be
detrimental since they potentially displace potential entrepreneurs that are United
3 INA §101(a)(15)(e)(ii).
4 INA §101(a)(15)(e).
5 The two basic types of legal aliens are immigrants and nonimmigrants. As defined in the
INA, immigrants are synonymous with legal permanent residents (LPRs) and refer to foreign
nationals who come to live lawfully and permanently in the United States. The other major
class of legal aliens are nonimmigrants — such as tourists, foreign students, diplomats,
temporary agricultural workers, exchange visitors, or intracompany business personnel —
who are admitted for a specific purpose and a temporary period of time. Nonimmigrants are
required to leave the country when their visas expire, though certain classes of
nonimmigrants may adjust to LPR status if they otherwise qualify.
6 P.L. 101-649.
7 INA §203(b)(5).
8 P.L. 108-156, 8 USC §1324a note.
There is currently one immigrant class set aside specifically for foreign investors9
coming to the United States. Falling under the employment-based class of
immigrant visas, the immigrant investor visa is the fifth preference category in this10
visa class. Thus, the immigrant investor visa is commonly referred to as the EB-5
Goals. The basic purpose of the LPR investor visa is to benefit the United
States economy, primarily through employment creation and an influx of foreign
capital into the United States.11 Although some members of Congress contended
during discussions of the creation of the visa that potential immigrants would be
“buying their way in,” proponents maintained that the program’s requirements would
secure significant benefits to the U.S. economy.12 Proponents of the investor
provision offered predictions that the former-Immigration and Naturalization Service
(INS) would receive approximately 4,000 applications annually. These petitioners’
investments, the drafters speculated, could reach an annual total of $4 billion and
create 40,000 new jobs.13 The Senate Judiciary Committee report on the legislation
states that the provision “is intended to provide new employment for U.S. workers
and to infuse new capital into the country, not to provide immigrant visas to wealthy
individuals” (S.Rept. 101-55, p.21).
Requirements. As amended by the Immigration Act of 1990,14 the
Immigration and Nationality Act (INA) provides for an employment-based LPR
9 The INA provides for a permanent annual worldwide level of 675,000 legal permanent
residents (LPRs), but this level is flexible and certain categories of LPRs are permitted to
exceed the limits, as described below. The permanent worldwide immigrant level consists
of the following components: family-sponsored immigrants, including immediate relatives
of U.S. citizens and family-sponsored preference immigrants (480,000 plus certain unused
employment-based preference numbers from the prior year); employment-based preference
immigrants (140,000 plus certain unused family preference numbers from the prior year);
and diversity immigrants (55,000). Immediate relatives of U.S. citizens as well as refugees
and asylees who are adjusting status are exempt from direct numerical limits. For further
discussion see CRS Report RL32235, U.S. Immigration Policy on Permanent Admissions,
by Ruth Ellen Wasem.
10 The INA provides that each category of immigrants has a set of preferences for the classes
within that category. These preferences determine the priority of visa distribution for each
category depending on certain formulas provided for in the INA. In the case of the LPR
investor visa, being the fifth preference (and therefore the lowest) within the employment-
based category, it has an annual maximum visa allocation of 10,000.
11 3 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 39.07 (Matthew Bender, Rev. Ed.).
12 For debate on this issue, see 136 Cong. Rec. S7768-75 (July 12, 1990).
13 The West Group. New Pilot Program for Immigrant Investors. 70 Interpreter Releases
14 P.L. 101-649.
investor visa15 program designated for individuals wishing to develop a new
commercial enterprise16 in the United States (INA §203(b)(5)). The statute stipulates
!The enterprise must employ at least 10 U.S. citizens, legal
permanent residents (LPRs), or other work-authorized aliens in full
time positions. These employees may not include the foreign
investor’s wife or children.
!The investor must further invest $1 million17 into the enterprise, such
that the investment goes directly towards job creation and the capital
is “at risk.”18 However, if an investor is seeking to invest in a
“targeted area”19 then the required capital investment may be
reduced to $500,000.20 For each fiscal year, 7.1% of the worldwide
employment-based visas (roughly 10,000 visas) are set aside for EB-
5 investors, of which 3,000 are reserved for entrepreneurs investing
in “targeted areas.”21
!The business and jobs created must be maintained for a minimum of
According to regulations, enterprises being proposed need not be backed by a
single applicant.23 Multiple applicants may provide financial backing in the same
enterprise, provided that each applicant invests the required minimum sum and each
applicant’s capital leads to the creation of 10 full-time jobs. The applicant may also
combine the investment in a new enterprise with a non-applicant who is authorized
to work in the United States. Furthermore, each individual applicant must
demonstrate that he or she will be actively engaged in day-to-day managerial control
15 This visa category is for permanent immigrants and should not be confused with the E-2
Treaty Investor nonimmigrant visa.
16 Since 2002, applicants have also been allowed to invest funds in “troubled businesses.”
These businesses must have been in existence for at least two years, and must have incurred
a net loss of at least 20% of the business’ net worth (prior to the loss) during the twelve- or
twenty-four-month period prior to filing the petition (8 CFR §204.6(e)).
17 These funds must be demonstrated to have been obtained lawfully. Generally, any burden
of proof to show qualifying status for an EB-5 lies with the applicant (8 CFR §204.6(j)).
18 Depositing the funds into a corporate account does not qualify as making the investment
“at risk.” Clear guidelines for demonstrating that the capital is”at risk” do not exist in the
regulations (8 CFR §204.6(j)).
19 “Targeted areas” are either rural areas or areas with unemployment rates of at least 150%
of the national average. A “rural area” is defined as one not within a metropolitan statistical
area or the outer boundary of a city or town with a population of 20,000 or more.
20 8 CFR §204.6(f).
21 INA §203(b)(5).
22 8 CFR §204.6(j).
23 8 CFR §204.6(g).
or as a policymaker.24 Petitions as a passive investor will not qualify.25 However,
since limited partnership is acceptable, regulations do not prevent the investor from
living in another location or engaging in additional economic activities.
Immigrant Investor Pilot Program. The Immigrant Investor Pilot Program
differs in certain ways from the standard LPR investor visa. Established by §610 of
P.L. 102-395 (October 6, 1992), the pilot program was established to achieve the
economic activity and job creation goals of the LPR investor statute by encouraging26
investors to invest in economic units known as “Regional Centers.” Regional
Center designation must be approved by the Department of Homeland Security’s
(DHS) United States Citizenship and Immigration Service (USCIS), and is intended
to provide a coordinated focus of foreign investment towards specific geographic
regions. Areas with high unemployment are especially likely to receive approval as
a Regional Center, since they are less likely to receive foreign capital through foreign27
direct investment (FDI) (although the basic requirements apply to all regional
petitions).28 Up to 5,000 immigrant visas29 may be set aside annually for the pilot
program. These immigrants may invest in any of the Regional Centers that currently
exist to qualify for their conditional LPR status.30
24 This latter criterion may be demonstrated through board membership, status as a
corporation officer, or qualifying as a limited partner under the Uniform Limited Partner Act
(ULPA) (8 CFR §204.6(i)).
25 8 CFR § 206.6.
26 A Regional Center is defined as any economic unit, public or private, engaged in the
promotion of economic growth, improved regional productivity, job creation and increased
domestic capital investment.
27 FDI is defined as an investment made by a foreign individual or company in an enterprise
residing in an economy other than where the foreign direct investor is based.
28 The basic requirements for Regional Center designation state that applicants must show
how their proposed program will:
!focus on a geographic region (8 CFR 204.6(m)(3)(i));
!promote economic growth through increased export sales, if applicable;
!promote improved regional productivity (8 CFR 204.6(m)(3)(i));
!create a minimum of 10 jobs directly or indirectly per investor (8 CFR
!increase domestic capital investment (8 CFR 204.6(m)(3)(i));
!be promoted and publicized to prospective investors (8 CFR
!have a positive impact on the regional or national economy through
increased household earnings (8 CFR 204.6(m)(3)(iii)); and
!generate a greater demand for business services, utilities maintenance and
repair, and construction jobs both in and around the center (8 CFR
29 These 5,000 visas represent a subset of the approximately 10,000 visas allocated for the
LPR investor visa.
30 USCIS does not publish an official list of the number of EB-5 Regional Centers that exist.
However, in November 2007, USCIS released to the American Immigration Lawyers
Association a list of regional centers that were “active” as of October 2007. This list
The Basic Pilot Program Extension and Expansion Act of 200331 extended the
pilot program through FY2008. In response to this legislation USCIS decided to
develop a new unit to govern matters concerning LPR investor visas and
investments.32 On January 19, 2005, the Investor and Regional Center Unit (IRCU)
was created by the USCIS, thereby establishing a nationwide and coordinated
program. USCIS believes that the IRCU will serve the dual purpose of guarding
against EB-5 abuse and encouraging investment.33
The USCIS approximates that between 75-80% of EB-5 immigrant investors
have come through the pilot program since it began, and that limited partnerships
constitute the most significant portion of this group.34
LPR Investor Visa Numbers
In contrast to the high number of applications for other employment-based LPR
visas,35 the full allotment of almost 10,000 LPR investor visas per fiscal year has
never been used. As Table 1 below shows, the number of LPR investor admissions
peaked in FY1997, with 1,361 admissions, or 13.6% of the program’s visa supply.
In subsequent years, the program declined markedly, before increasing up to 749 in
FY2006. Despite the low numbers of overall investor admissions, the program has
seen a marked increase since the implementation of the Immigrant Investor Pilot
Program expansion in 2004.
From FY1992 to FY2004, the cumulative total amount invested into the United
States by LPR investor visa holders was approximately $1 billion and the cumulative36
number of LPR investor visas issued was 6,024. Since FY2004, an additional 1,095
immigrant investor visas have been issued. In the earlier years of the program, it37
attracted a relatively higher rate of derivatives than principals. However, in the last
included 20 active centers. The list is available at [http://vkvisalaw.wordpress.com/
2007/11/12/updated-list-of-eb-5-investor-visa-regional-centers-as-of-oct-2007/], visited May
31 P.L. 108-156.
32 USCIS, EB-5 Immigrant Investor Pilot Program, Background, June, 2004.
34 Based on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS
Investor and Regional Center Program, November 20, 2006.
35 According to the Department of State (DOS) Visa Bulletin (No. 111, Vol. VIII) there are
backlogs only for all employment-based immigrants in the third preference categories, and
for nationals of India and China in the second preference category. All other categories
have numbers available for qualified applicants.
36 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
37 Principals are the actual investors. Derivatives are comprised of spouses, children, and
three years the distribution of visas between principals and derivatives has more
closely approximated parity. Derivatives have historically accounted for
approximately 66% of immigrant investor visa recipients, while principals account
Table 1. United States LPR Investor Visa Admissions,
Fiscal YearEB-5 Visa AdmissionsPrincipalsDerivatives
Source: CRS presentation of U.S. Department of Homeland Security Office of Immigration Statistics
Note: In FY2006, of the total admissions, 469 were new arrivals and 280 were adjustments of status.
The new arrivals included 187 principals and 310 dependents, while the adjustments of status included
93 principals and 159 dependents.
According to data from DHS’ Performance Analysis System, in the time span
of FY1992 through May 2006, authorities had received a cumulative total of 8,505
petitions for immigrant investor visas. Of these petitions, 4,484 petitions had been
granted while 3,820 had been denied38 — an approval rate of 52.7%. Furthermore,
in this same time span, officials received 3,235 petitions for the removal of
conditional status39 from the LPRs of immigrant investors. These petitions were
granted in 2,155 cases (a 66.6% approval rate), while the remaining 910 petitions for
the removal of conditional status were denied.
38 The discrepancy between the petitions granted, denied, and received is due to some
petitions remaining unadjudicated.
39 “Conditional status” for an LPR immigrant means that the final approval of the LPR is
contingent upon fulfilling certain requirements. For immigrant investors, the conditional
status lasts for two years before the applicant is reviewed for final approval.
Although numerous possible explanations for the overall low admission levels
of LPR investor visas exist, the notable drop in admissions in FY1998 and FY1999
is due in part to the altered interpretations by the former-INS of the qualifying
requirements that took place in 1998.40 The 21st Century Department of Justice
Appropriations Act (2002)41 provided remedies for those affected by the former-INS’
1998 decision, and provided some clarification to the requirements to promote an
increase in petitions.42
A 2005 report from GAO43 listed a number of contributing factors to the low
participation rates, including the rigorous nature of the LPR investor application
process and qualifying requirements; the lack of expertise among adjudicators;
uncertainty regarding adjudication outcomes; negative media attention on the LPR
investor program; lack of clear statutory guidance; and the lack of timely application
processing and adjudication. It is unknown how many potential investors opted to
obtain a nonimmigrant investor visa or pursued other investment pathways. A recent
law journal article on investor visas suggested that the two year conditional status of
the visa and the alternate (and less expensive) pathways for LPR status often
dissuaded potential investors from pursuing LPR investor visas.44 Yet, since
FY2003, the number of immigrant investor visas issued has increased on an annual
According to the GAO study, of the LPR visas issued to investors, 65345 had
qualified for removal of the conditional status of LPR visa (not including
dependents).46 GAO estimates that these LPR investors invested approximately $1
billion cumulatively into their collective enterprises and 99% kept their enterprise in
the same state where it was established.47 The types of enterprises these investors
established were often hotels/motels, manufacturing, real estate, or domestic sales,
with these four categories accounting for 61% of the businesses established by LPR-
qualified investors. Furthermore, an estimated 41% of the businesses by LPR-
qualified investors were set up in California. The subsequent states with the highest
40 The West Group, Sections 203(b)(5) and 216A of the Immigration and Nationality Act,
41 P.L. 107-273.
42 3 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 39.07 (Matthew Bender, Rev. Ed.)
43 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
44 Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green Cards: Rise of the
Phoenix?” New York Law Journal, April 25, 2005. At
[http://www.millermayer.com/EB5NYLJ0405.html], visited January 23, 2007.
45 Of these investors, 247 (or 38%) applied for U.S. citizenship.
46 The fact that they qualified for LPR status means that they had successfully maintained
their business and 10 full-time qualifying employees for more than two years.
47 GAO’s report stated it could not provide reliable figures on the number of jobs created by
percentages of established enterprises were Maryland, Arizona, Florida and Virginia
with 11%, 8%, 7%, and 7% respectively (for examples of current investment projects
see Appendix B).
As Figure 1 shows, LPR investors admitted to the United States between
FY1992-FY2007 were predominantly from Asian countries. Asia accounted for
approximately 83% of LPR investors in this time span, a total that is over nine times
larger than the second highest contributing region. Europe was the only other region
contributing more than 4% of the LPR investors, with a total of 9%. Within the
Asian region, the 2,438 LPR investors from Taiwan accounted for almost half of all
Asian LPR investors and 34% of the worldwide total. South Korea and China
contributed roughly 21% and 13% to the worldwide total, respectively, although
when combined with Hong Kong’s total, China’s contribution increases to 18%. The
country totals for the three largest Asian LPR investor contributors are more than the
sending totals of the four smallest sending regions combined.
Figure 1. LPR Visas Issued by Region and
Select Asian Countries of Origin, FY1992-FY2004
Source: CRS presentation of GAO analysis of DOS Bureau of Consular Affairs data.
Nonimmigrant Investor Visas
When coming to the United States as a temporary investor, there are two classes
of nonimmigrant visas which a foreign national can use to enter: the E-1 for treaty
traders and the E-2 for treaty investors. An E-1 treaty trader visa allows a foreign
national to enter the United States for the purpose of conducting “substantial trade”48
between the United States and the country of which the person is a citizen. An E-2
treaty investor can be any person who comes to the United States to develop and
48 §101(a)(15)(E)(i) of the Immigration and Nationality Act (INA).
direct the operations of an enterprise in which he or she has invested, or is in the
process of investing, a “substantial amount of capital.”49 Both these E-class visas
require that a treaty exist between the United States and the principal foreign
national’s country of citizenship.50
In the majority of cases, a commerce or navigation treaty serves as the basis for
the E-class visa extension (though other bilateral treaties and diplomatic agreements
can also serve as a foundation).51 A number of countries offer both the E-1 and E-2
visas as a result of reciprocal agreements made with the United States, although many
countries only offer one. Currently there are 75 countries who offer the treaty class
visas. Of these countries, 28 offer only the E-2 treaty investor visa while 4 countries
offer only the E-1 treaty trader visa (see Table 3 in Appendix A). In the cases where
a country offers both types of visas, an applicant who qualifies for both types of visa
may choose based upon his or her own preference. Such decisions, however, would
depend upon the specific nature of the business as the E category visas carry different
qualifying criteria for renewal.
Although each category has some unique requirements, other requirements cut
across all categories of nonimmigrant investor visas. An applicant for any of the
nonimmigrant investor categories must satisfy the following criteria:
!the principal visa recipient must be a national of a country with52
which the United States has a treaty.
!the principal visa recipient must be in some form of executive or53
supervisory role in order to qualify as a treaty trader or investor
!the skills the principal visa recipient possesses must be essential and54
unique to the enterprise under consideration
49 INA §101(a)(15)(E)(ii).
50 8 CFR §214.2(e)(6).
51 2 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 17.06[a] (Matthew Bender, Rev. Ed.).
52 Spouses and child dependents are not subject to the same nationality requirements as they
can be nationals of any country, regardless of whether that country has treaties with the
United States or not.
53 There is no set formula for determining whether a person’s role is sufficient to qualify,
but is determined on a case by case basis using a number of different factors. These factors
normally include such considerations as salary, position, duties, degree of control, and the
number of employees under the applicant’s supervision.
54 A nominal position (e.g. having the title of manager) or title is not sufficient grounds to
qualify for an E-class visa. Individuals with highly specialized skills or knowledge pertinent
to the employer’s business may also qualify, although if the individual’s skills are
determined to be of only a specialized nature that person must qualify for an H-1B visa (for
highly skilled professionals). An example of a skill that has been rejected by DOS as an
essential skill is knowledge of a foreign language.
!the visa holder must show an intent to depart the United States at the
end of the visa’s duration of status55
!if investing in an existing enterprise, the applicant must show that
the employer of the treaty trader or investor must be at least 50%
owned by nationals of the treaty country.56
A person granted an E-class visa is eligible to stay in the United States for a
period of two years.57 Although an applicant is obligated to show intent of departing
the United States at the end of the visa duration, the E-class visas may be renewed
for an indefinite number of two year periods provided that the individual still
qualifies.58 Spouses and child dependents are granted the same visa status and
renewal as the principal visa holder so long as the child is under the age of 21, after
which the child must apply and qualify for his or her own visa.59
Generally with the E-class visas, the individual may not engage in other
employment than that which is stipulated,60 although incidental activities are
generally allowed.61 If any E-class individual wishes to change employer, he or she
is under obligation to contact the Department of State (DOS) and apply for
adjustment of status.62
55 8 CFR §214.2(e)(2)(iii).
56 This criterion is more salient in the cases of smaller companies since ownership is more
constant and concentrated. Large publically traded companies are largely not saddled with
having to demonstrate ownership by nationals.
57 8 CFR §214.2(e)(19).
58 8 CFR §214.2(e)(20).
59 8 CFR §214.2(e)(4).
60 8 CFR §214.2(e)(8).
61 The rules on such incidental activities are quite flexible. The governing principle of such
incidental activities is that the primary trade or investment activity remains paramount (see
9 FAM §41.40 n7 (Visa TL-872 February 20, 1975, i.e. prior to 1987 revision) and 9 FAM
62 8 CFR §214.2(e)(8).
E-1 Treaty Trader63
The E-1 formally traces back to the 1924 Immigration Act, although merchants
working under treaty terms were recognized visa holders prior to this act.64 Under
current law, the E-1 visa is to be issued to an individual who engages in substantial
trade between the United States and his or her country of nationality. According to
immigration regulations, trade is defined as “the exchange, purchase or sale of goods
and/or services. Goods are tangible commodities or merchandise having intrinsic
value. Services are economic activities whose outputs are other than tangible
goods.”65 This expanded definition of trade into the service sector allows for a fairly
broad understanding of what trade may entail.
The term “substantial trade” has never been explicitly defined in terms of
monetary value. Rather, the term is meant to indicate that there is an amount of trade
necessary to ensure a continuing flow of international trade items.66 For smaller
businesses, regulatory qualification for treaty trader status may be derived from
demonstrating that the trading activities would generate an income sufficient to
support the trader and his or her family.67 The qualifications for sufficient volume or
transaction have not been explicitly set in the regulations,68 but a minimum
qualification is that more than 50% of the business’s trade must flow between the
United States and the treaty country from which the E-1 visa holder stems.69
E-2 Treaty Investor
The E-2 investor visa is a visa category that stems from the 1952 Immigration
and Nationality Act (INA). The qualifying applicant for such a visa is coming to the
United States in order to “develop or direct the operations of an enterprise in which70
he has invested, or is in the process of investing a substantial amount of capital.”
Unlike the E-1 visa, the business need not be engaged in trade of any kind. However,
63 Although technically being a “trader” category as opposed to an “investor” category, there
is sufficient grounds for believing that the E-1 traders should be included with the other
investor categories. Although their activities must be related to trade, they are still allowed
to make investments in United States enterprises. Also, investor categories such as the LPR
investor visa have previously held requirements that investments must positively effect
export levels in the industry where an investment is occurring (USCIS, EB-5 Immigrant
Investor Pilot Program, Background, June, 2004).
64 The term “treaty merchant,” for example, traces its roots at least back to the 1880 treaty
with China to conduct trade (Treaty Between the United States and China, Concerning
Immigration, November 17, 1880, art. I, 22 Stat. 826).
65 8 CFR §214.2(e)(2), as amended by 56 Fed. Reg. 10978, 10979 (1989).
66 8 CFR §214.2(e)(10).
69 8 CFR §214.2(e)(11).
70 INA §101(a)(15)(E)(ii).
the same rules concerning ownership are still applicable.71 In cases of ownership of
an enterprise, the regulations require that the E-2 visa holder control at least a 50%
interest in an enterprise.72 The burden of proof for E-2 qualification lies with the
applicant in the same manner as with the other E-class visas.73
There is no explicit monetary amount for what constitutes a “significant amount
of capital.” The DOS has operated under a regulatory proportionality principle that
dictates that the amount an individual invests must be enough to ensure the
successful establishment and growth of an enterprise, and there must be some level
of investment risk assumed by the treaty investor.74 Because of this proportionality
regulation, an investment in a small to medium-sized enterprise is acceptable.75 For
smaller sized investments, the DOS generally requires that the investment amount be
a higher percentage of the enterprise value.76 For higher valued enterprises the
investment percentage becomes less relevant, provided that the monetary amount is
As further grounds for regulatory qualification for an E-2 investor visa,
investments in marginal enterprises are not eligible for acceptance.78 Consequently,
the DOS applies a two-pronged test for marginality.79 On the one hand, the enterprise
in which the applicant seeks to make an investment must be capable of providing
more than a minimal living for the investor and his or her family. However, the rules
are capable of recognizing that some businesses need time to establish themselves
and become viable. Consequently, as a second prong of the test, the investor’s
enterprise must be deemed capable of making a significant economic impact within
five years of starting normal business activity. If neither of these prongs is
successfully passed, the enterprise is deemed marginal and the application is
rej ect ed. 80
71 8 CFR §214.2(e)(3)(ii).
72 Certain joint ventures have been deemed permissible by the United States, provided that
each joint venture partner have veto power over decisions by the other partner.
73 8 CFR §214.2(e)(12).
74 8 CFR §214.2(e)(14).
75 9 FAM §41.51 n.10.4, as amended, TL:VISA-322 (October 10, 2001).
76 Visa Bulletin, Vol. V, No. 20 — Nonimmigrant Treaty Investors U.S. Department of
State, Visa Office (1982).
78 8 CFR §214.2(e)(15).
79 2 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 17.06[c] (Matthew Bender, Rev. Ed.).
An additional category of E-class nonimmigrant visa — the E-3 visa for
Australian nationals — does exist, but it is set aside for use by specialized workers,
and not for investors or traders.81
Nonimmigrant Investor Visa Numbers
E-class visas are largely distributed to foreign nationals from the regions of Asia
and Europe. This result is not surprising since the majority of treaty countries are in
these two regions. Furthermore, one could reasonably expect that the financial
requirements embedded in nonimmigrant investor visa categories would result in a
high correlation between the nationality of qualifying applicants and country
membership in the Organization for Economic Cooperation and Development
(OECD) — an organization of capital abundant countries.
As Figure 2 shows, the Asian region was issued the highest number of E-class
visas in FY2007, with a total of 18,808 visas issued. These Asian issuances
constitute more than all other regions combined, and represent 49.4% of the
worldwide total. Within the Asian region, the biggest user of the E-class visa is
Japan, whose nationals accounted for 12,063 of the visa issuances in FY2007, a
figure representing 31.7% of the 38,084 worldwide E-class visas issued that fiscal
year. Europe’s 12,854 E-Class visas accounted for 33.8% of the worldwide total,
while the North American share of 3,803 visas represented 10.0%. Oceania’s
issuance accounted for 1,627 visas, or 4.3% of the total.82 South America and Africa
each accounted for less than 2.5% of the worldwide total, and combined their
nationals represented approximately 2.6% of the worldwide E-class visa issuances
81 A special category of nonimmigrants classified as the E-3 visa has been established and
is only available to nationals of Australia. Although agreed upon under the Australian Free
Trade Agreement, the agreement itself contained no explicit immigration provision. Rather,
the FY2005 supplemental appropriations for military operations in Iraq and Afghanistan
(P.L. 109-16) included §501 creating the E-3 visa category. This visa permits the
employment by any United States employer of a qualifying Australian national for a
specialty occupation. Unlike the other E-class visas, the E-3 carries an annual cap which
is currently set at 10,500. However, the other rules generally remain the same as E-1 and
E-2 visas, with admissions for two years and unlimited extensions for qualifying individuals.
The E-3 resembles the H-1B-1 visa which allows for similar admissions of specialized
workers from Chile and Singapore. After legislation was passed implementing the Chile and
Singapore Free Trade Agreements (P.L. 108-77 and P.L. 108-78, respectively), these new
laws carved out a portion of §101(a)(15)(H) of the INA for professional workers entering
through the free trade agreements. Unlike the other H-1B requirements, H-1B-1 recipients
are only required to be specialized workers as opposed to highly specialized. This visa
category also differs from the E-3 visa in that it allows for an 18 month admission and
carries an annual cap of 1,400 for Chilean nationals and 5,400 for nationals of Singapore.
For further discussion on the E-3 and H-1B-1 visas, see CRS Report RL30498, Immigration:
Legislative Issues on Nonimmigrant Professional Specialty (H-1B) Workers, by Ruth Ellen
Wasem and CRS Report RL32982, Immigration Issues in Trade Agreements, by Ruth Ellen
82 The figure does not include 2,572 visas issued to E-3 applicants under the Australian Free
Trade Agreement in FY2007.
Figure 2. E Treaty Trader and Investor Visas Issued by Region,
20, 00 0
18 ,8 08
18, 00 0
16, 00 0
12 ,85 414, 00 0
12, 00 0ed
8, 00 0V
6, 00 0
3,8 0 34, 00 0
1,6272, 00 0
Af r i c a As i a Eu r o p e No r t h Ocea nia So u t h
Ame r i c a Ame r i c a
Source: Data are from the Department of State, Bureau of Consular Affairs, Report of the Visa Office,
Notes: The figure does not include the one visa issued to an individual with no registered nationality.
E-3 visas issued are not included in the figure.
The admissions data on nonimmigrant investors offers more detailed insights
into the origins of the visa holders. Table 2 provides cumulative totals of E-class
visa admissions into the United States in FY2006 by region of origin, with a detailed
breakdown of the Asian region. The figures listed in Table 2 show that the Asian
region accounted for approximately 50.3% of the nonimmigrant investor visa
admissions into the United States. In FY2005, Japan accounted for the majority of83
nonimmigrant investor admissions with 83,478 admissions. South Korea’s 14,149
nonimmigrant investors admitted account for 6.5% of the United States total for
FY2006. It is worth noting that the fast growing markets of China and India (the
world’s two largest population centers) combined for slightly more than 1,000
admissions. The second largest region of origin for nonimmigrant investor
admissions was Europe, with slightly more investors admitted than Japan. And while
Europe’s 74,338 admissions accounted for 38.6% of the total U.S. nonimmigrant
investor admissions in FY2005, the 203 admissions of nationals from African
countries accounted for approximately one-tenth of 1% of this same total.
83 Admissions figures differ significantly from visa issuance figures because individuals may
leave the United States and return on the same visa, as long as the visa is still valid. Thus,
some individuals may be counted multiple times in the admissions data.
Table 2. Nonimmigrant Treaty Trader and
Investor Admissions, FY2006
Country (or Region) of OriginNumberPercentage of Total
Chi n a a 729 0.3
All other Asia6,3433.0
Total for Asia109,24550.3
All Other Regions:
Europe 79,599 36.7
Source: CRS presentation of Department of Homeland Security Office of Immigration Statistics
Notes: The data also include 2,123 individuals who were admitted on E-3 visas for free trade workers
from Australia. The vast majority of these workers were Australian nationals.
a. Denotes People’s Republic of China, Hong Kong, and Macau.
The Department of Homeland Security (DHS) offers statistics on the admissions
of nonimmigrants and their destination state. Figure 3 indicates the destination
states of nonimmigrant treaty trader and investor visa admissions into the United
States for FY2006. The state with the highest number of nonimmigrant investors as
their destination in FY2006 was California with 45,480 admissions, accounting for
21.2% of the admissions total. Following California, the next three biggest recipients
of nonimmigrant investors were Florida, New York, and Texas with 24,425, 24,216,
and 18,164 admissions each, respectively. In the respective order, these state
admissions accounted for 11.4%, 11.3% and 8.4% of the admissions total in FY2006.
The only other states with a combined total of more than 10,000 nonimmigrant treaty
trader and investor visa admissions were Michigan and New Jersey. Michigan was
the destination state of 11,851 nonimmigrant investors admitted, while New Jersey
attracted 10,521 admissions. These totals accounted for 5.5% and 4.9% of the United
States admissions total, respectively. The remaining states represented the
destination states for approximately 37.3% of nonimmigrant traders and investors.
Figure 3. Nonimmigrant Treaty Traders and Investors Admitted, FY2006
CRS presentation of Department of Homeland Security Office of Immigration Statistics FY2006 data.
The data do not include individuals who were admitted on E-3 visas for free trade workers from Australia.
Historically, more investors have applied to enter the United States as
nonimmigrants than immigrants, possibly because the less stringent requirements for
the nonimmigrant investor visa make it easier to obtain. However, relative to other
nonimmigrant categories, the admission levels of investor nonimmigrants are low.
With the ease of movement, technological advances, and ease of trade restrictions,
many investors may be choosing to invest in the United States from abroad and enter
the United States on B-1 temporary business visas or visa waivers.84
U.S. and Canadian Comparisons
Although there are many countries with investor visa programs — including the
United Kingdom, Australia, and New Zealand — the Canadian investor program has
the strongest parallels to those of the United States. These parallels are in part due to
the fact that the U.S. immigrant investor program was modeled after its Canadian
counterpart. The Canadian program allows investors who have a net worth of at least
$800,000 (Cdn) to make a $400,000 (Cdn) investment through Citizenship and85
Immigration Canada (CIC). The Canadian government additionally offers an
entrepreneurial visa for foreign nationals with a net worth of $300,000 (Cdn).86 These
nationals are required to invest and participate in the management of a certain sized
business, and they must produce at least one new full-time job for a non-family87
member. Between 1986 and 2002, the Canadian investor visa program attracted
more than $6.6 billion (Cdn) in investments.88 From FY1992 through FY2004,
United States LPR investor immigrants had invested an estimated $1 billion in U.S.
According to published accounts, the Canadian investor visa was developed90
initially to attract investors from the British colony of Hong Kong. The visa was
created in 1986 in response to the significant numbers of investors seeking to migrate
84 According to the DHS Office of Immigration Statistics’ 2005 Yearbook of Immigration
Statistics, in FY2005 there were 2,432,587 admissions of B-1 visa holders and 2,261,354
admissions for business purposes on visa waivers.
85 Citizenship and Immigration Canada, “Business Immigrant Links: FAQs,” March 31,
visited September 20, 2007.
88 Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green Cards: Rise of the
Phoenix?” New York Law Journal, April 25, 2005. At [http://www.millermayer.com/
EB5NYLJ0405.html], visited January 23, 2007.
89 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
90 Denton, Herbert H. “Canada Lures Hong Kong Immigrants: Well-Off Businessmen
Willing to Invest Are Granted Special Status.” Washington Post, March 8, 1986, pp. A11,
from Hong Kong in anticipation of the transfer of the colony from British to Chinese
control. For these investors, the visa offered an opportunity to establish legal
permanent residence in a country that was perceived to be more embracing of
individual property rights and open markets.91 These immigrant investors from Hong
Kong, along with other immigrant investors, have cumulatively invested over $3
billion in the Canadian economy.92
As Figure 4 demonstrates, the annual number of immigrant investor visas
issued over the past decade has remained multiple times higher than that of its United
States counterpart. The margin between these two programs was closest in 1997,
when the Canadian issuance of 5,595 immigrant investor visas was approximately
400% higher than the U.S. total of 1,361 immigrant investor visas issued. Although
these ratios have fluctuated, the sizable Canadian advantage in this measure has
remained. In terms of the absolute levels, the Canadian immigrant visa level for 2005
represented a 10-year high, while the U.S. level for the same time period represented
approximately 25% of its 10-year high. Both countries have shown an upward trend
in immigrant investor visas in the last two years.
Figure 4. Immigrant Investors to Canada and the United States,
10 ,0 00
7,000gr an t
5,000a t e go r
3,000I n ves
0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Ye a r
Source: Data are from the United States Government Accountability Office (2005) and Citizenship
and Immigration Canada (2005).
92 Citizenship and Immigration Canada, “Business Immigrant Links: FAQs,” March 31,
visited September 20, 2007.
What is unclear from the data is whether the competition between the U.S. and
Canadian program (as well as investor programs in other countries) constitutes a
zero-sum game. There are no data available showing the motive for migration
among investors, or if they perceive the United States and Canada as interchangeable
investment locations. If the investors are motivated purely by the economic returns,
then economic theory93 suggests that equalizing the program financial requirements
should result in more equal rates of petitions. Furthermore, a lowering of the
financial requirements should increase the supply for both countries. However, if the
immigrant investors are motivated to migrate by non-financial considerations, then
equalizing the United States program requirements with its Canadian counterpart is
likely to have little impact on the current trends.
Analysis of the Relationship
Between Investments and Migration
Classical economic theory has posited that trade liberalization (including the
reduction of investment restrictions) establishes a conditional inverse theoretical
relationship between foreign direct investment (FDI) and migration.94 In other words,
as trade increases, migration pressures decrease. The theory posits that an increased
level of FDI should reduce migratory pressures through growth in the targeted
economy. As economic growth produces a higher demand for labor, workers in that
economy feel less pressure to seek employment in foreign economies, provided that
the new jobs complement the workforce’s skills. For example, if economic growth
creates demand for skilled labor, then an unskilled labor force should not experience
any reduced migration pressures. Thus, while FDI increases host-country growth,
there is not necessarily a direct reduction in host-country migration pressures.
The investor visas offered by the United States operate on the principal that FDI
into the United States should spur economic growth in the United States. According
to the classical theory, if these investments are properly targeted towards the U.S.
labor force’s skill sets, it should reduce the migration pressures on U.S. workers.
Such economic growth from FDI should further spur greater demand for trade. In
FDI between capital abundant countries such as the OECD member states (between
whom a marked majority of FDI flows), the empirical evidence has largely supported
this notion.95 Furthermore, it has provided an increased per capita income in these
states, as well as boosted the general standard of living.
What is less clear from the empirical research is the degree to which potential
migration provides any additional incentive for investment activity in the United
93 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and Foreign
Direct Investment Policies: A Background Paper.” OECD Development Centre, Working
Paper No. 249, June, 2006.
94 For a brief discussion, see Xenogiani, Theodora. “Migration Policy and Its Interactions
with Aid, Trade and Foreign Direct Investment Policies: A Background Paper.” OECD
Development Centre, Working Paper No. 249, June, 2006, p.36.
States. The classical trade theory asserts that trade and migration are substitutes,96 and
that trade liberalization should reduce migratory pressures.97 These basic
propositions are generally agreed to hold in the long term. Consequently, in the long
term classical trade theory suggests there should be little migration of investors from
countries with liberalized trade arrangements with the United States.98 Instead, these
investors would achieve their investments through conventional FDI. Furthermore,
the theory suggests that investors would be more likely to migrate from countries
with restrictive trade policies (a policy more highly correlated with less economically
Critics of the classical economic models contend that despite elegant
predictions, the models produced by the theory frequently do not capture the costs of
international finance. Such critics argue that foreign investments often occur at the
expense of local businesses, and result in exploitive practices of local labor.99 These
criticisms are particularly common when critiquing the economic relationship
between capital abundant countries and less economically developed countries
(LEDC). According to the argument, more powerful countries can leverage their
power to construct investment relationships that shift a disproportionate amount of
profits to the capital abundant countries. Simultaneously, a greater share of the
costs100 are shouldered by the less powerful country. Classical economists generally
respond by noting that these investments are still producing growth in the LEDCs,
making the countries better off than without the investments. However, LEDCs
remain a source of contention between the classical economic theorists and their
Less Economically Developed Countries. Some scholars have expressed
doubt about the posited trade/migration substitutability, suggesting that the
relationship in the short or medium term could look different from the long term.101
One of the arguments put forward is that trade and migration are complementary for
96 For further discussion on immigration and trade see CRS Report RL32982, Immigration
Issues in Trade Agreements, by Ruth Ellen Wasem.
97 This migratory pressure reduction should occur through the increased exports of unskilled
labor-intensive goods, as well as the resulting fact-price equalization and subsequent
convergence of wages.
98 There exists the possibility that foreign investment and capital trade objectives of many
investors are accomplished through multinational corporations. Under the construct of a
multinational corporation, returns to the investor are achieved through the foreign direct
investment by the corporation and through the migration of managers and technical experts
to facilitate production efficiency.
99 For example, see Banerjee, Subhabrata Bobby, and Stephen Linstead, “Globalization,
Multiculturalism and Other Fictions: Colonialism for the New Millennium?” Organization,
vol. 8, no. 4 (2001), pp. 683-722.
100 These costs may include tax shelters, government sponsored benefits, subsidies, and the
101 Schiff, M. “How Trade, Aid, and Remittances Affect International Migration.” World
Bank Policy Research Working Paper No. 1376, Washington, DC, 1994.
countries with different levels of development.102 Under such a scenario, economic
growth in a sending country would provide potential migrants with the economic
means to overcome relatively high migration costs. Other observers point to such
factors as imperfect credit markets and currency fluctuations as significant “push”
factors for potential migrants.103 These latter factors, however, are generally more
highly correlated with LEDCs. Therefore, both the complementary and
substitutability theories of trade and migration suggest that higher demand for
investor out-migration should currently lie in the populations of LEDCs. However,
as noted earlier, investor visas issued to regions with LEDCs are relatively few.
What makes the visa program distinct from conventional FDI is that it involves
trade through the import of human capital. Consequently, these visas have potential
for creating a so-called “brain drain” migration out of less-developed sending-
countries.104 LEDCs are by definition limited in their capital levels, and economic
theory would suggest that exporting capital from a capital scarce country would
inhibit its growth and development.105 Classical theorists would argue that the United
States would be better served by sending FDI into LEDCs, thereby promoting
economic growth in LEDCs and a subsequent higher demand for U.S. goods.106 Such
investment, the theory dictates, would promote job growth both in the United States
and abroad.107 Instead, targeting investors from capital abundant countries for sector
102 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and
Foreign Direct Investment Policies: A Background Paper.” OECD Development Centre,
Working Paper No. 249, June, 2006, p. 31-33.
104 A large majority of the issued visas have been to foreign nationals from relatively capital
105 For further discussion of FDI into the United States see CRS Report RS21857, Foreign
Direct Investment in the United States: An Economic Analysis, by James K. Jackson.
106 FDI does entail some degrees of risk and reward for both the home and host economies.
For the home economy, FDI can improve competitiveness and performance of firms by
providing value-added activities, better employment opportunities, better export
performance, and higher national income. At the same time, engaging in FDI also runs the
risks of lower additions to both domestic investment and capital stock, as well as loss of
competitiveness and jobs in certain parts of the economy. For the host economies, the
benefits include increases in employment and potential multiplier effects on other parts of
the economy through productivity growth. Accepting FDI, however, does run the risk that
domestic firms are crowded out of the market (United Nations World Investment Report,
107 From the classical economic perspective, the immigrant investor pilot program is counter-
intuitive. In the case of investors from developed countries there is little incentive for them
to settle in the United States since they can achieve similar standards of living and all of
their FDI objectives from their home country. As for LEDCs, a drain of their capital may
provide short-term benefits to the United States, but would inhibit growth and trade in the
long run. The flight of investors from Hong Kong in the late-1980s and the 1990’s was a
unique economic situation that has since subsided. Other than the Hong Kong scenario,
there is seemingly little incentive for investors to relocate.
specific investments would serve a more complementary role for the global market.108
By attracting capital abundant country investors, the United States’ economic growth
and productivity could be stimulated without adversely affecting the consumption
and trade potential of the investor’s country of origin.
Temporary and Permanent Investors. Some recent scholarly work has
drawn a distinction between the decision-making factors of potential temporary and
permanent migrants.109 Amongst temporary migrants, it is the employment prospects
and wage differentials that are significant variables in deciding whether to migrate.
Differences in both gains and price levels should affect the cost/benefit calculation
of the potential migrants, as these variables will affect potential levels of
consumption and savings. For permanent migrants, however, the prospects for
professional and social mobility are the main motivating factors.
The distribution of visas among Asian countries shows marked country-specific
tendencies among investor visa petitioners. Specifically, the polarization among
petitioners towards either immigrant (permanent) or nonimmigrant (temporary) visas
suggests that a significant proportion of applicants are substituting immigrant visas
for nonimmigrant visas, or vice versa. For example, while Japan accounted for
37.8% of all the foreign nationals arriving on nonimmigrant treaty trader and investor
visas in FY2005 (Table 2), its nationals represented only 1% of all the LPR investor
visas issued in the time frame FY1992-FY2004 (embedded in “Other Asia” of
Figure 1). Conversely, from the same two sets of data-samples, nationals of Taiwan
accounted for 39% of immigrant investors issued, but only 2.5% of nonimmigrant
arrivals. In the context of the aforementioned theory, Table 2 and Figure 1 above
suggest that Japanese investors are seeking to capitalize on wage differentials, while
Taiwanese, Chinese, and (to some extent) South Korean investors are pursuing
professional and social mobility.
Although some considerations weigh more heavily on the decisions of
immigrant and nonimmigrant investors, no single explanation accounts for the
behavior of investor visa petitioners. Japan, for example, has some trade restrictions
with the United States through voluntary export restraint agreements limiting auto
and steel exports to the United States, suggesting from the theoretical standpoint that
Japanese investors would choose to temporarily migrate.110 The Japanese
governments have also complained that the post-9/11 customs regulations and
108 The complementary roles would be achieved through what economists refer to as
“comparative advantage.” Theoretically, each country should be able to produce a good or
service more efficiently than the world average, thereby making the good or service
exportable. By attracting investments in these comparatively advantaged sectors, costs
should decrease while production increases. Thus, consumers at both ends of a trading
relationship are able to consume more goods.
109 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and
Foreign Direct Investment Policies: A Background Paper.” OECD Development Centre,
Working Paper No. 249, June, 2006, p. 31-33.
110 CRS Report RL32649, U.S.-Japan Economic Relations: Significance, Prospects, and
Policy Options, by William H. Cooper.
practices of the United States inhibit U.S./Japanese trade.111 Despite the suggestion
by these factors that Japanese investors are temporarily substituting trade with
migration, it is also plausible that Japan’s weak economic performance has reduced
the professional mobility opportunities — a motivation associated with permanent
migration. From 1991-2000, Japan’s real (adjusted for inflation) average GDP
growth rate was 1.4%, and it fell to 0.9% from 2001 to 2003.112 Yet, regardless of
motivation, Japanese investors are predominantly choosing to temporarily migrate
to the United States.
The fact that China, Taiwan and South Korea have had strong economic
performance in the last decade and relatively higher levels of immigrant investors to
the United States, suggests that these investors are migrating for more than financial
purposes. These investors may be more strongly motivated by the family and/or
social network connections to previously migrated investors and other LPRs in the
United States. These theoretically derived motives, however, must be further tested
empirically before any conclusive behavioral statements can be made.
Multiplier Effects. Classical economic theory holds that investments provide
for multiplier effects throughout the economy by increasing demand for other goods
and services. For example, an increase in demand for corn may increase the demand
for storage facilities, which results in an increase in construction contracts. The U.S.
Department of Commerce has quantified these effects through the Regional Input-113
Output Modeling System (RIMS II). The RIMS II multipliers have become a
significant factor in assessing indirect economic activity and employment effects for114
Immigrant Investor Pilot Program petitions. Using the regional multipliers for
various industries, foreign investment funds are frequently shown to yield increases
in demand across an economy that are several times higher than the direct input by
an investor. Thus, despite the relatively low number of investors entering the United
States, the impact of each investment by a foreign investor is a multiplied factor
greater than the direct investment, depending upon which industry and region is
being invested in. Furthermore, studies showing the direct economic investments of
foreign investors may not fully capture the economic impact of these investors upon115
113 For an explanation of the RIMS II multiplier, see U.S. Department of Commerce,
Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System
(RIMS II), Third Edition, March, 1997.
114 According to the USCIS Chief Adjudications Officer for EB-5 visas, well established
input-output models such as RIMS II are useful in assessing investments for limited
partnerships, where the direct effects of an investment are difficult to demonstrate (based
on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS Investor and
Regional Center Program, November 20, 2006). Such established economic models are
permitted under regulations (8 CFR 204.6(m)(3)).
115 A recent study commissioned by the National Venture Capital Association found that
over the past 15 years, immigrants have started 15% of venture-backed U.S. public
In recent years, significant efforts have been made by administrative agencies
to both promote investment by foreigners in the United States economy, and to close
perceived loopholes for visa exploitation. At the center of these efforts has been the
USCIS’ changes to the Immigrant Investor Pilot Program, which addressed fraud
concerns and the development of a Regional Center unit for coordination and
targeting of foreign investments.
Fraudulent Investments. During the late 1990’s, the LPR investor visa was
suffering from high levels of fraudulent applications.116 There has been concern that
potential immigrants could use schemes of pooling their funds and transferring the
money to demonstrate the existence of sufficient capital.117 Furthermore, applicants
could potentially use promissory notes that would allow for their repayment after a
six year time period. Since the LPR was only conditional for two years, some
observers feared that these investors could pull out of their respective investments
after being granted their LPR, have the promissory notes forgiven, and the enterprise
would collapse. As a result, the USCIS has engaged in a policy of not accepting
promissory notes, although the regulations state that petitions with promissory notes
may be considered for approval.118 Additionally, the creation of the Investor and
Regional Center Unit (IRCU) has allowed greater scrutiny of applications through
companies. The value of these companies currently exceeds $500 billion, and most of the
companies were in technology-related industries. The study found that these companies
employ 220,000 people in the United States, and 400,000 globally. Some of the more
prominent companies included by the study’s criteria include Google, Yahoo!, eBay, and
Intel (Stuart Anderson and Michael Platzer, American Made: The Impact of Immigrant
Entrepreneurs and Professionals on U.S. Competitiveness, National Venture Capital
Association, November 15, 2006, pp. 5-8).
Although the study shows the potential benefits of immigrant entrepreneurs, it does
not directly reflect on the investor visa categories. Most of the immigrants that founded
these enterprises came to the United States as children, teenagers, graduate students, or were
hired on H-1B visas in their mid-twenties. Thus, it is unclear to what extent these
individuals would have qualified as either immigrant or nonimmigrant investors under the
current regulations. Furthermore, the study’s findings includes numbers from both
companies wholly founded by immigrants and companies founded through partnerships with
United States citizens (Ibid).
116 Some have expressed concern regarding the investor visas being a means for some
foreign nationals to channel illegal funds into the United States. Opponents of the LPR
investor visa raised objections during congressional debates by asserting that the LPR
investor category would allow individuals to become United States citizens who had
profited from drug cartels. According to DHS, there does exist documented past abuses in
the alien investor program (U.S. Government Accountability Office, Immigrant Investors:
Small Number of Participants Attributed to Pending Regulations and Other Factors, GAO-
05-256, April 2005, pp. 39.). However, since the implementation of the “no promissory
notes” policy, the fraudulent cases have largely disappeared.
117 Based on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS
Investor and Regional Center Program, November 20, 2006.
increased resources and coordination of petitions processing. Petitioners now must
provide extensive documentation that traces the source of their funds to show that the
capital was legally obtained.119
IRCU Expansion. Prior to the creation of IRCU, the former-INS had been
criticized for becoming more restrictive in application reviews for Regional Center
designation, including allowing some applications to remain pending for more than
three years.120 In 2005, concerns were raised by both Members and advocates that121
the IRCU still did not process applications quickly enough, and that staff members
had competing obligations within IRCU.122 Proponents of the Immigrant Investor
Pilot Program believe it has attracted a significant amount of capital and that
addressing these criticisms would further increase the levels of foreign investments123
through the LPR investor visa. USCIS has responded to these criticisms by
expanding the number of Regional Centers available for LPR investor investments.
Most recently, IRCU has been expanded into Western Pennsylvania.
Working with foreign financing from the immigrant investor program has
become highly attractive for many domestic investors. A number of current
investment projects are using LPR investor financing because it is less costly for the
domestic investors. For domestic investors, employing LPR investor funds becomes
a significantly cheaper option than a bank loan, since there is no requirement to pay
interest on the financing. Additionally, because the enterprises are less saddled with
financing debt they are more quickly able to turn a profit. The LPR investor visa
119 This practice has made it especially difficult for investors from countries with business
practices based on convention (as opposed to legal documentation) to qualify for investor
visas. Documentation requirements may force a potential investor to trace funds back
several decades, effectively disqualifying investors from countries where credible historical
records of income tax documents do not exist (Wolfsdorf, Bernard P., Naveen Rahman-
Bhora, Tien-Li Loke Walsh, and Kim Tran. “A Review of the Immigrant Investor Program.”
Immigration Law Today, July/August, 2006, pp. 27-33).
120 Lincoln Stone, INS Decisions Cloud Future of Investor Pilot Program, 6 Bender’s
Immigration Bulletin 233 (March 1, 2001).
121 Rep. Sensenbrenner wrote a letter to USCIS Director Eduardo Aguirre on April 6, 2005
asking the USCIS to institute premium processing and concurrent filing for immigrant
investor petitions (Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green
Cards: Rise of the Phoenix?” New York Law Journal, April 25, 2005. At
[http://www.millermayer.com/EB5NYLJ0405.html], visited January 23, 2007.).
122 Letter from Lincoln Stone, Chair of the Investor Committee of the American Immigration
Lawyers Association, to Michael Aytes, USCIS Acting Associate Director of Operations,
November 16, 2005.
123 Lincoln Stone, the Chair of the Investor Committee of the American Immigration
Lawyers Association, noted the generated level of capital in four targeted areas. According
to an informal survey Stone had conducted of four targeted centers (California Consortium
for Agricultural Export, Philadelphia Investment Development Corporation, Golden
Rainbow Freedom Fund, and South Dakota international Business Institute), these centers
had attracted $121.3 million in capital in their two-year existence (Letter from Lincoln
Stone, Chair of the Investor Committee of the American Immigration Lawyers Association,
to Michael Aytes, USCIS Acting Associate Director of Operations, November 16, 2005.).
petitioners are still able to qualify for conditional LPR status under these investment
structures through the multiplier rules for employment and capital that the USCIS
employs. Thus, limited partnerships of domestic investors with LPR investor visas
has become a popular option for financial stabilization and enterprise start-up in
Regional Centers as diverse as Philadelphia and South Dakota.
New Orleans. In the efforts to rebuild the sections of New Orleans damaged
by Hurricane Katrina, developers and officials alike have taken an interest in
attracting foreign capital. USCIS officials are working closely with New Orleans
officials to establish New Orleans as another Regional Center for LPR investor visa
investments. Officials at USCIS are hopeful that the program success that the
Philadelphia targeted center is experiencing can be replicated in New Orleans. Since
being designated a Regional Center, Philadelphia has attracted over 100 LPR
investors and most of their investments are being used to help finance the renovation
and transformation of the 1100 acre shipyard (for further discussion, see Appendix
Current Legislation and Potential Issues
Several issues related to investor visas may surface during the 110th Congress.
For example, the immigrant investor pilot program is scheduled to sunset at the end
of FY2008. The immigrant investor pilot program visa was last extended under the
Basic Pilot Program Extension and Expansion Act of 2003.124 There are currently no
other programs for targeting investments by immigrant investors to the United States.
Additional investor visa issues that could surface may relate to temporary
investors. In terms of nonimmigrant visas, the Danish government has been lobbying
the United States to grant E-2 treaty investor visas to Danish nationals. Originally,
this provision was granted to the Danes on May 2, 2001 as part of a protocol to the
treaty granting nationals of Denmark E-1 nonimmigrant trader visa eligibility. The
protocol was never ratified, however, due to congressional objections over the
inclusion of immigration provisions in a trade agreement. Subsequently,
Representative Sensenbrenner introduced H.R. 3647, which was passed in the House
on November 16, 2005, and would have allowed nationals of Denmark to enter and
operate in the United States as investors under E-2 treaty investor nonimmigrant
visas. Currently, Danish nationals are only allowed E-1 treaty trader visas. Denmark
is one of four countries whose nationals are eligible for E-1 treaty trader visas, but
not E-2 treaty investor visas (see Table 3 in Appendix A).
The E-2 Nonimmigrant Investor Adjustment Act of 2007 (H.R. 2310),
introduced by Representatives Heather Wilson and Sue Wilkins Myrick, would
amend the E-2 treaty investor visa rules, allowing visa holders to adjust directly to
LPR status after holding the visa for five years. In addition to being otherwise
eligible for a visa, the individual would be required to invest at least $200,000 in an
124 P.L. 108-156.
enterprise and to create full-time employment for at least two individuals. The
legislation would allow for up to 3,000 E-2 visa holders to adjust to LPR status on
an annual basis.
In terms of the LPR investor visa, the comprehensive immigration legislation
introduced by Senators Ted Kennedy and Arlen Specter on May 21, 2007 (as S.Amdt
1150 to S. 1348),125 would reduce the number of visas available to LPR investor
applicants. The Senate proposal (entitled “A Bill to Provide for Comprehensive
Immigration Reform and for Other Purposes”) would reduce the annual number of
visas available to LPR investors to 2,800. Of these visas, 1,500 would be set aside
for targeted areas. On June 18, 2007, Senators Kennedy and Specter introduced a
subsequent version of the comprehensive immigration reform legislation as S. 1639,
which, although not identical to S.Amdt. 1150, keeps the same foreign investor
provisions intact. Among those publically associated with negotiating the
compromise legislation are Homeland Security Secretary Michael Chertoff and
Commerce Secretary Carlos Guteirrez. S. 1639 stalled in the Senate on June 28,
On December 19, 2007, Representative Flake introduced H.R. 4890 (The Invest
in USA Act of 2007), which would make the Immigrant Investor Pilot Program
permanent. The bill would additionally set the premium processing fee for all
immigrant investors at $2,000, while instituting a $2,500 fee to apply for Regional
Center designation under the permanent EB-5 Regional Center Program. The
premium processing fee would be deposited in the Immigration Examination Fee
Account, and the Regional Center designation fee would be deposited in a new
account, entitled “Immigrant Entrepreneur Regional Center Account.” Funds from
both accounts would only permit collections under these provisions to be available
for the administration and operation of the EB-5 immigrant investor program. H.R.
4890 would also allow for concurrent filing of EB-5 petitions and adjustment of
status for applications through Regional Centers applications, wherein approval of
the petition would make a visa immediately available to the alien beneficiary.
Two other bills have also been introduced in the 110th Congress pertaining to
EB-5 investor visas. First, S. 2751 (the State Foreign Investment Improvement Act)
was introduced by Senator Leahy and Senator Specter on March 12, 2008. The
provisions of S. 2751 are the same as those in H.R. 4890, above. Second, on April
2, 2008, the House Committee on the Judiciary ordered reported H.R. 5569, which
would extend the EB-5 Regional Center pilot program for five years through
125 S. 1348 was introduced by Senate Majority Leader Harry Reid as a placeholder while the
language for the new immigration reform bill was being negotiated. The placeholder billth
that Senator Reid introduced was S. 2611 from the 109 Congress — a bill which had
previously passed the Senate.
Table 3. E-Class Visa Privileges by Year of Attainment
CountryClassificationYear of Visa
Arge ntina E-1 1854
Arge ntina E-2 1854
Australia E-1 1991
Australia E-2 1991
Australia E-3 2005
Azerbaij ana E-2 1901
Bahraina E-2 1901
Bangladesha E-2 1989
Bosnia & HerzegovinaE-11982
Bosnia & HerzegovinaE-21982
Brunei b E-1 1853
Bulgariaa E-2 1954
Came roona E-2 1989
Denmarkb E-1 1961
Ecuador a E-2 1997
E gyp t a E-2 1992
Estonia E-1 1926
CountryClassificationYear of Visa
Gr eeceb E-1 1954
Gr enada a E-2 1989
Israel b E-1 1954
Jamaicaa E-2 1997
Kazakhstana E-2 1994
K yr gyzs t a n a E-2 1994
Lithuaniaa E-2 2001
Luxembourg E-1 1963
Luxembourg E-2 1963
Macedonia E-1 1982
Macedonia E-2 1982
Moldova a E-2 1994
Mongoliaa E-2 1997
Moroccoa E-2 1991
Netherlands E-1 1957
Netherlands E-2 1957
CountryClassificationYear of Visa
Panama a E-2 1991
Philippines E-1 1955
Philippines E-2 1955
Pol a nda E-2 1994
Roma nia a E-2 1994
Senega l a E-2 1990
Singapore E-1 2004
Singapore E-2 2004
Singapore H-1B-1 2004
Switzerland E-1 1855
Switzerland E-2 1855
Trinidad & TobagoaE-21996
T unisiaa E-2 1993
Ukr a i n e a E-2 1996
Source: CRS presentation of data from the U.S. Department of State Foreign Affairs Manual, 9 FAM
a. Countries with only E-2 visa privileges.
b. Countries with only E-1 visa privileges.
There are currently numerous targeted economic regions set up for the
Immigrant Investor Pilot Program for the EB-5 visa category. These targeted areas
have focused on different types of investments in order to achieve economic benefits
for the given region. Below are descriptions of a couple of the projects that are
currently in place under the Immigrant Investor Pilot Program and the results these
projects are producing.
South Dakota International Business Institute
The South Dakota International Business Institute (SDIBI), Dairy Economic
Development Region (DEDR) is the only regional targeting center currently run by
a state government. Approved in June 2005, this Regional Center was the result of
a state-wide effort to find an improved method of attracting foreign capital to South
Dakota. From the state’s perspective, the EB-5 pilot investor program offered a more
promising solution than the E-2 nonimmigrant visa, since officials could offer
investors the benefit of LPR status.126 Additionally, the job-creation criterion of the
EB-5 visa aligned well with the state’s focus on job creation from foreign
investments (as opposed to isolated capital injections). In its application for Regional
Center designation, the state said it would focus its efforts on attracting dairy farm
investors. USCIS agreed to the designation on the condition that South Dakota would
allow for limited partnerships of foreign investors with domestic farmers.127 As a
result, South Dakota currently has enterprises fully owned and operated by foreign
investors, as well as limited partnerships.
Since the regional designation took effect, South Dakota has attracted 60 foreign
investors to its dairy industry (with an additional 10 applications still pending).128
These foreign investors have injected approximately $30 million into the South
Dakota economy, with an additional $6 million in matching funds coming from local
farmers. Furthermore, this combined $36 million in invested funds has resulted in
almost $90 million in bank financing for the various dairy investment projects. As
a direct consequence of these foreign investments, 240 additional jobs have been
created and 20,000 additional cows have been brought to South Dakota.129 Using the
RIMS II multipliers for investment and employment,130 the foreign investments from
EB-5 immigrants have resulted in a total of 638 additional jobs and over $360
million in additional funds to the regionally targeted economy.
126 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
127 Letter from William R, Yates, Associate Director of USCIS Office of Operations, to Joop
Bollen, Director of the South Dakota International Business Institute, June 11, 2005.
128 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
130 For the South Dakota targeted region, the RIMS II multipliers are 2.9 for investment and
According to SDIBI/DEDR Director Joop Bollen, the pilot program has
afforded South Dakota “a tremendous opportunity,” not only because of the direct
investments and multiplier effects, but because of the other investments made by the
foreign investors.131 According to Director Bollen, the attraction of foreign investors
has had significant spillover effects into the restaurant and meat packing industries.
As a result, SDIBI/DEDR hopes to focus on attracting additional investments for its
meat packing plants. As such, Director Bollen stated that it was of paramount
concern to the SDIBI/DEDR that USCIS have sufficient resources to quickly
adjudicate EB-5 immigrant visa petitions. If the adjudication process is too long,
Director Bollen stated, then the opportunity cost may make a South Dakota dairy
investment unappealing to foreign investors.132
CanAm Enterprises is a private financial advising group which serves to
structure, promote and administer the Philadelphia Industrial Development Center
(PIDC) Regional Center.133 The group works in conjunction with the City of
Philadelphia through the PIDC to facilitate the city development (mainly in the city’s
shipyard area) and provide investor credibility. This public/private partnership was
developed to aid the transition of Philadelphia from a manufacture-based to a service
based economy.134 The main strategy has been to use collateralized loans to attract
investments in industries that provide long-term full time employment. By doing so
the city hopes that investors will wish to invest in other projects and sectors of the
When the Philadelphia Naval Base was closed as part of the base closures of the
Despite the city’s efforts the shipyard was unable to remain competitive in the ship
construction industry.136 However, with the passage of requirements following the
Exxon Valdez oil spill137 (and the ongoing regulations from the Jones-Shafroth
131 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
133 On April 26, 2008, CanAm published a press release stating: “CanAm Enterprises, LLC
is pleased to introduce the Los Angeles Film Regional Center, which was designated by
USCIS on March 24, 2008, and will specifically target investments in the motion picture and
television industry in Los Angeles County, California.” (CanAm Enterprises, “CanAm
Introduces the LA Film Regional Center,” Press release, April 26, 2008, available at
[http://eb5dvd.com/news.php?inc=3&nid=59], visited May 5, 2008.
134 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.
136 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.
137 P.L. 101-380.
Act),138 the civilian shipbuilding industry in the United States became economically
viable again.139 The federal government and the city of Philadelphia combined to
invest over $400 million into the Philadelphia shipyard. Additionally Norwegian
shipbuilding companies were brought in as investors in the shipyard and provided
valuable training and human capital to the shipyard. Since production restarted, EB-
5 investors have become increasingly important for providing funds to remove
production bottlenecks. A recent example includes the use of EB-5 funds for the
development of a more advanced painting technology for the ships.140
Philadelphia is one of the Regional Centers that has been most successful in
attracting foreign investors through the EB-5 visa. There are approximately 60 EB-5
visa investors in Philadelphia who have invested a total of $75 million into the city.141
Additionally, there are around 30 petitions that are under review for other investment
projects. The lead official at CanAm Enterprises told CRS that while they believe
the funds have been important to the city, the human capital the investors bring is
equally important. This official stated that the investors being brought to the United
States represented highly competent entrepreneurs, who not only made investments
in the city beyond their initial investment, but also facilitated greater economic
activity through exchanges with their existing foreign networks.142
138 The Jones-Shafroth Act is a section of the Merchant Marine Act of 1920 (46 U.S.C. 883;
19 CFR 4.80 and 4.80b). Designed to protect the United States shipping fleet, the law
requires that cargo moving between U.S. ports be carried by ships that are built in the United
States and at least 75% owned by American citizens or corporations.
139 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.