An Explanation of the U.S.-Jordan Free Trade Agreement’s Temporary Visa Provisions

In 2000, talks began between the United States (U.S.) and Jordan on establishing a free trade agreement. For several reasons, the United States is keen on negotiating a free trade agreement with Jordan. In the wake of the 1999 WTO Ministerial Conference’s failure, U.S. trade authorities began exploring the feasibility of a free trade deal that would incorporate provisions met with resistance in multilateral commerce. In addition, the United States and Jordan signed a trade and investment framework in 1999, which is often the first step toward an FTA.

The United States-Japan Free Trade Agreement includes a foreword, introduction, 19 articles, three appendices, joint statements, MOUs, and side letters. The US-JO FTA includes informative pieces on the economy and environment and opens the door for Jordanians to invest and do business in the United States. Professionals from Jordan can enter the United States under specific conditions.

Citizens of either country can travel freely to the other’s territory thanks to the US-JO FTA. It’s essential to separate the issue of immigration from the point of Jordanian investment and commerce in the United States right off the bat. Foreign nationals from Jordan are only eligible for “non-immigrant” or temporary visas, not permanent resident status. The visa holder must return to Jordan after his authorized stay.

U.S. and Jordanian people are free to travel back and forth for “substantial trade,” which includes the exchange of services and technological know-how, thanks to the US-JO Free Trade Agreement. “Substantial Trade” is the benchmark in the FTA. There is no definition of “substantial trade” under Article 8. Is it necessary, for instance, that a Jordanian merchant have substantial exports to the United States before being admitted? Or, Jordanian businesspeople must be permitted admission to the United States by American immigration law to participate in trade shows or form business partnerships.

Article 8 of the US-JO FTA is based on the U.S. Department of State regulations and the former Immigration and Naturalization Service (INS; now the Bureau of Citizenship and Immigration Service within the Department of Homeland Security). The rules of the Department of State define a treaty trader as a foreign national who will be in the United States solely to engage in trade of a “substantial nature” between the United States and the foreign state of the alien’s nationality, either on the alien’s behalf or as an employee of an unfamiliar person or organization engaged in trade, “principally” between the United States and the foreign state of the alien’s nationality. Article 8.1 of the US-JO FTA has identical language, requiring that “consideration be given to any conditions in the country of which the alien is a national which may affect the alien’s ability to carry on such substantial trade,” as stated in the Department of State’s rules. In addition, the foreigner must show that he intends to leave the United States upon the expiration of his E-1 visa.

US Department of State regulations define “substantial trade” as the volume of commerce “sufficient” to assure a continuous flow of trade items between the US and the treaty party, even though the phrase is not defined in the US-JO FTA. A constant flow of any value considers multiple transactions throughout time rather than a single one. The U.S. legal system places a premium on monetary worth. However, transactions with a higher aggregate value have more weight. Therefore, Department of State regulations do not provide a hard and fast economic threshold for “substantial trade,” such as $100,000, at which a Jordanian dealer would be eligible for an E-1 visa.

Instead, the U.S. Consular Office in Jordan has certain leeway under Department of State standards to decide what constitutes “substantial trade” that would make a Jordanian national eligible for an E-1 visa. The Department of State’s regulations bolsters this conclusion and state that factors in the alien’s home country that may hinder the alien’s capacity to carry out such considerable trade must be considered. In other words, the conditions in Jordan will be considered by the U.S. Consular Office while deciding whether or not to grant an E-1 visa. Therefore, the definition of “substantial trade” will be determined case-by-case.

Moreover, the term “trade” is not defined in the US-JO FTA. However, the negotiators of the US-JO FTA may have intended to provide a non-exhaustive list of items that may be traded in the territory of the other party, including but not limited to money, international banking, insurance, transportation, tourism, communications, and certain newsgathering activities.

The US-JO FTA also allows nationals of one party to enter into the territory of the other party to establish, develop, administer, or advise on the operation of an “investment.” However, investment is qualified by the requirement that the nationals or the company that employs them “have committed” or are “in the process of committing” a substantial amount of capital or other resources. In other words, the language of “have committed” or “in the process of committing” seems to require a significant amount of upfront investment, such as transferring money before a national of Jordan can obtain the visa. Such language’s purpose could be interpreted to prevent maneuvering and fraud. Again, in the investment

provision of the FTA, the yardstick is a commitment to a “substantial amount of capital or other resources.” The Department of State regulations define a treaty investor as an alien, classifiable as a nonimmigrant treaty investor (E-2), that has invested or is actively in the process of investing a substantial amount of capital, as distinct from a relatively small amount of money solely to earn a living. He seeks entry solely to develop and direct the enterprise. Moreover, the treaty investor must intend to depart from the U.S. upon the termination of E-2 status. Thus, subparagraph 8.2 of the US-JO FTA is drawn directly from the U.S. regulations.

Neither “investment” nor “substantial amount of capital” are defined in the US-JO FTA; however, the Department of State regulation defines investment as the treaty investor’s placing of capital, including funds and other assets, at risk in the commercial sense to generate a profit. The investor must be “in possession” of and “have control” over the capital invested or being invested.

Even if all other conditions are met, the investment must not be passive or virtual but rather a “substantial” one. According to U.S. regulations, the treaty investor may use any legal mechanism that would irrevocably commit funds to the enterprise and extend some personal liability protection to the treaty investor.

Regarding the definition of “substantial amount of capital,” Article 8 of the US-JO FTA is silent. However, the U.S Department of State regulations define “substantial capital” as the amount that is 1) substantial in the proportional sense, for example, in relationship to the total cost of either purchasing an established enterprise or creating the type of enterprise under consideration; 2) sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and 3) of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. The U.S. regulations define

whether an amount of capital is substantial in the proportionality sense in terms of an inverted sliding scale. For example, the lower the total cost of the enterprise, the higher proportionally the investment must meet the criteria. Moreover, the Department of State regulations requires that the projected future capacity of the enterprise should generally be realizable within five years from the date the alien commences regular business activity. In summation, U.S. regulations do not specify an exact amount of capital that would serve as a yardstick to evaluate whether an investment could qualify its holder for an E-2 visa. Instead, the regulations leave a “substantial amount of capital” test to be assessed on a case-by-case basis.

Article 8.2 of the US-JO FTA permits nationals of either party to enter the territory of the other party for “establishing,” “developing,” “administering,” or “advising” of an investment. However, article 8 of the US-JO FTA does not define these four terms. Again, U.S. Department of State regulations describe some of these terms.

For Article 8, the United States recognized Jordanian nationals as eligible for Treaty Trader (E-1) and Treaty Investor (E-2) visas, which may give the impression that the United States grants Jordanian citizens preferential visa treatment. In reality, however, Jordanian nationals must still personally appear at the U.S. embassy or consulate in Jordan, interview a consular officer, and obtain a visa before entering the United States.

Two-way trade between the U.S. and Jordan is up substantially since the free trade agreement between the two countries took effect. Still, a provision enabling temporary entry of Jordanian nationals into the U.S. has seen little use. From 2002-2010, no trader or investor visas were issued to Jordanian citizens under the visa provisions of the FTA. This state of affairs could be attributed to a lack of awareness or understanding on the part of Jordan’s nationals as to the E category of visas, the difficulty traders or investors face in meeting the thresholds of “substantial trade” or “substantial amount of capital” for investment, or difficulty of proving intent to return to Jordan. Not any trader or investor can meet these thresholds. The demand of article 8 of the FTA might explain the nonexistent visas under the FTA so far, even though U.S regulations allow for consideration of any conditions in the country of which the alien is a national, which may affect the alien’s ability to carry on such substantial trade.

In contrast, in the year following the implementation of NAFTA, the following numbers of professionals from the United States and Canada entered the country independently: 220 accountants from the United States and 0 from Mexico; 62 accountants from the United States entered as intra-company employees; 965 engineers from the United States and seven from Mexico; 224 engineers from the United States and three engineers from Mexico; 34 lawyers from the United States and nine from Mexico.

Despite the importance of addressing national security, outsourcing, and immigration concerns, the United States must weigh the costs and benefits of restricting the movement of individuals. Increasing temporary worker mobility and extension of trade has more potential to benefit trade development, mutual understanding, peace, and tolerance.

Agreement on the Cross-Border Supply of Services Between the United States and Jordan

Regarding international trade agreements, the focus has traditionally been on lowering tariffs and non-tariff barriers on goods. However, modern trade agreements focus on service trade since the services sector accounts for about 75% of employment activity in industrialized countries like the U.S.

The World Trade Organization (WTO) has made significant strides in liberalizing the trade in goods, and more recently, it has begun to liberalize the trade in services, with “Mode 4” of the GATS addressing the temporary cross-border movement of business and professional workers. The US-JO FTA goes beyond this primary focus on goods to address the new frontier of liberalizing trade in services.

The US-JO FTA mandates several service obligations, including nondiscrimination between U.S. and Jordanian providers and the requirement that Jordan treats U.S. providers the same as Jordanian ones. Another important US-JO FTA obligation is the most-favored-nation obligation, which mandates that Jordan treat U.S. providers the same as Jordanian ones.

The movement of natural persons, and professionals, is of particular importance to Jordan; however, temporary entry into the U.S. is limited to executives, managers, or specialists of a Jordanian company with a presence in the United States. This is because the US-JO FTA created obligations specifically targeting professional services.

Low-skilled workers seeking entry into the U.S. will be denied under the US-JO FTA. The United States and Jordan would benefit more from relaxed restrictions on unskilled than skilled labor. Jordan has primarily unskilled labor to supply, while the United States has unskilled principally jobs to offer.

The Free Trade Agreement between the United States and Jordan prohibits the temporary movement of workers between the countries unless the sending company has a “commercial presence” in the United States. This “commercial presence” requirement means a Jordanian service provider must have a branch office or other enterprise in the United States.

Possibly due to worries over education, certification, professional accreditation, and licensing in Jordan, the United States opted for skilled workers and a commercial presence in the FTA. For example, an engineer who wants to build a bridge in the United States will need two pieces of paper: a temporary visa permit and a license from the United States’ professional regulatory body.

The NAFTA’s Impact on Workers’ Ability to Move Around

Chapter 16 of NAFTA aims to facilitate the temporary entry of business persons. NAFTA parties endeavor to develop and adopt standard criteria and definitions for implementing Chapter 16. Furthermore, each NAFTA party is committed to furnishing the other parties with materials that enable them to be acquainted with the provisions of Chapter 16. This contrasts the sparse language of Article 8 of the US-JO FTA.

Chapter 16 of NAFTA established four categories of business persons who are citizens of a member country to be granted temporary entry. These four primary categories are business visitors, traders and investors, intra-company transferees, and professionals.

Visas under NAFTA’s E-1 and E-2 categories are available to traders and investors, and they are subject to the same conditions as visas granted under Article 8 of the US-JO FTA. However, no NAFTA party may impose or maintain any numerical restriction relating to temporary entry for traders or investors under NAFTA.

Another distinction between NAFTA and the US-JO FTA under the treaty trader and investor provisions is that a Canadian or Mexican business person may be denied an E visa if there is a labor dispute in the Canadian or Mexican’s occupational classification in progress where the Canadian or Mexican will be employed. Their entry may adversely affect the settlement of the labor dispute or the employment of any person involved. In other words, the requirements for E-1 and E-2 visas under NAFTA are the same as in the US-JO FTA, except that entry may be denied when it would adversely affect the settlement of a labor dispute in the US. This provision is only triggered when the Department of Labor certifies the existence of a strike or work stoppage and does not apply to E-visa holders already in the US. This language is absent from the US-JO FTA, which means that even if there is a labor dispute in the Jordanian’s occupational classification, a Jordanian national can still enter the U.S. as a trader or investor.

Third, no NAFTA party may impose temporary entry quotas for workers in occupations requiring managerial, executive, or specialized knowledge, such as L-1 visas for business people employed by an enterprise who seek to render services to that enterprise or a subsidiary or affiliate thereof.

The last category of visas under NAFTA is the professional visa, TN category. This kind of visa is unique for NAFTA nationals and unavailable for other residents. The US-JO FTA does not contain such a kind of visa system for professionals. Under NAFTA, specific categories of professionals who meet minimum educational requirements, possess designated credentials or licenses and experience and seek to engage in professional occupations in a NAFTA member country may be admitted, for example, into the U.S. for up to one year. Appendix 1603.D.1 of NAFTA lists 63 professions whose holders may be eligible for TN visas after meeting the minimum requirements. For example, an economist has to possess a baccalaureate or

Licenciatura degree; a lawyer has to keep an LL.B (for example, a Canadian joint law degree), J.D., LL.L., B.C.L. (for instance, a Canadian civil law degree) or Licenciatura degree (Mexican law degree consists of studying for five years) or membership in a state/provincial bar, and a university teacher has to possess baccalaureate or Licenciatura degree.

It is possible that immigration and credential recognition issues prevented the United States from including a provision similar to the TN category of NAFTA regarding professional visas in the US-JO FTA. Such a provision would have allowed Jordanian professionals to gain the contacts and experience that would have increased trade between the United States and Jordan.

Conclusion

In formulating a trade agreement, the flow of goods between the member countries should be discussed in connection with the flow of people. Production is a function of capital, natural resources, and labor. Little attention has been paid to liberalizing the movement of persons who trade in these goods and services.

The US-JO FTA is designed to permit temporary entry of traders and critical business personnel without intent to establish permanent residence. Despite that, the FTA does not provide “truly temporary entry.” As of this date, Jordanian nationals cannot benefit from the visa commitments of the US-JO FTA. The US-JO FTA permits entry for narrowly defined investment-related and trade-related purposes. The U.S. made the access of traders and investors from Jordan difficult. Jordanian businesspeople face difficulties in meeting the threshold of “substantial trade,” “investment,” and “substantial amount of capital”.

Moreover, the U.S. couples the movement of key business personnel with local presence requirements. Only Jordanian nationals with money and extensive professional skills can gain entry to the U.S. The US-JO FTA prioritized workers with advanced educational training and capital to invest. The US-JO FTA prioritizes the cross-border movement of corporate executives, researchers, and professionals with advanced degrees.

The United States has aggressively pursued a free trade agenda in the Middle East while restricting inbound temporary labor mobility. Jordanian nationals are people with baccalaureate degrees; therefore, they are a part of the free trade agreement.

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