State Dept. Blocks Many Foreign Entrepreneurs From America

In several countries, the State Department has blocked foreign entrepreneurs from entering the United States on E visas, which are one of the few ways foreign nationals can start a business in America. Unlike Canada, Australia and the United Kingdom, no startup visa exists under U.S. law that allows temporary status and permanent residence after creating jobs in a new U.S.-based business. The problems for E visa holders come as foreign direct investment in the United States has plummeted in recent years.

What is an E visa? “The E category includes treaty traders, treaty investors, and certain nonimmigrant employees of such people (and their spouses and children) who come to the U.S. under a treaty of commerce and navigation between the U.S. and their country of nationality,” according to U.S. Citizenship and Immigration Services. “Treaty traders (E-1 visas) pursue substantial trade in goods, including (but not limited to) services and technology, principally between the U.S. and their country of nationality. Treaty investors (E-2) direct the operations of an enterprise in which they have invested, or are actively investing, a substantial amount of money.”

Over the past two years, the entry of E visa holders has dropped precipitously, despite U.S. treaty obligations. “The problem is that a number of U.S. consulates have refused to adjudicate applications by investors and entrepreneurs for E-2 treaty investor visas from the commencement of the pandemic until the present day,” said H. Ronald Klasko of Klasko Immigration Law Partners in an interview. “This is in violation of bilateral investment treaties between the U.S. and host countries around the world. This is highly surprising and unprecedented given that the visas are given to foreign nationals who invest a substantial amount in a U.S. business that will create jobs for U.S. workers.”

The action or inaction has created problems for foreign entrepreneurs. “With consuls not adjudicating the applications, these businesses cannot open and operate, and jobs cannot be created,” said Klasko. “The solution is not complicated: the Visa Office in Washington, D.C. needs to advise U.S. consulates that they do not have the discretion or option to refuse to accept or adjudicate E-2 visa applications.”

The treatment of E visa holders and EB-5 (employment-based fifth preference) investors has happened at the same time foreign direct investment in America, which is essential to creating jobs and growth, has plunged. “Expenditures by foreign direct investors to acquire, establish or expand U.S. businesses totaled $120.7 billion in 2020, down 45.4% from $221.2 billion in 2019,” according to the Bureau of Economic Analysis of the U.S. Department of Commerce.

Between 2018 and 2020, foreign direct investment fell by 61%, from $312 billion to $120.7 billion. On immigration, the problem is not only with E visas and the State Department, say attorneys. “The antagonism toward foreign investors in the U.S. is also exhibited by USCIS. EB-5 petitions are given the lowest priority and have the longest processing times,” according to Klasko. “The quoted processing times for EB-5 petitions is 44 to 77 months. That makes absolutely no sense if the country is trying to encourage foreign direct investment. The processing time for I-829 condition removal petitions for EB-5 green card holders is 38 to 63 months. The regulations state that these petitions must be adjudicated within 90 days.”

At many U.S. consulates, issuing E visas halted or fell dramatically in 2020 and 2021. “A number of consulates stopped all or nearly all adjudications of E visas now for over 20 months, including Ankara, Bogota and Bridgetown,” said Tammy Fox-Isicoff of Rifkin & Fox-Isicoff in an interview. “There are about 10 more on this list. Nationals of these countries cannot renew E visas or get new E visas to manage their investments. Many are scared their businesses will fail. Others have accepted E visa applications but generally have not given E appointments for interviews, such as in Panama and Paris.”

Copies of U.S. consular email responses I received from immigration attorneys confirm Fox-Isicoff’s assessment. An E visa applicant from Bogota was sent an email that said: “In response to your communication, we will inform you that unfortunately, until this moment we can’t handle this kind of visas.” From the U.S. consulate in Istanbul: “Due to the Covid-19 global pandemic only limited nonimmigrant visa services are being offered. Currently, we are not accepting E visa applications.”

In Bogota, the State Department issued no E visas in September 2021. At some locations, such as Paris, Buenos Aires, Copenhagen, Istanbul, Madrid and Luxembourg, E visas were issued but down approximately two-thirds or more when comparing the third quarter (July to September) of FY 2021 to the third quarter of FY 2019, according to a National Foundation for American Policy analysis. For other locations, including Frankfurt, Taipei, Bangkok, Ciudad Juarez and Tokyo, the data show the number of E visas issued was similar in the third quarter of FY 2019 and FY 2021.

The State Department announced new guidance on November 19, 2021, aimed at loosening policies introduced during the Covid-19 pandemic. The guidance states, in part, “Embassies and consulates have broad discretion to determine how to prioritize visa appointments among the range of visa classes as safely as possible, subject to local conditions and restrictions.”

“The Department recognizes that visas for work and tourism are the foundation of President Biden’s foreign policy for the middle class and international visitors are essential to the U.S. economy and to the travel and service industries,” according to a State Department official on background. “We are aware that as routine visa processing is re-introduced at some embassies and consulates that have not been able to schedule appointments, applicants may face extended visa interview wait times. We are committed to lowering those wait times as quickly and safely as possible, recognizing that visas for work and tourism play a critical role in the U.S. economy. Regular updates on estimated nonimmigrant visa (NIV) wait times are available on travel.state.gov.”

The policy to date has frustrated entrepreneurs and their attorneys. “Imagine opening up a business pre-pandemic, investing $250,000, hiring four workers, and your consulate won’t accept an E application, so you can’t come here to run the business?” asked Fox-Isicoff. “I would never have imagined that 20 months after my Colombian clients applied to renew their Es for the fourth or fifth time, their Es would still be pending. These foreign investors are really at wit’s end.”

A Fox-Isicoff client, Frank (he requested his last name not be used), owns an auto detailing business in Florida. He lived in the United States on an L visa but needed to leave to maintain lawful immigration status. Frank attempted to return on an E visa but to no avail. He and his family have been living in France during much of the pandemic and waiting for a visa.

“No one in Miami understands that I can’t be there to oversee my investments,” said Frank in an interview. “This situation is costing me a lot of money. My next big strategic move is to find a bigger, better-exposed location for my car business. Even if the search happens online, it turns out that to commit to a one-year lease at a location, most people need to go to the location, check it out and drive around it. I lost one year on my business plan because of that. I have another business unit that I want to start—getting a dealer license for my business—and it turns out that also can’t be done when you’re out of the country. Finally, I have no access to credit, although I have an excellent credit score, as I don’t have a valid visa for my passport.”

Frank said the situation has also taken a personal toll. “With my family, we’ve been forced to stay away from home for almost 10 months now, and nothing is making us think we’re going back any time soon,” he said. “Although we try to stay positive, every day is a struggle. We are lucky enough to have strong family and friends, so we could find places to stay overtime in France. Our kids don’t know a school system other than the U.S. one. Although our school was kind enough to accept our kids online last September, they advised us that as of January 2022, they won’t be able to keep our kids online. It’s a very stressful situation for parents and kids. We feel left out. It’s not like we did anything wrong.”

“This is clearly an abrogation of our treaty obligations,” said Fox-Isicoff. “We might as well hang a sign on our front door saying foreign nationals are not welcome and keep your investment dollars at home.”