Tighter rules on visa applications for foreign visitors are costing U.S. companies billions of dollars in lost sales


Inviting a customer or potential customer from a foreign country to your office or factory is often the key to a successful business relationship — one that can pay dividends for many years down the road. Bringing foreign employees, distributors or agents to the U.S. so they can better understand your products, services and corporate culture — and so that you and they can get to know each other — can also be critical to success in business.

Likewise, attendance by foreign visitors at trade shows or fairs provides you an opportunity to show off your product and to establish a relationship with a potential customer. It may not lead to an immediate sale, but it could be the start of something big. The same goes for participation by foreign business people in trade missions sponsored by their governments.

But tight restrictions on visas mandated by legislation such as the Enhanced Border Security and Visa Entry Reform Act of 2002 have prevented thousands of foreign business people from visiting the U.S. in the seven years since the terrorist attacks of 2001. The restrictions were designed to protect U.S. security, but there have been many unintended consequences. These include losses of many tens of billions of dollars in potential sales for U.S. exporters; lost revenue for companies in the travel and hospitality industries, such as airlines, hotels and restaurants; and the reduced ability of companies to hire foreign nationals as well as to retain those already working for them.

In some cases, U.S. companies have moved their research and development programs offshore, where foreign engineers and scientists they employ do not have to “run the visa gauntlet.”

“The United States continues to pursue a steadily tightening set of restrictions on visa issuance, and there’s no indication that is going to change any time soon. I don’t think a new administration of either party is going to substantially change the dominance of the security agencies in this area,” said Edmund Rice, president of the Coalition for Employment Through Exports and a member of a loosely knit group of a dozen or so business, educational, cultural and arts organizations formed in 2002. They contend that restrictive U.S. visa policies jeopardize the country’s position as a leader in product innovation and a center of global commerce.

“If a U.S. business cannot get its customer into the United States, then it must either make arrangements to move a business meeting overseas or move a project overseas to pursue working with its business partners, its customers, etc.,” Rice said.

A landmark study of small, medium-sized and large companies from across the spectrum of U.S. industries shows the restrictions have dealt a serious blow to U.S. business. The study found that U.S. exporters lost more than $30 billion in sales between 2002 and 2004 because of problems in securing visas for foreign business travelers.

The study was conducted in 2004 on behalf of the Aerospace Industries Association, the American Council on International Personnel, the Association for Manufacturing and Technology, the Coalition for Employment Through Exports, the National Foreign Trade Council, the U.S.-China Business Council, the U.S.-Russia Business Council and the U.S.-Vietnam Trade Council. To date, it is the only such assessment of the impact of visa policies on U.S. international commerce.

If the estimate had included trade in services as well as trade in goods, the total would have reached $65.15 billion. Many of the largest companies in the survey did not even list a specific cost estimate because it would have been too complicated to calculate.

Of the companies surveyed, 73 percent said they experienced problems in the processing of business travel visas, including unexpected delays and arbitrary denials. Sixty percent said they had suffered a “material impact” from business travel visa processing delays, including lost sales, increased costs and the need to relocate people or functions offshore.
 
Cases in point
The loudest complaints involve China, no doubt because of its huge market potential. In March alone, for example, U.S. exports to China jumped by more than half a billion dollars to $6.4 billion from February, led by measuring, testing and control instruments and semiconductors.

“Our member companies confirm U.S. export sales have been delayed or lost because of the inability to schedule visits by Chinese officials and customers to conduct quality and safety inspections, attend trade fairs, take delivery of purchased goods and negotiate contracts,” the American Chamber of Commerce in Shanghai said in a report issued earlier this year.

“Many member companies report that Chinese officials, customers, and employees are increasingly reluctant to plan business travel to the U.S. because they consider the visa process difficult, burdensome and undignified,” the report said.

The chamber cooperates with U.S. consular offices in Beijing, Shanghai, Guangzhou and Chengdu on Corporate Visa Programs for employees of AmCham members in those cities. The programs facilitate business visas by expediting the visa appointment waiting times and time spent at the consular office on the interview day.

Visa applicants under the program usually have a much higher rate of acceptance. Companies must apply to participate in the program.

Ken Cooksey, who manages export marketing for Florida aviation companies through the state’s economic development agency, Enterprise Florida Inc., recalls one company that was poised to conclude a multimillion-dollar aviation deal in China, but was unable to secure visas for the Chinese partner’s pilots to come to Florida to train on the light aircraft they produce.

“It was an amphibious aircraft company. They went out of business, and I never heard from the guy who handled the deal again,” he said.

In another example from Enterprise Florida, a small Broward County manufacturer could not get a visa for its new distributor in India to attend training classes in Florida.

In New York, Diana Torres, vice president of global competitiveness at the Partnership for New York, a business advocacy group, cited the case of a New York company that had to move its board meeting to Canada because one board member in Dubai could not get a visa. She declined to name the company.

“If you’re not one of the 27 countries where we have a visa waiver, then processing time can be very long and can deter companies from doing business here,” Torres said. “We can confirm that many companies have told us they are experiencing difficulty in getting valued partners or their own employees who are located outside the U.S. into the U.S. for regular business meetings,” she said.

“Short-sighted and sloppy U.S. policies — and an immigration bureaucracy that put the old Soviet Union to shame — are doing so much economic damage to this country that terrorists can sit back and let us do their work for them,” said Michele Wucker, executive director of the New York-based World Policy Institute.

“Instead, if we were to invest in making our visa approval system more efficient, we’d do a better job both at catching potential enemies and at helping our companies do business,” added Wucker, author of “Lockout: Why America Keeps Getting Immigration Wrong When Our Prosperity Depends on Getting It Right,” which was published in 2006.

Waiting for Godot
Companies have grown impatient waiting for Washington to solve the visa problem, said Bill Reinsch, president of the National Foreign Trade Council. Many have gotten around it by holding their conferences in Shanghai, say, or building the training center in Shenzhen.

“Ultimately there is the transfer of more technology and more resources abroad than otherwise would occur if we were granting visas and letting people into the country,” Reinsch said. “If you’re a large company, you’re in a position to do things like that. Waiting for the government to solve the problem is like waiting for Godot,” he said, referring to the title character in the Samuel Beckett play, “Waiting For Godot,” in which the other characters wait for someone named Godot, who never arrives.

That, of course, also applies to the foreign business people who never arrive because they can’t get a visa or because they give up in frustration. Often they may have to wait weeks or even months before they can get an interview at a U.S. consular office in their country. Then they may have to wait just as long before the visa is processed.

Ironically, U.S. companies that in the past outsourced production to take advantage of cheap labor overseas are being forced to move thousands of jobs off shore because they cannot recruit, train and deploy the people needed in their international work force under current U.S. immigration and visa policies, Kathryn S. Wilde, president of the Partnership for New York, wrote in a March 31 editorial in The New York Sun.

“This does not just apply to large multinational companies. The Partnership found that small and midsize businesses are hurt the most,” Wilde wrote.

Efforts to do a follow-up to the 2004 study are being frustrated.

“We’ve been polling our members, trying to figure out the current extent of the problem. Frankly we’re having difficulty getting responses,” Reinsch said. “That discourages us. Whether we will do another formal study remains to be seen.”

The 2004 study prompted action in Washington, albeit limited.

“It triggered a significant change in the policies of the State Department in terms of how the visas were approached and the creation of the Business Visa Center, said Charles A. Santangelo, principal of The Santangelo Group, the research firm that conducted the study.

Established in July 2005 within the State Department, the center provides information to U.S. companies about the application process for visas for employees, current and prospective business clients and business partners seeking to travel to the U.S. for business purposes. It works with the companies and U.S. consular officers to communicate information effectively between U.S businesses and the embassies and consulates worldwide.

Since publication of the results of the study, waiting times for interviews and processing have improved in some cities.

“India has gotten a lot better. Waiting times are much lower than when that survey was taken. Beijing has improved. Shanghai has gotten worse,” Reinsch said. “It’s a little bit of this and a little bit of that, with no particular pattern to it, which makes it kind of complicated.”

Advocates for greater change are pinning their hopes on bipartisan legislation introduced by Sen. Norm Coleman, R-Minn., in February as the American Competitiveness Through International Openness Now (ACTION) Act of 2008. Among other provisions, the bill would facilitate business travel through a “trusted traveler” program and by enhancing consular resources, and allowing holders of employment-based visas to renew them in the United States. It also would expand the duration and portability of certain security clearances and reduce visa-processing times. Sen. Jeff Bingaman, D-N.M., co-sponsored the bill.

People are not holding their breath waiting for passage, especially in an election year when immigration is a hot-button issue. The bill was referred to the Senate Judiciary Committee, but it has not yet held any hearings on the bill.

Coleman and Bingaman sponsored similar legislation in 2005, but it never got anywhere.