Options for foreign nationals wishing to open a business in the United States are often limited by the need to invest a significant amount of capital to meet stringent immigration requirements. The EB5 category, for example, requires a minimum investment of $500,000 USD in a new business; the L1 category, while not specifying any particular investment, effectively requires companies to part with significant capital to set up a US entity and secure the office premises required by the relevant regulations. And while the rules that govern the E2 Treaty Investor category do not set a specific qualifying dollar amount, they do require the applicant to make a significant investment – a confusing term of art the rules leave ambiguous.
So are there any other options for establishing a business presence in the United States?
The short answer is yes. This option is known as the Treaty Trader (“E1”) Visa, which is secured via the consular registration of a qualifying trading firm.
The E1 category authorizes employees of a qualifying firm to enter the country to build on an already-established stream of trade between the United States and the treaty country. To qualify for this category, the firm seeking registration must establish the following:
a. the majority of its owners possess the nationality of a treaty country;
b. the firm has established a substantial and consistent stream of trade with the United States; and
c. at least 50% of the firm’s non-domestic trade is between the United States and the treaty country.
In short, registration under this category is limited to firms that are owned by “treaty nationals” and that have a significant, pre-existing trading relationship with customers or clients in the United States.
The regulations broadly interpret the term “trade” as comprising goods, services, exchange of funds/banking activities, and anything else that can be reasonably seen as an exchangeable commodity.
The 50%+ “level of trade” requirement is almost universally misunderstood to mean that 50% of a firm’s overall trade must be with the United States. In fact, a firm’s domestic trade is not relevant. A successful E1 registration application exclusively focuses on non-domestic trade statistics, as illustrated by the following example:
Gerard is a French national who wholly owns a successful wine distribution company outside of Paris. Sixty per-cent (60%) of nirs overall sales are within France, ten per-cent (10%) are with the rest of the European Union, twenty-five per-cent (25% ) are with the United States, and the remaining five per-cent (5%) are with other countries. By suppressing the non-relevant domestic sales statistics and focusing analysis on Gerard’s foreign trade (i.e. trade with countries outside of France), it becomes clear that sales to the United States account for over seventy per-cent (70%) of Gerard’s trading activity. Hence, Gerard should be able to prove nirs company meets the E1 “level of trade” requirement.
The “substantial trade” requirement is also subject to misunderstanding, given that the rules are not clear as to what qualifies as substantial. For example, USCIS describes substantial trade as follows:
“… the continuous flow of sizable international trade items, involving numerous transactions over time. There is no minimum requirement regarding the monetary value or volume of each transaction. While monetary value of transactions is an important factor in considering substantiality, greater weight is given to more numerous exchanges of greater value… “
This vague explanation leaves most laypersons and many practitioners at a loss as to whether a particular trade scenario is substantial or otherwise. Also unhelpful is the fact that each consular post brings its own nuanced interpretation of the rules to the table.
A good rule of thumb to follow when considering whether a particular trade scenario is substantial is to determine whether the firm seeking registration has been consistently and systematically carrying on the qualifying trade for a minimum period of 12 months, regardless of the value of said trading activities. Using this approach, one may satisfy the substantiality requirement either by quantifying multiple small exchanges (e.g., ten widgets per week), fewer large exchanges (e.g., one shipment of a hundred widgets per month), or a mix of both.
Seeking the advice of a skilled immigration attorney with significant experience prosecuting E1 registrations before the relevant consular unit in one’s country is sensible when determining whether one’s firm can satisfy the substantial trade requirement. Consider the following example:
Eduardo owns OJOFINO, a successful eyewear company based in Chile, a treaty country. OJOFINO’s US exports currently make up 50% of the company’s overall sales. Spread over the past 12 months, OJOFINO has concluded 2,500 transactions with US clients, with an average invoice value of $100 USD, meaning that OJOFINO’s total US sales account for $250,000 USD in annual revenue. As such, OJOFINO’s trade with the US would be considered substantial given the 2,500 separate transactions spread out over 12 months. Further, although each sale was worth only $100 USD, the total amount of combined sales was $250,000 USD.
What makes the E1 visa so attractive?
Assuming one qualifies under the treaty, the E1 category is usually the most cost-effective way to gain a foothold in the United States, for the following reasons:
a. The registration application is adjudicated at the consular level, bypassing USCIS and it’s high filing fees and lengthy processing arc;
b. The regulations do not require a stateside parent, subsidiary, affiliate, or branch;
c. The regulations do not require a physical office or even a mailing address in the United States;
d. The regulations do not require the trading entity to invest in the United States; and
e. Consular E-Visa Units approve applications for E1 registration and associated visas on the merits of past trade between the treaty country and the United States, rather than on speculative trade.
Given that each embassy or consular post has its own local checklist of evidence required for a successful application, we note occasional deviations from the above generalities. Hence, before proceeding with an application, it is wise to consult with an experienced law firm to confirm the requirements specific to the relevant consular post.
If approved, eligible nationals can expect to receive a multiple-entry E1 visa valid for up to five years. This visa can be renewed indefinitely in 5-year increments, provided the trade between the treaty country and the United States continues at least at the same level.