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Consider this common scenario: GlobalCo regularly transfers financial and computer professionals among its 55 offices in Europe, Asia, and the Americas. In part, this reflects a core philosophy that the cross-fertilization of ideas among the best employees enhances competitive standing. In part, it is due to the dynamic needs of a global entity, where projects arise across borders. But since 9/11, GlobalCo has struggled with the U.S. visa system. In 2005 premier lateral candidates often face a wait of at least a year before they can contribute to projects on location in the United States. Even candidates for whom a visa is “immediately” available can be stalled for weeks or months because of appointment queues at overburdened U.S. consulates. Augmenting these problems is the reluctance of many candidates to accept a long-term relocation to the United States, because they have heard that it will take at least five to 10 years before they may become U.S. “permanent residents.” In other words, for the next five to 10 years, they remain at the mercy of the U.S. immigration system. The experience of GlobalCo is a typical one for multinationals. The increased restrictiveness in the U.S. immigration system is limiting recruitment of top talent from abroad and handicapping multinational companies. The impact on our economy is significant. If Congress does not act, we will lose our competitive edge in industries that rely on global talent — including information technology, telecommunications, and financial services. NARROW QUOTAS The challenges to companies like GlobalCo arise from two principal problems in the current U.S. immigration system. The first is a visa quota system that is much too lean for today’s demands. For example, the State Department announced this fall that a substantial shortage in the residency quota system will make immigrant visas (green cards) unavailable to highly skilled foreign executives and professionals. There are simply not enough slots to meet business demand. Candidates for employment-based, or EB, green cards will thus face a wait of multiple years even after the employer has concluded each of the regulatory prerequisites for EB residency. Thus, even though an employer has demonstrated to the U.S. government that a global market is needed to fill a professional position in an organization based on current market needs, the green card based on that need may not be granted for several years. The quota system for EB candidates was launched 15 years ago. Under immigration reform legislation in 1990, 110,000 green cards per year were allocated to the highly skilled, as follows: • EB-1: 40,000 green cards to aliens of extraordinary ability, outstanding researchers, and multinational executives and managers

• EB-2: 40,000 green cards to aliens of exceptional ability who are performing services in the national interest or who have advanced degrees • EB-3: 30,000 green cards to bachelor’s-degree holders and skilled workers These numbers are far too small to meet the needs of American businesses today. The severity of the shortfall can be seen in the length of the visa wait for the average candidate. For India and China, whose nationals have become part of the fabric of America’s scientific and technical sectors, workers making extraordinary contributions (EB-1) or performing services in the national interest (EB-2) face delays of three to eight years before their green card applications can be approved. And across the globe, any professional with a bachelor’s degree will wait a minimum of four years under current calculations before becoming a resident. Absent an updated and replenished EB quota system — one that takes a realistic measure of the needs multinationals have today — we risk losing global talent to other countries such as the United Kingdom and Canada, which have reformed their immigration systems to enhance the population of international workers in the highly skilled areas. There are also far too few slots available for those seeking a principal non-immigrant visa for foreign professionals in specialty occupations — the H-1B. In August 2005 the U.S. Citizenship and Immigration Services (USCIS), a successor to the old Immigration and Naturalization Service, announced that the quota for H-1B visas had been reached for fiscal year 2006 — that was almost two months before the fiscal year began. The H-1B has an annual quota of 65,000, the limit set in the 1990 legislation. In recognition of the need for robust global recruitment by U.S. companies, Congress expanded the H-1B to up to 195,000 per year for fiscal years 2002 to 2004, but the quota has since returned to 65,000. The drop to 65,000 after a robust usage creates a dramatic shortage. Because of this quota crisis, corporate managers face a human resources struggle. Attracting global talent to work in the United States is challenging in any case. Candidates are reluctant to consider employers that do not offer long-term commitments upfront, promises that are counterintuitive to America’s “at will” corporate culture. The difficulty in sponsoring permanent residency for foreign nationals only exacerbates the problem. Corporations hiring foreign nationals face time and cost burdens that are untenable. Human resources departments are overextended under the volume of requests and concerns from employees already in the visa process. In some cases the candidates’ anxiety is fueled by fears for their spouse or children, who may lose work authorization or the right to become residents because of EB quota restrictions. To work around these severe quota limitations, multinationals may be forced to engage in cumbersome procedures to preserve the visa status of workers while EB residency is unavailable. For example, the current laws limit to five years the time an intracompany worker with specialized knowledge of the company’s processes may remain in the United States on an L-1B temporary visa. If the EB quota shortage prevents the worker from becoming a resident by that fifth year, that worker, no matter how significant to the U.S. operation, will have to return to his or her home country. To avoid this costly and intrusive disruption, multinationals will need to convert these L-1B workers to H-1B workers, as the law allows long-term extensions for only H-1B workers in this situation. Ironically, these L-1 conversions will further clog the H-1B pipeline. While this type of pre-emptive planning will help corporations navigate through the shortage, there is no question that the quota system has diverged dramatically from the business reality. Access to human capital — the business world’s richest resource — is compromised because of artificial limitations. A CONGESTED SYSTEM The second trend that reflects the need for change is the extreme congestion facing U.S. immigration authorities. The USCIS had a pipeline of some 6 million cases last year, which the agency indicated included 3.7 million stale cases that it was behind in processing, in some instances by many years. The backlog stemmed from a severe administrative inefficiency within the predecessor agency, the INS, and was exacerbated by an ongoing conflict between the mission to provide service and other priorities, such as national security objectives after the Sept. 11 terrorist attacks. While there is no question the USCIS has made dents in that backlog in the past year, the agency has yet to establish a fluid process. Different field offices provide different results on similar cases, adjudication timetables vary dramatically from quarter to quarter, and users cannot get questions or concerns addressed with any degree of timeliness. Recent reports indicate that despite efforts to re-engineer the system, the problems are entrenched. This means businesses are never certain how smoothly cases will move. When project needs change suddenly, obtaining expedited reviews is difficult. Although companies can pay an extra $1,000 per case to facilitate a more accelerated processing, if the case generates an inquiry, that accelerated timeline becomes discretionary. A DATED SYSTEM Overall, the visa shortages and processing backlogs reflect a dated immigration system that is not competitive with that of our global counterparts. Recent immigration reforms in Canada, the United Kingdom, and Australia are heavily geared to attract the highly skilled international population. By contrast, our country — once criticized for causing a global brain drain because top professionals streamed into the United States from around the world — is now consistently rejecting talented candidates for professional opportunities or permanent residency. Efforts at reform have been frustrated, partly by a protectionism that fears immigrants will take American jobs and partly by security concerns in the post-9/11 environment. The result is that our stubborn adherence to quotas that are a decade-and-a-half old is limiting corporate growth in the United States while fueling the growth of offshore facilities by the Fortune 1000. While U.S. companies are not in danger of closing down any operations here, they are launching new facilities abroad more frequently and moving key talent to them. Companies are electing to develop new products and services in their foreign offices where more resources are available. As the costs of importing foreign talent rise because of visa factors, expatriate training centers as well as production facilities are increasingly being launched abroad. If the trend continues, the United States will lose its dominance in key technical areas — in particular, information technology. To add insult to injury, the filing fees for obtaining a simple H-1B visa have risen to more than $2,000 from what historically have been under $200 for routine cases. A study last year by nine key trade and business groups showed that businesses in the United States had spent billions of dollars on visa issues in the previous two years. It is time for Congress to revisit the 1990 quota system for both employment-based and H-1B residencies and make adjustments that more closely match the reality of what businesses need. The key is to find a better balance between supply and legitimate demand. Our legislators will find it easier to raise the quotas if they understand the real context — that of a society in which commercial growth and entrepreneurial endeavor is encouraged, not stifled.

Elizabeth Espin Stern is a partner in the D.C. office of Baker & McKenzie, where she specializes in corporate immigration matters.

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