Volume 43 | Number 3

Conflicts Between United States Immigration Law and the General Agreement on Trade in Services: Most-Favored-Nation Obligation

by William Thomas Worster

Summary

  1. Introduction
    1. Overview of the General Agreement on Trade in Services
    2. Overview of United States Immigration Law
  2. The General Agreement on Trade in Services
    1. Measures Covered by GATS
    2. Affecting Trade in Services
    3. Services Covered by GATS
    4. Modes of Supply
    5. GATS Application to Immigration Law
    6. Exceptions to GATS Coverage
      1. Exceptions for Certain Persons
      2. Exceptions for Border Control Regulations
      3. Exception for Labor Markets Integration Agreements
      4. Exception for Economic Integration Agreements
      5. General Exemptions and Security Exemptions
    7. Obligation to Provide Most-Favored-Nation Treatment
      1. Tests for Violations of MFN
      2. Treatment of Inherent Competitive Disadvantages
      3. Exclusion from MFN for Visas
        1. Distinction Between Visa and Status
        2. Definition of Visa
        3. Visa Application Procedure and Adjudication
      4. Exclusions from MFN for Country-Specific Scheduled MFN Exemptions
      5. Country-Specific MFN Exemption Scheduled by the United States
  3. Analysis of United States Immigration Measures Against GATS MFN
    1. H-1B, Worker in a Specialty Occupation
      1. Specialty Occupation
      2. Alien’s Qualifications
      3. Licensure
      4. Prevailing Wage
    2. H-1B1, Professionals under the Chile/Singapore Free Trade Agreements
      1. H-1B1 Requirements
      2. Labor Markets or Economic Integration Agreements Exemptions
        1. Labor Markets Integration Agreement
        2. Economic Integration Agreement
      3. Scheduled MFN Exemption
    3. E-1 or E-2, Treaty Trader or Investor
      1. Qualifying Treaty
      2. Scheduled MFN Exemption
        1. Applicability of the Exemption
        2. Interpreting Discrepancies Between Immigration Law and the Exemption
        3. Grant, Extension, and Change of Status
        4. Expiration and Justification of the Exemption
      3. Employer and Employer’s Activities
        1. Trade Under the Exemption
        2. Investment Under the Exemption
      4. Executive, Supervisory, or Essential Skills Position
      5. Alien’s Qualifications
      6. Labor Markets or Economic Integration Agreements Exemptions
    4. E-3, Australian National Worker in a Profession
      1. E-3 Requirements
      2. Labor Markets and Economic Integration Agreements Exemptions
      3. Scheduled MFN Exemption
    5. TN, North American Free Trade Agreement
      1. Professional Position
      2. Alien’s Qualifications
      3. Labor Markets and Economic Integration Agreements Exemptions
      4. Scheduled MFN Exemption
    6. L-1, Intra-Company Transferee
      1. Employer
      2. Executive, Managerial, or Specialized Knowledge Position
      3. “Blanket” L Program
    7. B-1, Business Visitors, and Admission Under the Visa Waiver Program
      1. Parties
      2. Alien’s Activities
      3. Visa Waiver Program
  4. Conclusion

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I. Introduction

United States laws establishing qualifications for temporary, nonimmigrant classifications are potentially in violation of the United States’ obligations under the World Trade Organization’s (WTO)1 General Agreement on Trade in Services (GATS).2 These violations, if ever the subject of a WTO dispute, may force the United States to choose between accepting trade sanctions and changing existing immigration policy under external pressure. In either case, by consenting to the GATS at the conclusion of the Uruguay Round of Multilateral Trade Negotiations (Uruguay Round) and not necessarily complying with it, the United States has incurred potential WTO liabilities. If a dispute over immigration law was successful, the United States would be forced by the coercive trade power of its international obligations to change what is normally considered one of the most sovereign of attributes of statehood, the very power to determine which aliens are qualified to enter and remain in the country.

A. Overview of the General Agreement on Trade in Services

The GATS is a sister agreement to the more well-known General Agreement on Tariffs and Trade (GATT).3 While the GATT seeks to eliminate unnecessary or burdensome barriers to trade in goods, GATS seeks to eliminate unnecessary or burdensome barriers to trade in services. The GATS comprises the Agreement itself, its Annexes integrated into the Agreement, and various Schedules that indicate each member country’s specific obligations under the GATS, which are also integrated into the Agreement. At the Uruguay Round negotiations, member states agreed on certain universal principles for international trade in services, which became applicable at the entry into force on January 1, 1995.4 These provisions are called “General Obligations” and apply to all national trade measures unless exempted.5 For those obligations that the member nations could not agree to make immediately applicable, the members had the option of listing country-specific commitments under the obligation, with the understanding that the commitment might be increased in future negotiations. These provisions are called “Specific Commitments.”6 In this Article, we will focus on one of the General Obligations, specifically, the obligation to provide “Most-Favoured-Nation [MFN] Treatment.”7

Any member of the WTO has the right to challenge the measures of another member when the member “considers that any benefits accruing to it directly or indirectly under the [GATS] are being impaired.”8 Although a “losing” member may be required to provide compensation or suffer trade sanctions, “the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned.”9 Of course, the WTO’s Dispute Settlement Body (DSB) will determine if a conflict exists between GATS and national immigration laws, not United States courts.10 National courts may interpret the GATS obligations in reviewing domestic legislation,11 but the GATS does not create enforceable individual rights,12 only state’s rights on an international level; thus, how United States courts will interpret the GATS is not relevant here. This Article will address the likely outcomes of a DSB dispute over the conflicts between the MFN obligation and the United States temporary immigration, or “nonimmigrant,” classifications.

B. Overview of United States Immigration Law

In general, employment-based immigration laws are designed to, and have the effect of, insulating national labor markets from free market pressures on a global scale, contrary to the free trade in services spirit of the GATS. The rules governing employment-based nonimmigrant status establish who qualifies to work in the United States. These rules establish criteria that are seen not to have an adverse effect on the United States labor market such as certain education, skills and duties, period of employment, and often, nationality. The understanding is that allowing certain types of jobs to be filled by foreign labor increases the competitiveness and hiring capacity of United States businesses, whereas other types of jobs take away existing jobs from United States workers. Therefore, we can say that the employment-based nonimmigrant regime is protectionist and designed to minimize the effect of foreign labor availability on the United States labor market.

In order to test United States immigration law against the GATS, which are essentially two foreign bodies of law, we cannot rely on seemingly comparable terminology. The GATS has its own language and employment classifications that are not based on any state’s particular system. Unlike types of goods which may be indexed to universal classifications, each nation has a highly individualized immigration regime, often with unique terms and concepts that may not translate. On the other hand, the United States was one of the principal architects of the WTO, the GATS, and its predecessor, the GATT 1947. The United States is also the author of its own schedule of Specific Commitments and GATS exemptions. The United States-authored sections are therefore particularly amenable to a literal reading using the usual definitions under United States law. The DSB will look to the precise language and its usual meaning under United States law, not any subjective meaning.13 Because United States immigration law and the GATS establish different obligations, we will compare them as functions of international migration, taking into consideration that different sections may be read more or less literally.

By way of introduction, there are several bases on which an alien may qualify for employment authorization in the United States.14 The alien may qualify for unlimited, unrestricted authorization; limited duration, unrestricted authorization; or limited, temporary employment authorization, restricted to a petitioning employer.15 This last category includes most of the temporary, nonimmigrant categories, and will form the basis of this discussion since the other categories of employment authorization are not clearly covered by the GATS.16

When an employer petitions for an alien in a particular nonimmigrant classification, the adjudicator assesses the duties the alien will perform, the employer’s qualifications, the alien’s qualifications, and other factors to determine if the alien, employer, and position qualify. On many occasions, an alien may qualify for any one of several alternate nonimmigrant categories, so the employer may petition for classification under any one of them, but the adjudicator will confine the inquiry to the category requested.17 The choice of the category is therefore a crucial strategic decision. If qualified, the petition will be approved, the alien may be issued a visa to travel to the United States, and the alien may be admitted to the United States in the particular category. When admitted, the alien receives restricted authorization for the purpose of working for the petitioning employer, in the petitioned position, and sometimes only at a particular salary and location for a limited duration of time.18 The alien’s authorization to remain in the United States is also for the same duration.19 Since the alien receives authorization based on a petition by a particular employer, the alien’s status will end prematurely if the employment ends either by quitting or termination.20

This process of acquiring employment-authorized nonimmigrant status is administered by a variety of executive agencies. The U.S. Department of Labor (USDOL) and U.S. Citizenship and Immigration Services (USCIS)21 adjudicate aspects of the alien’s qualifications and affect on the labor market. The U.S. Department of State (USDOS) and U.S. Customs and Border Protection (USCBP)22 regulate aspects of admission by adjudicating visa applications, inspecting arriving aliens, and sometimes adjudicating qualifications.23 USDOL and U.S. Immigration and Customs Enforcement (USICE)24 enforce aspects of the terms of the alien’s stay and employer’s sponsorship, remove non-complying aliens, and penalize non-complying employers. A variety of other government agencies may be involved as necessary, such as for assessing security risks or monitoring the export of controlled technology. In this Article, we will only address the function of designating who is qualified to work in the United States as it involves the USDOL, USCIS, USDOS, and USCBP.
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II. The General Agreement on Trade in Services

Turning from this general overview of United States immigration law, we now begin our inquiry into the GATS, the MFN obligation, and the effect on United States immigration law. The GATS applies to “measures . . . affecting trade in services”25 among the members of the WTO26 through one of the four “modes of supply.”27

A. Measures Covered by GATS

“Measures” are defined as any “act or omission”28 “by a Member, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form.”29

[T]he ordinary meaning of the term “affecting”, in Article I:1 of GATS, does not convey any notion of limiting the scope of the GATS to certain types of measures or to a certain regulatory domain. On the contrary, Article I:1 refers to measures in terms of their effect, which means they could be of any type or relate to any domain of regulation.30

In fact, “no measures are a priori excluded from the scope of application of the GATS.”31

B. Affecting Trade in Services

The measures must, however, have an effect on the conditions of competition.32 The definition of “affecting” is given “a broad scope of application,” based on the ordinary meaning of that word.33 “[T]he scope of the GATS encompasses any measure of a Member to the extent it affects the supply of a service regardless of whether such measure directly governs the supply of a service or whether it regulates other matters but nevertheless affects trade in services.”34 Additionally, the effect need only be minimal or even hypothetical, since the scope of the GATS is to “protect competitive opportunities, not actual trade flows.”35 Under the DSU, “an infringement of the obligations assumed under [GATS] . . . is considered prima facie to constitute a case of nullification or impairment . . . [such that] there is normally a presumption that a breach of the rules has an adverse impact.”36 Therefore, the complaining party need not even show harm to have standing, only a violation that has the potential for hypothetical harm.37

C. Services Covered by GATS

All services are covered except services “supplied in the exercise of governmental authority.”38 For the GATS, government services are only services “supplied neither on a commercial basis nor in competition with one or more service suppliers.”39

It is unclear to what degree the application for nonimmigrant admission must be for the provision of services in order to qualify for GATS coverage or if it may cover the mere incidental provision of services. Under United States law, the appropriate type of nonimmigrant category is that which is consistent with the principal purpose of the admission, even though admission may serve many functions.40 The GATS has no such similar statement. In addition, the GATS does not contemplate an entry that combines goods and services or an admission for which the purpose changes after entry from services to provision of goods or vice versa.41 The DSB has found that the same measure can be subjected to scrutiny under both the GATT and the GATS governing both goods and the service of supplying or distributing those goods, so presumably these purposes would be covered by the GATS even if services provision was a minor aspect of the overall admission.42

D. Modes of Supply

The trade must be through one of the four possible Modes of Supply.43 These modes encompass most, if not all, forms of international services supply; however, as a threshold inquiry, the form of trade must be identified. Mode One involves services supplied “from the territory of one Member into the territory of any other Member;”44 Mode Two involves services supplied “in the territory of one Member to the service consumer of any other Member;”45 Mode Three involves services supplied “by a service supplier of one Member, through commercial presence in the territory of any other Member;”46 and Mode Four involves services supplied “by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member” (for example, construction projects or consultancies).47 Mode Four is clearly the most applicable for this discussion of immigration law; however, Mode Three has also been suggested as potentially invoking immigration policy since a service provider may need to establish a local physical presence. For purposes of this Article, only Mode Four will be discussed.

The classification of services provision under Mode Four is not a simple matter. The Council on Trade in Services (Council),48 the WTO body charged with overseeing the operation of the GATS, stated that in order to qualify for Mode Four the natural person must be linked to a corporate commercial presence, excluding self-employment.49 Not only does this interpretation go beyond the narrow terms of the GATS, but it runs contrary to the parties’ understanding. As an example, when the United States and other nations became members of the WTO, one of the various types of nonimmigrant classifications presumed to be covered was the “business visitor” classification,50 which under United States immigration law, does not necessarily require a corporate presence.51 If the Council’s interpretation is correct, a number of commitments made by the United States under the GATS will escape coverage, contrary to the parties’ understanding.

In addition, it is not settled whether the employment must be with a foreign employer or if it may be with a United States employer (or a United States employer wholly-owned by a foreign employer). The benefits of the GATS must be extended to “natural persons of a Member in the territory of any other Member,”52 suggesting that United States employers cannot benefit from it, but this may not be the case.53 Looking at other GATS commitments, we see that the United States and other WTO nations presumed that the GATS would apply to United States nonimmigrant categories54 that specifically require a United States-incorporated employer.55 There is a presumption that provisions of the GATS are not in conflict,56 so one possible resolution may be that the only United States employers who would be covered would be those that were wholly-owned by foreign entities.

E. GATS Application to Immigration Law

Beginning with such an unsettled definition, one might wonder if immigration law was already exempted. In fact, the answer is clear; the GATS specifically covers visas and nonimmigrant policy.57 The Annex on Movement of Natural Persons Supplying Services Under the Agreement, an additional agreement integrated into the GATS, eliminates any doubt.58 The Annex only exempts from GATS coverage those “measures affecting natural persons seeking access to the employment market of a Member”59 as well as “measures regarding citizenship, residence or employment on a permanent basis.”60 In addition, WTO member nations have been very vocal in their desire to have temporary immigration regulations eased under the GATS, especially for the benefit of developing countries.61

Based on the Annex, the Council initially stated that “general immigration legislation (visa requirements, etc.)” are therefore “beyond the scope of the GATS.”62 However, this statement does not distinguish between permanent immigration and temporary immigration and the related visas. Both types of immigration include provisions of general application and both require visas. The language of the Annex clearly excludes permanent immigration from GATS coverage, but, by implication, temporary immigration must be covered. Despite some discussion,63 no specific period of stay has been defined as “temporary,”64 leaving the distinction somewhat unclear.

Notwithstanding the Council’s remarks, the DSB has already addressed the issue of applicability in the one DSB dispute involving United States immigration and visa policy.65 This dispute involved the United States’s refusal of visas to aliens who have trafficked in confiscated property in Cuba under the terms of the Cuban Liberty and Solidarity (LIBERTAD) Act of 1996 (Helms-Burton Act).66 The EU challenged the Helms-Burton Act at the DSB under the GATS.67 Although the United States initially stated that it would refuse to recognize any WTO ruling,68 it eventually reached an understanding with the EU outside of the DSB.69 This understanding called for the United States to waive the application of a different title of the Act70 and the EU agreed to encourage the transition to democracy in Cuba.71 The EU appears to be satisfied with the understanding. Although the immigration provisions were never reviewed by the DSB and remain in force, the DSB demonstrated that it will entertain disputes over immigration and visa issuance policies.

Despite this inconclusive dispute, the United States has already conceded GATS applicability. The United States included nonimmigrant categories, but not permanent categories, within its GATS commitments and exemptions. In fact, of the various nonimmigrant categories available under United States law, a number have been subjected to the GATS.72 Applicability, therefore, need not necessarily be argued, since the United States has deliberately committed certain nonimmigrant categories already.

F. Exceptions to GATS Coverage

In addition to specific exemptions for certain measures, the GATS also has significant general exceptions from coverage. Given the broad and ambitious scope of the GATS, the negotiating countries demanded general exemptions for measures that affect trade in services and potentially violate the agreement, but are nonetheless necessary.

1. Exceptions for Certain Persons

Although it may appear that only WTO member nationals may receive GATS treatment, this interpretation may not be correct. In order to dispute a measure, a WTO member must show that benefits accruing to it have been impaired. A member may deny the benefits of the GATS to a service supplier only if the member can establish that the supplier is not a supplier of a WTO member.73 This rule alone, however, may not serve to limit the GATS to nationals of WTO members, since under United States immigration law there are several parties involved in services supply.

Under the GATS, a service supplier is any natural or juridical person74 that supplies a service.75 A natural person is an individual who is either a national of a WTO member76 or has been granted the right of permanent residence in a WTO member,77 if that member does not grant status as a “national”78 or provides “substantially the same treatment to its permanent residents as it does to its nationals.”79 In addition, the individual must reside in the territory of a WTO member.80 A juridical person is “any legal entity duly constituted or otherwise organized under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association”81 that is either “organized under the law of that other Member, and is engaged in substantive business operations in the territory of that Member or any other Member”82 or “owned or controlled by . . . natural persons of that Member; or . . . juridical persons of that other Member.”83 Generally, under international law, a state may not espouse the claim of a national who merely owns or has an interest in the juridical person harmed, since it is the nation in which the juridical person is incorporated or has its principal place of business that makes that political choice.84 However, under the GATS, the DSB may assign the nationality of the juridical person based on the nationality of the individuals with ownership or control. A juridical person is “‘owned’ by persons of a Member if more than 50 per cent of the equity interest in it is beneficially owned by persons of that Member.”85 A juridical person is “‘controlled’ by persons of a Member if such persons have the power to name a majority of its directors or otherwise to legally direct its actions.”86 Lastly, a juridical person is “‘affiliated’ with another person when it controls, or is controlled by, that other person; or when it and the other person are both controlled by the same person.”87

Whether the employer is a foreign entity or a United States entity should not matter. GATS treatment must be accorded regardless of whether the service is supplied directly by a natural or juridical person88 or through a commercial presence inside the WTO member’s territory.89 The United States has already committed nonimmigrant categories that require a United States-incorporated employer.90 Since many foreign service suppliers establish wholly-owned subsidiaries within the United States, the United States may be required to provide GATS treatment to a United States-incorporated entity when it is owned or controlled by a foreign entity with WTO member nationality.

The employer and employee should not both need to have WTO nationality. The benefits of the GATS accrue to WTO members, not to particular individuals or companies. Under the immigration laws of the United States and many other countries, there are several persons involved in a nonimmigrant admission: the employee, the employer, and, in some cases, the foreign owner(s) of the employer. If an employee is a national of a WTO member and an employer is a United States corporation which is wholly-owned by a corporation that is a national of a WTO member, then all demand GATS treatment and any impairment of the supply would impair the GATS benefits to the WTO member(s).

However, if the employee was not a national of a WTO member, but the foreign owner of the employer was, then the problem of disparate nationalities arises. On the one hand, if the employee did not receive GATS treatment, then the foreign owner’s ability to supply its service through the employee has been affected. On the other hand, extending GATS treatment to an employee who is not a WTO member national merely because the foreign owner has WTO member nationality essentially extends GATS treatment to any nationality, provided the individual was employed by the right employer. It is interesting to note that in the Helms-Burton Act dispute, the measure at issue was directed at the employees of corporations, although the complaining companies had WTO member nationality.91 We can reverse the hypothetical and consider an employee who was a national of a WTO member, but a foreign owner who was not, and again find the same arguments on either side.

Theoretically, the GATS might also cover cases where an employer, who was not a WTO member national, hired an employee, who was also not a WTO member national, but was a WTO member permanent resident. A natural person under GATS includes permanent residents of WTO members.92 This definition means that an employer would not be limited to citizens of WTO member nations, but also permanent residents; although in order to be covered, the individual must reside in the territory of a WTO member nation.93 Whether the employee might abandon his permanent residence in the WTO member nation by taking temporary employment in the United States, and thus lose the very basis for his qualification for the GATS, treatment is unclear.

2. Exceptions for Border Control Regulations

Despite applying to nonimmigrant policy and visas, the GATS specifically exempts “measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders.”94 However, that language is not a blanket exemption of border control rules because the GATS only exempts them if “such measures are not applied in such a manner as to nullify or impair the benefits accruing to any Member under the terms of a specific commitment.”95 Therefore, even border control could be the subject of a GATS dispute if the United States was abusing its rights. Unfortunately, the GATS does not establish what standard would be used to determine if a measure was applied in a “manner” to nullify benefits. The strict GATS language could support the conclusion that unintentional effects alone might be considered impairment of benefits because they affect the conditions of competition.96

3. Exception for Labor Markets Integration Agreements

The GATS also exempts labor markets integration agreements and economic integration agreements.97 A labor markets integration agreement is the agreement of two or more countries to fully integrate their labor markets by exempting each other’s citizens from “requirements concerning residency and work permits.”98 This provision appears to be designed for the EU free movement of persons99 and similar labor markets unions since, in a footnote to the Article, the GATS states that “[t]ypically, such integration provides citizens of the parties concerned with a right of free entry to the employment markets of the parties and includes measures concerning conditions of pay, other conditions of employment and social benefits.”100

4. Exception for Economic Integration Agreements

Similarly, economic integration agreements are also exempted.101 Economic integration agreements are agreements to liberalize trade between two or more countries.102 An economic integration agreement will be exempted if the agreement “has substantial sectoral coverage, and . . . provides for the absence or elimination of substantially all discrimination . . . between or among the parties . . . through . . . elimination of existing discriminatory measures, and/or . . . prohibition of new or more discriminatory measures.”103 Whether an agreement has substantial sectoral coverage will be judged by the “number of sectors, volume of trade affected and modes of supply,”104 and an agreement will not qualify if it “provide[s] for the a priori exclusion of any mode of supply.”105 In addition, the agreement may not have the effect of raising the barriers to trade for any WTO members outside of the agreement.106 Discrimination will be judged against the standard in the GATS article on National Treatment,107 which requires that a relevant WTO member “accord to services and service suppliers . . . treatment no less favourable than that it accords to its own like services and service suppliers.”108 The treatment may be “either formally identical treatment or formally different”109 but will be considered “less favourable if it modifies the conditions of competition in favour of services or service suppliers of the Member.”110 However, the agreement may provide for the elimination of discrimination on the basis of a reasonable time-frame111 and the DSB will consider the “wider process of economic integration or trade liberalization among the countries concerned.”112 The only exceptions to the rule of non-discrimination113 are for restrictions on “international transfers and payments”;114 “payments or transfers” undertaken “[i]n the event of serious . . . external financial difficulties”;115 and General and Security Exceptions discussed below.

Ever since the GATS came into force, there has been an on-going debate regarding the applicability of the GATS to regional Free Trade Agreements (FTAs) and their compatibility.116 By way of comparison, under the GATT, there is an exception from coverage for customs unions and FTAs.117 Clearly, the parties to the Uruguay Round knew how to write an obligation that specifically exempted FTAs but neglected to do so under the GATS. Since FTAs are specifically exempted under GATT, they are, by silent implication, specifically covered by the GATS. The WTO Committee on Regional Trade Agreements was founded shortly after the implementation of the North American Free Trade Agreement (NAFTA) to examine whether or not that agreement complied with the GATS. The Committee has yet to make a determination.118 In a surprising admission, the Congressional Research Service has, however, already determined that FTAs are facially inconsistent with GATS obligations, despite the fact that the FTAs themselves claim that they are exempt.119 Regardless of the Committee’s ability to reach an agreement, the DSB has already decided in favor of applying the GATS to FTAs.120 In Canada – Certain Measures Affecting the Automotive Industry, Canada defended its trade measures by claiming that they were part of NAFTA, and, since NAFTA was exempted from the GATS as an economic integration agreement, so were the trade measures.121 The DSB Panel found that the measures were not part of NAFTA, and, even if they were, the particular provisions did not qualify since they did not provide for the absence or elimination of substantially all discrimination.122 The Panel stated: “[T]he purpose of Article V is to allow for ambitious liberalization to take place at a regional level, while at the same time guarding against undermining the MFN obligation by engaging in minor preferential arrangements.”123 The Panel report was reversed on appeal to the DSB Appellate Body, but it was not reversed on the grounds stated above.124 Having reversed the Panel on other grounds, the Appellate Body did not rule on the question, so the finding of the Panel is potentially still correct. Therefore, the DSB may still find in the future that NAFTA is subject to the GATS and that some NAFTA measures are not exempted. Even if the DSB eventually finds that NAFTA is exempted, the DSB has shown a willingness to look below the surface of FTAs and similar agreements to determine if they truly qualify for the exemption rather than deferring to a nation’s self-judging assertions of compliance.

An additional question in the area of immigration is whether the economic integration exemption is an alternative to the more clearly applicable labor markets integration provision. The WTO has found that measures may be governed by GATS and GATT concurrently,125 and that measures may be also governed by two separate GATS provisions.126 On the other hand, in the context of Specific Commitments, the DSB has found that sectoral classifications are “mutually exclusive.”127 It is unclear whether these exemptions for economic and labor markets integration, being treaty reservations, are overlapping or mutually exclusive. If movement of persons provisions were intended to be alternatively exempted under the more liberal economic integration provision, then it should not have been necessary to create a labor markets exemption at all. Surely the WTO would not have separate exemption provisions with different requirements without the inherent requirement of mutual exclusivity. The purpose of having a separate, more rigorous, labor markets exemption would be superfluous if a labor market measure could qualify for exemption through an alternative. The parties to the Uruguay Round must have perceived that the movement of labor involves different issues that could not be grouped with other economic relations and thus the exemptions are mutually exclusive. Therefore, it is unlikely that a measure regarding labor markets and movement of persons could be alternatively exempted under the economic integration agreement exemption.

5. General Exemptions and Security Exemptions

There are also two broad provisions that exempt a number of matters from GATS consideration. These exemptions fall under two types: “General Exemptions” and “Security Exemptions.” Notwithstanding any rules in GATS to the contrary, the General Exemptions allow:

Measures . . . (a) necessary to protect public morals or to maintain public order; (b) necessary to protect human, animal or plant life or health; (c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those related to: the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts; the protection of the privacy of individuals [and]; . . . safety [and]; (d) [measures] . . . aimed at ensuring the equitable or effective imposition or collection of direct taxes . . . .128

In order to qualify, the measure must fall into one of the above-listed types of measures, not violate the conditions of the exemption,129 and be “necessary” to achieve that end.130 The DSB considers a measure “necessary” when it is “located significantly closer to the pole of ‘indispensable’ than to the opposite pole of simply ‘making a contribution to.’”131 The DSB will consider “whether a less WTO-inconsistent measure is ‘reasonably available.’”132 Additionally, the measure must not be “applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services.”133 Unfortunately, this provision fails to give guidance on the standard for assessing the manner of application.

The second broad class of exemptions is Security Exemptions. These exemptions also allow countries to resist GATS rules that would:

(a) require any Member to furnish any information, the disclosure of which it considers contrary to its essential security interests; or (b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests . . . relating to . . . provisioning a military establishment; . . . fissionable and fusionable materials; . . . taken in time of war or other emergency in international relations; or (c) to prevent any Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.134

Although these are extraordinary situations, the GATS still establishes the same requirement of necessity as above135 and that “[t]he Council for Trade in Services . . . be informed to the fullest extent possible of measures taken under [the exemption] and of their termination.”136 It is unclear if a Member can claim an exemption if it failed to inform the Council and whether the Council can review a Member’s self-judgment of necessity.137

As mentioned previously, the immigration provisions of the Helms-Burton Act138 were disputed. The United States claimed that the Act was outside the WTO’s jurisdiction, and even if reviewable, the Act was justified under the Security Exemption.139 Since the EU withdrew the dispute, the DSB never determined if it could review a member state’s self-judgment of necessity. However, during the initial stages of the challenge, many nations and international organizations doubted that Cuba presented any real security threat to the United States140 and argued that the Act was contrary to international law.141 Since the United States agreed to negotiate under pressure, the United States may have thought that there was a risk that it might lose. Although not definitively establishing reviewability, this event shows that even immigration provisions that exclude aliens on national security grounds may be subject to review by the DSB, and that the standard of review might be based to some degree on world opinion of the defending member’s security assessment.

G. Obligation to Provide Most-Favored-Nation Treatment

Within the General Obligations of the GATS is the MFN obligation.142 Under MFN, all WTO member nations “shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country.”143 This provision is an unconditional end to discrimination among WTO member nations and establishes a common denominator of trade policy without regard to nationality.144

Although some commentators have stated that immigration and visa policy would only be covered by Specific Commitments and not General Obligations such as MFN, this is without basis.145 First, there is nothing in the text of the GATS to support such an assertion since MFN does not distinguish between the two, whereas other obligations do.146 Second, the DSB has found that measures may be covered by one or more GATS or GATT provisions, so immigration provisions covered by Specific Commitments may still be covered by MFN.147 Third, in the Helms-Burton Act dispute, the EU specifically complained that the immigration measure conflicted with MFN, and this assertion was not contested by the United States.148 Lastly, the United States and several other countries took steps to list exemptions that insulate some of their immigration laws from MFN and would not have done so if MFN did not cover immigration laws.

1. Tests for Violations of MFN

One of the most significant aspects of MFN is that the standard for discrimination is both de jure and de facto.149 The DSB will examine either intentionally discriminatory regulations or regulations that have discriminatory effects, regardless of intent. This requires United States immigration law to satisfy a standard foreign to United States law. Failure to appreciate this standard is partly why many may not perceive the potential for conflicts between United States immigration law and MFN.

There are several tests for violations of MFN.150 De jure discrimination occurs when the nationality of the service provider is specifically noted as a criterion in qualifying for admission, regardless of the scope of applicability.151 De facto discrimination exists when a measure operates in such a way as to create a discriminatory effect against a particular nationality compared to other nationalities, again, regardless of intent.152 The three potential tests for de facto discrimination are the “diagonal” test, the “subcategory” test, and the “asymmetric impact” test.153 The diagonal test examines all service suppliers from WTO members to determine if any one nationality is receiving less favorable treatment.154 The subcategory test examines services supplied by type of service to determine if any one nationality within that subcategory receives less favorable treatment.155 The asymmetric impact test examines all service suppliers, comparing the proportion of service suppliers with each nationality receiving less favorable treatment, looking for disproportionate effect. This test is the one most commonly applied by the DSB, and is the only test that has been applied in an MFN dispute to date.156 It is also the test that appears to be favored by the Council when it notes “measures having a disproportionate impact.”157

2. Treatment of Inherent Competitive Disadvantages

WTO members must take the level of development of other nations into consideration in applying MFN.158 As a basis of comparison, let us consider the application of the Specific Commitment of National Treatment. National Treatment will not be discussed in detail in this Article because the United States has not consented to its application; however, the comparison is instructive.159 While MFN is the obligation to refrain from discriminating on the basis of nationality among foreign service suppliers, National Treatment is the obligation to refrain from discriminating between domestic and foreign service suppliers.160 The National Treatment obligation specifically states that the obligation “shall not be construed to require any Member to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant services or service suppliers.”161 Since this limitation is specifically listed under National Treatment but a similar limitation is not listed under MFN, the implication is that MFN is not similarly conditioned. While National Treatment excuses members from compensating for the foreign character of the services, the MFN obligation may require members to compensate for the different foreign characters of the services. Accordingly, WTO members may not claim that de facto discriminatory effects are the result of inherent competitive disadvantages.

3. Exclusion from MFN for Visas

In a footnote, the Annex on Movement of Persons states that “the sole fact of requiring a visa for natural persons of certain Members and not for those of others shall not be regarded as nullifying or impairing benefits under a specific commitment.”162 By specifically exempting this type of discrimination from amounting to a per se violation of Specific Commitments, the Annex implies that it may be regarded as violating MFN.163 The Council appears to agree.164 This footnote may have been drafted based on the mistaken belief that immigration law was not covered by MFN. Although the language of GATS is to be read literally and the interpreter may not substitute different words, for the sake of argument, we will entertain the possibility that visas are somehow exempted from MFN.

i. Distinction Between Visa and Status

What is unclear about this footnote referring to “visas” is whether it intends to refer to the visa document stamped in a passport by an embassy or consulate as a prerequisite to travel to a country or whether it refers generally to admission in a particular non-immigrant status. Even seasoned immigration practitioners often informally say that a person is in the country “on a visa” when in fact that usage is not correct.165 A visa is merely evidence of the consular officer’s review of the alien’s qualifications and grant of permission to board transportation, travel to the country, and apply for admission in a particular status.166 This travel authorization usually takes the form of a stamp placed in a passport. It is this stamp only that is the “visa.” The inspecting officer at the port of entry always retains the right to refuse an applicant entry even if holding a valid visa.167 Provided the alien has applied for admission during the visa’s validity period and has been admitted, the alien receives nonimmigrant status for a set period of time and the visa becomes irrelevant since its sole purpose is over.168 Therefore, an alien is never in a country on a visa, but rather pursuant to a particular grant of nonimmigrant status.

One of the sources of the confusion may be the fact that some of the more common visas are issued with validity periods identical to the periods for which aliens will receive authorized stay. Upon admission, the expiration of status is often coterminous with the validity of the visa. However, this is not always the case and many visas are issued with validity either longer or shorter than the proposed stay.169 If the visa is valid longer than the stay, the alien will receive a certain term at admission and must exit before its expiration, not before the expiration of the visa. The person may return another day, still during the visa’s validity, to request another period of stay. On the other hand, if the visa’s validity is shorter than the proposed stay, then the alien merely has a shorter window of time during which admission must be requested; however, the period of stay will not be limited to the visa’s validity and may in fact extend beyond the visa expiration.170 If the alien decides to leave the country and return after the visa expiration, even if only for a brief trip, the alien must apply for and receive a new visa from the country’s foreign mission in order to receive renewed permission to apply for entry.171

ii. Definition of Visa

Based on the above, it is debatable how the DSB will define visa and how the definition will apply to United States immigration law. Language of the GATS must be given its “ordinary meaning . . . in [its] context and in the light of its object and purpose.”172 Initially, we observe that the word “visa” is used in the French version of the GATS173 and the word “visado” is used in the Spanish.174 As both of these terms are literal translations of visa this question of interpretation does not involve a word unique to English.175 Since there is no definition of visa in the GATS, we will examine dictionaries and general international custom to determine its ordinary meaning.

The DSB has found that it may use dictionaries to assist in determining the customary usage of a term.176 In Black’s Law Dictionary, a visa is defined as:

An official endorsement made out on a passport, denoting that it has been examined and that the bearer is permitted to proceed. A recognition by the country in which the holder of a passport desires to travel of that passport’s validity. U.S. v. Vargas, D.C. N.Y., 380 F.Supp. 1162, 1168. A visa is generally required for the admission of aliens into the United States. Cf. 8 U.S.C.A. §§ 1181, 1184. . . .177

The court in the cited case of United States v. Vargas found that a visa was defined in more detail as “an endorsement made on a passport by the proper authorities (as of the country the bearer wishes to enter) denoting that it has been examined and that the bearer is permitted to proceed.”178 In the more modern Webster’s New World College Dictionary, a visa is defined as “an endorsement on a passport, showing that a person has been granted official entry into or passage through a country.”179 Similarly, in the Concise Oxford English Dictionary, visa is defined as “an endorsement on a passport which indicates that the holder is allowed to enter, leave, or stay for a specified period of time in a country.”180 However, in this context, the etymology provided by the dictionary is also informative: “via Fr[ench] from L[atin] visa, past part[iciple] of videre ‘to see.’”181 This etymology suggests that the visa is a product of review, i.e., primarily an evidentiary concern. Although they do vary to some degree, in all of the dictionary definitions the relevant authority referred to the visa as being solely an endorsement placed in a passport as evidence of review. Two of the definitions referred to a grant of authorization to stay in a country, but the definitions still referred to the visa as merely evidence of the grant. This distinction is akin to that between citizenship and a passport, or the substantive right and evidence of the right.

As a multilateral agreement, the DSB will not necessarily judge the MFN obligation by reference only to United States usage; accordingly, we must also look to international usage. In the Glossary on Migration, the International Organization for Migration (IOM) provides proposed universal definitions of common terms used in discussing international migration to avoid just these types of misunderstandings.182 While acknowledging that “definitions in this field are often vague, controversial or contradictory,” and that “the usage of migration terms varies from country to country,” “care has been taken to provide the international definition where it exists; in other cases, a general definition is provided and mention made of alternative definitions.”183 The IOM defines visa as

[a]n endorsement by a consular officer in a passport or a certificate of identity that indicates that the officer, at the time of issuance, believes the holder to fall within a category of non-nationals who can be admitted under the State’s laws. A visa establishes the criteria of admission into a State.184

Since the IOM did not include alternative definitions for visa, the IOM must have found that the above definition is an international definition without commonly accepted alternatives. This definition supports the distinction between visa and status detailed above, specifically, that the visa is evidence that the alien appears to be eligible and allows the alien to request admission.

Furthermore, we can also look to the usage of individual nations, especially those nations who were parties to the Uruguay Round. Most nations use the term visa in a similar manner and employ the dichotomy of visa and status as described above,185 such as the requirement of many nations for aliens to have both a visa and a work permit. If a visa were the grant of authorized stay, then a separate work permit should not be necessary. Even for those nations that do not require separate visas and work permits, they still recognize the legal distinction.186 In fact, many of the nations that were parties to the Uruguay Round do not issue visas that are coterminous with the alien’s anticipated stay.187 Accordingly, those negotiating parties were even more acutely aware of the difference and presumably applied that understanding when negotiating the GATS. The fact that the GATS may have been actually negotiated by trade officers of a given country rather than immigration officers with a more refined understanding of the subtle language distinction is not relevant since the language is clear and the DSB will not investigate the subjective intent behind a clearly defined word.188

As it is widely acknowledged that a visa and authorized stay are fundamentally different concepts, we cannot merely substitute the word status for visa, as written in the Annex, and must read the word literally.189 Therefore, the footnote in the Annex must be read as “[t]he sole fact of requiring [documentary evidence of authorization to travel to the WTO Member nation] for natural persons of certain Members and not for those of others shall not be regarded as nullifying or impairing benefits under a specific commitment.”190 Accordingly, only the exemption of some nationalities from the requirement of receiving a visa stamped in their passport before traveling to the country may be acceptable discrimination under MFN. Discriminatory measures that go beyond that documentary requirement, such as differing qualifications for nonimmigrant status, are subject to MFN.

iii. Visa Application Procedure and Adjudication

In addition, the process for applying for a visa is not entirely insulated from the GATS. Even if requiring a visa is acceptable discrimination, submitting an application is only the tip of the iceberg. There are requirements for place of application, burden of proof, procedures,191 and other requirements that go far beyond submitting ministerial paperwork.192 Note that the WTO members were free to state that different visa application treatment will not be a violation, but they did not. The Members only agreed that “the sole fact of requiring [documentary evidence] . . . shall not be regarded as [a violation].”193 Accordingly, treatment and processing of the visa application is also within the scope of the GATS.

Although this Article is not the forum for a detailed assessment of visa processing procedures, some aspects of the procedures that implicate visa qualifications are pertinent. A quick survey of the documentary requirements at United States posts shows that different nationalities are required to present different documents to evidence qualification.194 Sometimes, these documents are United States documents or their local equivalent, but in some cases, the documents are locally unique.195 In these cases, we must wonder why the post requires different documents for different nationalities to qualify for the same visa. Practitioners observe that consulates appear to routinely apply differing burdens of proof to nationals of different countries. Many of these standards are established by local posts based on experience with fraud. These practices are clearly discriminatory and might be considered “measures” since there are no a priori exclusions from the definition. These policies could not be justified under the security exception since any qualifying alien may be refused a visa on valid security grounds. Requiring a higher burden of proof is not necessary to establish a security barrier.

4. Exclusions from MFN for Country-Specific Scheduled MFN Exemptions

In negotiating the GATS, the member nations realized that MFN was not immediately feasible. They therefore allowed members a single opportunity to schedule country-specific exemptions for certain measures that would otherwise violate MFN.196 These exemptions would allow members to continue discriminatory measures past the entry into force of the GATS. Many of the exemptions are for specific historic trading partners or nations with whom bilateral trade agreements have been entered.197 If the member nation did not schedule the exemption at the entry into force of the GATS, then the nation is prohibited from doing so without the consent of the other WTO Members.198 As new nations join the WTO, they are likewise granted an initial opportunity to schedule and are barred from amending thereafter without consent. These exemptions are listed in the Annex on Article II Exemptions, which is considered an integral part of the GATS.199

The WTO member nations were not completely unrestrained in scheduling exemptions. The exemptions must meet the conditions of the Annex to be enforceable.200 The Annex includes the condition that exemptions should not, “[i]n principle,” exist for more than ten years after the entry into force of the GATS.201 This ten-year period was intended to be a transition period to full MFN treatment.202 In the Annex, members were required to enter the date on which the exemption would expire although many WTO members listed exemptions as “indefinite.”203

The consequences of maintaining a measure beyond the ten-year limit are unclear. The limit has never been the subject of a DSB dispute, although the DSB has found that other similar expressions of intent are relevant when a member fails to pursue the goal in good faith.204 This obligation is in addition to the general principle of pacta sunt servanda in customary international law.205 The ten-year anniversary from the date of entry into force of GATS for the United States was January 1, 2005, at which point the United States MFN exemptions should have, in principle, expired.

Although the ten-year expiration is couched in terms of aspiration, the United States should not interpret this language to mean that exemptions will be tolerated long-term. The WTO has consistently reaffirmed that the exemptions are temporary206 and one of the expressed goals of the Doha Round is the elimination of exemptions.207 In fact, the Council has already issued Procedures for the Certification of Terminations, Reductions and Rectifications of Article II (MFN) Exemptions.208 In addition, the United States should not discount the fact that many nations have been vocal in their complaints that discrimination is still being practiced.209 Some members, such as Japan,210 did not list any MFN exemptions at the outset and are increasingly critical of nations that did. Many WTO member states are adamant that the ten-year period was merely a transition211 and have already begun to propose the commencement of the phase-out process and transition.212 Lastly, an exemption would need to be claimed as a defense at the DSB if a measure was challenged. The DSB might decline to recognize a more than ten-year old exemption as a valid defense. Member states have expressed a preference for negotiation on the elimination of exemptions rather than dispute resolution, so exemptions may be tolerated for some time.213 However, any MFN provision maintained beyond the ten-year mark is vulnerable.

In addition, WTO member nations must also justify their exemptions. Exemptions that expired more than five years in the future were reviewed by the Council to determine “whether the conditions which created the need for the exemption still prevail; and . . . determine the date of any further review.”214 The initial five-year review was admittedly ineffective but this does not mean that the Council has abandoned its right to review the exemptions for continued justification.215 If an exemption was disputed, the DSB could find that the exemption did not expire but is no longer justified. In addition, the exemptions are still subject to subsequent negotiations regardless of the outcome of the Council’s review or a DSB dispute.216

Lastly, there is some discussion whether such an exemption for a bilateral trade agreement must be recognized if both parties to the agreement did not take reciprocal exemptions. The Council has noted that “[p]references granted are not frequently mirrored by similar exemptions on the part of beneficiary countries.”217 The Agreement Establishing the WTO states that deviations from the agreements are not generally allowed, but where they are, they are considered treaty reservations.218 As has been noted above, the GATS is interpreted according to customary international law, including the Vienna Treaty Convention.219 Under the Convention, treaty reservations are not honored against a state which, at the time of entry into force, maintained an objection to the reservation.220 Some WTO members still maintain that these exemptions must be reciprocal or they are not recognized.221 How the Convention’s rule would apply in this multilateral context is unclear, but it is possible that parties have not taken their exemptions effectively so they are void ab initio either against the particular nation or the WTO generally.

5. Country-Specific MFN Exemption Scheduled by the United States

In its list of exemptions, the United States included nonimmigrant aspects of bilateral treaties for trade and investment.222 This exemption allows for:

Government issuance of treaty trader or treaty investor non-immigrant visas that extend a special visa category to nationals of treaty partners in executive and other personnel categories engaged solely to carry on substantial trade, including trade in services or trade in technology, principally between the US and the foreign state of which a natural person is a national, or solely to develop and direct the operations of an enterprise in which a natural person has invested or is actively in the process of investing a substantial amount of capital.223

This exemption applies to nationals from “[c]ountries with whom the United States has a Friendship, Commerce and Navigation Treaty (FCN), a Bilateral Investment Treaty (BIT), or certain countries as described in Section 204 of the Immigration Act of 1990.”224 The United States currently accords seventy-eight nations preferred nonimmigrant treatment under these agreements225 and continues to engage in negotiations for additional agreements that might fall under this exemption, even after the implementation of the GATS.226 The exemption is justified by the need “[t]o facilitate trade under FCNs and BITs” and as with most of the exemptions, it is listed as indefinite.227 Nonetheless, this exemption was theoretically slated for elimination on January 1, 2005, the ten-year anniversary of the entry into force of the GATS.

It is interesting to note that most countries that have an FCN or BIT with the United States have not entered a reciprocal exemption.228 Of the sixty-seven nations with whom the United States has concluded a treaty and who are also members of the WTO, only Brunei,229 Costa Rica,230 Estonia,231 Jordan,232 the Philippines,233 and Trinidad and Tobago234 have entered exemptions that are arguably reciprocal. Some of the most frequent users of the treaties have not entered reciprocal exemptions, notably Japan235 and the United Kingdom.236

Furthermore, the failure of the United States to have a fixed list of exempted agreements is also criticized. Certain countries, as described in the Immigration Act of 1990, are covered, but this is not a fixed list.237 The Act grants treatment equivalent to a treaty for countries that qualify under prescribed statutory requirements.238 Currently, Australia and Sweden have been designated by administrative determination as qualifying.239 This exemption is, therefore, neither transparent nor reliable since others must refer to national legislation to clarify the exemption240 and even then, the countries involved are not clearly identified.241 Moreover, additional countries may in the future receive the exempted treatment if they qualify.
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III. Analysis of United States Immigration Measures Against GATS MFN

This article will now apply the above analysis of MFN to qualifying for United States nonimmigrant categories. Before addressing each category in particular, note generally that United States immigration law and the GATS may operate in parallel but not necessarily in concert. Although the United States may believe that it merely entrenched its immigration law under the GATS, there may be dual sources of benefits that in total exceed the benefits accruing under only one of the sources.

A. H-1B, Worker in a Specialty Occupation

One of the most important nonimmigrant categories for business purposes is the H-1B.242 This category is for aliens coming to the United States to work for a United States-incorporated employer in a “specialty occupation” at a wage that will not adversely affect United States workers.243

1. Specialty Occupation

A specialty occupation is an occupation that requires the “theoretical and practical application of a body of highly specialized knowledge,”244 that has the “attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.”245 Originally, the category was designated for “professionals,” but was deliberately changed to “specialty occupations.”246 Although the definitions of professional and specialty occupation can overlap greatly, the definitions are distinct. All professional occupations are specialty occupations, but not all specialty occupations are professional.247 Certain positions are listed in the statute and regulations as examples of professions and specialty occupations,248 generally including physicians, engineers, lawyers, and other occupations traditionally regarded as professions.249 If the occupation is specifically listed, it should be considered a specialty occupation regardless of the particular position’s minimum requirements.250 It is important to note, however, that this test is not applied consistently.251

If the occupation is not listed in the statute or regulations, then the alien’s employer may still have the occupation classified as a specialty based on the position’s minimum requirements.252 The regulations establish several measures to determine if a position is a specialty occupation including whether the normal minimum requirements for the position demand a specialized degree; the degree requirement is common in the industry; the particular duties are complex or specialized; and the employer normally requires a degree.253

2. Alien’s Qualifications

In addition to the position qualifying, the alien must also be qualified to perform the duties.254 If the alien will practice a profession that is listed, the alien should be able to presumptively qualify if the alien is currently practicing in that occupation, regardless of qualifications.255 This policy is also not always applied in a uniform manner and, in reality, all aliens must have a bachelor’s degree in the specialty regardless of whether the occupation is listed.

In order to practice an occupation not listed in the statute but satisfying one of the alternative tests, the alien must have the appropriate specialized bachelor’s degree.256 Although it may be acceptable discrimination under the GATS to judge a position as a specialty based on the usual United States requirements, it may not be acceptable to require the foreign national to have the education that is the usual in the United States. If the position is a specialty and the employee is a qualified member of the occupation, it might be discriminatory to require the degree because different countries have differing requirements for the practice of specialties. In fact, it might be unusual for the national to have a specialized degree. The country’s national educational system might not even offer the degree in the specialty. The requirement is not de jure discrimination, but it might be de facto discrimination. If the United States applies the same standard to two nationals of two different countries, both of whom have been practicing the same specialty but have different educations, the United States would be making it more difficult for one country’s nationals to qualify. WTO members are not generally permitted to claim that discriminatory effects are the result of inherent competitive disadvantages. National employment or education standards may be inherent competitive factors between nations. Accordingly, the United States may not be able to use the usual United States standard, provided the employee was able to perform the duties.

If an alien does not have the required specialized degree, then the alien may still qualify if he has the equivalent to the degree through foreign education and/or experience.257 A professional work experience evaluation may assist in establishing equivalency. The difficulty with this alternate system is that it does not remedy the problem above and the alien’s employer has the additional burden of proving the equivalency with the additional expense of an independent professional evaluation and a further risk of denial. It is interesting to note that the United States willingly abolished the need for equivalencies for Canadian and Mexican degrees, when the employee applies for admission under NAFTA. It is unclear why the United States believes that all Canadian and Mexican degrees are presumptively the equivalent to United States degrees but not those from, for example, the Universities of Cambridge, Tokyo, and Paris. Also, the alien needs the equivalency despite the fact that other nationals may qualify without showing a degree or equivalent if the position is listed in the statute or regulations. The fact that certain nationalities may gravitate more frequently to certain occupations may aggravate the disproportionate discrimination. If the burden of proving the equivalent is consistently applied to certain nationals and not to others, then the result may be one of a de facto discriminatory effect.

The United States might be able to argue that the equivalency requirement falls under the General Exceptions because, without it, the United States cannot be certain that the person is competent.258 However, if nationals from particular countries have been admitted to the United States previously and have shown that their educations are not issues of competency, then the employee could argue that the equivalency requirement falls closer to the pole of “contributing to” than “indispensable” to competency.259 If true, the equivalency requirement might not be “necessary.”

3. Licensure

Licensure to practice the profession is a different situation. The alien must have the local license required to perform the services.260 Equivalencies are not acceptable.261 The licensing regime, of course, varies for each state and varies between occupations.

Since many professions are licensed by independent bodies on a state level, the first question is whether licensing is even a measure within the definition of GATS. Certainly, it is a regulation that restricts the performance of services that affects the conditions of competition through Mode 4. To be covered by GATS, measures may take the form of a “law, regulation, rule, procedure, decision, administrative action, or any other form”262 taken by any level of government or “non-governmental bodies in the exercise of powers” delegated by any level of government.263 Since the licensing professional bodies are exercising a monopoly to practice that is legally enforceable, and are overseen by the government, the acts of professional bodies can be considered measures within the terms of GATS.

The United States may be successful in arguing that this requirement also falls within the General Exemption relating to competency and protection of United States citizens.264 This argument presupposes that the United States could show that the licensing scheme is necessary to accomplish this task. However, the GATS already includes provisions on licensing recognition under the section on Domestic Regulation, which may exclusively cover competency questions. The particular state’s license may not truly be “indispensable” since it is contemplated that a mechanism for reciprocal recognition of licenses is acceptable.265

If not exempted, the next inquiry is whether it violates MFN. Since the United States provides for the same treatment for all foreign nationals, this requirement is not de jure discrimination, but it may be de facto. For example, due to the discrepancies in state licensing regimes, and the possible tendency of certain nationalities to migrate to certain United States regions and be disproportionately more likely to fall under certain state’s rules, the differing licensing regimes may result in statistically disproportionate discriminatory effects on certain nationalities. This aspect of federalism as integrated into immigration law may then operate to violate MFN on a national basis.

4. Prevailing Wage

Lastly, the employer must pay the alien the higher of the prevailing wage or the wage that the employer actually pays similarly-situated employees.266 The prevailing wage determination is unique for each position, geographic area, and level of seniority.267 Notwithstanding the prevailing wage, the employer may be required to pay above the prevailing wage, if the employer already pays its other similarly-situated employees a higher actual wage.

One of the most apparent differences between countries, and a source of comparable advantage, is the range in wages paid. When coming to the United States to perform services, some nationals may effectively receive raises. Just like licensing, this is a uniform standard that is applied to all nationalities and cannot be a de jure discriminatory practice, but it may have a de facto effect. The effect is that differing nationalities receive different raises or none at all. Since many nonimmigrant workers use their time in the United States as an opportunity to remit a proportion of their income to their home country, differing home countries may benefit to differing degrees. The dilemma is that allowing employers to consider the employee’s country of origin in setting the wage may be a de jure violation. Guidance may be found in the GATS as a whole. WTO members may not generally claim inherent competitive disadvantages and discrimination in favor of nationals from developing countries as defenses. Therefore, employers may need to pay employees the same prevailing wage regardless of the benefits that may accrue disproportionately, but this is far from settled.

B. H-1B1, Professionals under the Chile/Singapore Free Trade Agreements

In addition to the H-1B, the H-1B1 subcategory is also available, but only to nationals of Chile or Singapore under the terms of the Chile268 and Singapore269 Free Trade Agreements with the United States. The FTAs provide for treaty trader and investor categories that already exist under United States immigration law but also created this new H-1B1 subcategory. Significantly, the FTAs were not adopted as treaties but as legislation.270 Nationals from Singapore and Chile are by no means required to apply for H-1B1 and may still apply for the regular H-1B, but the new classification is an additional option.271 On its face, therefore, the H-1B1 establishes discriminatory preferences for certain nationalities, contrary to MFN.

It is important to note that petitions for H-1B1 classification may be filed directly at a United States Embassy or Consulate and not necessarily in advance with the USCIS.272 This option may exacerbate existing inconsistencies with consular adjudication of qualifications. If the H-1B1 is extended to other WTO nationalities, some posts may be confronted with petitions for which they have no training, expertise, or resources, and the degree of inconsistency may increase.

1. H-1B1 Requirements

Once it is established that the individual is a Chilean or Singaporean national, the next requirement is that the position be professional. This requirement is tested similarly to the H-1B regulations for specialty occupations.273 Although the Office of the United States Trade Representative (USTR) may not appreciate the distinction between professionals and specialty occupations, it is an important one as noted above. In the Immigration Act of 1990, Congress changed the H-1B criterion from professional to specialty occupation, so the use of the term professional here suggests that the test might properly be the prior test for a professional position. What implications this may have for the future interpretation of the H-1B1 category in other scenarios is outside this inquiry.

For four specific occupations, the position will be presumptively considered a specialty occupation without a bachelor’s degree.274 For (1) Disaster Relief Claims Adjusters and (2) Management Consultants from Chile or Singapore, a combination of specialized training and three years experience is sufficient.275 For (3) Agricultural Managers and (4) Physical Therapists from Chile, a combination of a post-secondary certificate in the specialty and three years experience is sufficient.276 These provisions suggest that the USTR may be admitting that the normal degree requirement for some specialties in other countries is not a bachelor’s degree and yet the individual can still perform the duties, supporting the argument about necessity of the degree requirement discussed above under H-1B.

In addition, there is a major difference between H-1B1 and H-1B regarding licensing. For H-1B1, the alien need not have a license as a condition of qualification.277 Licensing is considered purely a state enforcement issue and not an issue in the immigration context. Here again, we may find support for the argument that the necessity of licensing under H-1B may violate MFN.

2. Labor Markets or Economic Integration Agreements Exemptions

The United States would most likely submit that the Chile and Singapore FTAs fall under the labor markets and/or economic integration exemptions of GATS. An initial question is whether each FTA is an FCN or BIT masquerading as an FTA and gaining exemption here, rather than under the MFN exemption.278 Since the FTAs provide for treaty status,279 they must be FCNs or BITs. However, in each FTA, they specifically claim that they are exempted from the GATS as economic integration agreements not MFN exemptions.280 One reason why the USTR may have included this language in each FTA is that the MFN exemptions are slated for expiration but the exemption for economic integration agreements is not. Therefore, the FTAs may be considered hybrid agreements, combining aspects of FCNs, BITs, and economic integration agreements and must be assessed under MFN as such.

i. Labor Markets Integration Agreement

The FTA provisions cannot be exempted under the GATS labor markets integration provision. In order to qualify, the FTA must provide for “full integration of the labour markets between or among the parties to such an agreement,”281 meaning that the FTA must “exempt citizens of parties to the agreement from requirements concerning residency and work permits,”282 and “provide citizens of the parties concerned with a right of free entry to the employment markets of the parties.”283 The FTAs principally extend nonimmigrant categories to Chilean284 and Singaporean285 nationals, granting limited nonimmigrant employment authorization but do not “provide for open borders or freedom of movement of individuals.”286 The privilege of entry to and residence in the United States continues to be controlled by the usual United States immigration policy, a far cry from the EU freedom of movement. Since the FTAs do not provide Chilean or Singaporean nationals with the right of free entry to the employment market of the United States, they cannot be considered a labor market integration agreement.

ii. Economic Integration Agreement

Considering that the exemptions are not mutually exclusive, the FTAs do not alternatively qualify as an economic integration exemption. In order to qualify, the agreement must provide for the elimination of substantially all discrimination.287 Although the FTA may claim that it is in compliance, compliance is not judged by the parties but by the DSB. The FTAs do not provide for the elimination of substantially all discrimination regarding the treatment of service suppliers since foreign service suppliers must still qualify for nonimmigrant classifications and yet native service suppliers do not. Thus, the measure is discriminatory and cannot be an economic integration agreement.

3. Scheduled MFN Exemption

While it could be argued that these FTAs fall under the existing MFN exemption for FCNs and BITs,288 the plain language of the exemption does not cover them because the FTAs are not FCNs or BITs. The parties have specifically stated that the FTAs are exempt as economic integration agreements, not MFN exemptions.289 The United States was free to exempt FTAs when it filed its MFN exemptions, just as the parties to the Uruguay Round clearly exempted FTAs from the GATT, but it chose not to. Further, the United States did not extend H-1B1 classification to Chilean and Singaporean nationals by ratifying treaties, but by enacting domestic legislation that references the diplomatic negotiations. In order to make even a colorable claim to the MFN exemption, the United States would need to prove that not only is this legislation an FCN or BIT, but also that its separate claim in the FTAs for exemption as an economic integration agreement is superfluous.

The MFN exemption also only covers treaty trader and investors, not specialty occupations or professionals. In order for the United States to grant preferential treatment under the MFN exemption, the United States must issue a treaty trader or treaty investor visa. The United States can only make the argument that it has no obligation under MFN to extend FTA treatment if the United States limited treaty trader or treaty investor status to aliens who also, alternatively, qualified as specialty occupation and professionals. When the United States entered the MFN exemption, it included “executive and other personnel categories engaged solely to carry on substantial trade” or investment,290 so the grant of trader or investor status to an individual serving in a specialty occupation or profession is possible. However, this approach would set a bad precedent because it would establish that the particular nonimmigrant classification granted is not controlling for GATS treatment, provided the individual could have qualified for another category that demands GATS treatment. If the United States wishes to make GATS treatment contingent on alternate potential classification, then the United States would need to grant aliens the sum total of the most liberal benefits they could potentially qualify for under several different parallel classifications, regardless of the actual classification granted.

Even if the United States would argue that the FTA H-1B1 provisions fall under the MFN exemption, the exemption was supposed to, in principle, expire. Not only might the DSB be reluctant to enforce a theoretically-expired exemption, but the fact that the FTA entered into force only one year before the MFN exemption was set to expire, might suggest that the United States had acted in bad faith by actively working against the phase-out of exemptions. Also, the DSB might read the MFN exemption narrowly to only cover trade agreements in existence at the time of GATS entry into force, not thereafter, and thereby exclude these FTAs from the exemption.291 Note that the provision only exempts countries “with whom the United States has [a Treaty],” not those with whom the United States has or may have a treaty in the future, even though the United States clearly could have attempted to exempt potential future agreements.

Lastly, even if the DSB allowed the discriminatory FTA measures to stand, the United States could not fully benefit from the exemption if it exceeded its terms by granting H-1B1 status to an individual in a specialty which was not also a profession. By granting H-1B1 status in this way, the United States would be discriminating outside the exemption for professionals and would need to provide H-1B1 status to all WTO nationalities who work in similar specialty occupations.

There is clearly a danger inherent in FTAs. By creating new preferential trading regimes for certain nationalities without precedent on how the DSB will view such agreements, the United States may be inadvertently creating more liberal immigration obligations that must eventually be extended to all WTO members. The United States is currently pursuing other bilateral FTAs292 and after the success of the Singaporean and Chilean FTAs, may be inclined to include immigration provisions in some or all of those new agreements despite Congressional opposition.293 In so doing, the United States may be sowing the seeds of immigration liberalization when the MFN exemption is eventually eliminated.

C. E-1 or E-2, Treaty Trader or Investor

One of the most significant nonimmigrant categories in terms of a MFN discussion is the E.294 This category is extended for the promotion of international trade and investment pursuant to individual treaties with select countries.295 If the purpose of the admission is pursuant to trade, then the alien’s classification is E-1; if investment, then the classification is E-2.296

1. Qualifying Treaty

Not all employees and companies can qualify for E, since one of the principal criteria is nationality.297 In order to qualify, the alien and employer must both have the nationality of a nation with whom the United States has an FCN, BIT, or the equivalent.298 Although the United States has concluded a treaty with most members of the WTO, there are some notable exceptions, such as South Korea, Brazil, India, and Cuba.299 Thus, this classification is potentially discriminatory, although it has withstood challenges under United States discriminatory workplace legislation.300 Having survived scrutiny under United States law, the next question is if it complies with MFN Treatment.

Since E classification is a creature of treaty, the terms of the treaty control.301 USDOS, not USCIS, retains primary jurisdiction in the exercise of its foreign relations functions.302 Some nationals may qualify as either traders or investors, some may only qualify for one or the other, and some may have additional requirements based on the unique treaty terms.303 Also, treaties may from time to time be rendered inoperable, for example, the treaty with Iran304 which is currently blocked by Executive Order.305

To further complicate matters, the treaties take a variety of forms. Some of the treaties are classic FCN treaties,306 some are BITs,307 and some contain aspects of either or both. For the purposes of this Article, we will assume that all of these agreements would be considered FCNs or BITs by the DSB within the meaning established under the GATS; however, the DSB may, in the spirit of reading the MFN exemptions as narrow treaty reservations, find that a treaty of “Amity, Economic Relations, and Consular Rights” or “Establishment and Sojourn” does not qualify as an FCN under the MFN exemption.

In addition to the myriad of FCNs, BITs, and arguably similar agreements, trader or investor classification is extended to Canadian,308 Mexican,309 Singaporean,310 Chilean,311 and Jordanian312 nationals under the respective FTAs. Again, it is not entirely clear that FTAs are properly classified as FCNs or BITs since they were not enacted as treaties. The argument that a “Convention of Friendship, Commerce and Extradition” is, in actuality, an FCN, is far more reasonable than the argument that domestic legislation is an FCN, if for no other reason than the former is at least a treaty.

A unique situation is that of the Philippines where E status is available based on only the exchange of diplomatic notes pursuant to the Trade Agreement with the Philippines implementing certain provisions of the Act of June 18, 1954, even though there were no trader or investor terms in the Treaty.313 As opposed to the FTAs which actually include trader and investor terms, it seems even more difficult in this case to comprehend how a diplomatic understanding neither ratified nor enacted in domestic legislation could fall under the exemption.

In addition, some nationals are eligible to receive E classification even though the United States has not concluded a treaty or diplomatic exchange with the nation or enacted any treaty-based domestic legislation because the state succeeded to a treaty upon secession from a treaty state or because United States legislation provides for the treaty treatment without a negotiated agreement. Nationals of the successor states to the former Yugoslavia qualify based on the prior state’s Treaty of Commerce,314 nationals of the Czech and Slovak Republics qualify based on the BIT with Czechoslovakia,315 and nationals of Suriname qualify based on the treaty with the Netherlands.316 The Immigration Act of 1990 also extended E status to certain countries meeting statutory conditions.317 Although the countries were not mentioned by name, subsequent administrative determinations found Australia and Sweden qualified.318 The United States is currently considering another extension of E status to Danes.319 On May 2, 2001, the United States and Denmark signed a protocol to the existing FCN320 providing for E-2 eligibility; however, the House of Representatives objected to the protocol, arguing that even though the extension of E eligibility has almost always been accomplished through treaties, in light of the Chilean and Singaporean FTAs, it should only be extended in the future through the legislative process.321 Accordingly, the House Judiciary Committee has proposed legislation to extend E-2 eligibility to Danes.322

2. Scheduled MFN Exemption

This nonimmigrant category is clearly the category for which the MFN exemption was entered. As a preliminary matter, the very fact that the United States has listed this category as needing an exemption from MFN implies that the United States believes that the discriminatory E category inherently violates MFN. If the MFN exemption was to fail for any reason, then the category would not be protected, and the United States would have to extend treaty treatment to all WTO members, including Cuba.323

We will also assume that the DSB will recognize the exemption even though not all of the partners to those treaties have entered reciprocal MFN exemptions.

i. Applicability of the Exemption

By the exemption’s terms, if any of the different treaties described above (at least the portion of the treaty that confers the E benefits) could not be characterized as an FCN or BIT then treatment would fall outside of the exemption. There are, of course, several examples of extending trader or investor eligibility through alternatives to the treaty process, and these may be more prevalent in the future.324 Since the GATS must be read using the usual meaning of words, and the definition of treaty does not usually include domestic legislation or non-ratified agreements, the language of the GATS exemption cannot cover them. The United States appears to have already acknowledged this fact since it listed the Immigration Act of 1990 as an MFN exemption.325 The United States would only have listed this measure if it believed that it would not be considered an FCN or BIT. Since E eligibility was extended to Canadians, Mexicans, Singaporeans, Chileans, and Jordanians (and potentially Danes) by domestic law, along the same lines as the Immigration Act of 1990, then they must be separately exempted. Unfortunately, no further exemptions can be entered. Thus, the United States is arguably already exceeding the terms of its exemption.

ii. Interpreting Discrepancies Between Immigration Law and the Exemption

The language of the United States MFN exemption is not identical to the requirements for treaty trader or investor status under United States law. At times the exemption is more restrictive than the statutory requirements, demanding additional criteria for qualification, and at other times it is more liberal, requiring less. Since the United States was the author of its own MFN exemption, the USTR was free to literally transcribe the statute in its entirety as its exemption, or even directly cite the United States statute as it did for the Immigration Act of 1990, but it chose not to. The question of how to interpret the discrepancies arises. There are several options. A measure that is more restrictive than the exemption, requiring additional criteria to qualify, might still be exempted because the minimal criteria for the exemption are included in the more numerous criteria for qualification. If an employee qualifies, then it must be exempted because the fewer exemption criteria have certainly been met. However, if the employee qualifies for all of the criteria in the exemption, which would excuse the discriminatory treatment, the individual would still not qualify for the classification. If a national cannot even qualify for the classification under the criteria in the exemption, then the discriminatory classification based on criteria not in the exemption cannot be excused. The other discrepancy, if the measure is less restrictive than the exemption, requiring fewer criteria to qualify, also has potentially competing interpretations. Since the classification could be granted without satisfying all of the criteria of the exemption, then the classification would not fulfill the exemption’s terms and would not be excused. On the other hand, the exemption is the maximum criteria that may be imposed while still being exempted from MFN. Any criteria that are less do not exceed the exemption and provide for allowable discrimination. However, because the exemption functions similarly to a treaty reservation, the DSB may be inclined to read it very narrowly, and find that any deviation, whether more or less restrictive, is not in compliance with the exemption, thus defeating the exemption in its entirety.

iii. Grant, Extension, and Change of Status

The language of the exemption specifically excuses “[g]overnment issuance of . . . visas that extend a special visa category.”326 Again we find the recurring problem of the meaning of the term “visa.” Note that this term, however, must be read even more literally in this instance than discussed previously because this provision was authored by the USTR itself, referring to United States immigration statutes.

Reading the exemption literally and narrowly as a treaty reservation, the only acceptable measures would be for issuance of visa documents by the USDOS, not grants of status by USCBP or USCIS. Because USDOS retains primary jurisdiction over treaty traders and investors, applications for classification may be filed at an Embassy or Consulate as an amendment to a visa application, without the need for prior approval from USCIS.327 When the alien travels to the United States, USCBP may grant the alien E status based on the alien’s visa document.328 Once in the United States, extension of the alien’s E status is subject to the jurisdiction of USCIS. If the alien were to leave the United States, and the visa had expired in the meantime, he would need to apply for another visa before returning to the United States, and the embassy or consulate would again exert jurisdiction. However, as long as the alien remained in the United States, a request to extend status is judged solely by USCIS and a visa application is not necessary.329 Similarly, if an alien was admitted to the United States in another status, for example, H-1B, the alien might later seek a change of status to E, without leaving the U.S. if alternatively qualifying for that status, where USCIS would also have sole jurisdiction.330 A new visa would not be required for either a change or extension of status, though it would be required if the alien chose to travel outside of the United States. Moreover, the visa by no means compels USCBP to grant the related status at the port of entry. The exemption, by its express terms, only covers USDOS issuance of visa documents, not the admission, extension, or change of status by USCBP or USCIS, so these functions cannot be exempted from MFN.

iv. Expiration and Justification of the Exemption

Notwithstanding all of the above, the exemption itself has theoretically expired; therefore, it is doubtful that the United States could rely on it in a DSB dispute. Even if the expiration was not self-executing, the DSB could enforce the ten-year principle, refer the question to the Council, or review the exemption to determine if it is still justified. If referred to the Council or reviewed by the DSB, the justification that the United States offered does not seem to necessitate the MFN exemption.

The United States justified the exemption on the grounds that it needed to continue “[t]o facilitate trade under FCNs and BITs.”331 Interestingly, in making its justification, the United States did not refer to the Immigration Act of 1990, NAFTA, or any of the other vehicles that also grant equivalent treatment. Even if the exemption was justified, the treaty equivalents might not be upheld by the DSB since they were never justified. The same logic might also apply to any treaty not specifically an FCN or BIT or to agreements entered into after the entry into force of GATS.

In any event, the precise language of the justification is irrelevant, since the justification could still be satisfied if the exemption was held invalid. If the exemption was terminated and the United States extended the category to all WTO members, the nations to whom the privilege of receiving E status had already been extended would continue to receive it without interruption, the treaties would not be violated, and the justification would be satisfied. There would merely be more countries that qualified for E status than before, just as already happens each time a new qualifying FCN or BIT enters into force.

3. Employer and Employer’s Activities

In order to qualify, the employer must first have the nationality of the nation with whom the United States has the treaty.332 In many cases, the employer is a United States corporation, so in order for it to qualify, its ownership must be traced to at least fifty percent by natural persons or other juridical persons with the nationality.333 If a juridical person, then its ownership must be traced to natural persons with the nationality. The country of incorporation does not establish nationality,334 although if the stock is sold exclusively on a country’s stock exchange, nationality may be presumed.335

Second, the employer must be engaged in either trade or investment, depending on which of the two categories—or both—are provided in the treaty. If the basis is trade, then the employer must engage in substantial336 trade337 principally between the United States and the treaty country.338 If the basis is investment, then the employer must have an active339 and substantial340 United States investment341 that it will “develop and direct.”342

If the investment is pursuant to a BIT, the investing employer need not necessarily be “developing and directing” the investment, but may instead employ home country nationals that are “establishing, developing, administering or advising” the entity in which the employer has invested.343 Despite this different requirement, the USDOS has elected to interpret the BIT standard as identical to the FCN standard;344 however, there is no guarantee that the DSB will agree that this is the correct interpretation since it contrasts with the precise language of the BITs. The USTR only exempted “develop and direct”345 from MFN Treatment, so if the DSB found that employers could hypothetically “establish, administer, or advise,” then the United States may be harboring a potential discriminatory standard that was never exempted.

In addition, Mexicans and Canadians may not be accorded E classification under NAFTA when there is a strike at the place of employment in the particular occupation and the employee may adversely affect the settlement.346 How these additional criteria for qualification for these two nationalities would be addressed by the DSB will depend on the interpretation of qualification criteria that is more restrictive than the exemption, as discussed above. In the spirit of reading treaty reservations narrowly, the DSB could find that establishing additional criteria for certain nationalities results in a non-exempted application.

i. Trade Under the Exemption

The exemption for trade only permits discrimination in favor of “nationals of treaty partners” who “carry on . . . substantial trade . . . principally between the US and the foreign state of which a natural person is a national.”347 The problem is that the MFN exemption does not say anything about the nationality of the employer for trade purposes; it only requires the appropriate nationality of the employee. Accordingly, the exemption is less restrictive than United States law since it does not fully cover the classification criteria. If the United States granted E status only when the company also had the same treaty nationality as the alien, then it would be applying a measure that was not covered by the MFN exemption.

ii. Investment Under the Exemption

For investment, the exemption only applies to cases where a natural person has invested.348 Since the GATS is very explicit about the differences between natural and juridical persons,349 this exemption suggests that investments by juridical persons are not covered by the exemption. In many E cases, it is a foreign company that has invested in a United States entity. United States law qualifies investments made by juridical persons as long as those investments can be traced to qualifying natural persons.350 By the literal reading of the exemption, it is more restrictive than the measure since it imposes an additional criterion, saying nothing about tracing investment through one or more degrees of ownership.

The exemption is also unclear when it refers to “a” natural person. We could presume that the USTR intended this statement to mean “a national of the same treaty country,” or we could presume that the USTR meant “any” natural person of any nationality. A literal reading suggests that any natural person is the more likely interpretation based on the usual meaning of the indefinite article. Thus the exemption is less restrictive that the measure since the investment need not be made specifically by a national of a treaty partner; it must only be made by a natural person of any nationality.

4. Executive, Supervisory, or Essential Skills Position

In order to qualify, the employer also must offer the alien an executive or supervisory position,351 or a position requiring skills essential to the operation.352 The employer is not required to show that there are no United States workers that can perform the job, but such a showing may be informative in adjudicating essentiality.353 Neither licensure nor a bachelor’s degree is required.

The difference here between FCNs and BITs is that, in cases of BITs, nationals are not limited to executive, supervisory, and essential skills positions but may serve in “professional, technical and managerial [occupations]” involved in “establishing, developing, administering or advising on the operation.”354 The USDOS initially stated that the treaty covered positions “requiring special expertise or skills,”355 not necessarily essential skills, but in actual adjudication, the USDOS now applies an identical essential skills standard to either FCN or BIT-based applications.356 If the DSB were to find that the correct standard does not demand essential skills, the DSB might determine that, again, the United States has a formally different standard that it could apply to certain nationalities, which was not exempted.

The essential skills option may be discriminatory among nations on a de facto basis. Due to a country’s level of development, a claim of essentiality of skills may be disproportionately more difficult to sustain from certain countries. Many countries, for example, Germany, dedicate significant resources to technical training, so that when their nationals enter the workforce they are not entry-level employees needing training, but are already specially trained and experienced workers, often with an apprenticeship or university-level research position in the very company in which they are now employees. On the other hand, many countries do not provide these kinds of resources to training, so skills that might be essential for that position could be considered ordinary in the United States. Positions with companies from certain countries might then be disproportionately more or less able to require essential skills for operation.

5. Alien’s Qualifications

The employee must have the same nationality as the employer.357 Under BITs, as opposed to FCNs, employers are supposed to have freedom to employ “personnel of their choice, regardless of nationality,” which the USDOS initially explained was “to provide freedom of choice with respect to positions,” not specifically limited to home country nationals.358 Eventually, the USDOS implemented the default interpretation identical to that applied to FCNs,359 but of course this interpretation will not control the DSB. This language could as well be seen as a potential for non-exempted discriminatory treatment.

6. Labor Markets or Economic Integration Agreements Exemptions

We must also consider if the classification may be alternatively exempted under the labor markets and economic integration agreement exemptions.360 Treaty traders and investors are already expressly exempted under the MFN exemption. If the USTR thought that traders and investors fell under the labor markets or economic integration agreement exemptions, then there was no need to enter an MFN exemption, so it is unlikely that trader and investor provisions may be alternatively considered under the labor markets and economic integration agreement exemptions. It is interesting to note that Korea’s stated understanding is these types of reciprocal trade agreements do not fall under the labor markets or economic integration agreements provision since similar agreements did not fall under the Customs Union or FTA provisions of GATT.361 Nonetheless, we will consider the alternative exemptions for the sake of argument.

Labor markets integration agreements fully integrate their labor markets by exempting each other’s citizens from “requirements concerning residency and work permits”362 and “[t]ypically . . . provid[ing] [each other’s] citizens . . . with a right of free entry to the employment markets . . . .”363 The trader and investor provisions require nonimmigrant classification and restrict work authorization; therefore, they cannot be labor market integration agreements. Assuming that an immigration provision could alternately qualify for exemption under the economic integration agreement exemption, the treaty trader provisions also do not qualify there because economic integration agreements eliminate discriminatory measures,364 meaning that the member will “accord . . . treatment no less favourable . . .than that it accords to its own . . . .”365 By limiting the admission of service suppliers to certain qualifying workers, and by imposing an employment authorization qualification requirement, the agreements clearly discriminate between domestic labor and labor from the treaty country, and thus do not qualify.

D. E-3, Australian National Worker in a Profession

On May 13, 2005, the President of the United States signed the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief Act 2005, section 501 of which is the REAL ID Act of 2005 that, among other provisions, creates the new E-3 nonimmigrant category only for citizens of Australia.366 Although amending the section on E status,367 the E-3 appears to be a hybrid of the H-1B1 and E.368 The Act references the H-1B1 section and subjects the E-3 to some of the same requirements,369 but the E-3 does not mandate the same nonimmigrant intent as under the H-1B1.370

Although the United States might argue that the E-3 is not unlike the H-1B1, and thus the same arguments for its compliance with the GATS apply here, there is a key difference: the E-3 is not the result of a treaty, domestic legislation implementing a treaty, or legislation requiring the equivalent. Uniquely, the E-3 is a creation in United States law of a special nonimmigrant category reserved for a particular nationality without any connection to qualifying trade or investment under a treaty. In fact, informally, the provision is seen as measure of thanks to Australia for assisting the United States in the wars in Afghanistan and Iraq.371 According to Congressman James Sensenbrenner, the provision was intended to be part of the FTA with Australia but was removed due to Congressional opposition, with the pledge that Congress would work towards legislating the special category.372 The Congressman has stated that there are no plans to extend the E-3 to other nationalities.373

1. E-3 Requirements

In order to be classified as an E-3, the alien, position, and employer must all qualify.374 The alien must be an Australian national375 and must travel to the United States to serve in a profession.376 The continued use of the term “professional” rather than “specialty occupation” is surprising given the extension of the H-1B and H-1B1 to specialty occupations, not only professionals. However, since the E-3 defines “professional” by reference to the H-1B1 regulations, the test is the same as that for specialty occupations.377 In addition to serving in the occupation, the Australian must also have the license required to practice the occupation.378 The “professional” position and the licensure issues raise the same MFN problems addressed above under H-1B and H-1B1. In addition to these requirements for the alien and position, the employer must be a United States corporation379 since it must file labor condition attestations with USDOL.380

Although the E-3 falls under the E section of the statute, it is unclear to what extent the E-1 and E-2 provisions affect it. As mentioned above, Australians and Swedes uniquely receive the privilege of E-1 or E-2 status based on the Immigration Act of 1990, not because of qualifying treaties. If conditions were to change enough so that Australia no longer qualified for E-1 or E-2 under the Act, the E-3 might also need to be terminated or at a minimum, the E-3 might lose those features borrowed from the general E category, since Australians no longer qualified for them. The irony is that if the United States were to extend the E category to all WTO members under MFN, the E-3 would be doubly protected for Australians. That nationality would then continue to qualify for E as long as the nation was a member of the WTO regardless of qualifying under the Immigration Act of 1990.

2. Labor Markets and Economic Integration Agreements Exemptions

Since there is no FTA and the E-3 measure to a large degree tracks the H-1B1, the United States would not be successful arguing that the E-3 falls under the labor markets and economic integration exemptions. The E-3 does not exempt Australians from nonimmigrant employment authorization requirements so it cannot be a labor markets integration agreement. It also does not have substantial sectoral coverage or provide for the elimination of substantially all discrimination, so it cannot be an economic integration agreement either.

3. Scheduled MFN Exemption

In addition, the United States cannot argue that the E-3 is exempted based on the MFN exemption. The exemption only covers FCNs, BITs, or the Immigration Act of 1990. The provision for E-3 is none of these. The United States might argue that the E-3 is tenuously connected with the Australian FTA, as per Sensenbrenner’s statement, but it is doubtful that the DSB would find this one statement of vague connection sufficient to qualify the E-3 as a treaty. In the alternative, the United States could argue that Australia qualifies for E under the Immigration Act of 1990 and that the E-3 is included in the general MFN exemption. However, attempting to argue that a nonimmigrant category should be excluded because a different category from a neighboring section of the law is excluded is a rather weak argument. If the E-3 were exempted under this argument, no authority would keep the H-1B from also being exempted.

In addition, the MFN exemption is only for executives or other personnel pursuant to trade or investment, not professionals without a showing of trade or investment. As discussed above under H-1B1, if the United States wanted to argue that it will only provide E-3 status to aliens who could alternatively qualify for E-1 or E-2 status, the United States would create a precedent that it may not want to follow for other categories. Further, the DSB may not be amenable to the creation of this precedent. Of course, an attempt to argue the MFN exemption may be futile, in any event, since the exemption was slated for expiration.

E. TN, North American Free Trade Agreement

The next category that will be discussed is “TN,” which is an admission category in connection with NAFTA for specific professionals from Canada and Mexico.381 Similar to the H-1B1, this category was created through direct implementation in United States law, not the treaty process.382

1. Professional Position

In order to qualify, the Canadian or Mexican citizen must be entering the United States to serve an American, Canadian, or Mexican company in one of the professions listed in NAFTA Annex,383 and the position the person will fill must actually require someone in that professional capacity.384

2. Alien’s Qualifications

The Canadian or Mexican citizen need not have ever worked for the employer before but must show qualification for the position by having earned a four-year bachelor’s degree in the field or other alternative qualification specified in NAFTA. Only degrees granted outside the United States, Canada, and Mexico must be evaluated, so the evaluation issue is avoided to some degree.385 Just as with the H-1B, however, the education requirement is still an issue. In this case it may not be as significant as under H-1B since both Canada and Mexico succeeded in having some professional occupations recognized in NAFTA as not per se requiring a bachelor’s degree.386 Licensure is not specifically required, but may be effectively required since the alien must be qualified for the job and the particular state in which the alien will work may require a license.387 This requirement again involves the licensing problems that were discussed under H-1B. Again, the recognition of certain professions without a bachelor’s degree and waiving the licensing requirement appears to have been negotiated away without much concern, drawing the necessity of those requirements in the H-1B context into question as General or Security Exemptions.

3. Labor Markets and Economic Integration Agreements Exemptions

The TN, just like the other classifications, cannot be exempted under the labor markets and economic integration agreement exemptions, despite the fact that they are derived from NAFTA. As discussed above in the Canadian – Autos DSB Panel Report, the qualification for the agreement exemptions is not self-judging.388 The TN does not exempt Canadians and Mexicans from residency and work permits so it cannot be a labor markets integration agreement. Although NAFTA may significantly eliminate some discrimination, it still restricts the kinds of service providers that may compete against those in the United States and cannot therefore be an economic integration agreement. The DSB may be moved to consider the wider “process of economic integration or trade liberalization”389 between and among the United States, Canada, and Mexico. However, just because the counties have made certain liberalization agreements does not mean they intend to eventually reach full economic integration. Given the DSB prior ruling, it is unlikely that this provision of NAFTA will be exempted.

4. Scheduled MFN Exemption

Similar to the earlier discussions, the measure does not fall within the MFN exemption. Even if NAFTA is a type of FCN or BIT, the express language of the exemption does not cover the TN classification. First, the exemption is only for issuance of trader or investor visas, not admission in TN status. Second, the aliens admitted under TN are not necessarily executives or other personnel categories engaged in trade or investment. Third, the exemption was intended to have expired.

F. L-1, Intra-Company Transferee

The next category is the L-1.390 This category is for employees of international companies who are being transferred from an overseas office to a United States office.391

1. Employer

The employer must be a firm, corporation, or other entity, having a commonly-owned corporate relationship between the overseas parent, branch, affiliate, or subsidiary and the United States parent, branch, affiliate, or subsidiary.392 Just as with the H-1B, there is no prohibition against the alien employee owning the petitioning employer or being a majority stockholder.393

It is well-known that different countries have different corporate structures available such as the GmbH, SA, and SpA. The EU recently created a new pan-European entity termed the “Societas Europea” (SE) in which the corporation is, more or less, stateless, and thus may have a significant burden in establishing qualification.394 Other countries also often have different rules regarding partnerships, limited liability companies, and other corporate entities. Various forms of these country-specific entities may have a more difficult burden of proof to qualify and thus may face disproportionate discrimination.

A second aspect of corporate formation in other countries is ownership and control. Generally, it is sufficient to show the ownership connections and percentages to establish the centralized control of the foreign and United States entities. However, local legislation may demand that a certain percentage of ownership of the corporation be local or governmental. Also, different countries may have differing corporate control structures or potentially informal control patterns especially in family-owned companies that may make documenting the control of the entities more difficult on a disproportionate basis.

A third potential discriminatory basis is evidentiary. The United States determines the types and forms of unique documentary evidence for each country to establish the corporate existence, ownership, and control. Note that the difficulty of procuring these documents varies from country to country, sometimes based on legitimate reasons, and other times based on corruption or illegitimate reasons. This issue can be even more problematic if the petition for classification is filed at a United States Embassy or Consulate overseas where local adjudication may have a different standard than that of USCIS, as will be discussed in more detail below. Requiring the employers and employees to comply with local laws in order to satisfy United States law could be considered an inherent competitive disadvantage for nationals facing overly rigorous or poorly administered corporate regulation infrastructures resulting in a disproportionately more difficult qualification.

2. Executive, Managerial, or Specialized Knowledge Position

In order to qualify, the alien must fill a position that is executive, managerial, or requires the use of specialized knowledge,395 and the alien must have been employed for one year out of the last three years by the company abroad as a manager or executive, or in a position requiring the use of specialized knowledge.396 Unlike the H-1B, the L position need not pay the actual or prevailing wage.397 Neither licensure nor a bachelor’s degree is required.

The test for specialized knowledge is especially difficult to q