WOULD YOU LIKE TO BE A TREATY TRADER OR TREATY INVESTOR?

by
Edward R. Litwin
Attorney at Law

Introduction

The United States has entered into treaties or agreements with a number of countries throughout the world which allow citizens of those countries to open businesses in the United States. These persons can remain in the United States as long as their businesses are in existence. Sometimes such persons can remain in the United States for 15-20 years or more. If after reading this you feel you are qualified for treaty trader or treaty investor status, you should contact an attorney who specializes in Immigration Law or the closest U.S. Citizenship & Immigration Services (C.I.S.) office, U.S. Embassy or U.S. Consulate.
The countries with which the United States currently has treaties or agreements are:

E-1 Treaty Trader
A person is considered to be a “treaty trader” if he is coming to the United States to carry on substantial trade, principally between the United States and the foreign country of which he is a citizen. Most individuals who apply for treaty trader status are usually involved in some area of import/export. International airlines, international banks, and travel agencies may also qualify for treaty trader status.
The law requires that the trade be substantial. The law is more concerned with the number of transactions than the actual dollar figures. Therefore, numerous transactions, may be sufficient to meet the substantial requirement, even though each transaction may be small in value. However, the general rule is that at least enough profit must be generated by the trade to adequately support the treaty trader and his family while in the United States.
In order to qualify for treaty trader status, over 50% of the volume of international trade must be conducted between the United States and the country of the person’s nationality.
Documentation is extremely important in order to successfully obtain treaty trader status. Bills of lading and other traditional business documents will need to be presented to the C.I.S. (if a person is applying for E-1 status while in the United States) or to the American Consulate (if the person is applying abroad). In addition, other documents showing an on-going business such as incorporation papers, office leases or rental agreements, business licenses, etc. must be presented.

E-2 Treaty Investor
A treaty investor is a person coming to the United States for the sole purpose of developing and directing the operation of a business in which he has invested, or is actually in the process of investing, a substantial amount of capital. When a business is in the process of formation, it must be shown that the funds have been irrevocably committed to the business. Uncommitted funds in a bank account do not represent an investment.
The business into which the investment is being made must be a real, operating business, producing some service or commodity for a profit. Mere investment in a house or land does not qualify. However, a real estate development business or farming operation would qualify.
In order to ensure that the investor is in a position to “develop and direct” the business, the investor must control the business by owning at least 50% of the business or otherwise possessing operational control. Therefore, if the business will be owned with others as a partnership or corporation, the investor must be sure to have at least a 50% ownership share.
Although the U.S. government has not established a minimum dollar value to meet the requirement of substantial investment, the investor must look at the needs of the business and determine what must be invested in order to make the company viable. Generally, investments of less than $100,000 will not be considered substantial and, often, even larger amounts will be required to start a viable business.The U.S. government has determined that, if an investment is marginal, an investor will not be eligible for treaty investor status. An investment will be considered marginal if it will produce only enough income to provide a living for the investor and his family. The investment will be considered more than marginal if it can be shown that the investment expands job opportunities locally, that the investor has substantial income from other sources, or that the investment will produce a profit of much more than the investor needs in order to make a living. Generally, at least one employee must be hired and, in many cases, more will need to be hired so that the investment will not be viewed as marginal.

Employees of E-1 and E-2 Businesses
Under certain circumstances, persons may obtain E-1 or E-2 visas by working for treaty trader or treaty investor companies. To qualify, they must be employed as executives, managers, or supervisors, or they must have special qualifications which make their services essential to the efficient operation of the enterprise. Whether a person has special qualifications that are essential to the business operation depends on such factors as proven expertise, uniqueness of the specific skills, length of experience with the company, the period of training, and the salary.In order to qualify as an employer, the employer must be:
1. a citizen of a treaty country and be maintaining the status as treaty alien (E-1 or E-2) if in the United States; or
2. a partnership or corporation that is more than 50% owned by persons having the citizenship of a treaty country who are maintaining treaty status (E-1 or E-2) if residing in the United States.
In addition, the employee must have the same nationality as the owners of the treaty company.
Under some circumstances, a person may not qualify as an employee of a treaty company, but may be eligible to work for the company under another visa category. (For more information, see “Would You Like to Work in the United States?” by Edward R. Litwin.)

Procedures
A person can apply for E-1/E-2 status either a) in the United States, presenting all of the necessary forms, information and documentation to the C.I.S., or b) abroad, presenting all the necessary forms, information and documentation to the nearest American Consulate. Frequently, investors and traders apply for E status while in the United States. They have found that in cases where additional documentation may be requested to prove the required factors, they can obtain such documentation easier while they are in the United States. Trying to obtain such documentation from the United States while abroad may be more difficult and it, therefore, may slow down or otherwise hinder the visa application process if filed directly with an American Consulate or Embassy abroad. However, persons who have initially obtained E status in the United States must present the same documentation to an American Embassy or Consulate the first time they travel outside the United States to have a visa issued, otherwise, they will not be able to return. A person may remain in the United States as long as the trader or investor-company continues to be in operation. However, if the business is sold or closed, there is no further basis for remaining in the United States and the treaty trader or treaty investor must leave, unless the proceeds of a sale are reinvested into a new business.
While in the United States, the spouse and children of the treaty trader or treaty investor are also authorized to remain in the United States with him. In the case of children, however, once a child turns 21 years of age, the child is no longer considered a dependent of the treaty trader or investor, and will be required to find his or her own way to remain independently in the United States (for example, in F-1 student status) or be required to leave the United States.
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If after reading this you have questions about Treaty Trader or Treaty Investor status or any other immigration matters, you may call Mr. Litwin’s office and arrange an appointment with him or one of his associates at either his San Francisco or Sunnyvale office. There is an initial consultation fee for this first half-hour consultation.

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Disclaimer: Nothing on this or associated pages should be taken as legal advice for any individual case or situation. The information is intended to be general and should not be relied upon for any specific situation.

© 2004 All Rights Reserved

Edward R. Litwin is a specialist in Immigration and Nationality Law, certified by the Board of Legal Specialization of the State Bar of California. He and his firm have helped thousands of people immigrate to the United States. He is available for consultation by appointment.