Trade Agreements and Immigration

Last month, upon concluding a chummy summit at the ranch with President Bush, Mexican President Vicente Fox exuberantly announced the availability of an unlimited number of guestworker visas for Mexican professionals to work in the United States.

Last month, upon concluding a chummy summit at the ranch with President Bush, Mexican President Vicente Fox exuberantly announced the availability of an unlimited number of guestworker visas for Mexican professionals to work in the United States.  Though not the same as Bush's original guestworker program unveiled in January, which would offer visas to some six to ten million illegal workers, the program heralded by Fox required no new Congressional review.   Known as the TN visa program, it was negotiated ten years ago as part of NAFTA.  While hundreds of thousands of Canadians have used the program since 1996, the number of visas for Mexicans was capped at 5,500 until January of this year.  Demand is expected to be enormous, given the vast salary differential between the United States and Mexico.  U.S. consulates in Mexico are already reporting a sharp upswing in the number of applicants. 

It has come as a surprise to many people, including some members of Congress, which approved the pacts, that guestworker programs are a standard component in free trade agreements such as NAFTA, the recently approved Chile and Singapore treaties, and the ongoing World Trade Organization (WTO) negotiations.  (How the pending Central American Free Trade Agreement will deal with this issue remains to be seen.)  Each of these pacts includes pledges from the participating countries to guarantee access for temporary business visitors, traders and multinational corporate transferees (L visas).  That sounds logical, since traders need temporary access to other countries to ply their wares.  What is harder to explain is the inclusion of guestworker categories whose connection to international trade is less obvious.  For instance, the TN program, created by NAFTA, allows an unlimited number of Canadian and Mexican professionals to work in the United States on temporary visas, pretty much forever.  The other guestworker program covered by trade agreements, the H1-B, allows in at least 65,000 foreign professionals a year under certain conditions. 

As a result of these commitments, the United States has put itself on a one-way boulevard with few exits, moving toward wide-open access for foreign workers and the companies who hire them, under terms dictated by an international organization rather than our own democratically-evolving immigration laws.  Without adjustments to both our planned treaty commitments and our existing dysfunctional guestworker policies, the consequences are potentially disastrous for large segments of the U.S. workforce. 

The H1-B program has become very controversial in recent years, in part because a growing number of U.S. companies have outsourced technology-based functions to contractors providing cut-rate services, often staffed with H1-B or L guestworkers.  Some see this as legitimate trade in services - what the WTO calls "movement of natural persons" to sell a service.  Others see it as exploiting weaknesses in U.S. immigration law to hire cheap foreign labor.  Neither guestworker program includes a requirement that sponsors make an effort to hire Americans first.  Efforts to ensure that these visas are not used to replace U.S. workers have resulted in layers of complicated regulations that burden employers and are rarely enforced anyway.  Plus, the programs have suffered chronically from high rates of fraud. 

The H1-B program, and to some extent the intracompany transferee (L) program, enables foreign companies to essentially "dump" foreign workers here, much in the same way steel or lumber can be "dumped" in a foreign market; that is sold for less than its true value.  This practice is most common in the technology sector.  According to researcher Ronil Hira of the Rochester Institute of Technology, "the Indian IT industry has utilized U.S. immigration regulations for competitive advantage to accelerate its growth."  Infosys, for example, is one of the leading Indian-owned IT services firms.  Between 70 and 80 percent of the company's global revenues in the last few years came from U.S. contracts, and they are staffed mainly by Indian workers here on H1-B and L visas.

Hospitals and health care services firms are also heavy users of trade pact-guaranteed guestworker programs.  At least 50,000 foreign nurses have entered the country in the last 10 years on temporary visas, mostly Canadians, using the TN visa.  Nurses' advocates across the country are bracing themselves for the arrival of even greater numbers this year from Mexico with the lifting of the TN cap.  One Mexican headhunter has a contract to provide 3,000 nurses to hospitals in four U.S. states.  Stephanie Tabone, of the Texas Nursing Association, where the largest number of foreign nurses are working, says that the influx is causing noticeable wage depression for U.S. nurses.  "Hospitals can bring in even very experienced nurses from abroad, and call them entry level, so they can get away with paying them less." 

Teachers, too, are beginning to feel the pinch of foreign competition.  The National Education Association, the nation's largest teacher's union, commissioned a study in 2003 that found that roughly 10,000 foreign teachers had been hired by public school systems, usually on H-1Bs, and concentrated in certain areas, including Texas and California.  It noted with concern that the school systems may increasingly choose to hire foreign teachers to avoid costly employment taxes, retirement plans and health benefits.