Order Code RL33844
Foreign Investor Visas:
Policies and Issues
January 29, 2007
Chad C. Haddal
Analyst in Immigration Policy
Domestic Social Policy

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Foreign Investor Visas: Policies and Issues
Summary
In the 110th Congress, issues surrounding the entry of foreign investors into the
United States are likely to spark legislative debate as Members contemplate
comprehensive immigration reform. Congress may face decisions regarding the
possible renewal of the immigrant investor visa pilot program, as well as the
expansion of the E-2 nonimmigrant treaty investor visa.
There are currently two categories of nonimmigrant investor visas and one
category of immigrant investor visa for legal permanent residents (LPR). The visa
categories used for nonimmigrant investors are: E-1 for treaty traders; and the E-2 for
treaty investors. The visa category used for immigrant investors is the fifth
preference employment-based (EB-5) visa category. According to Department of
Homeland Security (DHS) statistics, there were 192,843 nonimmigrant investor visa
arrivals in the United States in FY2005. For the same time frame, DHS reported the
arrival of 346 LPR investors.
When viewed from a comparative perspective, the investor visas of the United
States are most closely mirrored by those of Canada. The LPR investor visa draws
especially strong parallels to the Canadian immigrant investor visa, since the latter
served as the model for the former. Comparing the admissions data between these
two countries, however, reveals that the Canadian investor provision attracts many
times the number of investors of its United States counterpart. Yet, both countries
showed an upward trend in immigrant investor visas in the last two years.
The investor visas offered by the United States operate on the principle that
foreign direct investment into the United States should spur economic growth in the
United States. According to the classical theory, if these investments are properly
targeted towards the U.S. labor force’s skill sets, it should reduce the international
migration pressures on U.S. workers. To attract foreign investors, research indicates
that temporary migrants are motivated most significantly by employment and wage
prospects, while permanent migrants are motivated by professional and social
mobility. Theoretically, however, it is unclear to what extent potential migration
provides additional incentive for investment activity. Investors from developed
countries may sometimes lack incentive to settle in the United States since they can
achieve foreign direct investment (FDI) and similar standards of living from their
home country. Yet, in cases where foreign investors have been attracted, the
economic benefits have been positive and significant.
Immigrant investors have been subject to notable administrative efforts in the
past couple of years. Attention has been focused on immigrant investment projects,
which DHS has sought to expand. In 2005, DHS developed the Investor and
Regional Center Unit (IRCU) to govern matters concerning LPR investor visas and
investments to better adjudicate petitions and coordinate investments. In part
because of these efforts, working with foreign financing from the immigrant investor
program has become highly attractive for many domestic investors, particularly
through limited partnerships. This report will be updated as warranted.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Immigrant Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Immigrant Investor Pilot Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
LPR Investor Visa Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Nonimmigrant Investor Visas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
E-1 Treaty Trader . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
E-2 Treaty Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Nonimmigrant Investor Visa Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
U.S. and Canadian Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Analysis of the Relationship Between Investments and Migration . . . . . . . . . . . 20
Less Economically Developed Countries . . . . . . . . . . . . . . . . . . . . . . 21
Temporary and Permanent Investors . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Multiplier Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Administrative Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Fraudulent Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
IRCU Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
New Orleans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Potential Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
South Dakota International Business Institute . . . . . . . . . . . . . . . . . . . . . . . 31
CanAm Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
List of Figures
Figure 1. LPR Visas Issued by Region and Select Asian Countries
of Origin, FY1992-FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 2. E-Class Visas Issued by Region, FY2005 . . . . . . . . . . . . . . . . . . . . . . 14
Figure 3. Nonimmigrant Trader and Investor Admissions by
Destination State, FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 4. Immigrant Investors to Canada and the United States, 1996-2005 . . . 19

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List of Tables
Table 1. United States LPR Investor Visa Admissions, FY1996-FY2005 . . . . . . 7
Table 2. Nonimmigrant Treaty Trader and Investor Admissions, FY2005 . . . . 15
Table 3. E-Class Visa Privileges by Year of Attainment . . . . . . . . . . . . . . . . . . 28

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Foreign Investor Visas:
Policies and Issues
Introduction
In the 110th Congress, issues surrounding the entry of foreign investors into the
United States is likely to spark legislative debate. For example, the immigrant
investor visa pilot program, which was created to attract foreign investors to
permanently emigrate to the United States, is set to expire at the end of FY2008.1
Additionally, the government of Denmark has lobbied for legislation that would
allow its nationals eligibility to enter the United States as E-2 nonimmigrant treaty
investors. If such legislation is successful, other governments whose nationals, like
Denmark, are currently only eligible for E-1 nonimmigrant treaty trader visas would
likely seek similar treatment. Granting visas to foreign investors provides many
potential benefits, including increased domestic employment and capital levels. Yet,
extending foreign investor visas provides several potential risks as well, such as visa
abuses, reduced foreign market growth, and security concerns.
The central policy question surrounding foreign investors — and particularly
legal permanent resident (LPR) investors — is whether the benefits reaped from
allocating visas to foreign investors outweigh the costs of denying visas to other
applicant groups. The subsequent analysis provides a background and contextual
framework for the consideration of foreign investor visa policy. After a brief
legislative background, this report will provide discussions of immigrant and
nonimmigrant investors visas, a comparison of U.S. and Canadian immigrant
investor programs, an analysis of the relationship between investment and migration,
and finally a review of current issues.
Background
Since the Immigration Act of 19242 the United States has expressly granted
visas to foreign nationals for the purpose of conducting commerce within the United
States. Although foreign investors had previously been allowed legal status under
several Treaties of Friendship, Commerce and Navigation treaties, the creation in
1924 of the nonimmigrant treaty trader visa provided the first statutory recognition
of foreign nationals as temporary traders. With the implementation of the
Immigration and Nationality Act of 1952 (INA), the statute was expanded to include
nonimmigrant treaty investors — a visa for which trade was no longer a
1 P.L. 108-156.
2 43 Stat 153.

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requirement.3 Nonimmigrant visa categories for traders and investors have always
required that the principal visa holder stems from a country with which the United
States has a treaty.4 The nonimmigrant visa classes are defined in §101(a)(15) of the
INA. These visa classes are commonly referred to by the letter and numeral that
denotes their subsection in §101(a)(15) of the INA, and are referred to as E-1 for
nonimmigrant treaty traders and E-2 for nonimmigrant treaty investors.
Unlike nonimmigrant investors, who come to the United States as temporary
admissions, immigrant investors are admitted into the United States as LPRs.5 With
the Immigration Act of 1990,6 Congress expanded the statutory immigrant visa
categories to include an investor class for foreign investors. The statute developed
an employment-based (EB-5) investor visa for LPRs,7 which allows for up to 10,000
admissions annually and generally requires a minimum $1 million investment.
Through the Immigrant Investor Pilot Program, investors may invest in targeted
regions and existing enterprises that are financially troubled. This pilot program was
extended by the Basic Pilot Program Extension and Expansion Act of 20038 to
continue through FY2008.
Foreign investors are generally considered to help boost the United States
economy by providing an influx of foreign capital into the United States and through
job creation. For investor immigrants, job creation is an explicit criterion, while with
the nonimmigrant visa categories economic activity is assumed to spur job growth.
Additionally, foreign investors are often associated with entrepreneurship and
increased economic activity. Critics, however, believe that such investors may be
detrimental since they potentially displace potential entrepreneurs that are United
States citizens.
3 INA §101(a)(15)(e)(ii).
4 INA §101(a)(15)(e).
5 The two basic types of legal aliens are immigrants and nonimmigrants. As defined in the
INA, immigrants are synonymous with legal permanent residents (LPRs) and refer to foreign
nationals who come to live lawfully and permanently in the United States. The other major
class of legal aliens are nonimmigrants — such as tourists, foreign students, diplomats,
temporary agricultural workers, exchange visitors, or intracompany business personnel —
who are admitted for a specific purpose and a temporary period of time. Nonimmigrants are
required to leave the country when their visas expire, though certain classes of
nonimmigrants may adjust to LPR status if they otherwise qualify.
6 P.L. 101-649.
7 INA §203(b)(5).
8 P.L. 108-156, 8 USC §1324a note.

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Immigrant Investors
There is currently one immigrant class set aside specifically for foreign investors
coming to the United States.9 Falling under the employment-based class of
immigrant visas, the immigrant investor visa is the fifth preference category in this
visa class.10 Thus, the immigrant investor visa is commonly referred to as the EB-5
visa.
Goals. The basic purpose of the LPR investor visa is to benefit the United
States economy, primarily through employment creation and an influx of foreign
capital into the United States.11 Although some members of Congress contended
during discussions of the creation of the visa that potential immigrants would be
“buying their way in,” proponents maintained that the program’s requirements would
secure significant benefits to the U.S. economy.12 Proponents of the investor
provision offered predictions that the former-Immigration and Naturalization Service
(INS) would receive approximately 4,000 applications annually. These petitioners’
investments, the drafters speculated, could reach an annual total of $4 billion and
create 40,000 new jobs.13 The Senate Judiciary Committee report on the legislation
states that the provision “is intended to provide new employment for U.S. workers
and to infuse new capital into the country, not to provide immigrant visas to wealthy
individuals” (S.Rept. 101-55, p.21).
Requirements. As amended by the Immigration Act of 1990,14 the
Immigration and Nationality Act (INA) provides for an employment-based LPR
9 The INA provides for a permanent annual worldwide level of 675,000 legal permanent
residents (LPRs), but this level is flexible and certain categories of LPRs are permitted to
exceed the limits, as described below. The permanent worldwide immigrant level consists
of the following components: family-sponsored immigrants, including immediate relatives
of U.S. citizens and family-sponsored preference immigrants (480,000 plus certain unused
employment-based preference numbers from the prior year); employment-based preference
immigrants (140,000 plus certain unused family preference numbers from the prior year);
and diversity immigrants (55,000). Immediate relatives of U.S. citizens as well as refugees
and asylees who are adjusting status are exempt from direct numerical limits. For further
discussion see CRS Report RL32235, U.S. Immigration Policy on Permanent Admissions,
by Ruth Ellen Wasem.
10 The INA provides that each category of immigrants has a set of preferences for the classes
within that category. These preferences determine the priority of visa distribution for each
category depending on certain formulas provided for in the INA. In the case of the LPR
investor visa, being the fifth preference (and therefore the lowest) within the employment-
based category, it has an annual maximum visa allocation of 10,000.
11 3 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 39.07 (Matthew Bender, Rev. Ed.).
12 For debate on this issue, see 136 Cong. Rec. S7768-75 (July 12, 1990).
13 The West Group. New Pilot Program for Immigrant Investors. 70 Interpreter Releases
1129. August 30, 1993.
14 P.L. 101-649.

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investor visa15 program designated for individuals wishing to develop a new
commercial enterprise16 in the United States (INA §203(b)(5)). The statute stipulates
that
! The enterprise must employ at least 10 U.S. citizens, legal
permanent residents (LPRs), or other work-authorized aliens in full
time positions. These employees may not include the foreign
investor’s wife or children.
! The investor must further invest $1 million17 into the enterprise, such
that the investment goes directly towards job creation and the capital
is “at risk.”18 However, if an investor is seeking to invest in a
“targeted area”19 then the required capital investment may be
reduced to $500,000.20 For each fiscal year, 10,000 visas are set
aside for EB-5 investors, of which 3,000 are reserved for
entrepreneurs investing in “targeted areas.”21
! The business and jobs created must be maintained for a minimum of
two years.22
According to regulations, enterprises being proposed need not be backed by a
single applicant.23 Multiple applicants may provide financial backing in the same
enterprise, provided that each applicant invests the required minimum sum and each
applicant’s capital leads to the creation of 10 full-time jobs. The applicant may also
combine the investment in a new enterprise with a non-applicant who is authorized
to work in the United States. Furthermore, each individual applicant must
demonstrate that he or she will be actively engaged in day-to-day managerial control
15 This visa category is for permanent immigrants and should not be confused with the E-2
Treaty Investor nonimmigrant visa.
16 Since 2002, applicants have also been allowed to invest funds in “troubled businesses.”
These businesses must have been in existence for at least two years, and must have incurred
a net loss of at least 20% of the business’ net worth (prior to the loss) during the twelve- or
twenty-four-month period prior to filing the petition (8 CFR §204.6(e)).
17 These funds must be demonstrated to have been obtained lawfully. Generally, any burden
of proof to show qualifying status for an EB-5 lies with the applicant (8 CFR §204.6(j)).
18 Depositing the funds into a corporate account does not qualify as making the investment
“at risk.” Clear guidelines for demonstrating that the capital is”at risk” do not exist in the
regulations (8 CFR §204.6(j)).
19 “Targeted areas” are either rural areas or areas with unemployment rates of at least 150%
of the national average. A “rural area” is defined as one not within a metropolitan statistical
area or the outer boundary of a city or town with a population of 20,000 or more.
20 8 CFR §204.6(f).
21 INA§203(b)(5).
22 8 CFR §204.6(j).
23 8 CFR §204.6(g).

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or as a policymaker.24 Petitions as a passive investor will not qualify.25 However,
since limited partnership is acceptable, regulations do not prevent the investor from
living in another location or engaging in additional economic activities.
Immigrant Investor Pilot Program. The Immigrant Investor Pilot Program
differs in certain ways from the standard LPR investor visa. Established by §610 of
P.L. 102-395 (October 6, 1992), the pilot program was established to achieve the
economic activity and job creation goals of the LPR investor statute by encouraging
investors to invest in economic units known as “Regional Centers.”26 Regional
Center designation must be approved by the Department of Homeland Security’s
(DHS) United States Citizenship and Immigration Service (USCIS), and is intended
to provide a coordinated focus of foreign investment towards specific geographic
regions. Areas with high unemployment are especially likely to receive approval as
a Regional Center, since they are less likely to receive foreign capital through foreign
direct investment (FDI)27 (although the basic requirements apply to all regional
petitions).28 Up to 5,000 immigrant visas29 may be set aside annually for the pilot
program. These immigrants may invest in any of the Regional Centers that currently
exist to qualify for their conditional LPR status.30
24 This latter criterion may be demonstrated through board membership, status as a
corporation officer, or qualifying as a limited partner under the Uniform Limited Partner Act
(ULPA) (8 CFR §204.6(i)).
25 8 CFR§ 206.6.
26 A Regional Center is defined as any economic unit, public or private, engaged in the
promotion of economic growth, improved regional productivity, job creation and increased
domestic capital investment.
27 FDI is defined as an investment made by a foreign individual or company in an enterprise
residing in an economy other than where the foreign direct investor is based.
28 The basic requirements for Regional Center designation state that applicants must show
how their proposed program will:
! focus on a geographic region (8 CFR 204.6(m)(3)(i));
! promote economic growth through increased export sales, if applicable;
! promote improved regional productivity (8 CFR 204.6(m)(3)(i));
! create a minimum of 10 jobs directly or indirectly per investor (8 CFR
204.6(m)(3)(ii));
! increase domestic capital investment (8 CFR 204.6(m)(3)(i));
! be promoted and publicized to prospective investors (8 CFR
204.6(m)(3)(ii));
! have a positive impact on the regional or national economy through
increased household earnings (8 CFR 204.6(m)(3)(iii)); and
! generate a greater demand for business services, utilities maintenance and
repair, and construction jobs both in and around the center (8 CFR
204.6(m)(3)(iv)).
29 These 5,000 visas represent a subset of the 10,000 visas allocated for the LPR investor
visa.
30 As of June 1, 2004, there were 26 Regional Centers in the United States (USCIS, EB-5
Immigrant Investor Pilot Program, Background, June, 2004). Since then, a number of
Regional Centers have been added (for example, see letter from Thomas E. Cook, Director
(continued...)

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The Basic Pilot Program Extension and Expansion Act of 200331 extended the
pilot program through FY2008. In response to this legislation USCIS decided to
develop a new unit to govern matters concerning LPR investor visas and
investments.32 On January 19, 2005, the Investor and Regional Center Unit (IRCU)
was created by the USCIS, thereby establishing a nationwide and coordinated
program. USCIS believes that the IRCU will serve the dual purpose of guarding
against EB-5 abuse and encouraging investment.33
The USCIS approximates that between 75-80% of EB-5 immigrant investors
have come through the pilot program since it began, and that limited partnerships
constitute the most significant portion of this group.34
LPR Investor Visa Numbers
In contrast to the high number of applications for other employment-based LPR
visas,35 the full allotment of 10,000 LPR investor visas per fiscal year has never been
used. As Table 1 below shows, the number of LPR investor admissions peaked in
FY1997, with 1,361 admissions, or 13.6% of the program’s visa supply. In
subsequent years, the program declined markedly, before increasing up to 346 in
FY2005. Despite the low numbers of overall investor admissions, the program has
seen a marked increase since the implementation of the Immigrant Investor Pilot
Program expansion in 2004.
From FY1992 to FY2004, the cumulative total amount invested into the United
States by LPR investor visa holders was approximately $1 billion and the cumulative
number of LPR investor visas issued was 6,024.36 In the earlier years of the program,
it attracted a relatively higher rate of derivatives than principals.37 However, in the
last three years the distribution of visas between principals and derivatives has more
closely approximated parity. Derivatives have historically accounted for
30 (...continued)
of USCIS’s Office of Program and Regulations Development, to Bruce V. Malkenhorst,
Executive Director of The Redevelopment Agency of the City of Vernon, December 23,
2005).
31 P.L. 108-156.
32 USCIS, EB-5 Immigrant Investor Pilot Program, Background, June, 2004.
33 Ibid.
34 Based on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS
Investor and Regional Center Program, November 20, 2006.
35 According to a recent issue of the Department of State (DOS) Visa Bulletin (No. 99, Vol.
VIII) there are backlogs for all the employment-based immigrant categories except LPR
investor visas.
36 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
2005, pp. 8-11.
37 Principals are the actual investors. Derivatives are comprised of spouses, children, and
other dependents.

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approximately 67% of immigrant investor visa recipients, while principals account
for 33%.
Table 1. United States LPR Investor Visa Admissions,
FY1996-FY2005
EB-5 Visa
Fiscal Year
Principals
Derivatives
Admissions
1992
59
24
35
1993
583
196
387
1994
444
157
287
1995
540
174
366
1996
936
295
641
1997
1361
444
917
1998
824
259
565
1999
285
99
187
2000
218
79
147
2001
191
67
126
2002
142
52
97
2003
64
39
25
2004
129
60
69
2005
346
158
188
Source: CRS presentation of U.S. Department of Homeland Security Office of
Immigration Statistics FY2005 data.
According to data from DHS’ Performance Analysis System, in the time span
of FY1992 through May 2006, authorities had received a cumulative total of 8,505
petitions for immigrant investor visas. Of these petitions, 4,484 petitions had been
granted while 3,820 had been denied38 — an approval rate of 52.7%. Furthermore,
in this same time span, officials received 3,235 petitions for the removal of
conditional status39 from the LPRs of immigrant investors. These petitions were
granted in 2,155 cases (a 66.6% approval rate), while the remaining 910 petitions for
the removal of conditional status were denied.
Although numerous possible explanations for the overall low admission levels
of LPR investor visas exist, the notable drop in admissions in FY1998 and FY1999
is due in part to the altered interpretations by the former-INS of the qualifying
requirements that took place in 1998.40 The 21st Century Department of Justice
38 The discrepancy between the petitions granted, denied, and received is due to some
petitions remaining unadjudicated.
39 “Conditional status” for an LPR immigrant means that the final approval of the LPR is
contingent upon fulfilling certain requirements. For immigrant investors, the conditional
status lasts for two years before the applicant is reviewed for final approval.
40 The West Group, Sections 203(b)(5) and 216A of the Immigration and Nationality Act,
75 Interpreter Releases 332, March 9, 1998.

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Appropriations Act (2002)41 provided remedies for those affected by the former-INS’
1998 decision, and provided some clarification to the requirements to promote an
increase in petitions.42
A 2005 report from GAO43 listed a number of contributing factors to the low
participation rates, including the rigorous nature of the LPR investor application
process and qualifying requirements; the lack of expertise among adjudicators;
uncertainty regarding adjudication outcomes; negative media attention on the LPR
investor program; lack of clear statutory guidance; and the lack of timely application
processing and adjudication. It is unknown how many potential investors opted to
obtain a nonimmigrant investor visa or pursued other investment pathways. A recent
law journal article on investor visas suggested that the two year conditional status of
the visa and the alternate (and less expensive) pathways for LPR status often
dissuaded potential investors from pursuing LPR investor visas.44
According to the GAO study, of the LPR visas issued to investors, 65345 had
qualified for removal of the conditional status of LPR visa (not including
dependents).46 GAO estimates that these LPR investors invested approximately $1
billion cumulatively into their collective enterprises and 99% kept their enterprise in
the same state where it was established.47 The types of enterprises these investors
established were often hotels/motels, manufacturing, real estate, or domestic sales,
with these four categories accounting for 61% of the businesses established by LPR-
qualified investors. Furthermore, an estimated 41% of the businesses by LPR-
qualified investors were set up in California. The subsequent states with the highest
percentages of established enterprises were Maryland, Arizona, Florida and Virginia
with 11%, 8%, 7%, and 7% respectively (for examples of current investment projects
see Appendix B).
As Figure 1 shows, LPR investors admitted to the United States between
FY1992-FY2004 were predominantly from Asian countries. Asia accounted for
approximately 83% of LPR investors in this time span, a total that is over nine times
larger than the second highest contributing region. Europe was the only other region
41 P.L. 107-273.
42 3 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 39.07 (Matthew Bender, Rev. Ed.)
43 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
2005, pp. 8-11.
44 Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green Cards: Rise of the
P h o e n i x ? ”
N e w Y o r k L a w J o u r n a l , A p r i l 2 5 , 2 0 0 5 . A t
[http://www.millermayer.com/EB5NYLJ0405.html], visited January 23, 2007.
45 Of these investors, 247 (or 38%) applied for U.S. citizenship.
46 The fact that they qualified for LPR status means that they had successfully maintained
their business and 10 full-time qualifying employees for more than 2 years.
47 GAO’s report stated it could not provide reliable figures on the number of jobs created by
these enterprises.

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contributing more than 4% of the LPR investors, with a total of 9%. Within the
Asian region, the 2,323 LPR investors from Taiwan accounted for almost half of all
Asian LPR investors and 39% of the worldwide total. South Korea and China
contributed to the worldwide total 14% and 12%, respectively, although when
combined with Hong Kong’s total, China’s contribution increases to 19%. The
country totals for the three largest Asian LPR investor contributors are more than the
sending totals of the four smallest sending regions combined.
Figure 1. LPR Visas Issued by Region and
Select Asian Countries of Origin, FY1992-FY2004
Nonimmigrant Investor Visas
When coming to the United States as a temporary investor, there are two classes
of nonimmigrant visas which a foreign national can use to enter: the E-1 for treaty
traders and the E-2 for treaty investors. An E-1 treaty trader visa allows a foreign
national to enter the United States for the purpose of conducting “substantial trade”
between the United States and the country of which the person is a citizen.48 An E-2
treaty investor can be any person who comes to the United States to develop and
direct the operations of an enterprise in which he or she has invested, or is in the
process of investing, a “substantial amount of capital.”49 Both these E-class visas
48 §101(a)(15)(E)(i) of the Immigration and Nationality Act (INA).
49 INA §101(a)(15)(E)(ii).

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require that a treaty exist between the United States and the principal foreign
national’s country of citizenship.50
In the majority of cases, a commerce or navigation treaty serves as the basis for
the E-class visa extension (though other bilateral treaties and diplomatic agreements
can also serve as a foundation).51 A number of countries offer both the E-1 and E-2
visas as a result of reciprocal agreements made with the United States, although many
countries only offer one. Currently there are 75 countries who offer the treaty class
visas. Of these countries, 28 offer only the E-2 treaty investor visa while 4 countries
offer only the E-1 treaty trader visa (see Table 3 in Appendix A). In the cases where
a country offers both types of visas, an applicant who qualifies for both types of visa
may choose based upon his or her own preference. Such decisions, however, would
depend upon the specific nature of the business as the E category visas carry different
qualifying criteria for renewal.
Although each category has some unique requirements, other requirements cut
across all categories of nonimmigrant investor visas. An applicant for any of the
nonimmigrant investor categories must satisfy the following criteria:
! the principal visa recipient must be a national of a country with
which the United States has a treaty.52
! the principal visa recipient must be in some form of executive or
supervisory role in order to qualify as a treaty trader or investor53
! the skills the principal visa recipient possesses must be essential and
unique to the enterprise under consideration54
! the visa holder must show an intent to depart the United States at the
end of the visa’s duration of status55
50 8 CFR §214.2(e)(6).
51 2 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 17.06[2][a] (Matthew Bender, Rev. Ed.).
52 Spouses and child dependents are not subject to the same nationality requirements as they
can be nationals of any country, regardless of whether that country has treaties with the
United States or not.
53 There is no set formula for determining whether a person’s role is sufficient to qualify,
but is determined on a case by case basis using a number of different factors. These factors
normally include such considerations as salary, position, duties, degree of control, and the
number of employees under the applicant’s supervision.
54 A nominal position (e.g. having the title of manager) or title is not sufficient grounds to
qualify for an E-class visa. Individuals with highly specialized skills or knowledge pertinent
to the employer’s business may also qualify, although if the individual’s skills are
determined to be of only a specialized nature that person must qualify for an H-1B visa (for
highly skilled professionals). An example of a skill that has been rejected by DOS as an
essential skill is knowledge of a foreign language.
55 8 CFR §214.2(e)(2)(iii).

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CRS-11
! if investing in an existing enterprise, the applicant must show that
the employer of the treaty trader or investor must be at least 50%
owned by nationals of the treaty country.56
A person granted an E-class visa is eligible to stay in the United States for a
period of two years.57 Although an applicant is obligated to show intent of departing
the United States at the end of the visa duration, the E-class visas may be renewed
for an indefinite number of two year periods provided that the individual still
qualifies.58 Spouses and child dependents are granted the same visa status and
renewal as the principal visa holder so long as the child is under the age of 21, after
which the child must apply and qualify for his or her own visa.59
Generally with the E-class visas, the individual may not engage in other
employment than that which is stipulated,60 although incidental activities are
generally allowed.61 If any E-class individual wishes to change employer, he or she
is under obligation to contact the Department of State (DOS) and apply for
adjustment of status.62
E-1 Treaty Trader63
The E-1 formally traces back to the 1924 Immigration Act, although merchants
working under treaty terms were recognized visa holders prior to this act.64 Under
current law, the E-1 visa is to be issued to an individual who engages in substantial
trade between the United States and his or her country of nationality. According to
56 This criterion is more salient in the cases of smaller companies since ownership is more
constant and concentrated. Large publically traded companies are largely not saddled with
having to demonstrate ownership by nationals.
57 8 CFR §214.2(e)(19).
58 8 CFR §214.2(e)(20).
59 8 CFR §214.2(e)(4).
60 8 CFR §214.2(e)(8).
61 The rules on such incidental activities are quite flexible. The governing principle of such
incidental activities is that the primary trade or investment activity remains paramount (see
9 FAM §41.40 n7 (Visa TL-872 February 20, 1975, i.e. prior to 1987 revision) and 9 FAM
§41.11 n.3.1).
62 8 CFR §214.2(e)(8).
63 Although technically being a “trader” category as opposed to an “investor” category, there
is sufficient grounds for believing that the E-1 traders should be included with the other
investor categories. Although their activities must be related to trade, they are still allowed
to make investments in United States enterprises. Also, investor categories such as the LPR
investor visa have previously held requirements that investments must positively effect
export levels in the industry where an investment is occurring (USCIS, EB-5 Immigrant
Investor Pilot Program, Background, June, 2004).
64 The term “treaty merchant,” for example, traces its roots at least back to the 1880 treaty
with China to conduct trade (Treaty Between the United States and China, Concerning
Immigration, November 17, 1880, art. I, 22 Stat. 826).

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CRS-12
immigration regulations, trade is defined as “the exchange, purchase or sale of goods
and/or services. Goods are tangible commodities or merchandise having intrinsic
value. Services are economic activities whose outputs are other than tangible
goods.”65 This expanded definition of trade into the service sector allows for a fairly
broad understanding of what trade may entail.
The term “substantial trade” has never been explicitly defined in terms of
monetary value. Rather, the term is meant to indicate that there is an amount of trade
necessary to ensure a continuing flow of international trade items.66 For smaller
businesses, regulatory qualification for treaty trader status may be derived from
demonstrating that the trading activities would generate an income sufficient to
support the trader and his or her family.67 The qualifications for sufficient volume or
transaction have not been explicitly set in the regulations,68 but a minimum
qualification is that more than 50% of the business’s trade must flow between the
United States and the treaty country from which the E-1 visa holder stems.69
E-2 Treaty Investor
The E-2 investor visa is a visa category that stems from the 1952 Immigration
and Nationality Act (INA). The qualifying applicant for such a visa is coming to the
United States in order to “develop or direct the operations of an enterprise in which
he has invested, or is in the process of investing a substantial amount of capital.”70
Unlike the E-1 visa, the business need not be engaged in trade of any kind. However,
the same rules concerning ownership are still applicable.71 In cases of ownership of
an enterprise, the regulations require that the E-2 visa holder control at least a 50%
interest in an enterprise.72 The burden of proof for E-2 qualification lies with the
applicant in the same manner as with the other E-class visas.73
There is no explicit monetary amount for what constitutes a “significant amount
of capital.” The DOS has operated under a regulatory proportionality principle that
dictates that the amount an individual invests must be enough to ensure the
successful establishment and growth of an enterprise, and there must be some level
of investment risk assumed by the treaty investor.74 Because of this proportionality
65 8 CFR §214.2(e)(2), as amended by 56 Fed. Reg. 10978, 10979 (1989).
66 8 CFR §214.2(e)(10).
67 Ibid.
68 Ibid.
69 8 CFR §214.2(e)(11).
70 INA §101(a)(15)(E)(ii).
71 8 CFR §214.2(e)(3)(ii).
72 Certain joint ventures have been deemed permissible by the United States, provided that
each joint venture partner have veto power over decisions by the other partner.
73 8 CFR §214.2(e)(12).
74 8 CFR §214.2(e)(14).

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CRS-13
regulation, an investment in a small to medium-sized enterprise is acceptable.75 For
smaller sized investments, the DOS generally requires that the investment amount be
a higher percentage of the enterprise value.76 For higher valued enterprises the
investment percentage becomes less relevant, provided that the monetary amount is
deemed substantial.77
As further grounds for regulatory qualification for an E-2 investor visa,
investments in marginal enterprises are not eligible for acceptance.78 Consequently,
the DOS applies a two-pronged test for marginality.79 One the one hand, the
enterprise in which the applicant seeks to make an investment must be capable of
providing more than a minimal living for the investor and his or her family.
However, the rules are capable of recognizing that some businesses need time to
establish themselves and become viable. Consequently, as a second prong of the test,
the investor’s enterprise must be deemed capable of making a significant economic
impact within five years of starting normal business activity. If neither of these
prongs is successfully passed, the enterprise is deemed marginal and the application
is rejected.80
An additional category of E-class nonimmigrant visa — the E-3 visa for
Australian nationals — does exist, but it is set aside for use by specialized workers,
and not for investors or traders.81
75 9 FAM §41.51 n.10.4, as amended, TL:VISA-322 (October 10, 2001).
76 Visa Bulletin, Vol. V, No. 20 — Nonimmigrant Treaty Investors U.S. Department of
State, Visa Office (1982).
77 Ibid.
78 8 CFR §214.2(e)(15).
79 2 Charles Gordon, Stanley Mailman, and Stephen Yale-Loehr, Immigration Law and
Procedure, § 17.06[3][c] (Matthew Bender, Rev. Ed.).
80 Ibid.
81 A special category of nonimmigrants classified as the E-3 visa has been established and
is only available to nationals of Australia. Although agreed upon under the Australian Free
Trade Agreement, the agreement itself contained no explicit immigration provision. Rather,
the FY2005 supplemental appropriations for military operations in Iraq and Afghanistan
(P.L. 109-16) included §501 creating the E-3 visa category. This visa permits the
employment by any United States employer of a qualifying Australian national for a
specialty occupation. Unlike the other E-class visas, the E-3 carries an annual cap which
is currently set at 10,500. However, the other rules generally remain the same as E-1 and
E-2 visas, with admissions for two years and unlimited extensions for qualifying individuals.
The E-3 resembles the H-1B-1 visa which allows for similar admissions of specialized
workers from Chile and Singapore. After legislation was passed implementing the Chile and
Singapore Free Trade Agreements (P.L 108-77 and P.L 108-78, respectively), these new
laws carved out a portion of §101(a)(15)(H) of the INA for professional workers entering
through the free trade agreements. Unlike the other H-1B requirements, H-1B-1 recipients
are only required to be specialized workers as opposed to highly specialized. This visa
category also differs from the E-3 visa in that it allows for an 18 month admission and
carries an annual cap of 1,400 for Chilean nationals and 5,400 for nationals of Singapore.
(continued...)

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CRS-14
Nonimmigrant Investor Visa Numbers
E-class visas are largely distributed to foreign nationals from the regions of Asia
and Europe. This result is not surprising since the majority of treaty countries are in
these two regions. Furthermore, one could reasonably expect that the financial
requirements embedded in nonimmigrant investor visa categories would result in a
high correlation between the nationality of qualifying applicants and country
membership in the Organization for Economic Cooperation and Development
(OECD) — an organization of capital abundant countries.
As Figure 2 shows, the Asian region is issued the highest number of E-class
visas, with a total of 20,694 visas issued in FY2005. These Asian issuances
constitute more than all other regions combined, and represent 55.7% of the
worldwide total. Within the Asian region, the biggest user of the E-class visa is
Japan, whose nationals accounted for 14,421 of the visa issuances in FY2005, a
figure representing 38.8% of the 37,157 worldwide E-class visas issued that fiscal
year. Europe’s 12,166 E-Class visas accounted for 32.7% of the worldwide total,
while the North American share of 2,898 visas represented 7.8%. Oceania, South
America, and Africa each accounted for less than 2.2% of the worldwide total, and
combined their nationals represented approximately 3.8% of the worldwide E-class
visa issuances for FY2005.
Figure 2. E-Class Visas Issued by Region, FY2005
E-Class Visas Issued
25,000
20,694
20,000
15,000
12,166
10,000
5,000
2,898
34
783
582
0
Africa
Asia
Europe
Nort h America
Oceania
Sout h America
Source: Data is from the U.S. Department of State, Bureau of Consular Affairs (2005)
81 (...continued)
For further discussion on the E-3 and H-1B-1 visas, see CRS Report RL30498, Immigration:
Legislative Issues on Nonimmigrant Professional Specialty (H-1B) Workers, by Ruth Ellen
Wasem and CRS Report RL32982, Immigration Issues in Trade Agreements, by Ruth Ellen
Wasem.

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CRS-15
The admissions data on nonimmigrant investors offers more detailed insights
into the origins of the visa holders. Table 2 provides cumulative totals of E-class
visa admissions into the United States in FY2005 by region of origin, with a detailed
breakdown of the Asian region. The figures listed in Table 2 show that the Asian
region accounted for approximately 50% of the nonimmigrant investor visa
admissions into the United States. In FY2005, Japan accounted for the majority of
nonimmigrant investor admissions with 72,606 admissions.82 South Korea’s 13,090
nonimmigrant investors admitted account for 6.9% of the United States total for
FY2005. It is worth noting that the fast growing markets of China and India (the
world’s two largest population centers) combined for less than 1,000 admissions.
The second largest region of origin for nonimmigrant investor admissions was
Europe, with slightly more investors admitted than Japan. And while Europe’s
74,338 admissions accounted for 38.6% of the total U.S. nonimmigrant investor
admissions in FY2005, the 203 admissions of nationals from African countries
accounted for approximately one-tenth of 1% of this same total.
Table 2. Nonimmigrant Treaty Trader and
Investor Admissions, FY2005
Country (or Region) of Origin
Number
Percentage of Total
Asia:
Taiwan
4,613
2.5
South Korea
13,090
6.9
Chinaa
769
0.5
India
228
0.1
Japan
72,606
37.8
All other Asia
4,228
2.2
Total for Asia
95,534
50
All Other Regions:
Europe
74,338
38.6
South America
5,338
2.9
Africa
203
0.1
North/Central America
13,159
6.9
Australia/New Zealand
2,735
1.5
Total
192,823
100
Source: CRS presentation of Department of Homeland Security Office of Immigration Statistics
FY2005 data.
a. Denotes People’s Republic of China, Hong Kong, and Macau.
82 Admissions figures differ significantly from visa issuance figures because individuals may
leave the United States and return on the same visa, as long as the visa is still valid. Thus,
some individuals may be counted multiple times in the admissions data.

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CRS-16
The Department of Homeland Security (DHS) offers statistics on the admissions
of nonimmigrants and their destination state. Figure 3 indicates the destination
states of E-class visa admissions into the United States for FY2005. The state with
the highest number of nonimmigrant investors as their destination in FY2005 was
California with 35,431 admissions, accounting for 18.4% of the admissions total.
Following California, the next three biggest recipients of nonimmigrant investors
were Florida, New York, and Texas with 22,765, 22,705, and 15,048 admissions
each, respectively. In the respective order, these state admissions accounted for
11.8%, 11.8% and 7.8% of the admissions total in FY2005. The only other states
with a combined total of more than 10,000 E-class admissions were Michigan and
New Jersey. Michigan was the destination state of 11,034 nonimmigrant investors
admitted, while New Jersey attracted 10,460 admissions. These totals accounted for
5.7% and 5.4% of the United States admissions total, respectively. The remaining
states represented the destination states for approximately 31% of nonimmigrant
investors.

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CRS-17
Figure 3. Nonimmigrant Trader and Investor Admissions by Destination State, FY2005

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CRS-18
Historically, more investors have applied to enter the United States as
nonimmigrants than immigrants, possibly because the less stringent requirements for
the nonimmigrant investor visa make it easier to obtain. However, relative to other
nonimmigrant categories, the admission levels of investor nonimmigrants are low.
With the ease of movement, technological advances, and ease of trade restrictions,
many investors may be choosing to invest in the United States from abroad and enter
the United States on B-1 temporary business visas or visa waivers.83
U.S. and Canadian Comparisons
Although there are many countries with investor visa programs — including the
United Kingdom, Australia, and New Zealand — the Canadian investor program has
the strongest parallels to those of the United States. These parallels are in part due to
the fact that the U.S. immigrant investor program was modeled after its Canadian
counterpart. The Canadian program allows investors who have a net worth of at least
$800,000 (Cdn) to make a $400,000 (Cdn) investment through Citizenship and
Immigration Canada (CIC).84 The Canadian government additionally offers an
entrepreneurial visa for foreign nationals with a net worth of $300,000 (Cdn).85 These
nationals are required to invest and participate in the management of a certain sized
business, and they must produce at least one new full-time job for a non-family
member.86 Between 1986 and 2002, the Canadian investor visa program attracted
more than $6.6 billion (Cdn) in investments.87 From FY1992 through FY2004,
United States LPR investor immigrants had invested an estimated $1 billion in U.S.
businesses.88
According to published accounts, the Canadian investor visa was developed
initially to attract investors from the British colony of Hong Kong.89 The visa was
created in 1986 in response to the significant numbers of investors seeking to migrate
from Hong Kong in anticipation of the transfer of the colony from British to Chinese
83 According to the DHS Office of Immigration Statistics’ 2005 Yearbook of Immigration
Statistics, in FY2005 there were 2,432,587 admissions of B-1 visa holders and 2,261,354
admissions for business purposes on visa waivers.
84 Citizenship and Immigration Canada, “Business Immigrant Links: FAQs,” November 11,
2005, at [http://www.cic.gc.ca/english/business/bi-faqs.html], visited January 23, 2007.
85 Ibid.
86 Ibid.
87 Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green Cards: Rise of the
Phoenix?” New York Law Journal, April 25, 2005. At [http://www.millermayer.com/
EB5NYLJ0405.html], visited January 23, 2007.
88 U.S. Government Accountability Office, Immigrant Investors: Small Number of
Participants Attributed to Pending Regulations and Other Factors, GAO-05-256, April
2005, pp. 8-11.
89 Denton, Herbert H. “Canada Lures Hong Kong Immigrants: Well-Off Businessmen
Willing to Invest Are Granted Special Status.” Washington Post, March 8, 1986, pp. A11,
A18.

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CRS-19
control. For these investors, the visa offered an opportunity to establish legal
permanent residence in a country that was perceived to be more embracing of
individual property rights and open markets.90 These immigrant investors from Hong
Kong, along with other immigrant investors, have cumulatively invested over $3
billion in the Canadian economy.91
As Figure 4 demonstrates, the annual number of immigrant investor visas
issued over the past decade has remained multiple times higher than that of its United
States counterpart. The margin between these two programs was closest in 1997,
when the Canadian issuance of 5,595 immigrant investor visas was approximately
400% higher than the U.S. total of 1,361 immigrant investor visas issued. Although
these ratios have fluctuated, the sizable Canadian advantage in this measure has
remained. In terms of the absolute levels, the Canadian immigrant visa level for 2005
represented a 10-year high, while the U.S. level for the same time period represented
approximately 25% of its 10-year high. Both countries have shown an upward trend
in immigrant investor visas in the last two years.
Figure 4. Immigrant Investors to Canada and the United States,
1996-2005
Canada
United States
10,000
9,000
8,000
ts
an
7,000
igr
m
6,000
Im
y
r
go
5,000
te
a
C
4,000
stor
ve
3,000
In
2,000
1,000
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
Source: Data are from the United States Government Accountability Office (2005) and Citizenship and
Immigration Canada (2005).
What is unclear from the data is whether the competition between the U.S. and
Canadian program (as well as investor programs in other countries) constitutes a
zero-sum game. There are no data available showing the motive for migration
among investors, or if they perceive the United States and Canada as interchangeable
90 Ibid.
91 Citizenship and Immigration Canada, “Business Immigrant Links: FAQs.” November 11,
2005, at [http://www.cic.gc.ca/english/business/bi-faqs.html], visited January 23, 2007.

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CRS-20
investment locations. If the investors are motivated purely by the economic returns,
then economic theory92 suggests that equalizing the program financial requirements
should result in more equal rates of petitions. Furthermore, a lowering of the
financial requirements should increase the supply for both countries. However, if the
immigrant investors are motivated to migrate by non-financial considerations, then
equalizing the United States program requirements with its Canadian counterpart is
likely to have little impact on the current trends.
Analysis of the Relationship
Between Investments and Migration
Classical economic theory has posited that trade liberalization (including the
reduction of investment restrictions) establishes a conditional inverse theoretical
relationship between foreign direct investment (FDI) and migration.93 In other words,
as trade increases, migration pressures decrease. The theory posits that an increased
level of FDI should reduce migratory pressures through growth in the targeted
economy. As economic growth produces a higher demand for labor, workers in that
economy feel less pressure to seek employment in foreign economies, provided that
the new jobs complement the workforce’s skills. For example, if economic growth
creates demand for skilled labor, then an unskilled labor force should not experience
any reduced migration pressures. Thus, while FDI increases host-country growth,
there is not necessarily a direct reduction in host-country migration pressures.
The investor visas offered by the United States operate on the principal that FDI
into the United States should spur economic growth in the United States. According
to the classical theory, if these investments are properly targeted towards the U.S.
labor force’s skill sets, it should reduce the migration pressures on U.S. workers.
Such economic growth from FDI should further spur greater demand for trade. In
FDI between capital abundant countries such as the OECD member states (between
whom a marked majority of FDI flows), the empirical evidence has largely supported
this notion.94 Furthermore, it has provided an increased per capita income in these
states, as well as boosted the general standard of living.
What is less clear from the empirical research is the degree to which potential
migration provides any additional incentive for investment activity in the United
States. The classical trade theory asserts that trade and migration are substitutes,95 and
92 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and Foreign
Direct Investment Policies: A Background Paper.” OECD Development Centre, Working
Paper No. 249, June, 2006.
93 For a brief discussion, see Xenogiani, Theodora. “Migration Policy and Its Interactions
with Aid, Trade and Foreign Direct Investment Policies: A Background Paper.” OECD
Development Centre, Working Paper No. 249, June, 2006, p.36.
94 Ibid.
95 For further discussion on immigration and trade see CRS Report RL32982, Immigration
Issues in Trade Agreements, by Ruth Ellen Wasem.

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that trade liberalization should reduce migratory pressures.96 These basic
propositions are generally agreed to hold in the long term. Consequently, in the long
term classical trade theory suggests there should be little migration of investors from
countries with liberalized trade arrangements with the United States.97 Instead, these
investors would achieve their investments through conventional FDI. Furthermore,
the theory suggests that investors would be more likely to migrate from countries
with restrictive trade policies (a policy more highly correlated with less economically
developed countries).
Critics of the classical economic models contend that despite elegant
predictions, the models produced by the theory frequently do not capture the costs of
international finance. Such critics argue that foreign investments often occur at the
expense of local businesses, and result in exploitive practices of local labor.98 These
criticisms are particularly common when critiquing the economic relationship
between capital abundant countries and less economically developed countries
(LEDC). According to the argument, more powerful countries can leverage their
power to construct investment relationships that shift a disproportionate amount of
profits to the capital abundant countries. Simultaneously, a greater share of the
costs99 are shouldered by the less powerful country. Classical economists generally
respond by noting that these investments are still producing growth in the LEDCs,
making the countries better off than without the investments. However, LEDCs
remain a source of contention between the classical economic theorists and their
critics.
Less Economically Developed Countries. Some scholars have expressed
doubt about the posited trade/migration substitutability, suggesting that the
relationship in the short or medium term could look different from the long term.100
One of the arguments put forward is that trade and migration are complementary for
countries with different levels of development.101 Under such a scenario, economic
96 This migratory pressure reduction should occur through the increased exports of unskilled
labor-intensive goods, as well as the resulting fact-price equalization and subsequent
convergence of wages.
97 There exists the possibility that foreign investment and capital trade objectives of many
investors are accomplished through multinational corporations. Under the construct of a
multinational corporation, returns to the investor are achieved through the foreign direct
investment by the corporation and through the migration of managers and technical experts
to facilitate production efficiency.
98 For example, see Banerjee, Subhabrata Bobby, and Stephen Linstead, “Globalization,
Multiculturalism and Other Fictions: Colonialism for the New Millennium?” Organization,
vol. 8, no. 4 (2001), pp. 683-722.
99 These costs may include tax shelters, government sponsored benefits, subsidies, and the
like.
100 Schiff, M. “How Trade, Aid, and Remittances Affect International Migration.” World
Bank Policy Research Working Paper No. 1376, Washington, DC, 1994.
101 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and
Foreign Direct Investment Policies: A Background Paper.” OECD Development Centre,
(continued...)

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growth in a sending country would provide potential migrants with the economic
means to overcome relatively high migration costs. Other observers point to such
factors as imperfect credit markets and currency fluctuations as significant “push”
factors for potential migrants.102 These latter factors, however, are generally more
highly correlated with LEDCs. Therefore, both the complementary and
substitutability theories of trade and migration suggest that higher demand for
investor out-migration should currently lie in the populations of LEDCs. However,
as noted earlier, investor visas issued to regions with LEDCs are relatively few.
What makes the visa program distinct from conventional FDI is that it involves
trade through the import of human capital. Consequently, these visas have potential
for creating a so-called “brain drain” migration out of less-developed sending-
countries.103 LEDCs are by definition limited in their capital levels, and economic
theory would suggest that exporting capital from a capital scarce country would
inhibit its growth and development.104 Classical theorists would argue that the United
States would be better served by sending FDI into LEDCs, thereby promoting
economic growth in LEDCs and a subsequent higher demand for U.S. goods.105 Such
investment, the theory dictates, would promote job growth both in the United States
and abroad.106 Instead, targeting investors from capital abundant countries for sector
specific investments would serve a more complementary role for the global market.107
101 (...continued)
Working Paper No. 249, June, 2006, p. 31-33.
102 Ibid.
103 A large majority of the issued visas have been to foreign nationals from relatively capital
abundant countries.
104 For further discussion of FDI into the United States see CRS Report RS21857, Foreign
Direct Investment in the United States: An Economic Analysis, by James K. Jackson.
105 FDI does entail some degrees of risk and reward for both the home and host economies.
For the home economy, FDI can improve competitiveness and performance of firms by
providing value-added activities, better employment opportunities, better export
performance, and higher national income. At the same time, engaging in FDI also runs the
risks of lower additions to both domestic investment and capital stock, as well as loss of
competitiveness and jobs in certain parts of the economy. For the host economies, the
benefits include increases in employment and potential multiplier effects on other parts of
the economy through productivity growth. Accepting FDI, however, does run the risk that
domestic firms are crowded out of the market (United Nations World Investment Report,
2006).
106 From the classical economic perspective, the immigrant investor pilot program is counter-
intuitive. In the case of investors from developed countries there is little incentive for them
to settle in the United States since they can achieve similar standards of living and all of
their FDI objectives from their home country. As for LEDCs, a drain of their capital may
provide short-term benefits to the United States, but would inhibit growth and trade in the
long run. The flight of investors from Hong Kong in the late-1980s and the 1990’s was a
unique economic situation that has since subsided. Other than the Hong Kong scenario,
there is seemingly little incentive for investors to relocate.
107 The complementary roles would be achieved through what economists refer to as
(continued...)

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By attracting capital abundant country investors, the United States’ economic growth
and productivity could be stimulated without adversely affecting the consumption
and trade potential of the investor’s country of origin.
Temporary and Permanent Investors. Some recent scholarly work has
drawn a distinction between the decision-making factors of potential temporary and
permanent migrants.108 Amongst temporary migrants, it is the employment prospects
and wage differentials that are significant variables in deciding whether to migrate.
Differences in both gains and price levels should affect the cost/benefit calculation
of the potential migrants, as these variables will affect potential levels of
consumption and savings. For permanent migrants, however, the prospects for
professional and social mobility are the main motivating factors.
The distribution of visas among Asian countries shows marked country-specific
tendencies among investor visa petitioners. Specifically, the polarization among
petitioners towards either immigrant (permanent) or nonimmigrant (temporary) visas
suggests that a significant proportion of applicants are substituting immigrant visas
for nonimmigrant visas, or vice versa. For example, while Japan accounted for
37.8% of all the foreign nationals arriving on nonimmigrant treaty trader and investor
visas in FY2005 (Table 2), its nationals represented only 1% of all the LPR investor
visas issued in the time frame FY1992-FY2004 (embedded in “Other Asia” of
Figure 1). Conversely, from the same two sets of data-samples, nationals of Taiwan
accounted for 39% of immigrant investors issued, but only 2.5% of nonimmigrant
arrivals. In the context of the aforementioned theory, Table 2 and Figure 1 above
suggest that Japanese investors are seeking to capitalize on wage differentials, while
Taiwanese, Chinese, and (to some extent) South Korean investors are pursuing
professional and social mobility.
Although some considerations weigh more heavily on the decisions of
immigrant and nonimmigrant investors, no single explanation accounts for the
behavior of investor visa petitioners. Japan, for example, has some trade restrictions
with the United States through voluntary export restraint agreements limiting auto
and steel exports to the United States, suggesting from the theoretical standpoint that
Japanese investors would choose to temporarily migrate.109 The Japanese
governments have also complained that the post-9/11 customs regulations and
107 (...continued)
“comparative advantage.” Theoretically, each country should be able to produce a good or
service more efficiently than the world average, thereby making the good or service
exportable. By attracting investments in these comparatively advantaged sectors, costs
should decrease while production increases. Thus, consumers at both ends of a trading
relationship are able to consume more goods.
108 Xenogiani, Theodora. “Migration Policy and Its Interactions with Aid, Trade and
Foreign Direct Investment Policies: A Background Paper.” OECD Development Centre,
Working Paper No. 249, June, 2006, p. 31-33.
109 CRS Report RL32649, U.S.-Japan Economic Relations: Significance, Prospects, and
Policy Options, by William H. Cooper.

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CRS-24
practices of the United States inhibit U.S./Japanese trade.110 Despite the suggestion
by these factors that Japanese investors are temporarily substituting trade with
migration, it is also plausible that Japan’s weak economic performance has reduced
the professional mobility opportunities — a motivation associated with permanent
migration. From 1991-2000, Japan’s real (adjusted for inflation) average GDP
growth rate was 1.4%, and it fell to 0.9% from 2001 to 2003.111 Yet, regardless of
motivation, Japanese investors are predominantly choosing to temporarily migrate
to the United States.
The fact that China, Taiwan and South Korea have had strong economic
performance in the last decade and relatively higher levels of immigrant investors to
the United States, suggests that these investors are migrating for more than financial
purposes. These investors may be more strongly motivated by the family and/or
social network connections to previously migrated investors and other LPRs in the
United States. These theoretically derived motives, however, must be further tested
empirically before any conclusive behavioral statements can be made.
Multiplier Effects. Classical economic theory holds that investments provide
for multiplier effects throughout the economy by increasing demand for other goods
and services. For example, an increase in demand for corn may increase the demand
for storage facilities, which results in an increase in construction contracts. The U.S.
Department of Commerce has quantified these effects through the Regional Input-
Output Modeling System (RIMS II).112 The RIMS II multipliers have become a
significant factor in assessing indirect economic activity and employment effects for
Immigrant Investor Pilot Program petitions.113 Using the regional multipliers for
various industries, foreign investment funds are frequently shown to yield increases
in demand across an economy that are several times higher than the direct input by
an investor. Thus, despite the relatively low number of investors entering the United
States, the impact of each investment by a foreign investor is a multiplied factor
greater than the direct investment, depending upon which industry and region is
being invested in. Furthermore, studies showing the direct economic investments of
foreign investors may not fully capture the economic impact of these investors upon
a region.114
110 Ibid.
111 Ibid.
112 For an explanation of the RIMS II multiplier, see U.S. Department of Commerce,
Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System
(RIMS II), Third Edition, March, 1997.
113 According to the USCIS Chief Adjudications Officer for EB-5 visas, well established
input-output models such as RIMS II are useful in assessing investments for limited
partnerships, where the direct effects of an investment are difficult to demonstrate (based
on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS Investor and
Regional Center Program, November 20, 2006). Such established economic models are
permitted under regulations (8 CFR 204.6(m)(3)).
114 A recent study commissioned by the National Venture Capital Association found that
over the past 15 years, immigrants have started 15% of venture-backed U.S. public
(continued...)

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CRS-25
Administrative Efforts
In recent years, significant efforts have been made by administrative agencies
to both promote investment by foreigners in the United States economy, and to close
perceived loopholes for visa exploitation. At the center of these efforts has been the
USCIS’ changes to the Immigrant Investor Pilot Program, which addressed fraud
concerns and the development of a Regional Center unit for coordination and
targeting of foreign investments.
Fraudulent Investments. During the late 1990’s, the LPR investor visa was
suffering from high levels of fraudulent applications.115 There has been concern that
potential immigrants could use schemes of pooling their funds and transferring the
money to demonstrate the existence of sufficient capital.116 Furthermore, applicants
could potentially use promissory notes that would allow for their repayment after a
six year time period. Since the LPR was only conditional for two years, some
observers feared that these investors could pull out of their respective investments
after being granted their LPR, have the promissory notes forgiven, and the enterprise
would collapse. As a result, the USCIS has engaged in a policy of not accepting
promissory notes, although the regulations state that petitions with promissory notes
may be considered for approval.117 Additionally, the creation of the Investor and
Regional Center Unit (IRCU) has allowed greater scrutiny of applications through
114 (...continued)
companies. The value of these companies currently exceeds $500 billion, and most of the
companies were in technology-related industries. The study found that these companies
employ 220,000 people in the United States, and 400,000 globally. Some of the more
prominent companies included by the study’s criteria include Google, Yahoo!, eBay, and
Intel (Stuart Anderson and Michael Platzer, American Made: The Impact of Immigrant
Entrepreneurs and Professionals on U.S. Competitiveness, National Venture Capital
Association, November 15, 2006, pp. 5-8).
Although the study shows the potential benefits of immigrant entrepreneurs, it does
not directly reflect on the investor visa categories. Most of the immigrants that founded
these enterprises came to the United States as children, teenagers, graduate students, or were
hired on H-1B visas in their mid-twenties. Thus, it is unclear to what extent these
individuals would have qualified as either immigrant or nonimmigrant investors under the
current regulations. Furthermore, the study’s findings includes numbers from both
companies wholly founded by immigrants and companies founded through partnerships with
United States citizens (Ibid).
115 Some have expressed concern regarding the investor visas being a means for some
foreign nationals to channel illegal funds into the United States. Opponents of the LPR
investor visa raised objections during congressional debates by asserting that the LPR
investor category would allow individuals to become United States citizens who had
profited from drug cartels. According to DHS, there does exist documented past abuses in
the alien investor program (U.S. Government Accountability Office, Immigrant Investors:
Small Number of Participants Attributed to Pending Regulations and Other Factors, GAO-
05-256, April 2005, pp. 39.). However, since the implementation of the “no promissory
notes” policy, the fraudulent cases have largely disappeared.
116 Based on CRS discussions with Morrie Berez, Chief Adjudications Officer, USCIS
Investor and Regional Center Program, November 20, 2006.
117 Ibid.

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CRS-26
increased resources and coordination of petitions processing. Petitioners now must
provide extensive documentation that traces the source of their funds to show that the
capital was legally obtained.118
IRCU Expansion. Prior to the creation of IRCU, the former-INS had been
criticized for becoming more restrictive in application reviews for Regional Center
designation, including allowing some applications to remain pending for more than
three years.119 In 2005, concerns were raised by both Members and advocates that
the IRCU still did not process applications quickly enough,120 and that staff members
had competing obligations within IRCU.121 Proponents of the Immigrant Investor
Pilot Program believe it has attracted a significant amount of capital and that
addressing these criticisms would further increase the levels of foreign investments
through the LPR investor visa.122 USCIS has responded to these criticisms by
expanding the number of Regional Centers available for LPR investor investments.
Most recently, IRCU has been expanded into Western Pennsylvania.
Working with foreign financing from the immigrant investor program has
become highly attractive for many domestic investors. A number of current
investment projects are using LPR investor financing because it is less costly for the
domestic investors. For domestic investors, employing LPR investor funds becomes
a significantly cheaper option than a bank loan, since there is no requirement to pay
interest on the financing. Additionally, because the enterprises are less saddled with
financing debt they are more quickly able to turn a profit. The LPR investor visa
118 This practice has made it especially difficult for investors from countries with business
practices based on convention (as opposed to legal documentation) to qualify for investor
visas. Documentation requirements may force a potential investor to trace funds back
several decades, effectively disqualifying investors from countries where credible historical
records of income tax documents do not exist (Wolfsdorf, Bernard P., Naveen Rahman-
Bhora, Tien-Li Loke Walsh, and Kim Tran. “A Review of the Immigrant Investor Program.”
Immigration Law Today, July/August, 2006, pp. 27-33).
119 Lincoln Stone, INS Decisions Cloud Future of Investor Pilot Program, 6 Bender’s
Immigration Bulletin 233 (March 1, 2001).
120 Rep. Sensenbrenner wrote a letter to USCIS Director Eduardo Aguirre on April 6, 2005
asking the USCIS to institute premium processing and concurrent filing for immigrant
investor petitions (Mailman, Stanley, and Stephen Yale-Loehr. “Immigrant Investor Green
Cards: Rise of the Phoenix?” New York Law Journal, April 25, 2005. At
[http://www.millermayer.com/EB5NYLJ0405.html], visited January 23, 2007.).
121 Letter from Lincoln Stone, Chair of the Investor Committee of the American Immigration
Lawyers Association, to Michael Aytes, USCIS Acting Associate Director of Operations,
November 16, 2005.
122 Lincoln Stone, the Chair of the Investor Committee of the American Immigration
Lawyers Association, noted the generated level of capital in four targeted areas. According
to an informal survey Stone had conducted of four targeted centers (California Consortium
for Agricultural Export, Philadelphia Investment Development Corporation, Golden
Rainbow Freedom Fund, and South Dakota international Business Institute), these centers
had attracted $121.3 million in capital in their two-year existence (Letter from Lincoln
Stone, Chair of the Investor Committee of the American Immigration Lawyers Association,
to Michael Aytes, USCIS Acting Associate Director of Operations, November 16, 2005.).

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CRS-27
petitioners are still able to qualify for conditional LPR status under these investment
structures through the multiplier rules for employment and capital that the USCIS
employs. Thus, limited partnerships of domestic investors with LPR investor visas
has become a popular option for financial stabilization and enterprise start-up in
Regional Centers as diverse as Philadelphia and South Dakota.
New Orleans. In the efforts to rebuild the sections of New Orleans damaged
by Hurricane Katrina, developers and officials alike have taken an interest in
attracting foreign capital. USCIS officials are working closely with New Orleans
officials to establish New Orleans as another Regional Center for LPR investor visa
investments. Officials at USCIS are hopeful that the program success that the
Philadelphia targeted center is experiencing can be replicated in New Orleans. Since
being designated a Regional Center, Philadelphia has attracted over 100 LPR
investors and most of their investments are being used to help finance the renovation
and transformation of the 1100 acre shipyard (for further discussion, see Appendix
B).
Potential Issues for Congress
Several issues related to investor visas may surface during the 110th Congress.
For example, the immigrant investor pilot program is scheduled to sunset at the end
of FY2008. The immigrant investor pilot program visa was last extended under the
Basic Pilot Program Extension and Expansion Act of 2003.123 There are currently no
other programs for targeting investments by immigrant investors to the United States.
Additional investor visa issues that could surface may relate to temporary
investors. In terms of nonimmigrant visas, the Danish government has been lobbying
the United States to grant E-2 treaty investor visas to Danish nationals. Originally,
this provision was granted to the Danes on May 2, 2001 as part of a protocol to the
treaty granting nationals of Denmark E-1 nonimmigrant trader visa eligibility. The
protocol was never ratified, however, due to congressional objections over the
inclusion of immigration provisions in a trade agreement. Subsequently,
Representative Sensenbrenner introduced H.R. 3647, which was passed in the House
on November 16, 2005, and would have allowed nationals of Denmark to enter and
operate in the United States as investors under E-2 treaty investor nonimmigrant
visas. Currently, Danish nationals are only allowed E-1 treaty trader visas. Denmark
is one of four countries whose nationals are eligible for E-1 treaty trader visas, but
not E-2 treaty investor visas (see Table 3 in Appendix A).
123 P.L. 108-156.

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CRS-28
Appendix A
Table 3. E-Class Visa Privileges by Year of Attainment
Country
Classification
Year of Visa
Albaniaa
E-2
1998
Argentina
E-1
1854
Argentina
E-2
1854
Armenia
E-2
1996
Australia
E-1
1991
Australia
E-2
1991
Australia
E-3
2005
Austria
E-1
1931
Austria
E-2
1931
Azerbaijana
E-2
1901
Bahraina
E-2
1901
Bangladesha
E-2
1989
Belgium
E-1
1963
Belgium
E-2
1963
Bolivia
E-1
1862
Bolivia
E-2
2001
Bosnia & Herzegovina
E-1
1982
Bosnia & Herzegovina
E-2
1982
Bruneib
E-1
1853
Bulgariaa
E-2
1954
Cameroona
E-2
1989
Canada
E-1
1993
Canada
E-2
1993
Chile
E-1
2004
Chile
E-2
2004
Chile
H-1B-1
2004
China (Taiwan)
E-1
1948
China (Taiwan)
E-2
1948
Colombia
E-1
1948
Colombia
E-2
1948
Congo (Kinshasa)a
E-2
1989
Congo (Brazzaville)a
E-2
1994
Costa Rica
E-1
1852
Costa Rica
E-2
1852
Croatia
E-1
1982
Croatia
E-2
1982
Czech Republica
E-2
1993
Denmarkb
E-1
1961
Ecuadora
E-2
1997
Egypta
E-2
1992

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CRS-29
Country
Classification
Year of Visa
Estonia
E-1
1926
Estonia
E-2
1997
Ethiopia
E-1
1953
Ethiopia
E-2
1953
Finland
E-1
1934
Finland
E-2
1992
France
E-1
1960
France
E-2
1960
Georgia
E-2
1997
Germany
E-1
1956
Germany
E-2
1956
Greeceb
E-1
1954
Grenadaa
E-2
1989
Honduras
E-1
1928
Honduras
E-2
1928
Iran
E-1
1957
Iran
E-2
1957
Ireland
E-1
1950
Ireland
E-2
1992
Israelb
E-1
1954
Italy
E-1
1949
Italy
E-2
1949
Jamaicaa
E-2
1997
Japan
E-1
1953
Japan
E-2
1953
Jordan
E-1
2001
Jordan
E-2
2001
Kazakhstana
E-2
1994
Korea (South)
E-1
1957
Korea (South)
E-2
1957
Kyrgyzstana
E-2
1994
Latvia
E-1
1928
Latvia
E-2
1996
Liberia
E-1
1939
Liberia
E-2
1939
Lithuaniaa
E-2
2001
Luxembourg
E-1
1963
Luxembourg
E-2
1963
Macedonia
E-1
1982
Macedonia
E-2
1982
Mexico
E-1
1994
Mexico
E-2
1994
Moldovaa
E-2
1994
Mongoliaa
E-2
1997
Moroccoa
E-2
1991
Netherlands
E-1
1957

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CRS-30
Country
Classification
Year of Visa
Netherlands
E-2
1957
Norway
E-1
1928
Norway
E-2
1928
Oman
E-1
1960
Oman
E-2
1960
Pakistan
E-1
1961
Pakistan
E-2
1961
Panamaa
E-2
1991
Paraguay
E-1
1860
Paraguay
E-2
1860
Philippines
E-1
1955
Philippines
E-2
1955
Polanda
E-2
1994
Romaniaa
E-2
1994
Senegala
E-2
1990
Singapore
E-1
2004
Singapore
E-2
2004
Singapore
H-1B-1
2004
Slovak Republica
E-2
1993
Slovenia
E-1
1982
Slovenia
E-2
1982
Spain
E-1
1903
Spain
E-2
1903
Sri Lankaa
E-2
1993
Suriname
E-1
1963
Suriname
E-2
1963
Sweden
E-1
1992
Sweden
E-2
1992
Switzerland
E-1
1855
Switzerland
E-2
1855
Thailand
E-1
1968
Thailand
E-2
1968
Togo
E-1
1967
Togo
E-2
1967
Trinidad & Tobagoa
E-2
1996
Tunisiaa
E-2
1993
Turkey
E-1
1993
Turkey
E-2
1990
Ukrainea
E-2
1996
United Kingdom
E-1
1815
United Kingdom
E-2
1815
Source: CRS presentation of data from the U.S. Department of State Foreign Affairs
Manual, 9 FAM §41.51.
a. Countries with only E-2 visa privileges.
b. Countries with only E-1 visa privileges.

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CRS-31
Appendix B
There are currently numerous targeted economic regions set up for the
Immigrant Investor Pilot Program for the EB-5 visa category. These targeted areas
have focused on different types of investments in order to achieve economic benefits
for the given region. Below are descriptions of a couple of the projects that are
currently in place under the Immigrant Investor Pilot Program and the results these
projects are producing.
South Dakota International Business Institute
The South Dakota International Business Institute (SDIBI), Dairy Economic
Development Region (DEDR) is the only regional targeting center currently run by
a state government. Approved in June 2005, this Regional Center was the result of
a state-wide effort to find an improved method of attracting foreign capital to South
Dakota. From the state’s perspective, the EB-5 pilot investor program offered a more
promising solution than the E-2 nonimmigrant visa, since officials could offer
investors the benefit of LPR status.124 Additionally, the job-creation criterion of the
EB-5 visa aligned well with the state’s focus on job creation from foreign
investments (as opposed to isolated capital injections). In its application for Regional
Center designation, the state said it would focus its efforts on attracting dairy farm
investors. USCIS agreed to the designation on the condition that South Dakota would
allow for limited partnerships of foreign investors with domestic farmers.125 As a
result, South Dakota currently has enterprises fully owned and operated by foreign
investors, as well as limited partnerships.
Since the regional designation took effect, South Dakota has attracted 60 foreign
investors to its dairy industry (with an additional 10 applications still pending).126
These foreign investors have injected approximately $30 million into the South
Dakota economy, with an additional $6 million in matching funds coming from local
farmers. Furthermore, this combined $36 million in invested funds has resulted in
almost $90 million in bank financing for the various dairy investment projects. As
a direct consequence of these foreign investments, 240 additional jobs have been
created and 20,000 additional cows have been brought to South Dakota.127 Using the
RIMS II multipliers for investment and employment,128 the foreign investments from
EB-5 immigrants have resulted in a total of 638 additional jobs and over $360
million in additional funds to the regionally targeted economy.
124 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
125 Letter from William R, Yates, Associate Director of USCIS Office of Operations, to Joop
Bollen, Director of the South Dakota International Business Institute, June 11, 2005.
126 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
127 Ibid.
128 For the South Dakota targeted region, the RIMS II multipliers are 2.9 for investment and
2.66 for employment.

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CRS-32
According to SDIBI/DEDR Director Joop Bollen, the pilot program has
afforded South Dakota “a tremendous opportunity,” not only because of the direct
investments and multiplier effects, but because of the other investments made by the
foreign investors.129 According to Director Bollen, the attraction of foreign investors
has had significant spillover effects into the restaurant and meat packing industries.
As a result, SDIBI/DEDR hopes to focus on attracting additional investments for its
meat packing plants. As such, Director Bollen stated that it was of paramount
concern to the SDIBI/DEDR that USCIS have sufficient resources to quickly
adjudicate EB-5 immigrant visa petitions. If the adjudication process is too long,
Director Bollen stated, then the opportunity cost may make a South Dakota dairy
investment unappealing to foreign investors.130
CanAm Enterprises
CanAm Enterprises is a private financial advising group which serves to
structure, promote and administer the Philadelphia Industrial Development Center
(PIDC) Regional Center. The group works in conjunction with the City of
Philadelphia through the PIDC to facilitate the city development (mainly in the city’s
shipyard area) and provide investor credibility. This public/private partnership was
developed to aid the transition of Philadelphia from a manufacture-based to a service
based economy.131 The main strategy has been to use collateralized loans to attract
investments in industries that provide long-term full time employment. By doing so
the city hopes that investors will wish to invest in other projects and sectors of the
city’s economy.132
When the Philadelphia Naval Base was closed as part of the base closures of the
1970s, the base was handed over to the PIDC for transformation to civilian use.
Despite the city’s efforts the shipyard was unable to remain competitive in the ship
construction industry.133 However, with the passage of requirements following the
Exxon Valdez oil spill134 (and the ongoing regulations from the Jones-Shafroth
Act),135 the civilian shipbuilding industry in the United States became economically
129 Based on CRS discussion with Joop Bollen, Director of the South Dakota International
Business Institute, November 28, 2006.
130 Ibid.
131 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.
132 Ibid.
133 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.
134 P.L. 101-380.
135 The Jones-Shafroth Act is a section of the Merchant Marine Act of 1920 (46 U.S.C. 883;
19 CFR 4.80 and 4.80b). Designed to protect the United States shipping fleet, the law
requires that cargo moving between U.S. ports be carried by ships that are built in the United
States and at least 75% owned by American citizens or corporations.

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CRS-33
viable again.136 The federal government and the city of Philadelphia combined to
invest over $400 million into the Philadelphia shipyard. Additionally Norwegian
shipbuilding companies were brought in as investors in the shipyard and provided
valuable training and human capital to the shipyard. Since production restarted, EB-
5 investors have become increasingly important for providing funds to remove
production bottlenecks. A recent example includes the use of EB-5 funds for the
development of a more advanced painting technology for the ships.137
Philadelphia is one of the Regional Centers that has been most successful in
attracting foreign investors through the EB-5 visa. There are approximately 60 EB-5
visa investors in Philadelphia who have invested a total of $75 million into the city.138
Additionally, there are around 30 petitions that are under review for other investment
projects. The lead official at CanAm Enterprises told CRS that while they believe
the funds have been important to the city, the human capital the investors bring is
equally important. This official stated that the investors being brought to the United
States represented highly competent entrepreneurs, who not only made investments
in the city beyond their initial investment, but also facilitated greater economic
activity through exchanges with their existing foreign networks.139
136 Based on CRS discussions with Tom Rosenfeld, President & CEO, CanAm Enterprises,
November 28, 2006.
137 Ibid.
138 Ibid.
139 Ibid.

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