Overlooked details in the story of the Canadian yarn merchant at the U.S. border

A week or two ago CBC ran this story about a Canadian vendor who landed a vendor’s booth at a trade show in Maryland. She loaded approximately “11 grand” worth of product into her car, along with an employee, her parents, and paperwork apparently in order, then proceeded to a U.S. port of entry. Ultimately, everyone was denied admission because they did not have an E-2 visa. This story omitted at least three key details: (1) the definition of a “substantial” investment, (2) the restriction on delivering goods in the U.S. as a business visitor, and (3) the possibility of an E-1 Treaty Trader visa for the merchant.

Misconception of E-2 visa requirement

The video segment recites a requirement for an E-2 visa as published on USCIS’s website:

  • Have invested, or be actively in the process of investing, a substantial amount of capital in a bona fide enterprise in the United States

Then, the CBC tells us that “exactly what constitutes a substantial amount isn’t clearly defined.” This statement is not correct. For purposes of an E-2 visa, “substantial” is “an amount… established by the Secretary of State, after consultation with appropriate agencies” (see INA § 101(a)(45) and INA § 101(a)(15)(E)). The Secretary of State establishes a  “substantial” amount in the Foreign Affairs Manual as an amount that:

  1. supports the likelihood that the investor will successfully develop and direct the U.S. enterprise,
  2. is sufficient to ensure the investor’s financial commitment to the successful operation of the enterprise, and
  3. satisfies the proportionality test.

The proportionality test is an evaluation of the ratio of the value of the capital invested to the total value of the business. For lower-value businesses a higher ratio will be required to satisfy the proportionality test. On the other hand, a $10 million investment into an enterprise worth $100 million would likely qualify based on the sheer magnitude of the investment itself. Thus, although there is no specific dollar figure that defines a “substantial” investment, the definition is quite clear.

The merchant in this story appears to be a long way from qualifying for classification as an E-2 investor because she does not have a U.S. enterprise. The CBC story then explores possible classification as a business visitor.

Would visitor classification be appropriate?

According to the lawyer interviewed by the CBC, B-1 visitor classification may have been appropriate in this case. An applicant for admission to the U.S. in visitor status must (INA § 101(a)(15)(B)):

  1. Have a residence outside the U.S. that she does not intend to abandon,
  2. Be coming to the U.S. for a period of specifically limited duration, and
  3. Engage only in legitimate activities while in the U.S.

Engaging only in legitimate activities includes declining unauthorized employment, which appears to have been the issue here.

The regulations governing classification as a business visitor authorize sales activity in the U.S., but explicitly prohibit “delivering goods or providing services” (8 CFR § 214.2(b)(i)(D)). Since the Canadian merchant was planning to deliver the goods that she was selling, she did not meet the requirements for B-1 visitor classification. She may, however, be able to overcome this requirement in the future by bringing only samples that are not for sale, setting up a laptop at her booth for buyers to place orders, and shipping them in the future.

If she wants to travel with her goods to sell at trade shows, the E-1 Treaty Trader visa may be the better option if she can show that she is engaged in “substantial” trade between the U.S. and Canada.

Stage set for a treaty trader visa

A Canadian citizen coming to the U.S. to “carry on substantial trade” between the U.S. and Canada may qualify for an E-1 Treaty Trader visa (INA § 101(a)(15)(E)(i)). Again, “substantial” is defined by the Secretary of State, however, it is defined differently for trade than for investment (see 9 FAM 402.9-5(C)). The more transactions over time, and the higher the value of these transactions, the more likely it is that trade will be substantial. The foreign affairs manual acknowledges that small businesses may be engaged in substantial trade. “Income derived from the international trade that is sufficient to support the treaty trader and family should be considered favorably when assessing the substantiality of trade in a particular case.”

Here, the merchant expected to sell approximately $11,000 worth of inventory during a single trade fair. Additionally, she had purchased her festival booth and brokerage services from the U.S. If she purchases additional inventory from the U.S. or sells is to customers in the U.S. she can count all of these transactions in an application for an E-1 Treaty Trader visa. Given the attention that her story has received so far, she may be well on her way to making a strong case that she is carrying on substantial trade between the U.S. and Canada.

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