Seeking Competitive Advantage in Divergent Immigration Systems: An Overview of Canada and U.S. Immigration

Andrew Cumming, Founder and Managing Partner of Toronto-based Cumming & Partners.

Andrew Cumming, Founder and Managing Partner of Toronto-based Cumming & Partners.

In today’s competitive global economy, access to highly skilled employees is critical to business success. For many businesses in North America, attracting and keeping top talent (including foreign workers) is a key component of their business model.

Canada and the United States have separate and increasingly divergent immigration systems. Each country’s immigration policies and platforms have strengths and weaknesses. I will compare and contrast their immigration systems for two distinct purposes: (1) to highlight how a North American business integrated immigration approach can provide a competitive advantage; and (2) to provide a context and useful insight into potential comprehensive U.S. immigration reform. I will first review the U.S. immigration system and then contrast Canada’s immigration system.

U.S. Immigration

There have not been comprehensive changes to the U.S. immigration system for several decades. Although there is a consensus that significant changes are required, the political complexity of addressing legal immigration reform (work visas, green cards) in conjunction with resolving the status of more than 10 million illegal immigrants has proven insurmountable.

U.S. Work Visas

H-1B Work Visas

The H-1B work visa is the cornerstone of the U.S. work visa system. This work visa allows a U.S. business to hire a foreign (professional) worker who has a specialized university degree for a position that requires such a credential. The foreign worker must be paid the prevailing wage, but there is no labor market test required. U.S. Immigration restricts the ability of U.S. companies to hire foreign workers on H-1B visas by placing an annual numerical cap (85,000) on the number of such work visas available each year. Each April 1st, applications are accepted (in 2019 approximately 190,000 applications were filed) and a lottery occurs to determine which foreign workers are chosen.

L-1 (Intra-Company Transfers) Work Visas

Foreign workers who have worked abroad for one year or longer for a company affiliated to a U.S. business can transfer to the United States on an L-1 work visa if they work in an executive, managerial, or specialized knowledge capacity.

TN (NAFTA) Work Visas

Professionals who are Canadian (or Mexican) citizens working in one of the approximately sixty listed professional occupations have access to TN work visas under NAFTA. These TN visas facilitate fast and easy access to the United States (immediate in-person processing upon entry) provided the applicant has the required education and the U.S. position fits into one of the listed occupations. NAFTA work visas are the key for professional worker mobility between Canada and the United States.

O-1 (Outstanding Ability) Work Visas

The O-1 work visa is for any foreign worker who can document outstanding ability in their field within the arts, sports, science or business.

E-1/E-2 Treaty Traders/Treaty Investors

The United States has commerce treaties with more than fifty countries that allow citizens of those countries U.S. work visas if their foreign business is undertaking substantial trade with the United States (E-1 Treaty Trader visas) or substantial investment in the United States (E-2 Treaty Investor visas).

U.S. Permanent Residence (Green Cards)

PERM (Labor Certification)

Employees in the United States who want to sponsor a foreign worker for a Green Card can undertake the Labor Certification process of advertising the position to prove that no U.S. worker (with the requisite credentials) is available. This Labor Certification process, if successful, allows the foreign worker to apply for a Green Card.

Green Card availability is restricted by an annual quota system that applies to both eligibility categories and also nationality. This has resulted, in many circumstances, in significant delays in obtaining Green Cards particularly for citizens of India, and China.

Multinational Executives/Extraordinary Ability

Exempt from the Labor Certification process are executives and managers of multinational companies and individuals who can document their extraordinary ability in the arts, sports, sciences or business.

Contrasting Canadian Work Permit Options

LMIA Work Permits

The Labour Market Impact Assessment (“LMIA”) work permit is Canada’s standard work permit for a foreign worker. In contrast to the H-1B visa, there is no annual numerical cap. However, and also in contrast to the H-1B visa, the LMIA work permit is restricted by a labour market test whereby a Canadian employer must advertise the position and prove there is no Canadian worker (with the appropriate credentials) available.

Intra-Company Transferee/NAFTA Work Permits

The Canadian rules for intra-company transferee work permits closely parallel those of the U.S. L-1 visas. That is also the case for Canadian NAFTA work permits vis-à-vis U.S. TN visas. Unlike the United States, in addition to NAFTA Canada has significant labour mobility provisions in its CETA (Comprehensive Economic and Trade Agreement with Europe) and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership with 10 Asia-Pacific countries) trade agreements.

Significant Benefit

Canada issues work permits for individuals of outstanding ability (in parallel to the U.S. O-1 visa) under the Significant Benefit category. Significant Benefit work permits are, however, significantly more flexible than O-1 visas as they can be issues not only where the applicant has outstanding ability (like the O-1) but also where the applicant lacks outstanding ability but is still contributing significantly to Canada’s economy or culture. This gives Canadian Immigration significant latitude to broadly issue Significant Benefit Work Permits.

Contrasting Canadian Permanent Residence Options

Canada continues to aggressively focus on economic growth through immigration. Last year, Canada welcomed approximately 300,000 permanent residents and the federal government has stated the goal of admitting 1.1 million new permanent residents between 2019 and 2021.

Express Entry System

This online immigration program facilitates the selection of immigration based on an applicant’s ranking score. Points are given for education, language skills, work experience, and age (youth). Unlike the U.S. Labour Certification process, sponsorship by an employer is not required. The system enables the best and brightest foreign workers to obtain permanent residence in Canada in 6 to 9 months and is focused on attracting young, well-educated professionals. In contrast to the United States, Canada does not restrict permanent residency on a country-specific quota system, so all foreign applicants are on a level playing field regardless of nationality.


Provincial Nominee Programs

Provincial governments in Canada have considerable flexibility to shape their provincial nominee (immigration) programs to respond to specific economic and labour needs. The Canadian federal government has permitted provincial nominee programs to grow to the point where they admit about one-quarter of Canada’s economic immigrants every year. This shift to provincial (regional) input into federal immigration policy has not occurred in the United States.

Utilizing an Integrated North American Platform to Create a Competitive Advantage

The immigration policies and programs of both countries both have strengths and weaknesses. Understanding each country’s immigration policies allows you to recruit talent to North America through either country to maximize access to highly skilled foreign workers and produce a competitive advantage. This can be illustrated through two practical examples.

Example 1: Indian Software Engineer (Recent Stanford Graduate)

Ms. Graduate is an Indian citizen who is graduating at the top of her class in engineering at Stanford. She is being recruited by several top California-based technology companies.

Company A offers her a position on her Optional Practical Training (OPT) work authorization with the assurance they will enter Ms. Graduate in the H-1B visa lottery next April, and if they can obtain an H-1B visa for her (40% chance), then they will undertake a Green Card through Labor Certification (2 to 3 years) and then eventually (in approximately 10 years because of the back-log in Green Cards for Indian nationals) a Green Card will be obtained.

Company B makes a similar offer of support for U.S. immigration assistance but also explains that it has operations in Vancouver, Canada. And if Ms. Graduate is not chosen for an H-1B work visa, it is happy to move Ms. Graduate to Canada on a Canadian work permit and facilitate her Canadian Permanent Residence (1 year), or put her in a temporary position in Vancouver that would facilitate an L-1 (Intra-Company Transfer) work visa back to the United States after one year of work. Ms. Graduate chooses employment with Company B.

Example 2: Renowned Romanian Scientist

Company A is a top Canadian pharmaceutical company based in Toronto with additional offices in Boston. It has identified Mr. Research, a world-class Romanian scientist, as the ideal candidate to head up a new research project. Mr. Research is married, 55 years old, with two children preparing for university. He is brilliant but his English language skills are poor. He will not move to North America without the assurance the move can be permanent for both himself and his family.

Company A is concerned that although they can get Mr. Research a Canadian work permit, he may not qualify for permanent residency through the Express Entry program (poor English) and that other options will take time (and the two children will “age out” at 21 and not get permanent residency with their parents).

So alternatively, Company A recruits Mr. Research to its Boston office on an O-1 (Outstanding Ability) work visa with an undertaking to obtain Green Cards for Mr. Research and his family forthwith (through Extraordinary Ability which is not English language skill dependent). Mr. Research gladly accepts the offer for the Boston office.

Canadian Immigration Policies: Insight to Possible U.S. Immigration Reform?

Canada, not burdened by the illegal immigration issues that confront the United States, has in the past ten years taken significant steps (LMIA work permits, Express Entry Permanent Residency, Provincial Nominee Programs) to modernize its immigration system. These steps provide insight to possible U.S. immigration reform options.

Labor Market Test for Work Visa

The United States currently restricts the number of H-1B visas issued through an annual numerical quota system. That could change to restrictions based on proving labor market needs to hire foreign workers.

Emphasis on Highly Educated, Young Professional Workers

Canada developed its Express Entry program for permanent residency to compete with Australia and other countries who have modernized their immigration systems to attract the best and brightest young professional workers. Applicants do not require an offer from a Canadian employer (or a Labor Certification type process). The United States may follow with a points-based system for Green Cards to compete for this global talent.

Reduced Family-Based Immigration

Canada (and other countries) have reduced family-based immigration to emphasize points (merit)-based and economic- based immigration. This decision is based on the greater economic benefit of emphasizing professional workers over family-based immigration, and that may be a significant driver for comprehensive U.S. immigration reform.

Conclusion

Sophisticated immigration planning and the use of an integrated U.S./Canada approach for North American companies can provide a competitive advantage for sourcing and retaining highly-skilled foreign workers. Further, the immigration reforms that have occurred in Canada offer valuable insight into comprehensive immigration reform options for the U.S.

To learn more, please visit Cumming & Partners online at canada-usa.com or contact their Toronto office at (800) 523-2581.

Andrew Cumming, Founder and Managing Partner, acumming@canada-usa.com

Magda Kapitany, Director Business Development, mkapitany@canada-usa.com