The End Of NAFTA?
By Andy Semotiuk | November 29, 2017
Andy Semotiuk – Pace Immigration: While former Prime Minister Jean Chretien of Canada doesn’t think President Trump will scrap NAFTA, not everyone shares his optimism. Some Canadian businesses are actually planning for the cancellation eventuality.
Let’s face it: It’s hard to predict what Trump is going to do. For professionals on work visas, however, there is good reason to be concerned. Consider that Trump has criticized NAFTA, calling it “one of the worst deals our country has ever made.” He affirmed this distaste for NAFTA by also announcing, “If I’m unable to make a fair deal for the United States … I will terminate NAFTA.”
The possible demise of the agreement could present a special problem for Canadian and Mexican professionals in the United States and American professionals in Canada and Mexico. If NAFTA is terminated, their careers may be on the line.
It’s unclear what would happen. Would visa holders be forced to leave the country? Would they be allowed to stay until their permits expired? Would they perhaps be allowed to stay indefinitely? No one really knows. Should we just pray for a good result, or should we consider backup strategies?
Sunset for NAFTA?
With NAFTA approaching 25 years of age, there are obvious areas where the trade deal could be modernized. But in seeking to update the agreement, President Trump’s negotiating team seems to be escalating demands, even trotting out almost impossible take-it-or-leave-it proposals.
Tom Donohue, president of the U.S. Chamber of Commerce, described some of these as “poison pill proposals,” which he says could doom the entire deal. One such poison pill is a sunset clause under which NAFTA would expire every five years unless all three countries agreed it should continue. Critics have said this would increase uncertainty, making it difficult for long-term investors to invest money. They contend that investors need predictability and certainty and that such a poison pill will not give them that.
Neither Canada nor Mexico wants the sunset clause. To underscore the problem with the proposal, one Canadian trade official drew an analogy: If marriages had a five-year sunset clause, few would survive.
However, Canada and Mexico may not have a choice. Failure to agree could scuttle the negotiations, creating a pretext for President Trump to fulfill his campaign promise of terminating NAFTA.
Returning to the theme of professionals under NAFTA with work visas, in the event of a U.S. withdrawal from NAFTA, Canadian and Mexican professionals would be hit particularly hard. TN visas would no longer be an option for them. That’s a problem because there aren’t that many other really good options.
Alternatives for Professionals if NAFTA Fails
The main alternative, H1B visas, require U.S. employers not only to sponsor the employee but also to obtain complicated wage determinations from the Department of Labor and give other assurances about labor peace on the job site. What is more, since there are only 65,000 H1B visas authorized each year, with a further 20,000 for applicants with at least a master’s degree, they are insufficient to meet the heavy demand for them. As a result, a lottery ultimately determines who gets the visas. Not everyone would be happy to have their career options determined by a lottery. Furthermore, Trump is on the warpath regarding these visas since he wants to ensure that American workers are hired preferentially in these cases.
There are of course other U.S. work visas: for example, the L-1 (inter-corporate transferees of managers and executives and specialized workers), the O-1 (extraordinary aliens, usually in the arts or athletics) and the E-1 (international trade executives) and E-2 visas (investors). But these are nowhere near as useful to employers and employees as are the TN visas because TNs are granted so quickly and are so much less complicated. They reflect the “free trade” idea between nations in that way.
What Should Professionals Do?
The termination of NAFTA could thus prove seriously detrimental to both current employers and employees. Canadian and Mexican professionals might be forced to uproot their lives in the U.S. and move back to their country of citizenship. IT professionals specifically would find it harder to obtain employment in Silicon Valley, where many of the world’s largest high-tech corporations are located. Some will resort to these other options for work visas. But many may not be able to do so.
To reiterate, President Trump’s stance toward NAFTA trade talks doesn’t necessarily look that promising for workers with TN visas. He acts as if he wants to renegotiate NAFTA, but the U.S. side is introducing poison pills into the negotiations. Canada and Mexico may go out of their way to save the trade deal, but even if a compromise is reached, there is no guarantee that President Trump won’t terminate it in the end.
Only time will tell. In the meantime, it is wise for everyone to start thinking about backup options.