Thanks to President Donald Trump (or at least he appears to be taking credit for some portion of it) the newly branded title is …….wait for it…the United States-Mexico-Canada Agreement (USMCA). And the best news of all, the only thing that appears to have changed in a substantive way, from an immigration perspective, is the “title”.
All of us Canadian and US immigration lawyers have just breathed a significant sigh of relief … maybe our corporate clients even more so.
We were all expecting something bad to happen. Would caps be put in place on renewals? Would certain professions be removed? Would all of Chapter 16 simply be scrapped entirely. From all of the initial posturing of President Trump, these fears were distinct possibilities.
However, thanks to some level headed negotiations between the U.S Trade Representative Robert Lighthizer and our Foreign Minister Chrystia Freeland (raised in Alberta, I might add), both sides were able to recognize what any North American company doing cross border trade already knows… the free flowing movement of business visitors, skilled professionals and intra-company transferees between our countries continues to be in the best interest of all parties.
Although some of us carried faint hopes that these negotiations would provide an opportunity to update the list of professionals to include digital media occupations that didn’t exist back in 2004 when NAFTA was created. We will continue to settle for the status quo.
So now that NAFTA has not been scrapped, I want to take this opportunity to remind all of you Canadian, American, and Mexican business owners why the USMCA is so important for the movement of cross-border personnel and why it would have truly sucked to see it go.
But before jumping into my list, I want to emphasize two quick things.
First, this article is written from an entirely Canadian Immigration perspective. Although what I discuss below will likely mirror what my fellow immigration lawyers and attorneys in the US and Mexico would say, I’ll let them extol the virtues of leveraging the USMCA in their countries.
Second, there is one final “overriding” requirement that cannot be ignored and which applies to anyone seeking to enter Canada for business or other purposes…..
…you need to be admissible.
In other words, if any business person seeking entry to Canada has had past criminality or prior negative immigration history in Canada, they could be refused entry. Having worked on the border as an immigration officer, I know there are almost always options available to deal with inadmissibility. However, these matters need to be dealt with proactively and well in advance of travelling to Canada. If you run into this situation with one of your professionals, I’d advise you to contact my office or another Canadian immigration lawyer for help because resolving these issues can take time…..in most cases, time you do not have.
So….now that the less important things have been covered, let’s jump into my Top 5 List.
[NOTE: Click here to listen to Mark’s recent Podcast Episode on this topic entitled: BUSINESS IMMIGRATION SERIES: United States Mexico Canada Agreement – 5 great ways to work in Canada]
Because we have become so accustomed to the free flow of business travel in North America, we tend to forget that without the USMCA and the corresponding provisions in the Immigration and Refugee Protection Act (IRPA), temporary entry into Canada for business visitor purposes would likely require a work permit. However, because of Annex 1603 to the USMCA, a business person can enter Canada without a work permit provided they are seeking to engage in a business activity set out in Appendix 1603.A.1 which includes:
• Research and design
• Growth, Manufacture and Production
• After Sales Services*
• General Services
• Commercial Transactions
• Public Relations and Advertising
• Tour Bus Operation
Practically speaking, because the list is so broad, only in rare situations will a business activity fall outside the confines of the USMCA. And if this does happen, it can generally be captured by section 187 of the Immigration and Refugee Protection Regulations which allows a foreign national entry as a business visitor if they are seeking to engage in international business activities in Canada without directly entering the Canadian labour market. So if you are faced with an activity not included in the magical list of acceptable business activities, you just need to make your pitch. We do this all the time for our clients.
What are the general eligibility requirements?
So how do you prove you are a genuine business visitor under the USMCA?
In every case, a business traveller will be travelling on their passport, so proving that you are a citizen of the US or Mexico is never an issue. However, you must remember that Permanent Residents of either country are not eligible under the USMCA. They would need to seek entry as a business visitor under section 187 of IRPR.
[HINT: I often make specific reference to the corresponding legislation I am relying upon in the subject line of the letter]
The typical approach to satisfying an immigration officer or border services officer (BSO) that someone is a business visitor is actually pretty simple. Have the business person’s employer in the US or Mexico provide a short business visitor letter (no more than 2 pages) confirming the following information:
• Purpose of entry – make sure to link your activity to one of the accepted activities in Appendix 1603.A.1
• Business activity is international in scope – the activity must have a cross border element to it. If you are travelling into Canada on behalf of a company in the US or Mexico, the international scope component will be relatively easy to meet. However, if the purpose of entry has no connection with a business outside of Canada, it is much more likely you will need a work permit.
• Not seeking to enter the Canadian labour market – this isn’t always easy to prove. However, if you can demonstrate that your primary source of remuneration, principal place of business and accrual of profits are all outside of Canada, you are likely going to be just fine.
When would I want to enter as a business visitor under the USMCA?
Any time a business person is seeking entry to Canada to perform activities leading up to the signing of a contract, they will almost assuredly be considered a business visitor. However, once negotiations are through and the contract for provision of a good or service is signed, the waters start to get a little muddy when business persons are seeking entry post contractual engagement.
Most BSOs use the pre/post contract continuum as a guideline when determining whether or not a business person needs a work permit to complete their business purpose in Canada. As such, when advising my clients, if the contract has not yet been signed, I am usually pretty comfortable telling them they are a business visitor and just need to bring the business visitor letter.
However, if the contact has been signed, I tend to err on the side of caution and prepare a work permit package for my client to obtain a work permit directly at the port of entry (POE) because the last thing I would want is for my client to get turned back at the border and miss a critical meeting with an important client.
*What are the eligibility requirements for after-sale service?
I had to create a separate section for this special business visitor entry, because in this case, the person is actually performing an activity that would normally be considered work (even more so than a typical business visitor) but for this special exemption built into the USMCA. Because of the special circumstances related to this entry, special requirements must be met.
In addition to the general requirements set out above, the following must also be established:
• Specialized Knowledge – Person must possess specialized knowledge essential to the seller’s contractual obligation [NOTE: For further info on specialized knowledge go to section 2.6 of the NAFTA Policy directives on the IRCC website]
• Purpose – to install, repair, service, or supervise these functions, or train workers to perform these functions.
• Equipment type – can include equipment, machinery or computer software and must be commercial or industrial and NOT household or personal
• Equipment source – must have been manufactured and purchased outside Canada
• Original sales contract – after sale service must be pursuant to the original sales contract or a warranty or service agreement connected to the original sale
• Term of service– work must be performed within the validity of the agreement
Obviously, a simple letter would not suffice here. You would need to establish all of the above through some form of documentary evidence. My after-sale service POE application packages can be as large as a regular work permit package. The content of these packages varies depending upon the circumstances of my client. However, as a general rule you must include a copy of the original sales agreement and ensure the after-sale service is actually contemplated within that original agreement. If not, entry will not be granted under this provision of the USMCA…
…that is unless an officer makes a mistake or their deliberate generosity is extended well beyond the confines of this category. As I always tell my clients, if a BSO is offering something that I do not feel my client is entitled to, you just take it….say thank you…and consider yourself fortunate to have found an officer who is having a good day.
If business visitor entry is not possible. The next best thing to explore in the USMCA is the professionals category. This is probably the most frequently used work permit option because it is fast, reliable and has fewer places for it to fall off the rails when being adjudicated by a BSO at a POE.
However, it is important to recognize that when applying for any work permit under the USMCA, IRCC requires that employers pre-register the job offer in IRCC’s online Employer Portal before the professional can apply for the work permit at the port of entry. If they do not complete this registration process and secure the confirmation (“A “ series file number), the BSO is actually prevented from issuing the work permit…even if the professional fully qualifies for the work permit.
What are the eligibility requirements?
The single greatest advantage with any USMCA work permit option is that there is no need to obtain a Canadian Labour Market Impact Assessment (LMIA) before applying for a work permit. Essentially what that means is that you do not have to prove there is no Canadian or permanent resident of Canada qualified and available to fill the position before offering it to a Mexican or American citizen.
The application process can occur directly at the port of entry just like a traditional business visitor entry; however, you’ll need more than a simple letter from the US or Mexican employer to secure the work permit. I’m not going to get into too much detail as to exactly what I include in every package as there is no set list of documents that I use in every circumstance. Instead I have basic guidelines that I follow and supplement these documents depending upon the unique circumstances of my clients.
I’ll probably write another blog or release a new Podcast episode in the coming months that will go into the nuts and bolts of applying for each of these various USMCA work permits. So for now, I just want to wet your appetite a little by introducing the possibilities.
The minimum requirements for this work permit include:
• Proof of citizenship
• Profession is identified in Appendix 1603.D.1 of the USMCA
• Qualification to work in that profession (degree, certificate or work experience)
• Pre-arranged employment with a Canadian employer
• Provision of professional level services
As can be seen from above, all that is needed is an offer letter from a Canadian employer, the professional falls within the USMCA approved list of professions, proof that the professional has the actual education or licensing, and finally, that they will actually be working in this profession while in Canada. It goes without saying that an accountant can’t qualify as a professional in Canada if they are coming to work as a book keeper.
When would I want to enter as a professional under the USMCA?
When would you want to use this category? ……at every opportunity that presents itself.
The key to this work permit is ensuring that employment within the Professionals category is pre-arranged with a Canadian employer. The definition of “pre-arranged” employment is extremely broad and can allow for a work permit to be issued in one of the following three circumstances.
An employee-employer relationship with a Canadian enterprise
This is your tradition “contract of service” or “employment situation” where a Canadian company wants to employ an American or Mexican professional to fill a full-time position with the company. In these situations, the Canadian company often requires the newly recruited professional to physically relocate to Canada. Some specific examples would be a US engineer coming to work on a full-time basis with a Canadian engineering firm in Calgary, or a Mexican veterinarian who is recruited to join an Animal Hospital in North Bay, Ontario.
When professionals are recruited to fill full-time positions in Canada, it is common for these work permits to be issued anywhere from one to three years depending upon the offer of employment. However, the best part of this work permit is that there are no caps on the number of extensions that can be requested. Although extending a Professional work permit theoretically has no limit, BSOs or inland immigration officers may start to wonder if the person is truly a “temporary” foreign worker if they are on their 15th extension. As such, I always consider permanent resident options early on to ensure greater flexibility for all parties long into the future.
A contract between the professional and a Canadian enterprise
This is your traditional “contract for service” where a Canadian company contracts with a self-employed professional to provide a defined scope of services with a set end date. These independent contractor situations are very common when a Canadian company needs to engage a US or Mexican professional to complete a specific project, or provide a professional service.
The professional often “parachutes” into Canada on an intermittent basis in accordance with the terms of the consulting or service agreement. The professional will often have other clients they may be working for both inside and outside Canada at the same time.
[NOTE: A USMCA Professional can hold more than one work permit for different Canadian companies at the same time.]
A typical scenario I commonly see involves a US management consultant seeking entry to Canada to provide consulting services to a Canadian corporation hoping to improve their operating or economic performance. However, this scenario could easily be expanded to include architects, engineers, economists, or just about any professional included on the list of eligible professionals within the USMCA.
A contact between the professional’s American or Mexican employer and a Canadian enterprise.
This type of pre-arranged employment is often overlooked by many US and Mexican companies contracted to provide professional level services to a Canadian client. In this scenario, it is an employee of the US or Mexican contracting company that is being “parachuted” into Canada to provide the professional level services. Provided the employee is qualified as a professional under the USMCA, they are eligible to obtain a Professional work permit to facilitate the provision of professional level service pursuant to the cross-border contract.
As is the case with most business immigration lawyers in Canada, we rely heavily on this USMCA Professional subcategory to facilitate the entry of IT professionals parachuting into Canada on behalf of US and Mexican tech firms who are contracted to provide a broad array of software engineering, computer systems analysis and overall IT consulting services to Canadian clients.
[NOTE: The USMCA Professional category is ideally suited for US or Mexican companies that do not have a physical presence in Canada, but need to send professionals to Canada to service contracts with Canadian clients]
As can be seen from the requirements of the USMCA Professional category, this work permit option is pretty awesome. Provided the foreign professional is a US or Mexican citizen with the requisite qualifications of a Professional found in Appendix 1603.D.1 of the USMCA, a job offer or contract with a Canadian company will do the trick. Obviously, it is not quite as simple as this sounds; however, from a 10,000 foot level, this is the first place I look when I am examining work permit options for US or Mexican citizens.
If a US or Mexican company has a subsidiary, branch, or affiliate relationship with a Canadian company, the possibilities under the USMCA expand exponentially. Not only will all of the USMCA Professional options continue to exist; but the list of eligible transferees is expanded to any employee that is currently working at an Executive or Senior Managerial level or in a position involving “specialized knowledge.”
The only slight drawback to a USMCA Intra-Company Transfer (ICT) work permit is that renewals are capped at 5 years for specialized knowledge personnel and 7 years for executive and senior managerial level employees.
What are the eligibility requirements?
Defining what constitutes an executive or senior managerial position is relatively straightforward. It is the definition of “specialized knowledge” that can be a real challenge. The BSOs on the border are instructed to assess whether the specialized knowledge worker has, on a balance of probabilities, a high degree of both proprietary knowledge and advanced expertise. Fortunately, in Canada, the level of specialized knowledge required to qualify for an intra-company transfer work permit is not at the level of a “rocket scientist”. This is not the case in the US where USMCA based ICT work permits undergo a far more rigorous assessment and are much more likely to be refused for lack of specialized knowledge. However, some POEs are more facilitative than others.
The minimum requirements for this work permit include:
• citizenship of the US or Mexico;
• employment in an executive or managerial capacity or one involving specialized knowledge;
• transferring from a related company (parent, subsidiary, affiliate, or branch); and
• employment for at least one full year in the previous three-year period.
As long as the employee has been employed with the transferring entity for at least one year in the previous three years and is currently employed with that entity immediately prior to the transfer to Canada, you have a great start. However, it must be noted that the person should be transferring from a similar position to the one being filled in Canada. If you are trying to figure out what a “similar position” really means, I tend to use the National Occupational Classification (NOC 2016) Code as a guideline. If the position on both sides of the transfer falls within the same NOC code, this will likely suffice.
[NOTE: One significant advantage to this work permit category is that neither a professional designation nor post secondary education is necessarily required.]
Let’s face it, some CEOs and Executives climbed their way up the corporate latter because of their hard work and great business sense….not an MBA or Ph.D. The USMCA ICT work permit accommodates for this reality.
When would I want to enter as an Intra-company Transferee under the USMCA?
The best part of the ICT is the flexibility it affords companies in how they use their transferring employees in Canada. With USMCA Professional work permits, unless the person is being hired directly to fill a position in Canada, all other contract-based engagements are limited to the specific terms of the contract. The Canadian client, work location, duration, and duties are restricted to the four corners of the agreement.
Whereas in the case of a USMCA ICT work permit, the job description can be defined in such a way that the work permit authorizes the transferee to provide ongoing services to not only the Canadian entity they are transferred to, but to any of that entity’s Canadian clients for which they are providing ongoing services to. In this situation, I routinely request that a notation be made in the remarks section of the work permit that authorizes my client’s employee to provide services at any client site of “Can Co.” across Canada.
Further, these ICT based work permits can often be issued for longer durations than are typically granted with short term USMCA Professional (contract based) work permits. Instead of obtaining multiple short-term work permits to work for a number of Canadian clients, one longer term work permit can be issued to cover all current and future projects.
Because of the significant advantages of the USMCA ICT work permit, many companies in the US and Mexico actually choose to incorporate a subsidiary in Canada to help facilitate the movement of personnel into Canada. There are always tax implications that need to be considered; however, I have invariably found that the immigration benefits of setting up a permanent establishment in Canada often offset the negative ramifications from a tax perspective.
The last two USMCA work permit options (Traders and Investors) are less popular and useful given the broad application of the Professional and ICT work permit categories. However, in some circumstances, these options can serve a limited purpose not otherwise captured by the previous two.
These work permit options are extremely technical and require a significant amount of background information including business plans, detailed financials and a host of other supporting documentation. However, in some cases, the USMCA Trader and Investor work permits are the only option available.
What are the eligibility requirements?
In order to qualify for a USMCA Trader work permit, the following requirements apply:
• applicant has American or Mexican citizenship;
• employing enterprise has American or Mexican nationality;
• activities involve substantial trade in goods or services;
• trade is principally between either the U.S. or Mexico and Canada; and
• position is supervisory or executive, or involves essential skills
In order to satisfy the requirement of “substantial trade”, the USMCA Trader must demonstrate that at least 50 percent of the trade undertaken by the US or Mexican entity occurs with Canada. With this being said, it logically flows that this can not be new trade. In other words, this work permit would not work well for a new start-up operation in Canada because an existing trade relationship needs to exist between the US/Mexican entity and the Canadian operation. So if you are looking at establishing new trade in Canada, this work permit is likely not for you.
Because of the complexity of these work permits, USMCA Trader work permits should be submitted through a Canadian visa office instead of at the POE. In fact, officers are instructed to redirect applicants back to the visa offices when they attempt to have Trader work permits adjudicated at the POEs. The application package is extensive. You might think the ICT process is overly burdensome….well you haven’t seen anything until you’ve seen what needs to be included within a USMCA Trader work permit package.
The main application form (Application for Trader/Investor Status: IMM 5321) associated with this type of work permit application is not even listed within the suggested document checklists for work permits filed online or via paper. In fact, the form is only mention within the IRCC USMCA policy instructions contained on the main IRCC website.
When would I want to enter as a Trader under the USMCA?
Unlike the USMCA ICT work permit, this category does not require that the person being transferred have worked for at least one year with the US or Mexican company prior to transfer to Canada. The person being employed in a capacity that requires essential skills need only have prior experience with the company if the essential skills can only be acquired through working for that enterprise.
The requirement of “substantial trade” already in existence really precludes this as a viable option when compared with the flexibility of the USMCA ICT work permit. As such, when faced with a situation when you need to transfer a newly hired employee to Canada and the ICT work permit is not available, a careful analysis of the actual trade being undertaken in Canada is essential in determining whether or not the Trader category should be relied upon. If evidence of existing trade does not exist, then invariably, most of my clients will turn to the USMCA Investor category.
Like the USMCA Trader work permit, the Investor category is used very sparingly when seeking a work permit to undertake cross-border trade or the delivery of contracted services.
What are the eligibility requirements?
In order to qualify for a USMCA Investor work permit, the following requirements apply:
• applicant has American or Mexican citizenship;
• enterprise has American or Mexican nationality;
• substantial investment has been made, or is actively being made;
• applicant is seeking entry solely to develop and direct the enterprise; and
• applicant seeking entry in an executive or supervisory position or one involving essential skills.
As is the case with the USMCA Trader category, the application should be submitted at a Canadian visa office as most BSOs at the POE will turn an applicant away. The Application for Trader/Investor Status (IMM 5321) form must also be included within the application.
What constitutes a “substantial investment” is case specific. Officers will undertake a “proportionality test” in which the amount invested is weighed against one of the following factors:
• the total value of the particular enterprise in question versus the the actual amount invested by the applicant; OR
• the amount normally considered necessary to establish a viable enterprise of the nature contemplated.
As can be seen from the above, the first factor is much more objective and mathematical whereas the second factor leaves considerable discretion to an officer in attempting to determine what is “normal” for establishing a business similar to the one in question. Officers will expect that for businesses requiring a smaller amount of total investment, the investor will be contributing a far greater percentage of the total investment compared with businesses that require a larger total investment.
So this leads to the question I get more often than any other…..
….How much money would be considered “substantial” for my business?
If you were seeking to enter Canada to start a consulting service, $50,000 CAD may be enough to satisfy an officer as this amount of investment would likely form a large percentage of the total value of the consulting firm. However, if you were looking at setting up a directional drilling company, $500,000 may be insufficient if the expected value of the company was in the range of $10 million. It all comes down to making your pitch.
Ultimately, it is clear that the investment funds must be irrevocably committed to the business and not at the preliminary stages of investment. The business must be close to the actual start of operations (pretty much to the point of no return) before the work permit will be considered. This exposes the potential Investor to considerable liability if the work permit is ultimately refused.
[NOTE: The enterprise must be an active commercial undertaking and not merely a passive or speculative investment. You have to actually be producing some good or service.]
If you are looking for something to really tip the scale in your favour, demonstrate that your investment is going to create jobs for Canadians. A consulting firm that requires an initial investment of only $50,000 CAD, but creates 3 new full-time jobs for Canadians will have a far greater chance of success than a used car dealership that requires $1 million dollars of initial investment, but only generates enough income to provide a living for the applicant and family.
When would I want to enter as an Investor under the USMCA?
This work permit option is ideally suited for a US or Mexican citizen that wishes to acquire a majority ownership stake in a Canadian entity when they do not necessarily have a related corporate entity in the US or Canada. The key difference really rests on the side of “substantial trade”. If there is no ongoing trade, then a carful examination of the actual investment being made in the Canadian operations will tip the scale to the Investor work permit.
If a substantial investment is being made in a start-up company and the US/Mexican investor is acquiring a majority stake in that operation in Canada, then an Investor work permit could be considered. Obviously if the Canadian entity has a related entity in Mexico and the US, an ICT work permit will be preferred.
Further, if the ICT work permit category is disqualified because the person you want to transfer does not have at least one year of work experience with the transferring company, the Investor work permit can accommodate for that situation. For medical professionals who want to acquire an existing practice in Canada and do not want to be an employee (thus disqualifying the Profession and ICT work permit categories), the USMCA Investor category is ideal for remaining self employed. However, if this is a long term plan with possibility of wanting to remain in Canada permanently, it is highly advisable to speak with an immigration lawyer prior to proceeding forward with this category as self employment in Canada does not always afford the same opportunities for transitioning into permanent resident status as exist for employees of a Canadian operation.
Each of these work permit options under the USMCA could lend themselves to a blog post all on their own…..which I just might do in the future. However, for now, this information is being provide just to open your eyes to the possibilities that exist for American and Mexican companies and professionals who are looking to do business in Canada and need to move personnel cross-border to facilitate this ongoing business.
Some of these categories are complicated and require considerable work and expense to secure a work permit. However, it is critical to remind you once again that pursuant to the USMCA, IRCC can not require a test of the local labour as a precondition to issuing these work permits (i.e. no LMIA is required). This above all else is why I always look to the USMCA as my first option when approached by an American or Mexican company looking to move personnel into Canada, or a Canadian company looking to hire an American or Mexican citizen.
As always, please note that the information provided above is for information purposes only and is not to be consider legal advice. Should you have any questions, do not hesitate to contact me or another member of the Stringam Immigration Team.
Mark Holthe | Immigration Lawyer | Stringam LLP
Mark is an x-immigration officer with Citizenship and Immigration Canada having worked on the Canada/US border. He is a past Executive Member of the National Immigration Law Section of the Canadian Bar Association and Immediate Past-Chair of the Alberta South Immigration Section of the CBA. He is a frequent speaker and educator on Canadian Immigration Law and Policy and regularly offers seminars and workshops to lawyers, consultants, and human resource personal related to the Temporary Foreign Worker Program and the transitioning of foreign workers to permanent resident status in Canada.