NAFTA Rewrite Could Shift Tech Talent to Canada, Mexico

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By Michaela Ross

Three years ago, Mexican entrepreneur Mike Galarza founded a fledgling automated bill pay platform called Entryless. The San Francisco-based tech company now boasts of clients around the world.

Galarza entered the Silicon Valley tech scene while on a TN visa, created under the North American Free Trade Agreement for high-skilled Mexican and Canadian professionals to work in the U.S.

Now Galarza is worried that the career path he took could be in jeopardy with President-elect Donald Trump’s promise to re-write the trade deal between the U.S., Mexico and Canada. It’s difficult enough, Galarza said, for tech entrepreneurs to find enough U.S. talent without looking to foreign high-skilled engineers who might only be able to work in the U.S. on a TN visa.

“I think that’s going to be a huge risk because the U.S. will lose competitiveness to countries like Canada and Mexico,” Galarza told Bloomberg BNA.

Canadian and Mexican software engineers, scientists and other talent have been able to migrate to U.S. tech hubs under the TN status for professional workers even as the tech industry has struggled in recent years with a shortage of the closest alternative: H-1B visas for high-skilled workers. Trump’s campaign promise to favor U.S. workers first in a NAFTA re-write may give Canada and Mexico’s growing tech scenes a boost at Silicon Valley’s expense. Both neighboring countries, especially Canada, are implementing initiatives to attract and retain tech talent within their borders.

Trump plans to file paperwork to renegotiate the 1994 trade pact on day one of assuming office. The new deal will put American workers “first and foremost,” Trump spokesman Sean Spicer said during a Jan. 3 telephone call with reporters.

That may mean the U.S. tech industry will lose a pipeline to Mexican and Canadian talent.

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“It is undoubtedly a well-used and important visa category,” Tahmina Watson, founder and attorney at Watson Immigration Law in Seattle, told Bloomberg BNA. “If the TN visa is eliminated, the hurt will be felt by businesses.”

Heavy Traffic

Last year, thousands of Canadian and Mexican workers with TN status crossed into the U.S. more than 787,000 times, according to Department of Homeland Security data. Some of them go back and forth daily between countries for work.

By comparison, the H-1B visa is issued to high-skilled workers from all countries, and individual visa holders are more closely tracked. In 2014, more than 2,700 Mexicans and 6,800 Canadians were approved petitions for H-1B visas, crossing the U.S. border 21,000 times and 64,000 times, respectively, according to Homeland Security and U.S. Citizenship and Immigration Services (USCIS).

As tech hubs grow in cities around the world, there is a fierce competition for talent.

“NAFTA’s TN visa program for Canadians and Mexicans are a valuable part of the U.S. efforts to attract and retain the best and brightest professionals” for hard-to-fill jobs in the United States, Nigel Cory, trade policy analyst at the Information Technology & Innovation Foundation (ITIF), told Bloomberg BNA.

Canadian tech entrepreneur Marc Adam’s business, the web development company Nixa, opened offices in Brooklyn and Philadelphia in the past 14 months. Adam is worried about how restrictions or caps put on the TN visa will limit his senior staff’s ability to move between offices.

“That’s my main concern for the next year, because if I want to keep growing, I need my management team to work where they need to work,” Adam told Bloomberg BNA.

Adam hires U.S. talent in his U.S. offices and is poised to grow his 23-person team this year. In the long run, a cut in TN visas could help Canada remedy its tech talent shortage by making it harder for Canadian talent to migrate to Silicon Valley, Adam said, but for now he’s worried it will complicate operating his state-side business from its headquarters in Montreal.

To be sure, Trump has yet to criticize the TN professional visa directly or threaten to revoke it in a NAFTA revamp. But the President-elect has been highly critical of H-1B visas and cases where employers used them to hire foreigners over American workers at lower wages.

Trump said in a Nov. 21 video message that his only immigration priority for his first 100 days in office would be to “direct the Department of Labor to investigate all abuses of visa programs that undercut the American worker.”

Muzaffar Chishti, a director at the nonpartisan immigration think tank Migration Policy Institute said that could be a bellwether for TN’s fate.

“If he’s concerned about the abuse of the H-1B program, it would mean he would logically be concerned about the TN system,” Chishti told Bloomberg BNA.

For now, the TN program may escape Trump’s scrutiny because it’s not overseen by Labor. But that also means it’s more vulnerable to abuse by employers and may draw criticism later, Chishti said. Unlike H-1B visas, there’s no cap on TN visas. They can be renewed indefinitely, don’t prescribe a wage floor and allow work for multiple employers.

“It’s a very liberal conduit for professionals from Mexico and Canada to enter the U.S., and it’s become much more attractive since the recession because the number of H-1B visas is a very small one,” Chishti said. “They’re a huge advantage in an immigration system that is full of limits and conditions.”

But a re-write of NAFTA and changes to the TN visa program may also open U.S. tech jobs to a more diverse pool of American workers, something the tech industry has been criticized for lacking, said Mark Krikorian, executive director of the Center for Immigration Studies, a research organization that favors limiting immigration. During the presidential campaign, Trump’s website said limiting high-skilled work visas could push more underrepresented Americans into those high-paying jobs.

“Part of the concern many people have is the under representation of women, blacks, Hispanics and technically whites since in Silicon Valley it’s so heavily populated by Asian men,” Krikorian said.

Tech Looks Across Borders

Although Trump’s strategy on TN visas isn’t clear yet, immigration attorneys have noticed an uptick in tech worker concern about being able to stay in the U.S. on TN or H-1B visas from the early days of Trump’s campaign, when he first zeroed in on NAFTA and immigration.

Some workers have accelerated efforts to become U.S. citizens, but others are looking to Canada. This is especially true for Indian tech workers, who are worried that a multi-year backlog for a green card—a grant of permanent residency—under the U.S. immigration system’s country quotas will only worsen in a Trump administration, Pavan Dhillon, immigration counsel at Seyfarth Shaw LLP in Boston, told Bloomberg BNA. The permanent residency process in Canada is significantly faster than the U.S. one, she said.

The growing Canadian tech sector, which is struggling to find talent, is more than happy to welcome high-skilled workers from other countries. The Canadian government has increased efforts to retain and attract those workers since Prime Minister Justin Trudeau took office in 2015.

“We’re having a booming tech sector, booming video game industry, a lot of new startups, they’re trying to get the talent,” Chamber of Commerce of Metropolitan Montreal President Michel Leblanc told Bloomberg BNA. “They keep complaining they’re stealing each others’ talent,” said Leblanc, who said his city is taking steps to keep talent, such as a program to retain foreign students post-graduation.

A new country-wide Canadian program, dubbed the Global Skills Strategy, would let tech workers attain visas and work permits in two weeks, down from several months, according to a November government release. The program is set to be implemented in 2017 to address the shortage of innovation talent.

“The global demand for highly skilled talent in the knowledge economy is outpacing the supply, leaving companies in Canada without the talent needed to fill vacancies and grow their businesses,” the release said.

Trudeau has also been looking for ways to keep engineers trained in Canada from being poached by American companies. Silicon Valley startups recruit more graduates from The University of Waterloo, a public research university in Ontario, than any other college after the University of California, Berkeley, a 2014 study by Riviera Partners, a technology recruiting company, said.

“A lot of tech people who go to Waterloo University in Canada, those are highly sought after workers that come on a TN visa,” Watson told Bloomberg BNA.

Mexico’s tech scene, though less robust than Canada’s, is also looking to keep talent within its borders. The country is working to attract investment in its innovation industry through government subsidies, such as tax credits for research and development and cash grants for information technology firms establishing themselves in Mexico, according to Mexico IT, a public-private partnership that promotes the Mexican IT industry.

Watching and Waiting

Trade attorneys say it’s unclear what Trump could do on his own to curb or end the TN visa program, or NAFTA more broadly, without lawmakers trying to step in. Advocates of high-skilled immigration in Congress say they’d want to shape any changes.

“The administration cannot arbitrarily change it, and on my watch in committee, I don’t expect us to change it without a very, very limited reform that we know why we’re doing it,” Rep. Darrell Issa (R-Calif.), who is heavily engaged in tech-related policy as the House Judiciary Courts, Intellectual Property and the Internet Subcommittee chairman, told Bloomberg BNA.

For now, immigration attorneys are advising clients to stay aware but patient as Trump’s administration takes shape and policy priorities concerning NAFTA and TN visas become clear.

“Nothing will happen quick,” Watson told Bloomberg BNA. “Keep doing what you’re doing, but plan out what you might want to do to transition out of a TN.”

One option for TN holders who want to stay in the U.S. is to ask their employer to file for an H-1B visa on their behalf, as it may take several years of filing before securing one of the popular visas before the yearly cap is met, Watson said.

But applying for an H-1B can cost an employer more than $2,000 more than a TN visa for a worker. Businesses may need to reassess the cost justification for that foreign employee, Angelo Paparelli, partner at Seyfarth Shaw LLP in New York, told Bloomberg BNA. Another option for qualified individuals is to begin the application process for U.S. citizenship, he said.

TN visa holders should also look to Trump’s picks to lead agencies like the USCIS as a sign of what’s to come, attorneys said. With so many of Trump’s Cabinet nominees coming from business, it’s conceivable they could be influenced by tech’s call to save high-skill visas.

“If our country will be lead by people claiming to be good businessmen, I expect good business decisions to be made by them,” Watson said.

To contact the reporter on this story: Michaela Ross in Washington at mross@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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