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Mexico

Mexico's woes: A golden opportunity for the U.S.

In 2018, Mexico joined the growing list of nations led by populists with the ascent of President Andrés Manuel López Obrador, a leftist who is defying traditions and shaking the status quo. López Obrador, almost universally known by his initials of AMLO, is the first Mexican president not to come from one of two dominant political parties in 89 years. He startled investors and provoked a stock market selloff by canceling a $13 billion plan to build a new Mexico City airport that was to have been the country’s biggest ever infrastructure project.1

He has assailed his predecessors’ free market-oriented policies as “a disaster” and accused the business community of being part of a “mafia of power.” While the Mexican public cheers man-of-the-people gestures like selling the lavish presidential airplane, political scientists worry about steps AMLO has taken to concentrate power, including stacking the courts, cutting regulators’ budgets and pulling funding from non-governmental organizations. “López Obrador is dismantling democracy in
Mexico,” read a recent headline in Bloomberg.2

AMLO’s actions in his first months in office are heightening the anxieties of Mexico’s moneyed and entrepreneurial classes, which may accelerate what has been a steady flow of these Mexicans seeking to abandon the troubled country for the greater security of the United States. For U.S. immigration attorneys, that scenario presents both opportunities and challenges as they find ways to help a growing number of Mexicans navigate a visa process that has become increasingly restrictive under the Trump administration. As the CEO of a firm that prepares business plans for foreigners seeking investor visas in the U.S, I have seen with my own eyes how moneyed Mexicans have been voting with their feet in response to the country’s deteriorating outlook. Business plans are a vital part of the visa application process, helping to make the case that an applicant has a viable business idea that will bring benefits to the U.S.

Some of the rancor between AMLO and the business class dates to last year’s presidential campaign, when investors openly favored one of the opposing candidates: a devoutly Catholic candidate named Ricardo Anaya and a pro-business candidate named Jose Antonio Meade. The Mexican digital portal SinEmbargo quoted a joke making the rounds in business circles that captured the mood of gallows humor that prevailed before the vote in July 2018.3 If Anaya won, the joke went, there would be a celebration at the Catholic basilica; and if Meade won, there would be a celebration at the Angel of Independence, the statue where Mexicans habitually gather for soccer triumphs. If AMLO won, the punch line went, the celebration would be in the airport — as affluent Mexicans were lining up to leave the country. Of course, AMLO has not been the only push factor prompting Mexicans to seek greener pastures. There have been escalating worries over personal security in a country that has become increasingly rife with killings and kidnappings in the 13 years since it declared war on drug cartels. The drug-related violence has left some 200,000 dead and 35,000 missing.4 AMLO declared the drug war over, but at the same time he created a new national security force.

One indicator of the growing presence of Mexican investors in the U.S. is that the total stock of foreign direct investment from Mexico to the U.S. grew from $31.8 billion in 2013 to $35.4 billion in 2017. Also, the number of U.S. workers employed by U.S. affiliates of majority Mexican-owned firms grew from 52,000 in 20095 to 79,200 in 2016. Another indicator that Mexican entrepreneurs and businesspeople are on the move to the U.S. is the number of E visas issued to business executives from that country. E visas are issued to citizens from countries with which the U.S. maintains a treaty of commerce and navigation. To obtain an E visa, a foreigner must make a substantial investment in a new or existing business in the U.S. or operate a business that will be engaged in international trade. From fiscal year 2010 to fiscal year 2017, the number of E visas issued by the U.S. State Department in Mexico jumped from 1,9657 to 3,493.

A profile of these new Mexican migrants and their motives came into focus in a 2015 study by Rice University’s Baker Institute for Public Policy called New Migration Patterns: High-Skilled Entrepreneurial Migration From Mexico To The United States. The study quoted another research paper that examined how the profile of Mexican immigrants has changed over the past two decades, with better-educated migrants becoming a larger part of the mix. Of the immigrants aged 15 years and older born in Mexico and residing in the U.S., 38.9% had an education above a high school diploma. That is a substantially higher level than the 27.8% of the general Mexican population.

The Rice University study also says that while some of these affluent migrants were driven out of Mexico by violence, others were simply fed up with the country’s business climate. ”Though insecurity has been a determinant push factor for some, the main factors behind the decision to migrate in recent years have been the corruption, fiscal uncertainty, bureaucracy and informality of the Mexican business environment,” the study said. “The U.S. institutional context represents the opposite situation for entrepreneurs who initially have the perception that the country will offer them and their families a safe, transparent, certain, efficient and well-regulated environment.”

The study noted that many of the migrants have “access to financial capital and support the creation of businesses” and that their northward migration “is provoking dynamic entrepreneurial activity with a considerable impact on the American economy.” Forbes Magazine further developed that idea in a 2016 article about the mark that wealthy Mexicans are leaving on southwestern cities like Los Angeles, San Diego, Houston and Dallas.13 “Nowhere has their presence — and their transformative qualities — been stronger than in the nation’s Mexican-American capital, San Antonio,” the article said. ”Although estimates vary, between 50,000 and 100,000 have settled in San Antonio, occupying gated communities and tree-lined suburbs, mostly on the north side,” Forbes reported. “Such areas, which were once exclusive enclaves for the city’s Anglo business establishment, have seen explosive growth in general, and Latino growth in particular,” it added.

The article went on to note that the Mexicans’ “notoriously lavish consumption habits were summarized in a 2013 study by the San Antonio Hispanic Chamber of Commerce.15 The study found that Mexican Nationals, both domestic and foreign, generated $2.7 billion in spending in 2012 across a 20-county area of south and central Texas.” The presence of wealthy Mexicans and their money is also evident in other cities, such as San Diego. ”San Diego has always attracted very wealthy families from Mexico buying second homes, but as the crime in Mexico has become more pronounced, businessmen are increasingly looking to base their firms and families in the U.S. and commute to Mexico,” Seth O’Byrne, a real estate agent for Pacific Sotheby’s International Realty, told The Financial Times.

So how can immigration lawyers and other immigration service providers assist this wealthy and entrepreneurial Mexican clientele who desire to come to the safer shores of the U.S? One good avenue is the E visa, which covers treaty traders and investors. To be eligible, the applicant must be a citizen or national of a country that has a treaty of commerce and navigation with the U.S. Mexico is one of approximately 80 such countries.

The E-1 visa covers individuals who carry on a substantial amount of international trade principally between the U.S. and the treaty country. Another option is the E-2 nonimmigrant visa. This classification allows a national of a treaty country to be admitted to the U.S. when investing a substantial amount of capital in a U.S. business. There is no hard and fast rule on precisely how big the investment must be. Immigration or consular authorities do apply a proportionality test weighing the funds invested against the cost of the business.

The L-1A visa, known as Intracompany Transferee Executive or Manager visa, is another option available for those seeking to establish themselves in the U.S. While a qualified immigration attorney will be able to pursue any of the visa options on behalf of their clients, there is one complication for foreigners seeking these visas: the restrictive policies of the Trump administration. Although the president has famously sought to build a wall to halt illegal immigration, his administration has also erected subtler barriers to legal immigration. The American Immigrant Lawyers Association called it an “invisible wall” made of additional red tape, further requests for evidence and more inhibitive interpretations of the law.17 One of the new obstacles is President Donald Trump’s Buy American and Hire American executive order, which is designed to prod companies headed by foreigners to purchase American made goods and employ American workers.

Another recent restrictive trend our company has noted is immigration officials mounting challenges to the proposed duties of the executive or manager in L-1A visa applications. The law sets out some strict criteria for the types of supervisory duties an executive must perform to qualify for the visa. Some immigration adjudicators have been cracking down on cases of managers whom they say do not fit the bill. The measures are having a clear impact. In the first nine months of fiscal year 2018 (which started in October 2017) the denial rate on all types of immigration petitions increased 37%, from 8.3% in 2016 to 11.3%.18

This is where a tightly written, well-reasoned business plan can help.

Business plans are designed to show U.S. authorities that the visa seeker has a legitimate business idea and a clear road map to success. In addition, the plans illustrate how a business can be beneficial to the U.S. in terms of creating jobs, boosting exports or providing a valuable good or service. The plans provide information on a company’s mission, its target market, and its marketing and sales strategies. Plans also provide a narrative — a compelling story that captures the essence of what makes the business unique. Most importantly, they must anticipate and answer the critical questions that an immigration or consular officer typically asks.

Having prepared numerous successful immigration business plans for Mexican entrepreneurs, investors and companies, we have a good idea about what immigration or consular officers look for in plans and how to present a company’s case in the most favorable light. Of note is the business plan we prepared for one of our clients, a Mexican company that promotes the export of fuels and petrochemicals from the U.S. into Mexico. In that case, we used statistical data to show how the export-oriented business would benefit the U.S. trade balance.

In another case, our client was a Mexican entrepreneur seeking a visa through an enterprise that manufactured toys focused on helping young kids develop vital cognitive skills. Our research showed how the toys foster creativity, motor skills and social interaction, substantially benefitting this demographic. In addition, we recently worked with a rubber products manufacturer seeking an L-1 visa. In that case, we chose to highlight the growth of the business and its sterling reputation for quality. Starting with six employees in 1990 and expanding to 150 employees, this company currently supplies products for Walmart, a company notoriously finicky about choosing its suppliers.

In summary, Mexican investors and entrepreneurs may feel understandably uneasy with political and economic developments in their homeland. AMLO has singled out the business community for criticism, and that has negatively affected the country’s international credit rating. But talented Mexican business owners and entrepreneurs have options if they want to relocate or hedge their bets against further domestic political turbulence. The E and L Class visas — when coupled with sound business plans — can convert Mexicans’ problems at home into new opportunities living and working in the U.S.

ABOUT THE AUTHOR

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Marco Scanu is the founder of Visa Business Plans in Miami, which has helped thousands of clients develop effective business plans used for raising capital and immigration purposes. Drawing from his own experience as an immigrant and recipient of an O-1 visa in entrepreneurship and management of entrepreneurial ventures, Scanu has established himself as a successful consultant and business plan writer with international experience assisting clients across Asia, Europe, Africa, Latin America and the United States.

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