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The United States (U.S.) and Jordan launched negotiations for a free trade agreement in 2000. Several reasons explain the U.S. desire to negotiate a free trade agreement with Jordan. The failed WTO Ministerial Conference in 1999 led U.S. trade officials to analyze the possibilities for a free trade agreement that would include certain provisions that are resisted at the multilateral trading level. Moreover, the U.S. and Jordan had already signed a trade and investment framework in 1999, which is usually a precursor for a FTA.
The US-JO FTA includes a preamble, nineteen articles, three annexes, joint statements, memorandums of understanding, and side letters. In addition to the interesting articles on labor and environment, the US-JO FTA provides the opportunity for Jordanian nationals to come to the U.S. to make investments and participate in trade. Under certain conditions, Jordanian nationals can enter the U.S. to render professional services.
The US-JO FTA permits entry of nationals of one party in the territory of the other. From the outset, it is necessary to distinguish between migration and the ability of Jordanians to enter into the U.S. to make investments and participate in trade. Jordanian nationals are not allowed permanent resident status, but are only given the opportunity to acquire a visa on a temporary basis or “non-immigrant” status. This status requires that the visa beneficiary return to Jordan after his temporary stay expires.
The US-JO FTA allows nationals of Jordan to enter into the U.S. to carry solely “substantial trade”, including trade in services and technology. The yardstick in the FTA is “substantial trade”. Article 8 does not specify what constitutes “substantial trade”. For example, should a Jordanian trader be major exporter to the U.S to be eligible for entry? Or the U.S is obliged, subject to its laws on entry, to allow Jordan’s traders entry into its territory for attending a trade fair or partnering with U.S firms.
In effect, the language of article 8 of the US-JO FTA is drawn from the Immigration and Naturalization Service (INS), now known as Bureau of Citizenship and Immigration Service within the Department of Homeland Security, and the U.S Department of State regulations. The Department of State regulations define a treaty trader as an alien, classifiable as a nonimmigrant treaty trader (E-1), who will be in the U.S solely to carry on trade of a “substantial nature” either on the alien’s behalf or as an employee of a foreign person or organization engaged in trade, “principally” between the U.S and the foreign state of which the alien is a national. This language is identical to the language of article 8.1 of the US-JO FTA. The regulations of the Department of State reads that consideration being given to any conditions in the country of which the alien is a national which may affect the alien’s ability to carry on such substantial trade. Moreover, the alien must prove that he intends to depart the U.S after the termination of E-1 status.
Although US-JO FTA does not define the term “substantial trade”, the Department of State regulations define it as the quantum of trade “sufficient” to ensure a continuous flow of trade items between the U.S and the treaty country. Continuous flow contemplates numerous exchanges over time rather than a single transaction, regardless of the monetary value. The U.S regulation considers monetary value as an important factor. However, greater weight is given to more numerous exchanges of larger value. Therefore, Department of State regulations do not specify an exact monetary value of substantial trade, for example $ 100,000, as a benchmark that would qualify a Jordanian trader as eligible for E-1 visa.
Rather, Department of State regulations leave it to the U.S Consular Office in Jordan the flexibility of determining “substantial trade” that would qualify Jordanian nationals of for E-1 visa. This conclusion is supported by the fact that the regulations of the Department of State itself read that consideration being given to any conditions in the country of which the alien is a national which may affect the alien’s ability to carry on such substantial trade. In other words, the U.S Consular Office will have to take into account the conditions prevalent in Jordan when evaluating a petition for E-1 visa. Thus, the term “substantial trade will be evaluated on a case-by-case basis.
Additionally, the term “trade” is not defined in the US-JO FTA. The negotiators of the US-JO FTA perhaps wanted to give a non-exhaustive list of trade activities that could be conducted in the territory of the other party such as trade in services and technology. Other items of trade may include trade in monies, international banking, insurance, transportation, tourism, communications, and some news gathering activities.
The US-JO FTA also allows nationals of one party to enter into the territory of the other party to establish, develop, administer, or advise on the operation of an “investment”. However, investment is qualified by the requirement that the nationals or the company that employs them “have committed” or “in the process of committing” a substantial amount of capital or other resources. In other words, the language of “have committed” or “in the process of committing” seems to require a significant amount of upfront investment such as transferring money before a national of Jordan can obtain the visa. The purpose such language could be interpreted so as to prevent maneuvering and fraud. Again, in the investment provision of the FTA, the yardstick is commitment to a “substantial amount of capital or other resources”. The Department of State regulations define a treaty investor as an alien, classifiable as a nonimmigrant treaty investor (E-2), that has invested or is actively in the process of investing a substantial amount of capital, as distinct from a relatively small amount of capital solely for the purpose of earning a living, and he seeks entry solely to develop and direct the enterprise. Moreover, the treaty investor must intend to depart from the U.S upon the termination of E-2 status. Thus, subparagraph 8.2 of the US-JO FTA is drawn directly from the U.S regulations.
The US-JO FTA is silent as to the definition of “investment” and “substantial amount of capital”. However, the Department of State regulation defines investment as the treaty investor’s placing of capital, including funds and other assets, at risk in the commercial sense with the objective of generating a profit. The treaty investor must be “in possession” of and “have control” over the capital invested or being invested. Furthermore, the U.S regulations require that capital in the process of being invested must be “irrevocably” committed to the enterprise. In other words, the treaty investor must commit capital in an unalterable way or commit beyond recall.
The treaty investor must have the burden of establishing such irrevocable commitment given to the particular circumstances of each case. Moreover, according to the U.S regulations, the treaty investor may use any legal mechanism available that would not only irrevocably commit funds to the enterprise but also extend some personal liability protection to the treaty investor. Even if all other conditions are met, the investment must not be passive or virtual but rather a “real” and “active” commercial or entrepreneurial undertaking, producing some service or commodity for profit and must meet applicable legal requirements for doing business in the particular jurisdiction in the U.S. This language intends to prevent visa fraud.
As to the definition of “substantial amount of capital”, article 8 of the US-JO FTA is silent on this matter. However, the U.S Department of State regulations define “substantial capital” as the amount that is 1) substantial in the proportional sense for example in relationship to the total cost of either purchasing an established enterprise or creating the type of enterprise under consideration; 2) sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and 3) of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. The U.S regulations define whether an amount of capital is substantial in the proportionality sense in terms of an inverted sliding scale. For example, the lower the total cost of the enterprise, the higher, proportionately, the investment must be to meet the criteria. Moreover, the Department of State regulations require that projected future capacity of the enterprise should generally be realizable within five years from the date the alien commences normal business activity of the enterprise. In summation, U.S regulations do not specify an exact amount of capital that would serve as a yardstick to evaluate whether an investment could qualify its holder for E-2 visa. Rather, the regulations leave “substantial amount of capital” test to be evaluated on a case-by-case basis.
Article 8.2 of the US-JO FTA allows nationals of either party to enter the territory of the other party to “establish”, “develop”, “administer”, or “advise” of an investment. These four terms are not defined in article 8 of the US-JO FTA. Again, U.S Department of State regulations define some of these terms. For example, the regulations define “develop and direct” as what the business or individual treaty investor does or will develop and direct the enterprise by controlling the enterprise through ownership of at least 50% of the business, by possessing operational control through a managerial position or other corporate device, or by other means. Therefore, an investor under the US-JO FTA must play a key role in the investment whether through establishment, development, administration, or advice in order to be eligible for E-2