Posted on September 29, 2004

America Closes Its Doors

Rana Foroohar, Newsweek,, Sep. 27

It’s a tale that’s all too familiar in business circles. Back in June, Liu Yongxing, the CEO of the East Hope Group, an animal-feed company that is China’s largest private enterprise, was invited to come to the United States by Novus International, a potential supplier, with the expectation that the two companies would sign a million-dollar deal. But Liu, turned off by new, post-9/11 barriers to entering the United States, decided to send two subordinates. As they were navigating the in-person interviews and other visa requirements, a French competitor, Adisseo, heard about the incident and quickly whisked Liu off to France. “We ended up signing the $1 million contract with Adisseo,” says Liu. “Maybe this business is insignificant in the big picture, but I’m sure ours is not the only story of its kind.”

He’s right. Since 9/11 — when the United States began scrutinizing certain types of visa applications more carefully under the Patriot Act — there has been a raft of such complaints. Just last week the American Chamber of Commerce in China issued a report saying that many Chinese no longer even bother trying to arrange business travel to America. A June survey of 734 U.S. companies estimated their worldwide losses because of visa delays and denials at $30 billion, just in the period between July 2002 and March 2004. But the problems of temporary-visa holders are just that — temporary. The larger worry is that tightened security will scare off people who want to live, work or study in the United States, thereby undermining one of America’s most important competitive advantages in the world economy: its status as the land of opportunity for talented immigrants.

There is some evidence that Washington may be effectively lowering the barriers to short-term visitors. Both visa applications and acceptances were up (albeit far below pre-9/11 levels) in the first half of 2004, after having plunged dramatically since 2001. Though some experts say the 10.4 percent increase in applications was due to the global economic rebound, the acceptance rate grew even faster, by 14.6 percent. That suggests that U.S. officials are indeed working hard to reopen the door.

The long-term picture looks more cloudy. Last week the United States issued data showing that the post-9/11 rate of people granted permanent-resident status in the United States continued to fall through 2003, dropping 34 percent from 2002. The Department of Homeland Security, which puts out the data, admitted that this was “due primarily to security checks that affected application processing.” It also noted that at the end of 2003 there was a backlog of 1.2 million “adjustment of status cases,” or legal visitors who have applied for permanent residency.

That’s bad news, not only because it reflects continuing red tape within the U.S. immigration system, but also because “adjustment” cases include the sort of highly skilled temporary workers and scholars that America needs most. Jeffrey Passel, a migration expert at the Urban Institute, a liberal Washington, D.C., think tank, notes that adjustment cases represented only 350,000 new legal immigrants in 2003, down from 680,000 in 2002. “The move from temporary to permanent migration in the U.S. has definitely been disrupted,” he says. While it’s unclear yet whether this shift is having a measurable effect on the talent pool in America, Passel believes “it’s something we should be concerned about.”

Despite a small recent rise in student visa numbers, some of the best and brightest appear to be going elsewhere. This is particularly true for Asians, who have the highest education and income levels among foreign-born residents of the United States. Last November the Institute of International Education, which tracks foreign students in the United States, noted that enrollment was flat after years of steady growth, with significant declines in 13 of the top 20 sending countries, including Indonesia, Thailand and Malaysia. Graduate programs suffered disproportionately — a report this year by the Council of Graduate Schools found that nine in 10 have seen a significant drop in international applications, particularly in areas like engineering and science.

America’s loss has become other nations’ gain. The European Union overtook the United States as the most popular destination for the growing numbers of middle-class Chinese students seeking a Western high school or university education in 2002, and the trend continued to gain momentum through this fall semester. Britain, which took 42,000 Chinese last year (just a third less than the United States), as well as other countries like Australia and Canada, have taken the opportunity since 9/11 to aggressively boost their foreign-student populations. (Britain is also going after highly skilled immigrants.) Last April Harvard president Lawrence Summers wrote a letter to U.S. Secretary of State Colin Powell, saying applications from the Chinese were down as much as 40 percent in certain Harvard departments. “We risk losing some of our most talented scientists and compromising our country’s position at the forefront of technological innovation,” he wrote. “If the next generation of foreign leaders are educated elsewhere, we also will have lost the incalculable benefits derived from their extended exposure to our country.”

The extent of U.S. visa reform is hotly debated. Janice Jacobs, assistant secretary of State for visa services, admits that “12 to 18 months ago, the government was having trouble turning things around in a timely way.” But since then, she says, improved communication, increased staffing and the smoothing of technological glitches in border controls have speeded up the visa process significantly.

Others aren’t so sure. Edward (Skip) Gnehm, the former U.S. ambassador to Jordan who left his post in July, says he saw “modest” improvements but “no concerted, interagency-wide effort to tackle the problem.” Gnehm says that in July, after eight months’ trying, he finally got visa approval for the son of a Jordanian senator whose name resembled one on a U.S. blacklist. He also intervened on behalf of the nephew of a former Jordanian prime minister who was unable to return to the United States to finish his degree after attending his mother’s funeral. The student ended up missing a year of school, by which time most of the VIPs in Jordan had heard of his plight. “Imagine the kind of PR effect that has,” says Gnehm.

Clearly, the common perception abroad is that America is less and less open. Eastern European officials grouse about being left off a list of 26 U.S. allies for which the visa requirements are waived, even as they support America’s agenda in Iraq. Wealthy Arabs are going to Germany rather than America for medical treatment. Russian high-tech firms, frustrated by random security checks, are seeking more business in Britain, France and Germany. Countries like China are beginning to impose timely and expensive countersecurity checks on American travelers. “America is still the big dream for many people, because we see all the images in films and on television,” says Barbara Chechova, editor in chief of the Czech student magazine StudentIN. “But at the end of the day, it’s becoming much simpler for us to work or study in Britain or Ireland or Sweden.”

Meanwhile Washington seems to take two steps back for every step forward. U.S. officials recently imposed a new $100 fee for student visas, which must be paid with a credit card or U.S. bank account, which most foreign students don’t have. Realizing its blunder, the government is now testing programs in India and China that would allow for local payment. Last week U.S. Deputy Secretary of State Richard Armitage was in Prague announcing a review of the Czech visa-application process, with the aim of simplifying it.

Some of the visa-waiver nations, which include Britain, Australia, Germany, France and Japan, had protested a U.S. demand that they include biometric data (such as fingerprints and face scans) on passports by Oct. 26. In response the U.S. Congress recently extended that deadline by a year, but nations like Britain say they need more time, as the first British biometric passports won’t be available till at least the end of 2005.

Meanwhile people wait on line for opportunity in America. The foreign born represent one in eight American workers, and constituted half the growth in the work force between 1996 and 2000. They make up 38 percent of science and engineering Ph.D.s. Whether or not they can continue to make it in America will have major ramifications — not only for the United States, but for its rivals in the global economy.

With Paul Mooney in Beijing, Katka Krosnar in Prague, Anna Kuchment in Moscow, Stefan Theil in Berlin and Emily Flynn in London.