Only 22 so far approved for E-2 investor status—GAO

With the Nov. 28 expiration of umbrella permits fast approaching, the U.S. Government Accountability Office is now saying that local businesses applying for E-2 CNMI investor status are not in the numbers they were expecting.

In early Friday morning’s public hearing by the House Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs on Public Law 110-229 and H.R. 1466, GAO International Affairs and Trade director David Gootnick testified that as of June 2011 only 22 applications for E-2 CNMI investor status have so far been approved by the U.S. Customs and Immigration Service.

“[This is] far fewer than the 512 applications it had anticipated. However, DHS officials predicted a surge in applications for E-2 CNMI investor status prior to the expiration of CNMI government-issued foreign investor permits on Nov. 27, 2011,” he said.

Gootnick quoted a senior USCIS official as saying that many Japanese and Korean investors apply for regular E-2 status at their local U.S. embassy rather than through USCIS.

The GAO official also said the future status of Filipino and Korean workers and their employers with regard to the Social Security payroll tax is unknown, following the elimination of CNMI immigration categories and the transition to federal immigration law by Nov. 28.

“Given the transition to federal immigration law—in particular, given the availability of H-2 work visas in the CNMI—it is uncertain whether Filipino and Korean workers who obtain CNMI-only work permits will be covered by Social Security. If these workers are deemed to be covered, they and their employers will be subject to Social Security payroll taxes. The IRS and SSA will need to consider CNRA’s impact on Filipino and Korean workers with regard to Social Security coverage,” he said.

Filipino and Korean workers who were admitted to the Commonwealth under CNMI immigration law are not currently covered by Social Security.

The CNMI Division of Revenue and Tax said that as of 2009, workers from Korea and the Philippines totaled 12,406 and represented 75 percent of foreign workers—or 44 percent of all workers—in the CNMI.

As of May 31, 2011, U.S. Immigration and Customs Enforcement officials on Saipan had identified 1,654 individuals in potential violation of U.S. immigration laws. Gootnick said.

He added that ICE initiated removal proceedings for 236 of these cases, resulting in decisions being rendered for 133 removal cases, 48 of which resulted in deportation.

Gootnick also said that as of June 1, 2011, USCIS had processed 1,033 CNMI applications for permanent residency and 96 CNMI applications for naturalization or citizenship.

In addition, USCIS had received 6,966 requests for advance parole, granting 97 percent of them, and had granted parole-in-place status to 2,625 individuals. Also, from October 2010 to June 2011, USCIS granted nonimmigrant H-visas and other categories of worker status classification for 67 individuals.

Gootnick said the Department of Homeland Security has yet to finalize rules for the CNMI-only transitional work permit program.

“Limited time remains for the submission and processing of approximately 15,000 workers’ and their dependents’ applications for these permits. These issues, as well as the unknown future status of Filipino and Korean workers’ coverage by U.S. Social Security, could impact the CNMI’s economy as the Nov. 27 deadline approaches,” he said.