Visa Restrictions and Big Business

Bloomberg has an interesting article today on how the US’s increasingly onerous visa restrictions are causing significant harm to American businesses.

Companies say U.S. rules have become so onerous in the wake of the Sept. 11 terrorist attacks that it’s often simpler to meet customers, business partners and employees elsewhere. Exxon Mobil Corp. has resorted to customer meetings in a London branch office; Ingersoll-Rand Co. says it took one of its Indian engineers three 18-hour trips to get his U.S. visa.

Problems created by the entry requirements have become so evident that the man who initially helped enforce them — Tom Ridge, the first U.S. secretary of Homeland Security — is now working with a business group to change them.

“Our challenge now is to continue to meet our security needs while striking a better balance with how we welcome foreign visitors,” Ridge says.

The number of business travelers to the U.S. fell 10 percent in 2005 from the previous year, according to World Travel Market, a London-based trade-show group. The Discover America Partnership — the group Ridge is working with, an organization of business executives working to improve America’s image abroad — says its survey of foreign travelers found that the U.S. entry process was rated the “worst” by a margin of more than two to one.

Roger Dow, president and chief executive officer of the Washington-based Travel Industry Association, says the situation “is going to have disastrous implications” for the U.S. economy unless changes are made. The National Foreign Trade Council says the entry rules cost U.S. businesses $31 billion in lost sales and higher expenses between 2002 and 2004.

More broadly, U.S. business groups say, foreign travelers choosing other destinations might fuel the growth of rival commercial and financial centers at the expense of the U.S. Europe is a major beneficiary: Foreign business travel rose 8 percent from 2004 to 2005, according to World Travel Market.

International travel “has expanded in Dubai, Budapest, Dubrovnik, not Washington, Philadelphia and Boston,” says William Hanbury, president and CEO of the Washington Convention and Tourism Corp.

Starting Jan. 23, entry requirements will further tighten when everyone entering the U.S. by airplane from Canada, Mexico, South and Central America and the Caribbean will be required to present a passport.

Visa restrictions also have a significant adverse affect on the mobility of individuals from developing nations. (An excellent article on the subject, written by Eric Neumayer, a Professor of Geography at LSE, is available here.) Sadly, however, that impact is far less likely to lead to reform than concerns about corporate balance sheets.