July 2002 Trade Winds

Canadian citizens and residents are having to bear what would seem an unfair burden as a result of U.S. immigration policy changes resulting from the September 11 terrorist attacks on the U.S. Border controls, visa requirements, and entry documentation requirements are being tightened with our neighbors to the North losing privileges and being subject to additional paperwork and delays in entering. Following are several of the changes and plans which affect our good friends from Canada.

Permanent residents of Canada who have a "common nationality with nationals of Canada" are exempt from the requirement to obtain a visa to enter the U.S. For example, a citizen of Australia who is a permanent resident of Canada can take a worker petition approval notice directly to a U.S. port of entry without having to first apply for a visa at a U.S. consul. Such individuals are also passport exempt.

Those deemed to have a "common nationality with nationals of Canada" are citizens of Antigua and Barbuda, Australia, Bahamas, The Bangladesh, Barbados, Belize, Botswana, Brunei, Cameroon, Canada, Cyprus, Dominica, Fiji, Gambia, The Ghana, Grenada, Guyana, India, Ireland, Jamaica, Kenya, Kiribati, Lesotho, Malawi, Malaysia, Maldives, Malta, Mauritius, Namibia, Nauru, New Zealand, Nigeria, Pakistan, Papua New Guinea, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Seychelles, Sierra Leone, Singapore, Solomon Islands, South Africa, Sri Lanka, Swaziland, Tanzania, Tonga, Trinidad and Tobago, Tuvalu, Uganda, United Kingdom (including colonies, territories, and dependencies), Vanuatu, Western Samoa, Zambia, and Zimbabwe.

According to Antoinette Marwitz, the new U.S. Consul General in Toronto, the State Department is planning to change this policy to require Canadian permanent residents, regardless of nationality, to obtain nonimmigrant visas to enter the United States. It is expected that the passport exemption also would be eliminated, as would the exemption for such nationals resident in Bermuda.

This action is only in the planning stage at this point in time so the exemptions currently remain in place.

Pursuant to a recent memorandum issued by the Immigration and Naturalization Service (INS), part-time students commuting from Canada (or Mexico) are prohibited from doing so after July 1. This change was not expected by either school officials in the United States or by commuter students.

According to INS, the action is being taken to comply with existing statutory and regulatory requirements. Under federal law, a foreign national coming to the United States to study may not be classified as a visitor (B-1 or B-2 classification). A foreign national may only be classified as a student (F-1 classification) if he/she intends to pursue a full-time course of study at an approved school. However, for a number of years district offices at border points in the United States have made exceptions to this rule, mainly for Canadian students.

An exception is being made for those part-time commuter students in ongoing programs that began prior to May 22, 2020. These students are being allowed to enter to complete their current session of school. Each student is required to provide proof of enrollment and request "parole" status each time they apply for admission at the U.S. port of entry.

Rep. Jim Kolbe (R-AZ) has submitted HR 4967 which will allow Canadian and Mexican citizens to commute to the U.S. for part-time study under a new F-3 visa category. Regretfully, permanent residents of Canada and Mexico would not benefit. Senator Hutchison has submitted a companion bill in the Senate. A number of representatives from New York and Texas are co-sponsoring these bills but none from Michigan as yet.

Whether these will be modified to accommodate permanent residents of both countries or pass in time for fall enrollments is yet to be seen.

It should be noted that the term "course of study" implies a focused program of classes leading to a degree or that teaches a potential vocation. INS recognizes that casual, short-term classes, such as a single English language or crafts class would not be part of a "course of study" and would not be affected by the change in policy.

It may be that Canadians may have to obtain documentation for any entry to the U.S. in the future. In 1996, Congress passed the Illegal Immigration Reform and Immigrant Responsibility Act (IIRAIRA); Section 110 of IIRAIRA mandated, for the first time, that INS implement an automated "Entry-Exit Control System." The provision required that INS collect departure and arrival records to enable the Service to identify those who had overstayed their visas, and called for the Entry-Exit Control System to be in place within two years of passage. However, INS never implemented such a system, and in 2000 Congress revised the Section 110 mandate, reaching a compromise that called for INS to create a centralized database to organize and coordinate entry and exit data already collected at ports of entry. The compromise legislation, The Immigration and Naturalization Services Data Management Improvement Act of 2000 (P.L. 106-215), was enacted to allay concerns that an Entry-Exit System would cost billions to implement, and would potentially slow and/or disrupt cross-border commerce and tourism.

The compromise directed that INS generally limit the information collected by agents at the ports of entry to that which is typically collected, such as name, country of origin, and date of birth. P.L 106-215 required air and seaports of entry to enter the information into the database by December 31, 2003. The fifty busiest land border crossings were required to have the system installed by the end of 2004 and the rest of the crossings by the end of 2005.

After September 11, 2020, Congress returned to the 1996 requirement for an Entry-Exit system, and in the USA PATRIOT Act mandated that INS establish an integrated entry and exit data system to be fully implemented at all ports of entry "with all deliberate speed and as expeditiously as practicable." Congress called for the development of the system to focus on the use of biometric technology and tamper resistant documents, and for the system to interface with law enforcement databases.

This may require all entrants, including Canadian citizens, to obtain either an Arrival-Departure Form I-94 or to participate in the Border Crossing Card program (for frequent entrants). The logistics could be nightmarish and daily cross-border commercial activity significantly affected. Businesses in Windsor, Canada noted a considerable drop in tourist activities as a result of the tightening of border security and inspections at the Detroit ports of entry after 9/11. The long delays which resulted initially discouraged many from cross either way over the border and the volume of casual activities – crossing for retail purchases and entertainment – is perceived to have never regained pre-9/11 levels. The delays which could result from having to document every Canadian visitor could have even greater affect.

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What Was The Best Investment Of The Past Decade?
Submitted by: Kenneth W. Peterson Ó 2002

If you were an investor in the 1990s would you have done better with stock or real estate?

No doubt a lot of money has been made with stocks. At the same time, the last few years have been a blow-out on Wall Street. Between dot-coms, cable firms and Enron, predictions that the Dow Jones Industrial Average would one day hit 36,000 now seem far removed. Indeed, the Dow has fallen nearly 15 percent in the past two years, from 11497.12 at the end of 1999 to 10021.50 at the end of 2001.

But what about real estate? Has it done any better?

Speaking before the National Press Club, Fannie Mae Chairman and CEO Franklin D. Raines offered this analysis:

It's January 1990. Three individuals have just received a $10,000 year-end bonus. And they're trying to decide what to do with the windfall.

John decides to invest his $10,000 in the stock market, and being conservative with his finances, he puts the money in an index fund of S&P 500 stocks.

Bill is excited by the possibilities of the Internet and all the new technology companies, so he puts his $10,000 in a Nasdaq index fund.

Mary has never invested in the stock market. But she's tired of paying rent every month with nothing to show for it. So she put her $10,000 down on a bungalow listing for about $80,000.

It's about 12 years later. Assuming they all had to pay for shelter every month, how would you say John, Bill, and Mary did on their $10,000 investment? Who came out better?

Since 1990, the value of the S&P 500 more than tripled. So from his initial investment of $10,000, John made about $22,000, pre-tax.

During the same period, the value of the Nasdaq quadrupled. So Bill's gain was roughly $30,000, pre-tax.

What about Mary? During the same period, home values increased roughly 4 percent per year nationally. At that rate, the house that Mary bought for $80,000 is now worth about $126,000. And if she sold it, she would have a profit of about $46,000. And that gain would be free of capital gains taxes.

"It is extraordinary," said Raines, "that after the longest, strongest bull market in history, the average American built more wealth owning a home than she did in the stock market."

"Most Americans invest and earn more in their homes than they invest and earn from their savings accounts, IRAs, stocks, bonds or other investments," he said.

"During the past ten years, the average stockholder earned $23,000 in the stock market, while the average homeowner earned $44,000 in home equity. Home equity remains the cornerstone of most family wealth."

But even if the returns from stock market investments and homeownership were the same, real estate would still yield a better net result. Why? While profits from the sale of stock are generally taxable, profits of up to $500,000 for a married couple (and as much as $250,000 for single owners) are typically shielded from taxes when a prime residence is sold.

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