USMCA vs. NAFTA and the impact on professionals crossing the border
The North American Free Trade Agreement (NAFTA) was signed to reinforce the connection between Canada, United States and Mexico by settling special economic and trade relationships for the participating countries. Being one of the most well-known free trade agreements Canada has entered into, NAFTA has reduced the barriers between these three countries and facilitated the transit of professionals among them for over 20 years. However, governments of United States, Mexico, and Canada reached a trilateral agreement on Sep 30, 2018 following several months of negotiations that is intended to replace NAFTA. US-Mexico-Canada Agreement (USMCA) has not been ratified yet by the stakeholders, and if it is, it will replace some rules and regulations of NAFTA around the trades of goods but does not have any effect on immigration policies described under NAFTA.
When it comes down to how NAFTA facilitates the transition of professionals to Canada from the other two member states, the highlight is exemption from the Labour Market Assessment (LMIA) or sometimes even of a work permit in certain cases for the qualified applicants. It is important to note that NAFTA provisions do not apply to permanent residents of the participating countries. To fall under these categories, the applicant must be a citizen of the US or Mexico.
NAFTA covers applicants in the following categories:
- Business visitors;
- Intra-company transferees (ICT)
- Traders and investors.
This category is not only LMIA exempt, but also work permit exempt. Business visitors are expected to not directly enter the Canadian labour market, but only to engage in international business activities. The activities covered under this exemption must be of a commercial nature and include consultation, negotiation, research, participation in conventions and meetings, etc. and are expected to be performed during a short stay in Canada.
To be considered a business visitor, following must remain outside of Canada:
- The employer’s principal place of business,
- The primary source of worker’s remuneration and
- The employer’s accrual of profits
Individuals can submit their request for this type of visits at the port of entry and at the time of entering Canada. If a business visitor needs entry to Canada for regular visits related to a specific project over a period of weeks or months, a Visitor Record may be issued by the immigration officer to facilitate entry. Also, a Visitor Record must be issued when authorized person under the after-sales service provision are going to stay in Canada for over two days.
This category is focused on applicants from Mexico or the United States that have professional experience in a given occupation for which they have been granted an offer of employment in Canada. If the occupation requires a specific professional qualification in that province or territory, this also must be demonstrated. NAFTA lists over 60 occupations and the level of expertise for each title that allow an applicant to qualify for this category. Please click here for the list of occupations.
Professionals are LMIA exempt, but require work permit to work for the employer in Canada. The application for their work permit can submit:
- at a Port of Entry
- at a visa office prior to the departure for Canada
- from Canada if the Mexican or American citizen is already in Canada as a temporary resident
The work permit can be initially granted for up to three years and there is no limitation on the number of possible extensions if the individual continues to satisfy the requirements of the professional category.
An Intra-Corporate Transferee is an employee of an international corporation that is being temporarily transferred from a Mexican or American enterprise to the Canadian subsidiary of the same enterprise.
Intra-corporate Transferees are LMIA exempt, but they still need a work permit to work in Canada. Their applications can be submitted at a Port of Entry or at a visa office prior to the departure for Canada. If the Mexican or American citizen holds a visitor status and is already in Canada, they can apply directly from within Canada for the ICT category.
The maximum duration of the initial work permit is typically 3 years, but if the applicant is authorized to open an office or be employed in a new office in Canada the initial permit will have a duration of up to one year. If the applicant continues to satisfy the requirements for ICTs, extensions are allowed for up to two years. The ICT category is the only NAFTA category to have a “cap” imposed on the total duration of employment. The total period of stay for a person employed in an executive or managerial capacity may not exceed seven years. The total period of stay for a person employed in a position requiring specialized knowledge may not exceed five years.
Traders and investors
> Investors are people that are willing to buy or invest in a business in Canada with a substantial amount of capital.
> Traders are people that intend to trade a substantial amount of goods or services between Canada and the US or Mexico.
Both traders and investors are LMIA exempt, but require work permit for their activities in Canada. Note that the same applicant cannot be granted both trader and investor status.
**Please note that this is just a simple overview of the program. To discuss your situation, whether you are an employee or employer, please reach out to us.