[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 LOWERING THE COST OF DOING BUSINESS IN THE UNITED STATES: HOW TO KEEP 
                          OUR COMPANIES HERE

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                   WASHINGTON, DC, NOVEMBER 20, 2003

                               __________

                           Serial No. 108-46

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                                 ______

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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           DONNA CHRISTENSEN, Virgin Islands
SAM GRAVES, Missouri                 DANNY DAVIS, Illinois
EDWARD SCHROCK, Virginia             CHARLES GONZALEZ, Texas
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVEDO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Hawaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL MICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               ENI FALEOMAVAEGA, American Samoa
STEVE KING, Iowa                     BRAD MILLER, North Carolina
THADDEUS McCOTTER, Michigan

         J. Matthew Szymanski, Chief of Staff and Chief Counsel

                     Phil Eskeland, Policy Director

                  Michael Day, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Kapp, Robert A., United States-China Business Council............     4
Norman, William S., The Travel industry Association of America...     7
Johnson, Randel K., U.S. Chamber of Commerce.....................     8
Yanni, Palma R., American Immigration Lawyers Association........    11

                                Appendix

Opening statements:
    Manzullo, Hon. Donald A......................................    26
    Velazquez, Hon. Nydia M......................................    34
Prepared statements:
    Kapp, Robert A...............................................    40
    Norman, William S............................................    72
    Johnson, Randel K............................................    80
    Yanni, Palma R...............................................    97

                                 (iii)

 
   THE COST OF DOING BUSINESS IN THE UNITED STATES: HOW TO KEEP OUR 
                             COMPANIES HERE

                              ----------                              


                      THURSDAY, NOVEMBER 20, 2003

                          House of Representatives,
                                Committee on Small Business
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 9:37 a.m. in Room 
2360, Rayburn House Office Building, Hon. Donald Manzullo 
presiding.
    Chairman Manzullo. Good morning and welcome to everyone. 
Today we are looking at ways of lowering the cost of doing 
business in the United States. This will be, along with our 
Subcommittee hearings, the 51st hearing that we have had with 
regard to manufacturing and the loss of jobs in the United 
States. Today's hearing deals with, really, how to keep jobs 
here by changing government policies so that people who want to 
buy our good stuff can come to the United States, examine the 
products, order them, buy them, and then take them back to 
their respective countries.
    We have numerous problems going on with the sale of our 
products and problems to do with our manufacturers. Today deals 
with the visa restrictions. We have dealt, in the past, with 
currency imbalances, taxes, market access restrictions, health 
care costs, energy costs, tort costs, regulatory burdens, et 
cetera.
    The visa restrictions implemented since 9/11 could be 
changed administratively in a very short period of time, 
without legislation, so as to ease the way for foreign 
nationals to do business with and spend money in the United 
States without threatening our national security. Moreover, 
everyone seems to agree that at least half of the entire 
backlog of these visas is attributable to China. That is, the 
Chinese who are ready, willing, able and eager to buy our 
manufacturing products, have a difficult, if not impossible, 
time of getting visas to come here and place their orders. And 
that is what this hearing centers on today.
    I have taken a hard look at the business visa backlog, 
because it is a huge U.S. trade barrier, that costs American 
companies enormous businesses, and it will encourage the 
companies that cannot receive foreign visitors here to move 
overseas where they can visit with their customers much easier 
than here. To understand and document this backlog, this 
Committee has held an oversight hearing, requested a GAO 
investigation, researched and resolved visa issues during 
travel to Asia, discussed these matters with numerous Chinese 
officials, and convened regular meetings with industry and the 
relevant U.S. agencies. Unfortunately, these meetings have 
occurred separately, which is part of the problem. Much of the 
backlog could have been avoided or now solved, through closer 
cooperation and consultation between U.S. agencies and 
industries.
    The backlog remains a serious problem. I know this through 
our Committee oversight work, my personal experience with our 
own constituents, reports from Congressional colleagues, 
preliminary reports from the GAO and numerous press reports 
such as the November 17th Washington Post editorial which is on 
the table. While many foreigners endure these delays, many 
others decide to change their plans to avoid the need to come 
to the United States. One of my constituents, Ingersoll 
Corporation, waited in vain for buyers from China to secure 
visas so they could inspect Ingersoll machines they wanted to 
buy. After seven months of waiting, bureaucratic bungling, with 
the United States Government presuming that any person with an 
engineering degree who comes here is a terrorist, making it 
difficult to buy U.S. products, and forcing companies to go 
overseas just to visit with customers. After seven months of 
waiting, the Chinese abandoned their efforts to come to the 
United States and buy products from Ingersoll Milling and the 
giant and proud 130-year-old Ingersoll Milling went bankrupt. 
And one of the reasons was caused by the United States 
Government.
    The official policy of the United States Government is to 
discourage foreign visitors from coming to the United States to 
buy our products. The official position of the U.S. Government 
is to discourage foreign visitors from coming to the United 
States to buy our products. The official government position of 
our United States Government is to discourage foreign visitors 
from coming to the United States to buy our products. Do I have 
to mention it more than three times?
    Because I am tired of it. And whoever is listening, anybody 
from the White House, anybody from the relevant agencies, would 
you help out our manufacturing base? Would you help my people, 
with 11\1/2\ percent unemployment, where we lose a factory a 
week? Would somebody realize that in the war in terrorism, you 
cannot presume that every visitor to this country is a 
terrorist. And that is the official policy of our United States 
Government, and that policy is destroying our manufacturing 
base, especially the high-tech manufacturing base where you 
need a validated license to sell. And even in those cases we 
don't need a validated export license. You can't blame that one 
on the Chinese, you can only blame it on Washington, D.C.
    And Ingersoll isn't alone. According to one survey, half of 
all our companies operating in China lost opportunities because 
of delays in business visas. Half the companies in the United 
States that sell valuable exports to China couldn't do it, 
because of huge delays in bringing the Chinese here to look at 
products. They lose direct business, as happened to Ingersoll. 
They also lose as suppliers when their U.S. customers lose 
business. And we develop the reputation as an unreliable 
supplier. Why buy from the United States when you can't even 
come here to shop for the goods that we make. And that is 
caused by the official policy of our U.S. Government which 
presumes that anybody with an engineering degree or from a 
tier-three country is a terrorist.
    Amway, one of the world's largest direct sale companies, 
decided against holding its convention in Los Angeles or Hawaii 
for its 8,000 South Korean distributors in the face of the new 
visa requirements. Instead, Amway will hold its convention in 
Japan. The United States Government is directly responsible 
through these foiled and stupid policies, for causing a great 
American company to hold a convention overseas because of the 
inability to get visas for the people that come to visit the 
United States. That cost at least $10,000,000 to the people of 
the United States in lost business.
    Besides the literal cost to our economy in terms of lost 
business and tourism dollars, the visa delays result in loss of 
goodwill from people from all over the world who wish to come 
here for exchange programs and educational opportunities. Since 
its inception, this country has enjoyed a reputation for 
welcoming people from all over the world. Now it enjoys a 
reputation for not welcoming people from all over the world.
    In the post 9/11 world, we must remain vigilant to keep 
terrorists away from our shores. But we can't shut the world 
out. We need to find better ways of distinguishing between 
friends and foe. Based on our work to date, I know the State 
Department, Homeland Security Department, FBI and other 
agencies are working to find better solutions to balance 
security with business necessity. But all we get is talk, 
interagency, looking at one another, agreeing there is a 
problem, but nothing gets done.
    Just one such solution is to offer qualifying Chinese 
nationals a one-year multiple entry visa. The people who work 
within those departments are actually tremendous public 
servants. We have had a great response from them, and we can 
sense and know firsthand the frustration, because they know 
that the best interests of the United States are not being 
served by a bureaucracy that keeps them all from doing what 
they really want to do.
    China also offers long-term business visas to frequent U.S. 
travelers. I have got a letter here from the Embassy of the 
People's Republic of China, Lee Ri-ho, Consul General. He 
simply makes reference to the Web site, the Chinese, the PRC 
Web site, that says that they will grant a one-year visa, 
multiple-entry visa, if the applicant has visited China at 
least twice within the past 12 months and submits a copy of it, 
because why not?
    So Americans can go to China to buy their stuff, but the 
Chinese can't come to America to buy our stuff, and there is 
something dramatically wrong with that.
    We are exploring numerous opportunities for closer agency-
industry cooperation. Just one example, we have suggested a 
consular-trade partnership against terrorism, for visa issuance 
similar to the customs-trade partnership against terrorism that 
already exists for container and port security. In such 
programs, industry works with the agencies to address a 
security concern in exchange for a business benefit, such as 
faster, more efficient processing and transport of goods or 
people.
    And when our ranking member comes back, I will give her the 
opportunity to do her opening statement.
    Our first witness is Robert Kapp, President of the U.S.-
China Business Council. You can tell I am excited, Bob. You can 
tell I am excited, and here we go again, the opportunity to 
sell frustrated by our own government.
    We have set the time clock at eight minutes, and we look 
forward to your testimony. The entire testimony of the witness 
will be part of the record. I will keep the record open for ten 
days. Anybody else who wants to submit something for the record 
can do so, however it is limited to two typewritten pages and 
the print is not to be less than 10 point print.
    Mr. Kapp, we look forward to your testimony.

  STATEMENT OF ROBERT A. KAPP, PRESIDENT, UNITED STATES-CHINA 
                        BUSINESS COUNCIL

    Mr. Kapp. Thank you very much, Congressman. I am glad to be 
back, but I am sorry to be back. This, to me, is an update. 
Your own introductory remarks have pretty much said what we try 
to say in this testimony. The situation is not markedly 
improving for our corporate and business members who are trying 
to develop their business with China and in China.
    Chairman Manzullo. Bob, could you pull the microphone 
closer?
    Mr. Kapp. Sure. It is now 15 or 16 months since we first 
wrote to the State Department to try to get a handle on what 
was happening in the visa issuance process, because it began to 
happen without anybody really knowing what was coming down. And 
I must say, to my regret, that I don't really feel that we have 
made a lot of progress.
    The purpose of my coming here is not to cast aspersions on 
individual agencies. We know people are overworked. We know 
there are not enough computers. We know there are data-handling 
problems, and so forth. And we hear, as I say in my testimony, 
privately, that measures are being planned to help with some of 
the mechanical problems associated with this massive increase 
in the reviewing of applications. But the bottom line is that 
we are just not seeing very much progress.
    In the attachments to my own testimony, there are a 
succession of items that relate specifically to the State 
Department, starting with my own first letter to Secretary 
Powell, and concluding with a message to Undersecretary Al 
Larson from the American Chamber of Commerce in Beijing just a 
few days ago. And those are in there not to say that the State 
Department specifically is the source of the problem. They are 
to say that the problems that I adduced as long ago as August 
of 2002 are still very much on the minds of the business 
community at the end of 2003.
    Following that, you will find three examples of individual 
companies' experiences with the visa mess, as I call it. One of 
them is a small firm out of West Virginia that has spoken to 
your committee before. Another is a subsidiary out of North 
Branford, Connecticut, the story taken from a news report. And 
the third, I hope it is in here--I am quite sure it is--the 
third is just the expression of extreme impatience from a 
Beijing-based figure with Rockwell Automation, a company you 
would know well. He himself, a former, I believe, Air Force 
general, former attache, defense attache, or air attache in our 
embassy there, now working for Rockwell, which is a very 
interesting and specific case of a company that just is not 
getting through this process.
    In the couple of minutes that I have left, let me say that 
I think in one sort of philosophical sense, there is a little 
bit of a sign of hope here. If you live in Washington long 
enough, you begin to realize that there is a pattern to the way 
things happen here. An emergency takes place, the political 
system reacts with tremendous force and pushes way over to one 
side. The media pile in, everybody rushes over to the side of 
the boat. The boat practically capsizes, the rail goes under 
water, and then gradually, slowly, the ship begins to right 
itself. The media begin to notice that there is more complexity 
to the story than initially met the eye. Civil society groups, 
interest groups, social organizations, others affected by what 
is happening begin to find their voice and to speak back.
    And I think that in a very, very tentative way that is 
beginning to happen now on the visa problem: The Washington 
Post editorial that you mentioned, Senator Cornyn's very 
interesting piece on another aspect of the visa system in The 
Washington Post the same day, November 17th are just two 
examples of the beginnings of a sign that the media are picking 
up on the fact that there are terrific collateral damages and 
downside costs to the measures that were taken in the aftermath 
of 9/11.
    The signs of hope, though, are very thin. And the reason 
is, of course, that at the end of the day there is no arguing 
with the need to defend the borders of the country against the 
arrival of those who would cause this country grievous harm. 
None of us for a minute, of course, would argue that that 
principle or that goal needs to be compromised in any way.
    But what has to happen and has not happened yet, is that 
people need to understand that nothing is absolutely, totally 
black and white; that everything is a question of probabilities 
and a question of costs and benefits. I understand, as I say in 
my testimony, informally understand, that the Technology Alert 
List review process which is designed to screen out people who 
might come to this country and gain access into inappropriate 
technology, the yield rate, if that is the term for it, is .04 
percent out of all of these cases, which is the real hangup on 
the China side, the great source of delay, leaving aside the 
more recent imposition of a requirement that every single 
applicant has got to have a personal interview with a visa 
officer, which has created a backlog from two weeks to a month 
or more.
    Leaving the interview question aside, the real source of 
the backlog on the China side is the so-called Security 
Advisory Opinion reviews here in Washington, interagency 
reviews of people who are vulnerable under this list called the 
Technology Alert List of sensitive technological areas. And I 
gather that the yield rate there is .04 percent, at least 
globally. The yield rate on CONDOR, I am told by the same 
source, which is the program we are not directly concerned 
with, a program aimed primarily at people of particular concern 
from certain countries in the Middle East and elsewhere, that 
is zero I am told, zero.
    So the question becomes, isn't there a way to try to 
redefine the task so as to eliminate as much as possible of the 
unnecessary and concentrate on the necessary. Now, the security 
organizations that run this review process, their job is not to 
help American business. I gather, not to me but to others, they 
have been quite blunt about that. Secondhand we get told, look, 
there are parties to this review process who just don't care 
whether you have got business problems. That is not their job 
and they are not going to budge on this.
    And what we have to try to get to is a redefinition of 
the--as you have said so well yourself, Congressman--we have 
got to get back to the idea that the costs, the downside, the 
collateral damage of the lost business, of the lost tourism, of 
the canceled trade shows, of the redirection of business to 
European subsidiaries or Asian subsidiaries of U.S. firms or to 
foreign firms altogether, all of that somehow has got to be 
taken into the calculus with which we decide both law and 
policy. Most of this is administrative, but I have to say, and 
I know it is an uphill battle in this body and in the Senate, 
but my instinct after having pushed on this pillow now for 15 
or 16 months, everybody says yeah, we are with you, we would 
really like to do it but it is not our pay grade or it is not 
our agency or it is not our bureau, or it comes from on high, 
or one of those things. My sense is that the incentives are not 
there in the executive agencies to redefine this calculus and 
begin to articulate and carry out policies that minimize the 
wastage and the collateral damage here.
    I just don't see where it is going to come from. It is not 
even clear to me, for example, whether the agencies of 
government which we would most associate with the interests of 
American businesses seeking to thrive internationally, namely 
Commerce and USTR, are even part of the SAO process at all. 
Somebody told me they were not. You will probably know the 
answer to that. I don't know the answer to that.
    So the system now is institutionally set up in a way that 
creates stasis and paralysis, as you have said yourself. And I 
just don't see the incentive structure for the executive 
agencies to get themselves out of it. I mean, if you are a 27-
year-old visa consul and you saw the head of the Assistant 
Secretary of State with consular authority axed in the 
aftermath of 9/11 and the furor over how these people got into 
the United States, if you had a choice between making a 
decision on the spot and sending something back to Washington 
for an indeterminate review, what would you do? You would send 
it back.
    So I have to say that in a slow, patient way, and we are 
very grateful to you, Congressman, for sticking with this 
issue, we somehow have to get the attention of people on the 
Hill as well, and get the Hill weighing in and saying look, 
guys, there is an economic loss going on here, as well as an 
international goodwill loss. This leaves aside the question of 
U.S. relations with other countries, large and small, who 
matter very much to us, even in noncommercial terms, and whose 
visitors and whose officials even are getting stiffed by the 
visa process. That is really a summary of what I had to say. 
Thanks.
    Chairman Manzullo. Bob, I appreciate your statement. The 
next witness is William S. Norman, President and CEO of the 
Travel Industry Association of America. We look forward to your 
testimony.

 STATEMENT OF WILLIAM S. NORMAN, PRESIDENT AND CEO, THE TRAVEL 
                INDUSTRY ASSOCIATION OF AMERICA

    Mr. Norman. Thank you, Chairman Manzullo and members of the 
Committee. I appreciate the opportunity to testify before you 
on how the U.S. visa policy is impacting international travel 
to the United States. I am Bill Norman, and I am President of 
the Travel Industry Association of America, or TIA. As you may 
know, TIA is a national, nonprofit organization representing 
all components of the $525 billion U.S. travel and tourism 
industry. Our mission is to represent the whole of the U.S. 
travel industry, to promote and facilitate increased travel to 
and within the United States. And the travel industry is 
predominantly comprised of small businesses. In fact, 
approximately 95 percent of all of our businesses have 50 
employees or fewer.
    International business and leisure travel to the United 
States is a vital component of our national economy. In 2002 
over 42,000,000 international visitors generated $83.5 billion 
in expenditures, $12 billion in federal, state and local tax 
revenues, and accounted for one million jobs nationwide. 
International travel and tourism to the United States is a 
service export, and in 2002 the United States had a positive 
balance of trade of $5.5 billion. However, these numbers are 
much lower than they have been in previous years, and our 
industry continues to see a decline in travel to the United 
States. Over the past three years, international travel to the 
United States has fallen by 20 percent, with over $15 billion 
in lost visitor spending.
    International travel to the United States has suffered 
greatly for a variety of reasons, for all of the events that 
have affected the international inbound international 
visitation, one fact that remains a deterrent are the many new 
U.S. policies on international travelers. TIA recommends 
Congress and the Administration take the following three 
actions to improve our policies affecting international 
visitors and to better facilitate these visitors.
    First, we believe the State Department should revise the 
interim rule on interviews for visa applicants. State has 
raised the rate of applicant interviews to 90 percent or more 
at all posts. TIA agrees with this new security measure in 
principle. However, the State Department lacks the personnel or 
the space to meet the demands of this new requirement at 
several key locations. TIA urges the State Department to 
increase the interview rate only as new resources become 
available at high-volume visa issuing posts. Additionally, TIA 
urges Congress to appropriate increased funding to meet these 
new security requirements.
    Secondly, we believe the State Department should not raise 
the visa application fee in 2004. The fee for non-immigrant B-1 
and B-2 visas was raised in November of 2002 from $65 to $100 
U.S. Raising the fee again will make the U.S. that much less 
attractive when compared to competing international 
destinations that do not require visas. If necessary, Congress 
will have to appropriate additional funds to support effective 
and efficient visa processing.
    Third, Congress must immediately introduce and pass 
legislation that would postpone the deadline for use of 
biometric visas and visa waiver programs, passports, by two 
years, to October 26, 2006. TIA does support the use of 
biometrics in travel documents. Capturing a person's 
fingerprint, eye, face, or other biometric and using it as part 
of the entry process will allow inspection officials to know 
the person before them is the same person to whom the passport 
or visa were issued.
    However, TIA has learned that the countries participating 
in the Visa Waiver Program will not be ready to issue these new 
biometric passports until late 2005 at the earliest. And this 
requirement is a condition of continuation in the Visa Waiver 
Program. A postponement of the deadline will provide much-
needed time for our major allies and trading partners to 
implement this necessary security program without disrupting 
legitimate international visitation. Without a postponement, 
these countries will miss the deadline and the Visa Waiver 
Program could be effectively terminated. Travelers who could 
normally visit here free would now have to apply for a U.S. 
visa. According to a GAO study performed just last fall, the 
resulting fall-off in travel would cost our economy nearly 
475,000 jobs.
    T.I.A. and the U.S. travel industry strongly support 
efforts by the Federal Government to protect our homeland from 
attack by those who would seek to harm our citizens, residents, 
and international guests. However, our government must consider 
the impact these efforts are having on the jobs of American 
workers. I urge the Congress and the Administration to 
seriously consider the recommendations I have made today.
    Mr. Chairman, we greatly appreciate the continued 
leadership the House Small Business Committee has demonstrated 
on these issues. The hearing held by this Committee in June of 
2002 was instrumental in highlighting the many deficiencies in 
the Immigration and Naturalization Service's proposed rule on 
B-1 and B-2 visa holders. And we appreciate the Chairman's 
attempt to make sure the indirect impact these visa rules have 
on small businesses will be documented and researched by 
agencies with the introduction of H.R. 2345.
    Thank you, Mr. Chairman, and the members of the Committee, 
and I look forward to your questions.
    Chairman Manzullo. Thank you very much. Our next witness is 
Randy Johnson, Vice President for Labor, Immigration and 
Employee Benefits with the U.S. Chamber of Commerce. Mr. 
Johnson, we look forward to your testimony. And could you pull 
the mike a little bit closer to you.

   STATEMENT OF RANDEL K. JOHNSON, VICE PRESIDENT FOR LABOR, 
  IMMIGRATION AND EMPLOYEE BENEFITS, U.S. CHAMBER OF COMMERCE

    Mr. Johnson. I was wondering if I could have Mr. Norman's 
remaining two minutes. But I do thank you, Mr. Chairman, for 
holding this hearing on the issue of delayed entry of 
legitimate travelers to the United States, and with particular 
focus on----.
    Chairman Manzullo. Randy, it is not an omnidirectional 
mike. You have got to speak directly into it.
    Mr. Johnson. All right, thank you, Mr. Chairman.
    Chairman Manzullo. No, a little bit closer.
    Mr. Johnson. How about this?
    Chairman Manzullo. If I say it a third time I will have to 
move it myself.
    Mr. Johnson. Thank you, Mr. Chairman.
    Chairman Manzullo. You have been here before, you know how 
it works.
    Mr. Johnson. I do.
    Chairman Manzullo. Thank you.
    Mr. Johnson. Thank you, Mr. Chairman for holding this 
important hearing. I would like to broaden my testimony a 
little bit from the problems associated with visa issuance, 
also to include some mention of some of the issues arising at 
our border communities. And in this regard I would like to note 
that I do represent the Chamber on a Congressionally created 
task force to study entry/exit issues at the borders, now 
called the U.S. VISIT System. And I also chair the Americans 
for Better Borders Coalition.
    Now, Mr. Chairman, as the other speakers have pointed out, 
we are all aware of the new environment we live in post-9/11. 
The Chamber has been a strong supporter of increased security. 
We were a strong supporter of the creation of the Department of 
Homeland Security. We key voted the legislation. However, we 
also strongly lobbied and were successful in lobbying for 
inclusions in that legislation which, in our view, protected 
the business community in the sense that it reassured us that 
the new Department would look at functions of economic 
security, it would look at the interests of the private sector.
    And unfortunately, however, I think to reflect the same 
theme as the other speakers today, what we are seeing is that 
although the rhetoric of the Administration is reassuring in 
the sense that the Government will always seek a balance 
between security and keeping legitimate trade and travel 
moving, the rhetoric is not, frankly, living up to the actions. 
Some of that may be just a function of the fact that the laws 
do not really have standards to direct the decisionmakers to 
know how to strike this balance. I am not sure, but I think we 
are all here today to just try and educate the Congress as to 
the fact that regardless of what the State Department may be 
saying, there are, in fact, real problems out there.
    And I think it is important to understand that the visa 
issuance is part of one puzzle. There are pyramiding deadlines 
approaching. All of us out here, on top of the August 1st State 
Department person-to-person interview requirement, there is a 
December 31st deadline for the U.S. VISIT requirements at 
airports and seaports. As another speaker mentioned, there is 
the October deadline for U.S. visas and passports by October 
26th, biometrics, and full implementation of U.S. VISIT at the 
land borders at the end of 2004 and 2005.
    And these are all parts of a puzzle that impact how a 
person can come into this country. It is not just the State 
Consulate, it is not just the Department of Labor, it is not 
just INS or Customs at the borders, or DHS. They are all part 
of a puzzle and the focus of this hearing today is on the visa 
issuance, but it is still really just one part of it.
    And, for example, with regard to the borders, we have met 
with representatives from Laredo and McAllen, Texas Chambers of 
Commerce, representing many small businesses, Mr. Chairman, and 
there is a strong feeling by these local communities, and I 
have been down there, that the government is listening, but 
they are really moving ahead with new requirements at the land 
borders without, I guess, paying much attention to what these 
very serious concerns are. And as one person pointed out at a 
State Corps meeting down there, is this because it is simply 
easy to ignore border communities? And now that these deadlines 
are approaching, there is a real sense of urgency on these 
businesses along the borders that a way of life is at stake.
    And the same urgency is on the visa front. Our American 
Chambers of Commerce in places like China and South Korea 
report that they are actually losing businesses to European and 
other competitors because of the difficulties in obtaining 
visas for the customers and clients. Impending changes to the 
Visa Waiver Program will disproportionately affect key American 
allies such as the United Kingdom and Japan, who have told us 
they will not be able to meet the October 2004 deadline for 
issuing biometric passports, in spite of their best efforts.
    In that regard we would strongly urge the other 
recommendation made here already, that the Congress reconsider 
that deadline and allow the State Department and the Department 
of Homeland Security to perhaps waive the October 24th 
deadline, or 26th deadline in appropriate circumstances.
    I think there is just a sense among us that the Government 
may not be carefully evaluating the impact of their decisions. 
And the rhetoric is there, but there is a failure to understand 
that a way of life is at stake in many of these communities. 
There are true dollars and cents at stake, and dollars and 
cents, as you well know, Mr. Chairman, do get translated into 
lost jobs.
    Maybe that is a communication issue on our part, or maybe 
it is on their part, but the perception is there, and that 
perception is backed up by reality. And this is not to demean 
these people in government. I worked half of my career in 
government. But I think we all know that sometimes when you are 
inside the bureaucracy it is easy to insulate yourself from the 
decisions you make, and say well, this is just what we have got 
to do, and then you go on. And we will continue to hammer away 
at these issues.
    Now, Mr. Chairman, my testimony goes through many sort of 
specific problems that our companies have faced, our Ingersoll-
Rand who chairs our Immigration Subcommittee has had many 
problems with delayed visas, costing thousands and thousands of 
dollars. There are problems with timely processing of visas in 
Korea, and that is impacting the travel community. We have a 
major industrial and chemical equipment and electronics 
manufacturer that has had, with a prestigious Russian 
institute, and the key scientist in this partnership waited six 
months for a visa even though the same person has been in the 
country many times over the last ten years. So the record was 
there that this guy was not a security risk. And this delay has 
threatened this long-continuing relationship.
    I won't go on. There are many examples in the testimony. 
You mentioned The Washington Post article, the Amway 
Corporation issue--Amway is a huge member of the U.S. Chamber, 
by the way. It is just somewhat amazing when you hear some 
representatives of the State Department continue to, I guess, 
take the position that really these are very isolated 
circumstances, and overall the process is simply working fine.
    I think we are frustrated, sometimes, on the outside 
because we are not sure who to go to, and the government 
appears to us, particularly in this new reorganization, as a 
huge black box. And the best we can do at this stage is try and 
educate those people within that there are problems out here 
and we hope the message gets through, and we hope that that 
message can also get through, through a hearing such as this, 
Mr. Chairman.
    So we do appreciate that. We have made some suggestions for 
improvements in the processing system in our written testimony. 
And I would like to thank you for this opportunity to present 
our views.
    Chairman Manzullo. Thank you very much. Our next witness is 
Palma Yanni of the American Immigration Lawyers Association. 
Palma, again, thank you for coming and we look forward to your 
testimony.
    If you could pull the mike closer; do it the first time. It 
took Randy three times, but you know.
    Mr. Johnson. All right, all right. I am only a vice 
president.
    Ms. Yanni. He can help me out if it is not close enough.

 STATEMENT OF PALMA R. YANNI, PRESIDENT, AMERICAN IMMIGRATION 
                      LAWYERS ASSOCIATION

    Ms. Yanni. Mr. Chairman, distinguished members of the 
Subcommittee, I am Palma Yanni, President of the American 
Immigration Lawyers Association, and I am honored to return to 
this Committee representing AILA, the national bar association 
of more than 8,000 attorneys who practice immigration law.
    Since I last talked to this Committee in June, the 
situation has further deteriorated. I will summarize my written 
testimony and ask that the whole be submitted into the record.
    In any category of visa that you can name, there are severe 
delays or situations that hamstring or defeat the purpose of 
having that visa in the first place. These situations have a 
disproportionate impact on small businesses. And as we have 
discussed this morning, one thing to keep in mind regarding all 
these delays in visa issuance is the FBI has recently 
acknowledged they have not excluded a single terrorist from the 
United States through all of these security measures.
    When we talk about visa issuance, we are generally 
referring to the process by which a consulate or embassy abroad 
issues a document that enables a person to come into the U.S. 
for a particular purpose. The delays in that visa issuance 
process have been discussed and are indeed monumental. But visa 
problems for key employees and consultants with small 
businesses actually begin long before the individual applies 
for a visa at a U.S. Consulate, and they continue after they 
arrive in the U.S. As was noted previously, people who have 
been here for years either working or studying, sometimes, 
frequently go home and then cannot return, even though they 
have already been cleared multiple times before.
    In many cases, visas for individuals critical to small 
businesses cannot be issued until the Department of Homeland 
Security, the Citizenship and Immigration Services, which was 
formerly INS, has approved the petition, which also includes a 
security check. There has been a marked increase in the number 
of cases where these visa petitions that are denied or delayed 
endlessly, or demands for additional documentation which are 
not even required in the regulations, and these burdens fall 
disproportionately and particularly on small businesses, which 
are asked to provide an incredible array of documents, from 
wire transfers, confidential contracts, years of bank 
statements and payroll records and rsumes for employees that 
are not even related to the petition, tax returns and more.
    These delays can mean that the temporary professional visa, 
the H-Visa, will not even be available to small businesses, 
which use them very heavily, for this fiscal year because there 
are reduced numbers of those visas and bigger businesses are 
not subjected to these demands by the formerly-known-as-INS.
    The people that are coming to these smaller employers from 
abroad bring unique experience in markets and technology to 
help the small businesses expand and fuel growth and jobs for 
American workers.
    I was recently on a panel in an immigration conference, 
where I suggested that we produce posters to be distributed 
throughout the service centers--we probably also need them at 
consulates--touting the economic contributions of small 
business. My thought was big posters that said small business 
is the engine that drives the economy. They would also do well 
to have facts from your Committee's Web site that say 99 
percent of the employers in the U.S. are small businesses, and 
they produce two-thirds to three-quarters of the net jobs in 
the U.S. Perhaps the Committee can help me with my poster 
project.
    The delays at the consulate have very serious consequences 
for businesses, families, schools and others in the United 
States provided that you get to the point of having the initial 
petition approved, or you are in a category where that is not 
needed. The State Department cites a 15 percent decrease in the 
number of non-immigrant visa applications from 2002 to 2003. 
People are simply not coming to the U.S., in large part due to 
the delays and roadblocks in the visa process.
    The other members of the panel have discussed the tourist 
problem and made reference to students, scholars and scientists 
who cannot bring their experience and talents to the U.S. and 
are going elsewhere. The National Academies of Science has 
issued a statement with a very dire warning. The U.S. 
scientific, engineering and health communities cannot hope to 
maintain their present position of international leadership if 
they become isolated from the rest of the world. And that is 
what is happening.
    Security clearances triggered by a person's nationality, 
line of work or study, or unknown factors, delay the process. 
The special checks relating to someone's employment in a field 
of study, include a list of occupations that was referred to, 
the Technology Alert List, that is so broad that virtually any 
scientific or technology field could be included.
    As you have emphatically said, Mr. Chairman, any engineer 
is deemed to be a terrorist. It is not just engineers. It is 
anyone involved in technology, in science, in almost any field, 
including health professionals.
    Chairman Manzullo. Hold on. Could you go to the anecdotal 
stories that are on the last page? Because this is what really, 
when you read these things, this gets me mad.
    Ms. Yanni. Well, I can make you very angry.
    Chairman Manzullo. Well, go ahead, do that; make my day. 
But if you could get into those accounts.
    Ms. Yanni. There are many. There was a classic example of 
stupidity, which I believe was the word you used, Mr. Chairman. 
A German professor, who has visited the Institute for Surface 
and Interface Science at the University of California in 
Irvine, had come for 25 years and didn't come this year because 
the visa issuance situation was so onerous. He would have had 
to go and stand in line at 6 in the morning, and come back for 
days. This is a gentleman, that could have, if he wanted to, 
stretch the rules, just get on a plane with his German 
passport. But he wanted to play by the rules and get the right 
visa because he was going to be compensated in the U.S. He is 
not coming.
    An engineer who had worked in the U.S. for four years under 
an L-1 visa status, so again, he was approved many times before 
in clearances, applied in Jakarta in 2002 to renew his L-1 
visa. The visa still has not been issued. Some agency is 
conducting a check. The company could not wait longer. They 
transferred the engineer to an overseas project and moved the 
project out of the U.S. because this engineer was key.
    A telecommunications engineer waited over a year for an H-
visa in Saudi Arabia. The company and the engineer gave up. 
They could never get an answer.
    A businessman coming to the U.S. to be the president of a 
subsidiary of a British company applied for his visa a month 
ago. He has a common name, so his name came up in the security 
database system of the FBI; his fingerprints were taken; he is 
still waiting. The U.S. subsidiary does not have their 
president, does not have a leader.
    A Panamanian couple in their seventies have visited their 
adult daughter in the U.S. every year for 15 years. Normally 
they come and renew their visitors visas consistently. They 
happened to be born in Morocco. Because of the accident of 
where they were born, they have waited several months for their 
visas and cannot come to the U.S. to visit their family.
    There is more, but I have hit the stop button. Thank you 
very much. I am pleased to be here today.
    Chairman Manzullo. I appreciate that. I would like to ask 
the same question of the other three witnesses for the 
anecdotal stories of people similar to Ms. Yanni's experiences. 
Bob, do you want to share with us? What I am trying to do is I 
want to quantify how much the United States loses, or at least 
come to some kind of guesstimate of the money that we are 
losing and the jobs that we are losing because of the inability 
of the United States Government to be a welcome host to 
visitors who come here for both business and pleasure. I hate 
to say this of my own country, but it is true.
    Mr. Kapp. Well, Congressman, in the written testimony I 
threw in these cases from Bill McHale of Kanawah Scales and 
Systems out of West Virginia. They have been at this for 
endless months now. The situation just doesn't get any better.
    Many of our companies are large companies, but they, as you 
pointed out yourself, they source from American vendors and 
from American component makers and suppliers, and the list just 
goes on. I mean, I am a little reluctant to cite cases without 
having the documents in front of me and to talk about other 
companies' experiences. But if I recall correctly, there was 
public mention of a situation where a leading U.S. airplane 
manufacturer couldn't get the pilots in to pick up the planes 
and drive them home. That is real money. A billion here, a 
billion there, as Senator Dirksen once said, and pretty soon 
you are talking about real money.
    I remember an instance which I would want to check for 
veracity before it was finalized, in which the United States 
Government bent over backwards to advocate for an American 
company seeking a very significant contract in China. The 
company got the contract, and the first batch of trainees sent 
by the PRC to the United States to start working up the 
product, which was a product that had to be developed for this 
contract, were denied entry to the United States. The list just 
goes on and on.
    Quantifying is tough. And one of the reasons quantifying is 
tough is that it is very hard to put a dollar value on time. 
But the theme that comes out here, I am fascinated by the utter 
unanimity of what we are saying here today. What is really 
interesting to me is that just the black box, as our friend 
from the Chamber put it, the dropping of these applications 
into a file where you can't know where it is, you can't know 
who is looking at it, you can't know who has got a problem with 
it, and you can't know when it is ever going to come out, that 
uncertainty is the worst part of the problem for many of our 
companies.
    In that regard, as I quit this question, Congressman, I do 
think that we have to try, again, the China cases, most of the 
ones that we work with have to do with the Technology Alert 
List and the SAO Security Advisory process. The great loss 
there was the elimination of this clock, this certainty that if 
the bureaucracies didn't make their decision after a certain 
number of days, the visa was going to be approved. That was 
killed after 9/11 and I think that is an area we really need to 
try to get some focus back into here. It doesn't have to be an 
old ten-day clock any more. We understand it is a different 
world. But there has got to be an understanding that there is a 
limit to this. And a reasonable limit. Not a six-month limit. 
Business can't run on six months for a visa application. But a 
reasonable limit, after which if the bureaucracy has not been 
able to make its mind up, let alone say no, then the visa goes 
forward. That has got to be high on the list of priorities.
    Chairman Manzullo. Bill, any anecdotal stories you want to 
add to this?
    Mr. Norman. There are so many, Mr. Chairman, I am not sure 
where to start.
    Chairman Manzullo. Give us your most egregious.
    Mr. Norman. I would like to just mention two, because what 
has happened to the U.S. travel industry has been phenomenal in 
the past three years. We have seen international travel to the 
United States fall by some 20 percent in the past few years 
alone. And although all of it can't be directly attributable to 
what is happening with visas, that is a very large part, 
because we have become a very unwelcoming society. You ask for 
anecdotal information. If I may, I will just mention two.
    You take our top ten trading partners in terms of travel to 
the United States and bear in mind that we have had a positive 
balance of trade which just a few years ago was running around 
$15 billion positive, and now it is down to five, and with all 
the other declines that we have seen.
    Use Brazil. In order to come to the United States, one of 
our top trading partners, in order to come to the United 
States, I will use an anecdotal story, an actual story, about a 
family of five coming here. First of all, in order to come to 
the United States they have to apply for a visa. It takes 
anywhere in the neighborhood of four to six weeks just to get 
the interview. They then have to travel. In order to travel to 
get the interview, because they have to come to one of our 
consulate offices, they have to take care of hotels there, and, 
by the way, each member of the family must come. The visa 
application for a family of five is five times $100. You add to 
the hotel, the air, that has already been done to the $500, and 
the result? Four of the five family members will get the visa, 
but not the fifth. If the family is going to go together, they 
are not going to go. So after all of that trouble they have 
lost $500, they have lost the hotel, and they are going to go 
to Europe where they do not need a visa otherwise.
    Take another top trading partner. Same situation, with 
South Korea, very important, and used as an example of what is 
happening overall to conventions and meetings. But let me use 
another example.
    The Visit USA Committee, which we work with very closely 
here, indicates that the new visa policies and delays and 
everything is resulting in one of every six visitor from that 
country being deleteriously affected, which results in a loss 
to the United States of some $200 million.
    And I could go on and on and on, but that is just a flavor 
of what is happening, and we see it, and it is affecting 
everyone. And it isn't out of the bounds of reality that if we 
go on and exacerbate it even farther by what we are talking 
about next year of moving into a situation in which we are 
going to ask for the biometrics, which they are not going to be 
able to do and they get out of the Visa Waiver Program, we can 
see a travel industry that is already decimated, is going to be 
in a situation that we could conceivably lose up to almost 
another 500,000 jobs, most of which are small businesses.
    Chairman Manzullo. Randy, do you have an anecdotal story to 
add?
    Mr. Johnson. Yes, one general statement, three anecdotal 
stories, Mr. Chairman. The United States Chamber of Commerce 
has a broad network across the world through our American 
Chambers abroad, and the message--I mean, I have rarely dealt 
with these American Chambers abroad until after 9/11 for lots 
of reasons. But one of the biggest reasons was the whole 
slowdown in international commerce due to the problems we are 
discussing today. And the message they are telling us is, one, 
can't you help us? But the other one is, look, we are losing 
business to our competitors because our competitors are telling 
clients don't deal with the United States, it is too much of a 
hassle. Can I quantify that? I have some examples here. I can't 
quantify that. We will try and do a better job of that, Mr. 
Chairman. But these groups would not be coming to us unless 
this was a serious problem.
    Second, with regard to specific examples, Ingersoll-Rand, 
the chairman of our immigration subcommittee is waiting to 
close a $2.5 million deal with an entity in China, but they 
can't get the visas to bring these engineers over from China to 
inspect the equipment to close the deal so they can move the 
compressors back to China.
    Chairman Manzullo. Randy, if you could have her get in 
contact with me, I will work personally on it, and I will set a 
hearing. I want to ask the people that are not issuing the 
documents to personally show up here. If they are not here I 
will have an empty chair with their name. Okay? Maybe we should 
do one of those every 30 days until somebody realizes that we 
mean business around here. Go ahead.
    Mr. Johnson. She is excellent on this, Elizabeth Dickson, 
so I will, Mr. Chairman, thank you.
    We have an example here in our list of problems on page 5, 
where a logistics manager has waited over ten months for 
renewal. A logistics management company has waited over ten 
months for renewal of a manager visa, losing, according to this 
company, $75,000 to $100,000 per month in revenues.
    We had a situation in Texas with a company that deals with 
the government in Saudi Arabia and private sector concerns in 
Saudi Arabia, and ultimately they were able to close this deal, 
but the message they gave to us was--the entity in Saudi Arabia 
to the Texas company here was, look, we got it done this time, 
but this is a real hassle for us and we are going to start 
looking elsewhere. So in that case it was done, but these are 
all things that pressure international customers to look 
elsewhere. So those are a few. But again, the overall message 
is clear from those people who are out there in the real world 
dealing with these problems.
    Chairman Manzullo. Ms. Bordallo?
    Ms. Bordallo. Thank you very much, Mr. Chairman. And good 
morning to all our visitors.
    Chairman Manzullo. Tell us your ship story first about the 
Navy not using your ports so maybe some of those people will 
understand why you have 20 percent unemployment.
    Ms. Bordallo. The Chairman has asked me to share a story 
with you on Guam. We have closed bases during 1993 and 1995, 
and we have a private enterprise taking over our ship repair 
facility. And, of course, at one time it was all MSC ships, 
Navy business. Then they found a loophole, and according to 
Navy regulations, if a ship is homeported in the U.S. you have 
to have it repaired in a U.S. port. But they have found that 
the MSC ships roam around in the Pacific, so therefore they are 
not really home-ported in the U.S. So they go to Singapore and 
Japan and have their ships repaired at a fourth of the cost. 
And meanwhile, this private entrepreneur over in Guam is hardly 
making it. And so the Chairman has been very interested and 
very helpful, and we are looking at that very carefully, and I 
think they did realize that this was something very, very 
unfair to us in Guam.
    But let me talk about the visa waiver now. The tourist 
industry is the largest private-sector employer on Guam. In 
1997 Guam's tourism volume reached its historical peak of 1.38 
million annual visitors, more than 80 percent of them haling 
from Japan. However, a number of factors, including the 
Japanese financial crisis, 9/11, the SARS and storms and so 
forth have contributed to a steady decline. Visitor arrivals 
fell below one million last year for the first time in a 
decade. With unemployment, as the Chairman stated, estimated at 
as much as 20 percent on Guam, we cannot simply wait for the 
Japanese economy to rebound.
    A large minority of residents on Guam, 26.3 percent to be 
exact, are of Filipino descent. Many have been waiting years 
and years for family members to obtain visas to visit them on 
Guam. With a population of 18 million and a strong regional 
connection to Guam, increasing the number of Filipino visitors 
would be a pragmatic solution to both increasing and 
diversifying our Island's visitor base. I personally would like 
to see us move toward including the Philippines as part of the 
State Department's Guam-only Visa Waiver Program.
    And I might add, Mr. Chairman, that we do have a strong 
interest in China as well. And we have suggested that Guam be a 
pilot program for this biometric system for Chinese visitors.
    Now, I do have some questions. To Ms. Yanni, given the many 
reforms implemented by the Philippine President, Gloria 
Macapagal Arroyo, to combat terror and strengthen economic ties 
with the U.S., do you feel that the current visa backlog which 
currently dates back to visa applications from 1995 is 
constructive to improve cultural interaction and commerce, and 
what are the reasons for this tremendous backlog?
    Ms. Yanni. Obviously this is in no way constructive to 
improve cultural interaction and commerce. There are various 
reasons for the different backlogs. The Philippines are now on 
the list of special countries or countries of interest, which I 
am afraid may mean even more barriers. I think that your 
suggestion of that specific program that not everybody knows 
about, where you can get a visa to Guam only and cannot 
continue on to the U.S. should, in large part, answer the 
security programs. There is a cost/benefit analysis. 
Essentially, you are saying you are willing to take the risk in 
Guam for these relatives of the people living there, and I 
really think that that is an excellent suggestion that could 
really help your economy. It is going to have to be agreed upon 
now because of the new structure, by both the Department of 
Homeland Security and the Department of State. But I think you 
have an excellent possibility for really improving you economy 
with that.
    Ms. Bordallo. So what you are saying is we should continue 
to do it. We have been working on it for many years, but we 
will continue. Thank you.
    Mr. Johnson and Mr. Norman, given the unique situation 
encountered by island economies such as Guam, as well as their 
geographic isolation, what special alternative policies 
specific to travel visas could be adopted that would enhance 
our local economies without adversely affecting national 
security?
    Mr. Johnson. Well, it is an interesting question, 
Congresswoman. It might, given the unique nature of an island 
economy and the population, it might, I am putting this out as 
a suggestion to perhaps approach State with, this might be an 
area where State or DHS could explore a Trusted Traveler type 
of program, where individuals who chose to go through--who may 
go back and forth more than just once every two years or 
whatnot, choose to be prescreened in a streamlined process but 
then they get a certificate--and this is done with laser visas 
at the Mexican border, for example, it is done in the Nexis 
Program, I think, in Canada. They are prescreened and so they 
get an expedited clearance when they go through Legacy Customs 
and Legacy INS. But what appeals to me is because of perhaps 
the unique geographic location and the population, this might 
be an interested test case for that idea. That is certainly 
something we have been trying to push generally with regard to 
the broader visa areas.
    Ms. Bordallo. Yes, go ahead Mr. Norman.
    Mr. Norman. I would concur with that. But I will also add 
something else. There are many things that we simply are doing 
that is making it more difficult. Guam and Hawaii are two 
classic examples. I will just use one country, Japan, where you 
have had a large number of visitors, it is a very important 
aspect of the economy, and with all of the things that we have 
been doing now, with the delays and others that don't allow any 
of the welcoming concepts in here, if we simply would look at 
some of the policies that we currently have. And I want to get 
into the issue of visa delays.
    As an example, the notion that you have to interview 
everyone from a trusted country like Japan or South Korea, that 
has been doing this forever, and with these interviews, which 
in essence are cursory, and now moving to an arrangement by 
which we are going to have to add next year, biometrics, means 
that the already deteriorating situation is going to be even 
worse.
    Simply delaying it. Japan simply is not in a position, as 
is South Korea--Japan is a Visa Waiver Country, as an example, 
is not in a position to have biometrics ready for next year. It 
then means that they are at risk of coming out of that which 
will cause even greater risk. So some things that could be done 
immediately, is to delay that so that when they are in a 
position it is not going to make any impact at all in terms of 
stopping any terrorism, as others have indicated. So just by 
taking simple steps of that particular nature, looking at what 
we do, and being more realistic about it will actually send a 
better picture that we are, in fact, welcoming you and we want 
you.
    Ms. Bordallo. When will the biometrics system be 
implemented?
    Mr. Norman. It has now been set for October 26, 2004, it 
will have to be implemented, and if a country does not have the 
biometrics ready then they will come out of the Visa Waiver 
countries. These are the 27 countries that are our trusted 
trading partners. We know for a fact, given the fact that we 
operate with Visit USA committees, which is U.S. companies 
operating in countries, some 39 different countries. And we 
have found out from them and from our contacts overall that 
there are a significant number of countries in Europe, in Asia, 
our valued trading partners, that will not be able to meet this 
deadline. By the way in which this is set up, if they are not 
able to have biometrics ready--which, by the way, the United 
States is not going to be fully ready either, with all of its 
passports, then they would have to come out of the Visa Waiver 
Programs, they would have to then get B-1 or B-2 visas. And as 
a consequence we would have backlogs now that would pall in 
comparison to what would happen there without visa waiver.
    Ms. Bordallo. Thank you. Thank you, Mr. Chairman.
    Chairman Manzullo. Let me make a clarification for the 
record. There are two Ingersoll companies. One is Ingersoll 
Milling Machine out of Rockford, Illinois, and the other one is 
Ingersoll-Rand which is headquartered in New Jersey. And we 
have a preliminary report from the GAO. They interviewed in 
their sampling and testing methods which have always impressed 
me on how they do that. They interviewed representatives of 48 
U.S. companies in China regarding their experiences obtaining 
U.S. business visas for their employees and customers. These 
are Chinese customers that want to come to the United States to 
look at equipment, for example.
    Almost half the companies reported lost business 
opportunities because of delays in obtaining U.S. business 
visas. That is based on 44 responses of the 48 companies. That 
is half. So these 22 companies, and these are major, major 
companies, that have lost business opportunities, and more than 
half the companies reported at least some additional expenses 
because of delays in obtaining U.S. business visas.
    What I would like to do is, I want to establish a foreign 
visitors visa delayed misery index. Bob, you are in charge of 
it.
    Mr. Kapp. Congressman, if you go to our Web site you will 
see the visa incident report form right there on the front 
page. You can click it.
    Chairman Manzullo. It is right on your Web site?
    Mr. Kapp. It is for our companies, but we have the same 
impulse you do. Get people, easy, user-friendly.
    Chairman Manzullo. But you will be the point person on 
this. Don't stutter, I have just given you another job. And 
what we are going to do is I am going to publicize the names of 
the companies plus the individual names of the individuals that 
are sitting on these applications, and the people in charge 
worldwide. I want accountability to this U.S. Government. I am 
tired of incident after incident after incident where people 
want to come to the United States to buy our goods and are 
simply not able to come here because of the delays. And so it 
is accountability time.
    And in January I am going to have a hearing, Bob, probably 
on the first ten that you give me. The ten most egregious cases 
where it is pending. And I am going to ask the people in 
charge, here in Washington, to personally show up and explain 
to this Committee the delays in each and every one of those. 
And I will give them the names so they can do their homework 
and come here. They may spend a lot of time in this room, and I 
may run a hearing that will last 10 or 12 hours, with stacks of 
files on my desk. If they can't process those visas, I will do 
it personally, because I am tired of the unemployment in my 
Congressional district. My heart just breaks in half that we 
have people that want to sell high-end quality products, and 
one of the finest went into bankruptcy, probably forced there 
by the inability to sell to people because they simply could 
not get visas. This is disgusting. And it is the fault of the 
U.S. Government.
    You know, we have had hearings on beat up on the Chinese 
because of their trade barriers. Beat up on the Chinese because 
of intervening with their currency. Blaming everybody in the 
world, but here is a thing that we can do ourselves and we are 
all stuck because there is a premise here in Washington that 
business visitors with certain backgrounds are terrorists. And 
the FBI check has turned up zero on them.
    Mr. Akin, do you have some questions?
    Mr. Akin. Yes, thank you, Mr. Chairman. I guess one of the 
questions I would like to ask is, if there were one thing that 
you would change, you don't get to choose number two or number 
three or number four, but there is just one thing that you 
would like to see changed. And I understand, I guess, there 
must be a tension on this whole situation between the fact that 
we are trying to take care of homeland security, our borders 
are like Swiss cheese, we have people coming across. 
Essentially, as soon as anybody gets in this country they might 
just as well be an American citizen because we have almost no 
mechanism to ship them out, or at least we don't seem to. So 
you have got that problem.
    On the other hand, you have got legitimate people coming 
and going for business purposes. With that tension, if you had 
to choose one thing, or let us say that you could get into 
whatever it is, INS, that is controlling these things. What 
would be the one thing that you would change in still keeping 
that balance but trying to deal with the problem in a balanced 
kind of way.
    I will let a couple of you go. I don't want to overuse my 
five minutes, but if a couple of you want to respond to that, 
what would be the one thing you would change?
    Ms. Yanni. The suggestion, if I may go first, that one of 
my colleagues made, that would solve it, is the fixed time 
period for clearances. Businesses can deal with a--there is a 
maximum of 60 days or 30 days--it used to be 30 to get a visa. 
And those agencies that are so concerned, the 21 agencies, some 
of whom we don't even know who they are, if they are told that 
visa will issue unless you say no within a certain period, they 
are going to start moving. So I think that that would solve the 
problem very quickly.
    Mr. Akin. Is whoever it is that has to issue these things, 
are they represented here? What is their problem? Why can they 
not do it? Are they just overloaded?
    Ms. Yanni. We don't know. The 21 agencies are all different 
kinds of intelligence agencies, the nuclear, the 
nonproliferation group, Defense Intelligence Agency, CIA, a 
whole array of agencies. And they have other missions. As 
another member of the panel said earlier, their mission is not 
to improve trade with the U.S. Their mission is otherwise, and 
they sometimes just don't seem to think that this is important.
    Mr. Akin. In terms of the way they are being measured, 
their safest thing is to issue none of them at all, because 
therefore there has been no security problem, because we didn't 
let anybody in. In a way, right? I mean, they are measured on 
trying to protect our security, right, not on trying to process 
visas in a timely way, right?
    Ms. Yanni. That is correct.
    Mr. Akin. Okay. Does somebody else want to add to that?
    Mr. Kapp. Well, Ms. Yanni took one of mine, but we are in 
agreement on so much of this. It is possible, as Congressman 
Manzullo suggested, it is possible to work bilaterally with 
countries to come up with longer duration, multiple-entry visas 
that would vastly reduce the workload at the consular windows 
and in this whole process.
    If a guy has come into the United States, and he is vetted, 
you know, and he is cleared and he is fine, and he goes back 
and forth on business, why make him come back any more often 
than you possibly have to? I mean, do year-long multiple 
entries. Do 18-month if you can get 18-month. The sheer 
reduction in the flowthrough at the windows is doable, I think. 
The bringing of fewer people into the process by recognizing 
that there is a logic here. If you cleared the guy, you have 
gone through all of this stuff, eight months ago, ten months 
ago, twelve months ago, why stick him through it again? And in 
the business sector a great deal of the travel is repeat 
travel, those who go back and forth.
    Mr. Akin. I was going to say, Bob, doesn't it seem like it 
is going to be one of these things, we used to call it the 80/
20 rule at IBM. You see it applying a lot. And that is that 80 
percent of the people coming across, those are people that are 
going back and forth multiple times. So that if you can deal 
with that you have got a huge bulk of the visas already taken 
care of and not having to keep reissuing. Isn't part of the 
problem that if you did put a specific timeframe on it that all 
these agencies couldn't really check their backgrounds in that 
amount of time? Isn't that what part of the problem is?
    Ms. Yanni. We know that most of the agencies, anecdotally 
we know that virtually all of them do respond back quickly or 
very, very quickly. But the information is not public. I think 
some of it may even be classified. You cannot find out who 
the--you can find out--who the agencies are that are holding it 
up.
    Mr. Akin. Well, it sounds like also you need some sort of a 
customer service front-end window to those agencies. However 
they want to organize themselves from the back side, the 
bureaucrats can set that up. But from the front end, you need 
some simple front end, an easy in and out, and this is the 
procedure, and run through it. I think that is what you are 
saying.
    Mr. Kapp. There is no organized interface now between the 
affected constituencies and the people who are making these 
decisions. There is nothing. I mean, we can have meetings, 
mostly with the State Department. You can get a meeting, sit 
down with people. They are very nice and they have been very 
forthcoming about sitting down with us. But there are 21 
agencies involved here. There is no structured dialog between 
the affected constituencies and those who are making these 
decisions.
    Mr. Akin. Just off the top, do you know who is--is this 
within the Department of Homeland Security at this point?
    Ms. Yanni. No, these agencies, the clearance comes if a 
consular officer determines that somebody might have one of 
these sensitive technologies. The process has changed recently. 
They send, essentially, a broadcast e-mail to all of the 
indicated agencies, and say we need a clearance. And then they 
have to wait for each agency to return. It used to be that it 
all came through the visa office in Washington, and only the 
visa office knew, if they knew, who was the holdup. Now, I 
think consular officers may have access to that, but it is 
secure information. Even the exact nature of the CONDOR visa is 
classified. The list of countries that we all know is 
classified. It was published in The New York Times, so we know 
anecdotally which they are, but officially that is classified 
information. So obviously it is not available to the visa 
applicant.
    Chairman Manzullo. Ms. Napolitano?
    Ms. Napolitano. Thank you, Mr. Chairman. I apologize for my 
being late, but I had other meetings that demanded my 
attention. But I have a great interest in this, first of all 
from the small business standpoint, but secondly because it has 
been a problem in some of my areas of business.
    I am interested in the question and answer you were giving 
about the 21 agencies not having a standardized focal point 
that you can go. So you are saying there are 21 agencies 
involved that have jurisdiction over the application process? 
Anybody?
    Ms. Yanni. That is right. Once the clearance is requested, 
all of those agencies must sign off before the visa can be 
granted.
    Ms. Napolitano. And do you have any idea or any knowledge 
of which ones work together in tandem?
    Ms. Yanni. No, I don't.
    Mr. Kapp. Congresswoman, I had a conversation the other day 
with a person in one of the agencies who suggested that in the 
next few months one progressive step is going to be made, first 
on a pilot basis and then on a broader basis. And that is, the 
extension of what I believe he called the consular database for 
use throughout all of the agencies in this multi-agency review 
process. He suggested that there are technical problems that 
have slowed everything down, and that they are working on them, 
of course, and that one of these has to do with the 
standardization of the database on which everybody draws to see 
if a person is a bad guy or a good guy. And he was a little 
surprised that we weren't giving credit where credit was due, 
and I explained to him that this would be a pilot project three 
months from now and it wouldn't be fully installed for six 
months or a year. So how could we give credit when we had seen 
no results?
    But if you do probe further into this, you may discover 
that there is something going on at the technical database 
sharing level that I, for one, didn't know about until 
yesterday.
    Ms. Napolitano. Thank you, Mr. Kapp. I am just curious, 
when you are talking about systems, do the systems talk to each 
other?
    Mr. Kapp. Well----.
    Ms. Napolitano. Do they have connection so they are able to 
bring up information to at least have an idea whether or not 
they need to delve further into this particular individual.
    Mr. Kapp. You know, we all use the word anecdotal at this 
moment. I used it in my testimony, and I am sure we all did, 
because a lot of this is gossip. We are talking about 
classified processes here that the uncleared, namely us, we, 
are not permitted to know. So you get rumors, and people say 
well, it is not our agency, it is those guys over there. We 
have heard anecdotally, and I think staff to this Committee has 
heard, that there were particular problems of data 
compatibility in certain agencies on the law enforcement side 
of the fence. But I can't comment with any authority on which 
agencies those are or whether they had or have solved their 
problems, because we just don't know. It is a black box, as Mr. 
Johnson suggested.
    Mr. Johnson. Congresswoman, I do serve on a task force that 
studies entry and exit issues at the borders, and I note that 
you are originally from Brownsville, Texas.
    Ms. Napolitano. Right.
    Mr. Johnson. So I am sure you are familiar with sort of 
cross-border traffic and how important it is to those 
communities. But one of the demonstrations we have had, and I 
think I can say this without violating any confidentiality, is 
in Los Alamos, on the interaction of all these computer 
systems, and they put it up on a board, and I can tell you, it 
makes spaghetti look organized. But they are working on it. 
Now, to what degree----.
    Ms. Napolitano. They being who, sir?
    Mr. Johnson. The government.
    Ms. Napolitano. Which government? Big Brother?
    Mr. Johnson. Justice, DHS, the State Department, they have 
their class systems, IBIS. You look at a GAO report and you 
look at the list of computers and computer data bases and there 
are probably 50 of them and it is an alphabet soup that boggles 
the imagination. But they are working on that. How far along 
they are, it does depend on who you talk to.
    Ms. Yanni. I can tell you that the FBI and Department of 
State databases are not compatible.
    Mr. Kapp. But I have to say, we will wait forever if we say 
it is a technology problem and it is all fixable, just give us 
time to fix the technology, we are going to wait forever on 
this thing. This has to do with the definition of goals and a 
provision of incentives to behave in certain ways. And the 
incentives are not there now to maximize the economic value to 
the United States from the flow of persons in and out of this 
country. There are no visible incentives that we can see in 
that regard. All of the incentives are on the other side. And 
the institutional arrangements that flow from those incentives 
are on the other side. So we can sit here and talk about 
whether the computers mesh or not, and I agree, it is 
important, of course. It is a national effort that is being 
done on shipping, on containers, on everything. It is a huge 
reorganization of the whole notion of data for national 
security in this country.
    But that alone is not the only problem to be resolved here. 
It has to do with behaviors and instincts, and the instincts 
right now, the incentives tell you your instincts should be, 
throw it into the black hole. First of all, you will cover your 
rear end by doing so, and second of all, at least you don't do 
any harm by doing so.
    Ms. Napolitano. Mr. Chair, I am not sure what you would 
propose, but I would certainly love to see you convene an 
agency meeting or task force or organization to bring these 
people before them.
    Chairman Manzullo. Matthew Szymanski, who is the Chief of 
Staff of our Committee has met with folks from State, from 
Homeland Security, FBI and CIA. These people are stellar. I 
mean, several testified here. They get A-plus in their devotion 
to duty, their honesty. They are just great people. And they 
work with us and they are not stroking us, and they are very, 
very--Randy, you know what I am talking about. These are some 
of the finest public servants that we have. And they are really 
frustrated because with all the different agencies they are 
trying to get a hold on this thing. Because they know the 
stakes. They know the frustration that is going on. And we want 
to work with them, and we have been.
    But we just can't break this thing loose. It is not a 
matter of incompetent people.
    Ms. Napolitano. Well, no, I am not saying it is.
    Chairman Manzullo. I know that. But I just want to state 
for the record that these are just fabulous public servants.
    Ms. Napolitano. Well, just continuing on with my statement 
is that we need to be able to help business be able to continue 
to put some pressure not only--and this is talking to 
business--because business is too busy making money and doing 
business and trying to stay afloat and trying to survive during 
this recession. But they need to understand that if they do not 
call and advise, whether it is the administration or their 
elected officials about how it is affecting your ability to get 
foreign business, because you can't bring people in, or you 
can't travel within the United States.
    And I have heard from my businesses, well, what have you 
done? And unfortunately they do not feel--first of all, they 
don't know how, they don't know who, and they are afraid that 
if they do they are not going to be able to have a voice later 
because they will be labeled as rabble-rousers, et cetera, 
whatever.
    But my contention is that business needs to come to the 
table and raise their voices. Your travel agents, your business 
people, and start saying to this administration you need to 
make this change so that they can then tell the agencies, sit 
at the table. Get this done, and get it done soon, because we 
need to improve our economy, and we can't do it if we are 
sitting there trying to figure out which agency has 
jurisdiction over the approval.
    Thank you, Mr. Chair.
    Chairman Manzullo. Well, we want to thank you all for 
coming. Randy, I am still trying to figure out this idiom, make 
spaghetti look organized. You know, being an Italian American, 
I----.
    Mr. Johnson. My oversight.
    Chairman Manzullo. I know there was no reference there, but 
I understand that we in America are--you are turning red there, 
but that is all right. We appreciate it very much.
    Again, I want to thank each of the panelists for your 
input. Bob, I have tasked you with helping us, I guess, on our 
Web site for the Small Business Committee, to be the Foreign 
Visitors Visa Delayed Misery Index. If you could work with 
Matthew again, on another project, maybe we could do it by a 
link to your Web site or however we do it.
    And the other thing I want to do is I want to try to 
quantify this loss so that when it comes time to fund the 
agencies, I want to put in an amendment to cut the agencies by 
that amount of money in lost business, just to drive home the 
point in the form of an amendment. Again, we are out of the 
appropriations cycle, that is the time to do it, and the 
amendment will probably not be in order. I am used to that. It 
has happened time and time again.
    But the agencies have to understand that what is at stake 
here is American jobs. We have lost three million manufacturing 
jobs. Yesterday word came out, the statistic is 750,000 high-
tech jobs have gone overseas. We continue to bleed in this 
economy, and we would address those issues and try to come up 
with some solutions.
    But this is an easy one. It simply asks the United States 
Government to allow people to come here within a relatively 
short period of time of application to buy the products that we 
sell.
    Again, we want to thank you for coming, and this Committee 
is adjourned.
    [Whereupon, at 11:00 a.m. the Committee was adjourned.]

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