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Insights 2017

Andres Pelenur: Canada Ready to Pounce while US falters

Canada has always suffered from the perception that it’s best and brightest, while educated in our public universities, headed south to the U.S. for more lucrative employment as quickly as they could toss their graduation caps in the air. The latter is a mix of fact and myth, since migration trends between both countries have always been cyclical instead of the one-way street commonly imagined.

For example, in the nineties, there was a verified brain-drain of Canadian doctors to the U.S., but by the mid-2000s, the numbers had dropped dramatically. That said, the number of Canadians emigrating to the U.S. far outnumbers the number of Americans immigrating to Canada. The latter is an expected and natural outcome when we consider that the U.S.’s GDP is almost ten times greater than Canada’s.

So while the raw numbers will always show more Canadians moving south than Americans moving north, the current political climate in the U.S. has created an unprecedented opportunity for Canada to leap forward in terms of attracting significant economic investment within certain sectors as well as retaining the technical and professional talent that support those industries.

Specifically, there has been much discussion behind closed doors on how to establish a true Silicon Valley North. Canada has been trying for years to make itself attractive to entrepreneurs, with mixed results. On the one hand, Canada has had success in the video game industry, becoming a worldwide leader and contributing nearly three billion dollars to Canada GDP in 2015. The Start-Up visa program, on the other hand, which was designed to attract entrepreneurs to Canada, as of 2016 only delivered 51 entrepreneurs into permanent residency from 26 new start-up companies, even though the program allows for 2,750 applications per year. But all this might be about to change.

A Perfect Storm in Canada’s Favour

The Trump administration’s aggressive and protectionist stance on immigration policy might prove to be the tipping point on a number of pressures facing foreign nationals in the U.S., especially Indian citizens. As it stands, the majority of Indian citizens who applied for employment-based permanent residency are already made to wait a staggering ten years before their visas are issued. This is above and beyond the fact that even getting an H-1B visa (which applies to a vast majority of IT professionals) is no better than a roll of the dice since H-1Bs are heavily oversubscribed and governed by a lottery system. Moreover, President Trump looks to make good on his campaign-trail promise to cancel or gut the H-1B visa, as well as restricting the L visa, further limiting the options not only for Indian citizens to move to the U.S., but for major U.S. companies to hire qualified employees.

In light of the above, Indian nationals in the U.S. are now open, more than ever, to immigrating to Canada.

The big U.S. technology companies are in full damage control mode, taking meetings with the White House to press the point that highly skilled software designers and engineers, for example, cannot simply be replaced by an army of perfectly qualified but mysteriously unemployed “white” Americans. The fact of the matter is that companies like Google and Apple cannot function without the level of IT engineering that comes naturally to Indian citizens, and those citizens – educated and trained in India – must immigrate to the U.S. There is simply no other way around it, short of opening offices in India and outsourcing all the work (an outcome the Indian Government would be pleased to see). Or is there? In fact, there is a third way: opening offices in Canada.

The changing winds on U.S. immigration policy are like an Indian summer for Canada. There is a growing chatter among U.S. companies to open satellite offices in Canada, given our views on how immigration supports rather than weakens our economy. Satellite offices in Canada are nothing new. They offer the near-shore benefits of not having to manage time-zone differences while providing U.S. companies with all the foreign trained talent they need. Foreign companies don’t even have to incorporate in Canada. Several major IT companies have operated for years in Canada under Extra-Provincial Licenses, although the needs of each company are different.

Current Immigration Policy

Despite the above, bringing IT workers to Canada as of this writing is not as easy as it should be or as it once was. There was a time when hiring a software professional was simple and straightforward. That’s because we had a legal instrument called the Simplified Entry Process for Information Technology Specialists, known as the Software Pilot Project, which allowed qualified IT professionals to apply directly for a work permit without their Canadian employer having to prove that they were not taking a job away from a Canadian. That program allowed thousands of IT professionals from all over the world to obtain Canadian work permits and subsequent permanent residency. After the economic crash of 2008, the program lasted another two years before it was shuttered in 2010.

Notwithstanding the loss of the Software Pilot Project, many foreign workers continued to enter Canada through our intra-company work permit, NAFTA Professional visas, or through the old Labour Market Opinion (LMO) process. While the LMO application involved proving that no Canadian person would lose a job opportunity, the qualifying thresholds still allowed Canadian companies to bring in foreign workers with minimal interference. That all changed with the introduction of the Labour Market Impact Assessment (LMIA) process, which was a political response to a news story involving a major Canadian bank and an Indian IT services company. In fact, it is arguable that the Canadian bank did nothing wrong, but the optics of the situation and the public backlash prompted the Harper Government to introduce very strict rules affecting how foreign nationals were screened for work permits. Likewise, the definition of what constitutes a Specialized Knowledge worker was also tightened as it applies to intra-company work permits.

A Golden Opportunity

Despite the populist appeal of the LMIA, which was championed by labour unions, Canadian corporations soon realized that their inability to hire foreign workers was a serious problem. Quiet pressure was put on the government to ease LMIA requirements, although under Prime Minister Harper the program never really changed. Then the Liberals won the election.

Not long after the Trudeau government came to power, it signaled a willingness to ease the LMIA requirements. For example, last July, Minister of Innovations, Science and Economic Development Navdeep Bains stated that the government intended to cut the processing times required to hire foreign workers. Likewise, on December 13, 2016, the four-year limit on LMIA work permits was rescinded.

More importantly, on March 0, 2017, the Canadian government announced details of a new Global Talent Stream of the Temporary Foreign Worker Program (the same department that oversees the LMIA), which establishes a two-week processing window for work permit applications for high-skilled talent. The Global Talent Stream will become operational in early June, most likely focusing on IT and knowledge-based workers. While it probably won’t be as flexible as the old Software Pilot Project program, the Global Talent Stream process sure sounds similar, at least in its spirit and intent. (The details of the program have not yet been made public.) The net result is that Canadian employers will find it easier to hire Indian nationals directly from India as well as those already working in the U.S.

In this way, it appears that the Liberal government has its finger firmly on the pulse of the U.S.’s immigration woes and is intending to fully capitalize on the opportunity. Minister Bains and Minister Hussen’s quick maneuvering on this issue is worthy of praise, and we can look forward to a more nimble, responsive, and market-ready immigration policy that has the potential to greatly advance Canada as a leading destination for cutting-edge companies across a wide range of sectors. Under these initiatives, Canada might finally emerge as the place for start-up investment. When combined with the government’s opening up of student visas, especially to Indian nationals, the future of Canada looks brighter than ever.



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