Tourism Agreement Should Be Applauded, But Does It Create an Unfair Monopoly?

On Dec. 11, 2007, the U.S. and China signed a memorandum of understanding on group leisure travel from China to the United States. This MOU should be applauded because it lifts prior Chinese rules restricting the travel industry. Still, a question remains whether travel agencies designated by the China National Tourism Agency (CNTA) will receive an unfair monopoly under the MOU.

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Prior Chinese restrictions prevented travel agencies advertising and organizing group leisure travel to the United States. These restrictions were in place because China and the U.S. hadn’t negotiated an approved destination status (ADS) agreement. Under a typical ADS agreement, China eases these restrictions for CNTA-designated travel agencies that post a bond with the Chinese government. In turn, the agencies collect “insurance” from their clients, the amount of which varies. And the destination country agrees to ease visa application requirements by waiving interview and fingerprinting requirements.
An ADS with the U.S. agreement isn’t possible given post-911 U.S. laws requiring interviews and fingerprints. Still, the MOU essentially provides the benefits of an ADS agreement without requiring the U.S. to change its laws. Under the MOU, CNTA-designated travel agencies may advertise and organize group leisure travel to the U.S. In return, among other things, the U.S. agrees that CNTA-designated agencies may make “exclusive” group interview appointments with the U.S. consular posts in China.
This is a step in the right direction. Chinese tourist dollars benefit the U.S. economy. Also, in the past, there has been a great deal of disembling as Chinese travel agencies sought to avoid market restrictions by organizing leisure travel under the guise of “business” travel. The agencies would then encourage applicants to misrepresent their travel purpose in U.S. visa applications. And U.S. consular posts would often deny such applications for failure to prove the business purpose or for misrepresentation. The MOU should alleviate this problem.
Still, the U.S. may be giving an unfair monopoly to CNTA-designated travel agencies by allowing them “exclusive” group interview appointment rights. It’s not clear what these “exclusive” rights are. Earlier in the negotiations over the MOU, the Commerce Department objected to giving exclusive rights to CNTA-designated agencies. A 2006 Washington Post editorial explained:

Needless to say, the United States cannot give preferential treatment to selected travel companies and grant them the profits from all inbound Chinese travel business. It would violate our laws and our most basic ideas of fairness.

But it’s not clear precisely what “exclusive” rights CNTA-designated agencies get under the MOU. The U.S. consular posts already allow group appointments to be booked if six or more are traveling together at the same time and for the same purpose.The MOU is expected to be implemented in the Spring of 2008. We may find out what “exclusive” rights CNTA-designated agencies have at that point.

Visa Statistics from the U.S. Embassy in Beijing

U.S. visa-issuing posts in China include the U.S. Embassy in Beijing and the Consulates in Shanghai, Guanghzou, Shenyang, and Chengdu.

In calendar year 2007, the U.S. Embassy and Consulates in china issued 417,146 nonimmigrant visas, a 17% increase over 2006. The vast majority, 417,146 or 69%, were B1/B2 visas (visitors for business and pleasure). Student and exchange visitor visas (presumably, F, M, J, and Q) made up 43,467 or 13% of the visas issued.

The U.S. Embassy alone issued 185,275 visas (44% of the China-wide total) in 2007, a 13% increase over 2006. Again, the majority, 185,275 or 70%, were B1/B2 and 24,137 or 13% were student and exchange visitor visas.

Source: U.S. Embassy in Beijing, NIV Issuances Workload Report.

U.S. Visa Application Fee Increase

NONIMMIGRANT VISA APPLICATION FEE WILL INCREASE TO $131

Effective January 1, 2008, the application fee for a U.S. nonimmigrant visa will increase from $100 to $131. Those applicants who paid the prior $100 application fee before January 1, 2008 will be processed without further payment only if they appear for a visa interview before January 31, 2008.

Applicants who paid the prior $100 application fee and appear for visa interviews after January 31, 2008 must pay the difference – $31 – at CITIC Bank and obtain a receipt before they will be interviewed.

Any payments made after January 1, 2008, regardless of the interview date, must be for the full $131 fee.

IMMIGRANT VISA APPLICATION FEE WILL INCREASE TO $355

Effective January 1, 2008, the application fee for a U.S. immigrant visa will increase from $335 to $355. Those applicants who paid the prior $335 application fee before January 1, 2008 will be processed without further payment even if they appear for an immigrant visa interview after January 1, 2008.

Most IV applicants pay their fees through the Department of State’s National Visa Center (NVC) in the United States. Fee bills sent by NVC will reflect this change effective January 1, 2008. Applicants who make their payment after January 1, 2008 will be required to pay the increase even if their original fee bill sent prior to January 1, 2008 displays the fee of $335.

Source: U.S. Embassy

GAO Report: Growing Visa Demand a Challenge for State Department

A new report from the U.S. Government Accountability Office highlights several challenges the State Department faces in keeping up with growing visa demand at consular posts in China. GAO, Border Security: Long-Term Strategy Needed to Keep Pace with Increasing Demand for Visas, GAO-07-847 (July 2007).

INACCURATE ESTIMATES OF VISA APPOINTMENT WAIT TIMES

One challenge is that the State Department in Washington, DC, doesn’t currently have accurate estimates of visa appointment wait times at consular posts. Posts use different methods–not one standard–for making these estimates. Most disturbing, “some posts artificially limit wait times by tightly controlling the availability of future appointment slots—such as by not making appointments available beyond a certain date, which can make appointment scheduling burdensome for the applicant who must continually check for new openings.”

[The State Department website today reports B visa wait times in China as follows: Beijing 30 days, Shanghai 20 days, Guangzhou 36 days.]

TEN-PRINT FINGERSCANS MAY INCREASE WAIT TIMES

By September 2007, State plans to have equipment in place at all posts to do 10-print fingerscans. This new security measure may slow down appointments and increase wait times. London has already begun using 10-point fingerscans, leading to “about a 13 percent reduction in the number of applicants processed in a day. However, as each post faces slightly different circumstances, it is unclear whether this reduction would take place at all posts.” Id. 22.

CONTINUED GROWTH IN VISA APPLICATION VOLUME

Consualr posts in China reported that their visa adjudication volumes increased between 18 and 21 percent last year alone, and growth is expected to continue. Id. at 10. According to a State Department study, visa applications in China are projected to grow 232% from 2005 to 2020. This represents the highest growth rate of any of the countries studied and the growth in the number of applications (behind Mexico).

STRAINED CONSULAR FACILITIES

Consular facilities are having a tough time keeping up with demand. Beijing is planning to open a new Embassy just in time for the 2008 Olympics. The new facility will meet consular section needs when it first opens, but the post expects to quickly outgrow the new space as workload will soon require an additional six interview windows. Id. at 22.

In Shanghai, even though the consular section was moved to an offsite location to process visa applications, the post has indicated that it already has reached visa-adjudicating capacity because it cannot add any more interviewing windows in the current space, and construction on a new consulate will not begin until 2009.

STATE DEPARTMENT’S TWO-YEAR PLAN

The State Department has adopted a Two-Year Plan to meet growing visa demand by the deployment of a worldwide appointment system; use of the Kentucky Consular Center to verify information on visa petitions; revalidation of fingerprints for applicants who have already completed the 10-fingerprint scan; the implementation of an entirely paperless visa application process by the end of 2007; and remote or off-site interviewing of visa applicants.

The full GAO report is available at the GAO website.