Closer Look: 'Deemed' visas are a Cold War holdover

For H-1B immigrants from China, Russia, and some Mideast nations, American firms must additionally obtain export control approval to hire them.

At the height of the technology boom, H-1B documentation was a widely used practice by U.S. firms eager to bring foreign nationals to this country to obtain critically short technical help. The influx of H-1B employees irritated the IEEE and other engineering groups which complained the companies were bringing in foreign workers at lower wages at the expense of American engineers and scientists.

The clamor has faded a bit with the electronics industry downturn and shrinking work forces. But one aspect of H-1B visas hasn't changed: U.S. companies seeking to hire technical employees from nations on the export control embargo list and who intend to put those employees to work on sensitive programs still require Commerce Department approval -- just as if the company was shipping a controlled product to these same countries.

The procedure is called a "deemed" export control license. The U.S. Commerce Department considers these workers with access to controlled technology to be equivalent to the exports sent to countries on the restricted list. Companies must apply for a license just as they would were they to ship actual goods.

"Deemed" export control licenses are no minor affair. The General Accounting Office found that they account for almost 10% of the total export licenses issued by the Commerce Department. But except for the paperwork hassle and long Commerce review times, the extra procedure has proved no real barrier to getting approval. Only three applications for "deemed" export licenses were denied in 2001, while 822 were cleared.

But what about possible foreign workers from controlled countries hired to work on restricted programs without companies seeking "deemed" export licenses? The GAO charged that Commerce has a poor record of screening immigrant visas and H-1B applications to spot possible violations. Even where a potential problem case is detected, Commerce often fails to follow up, the government auditor claimed.

A thornier problem is not with workers from restricted companies operating in the United States, but with foreign nationals working with American firms overseas on controlled technology. The question gets greater attention as U.S. high-tech firms rush to set up manufacturing, design, and even some R&D operations in China.

It is clear that the rest of the Western world is far less concerned than U.S. government hardliners about controlling employee access. Even if the U.S. can restrict access, foreign employees from controlled countries can probably get the technology from working at the companies of our allies.

For now, "deemed" licenses are another vestige of the Cold War legacy that U.S. high tech firms must deal with.