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Why did Canada just make it harder for multinational corporations to operate in Canada?

Last week, Citizenship and Immigration Canada issued this operational bulletin that changed the rules for certain employees of multinational companies coming to work in Canada on a temporary basis.

Details on the impact of those rule changes and how these rules differ from what previously existed can be found in my newsletter to clients last week.

In short, the changes to the rules affect what are known as “specialized knowledge” employees of multinational companies who are coming to Canada to work in the Canadian office. Under the new changes:

  1.  A wage floor has been set indicating what these workers must be paid in Canada to be able to transfer here;
  2. Clearing the bar for “specialized knowledge” is now much harder.

The changes to these rules are clearly targeted at nationals of certain countries.  Last year, when controversy erupted regarding a number of foreign workers taking away jobs for Canadians, the issue of individuals coming here as intra-company transfers came up on a CBC’s Go Public.  In this radio spot from CBC’s The Current, criticism was levied against the government regarding companies who bring in intra-company transfers to replace Canadian workers.

While stopping abuse of immigration problems is important, are these rule changes really set to protect Canadian jobs or is it being used to target certain foreign nationals?

Under these new rules, exceptions are made for citizens and residents of countries with free trade agreements with Canada. If these new rules conflict with an existing free trade agreement, the agreement would take precedence.

While this seems to be fair, a review of current and upcoming free trade agreements reveals who are really targeted.  Right now, Canada has free trade agreements with a number of countries including the U.S., Mexico, Chile, Peru and Columbia. As a result, individuals from these countries will be affected much less. When Canada finalizes its free trade agreements with Korea and the European Union, citizens of these countries will also face less stringent criteria.

 Practically, the companies that will be most affected will be companies transferring specialized knowledge workers from China, India and other countries. Is this rule change really being done to target India – the subject of The Current’s interview from last year?

 Not only were Indian workers the subject of last year’s media story on the CBC, but a couple of years ago, the Canadian High Commission in India attempted to set a number of rules for intra-company transfers that did not previously exist. This attempt was a struck down by the federal court at the time but, shortly after losing in court, the federal government made rule changes that incorporated everything the court said it could not do at the time. These recent changes seem to be an extension of that.

Regardless of who is the target of these changes, some of the comments that accompany the rule changes are troublesome with respect to global businesses.

The comment in the operational bulletin that “specialized knowledge” will only be held in a company by a small percentage of employees is troublesome. While it is clear that not every employee of a multinational company has specialized knowledge, in today’s world, companies are developing more specialized products and services. As a result, it is possible to legitimately have numerous “specialized knowledge” employees in a company.

 As well, companies around the world now have foreign offices that carry out distinct functions that may not be carried out at all in an office in another country.  There are also many companies in which multiple people do the same specialized task but larger groups are needed to accomplish a specific business project.  If immigration officers look at these rule changes to stringently, we could see the choking off of global interaction that can reduce the effectiveness of Canadian companies trying to do work abroad.

While some of the rules seem a bit harsh, what is the most troubling about these changes is that they came relatively unannounced.

While the government had sent signals that they would be changing these rules, they chose to make these changes with very little warning using what are known as a “operational bulletin”.  If the government made these changes by way of what is known as “regulation”, they must pre-publish the rules so that the public, individuals and businesses are given time to comment.  By doing it by way of operational bulletin, there is no way to provide meaningful feedback before the rule comes into effect.

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About Reis Pagtakhan

Reis Pagtakhan is an immigration law partner with MLT Aikins LLP. His extensive experience includes assisting businesses obtain temporary entry to Canada and permanent residency for their executives, employees and contractors from all over the world. Reis has lectured on and written papers on immigration law for the Law Society of Manitoba, the Manitoba Bar Association, the Human Resources Management Association of Manitoba, the Canadian Corporate Counsel Association, and the Community Legal Education Association of Manitoba. He has presented position papers before the Minister of Citizenship and Immigration, Immigration Department officials and Manitoba Labour and Immigration. He has written articles on immigration for the CBC, the Winnipeg Free Press, trade, industry and ethnic publications.

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