Sent: Tuesday, February 25, 2003 12:53 PM



War on terrorism squeezes businesses
Homeland security has added a huge burden to companies that have
international dealings.

By Evelyn Iritani Business reporter | Sentinel Staff Writer
Posted February 23, 2003

Florida tour operators complain that they are losing business to Canada and
South America because it is taking Mexican travelers up to four months to
get visas to visit the United States.

Newly painted Boeing jumbo jets sit for days on a tarmac in Seattle because
their foreign buyers are unable to obtain visas for pilots to come to the
United States for training to fly the aircraft home.

And a $5 million metal-cutting machine has been stranded at a Cincinnati
factory for four months because its Chinese purchaser can't get its
engineers into the United States for a final inspection.

U.S. companies, heretofore reluctant of appearing to be unpatriotic
profiteers, are becoming increasingly unhappy -- and vocal -- about the
campaign to secure America's borders.

Measuring the fiscal fallout from the war against terrorism is difficult
because it cuts across a broad swath of industries and has varying effects
depending on a company's size, its dependence on foreign markets and its
place in the global supply chain.

But anecdotal evidence suggests that the homeland security effort is adding
a huge amount of expense and uncertainty to a struggling U.S. economy.

Executives say that security efforts are strangling legitimate global
commerce and costing tens of millions of dollars in lost business, extra
handling and storage fees and increased paperwork.

Beyond the short-term losses, companies fear that the United States is
imperiling its economic recovery and future competitiveness by encouraging
frustrated foreign customers to do business with more amenable rivals.

The security processes "that are in place or are evolving have become so
cumbersome and so lengthy that it is extremely difficult for us to conduct
business in any regular fashion," said Bob Bauerline, Boeing Co.'s vice
president of international operations.

The problem could get worse, traders warn, if the United States implements
proposed "advance electronic notification" rules for imports and exports.
That's because these regulations could severely restrict the operation of
overnight air cargo services and companies dependent on "just-in-time"
delivery for their manufacturing plants and retail stores.

'Tilted too far'

U.S. business leaders insist that their intent is not to undermine
legitimate efforts to protect American citizens. But they say the
government has gone overboard in its rush to shore up its borders, creating
red tape that is overwhelming a homeland security apparatus that is
ill-prepared to cope.

"The only way to get to zero risk is to not let anything in, and that makes
no sense in a globalized world," said William Reinsch, a former Commerce
Department official who heads the National Foreign Trade Council, a
business group based in Washington. "You have to balance and minimize your
risk. We're concerned that this has tilted too far."



The most serious business complaints arise from the tighter controls on
foreigners entering the United States. Since the September 2001 attacks,
U.S. officials have revamped the visa process, dramatically increasing the
number of applications receiving special screening by the State Department,
the FBI and the CIA.

Males from the Middle East or predominantly Muslim countries are getting
the closest scrutiny. But business people from Russia, China, India,
Eastern Europe and Vietnam also are getting caught in the net, because of
concerns about sensitive U.S. technology falling into the wrong hands,
according to immigration lawyers and U.S. firms.

"Nobody wants to make a mistake, even a mistake that has nothing to do with
terrorism," said Crystal Williams, information director for the American
Immigration Lawyers Association.

For U.S. multinationals accustomed to moving people and products around the
world, getting a visa for a foreign customer or employee has become a major
headache.

Visas take up to 6 months

Routine visa applications that used to take less than 10 days to process
now take up to six months, according to U.S. companies. Late last year, the
State Department acknowledged it had a backlog of at least 20,000
applications, though it now says that it has worked through most of those
cases.

Boeing has had a number of cases in which foreign customers have spent
months, sometimes unsuccessfully, trying to get visas for their pilots to
visit the airplane maker's facilities for routine training or to take
delivery of new jetliners, Bauerline said.

He would not identify the airlines involved but said the biggest problems
involved the Middle Eastern and predominantly Muslim countries being
focused on by the Bush administration.

The visa issue has become particularly burdensome in China, where U.S.
firms are fighting for a share of one of the world's fastest-growing
technology markets.

Chip Storie, vice president of marketing for Cincinnati Machine Inc., spent
months trying to persuade federal officials to give him an export license
so he could sell a high-tech metal-cutting tool to Chengdu Aircraft last
year.

The Chinese aerospace firm, a major Boeing supplier, was going to use the
machine to build tail components for Boeing's 757. But four months after
its completion, the gear still sits in Cincinnati because the Chinese
company has been unable to obtain visas for its personnel.

"I'm not getting paid because I can't ship the product, and my customer is
upset because the U.S. government had already approved to ship this
equipment," Storie said.

Tightened border security also has dealt a blow to the battered U.S. travel
industry. International travel to the United States is down significantly,
with arrivals from the Middle East dropping by more than 50 percent in the
last part of 2002.

Looking elsewhere

In part, that reflects the tighter security controls that have translated
into increased costs and hassle for foreign visitors, according to Rick
Webster, director of government affairs at the Travel Industry Association
of America, a Washington trade group.

At a time when hotels and restaurants are desperately looking for ways to
boost business, the unpredictability of the visa process is causing
conference and trade show planners to rethink holding meetings in the
United States for fear their foreign participants will be unable to attend.

Evelyn Iritani is a business reporter for the Los Angeles Times, a Tribune
Publishing newspaper.

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