HOUSTON — A veteran of the U.S. oil industry, Paul Fairbanks is accustomed to the chaos and bureaucracy of countries such as Venezuela and Nigeria. But in the three years since the Sept. 11 attacks, he has faced obstacles from an unexpected source: the U.S. government.
The Bush administration's effort to tighten the borders has meant millions of dollars in lost revenue and added costs for Fairbanks' employer, Dresser-Rand Control Systems. Customers resent lengthy delays in obtaining U.S. visas, and the company's foreign-born engineers are routinely delayed and scrutinized at U.S. airports. At least one foreign firm has severed relations with the company.
"Security has a price, and part of the price is what we're seeing here," Fairbanks said.
Business executives have been reluctant to protest too loudly because no one wants to be accused of opening the door to the next terrorist attack on American soil. But throughout the country's increasingly globalized economy, concern is growing over the costs of a security-driven foreign policy.
U.S. and foreign hospitals are building medical centers in cities such as Singapore and Shanghai for wealthy patients who no longer can or want to travel to the United States. New regulations threaten to crimp commerce along the U.S.-Mexico border. Experts in the cutting-edge technologies that are likely to drive growth in the 21st century face long waits for visas, or outright rejection. Instead of attending the best U.S. schools, foreign graduate students are heading to Britain and Australia.
Wealthy foreigners are shopping, buying vacation homes and investing elsewhere. That has contributed to a plunge in direct foreign investment in the United States, which dropped to $40 billion last year from $72 billion the year before, according to the Organization for Economic Cooperation and Development.
Firms such as Dresser-Rand, Boeing and Merck are outsourcing work, moving meetings to less restrictive locations abroad or expanding foreign operations.
Administration officials said fears of economic fallout from their policies are overblown, and they cited improvements in exports and job creation. They also said they had dramatically reduced the wait for visas by adding personnel and technology.
Rather than choking off commerce, the tighter border security and immigration controls have provided a more secure environment for business, said Asa Hutchinson, undersecretary for transportation and border security in the Homeland Security Department. "I would make the case it is not costing our economy, it's the foundation for economic growth," he said.
Critics counter that Washington has swept problems such as illegal immigration and industrial espionage into its widened security net, bogging down a system that should be focused on more serious threats. Meanwhile, there is no program for expediting visas for frequent business or academic visitors, and it can take several years for workers with specialized skills to obtain them.
"It does have a critical impact," said Dr. Ismail Kola, vice president of basic research for Merck, a New Jersey-based pharmaceuticals firm that waited months for a visa for an Asian chemist it was hiring to work on a new project. Kola said the company loses millions of dollars each day a new drug is delayed.
William Reinsch, president of the National Foreign Trade Council, whose members include Boeing, Caterpillar, Motorola and Microsoft, said the security restrictions had "ominous" implications for the country's ability to retain jobs and stay at the forefront of technological development.
Visa delays alone have cost U.S. exporters $30.7 billion in lost contracts, delayed shipments and other areas, according to a study released in June by Reinsch's group and seven other leading U.S. business organizations. The restrictions impede access to fast-growing markets in countries such as China, which has supported the administration's campaign against terrorism.
"I think this is in part contributing to the growth of research labs in centers of excellence in China and elsewhere," said Reinsch, who served as the head of the Clinton administration's export control program. "Companies are saying, 'If we don't know if we can get our guys here, then we'll put our labs over there.' "
Some of the companies hit hardest are those that have been doing business with the Middle East or Muslim countries elsewhere. Since the Sept. 11 attacks, U.S. firms have lost at least $1.5 billion a year in contracts, tourism receipts and tuition from the Arab world, says the National U.S.-Arab Chamber of Commerce, a Washington-based trade group.
Midamar, an Iowa food products trading company, is one of them. Founder Bill Aossey's customers include the foreign outposts of McDonald's, KFC and other large U.S. restaurant and hotel chains.
