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Thursday, April 17, 2014

The end of an era for the Commonwealth

By Benigno R. Fitial
Special to the Saipan Tribune

Editor’s Note: The following is the statement of Gov. Benigno R. Fitial regarding the approval of the CNMI Takeover Bill.

The passage of S. 2739, the CNMI Federal Takeover bill imposing unprecedented U.S. immigration and labor controls, represents the end of an era for the people and government of the Commonwealth of the Northern Mariana Islands.

I believe that local control of immigration, labor, and minimum wage policies under our Covenant agreement with the United States Government served as vital economic development tools that transformed the CNMI economy during the 1980s and 1990s, and created a higher standard of living for CNMI residents and non-resident guest workers. The CNMI’s liberal free market policies previously enabled the CNMI to attract investments and develop a more modern and prosperous economy that substantially removed the poverty experienced during the days of the U.S. Trust Territory government.

I had hoped to continue using these sound economic tools to orchestrate an economic recovery for the CNMI, and I deeply regret that recently passed federal legislation may impede our local government’s ability to orchestrate an economic recovery based on sound economic incentives and competitive free market policies.

I understand that there are three factors of production vital to the success of any economy. These factors of production are land, labor, and capital. The federal government’s arbitrary political restrictions will severely damage our ability to attract and keep a sufficient labor force to sustain and grow our island economy. The new federal law, for instance, mandates that all CNMI guest workers will be phased out in five years. An economy without an adequate supply of labor would be a weak and distressed economy.

Our ability to attract capital will also be severely compromised by our inability, under federal law, to attract and keep an adequate foreign workforce to further develop our economy and increase our standard of living. Investment capital will likely not be attracted by artificially high labor costs resulting from forced federal minimum wage increases based on political rather than sound economic considerations. Forced federal wage increases would increase the cost of doing business and exacerbate an upward inflationary spiral already caused by record high fuel costs and the loss of the CNMI’s garment industry shipping subsidy previously derived from greater export volume and economies of scale.

The recently approved federal immigration legislation was not justified by existing CNMI economic conditions and failed to take the CNMI’s true economic situation into account. In advancing the bill, prominent U.S. policymakers got CNMI population figures wrong, greatly exaggerating the population of nonresident workers by a factor of one hundred. And sweatshop conditions and our garment industry were wrongly cited as justifications for the federal legislation, as federal policy-makers pointedly failed to recognize the demise of our apparel manufacturing industry and the weakness in our tourism base.

Like the federal minimum wage law applied to the CNMI, the federal immigration bill was passed without the benefit of an economic impact study, and despite conflicting interpretations of the legislation’s provisions.

For example, long after the Senate passed S. 2739 on April 10, 2008, the Senate Energy Committee report on the bill has been made public. Full of long-discredited allegations regarding the Commonwealth and numerous technical errors, the report rejects GAO’s view of a critical section of the legislation.

The provision in question relates to the issuance of H visas in Guam and the CNMI during the “transition program” without being restricted by the numerical limitations applicable nationally to such visas. In its legal report dated March 28, 2008, the GAO took the position that this exemption from these limitations would end on December 31, 2014, even if the Secretary of Labor exercised the authority granted under the legislation to extend the transition period for up to five years. According to GAO, the Secretary is authorized only to extend the CNMI-Only Transitional Program in the bill, but not other aspects of the transition program, such as the provisions relating to the issuance of H visas.

The CNMI strongly opposed this interpretation as unsupported by the language of the bill, its legislative history, and common sense. The Senate Committee report agrees with this position. With respect to this exemption from the numerical caps, the Committee states:

“The Committee notes that this waiver is necessary to help meet the anticipated labor demands of the planned U.S. military buildup in Guam and the CNMI, and the Committee intends that this waiver of the numerical limitations for Guam and the CNMI is extended along with any extension of the five-year transition period.”

Two paragraphs later, the Committee discusses the power of the Secretary of Labor to extend the transition period and points out:

“It is important to note that the transition period covers several policies and programs and is not limited to the Commonwealth Only Transitional Workers Program. For example, the transitional program also covers the Guam/CNMI waiver on numerical limitations on the INA H-visa program.”

The Committee’s effort to justify the legislation is based almost entirely on allegations and facts before the Committee eight years earlier.

- It relies on statistics regarding the CNMI workforce presented by the Commission on Immigration Reform in 1997. The report ignores the current data supplied by the Commonwealth regarding its actual population and the substantial reduction in the number of foreign workers since 2005.

- It ignores the changing nature of the CNMI economy as a result of the 2005 changes in world trade rules and the departure from the CNMI of most of the apparel factories.

- It ignores the current economic depression in the CNMI and makes no effort to assess the likely impact of the legislation on the economy and the Commonwealth’s citizens.

- It recycles 1997 allegations from the Immigration and Naturalization Service regarding law enforcement problems and the inroads of organized crime into the CNMI. These allegations were unsupported at the time and certainly have no relevance to the Commonwealth today.

- It cites a 2006 report by the Federal Ombudsman as supporting a persistent pattern of exploitation and mistreatment of aliens. This was a report that was so convincingly rebutted by the CNMI Department of Labor that the Ombudsman has not prepared another report in the last two years.

The Senate Committee report is confusing in many respects.

- The report states that the Committee recommends the House bill (H.R.3079) for approval “without amendment.” But in fact the bill submitted to the Senate did have two amendments – the most important one being the changed date of the expiration of the transition period (from 2013 to 2014).

- The report includes a version of H.R.3079 which was not the version actually passed by the House of Representatives and sent to the Senate for action.

- The report “encourages” the federal agencies implementing the legislation “to keep the costs associated with the transition program period on employers and non-immigrant guest workers at the same level as is currently being assessed by the CNMI government under local law.” But the report of the Congressional Budget Office included in the Committee report anticipates a very different end result. It states that “We expect that by 2010 [the Department of Homeland Security] would cover its costs by collecting fees from applicants for visas.”

I deeply regret that this legislation was passed to the detriment of the CNMI’s economic recovery efforts, and I will continue to consult with the Legislature, the business community, and other interested stakeholders about our options going forward.

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