Head Note 3(a) bill introduced

A bill amending Head Note 3(a) of the U.S. Harmonized Tariff Schedule was introduced Wednesday at the U.S. Senate—the first salvo in the effort to keep the CNMI’s garment industry competitive in the face of evolving world trade.

In a sign that bodes well for the bill, S.1954 was introduced by Sen. Larry E. Craig, a Republican from Idaho, and Sen. Daniel Akaka, a Democrat from Hawaii—in a bipartisan show of support for the Commonwealth.

S.1954 aims to amend the General Note 3 (a) to give products imported from U.S. insular possessions the same treatment as products imported from countries with which the U.S. has entered into a free trade agreement.

“This is truly a collaborative effort. …I am most encouraged by the bipartisan support from Congress. I’m greatly touched that Senator Akaka decided to co-sponsor this bill,” said Gov. Juan N. Babauta in a statement.

He said the legislation would not only help the CNMI, but potentially deliver economic opportunities to Guam, American Samoa, and the U.S. Virgin Islands.

Speaking in support of the bill, Craig cited the need “to help strengthen and diversify the economy” of the Commonwealth of the Northern Mariana Islands.

In his remarks introducing the measure, Craig cited the growing competition that the CNMI’s apparel industry is facing with China’s garment industry. Further, he said that the CNMI’s local economy has been negatively impacted by Japan’s recession.

“To help combat these outside influences, Congress must begin to address the economic realities of the CNMI,” he said.

He said S. 1954 would “address and mitigate the economic impacts on the CNMI.”

“It is my hope that this committee [Trade], along with Finance Committee, can and will take a hard look at the CNMI and address these issues,” he said.

The bill’s amendment would reduce the local value-added content of garments made in the CNMI from 50 percent to 30 percent.

Governor special assistant on trade relations Richard A. Pierce said yesterday that the passage of the bill would preserve jobs in the private and public sectors, stabilize service support industries, such as transportation, shipping, communications, local retailers and wholesalers, and potentially increase government revenue “as the industry would be able to produce apparel at sometimes less than even China could.”

The bill’s introduction came following the U.S. Congress’ passage of the Central American Free Trade Agreement. This, local authorities said, would compel U.S. lawmakers “to even more consider the plea of the CNMI, a U.S. territory.”

CAFTA extends trade privileges to Nicaragua, Guatemala, Honduras, El Salvador, Costa Rica and Dominican Republic. Similar trade agreements had been granted to Middle Eastern countries like Jordan and Egypt.

The administration said that lobbying effort was made in collaboration between the Governor’s Office and Washington Representative Pete A. Tenorio’s office.

Craig said that over the past few months, he and his staff “met with numerous officials from the CNMI to discuss [these] issues.” He said he is “very impressed” with Babauta’s willingness to address the issues facing the Commonwealth.

“Gov. Babauta understands what steps need to be taken to stabilize the economy and establish positive growth for CNMI. I believe his leadership will prove extremely valuable as the U.S. works with the CNMI to find long-term solutions for their economy,” said Craig.