Duty Free break sought for Caribbean

Posted on Apr 26 1999

Two pending legislation under review by the US Congress is seeking duty-free breaks to apparel made in countries on the Caribbean Basin subject to few conditions, posing yet another blow to the garment industry in the CNMI.

The nation’s lawmakers are likely going to compromise on country-of-origin textile provisions in the twin measures introduced in both the House of the Representatives and the Senate in a bid to hasten its passage.

The move comes on the heels of attempts by some members of the Congress to strip CNMI trade privileges guaranteed under the Covenant, such as the headnote 3(a) which provides duty-free, quota-free entry into the mainland for apparel products manufactured in the Northern Marianas.

In extending trade privileges to 26 Caribbean nations, the Congress is concerned over the impact of the World Trade Organization to US textile mills and Caribbean Basin apparel makers by year 2005 when global quotas on apparel are eliminated.

Rep. Jim Kolbe (R-Ariz) has told the House Subcommittee on Trade that if they were not given the duty-free advantage, it is likely that production will shift to the lowest cost producers which will be mostly in Asia.

The representative is a co-sponsor of the bill pending in the House that would grant duty breaks to apparel using either Caribbean Basin or US textiles.

Another measure proposed by Sen. Bob Graham (D-Fla) in the Senate, on the other hand, would limit the textile provision strictly from US mills only.

Both legislation have stalled due to the differences on the country-of-origin provision, but the two lawmakers have agreed to compromise, working on a proposal for a gradual duty-phaseouts or requiring some US fabric be used.

Pitched as debt-investment-trade package, they are measures aimed at helping the Caribbean Basin recover from devastation wrought by two hurricanes that lashed across the region last year.

If the bills pass the Congress, garments produced in the CNMI will not only face stiff competition from those manufactured in Caribbean nations, but may constitute a severe blow amid efforts to change the trade privileges of the commonwealth.

The Northern Marianas has come under fire in recent years over the increasing number of foreign workers on the CNMI, prompting the Clinton administration to press takeover of local labor, immigration and minimum wage standards.

Some members of the Congress, including Rep. Bob Franks (R-NJ), have also singled out the CNMI from other US territories to deny the island duty-free status under a proposal currently being reviewed.

Franks have expressed concern on the use of “Made in USA” label in apparels manufactured on the island, saying the business practice has threatened the apparel industry in the mainland.

He said tariffs should be imposed on all goods coming from the CNMI — a move being opposed by Rep. Dana Rohrabacher (R-Ca).

In a Dear Colleague letter, Rohrabacher lashed back at the proposal for trying to amend the Covenant, which formed the political union between the US and the CNMI more than 20 years ago, saying it would throw back the island to dependency on US taxpayers’ dollars.

He defended the island government for its rights to control its own labor and immigration laws that have allowed the CNMI to be self-sustaining.

“Under the commonwealth covenant, the economy of those islands has benefited and the standard of living has improved. Garment factories that would never dream of locating in a distant island territory have opened because the CNMI permits the use of visiting workers from the Philippines and Guam,” Rohrabacher said.

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