SGMA appeal to Senate committee Consider economic consequences on CNMI

Amid opposition to a planned federal takeover in the Northern Marianas, the Saipan Garment Manufacturers Association has asked the Senate Committee on Energy & Natural Resources to look closely at the consequences of any legislative solution it may consider imposing in the CNMI.

Even with a graduated reduction in foreign workforce as proposed under SB 1052, the CNMI loses not only management but control over its immediate economic future.

“Success in driving the apparel sector out of business may translate as well into the resumption of operating subsidies for a crippled CNMI,” SGMA said in a position paper submitted to the committee.

The 31-member garment factories of SGMA currently provide 25 percent of the CNMI government revenues amounting to more than $50 million aside from providing over half of all the jobs in the CNMI including those for permanent residents.

“That is what will be lost when garment factories are driven from the CNMI. Will it be replaced by federal appropriations or will the CNMI economy simply sink back closer to the subsistence living that characterized our pre-Covenant days,?” asked SGMA.

With the exception of garment businesses operated by SGMA, the Northern Marianas economy has taken a nose dive as a result of Asia’s financial crisis. Government revenues, highly dependent on business earnings, declined 25 percent over the last two years.

As further cuts are likely to happen, the CNMI is facing budget deficits. Due to the phasing out of all apparel quotas within the World Trade Organization in the year 2005, SGMA said the industry faces additional competitive pressures.

Instead of disrupting the CNMI economy, SGMA urged the Committee to encourage and direct federal cooperation in the areas of labor enforcement, training and long-term economic planning.

At a time when the U.S. Congress is debating extending favorable duty and quota treatment to apparel from the Caribbean and from Africa, SGMA asked why is it also considering changes to discourage apparel production in a U.S. territory where all workers earn more than those in these other regions. They are also protected by U.S. labor laws and are able to save significant sums that allow them independent financial futures in the countries they came from.

During the recent economic conference in the CNMI, economists predicted that the size of the CNMI apparel industry will shrink in the year 2005 . “In economic terms, that is a short-term prospect of uncertainty. Why push the industry away when market forces may do that anyway, but at a time when the CNMI will have had five years to adjust to that prospect,” SGMA said.

Critique of the bill

There is nothing in SB 1052 which requires the two federal agencies most responsible for immigration — the Department of Justice and the State Department, to actually assist the CNMI in trying to administer an effective immigration process.

The Commission on Immigration recommended that the State Department help pre-screen workers entering the CNMI, but the bill would leave to this administration, which urges an immediate takeover of CNMI immigration, the option of refusing to offer any assistance to the CNMI during the trial period.

SGMA said the administration could prevent an honest test of the CNMI’s ability to administer its own system.

As already expressed by members of the Senate committee, the garment association believes that there has been inadequate federal presence and inadequate federal assumption of responsibility for federal duties in the CNMI.

While the bill seeks to eliminate the garment industry in the CNMI, it has ensured adequate workers for construction firms and hotels. “They are intended to be the winners under the bill. The garment industry is the designated loser. This selection will thus be made in Washington, and neither voters nor market forces in the CNMI will have any say in such basic economic choices,” SGMA said.

SGMA said the bill creates a framework in which the CNMI’s immigration system will be evaluated, which will surely fail with the imposition of the Immigration and Naturalization Act. In case the CNMI passes, it is only the beginning of the process since the evaluations are far too many.

The proposed measure provides vast powers to the Attorney General since she alone decides what standards are “necessary.” No further guidance is provided. Neither the CNMI nor the public at large can comment on what the standards for an effective immigration system ought to be, nor are the Attorney General’s decisions are reviewable.

Based on the bill, the CNMI’s immigration system will be evaluated for only a year. “The Commission on Immigration has recommended that the existing federal immigration authority, the Immigration and Naturalization Service, be completely rebuilt, a process that will take years to complete. However, the CNMI only gets a year to show why its immigration system should stay in existence.

In its 1998 Federal-CNMI Initiative report, the Department of Interior has already determined that “the CNMI lacks the institutional capacity and a genuine commitment to institute” immigration reforms.

Said SGMA: There is also a certain irony in having the Attorney General, the overall boss of the INS, deciding whether the CNMI’s immigration system meets minimum standards when the INS has received a flunking grade from an independent commission. Will she rely on the INS to tell her how to fix immigration problems in the CNMI?
Will she receive objective analysis elsewhere in the administration.?

Cooperation

Together with the CNMI government, businesses on the island including SGMA had hoped for a cooperative relationship as urged by the Commission of Immigration.

Recognizing the responsibility of the Department of Interior toward the promotion and preservation of the CNMI’s economic development, SGMA had thought that with federal help, the CNMI government could improve the local system and bring it up to high standards.

Unfortunately, SGMA said the Clinton administration seemed to have gone out of its way to headline what was wrong with the CNMI rather an search for ways to help the Governor and business community carry out improvements.

Reforms

SGMA has implemented various reforms including the adoption of a Code of Conduct which must be followed by the member-companies. The development of the Code was made in cooperation with the Business for Social Responsibility, a San Francisco-based human rights and educational non-profit organization.

A compliance mechanisms is built into the Code where the committee is responsible for investigating complaints about member companies and taking appropriate action. In 1998, two members were suspended for non-compliance issues. This year, a company member withdrew from the association prior to the completion of a compliance committee investigation.

Statistics from the Occupational Safety and Health Administration of the Department of Labor showed that in fiscal year 1998, apparel factories had a 70 percent better compliance rate than apparel factories elsewhere in the United States.