Feds: Don’t kill the dying

A memo to the US Congress and the rest of the US Federal Government: Don’t kill the dying. Don’t kill what is already slated to die. And make no mistake about it, friends, the CNMI garment industry is a dying industry. It will not be around forever. Sooner or later, some other worthwhile industry must inevitably take its place.

The CNMI garment industry initially flourished for three crucial reasons: (1) a non-federalized and somewhat competitive CNMI minimum wage, (2) access to skilled Chinese and professional Filipino labor, and (3) the Headnote 3(a) duty free US export provision.
Yet, of all these vital reasons, the CNMI garment industry initially flourished mostly because of the Headnote 3(a) duty free provision.

Many other countries offered much lower labor costs. In such third world areas as Vietnam, Indonesia and Cambodia, for instance, garment workers might be lucky to earn $45 a month (perhaps even less)–overtime included.

Unlike the CNMI, many other countries also offered an abundant local labor supply. Had CNMI garment factory owners gone elsewhere, they would have avoided the costly irritation of having to import practically their entire labor force to run their operations.

Yet, when the CNMI garment factories first opened shop in the early 1980s, the Headnote 3(a) provision negated all of the other CNMI disadvantages. At that time, the CNMI had a very limited commercial infrastructure. The CNMI shipping industry was inadequate. The CNMI telecommunications industry was at its infancy.

Despite these formidable obstacles, enterprising garment entrepreneurs took a risk. They risked their precious capital on CNMI soil. They risked it on the promise of the CNMI’s Headnote 3(a) export provision, which the U.S. government–curiously and ironically enough–granted us in the hopes of fostering economic development and local self-sufficiency–the very things our local garment industry helped to accomplish for the formerly impoverished people of the Northern Mariana Islands.

Today, the Headnote 3(a) duty free provision is no longer as salient. After the North American Free Trade Agreement and the increasing spread of free trade, including the Caribbean basin initiative, the CNMI garment industry no longer holds such a distinct competitive advantage. Indeed, the CNMI garment industry is imperiled.

According to the 21 August edition of The Wall Street Journal, Mexico already exports “more than $9 billion of finished garments to the U.S. annually–about seven times what it exported in 1993.” But even Mexico’s low-wage, duty free garment exports are threatened, as China moves to join the World Trade Organization, which aims to phase out garment quotas by 2005.

The CNMI garment industry will die of natural free trade causes by the year 2005. Let it die a natural death. Why hasten to kill an already dying industry? Why bother to butcher an industry that only has a few more years of life?

Remember that if the Feds take away our Headnote 3(a) provision, they will not only be killing an already dying garment industry. Perhaps even more importantly, they will also be killing any chance of a replacement export industry–leaving the people of the CNMI to rot in poverty. Could this be what the Feds mean by “fairness”?

This is precisely the message Preston Gates must relate to the folks in DC.