‘LatAm issue affecting tariff code amendment’

The CNMI’s quest to have the U.S. Harmonized Tariff Schedule amended would have to take a back seat for at least a month as Congress is currently focusing its efforts on trade issues affecting Latin America.

“The U.S. is poised to take care of Latin America. It’s understandable because it’s the underbelly of the U.S. and the government is concerned about it. There’s national security concern, etc.,” said Richard Pierce, executive director of Saipan Garment Manufacturers Association at a presentation before the Strategic Economic Development Council meeting at the Senate chamber Monday.

He said Saipan’s goal for the amendment of HeadNote 3(a) of the Tariff Code “depends how successful” a Latin American-related trade bill will fare in Congress.

He said American lawmakers are deliberating on the measure now. This process may take at least a month. Only then can the CNMI have a chance to get the attention of the U.S. Congress.

He said that amending HeadNote 3(a) would give insular areas equal treatment with other U.S. free trade partners by extending to all products—including textile and apparel—the current requirements that eligible products contain at least 30 percent U.S. and local content. The existing law sets the limit at 50 percent.

The amendment, Pierce said, would result in reduced expenses, which would allow Saipan manufacturers to compete globally by promoting more orders, increasing the local industry’s tax payments to the government and local spending in the community.

As it is, the United States’ existing free trade agreements with foreign countries is “eroding Saipan’s competitive advantage,” he said.

These agreements include NAFTA, ATPDEA, AGOA, and other trade agreements with Middle Eastern countries such as Egypt, and South America.

CNMI business and government leaders have agreed to come together to petition the U.S. Congress to amend the tariff code.

Without the amendment, more factories are expected to close down in the Commonwealth, which would create a serious impact on the finances of the government.

SGMA said that garment sales in the CNMI has consistently dropped in the last four months. From $78.3 million in December 2004, the number dropped to $63.3 million in January when the WTO lifting took effect, and further down to $54.6 million in February.

In March, the sales went up a little to $57.2 million.

In user fees, CNMI government revenue from the industry decreased by $1.2 million in the last three months. The government used to receive an average of $30 million a year from the industry.