‘Lack of federal amendment will lead to garment buyers’ pullout’

Congressional amendment to Headnote 3(a) of the U.S. Harmonized Tariff Code must take place before the end of the year—or the CNMI garment would lose its buyers and face an early demise, said Lt. Gov. Diego T. Benavente.

Benavente, who recently flew to Washington D.C. to rally support for the legislative amendment, said yesterday that the CNMI faces a pullout of buyers if nothing is immediately done to help local manufacturers compete in the market, describing it as a “real threat.”

He said that major buyers have always been willing to source its products from cheaper sources such as China and other developing countries.

“Two, three months ago, there’s a threat of losing our buyers because of competition. It would have happened had the U.S. government not re-imposed certain restrictions on China. We’re lucky that the restrictions just came in time so the buyers stayed back. But we don’t know how long this safeguard would be there,” he said.

Amending Headnote 3(a) would allow the CNMI garment manufacturers to reduce the local added value requirement on their products from 50 percent to 30 percent.

“We are at great risk—real risk of losing our buyers immediately, which again translates to immediate shutdown of the industry,” said Benavente, noting that such a scenario would mean “economic chaos” since the government would immediately lose 40 percent of revenues from the apparel industry.

“We won’t be able to stand it [immediate loss of revenue]. It’s something that we can’t tolerate,” he said.

He said the local community could handle a “gradual departure” of the industry.

Based on his meetings with Congress members and staffers, he said that many are “very sympathetic” to the CNMI situation. He said some U.S. lawmakers are willing to sponsor and co-sponsor the legislative amendment.

He said these officials understand that the amendment is not a matter of “whether it would help us or not” but they know it is needed to save the local economy.

He said granting a 30-percent value-added requirement on garment products is already being enjoyed by other countries that have free-trade agreements with the United States.

“All we are asking is to reduce this to the level that other countries are enjoying right now, foreign countries, so we could compete and not see an immediate shutdown of the industry,” he said.