Strike three on Headnote try

It’s now official. The federal bill that seeks to help alleviate the woes of CNMI garment manufacturers failed to pass the U.S. Congress this week.

Richard A. Pierce, governor’s special assistant for trade relations and economic affairs, said in a statement Friday that the Headnote 3[a] amendment bill or S. 1954 “did not meet the [Senate Finance] Committee’s profile for inclusion…”

He said, “A [committee] spokesperson claimed that S. 1954, ‘The Insular Possessions Act of 2005,’ did not meet the committee’s profile for inclusion in a session ending omnibus trade and tax bill, itself in jeopardy for passage this year, as senators and representatives scramble to conclude work before heading home for the holidays.”

“We’re disappointed the committee reached this decision. We had neutralized domestic textile opposition, and weren’t a victim of political favor. We had tremendous support for our bill. We simply could not overcome [the] U.S. Customs letter of opposition that came at such a late date,” he said.

He did not provide details about the Custom’s opposition letter when asked.

CNMI sources said the U.S. Customs had issued a strong stance against the passage of the bill, which aims to amend the General Note 3[a] of the U.S. Harmonized Tariff Schedule.

The amendment would allow CNMI-made garment products that have up to 70-percent foreign content to enter the United States duty-free.

Currently, the U.S. Tariff Code only allows up to 50-percent foreign content. As a result, local factories have to do much of the manufacturing process, including cutting, sewing and packaging, on island.

A 70-30 content ratio would allow Saipan factories to save on costs since they could cut garment pieces overseas, where costs are lower, and do the assembly on island.

In his statement, Pierce said that “the last minute support from the U.S. Department of the Interior Department and Pacific Delegates to the U.S. Congress proved ineffective in the CNMI’s last-ditch effort to amend General Note 3(a) before the U.S. Senate Finance Committee.”

Nevertheless, he thanked Secretary of the Interior Dirk Kempthorne and Interior’s Office of Insular Affairs Deputy Assistant Secretary David Cohen, Guam Delegate Madeleine Z. Bordallo, American Samoa Delegate Eni F.H. Faleomavaega and U.S. Virgin Islands Delegate Donna M. Christensen “for their concerted effort toward the end of negotiations for entry onto the Senate omnibus bill.”

“With all the support we received, combined with the urgency of an imploding CNMI economy from an industry in distress, we can’t help but be optimistic we will eventually succeed in our efforts to amend 3(a) despite the mixed message the Congress received from the U.S. Administration,” Pierce said.

Pierce, who is currently in Washington D.C., said that without an urgent relief, Saipan factories could not survive any longer, especially in view of the overwhelming presence of China and Vietnam in the global market.

“Industry leaders have maintained that, in the face of a Sino-Trade Agreement set to expire in 2008, where China would finally achieve total unfettered access to the U.S. marketplace, and the accession of Vietnam into the World Trade Organization set for the beginning of 2007, CNMI factories cannot exist any longer without immediate relief through factors affecting their cost-competitiveness with Asian producing countries,” Pierce said.