Major economic disruption seen

Federal authority over the Commonwealth’s immigration laws will prove a “major economic disruption” as foreign workers are forced to leave and businesses are driven to compete for available labor, according to excerpts of a pending economic report and a key adviser to Gov. Benigno Fitial.

President Bush earlier this year signed legislation federalizing the Commonwealth’s immigration rules in a move that many local business leaders say will devastate the economy. In response, Fitial on Tuesday disclosed he might file suit against the federal government in a bid to overturn the new law.

Meanwhile, economists hired by his administration are crafting a report funded with U.S. Department of the Interior money that will illustrate the full scope of federalization’s consequences. The report will be finalized in the coming months, according to the governor’s chief trade adviser, Richard A. Pierce. The document could help local officials make the case against federalization and guide other efforts to address the issue, he said.

Excerpts of the report, which Fitial referenced when announcing early plans to file the lawsuit, suggest federalization will severely drain the Commonwealth’s labor pool.

“[F]ull implementation of federal immigration authority as enacted will injure existing business and future investment through labor access restrictions under a federally administered guest worker program,” the report says. “In a small, isolated island economy dependent on an outside labor market, there’s essentially no way to eliminate the overwhelming majority of the current 20,000 guest workers in five years and find qualified replacements from within. The outmigration and repatriation of half the employees on-island will effect major economic disruption.”

Fitial also said that federalization would result in a 50 percent decline in the CNMI’s gross domestic product, or GDP.

In an interview, Pierce echoed many of those statements, adding the pending report could complement a draft Government Accountability Office report Fitial’s staff is now reviewing.

“Our economy would be cut in half” by federalization, Pierce said. “There’s no way around it. We have an economy dependent on outside labor and because of provisions of the bill that have been passed, it is and will be injurious to the Commonwealth. How much injury there is remains to be seen.”

Moreover, he added, the lost workers would leave thousands of jobs unfilled. “We’ll have an increased need for labor that essentially doesn’t exist here,” he said.

And the cap federalization will set on the number of foreign workers allowed to stay in the Commonwealth, Pierce said, will put a significant strain on small businesses, which will have to compete with larger companies for labor.

A preliminary government document outlining the scope of the pending economic report shows that it will cover a host of issues related to federalization’s fallout. It will include an analysis of the various factors that could contribute to the Commonwealth’s economic decline, a 5- to 10-year forecast of the local economy without federalization, an alternative forecast that accounts for federalization, and recommendations for policy-makers on how to deal with the issue.