Land issues seal disapproval of free trade zones

Gov. Pedro P. Tenorio has tossed back to the Legislature a legislation seeking to establish free trade zones in the Northern Marianas due to the administration-sponsored bill’s failure to address issues surrounding the use of public lands.

“Issues regarding public lands have recently been identified and must be addressed in order to ensure the integrity of Commonwealth free trade zones once established,” Mr. Tenorio told legislators in a Feb. 10, 2000 letter.

He also noted changes made by the 11th Legislature to the original draft, including a provision which places control of large tracts of land under the control of Tinian and Rota mayors.

The bill allows Tinian and Rota mayors to put the land to municipal uses or be leased for commercial purposes without any meaningful restrictions or limitations.

“Such lands do not necessarily have to be utilized for FTZ. This mandate raises concern as it appears to contradict the principle policy under our Constitution which places certain fiduciary responsibility to the Board of Public Lands in the management and disposition of all public lands,” Mr. Tenorio said.

He wants a joint effort between the administration and the Legislature in addressing the issues that restrain the approval of the free trade zone bill which is part of the government’s plans in diversifying the local economy.

Incentives

The Economic Recovery and Revitalization Task Force has finalized a list of incentives that would be given to investors who would wish to establish businesses in the CNMI’s free trade zones.

The Department of Finance is mandated by enabling legislation to establish a Special Rebate Trust account for the FTZ investors’ deposits, which cannot be merged with other government funds.

The CNMI offers many non-cash incentives to encourage investors to establish business in the Commonwealth and to undertake infrastructure responsibilities.

Non-cash incentives include duty-free privileges on imports and up to 100 percent corporate tax rebates depending on the training and investment benefit to the local residents.

CNMI is also exempted from the Jones Act or the US Merchant Marine Act of 1920 which restricts foreign carriers from transporting any cargo from the US to the island.

This prevents higher freight rates since American vessels cannot monopolize the transportation of all CNMI-bound cargo.

Also, foreign flag vessels often have freight rates that are lower than American flag carriers. The expected increase in the volume of cargo, as well as the reduction in the existing high freight rates, will ultimately reduce the cost of living in both Guam and the CNMI.

The CNMI, being exempt from certain provisions of the Jones Act, can allow any foreign flag surface vessel to pick up and transport cargo between any US mainland seaport, Hawaii or Guam and deliver it to the Commonwealth.

A free trade zone in the Commonwealth also stands to benefit American firms exporting to Asia and Asian firms exporting to the United States.