CNMI hires Preston Gates anew

The CNMI government has hired the lobbying services of Preston Gates Ellis & Rouvelas Meeds amid growing support for a bill in the U.S. Congress which will deprive the islands of trade privileges granted under the Covenant, according to a statement release on Friday by the Office of Gov. Pedro P. Tenorio.

The lobbying firm, which had provided public relations and lobbying for the Commonwealth in the past, was selected for their expertise and long-time experience with CNMI concerns, said the statement.

A response to initial requests from the House of Representatives, the hiring of Preston Gates was backed by the Saipan Chamber of Commerce which has expressed concern on the “devastating impact” of the congressional action, the group said in a letter to the governor.

Mr. Tenorio underscored the need for the island government to engage lobbyists again in Washington D.C. in light of the mounting support for HR 1621, a bill pending in the U.S. House that his office said would unilaterally amend the Covenant.

The measure would strip the Commonwealth of the use of the “Made in USA” label and of its duty-free and quota-free status for apparel and other goods manufactured here under Headnote 3 (a) of the Covenant, according to the statement.

Under the proposal, even items made 100 percent in the CNMI by U.S. citizens paid the federal minimum wage could not be labeled “Made in USA” and would be subject to duty to enter the United States, it said.

Quotas will also have to be negotiated between the Commonwealth and the United States for import items. The imposition of duty costs on items would effectively eliminate the comparative advantage of manufacturing in the CNMI and exporting to the U.S., added the statement.

This means, it said, that the islands will be treated as foreign jurisdiction for trade purposes despite the fact that CNMI businesses must comply with U.S. employment laws.

Big loss

Island leaders projected potential loss at $85 million per year in government revenues if the House bill and a similar measure pending in the U.S. Senate take effect.

“The damage from the measure would be felt quickly, since the bill would come into effect 15 days after being signed into law,” the statement said.

Based on financial analysis prepared by the Tenorio administration, 40 percent of the general revenues would instantly be lost if the legislation forces garment factories to cease production.

Such a loss would require that the government close down approximately half of its operations and would curtail essential services and programs, including public health and education, the statement said.

The administration also cited two recent reports — one an economic study partly funded by the Office of Insular Affairs and the other a U.S. Government Accounting Office Report — that warned of job loss should the garment sector shut down.

“This bill would have a devastating impact on our economy. It would mean severe economic hardship for the people of the Commonwealth,” Mr. Tenorio was quoted as saying in the statement.

“It would close down existing industries, and foreclose efforts to develop alternative manufacturing industries in the CNMI,” he added.

Critical point

In view of reports that the measure has courted enough sponsors to bypass committee review for a floor vote, the local chief executive stressed CNMI’s attempts to block the proposal have not discouraged the supporters.

As the 902 consultation talks have largely been unsuccessful, he said the only alternative left for the island government at this critical point is “to seek additional assistance to inform Congress regarding the damage this bill would cause.”

Mr. Tenorio expressed confidence that the hiring of Preston Gates would help drum up support for the CNMI and protect local interests in Capitol Hill.

The Saipan Chamber of Commerce, on the other hand, believed that a lobbyist for the CNMI in Washington D.C. will assist local leaders in safeguarding the provisions of Covenant, including control over its immigration and minimum wage.

The business group backed a joint resolution earlier adopted by the lower house but not the Senate, asking Mr. Tenorio to hire lobbying firm because of the congressional support for the Franks bill on trade as well as S. 1052 which seeks to extend federal immigration laws to the CNMI.

Its letter, signed by Chamber President Lyn Knight and Government Relations Committee chair David Wiseman, was sent to the governor on August 3, a day before the announcement was made on Preston Gates’ hiring.