SGMA cautions House on increasing number of workers

The Saipan Garment Manufacturers Association reported that the garment industry of the CNMI has begun to shrink and is now 3,000-worker slots below the allowable maximum worker count of 15,727.

SGMA executive director Richard Pierce made the statement in view of the recent introduction of House Bill 14-282, which reportedly seeks to increase the total worker cap of 15,727 by an additional 7,600.

Pierce said increasing the allowable number of garment workers in the Commonwealth might just jeopardize the clamor to amend the U.S. Tariff Code for a reduction of value-added requirement on garment imports from insular areas, including the CNMI.

“This move to increase the size of the industry appears to contradict the argument that unless we change headnote 3(a) the industry will be harmed. People in Washington, D.C. already believe that foreign countries are crying wolf as they try to obtain trade benefits from the United States. We cannot afford the same to be said of the CNMI,” Pierce said.

Instead, Pierce proposed to allow factories that need additional workers beyond their quota counts the use of the available 3,000 slots.

There are at least two out of 26 SGMA-member factories that would like to increase worker counts over their existing ceilings, said Pierce, adding, however, that the need amounts to a maximum of 500 workers only.

“Just like the Attorney General’s Office admitted that these were ‘unintended consequences’ as a result of the hastily implemented emergency regulations that reduced worker quota slots for some factories, HB 14-282, in trying to refill those lost worker slots for some factories, has unintended consequences as well,” Pierce said.

“Times and situations in our industry have certainly changed this past year,” he said. “Where there was ‘demand’ last year for employees when buyers asked much of our production lines, this year that ‘demand’ has subsided. And, we see that trend continuing with our industry’s competitiveness at an all-time low.”

Pierce expressed gratitude, though, to House Rep. Oscar Babauta for sponsoring the legislative measure. Babauta had reportedly said that the local government should be more business-friendly to the garment industry, which has been contributing millions of dollars in annual revenue to its coffers.

“We support the intent of what HB 14-282 proposes to do. We agree with Oscar Babauta’s ‘primary reason’ for the introduction of this bill: to reclaim and reassign worker slots due to the hastily enacted emergency regulations to redistribute garment workers,” he said.

Local government officials and business groups rallied behind the local garment industry’s clamor for help in seeking congressional amendment to the U.S. Tariff Code for a reduction of value-added requirement on garment imports from the Commonwealth from 50 percent to 30 percent.

Such an amendment will allow local garment manufacturers to increase its foreign content material by up to 70 percent, and still avail of duty-free treatment in exporting apparel to the United States.

Garment industry players worldwide expressed fear that the lifting of quota restrictions beginning Jan. 1, 2005 would result in big players such as China dominating the U.S. market, the world’s largest apparel market.