‘Garment losses to impact govt’s ability to deliver services’

The governor’s legal counsel, Steve Newman, acknowledged that any huge losses in the garment industry arising from the global lifting of quota restrictions would adversely impact the CNMI government’s ability to provide essential services to the public.

“A swift withdrawal [of garment factories] would…endanger the ability of the CNMI government to provide essential public health services, education, etc.,” Newman said.

Newman jut got back this week from a trip to Washington, D.C. where he joined discussions on garment-related issues.

The legal counsel said that the Babauta administration is working closely with the U.S. Congress in pushing for the immediate amendment of the U.S. Tariff Code to give CNMI garment manufactures more leverage to compete in the U.S. market.

The amendment would allow CNMI garment manufacturers to reduce the value-added requirement from 50 percent to 30 percent.

He said that he had met with key congressional staff to present the CNMI situation.

“We met with congressional staffers. Basically, we reiterated the government’s position…that it [amendment] is necessary due to the fact that [CNMI garment firms] form a significant tax base structure,” he said.

Newman said that during those meetings, he noted that the CNMI and other insular areas “are at a disadvantage when you compare us to other nations.”

Amending the federal law, he said, would put the CNMI “in a clearer position, and in doing so, would allow the garment industry to remain competitive in this environment, at least for the next few years.”

Earlier, the CNMI Senate approved a resolution calling for the amendment of the Tariff Code, allowing local garment factories to increase the maximum allowable foreign content material from 50 percent to 70 percent to ensure the industry’s global competitiveness.

Industry players fear that China would further dominate the U.S. market, the world’s largest market for apparel, with the lifting of quota restrictions. With its cheap labor cost, China produces apparel at substantially lower costs than other countries and territories, including the CNMI.

The Saipan Garment Manufacturing Association, for its part, said that without amending the tariff formula, “there’s really no other way to get our prices down, barring paying less salary or eliminating local taxation, which is something no one really wants to think about.”

Further, SGMA asked the local government to assist in preventing retail shops on Saipan from selling stolen goods from Saipan factories.

SGMA also wants the federal government to grant petitions that would limit China’s growth rate to 7.5 percent annually.

It earlier lauded the federal government’s move to extend by 30 days the imposition of certain restriction on China’s garment exports in January 2005, giving more time until the petitions are decided.