A sobering big picture

The volume of apparel manufactured in the CNMI had gone down by 17.9 percent in the first seven months of 2005 versus 2004, based on statistical data from the U.S. Department of Commerce’s monthly FY 2005 report.

Citing the same data, former Saipan Garment Manufacturers Association executive director Richard Pierce, who is currently Gov. Juan N. Babauta’s special assistant for trade relations, also disclosed that the CNMI’s share in the United States’ apparel imports has fallen to 0.49 percent, with imports from foreign countries totaling some 99.51 percent.

The Commerce data—gathered and compiled from all U.S. ports of entry—also showed that the value of apparel exported to the United States had gone down by 10.1-percent for the same period this year.

Pierce said these data illustrate the current downswing in Saipan’s apparel production and the need to seek federal approval to amend the CNMI’s General Note 3(a)(iv) formula.

“The CNMI is miniscule in production impact upon the U.S. domestic market and our factory orders are declining due to foreign countries better able to compete for U.S. sales,” he said.

“Saipan factory orders represent less than a half percent of total goods entering the U.S., yet we are being outpriced by foreign countries with a better trade deal than the CNMI, an insular possession of the United States, and our production orders and tax dollars are declining as a result of that inequity,” he added.

This is why the CNMI government continues to lobby for the amendment of federal tariff rules that would reduce the value-added requirement on garment imports from 50 percent to 30 percent for local manufacturers, to avail of duty-free treatment.

Currently, the U.S. Tariff Code requires that 50 percent of the value of the garment has to be added locally by transformation, in terms of additional labor, packaging or other overhead costs, so that garment products coming from the Commonwealth could enter the United States duty-free.

Lt. Gov. Diego T. Benavente said that the Babauta administration has been vigilant in its efforts to push for a federal tariff amendment to ensure the local garment industry’s survival, one of the major contributors to government revenue and the economy.

Benavente, who chairs the governor’s Garment Industry Task Force, expressed optimism that the federal government would heed the CNMI’s request for tariff amendment.

“We have presented, and continue to present, this compelling story to members of the U.S. Congress,” Benavente said. “We believe the U.S. Congress and the White House will answer favorably our requests to be allowed to provide for our own funding versus an increase in federal assistance requests made of the same bodies in Washington.”

The SGMA earlier said the industry contributes about $69.9 million to the government in the form of taxes and fees and an additional $47.3 million in industry spending. It had estimated the industry’s contribution to the economy—including government and private sector revenue generation—at approximately $229.3 million to $292.6 million.