Saipan factories continue to slip

Gross sales of Saipan apparel factories slipped to a lowly $37.54 million in October 2006, which is 17 percent below October 2005’s sales of $45.06 million, 30 percent below October 2004’s gross of $61.65 million and 56 percent less than 2001’s October receipts of $85.73 million.

Attributing the sales drop to stiffer competition from Asian countries and foreign countries with better free trade agreements with the United States, and the elimination of export quota restrictions for members of the World Trade Organization, Saipan factories are turning to their host, the CNMI government, for relief through a change in country-of-origin rules allowed under the special tariff privilege afforded the CNMI and other U.S. insular areas.

The Fitial administration still pins hopes on a change in General Note 3(a) before the U.S. Congress, allowing all goods from the U.S. insular areas to be allowed into the U.S. without duty as long as existing country-of-origin rules on transformation are met and the current practice of adherence to transformation rules are met.

Things won’t get any better for what’s left of Saipan factories and the orders they still have in hand, as a delayed Vietnam WTO accession agreement now looks headed for approval in the U.S. Congress. This would grant Vietnam permanent NTR, or permanent most favored nation duty treatment on products coming into the U.S.

The original plan to grant PNTR was scheduled for Nov. 13, 2006, but has now been forwarded to the congressional lame-duck session scheduled to begin on Dec. 4, 2006.

Regardless of U.S. action on the PNTR bill, Vietnam is slated to join the WTO on or around Dec. 28, 2006, an automatic 30 days after Nov. 28, when Vietnam passed legislation ratifying its accession to the WTO.

Vietnam would no longer have quota restrictions on exports to the United States, further hindering Saipan factories whose order volumes drastically declined when WTO dropped quota restrictions for its other 132 foreign country membership.

The CNMI now looks for a favorable response from those Democrat and Republican members of Congress who want to pass an “end of session” omnibus bill to clear a number of pending trade measures.

Several of the measures are already packaged together in legislation introduced by House Ways and Means Committee chair Bill Thomas (with the active support of incoming House Ways and Means Committee chair Charles Rangel). That legislation, H.R. 6142, contains an extension of the GSP program, an extension and reform of the AGOA third-country fabric provisions, and the expansion of preferences for Haiti.

It now looks like that legislation may also include other trade measures, including a provision to address the gap in the Andean program and a modification of the rules of origin with respect to the Mariana Islands.

According to Inside U.S. Trade, a weekly Washington, D.C. trade journal, “The House could consider the legislation Thomas is trying to develop when Congress returns to Washington the week of Dec. 4 after the Thanksgiving recess.”

According to Women’s Wear Daily out of New York, “The world of music, politics and fashion collided on Capitol Hill Wednesday (Nov. 15, 2006) as high-level Haitian government officials joined forces with hip-hop musician Wyclef Jean to lobby members of Congress to pass a bill enhancing apparel trade benefits for the island nation before they adjourn for the year.”

According to Richard A. Pierce, the Governor’s special assistant for trade relations, who also attended the musical performance atop the 9th floor of the Hart Senate Office Building, Haiti most likely will be included in the bill Thomas wants passed.

“It now seems that perhaps even provisions of the miscellaneous tariff bill, where we had originally hoped to find a way to pass our legislation, S. 1954, may be included, as well, on the omnibus bill supported by many for passage this year before the 109th Congress adjourns,” said Pierce.

Pierce will return to Washington, D.C. at the start of the lame duck session on Dec. 4, and work with the Washington Representative’s Office, and those that support the passage of H.R. 6142.

“We do not know what the Congress will do with many bills now pending, or soon to be pending, affecting the CNMI. What we do know is what will happen if, or if not, those bills gain passage and are signed into law. With the passage of S. 1954, we can reasonably expect to save about 13,000 jobs in and around the garment industry, save approximately one-third of current CNMI government revenue, stop other factory and business closures and decrease the likelihood that we’d need to present ourselves before the same U.S. Congress hat-in-hand without S. 1954’s passage,” Pierce said. [B][I](PR)[/I][/B]