[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[Extensions of Remarks]
[Pages 2374-2375]
[From the U.S. Government Publishing Office, www.gpo.gov]



   GENERAL ACCOUNTING OFFICE REPORT ON THE NORTHERN MARIANA ISLANDS: 
      GARMENT AND TOURIST INDUSTRIES PLAY A DOMINANT ROLE IN THE 
                         COMMONWEALTH'S ECONOMY

                                 ______
                                 

                             HON. DON YOUNG

                               of alaska

                    in the house of representatives

                        Wednesday, March 8, 2000

  Mr. YOUNG of Alaska. Mr. Speaker, I want my colleagues to be aware of 
a revealing report issued last month by the General Accounting Office 
on the economy of the Northern Mariana Islands. The report's findings 
confirm the development of a healthy and diversified economy in our 
newest American territory in the Western Pacific that is not a drain on 
the U.S. taxpayer. However, these findings are contrary to past 
information by the Administration on which Congress has relied in 
considering changes in federal law [GAO's February 2000 report to 
Congressional Committees: ``Northern Mariana Islands: Garment and 
Tourist Industries Play a Dominant Role in the Commonwealth's Economy'' 
(GAO/RCED/GGD-00-79)].
  This GAO report sheds new light on the economy of the Northern 
Marianas and the flaws of prior reports by the Administration. The 
findings reinforce the need for the federal government to affirmatively 
support, and not hinder or undermine, efforts of the public and private 
sectors of the Northern Marianas to improve and maintain economic self-
sufficiency, and at the same time, enforce federal labor, safety, and 
equal employment opportunity laws.
  Since I became Chairman of the Committee on Resources in January 
1995, we have conducted extensive oversight investigations and hearings 
on worker conditions, the violation and enforcement of federal laws, 
and the Administration's agenda for the islands. I will

[[Page 2375]]

continue to press for maximum public awareness of the real conditions 
in the Marianas public and private sectors and efforts of the federal 
and local governments.
  The Commonwealth of the Northern Mariana Islands has been constituted 
under federal law as a local constitutional government for the primary 
benefit of the people of the Marianas as well as the United States as 
an example of democratic self-governance. There is, therefore, a 
careful balance that must be maintained between the respect of the 
wishes of the local government and enforcement of the civil and human 
rights that Americans hold as sacrosanct. Those decisions should be 
based on sound information, not subjective political agendas of the 
government or some private entity. For that reason, one of the most 
difficult aspects of Congressional oversight over these very important 
and often sensitive civil and human rights-related matters, has been 
the lack of credible information by the very executive branch agencies 
tasked with the responsibility for enforcement of federal laws. 
Throughout those oversight efforts, the Administration has given the 
Committee voluminous testimony and information about the Marianas. 
Fortunately, the GAO has now completed this independent report as 
mandated by the 1999 Omnibus Appropriations bill.
  The two main industries in the Northern Marianas are the tourist and 
garment industries. The Department of Interior has questioned the 
benefits of the Islands' garment industry. Interior has issued several 
studies concluding that the local garment industry--and foreign labor--
has an adverse fiscal impact on the Northern Marianas, findings hotly 
contested by the Northern Marianas' government and business sectors. 
Both sides have testified before my Committee to present their points 
of view, but for the first time an independent and unbiased government 
agency has looked into the Northern Marianas economy. The GAO looked 
specifically at the economic impact of the two dominant industries--
garment and tourist; tax contributions by the local garment industry; 
and local government revenues as compared to other territories.
  GAO found ``the garment and tourist industries are the driving forces 
of the CNMI economy.'' The two sectors account for a about 85 percent 
of the Commonwealth's total economic activity and represent--directly 
and indirectly--four out of every five jobs in the Northern Marianas. 
Critically important to the debate is the GAO's finding that ``the 
local resident population * * * has benefited, economically, in the 
form of higher incomes and better employment opportunities, from the 
growth in the garment and tourist industries, and from the presence of 
foreign workers.'' GAO concluded that without the garment and tourist 
industries ``the CNMI economy could not have grown to its current size 
and complexity.''
  Significant number of foreign workers are brought into the Northern 
Marianas to supplement the existing workforce. The Department of 
Interior and several Members have criticized the use of these foreign 
workers, stating that the foreign workers have taken employment 
opportunities from local residents. Yet GAO concluded that there was no 
support for Interior's claim. GAO determined that the ``garment and 
tourist industries are dependent on foreign workers for much of their 
workforce because the labor pool of local residents, even including 
those currently unemployed, is insufficient to support an economy the 
size and scope that exists in the CNMI.'' Changes in the Northern 
Marianas ability to use foreign labor to supplement its current labor 
pool or legislation that would adversely impact either of these 
industries could have severe impacts on the Northern Marianas' economy, 
``causing job losses among local residents and revenue losses to the 
CNMI government,'' the report stated. Several legislative proposals 
exist that would do just that, and I am opposed to them.
  The GAO also criticizes a 1999 Interior Department study that found 
that the garment industry had a net negative impact. ``[T]he Interior 
study is methodologically flawed because it understates the 
contributions made by the garment and tourist industries to the CNMI 
economy and overstates the impact of these industries and their workers 
on the need for government services and infrastructure.'' The GAO 
determined, however, that the Northern Marianas is more self-sufficient 
fiscally than other territories. It also found that the Northern 
Marianas generates more of its government revenues locally--about 87 
percent--than all other U.S. territories and all levels of government 
in the U.S., a remarkable fact.
  Finally, the study showed that the garment industry contributes 
significantly to the local economy, directly contributing about $52 
million, or 22 percent, of the government's $234 million budget in 
1998. It determined that the Northern Marianas garment industry 
proportionally pays more in taxes and fees that the U.S. garment 
industry. That is, the garment industry in the Northern Marianas taxes 
and fees represented about 5 percent of their gross receipts between 
1993 and 1998, whereas the U.S. garment industry overall paid only 3.3 
percent of their gross receipts in taxes and fees.
  During a hearing last September, my Committee heard reasoned warnings 
from business and government leaders about the potential impact of 
certain legislative initiatives to eliminate local control of 
immigration, to remove duty-free access, or to increase the minimum 
wage on the ``vulnerable'' economy of he Northern Marianas. GAO's study 
underscores those warnings and this body should consider carefully the 
potential adverse impact of any legislation on the frail economy of the 
Northern Marianas--or the economies of any of our territories.
  I will continue to insist on full compliance with federal laws, 
advocate heightened federal-territorial mutual cooperation in multiple 
areas, and support local and private sector initiatives to manage the 
economy and advance self-sufficiency. I strongly encourage my 
colleagues to review the GAO report, ``Northern Mariana Islands: 
Garment and Tourist Industries Play a Dominant Role in the 
Commonwealth's Economy'' (GAO/RCED/GGD-00-79) which is available to the 
public through the Government Printing Office and also the world wide 
web: http://www.gao.gov/new.items/r200079.pdf.

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