‘Garment sales may be capped’
Saipan Tribune
By Liberty Dones
Reporter
Tuesday, June 13, 2014
The proposed amendment of the U.S. Tariff Code may mean the setting of a garment sales cap in the CNMI at $350 million a year, said the Saipan Chamber of Commerce.
“Modification of Headnote 3[a] to allow 70-30 is moving ahead. .It appears benefits of 70-30 will be capped at $350 million a year for apparel, with no cap on shoes,” said the Chamber in its June 2014 newsletter.
A $350-million cap would mean a much diminished garment operations since the industry’s gross sales usually amount to over $600 million in prior years.
In 2005, industry gross sales totaled over $500 million while in 2004, the figure was over $700 million.
During its peak in the late ’90s, its gross sales reached almost a billion dollars.
CNMI government leaders and the business sector have been pushing for the amendment of the Code’s Headnote 3(a), which would allow CNMI manufacturers to export duty-free to the U.S. Saipan-made garment products that have up to 70 percent foreign content.
Right now, the law sets this requirement at 50 percent. Due to this requirement, apparel manufacturers buy foreign fabric that is then cut, sewn and packaged as final goods in the CNMI.
The amendment would greatly cut Saipan’s costs and place the local industry at a level playing field with China, proponents said.
The amendment would allow Saipan factories flexibility to cut pieces overseas at a lower cost and assemble them on Saipan.
Meantime, the Chamber issued again a letter of support for the passage of the amendment bill, which is now before the U.S. Congress.
“We are aware of the efforts currently undertaken by your office to convince the U.S. Congress to amend the CNMI’s tariff privilege, enabling Saipan factories to regain some of their lost competitiveness. .We fully support your efforts to amend the CNMI’s trade privileges,” said Chamber president Charles V. Cepeda in a letter to Gov. Benigno R. Fitial.
He said that SCC is comprised of over 145 small and large businesses, CNMI government offices, and non-profit organizations.
“These members are heavily dependent upon the Commonwealth’s major industries, tourism and apparel, for their revenue and business success,” he said.
