THE investigative arm of the U.S. Congress has downplayed the Fitial administration’s “prediction” that federalization of local immigration will result in an economic disaster and labor shortage in the CNMI.
The U.S. Government Accountability Office released its report on Monday titled “Managing Potential Economic Impact of Applying U.S. Immigration Law Requires Coordinated Federal Decisions and Additional Data.”
According to the GAO, there is no substantiated data available to validate the foreseen significant negative consequences of the federalization law on the islands’ labor market, tourism and foreign investment.
The law will be implemented next year.
Sen. Jeff Bingaman, D-N.M. and chairman of the U.S. Committee on Energy and Natural Resources, said he’s pleased with the GAO’s findings.
Bingaman was one of the main sponsors of the federalization law.
“I am pleased that in each of the three key areas impacted by the new law — labor, tourism and foreign investment — the Government Accountability Office has confirmed that the new law need not have the unacceptable consequences that some have feared. Instead, actual impact will depend on decisions to be made by federal agencies as they develop the implementing regulations,” said Bingaman in a statement.
“I look forward to continuing to work with GAO, federal agencies and CNMI interests to assure that this law is implemented with minimal disruption. Implementing this new law is an important step in establishing a stable foundation for the CNMI’s future,” he added.
Gov. Benigno R. Fitial is disappointed with the “timing” of the report’s release, according to Press Secretary Charles P. Reyes Jr.
“He believes this report should have been prepared and publicly released before the U.S. government passed federal takeover legislation,” Reyes said in an e-mail to Variety.
“Even with limited data and the most favorable scenario, the report clearly shows that federalization will be very damaging to the CNMI economy,” he added.
Labor market
In its 133-page report, the GAO said the transition phase of the CNMI-only guest worker permit program will begin on June 1, 2009 subject to a 180-day extension or up to Nov. 4, 2009, depending on the circumstances.
“(The U.S. Department of Homeland Security’s) decisions that will affect employers’ access to foreign workers include the number of permits to allocate each year, which will be reduced to zero by the end of the CNMI-only permit program; the distribution of the permits; their terms and conditions, and the permit fees,” the report said.
“(The U.S. Department of Labor’s) decision regarding whether and when to extend the CNMI-only permit program past 2014 will likewise affect the availability of foreign workers,” it added.
The GAO said given the foreign workers’ prominence in the CNMI’s economic activities, any substantial and rapid decline in their number will have a negative effect on the islands’ economy.
But it said there are conditions that will mitigate the impact of this scenario.
“Federal agencies may make more modest reductions in CNMI-only permits, resulting in minimal effects on the economy. At the same time, continuing declines in the garment industry, challenges to the tourism industry, and the scheduled increases in the minimum wage may reduce demand for foreign workers, lessening any potential adverse impact of the legislation on the economy,” the report stated.
As of June, the CNMI Labor Department said there were 18,492 documented foreign workers on the islands, mostly employed in the tourism industry.
Tourism industry
The GAO report also downplayed the federalization law’s negative impact on the local tourism industry’s major potential markets of China and Russia.
The GAO said its study shows that the two markets account for just 10 percent of tourist traffic to the islands.
Further, the GAO said the joint CNMI-Guam visa waiver program will open up the islands for more potential travelers from other countries, including South Korea, the second major tourism market of the Northern Marianas.
Foreign investment
The GAO said Homeland Security will decide which CNMI foreign investor permit holders will receive “grandfathered” status as U.S. nonimmigrant investors and how long this will be valid.
It said critical data on foreign investment in the CNMI are not readily available making it difficult to determine the likely impact of the federalization law.
The GAO suggests that Homeland Security and other relevant federal agencies identify the interagency process that they will use to address the foreign investment issue in the CNMI.
“We are also recommending that the secretaries of Homeland Security and Labor jointly develop strategies for obtaining critical data on the CNMI labor market and on CNMI foreign investment,” it said.
