Some in the Commonwealth hold the belief that the slowdown in
the economy started only a year or so ago when the economies of southeast
Asia began to falter but in reality the Commonwealth is now five years into
an economic slowdown that first became apparent, at least as far Japanese
investment is concerned, in 1993.
     Indications of a regional slowdown first appeared in late 1989 and
early 1990, when  the Japanese economy started to cool, partly as a result
of a decline in the Japanese stock market; rising interest rates and an
unexpected drop in the value of the yen against the dollar.
   Japan's economic difficulties worsened as stock prices continued to
decline sharply resulting in a slowdown  in  investment in the
Commonwealth. Major Japanese banks with large stock portfolios lost
hundreds of millions in value and many previous loans  became worthless.
Japanese banks stopped lending, particularly on the international scene, as
they strived for more liquidity. Japanese investment interest in the
Commonwealth all but dried up. Previously planned hotel projects were
postponed or delayed. Construction activity in the Northern Marianas slowed
considerably and the Japanese visitor became more prudent in his spending
habits purchasing less expensive gift items and dining in more
conservatively priced restaurants.
     The question now before us is when will local economic growth resume
to a level that would be considered acceptable?  In my opinion if we
continue to be tied to the Japanese economy - and it appears at this point
that we will - I don’t think we will see any substantial growth for another
five years or so - or sometime around mid year 2003. And maybe not even
then unless the confusion and uncertainty surrounding future investment in
the Commonwealth is mitigated. And what about this confusion? Aside from
the adverse publicity surrounding the Article X I I issues which was
disseminated far and wide among potential investors several years ago which
no doubt caused many to hesitate or postpone their investment plans in the
Commonwealth what is the genesis of the other major economic problems?
     Let Japan and the other nations of southeast Asia worry about their
difficulties since their problems are external to us and we can’t do
anything about it anyway - let us be concerned about our internal
predicament and the steps that can be taken to find a solution in order to
be ready when economic activity in the region picks up early in the next
century.
     I suspect many potential investors, both foreign and American, are
waiting to learn the eventual outcome of several vital issues for which
implementation is now either imminent or remain matters for rather
immediate resolution between the CNMI and the U. S. Congress. These are
well known locally and don’t require a lengthy explanation here, but for
the record they include: uncertainty as to whether the Commonwealth will be
permitted continued duty free access to U.S. markets for locally
manufactured products and when, and how, the U. S. minimum wage and federal
immigration laws will be imposed on the islands? In the case of the latter
- will the Northern Marianas be permitted some latitude in importing
nonresident workers to augment its limited indigenous labor force? And, in
terms of a tourism market, will the islands be able to tap the growing
affluent Chinese market by permitting entry to the Northern Marianas either
without a U. S. visa or with a special Commonwealth visa issued for that
specific and limited purpose? This, of course, is predicated upon another
unknown that being the Chinese Government permitting the issuance of exit
visas to their citizens for this purpose.
    These unresolved issues together with the economic recession in many
Asian countries complicate an already uncertain business investment
climate. They contribute a rather large measure of uncertainty among the
investment community - the single factor such investment abhors above all
else. When investment rules and requirements are subject to frequent
change, the investor views the area as unstable and loses any confidence
that he or she may have had in the reliability and continuity of stable
laws as they affect investment. We all know that many such changes in the
past were made in an attempt to accommodate the desires of certain members
of the U. S. Congress and local interests.
    I have come to the conclusion that the United States is as much at
fault as the CNMI in creating the current high level of business
uncertainty that currently prevails and I’ll tell you why.
     As a thirty year observer of the Northern Marianas’ economic
evolution, and a former principal in the former Education For Self
Government Program, I am convinced that back in the seventies the rush to
offer Commonwealth status was primarily motivated by military expediency
and outdated national security concerns and that many people in the islands
did not comprehend the ramifications and responsibilities of such a close
relationship with the United States with the result that at the time many
were unprepared for American citizenship. And for that - the United States
Government must bear some measure of the responsibility for many of the
problems that have evolved. I suspect that the American negotiators back in
the early seventies probably thought, “never mind all that political
preparation for citizenship, the Cold War is a pressing issue, bring them
into the fold and everything will be all right in the long run.”
     Today, almost twenty two years after U. S. citizenship was conferred,
there are still people within the Northern Marianas that appear to be
unfamiliar with the obligations and responsibilities that are inherent in
citizenship, an honor bestowed upon the islanders almost in total by
Presidential Order.  It  should be kept in mind that the people of the
Northern Marianas, unlike other nationalities seeking U. S. citizenship,
were not required to possess any  knowledge of American history or
appreciation of the principles of democracy as most Americans perceive them
to be.  Most foreigners seeking U. S. citizenship must study a variety of
subjects related to American history, pass an examination and swear an oath
of allegiance.  This was not required of the people of the Northern
Marianas.  Nor, during the period the Trust Territory Government conducted
educational programs for self government, was civics and the duties of
citizenship taught in the public schools. To have done so during this
period of the early seventies when political preferences were being
explored -  and to have openly advocated U. S. Commonwealth status from
among the other three remaining options available to the people of the
Northern Marianas, namely, maintaining the status quo and remain a Trust
Territory, independence or free association with the United States, would
have raised the ire of the French and Soviet delegates to the United
Nations and precipitate a charge of colonialism against the United States.
The political education program had to be impartial. I know this to be the
case because the Soviet delegate to the U. N. Security Council learned
about the civics portion of the educational program during a visit to
Saipan, complained to the U. S. Government that the process had to be
unbiased and we were informed to abandon the educational effort.  So, in
some respects, this has resulted in an educational deficiency among some in
the Commonwealth and it is partly the fault of the United States for
“caving in”  to the Soviet demand.
      Thus, being unaware of certain American values, the new Commonwealth
permitted many of the Asian investors to enter into business and treat
their imported workers in the Commonwealth in the same manner they were
permitted to treat them in their home country. This “broad brush” statement
does not apply to all investors and in particular it does not apply to
hotel operators. However, with respect to other businesses it first became
obvious to me when, as the co-director of the 1990 census, I noticed large
numbers of relatively highly educated nonresident workers employed for long
hours at low hourly wages in both some of the  local and foreign owned
enterprises.
      Of course, it was soon realized that many of the foreign investors as
well as their resident managers had no comprehension of the English
language. They could not read or speak English and, at the time, were
unaware of the various rules and regulations governing the treatment of
workers. A bill had been introduced in the legislature requiring those
applying for a business license to have some knowledge of either English,
Chamorro or Carolinian which would ensure that there would be no excuse for
not understanding local and federal laws governing the treatment of
workers. The bill was later considered unconstitutional and discriminatory
and was never passed. Thus, the Commonwealth was denied this very effective
tool to correct the situation and contribute to reducing labor abuses and
violations.
      I pointed out in the 1992 edition of my book: Business Reference and
Investment Guide To The CNMI,  the following , “As  a member  of the
American family of states, territories and semiautonomous entities, the
Commonwealth, situated on the doorstep of Asia is host to thousands of
citizens of Asian nations which are allies, trading partners and friends of
the United States. For some who visit, either as tourists or nonresident
workers, the islands will be the only contact many will ever have with the
American way of life, its form of government and democratic principles. The
treatment extended these people while they are in the islands will make a
lasting impression on many. To this extent the CNMI  exercises no small
degree of influence in partially shaping the reputation of America around
the Pacific rim and its human rights record.” I did not address the issue
of what some workers from Communist societies might think of this “American
mirror of democracy.” Still some businesses failed to get  the message as
far as the treatment of workers was concerned and continued to carry on
business as usual.
      The extent of the political relationship of the Northern Mariana
Islands with the United States of America and many of the details
pertaining there-to are still largely unknown and imprecise at this time.
More uncertainty. This results in part because the relationship has not
been defined in any detail and also from the fact that no other member of
the American political family became so associated under circumstances even
remotely similar to those by which the Northern Marianas became affiliated
with the United States. Not even the nexus between the Commonwealth of
Puerto Rico can provide much insight as to the extent and scope of the
CNMI's Covenant agreement. The issue is very much unsettled. It may be
somewhat disconcerting to some when it is discovered that even students of
the American legal structure will not venture to define what U.S. laws
prevail in the islands  and those that do not. Students of political
science are uncertain of the connection with the result that there is
confusion because of the many unresolved issues in this unique and complex
relationship.
       There are those in the Commonwealth that wish to retain as much
political and internal autonomy, indeed, independence from the federal
government and the American legal structure as possible. This is something
else that should have been made abundantly clear when a change in the
political status of the Northern Marianas was being explored. Apparently,
it was not. How and when a determination will be made and a method devised
to clear up the legal and political ambiguities which remain in this
sometimes awkward political affiliation is a subject of conjecture and will
no doubt remain so until resolved at the highest level of the American
judicial system, presuming, of course, that a sufficiently justified issue
is brought before the U. S. Supreme Court and the Court decides to hear the
case.
       The CNMI /US relationship is confused because it is still in the
process of evolving. Indeed, Section 902 of the Covenant permits a
reassessment of the relationship every 10 years. It is probably safe to
state that the people of the Northern Marianas did not clearly understand
what they voted to support when the plebiscite was held in June, 1975 to
accept a negotiated Covenant with the United States. Certainly they were
aware of some of the tangible benefits that would flow from the U. S.
Treasury such as better health care, social security, educational
assistance, and a cornucopia of food stamps, housing subsidies and other
grants. However, there was probably little knowledge or appreciation of the
extent of the full ramifications of an association with  the American
judicial system and the federal bureaucracy - for better or worse - with
its myriad of laws and regulatory agencies administering everything from
environmental protection to occupational health and safety in the work
place. Thus, the process of learning the unintended consequences of the
merging relationship with the United States, by necessity, continues to
evolve and be refined as time goes by. Many of the complex issues which
were  to arise in the future could not possibly have been foreseen in 1975
and thus a document was produced, the Covenant, to permit flexibility in
the new political relationship.
       Several years ago an Assistant Secretary of the U. S. Department of
Interior stated:
 "Freedom to choose a political status carries with it the responsibility,
first, to make an informed choice and second, to live with the benefits and
responsibilities of that choice.” Further the official stated,"for insular
leaders to argue that what they freely chose several years ago is not what
they thought they were choosing is a criticism of those who chose, not
those who offered the choice. It is clear from the plain English of the
historical documents involved that the United States has sovereignty in the
Commonwealth ...  sovereignty is not conditional and does not lend itself
to subject applicability.”
The key words here are “informed choice.” From what I can recall at the
time the electorate was not that well “informed.”
  It  is the contention of some residents in the CNMI that the Northern
Marianas did not  become a Commonwealth as a result of the will of the
United States Congress through enactment of law, but by means of
negotiation within the Trusteeship Agreement between the United States and
the United Nations.  The Trusteeship Agreement did not permit the United
States to acquire territory or possessions since it was considered a
trustee rather than sovereign and as such negotiated with the Northern
Marianas for Commonwealth status.
    As for myself I don’t care very much about politics. I am, however,
interested in the economy and all this confuses investors. The sooner these
issues are resolved - one way or the other the better.
   One final observation. If the Commonwealth loses control of immigration
without some arrangement with the federal government  permitting the
continued importation of a wide variety of alien workers to augment the
limited supply of indigenous labor there will be no more investment of any
magnitude. Employment opportunities will be limited, government revenues
will be reduced and less government services provided. Eventually an exodus
of local men and women seeking better opportunities than those offered in
the Commonwealth will occur and the situation will be even more aggravated
than is now the case.

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