Why The Commonwealth Needs Duty Free Access To The U. S. Market

      The Commonwealth of the Northern Mariana Islands is unique in its
relationship with the United States, a relationship which eventually
evolved out of the flames of World War II and a relationship entirely
different from any other territory associated with the United States. While
the people of the Northern Marianas are United States citizens and the
American judicial system prevails it is important to realize that the
Commonwealth is the only entity under the American Flag that controls its
own immigration and customs. Because of this fact, the United States
immigration and customs authorities consider the Commonwealth a foreign
country simply because it controls such entry.
       In spite of their proximity to Asia  -  in all of the islands' 476
years of recorded history -  the only time the islands  have been under the
control of an Asian nation (Japan)  was the thirty year period between the
world wars, (1914 to 1944). For the other 400 odd years, at least until
1978 when the islands became self-governing, they were controlled by
western nations, first Spain, then Germany and later by the United States
under the auspices of the United Nations. Indeed, the United States still
exercises control over defense and those federal laws that apply within the
Commonwealth.
    This unique relationship between the United States Government and the
Commonwealth stems from the fact that the islands were never recognized as
a permanent possession of any nation since they were taken from defeated
Germany by the Allied Powers during World War One. Subsequently assigned to
Japan under a mandate from the League of Nations, the islands' status did
not change after they were occupied  by  United States armed forces in
1944. Indeed, since their purchase by Germany from Spain in 1899, and
their  assignment to Japan for administration in 1920 by the League of
Nations, the Northern Marianas had no political identity among the
countries of the world. From the time of  Germany's loss of the islands
they were never regarded as a permanent colony within the exclusive
sovereignty of any nation, except, of course, by Japan when it left the
League  before the outbreak of World War Two.
       At the conclusion of the Second World War the United States, not
desiring to appear as having annexed the islands by virtue of "victor's
rights", placed the islands under the supervision of the Security Council
of the newly formed United Nations. As the Marianas where considered to be
within a strategic area of the western Pacific they were to be overseen
through the Security Council where the United States had veto power, rather
than  the U.N. General Assembly. The people of the Marianas were encouraged
to choose their future political status from several options. These
included: selecting independence; or becoming  affiliated with the United
States, either through a relationship of free association or a commonwealth
status based upon a negotiated agreement which later became known as the
Covenant. The Covenant describes the relationship agreed upon between the
people of the Northern Marianas and the United States Government.
       No other United States territory or insular possession has a similar
relationship. Alaska, Hawaii, Puerto Rico, the Virgin Islands, American
Samoa, Guam and other Pacific possessions were all acquired under
circumstances far different than that of the Northern Marianas.
       For a nation to acquire additional territory, a government must
either annex an area by force of arms or by purchase from a sovereign
government.The Northern Marianas was not a permanent legal possession of
Japan at the time of the war  as it had only been entrusted to Japan under
a mandate by a group of countries through their organization - the League
of Nations. Therefore, the United States could not strip territory from
defeated Japan at the conclusion of hostilities since the islands were
never recognized as a permanent legal possession of Japan in the first
place.
       The people of the Northern Marianas, by 78.8 percent of the votes
cast in a plebiscite held on June 17, 1975, elected to accept a negotiated
Covenant with the United States. This became U.S. Public Law 94-241 when
enacted by the United States Congress and became effective on April 1,
1976, a little more than 30 years after the end of World War Two.
       United States citizens residing in the Commonwealth are denied the
right to vote in presidential elections nor are they represented in the
United States Congress by an elected representative. This is, of course,
inconsistent with the fundamental premise of democracy, namely, that the
right to govern rests on the assent of those governed. At any rate, in
negotiating the Covenant relationship between the United States and the
Northern Mariana Islands the United States agreed to permit the Northern
Marianas to take advantage of certain valuable “development tools”
principally: control of immigration, relief from the U. S. minimum wage and
duty free entry into the United States of certain “qualified” products
manufactured In the Commonwealth.
     The American negotiators of the nexus establishing a political
relationship between the two governments may have failed to anticipate
certain conflicts which could arise from the marriage.  One cannot help but
wonder, after the fact, that the rush for agreement to establish a
political union may have been dictated principally by both military
expediency (the U. S. Government is responsible for defense of the CNMI)
and, the Commonwealth's own anxiousness to terminate what, at the time of
negotiations, amounted to a state of political limbo for the islands.
     The benefits of Headnote 3(a) of the U. S. Customs Tariff Schedule
allowing duty free entry into the United States of qualified products
manufactured in the Northern Marianas provides the only real economic link
the Commonwealth's private export sector has  with the United States.
Without this entry to the U. S. market it is unlikely that the two
economies would have any meaningful trade connection  at all - with only a
one-way street of imports from the U. S. flowing to the Commonwealth.
Considering the high cost of ocean shipping, it is possible that Japan
could eventually replace the U. S. as a source of many supplies with the
result that the Commonwealth's private sector commercial links with the
States could become ever thinner. With the exception of a small number of
American tourists briefly visiting the islands the only connection would be
that of a rather sterile government to government bureaucratic
relationship. In addition, in the early eighties ocean shippers were
reluctant to call at Saipan with cargo because they had to return empty.
The exports of the garment industry, benefiting from Headnote 3 (a), helped
convince the carriers that they could obtain a return cargo. This had the
effect of reducing inbound freight rates on imported commodities.
Additionally, it aided in the diversification of the economy and provided a
market for the lease of locally owned land.
       The CNMI needs the revenue generated by  the garment industry and
further needs the economic diversification the garment industry provides an
economy dominated by the tourism sector and its almost entirely single
market orientation, (Japan). The continued benefit of Headnote 3 (a) is
essential if the CNMI is to develop light manufacturing endeavors such as:
pharmaceuticals, bags and luggage, small electrical components, soap and
detergents, sporting goods, toys, jewelry and several other products. No
area should be dependent upon one or two major sectors within its economy
for its existence and this is true of the islands of Saipan, Tinian and
Rota.
     There are now those within the U. S. Government that would renege on
this contractual promise which is the only tool by which the Commonwealth
can diversify an otherwise tourism based economy. As an individual who has
spent more than 27 years involved in the process of development within
these far flung islands, I have yet to meet a single Washington based
official, one responsible for making policy effecting the Commonwealth,
that has spent a total time in the islands exceeding 30 days. A little
history never hurt anyone - but experience is a better teacher. There is an
old adage, “good judgment comes from experience - experience comes from bad
judgment.” And experience being what it is - it very often is a costly
process. Let’s hope that the price we may have to pay for the experience
gained by Washington  will not be too costly when, and if, the
Commonwealth’s duty free access to the U. S. market is withdrawn.

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