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STATEMENT OF JUAN T. GUERRERO,

PRESIDENT, SAIPAN CHAMBER OF COMMERCE,

BEFORE THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

FEBRUARY 8, 2007

Hafa Adai, Mr. Chairman and Members of the Committee. I am Juan T.
Guerrero, current president of the Saipan Chamber of Commerce. I
represent the Chamber's 151 members and am honored by the opportunity to
address this Committee on the issue of potential extension of federal
immigration law to the Commonwealth of the Northern Mariana Islands.

**INTRODUCTION**

The Chamber, along with your Committee, is keenly aware of the lengthy
history of the subject matter before the United States Congress. The
Chamber believes that: (1) the Commonwealth's resident labor pool is
inadequate, both in terms of population and skill, to adequately answer
the needs of businesses in the CNMI; (2) "federalization" -- of either
CNMI immigration laws or minimum wage laws -- will not solve, but,
rather, will exacerbate that problem; (3) the laws of the Commonwealth
are adequately designed to protect the interests of the islands, the
United States government, and non-resident workers; (4) enforcement,
which as a general rule never fulfills all of the hopes of the drafters
of any legislation, has continued to improve since the last time this
Committee visited the issue at hand; and (5) specific allegations
designed to cast a cloud over the CNMI's ability to manage its internal
affairs, rest on outdated, untrue, sensationalized, or aberrant facts.

**DISCUSSION**

While the Commonwealth is similar to many islands inasmuch as it does
not have the land mass, population, or ready access to markets required
to host a diverse economy, it is unique in many ways, including: it does
not enjoy the economic backstop provided by America's military machine,
as does Guam; the islands' tourism base is not made of 2.6 million
mostly western vacationers and we are not home to one of the world's
largest petroleum refineries, as is the United States Virgin Islands; we
do not enjoy anything near the per capita federal subsidization of
American Samoa.

The Commonwealth is unique to the United States, even in the context of
the "insular areas." The CNMI economy has, for the past 29 years, been
comprised almost exclusively of Asian-sourced tourism and garment
manufacturing. "Almost exclusively" is meant in the very real sense of
approximately 85 percent of the islands' total economic activity and 96
percent of the islands' exports, according to a 2006 General
Accountability Office report. It is easy to criticize, as many in the
United States have done over the years, a community for allowing its
economy to become dependent on only two revenue streams. What is less
easy to offer are alternatives to a people whose capitol island is 46
square miles of land, over 6,000 thousand miles of open ocean from the
west coast, accessible only by a grueling journey involving a minimum of
13 hours of air travel in addition to between 6 and 12 hours of
layovers. Small population base, even smaller worker base, difficult and
expensive access, phenomenally higher prices for basic staples of life
shipped or flown from thousands of miles away, few sources of
naturally-occurring potable water, often visited by destructive typhoons
-- this does not describe a locale to which many mainland-based
industries, or employees, aspire to relocate.

Under the best of circumstances, travel and shipping to and from the
Commonwealth and the cost of goods affected thereby present a challenge
to daily life. Our current economic situation, however, is far from
being "the best of circumstances." Passenger jet air service now
consists of two flights daily to Japan on Northwest Airlines, following
the termination within the last two years of scheduled air service by
Japan Airlines and Continental Airlines. These terminations reduced the
annual number of passenger seats into the CNMI by over 200,000. We have
one flight daily to Seoul on Asiana Airlines, and one flight twice
weekly to Manila on Continental Airlines. The remaining flights to and
from our islands are passenger propeller aircraft with limited cargo
capacity, and serve mainly as commuter flights to Tinian, Rota, and
Guam. Lack of competition brought about by the relatively small (and
shrinking) market has had the expected effect on prices and
availability, both for passenger transportation and shipping. Pricing of
and the ability to send cargo by waterborne transport have also taken
dramatic turns for the worse in recent years. One of the three shipping
companies that provide direct service to the islands from Asian ports
has ceased all CNMI operations. The remaining carriers are currently
considering a reduction in port calls. The CNMI has also seen
inter-island container carriage to and from Guam reduced from
twice-weekly to once-a-week service. This contraction in the shipping
market has been accompanied by an average across-the-board 25 percent
cost increase due to fuel price escalation and diminished outbound
garment volume. By way of example, a refrigerated freight container sent
from the United States mainland was priced at \$5,580, just two years
ago. Today, the same container costs \$7,600 on average.

The now ten-year-old recession, originally visited upon the CNMI in the
wake of the 1997 Asian financial markets collapse, has taken its toll on
the economic landscape of the islands. The 40 percent decrease over the
past ten years in tourist arrivals coupled with the more recent
reduction of more than 50 percent in the garment industry has had a
massive impact on the local market. The implementation of a (admittedly
necessary) ten percent decrease in government payroll by the current
administration, a 100 percent increase in the cost of power for
consumers, a mass exodus of workers (both local and foreign), and the
ever-increasing cost of goods and services, have resulting in economic
turmoil that would be further, and likely irrevocably, exacerbated by
the implementation of federal minimum wage and immigration laws at this
time. The local business community has estimated that federalization of
the Commonwealth's immigration as proposed in the form of S-1052 would
have the effect of slashing the local economy by approximately 50
percent. Any hindrance of the Commonwealth's attempt to rebuild and
sustain a viable and diverse visitor base from Japan, South Korea,
China, Russia, the Philippines, and other Asian countries would ruin the
islands' hopes for any economic rebound. Competing with such island
destinations as Guam and Hawaii, the CNMI, because of its size and
limited diversity of attractions, increasingly must rely on its ability
to attract tourists from countries such as China or Russia, where the
availability of passports to the average citizen on a wide-scale basis
is a recent development. This diversification is especially important as
the average Japanese and Korean traveler is becoming increasingly
worldly, sophisticated, and in search of destinations with greater
perceived "status."

Over the past ten years, the Commonwealth has experienced a decline in
U.S. citizen/local labor force participation. This should not be
surprising. The size of the average Chamorro and Carolinian family has
decreased steadily as the CNMI becomes more culturally "westernized." In
the past ten years, children of the very residents who were just young
adults at the time of the Covenant signing have begun to move to the
mainland for further education and employment opportunities in numbers
never before seen, as their parents and grandparents for the most part
had neither the financial ability, the need, or the impetus to do so.
The limited employment and advancement opportunities (even if the
minimum wage were commensurate with the mainland) for those with
advanced degrees in what is becoming, at heart, primarily a service
economy, is a determining factor in the current decision for many of the
younger generation to relocate.

Any substantial across-the-board decrease in the availability of
affordable foreign labor would negatively impact the local economy, even
if such a decrease was phased in over a number of years. As noted above,
the local labor pool is inadequate, under any scenario, to fill the
number of jobs currently held by non-resident workers. Although
individuals may prefer to remain close to their families, especially
when visits require lengthy and expensive travel, they also place great
weight on economic considerations in choosing where to live. It is
difficult to rationalize living in a relatively inaccessible, small
island community, where the cost of living is 25 to 30 percent higher
than the mainland U.S. and comparable income is far lower, even when
close familial ties are factored in. Individuals who might choose such
living and working arrangements are, for the most part, individuals
whose alternatives are less attractive. Those individuals are not United
States citizens. Those individuals are foreign nationals.

One popular misconception is that repatriated foreign workers can simply
be replaced by workers from the mainland. Those unfamiliar with
realities of island life might pose the question: why not employ United
States citizens from the mainland to staff the economy? The fact is that
some do come to the islands -- but many individuals from the mainland
who move to the islands for employment reasons find adjustment difficult
and do not remain long after their initial enthusiasm wears off.
Usually, disenchantment of one spouse or the other is likely to result
from one or more of the following: high cost of living compared with the
United States, particularly for utilities and food; limited and
expensive supply of fresh fruit, vegetables, and other refrigerated
foods; perceived limited medical facilities or educational
opportunities; inability to adapt to a different environment; limited
employment opportunities for a spouse; the expense of moving household
effects vast distances and the cost of re-establishing one's household;
limited opportunities for professional growth; hot and humid climate;
separation from family members on the mainland and the expense of
returning for frequent visits. The Commonwealth is a service-oriented
economy with limited opportunities for many professions; opportunities
for cultural enrichment are limited; there is no public transportation;
there are water shortages and power outages and, in some cases, special
medical needs cannot be met in the islands. Once again, those
individuals with the options available to them that abound in the
mainland are less likely to endure perceived or actual inconveniences
than those whose living conditions in their home countries may be
similar or, likely, worse.

One notion that the Chamber finds particular disturbing is the
oft-repeated characterization of the CNMI minimum wage as being a "slave
labor" wage. In 2005, non-resident workers remitted to their home
countries over \$114,000,000 of wage income. This represents 12 percent
of the gross territorial product of the CNMI and a phenomenal percentage
of the overall net wages of non-resident workers. While the Chamber
agrees with a measured increase in the CNMI minimum wage after
thoughtful analysis, this must be done with a realization and
acknowledgement that the current minimum is not akin to slave labor, as
evidenced by the massive amount of wage dollars annually exported from
the islands.

In addition to the need for affordable labor, the CNMI also relies on
local control of immigration to fuel the less-criticized second half of
the driving force behind the local economy: tourists. Tourists from
counties requiring visas under United States immigration policies
represent over one-third of all tourist arrivals in the CNMI. The CNMI
government is aware of national security and other concerns raised by
issues relating to visitors from such countries. The Chamber believes
that the LIIDS system currently in use by the CNMI Division of
Immigration has resulted in far fewer illegal visitor "overstays" on a
percentage basis than is the case in United States mainland. The Chamber
is also aware that it has been the choice of federal agencies not to
share relevant information with the CNMI concerning undesirable
visitors.

The Chamber believes that local immigration laws have been enforced with
increasing efficiency over the past several years. The Division of
Immigration's enforcement of policies and practices that are very
similar to the federal immigration policies and practices of the United
States has led to increasingly effective processing and tracking of
those who enter the CNMI as tourists. The Commonwealth's border
management system, visa waiver program, and visitor entry permit program
are, the Chamber believes, extremely effective tools for ensuring the
entry of qualified, legitimate foreign visitors. Similarly, the Chamber
believes that the CNMI's refugee and asylum program, which was
implemented with federal approval and oversight, is a fair and efficient
process for handling such matters in means consistent with United States
international obligations. The Chamber believes that the effectiveness
of the immigration processes in place could be further improved if
relevant federal agencies agreed to share information with the local
Division, but understands that those agencies have declined to do so to
date.

Similarly, local labor law is fully consistent with federal labor law,
in its entirety, with the sole exception of the minimum wage provision.
In addition to compliance with all federal standards, CNMI labor law
contains special protections for foreign workers that are not available
in the mainland. All foreign workers are employed pursuant to contracts,
each of which is approved by the Department of Labor -- that is, no
foreign workers are employed "at will." Furthermore, local law mandates
that employers provide for repatriation of foreign workers at the
conclusion of their employment, it requires employers to cover all
necessary medical costs incurred by their employees, it provides for
foreign workers dispute resolution mechanisms that are not even
available to the local workforce, and includes protections to ensure
that foreign workers' due process rights are protected. Perhaps the only
downside to a program that so comprehensively protects the rights of
foreign workers is that it has led to instances of "copycat" complaints
by workers who believe that the Department's rigorous enforcement of the
rights of aggrieved employees might be an effective alternate means to
obtaining financial security. The Chamber believes that in many ways,
the CNMI's labor laws, regulations, and policies for foreign workers
offer greater protection than those same workers would qualify for in
the United States mainland. By way of example, it has been noted that
there is no guarantee that a domestic worker complainant of abuse in the
United States mainland would be allowed to remain and seek legal
redress. This is not the case in the Commonwealth, where regulatory
mechanisms afford such workers rights to remain and seek alternative
employment, while adjudicating a legal action, if they so desire.

If there is one area that the Chamber believes could be improved upon
with respect to the issues at hand, it is enforcement. This is not meant
to suggest that local enforcement efforts have been ineffective -- they
have, if anything, improved significantly in recent years -- but,
rather, Chamber members perceive enforcement agencies to be underfunded
and understaffed. While the Chamber is fully satisfied that local laws
concerning labor, immigration, and minimum wage are appropriate and
adequate to address the needs and concerns of the Commonwealth, the
federal government, and non-resident workers (as does the Federal
Ombudsman's Office, which noted that the relevant local laws and
regulations "give the CNMI Department of Labor all the tools it needs to
fulfill its mandate"), the Chamber would not be opposed to federal
technical and financial assistance as regards enforcement of those laws.

One specific area of concern is federal enforcement of federal laws. The
Commonwealth has neither the manpower nor the budget to provide adequate
compliance and enforcement personnel with respect to federal labor law.
The Chamber believes that the federal government should strengthen its
presence through appropriate offices and agencies in the Commonwealth to
provide all workers, not just foreign workers, easy access to those
offices intended to address such matters. This position is bolstered by
the findings of the Federal Ombudsman's Office in 2006 that
"\[e\]nforcement efforts by some federal agencies have been somewhat
sporadic in the past, as a result of limited resources, the remoteness
of the CNMI, the expense of providing an enforcement presence, and the
perception that larger or more populous jurisdictions should be a higher
priority than the CNMI is for the agencies' dwindling enforcement
dollars."

There have been a number of reports, some dating back 20 years, of
foreign worker abuse, non- or under-payment of wages, rape, forced
prostitution, inhumane working and living conditions, and the like. The
Chamber deplores any occurrences of such actions or events, but in no
way believes that sensationalized reports represent the actual, current
state of working and living conditions of non-resident workers in the
CNMI. Law enforcement, public prosecutors, and relevant sections of the
Division of Immigration and Department of Labor have proven engaged,
effective, and equitable.

It is an unfortunate reality that there are bad people who commit
criminal acts in every part of the world. For example, the National
Organization of Women reports that there are approximately 132,000
incidents of reported rape or attempted rape in the United States each
year and that somewhere between two to six times that number that go
unreported. The Chamber finds such statistics as disheartening as the
reported incidents of rape or forced prostitution that occur within the
Commonwealth. An important distinction, however, is that few people
suggest that the United States is fostering such behavior through its
labor and immigration laws or minimum wage laws. The Chamber firmly
believes that these social issues need to be, and are, addressed by the
appropriate authorities in the CNMI. The Chamber also believes it
unfortunate that some have attempted to capitalize on the plight of a
relatively few victims of such crimes in the Commonwealth. We take very
seriously such allegations, and find this promotion of a sense of state-
or culture-sanctioned criminal behavior both utterly without merit and
highly misleading. While the Chamber acknowledges certain allegations
made decades ago, many of which were, the Chamber believes,
sensationalized aggrandizements of individual occurrences, we believe
that such incidents -- which happen everywhere in the world, including
the United States -- are on the decline in the Commonwealth. Statistics
and anecdotal evidence bear out this fact, and we hope that the United
States Congress will not succumb to such sensationalist reports.

The Chamber hopes that members of this Committee and their staff will
take this opportunity to independently investigate what those critics of
the Commonwealth would prefer you not know or consider: there are many
positive facets to the CNMI that reflect our unique character and the
warm, giving, and cohesive nature of our community. The NMI Chapter of
the American Red Cross, for example, has been recognized by the national
American Red Cross as one of the most successful chapters in the
country, on a per-capita basis, and has supported, through the provision
of volunteer workers and supplies, disaster relief efforts outside our
islands in places such as Yap and American Samoa, as well as in Texas
and Louisiana (in response to Hurricanes Wilma and Katrina) and New York
City (in response to the September 11, 2001 attacks). A relatively new
group on island, Beautify CNMI!, attracts on a weekly basis, dozens (and
sometimes hundreds) of community volunteers to clean and maintain the
natural beauty of our islands, and in one large event last October,
organized over 3,000 volunteers for a one-day, island-wide clean up. The
Chamber itself sponsors, though fundraising and private donations, a
number of scholarships for CNMI students. The CNMI Mayor's Office
sponsors international exchange programs, primarily with Japan. There
has been a resurgence in local sports, such as outrigger canoe racing.
Despite almost no government funding (because of the current economic
crisis), but because of widespread community support, both in terms of
donated manpower and dollars, the Commonwealth last year hosted the
Micronesian Games, a quadrennial regional sporting event that brought
together over 1,000 athletes and supporters from Palau, the Federal
States of Micronesia, the Republic of the Marshall Islands, Guam, and
the CNMI. These are just a few aspects of the CNMI about which you will
never receive a GAO or congressional report, or about which you will
never receive an email or read a story in a national magazine, but which
more accurately represent the true essence of our community.

**CONCLUSION**

The imposition of federal minimum wage law and immigration law will
remove two of the very few means that the CNMI possesses to shape its
economy and its future. The Chamber recognizes that the minimum wage
should rise, and agrees that immigration enforcement could be improved.
However, the Chamber does not believe that an across-the-board
imposition of federal law with respect to either will solve any
problems, real or perceived, that may exist in the CNMI. We hope the
United States Congress will acknowledge the uniqueness of our community
and our economy and will understand that answers to problems that are
conceived and implemented by and for a country of hundreds of millions
of citizens with the largest national economy on earth do not
necessarily translate well in a tiny group of islands thousands of miles
away. The Chamber invites interested federal officials to visit our
islands in order to better understand the unique challenges, both
natural and man-made, that we face. We look forward to an opportunity to
work with federal officials to reach agreement on these important issues
in ways that answer the concerns of all interested parties without
destroying our local economy.

The Chamber would be pleased to answer any questions or provide further
information that might be of assistance to this Committee.

Si Yu'us Ma'ase, Olomwaay, and Thank You.