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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
  OVERSIGHT HEARING ON THE ENFORCEMENT OF FEDERAL LAWS AND THE USE OF 
             FEDERAL FUNDS IN THE NORTHERN MARIANA ISLANDS

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                   SEPTEMBER 16, 1999, WASHINGTON, DC

                               __________

                           Serial No. 106-60

                               __________

           Printed for the use of the Committee on Resources

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
           Committee address: http://www.house.gov/resources

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
63-071                      WASHINGTON : 1999

                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                NICK J. RAHALL, II, West Virginia
JIM SAXTON, New Jersey               EDWARD J. MARKEY, Massachusetts
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH-HAGE, Idaho          FRANK PALLONE, Jr., New Jersey
GEORGE P. RADANOVICH, California     CALVIN M. DOOLEY, California
WALTER B. JONES, Jr., North          CARLOS A. ROMERO-BARCELO, Puerto 
    Carolina                             Rico
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
CHRIS CANNON, Utah                   PATRICK J. KENNEDY, Rhode Island
KEVIN BRADY, Texas                   ADAM SMITH, Washington
JOHN PETERSON, Pennsylvania          CHRIS JOHN, Louisiana
RICK HILL, Montana                   DONNA MC CHRISTESEN, Virgin 
BOB SCHAFFER, Colorado                   Islands
JIM GIBBONS, Nevada                  RON KIND, Wisconsin
MARK E. SOUDER, Indiana              JAY INSLEE, Washington
GREG WALDEN, Oregon                  GRACE F. NAPOLITANO, California
DON SHERWOOD, Pennsylvania           TOM UDALL, New Mexico
ROBIN HAYES, North Carolina          MARK UDALL, Colorado
MIKE SIMPSON, Idaho                  JOSEPH CROWLEY, New York
THOMAS G. TANCREDO, Colorado         RUSH D. HOLT, New Jersey

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held September 16, 1999..................................     1

Statement of Members:
    Hon. Don, Young, a Representative in Congress from the State 
      of Alaska..................................................     1
    Miller, Hon. George, a Representative in Congress from the 
      State of California........................................     2
    Tauzin, Hon. Billy, a Representative in Congress from the 
      State of Louisiana, prepared statement of..................    87

Statement of Witnesses:
    Babauta, Juan N., Commonwealth of the Northern Mariana 
      Islands....................................................    20
        Prepared statement of....................................    21
    Benavente, Diego T., Speaker, Northern Mariana Islands 
      Legislature, Saipan MP.....................................    16
        Prepared statement of....................................   138
    Berry, John, Assistant Secretary for Policy, Management and 
      Budget, U.S. Department of the Interior, Washington, DC....    84
        Prepared statement of....................................    87
    Galster, Steven R., Executive Director, Global Survival 
      Network, Washington, DC....................................   160
    Gess, Nicholas M., Associate Deputy Attorney General, U.S. 
      Department of Justice, Washington, DC......................    99
        Prepared statement of....................................   100
    Kinsella, Raymond, Founder and President, Grace Christian 
      Ministries, Saipan, MP.....................................   167
        Prepared statement of....................................   168
    Knight, Lynn A., Vice President, Saipan Chamber of Commerce, 
      Saipan, MP.................................................   132
    Manglona, Paul, President of the Senate, Northern Mariana 
      Islands Legislature, Saipan................................    14
        Prepared statement of....................................    16
    Meyerhoff, Albert H., Partner, Milberg Weiss Bershad Hynes & 
      Lerach LLP, prepared statement of..........................    66
    Tenorio, Pedro T., Governor of the Northern Mariana Islands, 
      Saipan, MP.................................................     5
        Prepared statement of....................................     6
    Sablan, Ronald D., President, Hotel Association of the 
      Northern Mariana Islands, Saipan...........................   143
        Prepared statement of....................................   145
    Shruhan, Donald K., Jr., Executive Director, Domestic 
      Operations West, U.S. Customs Service, U.S. Department of 
      the Treasury, Washington, DC...............................    95
        Prepared statement of....................................    97
    Nousher Jahedi, Washington, DC...............................   165
        Prepared statement of....................................   134
    Teitelbaum, Michael S., Alfred P. Sloan Foundation, New York, 
      NY.........................................................   140
        Prepared statement of....................................   151
    Wei, Christian, Ph.D., Christian Way Missions, Inc., Chinese 
      for Christ International, Greenville, South Carolina.......   163
        Prepared statement of....................................   164

  OVERSIGHT HEARING ON THE ENFORCEMENT OF FEDERAL LAWS AND THE USE OF 
             FEDERAL FUNDS IN THE NORTHERN MARIANA ISLANDS

                              ----------                              

               THURSDAY, SEPTEMBER 16, 1999
                          House of Representatives,
                                    Committee on Resources,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:03 a.m., in Room 
1324, Longworth House Office Building, Hon. Don Young [chairman 
of the Committee] presiding.
    The Chairman. The Committee will come to order. First let 
me thank the members that have braved the elements of nature 
and weren't frightened by a little bit of rain for attending 
this I think very important hearing.

STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ALASKA

    The Chairman. Today's hearing by the Committee on Resources 
will primarily focus on the enforcement of Federal use and the 
use of Federal funds in America's newest territory, the 
Commonwealth of the Northern Mariana Islands. In particular, 
the Committee will examine the effectiveness of millions of 
dollars of Interior funding that's been earmarked by the 
Congress each year by the Clinton Administration to enforce 
existing Federal laws in the Mariana Islands.
    The Committee will consider labor, customs, and 
immigrations management efforts by both the Federal and CNMI 
governments and their effect on economic self-sufficiency in 
the islands and the extent of the use of Federal capital 
improvement grants by the CNMI.
    In 1975, I supported the transition of the Mariana's 
district of the United States nation's trust territory to 
become the Commonwealth as a territory of the United States, 
the first since 1917. I also voted for the 1976 law 
implementing the Covenant establishing local constitutional 
self-government for Mariana's, giving them the specific and 
flexible authority for economic development. Since that time, 
the Mariana's have seen progress and difficult challenges in 
the pursuit of self-government and economic self-sufficiency.
    After the determination of the trusteeship and the 
conferral of U.S. citizenship to the people of the CNMI by 
President Ronald Reagan in November 1986, the economy developed 
rapidly and the reliance on Federal funds decreased 
significantly. The dramatic development of the economy in the 
Marianas was due to the flexible provisions of the Covenant, 
the infusion of Federal funds for the capital improvements, and 
local Mariana's policy supporting economic diversification. The 
growth of the newly emerging tourism and textile industries 
increased locally generated revenues and provided additional 
subsidy business and employment, but without the necessary 
Federal presence to enforce virtually all the same Federal laws 
that apply in the United States.
    These growing sectors of the economy also required an 
increase in alien guest workers. In the early 1990s, the 
Federal Department of Labor cited a number of garment factories 
in CNMI with violation of Federal wage and labor laws. In 
addition, the Occupational and Safety and Health 
Administration, OSHA, began to cite businesses in the 
Mariana's, including barracks for housing and alien guest 
workers. This gave rise to articles in the national media about 
slave labor conditions in the non-union textile industry in 
CNMI. The same articles used the below-national-Federal 
Mariana's minimum wage to support an allegation of unfair labor 
conditions in the garment factories, but without any 
substantial economic justification.
    Over the years, the Marianas reduced reliance on Federal 
funds from 85 percent to 15 percent. This shift in source of 
revenues was due to the increase in local revenues and a 
decrease of Federal funds, along with the end of grants for 
government operations. The CNMI are also required to match the 
reduced Federal capital grants. On January 31, 1995, this 
Committee held a hearing on legislation to address immigration 
and wage issues in the Mariana's and made it clear that human 
and civil rights abuses would not be condoned. Federal 
enforcement of Federal laws were clearly ineffective in ending 
the continued reports of labor and safety problems in the CNMI. 
At the same time, the CNMI government and the private sector 
had not adequately addressed management of a growing and 
diversified economy.
    The Clinton Administration opposed Insular Affairs 
Subcommittee Chairman Elton Gallegly's bill to establish a 
Federal private/public wage review board for the CNMI, due to 
an estimated biannual cost of $200 million to $100 million a 
year. The administration stated that a similar Federal board in 
American Samoa had a biannual cost of only $40,000 or $20,000 a 
year. The administration also opposed the bill's other 
immigration reform proposal. During the balance of that 
Congress, additional hearings and oversight and legislative 
actions were taken by the Committee on Resources to address 
CNMI issues without the support of the administration.
    In addition to those efforts, I made a commitment on May 
23, 1997, in a letter to John Babauta, the resident 
representative of the Northern Marianas, to lead a full 
Committee delegation of the Marianas to hear directly from the 
people of the Marianas after the Marianas elections for 
governor in the fall of 1997. I began planning a full Committee 
trip to the Marianas since 1989. Unfortunately, the 
administration canceled the promised plane just shortly before 
the planned February 1998 inspection trip. I also believed it 
was then appropriate to give time for the newly elected 
governor of the CNMI to reform local policies and management of 
Covenant construction grants. This would also give the Federal 
Government a chance to cooperatively work with the CNMI to 
address enforcement of labor and safety, customs, and other 
laws.
    The Committee did complete an inspection trip to the CNMI 
in February of this year. Federal officials in the islands at 
the time from various departments reported there were high 
levels of compliance with Federal labor and safety laws in the 
textile and tourist industries. In addition, the Committee's 
inspection of these industries did not find the evidence, as 
reported in the media, of certain violations of Federal laws.
    However, the Committee did find a serious problem, 
principally among guest workers from Bangladesh who had been 
brought in to work as security guards. Many of these 
individuals had been defrauded by recruiters and employers. The 
government took action--the CNMI government--took action to 
provide for a compensation fund to pay for these workers' lost 
wages and the airfare to return home, although there was no 
apparent legal obligation to do so.
    Today we have an opportunity to hear from the Clinton 
Administration and the government of the CNMI of their labor, 
customs, and immigration management efforts and the use of the 
Federal funds. The problems of the past may have been resolved, 
though they may be still problems with Federal and Mariana's 
efforts within the islands. I realize that the administration 
and others believe that action by the Federal Government is the 
only way to address the issues in the United States. However, 
the Marinas, while a territory, is not just a piece of 
property. This is a community of U.S. citizens exercising 
constitutional self-government and developing economic self-
sufficiency under the Covenant authorized by this Committee and 
this Congress and, thus, creating Federal law.
    The testimony presented today will be crucial to how 
members understand the present conditions in the Marianas as a 
basis for subsequent oversight or legislative action by the 
Congress. I intend to look at the current situation in the 
Marianas, not old problems or outdated solutions.
    And, for the rest of you in the audience, if any of you 
have mobile phones, pagers, shut them off or leave the room. 
And that is not a threat, that is an actual fact because that 
is something that I will not tolerate in this Committee. So 
just keep that in mind.
    The gentleman from California.

 STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Miller. I don't want to be excommunicated.
    Thank you very much, Mr. Chairman, and thank you for this 
hearing today. Together with my Democratic colleagues on this 
committee, I have sought oversight hearings into the labor, 
immigration, and human rights abuses for over three years. 
During that time, the press and the media accounts of the 
conditions in the Marianas have painted a desperate picture, 
one confirmed by interagency reviews from the Department of 
Justice, Labor, Interior, Immigration Service, and other 
agencies. We have issued reports describing the horrific 
conditions that pervade the CNMI's alien labor system, abuses 
no member of this committee would tolerate for one day in his 
or her own congressional district. Law enforcement and 
immigration officials have concluded that little has changed 
with the exception of some highly symbolic maneuvers in Saipan 
designed to deflect criticism, not solve the deep-seated 
problems.
    I am well aware that some will attempt to use this hearing 
to shift blame on the record of the Federal agencies enforcing 
Federal law in the territory. That cynical and deceptive 
strategy will not wash. The core corruption in the CNMI is the 
failure to apply our Federal immigration laws to this part of 
the United States. As a result, organized crime, communicable 
disease, and human exploitation, directly attributable to the 
CNMI's lax immigration laws, not only thrive in Saipan, but 
threaten every American. The time has long since passed to slam 
the door shut on these abuses and to restore Federal law to the 
Marianas.
    Congress waived the applicability of immigration laws in 
order to prevent a predicted onslaught of immigration and to 
preserve a traditional culture. But the exact reverse has 
occurred under the current situation. We will hear today that 
the immigration system operated by the government of the CNMI 
fails to provide the scrutiny required to serve our national 
interests. Sending additional agents and officials to Saipan is 
not going to help if the basic laws continue to be waived. And 
we all know that the real reason for lax immigration regulation 
is that the current system serves the desires of the garment 
industry, the sex trade, the drug trade, and others in the 
Saipan government--and the Saipan government either lacks the 
authority or the will and the ability to bring this under 
control.
    When we find sweatshops and exploitation in this country, 
we must use the full force of our Federal and local governments 
to root it out. In California, we have just passed two very 
strong anti-sweatshop laws after the previous Republican 
governors vetoed them. We need to be just as diligent in the 
Marianas. The CNMI should not serve as some haven where anti-
minimum wage zealots test our theoretical fantasies. It should 
not serve as a dangerous experiment of open borders. If it is 
to be part of the United States, it must be governed by the 
laws of the United States. If we continue to tolerate a system 
of virtual open borders 8,000 miles away, the abuses will 
overwhelm our capacity to respond. Now is the time to act, just 
like we would act if the conditions existed in our own 
district.
     Those who observe and write about the hearings today will 
judge not only the CNMI, but the capacity of this committee to 
exercise its power to uphold the rule of law. Thank you.
    The Chairman. I thank the gentleman. Are there any other 
opening statements? If not, we will bring the first panel. The 
first panel is the Honorable Pedro Tenorio, governor of the 
Northern Mariana Islands; the Honorable Paul Manglona, 
president of the senate; the Honorable Diego T. Benavente; and 
the Honorable Juan Babuata, the representative. Will you 
please, please come and don't sit down until I ask you to, but 
come and sit where you're supposed to be. Are we missing one? 
All right. Don't--
    I am going to put everybody under oath. That includes all 
the other witnesses, including the first panel.
    [Witnesses sworn.]
    The Chairman. Everybody says, ``I do''? All right. Sit 
down. Thank you.
    Governor, we do have a five minute rule, but, because of 
the distances that you have flown, I will be somewhat lenient, 
but try, all of you, to keep your presentation within five 
minutes and don't worry about it unless I say that's enough. 
And I will try to be as lenient as possible. But, governor, 
welcome and thanks for flying the long distance that you had to 
come here and testify for the committee. And I want to thank 
you for your hospitality when the committee was over there this 
last February. You're on.

STATEMENT OF PEDRO T. TENORIO, GOVERNOR OF THE NORTHERN MARIANA 
                      ISLANDS, SAIPAN, MP

    Governor Tenorio. Thank you, Mr. Chairman. I bring 
greetings from the CNMI and I appreciate the opportunity to be 
on this hearing this morning. I am Pedro T. Tenorio, governor 
of the Commonwealth of the Northern Mariana Islands. Thank you 
for the opportunity to testify before you today.
    I would like to take this opportunity to present to you a 
brief summary of my written testimony, which addresses the 
issue and concern raised by the Committee. I would like to 
begin by thanking the Chairman for the congressional delegation 
you led to the Commonwealth this February.
    The Asian economic downturn had a profound impact on the 
CNMI. The past three years have been very difficult. Tourism 
and apparel manufacturing, our own main industries, tourism is 
down 30 percent and apparel manufacturing is predicted to 
decline 10 percent. The magnitude of this decline is 
unprecedented in our history. Total government revenue have 
fallen by over $30 million. This is a 15 percent reduction. We 
have made painful sacrifices and cut government spending to the 
core. We are struggling to maintain vital public services to 
our people on our three major islands. Our economy is tied very 
closely to Asia and the outlook for the next five years is 
bleak.
    Mr. Chairman, you inquire about the status of our Covenant 
702 CIP funds. We worked very hard over the last year to move 
these funds efficiently and rapidly. In fact, last year alone, 
we released nearly $40 million. This was more than any other 
years in the history of the CIP programs. These funds are 
critically needed and we are grateful for your assistance in 
preserving them.
    We also appreciate your interest in determining how 
effective Federal enforcement and local reform efforts have 
been in the Commonwealth. While there have been some 
improvements in our Federal relationship and greater Federal 
presence, we still believe that increased joint efforts are 
necessary. Mr. Chairman, we have also made significant reforms. 
We hope, during your February visit, you were able to see that, 
despite our limited resources, we have worked hard to keep our 
commitment to make genuine reforms.
    In the last year and a half, we reduced the number of guest 
worker permits by 26 percent. This is the first reduction in 
our history. We passed a law granting workers greater mobility 
to transfer between laws. We expanded assistance to guest 
workers abandoned by their employers and helped them find new 
jobs. We repatriated over 163 abandoned workers. About two-
thirds of them qualified for unpaid back wages assistance. We 
passed a law providing limited immunity to illegal aliens. Over 
3,000 registered and became legal. More than 1,200 found full-
time employment and many more found temporary work. We also 
passed a law limiting the stay of guest workers to three years. 
We doubled criminal prosecution of immigration and labor law 
violators. And we collected over $1.1 million in back wages for 
workers.
    We stopped manpower and security agency scams by not 
allowing these firms to bring in guest workers from outside the 
CNMI. Those who are hire their own island employees are 
required to pay a bonding fee of $5,000 per employee.
    We are seeing a significant result of our reform. Workers' 
complaints have dropped dramatically. Last year, over 900 
complaints were filed. In the first 6 months of this year, only 
143 complaints were filed.
    This is only a brief summary of our accomplishments. Once 
again, Mr. Chairman, a more detailed report is in our written 
testimony. Mr. Chairman and members of the Committee, we appeal 
to you for your continued support. Please preserve our vital 
Covenant CIP funds. Please help us secure fair reimbursement 
for the enormous costs of accommodating thousands of 
Micronesian immigrants who have come to our island, contract 
costs exceeding $25 million during the last 2 years alone. As 
we struggle to diversify our economy, please help us restore 
investors' confidence. Please appreciate that we have extremely 
limited natural and human resources to develop our economy. 
Please recognize the impact of the Asian crisis on our fragile 
economy and what we have done to adjust to drastically falling 
revenues.
    In closing, Mr. Chairman, please acknowledge the progress 
we have achieved in making reforms. I appeal to this Committee: 
Please help our people prepare for the economic uncertainties 
that lies ahead. My staff and I will be ready to respond to any 
questions that you have. Thank you again, Mr. Chairman, for the 
opportunity to appear.
    [The prepared statement of Governor Tenorio follows:]

   Statement of Hon. Governor Pedro P. Tenorio, Commonwealth of The 
                        Northern Mariana Islands

    Hafa Adai, Mr. Chairman and Members of the Committee. I am 
Pedro P. Tenorio, Governor of the Commonwealth of the Northern 
Mariana Islands (``Commonwealth'' or ``CNMI''). Thank you for 
the invitation to testify before you today.
    We would like to thank the Chairman for the Congressional 
delegation you led to our islands this February. I hope that 
the delegation was able to see that, despite our limited 
resources, we have been working hard to keep our commitment to 
reduce the number of guest workers, to repatriate abandoned 
guest workers, to improve working and living conditions, and to 
enforce compliance with labor and immigration laws. We 
appreciate the interest of your Committee in determining how 
effective Federal enforcement efforts have been in the CNMI and 
the status of our reform efforts.

Economic Downturn and Efforts to Revitalize the Economy

    Unlike the mainland U.S. which is experiencing an economic 
boom, our economy has been suffering a severe downturn since 
late 1997. This is because the CNMI economy is closely tied to 
the Asian economies, unlike most of the U.S., except perhaps 
for Hawaii and Guam.
    Tourist arrivals fell by 28 perent in FYI 1998, from 
726,690 to 526,298. Arrivals are projected to decline another 8 
percent in FYI 1999 to 485,000, which would be the lowest 
arrival figure since 1991. Little or no improvement is expected 
for the next two years, and only small increases beyond that, 
as the Asian economies recover.
    Local revenue collections from tourist and other non-
apparel related activities have declined $54 million, or nearly 
30 percent over the last two years, from $186 million in FY 
1997 to a projected $132 million in FY 1999. Over the same 
period, apparel industry revenues have climbed from $62 million 
to $85 million (37 percent), providing some mitigation of the 
steep decline in tourism revenues. The net result is projected 
total FY 1999 revenues of $216 million, or a net reduction of 
$32 million from FY 1997.
    The filing of class action lawsuits against the CNMI's 
apparel manufacturers in January of this year has clearly 
affected the monthly user fee collections and the value of 
apparel exports. Based on recent trends in the industry, we 
have reduced our revenue estimates from the apparel industry by 
10 percent per year for FY 2000 and FY 2001. A drastic drop in 
FY 2004 is anticipated as quotas and tariffs are removed.
    In addition to General Fund revenues, approximately 50 
percent of the Commonwealth Ports Authority (``CPA'') seaport 
revenues are derived from apparel-related shipments. This has 
enabled CPA to secure long-term financing to fund major ports 
improvements. Loss of the apparel revenues with no replacement 
revenues would leave the Ports Authority unable to meet its 
long-term bond debt service payments and loss of the outbound 
cargo would mean higher shipping costs for the entire CNMI.
    Further, the Commonwealth Utilities Corporation generates 
over 20 pefrcent of its revenues directly from the apparel 
industry.
    The economic outlook for the CNMI over the next four years 
appears to be a small decline for two years, a stagnant economy 
for two years and a steep 30 percent drop in FY 2004.
    The net result of our most likely projections for the 
apparel industry, tourism, our economic diversification 
efforts, and the multiplier effect of capital improvement 
project (``CIP'') construction activities, is that government 
revenues will remain in the $200-$215 million range for FY 
2000--FY 2003, with a drop to $182 million level in FY 2004. 
This would reduce revenues to the FY 1994 level.
    A strict austerity program implemented in January 1998 
imposed restrictions on expenditures for personnel, 
professional services, travel, communications, leased vehicles 
and general procurement of goods and services. These belt-
tightening measures have resulted in drastic reductions in 
annual government expenditures from $268 million in FY 1997 to 
a projected $216 million in FY 1999. This will be a $52 million 
or 20 percent reduction over the two-year period. Over 1,000 
government positions have been eliminated through attrition and 
by leaving vacant positions unfilled, and some government 
offices have implemented a reduction in work hours.
    Further reductions in government expenditures present major 
difficulties. The CNMI, unlike most other local, state and 
insular jurisdictions, is comprised of three main populated 
islands, making duplication of government services and 
infrastructure unavoidable. Our analysis of government 
expenditures by island indicates the CNMI Government's 
operational costs are 30 percent higher than they would be if 
the population and facilities were located on one island. This 
amounted to $43 million in FY 1998. This does not include the 
additional infrastructure costs of multiple power, water, and 
sewage systems; airport and sea port facilities; highway and 
road systems; public school and public health delivery systems; 
et cetera.

II. Covenant Section 702 Grants are Expended on Vital Projects

    Upon taking office, my Administration made it a priority to 
move Covenant Section 702 CIP funds quickly and efficiently. 
One of the primary impediments against movement of CIP funds in 
the last Administration was the lack of an integrated list of 
prioritized CIP projects, which is a requirement to draw-down 
Federal funds. We quickly appointed a task force to develop 
such a list. The Covenant Section 702 Projects Plan for FY 
1996-FY 2002 (``CIP Plan'') was completed in December 1998. We 
also created an office specifically for the management of CIP 
projects. This has greatly improved our efficiency and ability 
to track progress on the expenditure of CIP funds and assist in 
the movement of pending projects. Our efforts have led to a 
substantial increase in the level of funds released per fiscal 
year. From January 1995 to December 1997, a total of $33.6 
million was released for CIP projects. During 1998 our efforts 
to expedite the release of funds led to a release of $39.5 
million for the year, more than was released in the entire 
preceding three-year period. In the last six months we have 
already managed to release $10.2 million. We are expending 
these funds as rapidly as possible and have instituted the 
organizational changes necessary to do so.
    Over the last several years, claims have been made that the 
CNMI was not using the Covenant CIP funds. An OIA press release 
issued in February 1999 supporting a proposal to divert these 
funds to other insular areas characterized the funds proposed 
for diversion as ``an unused balance from previous construction 
grants.'' This is not true. Although it may appear on the books 
that the funds have not been ``used'', this is misleading, as 
normally full payment for a project is not due until its 
completion.For instance, a project may be in the design phase 
and payment for the design has been expended, but you would not 
pay for the construction until actual completion of the 
facility. Therefore, it appears on the books that this money 
has not been used when, in fact, it has been committed.
    The funding levels and the CNMI match required since the 
inception of the Covenant Section 702 funding program are as 
follows:

         First Funding Period, FY 1979-FYI 1985           $192 
        million
         No local match required All grants have been fully 
        expended.        $228 million
         Second Funding Period, FYI 1986-FY 1992
         No local match required Approximately 40 percent of grants 
        went to local government operations. Only $1.2 million remains 
        unexpended. Projects have been identified.
         Interim Funding Period, FY 1993-FYI 19951\1\        
        $101 million
---------------------------------------------------------------------------
    \1\ Each funding period has been seven years except the Interim 
Funding Period for FYI 1993-1995. Because no agreement was in place 
after the termination of the second funding period in 1992, the U.S. 
Congress approved funding on a year-to-year basis until 1996 when the 
third and current period of funding began.
---------------------------------------------------------------------------
         Between 20 percent and 40 percent local match required, 
        totaling $29 million. All grants went to CIP projects; no 
        funding went to government operations. Although $41 million 
        remains unexpended, all of it has been committed to ongoing 
        projects.
         Third Funding Period, FYI 1996-FY 2002        $154 
        million
         Fifty percent local match totaling $77 million over seven-year 
        period is required. All grans is are for CIP projects. CIP Plan 
        was completed in December 1998 and is being implemented.

    The FY 1996-FY 2002 CIP Projects Plan identifies the projects to be 
accomplished under the current seven-year CIP funding program, totaling 
$154 million. Major projects include funding for a solid waste 
facility, a new correctional facility, school projects, and basic 
water, power and sewer infrastructure on Rota, Tinian, and Saipan.
    The Commonwealth has thus far appropriated $52.3 million for CIP 
projects under this plan. This appropriation takes us part way through 
the FYI 1998 funding period. In addition, legislation was recently 
passed authorizing a bond issue that will provide sufficient funding 
for the local match required through the rest of the current funding 
period, FYI 1996-FY 2002.
    There have been proposals to defer a portion of the Covenant 
Section 702 CIP grant funds. We strongly oppose any amendments to the 
existing funding structure. We are locating funds to match the Federal 
share and we are expending these funds quickly. We are aware of and 
appreciate the letters you have written, Mr. Chairman, to your 
colleagues in Congress regarding this issue and thank you for your 
efforts to assist us in preserving these important funds for our 
community.

III. Enforcement of Federal Laws

    Over the last year and a half, the Commonwealth has forged 
improved relationships with the Federal agencies that operate 
in our jurisdiction. However, we still have a few concerns 
regarding the operations of some of the Federal agencies in the 
CNMI.
A.The National Labor Relations Board (``NLRB''). The U.S. Equal 
Employment Opportunity Commission (``EEOC''). and The 
Occupational Safety and Health Administration (``OSHA'')
    The Commonwealth is currently finalizing a Memorandum of 
Agreement (``MOA'') with both the NLRB and EEOC. These 
agreements will expand and clarify the interaction of the 
Department of Labor and Immigration (``DOLI'') and the NLRB and 
EEOC. We have also been encouraged by the training efforts of 
the EEOC in the Commonwealth. They have been conducting on-
island workshops for employees, employers, and local government 
agencies.
    The CNMI's primary concern regarding the NLRB, EEOC, and 
OSHA enforcement efforts is that they do not have a full-time 
presence in the Commonwealth. Part-time enforcement of claims 
has created a backlog of cases. We have witnessed this from our 
processing of temporary work authorizations which DOLI issues 
for 90 days at time to guest workers who have filed a Federal 
labor claim, and are continually renewed until the completion 
of the case. A temporary work authorization allows a guest 
worker to remain on-island during the pendency of his or her 
claim. There are currently over 300 individuals who are on 
temporary work authorizations as a result of pending NLRB 
claims. Some of these individuals have been receiving renewals 
of the 90-day temporary permits since 1997. We also have 
individuals who are unemployed, but continue to remain in the 
CNMI during the pendency of their NLRB case. When guest workers 
come in for renewals of their temporary work permits, they are 
asked about the anticipated conclusion of their case. We have 
repeated instances of guest workers telling us they do not know 
because there is no agent on island. In addition, because we 
are an island community, employees have no reachable resource 
for assistance when an agent is not on island. They cannot 
drive to a neighboring town to see an agent.
    We are also disappointed over the reluctance of OSHA to 
assist in funding a consultation service in the CNMI as is done 
in many other jurisdictions including Guam, Puerto Rico and the 
Virgin Islands. We believe that such a service would assist in 
reducing the number of OSHA violations in the CNMI.

B. The U.S. Attorney's Office

    Our primary concern regarding this office is the delayed 
prosecution of an internal corruption matter at DOLI, which has 
not been prosecuted despite being ready for prosecution' from 
the Federal investigative task force since October 1998. The 
investigative task force has also informed us that, due to the 
lengthy passage of time, a number of ``targets'' and 
``witnesses'' are no longer available for testimony in the 
case. Swift prosecution of this case would send a message that 
corruption is not tolerated.

C. The Federal Bureau of Investigation (``FBI'')

    The primary interaction between the FBI and the CNMI has 
been through the FBI/CNMI Task Force. The Task Force has been 
extremely successful. Cooperation, training and technical 
assistance provided by the FBI is critical to effective 
enforcement of laws in the CNMI. Joint efforts of the FBI/CNMI 
Task Force have successfully combated Chinese gang operations, 
forced prostitution under the Mann Act, illegal immigration, 
mail and wire fraud violations, and Hobbs Act violations. A 
major concern expressed by CNMI members of the Task Force is 
the failure to respond to repeated requests for funding for 
federally certified translation services. Lack of translation 
services clearly hinders the overall progress of investigative 
work in a community with a large foreign speaking population.

D. The U.S. Department of Labor. U.S. Customs. and the 
Immigration and Naturalization Service
    U.S. Labor maintains a full-time presence in the CNMI and 
we have participated in a number of joint enforcement efforts. 
The Commonwealth is excluded from the customs territory of the 
United States under Covenant Section 603. However, the CNMI 
Customs Division cooperates fully whenever U.S. Customs 
requests to stage an operation in the CNMI. Last year, I 
invited the U.S. Customs Service to consider executing a new 
Memorandum of Agreement with the CNMI to replace one that 
expired in September 1996.\2\ U.S. Customs declined due to 
concerns about potential liability issues since U.S. Customs 
has limited jurisdiction in the CNMI under the Covenant. In 
addition, no CNMI law enforcement agency has yet received the 
contents of the so-called ``Gray Report'' allegedly detailing 
instances of textile transshipment into the CNMI during late 
1997.
---------------------------------------------------------------------------
    \2\ See letter of Governor Pedro P. Tenorio to Mr. Charles 
Simonsen, Special Agent in Charge of the U.S. Customs Service San 
Francisco office, July 7, 1998 (appended to Attachment IV of CNMI 
Report on Labor, Immigration and law Enforcement, distributed to the 
Committee April 1999).
---------------------------------------------------------------------------
    The last six months have seen a dramatic improvement in 
services from the NS office in the CNMI. Prior to this time, 
there was little interaction between CNMI immigration officials 
and the local FNS office despite efforts by the CNMI. This 
situation has improved dramatically with recent cooperative 
efforts, including the Tinian operations, and planned training 
seminars, which will be extremely helpful in enhancing local 
levels of expertise.

IV.Federal-CNMI Initiative Funds Are Instrumental in Improving 
the Labor and Immigration Situation in the CNMI

    The Federal-CNMI Initiative on Labor, Immigration and Law 
Enforcement was created by Congress in 1994 to address labor, 
immigration and law enforcement issues in the CNMI. Each year 
since 1994, Congress has appropriated funding to the Department 
of Interior to be used for activities under the Initiative. The 
CNMI applies annually for grants under the Initiative and the 
Office of Insular Affairs (OIA) determines how the money is to 
be spent. In addition to funding CNMI enforcement efforts in 
labor, immigration and related areas, OIA has provided 
substantial funding to Federal enforcement agencies to increase 
their presence and enforcement activities in the CNMI. 
Activities funded by the CNMI using Initiative grants are 
described below.

A. Attorney General's Office

    Initiative funds have enabled the CNMI Attorney General's 
Office (``AGO'') to address a critical need for additional 
attorneys. The FYI 1995/1996 grant funded two attorneys and a 
paralegal in the Criminal Division. These positions became so 
essential to the institutional capability of the Criminal 
Division that they were taken over by local funding to ensure 
continuity.
    Three labor and immigration attorney positions in DOLI were 
funded from the FYI 1997 grant and we have applied for funding 
to continue them under the FY 2000 Initiative appropriation. 
One attorney functions as in-house counsel to the Labor 
Division. Among the attorney's responsibilities are advising on 
labor policy and procedures, as well as drafting rules and 
regulations and reviewing labor related legislation, and 
representing the Department at hearings.
    In addition, a prosecutor from the AGO Criminal Division 
was permanently assigned to DOLI in August 1998 to criminally 
prosecute violations of CNMI labor laws. Although the vast 
majority of labor disputes are resolved on the administrative 
level, it was essential that abusive employers be charged 
criminally if the conduct called for it. Immigration criminal 
prosecutions are up 100 percent from 1997. During 1998 there 
were 25 criminal labor and immigration cases filed against 45 
defendants. This labor prosecutor's scope of responsibilities 
was expanded to include civil prosecution, collections (i.e. 
enforcement of judgments rendered by the hearing office) as 
well as representing the department at hearings. This attorney 
has filed 142 civil actions to collect over $1 million in back 
wages, liquidated damages, and civil penalties. A paralegal 
position is also funded under the grant.
    The third attorney position provides legal support to 
DOLI's Division of Immigration. This attorney handles all 
deportation and exclusion related matters and litigation up 
through the appellate level. In 1997 there were 247 deportation 
orders issued; this increased to 441 deportation orders in 
1998. In addition, over half a million dollars in assets from 
forfeiture cases have been collected by this attorney.
    A Criminal Code revision was also funded under the grant 
and is currently before the Legislature.

B. Attorney General's Investigative Unit

    In 1995 the Attorney General's Investigative Unit (AGIU) 
was awarded $487,000. The FYI 1999 grant funded $245,000 for 
this unit. These funds permitted the creation and operation of 
a professional law enforcement agency. The objective of the 
AGIU is to develop an investigative program to identify and 
prosecute white collar crime, organized crime, public 
corruption, and fraud against the government, with an emphasis 
on labor and immigration problems. The AGIU performs the role 
of an independent state police agency reporting to the Attorney 
General. This unit handles an average of more than 100 criminal 
cases per year by six investigators. To date for this current 
year, there have been 14 arrests, which are pending 
prosecution. These cases consist of misconduct of public 
officials--bribery, labor abuse, immigration fraud, sexual 
assault, extortion and prostitution. The unit is headed by a 
retired FBI special agent.

C. Department of Labor and Immigration

    The resolution of labor disputes at the administrative law 
level is important to efficient resolution of cases. The system 
and personnel in place in 1995 could not cope with the volume 
and complexity of cases filed. The Initiative grant in FY1995/
1996 provided $132,000 for improvements. Two administrative law 
judges were hired for this unit. Computers and modern court 
recording equipment were added to the available tools of the 
administrative law judges. This unit processed 1,133 cases in 
1996, issuing monetary awards to workers of $1,874,206. In 
1997, 1,229 cases were processed with $2,131,423 awards issued 
to workers. In 1998, 1,270 cases were processed, with 
$7,452,630 issued in administrative awards to employees. The FY 
1997 Initiative grant provided an additional $168,270 for a 
third judicial position, as well as additional equipment, 
training and library materials.
    In addition to the hearing office, the FYI 1997 Initiative 
grant provided DOLI funding for an Internal Affairs 
Investigator, a Health and Safety Investigator and a Wage and 
Hour Investigator. The Internal Affairs Investigator has 
developed a Departmental handbook including guidelines, 
procedures, and regulations for Department personnel. The 
officer has conducted training sessions with DOLI personnel. 
Investigations of alleged misconduct and/or violations of CNMI 
laws and DOLI policies have thus far resulted in the 
termination of six employees and the resignation of three. This 
investigator also conducted an investigation of a private firm, 
which resulted in 60 counts of criminal charges against that 
firm. This office has an increasing caseload as a result of 
active monitoring and enforcement. The FY 2000 Initiative 
request includes funding for an additional Internal Affairs 
Investigator. The Department has yet to fill the other two 
investigator positions; however, it is actively recruiting 
qualified candidates.

D. Labor and Immigration Identification System

    The Labor and Immigration Identification System (LIIDS) 
project began in 1994 with a $1.5 million grant from the FY 
1995/1996 Initiative appropriation. The purpose of this project 
is to develop a fully automated immigration tracking system 
that would include a comprehensive arrival and departure 
module. While this project has suffered some delays, it is now 
back on track. Development of a fully automated arrival and 
departure module is in the planning stages and vendors who have 
installed similar immigration tracking systems in other 
countries are being researched. Currently, CNMI immigration 
arrival and departure tracking is semi-automated, with plans to 
enhance this system until the installation of a fully automated 
arrival and departure system.

E. FBI/CNMI Task Force

    The FBI/CNMI Task Force was organized to combine law 
enforcement resources and efforts of the CNMI and the FBI to 
jointly investigate criminal activities that violate Federal 
law within the CNMI, specifically organized crime activities. 
The Task Force received small grants in FY 1995/1996 and in FY 
1999. The Task Force has been responsible for dismantling a 
Chinese gang that was involved in numerous extortion cases in 
the Chinese community. Three high ranking organizers of the 
gang have been convicted and are presently serving lengthy 
prison terms. In addition to extortion cases, the Task Force 
successfully investigated numerous Mann Act violations, 
immigration fraud, and an internal investigation of alleged 
corrupt activities in the DOLI. In April 1999, the Task Force 
assisted the U.S. Immigration and Naturalization Service in the 
investigation of the illegal alien smuggling operation that 
resulted in five boats being diverted by the U.S. Coast Guard 
to Tinian. Approximately 30 Chinese nationals have been charged 
with alien smuggling. A sixth boat carrying approximately 150 
Chinese nationals was diverted to Tinian in August. Just a few 
days ago, all of the aliens were processed by INS and 
repatriated out of Tinian.

F. Northern Marianas College

    In March this year, the Northern Marianas College organized 
an economic development conference, featuring a distinguished 
panel of experts. The event was funded by a $75,000 grant from 
OIA, and a $25,000 grant from the Commonwealth Development 
Authority. The information, ideas, and recommendations that 
arose from the conference have been incorporated into a major 
economic development study, funded by an additional $200,000 
grant from the Initiative. The College intends to finalize the 
study by the Fall of 1999.

G. Central Statistics Division/Department of Commerce

    The Central Statistics Division was awarded $87,000 from 
the FY 1998 Initiative grant to conduct four quarterly rounds 
of a current labor force survey for the entire CNMI. 
Unfortunately, these funds were inadequate to effectively 
survey all three major islands, so only Saipan was surveyed and 
only for three of the planned four quarters.

H. Department of Public Health

    The Department of Public Health (``DPH'') instituted a 
comprehensive alien health-screening program in early 1998. 
While OIA first offered technical and financial assistance to 
DPH in January 1998, virtually none was provided until April 
1999, fifteen months later, and long after the first screening 
was completed. Instead, OIA took the information and statistics 
provided by the CNMI for the purpose of developing the grant 
proposal in early 1998, and misrepresented and misinterpreted 
it and erroneously portrayed a ``public health crisis'' in a 
report to Congress. The report was issued in December 1998 
entitled the ``Fourth Annual Report on Federal-CNMI Initiative 
on Labor, Immigration and Law Enforcement''. The CNMI was 
disturbed by the misrepresentations and prepared a 
clarification, which was submitted, to Congress in April 1999.
    With no assistance from OIA, the CNMI successfully 
implemented the guest worker health-screening program. This 
program screened over 35,000 workers in 1998 and is moving into 
its second year. The program succeeded because of the diligent 
and cooperative efforts of several CNMI government agencies and 
the private medical community, using computer tracking 
capability and sustainable program policies.
    DPH received $320,000 from the FY 1999 Initiative 
appropriation to upgrade the data collection system at the DPH/
DOLI Liaison Office and to hire three disease control 
investigators. These funds will ensure continuity of the 
screening program, investigation of the work environment of 
workers testing positive for disease, and monitoring 
noncompliant workers.

Guest Worker Assistance Program

    Karidat is a non-profit organization operating a number of 
social service programs in the CNMI. One of these programs is 
the Guest Worker Assistance Program funded by the Initiative 
during the last four years. This program provides emergency 
food and/or rental assistance to ``displaced guest workers'' 
who have filed labor complaints with DOLI against their 
employer for breach of contract or abuse. Karidat received 
approximately $300,000 from the FY 1995 through FY 1997 
Initiative funding. An additional $200,000 was applied for from 
the FY 2000 grant. Between 1996 and 1999 they have assisted a 
total of 3,500 guest workers.

V. The Commonwealth is Successful1v Addressing Labor and 
Immigration Issues

    Over the last year and a half we have accomplished the 
following through our reform efforts:

    In March of last year, we enacted legislation imposing a 
moratorium to control and reduce the number of guest workers in 
the Commonwealth. This measure, coupled with the economic 
decline we are suffering, has produced a reduction in the 
number of guest worker permits by 22.7 percent from 1997 to 
1998, the first reduction in our history. Furthermore, our most 
recent figures, from August 1998 to August 1999, show that only 
25,306 permits were issued for this one year time period. This 
represents a 26% decline from Calendar Year 1997.\3\
---------------------------------------------------------------------------
    \3\ A recent CNMI labor force survey prepared by the CNMI 
Department of Commerce indicated that there are currently 35,755 non-
U.S. citizens in the CNMI labor force. However, this figure has to be 
clarified. In addition to the guest workers permitted by our Labor and 
Immigration Identification System (``LlIDS''), the Department of 
Commerce figure included citizens from the Freely Associated States, 
spouses of U.S. citizens who had not obtained green cards or U.S. 
resident status, illegal aliens (as identified under the limited 
immunity program), and other non-resident permit holders such as 
investor/business permit holders.
---------------------------------------------------------------------------
    In addition, our nonresident population is now lower than 
our resident population.\4\
---------------------------------------------------------------------------
    \4\ The 1995 Mid-Decade Census reflects that 37.7 percent of the 
CNMI population was born in the CNMI; 2.8 percent were born on Guam; 
4.1 percent were born in the U.S.; and 5.9 percent were born in the 
Freely Associated States. This totals 50.4 percent of the total CNMI 
population in 1995. This does not include naturalized U.S. citizens, or 
immediate relatives of U.S. citizens who are in the CNMI under that 
status under CNMI immigration law or as U.S. green card holders. Based 
on these figures, we believe that the guest worker population 
(nonresidents who are working in the CNMI under a business permit and 
guest workers under temporary worker contracts), is lower than our 
resident population of U.S. citizens, immediate relatives of U.S. 
citizens both green card holders and immediate relatives under CNMI 
immigration law and Freely Associated States citizens.
---------------------------------------------------------------------------
    In March this year, to complement the moratorium law, we 
passed a law imposing a clear and absolute cap on the number of 
guest workers permitted to be employed in the apparel industry. 
We also wanted to encourage a decrease in the numbers, and to 
eliminate the practice of using manpower companies to 
circumvent the cap. Consequently, the law contains an attrition 
mechanism mandating that if a company loses or lapses its 
license, the number of guest workers permitted under that 
license are permanently lost.
    This February, we passed a law expanding the relief 
available to abandoned guest workers. Prior law had established 
a deportation fund to be used to purchase airline tickets for 
guest workers who had not been properly repatriated by their 
employers. The new law expanded the relief to allow guest 
workers who had received judgments for back wages, the right to 
receive, in addition to airline tickets, the equivalent of 
three months salary. Since this February, we repatriated over 
163 individuals. One hundred and eleven also qualified for the 
three months salary relief. Thus far we have expended $359,000 
to provide this assistance. Currently, we have a list of 70 
additional guest workers who are seeking this relief. We are 
continuing to gather our limited resources to address their 
requests as quickly as possible. In addition, increased 
enforcement and monitoring efforts have contributed to the fact 
that we have not had any significant cases of worker 
abandonment during this Administration.
    Last September, we enacted a law providing illegal aliens 
the opportunity to register and become legal. The registration 
period ended on June 2, 1999, with 3,111 guest workers having 
registered. Upon registering, they were encouraged to seek 
employment. We also provided assistance to help them locate 
jobs. To date, 1,246 have obtained one-year contracts for 
employment, with 295 more applications pending. A total of 
2,125 have been granted three-month work authorizations. At the 
end of the amnesty period, we began asking those who had not 
found jobs to voluntarily depart. If they are unwilling to do 
so, we will institute deportation proceedings, ensuring that 
they are afforded all their due process rights.
    We are improving our border control capability. Early this 
year we installed a departure counter at the Saipan 
International Airport and are now collecting identification 
information from departing nonresidents. Prior to the 
installation of this counter, we only tracked nonresidents 
entering the CNMI. This change will improve our ability to 
ascertain who is physically present in the Commonwealth.
    We also instituted prescreening efforts to ensure that 
guest workers entering the CNMI satisfy conditions for entry. 
DOLI and State Department officials met late last year to 
discuss this issue. In addition, the Commonwealth unilaterally 
instituted prescreening of Filipino workers utilizing the 
Philippines Overseas Employment Agency (``POEA''), the 
Philippine Government agency responsible for all aspects of 
overseas employment for its citizens, and the Philippine 
Consulate in the CNMI.We are close to formalizing an agreement 
whereby POEA will assist us in our prescreening efforts. 
Efforts to implement prescreening have been concentrated on 
guest workers from the Philippines because they are the largest 
group of guest workers in the CNMI. Last year, DOLI instituted 
policies to prohibit entry into the CNMI of individuals from 
certain high-risk countries, except for garment workers. These 
countries include Bangladesh, Nepal, Sri Lanka, Pakistan, 
Russia, and the People's Republic of China. Individuals from 
these countries have been particularly difficult to repatriate 
in the past. These procedures are consistent with INS policies. 
The CNMI is now using INS ``watch lists'' of high-risk 
countries.
    Last year, DOLI promulgated strict regulations for 
manpower, service providers and security companies to eliminate 
recruitment scams. These regulations prohibit security guard or 
manpower companies from hiring employees from outside the CNMI, 
thereby eliminating foreign recruitment scams in those 
industries. The regulations also require financial screening of 
all security companies, manpower companies and service 
providers to determine whether they have the financial 
capability to employ the guest workers. Companies that qualify 
are required to post a cash bond or a standby letter of credit 
in the amount of $5,000. The result of these regulatory changes 
has been the virtual elimination of these types of companies in 
the CNMI.
    We passed a law this year limiting the stay of guest 
workers to three years.
    Last year, legislation was passed creating a special 
industry committee system to recommend minimum wage levels 
patterned after the system in American Samoa. The Chairperson 
of this Committee is an official of the Hotel Employees and 
Restaurant Employees Union Local 5; the Vice-Chairperson is the 
Vice President and General Manager of the Bank of Hawaii. The 
Committee has been meeting since January of this year. They 
have held public hearings on Saipan, Tinian and Rota, reached 
out to the business community through appearing before the 
Chamber of Commerce, and met with labor leaders to hear their 
views. Businesses throughout the Commonwealth are being 
surveyed in a manner similar to that done by the U.S. 
Department of Labor in American Samoa to determine current wage 
and compensation levels in various industries in the CNMI. 
Based on the data that is gathered and the public input from 
all interested parties, and considering the current economic 
conditions in various industries, the committee will make a 
recommendation to the Legislature on the minimum wage. The law 
requires that the Legislatube set minimum wages no less than 
the rate recommended by the committee. The law also requires 
that the recommended wage cannot be lower than the current 
minimum wage. The committee hopes to complete its work in the 
next several months.
    We are continuing to address our U.S. citizen unemployment 
rate, which is currently 13.4 percent, compared to 14.9 percent 
last year. First, we redrafted our Resident Workers Fair 
Compensation Act to ensure equal compensation between residents 
and guest workers and to make employment in the private sector 
more attractive to resident workers. Our Nonresident Worker Act 
mandates certain benefits for guest workers that are not 
provided for resident employees. Second, I created a panel to 
analyze job categories that would be attractive to residents. 
We will work with the CNMI Legislature to pass legislation to 
add these jobs to the categories reserved for residents. In 
conjunction with this effort, we are working with the college 
and local high schools to institute or improve existing 
training programs for the job categories identified. In 
addition to reducing our unemployment rate, this effort should 
also further reduce guest worker numbers.
    We improved services at DOLI's Employment Services Office. 
The task of this office is to assist residents in finding 
employment in the private sector. Under our Nonresident Worker 
Act, before an employer can hire a guest worker, he or she must 
certify that there is no resident interested and qualified for 
the job. This office has seen increased interest by our 
residents in private sector jobs, and has increased placement 
of resident workers in the private sector. By August of this 
year, we had already placed 142 more resident workers in 
private sector jobs than were placed for all of 1998. Further, 
placements from January to August of 1999 were five times the 
number of placements for all of 1997.
    This only highlights some of our actions over the last 
year. We will be providing you with a more comprehensive report 
on our progress. Overall, our efforts have led to a projected 
85 percent reduction in labor complaints between 1998 and 1999; 
collections, since January 1998, of $1,142,725 in back wage 
judgments for guest workers; a 41.6 percent increase in 
business establishment health and safety inspections; a 12 
percent increase in garment factory inspections; a 75 percent 
increase in garment factory housing health and safety 
inspections; a 78 percent increase from 1997 to 1998 in 
deportation proceedings; improved services at DOLI including 
educational forums for guest workers about their rights, and 
improved translation services to increase confidence levels; 
more active filing of cases against violators of our laws; and, 
stricter enforcement of laws. We will continue our efforts and 
look forward to working more closely and cooperatively with 
Federal enforcement agencies.

VI. Conclusion and Recommendations

    The CNMI has utilized the tools provided in the Covenant to 
develop a strong private sector economy over the past twenty 
years. The strength of the private sector has permitted us to 
become economically self-sufficient and to increase per capita 
income three-fold. Unlike other U.S. jurisdictions except Guam 
and Hawaii, our economic growth is directly tied to neighboring 
Asian economies. As those economies have suffered a drastic 
downturn in the past two years, the effect on our economy has 
been profound.
    We are now at a critical economic crossroads: we are faced 
with the challenge of diversifying our economy at the same time 
that one of two major industries is about to leave. We are 
deeply concerned because the same tools that permitted us to 
build our current economy are under serious attack.
    We have outlined the issues and what we have done to 
address them. We ask for your help and participation in the 
following ways.
         Please acknowledge our progress during the past year.
         Please preserve vital Covenant Section 702 CIP funds.
         Please help us restore investor confidence, which has 
        been badly damaged by the uncertainty regarding our situation 
        and negative publicity over the last few years. This is 
        critical to our efforts to maintain self-sufficiency and 
        diversify our economy.
         Please recognize the impact of the Asian economic 
        crisis when considering legislation affecting the CNML
         Please appreciate that we have extremely limited 
        natural and human resources with which to develop our economy, 
        and achieve a progressively higher standard of living.
    Thank you, Mr. Chairman.

    The Chairman. Thank you, Governor. At the appropriate time, 
I'll have the Secretary of Labor and Immigration's Mark 
Zachares come to the table if there's any questions he can 
address that are asked by the Committee.
    Mr. President, you're up.

 STATEMENT OF PAUL MANGLONA, PRESIDENT OF THE SENATE, NORTHERN 
              MARIANA ISLANDS LEGISLATURE, SAIPAN

    Mr. Manglona. Mr. Chairman, members of the Committee, on 
behalf of the Commonwealth senate and from the Northern 
Marianas and from our people, I thank you for allowing me to 
speak before this Committee.
    A year and a half ago, Mr. Chairman, we met with Members of 
Congress and said that the CNMI had a new administration with a 
strong commitment to work with the legislative branch to make 
reforms and resolve our labor and immigration problems. You and 
members of this Committee have personally taken time from your 
busy schedule to visit the CNMI and see for yourself the 
conditions there. We thank you for your fair-minded approach 
and your commitment.
    Mr. Chairman, we are very pleased to report, with the 
governor, that we have indeed made real and substantial 
progress in our reform efforts. Further, we acknowledge there 
is still much to be done.
    We have accomplished the following. We have greatly 
improved the treatment and living conditions of our guest 
workers. We completed a successful limited-immunity program to 
register illegal aliens. Our moratorium on new guest workers 
remains in effect and the number of foreign workers is 
declining. We enacted a law to help abandoned workers and 
provide airline tickets home in addition to salary relief. 
Workers' rights to transfer between employers have been greatly 
expanded. We also established a three year limit on the time 
guest workers can stay in the Commonwealth. We set a firm 
ceiling on the number of foreign garment workers and imposed 
attrition provisions.
    We recently passed a law strengthening our system of health 
clearances and criminal background checks on potential guest 
workers. We now rely on the same agencies used by the United 
States Government for such clearances and certifications.
    Mr. Chairman, these are only some of the concrete actions 
we have taken together with Governor Tenorio to address labor 
and immigration issues in the Commonwealth.
    I would also like to take this opportunity to seek the 
assistance and the understanding of this Committee regarding 
the longstanding frustration in obtaining compact-impact funds. 
Ironically, the Clinton Administration has tried to divert our 
CIP funding and give it to Guam when we have enormous compact-
impact costs too. Such actions can only be seen as an attempt 
to punish the CNMI for resisting efforts to kill the garment 
industry, one of the mainstays of our local economy. Our 
resident representative to the United States has repeatedly 
raised this issue with the Federal Government to no avail.
    To prepare for the future beyond the garment industry, we 
have also been working hard to diversify our economy so we will 
never again have to depend on Federal hand-outs. For example, 
we enacted a law to grant long-term residency to alien retirees 
who invest $150,000 or more in a single residence in the 
Commonwealth. A bill to establish free trade zones to stimulate 
the economy and bring in new forms of business and investment 
has been passed by the House of Representatives and, in less 
than 30 days, is expected to clear the Senate.
    But all of these efforts will come to nothing if we are 
unable to provide the work force necessary to support our 
economy. We need to retain our ability to tailor our labor and 
immigration system to local needs. Decisions that need to be 
made locally in the Commonwealth should not and cannot 
effectively be made in Washington, DC. We ask you, Mr. Chairman 
and members, to support our efforts to develop and sustain an 
economy that is a beacon of the superiority of the democratic 
free enterprise system.
    We appreciate your genuine commitment to give us an 
opportunity to be heard before Congress takes any action that 
could have a far-reaching effect on our islands and our people. 
This commitment is especially important because, more than 20 
years after joining the U.S. political family, we still do not 
have a voice in Congress. The Clinton Administration, together 
with some members in Congress, would like to silence us or 
bypass that voice by opposing non-voting delegate status, yet, 
at the same time, they ask Congress to enact legislation that 
would dramatically affect the lives of every person living in 
our islands. This irony is compounded when we reflect upon the 
fact that the CNMI is unique among the territories in being 
deprived of any representation.
    On a variety of issues, our Washington delegate, Mr. Juan 
Babauta, speaks of compact-impacts, yet defunding labor and 
immigration and minimum wage. Many times in the past he has 
raised these concerns to those Federal agencies which often 
resulted in little more than a raised eyebrow. We continue to 
maintain that representation in this Congress is a fundamental 
aspect of the Federal responsibility to the Commonwealth.
    Mr. Chairman, we know you have supported us on the non-
voting delegate issue, CIP funding issue, and other matters in 
the past. We thank you and this Committee for that and for the 
opportunity to appear before you today. We look forward to 
continuing to work closely with Congress to address our mutual 
concerns. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. President. Mr. Speaker.

  STATEMENT OF DIEGO T. BENAVENTE, SPEAKER, NORTHERN MARIANA 
                 ISLANDS LEGISLATURE, SAIPAN MP

    Mr. Benavente. Thank you, Mr. Chairman. Mr. Chairman and 
members of this honorable Committee, good morning. For the 
record, my name is Diego Benavente, speaker of the House of 
Representatives of the 11th Commonwealth legislature. On behalf 
of the members of the CNMI House of Representatives, I would 
like to thank you for the opportunity to testify on some of the 
Committee's concerns regarding the CNMI in this oversight 
hearing. Indeed, I am grateful for such an opportunity, more 
particularly on behalf of the people of the Commonwealth. For, 
as you know and as President Manglona has pointed out, we have 
no official representation in Congress, unlike the States and 
all other territories.
    I want to address several areas of concern with the hope 
that resolution of issues will take into consideration the 
CNMI's unique political, economic, and social status within the 
American political family. Mr. Chairman, the CNMI is still a 
very young democracy, even compared to its island neighbor to 
the south, Guam. Because of our limited experience with self-
government and in addition to the problems that came as a 
result of our economic policies over the last 15 years, 
especially in terms of immigration and labor matters, it 
becomes apparent why and where we made mistakes along the way.
    For their part, the national news media and even some in 
the administration and Congress have capitalized on our 
shortcomings and inexperience and have embarked on a mission to 
federalize the control over CNMI immigration and minimum wage. 
We submit that any successful attempt to take over our 
immigration and minimum wage would, one, harm our fragile 
economy and, two, remove a fundamental aspect of our right to 
self-government under the Covenant.
    I say that, given the chance, we can correct what mistakes 
there are without need for a Federal takeover. In fact, as 
Governor Tenorio has mentioned, they are being corrected and, 
through reform legislation and effective enforcements since 
last year, our legislature passed no less than half a dozen 
laws concerning guest workers in the Commonwealth.
    For example, there's now a moratorium on the hiring of 
additional guest workers. This law already resulted in a 22.7 
percent decline in the issuance of guest permits alone in 1998. 
For those workers who have judgments against their employees 
for unpaid wages or who have been abandoned by their employees, 
we enacted legislation whereby the government pays for 
repatriation costs and unpaid wages. This despite declining 
government revenues.
    In addition, there is now a limitation, legislation 
limiting the maximum length of time that guest workers can stay 
in the Commonwealth to three years, similar to the limitation 
for H-2B workers. Thus this limitation is reasonable and 
addresses dhe criticisms that some guest workers have lived in 
the Commonwealth for a long time, yet do not have the political 
rights--any political rights. Furthermore, by requiring guest 
workers to exit after three years, this law encourages 
employers to recruit local residents to replace the departing 
guest workers.
    Through such legislation and enforcement, our government is 
wholeheartedly committed to correcting the mistakes of the past 
and establish an effective system of immigration and labor 
control. Our united Commonwealth leadership that is here today, 
both government and private, hopes to convince you of that.
    Mr. Chairman and honorable members of this Committee, the 
leaders of the Commonwealth are mindful that the continued 
development of our local economy and enhancement of the overall 
quality of life in the islands require a firm physical 
infrastructure. To assist the Commonwealth in this regard, the 
United States has pledged to provide funding for capital 
improvement projects pursuant to section 702 of the Covenant 
and later funding agreements. Under the present agreement, the 
CNMI is required to match Federal CIP funds on a dollar-to-
dollar basis. Our current legislature and Governor Tenorio's 
administration have worked diligently to identify the full 
range of projects to be undertaken, including identifying and 
securing the sources to meet the local matching funds 
requirement. We appreciate any effort on your part to support 
continued CIP funding for the CNMI and that existing funding 
not be disturbed.
    In closing, on behalf of my colleagues in the House of 
Representatives and the people of the Commonwealth, I hope that 
we have impressed upon this Committee our resolve and strong 
commitment to set our house in order because the future of our 
Commonwealth depends upon it. Thank you, Mr. Chairman.
    [The prepared statements of Mr. Manglona and Mr. Benavente 
follows:]

                        Statement of David North

    You have an admirable collection of information here, and I 
think the report can make a big difference in the on-going 
policy discussion.
    But, truth to tell, my sense is that it needs a little more 
snap; there is potential drama within this theater, but it 
needs to be moved to the front of the stage.
    You have also done a lot of original work, creative 
undercover stuff, and you have (all too modestly) downplayed 
it. In how many studies does one find that the best part is in 
the methodology section? Not many.
    Before we go much further, bear in mind that I am a writer, 
one with a lot of familiarity with the subject, and so what I 
say relates to what I would have done with the similar 
material. So you should toss many grains of salt on what I say, 
for that reason. My comments come in three flavors:

     A. there are some over-arching suggestions noted above and below 
in this memo;
     B. there are notes A through I think I, which deal with specific 
subjects, set off by specific sentences in the text; and
     C. there is some page-by-page editing. In instances in which the 
notes are surrounded by brackets [ ] these are asides to you; in other 
instances, without brackets, they are suggested edits.
    Generally, I would encourage you to impose the following on the 
report:

    1. Some themes, notably a description of what you saw as a 
part of a giant conspiracy, maybe of how the PRC is taking 
over, with the unwitting help of American conservatives, a 
whole American island. This, I think, is a little sexier than a 
detailed litany of the very real human rights abuses.
    An alternative version would be an excellent example, on 
American soil, of how NOT to run an immigration policy; of how 
U.S. citizen workers are rendered unemployed while trafficking 
for profit dominates the scene.
    Another theme would be the bondage of debt, that prevails 
(silently) in the CNMI; all the garment workers are somehow 
bonded, and many (but not all) the others have similar 
experiences. The poor Bangladeshi are stuck and screwed, but 
not bonded to an employer.
    Whatever the theme, it is needed for itself (to tell a 
truth in a dramatic way) but also to make more coherent and 
more significant that great amount of detailed information you 
have collected.
    2. You need to be--and I could be fired, not shot for 
this--more distant from the Clinton Administration. Bill 
Clinton has not made this a personal battle with Congress; a 
secondary point, the Administration is not spending as much 
money as it should on enforcement, nor has its Justice and 
Treasury operations been as strong as its Labor and Interior 
programs. (We will need to figure out how you can say that 
without implicating me.)
    3. The drama of what you two did is all but lost; how you 
got parts of this story are more dramatic than what you 
learned. Your accounts of this in person, Steve, have a drama 
that is not reflected (yet) on paper.
    More drama and a theme or two will lead to useful and 
quotable soundbites, which are not now present.
    4. One temptation in such a report is to write down 
everything you learned; you need to resist that, and drop some 
of the detail.
    5. On the other hand the very peculiar civics and economics 
of the situation might be given a little more attention; the 
odd ways that the U.S. treats its territories, each quite 
different from the others.
    Further, to produce clothing in the CNMI (one of my 
favorite themes) is to produce it in the worst place in the 
world for various U.S. interests. I think I have walked you 
through this--if the clothes were made in Mexico, for instance, 
it would produce hundreds of millions of dollars worth of sales 
for U.S. fiber, yarn and textile companies and thousands of 
jobs for their workers; if made in Cambodia, no jobs, but 
$200,000,000 a year in duties, a major benefit to U.S. 
taxpayers. (The CNMI of course, just talks about garment jobs, 
none of these more sophisticated concepts.)
    This is of course, a bit distant from trafficking, but you 
can talk about these matters as another set of adverse results 
coming from the trafficking policies.
    OK, enough of the big picture. Here are some specifics:
    1. I found the definitions, probably very important to you 
as they are, getting in the way of the story. Maybe you could 
put them in an appendix, and just refer to them in the text.
    2. The text wanders between The Mogul (nice term) and 
naming Willie Tan; Preston Gates is treated the same way. I 
think I prefer naming them. A sentence or two about Willie 
Tan's other interests might help too.
    3. Paragraphs seem to be longish.
    4. You probably should stop for a sentence early on and 
talk about the Tenorios, uncle and nephew, battling each other 
in the 1997 election, an example of disunity among one of the 
14 families (a nice concept.) one of Allen Stayman's notions, 
though I have little proof of it is that the families get money 
from the garment industry by leasing land to it.
    5. Given the length of the report you might consider hiring 
someone to do some light editing, copy editing, not 
restructuring or extensive rewriting. I have done a little of 
that, but more is needed, and it is hard to do it yourselves--
you are both too close to it to notice unconscious items like 
``Congressman DeLay was successful in delaying action. . . .'' 
or some such sentence.
    6. I am a compulsive, footnote person; within limits, the 
more footnotes the easier it is for the reader to accept what 
you are saying; you, the author, is not the only authority. You 
could easily triple the number of footnotes in this one.
    Now for the notes which are keyed to the text:
    A. I would not use George Miller's 66,400 jobs lost; it 
sounds unbelievable, and you either have to stop and explain it 
or drop it.
    B. The 11,000 limit, presumably self-imposed, similarly 
needs to be explained or dropped. The current text makes it 
sound like there is some external law or regulation that the 
CNMI is violating.
    C. At the moment you have cited George Miller as the only 
person in the Congress who wants change; he does, of course, 
but I would let people know that in perhaps different ways 
there are a whole lot of people pushing for change--including 
Sens. Murkowski and Akaka, and Congressmen Spratt, Miller and 
Bob Franks (R NJ) whose name can not be used now, but can soon.
    D. Jane Mayer of the New Yorker is working, not totally 
successfully, with this problem.
    E. As to who pays for the lobbyists, it seems that the 
garment factories have enough clout locally to force the CNMI 
to do it from tax funds; having a public agency (the CNMI 
govt.) do it, was very helpful when they were funding the 
junkets, because govt-funded junkets do not have to be 
reported, but corporate ones do. You should bear in mind that 
in a few days (Feb. 28) there will be a new round of lobbying 
reports on file, and we can see how much P-G was paid for the 
last six months.
    F. The CNMI's lousy wage payment enforcement does not stand 
in a vacuum; both the feds and many states have highly useful 
programs to meet the same goal; it is not as if CNMI had to 
invent something on its own. Terry Trotter has a wonderful 
technique; he calls the customer in New York and says that he 
will go public, right away, unless the factory in the CNMI pays 
up promptly. They do, though you should not name him in this 
connection.
    G. This is under the ``XI. Extortion of Workers'' section. 
This is specialized, but a double whammy. If you (an alien 
worker) have lost your job in the CNMI you are subject to 
deportation; however, under a local amnesty law, if you come 
forward to the authorities, you have a (wildly generous) 60 
days to find a new job, and that new job will give you legal 
status again. The only people who are hiring are the garment 
industry, and so it is within the garment industry that the 
petty officials are selling jobs--and legal status--to poor 
alien workers for whatever gilt they can obtain.
    I can provide at least one news story on this subject, 
maybe more. Maybe you have the clips in hand.
    H. I disagree that Tan or the garment industry supports 
Preston-Gates; I may be wrong, but the govt. pays the bills, 
and there have been some lovely stories about what PG bills 
for, and for how much, all dug out of CNMI govt. files.
    I. I (me, David) am running down, now, but I think we can 
talk a little further about policy recommendations, but not 
just now.
    I hope you do not find this too harsh, too intrusive or too 
radical. You are about to make a major contribution and I want 
to help in that process.
    Perhaps Rhonda--not the report--will have the drama, but I 
think it can be in both places.
    Thank you for showing this to me. (And bear in mind that 
only the spellcheck has edited the document.)

    The Chairman. Thank you, Mr. Speaker. Mr. Representative 
Babauta. Hopefully we'll get you a vote one of these days. 
You're on.

                  STATEMENT OF JUAN N. BABAUTA

    Mr. Babauta Thank you, Mr. Chairman. Mr. Chairman, I join 
the governor and the Senate president and the speaker in 
expressing our appreciation to you for your continued support 
in preserving the Covenant funding for the Northern Mariana 
Islands; much needed for the development of our infrastructure 
throughout the Northern Marianas. As you know, we do have three 
islands for which that money is badly needed for development of 
our economy there.
    Mr. Chairman, the people of the Northern Mariana Islands 
have been putting a lot of pressure on their leaders for change 
because what the people are seeing is not right. But I have to 
assure this Committee that change is occurring. Local officials 
who best understand local problems and conditions and who are 
answerable to local voters have acted on numerous local 
policies to deal with these problems.
    And, very quickly, Mr. Chairman and members, we have 
improved our entry and exit system. It is much better now. We 
now have a better handle on the LIIDS program. We have limited 
amnesty for illegals; 3,000 of them showed up--signed up, 
rather. And we have tightened up regulations regarding security 
guards and manpower agencies which accounted for the large 
majority of the labor complaints in the Mariana Islands. We 
have a moratorium law. As imperfect as it is, it is a 
moratorium law nonetheless and it is a step; a step that we 
have never taken before in the Northern Mariana Islands.
    We have open transfer of jobs now in the Northern Mariana 
Islands that we did not have before. We put a cap on garment 
workers. The INS and the CNMI joint effort regarding the 
illegals in Tinian for those coming from China have worked out 
very well. We put a three-year cap on non-residency or non-
resident stay; and we now have a pre-check screening for health 
and a pre-check screening for criminal background checks for 
those now entering the Northern Mariana Islands.
    But while we try to address these difficult issues at the 
local level, the question is what has the Federal Government 
done? And the answer is that the Federal Government has not 
been willing to devote a high level of resources even to carry 
out functions where the Federal responsibility is quite clear. 
And this is not a statement by Juan Babauta nor a statement 
from Governor Pedro P. Tenorio or any one of us here on the 
panel. This is a statement from the U.S. Commission on 
Immigration report. It is clear that the Federal Government is 
a reluctant party when it comes to enforcing Federal laws in 
the CNMI. As a general observation, the Federal Government is a 
reluctant party when it comes to promoting and enhancing the 
cause and the well-being of all the insular areas, not just the 
Northern Mariana Islands.
    Mr. Chairman, we can sit here all day long and talk about 
immigration and labor and we can sit here all day long and talk 
about minimum wage and the duty-free manufacturing in the 
Northern Mariana Islands, but, in the end, these conditions are 
symptoms. They need to be dealt with, but they are not the core 
problem. Mr. Chairman, this great nation of ours has a 
territorial problem and until this nation addresses its 
territorial problem, deals with the needs and circumstances of 
the insular areas as a whole, then symptoms of that problem 
will continue to crop up.
    Today our nation is in a period of unprecedented economic 
growth, yet look at the conditions in the insular areas. By 
most economic measures, we lag behind. Half the insular area 
population is below the U.S. poverty line. Two days ago, before 
the Senate Energy and Natural Resources Committee, we heard 
that America should be one country. But the fact is that we are 
two America's. The 50 States are 1 America; the insular areas 
are the other America. And these two Americas are drastically 
different, not only economically, but politically.
    I believe it is no coincidence that the insular areas, 
without full political rights, are least well-off economically. 
And this is beyond having a delegate in the Congress and in the 
House of Representatives. And I have a concern that this 
condition of economic and political disenfranchisement seems 
permanent. There is no way out. The CNMI had a vision when we 
negotiated the Covenant. We wanted to be part of America 
economically and politically. And that vision still lives 
today. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Babauta follows:]

  Statement of Juan N. Babauta, Commonwealth of the Northern Mariana 
                                Islands

    Mr. Chairman and Members of the Committee:
    Today's hearing is the fourth this Committee has held since 
1992 to look at how the Federal and the local governments are 
dealing with the issues of immigration and foreign workers in 
the Northern Marianas. Mr. Chairman, you, Mr. Miller, and other 
Members have during this time epended the personal effort to 
fly halfway round the world to observe the reality in the 
Marianas and to talk with all parties. As a Committee your 
scrutiny has been an incentive for change. And as individuals 
your demonstration of personal concern and the informed counsel 
you have been able to offer as a result of your visits must 
also be credited with provoking positive changes.
    Even more important, though, has been the role of the 
people of the Northern Marianas, who have insisted that their 
elected officials change the course of immigration and labor 
policy. As Speaker Benavente testified last year regarding the 
sentiment of the people who elected him: ``They want stringent 
control of immigration. They want labor enforcement. They want 
to maintain the character of their traditional community 
life.''
    You have heard this morning of the actions the Northern 
Marianas has taken--and is taking--in response to this public 
sentiment. These actions are designed to ensure that 
immigration to our islands is managed effectively, and that 
foreign workers, once arrived, are treated in a manner 
consistent with the fundamental human values our local 
community respects. These actions also promote the goal of 
Covenant Section 701: to raise the standard of living of the 
people of the Northern Marianas to that of the rest of the 
United States in a manner which protects our culture, our 
community, and the environment in which we live.
    Have we achieved perfection? Of course not. But we have 
faced up to the need for change and taken appropriate action.
    Is there more to do? Yes, there is; as in any community, 
social improvement is an on-going process. But I believe--and I 
say this as one who has been a persistent critic of the 
Northern Marianas open-door immigration policy and of the way 
workers have been treated--I believe all-in-all the situation 
is better
    And change has occurred in a way, Mr. Chairman, I think you 
would agree is usually preferable: local officials, who best 
understand local conditions and who are answerable to local 
voters, have crafted local policies to deal with the problems.
    What has the Federal Executive branch done to make things 
better?

         OSHA inspections appear to be improving workplace 
        conditions. I was glad to see recently that the penalties for 
        the violations OSHA uncovers in the Marianas are below the 
        national average, which indicates to me the violations are on 
        average less severe than elsewhere in our country.
         The new ombudsman's office Congress mandated is in 
        operation and helping foreign workers reach the system of 
        Federal and local laws designed for workers' protection.
         The federally funded computerized tracking system is 
        up and running at least sufficiently that data from that system 
        is now being reported in our annual statistical abstracts.
    We still have, however, concern about the commitment and efficiency 
of Federal law enforcers in the Marianas. As the U.S. Commission on 
Immigration Reform observed in its 1997 final report: ``. . . the 
Federal Government has not generally been willing to devote a high 
level of resources even to carry out functions where the Federal 
responsibility is clear.\1\ Indeed, the principal reason that Labor and 
Justice and Treasury have agents and offices today in the Marianas is 
because those Federal departments have been able to siphon off funds 
that Congress had otherwise designated for capital improvements in all 
the U.S. territories. The agencies are reluctant to spend their regular 
operational funds to do their duty in the Marianas.
---------------------------------------------------------------------------
    \1\ Immgration and the CNMI: A Report of the U.S. Commission of 
Immigration Reform, 1997, p. 16.
---------------------------------------------------------------------------
    To me it is clear that when it comes to a ``territory'' 
without representation in Congress or a role in election of the 
President there is, of course, no incentive to commit Federal 
resources.
    It should be clear to you why, given this reality, we in 
the Marianas remain essentially skeptical about calls to 
increase Federal law enforcement responsibilities by extending 
the Immigration and Nationalities Act. We just don't trust that 
if the Federal Government had that additional power over us our 
interests would be listened to or our welfare put before other 
concerns that the Executive branch--or Congress--might in the 
future have.
    We see a pattern of unfulfilled promises from our Federal 
partners. Today, for instance, we wait patiently for 
reimbursement of some $700,000 we expended this year to assist 
the U.S. Immigration and Naturalization Service in the 
interdiction and confinement of over 500 Chinese who attempted 
to illegally enter Guam. The Governor responded immediately 
when the Attorney General asked for a commitment of CNMI 
manpower and money to deal with this crisis. Yet there seems to 
be no such sense of urgency on the part of the Federal 
Government when it comes to its pledge of repayment.
    And year after year goes by without the compact impact 
assistance Congress promised the Northern Marianas in U.S. 
Public Law 99-239 to offset the costs of immigration from the 
island republics with which the U.S. has a relationship of free 
association--costs we estimate in 1998 to have been $15.1 
million. Guam receives some $5 million annually for compact 
impact; and in this year's budget the President proposed 
doubling that amount. So, clearly the Federal Government 
acknowledges the legitimacy of the claim for compact impact 
wherever there are immigrants from the freely associated 
states. Yet the Northern Marianas--and the State of Hawaii--
receive nothing.
    Of course, the Marianas has benefited from our partnership 
with the U.S. We appreciate the many Federal grants. Yet we 
receive less Federal assistance per capita than any other part 
of our nation. The most prominent of the Federal grants--$11 
million annually for capital improvements--is subject to a 50-
50 match that no other territory has to make for similar 
monies. If we are slow to make the match, continuation of the 
funding is attacked on the floor during appropriations debates, 
as it was this year and last. Still we take pride in the self-
sufficiency that 50-50 match implies and in the systematic 
approach to spending those funds embodied in the plan Governor 
Tenorio prepared last year and which he and the Legislature are 
abiding by.
    We are proud, also, to be U.S. citizens. Perhaps, because 
we had to work to achieve that citizenship, because we 
consciously chose citizenship by referendum, and because we 
endured 300 years of colonialism to achieve this freedom, we 
appreciate--in a way those who simply have the good fortune to 
be born an American cannot--what it means to live in a 
democracy. And we will demonstrate our appreciation on November 
6th, when, if the past is any predictor, over 90 percent of the 
eligible voters in the Marianas will cast their ballots in 
legislative elections.
    Imagine how it feels to people who take participation that 
seriously to be denied any role in our national government.
    I commend this Committee for taking action in the past to 
provide the U.S. citizens of the Northern Marianas with a 
Delegate in this House of Representatives. But Mr. Gallegly's 
delegate bill was blocked--this Committee's recommendation was 
thwarted--in the 104th Congress. In the name of simple justice 
I ask that you not let the 106th Congress end without righting 
this wrong.
    And do not stop there, Mr. Chairman. This Committee and 
this Congress must confront the totality of the relationship 
between the ``territories'' and the rest of this United States.
    Our nation today is enjoying a period of unprecedented 
economic growth. Yet look at conditions in the insular areas. 
By many measures--GDP or personal income per capita--we lag far 
behind the rest of the nation. Large percentages of our 
populations are below Federal poverty guidelines. To one degree 
or another most of our governments have accumulated debt; some 
remain dependent on the Federal Government for operational 
funds. It would not be an overstatement to say that we are 
America's insular Appalachia. There is no vision required to 
see where we need to go: we want to be as prosperous as the 
rest of our nation. But vision is needed--and Congress must be 
our partner in this--to find a pathway to that goal.
    Politically, too, Congress needs to take action on what is 
a fundamental affront to our American ideals: Here in the third 
century of our democracy there remain 4 million U.S. citizens 
who are denied the right to vote for the laws that govern them 
or the right to vote for the President who administers those 
laws simply because those citizens live in American Samoa and 
Guam and Puerto Rico, the Virgin Islands and the Marianas. Why 
even U.S. citizens living in foreign countries can vote for 
members of Congress and the President. Only those of us in 
America's ``territorial'' enclaves are denied this fundamental 
right of citizenship
    One criticism of the NMI immigration policy is that it 
allows there to be a permanent resident population that is 
politically disenfranchised--and that this is counter to 
American values. I agree. And I would add that this is also a 
perfect description of U.S. territorial policy: four million 
Americans permanently dispossessed.
    So, I close by asking this Committee to rise to the 
challenge posed by a 19th century territorial policy that is in 
danger of persisting into the 21st century. Take on the 
challenge and together let's make the insular areas truly a 
part of America.
    Mr. Chairman, thank you for this opportunity to address the 
Committee.

    The Chairman. Thank you, Mr. Juan Babauta. I don't think 
anybody would disagree with what you just said about the 
territories being behind. And I think this Committee and this 
Congress has been neglectful over the years of all the 
territories. We were the last territory to become a State and 
thank God, if you read the paper yesterday, my people in the 
State of Alaska have done well as a State because we were given 
the God gift of economic well-being with good oil development 
and that you don't have, nor do the other territories. So we 
have to figure out a way to get you in the fold and make sure 
it works.
    To restate most all of your comments, I would just like to 
recap what's been said here. Now has there been a cap put on 
the number of garment workers by this administration, by you, 
Governor, and the House and the Senate?
    Governor Tenorio. Yes, sir, Mr. Chairman. The actual cap of 
the garment industry now is 15,727. However, we have the cap up 
to 15,727, presently we have only, I believe, a little over 
15,000 employees of the garment industry.
    The Chairman. Okay. Now has that had any impact? Mr. 
Zachares, if you'd like to join us because you're the guy that 
handles this thing.
    Mr. Zachares. Thank you, Mr. Chairman.
    The Chairman. What impact has that had on the activity and 
the present I'd say conditions of the work force in Saipan?
    Mr. Zachares. Governor, if I may? The bottom line is the 
numbers are down 26 percent from 1997 in the total work force 
within the Commonwealth. That includes garment and every other 
sector. It's had a very minimal effect right now. There's been 
a little over 500 actual workers that came in under this cap 
program or under the legislative cap. And most of those workers 
went to those new factories that had obtained a license in the 
previous administration but had no other workers.
    I think what the focus on this cap bill was the attrition 
effect of it, because they have one year to bring in the amount 
of workers for the cap. If they don't bring those workers in--
and I think we have about four months left under that--they 
lose the cap numbers. If a garment factory goes out of 
business, those numbers are lost through the attrition 
provision. And, additionally, one other highlight of that 
provision: that it closed up the loophole in manpower agencies, 
that you could no longer hire workers--it usurped the cap 
before when you could get a manpower worker and that was not 
included.
    The Chairman. What's the difference between the garment 
worker and a guest worker?
    Mr. Zachares. They would be essentially the same if the 
garment worker was from off-island and not a local worker.
    The Chairman. Okay, but there's a moratorium on hiring any 
new guest workers. Is that correct?
    Mr. Zachares. Yes, sir.
    The Chairman. How new is that?
    Mr. Zachares. The moratorium came into place I believe in 
March of 1998.
    The Chairman. Okay. Going on to the number of illegal 
aliens, did you grant amnesty to those illegals that came 
forward within a certain time frame? And has the amnesty bill 
help the CNMI get a better grasp of the illegal aliens?
    Mr. Zachares. Yes, sir. It has. I believe the numbers were 
3,111 workers came forward under the provision. If I can look 
in my notes here, I can give you an exact breakdown on it. But 
what we noticed from the workers that came forward from the 
demographics of it, the largest amount were Philippine workers, 
because we did a lot of education with the Philippine consulate 
there, a lot of outreach programs. But we did see an unusually 
high number of Chinese workers who generally are a little bit 
more suspicious of coming out and taking advantage of a 
program, government programs. They came in second, as far as 
coming out. And then the Bangladeshi situation. Almost half of 
those workers obtained one-year permits from that and then we 
had over 2,000-some got temporary work permits.
    The Chairman. The Bangladeshi were granted, I noticed in 
the testimony of the governor, they were given compensation for 
back wages and they have also been given an opportunity to 
return home, fully paid fare? Is that correct?
    Mr. Zachares. Yes, sir.
    The Chairman. How many have taken advantage of that?
    Mr. Zachares. Approximately--the Bangladeshis, sir, I 
believe it's about 111 Bangladeshis, per se, have. We have 
others that are eligible for it: Chinese workers and/or 
Filipino workers.
    The Chairman. How new is that?
    Mr. Zachares. This provision came into effect I believe in 
February.
    The Chairman. Okay. Governor, for you specifically, you 
described a level of cooperation between the CNMI and the 
various Federal governments and agencies. Have you received any 
reports from the Customs Service regarding the activities of 
the Marianas?
    Governor Tenorio. Yes, sir, we received a report from the 
Customs.
    The Chairman. I have not received that. Can you submit 
that?
    Governor Tenorio. Yes, sir. I would be very happy to submit 
to you, Mr. Chairman.
    The Chairman. I would appreciate that. I want to see that 
report. My time is about up. Talking about, Mr. Zachares, the 
Philippine government's current position regarding the 
treatment of the workers in CNMI, what is their position?
    Mr. Zachares. The current position, if I can quote from a 
letter that we received, actually the governor received through 
the administration, briefly I can quote from it. ``The 
consulate's report emphatically reiterated the good working 
conditions of our Filipino workers and the effective 
coordination efforts between the consulate and the local 
government.''
    The Chairman. Has that been submitted to the Committee?
    Mr. Zachares. I'm not sure if it has. It will be, sir.
    The Chairman. I would request that, respectfully, that it 
will be submitted to the Committee?
    Mr. Zachares. Yes, sir.
    [The information follows:]
    The Chairman. Okay. Now, lastly, before I turn things over 
to Mr. Doolittle because I have a short meeting I have to go to 
and he will run the Committee, I want all of you in the room 
after all the questions of this panel, I want you to remain in 
the vicinity so if I have any questions following the testimony 
of the government agencies, I want you available to answer 
those. And that goes for the government agency after they 
testify. Otherwise, I want you all around this vicinity after 
you've testified so we can sort of cross reference what's been 
said on both sides of the aisle so we know where we're going 
and what we're trying to achieve here today.
    Mr. Doolittle, will you please take over? And he will 
recognize you, Mr. Miller.
    Mr. Doolittle. [presiding] Mr. Miller is recognized.
    Mr. Miller. Thank you, Mr. Chairman. Zachares, is that 
correct?
    Mr. Zachares. Yes, sir.
    Mr. Miller. Mr. Zachares, thank you. Can you explain to me, 
or any other member of the panel, the difference between the 
cap that you just discussed and then the cap that I think an 
earlier version or--I don't know if it was an earlier--another 
version was the absolute garment cap that was vetoed by the 
governor? What's the difference between the two?
    Mr. Zachares. The garment cap and the moratorium. The 
moratorium law came into effect March of 1998. That was not to 
allow any new workers into the Commonwealth. Replacement 
workers were, with very few exceptions, under some provisions, 
as far as if you met certain criteria, financial criteria. 
There is a provision on the--now the garment cap bill that 
you're referring to was the final cap bill. The garment was not 
allowed to bring in new workers under the moratorium bill. The 
garment cap bill came into effect to set the limits for the 
garment industry, a final cap number with the attrition 
provisions provided.
    Mr. Miller. And that was vetoed? Is that the law now?
    Mr. Zachares. Yes, sir.
    Mr. Miller. And that puts a cap. So if you go out of 
business under existing law, what happens to your workers?
    Mr. Zachares. Two things can happen. If you own another 
factory that has an available numbers of workers that you could 
take, you could absorb those workers into that work force. 
Otherwise, it would be a repatriation back to your point of 
origin.
    Mr. Miller. Okay. How is it, now that you have a cap on I 
guess the phrase is guest workers, how is it you now check the 
background of people coming to the CNMI?
    Mr. Zachares. How do you check the background? Well, we do 
a police clearance and a health clearance from the point of 
hire. There is a new bill that was signed by the governor, I 
believe two days ago, that increased the background checks to 
be consistent with the U.S. standards.
    Mr. Miller. How can it be consistent with the U.S. 
standards?
    Mr. Zachares. For example, utilizing clinics within that 
country that are recognized by the U.S. State Department or the 
INS and also the criminal background agencies within that 
country.
    Mr. Miller. So explain to me how you utilize those.
    Mr. Zachares. Well, it was just signed two days ago. We 
will be utilizing it. It complements what we already have in 
place. It strengthens the background checks that are already in 
place.
    Mr. Miller. Explain to me how it works.
    Mr. Zachares. Our checks in place right now?
    Mr. Miller. No----
    Mr. Zachares. We would ask for a----
    Mr. Miller. Both of them. That and the new system.
    Mr. Zachares. In the previous one, we request a physical 
from a clinic within the country and also a police clearance. 
This one, the difference or the distinction between the two is 
now we will require the clinics that are recognized by the U.S. 
State Department instead of any clinic within the country and 
also the appropriate investigative agencies within that country 
for criminal background checks.
    Mr. Miller. What would be the situation if that same person 
was seeking entrance under the U.S. immigration system?
    Mr. Zachares. I'm not aware of that, sir, under the U.S. 
immigration system. I could not answer that with----
    Mr. Miller. You don't know how they would be pre-cleared? 
How would they be pre-cleared with law enforcement agencies 
under Immigration?
    Mr. Zachares. We've actually requested to have some watch 
lists. We have not been provided watch lists so I could not 
address that question.
    Mr. Miller. So you don't have the same provisions that you 
have when a person enters the United States they scan--you scan 
the visa and it picks up that information and when they leave 
you scan the visa and you pick up that information.
    Mr. Zachares. Well, that's actually part of what we're 
trying to develop through our LIIDS system, that compatible 
system, a similar system in that vein.
    Mr. Miller. When is the LIIDS system going to be--it's been 
in production for a number of years. When is that going to be 
on line?
    Mr. Zachares. Well, we're planning to visit a--we have a 
scheduled visit to Laos to examine a system that has been put 
in place by the Australian government there with a similar type 
of situation as far as guest workers coming in, sir.
    Mr. Miller. How do you verify both the law enforcement 
check and the health check currently?
    Mr. Zachares. Well, the health check, we have a two-tier 
system because before they come into the CNMI, they must submit 
a health clearance but, after they get in the CNMI, then they 
must go to a clinic within the CNMI and have a follow-up health 
check there.
    Mr. Miller. And what--the procedure for a tourist is what?
    Mr. Zachares. The procedure for the tourist is if you're 
coming in from, say, Japan or Korea, it's similar to the visa 
waiver program. They will be questioned at the point of entry. 
They have to show that they are financially able and that they 
are actually going to a legitimate place to stay as a tourist. 
They're identified through an examination, the same that INS 
would use.
    Mr. Miller. Well, not exactly the same.
    Mr. Zachares. When we're dealing with visa waiver programs, 
it would be identical, such as Japan or Korea.
    Mr. Miller. When a tourist comes in from the Philippines.
    Mr. Zachares. They would be examined a little bit more 
thorough than if they were coming in from Japan or Korea, sir.
    Mr. Miller. And how would that be?
    Mr. Zachares. Well, it's--the inspector at the airport 
would examine them, sir.
    Mr. Miller. What would he examine?
    Mr. Zachares. To make sure that they were coming in 
legitimately as tourists and identify where they were staying 
and the money--that they do have adequate funding in order to 
ensure that they are legitimate tourists.
    Mr. Miller. And if they were coming in from China, how 
would they be examined?
    Mr. Zachares. Chinese tourists don't come in, sir.
    Mr. Miller. You don't have anybody coming from China on 
tourist visas?
    Mr. Zachares. Very limited, from Hong Kong, sir.
    Mr. Miller. What number do you have coming from the 
Philippines?
    Mr. Zachares. I do not have that number before me. I'd be 
happy to give it to you at a later time, sir.
    [The information follows:]
    Mr. Miller. Thank you.
    Mr. Doolittle. Mr. Zachares, you've made some excellent 
testimony, but I think because you are such a--going to be a 
prominent witness, we need to put you under oath as well. So 
would you rise and do that?
    [Witness sworn.]
    Mr. Doolittle. Thank you. And now that you're under oath, 
the previous statements you made to this Committee were the 
whole truth and nothing but the truth, right?
    Mr. Zachares. Yes, sir. They were.
    Mr. Doolittle. Yes. Mr. Zachares, I appreciate your 
testimony and wondered if you would--and I'll invite the others 
in the panel if they'd like to offer this response--but how 
would you describe the level of cooperation between the CNMI 
and the various Federal departments and agencies? In other 
words, how do you feel about their cooperation with the 
government of the CNMI?
    Mr. Zachares. Governor, would you like me to address that?
    Mr. Doolittle. Governor----
    Mr. Zachares. Thank you, sir. It's been my experience--as 
you may be aware or you may not be aware, I was the incident 
commander for the Tinian operation, the diversion program, for 
the CNMI, so I did get a chance to intimately deal with a lot 
of Federal agencies over there in that particular situation. 
And I do have contact with other offices such as the Department 
of Labor, NLRB, EEOC, the FBI, DEA.
    In some cases, it is an extremely effective working 
relationship. For example, with the FBI-CNMI Task Force, we 
find an immense amount of cooperation and effectiveness between 
the CNMI's efforts and also the Federal efforts. Additionally, 
with the DEA, I don't deal with them as directly, but my 
understanding is that there is some cooperation there.
    I think the problem that arises now with some of my 
dealings with other agencies are we are full-time. We are on 
the ground 24 hours a day, 7 days a week. That is my home. My 
children are from there. My wife is from there. It is not a 
part-time enforcement effort for me. And it's very difficult 
when you have some agencies, Federal agencies, that treat it as 
a part-time enforcement agency--or enforcement effort.
    Mr. Doolittle. Well, which Federal agencies treat it as a 
part-time enforcement effort, in your view?
    Mr. Zachares. In my view, right now, agencies such as EEOC, 
NLRB, OSHA. And some of these agencies are, for example, with 
OSHA, could assist us immensely in our efforts in the very 
sensitive area of the garment. We are working very closely. 
When OSHA is on-island, we try to work very closely and share 
information with them, as well as working with the SGMA, that 
is the garment association, in trying to ensure that everyone 
keeps in their areas of compliance. But there are agencies 
that, quite frankly, like I said, are involved in more part-
time enforcement.
    Mr. Doolittle. So OSHA and the EEOC are two of the examples 
of lax enforcement and yet are these not two of the agencies 
making some of the most serious charges?
    Mr. Zachares. Yes, sir.
    Mr. Doolittle. Does that strike you as odd that they would 
make those representations of serious charges yet shirking 
their own duty, which they have the power to do, to enforce the 
law?
    Mr. Zachares. I think it's difficult to make an assessment 
based on a part-time enforcement effort. Yes, sir, I would 
agree with you.
    Mr. Doolittle. I mean, why are they ma--do they have the 
ability to have a full-time enforcement effort?
    Mr. Zachares. Federal laws apply there that they are there 
to enforce. I believe in our last hearing, Senator Murkowski 
alluded to the fact that Federal laws do apply; that the agency 
should be funding fuller enforcement out there and to maintain 
an office out there within their own agencies.
    Mr. Doolittle. What reason do they offer to you as to why 
they are not making a full-time enforcement effort?
    Mr. Zachares. It's very hard to pin them down on what 
reasons because it's a part-time effort. There's times that I'm 
working full-time there and it's hard to pin them down why. 
Generally, though, the answer is funding or where the funding 
is coming from.
    Mr. Doolittle. And aren't they supposed to enforce the 
laws, even in this part of America, namely the CNMI?
    Mr. Zachares. I believe those Federal laws are applicable.
    Mr. Doolittle. I mean, is there some reason why they 
would--I mean, would it be any different? And if they declined 
to enforce the laws in Kansas for some reason in favor of some 
other State?
    Mr. Zachares. No, sir, it wouldn't. It would be no 
different.
    Mr. Doolittle. Okay. Thank you. Let's see. Mr. Faleomavaega 
is recognized.
    Mr. Faleomavaega. Mr. Chairman, in deference to my 
colleagues who were here earlier than me, I----
    Mr. Doolittle. Oh, sorry.
    Mr. Faleomavaega. Both Bob and Neal were here.
    Mr. Doolittle. All right. The gentleman from Guam, Mr. 
Underwood, is recognized.
    Mr. Underwood. I thank you, Mr. Chairman, and Buenasviste 
and Hafa Adai to my neighbors to the north. I know that back 
home this is barely a ripple, not even a banana typhoon, so I 
know we're all having a hard time understanding what all the 
commotion is about the weather.
    [Laughter.]
    Mr. Underwood. But, nevertheless, I do appreciate Chairman 
Young for holding this hearing and, as you know, there's a 
number of very intricate policy questions in which Guam and the 
CNMI are interconnected, not only because of the fact that we 
basically come from the same people, but because so many policy 
questions get entangled. And I certainly appreciate the 
comments made by the political leadership: Governor Tenorio and 
Senate President Manglona and Speaker Benavente and, 
especially, the comments of Juan Babauta about the nature of 
territorial relationships with the Federal Government.
    And I too, of course, have always been a strong proponent 
of making sure that Juan Babauta was up here on the dais with 
us. Maybe not on that side.
    [Laughter.]
    Mr. Underwood. But at least somewhere here. And so 
hopefully we'll see that day come to pass.
    It is very interesting. I just want to ask questions 
relative to the CIP funding because I know that Senate 
President Manglona and Governor Tenorio both raised this issue. 
And the CIP funding, which is--of course, we've--as I've stated 
repeatedly, even though Guam ultimately deserves compact-impact 
aid, it was--that was not a funding source that I would have 
picked.
    But I did want to get on the record the exact condition of 
that CIP funding. In the third cycle, which you identified, 
Governor, you had $154 million which is for the CIP funding and 
that's supposed to be matched, half CNMI and half Federal 
Government. And the Federal Government keeps putting money into 
this funding, but the CNMI, because of the experiencing in 
large measure the same problems we're experiencing in Guam 
relative to government revenue, is unable to, as I understand 
it, adequately match that fund. So can someone tell me, based 
on your figures, what is the exact amount which has been put in 
by the Federal Government, which remains unmatched by the CNMI 
government?
    Governor Tenorio. Thank you, Congressman. I would like to 
refer that to my adviser, Mike Sablan. We have the full detail 
of all the CIP funds.
    Mr. Underwood. Before Mr. Sablan answers that question, Mr. 
Chairman, you know, it's not--and I have absolute trust that 
Mr. Sablan will give us a faithful rendition, but, you know, 
could you swear him in too?
    Mr. Doolittle. No. No. Let me just say that in our 
Subcommittee, everyone is sworn in and if someone else comes 
up, they get sworn in too. And that's all I'm doing here. That 
way all the testimony has the full credibility. Nobody can say 
that because somebody was sworn in, they didn't. So, Mr. 
Sablan, will you rise and take the oath please.
    Mr. Michael Sablan. Thank you, Mr. Congressman.
    Mr. Doolittle. Will you stand and let me administer the 
oath to you?
    [Witness sworn.]
    Mr. Doolittle. Thank you very much. Welcome to the 
Committee, Mr. Sablan. Why don't you tell us your title, for 
the record?
    Mr. Michael Sablan. For the record, my name is Michael S. 
Sablan. I am the special adviser for finance and budget.
    Mr. Doolittle. Thank you. Okay. Mr. Underwood.
    Mr. Underwood. Go ahead. Would you tell us how much money 
is in the fund now, given by the Federal Government, which 
remains unmatched by the CNMI government?
    Mr. Michael Sablan. Yes, Mr. Underwood. As you mentioned, 
we are in the third funding period under the 702 program, which 
began in Fiscal Year 1996. The Federal Government has 
appropriated Fiscal Year 1996, Fiscal Year 1997, Fiscal Year 
1998, and Fiscal Year 1999 funds, a total of $44 million, $11 
million per year. So far this year, the CNMI legislature has 
appropriated a total of $43 million--I'm sorry. $12 million 
plus--$16 million toward the $44 million required. We have 
matched the Fiscal Year 1996 Federal funds. We have fully 
matched the Fiscal Year 1997 Federal funds. We have matched 
part of the Fiscal Year 1998. The Fiscal Year 1999 funding has 
not been matched, but in the legislature--the legislature and 
the governor has passed into law a CIP bond in the amount of 
$60 million to provide the balance of the matching required.
    Mr. Underwood. Okay. So as we sit here today, of the $44 
million that has been appropriated, only $16 million has been 
matched, although I appreciate the comment that there are plans 
to match it in the future.
    Mr. Michael Sablan. There are plans to match the balance of 
this, yes.
    Mr. Underwood. But only $16 million to date has been 
matched.
    Mr. Michael Sablan. No, no, no, sir. We have matched $12 
million plus $16 million--$28 million.
    Mr. Underwood. $28 million.
    Mr. Michael Sablan. $28 million.
    Mr. Underwood. So there's some $16 million that remains 
unmatched?
    Mr. Michael Sablan. Unmatched. Yes.
    Mr. Underwood. Okay. All right. Thank you. Senate President 
Manglona, you raised the issue of compact-impact aid. Could you 
explain to the Committee what is the relationship of your own--
the lack of application of the INA Act to the CNMI and the fact 
that citizens from the Freely Associated States can go into the 
CNMI. I would assume that you'd have some authority to control 
or manage the flow of those citizens.
    Mr. Manglona. Thank you, Congressman Underwood. The figures 
that I raised about $28 million in the last 2 years, I must 
admit I do not have the exact detail on how they arrived at 
those numbers, but it is a figure that was derived by our 
various departments and agencies that see the impact of these 
people immigrating from the FSM and the Lao and other----
    Mr. Underwood. Well, of course--of course----
    Mr. Manglona. I guess the point that we're trying to make 
is that we have not been giving the attention to these 
estimates or figures and I think that the Department of the 
Interior ought to sit down and seriously discuss this with Guam 
as well and other territories that are affected. It is 
something that is impacting all the territories and that should 
be given serious attention. My point is that it is an impact 
that I think should be discussed.
    Mr. Underwood. Yes and I certainly appreciate that and I 
understand that Guam's impact is larger. But the question I'm 
asking is not whether it has an impact or the amount of the 
impact. The question I'm asking is what do your own immigration 
laws, how do they interact with the fact that if you have local 
control over immigration and you're trying to manage the flow 
of people into the CNMI, Guam does not have local control over 
immigration, so we're feeling the impact of the in-migration 
from the compact states without any recourse. And I'm assuming 
that you have some recourse, unless you have information to the 
contrary. Mr. Speaker.
    Mr. Benavente. May I just, Mr. Underwood? Thank you very 
much. Well, first of all, yes we do have the right to control 
immigration and also have the right to or are able at this time 
to control the influx of a FAS citizen. But I guess we've 
chosen not to do so, at this time, for a few reasons. One of 
them, of course, is, for example, the need for a 20 percent 
quota for the garment industry and that is for citizens, U.S. 
citizens, and, in that quota, FAS citizens are recognized as 
U.S. citizens for that purpose. So we do need workers to come 
into the Northern Marianas, although with thoseworkers comes 
the family and the children and the relatives.
    And the other reasons that we have chosen not to do so is 
that, you know, we feel that we need each other's support in 
the Pacific. As a region out there, we try to cooperate. We 
were at one time one of the districts of Micronesia and then we 
still continue to value some relationship with our neighbor 
islands. We also are relying in the compact-impact agreement in 
which Congress, as a matter of fact, has stated and I quote: 
``In approving the compact, it is not the intent of Congress to 
cause adverse consequences for the United States territories 
and Commonwealth or the State of Hawaii.'' And, you know, that 
particular statement actually meant that there will be compact-
impact reimbursement for the Commonwealth. And with all those 
reasons, we've chosen not to do so.
    Mr. Underwood. I understand that and I respectfully just, 
you know, because you took some time to swear in Mr. Sablan 
there, Mr. Chairman. My intent in this--okay. Thank you. My 
intent in raising that issue is not to cast doubt on your need 
for reimbursement for compact-impact aid. And all the--you 
know, we are all fundamentally Micronesians, both the Chamorros 
in Guam and the Chamorros in the Northern Marianas, as well as 
our Micronesian brothers and sisters.
    But, ultimately, the point that I'm trying to illustrate is 
that you were allowed to make a conscious choice about the 
impact of the FAS citizens and you have allowed them to come 
in. And that is a decision that you made. And that, to me, 
qualitatively makes it, even though it is still an obligation 
of the Federal Government, qualitatively makes it a different 
situation than your neighbors to the south where we are not 
allowed to make that conscious choice about the impact of the 
FAS citizens.
    Now, if we were allowed to make that choice in the same 
manner that you were allowed to and we allowed them in, I would 
think some people would argue in Congress--certainly we 
wouldn't argue that back home--but I think some people would 
argue that that somehow diminishes the claim. I still think it 
is a legitimate claim, but I think, categorically, it's 
different. And I just wanted to take the opportunity to point 
that out.
    Thank you, Mr. Chairman.
    Mr. Doolittle. Mr. Schaffer is recognized.
    Mr. Schaffer. Thank you, Mr. Chairman. My first question is 
for Mr. Babauta. I was intrigued by your comment in your 
testimony where you said, ``We still have, however, concern 
about the commitment and the efficiency of the Federal law 
enforcers in the Marianas. As the U.S. Commission on 
Immigration Reform observed in its 1997 final report, ``The 
Federal Government has not generally been willing to devote a 
high level of resources even to carry out functions where the 
Federal responsibility is clear.''
    I would like you to elaborate on that a little more as Mr. 
Zachares has and ask you if you have, just by way of your 
representative role here in Washington, whether you have heard 
similar kinds of concerns voiced by people perhaps within the 
Clinton Administration on this particular issue and toward the 
sentiment you described.
    Mr. Babauta. Officials from OSHA. Obviously they do not 
have a full-time operation in Saipan. They do have staff 
rotating throughout, in and out of Saipan. But, Mr. Chairman, I 
pulled that statement from the U.S. Immigration Commission 
report. They saw, when they were out there, the same kind of 
situation that we are seeing and it is that report confirms, 
independently from us, that the Federal agencies are reluctant 
to enforce Federal laws out there.
    Mr. Schaffer. Let me ask further. You know that--it's an 
interesting perspective because in a memo that the Committee 
has received, a memo from--let's see. This is from David North, 
who's the acting director of the Policy Division of the Office 
of Insular Affairs. The memo was to a gentleman named Steven 
Galster and a woman named Melanie Orent, who are with the 
Global Survival Network. One of the observations Mr. North made 
in this memo--and let me just add that the memo was used--is 
one to edit and proofread the report that this organization 
produced. But it speaks to this particular issue.
    It says, ``You need to be and I could be fired if not shot 
for this, you need to be more distant from the Clinton 
Administration. Bill Clinton has not made this a personal 
battle with Congress. A secondary point, the administration is 
not spending as much money as it should on enforcement. Nor has 
its Justice and Treasury operations been as strong as its Labor 
and Interior programs. We still need to figure out how you can 
say that without implicating me.'' That is, again, in relation 
to the report, which I'll bring up later.
    But with respect to the general issue here that the 
President has not made CNMI and the issues that are of concern 
a personal battle with Congress. And the second point, that the 
administration is not spending as much money as it should be on 
enforcement. Is that consistent with the kinds of things--is 
Mr. North's----
    Mr. Babauta. Was that a statement from Mr. North?
    Mr. Schaffer. Yes. That was received by the committee and I 
would ask, Mr. Chairman, that this be submitted for the record 
if it's not already part of the Committee's records.
    [The information follows:]

                          Memo of David North

    You have an admirable collection of information here, and I 
think the report can make a big difference in the on-going 
policy discussion.
    But, truth to tell, my sense is that it needs a little more 
snap; there is potential drama within this theater, but it 
needs to be moved to the front of the stage.
    You have also done a lot of original work, creative 
undercover stuff, and you have (all too modestly) downplayed 
it. In how many studies does one find that the best part is in 
the methodology section? Not many.
    Before we go much further, bear in mind that I am a writer, 
one with a lot of familiarity with the subject, and so what I 
say relates to what I would have done with the similar 
material. So you should toss many grains of salt on what I say, 
for that reason. My comments come in three flavors:

     A. there are some over-arching suggestions noted above and below 
in this memo;
     B. there are notes A through I think I, which deal with specific 
subjects, set off by specific sentences in the text; and
     C. there is some page-by-page editing. In instances in which the 
notes are surrounded by brackets [ ] these are asides to you; in other 
instances, without brackets, they are suggested edits.
    Generally, I would encourage you to impose the following on 
the report:

    1. Some themes, notably a description of what you saw as a 
part of a giant conspiracy, maybe of how the PRC is taking 
over, with the unwitting help of American conservatives, a 
whole American island. This, I think, is a little sexier than a 
detailed litany of the very real human rights abuses.
    An alternative version would be an excellent example, on 
American soil, of how NOT to run an immigration policy; of how 
U.S. citizen workers are rendered unemployed while trafficking 
for profit dominates the scene.
    Another theme would be the bondage of debt, that prevails 
(silently) in the CNMI; all the garment workers are somehow 
bonded, and many (but not all) the others have similar 
experiences. The poor Bangladeshi are stuck and screwed, but 
not bonded to an employer.
    Whatever the theme, it is needed for itself (to tell a 
truth in a dramatic way) but also to make more coherent and 
more significant that great amount of detailed information you 
have collected.
    2. You need to be--and I could be fired, not shot for 
this--more distant from the Clinton Administration. Bill 
Clinton has not made this a personal battle with Congress; a 
secondary point, the Administration is not spending as much 
money as it should on enforcement, nor has its Justice and 
Treasury operations been as strong as its Labor and Interior 
programs. (We will need to figure out how you can say that 
without implicating me.)
    3. The drama of what you two did is all but lost; how you 
got parts of this story are more dramatic than what you 
learned. Your accounts of this in person, Steve, have a drama 
that is not reflected (yet) on paper.
    More drama and a theme or two will lead to useful and 
quotable soundbites, which are not now present.
    4. One temptation in such a report is to write down 
everything you learned; you need to resist that, and drop some 
of the detail.
    5. On the other hand the very peculiar civics and economics 
of the situation might be given a little more attention; the 
odd ways that the U.S. treats its territories, each quite 
different from the others.
    Further, to produce clothing in the CNMI (one of my 
favorite themes) is to produce it in the worst place in the 
world for various U.S. interests. I think I have walked you 
through this--if the clothes were made in Mexico, for instance, 
it would produce hundreds of millions of dollars worth of sales 
for U.S. fiber, yarn and textile companies and thousands of 
jobs for their workers; if made in Cambodia, no jobs, but 
$200,000,000 a year in duties, a major benefit to U.S. 
taxpayers. (The CNMI of course, just talks about garment jobs, 
none of these more sophisticated concepts.)
    This is of course, a bit distant from trafficking, but you 
can talk about these matters as another set of adverse results 
coming from the trafficking policies.
    OK, enough of the big picture. Here are some specifics:
    1. I found the definitions, probably very important to you 
as they are, getting in the way of the story. Maybe you could 
put them in an appendix, and just refer to them in the text.
    2. The text wanders between The Mogul (nice term) and 
naming Willie Tan; Preston Gates is treated the same way. I 
think I prefer naming them. A sentence or two about Willie 
Tan's other interests might help too.
    3. Paragraphs seem to be longish.
    4. You probably should stop for a sentence early on and 
talk about the Tenorios, uncle and nephew, battling each other 
in the 1997 election, an example of disunity among one of the 
14 families (a nice concept.) one of Allen Stayman's notions, 
though I have little proof of it is that the families get money 
from the garment industry by leasing land to it.
    5. Given the length of the report you might consider hiring 
someone to do some light editing, copy editing, not 
restructuring or extensive rewriting. I have done a little of 
that, but more is needed, and it is hard to do it yourselves--
you are both too close to it to notice unconscious items like 
``Congressman DeLay was successful in delaying action. . . .'' 
or some such sentence.
    6. I am a compulsive, footnote person; within limits, the 
more footnotes the easier it is for the reader to accept what 
you are saying; you, the author, is not the only authority. You 
could easily triple the number of footnotes in this one.
    Now for the notes which are keyed to the text:
    A. I would not use George Miller's 66,400 jobs lost; it 
sounds unbelievable, and you either have to stop and explain it 
or drop it.
    B. The 11,000 limit, presumably self-imposed, similarly 
needs to be explained or dropped. The current text makes it 
sound like there is some external law or regulation that the 
CNMI is violating.
    C. At the moment you have cited George Miller as the only 
person in the Congress who wants change; he does, of course, 
but I would let people know that in perhaps different ways 
there are a whole lot of people pushing for change--including 
Sens. Murkowski and Akaka, and Congressmen Spratt, Miller and 
Bob Franks (R NJ) whose name can not be used now, but can soon.
    D. Jane Mayer of the New Yorker is working, not totally 
successfully, with this problem.
    E. As to who pays for the lobbyists, it seems that the 
garment factories have enough clout locally to force the CNMI 
to do it from tax funds; having a public agency (the CNMI 
govt.) do it, was very helpful when they were funding the 
junkets, because govt-funded junkets do not have to be 
reported, but corporate ones do. You should bear in mind that 
in a few days (Feb. 28) there will be a new round of lobbying 
reports on file, and we can see how much P-G was paid for the 
last six months.
    F. The CNMI's lousy wage payment enforcement does not stand 
in a vacuum; both the feds and many states have highly useful 
programs to meet the same goal; it is not as if CNMI had to 
invent something on its own. Terry Trotter has a wonderful 
technique; he calls the customer in New York and says that he 
will go public, right away, unless the factory in the CNMI pays 
up promptly. They do, though you should not name him in this 
connection.
    G. This is under the ``XI. Extortion of Workers'' section. 
This is specialized, but a double whammy. If you (an alien 
worker) have lost your job in the CNMI you are subject to 
deportation; however, under a local amnesty law, if you come 
forward to the authorities, you have a (wildly generous) 60 
days to find a new job, and that new job will give you legal 
status again. The only people who are hiring are the garment 
industry, and so it is within the garment industry that the 
petty officials are selling jobs--and legal status--to poor 
alien workers for whatever gilt they can obtain.
    I can provide at least one news story on this subject, 
maybe more. Maybe you have the clips in hand.
    H. I disagree that Tan or the garment industry supports 
Preston-Gates; I may be wrong, but the govt. pays the bills, 
and there have been some lovely stories about what PG bills 
for, and for how much, all dug out of CNMI govt. files.
    I. I (me, David) am running down, now, but I think we can 
talk a little further about policy recommendations, but not 
just now.
    I hope you do not find this too harsh, too intrusive or too 
radical. You are about to make a major contribution and I want 
to help in that process.
    Perhaps Rhonda--not the report--will have the drama, but I 
think it can be in both places.
    Thank you for showing this to me. (And bear in mind that 
only the spellcheck has edited the document.)

    Mr. Babauta. Well, that will make it a third independent 
observation by somebody other than the CNMI.
    Mr. Schaffer. Thank you. The second question I have is for 
any of the--perhaps for Mark Zachares. And that is with respect 
to the Fish and Wildlife. This Committee's interested in 
activities of the Fish and Wildlife Service. And I understand 
the Fish and Wildlife Service from time to time is engaged in 
inspections of imported materials. What has been the level of 
activity of the Fish and Wildlife Service?
    Mr. Zachares. I may not be the one to answer that, as far 
as the labor and immigration. I'm not aware of their activities 
in regards to inspections of things coming into the CNMI.
    Mr. Schaffer. Okay. Does anyone know? Have they been 
cooperating with the CNMI Customs on inspections of incoming 
shipments and so on?
    Mr. Zachares. We have our director of Customs here if you 
would like to address the question to him.
    Mr. Schaffer. Well, whoever can answer it would be fine. 
The government of the islands seems to be here and that's the 
general question that I have.
    Mr. Doolittle. Mr. Chairman, I apologize. While you were 
gone, we swore in other people that came forward to testify 
before the Committee, as you had indicated everyone was going 
to be put under oath.
    The Chairman. [presiding] Don't apologize. I'm glad you did 
it. Stand up, whoever you are. Identify yourself.
    [Laughter.]
    The Chairman. Identify yourself first.
    Mr. Mafnas. My name is Jose Mafnas.
    The Chairman. Okay, Jose.
    [Witness sworn.]
    The Chairman. You can go ahead and answer the question.
    Mr. Mafnas. I'm sorry, Congressman. Can you repeat the 
question again?
    Mr. Schaffer. Regarding the U.S. Fish and Wildlife Service. 
Have they been involved to any degree in the inspections of 
incoming materials, supplies, shipments to CNMI?
    Mr. Mafnas. Fish and Wildlife?
    Mr. Schaffer. The U.S. Fish and Wildlife Service, right.
    Mr. Mafnas. I'm not aware where the U.S. Fish and Wildlife 
serve with U.S. Customs.
    Mr. Schaffer. I understand, but the U.S. Fish and Wildlife 
Service does assist and has actually some special authority 
when it comes to inspections of imported products. And I guess 
my question is just if--if you're not aware of it, then I 
presume it didn't----
    Mr. Mafnas. No, I'm not aware of their presence.
    Mr. Schaffer. Fine. Okay, that answers the question. Thank 
you.
    The next question, jumping back to you, Mark, is regarding 
the Chinese illegals that you referenced that have been held on 
Tinian. Can you tell us about the expense that CNMI has 
incurred and how that occurred? As I understand it, it's about 
$700,000.
    Mr. Zachares. Yes, thank you, Congressman. It's 
approximately----
    Mr. Schaffer. That CNMI maintains the Immigration 
Department still owes them.
    Mr. Zachares. We--right. Before this operation began, we 
received a phone call from Justice where they asked for our 
assistance in their diversion program. For the record, it was 
Eric Holder speaking with the governor, with the staff members 
available, where they promised the CNMI government for our 
cooperation it would be 100 percent full reimbursement of any 
funds expended for whatever the CNMI put out. During the 
process from April and I believe the last plane just went out 
in September and I don't think we've added in the numbers from 
that last boat. But for the first 5 vessels, it was $750,000.
    It has been my understanding that since we've been--we 
submitted a bill to Justice itemizing the costs. Mr. Sablan 
behind me was the one that was working with that. To date, we 
have not been reimbursed. Yet we have received, I believe in 
the last few days, a request on repayment through some sort of 
grant proposed by the Department of the Interior to which I 
believe we're examining. We don't really quite understand how a 
grant is going to pay $750,000 that the governor reprogrammed 
himself mainly, essentially from my department, which 
represents almost a 20 percent operating costs for my 
department.
    Mr. Schaffer. As a case study of the effectiveness of CNMI 
immigration law compared to U.S. immigration law, why did the 
U.S.--why did the United States INS take these--they 
intercepted them out in the ocean somewhere. Why did they bring 
them to CNMI rather than Guam or California or somewhere else? 
Or Alaska?
    [Laughter.]
    Mr. Zachares. I actually was privy to some meetings in 
December of 1998 in Honolulu where this particular scenario was 
discussed with some high-level officials from INS. The plan 
there was to do a diversion of boats, of vessels to Tinian, to 
utilize the CNMI immigration system, and there would be 
minimal--it would be a interview under the U.N. I believe 
Torture Convention. The reason behind it is, essentially, in 
Guam, I believe, the number of people who landed in Guam are 
still there--if I'm not mistaken--and still being processed 
through. In Tinian, they have either been repatriated, the vast 
majority have been repatriated back to China. A very small 
amount were sent to the United States for further interviews, 
to which they are being confined in the United States right 
now, pending those interviews.
    But the short answer to that is rapid repatriation back to 
China.
    The Chairman. If the gentleman will yield. I hate to do 
this. Have you had 8 minutes or 10 minutes or are you on your 
first 5 minutes?
    Mr. Schaffer. First five minutes.
    The Chairman. Okay, why has this thing got an S-T-O-P up 
here? Is he on his first five minutes or his second five 
minutes? Time goes fast when you're having fun.
    [Laughter.)
    The Chairman. I would suggest to the gentleman, with all 
due respect, sir--I love his line, his train, but we have other 
members waiting and when they get done you can come back, okay? 
Please. Thank you.
    The gentleman from Hawaii.
    Mr. Abercrombie. Thank you very much, Mr. Chairman. Mr. 
Zachares, are you speaking for the CNMI government? Can your 
testimony here be seen as speaking on behalf of the government? 
That your observations can be seen as representing government 
policy, at least from the executive side?
    Mr. Zachares. I believe that I'm--yes, sir. That I'm 
speaking for the government.
    Mr. Abercrombie. Your testimony is that the other agencies 
of the Federal Government fail to carry out their duties of 
enforcement, is that correct?
    Mr. Zachares. Not all of the agencies, sir, but----
    Mr. Abercrombie. Not all of them, but some of them.
    Mr. Zachares. Some of the agencies.
    Mr. Abercrombie. And that your characterization of that 
constitutes principally what you have described as part-time 
enforcement. Is that fair?
    Mr. Zachares. Part-time enforcement or part-time----
    Mr. Abercrombie. It's part of your objection or part of 
your observation that enforcement is not taking place correctly 
has to do with the idea that your observation is that the 
enforcement is part-time.
    Mr. Zachares. Part-time or that they are not on-island on a 
full-time basis.
    Mr. Abercrombie. That's one of the points I want to raise. 
Have you concluded that because they don't have a full-time 
presence, a three-dimensional presence, a person?
    Mr. Zachares. Well, let me explain why, if I may, just to 
give an illustration of why I say that. For example, for the 
NLRB is actually working out of the Hawaii office.
    Mr. Abercrombie. Okay.
    Mr. Zachares. Now, when an investigation is in progress for 
an NLRB complaint, we are working with the NLRB allowing 
transfer tempo----
    Mr. Abercrombie. I got it.
    Mr. Zachares. But----
    Mr. Abercrombie. I only have five minutes. I understand. In 
other words, what you're saying is that they're not on the 
island. They're not there full-time.
    Mr. Zachares. Yes, sir.
    Mr. Abercrombie. Okay. So you have to operate by fax or e-
mail or somebody coming in from Honolulu or from some other 
place.
    Mr. Zachares. Well, it's this. The people who are going to 
them for the investigation are the ones that are finding it 
difficult because the investigation essentially stops when 
someone is gone.
    Mr. Abercrombie. All right. But even when someone comes in, 
then, and makes an observation, with respect to enforcement, 
supposing an edict of one kind or another is issued, now, who 
does the enforcing? Supposing somebody from the Department of 
Labor comes, they make an investigation; or OSHA comes, makes 
an investigation, makes a recommendation, says thus and so 
should take place, how is that monitored? The thus and so?
    Mr. Zachares. I believe it's through the Federal 
Government, sir.
    Mr. Abercrombie. But how is that actually accomplished if 
they don't have someone there to do it? If they don't have--if 
OSHA does not have a full-time presence?
    Mr. Zachares. Well, that's exactly the point, sir----
    Mr. Abercrombie. Okay.
    Mr. Zachares. [continuing] as far as who's gatching it or--
--
    Mr. Abercrombie. Okay. In other words, they could make a 
recommendation, order somebody to do something, but it isn't 
necessarily enforced because there's nobody there, necessarily, 
to do it; to then go and take such a legal recourse as might be 
required otherwise. This is a difficulty I'm sure the Chairman 
can appreciate that happens in all the non-contiguous 
territories. And with regionalization and so on, we end up with 
somebody--the same thing from Honolulu or Guam--and it's 
Seattle or San Francisco or something trying to enforce 
something elsewhere. So there's a difficulty there that might 
be----
    And the last question I want to ask is so what the CNMI 
government is saying is you would like to have vigorous 
enforcement of the laws and you feel that a more full-time 
presence would allow that to occur, right?
    Mr. Zachares. I actually believe that, yes, sir.
    Mr. Abercrombie. Thank you. Maybe you can tell me also, 
then, is there a difference between a visitor and a guest?
    Mr. Zachares. One would, I believe, be--a guest and a 
visitor?
    Mr. Abercrombie. Yes. Is there a difference? I was 
listening to--I'm trying to catch up on everything here and, 
you know, sometimes nobody intends to tell you an untruth, but 
sometimes you don't ask the right question, you don't 
necessarily get all the information. Are there differences 
between visitors to the CNMI and guests in the CNMI?
    Mr. Zachares. I guess we use the term ``guest worker'' and 
a ``visitor'' would be considered a tourist and a ``guest 
worker'' is----
    Mr. Abercrombie. Okay. Is that two different people?
    Mr. Zachares. There's a distinction. Yes, sir, there is a 
difference.
    Mr. Abercrombie. Well, can the, in terms of these quotas 
and ratios and so on, with respect to workers, do you make a 
differentiation between a visitor and a guest worker?
    Mr. Zachares. Yes, sir, we do.
    Mr. Abercrombie. Do visitors ever become guest workers by 
default?
    Mr. Zachares. A visitor--under the limited immunity program 
that did happen, but there is a CNMI statute that does not 
allow a visitor or tourist to change their status from a 
tourist to a guest worker without exiting first.
    Mr. Abercrombie. And is that vigorously enforced?
    Mr. Zachares. It is being vigorously enforced now, sir.
    Mr. Abercrombie. It was not in the past.
    Mr. Zachares. I can only speak for our enforcement efforts 
for the year and a half that I've been there.
    Mr. Abercrombie. Okay. One other thing, then, Mr. Chairman, 
with your permission. Do you have access to this series of 
graphs?
    Mr. Zachares. No, sir, I don't.
    Mr. Abercrombie. Well, if you'll take my word for it.
    Mr. Zachares. I will, sir.
    [Laughter.]
    Mr. Abercrombie. Thank you. You'll notice I haven't been 
sworn in.
    [Laughter.]
    Mr. Abercrombie. That shows you the confidence the Chairman 
has in me. I wanted to mention, these graphs come from Saipan 
labor force surveys, et cetera, fiscal impact reports. I'm 
interested in your opinion or perhaps the governor might have 
an opinion on this. It shows your population of Saipan--this is 
why I asked about the guest workers and all the rest of it.
    If you take a look at the first one, it shows CNMI 
population, non-U.S. citizens and U.S. citizens and what this 
shows, even by way of projection, is a huge disproportionate 
number of non-U.S. citizens in the CNMI population versus the 
U.S. citizens. And if you look in the last one, Mr. Chairman, 
it says, ``Population of Saipan by age, sex, place of birth, 
and parents' place of birth as of June, 1998.'' You have CNMI-
born and parents born in CNMI. Then you have the CNMI-born and 
at least one non-CNMI parent. So there is what I would call, 
what we used to call in Hawaii in the old days, out-marriage, 
right? Either marriage and/or children being born without 
benefit of marriage, right? Between those who are non-CNMI 
citizens and either guests or visitors or immigrants, legal or 
otherwise, right? Children being born.
    Mr. Zachares. Well, I'd take some exception to some of 
these numbers. When you're talking about at least one non-CNMI, 
that could be--I don't think it's taking into account either if 
they're from the Freely Associated States, one, or if they are 
married to or in the process of----
    Mr. Abercrombie. Right. But, in any event, any child being 
born--and then the one category that isn't here is non-CNMI 
parents, both parents, but CNMI-born. If a child has parents 
who are not citizens and is born in CNMI, they are American 
citizens, are they not? The children?
    Mr. Zachares. Yes, sir. You are correct.
    Mr. Abercrombie. Okay. And they're also citizens if they 
have at least one CNMI--if they're born there, regardless of 
what the parents' status is.
    Mr. Zachares. They're born there. Yes, sir.
    Mr. Abercrombie. My point is that it shows that there's a 
lot of children being born in CNMI, regardless of the 
parentage, and they could include at least some, although that 
category isn't listed here, whose parents are not citizens, but 
a child is nonetheless born. There's probably a small number, 
but a number anyway.
    Okay. These charts--it says they're part of the Department 
of Interior testimony. I'm assuming that what they have given 
to us comes from sources that are verifiable.
    So my question is the CNMI facing the prospect, say over 
the next 20 years or 25 years of more and more people becoming 
citizens with the right to vote in the CNMI elections, setting 
aside the question of congressional representation or Federal 
representation for the moment? They'll be able to vote for the 
speaker and the governor and so on. And what my question is 
what kind of projection do you have for being overtaken by 
people who are not CNMI-born and whose parents are CNMI-born? 
Is there a projection?
    Mr. Zachares. I don't have those projections with me, sir, 
but--no, sir.
    Mr. Abercrombie. Mr. Chairman, my point is it seems to me 
if I--if this follows itself out and if you continue to have 
non-CNMI immigration rates and retention rates, if you will, as 
it seems to be, there will be a significant demographic change 
in the make-up of the population in the CNMI, which I think 
might affect, rather dramatically, some of the issues that are 
before the Committee.
    The Chairman. I understand that. The same thing happened in 
Hawaii and the same thing happened to Alaska. So I understand 
that very well.
    Mr. Abercrombie. Thank you, Mr. Chairman.
    The Chairman. The only place it hasn't happened is in 
American Samoa yet and we're working on that.
    [Laughter.]
    Mr. Benavente. Mr. Chairman, may I respond to--may I offer 
an expla--respond?
    The Chairman. You can respond shortly, because his time's 
about up, but go ahead and respond.
    Mr. Benavente. Thank you. Well, first of all, yes, it is a 
matter of a situation that's happened which we're all aware of 
and which we are still trying to deal with. As a matter of 
fact, it was first brought up during the March hearings by 
Senator Mikulski. And one of the statements we made was that, 
at the time, there was the legislation that was introduced to 
limit the stay of guest workers, which a lot of these babies 
are born from or of. And, presently, we've enacted that 
legislation into law and which what we feel it would basically 
do is remove the idea or intention of a permanent stay in the 
Commonwealth, thereby being comfortable in starting out a 
family within the Commonwealth. And that's basically one of the 
reasons that that particular legislation was introduced. Thank 
you.
    The Chairman. The gentleman from California. Have you asked 
questions already? The gentleman from Puerto Rico, Governor 
Romero.
    Mr. Romero-Barcelo. Thank you, Mr. Chairman. And I want to 
thank the other members here on the panel and the members of 
the government of CNMI who have come so far from the Pacific to 
testify here today. And I want to thank you for the testimony. 
It's something that has been discussed and talked about a lot 
and a lot of issues that we certainly don't understand and I 
would like to get a little bit more understanding about some of 
these things.
    I heard the governor testify that there was a cap on 
garment workers of 50,707. Is that correct? Is that a cap on 
garment workers or on just guest workers?
    Governor Tenorio. That is for the garment workers.
    Mr. Romero-Barcelo. That's for all garment workers.
    Governor Tenorio. Yes, sir.
    Mr. Romero-Barcelo. Whether they're from CNMI or from 
outside.
    Governor Tenorio. Yes, sir.
    Mr. Romero-Barcelo. And what is the--is there a cap on 
guest workers on the garment industry? Or is that also the 
same--would that cap be fully taken over by guest workers?
    Governor Tenorio. No, the cap that we established is only 
for the garment industry which is composed of about 34 
companies.
    Mr. Romero-Barcelo. And they could all be guest workers? 
The full cap could be taken up by guest workers, all of it, 
couldn't it? I mean, there's no limitation to the number of 
guest----
    Governor Tenorio. Congressman, the cap is for the non-
resident workers. About 15,000 is the maximum that----
    Mr. Romero-Barcelo. Non-resident workers can----
    Governor Tenorio. Non-resident workers, so----
    Mr. Romero-Barcelo. Guest workers.
    Governor Tenorio. Guest workers. So those will be allowed--
I mean, they can be renewed.
    Mr. Romero-Barcelo. So, can I--is it all right for me to 
assume that there is no unemployment or very, very little 
unemployment in CNMI? Or what is the unemployment for U.S. 
citizens in CNMI? I mean, what is the percentage of 
unemployment for U.S. citizens in CNMI?
    Governor Tenorio. Presently we have 1,000--approximately 
1,400 unemployed U.S. citizens.
    Mr. Romero-Barcelo. What percentage is that, of the 
population?
    Governor Tenorio. That's about a little over 13 percent.
    Mr. Romero-Barcelo. How much?
    Governor Tenorio. Thirteen percent.
    Mr. Romero-Barcelo. Thirteen percent. Now, what is very 
difficult for me to understand why you have such a high cap and 
such a high quota of guest workers when you have such a high 
unemployment. It's very difficult to understand. What is the 
reason for the policy behind that?
    Mr. Babauta. If I may try to respond. It is difficult to 
understand, especially if you were, like me, living back in 
Saipan and you opened the newspapers and you read of all the 
numbers of positions that are available every day. We're 
talking about a lot of jobs. And then you see that number. It 
is difficult to understand, but it is something that we're 
actually looking at, we have been looking at. And part of the 
explanation is the fact that the culture, the way we live back 
there in the islands and, I guess, up to now continuous, this 
is something that I feel eventually will change in the future.
    But the culture, part of the culture, is that the family 
ties are very close. There are a lot of individuals who have 
graduated from high school and even come back from college who 
continue to live with parents or friends and brothers. And if, 
basically, what's out there is that there's a choice. There's a 
choice of a lot of individuals on the island to either go and 
be gas attendants. That's available out there. Or live with 
their parents. And those unemployment--the figures that we see 
in those includes those individuals who have that choice of not 
working.
    Mr. Romero-Barcelo. You don't pay Federal income taxes, do 
you? You do not pay Federal income tax?
    Mr. Babauta. No, sir.
    Mr. Romero-Barcelo. And those companies, those garment 
industry companies, are they owned by outsiders or by people 
from the mainland or from Asia?
    Mr. Babauta. There are companies both that are owned from--
that are non-U.S. and there are U.S. companies.
    Mr. Romero-Barcelo. But there not owned by the people from 
CNMI?
    Mr. Babauta. Which companies? There are companies----
    Mr. Romero-Barcelo. The garment industry?
    Mr. Babauta. Oh. There are companies that are owned by U.S. 
citizens.
    Mr. Romero-Barcelo. But from CNMI or from the mainland?
    Mr. Zachares. There are a couple of companies that do have 
some part ownership into the company from people from----
    Mr. Romero-Barcelo. But the vast majority are owned by non-
residents of the CNMI?
    Mr. Zachares. Right. Yes, sir.
    Mr. Romero-Barcelo. By mainlanders. U.S. citizens from the 
mainland or from other countries?
    Mr. Zachares. Yes, sir.
    Mr. Romero-Barcelo.  And they have tax exemptions? And they 
have U.S. Federal tax exemption? They don't pay Federal income 
taxes?
    Mr. Zachares. If I may defer to Mr. Sablan to----
    Mr. Michael Sablan. Mr. Congressman.
    Mr. Romero-Barcelo. Yes.
    Mr. Michael Sablan. The garment industry in the CNMI paid 
$14 million in income taxes last year.
    Mr. Romero-Barcelo. $14 million.
    Mr. Michael Sablan. $14 million.
    Mr. Romero-Barcelo. To the Federal Government? To the U.S. 
government or to the CNMI government?
    Mr. Michael Sablan. To the CNMI government.
    Mr. Romero-Barcelo. Yes. So they don't pay any Federal 
income tax.
    Mr. Michael Sablan. No, they don't, sir.
    Mr. Romero-Barcelo. Okay. That's what I'm--now what is the 
purpose of creating jobs for aliens and for companies that are 
going to take it out and invest it somewhere else later on? I 
just--it's very difficult for me to understand why you are 
interested in creating jobs to be taken over by aliens and then 
they don't pay--they pay very little taxes and then they don't 
pay any Federal income taxes and they take the money out when 
they close the shops and what does it mean for CNMI, in the 
long run?
    Mr. Michael Sablan. Governor, if I may----
    Governor Tenorio. Mr. Chairman, we have only two industries 
in the CNMI. We have the tourism and the garment industry. And 
the garment industry employs also local U.S. citizens and they 
also pay taxes to our government. If the garment industry 
closes at this time, we will probably, immediately, we will be 
losing approximately about $67 million of local resources.
    Mr. Romero-Barcelo. I mean, the aliens, the workers, the 
guest workers, they earn so little they don't pay any local 
income tax.
    Mr. Michael Sablan. Mr. Congressman, the apparel industry 
contributed nearly 40 percent to the total revenues in the CNMI 
economy. There is only one other industry, the tourism 
industry, which contributes approximately 60 percent. The 
apparel industry last year contributed $85.7 million toward the 
$210 million collected by the government.
    Mr. Romero-Barcelo. What kind of taxes?
    Mr. Michael Sablan. We have user-fee taxes based on the 
exports, income taxes, non-resident worker fees paid for each 
non-resident worker who comes in.
    Mr. Romero-Barcelo. Non-resident workers pay income taxes 
on those salaries?
    Mr. Michael Sablan. Employers pay a non-resident worker fee 
for every non-resident guest worker who comes in. Congressman, 
workers pay income taxes.
    The Chairman. The gentleman's----
    Mr. Michael Sablan. Payroll salary taxes.
    Mr. Romero-Barcelo. And what are there wages?
    Mr. Michael Sablan. I'm sorry?
    Mr. Romero-Barcelo. Are there wages under the Federal 
minimum wages?
    Mr. Michael Sablan. We have our own minimum wage of $3.05 
an hour.
    Mr. Romero-Barcelo. And a person who works 40 hours for 
$3., they pay income taxes?
    Mr. Michael Sablan. Yes. Yes, they do, sir. Wage and salary 
taxes.
    Mr. Romero-Barcelo. Oh, my. They pay income taxes? The 
individual?
    Mr. Michael Sablan. To the CNMI government, they do.
    Mr. Romero-Barcelo. Oh, my goodness. Okay.
    The Chairman. The gentleman's time is up.
    Mr. Romero-Barcelo. All right. Thank you.
    Mr. Michael Sablan. And, in addition to that, Mr. 
Congressman, they remitted last year nearly $60 million of 
earnings to their home countries.
    The Chairman. I have to remind the gentleman from Puerto 
Rico that there's some similarity between the CNMI and Puerto 
Rico. I mean, there's--the taxes and----
    Mr. Romero-Barcelo. I see the same pattern of exploitation.
    The Chairman. Yes. And if I can, I will also support them 
to be a State and then we'll solve this whole problem, as I do 
you and then we'll get Guam and what else in here. I need some 
more congressmen anyway.
    [Laughter.]
    The Chairman. But I think what--again I go back and the 
reason I want these hearings to be conducted is I, even before 
the chairman--Mr. Miller was chairman, was involved in the 
creation and the Covenant. And I hope we go back to the history 
of that. And the mistakes made in the past were made. There's 
no doubt about that. And I'm hoping that we hear today that 
we're trying to improve those situations so that those mistakes 
will not be repeated. And if they're still existing, we must 
eliminate them. And I think that's what we have to really 
address.
    There was no economy when I first went there. None. The 
gentleman talked about unemployment. We have a large 
unemployment in the State of Alaska if you look at the numbers, 
but there's a large number of my people in the State of Alaska, 
they're on the list, but, in reality, the culture doesn't allow 
them to be employed. And people have to remember that. If 
you're in Eek, Alaska, there's little jobs available other than 
what we call subsistence, and yet they are considered 
unemployed. There are jobs available, but they're not about to 
leave Eek, Alaska, and go to Anchorage or Fairbanks and 
transplant themselves and live a total different cultural life. 
That's just not going to happen. And yet they're on that list. 
I hope people keep that in mind.
    I understand what the gentleman is saying. There is 13 
percent; why aren't they working in those garment factories?
    Mr. Michael Sablan. Mr. Chairman, if I may?
    The Chairman. Yes. Yes.
    Mr. Michael Sablan. The unemployment rate in the CNMI is 
5.5 percent. The 13 percent refers to the residents. The 
unemployment situation in the Commonwealth is a symptom of an 
ailing economy that is suffering tremendously from the Asian 
crisis. Our neighbor to the south, Guam, has an unemployment 
rate of a similar magnitude. The numbers can be misleading. We 
have a small population.
    The Chairman. Let me clarify one thing. Where's the 13 
percent come from?
    Mr. Michael Sablan. The 13 percent represents one subgroup 
of the unemployed population in the CNMI.
    The Chairman. One what?
    Mr. Michael Sablan. The U.S. citizen resident workers.
    The Chairman. Where's the 5 percent come from?
    Mr. Michael Sablan. The overall unemployment, which 
includes subgroups representing the Micronesian population, 
non-resident population.
    The Chairman. So, in reality, the total unemployed 
population is 5 percent, then.
    Mr. Michael Sablan. 5.5 percent.
    The Chairman. Okay.
    Mr. Romero-Barcelo. Mr. Chairman.
    The Chairman. Yes.
    Mr. Romero-Barcelo. I just wondered if I could say 
something.
    The Chairman. Go ahead.
    Mr. Romero-Barcelo. You know, one of the things to 
consider, please on this, when you go back. If you offer a job 
for $5.65 or for $2.60, you might not get comers at $2.60. But 
at $5.65, you would. So you have a higher, a minimum wage 
enforced in CNMI, then those people who you say are not willing 
to work might be willing to work for double the wage than they 
are now. I would just keep that in mind. We found that out in 
Puerto Rico.
    The Chairman. Senator.
    Mr. Manglona. Mr. Chairman, I know these are complex 
issues. And let me just point out at this point that the House 
did pass legislation several months ago and the Senate I 
believe earlier this month passed that legislation, with 
amendments, and the bill now is before the House. But this is 
the Fair Compensation Act. And, basically, what this does is it 
requires garment factories and other companies hiring non-
resident workers to pay the local resident the equivalent of 
the minimum wage plus other benefits such as housing to the 
non-resident workers. We hope that this will drive up the wages 
for the local residents. So we are concerned about these 
issues. We're tackling that.
    And, also, earlier this year I believe, we mentioned we 
passed the wage review board and the wage review board should 
be coming out shortly with recommendations on the minimum wages 
for various industries. So we are very concerned about this and 
that's why that's one of the very first pieces of legislation 
that the governor passed into law, the creation of the wage 
review board. Thank you.
    The Chairman. You have a wage review board similar to 
American Samoa now? It's not similar? But that would have to be 
done----
    Mr. Faleomavaega. Would the chairman yield? Would the 
chairman yield?
    The Chairman. I'll yield to you--okay. You're recognized 
anyway. Have you asked questions already? You're on your own 
time. Go ahead.
    [Laughter.]
    Mr. Faleomavaega. All right. Thank you, Mr. Chairman. Mr. 
Chairman, I submit that you and the gentleman from California, 
Mr. Miller, not only as the most senior members of this 
Committee, but certainly have the years enough to know exactly 
the process and how the insular areas have come about. And the 
classic example of all is our friend and the gentleman now 
sitting before testifying as leaders representing the Northern 
Mariana Islands.
    As you know, Mr. Chairman, we do have a very unique 
relationship with the Northern Mariana Islands. Unique in the 
fact that it's based on a Covenant relationship that was drawn 
between our leaders and the leaders of the Northern Marianas. 
But probably no example that I've ever known in my life, Mr. 
Chairman, in the six years that I've served as a staff counsel 
in this Committee at that period, were a nation of 200-and-
some-60 million people were there negotiating on an equal basis 
with these people who were only 15,000, because of our desire 
in wanting to get rid of some 400 years of colonialism that 
these people were subjected to. And doing it after World War 
II, we had the strategic trust responsibility that we've had 
and these people have vied and wanted very much to join and 
become partnership with our country, unlike the other areas 
that have now become independent.
    And, because of this Covenant relationship, Mr. Chairman, 
and as the members of the Committee may realize, the process 
has granted also to these people U.S. citizenship. The process 
has also given them the right to make their own laws as in 
reference to customs and immigration. The process has also 
allowed them to create their own minimum wage. That's the 
reason why I say it's a very unique relationship. It's not a 
State like the rest of the other insular areas. The process 
also allows this country or you might say this entity to elect 
their own government officials, which has only taken place less 
than 25 years.
    And I wanted to put that perspective as I will continue my 
comments, Mr. Chairman, because I think it's important for the 
members to get that overall perspective. And as also part of 
the process, is that these people have also given up all their 
lands.
    As you know, Mr. Chairman, at the time of the negotiations 
with you and Mr. Miller and Mr. Burton, you know that the 
Department of Defense was probably the key agency that really 
had a lot to say about what would happen to the future of 
Micronesia. And let's face the bottom line facts, not only from 
my brother here from Guam, NMI, and other Micronesian entities, 
our only presence and interest in there was the strategic. It 
is for our national security. And this is the reason why 
they've agreed to allow our military, at any given time when 
our national security is at risk. That's the sacrifice that 
they are making for us. And I think we need to understand that 
perspective, Mr. Chairman.
    I know that things started happening when a gentleman by 
the name of Willie Tan sometime 8 or 10 years ago was fined by 
the U.S. Department of Labor some $9 million because of 
sweatshops, because of the problems that they had with the 
textile environment industry. And I think this is where the 
problem started eroding in terms of the relationship. And one 
of their former governors even testified to this Committee they 
didn't need CIP assistance. And, as you well know, this is what 
prompted the other insular areas and, unfortunately, we've had 
to do this, historically.
    I can say that my brothers and sisters here, NMI has a 
Covenant relationship. We don't have a Covenant relationship 
with America. My friend from Puerto Rico has a Commonwealth 
relationship with the U.S. We don't. My good brother here from 
Guam has an organic relationship with the U.S. We don't have an 
organic relationship with the U.S.
    So when you put it in the pot, Mr. Chairman, we're in a 
mess. And it makes it very, very difficult to put it in proper 
perspective. And I can deeply appreciate where my friend from 
California is coming from. You're U.S. citizens and we're 
giving assistance and, by golly, we've got to make sure that 
basic, fundamental, Federal laws for the treatment of U.S. 
citizens ought to be the same throughout. And, yet, at the same 
time, we've got these problems hanging on us. And it's a very 
difficult situation. And I'm not saying that what they're doing 
is correct in every instance. I can tell you a lot of governors 
in this country that have got a lot of problems, probably even 
worse than some of the problems that we've had in the insular 
areas.
    But, with that in mind, Mr. Chairman, I just wanted to 
share that. And, by the way, too, my good friends in the NMI 
are the only ones that are given the SSI. The rest of us are 
not given SSI, thanks to Philip Burton, bless his heart. It was 
the kindness of his heart that that happened. And I could also 
say it was a matter of history and fact that the reason why a 
lot of our Micronesian friends currently receive a lot of these 
social, educational programs is because of you and Mr. Miller 
and Mr. Burton.
    So it's given that sense that 4.7 million Americans that 
live in Puerto Rico and the Pacific and the Virgin Islands. The 
Hess Oil is in the Virgin Islands and the pharmaceuticals are 
in Puerto Rico. Tourism is in Guam. We have the largest tuna 
canning facility in the world right now and we're having 
problems. So I want to share that with the members of the 
Committee and the perspective that we can appreciate the 
problems that we're faced with. And it's not easy.
    And for some reason the concern that Phil Burton had about 
having a delegate included in the Covenant, his fear was that 
the Covenant would not have been approved if a delegate bill 
was included. And the feeling was at the time maybe at some 
point in time the Congress will seriously consider allowing the 
CNMI to have a delegate seat in the Congress. So I just wanted 
to share that perspective, Mr. Chairman.
    Mr. Faleomavaega.And I know the concerns. As I've said, 10 
years ago I'm sure these sweatshops existed. We wouldn't have 
fined Willie Tan $9 million and, by the way, he paid it 
immediately because he had the money to do so. But in our 
visit, Mr. Chairman, the members that visited NMI last year, 
this member can say distinctly I was very impressed with the 
improvements that have been made.
    My good friend here from Guam, we ended up in the midnight, 
we had to meet with about 600 foreign nationals on the problems 
they were faced with because of the contractual relationship 
that some of these foreigners had with the I call them coyotes, 
but maybe there's another name for them. And these poor people 
are brought to CNMI only to discover the employers couldn't 
provide them jobs and they ended up becoming wards of the 
state. And I want to commend the governor and the speaker and 
the president of the Senate and the government for taking 
instant, immediate remediary action by now taking the position 
to give assistance to these foreign nationals to send them back 
home because of the problems that they've had with not only the 
employers, but the people who were brokers in the process.
    So, if I may, Mr. Chairman, I do have one question to our 
friends. I suggested to the former governor of CNMI about eight 
years ago, under the minimum wage system, as American Samoa 
currently has, every two years the Department of Labor 
organizes a minimum wage committee composed of national labor 
leaders, the chamber of commerce, and local leaders and we get 
together and find out what would be in the best interests of 
the economy as a whole, whether or not the NMI territory can 
hold the minimum wage with the intent at some later point in 
time that we will conform to the national minimum wage system. 
But, unfortunately, this has never taken place. And I, for one, 
Mr. Chairman, would like to offer that recommendation to this 
day that maybe that would be another way to resolve the minimum 
wage problem that we have in the NMI.
    My question, Mr. Chairman, to my friends, what percentage 
of NMI budget comes from Federal grants? And how much does it 
get from Federal grants and loans?
    Mr. Michael Sablan. I'm sorry, Mr. Congressman. The CNMI 
government since 1993----
    Mr. Faleomavaega. No, no, no. Just right now.
    Mr. Michael Sablan. We receive zero Federal funding for 
government operations.
    Mr. Faleomavaega. No, no, no. Federal grants, like SSI, 
Food Stamp, whatever other. CIPs.
    Mr. Michael Sablan. According to the Department of 
Commerce, the U.S. Department of Commerce, we received a little 
over $30 million in Federal grants last year.
    Mr. Faleomavaega. No, I don't want the Federal Department 
of Commerce. I want your department to tell us how much do you 
get in all. Educational grants----
    Mr. Michael Sablan. About $32 million, $33 million.
    Mr. Faleomavaega. Okay. How much does your budget come from 
local revenues? And what is the amount of local revenues you 
get each year?
    Mr. Michael Sablan. This year, we're projecting local 
revenues of $210 million.
    Mr. Faleomavaega. And so that makes your total budget for 
approximately how much?
    Mr. Michael Sablan. Including the Federal grant money, 
general fund money, or Federal grant money, about $245 million.
    Mr. Faleomavaega. I see. Mr. Chairman, I know my time is 
up. I will wait for another round.
    The Chairman. Thank you.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    The Chairman. The gentleman from Guam, have you asked 
questions yet?
    Mr. Underwood. Yes.
    The Chairman. Okay. So I can start the second round? I am 
going to let me Schaffer go forth, if necessary. I think that 
would be appropriate. For five minutes. I think the people at 
the table may be getting uncomfortable about now and so I'd 
like to wrap this up, you know, within a period of time where 
we can go on to the next panel.
    Mr. Schaffer. Thank you, Mr. Chairman. I'd like to ask the 
governor, what would be the impact of increasing the minimum 
wage in CNMI and ask also whether that has been considered 
recently?
    Governor Tenorio. First, Mr. Chairman, yes, recently I 
learned that approximately about over 100 guest workers, non-
resident workers, returned to their country because of our 
economic impact in the CNMI. I understand the importance of the 
minimum wage, but whenever there is a minimum wage, also 
there's a multiplying factor because, in some cases, some of 
the so-called mom-and-pop stores were closed down because they 
cannot afford to pay the minimum wage. In some cases, they have 
to reduce the number of employees in order for them to meet the 
minimum wage.
    In the case of the non-resident worker, although they are 
receiving only $3.05 per hour, they are also getting other 
benefits such as health, food, places to stay, free 
transportation. So we feel that the CNMI as we have established 
our own permission to come up with a recommendation as to what 
minimum wage will be best for the CNMI. I hope that--after the 
submission of this report, we will be very happy, of course, to 
provide to the Committee.
    The Chairman. Will the gentleman yield for a moment?
    Mr. Schaffer. Yes, sir.
    The Chairman. And the gentleman from American Samoa, listen 
to this question. The minimum wage that's developed in these 
areas has to be considered with the local wages paid and the 
paying scale, is that correct?
    Mr. Faleomavaega. It's been considered on the overall 
economy of the territory.
    The Chairman. But what I'm just searching here for is just 
to say we're going to meet the Federal minimum wage, which will 
be--and I'm going to vote for it--to raise it to $6.75, if that 
was to be implemented in Saipan, for instance, that would be an 
extraordinary amount over the basic wage, would it not be? What 
is the basic wage now for somebody outside? Because you just 
said, governor, mom-and-pop stores and stuff would close. 
They'd have to shut down, not employ as many people. What is 
the minimum wage now for somebody to be employed? Is there a 
minimum wage at all?
    Governor Tenorio. Well, the--yes, sir. The minimum wage is 
$3.05 right now, even at the mom-and-pop stores. But what I'm 
trying to say is that because our economy is so bad that many 
of the small stores, the small apartment will be closed down.
    The Chairman. If we were to adopt the Federal minimum wage, 
they couldn't function.
    Governor Tenorio. If they adopt the minimum wage, then, 
automatically, it will tremendously impact our resources in the 
CNMI.
    The Chairman. And, again, if I'm remembering right, when we 
passed the Covenant, one was to allow you to set the minimum 
wage if that fit the territory instead of on the Federal level.
    The Chairman. That is correct, sir. That's why, if the 
minimum wage were implemented right away, there would be more 
unemployment on the CNMI.
    The Chairman. Thank you. Go ahead, sir. I'm sorry.
    Mr. Schaffer. Well, thank you, Mr. Chairman. I appreciate 
your clarifying that. I'd also point out that in June of this 
year, the Federal Wage Review Board for American Samoa 
considered those exact factors and recommended no increase in 
the minimum wage for three industries there and 3 cents an hour 
for an increase in the tuna canneries and to increase minimum 
wage for the garment industry from $2.50 to $2.60 per hour. So, 
while the minimum wage is still lower than it is even in CNMI, 
with the Federal Government's recommendation to keep it at that 
level, there are still other factors that go into 
consideration, calculation of the minimum wage in territories 
and insular----
    Mr. Faleomavaega. Will the gentleman yield?
    Mr. Schaffer. Yes.
    Mr. Faleomavaega. I appreciate the gentleman mentioning 
American Samoa's situation, but, here again, it's a very 
difficult situation because I have a love/hate relationship 
with the largest tuna canning facility in the territory. I mean 
this graciously in the fact that a fish cleaner in Puerto Rico 
gets paid about $6 to $7 an hour and the same fish cleaner that 
produces the same quality canned tuna in American Samoa gets 
paid only $3.20 an hour. And my question is why the 
discrepancy? And the problem has been--and, of course, one of 
the reasons a lot of the incentives that are given to these 
major corporations going to the insular areas simply because of 
lower labor costs. And whether we like it or not, that's the 
bottom line.
    And the fear is that if we keep putting pressure on our 
major industry to up the ante as far as minimum wage is 
concerned, then they turn around and say, well, we're going to 
leave you. And then I'm stuck with 4,000 employees wanting to 
know what they're going to do after that.
    The Chairman. That's a big chunk of voters too, isn't it?
    [Laughter.]
    Mr. Faleomavaega. I wasn't referring to that aspect of it, 
Mr. Chairman. But, you know----
    Mr. Schaffer. Mr. Chairman, can I ask more question, is all 
I ask.
    Mr. Faleomavaega. Again, if the gentleman would yield, I 
just wanted to mention as a clarification on this. They export 
over $450 million worth of canned tuna to the U.S. every year. 
Starkist company alone grosses over $1 billion a year in tuna 
worldwide. And, as a subsidiary of Heinz Food Company, which is 
now valued at about a $15 billion conglomerate, this is where 
the problem I have currently with my friends.
    Mr. Abercrombie. It would all collapse if they had to pay 
somebody more than $3 an hour.
    Mr. Schaffer. One last question. We have focused in this 
panel on the garment industry, some of the regulatory issues on 
CNMI. Some of the reports that I read, a month ago, that are 
critical of CNMI also mentioned the sex trade. And I would like 
someone here to comment on the prevalence of prostitution, the 
response that you all have taken as government officials, and 
whether--and I'd just like to hear your description as to the 
significance of the problem, the severity of it, and your 
response to it.
    Governor Tenorio. Yes, sir. I would like to have Mark 
Zachares to respond to that. But I just want to make a 
statement that prostitution is illegal in the CNMI, by virtue 
of the--in the Constitution.
    Mr. Zachares. Thank you, Governor. Exactly that. 
Prostitution is illegal in the CNMI. In fact, there has been 
added legislation that was passed, anti-loitering provisions 
dealing with, you know, street-corner type of activities. What 
we have done in the last year and a half and, more 
specifically, in the last year, we got together with the AG 
White Collar Crime Division, our Immigration DPS officers. We 
set up surveillance. Pretty much, we suffer the same type of 
problems, pretty much, any major, I think, and anyone sitting 
here has the problems of prostitution in their districts. But 
we attacked it in the way of using our Immigration, using DPS, 
using the new loitering law, and aggressively going in and 
trying to prosecute those involved in it.
    We have seen a drastic decrease in the tourist area. We 
call it the ginza district in Garapan, of that type of 
activity. The aggressive pimps with the prostitutes on the 
corner. So we took a task force type of approach, attacking it 
from--because there may have been immigration aspects involved 
in it that we could take care of and, additionally, the local 
police force in the AG's office.
    Mr. Schaffer. Have Federal officials been helpful in 
assisting in this particular----
    Mr. Zachares. Right. I'd like to address that too. The FBI 
and the CNMI task force got together and prosecuted several 
cases under the Mann Act and successfully prosecuted. And 
that's part of some of the success stories, that's one of them, 
of the Federal and local cooperation. Because without the local 
cooperation, our agents involved in with the FBI--they're 
cross-designated over--they were successful in doing 
prosecution regarding the importation of prostitutes coming in 
and federally charging and convicting them.
    Mr. Schaffer. Thank you, Mr. Chairman.
    The Chairman. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. If there's one 
conclusion to be drawn from this hearing today, I think it's 
very clear that we ought to just continue to have hearings, 
because everything gets so much better right before the 
hearings take place. So this is a worthwhile endeavor.
    You know, we talked here about the intent of the Covenant 
and why things were put into the Covenant and not put in. And 
Mr. Faleomavaega talked about a number of those. And I think he 
gave a pretty accurate history. And one of the parts of that 
history was we decided not to make the immigration laws apply 
because there was a great deal of concern within the CNMI that 
they would be overwhelmed by non-citizens and that they would 
lose their indigenous culture and they would not be able to 
maintain that if people 8,000 miles away were making decisions 
about immigration.
    So we come to the situation today where we have a situation 
where now the indigenous population is dramatically outnumbered 
by the non-citizen population. We see a situation where the 
island can no longer hold onto its population. They continue to 
flee that because they haven't been able to build an economy. 
We see a situation where, essentially, as pointed by Mr. 
Abercrombie and Romero-Barcelo, you have a taxation policy on 
the poorest workers on the island that where 90 percent of the 
private-sector jobs are now held by non-citizens, Asian-born 
individuals, and 90 percent of the public-sector jobs, the 
highest paying jobs, are held by citizens. So you have a 
transfer here of taxing the poorest people to support the 
wealthier individuals in that. We see a situation here where 
we've gone, in this decade, from about $200 million in garment 
exports to over $1 billion in garment exports and, at the same 
time, the amount of Food Stamps utilized in the island by the 
U.S. citizens has doubled.
    So we have all of the bad outcomes that they were worried 
about before we signed the Covenant and I think that's why it's 
important that we review the Covenant, because, in fact, what 
we see is the hole in the immigration laws that surround this 
nation are what enabled the rest of this to happen.
    I find it rather interesting. Maybe Mr. Doolittle and Mr. 
Schaffer and others will join us in an amendment and we'll have 
a line-item for OSHA. This is an island of some 80,000 
resident. I've got three cities in my district that are larger 
than that. And if you put a full-time OSHA inspector in each of 
those cities, I guess you'd probably get the same how you got 
on Saipan when the editorial comment was they wanted this 
Committee to subpoena people on why the increased, stepped-up 
OSHA investigations and they wanted to know who in the White 
House sicced OSHA on the island or why were they having to 
undergo all of these additional inspections. Of course they 
found out that the governor, of course, had requested those 
inspections.
    We find out that there's 450 OSHA inspections for 50,000 
people and there's 35,000 inspections nationwide for 70 million 
people who are in work places in this country, nearly 20 times 
the number of inspections. But, somehow, that's apparently now 
not enough. It used to be too much and they wouldn't cooperate 
and they sent the OSHA people packing. But now it's not enough.
    We see that, you know, we have 1,200 inspectors. These 
questions about why isn't OSHA more active, why aren't they in 
permanent residence, why aren't they full-time is rather 
interesting from people who came to Congress pledging 
themselves to abolish OSHA. It's like the guy, you know, who 
killed his parents and threw himself on the mercy of the court 
because he was an orphan. You know, I don't get it and it just 
doesn't ring true.
    The suggestion is if the Federal Government was just out 
there full-time, that these problems wouldn't exist. Well, this 
is just some of this is just old-fashioned law enforcement. 
Apparently you cleaned up the prostitution problems when it was 
called to your attention. That's just old-fashioned law 
enforcement.
    You know, if people are violating--companies are settling 
for back wages, companies are settling for all kinds of 
activities, you know, nothing prevents, you know, the State of 
California, the district attorneys go in and they prosecute 
people for these violations all the time, when you abuse your 
workers. So it's rather interesting, one, that everything has 
gotten so well here as we host this hearing. And the second 
thing is what we see from the conservative side of the aisle is 
that we just need more Federal involvement.
    You know, if we're going to start having one OSHA inspector 
for every 50,000 people or for every not even that many 
workers, then I think that's a different level of government 
participation in the work place. In fact, most of the 
legislation has been about backing out of OSHA; about relying 
on employers and local individuals to inspect that. In the 
State of California, we control the inspection and that's why 
we passed the sweatshop laws in that particular interest.
    Mr. Faleomavaega. Will the gentleman yield?
    Mr. Miller. Yes, I will yield.
    Mr. Faleomavaega. I want to say that it is irony, as the 
gentleman has stated earlier, that the feel was on the 
immigration aspects that there will be more Americans coming 
over to Saipan and taking over then the Saipanese becoming the 
minority. But it was not the expectation that there would be 
more foreign nationals. And that's what has now given to the 
situation that we're faced with.
    But I think that was the concern, as I recall, and the 
intent. That perhaps there will be more Americans coming over 
to Saipan, the vast majority of U.S. citizens, but not 
realizing that now it's just the opposite, more foreign 
nationals being there.
    Mr. Miller. I thank the gentleman. Zachares, is it? Mr. 
Zachares. I'm sorry. Zachares, excuse me. Zachares. You 
mentioned that no longer do tourists are able to convert their 
stay. How many have been prosecuted for doing that, to become 
workers?
    Mr. Zachares. We have prose--I don't have the actual 
numbers right now for you, but I can make those available to 
you.
    Mr. Miller. Do you have it off the top of your head? I mean 
a thumbnail guess here?
    Mr. Zachares. I can say the prosecution of our immigration 
laws in the last year and a half have increased tenfold, 
compared to in the previous administration from illegal 
employment of aliens----
    Mr. Miller. How many people have been prosecuted for 
converting their reason for entrance to another reason?
    Mr. Zachares. I don't have that off the top of my head, 
sir.
    Mr. Miller. Will you supply that for the Committee?
    Mr. Zachares. Yes, sir. I will.
    [The information follows:]
    Mr. Miller. How do you determine those today?
    Mr. Zachares. Determine?
    Mr. Miller. How do you know that?
    Mr. Zachares. If they came in as a tourist and then----
    Mr. Miller. If a person comes in for a tourist for 10 days, 
do they check out after 10 days? Do they go back to----
    Mr. Zachares. Yes, we do have--we have a semi-automated 
system in place right now, but what would happen, how you would 
find out is by the tourist stamp that would be in their 
passport upon presentation of their passport. If they were 
working, they would not have a valid permit. But if they did 
have a permit, they would show a tourist stamp within their 
passport and the question would arise, how do you get a tourist 
stamp when you have a working permit?
    Mr. Miller. And what's the fine--I assume it's a fine--for 
the employer who hires----
    Mr. Zachares. Oh, it's a felony for an employer.
    Mr. Miller. It's a felony. What's the fine or what's the 
punishment?
    Mr. Zachares. I believe it's a $5,000 fine and over a year.
    Mr. Miller. And how many employers have been prosecuted?
    Mr. Zachares. Excuse me, it's five years, sir.
    Mr. Miller. How many employers have been prosecuted?
    Mr. Zachares. In the last year? If I can go to my notes, 
briefly.
    Mr. Miller. Yes.
    Mr. Zachares. In the last year and a half, sir, we've filed 
over 30 criminal cases against 55 separate defendants. And 
that's including garment factories, construction companies. 
We've also seized over 500,000----
    Mr. Miller. What's the breakdown? Do you have it there by 
industry? Construction versus hotel or----
    Mr. Zachares. We do have a breakdown----
    Mr. Miller. I mean, I don't know. How do you break it down? 
By construction, hotel, or----
    Mr. Zachares. Construction, whether it would be a garment; 
whether it would be a hotel.
    Mr. Miller. And how does that break down?
    Mr. Zachares. I do not have that breakdown in front of me, 
sir. I will provide it to the Committee.
    Mr. Miller. Will you submit that for the Committee, please?
    Mr. Zachares. Yes, sir.
    [The information follows:]
    Mr. Miller. Thank you. I'll wait for the next round.
    Mr. Doolittle. [presiding] You know, I don't have any 
confidence in OSHA. And this hearing just is another reason why 
one shouldn't have any confidence in them when so much is made 
by our Federal Government of the terrible problems in the CNMI 
and then it turns out they don't even care enough to be on-site 
to enforce these laws. It's just absurd. It's just totally 
hypocritical and, as we're finding out in another 
investigation, thoroughly political, for partisan political 
ends. That's what this is about.
    I have only been to Saipan once in my life and to the 
Marianas. That was earlier this year. Like my colleague from 
American Samoa, I was very impressed by what I saw. I certainly 
didn't see anything resembling a sweatshop. I did see some 
pretty bad conditions for the people who came over here on 
false pretenses because of the unethical business practices of 
some of these recruiters. And, during that trip, the government 
of CNMI responded and, without any legal obligation to do so, 
nevertheless provided monies to repatriate the people to where 
they came from. And I commend you for that, governor, you and 
your government.
    I would love to see the CNMI succeed and I think even in 
your own business plan, the garment industry is only kind of a 
transitional type of industry, isn't it? What is the future, if 
I may address that to one of you gentlemen? What is the future 
for the CNMI? I mean, is this going to be a place where the 
garment factories thrive for decades? Or is that set to end and 
something else set to happen?
    Yes, sir, Senator, if you wish--or, Governor, who would you 
like to answer? Mr. Sablan?
    Governor Tenorio. Yes.
    Mr. Michael Sablan. Mr. Congressman, we have done a gross 
island product projection for the next five years. We see the 
garment industry leaving the CNMI when world trade agreements 
come into play in the year 2004. We are seriously concerned 
about the impact that would have upon our economy and our 
ability to continue to run our government on a self-sufficiency 
basis. We have been self-sufficient, as you know, for 
operations since 1993. The administration and the legislature 
has been working very hard this past few months, past year and 
a half as far as I know, to develop new alternative industries 
in the CNMI.
    As the president, I believe, mentioned earlier, there is a 
bill now before the Senate to establish free trade zones. That 
is perhaps our best hope to recover when the garment industry 
does leave. Without that, we anticipate government revenues in 
2004 dropping to the 1994 level. And we're doing everything we 
can to avoid a drastic drop in revenues of that magnitude.
    Mr. Doolittle. So, then, you clearly are heading for 
something else. All this fuss about the garment industry, I 
mean, we're almost to 2004 is four and one-half years away.
    Mr. Michael Sablan. It's right around the corner, sir. 
There are factories, in fact, I understand, who have closed. 
And we are told by the garment association that orders, buyers, 
are dropping, are reducing their orders. And we're very 
concerned about that.
    Mr. Doolittle. Is it your--I'm just looking at this. I 
guess we're going to hear about these from the government in 
the next panel, these graphs. But, I mean, I was listening to 
Mr. Miller, but it looks to me like, although, obviously, the 
alien population's gone up, your own population is increasing 
as well, or has been over the years, as I interpret these 
graphs. Is that, in fact, the case.
    Mr. Michael Sablan. Yes, it is. Mr. Congressman, if I may, 
the last census that was done in the Commonwealth was in 1995. 
I wouldn't give too much--I wouldn't rely too much on numbers 
since 1995. There is a 2000 census being planned. I understand 
the results of that census will be in the year 2001.
    Mr. Doolittle. Well, what do you anticipate will be 
happening with the alien as the--I mean, are the guest worker 
aliens, do you expect that to steadily decline as well, along 
with the garment industry? Or how does that fit into the 
economic picture for the future?
    Mr. Michael Sablan. According to statistics, and correct me 
if I'm wrong, the number of guest worker permits this year has 
decreased approximately 26 percent from last year.
    Mr. Doolittle. And part of that is the Asian flu still, 
though, right?
    Mr. Michael Sablan. Excuse me, sir?
    Mr. Doolittle. I mean, a part of the decline is due to the 
poor state of the economy in Asia.
    Mr. Michael Sablan. Oh, of course, sir.
    Mr. Doolittle. Yes.
    Mr. Michael Sablan. We have businesses closing. It's not a 
CNMI problem; it's a regional problem.
    Mr. Doolittle. Right. But my point is let's suppose the 
economy is healthy, after 2004, in Asia. What do you anticipate 
is going to be happening with the numbers of guest workers in 
the CNMI? Is that still going to be increasing like this graph 
shows? Or do you anticipate that's going to level off and/or 
decline?
    Mr. Michael Sablan. If and when the economy recovers, Mr. 
Congressman, I don't think anyone here could see our economy 
developing without the ability to hire guest workers, because 
of the limited population we have. The free trade zone, for 
example, we are doing everything we can to attract capital-
intensive non-labor-intensive industries, but the reality in 
our region, especially, is that would be a very difficult, very 
competitive venture. But we'll do everything we can. I, 
personally, I don't see development in the CNMI without the 
ability to hire guest workers to supplement our limited 
population.
    Mr. Doolittle. Well, and that reality, I presume, is why, 
in the compact, you were given control over immigration, to 
deal with this very situation. Yes, Mr. Babauta.
    Mr. Babauta. Thank you very much. I was wanting to poind 
that out earlier, that, while it is true that part of the 
reasons why we were granted the authority to maintain 
immigration and minimum wage was to protect us from the influx 
of migration and then, in turn, becoming U.S. citizens and 
overwhelm the people. But the other reason was because we 
needed it to start our economy until such time that the 
military comes in and builds a military-type economy base 
where, then, we have opportunities. And I wanted to point out 
that, up until now, we still are not there. We're not at that 
point where the commitments were made, basically, and we 
continue to need to control immigration and minimum wage to 
continue with our development.
    What we've done, though, so far on the concerns that you've 
raised as far as looking in the future and seeing the reduction 
of non-resident workers is, you know, other than the 
legislations that we have enacted, such as the moratorium laws 
and the caps, there is also efforts by the administration--and 
this is as the result of a push by the community, by the local 
people--to reduce the waste in government, to reduce the size 
of government. And Governor Tenorio has done a tremendous job 
in reducing the expense, the waste in government. And what that 
actually does, there are so many people that have contracts 
that have not been renewed, for example, in government or 
positions that were not filled that could have been filled by 
individuals. And those individuals will eventually be forced to 
go out and work in the private sector.
    As time goes on and families have harder times, this idea 
that I explained earlier about our culture, forces the families 
to send their children out to find those and fill those 
positions and, eventually, we will eliminate the need for non-
resident workers. As an example, personally, I have a 22-year-
old son who lived with me after he graduated from high school. 
And he was going from one job to another because he had that 
choice. But now that he wants to start his own family, he's out 
there working eight hours a day and not in a very high position 
in the private sector as a stevedore at the docks. But he is 
one of those individuals that has gone out because I had to 
force him out because I have three other children that I needed 
to support. And he's out there now supporting his own and 
taking over jobs that, in the past, non-resident workers were 
needed to take. Thank you.
    Mr. Doolittle. Well, my time is actually up. I'd like just 
to clarify one thing. Governor, you wish to have the assistance 
of OSHA in your Commonwealth, is that correct?
    Governor Tenorio. We feel that the presence of OSHA in CNMI 
should work closely with our labor and immigration so that we 
could come up with whatever recommendations that they have in 
order for us to maintain the employees. Because, in the past, 
we have been getting workers' complaints from different 
companies and the OSHA always visit in a different time and 
also impose some fine to the companies. And, of course, we 
would like to see the OSHA more involved in administering the 
Federal law.
    Mr. Doolittle. All right. Well, you're one of the few 
governments I know that really wants more OSHA presence. But 
since you want it, here's an invitation for OSHA. Now why 
aren't they taking up that invitation?
    Governor Tenorio. No, sir. What I'm trying to say is that 
we are being accused of all kinds of abuse and everything and 
the presence of OSHA are there and they are aware what is going 
on. And, unfortunately, sometime I wonder where are those 
information are coming in. They are the one who are submitting 
all of these reports, I believe, to the U.S. Congress. I have 
confidence in our department. We are having a inspection on 
almost on a weekly basis to all the companies. And we are also 
trying to work closely with the garment industry.
    As a matter of fact, Mr. Chairman, when I first took 
office, I invited all of the garment industry, the construction 
company and we met almost every week. And I told them that they 
have to police their own company. Please try to comply with all 
Federal laws and local laws so that we could work closely in 
helping each other. Their success will be, of course, our 
success of the government.
    Mr. Doolittle. Well, thank you, Governor. And I appreciate 
you and your colleagues coming today. I'd like to recognize 
Mrs. Christensen for any questions she may have.
    Ms. Christensen. Thank you, Mr. Chairman. And thank you for 
holding this long-awaited and very important meeting. And I 
want to say to you and to our guests who are here this morning 
that please do not take my being late for lack of interest. 
This is an issue that I'm very interested in. I want to take 
this opportunity to commend our Ranking Member, George Miller, 
for his commitment over the years to securing justice for the 
alien workers of the CNMI and to ending the practice of abuse 
that they received.
    I'm glad that I was able to get over here to welcome the 
witnesses today. I know many of you have traveled long 
distances and I'm sorry that we don't have better weather for 
you here. We had great weather when I was in CNMI. A special 
hello to Governor Tenorio and the members of the delegation, 
including the speaker of the House of Representatives, Diego 
Benavente, and President of the Senate Paul Manglona. I want to 
publicly thank you for all the graciousness and hospitality 
that you extended to me and the rest of our delegation while we 
were in the CNMI last February.
    And to welcome my colleague Juan Babauta. And it's good to 
see you again. I want to just say to you something that I said 
to you when we were there, that this issue, for me, is 
separated from the issue of whether you are a delegate or not 
and I look forward to having you join us here in the near 
future.
    Mr. Chairman and my colleagues, the situation with regard 
to the alien worker population in the CNMI has been a very 
serious one for years. And I'm afraid that, despite reports 
that it's getting better, I think it's time for the Congress to 
begin to address it. I was able to witness for myself the large 
number of foreign workers who are living on the streets of 
Saipan. My husband would not even go into some of the places 
that they lived, with me, as a result of being promised jobs by 
CNMI recruiters in their home countries only to find that there 
were no jobs available when they arrived and, after paying 
recruiters thousands of dollars in fees. And we were able to 
speak to some of these individuals about their particular 
plight, some of which were quite horrifying.
    What is particularly troubling about all of this is that 
these problems aren't new. They've been going on for several 
years prior to my being elected to Congress. And, despite 
serious concerns being expressed by successive administrations 
and members as far back as 1980, if there has been any change, 
it's been very little.
    In response, the Senate Energy and Natural Resources 
Committee last year reported a bill sponsored by Chairman 
Murkowski, Ranking Democrat Bingaman, and Mr. Akaka, to, among 
other things, extend the provisions of the U.S. Immigration and 
Nationality Act to the CNMI. A similar bill focusing solely on 
extending U.S. immigration laws was also introduced by the same 
three senators this year and a hearing, of course, was held 
last Tuesday.
    While I am sympathetic to the issues of fellow U.S. off-
shore areas, particularly one that does not have a 
representative in Congress to defend their concerns, I regret 
that I must agree with those who believe that the time has come 
to extend U.S. immigration laws to the CNMI, if for no other 
reason than to end the terrible abuses that have been shown to 
be occurring time and time again. Extending U.S. immigration 
laws to the CNMI was not an easy conclusion for me to reach 
because I am an off-shore territorian, because even in my own 
district, the Virgin Islands, many of our residents have voiced 
concern and interest in having us have control over our 
immigration to the Virgin Islands. But, on the other side, as a 
strong supporter of workers and workers' rights, I find it 
unacceptable that workers in any part of the United States 
should be subjected to the kind of forced working and living 
conditions as those that we witnessed and that we hear about.
    Again, I want to just thank the Chairman for holding this 
hearing. I have perhaps maybe just two questions. One, I was 
looking at the graph here and it just called to mind that some 
unemployment issues that we heard of when we were in the CNMI 
and, as I recall when you looked at employment or unemployment, 
that there were still large numbers of citizens, U.S. citizens 
in the CNMI, that were unemployed versus the non-citizens who 
were coming for employment. What is the unemployment rate in 
U.S. citizens and has that improved since we were there?
    Mr. Michael Sablan. The unemployment rate this year for 
U.S. citizens, residents, is a slight reduction from last year. 
Last year, it was 14.3 percent. This year, it's 13.4 percent. 
Again, the overall unemployment in the CNMI is 5.5 percent. In 
the CNMI, because of our limited population, percentages can be 
misleading. 13.4 percent represents 1,400 people in the CNMI.
    Ms. Christensen. Well, it's, by proportion, in terms of 
your citizens, it's a large proportional number even though the 
numbers are small. I mean, we may have 10 percent of the Virgin 
Islands having a particular statistic and it'll be maybe 11,000 
people. It's a small number, but it's still 10 percent of the 
population. And, in this case, 13.4.
    I had a question on the testimony. And I will read all of 
the testimony in its entirety. This is the one from the members 
of the legislature with regard to their quest for appropriate 
Federal funding to reimburse the Commonwealth for financial 
costs that unrestricted migration has incurred upon the CNMI. 
And I'm not sure I understand it because I understand in the 
case of Guam where they do not have control over their 
immigration and they're faced with a situation like this. But 
I'm not--I don't understand, since you have control over 
immigration, why it is a matter that we should still address on 
your behalf.
    Mr. Babauta. Well, let me try to explain first. And as I've 
responded to the same question earlier, actually. Yes, we do 
have the authority because we control immigration. We do have 
the authority to also treat citizens from the FAS as non-
resident and would be barred from coming into the Commonwealth 
except for tourist or work permit. The fact is, we have chosen 
not to do so because of several reasons. One of those reasons 
is the need for workers that are required under the garment 
industries, which is required to hire 20 percent U.S. citizens, 
and, for the purpose of the 20 percent, the FAS citizens are 
considered U.S. citizens.
    We've also decided not to because of our relationship with 
the FSM citizens of the states. As you know, we were part of 
Micronesia, one of the six districts of Micronesia, and we 
still value the relationship that we have with them. We also--
one thing that I did not mention in my earlier response was the 
fact that we also are--we recognize the United States policy 
with this matter and have chosen to be consistent with that of 
the United States and allow FAS citizens to come into the 
United States freely.
    I think, most importantly, one of the reasons why we've 
chosen all that is the fact that we would have been reimbursed 
just like Guam for any of the expenses incurred by the influx 
of those citizens. Yes, we have the choice and, yes, we can 
stop. But we've chosen not to do so. But we feel that, still, 
because we've chosen not to do so and because there are 
compact-impact that is costing the government, we're asking for 
that reimbursement that is a commitment by the United States. 
Thank you.
    Ms. Christensen. Thanks. At the risk of asking questions 
that were already asked, again, I'm going to--I won't ask any 
more questions. But, as I said, I will read all of the 
testimony that's been presented thoroughly and take into 
consideration any arguments that are made. And thank you, Mr. 
Chairman, and thank you, my colleagues, for allowing me to go 
out of turn. Thanks.
    Mr. Doolittle. Thank you. I'd like just to observe that 
this panel has now sat here for two and a half hours. At this 
rate, we'll finish the hearing at about 9 tonight because 
there's three other panels after this one. Are there members 
that feel compelled to want to say something? Mr. Miller has 
indicated a desire to make a few concluding comments. Anybody 
else who wanted? Maybe can we do--just--yes, how about two 
minutes apiece? Is that okay? Great. All right. Mr. Underwood 
and then Mr. Faleomavaega.
    Mr. Underwood. Yes. Okay. Thank you, Mr. Chairman. You 
know, I'm not a big fan of OSHA in the sense that I want them 
to be there all the time, but we have had an unintended 
consequence because I think if you guys could get OSHA to just 
go directly to Saipan, I'd appreciate it a lot more.
    [Laughter.]
    Mr. Underwood. Because I think they've had the 
justification of having and you know that Guam and the CNMI 
have, because of this overexposure to OSHA I think, has had a 
high rate of assessments. And I'm sure they would find the same 
number of abuses if they had that level of inspection given.
    But I do just want to make the point about minimum wage and 
raise the issue again, perhaps in the context of what our 
friend, Mr. Faleomavaega, has pointed out. When I first started 
going to the CNMI to do training, primarily to teach classes, 
on a regular basis, I remember back in the mid-seventies that I 
was having discussions with several of my students. And I went 
to Joten and I asked the people in Joten how much money they 
made an hour. They said they made 75 cents an hour. And then I 
asked some of the people who were trying to get a bachelor's 
degree to become teachers. And they were indicating to me that, 
at that time, that if they actually got a degree and became 
teachers, they would, in the 1970s, make the equivalent of 
about $1.50 an hour.
    And so, in recognition of that and in having several 
discussions and in my understanding through, you know, multiple 
discussions with a number of officials over the years, my 
understanding of the minimum wage exemption was that they were 
going to get out of that old trust-territory economy and into 
eventually an American-style economy. And that was the reason 
for it. It wasn't meant to help sustain a foreign work force. 
That it was to provide a kind of a natural bridge between 
people who were working as professionals for $1.50 an hour in 
the 1970s so that today we assume that those people would be 
making what would be comparable wages to the rest of the United 
States.
    And, yet, I'm puzzled because I don't sense that--and I 
fully understand the desire. I fully understand--and I'm sure 
my other colleagues from the insular areas--fully understand 
the desire to tell the Federal Government to butt out and to 
hold jealously as much authority as you can because there's so 
precious little authority given to insular areas. But I must 
really ask the question about minimum wage. Is the intent to 
have a Federal minimum wage down the line?
    I got an e-mail from someone who used to be in the previous 
administration under the previous Governor Tenorio, who e-
mailed me and said there's something wrong with a system where 
he lives next door to a 19-year-old young man out of high 
school who can't get a job and he looks across the street and 
he sees a young lady from Nepal pumping gas. Now, the 
distinction between those two is that, well, you can say, well, 
maybe the young man is culture-bound to hang around with his 
parents. I don't know. I don't think that's the issue.
    I think the issue is that the system that we have in place 
that may, indeed, have many problems if we immediately address 
the issue of a Federal minimum wage, would create a lot of 
disconnects and disjuncture and a lot of economic dislocation. 
But I want to hear: is the objective to get to a Federal 
minimum wage? Is that the objective? Because if it isn't, then 
I think we're going to have serious structural problems in the 
nature of your economy.
    What is the minimum amount of money that a person can work 
for inside the CNMI government? Because we have an overloaded 
number of people who are CNMI residents who are working in the 
government and none in the private sector. What is the minimum 
amount that a person can make in the CNMI government?
    Mr. Michael Sablan. Mr. Congressman, I think the lowest 
salary in government is approximately $11,000 or $12,000 per 
annum.
    Mr. Underwood. And what does that come out to in terms of--
in comparison to the minimum wage in the private sector?
    Mr. Michael Sablan. That's approximately $5.28 per hour.
    Mr. Underwood. And people are willing to work for the 
government. Local CNMI residents are willing to work for the 
government.
    Mr. Michael Sablan. Yes.
    Mr. Underwood. At $5.20 an hour. Well, I would submit that 
that should be a valid objective. That should be the objective 
of an economy that wants to not just help, you know--I 
understand the need to have revenues and I understand the need 
to have an alternative to tourism. And I understand that Guam 
is fortunate to the extent that they have the military economy. 
But, believe me, that has its ups and downs as well.
    But, in reality, at some point in time, I seriously believe 
we must ask ourselves the question: What kind of economic 
opportunities are we going to provide for our own people? The 
people that you and I--you know, you and I, well all share the 
same ancestors. And if we go back four or five generations in 
Saipan, we know that most of them have connections to Guam, 
except Mr. Manglona there who continually says the people of 
Rota, of course, are very different. But----
    [Laughter.]
    Mr. Underwood. I say that respectfully. I say that 
respectfully. But, in reality, you know, I'm trying to 
understand what is the objective of that? I mean, you know, the 
garment industry's going away. We've given a view of mom-and-
pop stores. I'm just, you know, I went way over my two minutes, 
Mr. Doolittle, but I appreciate that.
    Mr. Doolittle. And here, I want you to know, I've been 
liberal today.
    [Laughter.]
    Mr. Doolittle. Okay.
    Mr. Miller. Mr. Chairman, I want you to know, even though 
you say it, we don't believe it.
    [Laughter.]
    Mr. Doolittle. I had Mr. Faleomavaega next. But, yes.
    Mr. Abercrombie. Mr. Chairman, I just wanted to reserve 
that Mr. Miller may not believe you, but I believe you. It's 
just that I know that it's of no permanent nature.
    [Laughter.]
    Mr. Doolittle. Mr. Faleomavaega.
    Mr. Faleomavaega. Mr. Chairman, unlike my friend from Guam, 
I happen to be very grateful for OSHA's presence in American 
Samoa. And let me tell you why. For eight years, during the 
Reagan Administration, OSHA was not even on the radar screen. 
And after repeated efforts to talk to the management of 
Starkist Tuna Company, about a lot of the violations as far as 
working conditions are concerned, they wouldn't do anything 
until they finally slapped a $1.8 million fine, which Starkist, 
by the way, paid immediately. And I say to myself, what is the 
worth of $1.8 million if the lives of those workers in that 
canning facility would have been at risk or they would have 
died as a result of hazardous working conditions?
    So, yes, we can go to the extreme about some of the 
bureaucratic problems we deal with, but I, for one, am grateful 
for OSHA's presence because I firmly believe in the working 
man's conditions and, certainly, they ought to be given 
fairness in that respect.
    Governor, I have the highest admiration and respect for you 
and I think in times past that we've discussed some issues 
that, for one reason or another why, I have always tried to 
restrained myself in terms of the fact that so much of the 
transitioning was effected during the political campaign 
period. But now that you're on board, I just wanted to ask you: 
Can you distinguish clearly some of the clear policies that 
your administration is currently doing as contrast to your 
predecessors and the problems that we've had to deal with your 
predecessor?
    Governor Tenorio. Thank you.
    Mr. Faleomavaega. In the spirit of bipartisanship, by the 
way.
    Governor Tenorio. Well, my administration is trying to 
correct some of the deficiencies that happened during the past 
administration.
    Mr. Faleomavaega. There is a provision in the Covenant 
relationship that allows the leaders of CNMI to conduct 
consultations with the leaders of the United States Government. 
And I'd like to ask the governor, what has been your experience 
in dealing with that? And at what level is your government 
supposed to be discussing these consultations with the leaders 
of the United States?
    Governor Tenorio. I believe that there is a section in our 
Covenant, Mr. Chairman, section 902 of the Covenant gives us 
the authority to meet periodically with the representative of 
the President and discuss some of the issues, whether it's a 
Federal law that will be affecting the CNMI or any other issue 
that will affect that CNMI should be discussed during that 
forum. And, unfortunately, we just recently we had one meeting 
with the representative of the President and we have more or 
less been told that they are only telling us that this is what 
we want. Indirectly, they are saying we are not here to discuss 
some other issue. We want to discuss only one issue, in that 
spirit.
    Mr. Faleomavaega. Thank you, Mr. Chairman. My time is up.
    Mr. Doolittle. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. Again, after listening 
to this morning's testimony, I think we continue to be saddled 
with a problem that goes back to an inherent flaw in the 
current situation and that is the failure to have U.S. 
immigration laws apply here. Because it is that failure that 
allows the CNMI to continue to provide a surplus of labor 
within the CNMI which then continues to allow you to pay a 
substandard wage to those workers, that allows a kind of abuse 
of those workers that we have witnessed over the past decade to 
continue because those workers are put in the situation where 
they really, essentially, have little or no rights with respect 
to their legal standing in the country. Where workers continue 
to have the failure-to-pay actions against their employers, 
failure to pay for hours worked and for time rendered to their 
employers.
    Where people are still able, because the conditions and 
circumstances in which people are brought to the CNMI because 
they do not have to go through the kinds of checks, they do not 
have the rights other people would have, under our immigration 
systems. That those individuals can be diverted into the sex 
trade, they can be diverted into prostitution, they can be 
diverted into barroom dancing, and all of the other activities 
that are well-documented, not a matter of speculation. And 
until we remedy that problem, we will not be able to adequately 
provide for the protections and the rights of these individuals 
as human beings, whether or not they are foreign guest workers 
or not.
    The fact of the matter is we see a situation that is a 
false economy; that it's failing. It continues to be subsidized 
by the inflow of low-wage workers. And, yet, it fails to 
provide the kinds of needs that the citizens of the indigenous 
people in Saipan are entitled or, in fact, will carve out a 
future for those individuals.
    It is also this gaping hole in our immigration law that 
allows us to really have, in spite of all of the suggestions 
here this morning, we really don't have a way of validating the 
documentation, the health care checks, the criminal backgrounds 
of the individuals entering the country. I appreciate they're 
going to same clinic, but let's not pretend for a moment one of 
the hallmarks of organized crime and those who seek to evade 
the immigration laws is about false documentation. We have a 
way, under American immigration laws, to at least dramatically 
reduce the probability of that happening and keeping track of 
those individuals.
    I appreciate that you're going to use the same clinics and 
the same law enforcement people. Again, if you have to apply 
for a visa to the United States under our law, it's a far more 
extensive check in terms of activity and past history and all 
of the rest of it. And that's what protects this country 
against communicable diseases. That's what protects this 
country against increases in crime and the foothold of crime, 
to the extent that we can, in the drug trade.
    So you can continue to resist applying American immigration 
laws to Saipan and you may very well be successful. It's well-
documented that the leadership of this House is not interested 
in seeing that legislation moving. I don't know whether Senator 
Murkowski and Senator Akaka will be able to move their 
legislation or not. I know that they've asked you to comment on 
that. I would hope that you would, because you apparently led 
them to believe that you had some suggestions how to improve 
that legislation.
    But the fact of the matter is, whether it's because of when 
the current international regime for garments and textiles 
comes off and whether or not this business will go to China, as 
many suspect, or to yet a lower cost producer. Or just the fact 
that the garment manufacturers I meet with have decided that 
they're going to reduce their reliance on Saipan simply because 
they don't want to be associated with this kind of activity 
where workers are abused, not paid, and exploited and they 
don't believe that you have the local capabilities to keep that 
from happening and so they, as many of you have already 
testified, are reducing their exposure to that kind of 
activity.
    Mr. Chairman, I'll finish when I finish, okay? So I don't 
really expect that these hearings are going to put you in great 
jeopardy. You'll just keep doing what you're doing. You'll just 
keep paying the price. And, unfortunately, so will the citizens 
of Saipan, because all of the indicators are going in the 
negative fashion, in terms of their wealth, in terms of their 
poverty, in terms of their employability, in terms of their 
education, in terms of infant birth. All of it's going in the 
wrong direction. But if you continue to believe that that's a 
great position for you to hold for the people you represent, 
you're certainly welcome to that.
    As has been pointed out here, it's a tragedy what's 
happened over the past decade to the thousands and thousands of 
workers that have been there legally, illegally and have been 
exploited. And whatever time is running on the textile 
arrangement between now and 2004, I would hope that the 
situation would improve for them. But, clearly, it's not--you 
don't have an ability at the time being to do that with the 
current leadership in the House. So I suspect that those 
workers will continue to be brought in illegally. They'll 
continue to be exploited because that's the long history. And 
that's to the advantage of many people on Saipan.
    And the fact of the matter is that, in the most recent 
episode of many of the people you have paid to repatriate, 
those people came not with forged documents, they came with 
official documents of your government that were presented at 
the airport. They were clearly duped by those recruiters and 
they continue to be beholden. And I appreciate your gesture of 
$3,000. Many of those people are out $35,000 and $40,000 to 
recruiters in their own country. They borrowed money in good 
faith from the villages from which they came, from their 
families, and from their friends. So they will not be made 
whole and that's unfortunate and it's going to be unfortunate 
that there will continue to be others who will be put in that 
same situation. Thank you very much, Mr. Chairman.
    The Chairman. [presiding] Governor, after that 
presentation, I can tell you I'm quite pleased with what has 
occurred under your stewardship. Most of the bad things that 
have occurred and the media's been reported were results of the 
previous administration. By the way, it happened to be the 
party of my good friend on my left. I always find that kind of 
ironic. We have, myself, have been involved in this much longer 
than Mr. Miller has. And I have seen the difference. And, 
again, because of the Covenant and because we gave you the 
opportunity to have a House and a Senate and a governor and 
department heads and you are duly elected, I think it is very 
inappropriate for members of this Committee and, in fact, this 
administration to decide it's best to be run by the Federal 
Government.
    The Federal Government itself has done a deplorable job in 
all the territories. Absolutely disgusting. And, very frankly, 
I'm not the least bit proud of the Federal Government, 
regardless of what administration. I'm not particularly proud 
of this administration because I believe, indirectly or 
directly, they've tried to impede, even force the destruction 
of the Covenant. That didn't happen a year and a half ago. It 
didn't happen two years ago. Didn't happen three years ago or 
four years ago when most of the atrocities were taking place.
    Now I've told you, Governor, and the speaker and the 
representative and Mr. President, because I was out there 
before, as long as I continue to see progress--and I believe 
immense progress has been made--if anybody takes time within 
the media to study the progress that has been done in the media 
in the year and a half. I also would like to suggest, 
respectfully, that there are different areas and different 
cultures and different problems. That we have to recognize a 
duly elected people have to have some say in what occurs. It's 
presumptuous to think that government has all the answers.
    Anybody can show me that government is doing a good job in 
any field that couldn't be done better on a local level, 
without spending a considerable amount of money. I can go back 
to the BIA, one of my favorite subjects. The millions and 
billions of dollars they waste trying to help out my aboriginal 
people. They should go directly to those people; let them do it 
themselves. If they mess up, that's their problem.
    So, as long as what you continue to do--and I want to 
compliment the panel--is to present to this Committee, as long 
as I'm Chair, and I hope my predecessor will have the same 
courtesy to duly elected individuals that opportunity. If you 
screw up, I'm going to be on you. But I think I've seen great 
progress in the last year and a half and I hope that continues. 
So this has been a good panel. I'm sorry it took so long. But I 
think you traveled far and far and I think it was important, so 
I do thank you and you are excused. And stay available.
    Mr. Miller. Mr. Chairman.
    The Chairman. Yes.
    Mr. Miller. If I might----
    Governor Tenorio. Mr. Chairman, if I may.
    The Chairman. Yes, Governor?
    Governor Tenorio. Just assert. You asked me to submit the 
Customs report?
    The Chairman. Yes.
    Governor Tenorio. The Customs only gave us the report to us 
in the condition not to release, because of its contents are 
confidential figure in the business. Can this Committee give us 
the authority to release the report, despite this?
    The Chairman. The Customs cannot keep that report if I 
request it.
    Mr. Schaffer. Mr. Chairman.
    The Chairman. Yes.
    Governor Tenorio. Thank you, sir.
    Mr. Schaffer. Mr. Chairman, I requested that report from 
the Customs Department of the Treasury. They sent that report 
to me just the day before yesterday.
    The Chairman. That's right.
    Mr. Schaffer. So they have submitted to me already.
    The Chairman. So you're off the hook.
    Governor Tenorio. Well, I just wanted to make sure, sir. 
Thank you very much.
    The Chairman. Yes.
    Mr. Faleomavaega. Will the Chairman yield? Mr. Chairman, I 
would like to ask unanimous consent if our distinguished guests 
could sit with us here on the dais so that, in case or the 
event of questions----
    The Chairman. I have no objections to that, if they'd sit 
on the lower dais. But first I think they ought to be excused 
to get a sandwich; go to the restroom; wipe your sweating brow; 
whatever you want to do. Mr. Miller.
    Mr. Miller. Mr. Chairman, I would just say that I 
appreciate your statements against the Federal Government, but 
it was not the Federal Government that brought these thousands 
of people to this island. And it's not the Federal Government 
that imposed the punishment and the exploitation on those 
individuals. And I appreciate cultural differences and I think 
my public service has been very respectful of those, but I 
don't know any culture where it's accepted that you exploit 
other human beings. And I think that's a matter about laws and 
enforcement of those laws.
    The Chairman. I thank the gentleman. You're excused, 
gentlemen.
    Mr. Miller. Mr. Chairman.
    The Chairman. The gentleman.
    Mr. Miller. If I might, I have testimony that I'd like to 
submit for the record as part of--to make a part a part of the 
record of this hearing.
    The Chairman. From?
    Mr. Miller. From Mr. Wan Lan, who is a Chinese laborer; Mr. 
Albert Meyerhoff, who is one of the attorneys in the lawsuits; 
from the I guess this is the Take Pride in America Coalition; 
and Honorable John Dingell.
    The Chairman. Without objection.
    Mr. Miller. Thank you.
    [The information follows:]

Statement of Albert H. Meyerhoff Partner, Milberg Weiss Bershad Hynes & 
                               Lerach LLP

    My name is Albert H. Meyerhoff. I am a partner with the law 
firm of Milberg Weiss Bershad Hynes & Lerach LLP. I am also 
counsel for the plaintiffs in litigation brought in January of 
this year arising from conditions in the garment industry in 
the Commonwealth of the Northern Mariana Islands (``CNMI''). I 
appreciate the opportunity to testify before this Committee 
today and would like to primarily focus my remarks on a 
potentially landmark settlement agreement reached with several 
of the U.S. retailer defendants in that litigation. Before 
doing so, however, let me summarize events leading up to the 
litigation and the factual underpinnings of the case.
    Following an investigation conducted for the better part of 
a year, on January 13, 1999, two Federal class action lawsuits 
were filed on behalf of foreign ``guest workers'' from the 
Peoples Republic of China, the Philippines, Bangladesh and 
Thailand now working in the CNMI garment industry. A third 
companion lawsuit was filed in California state court by four 
national human rights and labor organizations (Global Exchange, 
Sweatshop Watch, Asian Law Caucus and UNITE!) alleging that 
U.S. retailers had engaged in false advertising (by claiming 
their goods were ``Made in the U.S.A.'' or ``No Sweat'') and 
were trafficking in ``hot goods'' manufactured in violation of 
U.S. labor laws. The facts providing the basis for these three 
cases can be summerized as follows.

FACTUAL BACKGROUND

    The Commonwealth includes the principal island of Saipan 
and a chain of 13 other islands north of Guam. After World War 
II, these islands were designated as a U.S. territory and, 
since 1975, have been a Commonwealth of the United States. 
While U.S. minimum wage and immigration laws were not extended 
to the Commonwealth, the Covenant establishing the Commonwealth 
did not exempt it from all other applicable U.S. labor laws, 
including OSHA, the provisions of the Federal Fair Labor 
Standards Act requiring the payment of overtime, and Federal 
civil rights laws, including Title VII and Anti-Peonage laws.
    The Covenant granted the Commonwealth authority over its 
own immigration policies. While the purported intent of this 
provision was to provide for stricter control over immigration 
than existed on the U.S. mainland, the Covenant had the 
opposite effect, resulting over the last decade in a rapid 
influx of foreign immigrants who now make up the substantial 
majority of Saipan's population of 70,000.
    Garment manufacturers operating on Saipan--more than 70 
percent of which are owned by foreign interests--actively 
promoted this immigration policy so they could import contract 
foreign laborers to work in their factories. The foreign 
garment workers in these factories are actively recruited by 
quasi-private agencies operating in China, Bangladesh, Thailand 
and the Philippines at the behest of the Saipan garment 
factories. These recruiters advertise well-paying jobs in the 
U.S. with comfortable working and living conditions. However, 
the workers they recruit are charged exorbitant recruitment 
``fees'' of $2,000 to $7,000 or more for one-year contracts as 
a condition of obtaining such promised ``benefits,'' which are 
either paid in advance or deducted from the workers'paychecks. 
As these workers receive a minimum wage of $3.05 per hour, 
between the average recruitment fee of $5,000 and food and 
housing costs of $2,400 a year, they must work up to 2,500 
hours a year just to repay this debt--before earning a single 
dollar for themselves. Over 90 percent of the garment industry 
jobs in the Mariana Islands are now held by such foreign 
``guest workers.'' Since 1996, over 200,000 apparel industry 
jobs were lost in the continental United States.
    The CNMI garment workers live in a state of peonage. If 
they are prematurely terminated for failing to work as demanded 
or for complaining and are summarily deported, either they or 
their families must nonetheless repay the huge recruitment fee. 
Moreover, workers are routinely required to sign ``shadow'' 
employment contracts establishing unqualified obedience to 
their employers while prohibiting them from participating in 
social, political or religious activities, asking for salary 
increases or alternative employment, marrying, becoming 
pregnant, attempting to change employers, or engaging in worker 
organizing efforts. These contracts are enforced by threats of 
immediate termination of employment, deportation and other 
means.
    As documented by Federal agencies, members of this 
Committee and others, the working conditions in the Saipan 
garment factories are, simply put, often deplorable. Little 
water is provided to workers during working hours, even though 
typically there is no air conditioning in these factories, 
where temperatures regularly reach or exceed 100 degrees. 
Impossible piece work quotas are imposed; when those quotas are 
not met, the workers are forced to provide ``contributions to 
the company''--specifically, involuntary overtime work for no 
pay, Mistakes also result in uncompensated labor, as does 
perceived disobedience. Saipan's garment workers routinely work 
12 hours a day, 7 days a week, and late into the evening, often 
for no pay beyond the first 40 hours or based on piece rates 
alone, with no overtime premium based on hours worked. 
Documented OSHA violations are rampant and are merely the tip 
of the iceberg, since inspections are announced sufficiently in 
advance to permit the CNMI contractors to remedy the most 
egregious violations.
    Living quarters are overcrowded, with four to six persons 
in a 250-square-foot room and barracks often surrounded with 
inward-pointing razor wire. The ``kitchens'' consist of a 
hotplate and fresh drinking water is routinely not supplied. 
The food is of poor quality and often contaminated, resulting 
in several recent and serious incidents of mass food poisoning. 
Workers who attempt to leave these barracks have their names 
recorded and, unless they return within imposed curfews, are 
reported to management and forced to work unpaid overtime.
    Major American retailers, such as The Gap, Inc., Wal-Mart 
Stores Inc., Tommy Hilfiger USA, Inc. and others have reaped a 
rich economic harvest from this system of exploitation. For the 
fiscal year that ended in October 1998, the wholesale value of 
garments shipped duty-free to the U.S. mainland from the CNMI 
totaled over $1 billion; retail value is conservatively 
estimated at over $2 billion. Most of these garments enter the 
United States through California ports and are thereafter 
distributed nationwide. Notwithstanding that these garments are 
manufactured by foreign workers in primarily foreign-owned 
factories using foreign cloth and materials, because the 
factories are located in the Commonwealth these garments are 
labeled as being ``Made in the U.S.A.'' Such labeling enables 
these garments to be sold both duty-free, at a higher price, 
and avoids quotas that would otherwise be in force if the 
factories were on foreign soil.
    Last year alone, the Federal Government estimated that CNMI 
contractors and U.S. retailers avoided more than $200 million 
in duties for $1 billion worth of garments shipped from Saipan 
that would otherwise have been paid for the same clothing than 
if it were manufactured on foreign soil. Some Chinese garment 
interests have moved their textile operations to Saipan 
virtually ``lock, stock and barrel,'' in large part to avoid 
U.S. duties and quota restrictions. The Federal Government 
estimates that this increase in Chinese apparel production in 
Saipan has allowed China to exceed its import quota by 250 
percent in 1997 alone.
    American retailers frequently acknowledge their obligation 
to eradicate sweatshop conditions, but those promises are 
honored in the breach. For example, the National Retail 
Federation Statement of Principles on Supplier Legal Compliance 
states that:

        We retailers stand behind our responsibilities and commitments 
        to our customers and our employees. It means we are committed 
        to selling products that are made legally, ethically and 
        morally. It means we hold our suppliers accountable if they 
        fail to uphold worker rights. Our employees expect it, our 
        customers demand it, and our reputations depend on it.
    The Principles, signed by many of the U.S. retailers, also state 
that its members:

         Will require suppliers to comply with all applicable 
        laws and regulations.
         Will take appropriate action against non-compliant 
        suppliers which may include canceling the affected purchase 
        contract, terminating the relationship with the supplier, 
        commencing legal actions against the supplier or other actions 
        as warranted.
    Based upon these facts, a complaint was filed in the U.S. District 
Court for the Central District of California against both the largely 
foreign-owned CNMI garment contractors as well as U.S. retailers for 
violations of the Racketeer Influenced and Corrupt Organization 
(``RICO''), Anti-Peonage laws and the Alien Tort Claims Act, also 
sometimes known as the ``Law of Nations.'' A second lawsuit was filed 
in the CNMI solely against the CNMI contractors for violating the 
Federal Fair Labor Standards Act and certain provisions of CNMI law. 
Finally, a third lawsuit was brought by four national human rights and 
labor organizations against U.S. retailers for alleged false 
advertising, fraud and trafficking in hot goods.\1\
---------------------------------------------------------------------------
    \1\ Selected press coverage of the litigation is attached to this 
testimony as Exhibit ``A''.

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II. PREVIOUS GOVERNMENT OVERSIGHT AND INVESTIGATIONS

    A host of government and Congressional investigations, 
reports and previous litigation have documented the serious and 
ongoing problems in the CNMMI garment industry, from forced 
prostitution and abortions to a working environment 
characterized by exploitation and fear of retaliation. In 1992, 
the United States Department of Labor filed suit against five 
garment factories owned by Mr. Willie Tan for labor and safety 
violations. The lawsuit alleged that employees were forced to 
work 84 hours per week without overtime pay, wages were paid 
below the already-low minimum wage, and employees were locked 
in their work sites and living barracks. Mr. Tan paid $9 
million in restitution to 1,200 workers--the largest fine ever 
imposed by the United States Department of Labor. Tan's company 
also pled guilty to felony charges for violating 18 U.S.C. 
Sec.  1001, prohibiting fraudulent or false statements to the 
government.
    In 1997, a series of government and investigative reports 
were released detailing serious problems in the CNNU's 
administration of its labor and immigration policies, based on 
worker interviews and on-site inspections. These reports 
include: Office of Insular Affairs, United States Department of 
the Interior, Report to Honorable George Miller's Congressional 
Delegation re: CNMI Labor and Human Rights Abuse Status 
Reports, Jan. 29, 1998 to Feb. 14, 1998 (Aug. 12, 1998) (``OIA 
Report''); United States Department of Labor, Evaluation of the 
Hays Report Minimum Wage Analysis for the Commonwealth of the 
Northern Mariana Islands (Mar. 1998); Democratic Staff Comm. on 
Resources H.R. Beneath the American Flag: Labor and Human 
Rights Abuses in the CNMI (Congressman George Miller (Mar. 26, 
1998)); United States Department of the Interior, Federal-CNMI 
Initiative on Labor, Immigration, and Law Enforcement in the 
Commonwealth of the Northern Mariana Islands, Third Annual 
Report (1997); Democratic Staff Comm. on Resources H.R., 
Economic Miracle or Economic Mirage? The Human Cost of 
Development in the Commonwealth of the Northern Mariana Islands 
(Congressman George Miller April 24, 1997). With the exception 
of a report by the Washington-based Hay Group (commissioned by 
the CNMI government at a reported cost of $1.48 million), all 
of these reports are highly critical of the sweatshop 
conditions in the CNMI and advocate a variety of sweeping 
reforms. In response to these reports, on May 30, 1997, 
President Clinton informed then-CNMI Governor Froilan Tenorio 
of the Government's concerns about the labor and immigration 
policies of the CNMI in a letter stating that ``certain labor 
practices in the islands . . . are inconsistent with our 
country's values.''
    In July 1997, the Clinton Administration issued its own 
inter-agency report that corroborated the conclusions of these 
earlier studies and likewise called for fundamental changes in 
labor practices in the CNMI.
    A government report dated February 14, 1998 and issued by 
the U.S. Department of Interior, Office of Insular Affairs 
(``OIA''), described the degrading treatment, abuse, and 
punishment of foreign garment workers, based on a two-week 
inspection tour by government officials. The following excerpts 
provide a summary of the OIA's findings:

        ``This is a report prepared by a seven member team who were 
        retained by the Office of Insular Affairs, United States 
        Department of Interior to prepare an itinerary for the 
        Congressional delegation that was scheduled to visit the CNMI 
        in February 1998 on a fact-finding trip. The itinerary was to 
        include opportunities for the visiting members of Congress and 
        their staff to speak directly to foreign contract workers, and 
        to visit sites that exhibit serious problems connected to the 
        present systems of labor and immigrants in the CNMI. The 
        delegation's fact-finding mission was unexpectedly canceled at 
        the last minute while team members were in Guam making final 
        arrangements to go to the CNMI. Nevertheless, the Office of 
        Insular Affairs believed that it was important for team members 
        to gather the latest information regarding emerging problems of 
        particular concern to the Federal Government. These issues 
        included:

         The problems faced by the unemployed legal and illegal 
        population of foreign contract workers in the CNMI include 
        fraudulent recruitment practices, substandard living 
        conditions, severe malnutrition, and health problems, and 
        unprovoked acts of violence being inflicted upon foreign 
        contract workers that are not being addressed by an ineffective 
        CNMI labor and immigration system;
         Underage Filipino or Chinese waitresses forced to work 
        as bar girls, who have been recruited under false pretenses to 
        work as waitresses, garment factory workers, or cashiers, but 
        subsequently forced to work as strippers and prostitutes in 
        Karaoke bars, discos, massage parlors and clubs;
         Living and working conditions of the Chinese garment 
        workers prevalent in CNMI garment companies, the restrictions 
        imposed by ``shadow contracts'' they are required to sign in 
        China, and the flow of Chinese contract workers from the CNMI 
        into Guam to seek asylum;
         Reports of women from the People's Republic of China 
        who have become pregnant while working in the CNMI and are 
        forced to return to China to have an abortion or forced to have 
        an illegal abortion performed in the CNMI.
         Workers describe a Chinese garmentwork force compelled 
        to live and work under conditions of employment that were 
        tolerated due to the fear of retaliation, economic and 
        otherwise from their government.

Shadow Contracts and Fear of Retaliation

    From the time garment workers first came to the CNMI, to the 
present time, the Chinese deploying agency sending them abroad has 
required all workers to sign contracts, kept by the deploying agency, 
which specify the workers' conduct and control over his wages while 
abroad. These contracts also contain sanctions the workers face if they 
break this contract while working in the CNMI. Because one of the 
sanctions specified provides for punishment if the workers reveal 
labor-related problems to the government agencies in the CNMI, workers 
are fearful of sharing any information to interviewers and 
investigators.
          Copies of these contracts have been made available to the 
        Department of Interior, and as they all contain essentially the 
        same restrictive provisions, many of which are in direct 
        contravention to Federal and local labor and civil right laws, 
        this information will not be repeated here. . . .

         [W]orkers feared returning to China because while 
        employed in the CNMI, they had violated provisions of the 
        Chinese contracts, also known as ``shadow contracts.'' These 
        are called shadow contracts because they are never made 
        available to governmental agencies or other interviewers. The 
        violations they had been involved in included attending 
        religious services in the CNMI, refusing to have an abortion, 
        and complaining about labor violations during the period of 
        time they worked here.

Working and Living Conditions

         Two team members visited workers at the [Redacted] 
        barracks. There appeared to be little change during the past 
        year despite OSHA inspections of the site.
         Workers are housed in rooms approximately 25 feet by 
        10 feet with four to six people to a room. The floors are bare 
        concrete and the beds are made of plywood with light padding. 
        The rooms are hot and stuffy because there is no air 
        conditioning. Insect infestation is a common complaint and most 
        workers need to sleep under mosquito netting.
         An interview revealed that the water is turned on for 
        only 15 minutes Per day for bathing and house cleaning. At this 
        time workers will fill buckets for use later either flushing 
        toilets or cleaning. Hot water is made by immersing heating 
        elements into buckets and leaving them for a period of a few 
        hours. Some workers [Redacted] are not provided with drinking 
        water at their barracks and must fill bottles at the factory to 
        bring back with them.
         During the course of this inspection, team members 
        encountered a woman crying quite loudly in her bunk. Coworkers 
        explained that she was new to the factory and still ``needed to 
        get used to the situation.'' After more questioning it was 
        learned that the women was upset because of the little amount 
        of money she was earning. The workers made the claim that she 
        must provide a certain amount of free work to the factory every 
        day. She was able to give a detailed explanation of the quota 
        system, which is based on hourly and total percentages. The 
        woman was concerned that she would be unable to repay the money 
        she borrowed for her recruitment fees and she worried for the 
        well being of her family because she didn't have enough money 
        to send home.''
    OIA Report, at 1, 15-16 (emphasis added).
    The Fourth Annual Report of the Federal-CNMI Initiative on Labor 
stated that ``the Administration continues to be concerned about the 
CNMI's heavy and unhealthy dependence upon an indentured alien worker 
program and on trade loopholes to expand its economy.'' (Emphasis 
added.) A press release by the United States Department of the Interior 
accompanying the publication of this report stated, ``the underlying 
immigration, labor, and trade problems of the Commonwealth of the 
Northern Mariana Islands (CNMI) remain as troublesome as ever, despite 
a year's worth of reforms set in motion by the recently-elected 
Governor of the [CNNI].'' Press Release accompanying the Fourth Annual 
Report of the Federal-CNMI Initiative on Labor, at 1 (emphasis added).
    Violations of OSHA regulations by the CNMI contractors have been 
frequent and numerous. During the first half of 1997, OSHA sent four 
inspection teams to the CNMI and found over 500 violations in the labor 
barracks alone. Inspectors found that barracks were unhealthy, with 
overcrowding, unsanitary facilities, dirty and inoperable toilets, 
dirty kitchens and electrical hazards. Further, Federal investigators 
noted evidence of class members being abused or fired for complaining 
about these poor facilities. During the most recent inspections carried 
out in February 1998, the OSHA Regional Administrator noted in an 
interview with a local news agency that working conditions in Saipan 
were worsening. In fact, since 1993, there have been over one thousand 
regulatory violations identified by OSHA inspectors in the CNNU garment 
factories with which the U.S. retailers do business.\2\
---------------------------------------------------------------------------
    \2\ A photograph of typical CNMI garment worker housing is attached 
as Exhibit ``B''.
---------------------------------------------------------------------------
    Following these Federal OSHA inspections (and three weeks 
before hearings in the United States Senate on labor and 
immigration conditions in the CNMI), the local government in or 
about April 1998 embarked upon surprise inspections of its own 
at various garment factories in the CNMI to check for illegal 
safety violations. At one factory, inspectors found the 
emergency exit nailed shut and tape covering smoke detector 
sensors. Another was cited for electrical wiring problems and 
dysfunctional air conditioning, and investigators discovered an 
unlicensed nurse and illegal medical clinic there.
    Despite all of these reports confirming a system of 
peonage, indentured and involuntary servitude and illegal 
working conditions in the CNMI garment factories, neither 
contractors nor the CNNH government have acted to rectify these 
conditions. Likewise, except as described below, American 
retailers--whose quality-control personnel routinely oversee 
production--have failed to require these conditions be either 
corrected or eliminated as a precondition of doing business in 
the CNMI with the contractors.

III. THE SETTLEMENT AGREEMENTS

    In a significant breakthrough concerning the pervasive 
problems confronting the CNMI garment industry, on August 8, 
1999, Nordstrom, J. Crew Group Inc., Cutter & Buck and The 
Gymboree Corporation became the first U.S. retailers to settle 
claims against them in the litigation described above. In 
addition, ``agreements in principle'' have been reached with 
Polo Ralph Lauren, Donna Karan, Phillips-Van Heusen, Chadwick's 
of Boston and Calvin Klein. Under these settlements, the 
retailers have agreed in their future contracts to require 
their CNMI contractors to comply with a set of ``monitoring 
standards'' establishing mandatory minimum workplace and living 
standards. These standards will address a host of the problems 
identified by members of this Committee, government agencies 
and others in the past. They will require, for example, that 
employees receive at least the CNMI minimum legal wage with no 
``off the clock'' or ``voluntary'' work, be ensured freedom of 
movement within the CNMI, and freedom to worship as the workers 
please. Employees will be paid at least one and one-half times 
their regular wages for work over 40 hours, and will be 
provided with safe and healthful working conditions. In 
addition, contractors doing business with these retailers will 
no longer be permitted to recruit workers from any employer 
broker that utilizes ``shadow contracts,'' contracts signed in 
China or elsewhere that limit freedoms guaranteed by U.S. law--
or that impose unlawful ``recruitment fees'' that now create a 
condition of indentured labor. While actual costs of 
transportation to (but not from) the CNMI and legally-required 
government fees (e.g., for passports) will be allowed, they 
will be capped, and no recruitment fees will be charged. If 
garment workers, in the future, are required to pay such fees 
to brokers, their CNMI contractor employers will be obligated 
to reimburse the workers for those fees.
    Under the terms of the settlements, a comprehensive 
monitoring plan will be established to ensure that the 
standards are met. Monitoring will be performed by VeriteSec. , 
a Massachusetts-based non-profit organization that will 
establish offices in the CNMI to oversee compliance with the 
standards. VeriteSec.  is empowered to conduct inspections and 
evaluations of working conditions, including unannounced 
inspections and worker interviews, require CNMI contractors to 
``cure'' identified violations, place them on probation for 
repeated violations and, in the case of a pattern and practice, 
require the retailer to terminate the contract. A settlement 
fund of $1.25 million will be established to fund the 
monitoring, as well as for public education, and to partially 
reimburse workers for unlawful recruitment fees paid in the 
past. CNMI contractors that will now be subject to monitoring 
under the settlement include Global Manufacturing, Inc., 
Concorde Garment Manufacturing Corp., Trans-Asia Garment Forte 
Corp., Jin Apparel, Inc., Marianas Garment Manufacturing, Inc., 
Mirage Saipan Inc., N.E.T. Corp. dba Suntex Manufacturing, 
Inc., Onwel Manufacturing Saipan Ltd., Diorva Saipan Ltd. and 
Micronesian Garment Manufacturing, Inc.
    These settlement agreements hold significant promise for 
improving working and living conditions in the CNMI garment 
industry. By using their economic leverage, these retailers 
will force change in the their contractors--or they will lose 
their business.

IV. CONCLUSION

    The controversy raging over conditions in CNMI's garment 
industry actually raises in a particularly visible context a 
more fundamental human rights debate over globalization of 
particular industries--garment manufacture included--and the 
duties and obligations of U.S. multinationals as global 
citizens. As trade barrier dissolve and American capital 
follows cheap labor, what will become of American values? Whose 
rights will remain protected? What laws will apply? And, in 
what form will disputes be resolved?
    For most Americans, the CNMI--and its principal island of 
Saipan--is remembered as the site of one of the great battles 
of World War II--where more than 100,000 Americans fought and 
3,100 lost their lives. The freedom won for this tiny island at 
the sacrifice of so many American lives should be protected, 
not exploited. We should expect--and Congress should require--
that U.S. companies ensure that basic human dignity is 
protected in the CNMI.
    In the long term, action by Congress is essential to 
address comprehensively the continuing problems in the CNMI 
that have repeatedly been documented but never resolved. 
Today's hearings are an important step in that process, and we 
look forward in the future to working with this Committee and 
Congress in achieving fundamental reform in the CNMI.
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    The Chairman. I also at the same time have a statement by 
Billy Tauzin. I ask unanimous consent to have it submitted for 
the record. Without objection, so ordered.
    [The prepared statement of Mr. Tauzin follows:]

 Statement of Hon. Billy Tauzin, a Representative in Congres from the 
                           State of Louisiana

    As we again revisit the issue of local labor and 
immigration authorities exercised by the Commonwealth of the 
Northern Mariana Islands, two issues have significantly changed 
the legislative landscape from just a year ago. First, numerous 
press accounts make clear that the Office of Insular Affairs 
(OIA) in the Department of Interior--that part of the Federal 
Government charged with responsibility for managing insular 
policy--has in fact been secretly operating for years as an 
adjunct of the Democratic Party and specifically of the 
Democratic Congressional Campaign Committee.
    At the time it was evident to even the most casual 
observers that OIA and Interior were waging jihad against the 
Marianas. In last year's Senate Energy and Natural Resources 
Committee hearing, Secretary Bruce Babbitt described the 
islands as a ``plantation economy'' where reform had failed 
irrevocably, whose un-American practices could not be fixed and 
``should never be allowed under the American flag.'' When Sen. 
Rod Grams raised questions in the hearing concerning 
politicization of OIA and its then-Director, Secretary Babbitt 
dismissed them peremptorily, decried the ``massive campaign of 
intimidation'' he claimed was being orchestrated against that 
official, and the Secretary announced on the spot that he was 
putting the official in for a departmental commendation. Sen. 
Grams followed up with a letter to the Inspector General of the 
Department of the Interior, but nothing was done.
    Thanks to the careful investigation conducted by the 
Chairman of this Commitdee, we now know that as these events 
gere unfolding, OIA's then policy director was using his 
government computer in his government office on government time 
to orchestrate a genuine campaign of intimidation. Using a hit 
list of Republican Members of Congress who had failed to see 
the wisdom of OIA's solutions for the Marianas, he sent memos, 
press releases, and whatever else he could find to the DCCC and 
to those Members' Democrat opponents. He explained that his aim 
was to elect Democrats to the House. His reward would be the 
defeat of those he targeted.
    But this man did not act alone. He sent copies of his 
political prose to the Director. His decorated Director sent 
his own political memorandum to the DCCC on behalf of all the 
``politicals'' at OIA urging that the Democrats repudiate the 
then Democratic governor of the Marianas for the unpardonable 
sin of agreeing with Republicans opposed to OIA's so-called 
solutions for the territory.
    We know that what has been revealed thus far suggests 
violations of the Hatch Act, along with other statutes intended 
to insulate Federal civil servants from politics on the job. 
This Committee's investigation must determine which superiors 
were informed of these actions, who else was involved and what 
they were doing. We can hope that the issues Sen. Grams first 
raised more than a year ago in the Senate Energy and Natural 
Resources Committee will finally be looked at by the Inspector 
General, who belatedly has begun to ask some questions at 
Interior.
    My has this bit of ``mud politics,'' as the Wall Street 
Journal calls it, changed the legislative landscape? First, the 
full extent of what was going on at OIA must be unearthed. 
Those who broke the law, and those who should have prevented 
them from doing so, must be held accountable. Those whose 
responsibility it was, and is, to manage the Department of 
Interior must provide solid assurances that this political 
``dirty tricks'' operation has been shut down and cannot be 
resurrected. All these things will take time. In the meantime, 
and for the foreseeable future, the credibility of OIA is 
seriously damaged. Officials willing to bend the rules in one 
area are just as likely to have done so in others. The 
exaggerated Administration descriptions of conditions in the 
Marianas have always been suspect. The evidence of a secret 
effort to defeat those who took an opposite view calls into 
question the accuracy of what we have been told by officials up 
to now. It is hard to discount the likelihood that the secret 
war against Republicans had its public counterpart in the overt 
Administration assault on the Marianas.
    One example of the hyperbolic excess we have come to expect 
from Interior is particularly noteworthy. The key charge made 
against the territory and its businesses is the systematic 
mistreatment of its foreign worker population. Last year's 
Senate hearing record is replete with charges of worker abuse. 
Yet the Philippine Consul in the Marianas, who looks after the 
largest group of foreign workers present in the islands, took 
the initiative shortly thereafter to write the Governor of the 
Marianas to inform him of a report the Consulate had prepared 
after investigating the treatment of Filipino workers. As she 
put it to the Governor, ``The Consulate's report emphatically 
reiterated the good working conditions of our Filipino workers 
and the effective coordination efforts between the Consulate 
and the local government.'' Since the Consul and her staff 
reside in the Marianas and have day-to-day contact both with 
Filipino nationals and local officials, and because she appears 
to have no reason to be less than vigorous in her assessment, 
her report has a credibility I no longer assign to Departmental 
testimony on this issue.
    There is another new factor in the policy debate affecting 
the Marianas. This element is directly related to the 
Commonwealth's immigration system. Last year and this year as 
well the Congress was told that the immigration system in the 
Marianas was ineffective and not fixable. One of the 
Administration's concerns was that the Marianas did not provide 
a process for considering asylum claims, an obligation the 
United States had assumed by international treaty.
    This criticism, however, appears to contradict other recent 
actions by government officials. This spring and summer Chinese 
smugglers, called ``snakeheads,'' have navigated overcrowded, 
leaking vessels from the coast of the Fujian province towards 
Guam. The vessels have been jammed with thousands of illegal 
Chinese migrants from whom the snakeheads had extracted large 
sums to land them on American soil. Yet when these ships were 
interdicted en route to Guam, the Administration ordered many 
of them to the Marianas. Why? As one INS official later 
testified before the House Judiciary Committee, this was 
considered ``an effective response to the recent increase in 
smuggling activity.'' Gone were the concerns about asylum. 
Front and center was the desire to quickly deport these 
illegals under Marianas' law! As another INS spokesman put it, 
``We just wanted to make the message get out that they should 
not go with these smugglers because they only expose themselves 
to danger only to be repatriated.'' So much for a flawed 
immigration system. The Coast Guard continues to send Chinese 
boat people to the Marianas.
    Because this Committee is being asked by the 
Administration, specifically the Interior Department, to 
consider whether the Marianas should retain their labor and 
immigration authorities, we should also take stock of what we 
really know about conditions in the islands. We should listen 
with particular attention to what Marianas officials are able 
to report about how it is being administered and improved. And 
we should examine with care the actual consequences, 
particularly the economic cost and consequences to the labor 
force, of changing those local authorities that the evidence 
shows at least some parts of the Federal Government actually 
find useful and effective, the protestations of Interior to the 
contrary notwithstanding. Let us do what is best for the 
citizens of the Marianas.

    The Chairman. Panel two: The Honorable John Berry, 
Assistant Secretary for Policy, Management; Mr. John Fraser; 
Mr. Donald Shruhan; and Mr. Nicholas Gess. Now before you all 
sit down, you all have to stand up. And I see two people well 
aware of that. The names that I just mentioned, Mr. Berry, Mr. 
Fraser, Mr. Shruhan, and Mr. Gess--is it Gess or Geese? Gess, 
okay--will take the oath and say I do or whatever it is when 
you get down.
    [Witnesses sworn.]
    You're sworn in. You may take your seat and, Mr. Berry, 
you're the first one up.

   STATEMENT OF JOHN BERRY, ASSISTANT SECRETARY FOR POLICY, 
    MANAGEMENT AND BUDGET, U.S. DEPARTMENT OF THE INTERIOR, 
                         WASHINGTON, DC

    Mr. Berry. Thank you, Mr. Chairman. Mr. Chairman, I'd like 
to begin by complimenting you, this Committee, and the Senate 
committee for reducing the rhetoric. And I will try to do the 
same on this issue.
    I would like to--there have been a number of press 
statements and others over the past year by members of the 
Department of Interior. I want to make clear for this Committee 
that I know Governor Tenorio. I've worked with him. I know 
Representative John Babauta and I've worked with him. They are 
good men. They are honorable men. They are well-intentioned 
men. And this is a complex problem. And they have taken 
significant steps, like you have been described, that you've 
heard this morning. And the Federal Government has increased 
its presence and taken an increased presence in terms of law 
enforcement, from the Federal perspective, on the Marianas 
Islands.
    But, as Representative Babauta used the correct analogy, we 
are chasing a symptom rather than treating the disease. Since 
1995, over $14 million has been spent on a law enforcement 
initiative jointly by the Marianas Islands government, $5 
million of that directly passed through to them for their 
initiatives, many of which you heard this morning and over $8 
million by Federal agencies that has been transferred from the 
Interior Department to other Federal agencies.
    You've heard the Marianas. They have increased. They've 
hired investigators. They've assisted with emergency shelter. 
And they've assisted with health screening of aliens.
    In the Federal perspective, we have increased the presence 
on the island from 4 permanent people to 18 now present. We 
have assigned Wage and Hour investigators. There was much 
discussion about the NLRB and EEOC. In terms of NLRB, Mr. 
Chairman, I'm informed that that member is now resident of 
Marianas Islands and is located there. The EEOC has 
significantly stepped up. They've made a number of cases. You 
heard some of those described about the prostitution cases and 
sexual discrimination cases that they have pursued in the past 
year, aggressively, with the Marianas government. They are also 
looking at establishing a permanent presence. So I think you're 
going to find that will come.
    There have been U.S. attorneys, FBI, INS, DEA agents 
assigned. The Ombudsman Office has been created in our office 
with two people. Pam Brown, who is our ombudsman, as directed 
by the Appropriations Committee. We have established that 
office. It was opened in May of this year.
    Despite all of these efforts, as we've said, we're chasing 
symptoms rather than treating the disease. And I think, when we 
look at the scale of the problem or the scope of the problem, 
it's akin to holding back the tide. When you--it has often been 
referred that this is--the economy is healthy. We would not 
perceive or at least use terms of health when 90 percent of the 
private sector are alien workers. And, as what has been 
discussed today, you heard 13 percent to 14 percent of locally 
born residents unemployment rate. If you actually use--and I 
don't want to get into a statistical war here--but if you the 
Census and Department of Labor standards, we believe that 
number is not 13 percent but 16 percent unemployment rate. So 
there's a significant unemployment rate among the local 
population. And, as has been discussed already, with the heavy 
public payroll.
    The immigration has gone--immigration control, which, as 
you are well aware, Mr. Chairman, which was originally left to 
protect the local population, has gone from 14,000 population 
in 1973 to 60,000 in 1995 to 80,000 in 1999. And, as you can 
see from this chart, over 58 percent of the population of the 
island is now alien population.
    The Chairman. Mr. Berry, if I should take and have that 
chart put in front of the TV or get the TV out of the way, I 
might be able to see it.
    Mr. Berry. Okay. I think we've also given you a copy to 
have in front of you, Mr. Chairman.
    The Chairman. That's better right there. Okay. Go ahead.
    Mr. Berry. Okay. And the increase in the U.S. citizens line 
that you note there, as was noted by Mr. Doolittle, is largely 
due to children born from aliens in the Commonwealth of the 
Marianas Islands who become U.S. citizens, obviously, upon 
their birth on U.S. soil. So that U.S. citizen line, you can 
see from statistics in another of those charts, is largely due 
to that result.
    It's our belief, Mr. Chairman, that things are not getting 
better in terms of the overall situation that's been described. 
The ombudsmans, you heard the governor that their complaints 
from labor complaints have gone from 900 to 143. I think we may 
be able to explain that in that, in the three months the 
Ombudsman's Office has been open, they've received over 760 
complaints. So I believe a number of those complaints that were 
originally going to the officials in the local government are 
now transferring over to the Ombudsman's Office, which is 
trying to work effectively with the Marianas. But those 
complaints track all of the stories and the statistics that 
you've seen in the past: payless days, holding back of wages, 
other things that you ran into on your trip to the islands.
    The labor permit issue. The governor testified that there 
was a cap applied of 15,000 people. I think to accurately 
reflect that, what I've been informed, at least--and, again, I 
think it's going to be important that we get these things 
straight--but the cap that was in place on 1998 was 13,000 
people. And last year, the local government raised that cap by 
2,500 to increase the aliens. So the cap is now above the 
15,000 number that you heard. But the Senate passed, just 
before the governor came here, legislation to, again, raise 
those caps again. Now the governor, to his credit, vetoed that. 
But it is clear that this is sort of a pass/repeal game that 
we're in here and we have to be careful with that when we look 
at that.
    We are beginning to investigate complaints from the 
Philippine Embassy, what was discussed here. People come in on 
tourist visas and then are even given work permits or are 
illegally employed. The Philippine Embassy figures that we're 
working with, with the Philippine Embassy now, that problem may 
be as high as 10,000 people on Philippine tourist visas in the 
past 5 years alone. So you can see the numbers and the scale 
that what were dealing with when we're talking about sort of 
trying to hold back the tide.
    The garment industry. The complaint has been made that the 
garment industry is suffering. Our statistics show in the first 
half of 1998, the garment industry orders were $493 million. In 
the first half of 1999, they were $511 million, up a 
significant increase. So the garment industry continues to 
increase and continues to expand their export of the made-in-
the-U.S.A. goods by alien workers, by alien companies, to the 
United States.
    The Chairman. John, how much more do you have?
    Mr. Berry. About a minute and a half, sir. That will be 
okay? All of that being said--and I think those statistics and 
we could, you know, go back and forth on the statistics all 
day--I think, to sum up, when you discuss the core problem 
here, I disagree with Representative Babauta when he describes 
the core problem.
    In my opinion, the core problem is when you have 90 percent 
of your private work force that is not allowed to vote locally. 
They are not--all of the horrors that we hear and all of the 
things that we're trying to enforce Federal laws to correct, 
all stem from the fact that these people are aliens to the 
United States. They are aliens to this community. And they 
don't have a local presence. And if they do raise their head 
and complain, I, quite frankly, Mr. Chairman, have been very 
surprised at the number of complaints our ombudsman has 
received.
    You've been there. It's an island nation; an island 
culture. And you're well familiar with an island area. People 
know one another. And when someone sticks their head up to 
complain, it's very clear who they're complaining to and it's 
easy to track that. And retaliation can occur. And we can't 
protect them against that. So I'm pretty surprised at the 
number of complaints that have continued.
    But we need, I think, the immigration system can't control 
this. They can't provide the double-check that our current 
immigration system does. They don't have the embassies and 
consulates abroad that can do the pre-screening before they get 
on-island, to do the health screening before they get on-
island. People coming in with tuberculosis don't have to be 
screened for 30 days. They're present on the island and 
exposing to workers and other residents of the CNMI during that 
30-day period. With U.S. immigration control, we would have a 
much better handle on being able to address those issues.
    But I am very sensitive and I don't want to leave the 
impression in this Committee that I think this immigration is 
going to be a magic wand to solve all of these problems. I 
agree with the governor. The economic situation in the 
territories--and I agree with you, Mr. Chairman--is a tough 
one. And we need to be creative. We need to create an economic 
diversification in the economy. The proposal that both Senator 
Murkowski has introduced and the administration's proposing is 
not trying to do this overnight. We're looking at an 8 to 10 
year phase-in of these principles and laws of immigration and 
minimum wage. We recognize you can't shock an economy like 
that.
    But, at the same time, we can't just say, do that and leave 
alone. We have to have an active/proactive partnership with 
this Committee, with the government of the CNMI, to create that 
economic diversification to help their tourist industry, to 
help attract other American industries, so that they can employ 
higher wage jobs on the island.
    Mr. Chairman, thank you for your leniency in the time.
    [The prepared statement of Mr. Berry follows:]

   Statement of John Berry, Assistant Secretary of the Interior for 
                     Policy, Management and Budget

    Mr. Chairman, and members of the Committee on Resources, I 
am pleased to appear before you today to discuss Federal law 
enforcement and the use of Federal funds in the Northern 
Mariana Islands.
    The Department of the Interior, itself, does not have 
Federal law enforcement responsibility with respect to 
immigration, labor and trade issues in the Commonwealth of the 
Northern Mariana Islands (CNMI). The Departments of Labor, 
Justice, and Treasury have law enforcement responsibilities 
which their witnesses will address. We will all explain why, 
despite the best efforts at Federal law enforcement, current 
Federal law is insufficient to correct the continuing 
inadequacies caused by CNMI immigration and labor policy. It 
remains the position of the Administration that the need to 
apply--and phase--Federal immigration, wage, and trade 
standards is inescapable.

Initiative Funding

    In 1994, the Congress was sufficiently alarmed over the 
ever-worsening immigration and labor situation in the 
Commonwealth of the Northern Mariana Islands (CNMI) that it 
appropriated $7 million for fiscal years 1995 and 1996 to the 
Department of the Interior for the Federal-CNMI Initiative on 
Immigration, Labor, and Law Enforcement. The program was 
intended to be, and our first two annual reports reflected, a 
partnership between the Federal Government and the CNMI. The 
goal was two-pronged: aid the CNMI in dealing with the problems 
the Congress identified, and encourage Federal agencies to 
commit increased resources to the enforcement of Federal law in 
the CNMI, where they have authority.
    As a result, we embarked on an ambitious Initiative with 
the CNMI to curb the excesses of the CNMI immigration and labor 
system, with both CNMI and Federal components. Since the 
inception of the Initiative in fiscal year 1995, the CNMI has 
received $5 million. The CNMI used these funds for development 
of a special investigation unit for the Attorney General's 
office, funding for a non-government protective service agency 
for alien workers with employment claims, the hiring of 
additional prosecutors and investigators, the updating of the 
CNMI criminal and labor codes, and the prototype development of 
the Labor and Immigration Identification system (LIIDS) 
database to track and control migrants and labor permit 
holders. The LIIDS system was intended to be fully integrated 
for immigration arrival and departure and on-island labor 
tracking. Despite the expenditure of $1.5 million, it has never 
been used for immigration, but is limited to an alien labor 
picture and identification system.
    The Initiative has devoted $9 million to Federal efforts in 
the CNML Federal officials have used the additional funds to 
establish a more active presence in the CNML This funding has 
increased law enforcement activities, technical assistance and 
training by the Wage and Hour Division, Solicitor's Office, 
Occupational Safety and Health Administration, and the 
Employment Training Administration in the Department of Labor; 
the Immigration and Naturalization Service, the Federal Bureau 
of Investigations, the U.S. Marshals Service the Drug 
Enforcement Agency, the U.S. Attorney's Office, Civil Rights 
Division, and the Criminal Division/Child Exploitation and 
Obscenity Division of the Justice Department; the Secret 
Service, U.S. Customs Service, and the Bureau of Alcohol, 
Tobacco and Firearms of the Department of Treasury; and the 
Diplomatic Security Service of the Department of State. Law 
enforcement personnel on-island has increased from four law 
enforcement related personnel in 1994 to 18 in 1999. A number 
of Federal agencies budget additional funds of their own for 
CNMI enforcement actions. Attached to my written statement is a 
more complete description of Initiative activities.
    After two-and-a-half years of experience with the program, 
and increasingly dismal statistics and on-the-scene reports, 
the Administration, in 1997, concluded that the problem is not 
a lack of resources and enforcement. The problem is the CNMI 
immigration and labor system itself, and the lack of will to 
change it fundamentally.
    This realization was reflected in the comprehensive 3rd and 
4th annual reports on the Federal-CNMI Initiative on 
Immigration, Labor, and Law Enforcement, which fully described 
the problems and outlined a legislative solution. Draft 
legislation addressing immigration, minimum wage, and trade 
issues in the CNMI was sent to the Congress on October 6, 1997. 
The Administration's proposal was introduced as S. 1275, in the 
105th Congress, and was reported with amendment by the Senate 
Committee on Energy and Natural Resources.

The Problem

    The Administration arrived at its position due to the 
unending stream of allegations, administrative determinations, 
court decisions, and statistics validating the fact that alien 
workers are routinely mistreated in the CNMI, with severe 
ramifications for both the Federal Government and the people of 
the Northern Mariana Islands. The Administration's firm 
position continues because the actions in the CNMI do not bring 
improved results in either statistics or real world experience.
CNMI Actions

    The current CNMI administration has sought to do more than 
its predecessors to address immigration and labor issues. These 
actions, characterized by the CNMI as ameliorating the 
immigration and labor situation in the CNMI, are:

         health screening for alien workers
         moratorium on hiring alien workers
         minimum wage review committee
         law for new funding for the CNMI deportationfund for 
        workers with awards
         required exit for alien workers after 3 years in the 
        CNMI
         6-month limited immunity for self-reported aliens who 
        are out of status

    On the surface, it appears that these CNMI actions are 
intended to redress the grave consequences of the CNMI's 
immigration and labor policies. Startling CNMI population 
growth statistics, however, bring us back to reality: 32,822 
non-United States citizens born in Asia were in the Saipan 
labor force in the first quarter of 1999--an increase of nearly 
10,000 from the 1995 census and an increase of about 2,000 from 
the June 1998 survey, 9 months earlier. Violations of the 
spirit and letter of the moratorium law added to the increases 
in alien workers during the past year. In 1997, the CNMI House 
of Representatives, in legislation, found there to be 7,000 
illegal and undocumented aliens in the CNMI.
    While possibly well-intentioned, these six CNMI actions 
merely address symptoms. They do not strike at the heart of the 
problem: (1) the indenture--a contract between a CNMI employer 
and a poverty-stricken alien worker for his or her labor, and 
(2) the availability of virtually unlimited numbers of such 
workers, at a minimum wage, and virtually a maximum wage, of 
$3.05 per hour (less for domestic and agricultural workers). 
Under the indenture, the employee is tied to a specific 
employer, with most job transfers requiring the permission of 
the current employer or occurring at the end of the contract. 
During the year-long indenture or contract, the employer has 
nearly unfettered sway over the employee, because the 
suggestion of alternative employment will likely bring 
retribution, including return to the employee's home country 
with no means of repaying huge debts owed to recruiters, and a 
reduction in overtime work, which for some can be lucrative. 
The employee's poverty in his or her home country, debts 
stemming from recruiting fees paid for jobs in the CNMI, and 
extremely low wages paid in the CNMI, usually limit the 
employees choices to one--continuing to work for the same 
employer and bearing whatever treatment the employer may mete 
out.
    An increase in enforcement funding and personnel, either 
CNMI government or Federal Government, will not solve this 
problem. The problem is inherent in the CNMI system, not the 
fault of law enforcement. The Federal immigration and minimum 
wage laws that apply in the fifty states, and in prosperous 
Guam, only 35 miles away, are non-existent for the CNMI.

Mistreatment

    The mistreatment and consequences that occurred under the 
CNMI's immigration and labor system in past years are well-
documented in the Administration's 3rd and 4th annual reports. 
Plentiful, recent illustrations continue to indict the CNMI's 
immigration and labor system.

         During the past year, the CNMI reneged on its own 
        moratorium on alien workers: the Governor liberally exercised 
        his executive discretion for granting exceptions, the 
        Legislature by admitting 2,500 aliens as garment workers, and 
        the CNMI Department of Labor and Immigration by giving work 
        permits to thousands of Philippine citizens who came to the 
        CNMI on visitor permits in violation of the CNMI-Philippine 
        memorandum of understanding.
         CNMI attempts at fixing the symptoms of the problem 
        often spawn their own sets of problems. Such is the case with 
        the CNMI's limited immunity and illegal alien registration act 
        which gave temporary immunity to undocumented workers who 
        identify themselves and then seek to secure work within the 
        law's 3 month limit. Several personnel or resident managers 
        began charging workers for guaranteed labor system that 
        requires the massive importation of poverty-stricken, low-paid, 
        indentured alien workers. It has harmful effects for the 
        interests of the Federal Government, including:

         Loss of jobs for U.S. citizens in the CNMI
         Legal circumvention of the U.S. textile import quotas 
        by countries that have reached their quota limits
         Avoidance of over $200 million annually in U.S. 
        tariffs--benefiting the overwhelmingly alien-owned CNMI garment 
        companies
         A concession to the CNMI government of Federal control 
        over the conferring of United States citizenship in the CNMI
         An exception to the basic Federal immigration 
        principle that aliens admitted on a temporary basis may not 
        fill permanent jobs
         Smuggling of aliens from the CNMI to Guam by organized 
        crime syndicates, with some seeking United States asylum
         Exposure of the mainland United States citizens to 
        tuberculosis through travelers from the CNMI where a large 
        number of aliens carry the disease. Embarrassment for the 
        United States in the international community due to complaints 
        from nations whose nationals are mistreated in the CNMI

The CNMI system also harms CNMI interests:

         16.1 percent unemployment in 1999 among locally-born 
        United States citizens--an increase of nearly 2 percent in 2 
        yearsaliens account for 76% of the total working population of 
        the CNMI, and
         more than 90 percent of private sector employment 
        while 56 percent of locally-born United States citizens work 
        for the CNMI government.
         35 percent poverty rate among locally-born United 
        States citizens
         32,822 non-United States citizens born in Asia were in 
        the Saipan labor force in the first quarter of 1999--an 
        increase of nearly 10,000 from the 1995 census and about 2,000 
        from the June 1998 survey
         a tuberculosis rate six times higher than on the 
        United States mainland severe strain on infrastructure (mostly 
        Federally funded) and social services due to unanticipated 
        population growth
         expansion of organized crime, including extortion, 
        prostitution and smuggling of illegal aliens into nearby Guam
         inefficient use of a large portion of CNMI government 
        funding and personnel to perpetuate this immigration and labor 
        system.
                                ------                                

                              Attachment A

   FEDERAL-CNMI INITIATIVE ON IMMIGRATION, LABOR, AND LAW ENFORCEMENT

Activities

    In 1994, Congress appropriated $7,000,000 for fiscal year 
1995 to address the problems of labor, immigration, and law 
enforcement in the Commonwealth of the Northern Mariana Islands 
(CNMI). The Department of the Interior coordinated efforts from 
the Departments of Justice, Labor, and Treasury to work in 
partnership with the CNMI to develop a plan to address the 
problems by establishing the Federal-CNMI Initiative on Labor, 
Immigration and Law Enforcement.
    In the first year of the Initiative, the result of these 
interagency and intergovernmental efforts was the allocation of 
the $7,000,000 appropriation through direct grants and 
reimbursable support agreements. CNMI was awarded $3,000,000, 
of which $1,500,000 was used to develop a computerized alien 
identification and tracking system and $1,500,000 was used in 
local immigration and labor projects. The Department of the 
Interior entered into a several reimbursable support agreement 
amounting to $4,000,000 with the Departments of Labor and 
Justice; U.S. Customs Service; the Bureau of Alcohol, Tobacco, 
and Firearms; and the U.S. Secret Service to strengthen 
enforcement of Federal laws. The funds were used to hire 
additional investigative agents, attorneys, marshals, and 
provide technical law enforcement assistance to the CNMI.
    Congress continued to provide additional annual 
appropriations from fiscal year 1995 to the present with the 
enactment of Public Law 104-134, which authorizes for the 
purposes of labor, immigration, and law enforcement in the CNMI 
a maximum annual $3,000,000 allocation through fiscal year 
2002. The maximum $3,000,000 was appropriated in fiscal year 
1997, $2,000,000 in fiscal year 1998, $2,000,000 in fiscal year 
1999, and $2,000,000 is sought in fiscal year 2000. Additional 
Federal agencies have joined the Initiative including the 
National Labor Relations Board, the Equal Employment 
Opportunities Commission, the Bureau of Census, the Office of 
the Inspector General for the Department of the Interior, 
Center for Disease Control, Immigration Health Services, and 
the Diplomatic Security Service.
    Since the inception of this initiative in fiscal year 1995, 
the CNMI has received $5,000,000. The CNMI used its share of 
the fiscal year 1995 and fiscal year 1997 funds amounting to 
$4,000,000 to address specific needs in its government 
institutions that could otherwise not have been funded in its 
operational budget. This included development of a special 
investigation unit for the Attorney General's office, creation 
of a non-govenrment protective service agency for guest 
workers, the hiring of additional prosecutors and 
investigators, and the updating of the CNMI criminal and labor 
codes. The Labor and Immigration Identification system (LIIDS) 
database to track and control immigrants and immigration labor 
permit holders was created by this initiative. Although the 
system is not yet fully functioning, it is esed to issue and 
track labor permits.
    In fiscal year 1999, the CNMI used $1,000,000: (1) to 
assist the Department of Public Health with its health 
screening program ($320,000); (2) to provide assistance for 
emergency housing and shelter for alien workers ($200,000); (3) 
to continue joint law enforcement efforts by the FBI-CNMI Joint 
Task Force ($60,000; (4) to further supplement the Attorney 
General's Investigative Unit to identify and prosecute 
corruption relating to alien smuggling, organized and white 
collar crime, immigration and labor violations ($245,000); and 
(5) to enhance the canine unit at the Customs Department to 
detect drug trafficking, particularly in the arrival and 
departure of aliens to the CNMI ($175,000).
    Federal officials have used the additional funds to 
establish a more active presence in the CNMI. This funding has 
increased law enforcement activities, technical assistance and 
training by the Wage and Hour Division, Solicitor's Office, 
Occupational Safety and Health Administration, and the 
Employment Training Administration in the Department of Labor; 
the Immigration and Naturalization Service, the Federal Bureau 
of Investigations, the U.S. Marshals Service the Drug 
Enforcement Agency, the U.S. Attorney's Office, Civil Rights 
Division, and the Criminal Division/Child Exploitation and 
Obscenity Division of the Justice Department; the Secret 
Service, U.S. Customs Service, and the Bureau of Alcohol, 
Tobacco and Firearms of the Department of Treasury; and the 
Diplomatic Security Service of the Department of State.
    Law enforcement personnel on-island has increased from four 
law enforcement related personnel in 1994 (1 Assistant U.S. 
Attorney, 2 FBI agents, and 1 U.S. Marshal) to 18 in 1999 (3 
Assistant U.S. Attorneys, 5 FBI agents, 2 DEA agents, 2 U.S. 
Marshals, 1 INS officer, 4 Wage and Hour labor investigators, 
and I part-time DOI Inspector General criminal investigator). 
In addition, attorneys from these agencies, the National Labor 
Relations Board, and the Equal Employment Opportunity 
Commission have been temporarily assigned on occasion to the 
CNMI on special detail to litigate and prosecute cases and 
additional Stateside Federal personnel have been utilized. All 
the Federal agencies have provided technical law enforcement 
assistance to the CNMI, including the National Institute of 
Corrections has provided specialized expertise to plan for a 
new correctional facility. The Federal District Court criminal 
cases, cases filed by the U.S. Attorney, and incarcerations 
have all increased dramatically since the beginning of this 
Initiative.
    In fiscal year 1998, the Department of Justice increased 
its base operations budget to assume total financial 
responsibility for the additional law enforcement personnel in 
the CNMI. The Department of Labor increased its base operations 
budget to assume twenty-five percent of its additional presence 
in the CNMI.
    Through the Initiative, the Department of the Interior has 
provided assistance to the Northern Marianas College to convene 
an economic development conference. A report is to be written 
by a steering committee under the direction of the College. The 
Department has also provided funding assistance to the Bureau 
of Census and the CNMI Bureau of Statistics to produce 
population and labor surveys with statistical data. In 
addition, funding was used to prepare two reports by the 
Department of the Interior consultant regarding labor, 
immigration and garment issues in the CNMI in February 1998. 
The first report, on the living and working conditions of the 
workers, consisted of hundreds of interviews. It was considered 
a ``sample snapshot'' of the situation in the CNMI.\1\ The 
second report, on garment companies and transhipment, compiled 
by a national expert on transshipment of garments from Asia via 
Saipan to the United states. While the report did not document 
the full extent of transshipments through Saipan, it did 
confirm that specific incidents had occurred in the past. Both 
reports were turned over to the Department of Justice and 
Treasury respectively.
---------------------------------------------------------------------------
    \1\The consultants who prepared this report were originally 
retained to assist a Congressional delegation from the U.S. House of 
Representatives, Committe on Resources, in obtaining first-hand 
experience. The delegation's fact-finding mission was canceled, the 
consultants who were already in the area, were asked to compile the 
information on personal interview and site visits.

    The Chairman. I thank you. And during the question and 
answer period, you can address some other things that you 
missed. Mr. Fraser.

  STATEMENT OF JOHN R. FRASER, DEPUTY ADMINISTRATOR, WAGE AND 
   HOUR DIVISION, EMPLOYMENT STANDARDS ADMINISTRATION, U.S. 
              DEPARTMENT OF LABOR, WASHINGTON, DC

    Mr. Fraser. Mr. Chairman, Mr. Miller, other members, I'm 
John Fraser, deputy administrator of the Wage and Hour Division 
at the U.S. Department of Labor. And I am representing the 
Department of Labor, which gives me the honor today to address 
questions you may have about OSHA as well. So I look forward to 
that and I'll be honored to do that and straighten out some of 
the----
    The Chairman. And, Mr. Fraser, you know, I have not 
mentioned OSHA, so somebody else will answer those questions.
    [Laughter.]
    Mr. Fraser. Mr. Chairman, you haven't, but you missed some 
interesting discussion and we need to straighten that out, I 
think.
    All of us have submitted written statements, which I trust 
will be put in the record. I'd like to focus on just a couple 
of points in my statement this morning. The first of those is 
that there are extremely serious, pervasive, and stubbornly 
persist immigration, labor, and human rights problems in the 
Commonwealth of the Northern Marianas. And I hope all the 
witnesses you hear from today will at least acknowledge the 
existence of those problems.
    But, secondly and more importantly, these problems arose in 
the first place and they will persist because they derive from 
systematic, structural weaknesses in the legal framework in the 
Commonwealth and any solution to these problems demands a 
comprehensive, structural solution. I have a great deal of 
respect, like my colleague Mr. Berry said, for the governor; 
for his colleagues; for our colleagues, our law enforcement 
colleagues in the Commonwealth. Their efforts can help solve 
the problem. Their commitment to reform, if it lasts, if it 
persists, can help solve the problem.
    Enhanced Federal law enforcement is part of the solution to 
the problem. External economic influences, like the monitoring 
that will be done as a result of the settlement of part of the 
garment lawsuit that was filed in January of this year can be 
part of the solution.
    But the cause of the problems, as you've heard over and 
over again this morning, the cause of the problems in the 
Commonwealth is a structural, inapplicability of Federal law 
and that's the only solution that we see that doesn't 
constitute a Band-Aid on what's otherwise a gaping wound. The 
system in the Commonwealth, Mr. Chairman, produces casualties 
and the best we can do, through Federal law enforcement, 
through the Commonwealth efforts, is treat the wounded. We 
should be approaching this problem in a way so that we're not--
we don't have a system that creates casualties.
    One of the things I think I can do for the Committee is to 
refute the notion that the problems in the Commonwealth are 
ancient history. And just to give you some information, just 
from this year's Department of Labor Enforcement in the 
Commonwealth, the Wage and Hour Division has found more than $8 
million in back wages owed to more than 2,600 workers of 13 
employers in the Commonwealth. To give you some perspective, to 
put that in perspective, that's 7 percent of the private sector 
work force owed back wages in our cases. That's $3,000 a 
person. That's about 800, 900 hours of work for which they 
weren't paid.
    In one of these cases earlier this year, we found that, for 
the second time in one year, within nine months of having 
entered a consent judgment in court with a commitment to future 
compliance, we found a Micronesian garment manufacturing failed 
to pay its workers for 3 months and ended up having to pay--
this was the second time, after finding them owing $550,000 in 
back wages, getting a consent judgment, they stopped paying 
their workers again, didn't pay them for 12 weeks, and owed $1 
million in back wages.
    In two other cases, not included in the statistics I gave 
you, we found and obtained a default judgment against the 
gentleman named Byung Yong Moon for more than--almost $900,000 
in back wages. But we've been unable to locate this gentleman. 
We're suing two other companies: Hyunjin Saipan, it formerly 
did business as Coral Fashion, which was formerly S.R. Saipan, 
to recover back wages for those workers. And there are other 
cases just like that.
    And I think the most discouraging new development this 
year, as you know--I believe part of this occurred during your 
visit earlier this year--is that there have three episodes of 
food poisoning affecting large numbers of workers. In February 
of this year, 50 workers at TransAsia and Concorde Barracks, 
owned by Tan Holdings, became ill in a food poisoning incident. 
A week later, 150 workers employed at United International 
barracks, owned by Mr. James Lin, became ill in a food 
poisoning incident. On March 24, 1,100 workers at Tan Holdings 
barracks became severely ill with food poisoning. It created an 
unprecedented health emergency in the Commonwealth.
    Unfortunately, the day before, OSHA had tried to inspect 
that facility. They'd been denied access, so the incident 
occurred when OSHA was out trying to seek a warrant. 
Unfortunately, when the hospital tried to respond and send 
medical personnel to the factory and to the barracks, they were 
denied access and had to get the local police to allow them in 
to treat the workers who were ill.
    So the problems are pervasive. They're serious. They're 
current. Federal enforcement's a part of the solution, the 
efforts of our colleagues in the Commonwealth government are 
part of the solution, but we really do need structural changes 
to address the structural weaknesses that give rise to the 
recurrence of these problems. And we'll be happy to talk some 
more about that in the question period, Mr. Chairman.
    [The prepared statement of Mr. Fraser follows:]

                              Attachment B

    We are writing to urge Congress to enact legislation 
extending Federal immigration and wage laws to the Commonwealth 
of the Northern Mariana Islands, as originally anticipated by 
the Covenant agreement that joined the Commonwealth in 
political union with the United States in 1976.
    For close to 15 years--through the Reagan and Bush 
Administrations and now during the Clinton Administration--
Federal officials have expressed deep concern about the CNMI's 
growing dependence on indentured alien labor paid at unfairly 
low minimum wage rates to build its economy.In the past five 
years, we have found that conditions have deteriorated, 
including high unemployment, failure to pay wages, poor living 
and working conditions, even incidences of ``hidden'' contracts 
forbidding the exercise of political and religious rights. 
These problems have become so severe that the United States has 
received formal complaints from three countries concerned with 
the treatment of their citizens in the CNMI. The current CNMI 
Governor has acknowledged many of the problems that have 
resulted from these policies and he is responding with changes 
in local laws and more vigorous law enforcement.
    Despite these efforts, however, we remain deeply concerned 
that the local reforms--like those that have come and gone 
before--will not solve the problems inherent in an economic 
policy of relying on a majority population of indentured alien 
workers who account for more than 90 percent of the private 
sector workforce. The situation does not appear to have 
improved. For example, because of the favorable treatment the 
CNMI enjoys under our trade laws and the low minimum wage paid 
to alien workers, garment shipments to the United States 
continue to increase at a rapid rate (about 40 pecent for the 
year June 1997 to June 1998, now close to $1 billion annually); 
the number of indentured alien workers has not declined nor has 
their vulnerability to exploitation and human rights abuses 
decreased; and there are continuing adverse impacts of 
ineffectiual, border control, such as organized crime and 
public health problems, smuggling of illegal aliens to Guam, 
and strained infrastructure. Past local reforms have proven to 
be fleeting. Throughout the years we have supported many local 
reforms, only to have those reforms repealed or ignored when 
local administrations change or media attention fades.
    In this regard, we were both perplexed and disappointed to 
learn that the CNMI government recently canceled consultations 
with the President's Special Representative, Edward B. Cohen, 
to discuss fundamental Federal concerns with the CNMI's 
immigration and labor policies.
    In fiscal year 1999,the CNMI used $1,000,000: 1) to assist 
the Department of Public Health with its health screening 
program ($320,000); 2) to provide assistance for emergency 
housing and shelter for alien workers ($200,000); 3) to 
continue joint law enforcement efforts by the FBI-CNMI Joint 
Task Force ($60,000; 4) to further supplement the Attorney 
General's Investigative Unit to identify and prosecute 
corruption relating to alien smuggling, organized and white 
collar crime, immigration and labor violations ($245,000); and 
5) to enhance the canine unit at the Customs Department to 
detect drug trafficking, particularly in the arrival and 
departure of aliens to the CNMI ($175,000).Federal officials 
have used the additional funds to establish a more active 
presence in the CNMI.
    This funding has increased law enforcement activities, 
technical assistance and training by the Wage and Hour 
Division, Solicitor's Office, Occupational Safety and Health 
Administration, and the Employment Training Administration in 
the Department of Labor; the Immigration and Naturalization 
Service, the Federal Bureau of Investigations, the U.S. 
Marshals Service the Drug Enforcement Agency, the U.S. 
Attorney's Office, Civil Rights Division, and the Criminal 
Division/Child Exploitation and Obscenity Division of the 
Justice Department; the Secret Service, U.S. Customs Service, 
and the Bureau of Alcohol, Tobacco and Firearms of the 
Department of Treasury; and the Diplomatic Security Service of 
the Department of State.
    Law enforcement personnel on-island has increased from four 
law enforcement related personnel in 1994 (1 Assistant U.S. 
Attorney, 2 FBI agents, and 1 U.S. Marshal) to 18 in 1999 (3 
Assistant U.S. Attorneys, 5 FBI agents, 2 DEA agents, 2 U.S. 
Marshals, I INS officer, 4 Wage and Hour labor investigators, 
and 1 part-time DOI Inspector General criminal investigator). 
In addition, attorneys from these agencies, the National Labor 
Relations Board, and the Equal Employment Opportunity 
Commission have been temporarily assigned on occasion to the 
CNMI on special detail to litigate and prosecute cases and 
additional Stateside Federal personnel have been utilized. All 
the Federal agencies have provided technical law enforcement 
assistance to the CNMI, including the National Institute of 
Corrections has provided specialized expertise to plan for a 
new correctional facility.
    The Federal District Court criminal cases, cases filed by 
the U.S. Attorney, and incarcerations have all increased 
dramatically since the beginning of this Initiative.
    In fiscal year 1998, the Department of Justice increased 
its base operations budget to assume total financial 
responsibility for the additional law enforcement personnel in 
the CNMI. The Department of Labor increased its base operations 
budget to assume twenty-five percent of its additional presence 
in the CNMI.
    Through the Initiative, the Department of the Interior has 
provided assistance to the Northern Marianas College to convene 
an economic development conference. A report is to be written 
by a steering committee under the direction of the College. The 
Department has also provided funding assistance to the Bureau 
of Census and the CNMI Bureau of Statistics to produce 
population and labor surveys with statistical data. In 
addition, funding was used to prepare two reports by the 
Department of the Interior consultant regarding labor, 
immigration and garment issues in the CNMI in February 1998. 
The first report, on the living and working conditions of the 
workers, consisted of hundreds of interviews. It was considered 
a ``sample snapshot'' of the situation in the CNMV. The second 
report, on garment companies and transhipment, compiled by a 
national expert on transshipment of garments from Asia via 
Saipan to the United States. While the report did not document 
the full extent of transshipments through Saipan, it did 
confirm that specific incidents had occurred in the past. Both 
reports were turned over to the Department of Justice and 
Treasury respectively.
    The consultants who prepared this report were originally 
retained to assist a Congressional delegation from the U.S. 
House of Representatives, Committe on Resources, in obtaining 
first-hand experience. The delegation's fact-finding mission 
was canceled, the consultants who were already in the area, 
were asked to compile the information on personal interview and 
site visits.
    The Administration has proposed legislation, introduced as 
S. 1275, that would phase-in Federal immigration and wage laws 
over a 10-year period. While S. 1275, as amended, has been 
reported by the Senate Committee on Energy and Natural 
Resources and would take steps toward addressing the 
immigration issues discussed above, we believe that the 
Administration's proposal more appropriately balances the 
CNMI's legitimate concerns about its economy with the Federal 
Government's interest in resolving these long-standing concerns 
over the negative consequences of the CNMIs labor, minimum wage 
and trade policies. We, therefore, urge Congress to enact 
legislation that appropriately addresses the full range of 
concerns set forth in the Administration's proposal before the 
close of the 105th Congress, and thus complete implementation 
of the Covenant as anticipated in 1976.

    The Chairman. Just for your comment, Mr. Fraser, about food 
poisoning. They just had an outbreak in the United States 
Senate cafeteria, too.
    [Laughter.]
    Mr. Fraser. I take your warning, Mr. Chairman.
    [Laughter.]
    The Chairman. Mr. Shruhan.

   STATEMENT OF DONALD K. SHRUHAN, JR., EXECUTIVE DIRECTOR, 
DOMESTIC OPERATIONS WEST, U.S. CUSTOMS SERVICE, U.S. DEPARTMENT 
                OF THE TREASURY, WASHINGTON, DC

    Mr. Shruhan. Good afternoon, Mr. Chairman and members of 
the Committee. My name is Donald Shruhan. I'm the executive 
director of Domestic Operations West, the Office of 
Investigation, U.S. Customs Service. I'm pleased to be here 
today to discuss the responsibilities of the U.S. Customs in 
enforcing laws in the Northern Marianas Islands. I have 
submitted a complete statement for the record. And, with your 
permission, I'll summarize it now.
    CNMI is considered, for U.S. Customs purposes, to have the 
same relationship in the U.S. as Guam, meaning that we do not 
have title 18 authority. In other words, U.S. tariff laws do 
not apply in the CNMI. We do have title 18 authority for 
criminal investigations, with a few exceptions. We can conduct 
criminal investigations and can make arrests in CNMI, as we do 
in Guam. Investigations are conducted by agents from our 
offices in Guam and Honolulu. As we work with CNMI Customs, we 
provide training on customs interdictions, contraband 
enforcement, money laundering, transshipment of textiles, and 
narcotics controls. CNMI Customs has implemented a number of 
recommendations we have offered relating to examination of 
containers.
    The following are U.S. Customs enforcement initiatives 
conducted in the CNMI. Textiles. Garment exports from CNMI 
reached $1 billion last year and is expected to exceed that 
amount this year. CNMI Customs Service relies upon reviews of 
documents that are presented by the manufacturers as to the 
production capabilities of the factories. We have and will 
continue to work with CNMI Customs Officials on this issue in 
order for the U.S. to accept as accurate the import documents 
certified by CNMI for export.
    In September of 1988, agents from our Honolulu office, 
Customs inspectors from the Port of Honolulu, and a Customs 
Service import specialist from San Francisco conducted an on-
site assessment of textile shipments in CNMI. Working with CNMI 
Customs officials, they examined 51 inbound containers. All of 
the examined shipments were found to contain fabric, as had 
been manifest by the Asian suppliers. The team also examined 
records maintained by CNMI Customs. All of the production data 
was provided by the manufacturers with little verification 
being completed. The team found no direct evidence of finished 
products being imported into the CNMI from Asia. We expect to 
continue our efforts with CNMI Customs on this issue.
    Narcotics. Our agents have been involved in investigations 
concerning the smuggling of narcotics into CNMI. Crystal 
methamphetamine, also known as ice; heroin; and the import of 
marijuana continue to be counted in the CNMI. CNMI Customs 
Service has requested our assistance in identifying internal 
airline conspiracies involving illegal importation of 
narcotics. We continue to work with CNMI Customs on narcotic 
investigations and on enhancing their investigative 
capabilities.
    Money laundering. Customs has investigated the possible 
laundering of money derived from drug trafficking and illegal 
weapons sales by Asian organized crime syndicates. The U.S. 
currency report requirements do apply in CNMI, however 
enforcement by CNMI officials has been sporadic over the past 
years. There is a growing concern that money from the legalized 
casino gambling will be moved internationally without 
compliance with the reporting requirements.
    Pornography and international property rights. There's 
anecdotal information that export violations and child 
pornography activities are occurring in CNMI. We are looking 
into both of these issues. There has also been alleged that 
vendors related to the tourist trade have been selling 
counterfeit merchandise protected by trademark and copyright 
laws. Recent information suggest that Japanese organized crime 
members may be involved in the trafficking of such merchandise.
    U.S. Customs will continue to work with CNMI Customs on 
each of the areas I've mentioned. We believe the U.S. Customs 
Service has sufficient authority to address any potential 
illegal activity coming out of CNMI and directed towards the 
United States. The administration's proposed legislation will 
include additional investigative authority that would be useful 
for addressing illegal activity within CNMI itself through our 
office in Guam and Honolulu.
    I can assure the Committee that enforcing the laws of the 
United States is the primary concern of the Customs Service. 
Mr. Chairman, this completes my remarks and I'll be happy to 
answer any questions.
    [The prepared statement of Mr. Shruhan follows:]

   Statement of Donald K. Shruhan Jr., Executive Director, Domestic 
   Operations West, Office of investigations, United States Customs 
                                Service

    Good morning Mr. Chairman and Members of the Committee. I 
am pleased to be here today to discuss the responsibilities of 
the U.S. Customs Service in enforcing laws in the Northern 
Mariana Islands. We share the concerns of this Committee that 
the relationship between the Commonwealth of the Northern 
Mariana Islands (CNMI) and the United States not create an 
opportunity for violations of U.S. laws, particularly regarding 
the importation of goods.
    First let me explain the relationship the Customs Service 
has with CNMI. The agreement by which the CNIMI joined the 
U.S., provided that the islands would be outside the Customs 
territory of the U.S.--as are smaller territories--but their 
products would be able to enter the U.S. Customs territory duty 
free. This enables the goods of nearby foreign countries to 
enter the islands at lower cost but the islands also have the 
benefit of having the U.S. effectively be the islands' market. 
With the signing of Presidential Proclamation #4534, the CNIMI 
is considered, for U.S. Customs Service purposes, to have the 
same relationship with the U.S. as Guam. In fact, the agreement 
mirrors Customs law for Guam in the CNMI. That means that the 
U.S. Customs Service does not have Title 19 authority relating 
to Customs duties. This means that tariff laws do not apply in 
CNMI. We do have Title 18 authority for criminal investigations 
with a few exceptions to include, Section 545 dealing with the 
smuggling of merchandise and Section 542 dealing with the entry 
of merchandise through false statements. The U.S. Customs 
Service conducts criminal investigations and can make arrests 
in CNMI as it does in Guam.
    The U.S. Customs Service participates as a member of a 
joint Federal working group for the Federal/CNMI Initiative on 
Labor, Immigration, and Law Enforcement. Our Resident Agent in 
Charge in Honolulu, Hawaii (RAIC, Honolulu) is the regional 
representative of the Customs Service for the Commonwealth of 
the Northern Mariana Islands. Investigations are conducted by 
agents from the Resident Agent Office in Guam and the RAIC, 
Honolulu office. In addition to textile transshipment 
investigations, we also conduct narcotics smuggling 
investigations and other investigative case categories enforced 
by U.S. Customs. As we work with CNMI Customs, we provide 
training on; customs interdictions, contraband enforcement, 
money laundering, textile transshipment and narcotics control. 
Based on recommendations made by U.S. Customs to the CNMI 
Customs during an on-site assessment, the CNMI Customs recently 
relocated its office space adjacent to the area utilized to 
off-load inbound container shipments. Further, facilities have 
been established at that location to allow for conducting 
intensive container examinations. At the suggestion of the U.S. 
Customs, the CNMI Customs has begun to conduct container 
examinations without the consignee/importer present. Prior to 
this, most container examinations were conducted in the 
presence of the consignee/importer and at the importer's 
premise. CNMI Customs collects a 3.7 percent excise tax on 
garments produced in CNMI and exported. There are no excise 
taxes levied on imported material used in the textile 
manufacturing process. Therefore, CNMI Customs concentrates on 
exports as opposed to imports.
    U.S. Customs Service conducts investigations and 
enforcement initiatives on CNMI, in conjunction with CNMI 
Customs with existing authority however, we do not have the 
authority to examine containers without prior notification to 
CNMI Customs. To that end the following are U.S. Customs 
enforcement initiatives conducted in the CNMI:

TEXTILES

    The most significant U.S. Customs Service enforcement 
initiative involves textile transshipment. Given that 
merchandise that originates in CNMI enters the United States 
duty free, and that wages there can be lower than the minimum 
wage in the United States, many overseas garment manufacturers 
have opened plants in CNMI in the past 10 years. These 
manufacturers typically use all Asian equipment, materials, 
management, and workers. These workers are primarily from the 
People's Republic of China, the Phillippines, and Bangladesh.
    The CNMI garment industry can legally produce goods with 
the ``Made in USA'' label. In July 1997, the country of origin 
regulations changed to make the origin of the goods the country 
where the apparel was assembled. Prior to July 1997, the 
country in which ``cutting'' of the material took place 
constituted the country of origin of the merchandise. Fabric 
therefore had to be cut in CNMI in order to shipped to the U.S. 
duty or quota free. Presently, the country in which the 
merchandise is assembled constitutes the country of origin for 
duty and quota purposes. If components are imported and 
assembled in CNMI, they will be quota free. However, concerning 
duty, if the components are from a third country and only 
assembly costs are added in CNMI, the cost of the assembly must 
be more than 50 percent of the value of the imported product to 
qualify for duty free treatment.
    The export of garments from CNMI reached 1 billion dollars 
last year and is expected to exceed that amount this year. 
Given that volume of exports, allegations of textile 
transshipment are expected to continue. At the present time, 
the CNMI Customs Service does not have the expertise or 
manpower to determine production capabilities in the factories. 
Instead, they review documents that are presented by the 
manufacturers as to the production capabilities. We have and 
continue to work with the CNMI Customs officials on this issue 
in order for the U.S. to accept, as accurate, the import 
documents certified by CNMI for export.
    In September, 1998, agents from the RAIC/Honolulu, 
inspectors from the Customs Area Port of Honolulu and a Customs 
Service Import Specialist from San Francisco conducted an on-
site assessment of textile-related importations and 
exportations in CNMI. During this assessment, these U.S. 
Customs officers, working in conjunction with CNMI Customs 
officials, examined fifty-one inbound containers destined to 
textile manufacturing facilities. All of the examined shipments 
were found to contain fabric as had been manifested by the 
Asian suppliers.
    The team also conducted an examination of the records being 
maintained at the CNMI Customs Garment Section. The export 
records were very detailed since they are the basis for the 
collection of the CNMI Government's 3.7% User Fee. Hogever, all 
the production data was provided by the manufacturers with 
little verification being completed by the CNMI Customs 
officials. The CNMI Customs outbound inspectors were inundated 
with processing the paperwork generated by the $1 billion-a-
year export industry. The team we sent found no direct evidence 
of finished products being imported into the CNMI from Asia. 
The amount of textiles being produced in the area however, does 
make it easier for fraudulent activities to be commingled with 
legitimate activity. At present, the CNMI Customs has taken 
suggestions provided by the U.S. Customs Service to address 
these observed shortcomings. We expect to continue our efforts 
with the CNMI Customs on this issue over the next few of years.

NARCOTICS

    The U.S. Customs Service is concerned about the possible 
trafficking of narcotics in and through the CNMI. Our agents 
based in Honolulu and Guam have been involved in several 
investigations involving the smuggling of narcotics into CNMI 
from Asia and other Pacific islands. Crystal methamphetamine 
(``ice''), heroin, and imported marijuana continue to be 
encountered in the CNMI.
    The CNMI Customs Service has requested U.S. Customs 
assistance in identifying internal airline conspiracies 
involving the illegal importation of narcotics. In the past we 
have helped identify corruption within the confines of the 
international airport. We continue to work with CNMI Customs on 
narcotics investigations and on enhancing their investigative 
capabilities.

MONEY LAUNDERING

    Another area of concern is money laundering. In the past 
few of years, Customs has investigated the possible laundering 
of money derived from drug trafficking and illegal weapon sales 
by Asian organized crime syndicates. The U.S. currency 
reporting requirements do apply in CNMI, however, enforcement 
by CNMI officials has been sporadic over the past years. The 
reporting requirements act as a trigger mechanism to identify 
other violations of law in CNMI. There is a growing concern 
that money from the legalized casino gambling industry on the 
island of Tinian will be moved internationally without 
compliance with the reporting requirements. It is suspected 
that Asian organized crime will move their money through 
Tinian.

PORNOGRAPHY AND INTELLECTUAL PROPERTY RIGHTS

    There is anecdotal information that export violations and 
child pornography activity are occurring in the CNMI. We will 
analyze the intelligence regarding this information and develop 
a strategy to address these concerns while seeking more solid 
evidence.
    Finally, due the tourist trade in the CNMI, it has been 
alleged that many vendors have been selling counterfeit 
merchandise protected by trademark and copyright laws. Recent 
information suggests that Japanese organized crime members may 
be involved in the trafficking of such merchandise.
    U.S. Customs will continue to do factory inspections in 
conjunction with CNMI Customs. We will also continue to work 
with and help them develop the capability to perform production 
verification visits to factories in CNMI. We also plan to 
continue to work with CNMI law enforcement personnel on 
conducting narcotics trafficking and money laundering 
investigations. We believe that the U.S. Customs Service has 
sufficient authority to address illegal activity coming out of 
CNMI and directed towards the United States.
    As noted by the other Administration witnesses, the 
Administration will be submitting its proposed legislation on 
CNMI shortly. The proposed legislation will include additional 
investigative authority that will be useful for addressing 
illegal activity within CNMI itself through our offices in Guam 
and in Honolulu.
    I can assure the Committee that enforcing the laws of the 
United States is the primary concern of the Customs Service. We 
will continue to work with the other agencies and the CNMI 
Customs Service to ensure that all applicable laws are 
enforced. Mr. Chairman, this completes my prepared remarks. I 
will be happy to answer any questions.

    The Chairman. Thank you, Mr. Shruahan. Mr. Gess.

   STATEMENT OF NICHOLAS M. GESS, ASSOCIATE DEPUTY ATTORNEY 
      GENERAL, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC

    Mr. Gess. Thank you. Mr. Chairman, Congressman Miller, 
members of the Committee, good afternoon. My name is Nicholas 
Gess. I'm an associate deputy attorney general of the U.S. 
Department of Justice. First, let me thank the Committee for 
the opportunity to testify today. Second, I have provided and 
submitted a written statement and I recognize that the 
Committee's time is particularly valuable. Mr. Chairman, I'd 
ask you to make my written statement a part of the record and 
allow me to--thank you.
    We have had a very positive impact on crime in the 
Commonwealth of the Northern Mariana Islands. Although it's a 
special and remote location, you've heard testimony earlier 
today about the active task force operations that occurred with 
participation by both the FBI and local law enforcement. That's 
as it should be in the CNMI and it's as it should be everywhere 
in this nation. People of the CNMI are entitled to the same 
level of protection from crime as all America and law 
enforcement needs the tools to get it done.
    Despite the lengthy distances involved to travel from the 
Continental United States, we are doing all that we can to 
enforce Federal criminal law. We have increased the operating 
strength of the United States Attorney, the Federal Bureau of 
Investigation and DEA, and we've placed a liaison officer from 
INS on the islands. At the same time, you should be aware that, 
in addition to permanent resources, we have made specialized 
resources. We've detailed attorneys from here at the Justice 
Department out there on an as-needed basis.
    However, as crime victims and law enforcement alike tell us 
across the nation, our first and most important duty is to 
prevent crime in the first instance. Clearly, once a crime is 
committed, we have a duty to investigate it and, if 
appropriate, prosecute. But if we can prevent the crime from 
occurring, we are all safer and the victims are spared whatever 
agony is involved.
    A crucial link is missing in the CNMI and that is the 
simple fact that the INA does not apply. Hence, foreign 
organized crime elements are readily able to infiltrate the 
islands and will continue to do so until and unless there is an 
effective immigration mechanism. And that, unfortunately, means 
applying the INA in the sensitive manner described by my 
colleague from the Interior to the CNMI. The analogy I would 
give you, Mr. Chairman, is simply that, if 15 people showed up 
at a hospital emergency room with broken ankles reporting that 
they had stepped in a hole in the pavement, if I were the 
hospital administrator, I could say, boy, I need to go out and 
hire more orthopedic specialists. But I would suggest that it 
would be far better to go fill the hole and not go through 
that. And that is the crux of the problem.
    Choices are stark and, so long as the INA does not apply, 
we will do our best to mop up by investigating and prosecuting. 
But when the CNMI is afforded the protections of the INA, we 
will be better able to protect the people and, for that matter, 
the rest of the citizens of America who are the worse off for 
allowing foreign organized crime to get a toehold on American 
soil.
    I am here to answer the Committee's questions and to assure 
you, on behalf of the administration and Attorney General Janet 
Reno, that we are here to work with the Committee. Thank you.
    [The prepared statement of Mr. Gess follows:]

   Statement of Nicholas M. Gess, Associate Deputy Attorney General,

I. Introduction

    Mr. Chairman, Congressman Miller, and members of the 
Committee, good afternoon. I am Nicholas M. Gess, Associate 
Deputy Attorney General of the United States Department of 
Justice. I would first like to thank the Chairman, the Ranking 
Minority Member, and the Committee Members for the opportunity 
to testify today. The issue of law enforcement in the 
Commonwealth of the Northern Marianas is as important to the 
Department of Justice as law enforcement anywhere else in the 
United States, and we are grateful for your invitation to 
provide our views to the Committee.

II. Law Enforcement Problems in the CNMI

    Under the leadership of Deputy Attorney General Eric H. 
Holder, Jr, several components of the Department of Justice 
have taken important strides to address law enforcement issues 
in the CNMI. The United States Attorney's Office, FBI, DEA, and 
Civil Rights Division, as well as the Child Exploitation and 
Obscenity, and Public Integrity Sections of the Criminal 
Division, the INS, Marshals Service and National Institute of 
Corrections are all involved in the Department's effort to 
combat crime in the CNMI. This effort addresses specific areas 
of crime in addition to systemic problems we face in enforcing 
laws in this newest jurisdiction of the U.S.
    The Department of Justice, in cooperation with the 
Departments of Labor and Interior, has had a positive impact on 
the law enforcement situation in the CNMI. We have been 
successful in prosecuting individual cases. We have shut down 
illegal businesses and taken drugs and guns off the islands. 
While we are doing everything we can and our efforts have 
produced measurable results, our hands are tied to correct the 
problem.
    Every day as we work to investigate and prosecute these 
cases, more criminals arrive on the CNMI. As we investigate to 
determine whether a recruiter who promised jobs to workers to 
get them to come to the CNMI committed fraud or is just a bad 
businessman, another group of cheated workers lands at the 
airport. As we seize a load of drugs brought in by members of 
the Japanese Yakuza or Chinese triad gangs, others are already 
on their way, ensured of easy access to the islands. As we put 
one gang member in jail, others arrive. In short, we are 
winning individual battles, but we may be losing the war.
    Law enforcement in the CNMI is complicated by a number of 
factors not present in most U.S. jurisdictions. These factors, 
which go to the heart of effective law enforcement, arise from 
the immigration policies of the CNMI government.
    Under the agreement by which the CNMI joined the United 
States, Congress has the authority to extend the Immigration 
and Nationality Act to the CNMI at any time. The Federal 
Government agreed for several reasons to not apply the INA 
immediately (in a decision which was not intended to be 
permanent) in the mid-1970s when it negotiated the eventual 
termination of the U.N. trusteeship over the islands. A reason 
put forth by the CNMI was the fear of the islands' negotiators 
that their archipelago might be overwhelmed by a massive influx 
of immigrants from nearby countries. Ironically, what has 
resulted from local CNMI control over immigration is indeed an 
explosion of the alien population that has had drastic 
consequences for the islands. This is not an immigrant 
population admitted for integrating into society with a view 
toward eventual citizenship. These alien workers are permitted 
by the CNMI to remain in the CNMI only for periods of a year or 
two, but we find that many workers are staying much longer. As 
a result, CNMI policies have led to a continual population 
increase of exploited temporary workers that lack political 
power. This alien population now actually accounts for 76 
percent of the total working population of the CNMI.
    This immigration policy has had a severe negative effect on 
law enforcement. Many of the aliens who find themselves on the 
CNMI are the victims of fraud. They left their homelands to 
follow promises of good paying jobs and U.S. citizenship and 
arrived in the CNMI to find neither. Many gave everything they 
owned to crooked recruiters and have no means of returning 
home. They are recruited and employed under indenture contracts 
that give their employers virtually total control over their 
stay.
    These unfortunate souls have few options. They lack the 
resources to return home, and are forced to work for twenty or 
thirty dollars a day in a place with a cost of living 
comparable to that of Hawaii, one of the highest in the Nation. 
Until recently, many of these shops were surrounded by barbed 
wire fences. The barbed wire arched inward, as if to keep the 
workers in, rather than to keep others out. Even today almost 
all of the factories and many barracks are surrounded by high 
cyclone fences, with security guards controlling the movement 
of employees. Conditions in many of these factories are 
deplorable.
    The dire situation these workers find themselves in causes 
them to shun law enforcement. Few legal aliens will step 
forward to report crimes for fear of losing their jobs, and 
even fewer will testify. Many come from countries where the 
citizens do not trust law enforcement officials, which leads 
them further away from our efforts. Others entered into 
foreign-based recruitment agreements that discourage any form 
of cooperation with law enforcement. We have discovered Chinese 
``shadow contracts'' that forbid an employee to cooperate with 
CNMI labor officials. In one case, we had to join forces with 
the Philippine Labor Office to protect some of our witnesses 
who were being prosecuted criminally for cooperating with our 
efforts. The case involved waitresses working in a bar run by 
Japanese Organized Crime who were subject to lock-down 
conditions. Fortunately, we were able to get the Philippine law 
suit quashed and the case resulted in $600,000 judgment for the 
waitresses. The lock-down conditions were terminated as a 
result of the case.
    Workers will endure a tremendous amount of hardship in 
order to remain and work because they need to pull themselves 
out of debt and they know that their contracts are good for 
only one year. If they fail to please their overseers and 
monitors they will be ostracized and returned home in debt. 
Once a worker is branded as a ``snitch'' he or she is 
blacklisted by the garment industry and will unlikely be 
legally employed in the CNMI again. Another obstacle to 
cooperation has been the local bureaucracy. The CNMI Department 
of Labor and Immigration (DOLI) has often been reluctant to 
issue work authorization to laborers who are seeking relief 
through the Federal system. With both local industry and local 
agencies often colluding to ``starve out'' those who cooperate, 
there is little wonder why workers find it so difficult to 
assist our law enforcement efforts.
    The lack of Federal immigration authority also directly 
facilitates the entry of criminals. As opposed to a local 
jurisdiction like the CNMI, a sovereign nation such as the 
United States is able to operate a ``double-check'' immigration 
system. Our double-check system is one in which (except for 
temporary visitors from certain nations that experience has 
shown present a low risk of immigration violation, and 
therefore can be screened at the port-of-entry), arriving 
aliens are screened twice by trained officers, first by a 
consular officer at a State Department post abroad before 
issuing a visa, and then by an immigration inspector at a U.S. 
port-of-entry. Although no screening system is foolproof in 
deterring criminal elements, our officers have access to 
international and U.S. lookout information that in many cases 
enables them to detect criminals, terrorists and other 
dangerous aliens attempting to enter the United States.
    None of these important safeguards exists in the CNMI, 
which has no consular operations abroad and therefore cannot 
operate a double-check system, nor are CNMI immigration 
facilities sufficiently secure to be granted access to Federal 
lookout information. As a result, members of Chinese Triad and 
Japanese Yakuza gangs have infiltrated the CNMI, bringing with 
them the criminal trades they plied in their homelands--drug 
trafficking, money laundering, gun sales, and corruption. 
Perhaps the worst thing they bring to the population of the 
CNMI is fear. Those who might otherwise be willing to report 
crimes or even to testify refuse to do so because they fear 
violence--either to themselves from gang members on the island, 
or attacks directed at their families back home.
III. Recent DOJ Efforts in the CNMI

    These problems complicate law enforcement in the CNMI. Last 
year, Deputy Attorney General Holder convened a working group 
of Department of Justice agencies involved in the CNMI to work 
toward solving the major enforcement problems there. The 
Department has implemented a number of the recommendations of 
the working group. Consistent with the Administration's Anti-
Violent Crime Initiative, these efforts are in partnership 
among the agencies and the local authorities.
    As I noted above, one of the major problems with 
prosecuting crimes in the CNMI is the reluctance of witnesses 
to cooperate and testify. In order to encourage witnesses to 
report and provide evidence of crimes the Department has 
established a victim/witness coordinator and has created a 
Temporary Witness Protection program. These programs are aimed 
in appropriate cases at making the decision to become a 
government witness less dangerous, and less difficult. And, 
because so many of the witnesses are non-English speaking, we 
are engaged in an uphill battle to locate and hire translators 
capable of working with prosecutors to gather evidence. We have 
also provided training to the CNMI law enforcement personnel in 
gathering, retention and use of forensic evidence, and in 
numerous other areas.
    The Yakuza and Chinese Triad gangs have brought with them 
the trafficking of drugs, including Methamphetamine, heroin and 
marijuana. As a result, drug trafficking has become a serious 
problem in CNMI. To combat this problem, the DEA has 
established a working group with the CNMI authorities to combat 
narcotics trafficking. To date, the task force has produced 64 
arrests and 42 convictions and has seized 1260 grams of 
Methamphetamine, 14 kilos of heroin, and numerous assets 
associated with the seized drugs. In addition to its work with 
the task force, the DEA has provided and continues to provide 
counternarcotics training to CNMI law enforcement officers. The 
DEA continues to assist and support the establishment of a Drug 
Demand Reduction Program by the CNMI government, but the local 
government currently lacks the funds to institute it. DEA has 
committed further resources to the enforcement effort by 
supplyinq a second DEA agent to the CNMI in June of this year.
    The Department of Justice has also taken steps to assist 
the Federal agencies in fighting public corruption. Last year, 
an attorney from the Public Integrity Section of the Criminal 
Division traveled to the Marianas to determine how the 
Department could best help. The Public Integrity Section has 
committed to providing training and assistance to the U.S. 
Attorney's office as it investigates corruption. The FBI has 
established a joint task force with the CNMI government to 
investigate public corruption, and is working in cooperation 
with the appropriate investigative units in the other Federal 
agencies involved in the CNMI to uncover and prosecute 
corruption.
    Trafficking in women and forced prostitution also exist in 
the Northern Marianas. Last year, an attorney from the Child 
Exploitation and Obscenity Section of the Criminal Division 
went to the CNMI to assess the prevalence of trafficking in 
women, and to determine how the Department can best address the 
problem. The Department is currently reviewing her 
recommendations. The U.S. Attorney's Office recently obtained 
convictions in three separate cases of persons who had forced 
young women from the Philippines and from China to engage in 
prostitution. Attorneys from the Civil Rights Division assisted 
the U.S. Attorney's office in prosecuting these cases. The 
Civil Rights Division also sent an attorney for two months to 
the CNMI to investigate potential criminal and civil violations 
of the civil rights laws.
    Although the INS does not have immigration law jurisdiction 
in the CNMI, it has stationed an immigration officer there 
since 1996 for liaison purposes, and has provided technical 
assistance and training to CNMI officials. The Marshals Service 
also has a presence on the islands. Two Deputy U.S. Marshals 
are assigned to the USMS office on Saipan, and three court 
security officers are assigned to the U.S. Courthouse.

IV. Application of the Federal Immigration Law is Essential

    We can and will continue to do our best to fight crime in 
the CNMI, and to work with other Federal agencies and the 
government of the CNMI to do so. We will continue our efforts, 
targeting specific areas of crime, and providing support for 
investigations and prosecutions. However, in order to control 
crime in the CNMI, the U.S. government must be able to prevent 
criminals from gaining unlimited access to the islands. We 
cannot expect to stop the flow of drugs, or guns, or 
trafficking in women and forced prostitution, unless we keep 
out the people who we know are already committing these crimes. 
The Immigration and Nationality Act that applies on the 
mainland and in other U.S. jurisdictions helps keep criminals 
out, and it is the position of the Department of Justice that 
the only way to fight effectively the larger crime problem on 
the CNMI is to apply the Act as it is applied in other U.S. 
jurisdictions with appropriate transitional phase-in provisions 
to prevent avoidable adverse impacts on the economy.
    As was reiterated at a hearing before the Senate on 
Tuesday, the Administration both supports (with some necessary 
amendments) pending legislation that would apply Federal 
immigration law in the CNMI with appropriate transition 
provisions, and is preparing to send forward a legislative 
proposal that would make the necessary immigration reforms and 
address other needs such as a Federal minimum wage. Federal 
immigration authority would allow us to screen those who would 
seek to enter the CNMI to keep out known gang members and other 
international criminals who would come into the United States 
to continue their harmful and dangerous activities. Merely 
preventing these known criminals from entering the CNMI would 
be a major step toward reducing crime on the islands.

V. Conclusion

    Applying the Immigration and Nationality Act to the CNMI is 
a necessary beginning, but we also will need the resources to 
enforce those laws effectively, including detaining, removing 
from the United States, and in appropriate cases prosecuting 
and imprisoning those who violate them. The Department of 
Justice stands ready to assist in this effort, and we remain 
committed to effective law enforcement in the Commonwealth of 
the Northern Marianas.
    I wish again to thank the Chair, Congressman Miller, and 
the Committee Members for the opportunity to provide the views 
of the Department of Justice on this important issue. We look 
forward to working with you.

    The Chairman. Thank you, Mr. Gess. I had one impression 
when I was out there with the Federal representatives that 
there was a sense that they had already made up their mind that 
it was a hopeless and the only way they could solve it was by 
Federal takeover and including your FBI. I'm hoping that is not 
the intention of the Justice Department or anybody else to 
think the only solution is the Federal solution.
    Mr. Gess. Absolutely not. Mr. Chairman, I can assure you at 
this point that later today I will be sitting down with the 
attorney general to review what has occurred at this hearing 
because she particularly asked me last night for impressions 
that I receive regarding cooperation out there, because it is a 
distant place.
    The Chairman. You see, cooperation is a two-way street. 
Like I say, every one of the Federal officials out there, I 
believe, had an attitude that they knew the answers. Don't 
bother. The government doesn't owe anything, we don't owe 
anything to the State representative or the Senate or the 
governor. And, of course, under the Covenant and the 
recognition of the Marianas by this Congress, we gave them that 
authority. And I hope everybody at this table understands that 
this has to be a working relationship. I don't think they can 
solve all the problems themselves. They can't do it without 
your help. But don't think you can solve the problems if you 
exclude them. I hope you've got that in your mind. As long as 
it's on my watch, that isn't going to happen.
    Mr. Berry, I've got to ask you one question that's of 
interest to me. During the past three years, you and the 
Department of Interior officials have accompanied non-U.S. 
citizens previously with the CNMI to appear as witness or give 
statements before congressional hearings or meetings with 
congressional staff. Describe to me all assistance provided by 
the administration to help these non-U.S. citizens to appear 
before Congress.
    Mr. Berry. Sir, the report that you're referring to--there 
are two reports. One, which we had done in preparation for the 
trip that you mentioned that you were going to take over--that 
unfortunately got canceled.
    The Chairman. By the way, you canceled it. I didn't cancel 
it. The administration canceled it.
    Mr. Berry. Well, I appreciate that Mr. Chairman. I guess 
the Department of Defense canceled it.
    The Chairman. Yes. Yes.
    Mr. Berry. We were eager and hopeful for your attendance 
and we appreciate your follow-up visit thereafter. In dealing 
with the CNMI, we face a number of issues. One is language.
    The Chairman. Yes. I understand that. But I'm asking 
directly, now, John. How did these people get here? Who paid 
for them? And I've got a series of questions after that. How 
did that occur and how were they picked?
    Mr. Berry. Mr. Chairman, I know we paid for their 
activities in the CNMI and the cost of that, my understanding 
is, approximately $175,000 for both----
    The Chairman. To bring them here?
    Mr. Berry. No, to do the report that was subsequently----
    The Chairman. No. I'm talking about the witnesses that come 
before the committees and talk to staff that were brought here 
under your wing.
    Mr. Berry. Yes, sir, Mr. Chairman. I'm informed that we did 
pay for the travel of those people. They were brought in under 
the request of staff for the hearings that both the Senate and 
the House were preparing and we did cover that. In terms of the 
exact amount, if you would be okay, we could provide that for 
the record.
    [The information follows:]
    The Chairman. Okay. How was their entry cleared by the INS?
    Mr. Berry. Mr. Chairman, I'll have to--I'm not exactly 
clear of the procedures that were followed. If we could----
    The Chairman. I'm going to ask the director of your office 
of district affairs be--come up and answer these questions. 
You're right behind him. Instead of whispering in his ear, I 
want to swear you in, too.
    Mr. Berry. This is Danny Aranza. He's the director of the 
Office of Insular Affairs.
    The Chairman. Yes. I'm going to swear him in. Danny, raise 
your right hand.
    [Witness sworn.]
    The Chairman. You heard the question. How was their entry 
cleared by the INS? Or was it cleared?
    Mr. Aranza. Mr. Chairman, the witnesses--the workers in 
question were brought into the United States under what's 
called a ``significant public interest parole,'' which means 
that they came in for--the justification was they were coming 
in specifically to provide information for these congressional 
hearings.
    The Chairman. Okay. Who provided for the transportation and 
the living expenses while they were here?
    Mr. Aranza. My office, Mr. Chairman.
    The Chairman. Your office did. What happened to these 
individuals after they appeared before Congress and where are 
they now and what is their immigration status?
    Mr. Aranza. I understand, Mr. Chairman, that they were 
paroled in for a period of one year. That several of them have 
applied for asylum and that these witnesses now reside in 
Seattle, Washington.
    The Chairman. How were these individuals identified?
    Mr. Aranza. They were identified, Mr. Chairman, by Federal 
agencies and human rights activists in the Commonwealth of the 
Northern Mariana Islands.
    The Chairman. By the governments there or by individual 
parties?
    Mr. Aranza. It was based on people who knew the community, 
who thought that the congressional committees who were having 
hearings could get the best information from different sectors 
of the workers community there.
    The Chairman. Were they told that the results, that they 
would have free transportation, room, and board and a 
possibility of asylum?
    Mr. Aranza. They were not told about the possibility of 
asylum, Mr. Chairman. What they were told was that Congress, 
staff wanted information regarding the situation in the CNMI. 
That, as workers, they had a unique perspective to share. And 
that my office would defray the expenses.
    The Chairman. I'm just concerned about how they were picked 
out. I mean, if I was an individual from Bangladesh or from 
China or somebody else and was aware that I'd have a free trip 
to the United States to appear before the Congress, get my room 
and board paid for, and I doubt if they didn't know they'd have 
a possibility of asylum, I would volunteer in a second. I mean, 
I'm just curious how it occurred.
    And, by the way, when the Committee traveled to the 
Marianas this year to see firsthand the conditions of the 
islands, a number of alien workers appeared with signs outside 
of Federal buildings where Members of Congress were meeting 
with alien workers. Mr. Berry, were you aware of any funds or 
inducements being provided or suggested to individuals to take 
part in activities to protest, demonstrate, or lobby against 
the conditions in the CNMI?
    Mr. Berry. No, sir, I was not.
    The Chairman. You are not aware?
    Mr. Berry. I am not aware.
    The Chairman. Mr. Aranza, were you aware of this?
    Mr. Aranza. No, I wasn't, Mr. Chairman.
    The Chairman. Now, remember, you're under oath.
    Mr. Aranza. Mr. Chairman, I was not aware.
    The Chairman. All right. That's fine. I just want to make 
sure you're aware of it. The Office of Insular Affairs is 
directly under your management and responsibility as the head 
of the office's policy and budget and management. Describe your 
involvement or your awareness of any action by Federal officers 
to permit the entrance of non-U.S. citizens into the U.S. from 
CNMI to lobby for conditions in the Marianas. Anybody aware of 
that?
    Mr. Aranza. Mr. Chairman, our only involvement as an office 
was to bring in these workers for the congressional hearings 
from last year.
    The Chairman. I'm sure both of you are aware that I'm 
deeply involved in this, your office. And I'm sure you're aware 
you're under oath. I do appreciate that.
    Mr. Customs man, what you were saying, you found nothing 
wrong, did you?
    Mr. Shruhan. Pardon me?
    The Chairman. You found nothing wrong with what was going 
on over there. You had found no illegal--like there have been 
some allegations made by the media and certain individuals that 
there was being manufactured goods laundered through Saipan. Is 
that correct?
    Mr. Shruhan. Well, there have been allegations of the 
transshipment of textiles.
    The Chairman. And you found none of that, did you?
    Mr. Shruhan. Well, when we did that assessment, we were not 
able to verify that. However, we do have ongoing investigations 
into that.
    The Chairman. And I hope so.
    Mr. Shruhan. Yes.
    The Chairman. I'm not saying that. But the allegations were 
made and they were printed in the papers and--without any 
backing up. But you found none and yet you're the head Custom 
person who did this investigation.
    Mr. Shruhan. Yes.
    The Chairman. Okay. The other thing that concerned me. You 
know, I heard reports of the recent report on the 
investigations and it says, ``This report remains the property 
of the U.S. Customs Service's internal use only. Please ensure 
that its contents are not released to the public or other 
agencies without our permission.'' Mr. Schaffer referred to 
that. Why was that restriction put in and why wasn't it 
reported to the Department of Interior and why wasn't it 
reported to the media and who else is involved? Why didn't we 
have a copy of it until yesterday?
    Mr. Shruhan. That report was requested by Congressman 
Schaffer and we provided it to him. The findings and 
recommendations were provided.
    The Chairman. But the governor was told not to release it. 
And why wasn't it submit--what I'm suggesting is this was a 
good report.
    Mr. Shruhan. Yes. We shared that report with the governor. 
There was some proprietary information in there that could not 
be released.
    The Chairman. There's some proprietary information?
    Mr. Shruhan. That's what I've been advised.
    The Chairman. Like individuals or--what would be 
proprietary about it? Did Interior know about it? Did Interior 
have that report? Did they know about it?
    Mr. Shruhan. They're aware of the visit, yes.
    The Chairman. But were they aware of the--see, what I'm 
getting to--out of the Department of Interior, there's been a 
lot of hanky-panky going on concerning the Marianas. Now why 
wasn't that report--and the governor had it--why wasn't that 
report sent to the Interior? And why wasn't it made public? 
Because the allegations, again, were coming out that this was a 
terrible thing occurring there. Now how can you reverse 
allegations when they're not factual unless the presentation is 
made with facts that say this isn't happening?
    You know, frankly, we didn't have it. He just got it. The 
Department of Interior didn't have it. Do you know who said to 
make it an exclusive document?
    Mr. Shruhan. No. No, I can get that information.
    The Chairman. Would you do that for me to find out, you 
know, who said that and so on?
    [The information follows:]
    The Chairman. My time's up. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. Mr. Gess, is it?
    Mr. Gess. Yes, sir.
    Mr. Miller. In your statement, you say, ``This 
immigration''--and I believe it's on the second page--``This 
immigration policy has a severe negative impact on law 
enforcement.'' Can you elaborate on that? You're talking about 
the immigration policy within the CNMI, is that correct?
    Mr. Gess. Yes, Congressman, we are. Fundamentally, law 
enforcement is a seamless web. It is not simply a set of 
organized crime or narcotics or customs or immigration laws. It 
functions as a package. The best example I can give you is that 
Al Capone went to jail for violating Federal income tax laws. 
Had they not applied in Illinois in the 1930s, he would have 
gone scot-free. Fundamentally, the problem in the CNMI is that 
there is virtually unfettered access to the islands. Once 
people are there, they're there to stay. The problem is that 
that gives perfectly good people and a lot of bad people the 
chance to get there, to get a toehold on American soil.
    Mr. Miller. When you say ``unfettered access,'' you're 
suggesting, therefore, that they have the inability or the 
unwillingness to keep out people who you think engaged in 
illegal activities.
    Mr. Gess. Yes. The CNMI is--this is not a criticism of a 
local government. State governments and territorial governments 
are simply not in a position to run an immigration service. And 
that protection of the borders to the colonial times has been 
the function of the Federal Government for exactly that reason. 
We provide a dual system of protection, which is consular 
officers of the State Department abroad doing the first-level 
screening and Immigration officers at the point of entry doing 
the second screening.
    Mr. Miller. So when the gentleman from the Department of 
Labor from the CNMI suggested that somehow they now have in 
place a parallel system, parallel is not to suggest comparable 
in terms of the checks that are done. When they say they're 
going to use a health clinic that our government uses in China 
or the Philippines and they're going to use a local law 
enforcement agency, that in no way mirrors what we do in terms 
of immigration policy?
    Mr. Gess. Your term is correct. It parallels; it is not the 
equivalent of.
    Mr. Miller. And so that system, if I read your testimony 
correctly, that system is an impediment to law enforcement in 
the CNMI and, eventually, you're suggesting, in this country?
    Mr. Gess. It is. It puts our Federal law enforcement 
officers behind the eight-ball playing catch-up.
    Mr. Miller. You also suggest that you're basically working 
a revolving door here. You say in the top of that page--I 
believe it's--yes, same page: ``As we seize a load of drugs 
brought in by members of the Japanese Yakuza and the Chinese 
triad groups, others are already on their way, ensured of easy 
access to the islands.''
    Mr. Gess. That's exactly the problem. We, again, are 
playing catch-up from behind the eight-ball.
    Mr. Miller. I assume, when we look at our drug policy 
elsewhere in the country, that there is a merging between drug 
policy and immigration policy in terms of trying to screen 
people we would suspect of or historically have been involved 
in the drug trade in one fashion or another?
    Mr. Gess. In fact, that is the seamless web of law 
enforcement.
    Mr. Miller. That's why we go through the double-check 
system in the country of origin and that system also allows us 
to check other countries where that individual may have gone, 
is that not correct?
    Mr. Gess. That is correct. We have----
    Mr. Miller. So a person applying from the Philippines or 
applying from China or from Korea or from Bangladesh, where-
have-you, the best that the CNMI can do is check some kind of 
law enforcement arrangement in that particular country, but 
that does not extend to the extent to which our consulates and 
our embassies would check that individual against all the rest 
of the information.
    Mr. Gess. That's absolutely correct. We could not expect 
any one territorial or State government, it doesn't matter how 
large or how small, to maintain a consular relationship with 
every nation.
    Mr. Miller. So, again, you know, we're in the position of 
commenting on the testimony earlier. They really don't know 
very much about people who enter the CNMI at all?
    Mr. Gess. It's hard to say. They cannot--what's fair to 
say----
    Mr. Miller. They don't have access to the same system.
    Mr. Gess. They simply do not have access.
    Mr. Miller. It's a secure system. You're in the law or 
you're not in the law.
    Mr. Gess. That's exactly it. They cannot get access to the 
secure systems and do not have the relationships with unrelated 
foreign governments with which one might not ordinarily expect 
to have information.
    Mr. Miller. To what extent is the fact that these people do 
not have the protections now, if you will, of American 
immigration law, does that impeded their willingness, their 
ability to come forward and to lodge complaints, either of a 
criminal nature or over in the Justice Department, people 
coming forward now to the ombudsman or, prior to that, 
lodging--because, earlier, the policy was, if you filed a 
complaint, you would be deported. I think that's now changed 
and you have, apparently, some right of reentry, which is 
interesting for a person from Bangladesh who's $30,000 in debt 
that they would have the right to reenter. But to what extent 
does the lack of having INS control deportation as opposed to 
CNMI change the circumstances of those people lodging 
complaints?
    Mr. Gess. Clearly, there needs to be a partnership in law 
enforcement between Federal and local enforcement efforts, but 
the impact is that, unless the task force officers who are 
engaged in a particular operation can assure prospective 
witnesses or cooperating individuals that they can protect them 
adequately, there simply is no question but that a rational 
prospective witness will not cooperate.
    Mr. Miller. Because as I understand it--and correct me if 
I'm wrong--many of these people either have paid recruiters--
although it was suggested now that the recruiters are no longer 
allowed or you can't hire from them--but many of these people, 
in fact, are found within the foreign countries and have been--
and some continue to be--subject to shadow contracts about 
their rights and they can, in fact, be deported by the CNMI 
government under current law. Is that not correct?
    Mr. Gess. That is my understanding.
    Mr. Miller. So if these people have borrowed money or have 
some other obligation, they or their families in the country of 
origin, they place themselves at great jeopardy by being 
deported because deporting them, in fact, could trigger their 
failure to pay off their debt or some obligation of their 
family. Is that not correct?
    Mr. Gess. That is correct. And, moreover, it puts those 
people beyond the protection of U.S. law enforcement 
authorities because they are in a foreign nation where we don't 
have jurisdiction.
    Mr. Miller. Right, so deporting people or the policy of 
having the local government here, the CNMI government, the 
Commonwealth, having it is both a weapon, if you will, and a 
shield. You can shield people by getting people out of the 
country, employers who have large complaints against them for 
back wages or what-have-you or it's a weapon against somebody 
not to complain about their circumstances or what's happened to 
them if they've been forced into prostitution or into the drug 
trade or have not been paid wages.
    Mr. Gess. Yes, Congressman.
    Mr. Miller. Under American immigration law, if the State of 
California wanted to deport this individual for complaining 
against an employer, they would have to go to the Immigration 
office of the United States Government and try to make that 
case.
    Mr. Gess. They would.
    Mr. Miller. That that would be grounds for deporting 
somebody.
    Mr. Gess. They would.
    Mr. Miller. I don't know if that's for deportment or not. 
But the fact of the matter is there is a protection that is 
given these indentured workers who have been brought here under 
these circumstances that is not afforded to them in the local 
immigration laws.
    Mr. Gess. That's just as a matter of necessity because we 
lack authority. And I do say ``we''----
    Mr. Miller. You have no ability to enforce or to question 
those local immigration laws.
    Mr. T4Gess. That's correct.
    Mr. Miller. Because our laws don't apply.
    Mr. Gess. That is correct.
    Mr. Miller. And so if a local immigration law facilitates 
the entry of drugs or facilitates the entry of communicable 
diseases, there's nothing that we can do with that with regard 
to the immigration laws. Is that correct?
    Mr. Gess. Right. We lose a piece of the seamless web.
    Mr. Miller. So then once the person is already on the 
island, then you try to catch up to them in terms of capturing 
the drugs that they may be bringing with them, as opposed to 
trying to prevent them from crossing the ocean to get there.
    Mr. Gess. That is correct, except that, at the catch-up 
point, it is the collaborative task force that----
    Mr. Miller. No, I understand that, because there you have 
an illegal substance; you have a violation of that law. But the 
fact is, the person got to the airport on the CNMI or got to 
the port in the CNMI under a much more lax system than would be 
allowed anywhere else in the United States.
    Mr. Gess. That is a fundamental problem, that they get to 
the CNMI in the first place.
    Mr. Miller. Thank you, Mr. Chairman. I'll have my other 
questions on the next round. Thank you.
    Mr. Doolittle. [presiding] Mr. Fraser, it's my 
understanding that American Samoa and the CNMI have similar 
wage review committees. Is that your understanding?
    Mr. Fraser. Structurally, they're similar, Mr. Doolittle. 
The minimum wage setting system in American Samoa is 
established under Federal law. It is a provision of the Fair 
Labor Standards Act. That does not apply in the Commonwealth. 
The Commonwealth has enacted its own similar procedure for 
setting minimum wages.
    Mr. Doolittle. And----
    Mr. Fraser. Which, by the way, has not happened yet, as I 
understand it.
    Mr. Doolittle. What has not happened?
    Mr. Fraser. They have established the structure, but they 
have not--that industry committee process has not resulted in 
recommendations for any changes to the minimum wage. It's been 
the same for the last three years.
    Mr. Doolittle. Well, it's my understanding that American 
Samoa's done it, but CNMI has gone through the process, have 
they not? All right. Well, I guess it's in the process. 
Apparently, in American Samoa, though, they voted to raise the 
garment minimum wage by 10 cents, I believe. Is that your 
understanding?
    Mr. Fraser. That sounds correct, sir.
    Mr. Doolittle. Okay. And I think the Federal Government 
recommended 30 cents. And that was rejected and they went to 10 
cents, instead, for $2.60 an hour.
    Mr. Fraser. Well, perhaps, Mr. Doolittle, it would be 
useful to take a minute to just explain the process. In 
American Samoa, under the Fair Labor Standards Act, the 
Secretary of Labor appoints a committee of external parties. By 
statute, those parties have to represent workers, employers, 
and the public's interest. Nominations for members of that 
committee are solicited from a variety of sources, including 
from the governor. But that committee does the analysis; hears 
the testimony; makes the recommendations; and the findings of 
that committee, the conclusions of that committee, have to be 
implemented by the Secretary. The Secretary doesn't have any 
discretionary authority to change the recommendations of the 
committee. So this is an outside party. It's not the Federal 
Government.
    Mr. Doolittle. No, I understand that. I recognize American 
Samoa is not the CNMI. But they're both American territories, 
sort of far-flung from the rest of the United States. I'm just 
looking at what happened with this committee you've been 
describing. There was no increase at all in the minimum wage 
for hotel. No increase for tour and travel services. No 
increase for private hospitals and educational institutions. 
Garment manufacturing: they did increase it by 10 cents.
    So we hear all of this criticism about the low minimum wage 
in the CNMI, but, in fact, another American territory has 
similarly low wages and we don't hear criticism of that. And I 
just wanted to note the comparison, I guess, because I think 
CNMI is being really hit for its low minimum wage, but other 
American territories, American Samoa, has a similarly low wage. 
Its biggest, I guess, industry, fish canning, they increased it 
3 cents.
    Mr. Faleomavaega. Will the gentleman yield?
    Mr. Doolittle. Yes. I'll--sure. Well, yes, I'll yield, but 
let's be brief, though.
    Mr. Faleomavaega. Just to say, briefly, that we have been 
under the Federal umbrella now for the last 50 years and from 
which the Federal Labor Relations Act has provided that for us 
to do that. Now, I'm not necessarily favorable to 
recommendations that the Committee has made for the past 
several years because increments of 3 cents an hour, to me, is 
utterly ludicrous. But that's exactly what we're faced with. 
And tied into probably rather than being a banana republic, 
we're a tuna republic and our whole total work force is tied to 
the situation that I wish that there could be some better ways 
of doing it. But I just wanted to note that.
    My friends in NMI is completely, totally locally controlled 
and managed. There's no Federal input whatsoever in the 
process.
    Mr. Doolittle. You know, I understand that. All right----
    Mr. Fraser. Mr. Doolittle, if I could just finish the 
point. I think it's important to emphasize that the results of 
the industry committee process in American Samoa are not the 
recommendations of the Federal Government. They are not the 
recommendations of the Secretary.
    Mr. Doolittle. Yes, I know. You made that clear.
    Mr. Fraser. The law makes us go through a process that has 
these results. That's not--I don't think--to say that we 
wouldn't criticize low minimum wages in American Samoa any more 
than Mr. Faleomavaega might.
    Mr. Doolittle. I just wanted to bring out for the record--
and I wish now to reclaim my time--that the fact of the matter 
is CNMI is made to appear in the media and, frankly, made to 
appear, I think, by statements of people in the administration, 
that this is somehow extraordinary and unique when, in fact, 
it's one territory. We only have a handful of them. And another 
one that's out there in the Pacific with them has got the same 
kinds of low minimum wages. That's the only point that I wish 
to make.
    Mr. Fraser. And perhaps the counterpoint, sir, would be 
that----
    Mr. Doolittle. Well, I'm not looking for a counterpoint. My 
time is up and I'm going to recognize now--who?--Mr. Underwood, 
I guess. Is that right? Is that the correct order? I don't want 
to--what is my--I don't have my order here.
    Mr. Underwood. Yes. That's the correct order.
    Mr. Doolittle. Mr. Underwood.
    Mr. Underwood. Thank you. Thank you very much, Mr. 
Chairman.
    Mr. Abercrombie. You could always change it to 
alphabetical, if you want.
    [Laughter.]
    Mr. Underwood. I always end up at the end on that system. 
But I thank you, Mr. Chairman. And just a comment on ``far-
flung,'' you know. When you say a territory is ``far-flung,'' 
it implies that it's been flung. But we were always there. 
We've always been there. We were never flung anywhere.
    [Laughter.]
    Mr. Underwood. I wanted to raise a couple of issues because 
I know that--and all of you have made commentary on the genuine 
efforts that have been made by the Tenorio administration and 
the current leadership of the legislature. And we all know them 
to be men of honor and they face very difficult challenges, but 
I just wanted to ask a general statement, perhaps, of Mr. Gess 
and Mr. Fraser. As a result of their efforts, have we seen any 
kind of improvement in the conditions which we would consider 
measurable? Mr. Gess.
    Mr. Gess. We can get back to you with a specific 
assessment.
    Mr. Underwood. Is that because you're under oath or----
    [Laughter.]
    Mr. Gess. No, I----
    Mr. Underwood. I was just looking for a general impression.
    Mr. Gess. It's hard to give general impressions. I can say 
that I've had the pleasure of working directly with Mr. 
Zachares under horrible conditions, late at night, given the 
time differences. And it's a pleasure to do so. It's a 
collegial relationship. It's the partnership that ought to 
exist between Federal and local government, whether a 
territory, a commonwealth, a State, or a city.
    Mr. Underwood. Okay.
    Mr. Gess. I am just simply not in a position, sitting here 
in Washington, to assess the impact and that's why I would 
prefer to get back to you.
    [The information follows:]
    Mr. Underwood. Okay. Mr. Fraser.
    Mr. Fraser. Mr. Underwood, I think from the Department of 
Labor's perspective, there has been some progress, not just 
from our enhanced enforcement and expanded enforcement, but 
from the relationships we build with our colleagues in the 
Commonwealth. I think my OSHA colleagues would say that we've 
seen some improvements in some of the garment barracks. But I 
think we would all agree that there are still incredible 
challenges, incredibly difficult circumstances for many, many 
of the workers that are there and a long way to go before we'd 
be anything like satisfied with the conditions either in terms 
of wage payment or occupational safety and health.
    Mr. Underwood. I appreciate the discussion about the nature 
of the structural problems that are involved. But I did want to 
give some credence to the notion that at least the current 
political leadership in the CNMI has made an effort, within 
their resources and their capabilities to do so. Now I 
understand that there may be structural problems involved, but 
I did want to make that point.
    Mr. Shruhan, you're not suggesting anything that would 
include the CNMI inside the Customs zone, are you? Because if 
you are, we're going to have some real problems in Guam.
    Mr. Shruhan. Could you say that again, sir?
    Mr. Underwood. You're not suggesting anything, any kind of 
policy directive, which would include the CNMI in the Customs 
zone?
    Mr. Shruhan. That is correct. We're not.
    Mr. Underwood. Okay, thank you. Mr. Gess, when, in the 
hearing the other day, the issue of the illegal Chinese that 
have been smuggled into Guam and then, subsequently, taken to 
the CNMI, just before they entered into Guam was raised and I 
think that INS made a kind of a surprising announcement that 
the CNMI was going to be reimbursed $750,000. Of course, that's 
of great concern to us in Guam when the total now is 
approaching over $5 million and, you know, we haven't seen 5 
cents yet of reimbursement. And so is there any movement on 
that from the perspective of DOJ?
    Mr. Gess. Well, yes, Congressman. Actually, it's from the 
perspective of the entire administration. I can tell you that 
there is a supplemental request to supplement our Fiscal Year 
2000 appropriation request which would provide the funds to 
reimburse the government of Guam. Because I know this is a very 
big issue for you and for Governor Gutierrez.
    Mr. Underwood. Thank you. And, just lastly, Mr. Berry, you 
raised the issue about--and people have raised the issue--that 
all the insular areas face some structural economic problems. 
But just as a point of comparison, wouldn't you say that more 
effort has been devoted to enforcement of Federal regulations 
in the territories than trying to help them develop alternative 
economic structures? Certainly in the case of the CNMI, that 
seems to be the case.
    Mr. Berry. Yes, sir.
    Mr. Underwood. I would then add that, you know, it would be 
very useful for the Department of Interior to become more 
involved in trying to develop sustainable ways of maintaining a 
healthy economy so that we wouldn't have to go through this 
process repeatedly. Thank you very much.
    Mr. Doolittle. Mr. Schaffer is recognized.
    Mr. Schaffer. Thank you, Mr. Chairman. Mr. Aranza, let me 
ask some more questions of the chairman's, but maybe a little 
differently. I just want to press this issue one more time. 
Were you aware of any activity by Federal employees to assist 
non-government individuals in the preparation of materials to 
lobby Congress or promote the administration's positions 
regarding conditions in CNMI?
    Mr. Aranza. I am not aware of those activities, but I'll be 
glad to review my files and provide a supplemental answer to 
that question.
    [The information follows:]
    Mr. Schaffer. The individuals that you mentioned that your 
agency had assisted in receiving being paroled? Is that the 
word?
    Mr. Aranza. Yes.
    Mr. Schaffer. Receiving parole immigration status to come 
to Washington, are any of those individuals that your agency 
assisted to be here in the room today or scheduled to testify 
today?
    Mr. Aranza. No, Congressman.
    Mr. Schaffer. They are not. So am I correct to understand 
that your agency provided no assistance to anyone who is here 
to testify today or in the room, presently.
    Mr. Aranza. To my knowledge, Mr. Congressman, we have not 
provided any financial support for anyone here to provide 
testimony to this hearing.
    Mr. Schaffer. Understood. Mr. Berry, in your statement, you 
said, ``It remains a position of the administration''--the 
written testimony. I don't recall whether you actually said 
this. ``It remains the position of the administration that the 
need to apply and phase Federal Immigration Wage and Trade 
standards is inescapable.'' Now I would like to ask you further 
about the seriousness of the administration to work on this 
issue and problem in CNMI and its objectives that it seeks to 
achieve here.
    Mr. Berry. Congressman, as I said in my testimony, we see 
that as an active component of the solution, but I add, as the 
governor and this Committee have pointed out and as Congressman 
Underwood just mentioned, we need to also diversify that to 
include assistance that we can provide to attract more private 
sector location of industries.
    Mr. Schaffer. Understood. The reason I'm asking is because 
I want to know how that squares with the memo from Mr. David 
North who is in your department. The memo, again, that I 
referenced earlier and is now part of the Committee record. He 
says, ``You need to be--and I could be fired, not shot for 
this--more distant from the Clinton Administradion. Bill 
Clinton has not made this a personal battle with Congress. So I 
guess, a second point, the administration has not spent--is not 
spending as much money as it should on enforcement, nor has the 
Justice and Treasury operations been as strong as its Labor and 
Interior programs. We will need to figure out how you can say 
that without implicating me.''
    Now when Mr. David North issued those statements, who's 
wrong? Are you wrong or is he wrong?
    Mr. Berry. Well, Congressman, he's wrong. The President is 
committed. The President has been committed. The administration 
has been attempting to seek legislation in this regard. Could 
we do more? Yes, we have been trying to step up on the 
enforcement side. Could we do more on the economic 
diversification? Yes, we need to be doing that. But the 
President is committed.
    Mr. Schaffer. Are you--first of all, are you aware of this 
memo I'm referring to, which was subpoenaed by the Committee?
    Mr. Berry. No, sir, I've not read that memo.
    Mr. Schaffer. Have not read the memo? Let me go on further. 
These are all editing suggestions to a private report that has 
been presented to the Committee and was being--in the drafting 
phase. Here are some themes he suggested in the editing, these 
are some themes: ``Notably, a description of what you saw as a 
part of a giant conspiracy. Maybe of how the PRC is taking over 
with the unwitting help of the American conservatives. A whole 
American island. This, I think, is a little sexier than the 
detailed litany of very real human rights abuses.''
    Do you think--is it the position of the Department of 
Interior to help paint a picture of a conspiracy where American 
conservatives are helping to take over a whole American island?
    Mr. Berry. No, sir.
    Mr. Schaffer. What would you say your responsibility is for 
a memo like this, in preparing a private report?
    Mr. Berry. I'm not sure I follow the question.
    Mr. Schaffer. Well, I assume somebody in the Department of 
Interior is eager to claim responsibility for these kinds of 
activities. I was hoping it might be you. Do you believe you 
have some responsibility for these kinds of memos.
    Mr. Berry. Oh, absolutely, sir.
    Mr. Schaffer. What is the extent of that responsibility?
    Mr. Berry. It would be to ensure that that person follows 
policies and laws and regulations of the United States, I 
think, and consistent with the administration policies as well. 
I think, in that case, that person clearly got carried away.
    Mr. Schaffer. Very good. In terms of the question I asked 
Mr. Aranza before about providing the assistance for 
individuals who have been here before, the Committee received 
another memo from Mr. David North, Office of Insular Affairs, 
Department of Interior to Steven--let's see--oh, it's from 
Steven Galstar, which requests the Department of Interior to 
help somebody get here.
    And then it results in a second memo on Department of 
Interior letterhead which is to ``David Johnson, Officer in 
Charge of INS in Guam'' and this memo suggests that, ``There's 
an organization we know and trust and has our advice to help 
securing brief visits in Washington, DC, via Guam for a 
Bangladeshi national who has been active in the workers' rights 
movement in Saipan.'' And then it says that, ``We need his 
assistance and advice as to how to proceed. I assume that a 
parole would be in order, but there may be some other 
mechanisms causing this individual to return to Bangladesh--
causing him to go back to Bangladesh to secure a visa would not 
be possible because of both financial and time considerations. 
Ideally, you or someone on your staff would fax or call Steven 
Galster and tell him what steps to take before the request was 
made.''
    That was, indeed, done, as I understand that individual is 
here in Washington, DC. Are either of you aware of your 
department's involvement in assisting in the parole--achieving 
this parole to come here?
    Mr. Aranza. Mr. Congressman, when I answered the previous 
question, I think I made it clear that we didn't provide any 
financial assistance to a particular witness. I think, based on 
that memo, it appears as though--was that a North memo, Mr. 
Congressman?
    Mr. Schaffer. A what?
    Mr. Aranza. Was that a memo from Mr. North?
    Mr. Schaffer. Yes, it was.
    Mr. Aranza. Well, if it was from Mr. North, then--and it 
was on Department of Interior letterhead, it appears, then, 
that we had communicated with the INS.
    Mr. Schaffer. Thank you. Who's from Customs? The Customs 
report? Mr. Shruhan. Congressman Young, the chairman, is 
exactly right that there was some effort in the States--
right?--in the cover letter to the governor of CNMI that the 
Customs report, ``remains the property of U.S. Customs and it 
is for internal use only. Please ensure that its contents are 
not released to the public or other agencies without our 
permission.'' Now that letter was January 11, which is, I 
presume, approximately when the report was concluded. Can you 
tell us one more time why this report was not shared publicly 
or was not able to be used until Tuesday in a forum like this?
    Mr. Shruhan. What this report--was done was an assessment. 
We went out--the U.S. Customs Service went out to CNMI with a 
team to do a textile verification assessment to look at the 
operations on CNMI in conjunction with CNMI officials. CNMI 
Customs officials were present at the time. This was done with 
CNMI Customs and with U.S. Customs officials. As a result, we 
shared their, basically, the findings and recommendations with 
CNMI officials.
    Mr. Schaffer. In addition to the finding of--or no finding 
of any problems in transshipments on the day of the 
investigation----
    Mr. Shruhan. It was a week of investigations where we 
looked at approximately 51 containers.
    Mr. Schaffer. The issue of opening containers while the 
owner of those containers is nearby was one that you raised in 
the letter. I just want to be clear and understand. Am I 
accurate to understand that U.S. Customs has suggested that 
CNMI Customs downlist the risk factor of those containers from 
the high-risk factor that they placed under today?
    Mr. Shruhan. Well, that is CNMI's--what we would like to do 
is see that the containers be searched without the consignees 
present.
    Mr. Schaffer. Right now those containers are regarded as 
high-risk when they come from another country.
    Mr. Shruhan. According to their policy now, I believe 
that's so.
    Mr. Schaffer. Right. And your recommendation is to lower 
the risk of those containers. Is that correct?
    Mr. Shruhan. I believe our recommendation was we should do 
this--CNMI Customs should do the search without consignee 
present.
    Mr. Schaffer. So, where it says here that, ``In addition, 
containers arriving in CNMI which are manifested as fabric 
should be considered low-risk and not subject to the 
restrictions.'' You're saying that you said something other 
than ``low-risk''? Is it----
    Mr. Shruhan. Right now----
    Mr. Schaffer. Did you suggest they be characterized as low-
risk rather than high-risk?
    Mr. Shruhan. I believe from during our inspection out 
there, CNMI Customs has indicated that they have searched 
numerous containers entering from Asia and they have not found 
any trans--they've only found fabric.
    Mr. Schaffer. Just to be clear, you believe it to be 
prudent to lower the risk category of those containers when 
they come into CNMI? Am I reading this incorrectly?
    Mr. Shruhan. The people that did the assessment believe 
that to lower it would be fine.
    Mr. Schaffer. Thank you, Mr. Chairman.
    Mr. Doolittle. Mr. Abercrombie.
    Mr. Abercrombie. Thank you, Mr. Chairman. Mr. Berry--oh, by 
the way, even though I'm not under oath, Mr. Chairman, I think 
I should tell you I have a great deal of affection for Mr. 
Berry as a result of his work in Hawaii and that Mr. Aranza is 
a personal friend of longstanding, whom I've met through his 
wife. Is that sufficient? His wife who worked and whom I love 
and admire. I want to make sure that no one misunderstands 
anything I have to say.
    Mr. Berry, if somebody in the Department of Interior abused 
his or her authority or responsibility or obligations, either 
as an employee or as a representative of the policy or 
obligations of the Department of the Interior, that person 
would be disavowed, would he or she not be?
    Mr. Berry. Yes, sir. And further than that, we would begin 
investigations. In this case, in both cases, Mr. North, for 
example, is no longer with the Department of Interior. But 
there is an ongoing inspector general investigation. The minute 
that I was informed--I have an ongoing policy under my 
administration of the Office of Policy, Management and Budget, 
whenever anything alleging any illegality or impropriety is 
brought to my attention, I immediately refer it to the 
inspector general and ask for his or her advice on what should 
be done.
    Mr. Abercrombie. Okay.
    Mr. Berry. In this case, this case was Mr. North. As soon 
as the committee made us aware of it, it's been referred to the 
Office of the Inspector General but, further, it's also been 
referred to the Office of the Special Counsel, which is an 
independent government agency set up to investigate violations 
of the Hatch Act.
    Mr. Abercrombie. So, to the degree and the extent this 
individual did anything along the lines that you've just 
outlined, you were not aware of it until it was brought to your 
attention. Is that right?
    Mr. Berry. Yes, sir.
    Mr. Abercrombie. And when it was brought to your attention, 
you took appropriate steps immediately, right?
    Mr. Berry. Yes, sir.
    Mr. Abercrombie. So if somebody in the department here or 
even perhaps in the United States Congress does something 
stupid or illegal that presumably when that stupidity is made 
manifest or the illegality is found out, appropriate action 
will be taken?
    Mr. Berry. Yes, sir.
    Mr. Abercrombie. And you disavow anything that was said--I 
don't know if you can disavow anything that was said stupidly 
because you might not have enough time during your tenure in 
office to do it.
    [Laughter.]
    Mr. Abercrombie. But anything illegal or, for that matter, 
against the policy of the department and so on, you disavow.
    Mr. Berry. Yes, sir. Absolutely.
    Mr. Abercrombie. Thank you. You notice I didn't say it will 
never happen again, right?
    [Laughter.]
    Mr. Abercrombie. Mr. Fraser, maybe you can help me with 
this. I want to understand exactly the question around, not so 
much the minimum wage, which I have an idea is pretty close to 
the maximum wage. Would that be a fair statement? Is there much 
wages, except for the instance that we mentioned about some 
government jobs, in which the minimum wage is $3.05? Is that 
pretty much the mean average wage, excluding those other 
occupations?
    Mr. Fraser. Mr. Abercrombie, there are very rare 
exceptions. If you look at the want ads in the local papers, 
almost all the jobs, no matter what they are, are listed at the 
minimum wage. If it's an accountant, whatever it might be.
    Mr. Abercrombie. Okay.
    Mr. Fraser. But there are some few exceptions, that you 
will find some job listings, a few job listings where $3.05 per 
hour is not the advertised pay.
    Mr. Abercrombie. Okay. If that's the case. Then, what's the 
situation with the so-called recruiter fees? Why wouldn't the 
manufacturer pay the recruiter fees? Why on earth would the 
employee coming pay the recruiter fees? Doesn't that put what 
amounts to an indentured--I won't say indentured servant--but 
an indentured worker at almost an immediate disadvantage in 
which he or she will, in all likelihood, be playing catch-up 
for the rest of their working time in the contract?
    Mr. Fraser. Not almost an immediate disadvantage. Many of 
the workers I've talked to in the Commonwealth have typically 
had to borrow money or sell assets to come up with $3,000 or 
$5,000 or $7,000 to get on a list of potential workers to be 
referred for employment in the garment industry or in 
construction or in----
    Mr. Abercrombie. And is in the nation of origin?
    Mr. Fraser. Both in their home country and, in some cases, 
in third countries, they will have to come up with these fees. 
In fact, we have--and I think the Committee today will hear 
evidence that this very practice goes on within the 
Commonwealth when employees seek--when employees are dismissed 
and seek to find a new job or are transferring from one 
employer to another. They are commonly asked by the employer to 
pay a fee to be considered for employment. So the employee 
doesn't start out whole.
    Mr. Abercrombie. So is the practice--I'm sorry, I don't 
understand it. Does this mean that some--I'm not quite sure. 
What is the recruiting? If the country--if you're paying $3.05 
an hour, that's not a lot of money in the American economy. 
Okay? And someone's coming to take the $3.05 an hour, and 
you're telling me that the recruiting fee may be in the 
thousands----
    Mr. Fraser. Several thousand dollars typically, yes.
    Mr. Abercrombie. Several thousand dollars. Well, I mean, is 
that money taken out of the salary as it's earned? Because they 
couldn't have it ahead of time.
    Mr. Miller. Would the gentleman yield?
    Mr. Abercrombie. Sure.
    Mr. Miller. Because I think it's very hard for us to 
comprehend this. No, the money's not taken out of the salary. 
The money is paid to somebody in the country of origin or the 
third country for the right to get a ticket to come to America. 
That's what it's about.
    Mr. Abercrombie. It's paid upfront?
    *Mr. Miller. As many of these have testified, they, their 
village----
    Mr. Abercrombie. Who pays it?
    Mr. Miller. [ continuing] or their family believe that 
they've won the lottery by getting the ticket because they're 
told they're going to America. And then they pay the money. 
They come here. They found out they don't have the job. Now 
they're in violation of the law in the CNMI. And now they do 
the best they can.
    Mr. Abercrombie. I see. So these--am I correct--I'm sorry 
to sound naive about this, but I'm trying to get through all 
this. I'm reading the material and when I see it, I haven't 
quite grasped how it works. That's a lot of money. How do 
people accumulate that money--I'm thinking about how the 
plantation system worked in Hawaii, you know, 100 years ago. Or 
even to the point of the Filipino workers coming in after World 
War II. How would people in Bangladesh or the Philippines, for 
that matter, accumulate that kind of money to send somebody to 
work? And at the idea that it'd be $3 an hour, because the 
ratio doesn't make sense to me.
    Mr. Fraser. Well, if the worker is lucky enough not to be a 
victim of recruitment fraud and arrive in Saipan only to find 
out there isn't a job and that they are unemployed and don't 
have any way of paying it back----
    Mr. Abercrombie. Well, even if they are employed, at $3 an 
hour, that's 100----
    Mr. Fraser. They have 20 weeks, 30 weeks, 40 weeks, in some 
cases a year or more work to do before they can start paying 
back--before they start earning money that they don't already 
owe before they've arrived.
    Mr. Abercrombie. Okay. All right. Well, I'll let that go at 
this point. But that seems to me that that amounts to, 
essentially, to slavery.
    Mr. Fraser. Well, it's part of the reason that we are here 
talking about the need for a structural solution. That 
normally, in a situation where an employer or an economy is 
investing in low-wage, labor-intensive industry, when it 
doesn't have a labor force, you question the wisdom of that 
economic strategy, but you'd also think employers would have to 
go out and spend money to recruit workers. What's happening in 
this upside-down economy is just the opposite. Workers are 
spending money to get these jobs. Employers are facilitating 
that. That's coming out of their earnings. So the already low 
earnings they have are already owed to somebody else when they 
start that work, if they're lucky enough to have a job.
    Mr. Abercrombie. Thank you.
    Mr. Doolittle. Thank you. Mr. Faleomavaega is recognized.
    Mr. Faleomavaega. Thank you, Mr. Chairman. This is one of 
the biggest problems that those of us who do represent the 
insular areas, when one insular area is pitted against another 
for findings of fault and shortcomings and the problems 
attending to not only NMI, but certain the territory that I 
represent. And I'm certain that it was not all intentional, but 
this is where we are and that's the problem that we have to 
deal with.
    Mr. Berry, you mentioned that 90 percent of the work force 
currently in NMI is alien workers?
    Mr. Berry. Of the private sector, Congressman.
    Mr. Faleomavaega. I see. And----
    Mr. Berry. And 76 percent of the total work force, as I'm 
advised.
    Mr. Faleomavaega. And 90 percent of the work force of the 
government is NMI?
    Mr. Berry. The exact percentage, Danny, do you have the 
exact----
    Mr. Faleomavaega. Can you submit that for the record? I 
know my time is short, so I want to----
    Mr. Berry. Yes, sir. But it's in that approximate range.
    [The information follows:]
    Mr. Faleomavaega. Mr. Berry, it's my understanding over the 
years that the Department of Interior is the lead agency for 
the insular areas, whether we like it or not. The DOI is the 
lead agency on matters affecting the welfare and the needs of 
the territories. Basically, the position that you currently 
hold towards NMI--and I think, as it was alluded to earlier by 
my friend from Guam--we're exposing the problems affecting 
NMI's needs and the limited resources. We can go regurgitate 
all of that, but my question is what is the Department doing to 
give assistance to NMI to resolve these basic issues? If you're 
saying that they are structurally incapable of fulfilling its 
responsibilities towards immigration and so on. And what--how 
much of an effort has really been made by the administration to 
give assistance? Or should you give assistance?
    Mr. Berry. Well, Congressman, in terms of--as we've 
described and I think as has been discussed and debated fully 
this morning, the issue of immigration, it's not a question of 
more enforcement of a Federal law, it's the ability to enforce 
a law that we cannot do right now. That is one, as we believe, 
as the administration believes, is one of the cornerstones to 
much of the pain and problems we find. There are many other 
things that we've discussed that apply, as you've correctly 
identified, to all of the territories, including the Virgin 
Islands in the Atlantic, that we need to seek a way to 
encourage American companies to invest in our American 
territories.
    Mr. Faleomavaega. Mr. Berry, this has been a farce, you and 
I know that, for the past 50 years. American companies will not 
come to these insular areas to invest. I guess, by chance, we 
were lucky to have Starkist, our canning industry, to come 
because it had no 3A in section 936 that was also benefiting 
Puerto Rico. And that's the only reason why they're down there. 
It's not because they have a love for the Samoan people. They 
want to make the money. And exporting $450 million worth of 
canned tuna to the U.S., it's not pennies, as far as I'm 
concerned.
    So we talk about self-sufficiency that has already been 
there. The words that have been used for how many years now? 
But it's not getting there. And I just wanted to ask you, what 
are the real advents of what the administration has done to 
improve the situation? Because you've given us the problems, 
give us the solutions, now, to these problems. Aside from, you 
know, a bill has been introduced in the Senate to do this. Does 
the administration support that?
    Mr. Berry. Sure. Congressman, could I ask Danny to discuss 
some of the initiatives that we've taken in Insular Affairs, 
along these lines? We have begun----
    Mr. Faleomavaega. Well, my time is limited. Can you submit 
that for the record?
    Mr. Berry. Absolutely.
    Mr. Faleomavaega. I would like to personally know about 
this.
    The information follows:]
    Mr. Berry. One of the things we've done which I would like 
to seek to expand to the other territories as well is we have 
begun a process of working with the Marianas Islands. We have 
had a study in place, jointly with the Marianas Islands, on 
economic diversification. It----
    Mr. Faleomavaega. Okay. My time. I've got to run to Mr. 
Fraser now. As I've said earlier, now my territory is being 
pitted against NMI because of low wages. Mr. Fraser, you know, 
we recently had a Wage and Hour Committee hearing in American 
Samoa. And I always felt comfortable this has the umbrella of 
the Federal presence because it will help us. Now, given the 
fact that some of these industries are giving only a 3 cents 
raise here, 10 cents--my God, it will take 132 years before we 
reach minimum wage, which is supposedly the Federal goal for 
American Samoa to achieve.
    Now these wage recommendations, to tell you quite honestly, 
it's unpardonable, as far as I'm concerned. But I'd like to 
hear your comment. I don't even know what our standard of 
living, the cost of living, the per-capita income, the price 
indexing. The food that we buy costs almost the same as in 
Hawaii and other States in America. Our per-capita income now 
is somewhere $6,000 per annum, which is twice below the poverty 
level of this country. I mean, that's what we're faced with 
economically. And I must say that the wage-price committee has 
not given justice to this idea that we're supposed to come up 
to the minimum wage. We've been doing this for the last 30 
years and we haven't gotten anywhere. Can you help us on that?
    I think my criticism of the Department of Labor is that we 
haven't had any real economic specialists that could really 
give us the bottom line as to where we're at and what we're 
doing and where we're going.
    Mr. Fraser. Mr. Faleomavaega, we'd be delighted to work 
with you on this. This has been a problem from our perspective 
as well. This industry committee process used to apply in many 
of the insular areas. It applies now under Federal law only in 
American Samoa. As I explained earlier to Mr. Doolittle, we do 
not have power over the activities of--the department, the 
Federal Government does not have power over the activities of 
the Committee except in the appointment process. And that is 
strictly limited.
    The committees are supposed to serve two purposes, as 
you've properly pointed out. One, is to----
    Mr. Faleomavaega. Mr. Fraser, I know my time is up. And I 
know----
    Mr. Fraser. Okay. For the record, Mr. Faleomavaega----
    Mr. Faleomavaega. I definitely would like to work with you. 
Mr. Berry, with all due respect, you're my dear friend, but I 
was very dismayed, and the Department of the Interior is the 
lead agency, to find out from my colleagues that you had made a 
recommendation to our budget cycle this year, without even 
consulting me. And I'm very, very disappointed that, if the 
Department of the Interior is the lead agency giving assistance 
to the territories and not even the courtesy of notifying their 
respective--and, yes, I'm a delegate, I don't vote on the House 
Floor, but I do vote in the Committee. I really, really would 
appreciate the courtesy of working with my office to find out 
what your policies are towards American Samoa so that the 
governor and I could be made better aware of your concerns and 
the problems that we're faced with. Thank you, Mr. Chairman.
    Mr. Doolittle. Thank you. I sense a great deal of 
frustration by our government officials in the CNMI, who seem 
to have an expectation--and as I understand the way this is 
supposed to work, they are entitled to have an expectation--
that the Federal officials, through the Department of Interior, 
but all the Federal officials that are supposed to be involved 
with their commonwealth are supposed to kind of help them. I 
mean, I thought that was sort of the role of the Interior 
Department of Federal officials to help these territories get 
on their feet and progress. I don't know. Maybe that's 
paternalism in the good sense. I don't know. But that was what 
I thought was the purpose of this relationship.
    Mr. Faleomavaega. If the chairman would yield, I just want 
to say that I've always felt that the relationship is supposed 
to be a partnership.
    Mr. Doolittle. Well, I think that's true. It is a 
partnership.
    Mr. Faleomavaega. It's supposed to be a partnership.
    Mr. Doolittle. That's what it should be, is a partnership.
    Mr. Faleomavaega. It hasn't happened that way, Mr. 
Chairman.
    Mr. Doolittle. Instead, it seems like--it doesn't seem like 
there's a very helpful attitude reflected. Mr. Berry, you're 
over all of this, at least in the Department of Interior. Would 
you care to react to that observation?
    Mr. Berry. Mr. Chairman, as I've discussed, we can do 
better and we're going to do better. We have begun that 
dialogue with the Marianas. It must be a partnership. And to be 
effective, it's going to take both of us rowing in the right 
direction. But, at the same time, this issue of immigration, 
which we see is key to many of these problems, we could triple 
Federal law enforcement. We could quadruple by an exponential 
factor of 100. It will not solve this problem.
    Mr. Doolittle. Well, may I just react to that? I mean, the 
Marianas came into the United States. It was via the compact, 
wasn't it? There's a Covenant. I mean, it was an agreement 
between these two entities. And to sit here and hear all of you 
from the Federal Government attack one of the underlying 
premises of that Covenant. I mean, it's fundamental. Which is 
that they get to control their immigration. That, to me, seems 
like it's not acting in good faith. That was the terms of the 
bargain when they joined us.
    Mr. Berry. Mr. Chairman, it was not a permanent term of the 
bargain. It was recognized in the beginning to protect their 
indigenous population. But when you see that the majority of 
the population, over 58 percent of this island, is now alien 
indentured work force, the principle and the spirit with which 
that was negotiated has been woefully abused.
    Mr. Doolittle. Well, you've heard them acknowledge in 
testimony that this whole thing with the garment industry is 
going to top out and decline. And it's going to happen in less 
than five years. So instead of expending so much effort, from 
the administration's viewpoint, in focusing on just this, what 
are we doing, what plans are being laid to help them transition 
to what they, themselves, want to get to? And they admit it is 
going to be something new and different than where we are.
    I mean, they are sort inherently disadvantaged because they 
are one of these remote territories, so why don't we just work 
on finding a solution for them and I'm frustrated to hear the 
constant attack on their minimum wage and all of that. And it's 
kind of relates--I mean, it's principally focused around the 
garment industry.
    Okay. I mean, in five years the garment industry is on a 
decline. So what else do we have to--how are you going to help 
them get to the next stage? That's what I'm interested in.
    Mr. Fraser. Mr. Doolittle, if I may, I'd like to start with 
the first part of the question--and I'm sure John would want to 
address the next steps. When you say, ``Focus on just this,'' 
let's remember what ``jusd this'' is. It's 33,000 poor, 
vulnerable, entirely dependent, young men and women from Asian 
countries.
    Mr. Doolittle. All right. Now, Mr. Fraser, it's my time and 
I'm going to reclaim the time.
    Mr. Fraser. Okay.
    Mr. Doolittle. Just to observe I've been there. I don't 
have the advantage of having comparatives, like Mr. Young did, 
but to listen to those who saw it years ago versus how it is 
now, it's come a long ways. Mr. Berry, do you feel that we've 
made progress in the CNMI in terms of their overall economic 
condition, between now and when the Covenant was entered into? 
Yes or no?
    Mr. Berry. Yes.
    Mr. Doolittle. Thank you. I appreciate hearing that. My 
time is up and I'm going to recognize Mr. Miller for--we're on 
the second round of questioning now, which I intend to be the 
final round.
    Mr. Miller. Well, Mr. Doolittle, we have--under the rules, 
we have time to ask each of the witnesses five minutes worth of 
questions. So let's see where we go with this.
    Well, I certainly wouldn't want to say in my congressional 
district that success is and improvement is when we've doubled 
the number of people receiving Food Stamps while we've engaged 
in a great economic experiment here that has taken its toll on 
the number of poor, vulnerable workers that you describe. I 
find it interesting, with all due respect to the gentleman from 
Samoa, that, yes, you are the lead agency and yet we continue 
to resist the notion of your recommendations. We have the 
recommendations of the Justice Department, of the Labor 
Department, of the Department of Interior, who are far more 
familiar with this than the members of this Committee, who tell 
you we have a gaping hole in our system. Most Americans would 
be shocked to find out that, given the entire immigration 
system of this country and the protection of America's borders, 
that there's a big hole sitting out there in the middle of the 
Pacific where people can simply show up and we will have no 
knowledge of their background, their intentions, or their 
ability to carry out activities against this population or 
other populations.
    You wouldn't accept this in Texas. You wouldn't accept it 
in Canada. You wouldn't accept it in Kansas. You wouldn't 
accept it in Florida. But right out there, that's what you have 
sticking out into the middle of the Pacific.
    The goal, as we've heard from numerous Justice reports, 
this and others, is to get your toe on the foothold here. 
Because then you go here, you go to Guam, you go to the United 
States. And that's why the gangs keep coming. And that's why 
the poor and the dispossessed keep coming is they keep telling 
them they're getting a ticket to America.
    So I find it rather interesting. We keep saying we want a 
partnership. And my friends on the other side of the aisle here 
say they want the Federal Government to do more, which is kind 
of an interesting chant. They want the Federal Government to do 
more. They want to be partners. Yes. We're the partners on the 
deck of this ship and the CNMI is the partners below the water 
line and they won't fix the hole in the ship, but they want us 
to remodel the cabins.
    That's not a partnership. And this ship is sinking, as has 
been pointed out by every one of these graphs. All of the 
indicators in the CNMI are negative, they are continuing to go 
negative, and they've been going negative a long time. And why? 
Because you have no ability to build an alternative economy 
when you have an economy that's so heavily reliant on the 
illegal use of labor in the United States, where you get the 
benefit of the ``made in the U.S.A.'' label; you get the 
benefit of no quotas; and you can use that time and time again. 
And when you can reinvent yourself in businesses, you get a 
claim against somebody for back payment of wages, they reinvent 
themselves, and the CNMI--not the Federal Government--the CNMI 
allows them to open up another business under another name and 
everybody knows who they are.
    When we ask people how do people get in under these false 
documents? You show them the documents, they say, oh, we know 
these people who signed this document. Yes, I know this man. 
No, these people never had a job. That's not a business. That 
person lives down the street. It is an island, as you say, and 
they do know what's going on. And the level of corruption is 
allowed because the immigration laws cannot be enforced.
    We can argue over minimum wage until the cats come home. 
You know what? If you didn't have this huge subsidy of illegal 
labor, of people who could get in under the immigration law, 
who mightn't be, in many instances, wouldn't be otherwise able 
to get in, the minimum wage problem would take care of itself. 
Because people on the island would have to make a decision 
about what they're prepared to work for or not work for.
    Now most of the citizens have already made that decision. 
They're working for the government. But all the aliens are 
working out here in an area where they have no labor 
protections. They have no rights of a green card under our 
immigration laws. It is very difficult for law enforcement to 
pursue their rights. And yet we're told, somehow, this is a 
system that's going to transition? It's not going to transition 
into anything. It's going to continue its downward spiral. But 
that's what the political system in the CNMI is endorsing and 
supporting and they're welcome to it. They're entitled to do 
that; that's their rights.
    But let's understand the ramifications of what's taking 
place. But when you ask the chief law enforcement people what 
their recommendations are and you continue to reject them and 
the problem continues, don't put it on their back to clean up 
the problem. They have told you that they don't believe--
throughout their testimony--additional manpower or additional 
efforts because they are constantly after the fact because they 
can't engage in preventative activities by knowing and 
protecting people who come to this country. And, again, there's 
nowhere else.
    I mean, you howled against the protection of the borders 
and people coming in from Mexico and California's southern 
border. We've joined to put the troops on the border. We've 
joined to beef up the INS. We've taken away people's rights. 
We've deported people. But you know what? In the CNMI, none of 
it applies. It doesn't apply to drugs. It doesn't apply to 
diseases. It doesn't apply to criminal activity. It doesn't 
apply to employment protections.
    So this is, as your leader Mr. DeLay said, if this is a 
wonderful, successful experiment in the free marketplace, then 
something's terribly wrong with that free marketplace that you 
would take the poorest people, in some cases, the poorest 
people in the world and you would exploit them and tax them to 
support other people.
    We have--and, I don't know, maybe there are witnesses who 
can testify, but we talked to a number of people. You have 
people who are on the welfare system as citizens--of the 
country of CNMI--of the United States as citizens of the CNMI, 
who engage, in fact, have foreign workers as their maids and 
their servants. And they're on the welfare rolls. That's an 
encouraging notion of the free market system and of this great 
experiment and the fact that this is a success. The fact of the 
matter is that it isn't.
    I would like, before we go to the next round, if you want 
to let me just finish up with Mr. Fraser.
    Mr. Fraser, in your testimony, you do recount--you say, 
``Neither stepped-up Federal law enforcement, nor enduring 
commitment on the part of the CNMI itself to reform and enforce 
local laws can solve these problems without structural 
changes.'' And then you go on to account that, despite what you 
consider a strong commitment and the best efforts of the DOL 
and participating Federal agencies, unfortunately reality is 
that the problem persists and, in many cases, is getting worse. 
And then you go on to talk about the question of the rights of 
the--many of these foreign workers. Do we still see the 
presence of shadow contracts?
    Mr. Fraser. Absolutely, Mr. Miller. It's very common. 
They're hard to get your hands. They're hard to penetrate. But 
it's very common. We hear that it's typical. We'd love to have 
more information about it.
    Mr. Miller. Some of these contracts, if the person 
complained against the country, there are contracts in some 
cases made with people in China and I guess in other countries, 
that, as a condition of that contract, if you complain against 
the company, the company tells the holder of your shadow 
contract and you're deported.
    Mr. Fraser. Yes.
    Mr. Miller. That wouldn't be allowed under American 
immigration laws.
    Mr. Fraser. No, sir.
    Mr. Miller. That wouldn't be a condition for that.
    Mr. Fraser. Again, I'm not an immigration law enforcement 
agency.
    Mr. Miller. No, no, I----
    Mr. Fraser. But I have never heard of such a circumstance.
    Mr. Miller. So, in fact, so when we're told, again, as we 
were putting a good face on what the previous panel told us 
that they believe that the recruitment, you know, you're not 
allowed to hire anybody who used a recruiter, that hasn't 
solved the problem of the shadow contract that can have every 
bit as much hold on these individuals while they're working in 
the CNMI.
    Mr. Fraser. That's correct, Mr. Miller. And if I understood 
the governor's testimony correctly, I don't believe the 
Commonwealth has eliminated the use of recruiters entirely, but 
for certain industries. In the guard service industry in 
particular where it was a very serious problem I think they've 
taken steps to try to eliminate the use of recruitment, at 
least for guard service employment. But I don't believe that's 
the case across the board.
    Mr. Miller. So, in fact--and, again, they've given their 
check system of people before they come--and maybe somebody can 
answer this in Justice--they would have no way of knowing 
whether a person had a shadow contract. They don't have to ask 
the question. The person doesn't have to tell them the truth. 
And they wouldn't know. If that person knew it was illegal to 
say you came with a recruiter, why would you answer the 
question yes? There would be no way to verify that under 
current immigration laws, is that correct? I don't know, maybe 
Justice is more comfortable--if you're not comfortable 
answering the question, then we can get it.
    Mr. Gess. I frankly am not comfortable answering that.
    Mr. Miller. All right. Leave it there.
    Mr. Gess. I could certainly obtain one for you.
    [The information follows:]
    Mr. Miller. But, again, if we don't know about the criminal 
background of individuals and we don't know all the rest of it, 
it's highly unlikely we'd know whether or not their family had 
entered them into a shadow contract or had paid money to get 
them to the United States.
    On the question of--you talked about the default judgment, 
Fraser, against Byung Yong Moon for $870,000 and you say you 
can't find him. Is his company still in business?
    Mr. Fraser. No, sir. We are pursing litigation against the 
successor company, which is Hyunjin Saipan, to try to recover 
some or all of those wages.
    Mr. Miller. Do we know if that's truly a successor company?
    Mr. Fraser. We understand that that company acquired the 
assets of Mr. Moon and his former companies and that's why 
we're pursuing that enterprise to recover the back wage 
liability. Whether we'll be successful or not remains to be 
seen.
    Mr. Miller. I see.
    Mr. Doolittle. Will the gentleman yield just a moment?
    Mr. Miller. Yes, sir.
    Mr. Doolittle. Mr. Gess has a pressing engagement that 
requires him to leave and, just before he does, does any member 
of the Committee wish to pose any questions?
    Mr. Miller. I would like--because it may be joint, but 
maybe Mr. Fraser can answer the question.
    Mr. Doolittle. Well, let me just observe--and you still may 
wish to ask him--but he's going to leave behind a 
representative that could answer questions. But, anyway, go 
ahead.
    Mr. Miller. My question is, with respect to the recovery--
and, Mr. Gess, if your representative can answer. But with 
respect to the recovery of unpaid wages, back wages, and the 
$3,000 program that was put in place for the stranded 
Bangladeshis and maybe some others, I'd like to know the 
complications in recovering that money and what we do about it. 
Because, again, I understand that in many instances, if you 
make a claim for back wages, you're then in jeopardy of being 
deported under CNMI policy. And whether that hampers, if you 
will, the prosecution of justice.
    Mr. Gess. I am, frankly, not in a position to answer that 
question.
    Mr. Miller. Okay.
    Mr. Gess. But, as I heard it, it is an area that I know 
internally the Justice Department needs to look at. We will and 
I would like to share that information with the Committee as 
well.
    Mr. Miller. Thank you. Mr. Fraser, you indicate in your 
statement that the relief provided under the Act, and that was 
the Commonwealth Non-Resident Worker Relief Act, is only 
available to those workers who filed complaints with the local 
CNMI labor agency and not to those holding orders or judgments 
from Federal agencies or courts of competent jurisdiction.
    Mr. Fraser. That's correct, Mr. Miller. That was the point 
I was going to make in response to your question. That 
provision to provide up to $3,000 in return airfare and back 
wages is not available to any of these 2,600 workers for whom 
we've found--the Federal Government, the Federal Department of 
Labor--has found back wages are owed only if the case is 
brought to the Commonwealth government and an administrative 
finding issued by the Commonwealth government is that 
available.
    Mr. Miller. So, in all of these arguments we heard this 
morning about greater cooperation with the Federal Government 
and the Federal Government should do more, we have judgments 
for back wages for 2,600 individuals and they won't let you go 
ahead and process those. So those individuals can get an 
airplane ticket and $3,000 and go home, in theory.
    Mr. Fraser. Oh, I wouldn't want to put that in the context 
of cooperation, Mr. Miller. That's my understanding of the law 
that was enacted by the Commonwealth legislature.
    Mr. Miller. I understand why the law was enacted. Listen, I 
think I'm fairly well schooled on why the laws were enacted in 
the Commonwealth. Not what they are, but why they are.
    You state that, in many instances, I believe--don't let me 
put words in your mouth--but in many instances the judgments 
for those individuals far exceed $3,000. So by taking this 
great humanitarian act, the worker gets screwed out of whatever 
is over $3,000 and an airplane ticket. And I understand in some 
cases the airplane ticket is deducted from the $3,000. So 
really what we have is a heavily indebted Bangladesh person 
going home no better off than they came, even though they 
worked and provided labor and goods and services for their 
employer.
    Mr. Fraser. That's my understanding, Mr. Miller, that many 
of the workers have administrative decisions well in excess of 
$3,000. That in some cases, at least the cost of the airplane 
ticket is deducted from that. That the maximum amount payable 
is $3,000.
    Mr. Miller. So what happens to those administrative 
decisions and/or those judgments? How are they collected?
    Mr. Fraser. That's really a question I think Mr. Zachares 
is much better situated to answer than I. If it's a Federal 
finding in a Federal Department of Labor determination, we 
would try to ascertain whether assets are available that we 
could go after, as we are doing in these cases referenced in 
the testimony. But you're asking a question about how one would 
proceed under the Commonwealth's law and I do not know the 
answer to that.
    Mr. Miller. So for every worker that I as the Commonwealth 
can convince to take the $3,000 and the airplane fare, in many 
cases, I am saving the employer the cost of paying that 
judgment.
    Mr. Fraser. Yes, sir.
    Mr. Miller. That's a wonderful, humanitarian Act. I am 
really thankful to the legislature for passing that Act. Thank 
you, Mr. Chairman.
    Mr. Doolittle. Mr. Schaffer. Oh, let's--just a minute. Did 
you--are you going to address to Mr. Gess? Because I want to be 
able to let him go. Go ahead. Okay.
    Mr. Schaffer. Yes. That's the only question I'll ask and 
I'll save the rest for the rest of my turn. Mr. Gess, I want to 
get at the question of the Department of Justice's practices in 
CNMI and similar places as well. Does the Department of Justice 
pay non-resident aliens to perform any work for the Department 
of Justice?
    Mr. Gess. I don't know, Mr. Congressman. That's an answer 
that I would need to get to you.
    Mr. Schaffer. Can you envision any kind of scenario or 
situation where it ever appropriate for the Department of 
Justice to pay non-resident aliens for services performed for 
the Department of Justice?
    Mr. Gess. I'm just simply not familiar with the topic, but 
I can assure you----
    Mr. Schaffer. How about specifically with respect to 
translation? Do you know if the Department of Justice pays 
translators who are not residents to translate in a courtroom?
    Mr. Gess. Congressman, I don't know. But I do know after 
talking with Fred Black, the United States attorney out there, 
that one of the most severe problems that assistant U.S. 
attorneys and agents face is interpretation. So your question 
sounds a bell that really tells me that I need to talk with Mr. 
Black and find out. Because I know it's a severe law 
enforcement problem.
    Mr. Schaffer. Just, given that conversation took place 
between you and Mr. Black, do you think it's, with all the 
concern the Department of Justice has and all the other Federal 
agencies represented here with illegal, you know, work 
arrangements and so on, do you suppose it's possible that the 
Department of Justice has ever hired non-resident aliens to 
translate for them in a courtroom?
    Mr. Gess. Congressman, I really don't know. My 
understanding, though, is that courtroom interpretation is by 
the courts. But, nonetheless, it's the same concern. And I 
understand it. Understood.
    Mr. Schaffer. If I told you I had a check stub of a U.S. 
Department of Justice check written out to an individual who 
translated who is not a United States citizen who was here on a 
tourist visa, would that sound out of the ordinary?
    Mr. Gess. Again, Congressman, this is just simply a topic 
that--the only reason it rings a bell is the United States 
attorney telling me that there's a problem with obtaining 
interpreters. Nobody has suggested who is used or who isn't 
used. If you have any information, may I contacd your staff 
after the hearing and ask for a copy?
    Mr. Schaffer. You can contact me, sure. But let me just say 
I have one check stub of that sort that I was able to find in 
my five days on the island. I would appreciate information from 
you, frankly, if there are others like this. I would like 
those, instead.
    Mr. Gess. Congressman, absolutely. I am only asking for the 
document because it starts a paper trail. I can assure you that 
we want the answer too. We'll obtain it. Again, as with 
everything else, we will share it with the Committee.
    Mr. Schaffer. Thank you, Mr. Chairman. That's the only 
question I have for Mr. Gess.
    Mr. Doolittle. Thank you. All right, Mr. Gess, we'll--oh, 
yes.
    Mr. Faleomavaega. We each have one question for Mr. Gess.
    Mr. Doolittle. Oh, you do. All right. Well, okay. Mr. 
Underwood.
    Mr. Underwood. Okay, thank you, Mr. Chairman. Much has been 
made about this chart which has been carted out as to the 
proportion between non-U.S. citizens and U.S. citizens and I 
guess the lack of the application of the INA has been suggested 
as part of this.
    If you made a comparison to the population of Guam and you 
drew the comparison in terms of people who have a parent that 
was born on Guam, you'd get almost relatively the same 
proportion of people who had roots in Guam versus people who 
didn't have roots in Guam because of the INA. So the issue--and 
I appreciate and I want to separate the issue of enforcement 
under the INA, which may be appropriate in some instances--but 
to use the INA argument as the application of the INA argument 
as a way to keep the local indigenous population from being 
overwhelmed, that simply does not hold water because, in the 
case of Guam, that has not been the case.
    And, in fact, it is because of the Guam experience that 
many CNMI people originally asked for this authority. 
Admittedly, they've done other things with it, but I just 
wanted to make that case.
    To the point that I'm asking is that would the Department 
of Justice or would the administration entertain having--and as 
has been suggested in the case for Guam--if you want to 
continue to apply the INA, why could you not have a locally 
negotiated quota?
    Mr. Gess. Congressman, my answers earlier were solely 
directed to the enforcement issues that we find. My background 
as a career prosecutor and working with agents and talking to 
them is that this is an enforcement problem for us. I 
understand there were other reasons for this. But from our 
enforcement perspective, we find a problem in not having the 
immigration--I hate--I'm not trying to make light--but the 
immigration piece of the pie is missing.
    Mr. Underwood. Well, I just wanted to make the case and I 
think it's rather clear that the end result is relatively the 
same thing.
    Mr. Gess. Understood, Congressman.
    Mr. Fraser. And, Mr. Underwood, if it helps, to answer that 
question, the administration's bill does contemplate, in the 
transition provisions in phasing in the INA, it does 
contemplate local negotiation with the CNMI regarding 
transitional foreign worker programs. So the administration 
approach is very much along the lines that you're suggesting.
    Mr. Underwood. Well, and I'm very glad to hear that, Mr. 
Fraser, because I hope the same courtesy is extended to Guam in 
terms of the application of the INA. Because that's the issue--
--
    Mr. Fraser. We've had this discussion before, Mr. 
Underwood.
    Mr. Underwood. I know we've had this discussion before. But 
the point that I'm making is that, if this chart is utilized to 
create a certain impression, as if, somehow or other, although, 
admittedly, enforcement issues play a role in this and this 
process was sped up for the CNMI in comparison to Guam, but the 
application of the INA to Guam has been no great shakes either. 
Thank you.
    Mr. Faleomavaega. Mr. Chairman.
    Mr. Doolittle. Yes, Mr. Faleomavaega.
    Mr. Faleomavaega. Just one quick question to Mr. Gess. He's 
the legal authority here in our hearing. Mr. Gess, any alien 
born in North Marianas, does that person become automatically a 
U.S. citizen?
    Mr. Gess. I don't know the answer to that. I can get that 
for you.
    Mr. Faleomavaega. So the reason for my question is that the 
33,000 workers, you know, under circumstances where some of 
them give birth there in NMI, do they automatically become U.S. 
citizens?
    Mr. Gess. I understand from my colleagues that the answer 
is yes. I simply----
    Mr. Faleomavaega. Did somebody nod yes? Danny Aranza?
    Mr. Aranza. Yes.
    Mr. Faleomavaega. Is that by our Federal law? The operation 
of our Federal law?
    Mr. Aranza. Yes, that's an actual--also a provision of the 
Covenant.
    Mr. Faleomavaega. Thank you.
    Mr. Doolittle. Have you concluded? Okay. Okay. Mr. Schaffer 
still has time remaining. Let's say three minutes. And he has 
other questions now to pose to the remaining--thank you, Mr. 
Gess. We appreciate your being here. So, Mr. Schaffer, you're 
recognized.
    Mr. Schaffer. Mr. Abercrombie asked Mr. Berry if he knew of 
any illegal or improper activities by OIA employees and he said 
not until this Committee told him. Mr. Aranza, I have a similar 
question for you. When did you become aware that anyone 
employed by OIA may have engaged in partisan political activity 
or lobbied with Federal resources?
    Mr. Aranza. I first became aware of those allegations, Mr. 
Schaffer, when the subpoenas were issued and the documents were 
produced.
    Mr. Schaffer. At any time, did you become aware that OIA 
employees were offering cash or other things of value to people 
to help organize or participate in any protests or 
demonstrations?
    Mr. Aranza. I am not aware of any such activity.
    Mr. Schaffer. Was the prospect of green cards or visas or 
U.S. passports ever mentioned to Bangladeshi workers, that if 
they protested or demonstrated and it resulted in Federal 
takeover of the island, that those kinds of benefits might 
accrue to them?
    Mr. Aranza. I am not aware of any such promises.
    Mr. Schaffer. Let me tell you, I did spend five days in 
Saipan and interviewed many individuals, including Bangladeshis 
and have heard three accounts since then, two while I was 
there, one that I have since received in writing, that you were 
at a meeting of that sort and suggested to Bangladeshis that 
many people told their problem--let me go jump back a little. 
He writes in broken English in the letter that I have in front 
of me. For protests against--okay. ``Danny Aranza. We met with 
him at two Bangladeshis and a fellow to discuss with them about 
CNMI and help U.S. and to help them collect documents against 
CNMI labor and immigration. By this way, many Federal officials 
met with Bangladeshi workers and encouraged them to protest 
against CNMI.''
    Were you ever at any meeting like that where you encouraged 
Bangladeshis to protest against the CNMI government?
    Mr. Aranza. Absolutely not.
    Mr. Schaffer. Do you recall being at any meeting where 
Bangladeshis might have come away with the impression that you 
were encouraging them to protest against CNMI activities or in 
connection with any congressional activities, visits, or 
hearings?
    Mr. Aranza. There were several times I was in the CNMI 
where I did visit with various worker communities, Bangladeshis 
included. But in none of those meetings, do I recall making any 
promises of asylum or cash awards or anything.
    Mr. Schaffer. You know, I asked my previous question asked 
about when you became aware of any of the illegal allegations. 
I guess I want to be more specific. At what point were you 
aware of any illegal actions involving lobbying or political 
work by OAI employees?
    Mr. Aranza. Could you put that in a clear context?
    Mr. Schaffer. I want to know if you were aware of anything 
illegal that occurred to you that it might perhaps be illegal 
or inappropriate, any activities prior to the subpoenas being 
filed by the Committee?
    Mr. Aranza. I believe, Mr. Schaffer, with respect to the 
Guam negotiations, I believe there some allegations about 
fundraising. But that wasn't related to my office.
    Mr. Schaffer. Did you receive a memo from Mr. David North? 
The date on it is May 10, 1998, where he described a scheme to 
have the Fish and Wildlife Service inspectors come on the 
island, CNMI, to help open containers because of, as the memo 
says, ``Fish and Wildlife inspectors have powers in the CNMI 
and, for Guam, for that matter, that U.S. Customs inspectors 
lack. Fish and Wildlife inspectors can open anything that is in 
international trade. Probable cause for them in the ninth 
Circuit is simply something that has crossed an international 
border. Fish and Wildlife has an interest in shell buttons.'' 
And he goes on and describes how he had had conversations with 
the Fish and Wildlife Service to engage in this kind of a joint 
effort with other law enforcement agencies to look for shell 
buttons, I suppose, in the garmend containers.
    Do you remember receiving that memo?
    Mr. Aranza. I don't recall receiving that memo. I'd be glad 
to receive that and refresh my memory.
    Mr. Schaffer. Just to be fair, your name is mentioned as 
one of the three individuals who received the memo. Alan 
Stamon, you, and Nancy Fanning. Let me ask Mr. Shruhan, are you 
aware of any plans or any activities where the Fish and 
Wildlife Service was involved in any inspections of garment 
containers?
    Mr. Shruhan. None.
    Mr. Schaffer. None. I have lots more questions, Mr. 
Chairman, but I want to finish on time, too. Thank you.
    Mr. Doolittle. I appreciate the gentleman's concern. 
Gentlemen, this will conclude the second panel. There will be 
further questions which members of the Committee may wish to 
ask and those will be propounded in written form and we would 
request your prompt response and the record will be held open 
for that purpose. With that, we will excuse you and thank you 
very much for your patience and your testimony.
    And we will begin panel number three. Ladies and gentlemen, 
we welcome you, finally, to have your chance to testify as our 
third panel. May I please ask you to rise and raise your right 
hands for the purpose of taking the oath. Thank you.
    [Witnesses sworn.]
    Let the record reflect that each answered in the 
affirmative. Please be seated and we will begin our testimony 
with Ms. Lynn A. Knight, vice president of the Saipan Chamber 
of Commerce. And I'm going to ask Mr. Schaffer to take the 
Chair for a few moments. Ms. Knight, you're recognized.

STATEMENT OF LYNN A. KNIGHT, VICE PRESIDENT, SAIPAN CHAMBER OF 
                      COMMERCE, SAIPAN, MP

    Ms. Knight. Mr. Chairman and members of the Committee, my 
name is Lynn Knight. I'm here today on behalf of the Saipan 
Chamber to discuss the state of business in our islands and the 
impact of changes to our economic freedoms which are being 
considered by this Committee.
    It's difficult to afford to be here in the midst of the 
worst recession we've ever had. But I'm here because, as a 
small business owner, I'm afraid of a future we can't control. 
Like many others, I've invested everything I own in Saipan and 
I believe it's imperative that we continue to control our own 
economic destiny.
    While the words may sound a bit strange to your ears, the 
words Federal takeover instill fear in most business owners. 
The possibility of a loss of control over our immigration, 
minimum wage, and special trade advantage spells economic 
disaster. This doesn't mean we are any less proud to be 
Americans. Our community shares the same values that you do. We 
believe that work places should be safe and that employees 
should not be taken for granted, that we should hire from the 
local community first, and that our staffs should receive a 
decent living wage.
    But we differ in other ways. If you were to live on a 
remote island, you'd see that the costs of running a business 
are extremely high, that small economies of scale make it 
difficult to make a profit and that the local labor pool is 
very limited. Our educational system could never fully prepare 
people to work in the wide range of jobs that exist in our 
community.
    We live where East meets West. And, as such, we're affected 
by regional economic conditions which are in serious decline. 
Bridging the various cultures and currencies has always offered 
significant challenges. In the past 13 years since I've made 
Saipan my home, I've seen a vast improvement in the quality of 
life, but we're still far behind the mainland. We don't yet 
have fresh drinking water from every tap. We're anxiously 
awaiting new capital improvement projects which may help 
jumpstart our ailing economy. But funds for such projects are 
short, due to the Asian economic crisis.
    Our tourism industry's down 30 percent. Garment factories 
are reporting a 25 percent reduction in orders and that means a 
lot less money circulating in our economy. Retail and auto 
sales have plunged, up to 50 percent. One in every 10 
businesses has closed. We're trying to attract diversified 
industries, but no one will invest in the Northern Marianas 
now. We can't attract new investment with the threat of a 
massive change that a Federal takeover would bring: the 
possibility of doubling our minimum wage and the removal of 
necessary access to a labor supply. It's impossible to plan for 
the coming months, let alone recruit investments.
    Clearly we're in a crisis, one that many businesses will 
not survive if drastic changes occur in the way we must 
operate. Our recession is also forcing the local government to 
downsize. This should give the private sector the opportunity 
to hire more local workers, however even if we were to hire all 
5,000 of the government staff plus the 1,400 unemployed, it 
would not equal the 25,000 jobs that we have.
    Do we have an economy that could withstand a doubling of 
its minimum wage? Going from $3.05 to $6.15 an hour will mean 
that businesses will be forced to do more with significantly 
less resources. That means layoffs and an increase in the cost 
of living at the worst possible time. The Federal minimum wage 
is based on the cost of living in a highly developed mainland 
economy. We have our own minimum wage review board and we 
believe this system best accommodates local employment and 
economic conditions.
    I won't say that we haven't had labor problems in the past. 
Loopholes that needed to be closed. We're working closely with 
the CNMI government on reforms and we see substantial progress 
in all industries.
    Mr. Chairman, I understand that there's a concern that we 
have what many consider to be too many aliens in our 
population, but based upon the rules of the game that we were 
given under the Covenant, we built industries that could not 
have existed without outside help. If our immigration control 
ends, we can't fulfill all of our employment needs with local 
residents, Micronesians, or Americans who live at least 6,000 
miles away.
    If we lose our ability to hire skilled guest workers, 
please consider a few of the likely victims from among our 
Chamber. Working women, like myself, who have small children 
and elderly parents to take care of will not be able to work. 
Our small inter-island airline will cease flying or be forced 
to double its rates. Air conditioning companies will lose their 
skilled technicians. A 40-year-old family bakery will close. We 
respectfully ask whether the loss of these businesses and many 
others like them constitute reform for the Marianas.
    For most foreign workers who have been recruited to our 
islands, it's meant a greatly improved quality of life. Most of 
the foreign employee's needs are provided for by locally 
mandated benefits, including unlimited 100 percent health care. 
In this 1998 communication, the Philippine consulate praises 
the Marianas for the good treatment of their workers. A copy of 
this document has been submitted with our written testimony.
    But rather than recognizing the positive, rather than 
working with us on reforms, our critics on the Federal side 
seem to prefer a one-size-fits-all approach, Federal takeover. 
We're left feeling like a child who's done something wrong. 
Rather than teaching the child, the parent simply takes the 
matter over and does it their way. This is not the way to 
ensure that a child never makes another mistake.
    Would a takeover mean that there would never again be an 
OSHA violation or disagreement between an employer and 
employee? If such problems can and do exist all across America, 
they will surely continue in the Northern Marianas, even under 
full imposition of American laws. The answer clearly lies not 
in a takeover, but more emphasis and partnership with the 
Federal Government in education training and law enforcement.
    In its wisdom, Congress in 1976 agreed that we needed 
certain advantages in order to help us achieve economic 
development. We've heard that a goal of this Committee is to 
promote economic development in the insular areas. To this end, 
we urge the Committee to lay such takeover legislation aside. 
Let us concentrate on improving our local laws with Federal 
guidance. Let us meet somewhere along the road. Thank you.
    [The prepared statement of Ms. Knight follows:]

        Statement of Lynn A. Knight, Saipan Chamber of Commerce

    Mr. Chairman and Members of the Committee, on behalf of the 
Saipan Chamber of Commerce, I am pleased to be here today to 
discuss the state of business and commerce in the Commonwealth 
of the Northern Mariana Islands (CNMI). We believe it is 
important to convey how our businesses are now faring at this 
particular time and, more importantly, how they will fare under 
circumstances of a Federal takeover--shorthand for the 
legislative eradication of the Northern Marianas' unique 
Covenant authorities of local control over the minimum wage and 
immigration.
    In the Northern Mariana Islands, the words ``federal 
takeover''instill fear in most business owners. This phrase has 
become synonymous with economic disaster. One executive of a 
major international firm on Saipan said his business plan for 
the coming year anticipated further cost cutting and hardship 
due to the Asian economic crisis. He went further to say that 
if the pending ``takeover'' bills in U.S. Congress were to 
pass, he would have to throw all his business plans out the 
window. This is but one example of what a ``federal takeover'' 
would mean to the business community of the Northern Marianas.
    This doesn't mean we are any less proud to be Americans. We 
share the same basic values as mainland America. We believe 
that work places should be safe and that employees should not 
be taken for granted, that we should hire locally when possible 
and that our staffs should receive a decent living wage.
    The Northern Marianas became an American territory by 
overwhelming local vote, but there are few similarities with 
most American jurisdictions. Our small insular territory of 
approximately 70,000 people--which is across the international 
dateline and 9,000 miles from the nation's capital--is more a 
part of Asia than the Western Hemisphere. The investment we 
have managed to attract since we became an American 
jurisdiction only two decades ago has been virtually all Asian. 
Our largest industry, tourism, attracts almost exclusively 
Asian visitors. When Asian markets dropped two years ago, so 
did our visitors.
    We differ in other ways as well. We still don't have fresh 
drinking water from every tap and the sewer system is 
antiquated. Our roads are improving and the power system has 
just begun to meet our needs. Recently we connected to 
worldwide communications systems via our first undersea fiber 
optic cable. We continue to strive to improve our 
infrastructure with both private and public funds, but these 
funds have rapidly diminished with the Asian economic crisis.
    In general, the growth in our economy has meant an improved 
quality of life. The simple fact, however, is that we are an 
isolated group of islands that only recently was more like a 
third world country. We do not have the same economy as the 
U.S. mainland, and therefore the economic policies that work 
for the mainland cannot be indiscriminately applied in the 
Marianas. We are highly affected by regional economic 
conditions, which are in a serious decline.
    The authors of our Covenant to Establish the Commonwealth 
of the Northern Mariana Islands recognized the differences. In 
its wisdom in 1976, U.S. Congress developed the rules of the 
game upon which our economy was built. They gave us the ability 
to control our own minimum wage and immigration due to our 
unique circumstances. They also gave us the ability to trade 
freely with the U.S. Based upon these rules that we were given 
just 20 years ago, we have built a small, but successful multi-
national society. Out of necessity, we employ approximately 
25,000 guest workers from Asia and other foreign countries. 
This number is fixed by a local moratorium dictating a cap on 
foreign hires.
    While we would prefer to hire primarily local residents if 
we could--it would certainly be less expensive and less risky--
we do not have enough citizens to staff our businesses. Even if 
we had the numbers, our limited educational institutions could 
not produce enough skilled workers in all the positions we need 
to fill. Even if our local government shut down and forced all 
of its 5,000 employees into the private sector, there would 
simply not be enough people to fill all the jobs.
    Our local economy has assimilated foreign workers into our 
community and they have become a major consumer of and user of 
local goods and services. Today most successful companies in 
the Northern Marianas have made marketing efforts to encourage 
foreign workers to buy their products and services. If these 
people were forced to leave under the U.S. immigration system, 
many establishments that cater to Filipinos, Japanese, Chinese 
and Koreans would close from the loss of business.
    A good example is in telecommunications. The top 
destinations for long distance calling are the Philippines and 
China due to the large number of guest workers from these 
countries who call home. The volume of calls helps ensure that 
we have competition in providers. If this calling ceases, the 
cost for all other destinations will rise. The telephone 
companies will lay off local people, their suppliers will 
suffer, the government will receive less in taxes and so on.
    In the continuing debate over immigration, we often ask 
ourselves: we are a tiny, isolated group of islands with a 
small indigenous population, but must we also be limited to a 
tiny economy? If we didn't have the ability to recruit from 
overseas, would we still live as our Micronesian neighbors, 
dependent upon Federal handouts and subsistence living?
    The Saipan Chamber of Commerce member businesses represent 
79 percent of the private sector work force, yet nearly all of 
our members would fit the definition of small businesses. We 
believe it is vital that the Northern Marianas continue to 
control our own immigration and minimum wage, and that we be 
allowed to continue with the same trade advantages that were 
granted under the Covenant. To take away these benefits would 
take away the very foundation of the economic structure of the 
CNMI and frustrate the mandate of the United States under the 
Trusteeship Agreement, ``To promote the economic advancement 
and self sufficiency of the inhabitants.''
    The Northern Mariana Islands have received international 
media attention due to the problems of our rapid economic 
growth, confusion about applicable labor laws and complaints of 
worker abuse. As a community we are doing something about the 
problems we all agree must be addressed. Painstaking reforms 
are underway. Local leaders from business and government have 
been meeting frequently to share ideas and work together as 
never before.
    But rather than working with the Northern Marianas 
government on reforms, rather than helping us to enforce the 
law, some of our critics prefer a one-size-fits-all Federal 
takeover. We are left feeling like a small child who has done 
something wrong. Rather than teaching the child, the parent 
simply takes the matter over and does it his or her way. But is 
this the way to ensure that the child never makes another 
mistake?
    Would a takeover of our immigration and minimum wage, the 
removal of our tariff status mean that there would never again 
be an OSHA violation, a staff member who wants a higher salary, 
a disagreement between employee and employer regarding 
overtime? If such problems can and do exist throughout work 
sites all across America, they will surely continue in the 
Northern Marianas, even under the full imposition of American 
laws. The answer clearly lies more in education, training and 
law enforcement.
    On a personal note, I moved to Saipan from California in 
May 1986, recruited for an assignment by a former employer who 
desired to do business within the Pacific Rim. At the time, the 
notion of doing business with China and anywhere in the Pacific 
Rim was hot for investors around the world. Attracted by the 
opportunity to live and work in an international atmosphere 
with people of other cultures, I stayed in Saipan and opened a 
small business. At that time the island was booming. Foreign 
investors were welcomed with open arms to build resorts, 
garment factories and other businesses on Saipan, a place where 
East truly met West.
    Bridging the various cultures offers significant challenges 
for training, education and doing business in general. For most 
Asian workers recruited to Saipan, however, living here has 
meant a greatly improved quality of life. In fact, the 
Department of Foreign Affairs of the Philippines praised the 
CNMI last year, reiterating ``the good working conditions of 
Filipino workers'' that they found in our islands. (See 
Appendix A--April 21, 1998 letter from Philippine Consul Julia 
Heidemann.)
    Virtually all of a foreign employee's needs are provided 
for by locally mandated benefits, including housing, 
transportation and unlimited 100 percent health care. This 
enables them to send most of their strong American dollars home 
for the benefit of families.
    Closely tied to the economies of Asia, our business 
community has grown with tourism and the trade opportunities in 
the Pacific. But now the tide has changed. The strength of the 
dollar against the yen, the won, and the peso is good for 
foreign employees and their families, but it is devastating for 
tourism. Virtually every other competing tourist location in 
Asia is now a better value than our dollar-based destination. 
Meanwhile, the U.S. mainland is enjoying unbelievable 
prosperity while the U.S. Commonwealth of the Northern Mariana 
Islands is in the throes of recession.
    While Asia is reeling and America is celebrating, we are 
caught helplessly in the middle. The Asian economic crisis hit 
us hard and unexpectedly. Built on two major industries--
tourism and garment manufacturing--we don't have enough 
diversity to weather a long and severe recession. Together 
tourism and garment manufacturing account for 4 out of every 5 
jobs in the Commonwealth today and more than 7 out of every 10 
jobs held by permanent residents. Virtually all small 
businesses exist in some way to support those two industries. 
If a garment factory or hotel closes, a myriad of other small 
businesses will close.
    It may seem that if an investor has the money, such a down 
market may mean an ideal time to come to the Northern Marianas. 
Land prices have plummeted. Office and retail space is 
available everywhere. More than 1,300 business licenses have 
not been renewed and many companies are for sale. Bankruptcy 
filings have increased tremendously. A savvy investor could 
take advantage of bargain opportunities.
    As we prepare for the new millenium, we have undertaken a 
new study to develop an economic strategy for the Commonwealth. 
The objective of this study, designed and funded by the CNMI 
leadership and the Office of Insular Affairs, is to provide 
some insight into the future directions of the CNMI economy so 
that policy makers in Washington, DC and the CNMI can adapt 
policies to achieve maximum benefits for the people of the 
CNMI. The Chamber's summary of that draft study is attached. 
(See Appendix B.)
    A group of volunteers from our Chamber have also been 
working hard with local government officials to examine ways 
that we can attract new and diversified industries. They call 
this group the Governor's Economic Revitalization Task Force. 
But no one will invest in the Northern Marianas now.
    We cannot diversify our economy in the face of an 
unrelentingly negative campaign launched by those who would 
demonize our culture and take away our local economic controls. 
Add to the equation the possibility of a 100 percent hike in 
the local minimum wage at the worst possible time, and the 
removal of necessary access to our labor supply. Further add to 
this a variety of new local laws our government has instituted 
in order to improve our labor and immigration systems. These 
circumstances have created an air of instability for any 
investor, whether foreign or local.
    The effect on existing businesses is staggering. For most, 
it is impossible to plan for the coming months, let alone 
recoup investments that will take years to recover. Potential 
investors have simply turned away. Clearly we are in a crisis, 
one that many will not survive if drastic change occurs in the 
way we must do business. Consider these facts:
    Tourism, a primary driver of our economy is down 30 
percent. Garment manufacturers have lost 25 percent of their 
orders. Automotive sales are down nearly 50 percent as is much 
of retail in general. One in every 10 businesses has closed. 
Hundreds more that cater to Filipinos, Japanese, Chinese and 
Koreans will close overnight if all of our guest workers have 
to go home.
    Is this a community that could afford to replace and re-
train its private sector? Is this an economy that could 
withstand a doubling of its minimum wage? A hike in the wages 
at this time will carry significant costs: slower job creation, 
fewer hours, and lost jobs. The evidence is overwhelming that 
raising the minimum wage will help few working men and women. 
It will demand that small businesses do more with significantly 
fewer resources. It will cause higher-level wages to be 
increased, thus boosting inflationary pressures in an already 
precarious time.
    The Federal minimum wage rate is based on the cost of 
living and prevailing wage levels in a highly developed 
mainland economy. The imposition of the mainland minimum wage 
on the Commonwealth's employers may in fact force many of us 
out of business.
    The Commonwealth has enacted its own minimum wage law and 
formed its own Minimum Wage Review Board, which we believe is 
consistent with the intent of the Covenant. We believe this 
system best accommodates local economic and employment 
conditions. It is unfortunate that the positions on this board 
reserved for Federal representatives have remained vacation, 
despite numerous invitations to participate.
    It seems clear that because of the special characteristics 
of its economy and despite the growth that has been realized in 
recent years, the Commonwealth would be unable to absorb an 
immediate increase to the U.S. mainland minimum wage without 
the possibility for serious economic disruption. The Chamber of 
Commerce respectfully urges this Committee to consider these 
consequences when it is asked to deliberate proposals designed 
to eliminate immigration and labor problems, which we believe 
are aimed at eliminating our garment industry. Simply put, 
bills that force a Federal takeover will cause many businesses, 
both large and small, to collapse.
    Consider some of the likely victims from among our Chamber 
members: a small inter-island airline will have to cease flying 
or double its rates; an air conditioning company will lose its 
skilled technicians; a security company will be unable to serve 
its customers; restaurants and hardware stores will lose their 
customers; a 40-year old family bakery will fold.
    We respectfully ask whether the loss of these businesses 
and many others like them constitute ``reform'' for the 
Marianas. We believe the answer is no and that Congress should 
instead consider giving our reforms an opportunity to work. The 
results of a cap on new alien hiring are just now being 
realized. A full range local and Federal laws give 
comprehensive protection to employees. Our amnesty program 
encourages any illegal foreign workers to come forward. We are 
also deeply involved in efforts to provide more on the job 
training and to create incentives for local hiring. In short, 
we are taking stock of the present and have begun planning for 
the future. Perhaps even more significantly, we have our first 
bonafide recession to challenge us to be better businesses.
    And while we do so, we ask that the Federal Government 
share in the responsibility for the crisis atmosphere that has 
been created in CNMI-Federal relations. Let us work together on 
law enforcement to the end that you will feel comfortable that 
the incidence of labor abuse in the Northern Mariana Islands 
has declined and will decline further. We are but a tiny 
concern for such a powerful body as U.S. Congress--but if you 
look closer, we believe you'll see that our efforts to educate 
our businesses on all applicable Federal and local laws are 
working. The reforms that have been put in place by our local 
government are making a difference.
    Given the devastating consequences, the Saipan Chamber of 
Commerce cannot support legislation that will have a serious 
negative impact on an economy we believe is headed into even 
more uncertain times. We urge the Committee to lay such 
``takeover legislation'' aside permanently. We do not, however, 
suggest that this is all that the Committee should do. Congress 
can and should direct the Administration to shift from 
regularly criticizing the CNMI activities to making a real 
commitment to providing training and assistance in operating 
more effective programs.
    The Chamber believes that a genuine spirit of Federal-
Commonwealth cooperation would go much farther than any Federal 
takeover in addressing the immigration and labor problems we 
all agree must be resolved. It would also provide the business 
community and the Commonwealth government the time, and 
potential investors the confidence, to bring new and 
diversified economic opportunities to the Marianas.
    Our message to the Committee is simple: please don't cause 
a collapse of our economy by adopting legislative ``solutions'' 
that may seem unremarkable in the context of the economic boom 
now enjoyed in the 50 states but that are so foreign to the 
CNMI. We are all Americans, yet we work in vastly different 
economies that are indeed a world apart.
                                ------                                

                               Appendix A

The Honorable Governor Pedro P. Tenorio
Commonwealth of the Northern
Mariana Islands
Dear Gov. Tenorio,
    It is an honor to furnish you a copy of a press release 
dated 20 April 1998 issued by the Philippines' Department or 
Foreign Affairs concerning the Filipino workers in the 
Commonwealth. It was based on the report submitted by the 
Philippine Consulate.
    While the press release was meant to be for home 
consumption to allay the fears and concerns of the families of 
Filipino workers in the CNMI, the local media might find it 
interesting.
    An AP news report from Washington DC during the U.S. 
Congressional hearing of CNMI's labor and immigration found its 
way to the Philippine media early this month. The Philippine 
Consulate was tasked to verify and investigate the allegations 
of sexual slavery and maltreatment of workers insofar as 
Filipinos are concerned. The Consulate's report emphatically 
reiterated the qood working conditions of our Filipino 
workers--and the effective coordination efforts between the 
Consulate and the local government.
    Personally, I am happy that the Philippines is now aware of 
the true labor situation in the Commonwealth. It is worth the 
persistence and at times frustrating attempts to demand 
fairness in media coverage.
    With this development, the Philippine Consulate hopes to 
forge closer relations with your administration through regular 
dialogue and consultation. Meantime, I would like to inform you 
that in view of the effectiveness of the consultation talks 
between the Consulate and DOLI, our Labor Representative has 
proposed to Sec. Mark Zachares the resumption of the bilateral 
consultations on labor issues.
With best personal regards.
                                ------                                

         Statement of Hon. Diego T. Benavente and Paul Manglona

1. Introduction

    On behalf of the members of the Eleventh Northern Mariana 
Islands Commonwealth Legislature, we are honored to be given 
the privilege to testify before the Committee on Resources of 
the U.S. House of Representatives which has oversight 
jurisdiction of the territories and commonwealths of the United 
States, including the Northern Mariana Islands. The hearing 
today before this Committee is focusing on three areas. The 
first relates to the adequacy of enforcement of Federal laws in 
the Northern Mariana Islands, particularly the Federal labor 
laws, the equal employment opportunity laws, and the 
occupational health and safety laws. The second will examine 
the use of Federal funds by Federal departments charged with 
the enforcement of Federal laws in the Northern Marianas. The 
third will examine the use of Federal funds for capital 
improvement projects by the Commonwealth Government.
    Because Governor Pedro P. Tenorio is separately addressing 
the signIficant progress being made by the Commonwealth 
Government in the enforcement of local laws with respect to 
immigration and labor reforms in the Commonwealth since he 
began his administration a year and a half ago, our testimony 
will focus on the reform legislations that the Commonwealth 
Legislature has enacted to combat labor abuse in the 
Commonwealth and to improve our local system of immigration. We 
shall, however, briefly address the areas that are the subject 
of this hearing in relation to our reform efforts, and set 
forth our views, observations and concerns, if any, with 
respect to those areas, particularly the adequacy of 
enforcement of Federal laws in the Northern Marianas and the 
use of Federal capital improvement funds by the Commonwealth 
Government.
    Finally, we wish to bring to the attention of this 
Committee, an issue that we would like the U.S. Congress to 
look into: our request for Congress to appropriate Federal 
funding to reimburse the Commonwealth for the financial costs 
that unrestricted imigration from the Federated States of 
Micronesia, Belau, and the Republic of Marshalls has had on the 
Commonwealth over the years, under the Compacts of Free 
Association.

2. Local Reform Legislations

    Mr. Chairman, we begin our testimony today by going over 
the series of reform legislations that the Commonwealth 
Legislature has enacted or is in the process of enacting since 
early 1998, immediately after the immigration and labor hearing 
before Senator Frank Murkowski's Committee on Energy and 
criticism leveled against the Commonwealth by the national news 
media, various human rights groups, and officials at the 
Department of Interior. The purpose of the hearing before the 
Senate Committee on Natural Resources last year, as well as the 
hearing held two days ago before the same Committee was to 
consider proposed Federal legislation intended to make the U.S. 
Immigration and Nationality Act applicable to the Northern 
Marianas.
    Proposed legislation was introduced in the U.S. Senate in 
1998 and again re-introduced this year to take away our local 
control of immigration matters, in part because of widely-
publicized criticism that guest workers in the Commonwealth 
were abused by their employers. Another criticism was that 
guest workers had outnumbered the local resident population. A 
third criticism was that guest workers were working and living 
in deplorable and unsanitary conditions. A fourth was that many 
aliens have been illegally overstaying in the Commonwealth 
beyond the term of their entry permit. A fifth was that the 
garment industry was taking advantage of the non-quota, duty-
free treatment of manufactured products given the territories, 
a privilege intended for the benefit of local businesses and 
local workers.
    We know that you, Mr. Chairman, your Committee, and other 
members of the Congress are likewise concerned with these 
issues and have been working steadily to promote improvements 
in the Commonwealth situation. You have personally taken time 
from your busy schedule to visit the CNNH and see for yourself 
conditions there. We thank you for your sincere and forthright 
approach to these questions. We also find it especially useful 
when members of Congress work in a cooperative way to help us 
address labor and immigration issues and to help us better 
understand Federal concerns. We believe this kind of approach 
provides a more effective approach to what problems may exist 
and is a far greater service to our respective constituents 
than confrontation and condemnation. We see these hearings in 
this light and look forward to continue to work with the 
Congress and this Committee to better conditions in the 
Commonwealth for residents and nonresidents alike.
    Governor Pedro P. Tenorio immediately began taking action 
to address the concerns raised, from Day One of his 
administration. Through the CNMI Department of Labor and 
Immigration (DOLI) he began conducting unannounced inspections 
of the working and living conditions of guest workers, 
particularly those employed by the garment industry. The 
Commonwealth Legislature joined the Governor's call for reform 
and began considering legislation that would address the labor 
and immigration criticisms mounted against the Commonwealth.
    One of the first pieces of legislation that was enacted by 
the Commonwealth Legislature was the moratorium law (Public Law 
11-6), which imposed a moratorium on the hiring of additional 
guest workers. The law was enacted in response to the criticism 
that the non-immigrant guest worker population had already out-
numbered our locaL resident population. We understand from the 
Department of Labor and Immigration that, since this law was 
enacted, there has been a 22.7 percent decline in the issuance 
of guest worker permits for 1998, as compared to those issued 
in 1997.
    To strengthen the moratorium. with respect to alien garment 
workers, Public Law No. 11-76 was enacted establishing the 
maximum number of garment workers for individual manufacturers 
and imposing attrition provisions. Because of our moratorium 
laws, which are still in effect, we expect the number of guest 
worker perrmits issued for 1999 to go lower than 1998. Our goal 
is to continue to decrease the number of guest workers to an 
acceptable level and hire only guest workers that we truly need 
to supplement our local work force.
    A second significant legislation that was enacted by the 
Commonwealth Legislature soon after the March 1998 hearing 
before Senator Murkowski's Committee on Energy and Natural 
Resources was Public Law 11-69 which limits to three-years the 
maximum length of stay in the Commonwealth for non-resident 
workers; after which they must exit the Commonwealth for at 
least six (6) months before applying again to return to work. 
This legislation is similar to the Federal regulation 
promulgated by the U.S. Immigration and Naturalization Service 
(INS) limiting to 3-years the maximum length of stay of H-2B 
workers admitted to work in the United States, after which they 
also must exit the United States for at least six (6) months 
before entering again to work. This measure is intended to 
remove the criticism that a substantial number of guest workers 
have been staying in the Commonwealth for many years without 
having any voice in our political process.
    A third legislation that we enacted in 1998 is Public Law 
11-22, which establishes ``special industry committees'' 
charged with studying the several industries in the 
Commonwealth, such as the hotel and tourist industry, and 
recommending to the Commonwealth Legislature the minimum wage 
rates appropriate for employees of a particular industry. This 
measure is patterned after the Special Industry Committee 
established by Congress for American Samoa many years ago. As 
you know, Mr. Chairman, for several years now the Department of 
Interior has chastised the Commonwealth for not implementing 
outright the Federal minimum wage in the Northern Marianas.
    Our economic conditions and circumstances, however, are far 
different from the economy of the continental United States, 
forcing us to adjust our wage levels based on the factors that 
affect our economy, which is directly dependent on the 
economies of Asia and Japan. This direct reliance on the 
economy of Asia and Japan is best illustrated by the adverse 
effect that the Asian economic crisis, which began in 1997 and 
is still continuing, has had on the economy of the Northern 
Marianas. Since the financial crisis in Asia began two years 
ago, our tourist industry has suffered a severe decline of at 
least 30 percent in the number of visitors to the Commonwealth. 
This has translated into a corresponding 30 percent decline in 
local government revenue, which has crippled our ability to 
provide essential public services.
    A fourth piece of legislation that we enacted within the 
past year was Public Law 11-66 which addressed the plight of 
our guest workers who were abandoned by their employers and 
were left stranded without any means to feed themselves or to 
return to their country of origin. This was one of the 
criticisms seized upon by the national news media and later 
became the rallying cry of some officials at the Department of 
Interior and human rights group seeking the federalization of 
immigration in the Commonwealth. Unfortunately, the focus of 
the criticism was not on the employers who had abandoned these 
workers, but on the Commonwealth Government which had allowed 
the hiring of these workers without fully scrutinizing the 
financial resources and commitment of their employers.
    Public Law 11-66 established a deportation fund to purchase 
airline tickets for abandoned guest workers and provide at 
least a 3-month salary for those who had received judgments for 
back wages. Since February of this year, over 1633 abandoned 
workers have been repatriated under this law, and 111 of these 
workers qualified for the salary relief. An additional 50 
workers are also seeking similar relief. So far the program has 
cost the Commonwealth $359,000, a fairly hefty sum considering 
the Commonwealth's continuing revenue decline.
    A fifth important piece of legislation that we enacted in 
early 1998 was Public Law 11-33 which established a ``limited 
immunity program'' for illegal guest workers who were 
encouraged to come forward, register and become legal. The 
Commonwealth had been criticized that a large number of aliens 
were staying illegally in the Commonwealth. This law provided 
the opportunity to rectify the situation. It was a huge 
success: 3,079 guest workers who had overstayed beyond the term 
of their entry permit stepped forward and were registered. The 
program was a voluntary one and no threat was made to any guest 
worker. The Commonwealth Government thereafter assisted the 
workers in locating employment locally. 1,246 have since been 
employed under one-year contracts. Those who cannot find 
employment are being asked to voluntarily depart.
    A sixth piece of reform legislation has just been passed by 
our legislature and has been transmitted to the governor for 
his review and consideration. This is Senate Bill No. 11-15, 
S.S.I., which requires a health and criminal background, pre-
clearance check for each guest worker in the guest worker's 
country of origin, before being issued an entry/work permit to 
enter the Commonwealth for employment. This legislation would 
ensure that all guest workers entering the Commonwealth are 
free of communicable or contagious diseases and do not have any 
criminal background. It accomplishes this by providing that the 
Commonwealth will use the same sources for health clearance 
certification and criminal background checks as those relied on 
by the U.S. State Department and the Department of Justice.
    A seventh piece of legislation that is now being re-drafted 
for consideration by the Commonwealth Legislature is the 
Resident Workers Fair Compensation Act. This measure is 
intended to attract our unemployed resident population to work 
in the private sector, such as the hotel and tourist industry. 
The measure proposes to ``level the playing field,'' so to 
speak, with respect to the ``true wages'' being paid non-
resident workers and what the equivalent wages should be for 
resident workers if employed for the same positions. All of the 
benefits being given a non-resident worker, such as free 
housing, food, and medical insurance, for example, are computed 
in order to determine the true wage that is being paid a guest 
worker for a particular position. This measure proposes to 
address the criticism that the Commonwealth has a high 
unemployment rate of 14 percent for local residents, yet has 
continued to allow the hiring of guest workers without first 
finding work for unemployed local residents. The goal of this 
legislation is to attract our local residents to work for the 
private sector, to reduce the resident population's 
unemployment rate, and to lessen the number of residents 
working for the local government.
    The foregoing illustrates the many legislations that the 
Commonwealth legislature has passed and enacted into law, or is 
now considering, to address the immigration and labor issues 
for which we have been criticized. It is a Joint effort between 
the CNM executive and legislative branches, with the assistance 
and participation by interested parties, such as the Saipan 
Chamber of Commerce, the Hotel Association of the Northern 
Mariana Islands, the Saipan Garment Manufacturers Association, 
and others. We shall continue considering other legislation 
that would assist in addressing and eliminating our immigration 
and labor problems. We are committed to rectifying the abuses 
of the past so that we do not repeat them again, and so that we 
will regain our credibility and reputation in the eyes of those 
around us.

3. Adequacy of Enforcement of Federal Laws in the Commonwealth

    The first area that the Conumittee is focusing on at this 
oversight hearing is the adequacy of enforcement of Federal 
laws in the Northern Mariana Islands, particularly the Federal 
labor laws, equal employment opportunity laws and the 
occupational safety and health laws. Based on our general 
observation over the 20 years since we became a member of the 
American political family, the U.S. Department of Labor, 
particularly its Wage and Hour Division, has established and 
made its presence known in the Commonwealth through the 
prosecution of highly publicized cases involving employer 
violations of wages and hours of employment. We believe that 
Labor's Wage and Hour Division has done a good job of 
monitoring and prosecuting various violations of the Federal 
wage and hour laws.
    As to the enforcement of the equal employment opportunity 
laws, we wish to note that staff of the Equal Employment 
Opportunity Commission (EEOC) only recently began coming to the 
Commonwealth to take complaints from aggrieved employees. EEOC 
has no permanent office in the Commonwealth, as far as we are 
aware. As you know, Mr. Chairman, the enforcement of any law is 
only as good as the personnel and resources committed by the 
agency enforcing the law. The presence of EEOC staff on Saipan 
for about a week every month or so is clearly inadequate. It is 
difficult for Commonwealth employees to follow-up or to find 
out the status of one's case without a local office. EEOC 
should hire at least one or two permanent staff for Saipan. On 
a positive note, however, we are happy that EEOC staff has 
begun conducting seminars and training sessions for private 
employers and local government agencies so that the 
Commonwealth is now becoming more aware of the various EEOC 
laws and regulations.
    The third Federal law that the Committee is addressing is 
the occupational safety and health laws. Our major complaint 
with OSHA is also the fact that it does not have any permanent 
staff on Saipan to assure continuity and to provide assistance 
and information to employers and employees. OSHA investigators 
come to Saipan fairly regularly, mispect job sites and 
conditions of employment issue citations and impose fines; then 
they leave. We believe that OSHA should have one or two 
permanent staff on Saipan so that the enforcement of OSHA laws 
and regulations would have permanency and continuity in terms 
of enforcement. Our second concern is that fines collected 
under OSHA laws is not turned over to the Commonwealth as is 
the case with Federal taxes and fees collected in the Northern 
Marianas, pursuant to the Covenant. We would like to see that 
fines collected under OSHA be also remitted to the Commonwealth 
just like the Federal taxes and fees collected in the Northern 
Marianas.
    We also wish to mention the Office of the Federal Labor and 
Ombudsman which recently opened. By all accounts, this is a 
very helpful and welcome office. We have a very good working 
relationship between local officials and the new Labor 
Ombudsman. Already the office has begun to help expedite 
resolution of a large number of complaints.
    Finally, we want to note that we urged Congress last year 
to provide the CNMI with its own United States Attorney. 
Although we believe the U.S. Attorney's office is doing a good 
job and continues to improve its record of prosecutions, we 
remain convinced that a separate U.S. Attorney for the CNMI is 
justified and would significantly enhance Federal law 
enforcement in the Commonwealth. One benefit would be a better 
focusing of Federal legal resources based on the particular 
circumstances and unique needs of the Commonwealth.

4. The Use of Federal Funds by Federal Agencies to Enforce 
Federal Laws in the Commonwealth

    We respectfully defer to the respective Federal agencies to 
explain to this Committee how they have used Federal funds to 
enforce Federal laws in the Commonwealth.

5. The Use of Federal Funds For Capital Improvement Projects in 
the Northern Mariana Islands

    In the topic regarding the use of Federal funds for capital 
improvement projects in the Northern Mariana Islands, we wish 
to take this opportunity to thank the U.S. Congress for its 
constant support of the Commonwealth's continuing need for 
capital improvement funds, particularly under Section 702 of 
the Covenant. Contrary to the belief that others appear to 
have, Covenant Section 702 funding is the primary source of 
funding that we have for capital improvement projects in the 
Commonwealth. For example, this is the money that we have been 
depending heavily on to construct the Commonwealth's new solid 
waste disposal facility, away from the environmentally unsafe 
Puerto Rico Dump; to construct a new correctional facility; to 
build much needed classrooms; and to carry out essential water, 
power, and sewer infrastructures; and so forth.
    In order to use Covenant Section 702 CEP funds, which 
requires a ``dollar for dollar'' local matching, the 
Commonwealth is required to adopt a prioritized CEP project 
listing. The Commonwealth Governinent completed the CIP Project 
Plan listing in 1998, which was adopted by the legislature 
recently. Attempts have been made to divert our Covenant 
funding to other jurisdictions on the mischaracterization that 
the Covenant funds that remain are ``an unused balance from 
previous construction grants.'' This is not true. All of the 
Covenants funds have been earmarked for specific projects. What 
held back its usage in the past was either the absence of a 
prioritized project listing or the need to identify the 
required matching funds. Thus, for the Third Funding Period 
under the Covenant (FY1996-FY2002), we have now identified all 
of the essential capital improvement projects that will be 
funded. The Federal funds available for this period is $77 
million, plus the $77 million in local matching funds, bringing 
the total CIP Funding to $154 million. We humbly ask the 
Congress to please not divert this money to other 
jurisdictions. We need the money for urgent CEP projects in the 
Commonwealth that have already been identified. To ensure that 
we have the matching funds needed, legislation has passed our 
House and Senate authorizing the Commonwealth Development 
Authority to float a $60 nuillion general obligation bond on 
behalf of the Commonwealth Govemment for CIP projects.

6. Financial Assistance Under the Compacts of Free Association

    Mr. Chairman, while we are on the subject of Federal 
funding, we would be remiss if we do not bring to the attention 
of this Committee a matter that in the past has not been given 
much attention or was not considered important enough by the 
Department of Interior. This is the matter of appropriating the 
funding needed to reimburse the Commonwealth for the financial 
impact that the unrestricted migration of Freely Associated 
States citizens into the Commonwealth has had on our treasury. 
In past years, Interior has given small grants to the 
Commonwealth to somehow defray the costs to the Commonwealth 
for its delivery of essential public services to FAS citizens. 
We ask the Congress to take a closer look at the issue and 
consider the substantial expenses that have been or are bemig 
incurred by the Commonwealth on behalf of FAS citizens who live 
in the Northern Marianas.
    The CNMI Department of Commerce recently performed a study 
to determine the so-called ``Compact-Impact'' costs to the 
Commonwealth. The study, using both a ``direct cost method'' 
and a ``percentage of total cost method,'' has concluded that 
our Compact-Impact cost for 1997 was $13.7 million and for 
1998, it was $15.1 million, for a two-year total of $28.8 
million. The Commonwealth has requested and wants to be 
reimbursed for this amount. In approving the Compacts of Free 
Association which the United States entered into, Congress has 
stated: ``In approving the Compact it is not the intent of the 
Congress to cause adverse consequences for the United States 
territories and Commonwealth or the State of Hawaii.'' The 
Compact has in fact adversely affected us financially in terms 
of the delivery of public services. The Commonwealth, upon 
request by this Committee, would be very happy to determine the 
compact-impact costs for the years prior to 1997.

7. Conclusion and Recommendation

    Mr. Chairman, we thank the Committee for giving us the 
opportunity to submit this testimony. The hearing before your 
Committee on the enforcement of Federal laws in the Northern 
Mariana Islands and on the use of Federal funds to enforce 
those laws, in essence, complements the hearing held two days 
ago before the Senate Committee on Energy and Natural Resources 
chaired by Senator Frank Murkowski with respect to legislation 
being proposed to implement the U.S. Immigration and 
Nationality Act to the Northern Mariana Islands. We believe 
that the INA should not apply to the Commonwealth. We believe 
that the Commonwealth should be allowed to continue to enact 
and enforce laws that would eliminate guest worker abuse and 
address the criticisms that have earlier been made against the 
Commonwealth. The Commonwealth has earnestly begun to reform 
itself. We believe that a necessary ``part of the equation'' in 
our enforcement effort is the active participation of Federal 
agencies in the enforcement of Federal laws. Although there are 
signs that Federal agencies, like the EEOC, are beginning to 
make their presence in the Commonwealth known and felt the 
permanent presence of these agencies in terms of office and 
staff in the Commonwealth would make a big difference.
    Thank you very much.

    Mr. Schaffer. [presiding] Thank you. Mr. Sablan.

STATEMENT OF RONALD D. SABLAN, PRESIDENT, HOTEL ASSOCIATION OF 
              THE NORTHERN MARIANA ISLANDS, SAIPAN

    Mr. Ronald Sablan. Thank you, Mr. Chairman. Mr. Chairman 
and honorable members of this Committee, my name is Ronald 
Sablan and I'm president of the Hotel Association of CNMI. 
Thank you for the opportunity to once again represent our 
tourism industry, specifically our hotels. This hearing is 
about enforcement and application of Federal statutes, 
expenditure of Federal funds in our islands, but because it is 
so critical to us, we must focus our comments on the so-called 
Federal takeover issue.
    I must state now that with all due respect that we stand 
firmly against Federal takeover of our Commonwealth immigration 
and application of U.S. minimum wage. The U.S. Congress should 
not place the same restriction limits on tiny isolated islands 
as it would a powerful country nearly half the world away. 
Please consider geographical location and the unique limitation 
of islands. As you know, this is exactly why special provisions 
were written into our Covenant.
    While the U.S. has experienced prosperity, the past two 
years have been the worst in our economic history. The main 
driver of our economy, tourism, has dropped more than 30 
percent during the Asian economic crisis. Many hotels, 
particularly family-run operations like mine, are barely 
surviving. A severe recession is the worst possible time to 
raise wages and force the replacement of 61 percent of our work 
force from other countries.
    There is no relevance within our economy and that of the 
mainland. In fact, the rise of the dollar against the yen is 
never good news for a tourism-based economy. Please remember 
when the U.S. dollar goes up, our economy goes down. Special 
consideration should be given to the fact that we are more 
closely tied to regional economic conditions which are now in a 
recession. We have already cut 15 percent of our hotel 
personnel. By increasing the minimum wage, business owners will 
be forced to make tough choices. More layoffs, increase prices, 
increase working hours, or simply throw in the towel.
    As our hotel industry began 25 years ago, we recruited 
employees from nearby Asian countries out of necessity, due to 
the fact that our small local population could not meet the 
need for a skilled work force. Much of our industry developed 
by Japanese investors, marketing to Japanese tourists. 
Naturally, many personnel are recruited from Japan.
    Now I would like to address the question we are often 
asked. If Guam can live with U.S. immigration and minimum wage, 
why can't you? Our economy is vastly different than our 
neighbor to the south. An island with four times the citizen 
population, a major hub of transportation, shipping, 
communications for the region, not to mention the military 
inputs to the Guam economy. With the exception of wages, 
virtually every cost of operating a hotel is more expensive in 
Saipan than in Guam due to the fact--due to much smaller 
economic scales, shipping costs and infrastructure 
requirements.
    We are also asked if we could recruit from Micronesia where 
the vast majority of people have very little or no work 
experience. Notwithstanding the cost of training and 
assimilating these people into our more developed society, what 
do you think it would do to the fledgling economy of these 
islands if the CNMI were to suddenly need to recruit nearly 
27,000 employees from their small adult population? We can say 
with certainty that a regional economic crisis will occur.
    Could we hire from the mainland? Experience has shown that 
this is not viable option due to great distance and recruiting 
costs, as well as the high turnover rate of U.S. employees that 
have left families to come to our island.
    We cannot predict when the Asian economic crisis will end 
nor when visitors will return, but we do know this. If the CNMI 
loses its immigration control, we lose our ability to staff our 
businesses, there will be no recovery of this industry for the 
foreseeable future. Mr. Chairman, we are located very closely 
to Asia, but our islands have very limited resources. We are 
fortunate to have a very successful tourism industry, which is 
highly competitive with other destinations. This is due to our 
exceptional environment and service-oriented personnel. 
Anything we do to reduce our service level or increased the 
packaged costs will mean a reduced marketshare of mature 
travelers.
    In addition to poor economic conditions, the threat of a 
takeover of our immigration has been the major factor in 
damaging our investment climate. It has meant significant 
delays, relocation, and outright cancellation of investment. 
There is an ongoing concern for financiers and lending 
institutions. This I know well, as my own hotel expansion was 
halted for this reason.
    I believe that your good intentions are to clean up the 
sensationalized labor and immigration problems of the past, but 
a takeover is not an all-win solution. Our problems are 
proportionately nothing more than what occurs in cities across 
America. The records of our tourism industry shows a clean, 
well-run industry with a reputation of fair treatment of 
employees. We have educated our hotels about the CNMI and 
Federal laws. We have worked hard to train and recruit local 
workers. But whatever we do, there's not enough local citizens 
to fulfill all the jobs.
    In closing, Mr. Chairman, the people, the businesses, and 
the government of the CNMI have the sincere commitment to 
improve our labor and immigration systems. At the same time, we 
need to bring up the level of education and training that is 
available to our people. Rather than an outright takeover, we 
must approach this properly to build an honest supporting 
working relationship between the Federal and local agencies. 
One without any hidden agendas. Help us to enforce the laws 
rather than seek problems to capitalize on. Only through a 
cooperative and focused approach can we accomplish real 
solutions. Thank you.
    [The prepared statement of Mr. Ronald Sablan follows:]

            Statement of The Take Pride in America Coalition

    Mr. Chairman, Ranking Minority Member Bingagaman, and 
Members of the Senate Energy and Natural Resources Committee, 
the Take Pride in America Coalition would like to thank you 
very much for the opportunity to submit this testimony today.
    Our Coalition (membership list attached) is growing larger 
even, day, and already represents a broad and diverse cross-
section of the American people. The members of our coalition 
include business, labor, consumer groups, senior citizen 
groups, and human rights organizations--all dedicated to 
seeking reform legislation regarding the Commonwealth of the 
Northern Mariana Islands (CNMI, or Saipan).
    Our coalition includes such esteemed representatives of 
American business as Dupont, Summitville Tile, Milliken & 
Company, the Knitted Textile Association, and the American 
Textile Manufacturers Institute.
    We also have as members such great American labor 
organizations as the Union Label and Service Trades Department. 
AFL-CIO, the United Mine Workers of Ainerica, the United Food 
Workers, the Utility Workers, the Steelworkers. UNITE, the 
Sheet Metal Workers, and the Bollermakers, just to mention a 
few.
    Additionally, we have such prominent and effective 
representatives of U.S. consumers and seniors as the National 
Consumer League and the National Council of Senior Citizens, as 
well as human rights organizations.
    Mr. Chairman, we all join in applauding you and Ranking 
Minority, Member Bingaman for holding today's hearing.
    Despite persistent interests that would benefit by keeping 
the American people in the dark about the situation in Saipan. 
Mr. Chairman, you and Ranking Minority Member Bingaman, Senator 
Akaka and others on the Committee have been determined to shine 
some necessary light oil the serious problems in this American 
territory, and we commmend you for it.
    Our Coalition appreciates your knowledge and experience on 
issues related to the CNMI, Mr. Chairman, and that of the 
Members of our Committee. There is little question that, had 
the government of the CNMI listened to your earlier warnings 
and those of Senators Bingaman, Akaka and others about the need 
to institute voluntary reforms, Saipan would not be having--and 
causing--the problems that it is today.

The Reagan Administration Issued The First Warning

    But, as we have seen, there is a long history of the CNMI 
failing to listen to warnings urging reform of CNMI policies--
warnings from this Committee and warnings from every one of the 
last three Administrations.
    As far back as 1986, the Reagan Administration warned the 
CNMI that continued importation of contract workers into the 
CNMI garment industry would not be tolerated. In the attached 
letter to Governor Pedro Tenorio of the CNMI. Reagan Assistant 
Secretary of Interior Richard Montoya, wrote:

        . . . As I have often stated, the intent of Congress in 
        providing the privilege of Headnote 3(a) to the territories is 
        to benefit local and not alien job and business growth. The 
        extensive and permanent use of alien labor will Headnote 3(a) 
        industries is all abuse which cannot be tolerated by the 
        [Reagan] Administration. . . .
        ``Recent reports again indicate all unwarranted increase in the 
        use of alien labor in the NNI garment industry . . .
        ``These events may lead to the ruin of textile opportunities 
        under Headnote 3(a) not only for the NMI but for all of the 
        U.S. territories. Furthermore, the uncontrolled influx of alien 
        workers in many segments of the NNJI econoiny can only result 
        in increased social and cultural problems. The objectives of 
        the recently negotiated Covenant financial agreement could be 
        derailed as the wholesale transfer of U.S. tax, trade and 
        social benefits to non-U.S. citizens occurs under the NMI's 
        alien labor promotional policies . . .''
    Mr. Chairman. the situation in Saipan has grown much worse 
since the Reagan Administration issued this crystal clear 
warning to the CNMI in 1986. At that time there were fewer than 
7,000 alien contract workers in the CNMI. Today as you have 
noted there are 28,000 alien workers with estimates of another 
10,000 illegal aliens in the CNMI.
    All told, there are almost 40,000 non-U.S. citizens in the 
CNMI today almost twice as many as there are U.S. citizens in 
the CNMI.
    Also, when the above warning was issued by the Reagan 
Adiministration, there were only ten garment factories in the 
CNIQL. Now, there are over 30 garment factories there. And, 
every one of these garment factories uses almost all foreign 
contract workers!
    Clearly, the potential situation in the CNMI that former 
President Reagan's Assistant Secretary of the Interior warned 
about--where continued importation of foreign contract workers 
results in trade benefits intended for U.S. citizens going 
primarily to foreign citizens--has arrived with a vengeance.
    The massive importation of these alien contract workers has 
lead to almost all private sector work being done by foreign 
workers. Incrediby, 91 percent of Saipan's entire ptivate 
sector workforce is now composed of non-U.S. citizens.

Saipan: Free Market Success or Failing Welfare State?

    The immigration problem in Saipan continues to grow worse 
each year. Mr. Chairman, we strongly agree with your statement 
that Saipan's economy is not prosperous and diversified but in 
fact has ``a far more fragile economy that is becoming ever 
more dependent on a system of imported labor.'' (Statement on 
the introduction of S. 1052, ``The Northern Mariana Islands 
Covenant Implementation Act'').
    As you point out, the public sector in Saipan has doubled 
recently and is rapidly becoming the employer of last resort 
for U.S. citizens in the CNMI. Almost one half of the U.S 
citizens who are employed in Saipan are working for the 
government!
    Through its massive import of indentured alien workers, 
Saipan has crowded out private sector jobs for the U.S. 
citizens on the island, and the unemployment rate among E.S. 
citizens in Saipan hovers around 15 percent.
    What's mobe, in another sign of welfare state decay. 
Federal officials have recently reported an increase in 
organized crime in the CNMI and increased activity of Chinese 
and Japanese organized crime groups.
    And even though the Saipan garment factories have 
quadrupled their exports to the U.S. since 1991, the food stamp 
applications of the U.S. citizens in the CNMI have doubled 
during the same period of time. (See charts below.)
[GRAPHIC] [TIFF OMITTED] T3071.037

    Mr. Schaffer. Thank you, Mr. Sablan. Mr. Teitelbaum.

STATEMENT OF MICHAEL S. TEITELBAUM, ALFRED P. SLOAN FOUNDATION, 
                          NEW YORK, NY

    Mr. Teitelbaum. Thank you, Mr. Chairman, members of the 
Committee. My name is Michael Teitelbaum. I'm a foundation 
executive at the Alfred P. Sloan Foundation in New York. By 
background, I am a demographer. I hold a doctorate in this 
field from Oxford University.
    May I just begin by saying it's a pleasure to appear before 
you today, though I fear you may be getting somewhat weary. I 
am doing so at your invitation and entirely in my personal, 
professional capacity. I am representing no person or entity 
other than myself.
    In October 1997, I undertook a site visit to the 
Commonwealth of the Northern Marianas at the invitation of the 
commission on Immigration Reform, of which I was then a member. 
The commission had been asked by the U.S. Department of 
Interior to undertake its own independent analysis of the 
immigration situation in the CNMI. We agreed to do so only with 
the understanding that our assessment and any recommendations 
that might result would be wholly independent of the 
Department. We emphasized that our views might well be at 
variance with the opinions and positions that the Department 
had already expressed, and, indeed, they were, ultimately. The 
Department officials involved agreed to these ground rules and, 
to my knowledge, did not make any attempt of any kind to 
influence our findings or recommendations.
    This is the report quoted by Representative Juan Babauta, 
the resident representative of the CNMI, just to pull things 
together. And I do believe Mr. Sablan and--we met in a very 
cordial meeting and interesting meeting while we were there.
    At the time I agreed to undertake this trip, I had no prior 
knowledge or opinions about the CNMI. In preparation, I did 
read a large compilation of articles and reports that reflected 
all perspectives on the subject. I believe we learned a great 
deal during our five-day visit. In addition, there was a one 
and a half day, rather rushed, stopover in Manila on the way 
home. And I took a one-day side trip to nearby Guam.
    Many of our meetings were arranged by the CNMI government, 
who were our hosts. But we did undertake some independent 
meetings. In fact, on our very first day--it was a Sunday, as I 
recall--before we had begun our scheduled meetings and, indeed, 
before we had met any of the CNMI officials, I and some of my 
colleagues set off in a private rental car on our own without 
announcement and unaccompanied, of course, to inspect two of 
the garment industry hostels for workers from the People's 
Republic of China.
    We did so because, in my view, any such site visit requires 
that one avoid being entirely controlled by one's hosts. It's 
really the only way to get a reasonably clear picture of a 
situation that is in passionate dispute and is otherwise quite 
distant from most of us in this hearing room. Now, given the 
limitations of time, I'm going to restrict myself to the 
following brief points.
    First, the decisions taken by the CNMI government over the 
past decade essentially to use its exception from the 
Immigration and Nationality Act to import thousands of foreign 
garment workers on temporary contracts as its principal 
strategy for economic development and tax generation are, in my 
view, most unwise and quite unsustainable, both economically 
and politically. They are also contrary to core values of U.S. 
Immigration policy.
    Second, the economy that has emerged in the CNMI over the 
past decade is one of the strangest in the world. You've 
already heard some of this described. I will very quickly say 
the CNMI is an entity with a very small land mass and a small 
indigenous population. It decided to use its Immigration 
exception and Customs preferences to build an economy based on 
the garment industry, one of the world's most labor-intensive 
and lowest productivity industries. As a result, the entire 
indigenous population of the CNMI is now literally outnumbered 
by foreign contract workers.
    And I won't go over the other things. You've heard them 
already. Nine out of 10 workers in the for-profit sector are 
foreign contract workers. Oddly enough, the for-profit sector 
is the low-wage, low-benefit part of the economy.
    To my knowledge, no democratic society has allowed such an 
economy and immigration system to develop. The only economy in 
the world that I know of that is at all similar to that of the 
CNMI is the economy of Kuwait. But Kuwait is not part of the 
United States. It has only limited provisions regarding 
democratic governance and individual rights. And it has a core 
economy, obviously, that is based upon enormous reserves of 
oil.
    Third, to be frank, the CNMI government is unable to manage 
the immigration policy that it has created. And to be fair, 
this should not surprise us. No U.S. State, no U.S. territory 
could hope to effectively manage its own immigration policy. 
None has the embassies. None has the consulates around the 
world that it would need to pre-screen those applying for visas 
and to issue the visas. I live in the State of New York. New 
York State is much bigger, as a government than that of the 
CNMI. I am sure that the New York State government could not do 
what the CNMI government is trying to do.
    Fourth, Foreign contract workers are easily exploited under 
the condition of their contracts and CNMI law enforcement. 
You've heard this already. I won't belabor it. During our 
visit, we heard directly from numerous such workers alleging 
exploitation. And we also saw for ourselves the disgraceful 
living conditions in one of the two garment industry hostels we 
visited independently on that Sunday afternoon. The living 
conditions in the second hostel were somewhat better than 
disgraceful, but they were still rather bad.
    Fifth, I had not realized before this trip that the CNMI 
immigration system, which falls under the sovereignty of the 
United States, is a diplomatic embarrassment to the United 
States Government. I know this to be true from first-person 
discussions we held in Manila and it appears to be the case 
elsewhere in Asia. This on the basis not of first-person but on 
press reports and testimony.
    And then I would add, finally, that the CNMI immigration 
system fails to provide an avenue through which political 
asylum might be claimed. This is another embarrassment and one 
in direct contravention of U.S. treaty obligations, obligations 
that the U.S. State Department energetically urges upon all 
other countries.
    The commission report in late 1997 expressed reservations 
about immediate imposition of Federal immigration controls then 
being recommended by the executive branch. In part, this was 
out of concern about the economic dependence on thousands, tens 
of thousands, of imported contract garment workers that the 
CNMI government had allowed to develop. It was also based, in 
part, out of concern about the health of the tourism industry, 
represented so ably by Mr. Sablan. And, finally, it was based, 
in part, on indications we received that the immigration 
service would not be willing or able to commit the personnel 
resources that would be needed for Federal enforcement of 
Federal immigration law, coupled with reasonable doubts that 
the local government could be expected to enforce effectively a 
Federal law which it opposed.
    Nearly two years has now passed since this recommendation 
was issued. And, in the interim, the CNMI government has 
changed hands and the current governor has expressed more 
concern about these problems. And some improvements, as you 
have heard, seem to have been made in enforcement and 
protection of contract workers rights.
    Our second reservation concerned the willingness of the 
executive branch to commit the INS and other agency resources 
needed for effective enforcement. Here I would ask you to get 
it in writing, Mr. Chairman, because, according to the hearing 
record before the cognate committee on the Senate side, in 
1998, the executive branch has committed itself to providing 
the necessary INS and other personnel that would be needed. If 
you obtain--if you have or obtain written assurances on this 
key point, then this source of the commission's hesitation and 
caution would no longer be at issue.
    Mr. Chairman, there's one disagreement between the CNMI 
government and the Federal Government that I hope you will be 
able to resolve. And we've heard it here today. The CNMI 
government officials told us during our visit and continued to 
say today that the exception from the Immigration and 
Nationality Act, agreed during the 1976 Covenant negotiations, 
was intended to allow large numbers of foreign temporary 
contract workers to be imported to the CNMI.
    The Federal Government, both the executive branch and the 
relevant congressional committee reports that I have seen, say 
that the intention of the exception was the very opposite, to 
protect the small island territory and its small indigenous 
population from being inundated with immigrants under the terms 
of the INA, an issue raised by one of your members just a few 
moments ago.
    Obviously, these are dramatically different interpretations 
of the very same negotiations and the same Covenant. I hope you 
will be able to resolve this matter to your own satisfaction.
    During our commission delegation meeting with then-Governor 
Froilan Tenorio, he told us that if the U.S. Government 
continued to insist the Federal immigration law should apply to 
the CNMI, he would consider moving towards independence for the 
Northern Marianas. My own view is that, as a U.S. territory, 
the CNMI should have such a right of self-determination as to 
future independence. If the majority of the citizens of the 
CNMI, in an open and fair referendum, were to vote to reverse 
the terms of the Covenant and thereby to cancel their U.S. 
citizenship so that they could become an independent state, 
their wishes should be respected.
    I'd be happy to answer any questions you may have.
    [The prepared statement of Mr. Teitelbaum follows:]

  Statement of Michael S. Teitelbaum, Alfred P. Sloan Foundation, New 
                                  York

    Mr. Chairman, Members of the Committee, Ladies and 
Gentlemen:
    I am Michael S. Teitelbaum, a foundation executive at the 
Alfred P. Sloan Foundation in New York. By background I am a 
demographer, with a doctorate in this field from Oxford 
University. I first became interested in data and research on 
international migration while serving from 1979-81 as Staff 
Director of the House Select Committee on Population. For the 
past 15 years I have done considerable research and analysis of 
immigration and refugee policies in the United States and many 
other countries.
    From 1991 through 1997, I served as a Commissioner and Vice 
Chair of the U.S. Commission on Immigration Reform, the 
Congressionally-appointed Commission widely known as the Jordan 
Commission after its late Chair, former Congresswoman Barbara 
Jordan. Its eight members were appointed by the House and 
Senate majority and minority leaderships, its Chair by the 
President. I was appointed by the Senate Republican Leader Mr. 
Dole, though I am a political independent. Prior to this, I 
also served as a Commissioner on the U.S. Commission for the 
Study of International Migration and Cooperative Economic 
Development (chaired by Ambassador Diego Asencio), which 
completed its report to the Congress and President in 1990.
    It is a pleasure for me to appear before you today. I am 
doing so at your invitation, and entirely in my personal 
professional capacity, representing no person or entity other 
than myself
    In October 1997, I undertook a site visit to the 
Commonwealth of the Northern Marianas (CNMI) at the invitation 
of the Commission on Immigration Reform, of which I was a 
member. The Commission had been asked by the U.S. Department of 
Interior to undertake its own independent analysis of the 
immigration situation in the CNMI. We agreed to do so only with 
the understanding that our assessment, and any recommendations 
that might result, would be wholly independent of the 
Department. We emphasized that our views might well be at 
variance with the opinions and positions that the Department 
had already expressed. The Department officials involved agreed 
to these ground rules, and to my knowledge did not make any 
attempt to influence our findings or recommendations. I was 
accompanied on this trip by a fellow Commissioner, Robert 
Charles Hill, and by the Commission's Staff Director Susan 
Martin and two other staff members, David Levy and Monica 
Heppel (the last two traveled to CNMI a few days in advance in 
order to make arrangements for meetings with CNMI officials and 
other meetings and visits.) This visit, along with other data 
collection and analysis efforts, was the basis of the November 
1997 report Immigration and the CNMI, of which I believe you 
have copies.
    At the time I agreed to undertake this trip, I had no prior 
opinions about the CNMI. In preparation, I did read a large 
compilation of articles and reports reflecting all 
perspectives. I deliberately included in my reading list both 
the criticisms emanating from the U.S. Department of Interior 
describing the CNMI policies as failures, and the arguments 
prepared by the CNMI and its Washington supporters that 
described its policies as a successful model of free 
enterprise. Though I was reluctant to undertake such a long 
trip, it was clear to me from this reading that it would be 
impossible to make any fair determinations of the facts without 
seeing the situation firsthand.
    We learned a great deal during our 5-day site visit, a 1\1/
2\ day stop in Manila on the way home, and a 1-day side trip I 
took to nearby Guam. With one or two notable exceptions, we 
were treated with courtesy and professionalism by CNMI 
officials, private sector leaders, and Federal Government 
officials. I should also report to you that in a few cases, 
CNMI officials took us aside to confide that the official CNMI 
government position was not really accurate, and the ``true 
story is'' Moreover, on our very first day (a Sunday as I 
recall), before we had begun our scheduled meetings, I and some 
of my colleagues set off in a private car on our own, without 
announcement and unaccompanied by local officials, to inspect 
two of the garment industry ``hostels'' for workers from the 
People's Republic of China. In my view, any such site visit 
requires that one avoid being entirely controlled by one's 
hosts; this is really the only way to get a reasonably clear 
picture of a situation that is in passionate dispute and is 
otherwise quite distant from most of us in this hearing room.
    Given the time limitation, I shall restrict myself to the 
following brief points:

    1. The decisions taken by the CNMI government over the past 
decade--essentially to use its exception from the Immigration 
and Nationality Act (INA) to import thousands of foreign 
garment workers on temporary contracts, as its principal 
strategy for economic development and tax generation--are in my 
view unwise and quite unsustainable, both economically and 
politically. They are also contrary to core values of U.S. 
immigration policy.
    2. The economy that has emerged in the CNMI over the past 
decade is one of the strangest in the world. To summarize:

        the CNMI is an entity with a small land mass and small 
        indigenous population--it decided to use its immigration 
        exception and Customs preferences to build an economy based on 
        the garment industry, one of the world's most labor-intensive 
        and lowest-productivity industries--as a result, the indigenous 
        population of the CNMI is now outnumbered by foreign contract 
        workers
        9 out of 10 workers in the whole of the for-profit sector are 
        foreign contract workers, and it is this for-profit sector that 
        is the low-wage, low-benefit part of the economy
        most of the indigenous Chamorro workforce works for the local 
        CNMI government, and this government sector is the high-wage, 
        high-benefit sector of the economy.
    The only economy in the world that is at all similar to that of the 
CNMI is Kuwait's--but Kuwait is not part of the United States, has only 
limited provisions regarding democratic governance and individual 
rights, and has a core economy based upon its enormous oil reserves.
    3. To be frank, the CNMI government is unable to manage the 
immigration policy that it has created. To be fair, this should be no 
surprise: no U.S. state or territory could effectively manage its own 
immigration policy, since none has the embassies and consulates around 
the world that it would need to pre-screen those applying for visas. 
Even the large state governments of New York and California could not 
do this; and neither can the much smaller CNMI government.
    4. Foreign contract workers are easily exploited under the 
conditions of their contracts and CNMI law enforcement. Most are tied 
to a single employer, and most need to keep working to pay off the 
debts they owe to the labor recruiters who hired and transported them.
    During our visit, we heard directly from numerous such workers 
alleging exploitation. We also saw for ourselves the disgraceful living 
conditions in one of the two garment industry hostels we visited 
independently; the living conditions in the second hostel was somewhat 
better than ``disgraceful'', though still rather bad. (Of course this 
is not a statistically representative sample.)
    We also heard much about young female foreign contract workers 
employed as prostitutes. While of course it is very difficult to 
observe open prostitution, anyone taking a late evening walk in the 
entertainment district--literally right across the road from the 
principal hotel, the Hyatt--could not miss seeing the groups of 
scantily-dressed young women (who appeared to be Filipina and Chinese) 
beckoning to male tourists.
    5. I had not realized before this trip that the CNMI immigration 
system, which falls under the sovereignty of the United States, is a 
diplomatic embarrassment to the United States. I know this to be true 
from first-person discussions we held in Manila, and it appears to be 
the case elsewhere in Asia (this on the basis of press reports and 
testimony we received).
    The CNMI immigration system also fails to provide an avenue through 
which political asylum might be claimed--another embarrassment, and one 
that is in direct contravention of U.S. treaty obligations, obligations 
that the State Department energetically urges upon all other countries. 
In this regard, however, I did note recent press reports about the 
serious difficulties U.S. Government officials in neighboring Guam are 
facing in applying U.S. asylum procedures to the increasing numbers of 
Chinese from Fujian Province who are paying Chinese people-smugglers 
(``snakeheads'') large sums to smuggle them into Guam in order to claim 
asylum. Given this experience, I would urge that you assure yourselves 
that U.S. asylum laws can be effectively enforced in Guam before they 
are applied to the CNMI.
    The Commission report in late 1997 expressed reservations about 
immediate imposition of Federal immigration controls then being 
recommended by the Department of Interior. In part this was out of 
concern about the economic dependence on thousands of imported contract 
garment workers that the CNMI Government had allowed to develop. It was 
also based in part on indications we had received that the INS would 
not be willing or able to commit the personnel resources that would be 
needed for Federal enforcement of Federal immigration law, coupled with 
doubts that the local government could be expected to enforce 
effectively a Federal law which it opposed. For these reasons, the 
report recommended that the CNMI and U.S. governments enter in 
negotiations to find mutually-agreed policies that would be consistent 
with U.S. immigration traditions but recognize the special labor needs 
of the CNMI, especially with respect to the tourism industry.
    Nearly two years has now passed since this recommendation was 
issued. In the interim, the CNMI government has changed hands, and the 
current Governor has expressed more concerns about the CNMI's 
immigration system than did his predecessor. Some improvements seem to 
have been made in enforcement and protection of contract workers' 
rights. Yet (as I understand it) the present Governor himself initiated 
the contract worker program in the garment sector, while he was in 
office during the 1980s, and recent statements that I have seen by him 
continue to emphasize the importance of the garment industry for the 
CNMI economy and for the revenues to the CNMI government.
    In my opinion, any immigration policy like this one--
promoting large-scale importation of low-skill temporary 
contract workers into a small tropical island, for the purpose 
of sewing shirts at low wages for export to the U.S. mainland--
is not a viable option either in terms of sustainablev economic 
development OR in terms of basic American principals and treaty 
obligations.
    Our second reservation concerned the willingness of the 
Executive branch to commit the INS and other agency resources 
needed for effective enforcement of U.S. law in the CNMI. 
According to the hearing record before the Senate Committee on 
Energy and Natural Resources on March 31, 1998, the Executive 
branch has now committed itself to providing the necessary INS 
and other personnel that would be required to enforce the INA. 
I would respectfully urge the Committee to obtain written 
assurances on this key point, but if these are already in hand 
or forthcoming, this source of the Commission's caution would 
no longer be at issue.
    Given the passage of time and the fact that the CNMI 
government apparently continues to be committed to immigration 
policies that are not consistent with U.S. immigration 
traditions, and given the lengthy transition periods in both 
the House and Senate bills designed to allow the CNMI economy 
to adapt, I believe the case for the recommendation of further 
negotiations on these issues is no longer a strong one.
    7. There is one disagreement between the CNMI government 
and the Federal Government that I hope you will be able to 
resolve.
    CNMI government officials told us during our visit, and 
continue to assert publicly today, that the exception from the 
INA agreed during the 1976 Covenant negotiations was intended 
to allow large numbers of foreign temporary contract workers to 
be imported to the CNMI.
    The Federal Government, both the Executive branch and the 
relevant Congressional committee reports, says that the 
intention of the exemption was the very opposite: to protect 
the small island territory and its small indigenous population 
from being inundated with immigrants under the terms of INA, 
which does not differentiate between immigration to the U.S. 
mainland and to a small island territory on the fringes of 
Asia.
    Obviously these are dramatically different interpretations 
of the very same negotiations and the same Covenant. I hope you 
will be able to resolve this matter to your own satisfaction.
    Since you have asked me for my opinion, here is what I 
think about these two possible interpretations. If the CNMI 
view is correct, I think the U.S. negotiators made a serious 
error that needs to be corrected. If the U.S. government view 
is correct, then the INA exception has been used for purposes 
opposite to those for which it was intended, and it should be 
terminated.
    During our Commission delegation meeting with then-Governor 
Froilan Tenorio, he told us that if the U.S. government 
continued to insist that Federal immigration law should apply 
to the CNMI, he would consider moving toward independence for 
the Northern Marianas. My own view is that as a U.S. territory, 
the CNMI should have such a right of self-determination as to 
future independence, and I understand that in the last Congress 
Congresswoman Mink introduced legislation to this effect. If 
the majority of the citizens of the CNMI, in an open and fair 
referendum, were to vote to reverse the terms of the Covenant 
and thereby to cancel their U.S. citizenship so that they could 
become an independent state, their wishes should be respected. 
Such a referendum, with appropriate monitoring provisions, 
could be incorporated into pending legislation, limited to a 
specified time period (e.g. 1 year from enactment). It would 
presumably give CNMI citizens voting in the referendum two 
clear options:

     application of the terms of U.S. immigration law, with 
appropriate provisions for transition;

     or, reversal of all provisions of the Covenant and 
establishment of full independence for the Northern Marianas, with 
acquisition of a new Northern Marianas citizenship by the indigenous 
people of the islands accompanied by cancellation of the U.S. 
citizenship that the Covenant accorded to them as a group during the 
1980s.
    I would be happy to answer any questions you may have.
    Thank you for your invitation, and for your kind attention.

    Mr. Doolittle. [presiding] Thank you very much. I'm going 
to reserve my questions at this time and recognize Mr. Schaffer 
for his.
    Mr. Schaffer. Thank you, Mr. Chairman. I appreciate all of 
the witnesses being here and making trips to accommodate our 
schedule today and I'm even more grateful that the weather 
allowed us to be the only hearing in town so that we could 
actually sit through a whole hearing for a change, which we 
rarely get to do.
    Let me ask the two industry representatives just a general 
question. You know, on the five days that I spent there, I had 
a chance to look at the number of aspects of CNMI's economy and 
visited I think eight or nine garment factories in the time we 
were there and had a chance to talk with a lot of local 
officials and met the two of you there as well. And there are 
acknowledged and legitimate concerns about many of the 
allegations that occurred here today.
    My perspective is that the degree of those problems are 
perhaps different than have been described by some who have 
resorted to sort of an extreme kind of description, but labor 
conditions that need to be addressed, nonetheless. Those labor 
conditions also occur in the rest of the United States and we 
see a pretty vigorous effort by industry representatives and 
groups to try to resolve those internally in a way that seeks 
to avoid the heavy hand of the Federal Government as a worse, 
less desirable, option.
    I would like you to discuss that as well, with respect to--
well, we're going to hear from an individual a little later who 
has problems with the hotel industry. That's what brought him 
to CNMI and the reason he's here to testify about the harsh 
working conditions on the island, as well. Let me start there 
with the hotel industry, with the Chamber of Commerce in 
general. What kinds of things is your industry doing or 
trying--which direction are you trying to--can you give us an 
idea of the kinds of things you're trying to do internally, as 
business owners and community leaders, to resolve many of the 
legitimate concerns that are, from time to time, raised about 
the labor and employment conditions and immigration issues in 
the Commonwealth?
    Ms. Knight. Well, the Saipan Chamber of Commerce does have 
a code of ethics and we also spend a great deal of time 
educating our members about all the applicable Federal and 
local laws. We are fortunate to have an attorney on our board 
of directors. And he regularly puts out information to the 
members and we encourage forums where we can talk about the 
laws and how to enforce them.
    Our community does care about the people that have had 
problems in the past. Personally, I have gone down and brought 
food to the Bangladeshis. We haven't done anything in a formal 
way, as a Chamber of Commerce. But, you know, I can assure you, 
we're working, in the best way we know how, which is--and that 
is to educate our members about the proper things to do.
    Mr. Ronald Sablan. The same thing, Congressman. The hotels 
also have an attorney on board and we try to disseminate 
information that is relevant to enforcement of applicable CNMI 
and Federal laws. There's a little concern in reference to 
owners and employee's cultural differences. Sometimes what is 
not good for us in the U.S. families might be acceptable in 
Asia. But, you know, those are the concerns that--or one of the 
reasons that we try to ask Federal agencies to come to guide 
us, help us as to what applicabilities can be stricken out 
before any problem arises.
    I have asked two times from the regional administrator of 
OSHA to come in and give us managers and engineers as to how we 
can apply the OSHA regulations. In the past, inspections had 
been, it was more focused on the garment and construction 
industries. We have asked them, but, until now, we haven't 
received any responses and we've been getting a lot of 
citations, not knowing what our requirements, especially in 
housing situations. So that's one of the reasons we're, again, 
asking for Federal agencies to come in and educate, especially 
owners of different nationalities in reference to applicable 
Federal laws.
    Mr. Teitelbaum. Congressman, may I add one word of 
endorsement to that?
    Mr. Schaffer. Please do.
    Mr. Teitelbaum. My impressions were that the hotel 
industry, the industry of large hotels, at least, the large 
tourist hotels, is consists of responsible employers who do not 
engage in inappropriate or exploitative behaviors that I even 
heard about, much less observed. The main problem industries in 
the CNMI are not the large hotel, tourism industry. In fact, 
our commission was concerned that it not be caught in the 
backwash of concern about other kinds of problems in other 
industries and, thereby, damaged unfairly.
    The problem industries seemed to be the garment industry, 
which is very big and is a problem; domestic workers; 
security--you already heard about that; many small businesses, 
but we couldn't tell how many; and agriculture, as well, which 
we learned very little about, but there are contract workers in 
agriculture as well. Those are the problem areas. The large 
hotel industry, I do not believe, is a problem area.
    Mr. Schaffer. Thank you, Mr. Chairman.
    Mr. Doolittle. Thank you. Ms. Knight, Mr. Teitelbaum has 
indicated that he heard in Manila we looked upon poorly or 
negatively because of CNMI's treatment of Filipino workers 
during his October 1997 visit. But you've submitted a letter, 
as I understand, and press releases from 1998 and 1999 that 
reflect good working conditions of Filipino workers in the 
CNMI. Have you seen evidence of a change in labor and 
immigration practices by the CNMI since 1997?
    Ms. Knight. I'd also like to add to what you just said and 
that is that the Philippine consul, who is, on Saipan, is 
actively participating in our business organizations, not only 
the Chamber of Commerce, but also the Rotary Club. So she 
spends a lot of time talking to business owners and managers. 
And, yes, she has submitted a very favorable letter and press 
releases from her organizations that oversee Filipino contract 
workers overseas. And we were very encouraged by that. That's 
why we included that as part of our testimony.
    I'd like to take a moment also, if I could, just to say 
that there's a misconception that our community has, you know, 
citizen workers at one level and alien workers at a far lower 
level. We have--we employ alien workers at all levels, from 
minimum wage on up. I mean, the two alien workers that I 
employ, for example, one of them makes $20,000 a year and has a 
company car. So it's a little bit discouraging to hear people 
talk about alien workers as if all of them make minimum wage.
    Also, they get a substantial number of benefits. The 
unlimited 100 percent health care that I talked about earlier 
is very significant. And I hope that people will remember that 
we do provide these benefits.
    Mr. Doolittle. I apologize. Regrettably, I missed most of 
the testimony of this panel while I was out of the room, but 
how long have you been there in the Northern Marianas?
    Ms. Knight. I've lived on Saipan 13 and a half years.
    Mr. Doolittle. Have you seen steady improvement in 
conditions there?
    Ms. Knight. Steady improvement not only in how people are 
employed, but also in our quality of life in general. When I 
first moved to the island, the telecommunications and the power 
system were very bad. The roads were filled with potholes. Our 
community is moving up in a lot of different ways. We're 
becoming a more sophisticated place to live and we have a lot 
more choices and opportunities than we've ever had before. And 
I think our employees do as well.
    Mr. Doolittle. Are you optimistic about the future for the 
Commonwealth?
    Ms. Knight. I remain optimistic, although, as I said 
earlier, this is the worst recession we could have ever have 
imagined. It came up sharply and suddenly without warning. But 
I believe that this recession is also an opportunity for us to 
become a better community. By going through a difficult time, 
it's forcing us to examine how we live, how we do business, how 
we treat one another. And I think we're going to come out as a 
better tourist destination and just, in general, as a better 
community.
    Mr. Doolittle. As the representative of the Chamber of 
Commerce, did you address the issue of the decline of the 
garment industry? I mean, is that your belief, that it's going 
to decline because of the provisions under GATT, I guess, 
kicking in and sort of disadvantaging, competitively, the CNMI 
vis-a-vis other nations?
    Ms. Knight. Well, I see two declines. One is happening now 
because of the lawsuit that was filed in January. In talking 
with a lot of factory managers and owners, I've been led to 
believe that we're going to see a 25 percent drop in orders by 
the end of this year.
    Mr. Doolittle. Can you tell us--maybe you've discussed 
this--the lawsuit refers to what?
    Ms. Knight. The class-action lawsuit that was filed in San 
Diego and San Francisco and Saipan against factory owners and 
also some major U.S. retailers. That's the first decline we're 
having, because of that lawsuit. The second will, of course, be 
from the new world trade agreements which will take place in I 
think it's 2004.
    But I don't think that will destroy the industry. I think 
we have some very good businesses that are running factories on 
Saipan. I had an opportunity to meet and tour several of them 
and I saw that they were modern. They're doing quality work. 
They also have very good clients. I don't think they're going 
to disappear entirely.
    Mr. Doolittle. Thank you. Mr. Faleomavaega.
    Mr. Faleomavaega. Thank you, Mr. Chairman. And I want to 
thank the members of the panel for their testimony this 
afternoon. I just wanted to ask Ms. Knight. You had indicated 
earlier that this figure of 90 percent work force--alien 
workers is somewhat misleading. Do you have an accounting of 
exactly the number of alien workers that are in mid-management 
or in high positions that are paid high salaries? I mean, is 
there a breakdown? Is it 1 percent out of the 33,000 that are 
alien workers? What level do they fit in as far as the salary 
range scale?
    Ms. Knight. Well, they fit in all levels. I mean, we do 
have--let me tell you, we're doing a survey of the Chamber of 
Commerce right now to find out exactly how many are in 
management and supervisory positions. But I just know from my 
own experience. We have a lot of managers in companies, 
supervisors, specialists that are paid a lot more than minimum 
wage.
    Mr. Faleomavaega. Well, I'd like Mr. Sablan in the 
governor's office to submit that for the record. Is there such 
a record to give indications in terms of exactly where the--
because I am very curious. Because 90 percent is a very high 
rate as far as foreign workers are concerned.
    Ms. Knight. We do, every quarter, as an employer, we're 
required to turn in records of what we pay every person on our 
staff. It's the employer's quarterly withholding report. And 
that would show what aliens and residents are making.
    Mr. Faleomavaega. Well, I would like to request Governor 
Tenorio for those statistical data, if I could, Governor.
    [The information follows:]
    Mr. Faleomavaega. Okay. There was an indication, Mr. 
Sablan, concerning the hotel industry. What's the total number 
of hotel units that you now have in Saipan?
    Mr. Ronald Sablan. Right now, we have 4,588.
    Mr. Faleomavaega. 4,500 rooms.
    Mr. Ronald Sablan. Yes.
    Mr. Faleomavaega. And your current tourism----
    Mr. Ronald Sablan. The Hotel Association is comprised of 67 
percent of that.
    Mr. Faleomavaega. Give me the total number of hotel rooms 
you currently have right in Saipan.
    Mr. Ronald Sablan. 4,588.
    Mr. Faleomavaega. 4,500. Okay. And you have currently how 
many tourists come to Saipan every year?
    Mr. Ronald Sablan. As of right now, it's a little over 
380,000.
    Mr. Faleomavaega. And before that, you were getting about 
600,000 tourists.
    Mr. Ronald Sablan. 700,000.
    Mr. Faleomavaega. A year?
    Mr. Ronald Sablan. Yes.
    Mr. Faleomavaega. On your hotel industry, what percentage 
of the workers are alien workers in the hotel industry in 
Saipan?
    Mr. Ronald Sablan. We have 61 percent contract foreign 
workers; 39 percent local U.S. citizen.
    Mr. Faleomavaega. Okay. And, of that, how many of the 
Saipanese are in management positions?
    Mr. Ronald Sablan. I don't have the exact percentage for 
that, Congressman, but I can provide it.
    Mr. Faleomavaega. Yes. I would be interested to know if 
that could be provided.
    Mr. Ronald Sablan. We have the same as the Chamber. We put 
out the survey at the same time.
    Mr. Faleomavaega. Yes.
    Mr. Ronald Sablan. So I can get all the stats in.
    [The information follows:]
    Mr. Faleomavaega. I notice also, Dr. Teitelbaum, that you 
made an interesting statement here that there is--the CNMI 
government officials told your commission that the 1976 
Covenant negotiation was intended to allow large numbers of 
foreign temporary workers, contract workers, to be imported to 
the CNMI. I'm going to really look into the record, because 
that's not my understanding when we were in process of 
negotiation. The apparent fear that was among many of the 
members of the Congress was the instant travel of U.S. citizens 
going to CNMI. And, of course, then the being careful as well 
to see that we don't dominate, our citizens coming from the 
U.S. coming to CNMI would then dominate the economy as well as 
the social and governmental structure of the island.
    But this is what you were told in you----
    Mr. Teitelbaum. Yes, Congressman. We were told that. And, 
actually, a similar point was made today during these hearings, 
I believe, several times. So I believe that CNMI officials 
believe that to be the case. And that's why I put in my 
testimony that it would be useful for you, as the members of 
this Committee, to clarify that matter. Perhaps you should ask 
the congressional research service to do a report on that. I 
don't know the details of those negotiations. But the reports 
we got were polar opposite as to what the intention.
    Mr. Faleomavaega. Oh, we're definitely going to look into 
that. Another point also, Dr. Teitelbaum, that you made 
concerning the Kuwait and CNMI, I've been to Kuwait and I know 
that a vast majority of the workers there in the Kuwait work 
force are aliens, some from Jordan, even from the Philippines. 
But, of course, Kuwait has the oil, as it were. It can do 
pretty much what it wants as a sovereign nation and you're 
quite accurate about that.
    Ms. Knight and Mr. Sablan, Mr. Fraser earlier documented 
some abuses, very serious abuses, in terms of the immigration 
and the labor laws, as far as some of the people, the foreign 
workers that were brought to the territory. Is this account 
accurate, in terms of--is this just glancing at the situation 
or is it--because from the statement of Mr. Fraser, it's very, 
very serious. Or is this just an account of just a few cases 
that I sincerely it has been resolved. But is this something a 
lot deeper than what Mr. Fraser describes in his testimony 
here? Do you agree with Mr. Fraser's assessment that it is a 
very serious problem?
    Mr. Ronald Sablan. I would say, Congressman, those were 
isolated cases in the past. There's always going to be 
problems. There's always going to be problems between employer 
and employee. But the rates, the prosecution, and the cases 
filed recently have been lower than what it used to be. And I 
would say that the abuses that were claimed before are--a lot 
of it, as I mentioned earlier--was, again, it's either the 
employees were misinformed----
    Mr. Faleomavaega. Okay. My time is up, Mr. Sablan. But one 
more question, if I may, Mr. Chairman. Could the economy and 
the people of Saipan, just on its hotel industry alone, with 
the number of the people of Saipan operating the hotels in 
terms of whatever they could do in that investment in the hotel 
industry, tourism for that matter, in the same fashion that the 
State of Hawaii is totally dependent on tourism, is it really 
absolutely necessary that you have to have a garment/textile 
industry to provide for that, critical? Is it critical that you 
have to have the garment industry as part of your work force?
    Mr. Ronald Sablan. Well, I wouldn't say it was critical, 
Mr. Chairman, but I think that any economy has to be 
diversified. I think tourism is always going to be the number 
one industry in the CNMI. But we also have to have another 
industry to fall on. Hopefully, we can get into an industry 
where it's less labor-intensive. But that's definitely 
something that we need to look at.
    Mr. Faleomavaega. I know my time's up, Mr. Chairman.
    Ms. Knight. Can I answer that?
    Mr. Faleomavaega. Please.
    Ms. Knight. We're very fortunate to have two legs to stand 
on instead of one, now that we have the Asian economic crisis, 
which has dropped our tourism industry so drastically. If we 
didn't have the revenue from the garment manufacturing right 
now, I don't know what we would be doing. We would all be 
coming to you with our hands out. The garment industry 
employment multiplier in our community is something just under 
1.5. So what that means is that for every two garment workers, 
there's one other worker out in the community that has a job. 
So, yes, I believe we need that industry. I don't think we can 
wipe it out and live with that, overnight.
    Mr. Faleomavaega. If I could ask Mr. Sablan of the 
governor's office. What percentage of your total budget comes 
out of the garment industry?
    Mr. Michael Sablan. Mr. Congressman, as I mentioned 
earlier, the industry as a whole contributes about $85.7 
million.
    Mr. Faleomavaega. No, no, no. I want the percentage. What 
percentage comes out of the garment industry?
    Mr. Michael Sablan. It's $85 million out of $210 million. 
About 39 percent, if I'm not mistaken.
    Mr. Faleomavaega. About 39 percent?
    Mr. Michael Sablan. 39 percent.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    Mr. Doolittle. Ms. Knight, you referred to the multiplier 
effect. Do you have--do you or anyone else out there--have any 
sense as to that worker that has a job because of the garment 
industry, which employs, I guess, almost--or mostly alien 
workers, is the worker who's got that job, the other job 
created by the garment industry, does that tend to be an 
American or another alien? Do you have any sense of that?
    Ms. Knight. It's both. It certainly provides a lot of 
government jobs. Government jobs, people that own mom-and-pop 
stores, local residents that are leasing their land for the 
place where the factories are located, transportation 
companies, shipping companies, stevedore employees, Customs 
officials, you name it. I mean, it is a big part of our 
community and there are a lot of other small businesses that 
support that industry.
    Mr. Doolittle. Okay. Thank you. Unless the members have 
further questions?
    Mr. Miller. Mr. Chairman.
    Mr. Doolittle. Yes.
    Mr. Miller. I do not have questions now. I just want to say 
to Mr. Teitelbaum, I had an opportunity to read his testimony 
and I, obviously, as you could tell this morning, I agree with 
much of your discussions of the problems and some of your 
conclusions about where I think this is heading. And I 
appreciate the work of the commission. And I thank the other 
witnesses for their testimony.
    Mr. Doolittle. I, too, thank the witnesses today. You've 
had a long day waiting to make your testimony and we appreciate 
your doing that. We will have, no doubt, further questions to 
propound to you and would ask for your prompt response. And 
we'll hold the record open until that comes. And, with that, 
we'll excuse the members of the third panel.
    We will now proceed to the final panel. And, as the 
opportunity becomes available, please assemble yourselves up 
front here at the witness table. Gentlemen, if you will please 
rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Doolittle. Thank you. Let the record reflect each 
answered affirmatively. We welcome you here. We appreciate you 
coming. And we will begin by recognizing Mr. Steven Galster, 
executive director of the Global Survival Network. Mr. Galster.

  STATEMENT OF STEVEN R. GALSTER, EXECUTIVE DIRECTOR, GLOBAL 
                SURVIVAL NETWORK, WASHINGDON, DC

    Mr. Galster. Thank you, Mr. Chairman. My name is Steven 
Galster. I'm the director of the Global Survival Network, which 
is a human rights and environmental organization based here in 
Washington, DC.
    GSN has extensive background for investigating cases of 
human trafficking. Our investigative work on trafficking has 
been the focus of a lot of media exposes in CNN, New York 
Times, ABC, Washington Post, and a number of other media 
outlets. We've also worked with the State Department on public 
awareness programs aimed at preventing women from the former 
Soviet Union from falling into traps by sexual traffickers. And 
we've also--the recommendations and research we've done have 
been the focus of two pieces of legislation currently floating 
through the House and Senate chambers to combat trafficking. 
And our report on Saipan, called ``Trapped'' was also the focus 
of an ABC 20/20 piece in May as well as a Washington Post and 
other newsprint stories on that subject.
    Although not always apparent to visitors to Saipan, 
including some congressional delegations, debt bondage is a way 
of life for many foreign workers living in the CNMI. Taking 
full advantage of the CNMI's special status as a U.S. 
territory, foreign corporations, Chinese employment agencies, 
criminal traffickers from across Asia, and opportunistic 
middlemen from the CNMI profited at the expense of thousands of 
foreign workers in search of jobs in the USA.
    They've also made somewhat of a mockery of our government's 
reputation as a leader of human rights. Instead of finding the 
dollars and democracy most workers seek in the CNMI, many do 
end up becoming trapped in debt bondage situations.
    This situation has gone on for quite a long time. And I 
think the question now remains: What's this Committee and the 
Senate Committee on Energy and Resources going to do about it? 
I hope that they're not going to simply shift the blame onto 
Federal agencies and conduct witch hunts against former Federal 
employees.
    Because the basic problem is not that existing U.S. laws 
are not fully enforced by Federal agencies on Saipan. The basic 
problem is a systemic one. Congress has allowed a situation to 
develop in which the transplanted Asian garment industry 
simultaneously enjoys substantial U.S. sanctioned tax breaks 
while flooding the local CNMI labor market with tens of 
thousands of powerless foreign workers. The industry is 
protected by U.S. tariffs, but the workers lack Federal 
protection, in part because Federal agencies, even if they had 
a full-time presence, would be constantly chasing criminals and 
labor violations that pile up as the result of the lax 
immigration and labor system regulated by the CNMI government.
    GSN decided to focus on the CNMI because we had learned 
that Russian and Asian women were buying jobs as waitresses 
there, being sold jobs, that is. But then being forced into 
prostitution once they got to Saipan. We later learned that 
Saipan was full of garment factories, as well as stories of 
sweatshop abuse. Employer watchfulness and intimidation of 
workers, be it in brothels or garment factories, makes it 
difficult to obtain reliable information through traditional 
interviewing methods. In response to these constraints, we 
conducted an undercover investigation on top of our 
conventional research to document the existence and degree--or 
non-existence--of human trafficking in the CNMI.
    During our investigation, among other things, we learned 
and documented the following. First, most foreign workers in 
the CNMI are working and living under debt bondage. They have 
incurred between $1,500 and $12,000 in recruitment fee debts 
for the right to have a job in the CNMI. That's before other 
debts might have been incurred once they got there.
    Secondly, in many cases, a foreign worker in the CNMI will 
have to work one full year or more at 60 hours per week to pay 
off their debt before they start to earn money for themselves. 
Once on Saipan, most of these foreign workers give up their 
right to change jobs or return home if they decide they want 
to. Or to leave their job.
    Security guards and sewers working for garment factories 
matter of factly stated that if they took their respective 
complaints, whether it was about worker harassment, employer 
harassment, or nonpayment, to the local Department of Labor and 
Immigration, the DOLI, they would lose their chance at having 
any job in the CNMI, which, given the debts they had compiled, 
was not a viable option. Obviously, some people do take their 
complaints to officials, but many, I would submit do not.
    Workers who do manage to leave their abusive employers are 
often forced to buy another job, usually at the rate of $1,000. 
Many foreign women and some girls have been deceived by 
traffickers who promised them jobs as waitresses, but, upon 
arrival on Saipan, they were forced into prostitution, 
sometimes working in Chinese and Japanese owned clubs, run by 
what the women told us or described to us as Mafia.
    Many garment workers are still working in squalid 
conditions, specifically I've witnessed fire hazards in 
factories, air unfit for breathing in others, dirty and cramped 
living quarters, and unsanitary water conditions. Garment 
factory bosses are known to prepare their factories in some 
places, and workers, for visits by U.S. legislators or garment 
monitors by warning workers not to speak badly about their jobs 
and by cleaning up factory floors in advance of the visit.
    Domestic servants in CNMI are often abused psychologically 
and sometimes physically by their employers, who often pay them 
late and sometimes not at all.
    The last two points I'd like to make are that the CNMI 
government is neglectful of and sometimes complicit in labor 
abuse. Job permits have been sold by CNMI officials to 
traffickers, who turn around and sell jobs, sometimes non-
existent ones, to foreign workers.
    And, secondly, CNMI politicians and CNMI businessmen feel 
free to abuse workers because, first of all, the local 
government agency in charge of investigating labor abuse, the 
DOLI, is oftentimes less than diligent in investigating these 
allegations.
    And, secondly, and perhaps most disturbing, is that they 
feel they have close friends here in Washington, namely on this 
Committee and in other parts of Congress. The top garment 
executives as well as some CNMI legislators that I met, while 
working undercover--they didn't know who I was--claimed that 
House Majority Whip Tom DeLay promised he would manipulate 
congressional processes to prevent CNMI labor reform and that 
he had convinced the House Committee Chairman Don Young to 
quote, unquote ``back off.''
    I hope this Committee is not going to back off this issue. 
I hope your not going to conduct simply witch hunts into what 
the Federal Government has been doing or not been doing. I hope 
you'll address the real issues here.
    I hope you will extend the Immigration and Nationality Act 
to the CNMI, because it's my opinion that leaving control over 
immigration and labor in the hands of the CNMI administration 
will delay even longer the justice and the protection that they 
deserve and need. And justice delayed is justice denied. Thank 
you.
    [The prepared statement of Mr. Galster follows:]
    Mr. Doolittle. Thank you.
    Our next witness is Dr. Christian Wei, with the Christian 
Way Missions.

  STATEMENT OF CHRISTIAN WEI, Ph.D., CHRISTIAN WAY MISSIONS, 
   INC., CHINESE FOR CHRIST INTERNATIONAL, GREENVILLE, SOUTH 
                            CAROLINA

    Mr. Wei. Thank you, Mr. Chairman. My name is Christian Wei, 
president of Christian Way Missions, Inc. and the senior pastor 
of Chinese Bible Church, located in Greenville, South Carolina. 
Our ministry is focusing on preaching the gospel of Jesus 
Christ to the world, especially the Chinese worldwide.
    Since 1992, our organization has engaged in the ministry in 
the Commonwealth of the Northern Mariana Islands to preach the 
gospel to many Chinese contract workers, or guest workers. The 
Chinese workers come to the CNMI seeking to earn money so that 
they can have better lives when they go back to mainland China. 
Most of the Chinese workers are satisfied with their situation. 
This is because they know they would not have their freedom 
back home and they also know that they will not have the 
freedom and opportunity when they return. They have freedom in 
the CNMI to worship God, to work hard, and get paid. They do 
not want to lose this opportunity to work in this free country.
    Reverend Kok Hiong Pang, pastor of the largest Chinese 
church in Saipan, and our coworkers have worked very hard to 
reach out to these Chinese contract workers. Because in the 
last 7 years, we have seen more than 1,200 Chinese workers get 
saved and 1,000-plus get baptized. Among these 1,000 baptized 
newborn Chinese Christians, around 800 have gone back to China 
and more than 20 house churches have been established. We 
believe the best way to change or transform that nature of the 
Chinese government is through sending back born-again Chinese 
Christians.
    Last year, Reverend Pang and one of our coworkers came to 
Washington, DC, to testify in the Senate against the untruthful 
information presented by the media, the Department of Interior, 
Members of Congress, as well as some human rights 
organizations. The decision of the Senate was wise because they 
did not accept all the untrue data that the human rights 
organizations had submitted. This is because the majority of 
the foreign workers in the CNMI are still satisfied with their 
situation. However, the media and the above-mentioned groups 
did not reflect the views of these satisfied workers.
    I would, therefore, testify that the allegation of so-
called religious persecution and forced abortions are untrue. 
However, the cases of forced prostitution are isolated 
situations which can happen and do happen anywhere. Therefore, 
the above-mentioned groups and some of the media did not 
present the truth. They did not interview those or present the 
view of those who are satisfied and willing to come back to 
work in the CNMI for another term. I have spoken to many 
workers that want to stay and, if given the opportunity, they 
will come back. In fact, I have never spoken to any workers who 
would choose to never come back.
    Thus, it is wrong to mislead the public to think that in 
the CNMI all are bad, all are guilty, all should be punished, 
and all laborers are criminals, and all are unhappy and have 
turned to prostitution.
    Another important point is that major factories have 
encouraged their laborers to go to worship services. The buses 
of the factories have also been used to transport Chinese 
laborers to our church. One factory has even set up a chapel 
inside the company for Christians to pray and to worship there. 
Our church is growing rapidly.
    On behalf of my ministry, I urge you to oppose any attempts 
by the Federal Government to take over the CNMI. Furthermore, I 
urge you to oppose any legislation that would directly impact 
the present situation of the CNMI.
    Through our ministry, over 25,000 Chinese workers have 
learned the principles, values, and freedoms of democracy, 
through the word of God. There is no better way to change a 
nation like China than through this back door. Therefore, 
current legislation would destroy opportunities for us to 
preach and train workers and later send them back to China to 
work for democracy.
    Thank you.
    [The prepared statement of Mr. Wei follows:]

   Statement of Christian Wei, Ph.D., Christian Way Missions, Inc., 
                           Chinese for Christ

    Mr. Chairman, my name is Christian Wei, president of 
Christian Way Missions, Inc. and the senior pastor of Chinese 
Bible Church located in Greenville, South Carolina. Our 
ministry is focusing on preaching the Gospel of Jesus Christ to 
the world, especially the Chinese worldwide.
    Since 1992 our organization has engaged in the ministries 
in the Commonwealth of the Northern Mariana Islands (CNMI) to 
preach the Gospel to many Chinese contract workers. The Chinese 
workers come to the CNMI seeking to earn money so that they can 
have better lives when they go back to Mainland China. Most of 
the Chinese workers are satisfied with their situation. This is 
because they know they would not have the freedom back home and 
they also know that they will not have the freedom and 
opportunity when they return. They have freedom in the CNMI to 
worship God, to work hard and get paid. They do not want to 
lose this opportunity to work in this free country.
    Rev. Kok Hiong Pang, pastor of the largest Chinese church 
in Saipan, and our coworkers have worked very hard to reach out 
to these Chinese contract-workers. Thus in the last 7 years, we 
have seen more than 1,200 Chinese laborers get saved and 1,000 
plus get baptized. Among these 1,000 baptized newborn Chinese 
Christians, around 800 have gone back to China and more than 20 
house churches have been established. We believe the best way 
to change or transform the nature of the Chinese government is 
through sending back born again Chinese Christians.
    Last year, Rev. Pang and one of our coworkers came to 
Washington DC to testify in the Senate against the untruthful 
information presented by the media, the Department of Interior, 
Members of Congress as well as some human rights organizations. 
The decision of the Senate was wise they go back to Mainland 
China. Most of the Chinese workers are satisfied with their 
situation. This is because they know they would not have the 
freedom back home and they also know that they will not have 
the freedom and opportunity when they return. They have freedom 
in the CNMI to worship God, to work hard and get paid. They do 
not want to lose this opportunity to work in this free country.
    Rev. Kok Hiong Pang, pastor of the largest Chinese church 
in Saipan, and our coworkers have worked very hard to reach out 
to these Chinese contract-workers. Thus in the last 7 years, we 
have seen more than 1,200 Chinese laborers get saved and 1,000 
plus get baptized. Among these 1,000 baptized newborn Chinese 
Christians, around 800 have gone back to China and more than 20 
house churches have been established. We believe the best way 
to change or transform the nature of the Chinese government is 
through sending back born again Chinese Christians.
    Last year, Rev. Pang and one of our coworkers came to 
Washington DC to testify in the Senate against the untruthful 
information presented by the media, the Department of Interior, 
Members of Congress as well as some human rights organizations. 
The decision of the Senate was wise because they did not accept 
all the untrue data that the human rights organizations had 
submitted. This is because the majority of the foreign workers 
in the CNMI are still satisfied with their situation. However, 
the media and the above mentioned groups did not reflect the 
views of these satisfied workers.
    I would, therefore, testify that the allegations of so-
called religious persecution and forced abortion are untrue. 
However, the cases of forced prostitution are isolated--
situations which can and do happen anywhere. Therefore, the 
above mentioned groups and some of the media did not present 
the truth. They did not interview those or present the view of 
those who are satisfied and willing to come back to work in the 
CNMI for another term. I have spoken to many workers that want 
to stay and if given the opportunity they would come back. In 
fact, I have never spoken to any worker who would choose to 
never return.
    Thus, it is wrong to mislead the public to think that in 
the CNMI all are bad, all are guilty, all should be punished 
and all laborers are criminals, and all are unhappy and have 
turned to prostitution.
    Another important point is that major factories have 
encouraged their laborers to go to worship services. The buses 
of the factories have also been used to transport Chinese 
laborers to our church. One factory has even set up a chapel 
inside the company for Christians to pray and to worship there. 
Our church is growing rapidly.
    On behalf of my ministry, I urge you to oppose any attempts 
by the Federal Government to takeover the CNMI. Furthermore, I 
urge you to oppose any legislation that would directly impact 
the present situation of the CNMI.
    Through our ministry over 25,000 Chinese workers have 
learned the principles, values and freedoms of democracy 
through the Word of God. There is no better way to change a 
nation like China than through this backdoor. Therefore, 
current legislation would destroy opportunities for us to 
preach and train workers and later send them back to China to 
work for democracy.

    Mr. Doolittle. Thank you. Our next witness is Mr. Nousher 
Jahedi. Mr. Jahedi.

          STATEMENT OF NOUSHER JAHEDI, WASHINGTON, DC

    Mr. Jahedi. Thank you, Mr. Chairman and the members. My 
name is Nousher Jahedi. I am from Bangladesh. I am the victim 
of human rights abuse and human trafficking in the United 
States Commonwealth of the Northern Mariana Island. I am one of 
40,000 foreign guest workers trapped there.
    After my father passed away, I had to provide for my 
mother, four sisters, and young brother. I took a job at an 
American military base in Saudi Arabia where I learned to speak 
English. I also came to admire the culture and the values of 
the greatest culture on the earth.
    I paid a $7,000 recruitment fee to arrange for a job in 
Saipan, USA. The job I was offered by the recruiter, who worked 
for a U.S. citizen from the CNMI, was working as a cleaner for 
a hotel. That was the beginning of a nightmare that has yet to 
end.
    After I and 11 other Bangladeshis left from our homes, we 
were taken by the recruiter to the Philippines, where we 
remained for 115 hellish days. We were kept in a room so small 
that only three of us could lie down at the same time. The 
recruiter, a predatory human trafficker, even robbed me of 
$1,700 at gunpoint, dollars, sir.
    Things got worse when I finally reached Saipan. The 
employer who had recruited us demanded an additional $29,000 to 
obtain--$29,000 U.S. dollars to obtain our job that only paid 
$3.05 per hour, in essence forcing us to each work 20 weeks for 
free. This was my first glimpse into how life under the U.S. 
flag in the CNMI is different than anywhere else on earth.
    I and the other Bangladeshis couldn't pay our prospective 
employer $29,000, so we found ourselves homeless and destitute. 
I lived hand-to-mouth for a year before finally finding a 
menial job. On some days, I only had one meal. On others, I and 
the others went without food.
    I came to the CNMI legally and I had working papers issued 
by the CNMI Department of Labor and Immigration. So I filed a 
legal complaint against my employer. Two and a half years 
later, my complaint is still being processed in a system 
overwhelmed with similar complaints from trafficking and 
exploited workers.
    I have lost my everything and I can't believe that I and 
40,000 of my sisters and brothers were treated like an animal 
under the U.S. flag. And ``everything'' includes not only my 
physical possessions, but my personal life as well. I borrowed 
$3,500 from Bangladeshi money lenders to pay half of my 
recruitment fee. I was unable to repay the loan or its 
exorbitant interest. As a result, my family was trying to help 
me, instead has been mercilessly harassed, even threatened.
    I came to Washington, DC, to urge you the law makers to 
extend the rights and protection every other worker laboring 
under the American flag enjoys. And, thank you very much.
    [The prepared statement of Mr. Jahedi follows:]

                      Statement of Nousher Jahedi

    My name is Nousher Jahedi. I am from Bangladesh. I am the 
victim of human rights abuses and human trafficking in the 
United States Commonwealth of the Northern Mariana Islands. I 
am one of forty thousand foreign guest workers trapped there.
    After my father passed away, I had to provide for my 
mother, four sisters, and young brother.'' I took a job at an 
American military base in Saudi Arabia, where I learned to 
speak English. I also came to admire the culture and values of 
``the greatest country on Earth.''
    I paid a $7,000 ``recruitment fee'' to arrange for a job in 
``Saipan, USA.'' The job I was offered by the recruiter, who 
worked for a U.S. citizen from CNMI, was working as a cleaner 
for a hotel. That was the beginning of a nightmare that has yet 
to end.
    After I and eleven other Bangladeshis left our homes, we 
were taken by the recruiter to the Philippines, where we 
remained for 115 hellish days. We were kept in a room so small 
that only three of us could lie down at the same time. The 
``recruiter,'' a predatory human trafficker, even robbed me of 
$1,700 at gunpoint.
    Things got worse when I finally reached Saipan. The 
employer who had ``recruited'' us demanded an additional 
$29,000 to obtain our jobs that only paid $3.05 per hour--in 
essence forcing us to each work 20 weeks for free.
    This was my first glimpse into how life under the U.S. flag 
in the CNMI is different than anywhere else on Earth.
    I and the other Bangladeshis couldn't pay our prospective 
employer $29,000, so we found thernselves homeless and 
destitute. I lived hand-to-mouth for a year before finally 
finding a menial job. On some days I only had one meal; on 
others I and the others went without food.
    I came to the CNMI legally. I had working papers issued by 
the CNMI Department of Labor and Immigration. So I filed a 
legal complaint against him employer. Two and a half years 
later, my complaint is still being processed in a system 
overwhelmed with similar complaints from trafficked and 
exploited workers.
    I have lost everything, everything. I can't believe I and 
forty thousand of my brothers and sisters are being treated 
like animals under the U.S. flag.
    ``Everything'' includes not only my physical possessions, 
but my personal life as well. I borrowed $3,500 from 
Bangladeshi money lenders to pay half of my recruitment fee. I 
was unable to repay the loan or its exorbitant interest. As a 
result, my family was trying to help have instead has been 
mercilessly harassed, even threatened.
    I came to Washington DC to urge lawmakers to extend the 
rights and protection every other worker laboring under the 
American flag enjoys.
    I face an uncertain future when I return to the CNMI. Since 
coming to the Washington, I have been warned I may be the next 
victim of hate crimes in the CNMI.

    Mr. Doolittle. Thank you. Our final witness will be the 
Reverend Raymond Kinsella, president of Grace Christian 
Ministries in Saipan. Reverend Kinsella.

  STATEMENT OF RAYMOND KINSELLA, FOUNDER AND PRESIDENT, GRACE 
                CHRISTIAN MINISTRIES, SAIPAN, MP

    Reverend Kinsella. Mr. Chairman and members of the 
Committee, thank you for the opportunity to appear before you 
today to speak in opposition to the Federal takeover of the 
Commonwealth of the Northern Mariana Islands.
    I am Reverend Raymond Kinsella, founder and president of 
Grace Christian Ministries, the largest evangelical ministry in 
the CNMI. Included in this organization are churches, Christian 
schools, and family social services. I also serve as the 
district superintendent of the Northern Marianas district of 
the Assemblies of God of Micronesia and I'm a member of the 
Traditional Values Coalition of the CNMI. In addition, I was 
born and reared in Guam and have lived in the CNMI for the last 
13 years.
    Over the last few years, there have been a number of news 
articles and programs that have been unfavorable and unfair to 
the CNMI. Recently, I watched the 20/20 program and did not 
recognize its portrayal of my home, the place where I've lived, 
worked, and ministered. As a result, I felt compelled to come 
to Washington, DC, and try to bring another, more accurate, 
perspective of the CNMI.
    The CNMI has a deep-rooted history of Catholicism and now a 
growing evangelical community. There are more than 55 churches 
in the CNMI and this is more per capita than in most American 
cities.
    In an attempt to seek out the truth and to either confirm 
or deny these allegations, I personally visited garment 
factories and surveyed workers. I met with garment, business, 
and church leaders and reviewed government reports and met and 
surveyed guest workers in my own congregation. While my study 
was not scientific, my goal was simply to gain a better 
understanding so I could form an intelligent opinion regarding 
these allegations and be able to speak truthfully.
    As a result, I have formed the following conclusions. I 
understand religious persecution to exist when an individual 
group is singled out and deprived of basic liberties because of 
a profession of faith. However, the incidents I am aware of 
appeared to be more resolvable employment disputes than cases 
of religious persecution. For example, in some instances, 
employees are required to work on Sunday and get a weekday off 
in the compensation. I do not believe these are examples of 
persecution or repression, instead, issues that can be resolved 
through mediation and consciousness raising. Furthermore, some 
factories provide transportation to church services on Sundays 
and Wednesday evenings for the employees.
    The issue of forced abortion follows along the same lines. 
The people of the Commonwealth overwhelmingly approved a 
constitutional provision opposing abortion. Any and all 
attempts to the contrary have failed due to the unwavering 
stand of the majority. Abortion is not acceptable in the CNMI, 
despite the impression the national media may convey. We have 
no evidence of forced abortion among our flock, nor do we hear 
reports of such from them.
    Prostitution is prohibited in the Commonwealth by section 
1341 of title 6 of the Commonwealth Code and again in Public 
Law 11-19, passed just last year, which is a strong indication 
of where the majority stand on this issue and on strict 
enforcement of the law. While there is prostitution in the 
CNMI, as there is, regrettably, everywhere throughout the 
globe, it is neither rampant nor unrestrained in the CNMI. And 
I support the local government's crackdown on prostitution. 
Where there have been issues of prostitution among workers, 
some of the Christian community have worked together with 
government officials to address the problem.
    However, corruption on the grand scale, suggested by the 
20/20 story and other reports, does not occur in a community 
with such strong religious standards.
    We are aware that bills have been introduced in Congress 
that would end the CNMI's ability to bring in foreign workers. 
Such bills would have devastating effects on our own 
ministries. In my own ministry, 50 percent of our students are 
children of guest workers. Fifty percent of our staff are guest 
workers. And 60 percent of our congregation are guest workers. 
Our members are grateful for the chance to work and to live for 
a time in the CNMI. We thank God for the opportunity it has 
given our churches to spread the gospel among them.
    In addition, we view such bills as destructive measures 
that will humiliate and ultimately degrade the people of the 
Commonwealth. The negative publicity we have received has been 
devastating. I honestly believe that such a takeover would not 
only be a grave insult, but also unfair. No one in the CNMI 
denies that problems exist. However, recent media stories and 
efforts by the Clinton Administration have created the illusion 
that nothing is being done and that we are not competent to 
resolve these problems. This is unfair and untrue.
    Mr. Chairman and the members of the Committee, we all take 
responsibility for the problems within the Commonwealth. We 
reap the benefits of this relationship and we are accountable 
for the mistakes. I appeal to the Committee to allow the 
partnership of the local government, the business, and the 
church to prove their commitment to resolve this once and for 
all. Thank you again for this opportunity for me to bring this 
message for myself and my CNMI colleagues.
    [The prepared statement of Reverend Kinsella follows:]

 Statement of Raymond Kinsella, Founder and President, Grace Christian 
                         Ministries, Saipan, MP

    The CNMI has a deep-rooted history of Catholicism, and now 
a growing evangelical community. There are more than 55 
churches in the CNMI. This is more per capita than in most 
American cities.
    In an attempt to seek out the truth and to either confirm 
or deny these allegations, I personally:

--visited garment factories
--conducted a survey of garment factory workers
--conducted a survey of pastors--and met with pastors
--conducted a survey of my own congregation
--reviewed reports supplied by the offices of the Governor of 
the CNMI and the Washington, DC Representative for the CNMI
--met with Governor Tenorio, Lt. Governor Sablan and Washington 
Representative Babauta
    While my study was not scientific, my goal was simply to 
gain a better understanding so I could form an intelligent 
opinion regarding these allegations and be able to speak 
truthfully. As a result I formed the following conclusions:
    1. I understand ``religious persecution'' to exist when an 
individual or group is singled out and deprived of basic 
liberties because of a profession of faith. However, the 
incidents I am aware of appear to be more resolvable employment 
disputes than cases of religious persecution. For example, in 
some instances, employees are required to work on Sunday and 
given a weekday off in compensation. I do not believe these are 
examples of persecution or repression, instead issues that can 
be resolved through mediation and consciousness raising.
    Furthermore, some factories provide transportation to 
church services on Sundays and Wednesday evenings for their 
employees. Clearly those who accuse the CNMI of rampant 
religious persecution know little of our island. Perhaps these 
accusers have not read the papers or visited places like Sudan, 
Iran or Iraq--where religious persecution really does exist.
    2. The issue of ``forced abortion'' follows along the same 
lines. The people of the Commonwealth overwhelmingly approved a 
constitutional provision opposing abortion. Any and all 
attempts to the contrary have failed due to the unwavering 
stand of the majority. The Catholic Bishop, His Excellency 
Bishop Tomas A. Camacho, in his testimony to the CNMI House of 
Representatives stated, ``both Federal and local laws prohibit 
the capture of Haggan (turtles) and the penalty for violation 
for this is a $25,000 fine. The proposed bill states `any 
person who is found guilty of abortion shall be punished by . . 
. a fine not to exceed $20,000. Are Haggan worth more than 
Chamolinian babies?'' Abortion is not acceptable in the CNMI, 
despite the impression the national media may convey. We have 
no evidence of forced abortion among our flocks nor do we hear 
reports of such from them.
    3. Prostitution is prohibited in the Commonwealth by 
Section 1341 of Title 6 of the Commonwealth Code and again in 
Public Law 11-19, passed just last year, which is a strong 
indication of where the majority stand on this issue and on 
strict enforcement of the law. While there is prostitution in 
the CNMI, as there is, regrettably, everywhere throughout the 
globe, it is neither rampant nor unrestrained in the CNMI. I 
support the local government's crackdown on prostitution.

    Mr. Doolittle. I am going to reserve my time and recognize 
Mr. Schaffer.
    Mr. Schaffer. Thank you, Mr. Chairman. Mr. Jahedi? Is that 
how--how do I pronounce your name, properly? How do I pronounce 
your name properly?
    Mr. Jahedi. Jahedi. Nousher Jahedi.
    Mr. Schaffer. Your last name?
    Mr. Jahedi. Jahedi, sir. J-A-H-E-D-I.
    Mr. Schaffer. Do you go by the name Poppen as well? Is that 
correct?
    Mr. Jahedi. Yes, sir. It's my nickname. My parents called 
me Toppen.
    Mr. Schaffer. Toppen. I appreciate your taking my call last 
night. It was a nice conversation. I appreciate that. You 
mentioned your plans here in the United States, that there may 
be some chance for--what's the word?--asylum. Is that your goal 
and objective, to seek asylum in the United States?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. It is not?
    Mr. Jahedi. Before I left from Bangladesh, I thought that 
Saipan was the United States of America.
    Mr. Schaffer. Right.
    Mr. Jahedi. When I arrived in Saipan, I realized that 
Saipan is not America. It's only a U.S. commonwealth. But I was 
told by the recruiter when I arrived in----
    Mr. Schaffer. I understand that. I'm speaking about the 
conversation we had last night.
    Mr. Jahedi. Yes.
    Mr. Schaffer. About--I asked how long you were staying in 
the United States. You said you were seeking asylum. Is that 
still the case, today?
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. Yes. How have--can you tell me a little bit 
about the process of seeking asylum? What are you doing to seek 
asylum now?
    Mr. Jahedi. I was involved in a political party in 
Bangladesh. When the new government came to the party on June 
23, so I left Bangladesh.
    Mr. Schaffer. Okay. The history is not what I'm after. Let 
me ask you, is Global Survival Network helping you achieve 
asylum in the United States?
    Mr. Jahedi. No, sir. It's my own.
    Mr. Schaffer. Are you aware that--I just want to be 
certain. Are you aware that the Global Survival Network, in 
helping to apply for the parole to come here for this hearing, 
guaranteed to the Office of Insular Affairs that they will 
guarantee your return to CNMI at the end of your stay? Were you 
aware of that?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. That Mr.--can't remember names today. Mr. 
Galster in a letter that he assigned to--the memo to the Office 
of Insular Affairs has guaranteed your return to CNMI after the 
hearing. Were you aware of that guarantee, that this was a 
condition of coming here today?
    Mr. Jahedi. Yes, sir. I know that.
    Mr. Schaffer. That you must go back to CNMI?
    Mr. Jahedi. Yes, sir. I know that I have to return to 
Saipan.
    Mr. Schaffer. Were you aware of this guarantee?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. Were you aware of this guarantee?
    Mr. Jahedi. I did not understand. Can you please make it 
easy for me please?
    Mr. Schaffer. Did you know that this guarantee exists? That 
Mr. Galster will guarantee that you'll be returned to CNMI 
after your stay here?
    Mr. Jahedi. Yes, sir. I know that.
    Mr. Schaffer. You understood that?
    Mr. Jahedi. Yes.
    Mr. Schaffer. Thank you. Now let me ask, when Chairman Don 
Young was in Saipan.
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. As I understand, you were at a rally there?
    Mr. Jahedi. Yes, sir, I was. I was with the workers.
    Mr. Schaffer. Right. How did you learn about the rally?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. How did you learn that the rally was going to 
take place?
    Mr. Jahedi. We know that Mr.--I read it from the newspaper 
that Mr. Don Young and other members of the Committee is going 
to have a plan to visit the Commonwealth of the Northern 
Mariana Island. And, by that time, before Mr. Young came out 
there----
    Mr. Schaffer. Right. Can you tell me about the car you 
borrowed to drive to that rally? Who did you borrow the car 
from?
    Mr. Jahedi. My friend, sir.
    Mr. Schaffer. Your friend? That same friend tells me you 
accepted $1,200 to help round up other friends for food, gas, 
and for the vehicle, to help find other Bangladeshis to go to 
the rally. Is that true?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. Did you receive any money or compensation at 
all for attending that rally and rounding up friends?
    Mr. Jahedi. No, sir. No, sir.
    Mr. Schaffer. None at all?
    Mr. Jahedi. No.
    Mr. Schaffer. Do you know any others who did?
    Mr. Jahedi. No, sir. I don't know about that.
    Mr. Schaffer. On my visit to Saipan just two weeks ago.
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. I heard from two separate individuals that 
you received $1,200 from a Federal official, frankly, to attend 
that rally. And that you used it to help pay for food and gas 
and so on. Is that incorrect or is it correct?
    Mr. Jahedi. No, sir. It's not correct.
    Mr. Schaffer. Okay.
    Mr. Jahedi. It's not correct.
    Mr. Schaffer. Do you know any others who received money to 
attend that rally from any Federal officials?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. None at all?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. Let me--how about the signs that were used at 
the rally. Did you make those signs?
    Mr. Jahedi. Not only me, sir.
    Mr. Schaffer. Now where did they come from?
    Mr. Jahedi. Sir, we made the banner, sir, and the placards. 
The placards, sir?
    Mr. Schaffer. The chairman would ask--like me to stop 
asking questions. Okay. Yes, the signs. The signs you were 
holding.
    Mr. Jahedi. Yes, we hold it. We make it on the boat, you 
know, the cartons. We use the cartons.
    Mr. Schaffer. And where did those materials come from?
    Mr. Jahedi. We grab it from the street some and we buy from 
the Joten some, though, not all though, everything, only the 
few. Like the six pages that we buy from the Joten. The colored 
one.
    Mr. Schaffer. Thank you, Mr. Chairman.
    Mr. Doolittle. Thank you. Mr. Miller.
    Mr. Miller. Maybe Mr. Schaffer could tell us the answer to 
these questions, because apparently--well, no, if there is, I 
mean you've--I don't know--accurately or inaccurately, 
whatever, you suggested Federal officials paid people to go 
to--that this gentleman received money. He says he didn't. So 
what's the allegation and then maybe people can help out and 
find out what the answer is.
    Mr. Schaffer. If the gentleman would yield.
    Mr. Miller. Yes.
    Mr. Schaffer. I will tell you with absolute certainty, 
while I was there in CNMI and interviewed a number of garment 
workers and others, in the case of this question, Bangladeshi 
workers, I was told on multiple occasions that individuals 
received funds, in fact, $1,200 from Federal officials to 
attend this rally and go rent cars, fill up the tank, and feed 
people.
    Mr. Miller. And you were also told that this gentleman 
received money. And he says no.
    Mr. Schaffer. Yes. The testimony I received mentioned you 
by name as one individual who received money from a Federal 
official----
    Mr. Jahedi. And--excuse me, sir. How do you believe that 
the person who told you that I received the money? Because I am 
a victim. I suffered. I care for--as a human being, I have 
little respect to myself. That way, my employer make me suffer. 
Of course, I will join with them and I will try my best to 
protest against this.
    Mr. Schaffer. I think, in all fairness, the conclusion I 
reached that you----
    Mr. Jahedi. I did not take any money from anybody, sir.
    Mr. Schaffer. [continuing] your answer is part of the 
inquiry that is ongoing, frankly. I think I've been forthright 
in telling you that while I was there somebody suggested----
    Mr. Jahedi. Yes. And that----
    Mr. Schaffer. Two individuals that we--that--that----
    Mr. Jahedi. Yes. No, sir. I understand that.
    Mr. Schaffer. On two separate occasions, in addition to 
another letter that I've received since then, that mentioned 
you by name. I'm merely giving you a chance to respond to that. 
If you say it's not true----
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. Then that is a fine answer for you to give us 
today.
    Mr. Jahedi. Yes. But----
    Mr. Schaffer. Now is that the answer.
    Mr. Jahedi. I--yes, sir. I just joined the party for--I 
just joined the demonstration because I am also----
    Mr. Schaffer. To answer your question, Congressman Miller--
--
    Mr. Miller. Yes. No, that's what I wanted to know.
    Mr. Schaffer. During my investigation----
    Mr. Miller. Because he has said that what you were told was 
inaccurate and I don't want to leave the suggestion that 
somehow that that story is more accurate than what this 
gentleman has told us, because he said, in fact, it didn't 
happen. So what we have, for the moment here, is we have an 
allegation.
    Mr. Schaffer. That's right.
    Mr. Miller. Of which we don't know the----
    Mr. Schaffer. Fairly stated.
    Mr. Miller. [ continuing] truth or not. And I guess that'll 
be determined down the road. I want to thank you, Mr. Jehedi, 
for your testimony. I don't know your particular case, but I 
did have an opportunity to meet with many of the young 
Bangladeshi men, who were brought under really false pretence 
and fraud and really a criminal conspiracy to defraud them of 
whatever money they could get from you and others to come to 
the CNMI. The tragedy is that it appears that many people in 
the CNMI were part of that same operation, since many of you 
were given official documents. They weren't forgeries. They 
were given by other government officials to these individuals 
that took you for all that money. And it's a very sad state of 
affairs that you've been put in this situation.
    I also find it rather interesting that, in a time when 
you're in a very desperate situation and the government 
acknowledges that you and many of your friends have been 
fraudulently taken advantage and criminally taken advantage of, 
that they would rather bring additional workers to the CNMI 
than give you the job so you might have a chance to earn your 
way out of your predicament back home.
    Because, as I understand in talking to many, many people 
during the days that we were there, many people had borrowed 
from friends and from family and from other people in their 
towns and their villages to pay the recruiter to come to 
America, they thought. They later found out, of course, it was 
the CNMI, which was not the same, under immigration laws.
    And I find it rather disheartening that the government in 
many cases, many, many of the Bangladeshi young men--for those 
who aren't aware of this--had been working as day laborers, 
they'd been working for people and people have constantly hired 
them, promised them wages, and not paid them, at the end of the 
jobs, as they've tried to form a commune and support one 
another and get work where they can. But rather than let them 
have eligibility for other jobs in the area, they have not been 
able to go to work except in an illegal fashion and, obviously, 
if they're in an illegal fashion, then they can immediately be 
deported. The people who employ them know that, but that's not 
unique to the CNMI; it happens, unfortunately, in some of the 
States in this country where people's alien status is used 
against them.
    So it's a tragedy. And it's one that these young men, while 
they could be earning some of the debt that they have incurred 
in good faith on their part to go back, but the government 
hasn't seen fit to do that. As we've heard, many of them, some 
of them have, that have been able to work, have claims for 
unpaid wages that exceed the amount of money that the 
government is willing to give them along with the plane ticket. 
And so they're going to lose money not only to those who took 
it from them illegally, but those who are taking the money from 
them under the rubric of enforcement of the law, which is a 
double tragedy for these young people. And I guess, you know, 
that's why formal complaints have been lodged by their embassy.
    Mr. Galster, let me thank you for your testimony and for 
your work on this issue. I don't think I need to go through a 
lot of questions with you. I agree, obviously, with much of 
what your findings were and the information that you conveyed.
    And, finally, you know, for the other two witnesses, I'd 
just say to continue to try to pass off that somehow this is 
all about the media. I don't know how many indictments, I don't 
know how many convictions, I don't know how many tragic cases 
it'll take. It's not a matter of speculation. It's thousands of 
workers who people have stipulated they've withheld their 
wages, they've been convicted of withholding their wages, 
they've entered into settlement agreements, in some cases 
they've been prosecuted under the criminal laws of this nation. 
I don't know how much evidence you'll need to understand that 
tragically this is going on all too often.
    This isn't the exception. Over the last decade, tragically, 
this has been much of the rule of the relationships with these 
people who were brought to the CNMI. That's not to suggest that 
there aren't people there who have not been victimized and many 
people there who have different circumstances. But the numbers 
run into the thousands and thousands and the amounts of money 
run into the millions.
    And I don't know how much prostitution it takes before you 
decide that this is factual. The prosecutions that have gone--I 
don't know. We prosecute people under the Mann Act and all 
that. So it's not about the media. It's not about the media. 
It's about hard facts that human rights workers and others have 
developed and, tragically, people like the young Bangladeshi 
gentleman and his colleagues have suffered through, that 
they've told--you know, it wasn't the media that told their 
story to this Committee, that told the governor and the others 
that they ought to pass a law to try to help these people 
financially. This Committee on both sides of the aisle believed 
these young men when they told us their situation. The U.S. 
attorney has validated that. The prosecutions, to some extent, 
have validated that.
    So I think to suggest that somehow this is just something 
that the media has made up is a tragic disservice to the 
thousands of young people who have been caught up in this 
effort who are doing nothing more than, one, looking for an 
opportunity, obviously, to come to America and to search for 
the better and to work very, very hard. And whether they're 
exploited or not, obviously, when you go into these factories, 
you see people who are working very, very hard, trying to earn 
some wherewithal within their families or relatives, however 
it's apportioned out. And to suggest that that's just a figment 
of 20/20's imagination or something else would be a tragic 
disservice to those individuals.
    Thank you, Mr. Chairman.
    Mr. Doolittle. I recognize myself for five minutes and 
yield the time to Mr. Schaffer.
    Mr. Schaffer. Thank you. Mr. Galster, who wrote the report? 
The ``Trapped'' report?
    Mr. Galster. I was the principal author.
    Mr. Schaffer. The principal author. Now, in your testimony, 
you mentioned that there were a team of investigators. How big 
was the team?
    Mr. Galster. There were two principal investigators and 
then we had about three or four--yes, about three or four other 
people helping us on the ground. So I'd say a team of five to 
six altogether.
    Mr. Schaffer. Let me ask, did the United States Department 
of Interior play any role in helping to edit or write any or 
all of the report?
    Mr. Galster. No. What I did is I sent a draft of that 
report around to about 14 different people for a peer review, 
including David North, including other people we had 
interviewed, even including two business people in the CNMI who 
were very sort of anti-Federal takeover. All of them came back 
with comments. We were mainly doing a factual----
    Mr. Schaffer. It's Mr. North, at the time, the Department 
of Interior employee that I'm interested in. Can you tell me 
about the title, ``Trapped: Human Trafficking for Forced Labor 
in the Commonwealth''? Where did that title come from?
    Mr. Galster. I think that was a series of titles that we 
had thought about and brainstormed about. It seemed to me----
    Mr. Schaffer. Let me ask, in the second batch of----
    Mr. Miller. Will the gentleman yield. You've got to let the 
witness answer the question. You keep breaking him off in the 
middle of the question.
    Mr. Schaffer. With the second--I'd be happy to if you would 
yield the time to me so I could do that. I would----
    Mr. Miller. You can take all the time you want, but let him 
answer.
    Mr. Schaffer. The second--let me--the second draft report 
of notes from Mr. North said, ``Regarding the title, here are 
some possibilities: Trapped. Trapped Under the U.S. Flag. 
Trapped: Human Trafficking in the Marianas. Trapped On Saipan. 
Trapped Under the U.S. Flag on Saipan.'' Do you think any of 
those suggestions had anything to do with your choice of the 
title ``Trapped: Human Trafficking in the Forced Labor of the 
Commonwealth of Saipan''?
    Mr. Galster. They might have. I mean, we were playing with 
a whole bunch of titles at the time.
    Mr. Schaffer. Might have?
    Mr. Galster. I would suggest, though, if you're 
investigating all this and you want to look for ghostwriters, 
you might want to look right behind me at some of the lawyers 
and other lobbyists who have helped write the testimony for 
some of the other people who have testified today.
    Mr. Schaffer. Very good. Did you and your organization 
commit to the Office of Insular Affairs that, with respect to 
Toppen, that you would guarantee that your organization would 
pay for his travel and daily expenses, ensure his return to the 
CNMI at the end of his brief stay, and chaperon and accommodate 
Mr. Jahedi during his stay?
    Mr. Galster. Yes, I did.
    Mr. Schaffer. Has your organization done that, in fact?
    Mr. Galster. I paid for--our organization paid for Nousher 
to come over. I guaranteed that we would get him back. Once he 
got here, we thought that--we wanted him to come over and be 
able to speak to the media and possibly testify, because I 
found during my investigations that he was one of the more 
forthright and articulate person who was willing to speak.
    Mr. Schaffer. I agree.
    Mr. Galster. Once he got over here, it was clear to me if 
we sent him back I felt like I was sending him back to get 
killed. So I backed off of that commitment.
    Mr. Schaffer. The----
    Mr. Galster. I hear sneers in the background here, so I'd 
like to just follow up on that.
    Mr. Schaffer. Your guarantee to ensure his return to CNMI 
at the end of his brief stay was made--I guess he arrived here 
May 12, May 13, somewhere around that?
    Mr. Galster. Yes, somewhere around then, that's right.
    Mr. Schaffer. When is--how long is the brief stay?
    Mr. Galster. He would get a 90-day visit, so I think it was 
an open-ended ticket for 90 days. And at that time, I think, we 
were hoping that there were going to be hearings on this issue 
sometime in May.
    Mr. Schaffer. How many--during the course of your 
investigation, how many factories did you investigate?
    Mr. Galster. Nine.
    Mr. Schaffer. Nine?
    Mr. Galster. Nine.
    Mr. Schaffer. And can you--the--and over what kind of time 
period?
    Mr. Galster. I went to Hong Kong for a week. I went to 
Saipan for another four weeks. Five weeks altogether.
    Mr. Schaffer. Were all the factories on Saipan?
    Mr. Galster. Yes.
    Mr. Schaffer. Okay. And can you tell us under what pretense 
you managed to investigate these factories?
    Mr. Galster. Sure. We'd conducted two levels of inquiry. 
One was conventional research in which I told people who we 
were. Another one, I was an undercover investigator purporting 
to be a New York-based garment executive who was interested in 
placing orders, possibly interested in placing order with 
Saipan-based factories.
    Mr. Schaffer. Now, Toppen, can I ask you a couple more 
questions? Do you know Jeff Shore?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. Do you know Jeff Shore?
    Mr. Jahedi. Yes, he's working in the Department of Interior 
Saipan, sir.
    Mr. Schaffer. Right. Has Jeff Shore ever given you any 
amount of money for any reason?
    Mr. Jahedi. No, sir. No, sir.
    Mr. Schaffer. No. And has Alan Stamen ever given you any 
amount of money for any reason?
    Mr. Jahedi. No, sir. No.
    Mr. Schaffer. Did Jeff Shore or anyone else ever ask you to 
help in getting people together for demonstrations or protests?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. No? Did Jeff Shore or anyone else ever ask 
you for help in getting cars to round up people?
    Mr. Jahedi. Excuse me, sir?
    Mr. Schaffer. Getting cars to round up Bangladeshis?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. No? Thank you, Mr. Chairman.
    Mr. Doolittle. Mr. Faleomavaega is recognized.
    Mr. Faleomavaega. Thank you, Mr. Chairman. This has been a 
long afternoon, to say the least. I do have just two questions 
that I want to communicate with Governor Tenorio or Mr. 
Zachares or anybody in the NMI administration that I would like 
to just clarify for the record. Can anybody come and help me on 
that? Is Mr. Zachares there? Governor Tenorio or somebody? 
Please.
    There's been a lot of the statements and also the 
proposition that was brought forth by the government witnesses 
earlier this morning, Mr. Zachares. I don't think there's any 
question, in terms of the past record, that there have been 
abuses. Can that be safely said, for the record, that there 
have been abuses of the use of labor and immigration law, as 
far as the NMI government is concerned?
    Mr. Zachares. As far as the government is concerned?
    Mr. Faleomavaega. Yes. And I'm not one to try to go into 
the sins of the past. I'm just trying to project, at this point 
in time, since Governor Tenorio took over as the new governor, 
I'd say for the past one year, can you tell me exactly, for the 
record, what is the procedure before a foreign worker can come 
to NMI to work, do you still have shadow contracting going on 
as part of the process?
    Mr. Zachares. Not that we recognize and not that we're 
aware of, sir.
    Mr. Faleomavaega. No. That's not my question. Do you still 
permit shadow contracting in the process?
    Mr. Zachares. No, sir. No, sir. No, sir.
    Mr. Faleomavaega. So, right now, if I want to get the 
gentleman from Bangladesh and somebody does the contracting or 
the brokering, is that still permitted as part of the process 
of bringing a foreign workers to NMI?
    Mr. Zachares. Okay. Could you say that one more time, sir? 
I couldn't----
    Mr. Faleomavaega. Let's say I've got five people in 
Bangladesh that want to come to work in Saipan. Somebody in 
Bangladesh goes and says, hey, I know somebody in Saipan, USA, 
that wants to bring five workers to work there in Saipan, USA. 
Does that coyote or does that middle man still exist as part of 
the process?
    Mr. Zachares. Should not. Should not there. First of all, 
would not come in from Bangladesh. Second, would be subject, 
under the moratorium and we would recog--that middle man in 
Bangladesh should not be there.
    Mr. Faleomavaega. Are you saying you now have current laws 
in the books in NMI that restricts this kind of procedure?
    Mr. Zachares. We are looking into the legislation to 
restrict this procedure----
    Mr. Faleomavaega. You mean, it's still going on right now?
    Mr. Zachares. No, sir. We would not recognize that 
individual.
    Mr. Faleomavaega. No, I don't--maybe I'm not clear in my 
question. Right now, as a matter of policy or as a matter of 
law----
    Mr. Zachares. Well, as a matter of policy, sir, no, we 
would not.
    Mr. Faleomavaega. But it's not under the law right now, as 
far as NMI is concerned?
    Mr. Zachares. No, sir.
    Mr. Faleomavaega. So, in other words, they can still come 
with contract brokers, living in Bangladesh or Pakistan or 
wherever they go?
    Mr. Zachares. Well, what we've done in those countries with 
the high incidence of exploitation----
    Mr. Faleomavaega. Gee, you know, please appreciate, I was 
there when that rally was held. It wasn't very pleasant. I was 
there when we had 600 of these people and Mr. Jehedi. At 
midnight, we were hafing a rally next to the hotel and people 
groping and wanting to know what can we do? Because they 
couldn't find employment. They can't--you know, I mean, it was 
really a very sad situation. And I just wanted to know, within 
the one year period, that my good friend Governor Tenorio had 
has this administration, is it the policy of the administration 
now that forevermore you don't have this kind of contracting, 
not to allow these kinds of people to come in and be employed?
    Mr. Zachares. Yes, sir. Yes, sir. In point of fact, in the 
countries where we found the high exploitation of workers, for 
example, Bangladesh, Nepal, Pakistan, that you were--we're not 
even bringing in workers from those areas right now, because of 
the level of abuse in the past that was there and because of 
the exploitive nature of the people that were coming in.
    Mr. Faleomavaega. So what you're saying, Mr. Zachares, as a 
matter of policy, as far as Governor Tenorio is concerned, 
that's his policy.
    Mr. Zachares. Yes, sir.
    Mr. Faleomavaega. But it is still not a law.
    Mr. Zachares. It's not currently a law, no, sir.
    Mr. Faleomavaega. So you could have a policy, but it could 
still abuse it, because there's no law that will govern this 
very real serious issue and problem.
    Mr. Zachares. Well, there are other laws in place right 
now. For example, one, as I pointed out, there are some 
countries that we are not bringing workers in. Second, the 
moratorium laws that are in place. There are other laws that 
are covering. And the policy is we are not recognizing that, 
sir, no.
    Mr. Faleomavaega. Mr. Chairman, I just want to say, in 
closing, this is really a sad day for the territories. I say it 
with due respect to my good friend Governor Tenorio and all his 
efforts that has been in trying to rectify the problems the NMI 
have had to go through in the past, and abuses, as it has 
recognized.
    Traditionally in this Committee and the members that deal 
with issues affecting the insular areas, it's been on the 
process of bipartisanship. But there was no partisanship in 
terms of whether it's a Democratic or a Republican issue. And 
I'm sad to say, Mr. Chairman, that today is now we're at the 
pits. It has now become a very partisan issue. And it really 
saddens me because I just hope and wish that this would not be 
the case with NMI and I just really, really am saddened that it 
has now come to this.
    And I wanted to ask Governor Tenorio, earlier Dr. 
Teitelbaum made a very astute observation. Because it's almost 
now to the point where some members who know Tenorio say, hey, 
if you want to become independent, will you be willing to 
become independent tomorrow and forget about U.S. citizenship. 
Because this is where it's leading to. And I want to ask 
Governor Tenorio, what is your feeling about this issue because 
this is where members now are getting at each other. It's now 
NMI independence or commonwealth or on your own. And I would 
like to have Governor Tenorio's observation because, as I said, 
it's a sad day for the territories, because it's now become a 
very partisan situation.
    Governor Tenorio. Congressman, on my testimony, I made it 
very clear that we are very proud to be part of the United 
States. And we continue to do so.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    Mr. Doolittle. Mr. Zachares, while you're up there, Mr. 
Miller in the last panel in his line of questioning, it came 
out, or at least this is what I picked up, that people who were 
repatriated lost their claims for whatever they might have had 
in terms of the back wages, the travel expenses. This is the 
Bangladeshi situation. And it was my understanding that the 
government would continue to pursue those claims and that 
whatever recoveries were obtained would be forwarded to them. 
What is the situation on that?
    Mr. Zachares. That is the policy. And let me elaborate on 
that just briefly. We continue to go after civil enforcement. 
We filed 142 cases against 170 individuals, 57 corporation, 18 
bonding companies. We're seeking $1.5 million for 459 workers 
in just the last year, 108 of them being Bangladeshi workers. 
We also collected $1 million in a judgment against a garment 
factory to which we will be disbursing the funds to the workers 
that are already back in China.
    Mr. Doolittle. So you got $1 million recovery.
    Mr. Zachares. Yes, sir, we did.
    Mr. Doolittle. And so how many workers is that going to be 
distributed to?
    Mr. Zachares. That's approximately I believe between 300 
and 400 workers. I'm not quite sure on the exact numbers of 
that. But under the compensation, if--and there's one other 
area that we've exploited. For example, the Benavente security 
case, and I would like to bring that up. That's a very high-
profile case that U.S. Labor was involved, numerous people were 
involved. We went in. We filed 162 count indictment and sought 
and got a $3 million bail against the person who put up 
property and is supposedly under bankruptcy now, which would 
extinguish all the claims of his administrative orders.
    We are seeking to go after the person in the criminal vein, 
due to the restitution that we can gain under the criminal 
aspect of it. If we can identify, then that would not be 
extinguished under the bankruptcy, so we're looking in the 
areas of criminal prosecution in order to try to recover some 
of the restitution for these workers. We filed 5 other cases 
against 5 other security companies totaling 147 count 
indictment. We just received a five count illegal employment 
indictment against one other woman who was running a security 
company and she was sentenced to three years in prison.
    Under the compensation, they get up to the $3,000, the 
plane ticket, the $2,300 if it's $700 and we take their names, 
addresses, and information and if we recoup the money, we have 
the record of what was owed them and we would reimburse them 
the difference, if we do make the claim. For example, under the 
Benavente, if a person under Benavente security took advantage 
of this, which we've had people take advantage of it, and we do 
recover under our criminal and restitution, if we do, we will 
try to forward those monies. We will forward those monies to 
those people.
    Mr. Doolittle. Thank you. I have a couple of minutes left 
and I yield them to Mr. Schaffer for any questions he may have.
    Mr. Schaffer. I have a couple more questions for Toppan. I 
wanted to know if there was--you observed or were able to--if 
you know of anyone who was involved in organizing the rallies 
that took place?
    Mr. Jahedi. Sorry, sir? Can you come again, once again, 
please?
    Mr. Schaffer. If there was anyone involved in organizing 
the rallies that took place?
    Mr. Jahedi. On February 18, sir?
    Mr. Schaffer. When Don--when Chairman Young came to CNMI?
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. Who?
    Mr. Jahedi. There was my--there was many of us. Not only 
me. There was Filipino. There was Nepalese. Sri Lanka. Me, too. 
Chinese also.
    Mr. Schaffer. Now, have you ever--has it ever been 
suggested to you that, if we here on the Committee and the 
Federal Government impose our laws on CNMI, that your chances 
of getting a green card or a visa or a passport or citizenship 
would be better?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. No one ever suggested that to you?
    Mr. Jahedi. No one at all, sir.
    Mr. Schaffer. The menial job that you mentioned in your 
testimony. You said that you found a menial job. What was that 
job?
    Mr. Jahedi. The first job of mine, sir?
    Mr. Schaffer. No, the one you described as menial.
    Mr. Jahedi. The first employer, she hired me as a 
commercial cleaner and when I came to Saipan, there was no job 
waiting for me. And the second----
    Mr. Schaffer. Okay, you used menial to describe the third 
job, actually----
    Mr. Jahedi. The second.
    Mr. Schaffer. Or the second job on Saipan.
    Mr. Jahedi. Yes, sir.
    Mr. Schaffer. I asked you last night about the dramatic 
just then, the language of previous comments and testimony that 
the Committee has been in receipt of and the well-written 
testimony that you have today. You suggested someone helped you 
write that testimony. Who helped you write your speech.
    Mr. Jahedi. Sir, I told you that last night between when I 
spoke to you, I write it in my own language and I asked Mr. 
Rick if he can translate it. I explain to him so he can make it 
sound good.
    Mr. Schaffer. So someone else actually translated what you 
had written?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. So someone else had translated what you had 
initially written?
    Mr. Jahedi. No, no, no. Not translate. I explain to him 
what's my problem and how did I come to from Bangladesh to 
Saipan and that's all.
    Mr. Schaffer. Sure. Can you tell me who was it that 
translated your speech?
    Mr. Jahedi. Not translator, sir. I speak to him in English.
    Mr. Schaffer. In English.
    Mr. Jahedi. Yes. And try--you know. I am not so good in 
English. I hope you understand that English is not my mother 
tongue.
    Mr. Schaffer. Okay. Okay. So who used the word ``menial,'' 
for example? Is that a word you used?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. The word ``menial''? Is that a word you used?
    Mr. Jahedi. No, no, sir.
    Mr. Schaffer. No? What does ``predatory human trafficker'' 
mean?
    Mr. Jahedi. Like the human being taking money from the 
people and take to the different place and can no way to get 
out of place.
    Mr. Schaffer. Okay. How would you describe Washington, DC? 
Would you say it's ``hellish''?
    Mr. Jahedi. No, sir.
    Mr. Schaffer. You would not?
    Mr. Jahedi. No.
    Mr. Schaffer. What does that word mean to you?
    Mr. Jahedi. Sorry, sir?
    Mr. Schaffer. ``Hellish''? What does that word mean to you?
    Mr. Jahedi. Like what happen in Philippines, when I was in 
Philippines.
    Mr. Schaffer. In the Philippines? Thank you, Mr. Chairman.
    Mr. Miller. Mr. Chairman, I'd like to submit for the record 
some additional questions and I would also like to submit for 
the record of all of the witnesses who prepared their 
testimonies too. Because we are in receipt of e-mails that 
suggest that lawyers have been working on behalf of other 
witnesses and I didn't know that was, you know, a problem in 
this country. But I'd like to know who. So we'll submit that 
for the record and to the witnesses directly. Thank you.
    Mr. Schaffer. Mr. Chairman.
    Mr. Doolittle. Yes, Mr. Schaffer.
    Mr. Schaffer. I did not make any comments at the opening or 
didn't really make too many statements during the course of the 
hearing.
    Mr. Doolittle. I'll be happy to recognize you.
    Mr. Schaffer. As far as my opinion. I'd like to do that 
now.
    Mr. Miller. I would like to reclaim my time. Mr. Galster.
    Mr. Galster. Yes, please, just real quickly before we 
finish up. I just wanted to speak about the shadow contracts. 
They still exist. It's not primarily from Nepal and Bangladesh. 
In terms of numbers, most of them are from China. I learned 
this when I was in Hong Kong talking to the factory bosses 
there and they explained that they're still signing, sometimes 
verbally, agreeing to two-year contracts. And what happens is 
that the Chinese, mainly women, mainly from the countryside, 
mainly from Fujian Province have to borrow around $8,000, which 
they pay to an employment agency, actually. It's a Chinese 
quasi-government agency. And then they get the work permit, 
which is issued by the CNMI to this company for usually a real 
job because most of those are sewing jobs.
    So they do exist and once they get on the island, they 
understand that the real governing boss there is not the 
government. It is their garment factory boss. And that was 
explained to me and I quote what one of the major factory 
owners in Saipan said, he said, ``The worker that goes to 
Saipan gill sign a two-year contract. It's unlike the factories 
in other countries like in Thailand, China, or the Philippines, 
whatever. They can change their employee as they wish. Say you 
sign a two-year contract going to Saipan and work there for two 
years. And if they want to go from one factory to another, they 
have to apply to the government and say I want to transfer from 
factory A to factory B. They, the worker, cannot do that 
without the government approval. And the government usually 
asks whether we want to transfer this person or not. Usually we 
don't say yes. Usually we refuse.''
    So I think that's important to remember. That's what we 
mean by debt bondage. And that is forbidden under a couple of 
UN treaties that this government is a signatory to. So, in 
addition to the U.S. laws, you're talking about and the 
effectiveness of enforcement of Federal agency laws in the 
Saipan, remember we have some obligations to some international 
treaties with respect to human rights that forbid this kind of 
debt bondage.
    The other thing. When I said that I didn't want to send 
Nousher back because I feared for his life and I heard some 
sneers in the back here. And I think there's even people 
laughing who are from Saipan. But that doesn't surprise because 
sometimes you can be close to this kind of situation, this kind 
of debt bondage situation, and not know it exists. It's kind of 
an invisible slavery, because most workers won't speak up about 
it because of the situation I just described. They have nothing 
to gain from speaking to a congressman who comes there. Nousher 
and some of the Bangladeshis have really taken a lot of risks. 
Some of them have been beaten up and there have been a couple 
of people killed.
    So please don't forget that. It's not an exaggeration. And 
I hope this Committee will do something about it. Thank you.
    Mr. Miller. So does the shadow contract exist? Mr. 
Zachares.
    Mr. Zachares. The only contract that we recognize is the 
CNMI labor contract.
    Mr. Miller. How would you know if the shadow contract 
existed?
    Mr. Zachares. We would not, unless they came forward. 
Unless a worker brought it forward and said, this contract is--
--
    Mr. Miller. And how would you know if that worker paid a 
recruiter or not?
    Mr. Zachares. If they would come forward and either let us 
know or the Federal Government, U.S. Labor, know or my 
department know.
    Mr. Miller. But, absent that, we don't really know whether 
or not----
    Mr. Zachares. I can tell you in the four years I've been in 
Labor and Immigration, I've yet to see in front of me someone 
bring in a shadow contract.
    Mr. Miller. I understand that. But when you say, earlier in 
your testimony--it seems like a long time ago this morning--you 
indicated that you no longer use recruiters. You no longer are 
allowed to use recruiters. The fact is we don't know whether or 
not people--and I'm not--because you get jobs how you get jobs, 
the best way you can, you get this opportunity. We don't know 
for a certainty whether or not they are continuing to use 
recruiters, whether they are continuing to pay money, and/or 
whether or not they're continuing to use shadow contracts in 
some places.
    Mr. Zachares. We do know from the CNMI side, but from the 
other side, it's difficult at best to enforce.
    Mr. Miller. That, I think, again going back to earlier this 
morning, that goes to the questions of, you know, the ability 
to enforce these policies. You know. Okay.
    Mr. Doolittle. Mr. Schaffer.
    Mr. Schaffer. Thank you, Mr. Chairman. I went to Saipan and 
spent five days. Visited probably eight or nine factories in 
the time that we were there. And, with the exception of two or 
three, all were unannounced. We literally showed up based on 
testimony we had taken from other workers that we had heard 
off-premises of work sites and worked kind of backwards. Found 
out where the complaints were first, then went to the factories 
and met--showed up at the gate and asked to come in and 
sometimes there were exchanges between the gate and the front 
office, but, in all cases, we were eventually let in, never 
took more than five minutes at the longest.
    The first factory we saw was a Chinese-owned factory, owned 
out of Hong Kong. It was probably the worst one we saw. My 
experience was not the same as those who said they had been 
there and found things to be wonderful. I found a number of 
specific factories and specific incidents that I found to be 
offensive and believed they need some attention, clearly. Those 
issues I've discussed with a number of people and, for my part, 
my five-day investigation is not over. This hearing is 
certainly part of it and there's still a lot of documents that 
we've requested that we have yet to receive.
    But I will say this. We spoke with lots and lots of 
workers, not just on work sites. We met with about 10 who had 
plaintiff's attorney bringing lawsuits against the garment 
industry, had helped arrange for us. We met with several at a 
church on Sunday. And with the exception of those that were 
organized by the plaintiff's attorney--obviously they had 
complaints of some merit or they wouldn't have been there--
almost all workers said they would come back to CNMI. The 
biggest complaint we had was that, because of the work slowing 
down, the number of contracts seemed to be dropping, that 
workers are not able to work as much as they want to. They like 
the overtime hours and they like the time and a half pay that 
they receive and they want to work more. And that was probably 
the biggest complaint.
    That and the workers from southern parts of China don't 
like the cooks from the northern parts of China because they 
use more rice than noodles and that was a complaint we heard a 
few times at lunch.
    I took a bunch of photos and these are just right out of 
the box. They came here today. Anybody can take a look them as 
long as you don't walk off with them. They're all--and I 
didn't, you know, pull anything out or edit them. I tried to 
get all the tourist ones, except for this one of the Japanese 
gun that shot down or sunk the Colorado. That's I wanted to 
take a picture. Anyway, these are all just the shots that we 
saw and there are things to be concerned about and others that 
look like any factory you might see anywhere in the United 
States.
    For me, in my personal experience, I worked in a salmon 
cannery for a while. I worked my way through college on a farm 
and I would say for most of my constituents who worked in farm 
labor and worked for low pay and under the hot sun and toil 
long hours, a trip through many of these factories would not 
seem out of the ordinary. I learned enough from my experience 
to know I did not want to do this kind of thing for the rest of 
my life. And nonetheless.
    And I have to tell you, Mr. Chairman and Committee, of one 
of the most amusing things we saw. The worst factory we went 
into was the Little MGM, as it's called. After we went through 
the tour, the manager there was kind of annoyed that we were 
there. We kept him off to the side and didn't let him follow us 
around and that's where some of the worst pictures you'll see 
in here are in his factory.
    After it was over, we went in his office to chat a little 
bit. And while we were talking, we asked a bunch of questions 
about ownership and about this contract, these shadow 
contracts, and so on. To finish up, I said, you know, I can't 
help but notice that picture of the President of the United 
States hanging on your wall. And hearing a little bit about the 
affection the President has sometimes been known to have for 
the Chinese, I said, is he a friend of yours? Do you have some 
high regard for the President. And he said absolutely not. He 
said, but the reason we have the picture on the wall is because 
he's wearing one of our shirts in the photo.
    [Laughter.]
    We have a picture of that. So I would point that out.
    You know, there are, in all seriousness, there are real 
problems in CNMI that need to be addressed. I am encouraged 
that there has been a new election in January and there is some 
new leadership that seems to be a little more forceful in 
bringing about some of the changes that need to occur. I'm also 
impressed that the industry itself seems to have gotten a 
little more serious in the last few months about trying to 
enforce some of its own internal standards. And we did see some 
evidence of that, not just because they told us, but because we 
interviewed workers and asked them about changes that they'd 
seen, whether they knew about the rights that they had and how 
they found out and how they had read them.
    But question is one that does ignore the importance of 
maintaining and preserving and elevating the level of human 
dignity for any human being. That is not in dispute in my mind. 
What is in dispute is how to arrive at securing that goal, 
whether we resort to Washington, DC, and our laws here in 
Washington to accomplish that or whether we rely on the 
ingenuity of local governments.
    Congress is almost a continuous investigation like this. 
Every day you can walk somewhere around Capitol Hill and find 
an investigation about some American scandal, whether it's 
selling missiles to the Chinese, whether it's letting the 
Chinese government steal sensitive nuclear technology out of 
our most sensitive areas, whether it's a labor disputes, 
whether it's sweatshops in New York City. And so the notion 
that somehow we are the definitive characters in deciding what 
laws are most appropriate is just nonsense.
    The INS, for example. I would hate to see the CNMI have a 
record similar to the INS in the United States. When I call the 
INS, when we find illegal aliens in my district, they laugh at 
us and tell us we'll get there in a year or two if we feel like 
it. Now nobody can tell me that those kinds of laws will be in 
the best interests of CNMI.
    The Department of Interior, for example. Now I heard the 
gentleman from Samoa talk about the unfortunate nature of these 
hearings becoming political. When the Department of Interior 
itself fires off memos that says, ``As a one-time candidate 
with a similar district against a Frelinghuysen in the old New 
Jersey fifth, I understand the utility to all hands of 
administrative candidate communications on such matters.'' Now 
this is a communication involved directly in a political 
campaign about this issue at CNMI. I'm sorry the administration 
has decided to make this topic a political issue. It should not 
be and it's unfortunate that it has become such.
    Yes, the Department of Labor. I could go on about all the 
efforts that I've seen in my own district of the Department of 
Labor putting people out of work and reducing the number of 
jobs in my district.
    And then, of course, you know, I don't what I'd say about 
the Department of Justice, the least of which is that they 
themselves in the CNMI hire non-resident aliens to do jobs for 
them. You know, we could go on about the other investigations 
going on in the Senate about the new revelations that the 
Department of Justice down there in Texas. FBI background 
checks. Chinese campaign checks making their way to Democratic 
National Committee going uninvestigated. The independent 
counsel and on and on and on.
    I guess the final conclusion is that there are acknowledged 
problems in CNMI but Washington, DC, is the absolute last place 
anyone should look to fix them because this government has 
proven time and time and time again that, in the end, at the 
end of the day, people around here in DC tend to make matters 
worse, not better.
    Reverend Kinsella. Congressman Schaffer, can I respond? I 
know you're out of time.
    Mr. Doolittle. Well, let me--I'm going to take the time and 
I'll allow you to respond, Reverend Kinsella. Go ahead.
    Reverend Kinsella. You know, I've sat here all day 
listening to the debate and the issues are really very 
complicated and very complex. One of the things I think, you 
know, that was brought out I think by Congressman Underwood was 
that, you know, there's something about the islands and 
something that every one of the islands feels and that is, you 
know, that sense of dignity and that sense, you know, of 
ownership. The sense of being able to do our own thing and run 
our own show. And it's not to mean that, you know, we're being 
rebellious or snobbish or anything like that, but there's 
something about the islands that, you know, wants to be able to 
say, we have done this. And, yes, it was hard and, yes, it was 
difficult and, yes, we made mistakes, but we've learned, we've 
grown, we've changed. And we have the capability to do it.
    You know, I have grown up in the island and I know that 
they're very capable people of handling the problems. It's not 
going to be easy and I don't think that the government alone is 
going to be able to do it. I don't think the business community 
alone is going to do it. And it's not going to be the church 
alone that's going to do it. Or Washington. I think, though, 
that if everybody will kind of come together and everybody 
begin to start focusing on what is happening, that's the one 
thing I think that's coming out of all of this. People are 
coming together. People are paying attention. People are making 
the effort. And they're doing it together.
    And I see some signs, really, down the road where more of 
this is going to happen and I feel very confident that we can 
do this. I don't think it's needed. I don't think we really 
need to let Washington do it. I think we need Washington's 
help, but I don't think that Washington's the answer. I think 
that there's a lot that we can do and we're going to do it 
together. But, you know, it's something that I think we are 
growing in. I think we're really young and we're growing. We're 
making mistakes, but we're learning and we're growing and I 
think we're getting to the point where we're seeing some 
progress.
    So don't take it away. You know, don't--what analogy will--
don't kick us out yet. Don't take over and send us to the room. 
Give us some room. And I know that I'm committed. And as long 
with the other churches. Things that maybe we haven't done as 
much as we should have. But I think we're ready and we're 
committed and I think we're going to be able to do things 
together. Thank you.
    Mr. Doolittle. Reverend, I wanted to ask you, your 
congregation is how large?
    Reverend Kinsella. We're about 350 in the church and 620 in 
the school. It includes also a family service that includes a 
domestic violence shelter, a girls' home, as well as ministries 
in Rota and Tinian. Both school and a church in Tinian and 
Rota.
    Mr. Doolittle. All right. So you're going to have a pretty 
good basis to answer this next question, then. Obviously, 
wherever you serve as a pastor, you're going to have people who 
have different kinds of issues and problems. And I'm sure that 
your congregation has the same types of issues and problems--or 
many of the same types--as you might find any place. How long 
have you been a pastor?
    Reverend Kinsella. I've pastored in Saipan for 13 years.
    Mr. Doolittle. Okay. Well, I didn't spend five days in 
Saipan. I think I was there for two or three. But I thought I 
got a pretty good sense of it, but not as good a sense as 
you're going to have. As you kind of assess overall the overall 
spiritual, emotional, physical condition of the people that you 
are the pastor to, how would you sum that up, say, compared to 
an earlier time? I mean, I don't know, is it excellent? Good? 
Fair? Poor? How does it rank there?
    Reverend Kinsella. I think we are at this time in our 
history, in the time since we've been in Saipan, there's a lot 
more confidence, a lot more willingness for the contract 
workers or the guest workers to begin to become involved. We're 
pulling together the church in a cross-cultural setting. That's 
one of the things that we have felt a real goal in. Because we 
didn't want different groups to just simply be separated. But 
we wanted one group to be able to feel the same dignity and the 
same confidence, to be able to say, just because I'm Filipino, 
you know, I'm not as good as an American. Or I'm not as good as 
a Carolinan or Chamorro. And that process is happening.
    So we've seen some great success and great growth in the 
ministry. Where there's a lot of helping one another out. We 
have the Filipinos and the Chamorros going and working, you 
know, to help a Carolinian, an American. And so there's a lot 
of pulling together and that sense that was there before of 
just kind of pulling back and being alone or separated from, 
you know, the mainstream of the Americans or the Chamorros is 
changing.
    Mr. Doolittle. All right. So it would be fair to say 
there's a sense of hope rather than hopelessness.
    Reverend Kinsella. Yes. I think there's great hope.
    Mr. Doolittle. All right. Well, that was my impression and 
I just wondered how you would assess that overall.
    Mr. Wei. Mr. Chairman, may I say a few words?
    Mr. Doolittle. Yes.
    Mr. Wei. Thank you. I have heard a lot of this debate, but 
a lot of time people just focus on the small picture instead of 
the big picture. We have to consider a lot instead of just the 
human rights things and those abuse.
    You have to think that if the takeover, that Saipan will be 
the welfare state and who is going to pay that. And if that 
happens, then the economy immediately will lose touch and then 
who is going to pay all those lost? Saipan has worked very 
hard, to work thus far, and now they are still struggling. And 
when we debating, we didn't consider the Asian economy crisis 
hit the last few years. You have seen all these Asian 
countries, they just collapse. But Saipan still continues. And 
nobody pats their backs and said, you did a good job. And they 
just take out just a small thing and then try to take over.
    Now if we take over, can we manage Saipan? That's a big 
problem and we need to consider it, too. Now we had--our 
organization had tried very hard to help those Chinese workers 
to know God and get saved. Once they get saved, they have the 
right attitude to work and they serve their master, physical 
master, well. And they try their best to do well. And so you 
see the whole atmosphere has been changed because they know 
God. And so I feel there's a great hope.
    And plus there's a lot of paths we see the government in 
Saipan is trying to improve all the service, try to deal with 
the crashing, try to deal with the problems. There's no perfect 
place in this earth. But if there's a problem and we face the 
problem and solve the problems. And I think we should let the 
government run their own government instead of we take over. If 
we see the problems and we jump on, let the Federal Government 
to take over, then we should take over all the States, instead 
of just sit there and try to discover what is Saipan's issue.
    Mr. Doolittle. Well, let me just say that, as one observer, 
I'm very impressed with the caliber of leader that we have in 
the CNMI. It really stands out. And they're deeply committed 
people, hard-working people, who I feel have a great deal to be 
proud of and no place, as you pointed out, is free of problems, 
especially the place that we're in right now or the city that 
we're in right now. I think Saipan compares very favorably. And 
let me just say that we don't expect you to be problem-free. 
What we do, is we want you to allow you to continue to have 
self-determination and we want to continue to fulfill the 
obligations that the Federal Government has made to you.
    I do feel that there has been some gross abuse of power at 
the Federal level. Some shirking of duties where they could be 
helping you and haven't adequately. I don't think all of them 
are ill-intentioned. There's some who are good-intentioned. But 
we can do a lot better I think, as Mr. Berry indicated. And I 
would hope that the administration will take seriously its 
obligations. We will try and support them in that from here. 
And support you in your efforts to achieve good government in 
the territory of the CNMI. And with that, I thank you all for--
--
    Mr. Galster. Mr. Chairman, may I make one last comment? 
I'll be very brief.
    Mr. Doolittle. Okay.
    Mr. Galster. I just wanted to submit some information which 
I think is relevant. One is that, during our investigation, it 
became clear to us that some of the garment factories are 
planning to move out of Saipan, regardless of what happens. 
They are starting to diversify and move to places like 
Mongolia, Central America, and Cambodia, so I think, whichever 
way one goes with the policy on Saipan, that's useful 
information.
    And I would just like to back up some things that Mr. 
Schaffer said. I thought that there are improvements being made 
in the garment industry on Saipan and some of the factories and 
it was clear they felt that they were being watched a little 
more closely and felt that they needed to make some of those 
changes.
    I would just reiterate, though, that these shadow contracts 
and the debt bondage situation, it is invisible and you can't 
really get to it when you go to the factories. They're not 
going to come up and speak about that. And a case in point, at 
the factory you went to, Little MGM, I just received a letter 
two weeks ago from a woman who was fired from that factory. She 
was fired because she spoke to ABC. And the--Okay, so----
    Mr. Doolittle. Is Little MGM is that in Hong Kong or 
Saipan?
    Mr. Galster. It's actually in Saipan. It's a Hong Kong-
based company. It's got some factories over there.
    And she just wrote, and I'll just read three lines from her 
letter, because she actually sent this to Congress, too, and 
cc'ed myself. And she writes, ``Currently my situation is very 
difficult. If I return to China, its Governmental International 
Company,'' which is the agency that recruited her, ``would seek 
revenge and punish me. If I don't go back to China, my life is 
threatened here. Every day, I'm on tenterhooks, hiding, while 
seeking jobs that are not to be found. I can't support myself 
or basic expenses such as food, rent, and going to the doctor. 
I'm at the end of my rope. If you don't help me, I continue to 
live like this. I may die in Saipan. Reach the stage of 
collapse. Please give me a hand.''
    So the problem is in Saipan to a large degree and 
Washington is being asked to do something by a whole bunch of 
people. So I hope we don't just stand back in this city and 
think that it's going to sort itself out. We've tried that 
before and it hasn't. Thank you.
    Mr. Doolittle. Thank you. Well, let me just say, I don't 
think anybody's proposing that. But it's either going to be a 
partnership or, to achieve a partisan political goal to aid the 
friends of one party to try and destroy this territory. The 
only territory that shows any promise of becoming self-
sufficient. And I, for one, do not plan to stand by and allow 
that to happen without putting up a good fight. And I know I 
have a lot of allies in that.
    So I thank all of you for coming today and for your 
testimony. We will ask you to answer further questions I am 
sure and we will hold the record open for your response. With 
that, this hearing is adjourned.
    [Whereupon, at 6:03 p.m., the Committee was adjourned.]
    [Additional material submitted for the record follows.]
Notes Good Situation of Overseas Filipino Workers in the 
Marianas Islands and Commends Filipine Consulate in, Saipan
    DFA Undersecretary for Migrant Workers Affairs Leonides T. 
Caday commended the Philippine Consulate in Saipan for its 
active response to the needs and problems of than Filipino 
workers in the Commonwealth of Northern Marianas Islands 
(CNINU).
    Undersecretary affirmed that Overseas Filipino Workers 
(OFWs) in the islands are enjoying working conditions and the 
same social benefits as the local population, including free 
education and school bus services for children and 
accessibility to social services. They are also adequately 
protected both by local laws and the Federal laws of the United 
States, in matters of adequate living quarters, transportation, 
safety and medical welfare.
    The random inspections conducted by the Consulate on living 
quarters of OFW& have confirmed that decent standards for 
housing set by law are generally being observed by employers. 
The Consulate's weekly consultations with Marianas labor 
officials on complaints and problems of OFWs has not only 
resulted in raids in garment factories which uncovered and 
rectified some cases of below standard living conditions, but 
also expedited the resolution of various cases and the 
enforcement of court decisions. Monthly seminars conducted by 
the Consulate for OFWs have also increased their awareness.over 
their rights and privileges, and this has resulted in a 
dramatic decline in labor complaints including frivolous labor 
complaints which had proliferated for some time as an excuse by 
workers with expiring work permits to gain extended permission 
to stay in the islands.
    There are an estimated 21,000 OFWs in the islands, 
consisting of nurses, accountants, engineers, businessmen, 
teachers, workers in factories and hot-els/restaurant clubs, 
construction workers, farmers/fishermen and domestic helpers.
    Most of the 380 OFWs working in garment factories are 
holding managerial positions. The OFWs employed as unskilled 
workers earn salaries higher than Philippine rates.
    The Undersecretary also praised the Consulate for being 
attuned to the various concerns of the OFWs, for responding 
quickly and thoroughly to their needs and problems, and for 
being persistent in investigating reports of human rights 
abuses. He said that this approach has been effective in 
rectifying cases of abuse and fraud which victimize OFWs. The 
close collaboration of the Consulate with the local and Federal 
authorities have resulted in the prosecution of offenders or in 
moves towards the extradition, and this has served as an 
effective deterrent. Since mid-197 no magic maltreatment case 
has been reported to the Consulate.
    On reported sexual abuses against Filipinas, Mr. Caday 
cited a case filed by a Filipina in October 1996, for unpaid 
wages and being forced to perform lewd acts, which resulted in 
investigations conducted by both the U.S. Departments of 
Justice and Labor, and the issuance on 26 March 1999 of a 
warrant of arrest for Eugene Zamora Sr., Filipino operator of 
the Kalesa Club, for ``transportation of illegal sexual 
activities in the CNMI''. It was the Philippine Consulate which 
uncovered that the Filipina victim is a minor, and this 
provided the basis for the swift action of the Federal 
authorities.
    In another case, on 28 November 1991, the U.S. Federal 
Bureau of Investigation arrested two Filipinas, Elizabeth 
Castaneda and Liza St. Maria, owner and manager respectively of 
several karaoke bars and clubs, ``for transportation generally 
of sexual activity''. The case stemmed from the testimonies of 
six Ripino, waitresses. The first court hearing is scheduled 
for the end of April 1998. The Philippine Consulate is 
providing assistance to all the Filipinos involved. It has 
provided job placement to the complainants, and food and 
shelter for them at the OWWA Center. It is also attending to 
the basic needs of the accused Filipinas.
    Mr. Caday also said that cases of illegal recruitment in 
the islands involving Filipinos are being addressed firmly by 
the Consulate and the local and Federal authorities. Filipino 
illegal recruiter Segundino Ubongen, who fled the islands after 
victimizing Filipinos and Bangladeshis, is now the subject of a 
manhunt, and the Attorney General's Office has requested the 
assistance of the Consulate in bringing him back to the CNMI 
for prosecution. The possibility of extradition in accordnace 
with the procedures prescribed under the RP-U.S. Extradition 
Treaty is being explored. With the help of the Consulate, the 
Filipino victims quickly found suitable employment in the 
islands. Similarly, the Consulate assisted the 21 Filipino 
victims of illcgal recruitment by a certain Filipino Methodist 
Pastor, Rev. Rolando Perez, who acted in behalf of the foreign-
owned Petrina Enterprises. The case is now in the hands of 
Marianas labor officials, and the United Methodist Church 
defrocked Mr. Perez and offered assistance to the victims.
                                ------                                

     Statement of Hotel Association of The Northern Mariana Islands

    Dear Chairman Young and Committee Members:
    The rights and privileges of the U.S. Commonwealth of the 
Northern Mariana Islands to control our own immigration, 
minimum wage, trade and tariff policies have enabled these 
islands to become self sufficient in just 21 years since the 
end of the United Nations Trusteeship Agreement. This has not 
been achieved without growing pains that have become the 
subject of congressional debate. However, a Federal takeover of 
the Commonwealth's immigration and minimum wage--a massive 
change of rules in the middle of the game--will break 
industries, both large and small. It will be a nightmare for 
the islands of Saipan, Tinian and Rota, where the standard of 
living will plunge back 20 years or more. U.S. Congress should 
not place the same restrictions and limits on the growth of 
tiny, isolated islands as it would a powerful country of 250 
million people nearly half a world away.

The Northern Marianas: A Fragile Island Economy Jeopardized by 
the Asian Economic Crisis

    For the U.S. Commonwealth of the Northern Mariana Islands 
(CNMI), the past two years have been the worst in economic 
history since World War II ravaged the islands. Due to the 
Asian economic crisis, tourism, the leading industry is down 
over 30 percent. Many hotels--particularly small, family-run 
operations-are barely hanging on to their businesses. The 
community is reeling from an unprecedented downturn, which 
began suddenly and severely in late 1997.
    With fewer tourist dollars circulating in the Northern 
Marianas, every segment of the economy is suffering. From 1995 
to 1998, tourism-based employment decreased from 48.3 percent 
to just 34.5 percent. More than 1,300 companies did not renew 
their licenses from 1997 to 1998, resulting in a net business 
decline of 11 percent. Among the worst hit by the economic 
crisis, retail and auto sales have been cut nearly in half. The 
number of empty storefronts continues to grow at an alarming 
rate.
    For the Northern Marianas, it was previously unimaginable 
that such a huge drop in tourism could occur over such short a 
time. In 1996, Saipan enjoyed an 85.6 percent average hotel 
occupancy rate--healthy by any international standard. Today, 
even the largest 5-star resorts are suffering. Based on 
declining airline access from Japan, some travel agents are 
predicting that the island will see no greater than 43 percent 
hotel occupancy through the end of 1999. The Hotel Association 
of the Northern Mariana Islands (HANMI) has forecast a total 
occupancy in the low 50 percent range for the year. For many 
businesses, this is below the break-even point. Nearly every 
hotel has cut working hours and laid off employees. Some have 
temporarily closed blocks of hotel rooms in efforts to cut 
costs while waiting out the Asian economic crisis. (See 
Appendix A--Hotel Occupancy and Appendix B--4th Quarter 
Arrivals Forecast.)
    As the economy has declined, the public and private sectors 
have begun working proactively to capitalize on our islands' 
unique identity and strengths, identifying opportunities for 
diversification, and promoting more local hiring. These efforts 
will take time. However, the instability of the investment 
climate has become virtually impossible to manage with the 
threat of a potential Federal takeover of immigration and 
minimum wage.
    Meanwhile, the people of the Northern Marianas read the 
newspapers and watch TV reports about the robust American 
economy and the troubling crusade against our garment industry. 
Some feel it is a conspiracy fueled by unions. True or not, the 
media attacks on Saipan have reached a level of yellow 
journalism that has hurt us all.
    The Hotel Association is not presenting this paper to 
defend the garment industry, although we are highly concerned 
that if that industry should leave, the entire community will 
suffer. Without garment exports, containers leaving Saipan will 
leave empty. For the hotels, the added cost of doing business 
will be immediate, as prices will rise and schedules will 
decline in the shipping industry.

A Tourist Economy Dependent on Japan

    The Hotel Association of the Northern Mariana Islands, 
representing 67 percent of the total 4,588 hotel rooms in the 
Northern Marianas, is just one part of a fragile industry that 
is almost completely dependent upon the economies of Japan and 
Korea. Members of the association employ 2,118 people or 
roughly only 3 percent of the total population of the CNMI. Of 
these, 39 percent are resident hires (U.S. citizens and 
Micronesians) and the balance--1,451 or 61 percent--are 
contract foreign workers.
    Since the hotel industry began 25 years ago, employees have 
been recruited from the Philippines and other nearby Asian 
countries out of necessity due to the fact that the small local 
population could not meet the demand for a skilled work force. 
Since many hotels were developed by Japanese investors 
marketing to Japanese tourists, many personnel in both the 
executive and semi-skilled positions were naturally recruited 
from Japan. Indeed the right of Japanese businesses to employ 
their own supervisors and managers was in fact agreed to under 
the Treaty of Friendship, Commerce and Navigation between the 
United States and Japan entered into force on October 30, 1953.
    When the Asian economic crisis began, the outbound Korean 
and Japanese markets immediately declined both in the number of 
visitors and in what they spent abroad.
    Two years ago many Japanese travelers would dine in fine 
restaurants and fill their suitcases with designer goods to 
take home as gifts. Today it is not uncommon for visitors 
entering the CNMI to bring dried noodles to eat in hotel rooms.
    This downtrend has also meant a declining pool of money to 
promote the Northern Marianas. The budget of the Marianas 
Visitors Authority, dependent upon hotel room occupancy tax and 
container tax revenues, has been cut from $8.4 million in 1997 
to just $6 million this year. Less money to promote in Japan 
correlates to reduced market share for the CNMI--from 3 percent 
down to just 2.4 percent of the 15.8 million Japanese who 
traveled overseas in 1998.
    In this time of recession in Japan when many destinations 
are competing to attract more of a declining outbound travel 
market, we wonder what the reaction will be if U.S. Congress 
takes over our immigration and the minimum wage. We'll be 
forced to scale down our staffs, reduce the quality of service 
we offer, and raise prices at precisely the same time we most 
need to be competitive. Additionally, what will happen if 
Japanese employees of the Japanese hotels and travel companies 
on Saipan are mandated to return home to be replaced by 
American mainland workers from 6,000 miles away--or Micronesian 
subsistence farmers and fisherman who have no training nor 
ability to speak the language of visitors?
    The Hotel Association of the Northern Marianas cannot 
predict when the Asian economic crisis will end, nor when the 
visitors will return. But we do know this: if the CNMI loses 
control of its immigration and we lose our ability to hire 
skilled workers to run our hotels and travel-related 
businesses, there will be no recovery of this industry for the 
foreseeable future. The fragile connection of marketing to the 
Japanese--and to a lesser extent the Korean market--is 
something the Northern Marianas has been good at managing in 
the past. But the message of a potential Federal takeover of 
immigration and minimum wage has already damaged our business 
climate and begun drying up investment here.
    The hotel industry is a captive one. Japanese, Korean and 
American investors have spent over a billion dollars developing 
resorts and family-run hotels which cannot be abandoned. Behind 
the swimming pools and landscaped gardens are elaborate 
infrastructure systems, built with private funding to include 
fully capable power and water desalination plants, necessary to 
bring fresh drinking water to guests.
    The travel industry of Japan, however, doesn't have to 
promote Saipan. They can open and close representative offices 
at will. If the CNMI becomes more expensive as a destination 
and we lose our quality of service, the Japanese can easily 
choose Guam or other non-dollar-based destinations.

What is the Difference in Operating a Hotel Business on Saipan 
Compared to Guam?

    In the debate over immigration control and minimum wage, we 
are often asked, ``If Guam can do it, why can't the CNMI. Our 
economy is vastly different than our neighbor to the south, an 
island with four times the U.S. citizen population and the 
major hub of transportation, shipping and telecommunications 
for the region. Guam has been a part of the American political 
family for more than 100 years--the CNMI only 21 years.
    Since World War II, Guam has enjoyed the multiplying 
benefits of thousands of high-paying Federal jobs and many 
millions of dollars in infrastructure improvements made through 
the U.S. military presence. Guam has grown with military 
investment; the CNMI's economy has grown due to private 
enterprise.
    With the exception of wages, virtually every cost of 
operating a hotel is more expensive on Saipan than on Guam due 
to smaller economies of scale, shipping costs and inadequate 
infrastructure. While some Guam hotels have invested in backup 
power generation capability for emergencies, hotels on Saipan 
have always had to be fully self-sufficient from the time they 
opened because local infrastructure could not meet the demand. 
Many Saipan hotels are still 100 percent reliant on their own 
in-house water and power-generating capabilities. The cost of 
water desalinization and power plants has ranged as high as $3 
million per resort hotel, with more than $800,000 in annual 
maintenance costs and specialized personnel to run the 
equipment. On Guam, hotels can simply get water from the tap.
    The cost of goods and building materials is at least 15 
percent higher in the CNMI than Guam due to the added shipping 
costs. For the island of Rota, shipping costs are virtually 
double. Most ships stop at Guam first and are then transshipped 
to Saipan by weekly barges. At great inconvenience to the 
CNMI's visitors, most flights on the way to Saipan lay over 
first at Guam's newly expanded $300 million airport.
    Another significant factor in recovering the cost of 
investments is that most businesses cannot own the land they 
are built on. On Guam anyone can own land; in the CNMI, land 
ownership is restricted to people of Northern Marianas descent 
and businesses can only lease land. Construction costs are high 
due to smaller economies of scale in importing building 
materials.

How Does Guam Meet Work Force Requirements and Why Can't the 
CNMP

    A larger local population, including many American military 
families, makes it easier for Guam hotels to find both full and 
part-time employees. Indeed the ratio of hotel rooms to the 
citizen population of Guam is 1 to 18, while in the CNMI, it is 
only 1 to 8.
    A significant number of the people working in the tour and 
travel companies on Guam are Okinawans or Japanese-speaking 
Filipinos married to U.S. military personnel. The past 50 years 
of having military bases with personnel frequently traveling 
betwee Okinawa and Guam have resulted in multinational families 
and as such, have helped the tourism industry labor pool. 
Saipan has had no such advantage.
    In Guam, a Manpower Development Fund provides millions 
annually in training people for the trades. The CNMI has no 
programs to compare to this. The Northern Marianas College 
continues to question how they'll even meet the payroll as its 
budget has declined with the economy. College officials 
reported just this month that less than a handful of students 
were enrolled in the tourism program, and more classes would be 
canceled in the fall.
    In comparison, Guam has been able to attract many people 
from Saipan and Micronesia who come to the island to attend the 
University of Guam. In many cases their families come with them 
and as a result, a large pool of people are available to work 
in hotels.

Would the CNMI Fulfill its Employment Needs from Micronesia?

    The Compact of Free Association allows Micronesians to 
immigrate to the CNMI and they are considered ``local'' for 
purposes of hiring. Approximately 10 percent of the Hotel 
Association's total work force are Micronesians.
    There are currently 140,000 people living in Micronesia, 
where the median age is only 17.8. This leaves very few people 
of legal employment age. The vast majority of Micronesians 
engage in subsistence living. Mandatory education in the 
Federated States of Micronesia carries its citizens only 
through the eighth grade level. The minimum wages paid to the 
small number of hotel workers of these islands start at only 9 
per hour in Kosrae, to $1.50 in Pohnpei, to a high of $2.50 per 
hour in the Republic of Palau.
    Recruitment from the neighboring islands of Micronesia has 
been utilized with some success, although most people come with 
no job skills. It may help in understanding the hiring of 
Micronesians to give an example of a hotel in Guam: in 1990, 
the Palace Hotel experimented with recruiting 200 unskilled 
Micronesians. The Palace brought these people to Guam for 
intensive hospitality training. After providing for their 
housing, food, uniforms, and medical care for several months, 
the hotel discovered the sad truth: most of the training time 
was spent not in teaching job skills, but in basic hygiene and 
other skills that would help them cope with living in a 
developed society. By the end of the program, 75 percent had 
returned home or left to work for other businesses.
    Currently less than 20 people remain from that original 
staff. Other Guam hotels learned from the example and no 
recruitment program of this magnitude has been attempted since.
    Significant social impacts and costs to local governments 
have become the subject of regional controversy as more 
Micronesians have migrated to Saipan, Guam and Hawaii to join 
their employed family members. Unlike the typical Asian worker 
who remits most of his money home, the paychecks of Micronesian 
workers are often utilized to bring family members to live with 
them. Those who don't work enjoy all the rights of U.S. 
citizens to utilize the maximum of food stamps, health and 
educational facilities, and other government services. 
Micronesian leaders have stated that they are concerned about 
the ``brain drain'' of the best and brightest workers leaving 
their islands and the impact this is having on their own 
development. Preliminary discussions regarding mass recruitment 
from Micronesia have taken place between the Hotel Association 
of the Northern Mariana Islands and other regional business and 
educational organizations. These discussions have indicated 
that if Saipan were to phase-out its alien work force and 
suddenly need to recruit nearly 25,000 workers from Micronesia, 
a regional economic and social crisis would occur.

Can the Hotels Train and Hire Locally?

    A priority for HANMI and our individual hotels has been to 
develop programs to train and hire more local people. However, 
there simply aren't enough workers available locally to keep 
hotel businesses operating around the clock, 365 days a year. 
From chefs to busboys, to power plant technicians, to 
accountants, entertainers and marketing experts, jobs in the 
hotel industry cross a wide spectrum.
    In an effort to improve professional standards in the human 
resources function and keep businesses appraised of local and 
Federal employment laws, the Hotel Association organized the 
Society for Human Resources Management, a chapter of the 
American organization by the same name. HANMI is also a member 
of the American Hotel & Motel Association, which gives member 
hotels access to nationally produced training materials. 
Additionally, the association has established an education 
fund, which will be used for scholarships and other training. 
We are currently working with the University of Las Vegas, 
Hospitality and Tourism Industry Management School on specific 
programs for our islands' students. Each hotel has its own on-
the-job training programs as well.
    But scholarships and training aren't the only issues when 
the work force simply isn't there. One economist has calculated 
that it would take until the year 2065 for there to be enough 
local people of working age to fulfill every job that existed 
in the Northern Marianas as of the year 1995.
    A sensitive issue and another problem for private sector 
employers is the local work ethic. During the Japanese 
administration of Saipan prior to WW II, indigenous citizens 
were limited to an elementary school education. This followed 
with years of isolation, Federal control and subsidy after WW 
II. When the Northern Marianas were finally opened to visitors 
and foreign investment, a boom in the tourism industry began. 
In the 1980's, many local people became wealthy overnight after 
leasing their land. This left a generation of young people 
uncertain about the need to work.
    The poor work ethic, adversity to manual labor, and shyness 
in serving others has handicapped the ability of many 
indigenous people to be successful in the private sector. 
Regardless of wage rates, very few indigenous citizens will 
work in food and beverage, a critical area of the hospltallity 
business. It is essential that hotels have access to employees 
with a service-oriented mentality. While the downturn in the 
economy will eventually contribute to the perceived value of 
stable employment, attitudes will take years to change.

Could the CNMI Tourism Industry Continue to Operate Under the 
Tight Restrictions of the U.S. Immigration & Naturalization 
Act?

    Without enough local people to fulfill the need for private 
sector employees, one of the most significant problems that the 
CNMI's tourism industry would have if the U.S. I.N.A. system 
were to be mandated here is that hotel and tourism jobs are not 
temporary. The U.S. labor certification process lists 49 
occupations in the Code of Federal Regulations, Title 20 for 
which the U.S. department of Labor has determined that there 
are, ``. . . sufficient U.S. workers who are able, willing, 
qualified and available to work.'' Therefore, I.N.S. will not 
allow certification for permanent employment of aliens for 
these occupations. These are virtually all of the jobs in the 
tourism industry.
    For example, a prohibition on Category 3, ``Attendants or 
Service Workers'' will eliminate half of the Saipan-based 
personnel of the Japanese travel agencies and ground handling 
companies. We worry about the harsh message this will send to 
the Japanese management of these companies, which bring roughly 
90 percent of the Japanese tourists to our islands. Although 
Americans may be, ``able, willing and qualified'' to work in 
this category, how will these companies afford to recruit 
Americans for entry level or semi-skilled jobs from the U.S. 
mainland? If the CNMI is mandated to hire outside of the 
region, recruitment costs will skyrocket. In turn, if the cost 
of doing business escalates during the Asian economic crisis, 
there will be no way we can pass these costs on to our visitors 
without completely losing our marketability as a destination.
    In our remote location, it is only economically feasible to 
recruit from the nearest area with a sizable population, and 
that is Asia. Even if hotels were to attempt recruitment from 
the U.S. mainland, it is highly unlikely that large numbers of 
people would be ``ready, willing and able'' to leave homes and 
families for entry-level jobs.
    Furthermore, a round trip ticket from West Virginia or 
Alaska--the states of the highest unemployment in the nation--
cost approximately $2,600 to Saipan. It is unlikely that 
employers could undertake such great expense and risk for 
anything less than managerial positions.

The CNMI Cannot Raise Wages in the Midst of a Recession

    U.S. Congress is considering numerous bills to raise the 
minimum wage on the U.S. mainland. These bills indiscriminately 
include the CNMI, which could mean an immediate 84 percent jump 
in our minimum wage, 102 percent by September 2000. This does 
not include local benefit mandates.
    It is false to assume that $3.05 an hour, the legal minimum 
wage of the CNMI, is not a ``living wage.'' A wide variety of 
locally, mandated benefits-including 1000 percent health care 
coverage and employer-provided flOLISing--ensure that employees 
are well provided for. Many foreign contract workers are able 
to remit anywhere from 50 percent to 90 percent of their income 
back home to greatly better the standard of living of their 
families.(See appendix D.) It would indeed be rare for any 
minimum wage earner in the United States to be able to save 
such a huge portion of their income.
    In more prosperous times several years ago, the Hotel 
Association of the Northern Mariana Islands supported local 
legislation that would require a gradual increase of 30 per 
year until the CNMI reached the U.S. minimum wage. This gave 
businesses ample opportunity to plan ahead. However, at this 
time when we must reduce costs in order to survive, a mandated 
wage increase would mean that hotels would be forced to reduce 
staff even further than we already have. This will translate to 
further decline in the quality of service we can offer and 
therefore as stated previously, less competitiveness as a 
destination. For this reason, we do not support an increase in 
the minimum wage at this time.
    The CNMI must have the local flexibility to determine what 
appropriate wages are given our unique economic circumstances. 
We feel that a locally based committee, such as our own Minimum 
Wage Review Board is best equipped to do so.

Let the CNMI Continue its Own Path to Economic Maturity

    The free market economy of the Northern Mariana Islands is 
a living, breathing thing. If the laws are too tight, we must 
loosen them. If they are too loose, they must be tightened. We 
have this necessary flexibility with local authority over our 
own immigration and minimum wage.
    We expect that the intentions of the various pieces of 
legislation are to help clean up immigration problems of the 
past. However, we must respectfully disagree with the approach 
of a complete takeover, which will not solve the problems. A 
more flexible solution given the uniqueness of this island 
economy would be to provide Federal assistance, resources and 
possibly oversight to local control.
    In conclusion, the people, businesses and government of the 
CNMI have the commitment to correct our own problems and are in 
a better position to know the needs of the Northern Marianas 
community. Our local government has made significant reforms 
and has the continuing flexibility to make adjustments as the 
economy ebbs and flows.
    Last year when we testified before the U.S. Senate on these 
same issues, we had asked for the Federal Government's 
assistance in enforcement; however, we feel that the approach 
the Federal agencies took was more to find faults and 
capitalize on how to attract negative media attention. We ask 
for genuine assistance by Federal agencies in cooperation with 
our local counterparts to enforce applicable statutes, similar 
to the successful relationship between local and Federal drug 
enforcement agencies.
    The CNMI is in the midst of what could be called an 
economic depression. Our economy is closely tied to Asian 
economic conditions. When Asia recovers, we expect tourism to 
recover. However, U.S. policies that are rooted in a strong, 
robust American economy have no relevance at this time and will 
only cripple our efforts. If the

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