Part of the Mariana Islands Archipelago, the CNMI is a chain of 14 islands in the western Pacific Ocean, just north of Guam and about 3,200 miles west of Hawaii. The CNMI has a total population of 53,890, according to the CNMI’s 2016 Household, Income, and Expenditures Survey. Almost 90 percent of the population (48,200) resided on the island of Saipan, with an additional 6 percent (3,056) on the island of Tinian and 5 percent (2,635) on the island of Rota. The Consolidated Natural Resources Act of 2008 amended the U.S.– CNMI covenant to apply federal immigration law to the CNMI after a transition period. To provide for an orderly transition from the CNMI immigration system to the U.S. federal immigration system under the immigration laws of the United States, DHS established the CW program in 2011. Under the program, foreign workers are able to obtain, through their employers, nonimmigrant CW-1 status that allows them to work in the CNMI for up to a year. The Consolidated Natural Resources Act of 2008 requires DHS to annually reduce the number of CW-1 permits until the number reaches zero by the end of the transition period. The act was amended in December 2014 to extend the transition period through December 31, 2019. The act was further amended in August 2017 to, among other things, (1) add 350 CW-1 permits to the fiscal year 2017 cap; (2) restrict future permits for workers in construction and extraction occupations; and (3) increase the CNMI education funding fee that employers must pay for each permit from $150 to $200. DHS determines the annual cap on CW-1 permits and the terms and conditions of the CW program. In November 2017, DHS set the cap for CW-1 permits for fiscal year 2018 through the end of the program (see table 1). The proposed bill, the Northern Mariana Islands U.S. Workforce Act (S. 2325), includes the following provisions, among others, that would affect the CW program: (1) the number of permits to be allocated each year, (2) the distribution of the permits, and (3) a new CW-3 worker designation. Under the terms of S. 2325, the number of permits issued may not exceed 13,000 during fiscal year 2019. Starting in fiscal year 2020, the number of permits issued may not exceed a number that is 500 fewer than the number issued during the immediately preceding fiscal year. Figure 1 shows the past and future numerical limits on CNMI-Only Transitional Worker permits established by DHS and the proposed numerical limits for permits under S. 2325. The limits shown for S. 2325 in figure 1 assume that employers would petition for, and DHS would issue, the maximum number of available permits for fiscal year 2019 and for each subsequent year. Under S. 2325, as under the current law, a permit for construction and extraction occupations would be issued only to extend a permit that was first issued before October 1, 2015. Also, S. 2325 would require the Secretary of Homeland Security to consider, in good faith, any comments or advice submitted by the CNMI governor, including any recommendation to reserve a number of permits each year for occupational categories necessary to maintain public health or safety in the commonwealth. S. 2325 proposes a new CW-3 worker designation. Foreign workers who are otherwise admissible would be eligible for CW-3 permits if they were admitted to the CNMI as CW-1 workers during fiscal year 2014 and every subsequent fiscal year beginning before the date of the enactment of S. 2325. These workers would receive a permit to remain in the CNMI for a 3-year period beginning on the date of S. 2325’s enactment. CW-3 permits could be renewed in 3-year increments during the transition period for workers who remain outside the United States for a continuous period of not less than 30 days during the 180-day period immediately preceding each such renewal. CW-3 permits would count against the numerical caps specified in S. 2325. The CNMI’s inflation-adjusted gross domestic product (GDP) has grown each year since 2012. The U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) estimates that the CNMI’s GDP increased by almost 29 percent in 2016 after increasing by about 4 percent in 2015. BEA attributes this economic growth to a significant increase in visitor spending, particularly for casino gambling, and investment in the construction of a casino resort in Saipan and other hotel construction. Figure 2 shows the casino’s development site in Saipan before and during construction. The new casino opened for business on July 6, 2017. Since 1990, the CNMI’s tourism market has experienced considerable fluctuation, as evidenced by total annual visitor arrivals (see fig. 3). Visitor arrivals to the CNMI declined from a peak of 726,690 in fiscal year 1997 to a low of 338,106 in fiscal year 2011, or by 53 percent. However, since 2011, visitor arrivals have nearly doubled, reaching 653,150 in fiscal year 2017, and increased by 30 percent from 2016 to 2017. Data from the Marianas Visitors Authority show that the downward trend in Japanese arrivals from 2013 to 2017 was offset by the growth in arrivals from China and South Korea. While eligible Japanese and South Korean visitors enter the CNMI under the U.S. visa waiver program, Chinese visitors are not eligible for the program and are allowed to be temporarily present in the CNMI under DHS’s discretionary parole authority, according to DHS officials. DHS exercises parole authority to allow, on a case-by-case basis, eligible nationals of China to enter the CNMI temporarily as tourists when there is significant public benefit, according to DHS. Following consecutive annual decreases in the total number of employed workers from 2005 through 2013, employment has increased annually since 2014, according to CNMI tax data. Figure 4 shows the numbers of employed workers, both foreign and domestic, in the CNMI from 2001 through 2016. From 2013 to 2016, the number of employed workers increased by approximately 25 percent, from 23,344 to 29,215. As figure 4 shows, while the number and percentage of foreign workers fell between 2001 and 2016, foreign workers still constitute the majority of the CNMI workforce. Of the nearly 30,000 employed workers in the CNMI in 2016, more than half were foreign workers, according to CNMI tax data. The number of foreign workers fell from a peak of over 38,000 in 2002—roughly 75 percent of employed workers—to fewer than 16,000 in 2016. In contrast, since 2002, the number of domestic workers has fluctuated from year to year, ranging from about 10,500 to almost 13,700, but increased by 28 percent from 2013 to 2016. The CNMI economy continues to experience growing demand for workers. In fiscal years 2012 through 2016, the number of CW-1 permits almost doubled, and since fiscal year 2016, the number of permits has approached the numerical limits on permits for those years. Our preliminary analysis indicates that the number of approved CW-1 permits grew from 7,127 in fiscal year 2012 to more than 13,000 in fiscal year 2016. On October 14, 2016—2 weeks into fiscal year 2017—USCIS announced that it had received enough petitions to reach the CW-1 cap for fiscal year 2017 and would not accept requests for new permits for that year during the remaining 11 months. In May 2017, USCIS announced that it had received a sufficient number of petitions to reach the CW-1 cap for fiscal year 2018. Table 2 shows the CW-1 permit caps and numbers of permits approved for fiscal years 2012 through 2018. According to USCIS officials, as of January 26, 2018, fiscal year 2018 petitions were still being adjudicated. Our preliminary analysis of USCIS CW-1 permit data for fiscal years 2012 through 2018 identified trends in CW-1 workers’ country of birth, occupation, and duration of employment. USCIS data showed a decline in the numbers of CW-1 permits for fiscal years 2017 through 2018 for workers born in each of the five countries listed most frequently on the petitions—the Philippines, China, South Korea, Bangladesh, and Japan (see table 3). As of January 17, 2018, the number of permits approved for workers born in the Philippines, who received the most permits for all 7 years of the CW program, had declined by 13 percent from fiscal year 2017 to fiscal year 2018 and by 26 percent from fiscal year 2015 to fiscal year 2018. Concurrent with construction of the casino and other tourism infrastructure, the number of CW-1 permits for workers born in China increased by almost 3,800 from fiscal year 2015 to fiscal year 2016 and declined by about 3,500 from fiscal year 2017 to fiscal year 2018. Our preliminary analysis indicates that as of January 17, 2018, USCIS had approved 750 CW-1 permits for construction workers for fiscal year 2018. This number represents a 75 percent decline from the nearly 3,000 permits approved for fiscal year 2017 (see table 4). This decline reflects new restrictions on future permits for workers in construction occupations. Of the 8,228 foreign workers who had been granted fiscal year 2018 permits as of January 17, 2018, 2,352 had maintained continuous employment in the CNMI since fiscal year 2014 (see table 5). Of the 2,352 workers with continuous employment in fiscal years 2014 through 2018, 1,905 workers (81 percent) were born in the Philippines. Chairman Murkowski, Ranking Member Cantwell, and Members of the Committee, this concludes my prepared statement. I would be pleased to respond to any questions you may have at this time. For further information regarding this statement, please contact David Gootnick, Director, International Affairs and Trade at (202) 512-3149 or gootnickd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this testimony included Emil Friberg (Assistant Director), Julia Ann Roberts (Analyst-in-Charge), Sada Aksartova, Andrew Kurtzman, Reid Lowe, Moon Parks, and John Yee. Technical support was provided by Chris Keblitis, Mary Moutsos, and Alexander Welsh. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Summary: Pub. L. No. 110-229, enacted in 2008, amended the U.S.-CNMI covenant to apply federal immigration law to the CNMI after a transition period. The law required the Department of Homeland Security (DHS) to establish a temporary work permit program for foreign workers. DHS is required to decrease the number of permits issued annually, reducing them to zero by the end of the transition period, scheduled for December 31, 2019. To implement the law, DHS established a new work permit program in 2011. Under the program, foreign workers can obtain, through their employers, nonimmigrant CW-1 status that allows them to work in the CNMI. The law was amended in August 2017 to, among other things, restrict future permits for workers in construction and extraction occupations. Proposed legislation—Senate bill S. 2325—would, among other things, extend the transition period through December 31, 2029; increase the number of available permits from the 2018 level; and set required decreases in the annual numerical limit for the permits. (See figure for past numerical limits established by DHS and future limits proposed by S. 2325.) This testimony discusses (1) recent trends in the CNMI economy and (2) preliminary observations about the number of approved CW-1 permits and characteristics of permit holders, drawn from GAO's ongoing work. GAO updated information about the CNMI's economy that it reported in May 2017 (see GAO-17-437 ). GAO also analyzed data and documents from U.S. agencies and the CNMI government. The Commonwealth of the Northern Mariana Islands' (CNMI) inflation-adjusted gross domestic product (GDP) has grown each year since 2012, according to the Bureau of Economic Analysis. In 2016, the CNMI's GDP rose by 29 percent, partly as a result of construction investment. While tourism has fluctuated in recent years, visitor arrivals in the CNMI rose by nearly a third from 2016 to 2017. After nearly a decade of annual decline, the total number of workers employed in the CNMI increased from 2013 through 2016, according to the most recent available CNMI tax data. Foreign workers made up 53 percent of those employed in 2016, compared with roughly 75 percent in 2002. GAO's preliminary analysis indicates that the number of approved CNMI-Only Transitional Worker (CW-1) permits for foreign workers in the CNMI grew from over 7,100 for fiscal year 2012 to nearly 13,000 for fiscal year 2017. In addition, GAO identified trends in the country of birth, occupation, and employment duration of foreign workers with CW-1 permits approved for fiscal years 2012 through 2018. Workers born in the Philippines received the highest number of CW-1 permits each year. As of January 2018, 750 CW-1 permits had been granted to construction workers for fiscal year 2018—a 75 percent decline from the prior fiscal year. GAO estimated that approximately 2,350 foreign workers with approved CW-1 permits maintained continuous employment in the CNMI from fiscal year 2014 through January 2018. About 80 percent of these workers were born in the Philippines.