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Author: Zaji “Persona Non Grata” Zajradhara
Contact: CNMIGA.ORG
Executive Summary
This comprehensive proposal advocates for the establishment of a Free Trade Zone (FTZ) or Sub-Zone in the Commonwealth of the Northern Mariana Islands (CNMI) as a strategic initiative to propel economic growth, enhance regional trade relations, and foster small business development in the American Pacific Territories.
The CNMI, along with Guam, American Samoa, and the Federated States of Micronesia, faces significant economic challenges stemming from its dependence on imported goods and its limited export capacity. This dependence on external sources leaves these territories vulnerable to global market fluctuations and limits their ability to diversify their economies.
The CNMI, in particular, has been hard hit by the decline in tourism and casino revenues following the impact of Super Typhoon Yutu in 2018, as evidenced by the GAO-20-305 report on the CNMI's recent economic and workforce trends.
This proposal recognizes these challenges while highlighting the significant opportunities for growth and diversification within the American Pacific Territories. The CNMI, with its strategic location in the Western Pacific, its access to skilled labor, its rich natural resources, and its unique cultural heritage, has the potential to become a regional economic hub, attracting foreign investment, creating jobs, and stimulating economic activity.
The establishment of an FTZ in the CNMI would serve as a catalyst for unlocking this potential, fostering a thriving business environment, and positioning the CNMI as a significant player in the global trade landscape. This initiative would not only enhance the CNMI's economic competitiveness but would also strengthen trade relations with ASEAN economies, fostering closer economic cooperation and integration within the Pacific region.
This proposal presents a compelling case for the development of an FTZ in the CNMI, highlighting its potential to drive economic growth, enhance regional trade, and promote small business development. It emphasizes the need for collaborative support from key U.S. government agencies to ensure the successful implementation and management of the FTZ.
I. Introduction: A Vision for Economic Transformation in the American Pacific Territories
The American Pacific Territories, including the CNMI, Guam, American Samoa, and the Federated States of Micronesia, play a critical role in U.S. foreign policy and national security. However, these territories face a number of economic challenges that hinder their growth and prosperity.
These challenges include:
Overdependence on Imported Goods: The American Pacific Territories rely heavily on imported goods and services, leaving them economically dependent on foreign markets and susceptible to global market fluctuations. This dependence hampers the growth of domestic industries and limits the development of a vibrant local business sector.
Limited Export Capacity: The American Pacific Territories have limited export capacity, restricting their ability to generate revenue from international trade. This restricts economic diversification and limits their ability to compete in the global marketplace.
Vulnerability to Natural Disasters: The American Pacific Territories are vulnerable to natural disasters, such as typhoons and earthquakes, which can disrupt economic activity, damage infrastructure, and cause significant financial losses.
Limited Infrastructure: These territories often lack adequate infrastructure, including transportation, energy, and communication networks, which can hinder economic development and attract investment.
Labor Shortages: The American Pacific Territories sometimes experience labor shortages, particularly in skilled trades and professional sectors, which can hinder business growth and limit the expansion of key industries.
Addressing these challenges is essential to ensure the economic well-being and long-term prosperity of the American Pacific Territories. This report presents a strategic initiative: the development of a Free Trade Zone (FTZ) in the Commonwealth of the Northern Mariana Islands (CNMI). This initiative, backed by a collaborative effort of U.S. government agencies, will not only foster economic growth and prosperity in the CNMI, Guam, and American Samoa, but will also strengthen trade relations within the region and provide a platform for small business development.
II. The CNMI’s Economic Landscape: Opportunities for Growth and Diversification
While the CNMI's economic situation presents significant challenges, it also presents exciting opportunities for growth and diversification. The CNMI’s strategic location in the Western Pacific, its access to skilled labor, its rich natural resources, and its unique cultural heritage provide a solid foundation for economic development.
The CNMI, located in the Northern Mariana Islands chain, is a key strategic location for the U.S. in the Western Pacific. The CNMI is strategically positioned to benefit from the growing economic activity in the region, particularly in the ASEAN market.
The CNMI has a diverse workforce with a significant pool of skilled labor, particularly in the tourism, hospitality, construction, and manufacturing sectors. This workforce is a valuable asset that can be leveraged to attract foreign investment and develop new industries.
The CNMI is home to a variety of natural resources, including pristine beaches, diverse marine ecosystems, and rich agricultural land. These resources can be leveraged to develop new industries, such as tourism, fisheries, and agriculture.
The CNMI's unique cultural heritage offers a significant opportunity for developing new economic sectors, such as cultural tourism, traditional crafts, and artistic expressions.
The CNMI's economic diversification can be achieved by focusing on the following key areas:
Developing a Vibrant Tourism Sector: The CNMI can capitalize on its natural beauty, rich culture, and unique experiences, such as diving, snorkeling, and cultural events, to attract tourists from ASEAN countries, generating revenue from tourism-related services and products.
Expanding the Fisheries Industry: The CNMI's rich marine resources and skilled fishing communities present a significant opportunity to develop a thriving seafood export sector, ensuring the sustainability of its fisheries and meeting the growing demand for seafood in both the U.S. and ASEAN markets.
Promoting Agriculture and Aquaculture: The CNMI can leverage its local production of niche agricultural products, such as tropical fruits, vegetables, and seafood, to supply the growing demand in ASEAN countries. The CNMI can focus on developing its agricultural sector, increasing production, and investing in value-added processing, such as canning, packaging, and marketing.
Developing a Sustainable Energy Sector: The CNMI can become a regional hub for exporting solar and wind technology components, capitalizing on ASEAN's transition towards cleaner energy sources. The CNMI can position itself as a leader in renewable energy, attracting investment and creating jobs in this sector, promoting sustainable development, and contributing to the global fight against climate change.
Harnessing Technology and IT Services: The CNMI can partner with U.S. tech companies to export CNMI-based IT services, particularly in cybersecurity and software development, catering to the growing demand for digital solutions in ASEAN. The CNMI can position itself as a hub for cybersecurity services, software development, and other IT services, capitalizing on the increasing demand for these services in ASEAN and leveraging its skilled workforce in the tech sector.
Promoting Cultural Tourism and Heritage Crafts: The CNMI can capitalize on its unique cultural heritage to generate income from the export of handicrafts, traditional art, and cultural products, attracting interest from international buyers and fostering a vibrant cultural economy.
Developing Infrastructure: The CNMI can invest in improving its infrastructure, including transportation, energy, and communication networks, which would attract investment, enhance economic activity, and create new opportunities for business growth.
III. The Case for a CNMI Free Trade Zone/Sub-Zone: A Catalyst for Economic Growth and Diversification
The creation of a Free Trade Zone (FTZ) or Sub-Zone within the CNMI presents a unique opportunity to unlock significant economic potential, reduce reliance on imported goods, and propel long-term regional development. An FTZ in the CNMI would bring about numerous benefits, making it a strategic initiative for economic transformation:
Reduced Reliance on Imports: The CNMI, Guam, and American Samoa would be able to reduce their dependence on imported goods, boosting economic independence and resilience. This would be particularly relevant in light of the ongoing global supply chain disruptions and the growing emphasis on reshoring and regionalization.
Enhanced Economic Growth: An FTZ would stimulate economic growth by attracting foreign investment, creating jobs, and encouraging domestic production and trade. This would help diversify the CNMI's economy and create new sources of revenue, leading to increased economic activity and job creation within the region.
Small Business Development: The FTZ would provide a supportive platform for small businesses to flourish, encouraging entrepreneurship and innovation. This would be crucial in empowering local businesses and fostering economic diversification, particularly in the face of global economic uncertainty.
Stronger Trade Relations: The CNMI would be able to strengthen its trade relations with ASEAN economies, opening doors to new markets and opportunities. This would enhance regional economic integration, promote greater cooperation between the U.S. and ASEAN, and facilitate the flow of goods and services across the Pacific.
IV. Understanding Free Trade Zones (FTZs): A Global Model for Trade Enhancement
A Free Trade Zone (FTZ) is a geographically designated area within a country where goods can be imported, stored, processed, manufactured, or assembled without being subject to customs duties or import restrictions until they are exported or re-exported. FTZs offer numerous benefits to businesses, making them a key tool for promoting international trade and economic development:
Reduced Customs Duties and Tariffs: Goods entering an FTZ are not subject to customs duties or tariffs until they are released for consumption within the country. This allows businesses to significantly reduce their import costs, making their products more competitive in both domestic and international markets.
Simplified Customs Procedures: FTZs streamline customs procedures, simplifying the process of importing and exporting goods. This helps businesses save time and resources, making their operations more efficient and cost-effective, particularly in a global economy where speed and agility are critical for success.
Tax Incentives: Many countries offer tax incentives for businesses operating within FTZs, including exemptions from property taxes, income taxes, and other taxes. These incentives make FTZs an attractive option for businesses seeking to reduce their tax burden and enhance their profitability.
Enhanced Manufacturing and Logistics Capabilities: FTZs provide a platform for businesses to enhance their manufacturing and logistics capabilities. These zones typically offer access to modern infrastructure, skilled labor, and specialized services, enabling businesses to improve their operational efficiency and competitiveness.
Strategic Location: FTZs are often located in strategic locations, such as near ports, airports, or border crossings, providing easy access to global markets. This strategic location is particularly advantageous for businesses involved in international trade, facilitating the movement of goods and services and making FTZs an attractive option for businesses seeking to establish a global presence.
V. The Importance of Collaborative Support: Engaging Key U.S. Government Agencies in a Unified Effort
To successfully establish an FTZ in the CNMI, a collaborative effort from the following U.S. government agencies is crucial, bringing their expertise and resources to bear on the project:
U.S. Department of Commerce: The Department of Commerce plays a crucial role in promoting U.S. trade and investment and would be instrumental in supporting the CNMI's FTZ application. It can leverage its expertise in international trade, market research, and economic development to provide technical assistance and guidance to the CNMI, ensuring the initiative aligns with U.S. trade policy objectives and receives the necessary support from the federal government. The Department of Commerce can also play a key role in facilitating the negotiation of trade agreements between the CNMI and ASEAN countries.
Government Accountability Office (GAO): The GAO's expertise in government oversight and its analysis of the CNMI’s economic and workforce trends would be invaluable in demonstrating the viability and effectiveness of the FTZ initiative. The GAO can provide valuable insights on the potential impact of the FTZ, ensuring its alignment with existing U.S. laws and regulations and fostering accountability and transparency in the implementation process. The GAO can also help to identify any potential challenges or risks associated with the FTZ initiative and recommend solutions to address these challenges.
International Trade Administration (ITA): The ITA’s expertise in international trade policy and its knowledge of the ASEAN market would be crucial in developing strategic partnerships for the CNMI. The ITA can provide valuable guidance on negotiating trade agreements, accessing new markets, and navigating trade regulations, ensuring the CNMI’s successful entry into the ASEAN market and the formation of mutually beneficial trade relationships. The ITA can also help the CNMI to identify specific industries and products that are in high demand in ASEAN and to develop strategies for targeting these markets.
Export-Import Bank of the United States (EXIM Bank): EXIM Bank's financial assistance programs could help attract foreign investment to the CNMI, supporting the development of new industries. EXIM Bank can provide loans, guarantees, and insurance to businesses operating within the FTZ, making it easier for them to access capital and expand their operations, boosting economic activity and supporting job creation within the CNMI. EXIM Bank can also help to identify and connect CNMI businesses with potential investors in ASEAN countries.
Small Business Administration (SBA): The SBA's resources and programs would be vital in supporting small businesses within the CNMI, helping them leverage the benefits of the FTZ. The SBA can provide training, counseling, and funding to help small businesses grow and thrive within the FTZ environment, fostering economic diversification and creating opportunities for entrepreneurship in the region. The SBA can also help to ensure that small businesses in the CNMI have access to the resources and support they need to take advantage of the FTZ.
Minority Business Development Agency (MBDA): The MBDA's focus on minority-owned businesses would be essential in ensuring that all businesses in the CNMI have access to the opportunities created by the FTZ. The MBDA can provide specific support to minority-owned businesses in the CNMI, ensuring equitable access to resources and opportunities, promoting inclusivity, and expanding economic empowerment within the region. The MBDA can also help to identify and address any barriers that minority-owned businesses may face in accessing the benefits of the FTZ.
United States Department of Agriculture (USDA): The USDA's expertise in agricultural development and trade would be crucial in supporting the growth of the CNMI’s agricultural sector, one of the key areas for export development. The USDA can provide technical assistance, funding, and market access programs to bolster the CNMI's agricultural sector, helping it capitalize on the growing demand for agricultural products in ASEAN and fostering sustainable and diversified agricultural production within the CNMI. The USDA can also help the CNMI to identify and access new markets for agricultural products in ASEAN and to develop strategies for promoting sustainable agricultural practices.
VI. Seven Key Areas for Export Development: Targeting Opportunities in the ASEAN Market
The CNMI's strengths and the needs of the ASEAN market suggest seven key areas for export development, offering a framework for targeting specific sectors with high potential for growth and investment:
Agriculture and Aquaculture: The CNMI can leverage its local production of niche agricultural products, such as tropical fruits, vegetables, and seafood, to supply the growing demand in ASEAN countries. The CNMI can focus on developing its agricultural sector, increasing production, and investing in value-added processing, such as canning, packaging, and marketing, to meet the needs of the ASEAN market.
Sustainable Energy Technologies: The CNMI can become a regional hub for exporting solar and wind technology components, capitalizing on ASEAN's transition towards cleaner energy sources. The CNMI can position itself as a leader in renewable energy, attracting investment and creating jobs in this sector, promoting sustainable development, and contributing to the global fight against climate change.
Textile Manufacturing: The CNMI can establish textile and garment production hubs, partnering with U.S. apparel companies to meet the high demand for clothing and accessories in ASEAN markets. The CNMI's proximity to Asian markets and its access to skilled labor make it a strategic location for textile manufacturing, particularly for niche markets such as swimwear, beachwear, and casual clothing, catering to the lifestyle and fashion preferences of ASEAN consumers.
Tourism and Hospitality Products: The CNMI can develop an export market for its unique tourism services and hospitality products, attracting regional travelers seeking new and exciting experiences. The CNMI can capitalize on its natural beauty, rich culture, and unique experiences, such as diving, snorkeling, and cultural events, to attract tourists from ASEAN countries, generating revenue from tourism-related services and products.
Fisheries: The CNMI can expand its fishing industry by exporting high-quality seafood to both ASEAN and U.S. markets. The CNMI's rich marine resources and skilled fishing communities present a significant opportunity to develop a thriving seafood export sector, ensuring the sustainability of its fisheries and meeting the growing demand for seafood in both the U.S. and ASEAN markets.
Crafts and Cultural Products: The CNMI can leverage its rich cultural heritage by exporting traditional crafts and goods to the global market, promoting cultural exchange and tourism. The CNMI can capitalize on its unique cultural heritage to generate income from the export of handicrafts, traditional art, and cultural products, attracting interest from international buyers and fostering a vibrant cultural economy.
Technology and IT Services: The CNMI can partner with U.S. tech companies to export CNMI-based IT services, particularly in cybersecurity and software development, catering to the growing demand for digital solutions in ASEAN. The CNMI can position itself as a hub for cybersecurity services, software development, and other IT services, capitalizing on the increasing demand for these services in ASEAN and leveraging its skilled workforce in the tech sector.
VII. A Detailed Implementation Plan for the CNMI Free Trade Zone/Sub-Zone: A Blueprint for Success
The establishment of an FTZ or Sub-Zone in the CNMI requires a well-defined plan for its structure, operations, and governance, ensuring the project’s success. This implementation plan focuses on the CNMI but can be adapted to the other American Pacific Territories:
A. Legal Framework
Establishing the Legal Foundation: The CNMI government should work closely with the U.S. Department of Commerce to establish a legal framework for the FTZ, ensuring it aligns with U.S. laws and regulations while accommodating the unique needs of the CNMI.
Defining the Scope of the FTZ: The legal framework should clearly define the scope of the FTZ, specifying the geographic area covered, the types of activities permitted within the zone, and the specific goods and services that can be imported, processed, or exported. This will help to ensure clarity and transparency in the operation of the FTZ.
Creating a Regulatory Framework: The legal framework should establish a regulatory framework for the operation of the FTZ, including rules and procedures for customs clearance, business licensing, environmental protection, labor standards, and other relevant aspects of FTZ operations.
B. Administrative Structure
Establishing a Governing Body: A governing body should be established to oversee the operation of the FTZ. This body could be composed of representatives from the CNMI government, local businesses, and relevant federal agencies, ensuring a balanced and collaborative approach to FTZ management.
Creating an Executive Secretariat: An executive secretariat should be established to manage the day-to-day operations of the FTZ, including processing applications, facilitating customs clearance, and ensuring compliance with regulations. The executive secretariat should be staffed by qualified professionals with expertise in trade, logistics, and FTZ management.
Establishing a Dispute Resolution Mechanism: A dispute resolution mechanism should be established to address any disputes that may arise between businesses operating within the FTZ, ensuring a fair and efficient process for resolving disputes.
C. Management Structure
Developing a Strategic Plan: A strategic plan should be developed to guide the long-term development and management of the FTZ. This plan should outline the FTZ's objectives, target industries, market strategies, and potential impact on the CNMI's economy.
Creating a Marketing Strategy: A comprehensive marketing strategy should be developed to promote the benefits of the FTZ to businesses, investors, and potential partners. The marketing strategy should highlight the advantages of operating within the FTZ and promote the CNMI as an attractive destination for trade and investment.
Building Partnerships: The FTZ management team should build strong partnerships with local businesses, chambers of commerce, industry associations, and relevant federal agencies to ensure the success of the initiative.
D. Operational Procedures
Customs Clearance: Clear and efficient procedures for customs clearance should be established, ensuring the smooth movement of goods into and out of the FTZ. This will require close collaboration between the CNMI customs authorities and U.S. Customs and Border Protection.
Business Licensing: A transparent and efficient licensing process should be established for businesses operating within the FTZ, ensuring that businesses meet the required standards and comply with applicable regulations.
Environmental Protection: Procedures for environmental protection should be established to ensure that the operations within the FTZ do not negatively impact the environment.
Labor Standards: Clear and enforceable labor standards should be established to ensure that workers operating within the FTZ are treated fairly and that their rights are protected.
Infrastructure Development: The FTZ management team should work with the CNMI government and relevant federal agencies to improve the FTZ's infrastructure, including transportation, energy, and communication networks.
E. Governance
Transparency and Accountability: The FTZ management team should operate with transparency and accountability, ensuring that all decisions and actions are made in a fair and equitable manner. This would involve implementing a system of oversight and public reporting, allowing stakeholders to monitor the performance of the FTZ and ensure its compliance with regulations.
Public Consultation: The FTZ management team should establish a process for public consultation, allowing stakeholders to provide input on the development and operation of the FTZ.
F. Promoting the CNMI Free Trade Zone/Sub-Zone: Building Support for Economic Transformation
To build support for the CNMI FTZ initiative, the CNMI government and its partners should:
Engage with the Local Business Community: The CNMI government should work closely with the local business community, chambers of commerce, and industry associations to educate them about the FTZ initiative and address their concerns.
Promote the Benefits of the FTZ to Businesses: The CNMI government should highlight the benefits of operating within the FTZ to businesses, including reduced customs duties, simplified procedures, tax incentives, and access to skilled labor.
Attract Foreign Investment: The CNMI government and its partners should aggressively market the FTZ to potential foreign investors, promoting its advantages as a strategic location for trade and investment.
Develop Public Relations Campaign: A public relations campaign should be launched to promote the benefits of the FTZ to the public, highlighting its potential to create jobs, stimulate economic growth, and improve the overall well-being of the CNMI and the American Pacific Territories.
G. Conclusion:
A Collective Effort for Sustainable Growth and Economic Empowerment
The establishment of an FTZ or Sub-Zone in the CNMI presents a unique opportunity to unlock significant economic potential, reduce reliance on imported goods, and propel long-term regional development. This initiative requires a strong commitment from the CNMI government and its federal partners, working collaboratively to ensure that the Pacific territories become integral players in the global trade landscape.
The CNMI, with its strategic location, skilled workforce, and diverse economic potential, can become a model for economic development in the Pacific region. By embracing the opportunities presented by an FTZ, the CNMI can achieve a more sustainable and prosperous future for its people and the Pacific community.
This report provides a comprehensive proposal for the development of an FTZ in the CNMI, addressing all key aspects of the initiative, from the legal framework to operations and governance. The proposal highlights the importance of collaboration between the CNMI government and U.S. federal agencies, emphasizes the need for a strategic approach to export development, and outlines a plan for promoting the FTZ to local businesses and potential investors.
By working together, the CNMI government, U.S. federal agencies, and the private sector can make this vision for economic transformation a reality, leading to sustained growth, job creation, and increased prosperity for the CNMI and the entire Pacific region.
For further information, please visit CNMIGA.ORG
AUTHORS PROFILE:
Authors’ Profile:
Zaji "Persona Non Grata" Zajradhara: A Voice for the Voiceless Zaji "Persona Non Grata" Zajradhara isn't just an author; he's a force of nature. A staunch advocate for American workers and Indigenous rights in the CNMI, Zaji's life reads like a gritty urban novel, filled with struggle, resilience, and an unwavering commitment to justice. Labeled "persona non grata" by the CNMI government for his relentless pursuit of truth and his outspoken criticism of corruption, Zaji has become a symbol of resistance against those who seek to exploit the islands and its people. As an unemployed Afro-American father, he knows firsthand the sting of the CNMI's dysfunctional labor market, its rigged political system, and the exploitation of vulnerable communities. His experiences fuel his activism, driving him to file numerous legal claims against companies for violating labor laws and discriminating against American workers. Zaji's voice, though silenced by the establishment, resonates through his writing, exposing the harsh realities faced by those on the margins. But Zaji's compassion extends far beyond the shores of the CNMI.
As Program Director of CNMIGA.org, a non-profit dedicated to providing humanitarian assistance in Myanmar, he leads a team committed to delivering essential support and resources to communities in need.
Zaji's story is a testament to the power of one person to make a difference. He is a writer, an activist, a humanitarian – a true urban warrior fighting for a more just and equitable world.
Bibliography
U.S. Department of Commerce, Bureau of Economic Analysis, Summary of Methodologies: Gross Domestic Product for American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and the U.S. Virgin Islands (February 2022).
United States Government Accountability Office, Commonwealth of the Northern Mariana Islands: Recent Economic and Workforce Trends (February 2020).
InterMart, Inc., The Beginner's Guide to Export Forms (Whitepaper).
U.S. Department of Commerce, International Trade Administration, FTZ Board Procedures to Establish or Modify Sites.
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