TED Case Studies

Saipan Case Study

by Elizabeth Sobel



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I. Identification

1. The Issue


This case study is about Saipan, capital of the United States Commonwealth of the Northern Mariana Islands (CNMI), which is famous to Japanese tourists for its beautiful beaches, golf courses, and sex industry, but infamous to human rights advocates, American labor unions, the U.S. federal government and media for its historically egregious human and labor rights violations. This is the story about an American territory whose exemption from federal duties, tariffs, minimum wage and immigration laws has opened the door to a multitude of labor and trade abuses and exploitation. Saipan's garment industry has incited this political storm. Together with the tourist industry, it forms the backbone of the CNMI economy, yielding tremendous power to mostly Chinese and South Korean garment factory owners. Herein lies the linchpin to this political fiasco. The Chinese government flouts US garment industry trade barriers by setting up shop in Saipan, recruiting its citizens to work there and sending textile materials through the factories for unfettered access to US markets. Additional Chinese, Filipino, Bangladeshi, and other South Asian recruiters successfully advertise jobs in the CNMI's garment, construction, domestic work, and other industries by offering wages competitive to those at home. While thousands of individuals fall into thousands of dollars in debt to pay the required recruitment fees, their influx severely strains Saipan's local infrastructure, provoking a host of health, crime, and other societal problems. The Clinton administration, labor-friendly politicians, and Department of the Interior (Office of Insular Affairs) assess the situation and conclude that the CNMI does not have the dedication nor ability to adequately address these problems and argue that federalization of the minimum wage and immigration laws is the appropriate antidote. On the opposite side of this political conundrum are the garment industry, local CNMI government, and conservative neoliberal politicians who assert that federalization would debilitate the garment industry, which would decrease the Commonwealth's ability to be financially self-sufficient, making it more dependent on American taxpayers. The local government insists that it wants to improve the situation for both residents and nonresidents but only can do so with federal financial, human and technical capital. Left in the middle of this quagmire are the exploited and abused nonresident workers and American clothing retailers who face a $1 billion lawsuit for contracting with factories that "would make medieval conditions look good." 1

2. Description

Following is Chie's story, which illustrates the abuse, exploitation, powerlessness and vulnerability of hundreds and thousands of Chinese, Filipino, Bangladeshi, Sri Lankan and Thai women and men who have left their countries in search for better opportunities for themselves and their families. It is a story that has reproduced itself in the Commonwealth of Northern Mariana Island's garment, sexual slavery, domestic servitude, security, and construction industries. It is a story that humanizes the global problem of human trafficking for forced labor.2

Abstract: This story is reproduced from an article by Global Exchange, a nonprofit organization that works to promote social justice and sustainable development. For the complete story, click here.

Carmencita Abad ["Chie"]. . .spent six long years as a garment worker on the Pacific island of Saipan, in the US Commonwealth of the Mariana [the CNMI]. During that time, she endured wretched working conditions, frequently working 14-hour shifts in sweatshop conditions in order to meet arbitrary production quotas. Chie worked for the [Korean-owned] Sako Corporation, which makes clothes for the Gap, among other major US retailers.

After suffering the island's intolerable living and working conditions for four years, Chie attempted to organize Saipan's first garment worker union. When the factory management learned of her organizing efforts, managers began an intense campaign against the formation of a union. They threatened employees that they would shut down the plant and, in general, intimidated workers, frightening them from supporting the union. The eventual union-certifying election was lost by only five votes.

As a result of her attempts to organize workers at the Sako factory, Chie's yearlong work contract was not renewed for the first time in five years. Rather than return to her home in the Philippines, she chose to come to the US in order to expose the harsh reality of Saipan to the American people and government. Chie now serves as a spokeswoman for the workers of Saipan's garment industry as she works with several US organizations on a lawsuit that hopes to improve living and working conditions on the island.
3



The Larger Picture: Examining nonresident workers' journey from their homelands to the rude realization that this US commonwealth's promise of the American Dream is all but a myth.

The Recruitment Stage:

Traffickers and trafficking syndicates advertise well-paid jobs in Saipan via newspapers, travel agencies and word-of-mouth. They promise fair wages, good housing and benefits, waving the American flag to garner interest and trust. Tens of thousands of Asians who want to improve their and their families' standard of living have taken the leap of faith and borrowed up to $10,000 from money lenders, family, and friends to pay for guaranteed jobs and transportation to Saipan.4

Arrival at CNMI: The Rude Realization

Many Filipino, Chinese, Russian, and South Asian women sign contracts to waitress in Saipan but upon arrival are sent to work in nightclubs where they are forced to be sexual slaves and/or consummation hostesses. Many Bangladeshi, Nepalese, Pakistani, Filipino, and other South Asian women who come as domestic workers are often abused by their native Chamorro and Carolinian employers. These women are often paid late, underpaid, or not paid at all, deprived of vacation days, and restricted from contact with the rest of the community.5 Asian women do not monopolize this exploitation and abuse. Chinese men, many from the Fujian Province, go to Saipan to do construction work. Upon arrival, however, they find that there are no jobs. Even foreigners who do have jobs are not necessarily better off than their counterparts because some, such as the former employees of the infamous Antonio Benavente, are never compensated for their work. In the "Benavente" case, security firm owner Benavente attracted hundreds of Bangladeshi, Nepalese, and Pakistani citizens with well-paying jobs but failed to pay them. Two hundred workers sued him and won, making him the first local businessman indicted for violating employees' labor rights. However, workers never received their back wages totaling hundreds of thousands of dollars because Benavente fled the Commonwealth.6

Among all of the sectors employing foreign labor, the garment industry has attracted the most media attention for abuse of its mostly female Asian workforce. One of Saipan's largest recruiters7 of nonresident workers, it forces its foreign employees to do overtime, and sometimes regular work, without pay, provides them with unhealthy and dangerous work and living environments, and gives them few, if any, days off. Blocked exits, un-air conditioned buildings, several food poisonings (one of which was the largest workplace food poisoning case found by the Occupational Safety & Health Administration (OSHA))8 , inaccessible clean running water, machines without safety guards, and broken toilets exemplify the factories' flagrant abuse of federal health and safety regulations. According to Frank Strasheim, administrator of OSHA regulations in the CNMI, conditions have improved to varying degrees in different factories, but the industry as a whole continues to have room for improvement. 9

Leaving the CNMI: Not an Easy Escape

Foreign workers cannot simply leave the CNMI because they are virtually powerless. Oftentimes they cannot pay the recruiters' exorbitant fees that guarantee them jobs, so they either agree to pay their dues with their future labor or borrow money from money lenders who lend at excessive interest rates.10 Aware of their employees' precarious and vulnerable position, employers exploit their employees by withholding pay, paying them late, deducting wages from their pay to cover recruitment fees, and refusing to pay them overtime. As a result, it is very difficult for foreign workers to pay back their fees. It can take years for them to get out of debt, and many people end up leaving the CNMI without any funds. International human rights standards consider this entire situation to be "debt bondage."11

Sex club owners, whose business mostly caters to Japanese tourists, maintain tight control over their employees through intimidation, physical and verbal abuse, confiscation of their passports, and strict monitoring of their movement. Without their passports, these indentured women cannot leave the island, and their fear of money lenders' and/or traffickers' retribution on them and their families as well as their shame stop them from reporting their plight. Fear and intimidation are common tactics used among CNMI employers. For example, it is not unusual for them to threaten to deport and harm or kill foreign workers and their families if they voice factories' abuses to the media, CNMI and federal government agents, and other foreigners.

Garment factory owners exercise extreme control over their foreign employees because they are in charge of granting work permits. Therefore, if an employee complains or causes any problems that threaten the owner, then the latter can simply take away the permit, automatically making the employee an illegal worker. If workers want to work at another factory, then they must apply to the government for another permit. The government usually defers this decision to the factories themselves, and because factory owners usually deny this type of request, workers have no option but to work in their designated factory. As a result, they are forced to endure their exploitation. Another way that employers exploit foreign workers is by refusing them overtime work unless they meet the owners' strict production quotas. If they do not meet these high standards, then they are forced to work without pay to increase their efficiency and prove their merit.

The CNMI's Department of Labor and Immigration (DOLI) and Federal Wage Hour Division are theoretically responsible for protecting foreign workers' labor rights. However, they flagrantly shirk their duties. Some governmental officials will not review cases unless they are bribed. When the legal process does investigate abuses, it usually does not officially recognize and award worker damages. Cases that involve withheld wages are automatically sent to the Attorney General Office, which is supposed to implement the judgment but in reality rarely does so. There is no incentive for private lawyers to take these cases to the Superior Court to enforce the judgment because they know that their clients' chances of winning are virtually nil, which translates into zero earnings in legal fees. In the rare case that the Court decides in favor of nonresident employees, employers can easily ignore their legal obligations by declaring bankruptcy. This clearly is a no-win situation for nonresident workers.

Foreign worker desperation has propelled some to resort to extreme avenues, such as trying to smuggle themselves to Guam to be granted political asylum, and gamble their earnings or offer to sell their bodily organs to pay off their debt.

Pressure for change: The Snowball Effect

US Congressman George Miller (D-California), US Congresswoman Patsy Mink (D-Hawaii), US Congressman Bob Franks (R-New Jersey), US Senator Daniel Akaka (D-Hawaii), US Senator Frank Murkowski (R-Alaska), US Senator Spencer Abraham (R-Michigan), the Clinton Administration, the Occupational Safety and Health Administration (OSHA), the Department of the Interior Secretary Bruce Babbitt and Office of Insular Affairs Director Allen Stayman (DOI-OIA), the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), the Union of Needletrades Industrial and Textile Employees (UNITE), human rights and religious organizations have protested the CNMI's policies of peonage and indentured servitude under the American flag. They claim that the CNMI's lax immigration and minimum wage laws as well as its exemption from federal duty and quota laws have not only harmed the foreign workers but cost the US $200 million in uncollected revenue and 20,000 American jobs.12 Through Congressional hearings, governmental agency reports, print and broadcast media exposes and other public platforms, they have laid the groundwork for three major lawsuits that demand a change to the status quo.

The Lawsuits

These lawsuits label Saipan "America's biggest sweathshop."13 In 1999, labor and human rights groups brought a lawsuit against American retailers and garment factory contractors, accusing them of a "racketeering conspiracy"14 to exploit foreign workers and intentionally deceive consumers by labeling clothing "Made in USA" even though it was made by Asian workers in Asian-owned factories under violated US labor laws. Federal agencies brought on two other lawsuits to protest workers' unpaid overtime and substandard work and living conditions. Altogether, these three lawsuits seek a total of $1 billion USD in lost wages and damages for 50,000 former and current garment factory workers, demand fair wages for and treatment of current and future workers, and insist upon factories' compliance with federal and international human rights and labor standards.15

Retailers' Response

As of November 15, 2000, 18 retailers settled out of court. They agreed to follow the new Saipan Code of Conduct, which prohibits contractors from violating the law, dictates that factories that manufacture their clothing must be monitored by Verite, an independent monitoring firm, and requires them to pay workers' unpaid wages.16 This package amounts to almost $8.5 million, which will go into a fund that pays workers' unpaid wages, the lawsuits' legal and administrative fees, and independent monitoring of the factories. Following is a list of the companies that have settled to date.17
  1. Brylane, L.P.
  2. Calvin Klein, Inc.
  3. Cutter & Buck, Inc.
  4. Donna Karan International Inc.
  5. The Dress Barn, Inc.
  6. The Gymboree Corp.
  7. J. Crew Group Inc.
  8. Jones Apparel Group, Inc.
  9. Liz Claiborne, Inc.
  10. The May Department Stores Company
  11. Nordstrom Inc.
  12. Oshkosh B'Gosh, Inc.
  13. Phillips-Van Heusen Corp.
  14. Polo Ralph Lauren Corp.
  15. Sears Roebuck and Company
  16. Tommy Hilfiger U.S.A., Inc.
  17. Warnaco Group, Inc.
  18. Woolrich, Inc.


Companies that have not yet settled are:
  1. The Gap, Inc.
  2. Dayton Hudson/Associated Merchandising Corp. (Target and Mervyns)
  3. J.C. Penney
  4. Lane Bryant
  5. The Limited
  6. Levi Strauss & Co.
  7. Talbots
  8. Abercrombie and Fitch
  9. Brooks Brothers


Pressure for Maintaining the Status Quo:

J.C. Penney, Target, The Gap, and Lane Bryant probably have not settled yet because they have a significant stake in Saipan: their combined business makes up almost 50% of the island's garment trade. Moreover, the CNMI government, garment industry, House Majority Whip Tom Delay (R-Texas), Majority Leader Dick Armey (R-Texas), Senator Rod Grams (R-Minnesota), and other very conservative neoliberal18 politicians allege that the government and media's allegations are mere exaggerations and that their true motivation is to protect the trade unions19 and "kill prosperity on the islands." 20 Delay sums it up, "[reformists are] the forces of big labor and the radical left,"21 and has promised Willie Tan, the most powerful garment industry businessman, that he would leverage his power as Majority Whip to prevent the CNMI-reform legislation from being included on the congressional schedule.22 This flagrant abuse of power may have gone unchecked if this remark was not aired on the popular ABC news program 20/20, whose coverage of the Saipan sweatshops provoked a national outcry.23

In response to this public cry of protest, the garment industry has employed the extremely conservative lobbyist law firm Preston Gates24 Ellis and Rouvelas Meeds for over $4.25 million. 25 to protect the status quo. The lobbyist's strategy is simple: the firm provides Congress members, their families, and Congressional staff with free trips to the tropical island of Saipan. The CNMI government ascertains that their guests see their beautiful beaches, enjoy their resorts, and only see their model factory. Upon their return, Congressmen and their staff write glowing reviews of the CNMI. Preston Gates enforces this CNMI-friendly publicity by ensuring that Chinese, Filipino, and Bangladeshi workers who testify at congressional hearings give glowing reviews about their work and living conditions. In addition, they prepare "friendly" congressmen with "friendly" scripts as to validate their support of the status quo. Finally, this lobbyist firm attempts to seal its progress by preparing legislation that would solidify gains that it has achieved at federal hearings. Preston Gates' strategy to stymie the Clinton administration's pursuit of reform has been successful because the Clinton administration has not been able to pass federal wage and immigration laws onto the CNMI.

Reform Versus the Status Quo: Why Neither Option is Ideal

There is a national debate over whether the garment industry is a boon or detriment to the native Saipan population. In the CNMI's "two-tier economy,. . .low-wage, indentured alien workers dominate the private sector26 and local US citizens dominate the higher wage public sector."27 The private sector is composed of two main industries: garment and tourism. According to the CNMI government, the garment industry generates an annual budget of $85 million, almost 40% of the CNMI's total budget. In addition, the US Department of Interior reports that the garment industry has created 7,500 non-factory jobs such as government jobs and jobs in the land-leasing, transportation, shipping, telecommunications, retail, and insurance industries.28

In 1997, Asia's financial crisis thrust the CNMI economy's dependence on the garment industry into the limelight. From 1997 to 1998, the largely Japanese-based tourist industry shrank from 700,000 to 450,000 visitors, weakening the hospitality and transportation sectors. As a result, the garment industry virtually became the Commonwealth's only tax revenue provider.29

The concomitant drastic decline of revenue forced the government to significantly curtail its spending. This spurred a massive exodus from the public school and health systems, leaving the CNMI with its highest recorded unemployment rate of over 16 percent. Some of the biggest victims of this human and capital flight have been children of non-U.S. citizens, who constitute the 13 percent increase in food stamp recipients.30

While the garment industry bolstered the CNMI economy in the face of the Asian economic crisis, it simultaneously created negative externalities to the CNMI society. The growth of this industry triggered an exponential population boom, which has severely strained public services such as water, power, sewage, air, health care, and school systems. 31

Accompanying the expansion of Korean and Chinese-owned garment industry has been a jump in Japanese and Chinese organized crime activities. The CNMI lacks the infrastructure and resources to combat the rise in prostitution, drug and arms trafficking, illegal gambling, and other forms of corruption. As a result, its already strained health care system is overwhelmed with the epidemic-level growth of HIV, tuberculosis, sexually transmitted diseases, and other communicable diseases in the CNMI.32

Conclusion: What Should Be Done

There are no easy answers to what should be done in the Commonwealth. Even if retailers insisted and ensured that their factory contractors complied with the US Occupational Safety & Health Administration's (OSHA) labor standards, workers could still be victims of peonage. On the other hand, if the US federalized minimum wage and immigration laws, then American retailers would lose their competitive edge over foreign goods because the cost of labor would increase. As a result, factories would lose business and would not be able to compete with cheaper foreign labor. These factories would eventually close down, which would wield a great blow to the economy, taking away jobs from both CNMI citizens and foreign workers. Is this a better situation than the status quo?

While the debate continues, it is becoming less relevant because quotas on developing countries' garment exports are being phased out, which automatically decreases the significance of the CNMI's special trade provisions. Under the Multi Fibre Agreements (MFA), which came into effect in 1974 within the General Agreement on Tariffs and Trade (GATT), industrialized countries protect their garment industries by establishing quotas on garment imports from developing countries. In 1995, members of the World Trade Organization (WTO) enacted the New Agreement on Textiles and Clothing, which requires the MFA quota system to be phased out by the year 2005. When this process is complete, trade barrier exemptions will no longer create a competitive advantage, leaving garment factories with a more level and competitive playing field. According to Angela Hale, author of "Phasing out the Multi Fibre Arrangement - What does it mean for developing countries garment industries?", the MFA's "disappearance will lead to increased competition where success will depend on the. . .choice of production sites. . .labour costs. . . local provision of fabrics, yarns and accessories. . .[the] commercial and transport infrastructure. . .[and the] proximity to markets." 33

The CNMI does not offer any of these significant advantages to its garment industry. In fact, labor costs are rising in the CNMI because factories are compelled to implement and enforce the Saipan Garment Manufacturers Association (SGMA)'s Code of Conduct due to American retailers' aversion to non-compliant contractors. Compliance with the Code of Conduct, which is based on OSHA's labor standards, increases the cost of doing business in the CNMI. According to the Advance Textile Corporation, an American company that operates a factory in Saipan, "rising costs are making Saipan an increasingly less attractive place to do business. . .[meanwhile] there are over 500 Korean-owned factories now producing apparel in Central America, some with the same ownership as in Saipan, where production is rapidly eroding Saipan orders."34

What does this mean for the garment industries and their employees worldwide? Angela Hale and Jennifer Hurley, co-authors of "What does the phase out of the MFA quota system mean for garment workers?"35 assert that trade liberalization will trigger a race to the bottom in wage and labor conditions across the globe because transnational corporations will relocate to countries where they can extract the cheapest labor and raw materials. China is expected to "consolidate its dominance of the global garment industry"36 because its ascension into the WTO will enable it to take full advantage of the quota-free market and its virtually limitless supply of cheap labor. Meanwhile, worker conditions will continue to deteriorate. Thus, as long as workers stay in the garment industry, which is structured to take advantage of global inequalities, their best option is to work for companies that enforce the friendliest labor standards.

3. Related Cases

SLAVE Abolition of the Atlantic Slave Trade in the United States
BRACERO Bracero Program and Labor Rights
NIKE Nike and Pakistani Child Labor
PICKER Apple Picker Rights
ORANGE Oranges Imports and Child Labor
MAQUILA Maquiladoras
BIGMAC McDonalds and Labor Rights under NAFTA
BURMAPIPELINE Burma Gas Pipeline and US Court Case
CUBATOUR Cuba Tourism and Women's Rights
THAIWOMEN Women Trafficking from Thailand to Japan
BODYSHOP The Bodyshop and Exploitation

4. Draft Author:

Elizabeth Sobel, December 2000

II. Legal Clusters

The World Trade Organization (WTO) rules are inapplicable to the Saipan case study because it is a domestic trade dispute involving United States and the CNMI, a commonwealth of the US When the CNMI officially became a US commonwealth in 1986, it agreed to be subject to all US federal laws with exception to the immigration and naturalization laws and the minimum wage provisions that fall under the Fair Labor Standards Act.37 The CNMI’s local control over these issues has been a major point of contention between the US federal government and the CNMI government because the latter’s immigration system “is antithetical to American values.”38

While US immigration policy limits immigration to professionals who will eventually become enfranchised, CNMI policy has allowed such a high influx of temporary foreign contract workers that they have become a majority of Commonwealth inhabitants. Meanwhile, this new majority cannot acquire political representation. Because the foreign temporary workers are politically, socially and economically powerless, they cannot protect themselves from exploitation. As a result, their population has endured a plethora of abuses: indirectly forced abortions; shadow contracts that strip of them of basic rights such as protesting unfair labor conditions; recruitment scams that leave them in debt with no job opportunities; unpaid wages; forced prostitution and sexual harassment; work conditions that are identified as unsafe and unsanitary by the Occupational Safety and Health Administration (OSHA); victims of hate crimes committed by native CNMI citizens who suffer from the overburdened social infrastructure39 ; and, the lack of “meaningful opportunity” to request non-refoulement, the non-return to a migrant’s home country where s/he is more likely than not to be persecuted upon return.40

Temporary foreign workers are wholly vulnerable to the whim of their abusers because they are not protected by local CNMI nor federal US laws against these abuses. In principle, the United Nations Declaration of Human Rights is supposed to protect them, and all people, from these types of abuses via its promotion of generally agreed-upon fundamental rights such as the right to life, prohibition against slavery and the slave trade, prohibition against torture and other inhumane, degrading treatment, equality before law, and principle of non-refoulement. Moreover, the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights were established in 1966 to give legal power to many of these right.

The international community has created numerous international labor conventions and recommendations specifically to improve and protect the welfare of migrant workers. These include the 1949 Migration for Employment Convention, 1949 Migration for Employment Recommendation, 1975 Migrant Workers (Supplementary Provisions) Convention, 1975 Migrant Workers Recommendation, 1984 Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, and 1990 International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families. While these recommendations and conventions have the potential to ensure the humane treatment of migrant workers, they remain ineffective because the “receiving” state, the United States, has no jurisdictional power to enforce these laws in its Commonwealth. At the same time, the “sending” states, such as China, the Philippines, Bangladesh and Thailand, do not enforce these standards.41 As a result, while there are minimum standards for the treatment of migrant workers in paper, they are meaningless until they are incorporated into national legislation and actively enforced.

5. Discourse and Status: Disagreement and In Progress

6. Forum and Scope: USA and Sub-National

7. Decision Breadth: 1

8. Legal Standing: Law

III. Geographic Clusters

9. Geographic Locations

The Commonwealth of the Northern Mariana Islands (CNMI) is a Pacific Ocean island chain just north of Guam that stretches for 375 miles and totals 181 square miles. It consists of 14 volcanic islands: Agrihan, Alamagan, Anatahan, Asuncion, Farallon De Medinilla, Farallon De Pajaros (Uracas), Guguan, Maug (three islands), Pagan, Rota, Saipan, Sarigan and Tinian. Altogether, the CNMI hosts a population of 72,000- 75,000 individuals, most of whom are located on Saipan, the capital of the CNMI. This tiny island, which is smaller in size than Washington, D.C., is the center of focus in this case study.

a. Geographic Domain: Asia

b. Geographic Site: East Asia

c. Geographic Impact: USA (Saipan)

10. Sub-National Factors: Yes

11. Type of Habitat: Tropical

IV. Trade Clusters



In 1976, the US federal government granted the CNMI special trading privileges so that it could attract enough foreign investment to become self-sufficient. The US exempted the CNMI of tariffs and duties on US imports and allowed the CNMI to set its own minimum wage policy to maximize its competitiveness in the manufacturing industry. In addition, the United States allowed the CNMI to set its own immigration laws to protect it from a massive influx of foreigners desperate to reside under the protection of the American flag. Ironically, the CNMI was so eager to attract foreign capital that it failed to establish strict immigration policies and as a result, nonresident citizens now outnumber resident citizens and are putting a tremendous strain on the Commonwealth's infrastructure.42

According to the federal government's 43 most recent available data, there are approximately 27,000 American citizens, 38,000 non-American citizens, and 7,000 to 10,000 undocumented alien workers living in the CNMI. 44 This calculates into a foreign population, mostly from the Philippines and the Peoples Republic of China, that makes up over 58% of the total population. The following tables illustrate where the influx of workers are coming from and how fast they have outnumbered the local citizenry, overwhelming the local infrastructure. 45

Country of Origin:
 
Number of Foreign Workers (% of Total)
Philippines 18,121 (48%)
Peoples Republic of China 15,440 (41%)
Bangladesh 943 (3%)
Japan 889 (2%)
Korea 878 (2%)
Thailand 688 (2%)
Others 682 (2%)


Saipan Population46:
 
Total Population of Saipan US Citizens (% of Total) Non-U.S. Citizens (% of Total)
1973 12,486 10,325 (83%) 2,161 (17%)
1980 14,549 11,195 (77%) 3,354 (23%)
1990 38,896 17,171 (44%) 21,725 (56%)
1995 52,698 23,585 (45%) 29,113 (55%)
1999, 1st Quarter 71,790 30,153 (42%) 41,636 (58%)


While this population boom greatly strains the public health and safety systems, the garment industry continues to reap tremendous benefits. According to the CIA Factbook’s most recent set of available data, the CNMI’s garment industry shipped $1 billion worth of products to the US mainland in 1998 alone. Because it is exempt from federal taxes, which under normal trade conditions would have cost it approximately $200 million, the industry held on to a substantial portion of its revenues.47

Following is a table of the 34 garment companies who are beneficiaries of the CNMI's trade privileges.48 Note that the third column indicates the nationality of factory ownership.

Factories:
 
Nickname Factory Ownership
Advanced Textile Corporation "Advanced" USA
American Pacific Textile, Inc. "Am. Pacific" N/A
Commonwealth Garment Manufacturing, Inc. "Commonwealth Garment" China/Hong Kong
Concorde Garment Manufacturing Corp. "Concorde" USA/Hong Kong
Coral Fashion, Inc. N/A Korea
Diorva Saipan, Inc., subsidiary of Micronesian Garment Manufacturing, Inc. "Diorva" Hong Kong/China
Eurotex (Saipan), Inc. N/A Hong Kong
Express Manufacturing, Inc. "Express Mfg." N/A
Global Manufacturing (Saipan), Inc. "Global" USA/Hong Kong
Grace International "Grace" Hong Kong/China
Hansae (Saipan), Inc. "Hansae" Korea
Jin Apparel, Inc. "Jin Apparel" China
Joo Ang Apparel, Inc. N/A Korea
Kyung-Suh (Saipan) Co., Ltd., subsidiary and subcontractor of Hansae "Kyung-Suh" N/A
Kum-Kyung Corporation, also known as Handsome (Saipan) "Handsome" Korea
Mariana Fashions, Inc. "Mariana Fashions" Korea
Mariana Garment Manufacturing, Inc. "Big MGM" China
Michigan, Inc. N/A Korea
Micronesian Garment Manufacturing N/A China
Mirage Saipan Co., Ltd. "Mirage" China/Hong Kong
Neo Fashions, Inc. "NEO" Japan/Korea
Net Apparel N/A N/A
New Star Corporation N/A Korea
Onwel Manufacturing Saipan, Inc. "Onwel" Hong Kong/Thailand
Pang Jin SA Corp. "Pang Jin" Korea
Sako Corporation "Sako" Korea
Sam Mariana, Inc. N/A Korea
Suntex Corporation "Suntex" Great Britain/Taiwan
Top Fashion Corporation "Top Fashion" USA/Hong Kong
United International Corporation ("U.I.C.") "U.I.C." Korea49
Trans-Asia Garment Forte Corp. "Trans-Asia" Taiwan/Hong Kong
Uno-Moda Corporation "UNO MODA" Korea/Japan
U.S.-CNMI Development Corporation N/A Hong Kong
Winners Corporation "Winners" Korea


American retailers have flocked to the CNMI, contracting with these factories to avoid expensive labor and trade barriers. Ironically, the very incentive to do business in the CNMI has cost them dearly. In 1999, the general public accused retailers of a “racketeering conspiracy,”50 holding them accountable for $1 billion in unpaid wages and damages. The plaintiffs in this lawsuit51 are, on behalf of the general public: the Union of Needletrades Industrial and Textile employees, AFL-CIO, Global Exchange, Sweatshop Watch, and Asian Law caucus. The defendants are outlined in the following table. Note that the first column lists the factories they contracted with, the second column lists the weight of clothing shipped to the US, and the third column lists the wholesale value of that clothing.52 This information illustrates the degree to which each retailer is responsible for the alleged human and labor rights violations.

Retailers:
 
Factories Contracted With Weight (million lbs.) Wholesale Value (million $US)
The Gap, Inc. Mirage, U.I.C., Winners, Sako, Onwel, Michigan, Inc., Mariana Fashions, Hansae 39.2 237.3
The Associated Merchandising Corp. NEO, U.I.C., Winners 2.4 14.8
Cutter & Buck, Inc. Diorva N/A N/A
Dayton-Hudson Corp. Hansae, Top Fashion, Winners, U.I.C. 15.2 91.5
The Dress Barn, Inc. NEO, UNO MODA, Sako 2.7 16.5
The Gymboree Corp. Global 5.0 30.5
J.C. Penney Company, Inc. Hansae, Big MGM N/A N/A
J. Crew Group, Inc. Concorde, Jin Apparel, Big MGM, Mirage, N.E.T., Suntex, Onwel, Trans-Asia 2.6 19.3
Jones Apparel Group, Inc. Concorde, Jin Apparel, NEO, Onwel, UNO MODA 7.0 41.8
Lane Bryant, Inc. Top Fashion 2.8 16.9
The Limited, Inc. Am. Pacific, Express Mfg., Advanced, Hansae, Mirage, Winners 3.3 21.7
The May Department Stores Company Little MGM, Commonwealth Garment, Express Mfg., Neo, UNO MODA, U.I.C. 6.5 46.7
Nordstrom Inc. Global, Onwel 3.0 18.3
Oshkosh B'Gosh, Inc. U.I.C. 1.5 8.8
Sears Roebuck and Company Hansae, Kyung-Suh, Pang Jin, Handsome, Top Fashion 0.43 2.6
Tommy Hilfiger USA, Inc. Concorde, U.I.C. 1.1 6.85
Wal-mart Stores, Inc. Mirage 7.3 43.8
Warnaco Group Inc. Grace, Big MGM 1.5 0.93

12. Type of Measure: Regulatory Measure

13. Direct v. Indirect Impacts: Direct

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes, Textiles

b. Indirectly Related to Product: Yes, Sex Trade

c. Not Related to Product: No

d. Related to Process: Yes, Human and Labor Rights

15. Trade Product Identification: Textiles and Foreign Workers

16. Economic Data: $200 million in lost revenue for federal government

17. Impact of Trade Restriction: High (Potential collapse of CNMI's economy)

18. Industry Sector: Textiles

19. Exporters and Importers: China/Philippines/Bangladesh/Thailand/Other South Asian Countries and USA

"Exporters" are the nonresident garment workers' countries of origin: China, the Philippines, Bangladesh, Thailand, and other South Asian countries. China, which is a major stakeholder of the Saipan garment industry, provides not only its citizens but virtually all other resources needed for the manufacturing process. As Allen Stayman, Director of Insular Affairs at the Department of the Interior, stresses, "Everything" in the Chinese factories "comes from the Chinese mainland -- managers, workers, the textiles, the buttons, the zippers, the thread.53

"Importers" is the United States of America. All garments produced in the CNMI are sent to the US mainland. Congressman George Miller and the Democratic Staff of the House Committee on Resources explain why CNMI exports exclusively go to America: "The only advantage of locating the cutting and assembly phase of the garment manufacturing process in the CNMI is to take advantage of the duty and quota exemptions provided to the CNMI by the US"54

V. Environment Clusters


The natural environment is not a key element of the Saipan trade dispute.

20. Environmental Problem Type: Rights

21. Name, Type, and Diversity of Species: N/A

22. Resource Impact and Effect: Low and Structure

23. Urgency and Lifetime: Low and 60 years

24. Substitutes: Expanding and enforcing workers' rights

VI. Other Factors:

25. Culture: No

26. Trans-Boundary Issues: No

27. Rights: Yes

Thousands of Asians temporarily move to the CNMI to make money for themselves and their families, but upon arrival often find themselves in peonage, working and living in unhealthy, restricted, and dangerous environments.

28. Relevant Literature

"Beneath the American Flag: Labor and Human Rights Abuses in the CNMI," report by Congressman George Miller and Democratic Staff of the House Committee on Resources, March 26, 1998.

"Economic Miracle or Economic Mirage? The Human cost of Development in the Commonwealth of the Northern Mariana Islands," report by Democratic Staff Committee on Resources, US House of Representatives, April 24, 1997.

Economic Report of the Commonwealth of the Northern Mariana Islands, Bank of Hawaii, October 1999.

"Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands, Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998

"Lawsuit Against US Corporations Using Sweatshops in Saipan," The National Labor Committee, 01/11/99, www.nlcnet.org/saipan/complaint.htm.

"Trapped: Human Trafficking for Forced Labor in The Commonwealth of The Northern Mariana Islands (A US Territory)," Global Survival Network report, 1999.

Recommended Websites

Corporate Watch, www.igc.org/trac/japan/intl/internatl/saipan.html.

Global Exchange, www.globalexchange.org.

"Information Archives on The Saipan Scandal," Take Pride in America Coalition, www.takepride.org/archives.htm.

Saipan Garment Manufacturers Association, www.sgma-saipan.org.

Sweatshop Watch, www.sweatshopwatch.org.

Image References

Flag of the Commonwealth of the Northern Mariana Islands, by Animation Factory. See www.animfactory.com/af_flags_poles_us_territories_page_aa.html.

Map of the Commonwealth of the Northern Mariana Islands, by the CIA and made available by the University of Texas at Austin Library Collection, 1989. See www.pixi.com/~cpac/maps.htm.

Footnotes

1. "Top US companies being sued for 'America's worst sweatshop,'" Los Angeles (Associated Press), 01/13/99. back
2. This is how Global Survival Network defines the problem in the CNMI. Back
3. "Carmencita 'Chie' Abad," Global Exchange, www.globalexchange.org/education/speakers/CarmencitaAbad.html, 11/22/00. Back
4. Global Survival Network reports recruitment fees to be $2,000 to $10,000 USD, Global Survival Network report, p.8. Back
5. Global Survival Network report, p.14. Back
6. Global Survival Network report, p.15. Back
7. Economic Report of the Commonwealth of the Northern Mariana Islands, Bank of Hawaii, October 1999. Back
8. Approximately 1,200 garment factories suffered from this particular incident. For more specific information on other poisonings, see "OSHA: Massive food poisoning outbreak at Saipan garment factory," 04/08/99, Ron Harris, Associated Press. See www.globalexchange.org/economy/corporations/saipan/harris040899.html, 11/22/00. Back
9. GSN Report; 11/00 Interview with Frank Strasheim, Region IX Administrator, US Dept. of Labor, OSHA Division; "The Shame of Saipan," ABCNews' 20/20 expose, 5/24/99. See www.globalexchange.org/economy/corporations/saipan/2020expose.html, 11/22/00. Back
10. According to Global Survival Network, Chinese criminal groups reportedly lend at 15-30% annual interest rates. Back
11. According to Anti-Slavery International and the Development and Peace organization, individuals "[enter] debt bondage when their labour is demanded as a means of repayment of a loan, or of money given in advance. Usually, people are tricked or trapped into working for no pay or very little pay (in return for such a loan), in conditions which violate their human rights. Invariably, the value of the work done by a bonded labourer is greater that the original sum of money borrowed or advanced." See www.devp.org/slavery/bondage.html#mechanism for more details, 12/19/00 back
12. "Beneath the American Flag: Labor and Human Rights Abuses in the CNMI," report by Congressman George Miller and Democratic Staff of the House Committee on Resources, March 26, 1998, resourcescommittee.house.gov/105cong/democrat/cnmifin.html#F_14_,12/18/00. Back
13. ABCNews' 20/20 expose. Back
14. "Sweatshops in Saipan," Corporate Watch, September 1999, www.igc.org/trac/Japan/intl/internatl/saipan.html, 9/13/00. Back
15. "Sweatshops in Saipan," Corporate Watch, September 1999, www.igc.org/trac/Japan/intl/internatl/saipan.html, 9/13/00. Back
16. "Gap Campaign Update – 11/15/00," Global Exchange, www.globalexchange.org/economy/corporations/gap/campaignUpdate111500.html, 11/22/00. Back
17. "Gap Campaign Update – 11/15/00," Global Exchange, www.globalexchange.org/economy/corporations/gap/campaignUpdate111500.html, 11/22/00. Back
18. Neoliberals call for a global free market economy, one that deregulates businesses, absolving them of following minimum wage requirements. Back
19. "Sweating it out in Saipan," Jonathan Fox, Dallas Observer, 04/20/00, www.dallasobserver.com/issues/2000-04-20/news.html, 11/22/00. Back
20. Global Survival Network report, p.27 and "Tom Delay, Defender of Sweatshops," Jeff Stein, Salon magazine, 02/02/99, http://salonmagazine.com, transcript of press conference, 11/22/00. Back
21. "Tom Delay, Exterminator: Killing Workers," Students' Information Technology, University of Wisconsin-Madison, www.sit.wisc.edu/~lsfitzge/delay.htm, 11/22/00. Back
22. ABCNewss' 20/20 expose. Back
23. "Is this the USA? Behind the Trusted 'Made in the USA' Label," ABCNews' 20/20 expose, March 13, 1998. Back For full transcript, go to the Sweatshop Watch website at www.sweatshopwatch.org/swatch/Mariana/2020.html.
24. "Gates" is Microsoft Bill Gates' father. Back
25. Global Survival Network report, p.26. Back
26. 91% of private sector jobs are held by foreign contract workers. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
27. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands, Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
28. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
29. "Micronesia in Review: Issues and Events, 1 July 1998 to 30 June 1999, Political Review, Northern Mariana Islands," McPhetres, Samuel F., The Contemporary Pacific 12.1 (2000) 211-216. Back
30. "Micronesia in Review: Issues and Events, 1 July 1998 to 30 June 1999, Political Review, Northern Mariana Islands," McPhetres, Samuel F., The Contemporary Pacific 12.1 (2000) 211-216. Back
31. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
32. "Micronesia in Review: Issues and Events, 1 July 1998 to 30 June 1999, Political Review, Northern Mariana Islands," McPhetres, Samuel F., The Contemporary Pacific 12.1 (2000) 211-216. Back
33. "Phasing out the Multi Fibre Arrangement - What does it mean for developing countries garment industries?," Angela Hale, Women Working Worldwide - The Labour behind the Label, 1997, TransFair Canada, www.transfair.ca/fairtrade/fair6913.html, 12/18/00. Back
34. "SGMA Tackles Issues With CNMI Leaders," Saipan Garment Manufacturers Association, October 14, 2000, www.sgma-saipan.org/sgma_websmall/news/pr/pr00_10_14.html, 12/15/00. Back
35. "What does the phase out of the MFA quota system mean for garment workers?" Ann Hale and Jennifer Hurley, Gender, Trade and the WTO, Globaler Aktionstag Gegen Kapitalismus, 09/26/00, www.no-racism.net/s26/gender/gender_wto.htm#2, 12/18/00. Back
36. "The Asian Garment Industry and Globalization," Catholic Agency for Overseas Development, November 1998, www.cafod.org.uk/garment_industry.htm 12/18/00. Back
37. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
38. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
39. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
40. There is no right to apply for asylum in the CNMI. However, international law permits temporary contract workers, defined as "aliens," to request non-refoulement without having to go to nearby Guam or any other US immigration zone. The CNMI has not allowed its temporary contract workers the "meaningful opportunity" to become a refugees seeking asylum. However, the US federal government is ultimately responsible and obligated to establish this legally binding procedure. Therefore, according to the US Department of the Interior, the US may have to protect the burgeoning number of CNMI "aliens" from return to their home countries. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
41. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
42. Economic Report of the Commonwealth of the Northern Mariana Islands, Bank of Hawaii, October 1999; Global Survival Network report; and, "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
43. Global Survival Network report, p.7. Back
44. Secretary of the Interior Bruce Babbitt before the Senate Committee on Energy and Natural Resources on S. 1275, The Covenant Implementation Act, 03/31/98. Back
45. Global Survival Network report, p.7. Back
46. Economic Report of the Commonwealth of the Northern Mariana Islands, Bank of Hawaii, October 1999. Back
47. "Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands," Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998. Back
48. This list is compiled from three sources: US Department of Commerce, Office of Textiles and Apparel, Industry Assessment Division, Maria Dandrea, 10/03/00; "Lawsuit Against US Corporations Using Sweatshops in Saipan," January 11, 1999, www.nlcnet.org/saipan/complaint.htm, 11/22/00; and, Saipan Garment Manufacturers Association, www.sgma-saipan.org/sgma_websmall/members/members.html, 11/22/00. Back
49. According to Global Exchange, this is the largest single factory in Saipan. For more information, see: www.globalexchange.org/economy/corporations/saipan/startrib062199.html, 11/20/00. Back
50. "Sweatshops in Saipan," Corporate Watch, September 1999, www.igc.org/trac/Japan/intl/internatl/saipan.html, 9/13/00. Back
51. "Download the Complaint Document," Global Exchange, www.globalexchange.org/economy/corporations/saipan/complaint.html, 11/22/00. Back
52. "Lawsuit Against US Corporations Using Sweatshops in Saipan," The National Labor Committee, 01/11/99, 1999, www.nlcnet.org/saipan/complaint.htm, 11/22/00. Back
53. "Clotheshorse of a Communist Color," Charles A. Cerami, Insight Magazine, February 15, 1999, www.takepride.org/news_archives/insight_magazine_piece.htm, 12/18/00. Back
54. "Beneath the American Flag: Labor and Human Rights Abuses in the CNMI," report by Congressman George Miller and Democratic Staff of the House Committee on Resources, March 26, 1998, http://resourcescommittee.house.gov/105cong/democrat/cnmifin.html#F_14_, 12/18/00. Back

Bibliography

Antislavery International and the Development and Peace organization, www.devp.org/slavery/bondage.html#mechanism

"Beneath the American Flag: Labor and Human Rights Abuses in the CNMI," report by Congressman George Miller and Democratic Staff of the House Committee on Resources, March 26, 1998.

"Clotheshorse of a Communist Color," Charles A. Cerami, Insight Magazine, February 15, 1999, www.takepride.org/news_archives/insight_magazine_piece.htm, 12/18/00.

"Economic Miracle or Economic Mirage? The Human cost of Development in the Commonwealth of the Northern Mariana Islands," report by Democratic Staff Committee on Resources, US House of Representatives, April 24, 1997.

Economic Report of the Commonwealth of the Northern Mariana Islands, Bank of Hawaii, October 1999.

"Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands, Fourth Annual Report," Department of Interior Office of Insular Affairs, 1998

Global Survival Network report, p.27 and "Tom Delay, Defender of Sweatshops," Jeff Stein, Salon magazine, 02/02/99, http://salonmagazine.com, transcript of press conference, 11/22/00.

"Lawsuit Against US Corporations Using Sweatshops in Saipan," The National Labor Committee, 01/11/99, www.nlcnet.org/saipan/complaint.htm, 11/22/00.

"Micronesia in Review: Issues and Events, 1 July 1998 to 30 June 1999, Political Review, Northern Mariana Islands," McPhetres, Samuel F., The Contemporary Pacific 12.1 (2000) 211-216.

"Phasing out the Multi Fibre Arrangement - What does it mean for developing countries garment industries?," Angela Hale, Women Working Worldwide - The Labour behind the Label, 1997, TransFair Canada, www.transfair.ca/fairtrade/fair6913.html, 12/18/00.

"Sweating it out in Saipan," Jonathan Fox, Dallas Observer, 04/20/00, www.dallasobserver.com/issues/2000-04-20/news.html, 11/22/00.

"The Asian Garment Industry and Globalization," Catholic Agency for Overseas Development, November 1998, www.cafod.org.uk/garment_industry.htm 12/18/00.

"Trapped: Human Trafficking for Forced Labor in The Commonwealth of The Northern Mariana Islands (A US Territory)," Global Survival Network report, 1999.

"What does the phase out of the MFA quota system mean for garment workers?" Ann Hale and Jennifer Hurley, Gender, Trade and the WTO, Globaler Aktionstag Gegen Kapitalismus, 09/26/00, www.no-racism.net/s26/gender/gender_wto.htm#2, 12/18/00.