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By Jude O. Marfil

SAIPAN, CNMI (Marianas Variety, Dec. 29) –The clock is ticking.

Garment factories in the Commonwealth of the Northern Marianas are beginning to feel the heat of the impending World Trade Organization’s lifting of the garment quota, effective January 1.

Several manufacturers are already starting to experience a reduction in job orders for next year.

"Usually, December is when factories are getting job orders for the second quarter of the 2005 calendar year. Unlike in the past, orders have been minimal," a manager of a factory located in San Antonio said on condition of anonymity.

The same source pointed out though that it was still "too early to tell" how the lifting of the quota will impact their business.

"We are in a wait and see mode. We won’t know until the summer of next year if we are going to survive," the source said.

According to a Federal official, first to be hit by the quota lift would be the so-called "fly-by-night" factories, which operate in garages.

"We’re looking at about five to six of these moonlighting garment manufacturing shops," a well-placed official said.

Even United International Corp., which controls 20 percent of the islands’ total garment production, was not spared from the "chilling effect" of the quota lift.

"Our orders for apparel from the United States as of April 2005 have dropped by 20 percent," UIC owner James Lin said.

For his part, Saipan Garment Manufacturers Association executive director Richard A. Pierce said, "We expect orders to drop a little bit."

"We’re pins and needles about what’s gonna happen. We know that buyers care only about placing orders as cheaply as they can," Pierce said.

Reports show that a handful of garment factories have issued bad checks to their workers.

Industry observers view this as a bleak scenario leading to the lifting of the garments quota, a situation in which China will benefit most.

In a free-market economy, small producers with lower production costs are likely to survive the competition.

China, which made 17 percent of the world’s apparel and textiles, has the upper hand because labor in the mainland is cheaper than the rest of the labor-intensive areas like Thailand, Bangladesh, Pakistan, the Philippines, Honduras, and even the CNMI, which is flooded with foreign workers employed at various garment factories.

The garment industry has been one of CNMI’s main economic drivers besides tourism. In 2003, the garment sector paid $30 million in user fees and an aggregate of $70 million to the islands’ coffers, which is about 32 percent of the CNMI’s 2005 proposed budget of $215 million.

December 29, 2004

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