By Bryan Manabat
Saipan- Nearly two decades after the demise of the CNMI’s garment industry, traces of its former glory linger to this day. Branded apparels abound on island, although the raging scandals and controversies associated with them have been relegated to history.
Some clothing stores on Saipan sell signature brands such as Ralph Lauren, Burberry, Abercrombie and Fitch and GAP, which were salvaged from the notorious factories that have since shut down. While these brands are normally sold for more than a hundred bucks apiece at exclusive outlets, local retailers put them up for sale at bargain prices.
As you enter Hong Yuan, a relatively new Asian-run mini department store in Garapan, you’ll see an aisle with about 20 rows of clothing racks on both sides. The left side is filled with a selection of women’s apparel, while the right side is designated for men's t-shirts and dress shirts and children's clothing. A shirt is priced at $4. For $10, you can get three pieces.
Walk further inside. On the left side near the end, you’ll see three neatly arranged racks of Burberry shirts for men and women with “Made in USA” labels.
The Pacific Outlet on Beach Road sells GAP, Abercrombie & Fitch and Ralph Lauren labels. GAP and Abercrombie sweatshirts are $10 to $12 each, and Ralph Lauren polo shirts go for $8 to $10 each. But like any other business establishments in the CNMI, their operation was affected by the Covid-19 pandemic and has not fully recovered. The store opens its doors from time to time to put its products on sale.
At the height of the pandemic, an apparel printing shop in San Antonio held a garage sale to clear its inventory. Ralph Lauren shirts and other apparel brands were sold for $2 each.
In its heyday, the garment industry contributed over $13 million in annual revenue to the CNMI government. At its peak in 1998, the CNMI garment industry exported more than $1 billion worth of products.
The garment factories were run by Chinese and local operators. Since the CNMI enjoyed labor autonomy before the “federal takeover,” the commonwealth government set its own minimum wage rate for the local market— $3.05 an hour at the time—which was far below the federal level. The situation raised concerns among U.S. manufacturers, whose operations cost more than those of their CNMI counterparts, hence their inability to compete.
The CNMI industry came under the watchful eye of the federal government and human rights advocates. A series of congressional hearings were held and fact-finding missions were sent to Saipan to look into reports of labor violations and human rights abuses. Saipan subsequently earned the reputation of a “slave colony.”
The garment industry employed more than 7,000 foreign workers, mostly from China, Thailand and the Philippines.
The CNMI’s garment industry thrived because of the Multi-Fibre Arrangement, an international trade agreement established in 1974 to govern the global trade of textiles and garments, which allowed the CNMI to export garments to the U.S. without quotas and tariffs.
The MFA also allowed the CNMI garment industry to import pre-cut fabrics and sew them together in Saipan factories, where they were labeled “Made in the USA.” There were also reports that some of the clothing products were actually manufactured in Asian countries, shipped to the CNMI, and deceptively labeled “Made in USA.”
In 2005, the MFA was abolished, which led to the dramatic decline of production orders in the CNMI garment industry.
Some Saipan garment factories have moved to Cambodia, Vietnam, the Philippines and China, according to a former garment factory executive, who asked to be named only as "Jojo."
"After the exit of the garment factories in early 2007, some former garment workers started selling signature branded clothes at Saturday street markets for prices ranging from $3 to $10," Jojo told the Pacific Island Times. "Then later you've seen (these shirts) being sold in some mom-and-pop stores. Some outlet stores opened for this type of product.”
After the business closures, some factory owners shipped their equipment, machinery and other leftover materials off island, Jojo said. “But there were also a lot of materials that were left behind, including fabrics, pre-cut shirts and fully made branded apparels. These were sold in bulk," he added.
There were about 36 garment factories on Saipan in the late 1990s. The last factory closed in 2009.
"The leasehold agreements on these factories were terminated, and any improvements to the real estate property were turned over in favor of the landlords," Jojo said. "I know some of these real estate properties have successfully transitioned to other types of business."
The factory owners auctioned off their assets, including their vehicles, machinery and other specialized equipment, which, Jojo said, “were sold on Saipan at low prices because most factory owners were in a hurry to leave.”
Jojo declined to discuss the proprietary rights and other legal aspects of selling signature items at cut-rate stores on Saipan. “The CNMI government should have done something about the selling of the signature branded clothes,” he said. “I don’t know why nothing was done about it. I also heard that these signature products were once sold on eBay, but personally, I did not see it."
The CNMI is one of the few U.S. jurisdictions that sell clothing products labeled “Made in USA.”
“Despite America remaining the largest apparel market, very little clothing continues to carry the ‘Made in USA’ label,” according to thrift.com.
“Additionally, between 1990 and 2011, approximately 750,000 apparel manufacturing jobs disappeared in the U.S. These jobs were transferred to developing countries, where labor conditions are much worse.”
According to Forbes magazine, more than 30 percent of all packages shipped to the U.S. daily originate in China.
Asked whether the CNMI should revive the garment industry, Jojo replied, "The reasons why the garment industry exited was because of the difficulty in competing with salary being offered in other garment-producing countries due to the new World Trade Organization’s agreement on textiles and clothing, the human rights abuses. Another factor was the expensive energy costs in the CNMI."
After the departure of the garment industry, the CNMI shifted its focus to tourism, which hit a snag during the Covid-19 pandemic in 2020. The CNMI is now pivoting toward military tourism and military build-up on Tinian, where the U.S. Air Force is building a divert airfield.
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