Commonwealth of the Northern Mariana Islands
Coordinated Federal Decisions and Additional Data Are Needed to Manage Potential Economic Impact of Applying U.S. Immigration Law Gao ID: GAO-09-426T May 19, 2009This testimony discusses our work on factors that will affect the potential economic impact of implementing the legislation applying U.S. immigration law to the Commonwealth of the Northern Mariana Islands (CNMI). Although subject to most U.S. laws, the CNMI has administered its own immigration system since 1978, under the terms of its 1976 Covenant with the United States. The CNMI has applied this flexibility to admit substantial numbers of foreign workers through a permit program for non-U.S. citizens (noncitizens) entering the CNMI. In 2005, these workers represented a majority of the CNMI labor force and outnumbered U.S. citizens in most industries, including garment manufacturing and tourism, which have been central to the CNMI's economy. The CNMI also has admitted tourists under its own entry permit and entry permit waiver programs and has provided various types of admission to foreign investors. As we have reported previously, the CNMI faces serious economic challenges, including the decline of garment manufacturing and fluctuations in tourism. The recent immigration legislation amends the U.S.-CNMI Covenant to establish federal control of CNMI immigration and includes several provisions affecting foreign workers and investors in the CNMI during a transition period that ends in 2014. The Secretary of Homeland Security decided to delay the start of the transition period for 180 days, from June 1, 2009, to November 28, 2009, as allowed under the law in consultation with the Secretaries of the Interior, Labor, and State, the Attorney General, and the CNMI Governor. Unless otherwise noted, "transition period" refers to the period beginning November 28, 2009, and ending on December 31, 2014. During the transition period, the Secretary of Homeland Security, in consultation with the Secretaries of the Interior, Labor, and State, as well as the Attorney General, are responsible for establishing, administering, and enforcing a transition program to regulate immigration in the CNMI. This program will provide foreign workers temporary permits to work in the CNMI (CNMI-only work permits); the number of these permits must be reduced to zero by the end of the transition period or the end of any extensions of the CNMI-only work permit program. The legislation also establishes a joint visa waiver program by adding the CNMI to an existing visa waiver program for Guam visitors. The legislation's stated intent is to ensure effective border control procedures and protect national and homeland security, while minimizing the potential adverse economic and fiscal effects of phasing out the CNMI's own foreign worker permit program and while maximizing the CNMI's potential for economic and business growth.
The potential impact of the legislation's implementation on the CNMI's labor market, and therefore on its economy, will largely depend on decisions that the U.S. Departments of Homeland Security (DHS) and Labor (DOL) make in implementing the CNMI-only work permit program. DHS will decide on the number of permits to allocate each year, the distribution of the permits, their terms and conditions, and the permit fees; DOL will decide whether and when to extend the CNMI-only permit program past 2014. The interaction of the rate and timing with which DHS reduces the available number of permits and the timing of any DOL extensions of the program will significantly impact the availability of foreign workers; however, we reported in August 2008 that federal agencies had not yet identified an interagency process to coordinate these decisions. Although modest reductions in CNMI-only permits for foreign workers would cause minimal impact, any substantial and rapid decline in the availability of CNMI-only work permits would have a negative effect on the economy, given foreign workers' prominence in key CNMI industries. However, because key federal sources of labor market data do not cover the CNMI, the agencies may have difficulty obtaining the data needed to make decisions. At the same time, the decline in the garment industry, challenges to the tourism industry, and the scheduled increases in the minimum wage may reduce demand for foreign workers, lessening any potential adverse impact of the legislation on the CNMI's economy. Any impact of the legislation on the CNMI's tourism sector will depend largely on DHS decisions about the countries to be included in the joint CNMI-Guam visa waiver program. The legislation's impact will be minimal for tourists from countries included in the joint visa waiver program. However, increases in costs and time associated with obtaining visitor visas, likely for countries not included in the joint program, could influence tourists from those countries to choose destinations other than the CNMI. At present, most CNMI tourists are from Japan and South Korea, both of which will probably be included in the joint visa waiver program because they currently are included in the Guam visa waiver program. China and Russia are currently not included in the Guam visa waiver program and are excluded under a DHS interim final rule for the joint visa waiver program; they are therefore most likely to be affected by the legislation. They account, respectively, for about 10 percent and less than 1 percent of CNMI tourist arrivals but are nevertheless considered important markets. If China and Russia are not included in the joint visa waiver program, tourists from these countries will face increased visa fees, more time-consuming procedures, and uncertainties related to possible visa refusal. The legislation's potential impact on CNMI foreign investment will depend, in part, on key DHS decisions regarding foreign investor entry permits; however, lack of data makes it difficult to assess the likely impact of these decisions and may hamper federal decisions. In implementing the legislation, DHS will decide whether to grant holders of several types of CNMI foreign investor permits "grandfathered" status as U.S. nonimmigrant treaty investors during the transition period. DHS also will decide how long the grandfathered status will be valid. Although available CNMI data suggest that DHS's decision regarding the application of grandfathered status will partly determine the impact of the legislation, critical data--showing, for instance, current overall foreign investment and amounts associated with each type of permit--are not available. This lack of critical data makes it difficult to estimate the legislation's likely impact and limits DHS's ability to make informed decisions regarding the grandfathered status.
GAO-09-426T, Commonwealth of the Northern Mariana Islands: Coordinated Federal Decisions and Additional Data Are Needed to Manage Potential Economic Impact of Applying U.S. Immigration Law
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Testimony:
Before the Subcommittee on Insular Affairs, Oceans and Wildlife,
Committee on Natural Resources, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Tuesday, May 19, 2009:
Commonwealth Of The Northern Mariana Islands:
Coordinated Federal Decisions and Additional Data Are Needed to Manage
Potential Economic Impact of Applying U.S. Immigration Law:
Statement of David Gootnick, Director:
International Affairs and Trade:
GAO-09-426T:
[End of section]
Madame Chairwoman and Members of the Subcommittee:
Thank you for the opportunity to discuss our work on factors that will
affect the potential economic impact of implementing the legislation
applying U.S. immigration law to the Commonwealth of the Northern
Mariana Islands (CNMI).[Footnote 1]
Although subject to most U.S. laws, the CNMI has administered its own
immigration system since 1978, under the terms of its 1976 Covenant
with the United States. The CNMI has applied this flexibility to admit
substantial numbers of foreign workers[Footnote 2] through a permit
program for non-U.S. citizens (noncitizens) entering the CNMI. In 2005,
these workers represented a majority of the CNMI labor force and
outnumbered U.S. citizens in most industries, including garment
manufacturing and tourism, which have been central to the CNMI's
economy. The CNMI also has admitted tourists under its own entry permit
and entry permit waiver programs and has provided various types of
admission to foreign investors. As we have reported previously, the
CNMI faces serious economic challenges, including the decline of
garment manufacturing and fluctuations in tourism.[Footnote 3]
The recent immigration legislation amends the U.S.-CNMI Covenant to
establish federal control of CNMI immigration and includes several
provisions affecting foreign workers and investors in the CNMI during a
transition period that ends in 2014. The Secretary of Homeland Security
decided to delay the start of the transition period for 180 days, from
June 1, 2009, to November 28, 2009, as allowed under the law in
consultation with the Secretaries of the Interior, Labor, and State,
the Attorney General, and the CNMI Governor.[Footnote 4] Unless
otherwise noted, "transition period" refers to the period beginning
November 28, 2009, and ending on December 31, 2014. During the
transition period, the Secretary of Homeland Security, in consultation
with the Secretaries of the Interior, Labor, and State, as well as the
Attorney General, are responsible for establishing, administering, and
enforcing a transition program to regulate immigration in the CNMI.
[Footnote 5] This program will provide foreign workers temporary
permits to work in the CNMI (CNMI-only work permits); the number of
these permits must be reduced to zero by the end of the transition
period or the end of any extensions of the CNMI-only work permit
program. The legislation also establishes a joint visa waiver program
by adding the CNMI to an existing visa waiver program for Guam
visitors. The legislation's stated intent is to ensure effective border
control procedures and protect national and homeland security, while
minimizing the potential adverse economic and fiscal effects of phasing
out the CNMI's own foreign worker permit program and while maximizing
the CNMI's potential for economic and business growth. (See attachment
I for a summary of the legislation's provisions with regard to foreign
workers, tourists, and investors in the CNMI.)
My remarks today will summarize findings from our report, issued in
August 2008, examining factors that will affect the potential impact of
the legislation's implementation on the CNMI's labor market,
particularly foreign workers; on its tourism sector; and on foreign
investment in the CNMI.[Footnote 6] Our report also included
recommendations to the heads of the agencies responsible for
implementing the legislation. We conducted the performance audit for
our August 2008 report from June 2007 to August 2008 in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.[Footnote 7]
Summary:
The potential impact of the legislation's implementation on the CNMI's
labor market, and therefore on its economy, will largely depend on
decisions that the U.S. Departments of Homeland Security (DHS) and
Labor (DOL) make in implementing the CNMI-only work permit program. DHS
will decide on the number of permits to allocate each year, the
distribution of the permits, their terms and conditions, and the permit
fees; DOL will decide whether and when to extend the CNMI-only permit
program past 2014. The interaction of the rate and timing with which
DHS reduces the available number of permits and the timing of any DOL
extensions of the program will significantly impact the availability of
foreign workers; however, we reported in August 2008 that federal
agencies had not yet identified an interagency process to coordinate
these decisions. Although modest reductions in CNMI-only permits for
foreign workers would cause minimal impact, any substantial and rapid
decline in the availability of CNMI-only work permits would have a
negative effect on the economy, given foreign workers' prominence in
key CNMI industries. However, because key federal sources of labor
market data do not cover the CNMI, the agencies may have difficulty
obtaining the data needed to make decisions. At the same time, the
decline in the garment industry, challenges to the tourism industry,
and the scheduled increases in the minimum wage may reduce demand for
foreign workers, lessening any potential adverse impact of the
legislation on the CNMI's economy.
Any impact of the legislation on the CNMI's tourism sector will depend
largely on DHS decisions about the countries to be included in the
joint CNMI-Guam visa waiver program. The legislation's impact will be
minimal for tourists from countries included in the joint visa waiver
program. However, increases in costs and time associated with obtaining
visitor visas, likely for countries not included in the joint program,
could influence tourists from those countries to choose destinations
other than the CNMI. At present, most CNMI tourists are from Japan and
South Korea, both of which will probably be included in the joint visa
waiver program because they currently are included in the Guam visa
waiver program. China and Russia are currently not included in the Guam
visa waiver program and are excluded under a DHS interim final rule for
the joint visa waiver program; they are therefore most likely to be
affected by the legislation. They account, respectively, for about 10
percent and less than 1 percent of CNMI tourist arrivals but are
nevertheless considered important markets. If China and Russia are not
included in the joint visa waiver program, tourists from these
countries will face increased visa fees, more time-consuming
procedures, and uncertainties related to possible visa refusal.
The legislation's potential impact on CNMI foreign investment will
depend, in part, on key DHS decisions regarding foreign investor entry
permits; however, lack of data makes it difficult to assess the likely
impact of these decisions and may hamper federal decisions. In
implementing the legislation, DHS will decide whether to grant holders
of several types of CNMI foreign investor permits "grandfathered"
status as U.S. nonimmigrant treaty investors during the transition
period. DHS also will decide how long the grandfathered status will be
valid. Although available CNMI data suggest that DHS's decision
regarding the application of grandfathered status will partly determine
the impact of the legislation, critical data--showing, for instance,
current overall foreign investment and amounts associated with each
type of permit--are not available. This lack of critical data makes it
difficult to estimate the legislation's likely impact and limits DHS's
ability to make informed decisions regarding the grandfathered status.
In our August 2008 report, we recommended that the Secretary of
Homeland Security lead other relevant federal agencies, including the
Departments of the Interior, Labor, and State, in identifying the
interagency process that they will use to coordinate their decisions--
and consult with the CNMI government as required[Footnote 8]--in
jointly implementing the legislation. We also recommended that the
Secretaries of Homeland Security and Labor jointly develop strategies
for obtaining critical data on the CNMI labor market and on CNMI
foreign investment.
Prior to our August 2008 issuance, we provided a draft of our report to
officials in DHS, DOI, DOL, and in the CNMI government for review and
comment and received written comments on the draft report from DHS and
DOI and from the CNMI government.[Footnote 9] At that time, DHS agreed
with our findings and recommendations, and DOI generally agreed with
our findings. The CNMI government raised concerns or issues about some
aspects of our report methodology and analysis and expressed concern
that the report's discussion of possible consequences to the CNMI
economy could itself harm the CNMI. We believe our methodology is a
sound approach for analyzing the potential impact of federal
implementation decisions on the CNMI economy. Moreover, we believe that
reporting the key decisions facing federal agencies and illustrating
the range of those decisions' potential impacts on the CNMI economy is
essential to effective implementation of the legislation.
Legislation's Potential Impact on CNMI Labor Market:
Decisions that DHS and DOL must make in implementing the CNMI-only work
permit program will largely determine the legislation's potential
impact on the availability of foreign workers and, as a result, on the
CNMI labor market and economy. Under the legislation, DHS is to decide
on the number of CNMI-only work permits to allocate each year, the
distribution of the permits, the terms and conditions of the permit
program, and the fee for the permit.[Footnote 10] DOL will decide
whether to extend the CNMI-only work permit program, based on the
unemployment rates of foreign workers and U.S. citizens, as well as
other CNMI-specific data.[Footnote 11] (See attachment II for a summary
of the agencies' key implementation decisions.)
* Number of permits. The number of CNMI-only work permits that will be
available each year of the initial transition period will depend on the
strategy that DHS adopts for reducing CNMI-only permits to zero. For
example, if DHS uses a linear strategy--reducing the permits by the
same number each year--the number of permits will decline by about half
by the midpoint of the initial transition period. In contrast, DHS may
apply a strategy that reduces the number of permits modestly or even
minimally by the midpoint of the initial transition period. (See
attachment III for illustrations of alternative DHS decisions regarding
the annual reduction in CNMI-only work permits.)
* Distribution of permits. The method that DHS chooses to distribute
the CNMI-only work permits will also affect employers' access to
workers, particularly if demand for the permits exceeds the supply. For
example, DHS could decide to distribute the permits through a lottery
or to distribute the permits among certain industries according to some
measure of those industries' importance to the CNMI economy.
* Terms and conditions of the permit program. The terms and conditions
that DHS sets for the CNMI-only work permit program will affect
employers' access to foreign workers. For example, any requirements
regarding workers' skill levels or qualifications could limit the pool
of available workers.
* Permit fee. The fee that DHS sets for the CNMI-only work permit may
affect access to foreign workers. If DHS sets a higher fee for the CNMI-
only permit than the annual fee of $250 that employers currently pay
for CNMI foreign worker permits, this will increase employers' costs
and reduce employers' ability or incentive to hire foreign workers.
* Extension of the permit program. A decision by the Secretary of Labor
to extend the CNMI-only work permit program past 2014 would maintain
access to the permits for up to 5 years at a time. Alternately, the
Secretary may decide not to extend the program, thus ending access to
CNMI-only work permits after 2014.
The legislation requires DHS and DOL to coordinate their implementation
of the legislation, including the CNMI-only work permit program, with
one another and with other relevant agencies. However, we reported in
August 2008 that although DOI convened an interagency meeting to
discuss coordination of the legislation's implementation, the agencies
had not yet identified the interagency process that they will use.
In addition, to minimize any potential adverse economic effects of
implementing the legislation, DHS and DOL will need to consider up-to-
date information about the CNMI labor market, such as data on the
wages, occupations, and employment status of CNMI residents and foreign
workers. However, the agencies may have difficulty in obtaining these
data because the federal sources generally used to generate such data
for the United States, including the Current Population Survey and the
Current Employment Statistics program, do not cover the CNMI.[Footnote
12]
The interaction of the rate and timing with which DHS lowers the
available number of permits with the timing of any DOL extensions of
the program will significantly affect the permits' availability. For
example, if DHS lowers the annual allocation of CNMI-only permits by
the same number each year (a linear decline) and DOL extends the
program every 2 years, the number of permits will decline less rapidly
than if DOL extends the program every 4.5 years.[Footnote 13]
Alternatively, if DHS decides not to substantially decrease the number
of CNMI-only permits until the last month of the 5-year period and DOL
extends the program every 2 years, the number of permits will never
rapidly decline, and by 2028, will not have substantially declined.
(See attachment IV for illustrations of the potential joint effects of
alternative DHS and DOL decisions regarding the CNMI-only work permit
program.)
The rate at which the availability of CNMI-only work permits for
foreign workers declines as a result of DHS's and DOL's decisions will
partly determine the legislation's impact on the CNMI labor market and,
therefore, on the CNMI's economy. Because of foreign workers'
prominence in the CNMI labor market, any substantial and rapid
reduction in the number of CNMI-only permits for foreign workers would
have a negative effect on the size of the CNMI economy. However,
federal agencies may make more modest reductions in CNMI-only permits,
resulting in minimal effects on the economy. To illustrate a range of
possible impacts on the CNMI economy given varying rates of reduction
in the number of available CNMI-only work permits, we generated
simulations that estimate the impact on the CNMI's economy. Attachment
V presents the results of these simulations, based on several of the
scenarios shown in attachment IV.[Footnote 14]
Although U.S. agencies' implementation of the legislation may reduce
the availability of foreign workers, possible lower demand for these
workers may lessen the economic impact of any such reduction. The
decline of the garment industry and challenges to the tourism industry
have contributed to a drop in the number of foreign workers in the
CNMI;[Footnote 15] since the elimination of textile quotas in 2005, all
garment factories in the CNMI have closed, with the last factory closed
as of February 2009. In addition, the tourism sector has faced
challenges as visitor arrivals have declined from historic levels. Any
further declines in these sectors would likely result in reduced demand
for foreign workers. Moreover, ongoing scheduled increases in the
CNMI's minimum wage are likely to further reduce the demand for foreign
workers.[Footnote 16]
The CNMI has begun efforts to prepare CNMI residents to replace foreign
workers, which, if successful, could lessen any impact of the
legislation's implementation on access to foreign workers. In addition,
the federal legislation requires the U.S. government to provide funding
for vocational education, as well as technical assistance, to the CNMI.
[Footnote 17] Although it is too early to assess the CNMI's efforts to
replace foreign workers with CNMI residents, a number of factors may
limit the effectiveness of these efforts. For instance, according to
CNMI government representatives, some CNMI residents are leaving the
CNMI for opportunities in the United States. Moreover, the number of
nonworking residents who might accept a job is less than the total
number of foreign workers.
Legislation's Potential Impact on CNMI Tourism Sector:
Any impact of the legislation on the CNMI's tourism sector will depend
largely on federal regulations specifying the countries to be included
in the joint CNMI-Guam visa waiver program.[Footnote 18] DHS, in
consultation with the Department of State, DOI, and the Governors of
the CNMI and Guam, will decide on the countries to be included in the
joint CNMI-Guam visa waiver program.[Footnote 19] We reported in August
2008 that because both Japan and South Korea were part of the Guam visa
waiver program, they will likely be included in the joint CNMI-Guam
program. Currently, approximately 80 percent of tourists visiting the
CNMI come from Japan (55 percent) and South Korea (25 percent). We also
reported that a key DHS decision would be whether to include China and
Russia, which are not part of the existing Guam visa waiver program, in
the joint CNMI-Guam visa waiver program. Tourists from China and Russia
account for a smaller proportion of the overall CNMI tourist arrivals-
-approximately 10 percent and less than 1 percent of CNMI tourist
arrivals, respectively. However, according to representatives of the
CNMI tourism sector, China and Russia are considered important markets
because of their recent and potential future growth. On January 16,
2009, DHS issued an interim final rule for the CNMI-Guam joint visa
waiver program that includes Japan and South Korea and excludes Russia
and China, citing political, security, and law enforcement concerns,
including high nonimmigrant visa refusal rates. DHS has not yet issued
a final rule.[Footnote 20]
For tourists from countries not included in the joint CNMI-Guam visa
waiver program, the legislation will likely increase the costs and time
associated with obtaining visitor visas. For example, if China is not
included in the program, visa fees could add close to 20 percent to
tour package costs for Chinese tourists, and in-person visa interviews
will impose additional inconvenience and cost. To the extent that
increased costs and time in obtaining a visa may influence tourists to
choose destinations other than the CNMI, the legislation could have a
negative impact on CNMI tourism. However, the likely impact on the CNMI
of sharing the joint program with Guam is unclear.
Legislation's Potential Impact on CNMI Foreign Investment:
The impact of the legislation on CNMI foreign investment will depend,
in part, on DHS decisions regarding foreign investor entry permits. In
implementing the legislation, DHS will make two key decisions that will
affect foreign investors' access to the CNMI (see attachment II).
First, DHS will determine which current CNMI foreign investors will
receive the grandfathered CNMI-only U.S. treaty investor status during
the transition period. In particular, DHS will determine whether the
grandfathered status applies only to investors holding the CNMI
perpetual foreign investor entry permit or also to investors holding
the CNMI long-term business entry permit.[Footnote 21] Second, DHS will
determine the validity period of the grandfathered treaty investor
status and decide whether to extend it past the initial transition
period.[Footnote 22]
If DHS restricts the grandfathering of foreign investors to perpetual
foreign investor entry permit holders, available CNMI data suggest that
a small number of investors will qualify for grandfathering under the
new legislation. However, if DHS extends the grandfathering provision
to long-term business entry permit holders, many more investors will
qualify.
CNMI data show that of 562 long-term business and perpetual foreign
investor entry permits active and valid in July 2008, perpetual foreign
investor entry permits accounted for about 10 percent (56 permits) and
were associated with 30 businesses, and long-term business entry
permits accounted for 90 percent (506) and were associated with 448
businesses.
A lack of key data on foreign investment in the CNMI makes it difficult
to determine any economic impact of this and other implementation
decisions and limits DHS's ability to make informed decisions regarding
the grandfathering of foreign investors. Neither the CNMI government
nor the federal government has complete data on the overall level of
foreign investment in the CNMI, which are needed as a baseline for
assessing the impact of key agency decisions on foreign investment.
[Footnote 23] In addition, the CNMI government lacks readily accessible
and compiled data on the sizes and types of permit holders'
investments, which DHS needs to determine the relative importance of
each type of entry permit and the likely impact of possible
implementation decisions. Also unavailable are data showing the extent
to which foreign investors' decisions are currently affected by their
access to particular entry permits.
Concluding Remarks and Prior Recommendations:
Given the serious challenges already facing the CNMI economy, it is
critical that federal agencies implement the legislation in ways that
minimize potential adverse effects to the CNMI economy and maximize the
CNMI's potential for economic and business growth, following the
legislation's stated intent. Because the interaction of key federal
decisions involving different departments will have a significant
impact on the CNMI economy, coordination of these decisions is critical
and necessitates an established interagency process, which did not
exist as of our August 2008 report. In addition, developing strategies
for obtaining critical data that are unavailable on the CNMI labor
market and foreign investment is essential to federal agencies' ability
to make appropriate and effective decisions in implementing the
legislation and fulfilling its goals.
Because of the importance of federal agencies' key implementation
decisions and the interaction of those decisions, our August 2008
report recommended that the Secretary of Homeland Security lead other
relevant federal agencies, including the Departments of the Interior,
Labor, and State, in identifying the interagency process that will be
used to collaborate with one another--and consult with the CNMI
government, as required--to jointly implement the legislation.
In addition, because current data gaps limit federal agencies' ability
to make key implementation decisions to best meet the goals of the
legislation, we recommended that the Secretary of Homeland Security and
the Secretary of Labor:
* develop a strategy for obtaining critical data on the CNMI labor
market that are not currently available on an ongoing basis, such as
data on the wages, occupations, and employment status of CNMI residents
and foreign workers; and:
* develop a strategy for obtaining critical data on CNMI foreign
investment, such as overall levels of foreign investment and the
investment amounts associated with various types of foreign investor
entry permits.
DHS agreed with our recommendations in its written comments, and DOL
had no comments.
Madame Chairwoman, this completes my prepared statement. I would be
happy to respond to any questions you or other Members of the
Subcommittee may have at this time.
[End of section]
Attachment I: Federal Immigration Legislation's Provisions for Foreign
Workers, Tourists, and Foreign Investors in the Commonwealth of the
Northern Mariana Islands (CNMI):
Figure: Illustration of timeline:
[Refer to PDF for image]
Enactment of legislation: May 8, 2008;
Transition period start date November 28, 2009;
End of initial transition period: 2014.
Foreign workers:
CNMI-only work permit program: May be extended indefinitely for up to 5
years at a time by the U.S. Secretary of Labor.
Exemptions from certain visa caps for nonimmigrant workers: Begins with
transition period start date and ends December 31, 2014, under P.L. 110-
229, enacted May 8, 2008.
Option to apply for nonimmigrant worker visas generally available under
U.S. law: Begins with transition period start date and continues
permanently.
Option to apply for employment-based permanent immigration status
generally available under U.S. law: Begins with transition period start
date and continues permanently.
Tourists:
Joint CNMI-Guam visa waiver program: Begins with transition period
start date and continues permanently.
Option to apply for U.S. visitor visas for business or pleasure
generally available under U.S. law: Begins with transition period start
date and continues permanently.
Foreign investors:
Option for current CNMI foreign investors to convert to U.S. CNMI-only
nonimmigrant treaty investors: Begins with transition period start date
and ends December 31, 2014, under P.L. 110-229, enacted May 8, 2008.
Option to apply for nonimmigrant treaty investor status generally
available under U.S. law: Begins with transition period start date and
continues permanently.
Option to apply for U.S. immigrant foreign investor status generally
available under U.S. law: Begins with transition period start date and
continues permanently.
Source: GAO analysis of P.L. 110-229 and current U.S. immigration law.
[End of section]
Attachment II: Key Federal Implementation Decisions Related to CNMI
Foreign Workers, Tourism, and Foreign Investors:
Key federal implementation decisions related to CNMI foreign workers:
Key federal implementation decisions: Secretary of Homeland Security;
* Determine the number of permits to provide under the CNMI-only work
permit program;
* Determine the way the permits are distributed;
* Determine the terms and conditions for the permits;
Legislative requirements and authorizations:
Reduce annual allocation of CNMI-only permits to zero by the end of the
transition period or any extensions of the CNMI-only permit program;
Attempt to promote the maximum use of U.S. citizens and, if needed,
lawful permanent residents and citizens of the Freely Associated
States, and to prevent adverse effects on the wages and working
conditions of those workers.
Key federal implementation decisions: Secretary of Homeland Security;
* Determine fees to charge employers and workers for CNMI-only work
permits;
Legislative requirements and authorizations:
Set fees for the permits so as to recover the full cost of providing
services, including administrative costs; Charge employers an annual
supplemental fee of $150 per permit to fund CNMI vocational education.
Key federal implementation decisions: Secretary of Labor;
Decide whether and when to extend the CNMI-only permit program past
2014 (indefinitely, for up to 5 years at a time);
Legislative requirements and authorizations:
Base decision on the labor needs of legitimate businesses in the CNMI;
May consider (1) workforce studies on the need for foreign workers, (2)
the unemployment rate of U.S. citizen workers in the CNMI, and (3) the
number of unemployed foreign workers in the CNMI, as well as other
information related to foreign worker trends; Consult with DHS, DOI,
Department of Defense, and the Governor of the CNMI.
Key federal implementation decisions related to CNMI tourism:
Key federal implementation decisions: Secretary of Homeland Security;
Determine countries to include in the CNMI-Guam visa waiver program, in
consultation with the Department of State, DOI, and the Governors of
the CNMI and Guam;
Legislative requirements and authorizations:
Shall include any country from which the CNMI has received a
significant economic benefit from the number of visitors for pleasure
for the prior year, unless the country's inclusion would pose a
security threat; Governors of the CNMI and Guam may petition to have
countries added.
Key federal implementation decisions related to CNMI foreign investors:
Key federal implementation decisions: Secretary of Homeland Security;
Determine which current CNMI foreign investors will be "grandfathered"
as U.S. E-2 treaty investors when the transition period begins;
Legislative requirements and authorizations:
May provide grandfathered status to those who were admitted to the CNMI
in long-term investor status under CNMI immigration laws before the
transition program start date, who maintain the investment(s) that
formed the basis for such status, and who meet other requirements.
Key federal implementation decisions: Secretary of Homeland Security;
Decide the validity period for the grandfathered treaty investor
status;
Legislative requirements and authorizations: [Empty].
Source: GAO analysis of P.L. 110-229, Consolidated Natural Resources
Act of 2008, May 8, 2008.
Notes: During the transition period, the Secretary of Homeland
Security, in consultation with the Secretaries of the Interior, Labor,
and State, and the Attorney General, has the responsibility to
establish, administer, and enforce a transition program to regulate
immigration in the CNMI.
On January 16, 2009, DHS issued an interim final rule for the CNMI-Guam
joint visa waiver program. DHS has not yet issued a final rule.
The legislation does not clearly define what constitutes a "significant
economic benefit."
[End of table]
[End of section]
Attachment III: Illustrations of Alternative Department of Homeland
Security Decisions Regarding Annual Reductions in CNMI-Only Work
Permits for Foreign Workers (3 lines graphs):
Linear: Reduces the permits at a constant rate to zero:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 17,751;
December 2010: 14,201;
December 2011: 10,651;
December 2012: 7,100;
December 2013: 3,550;
December 2014: 0.
Increasing rate: Increases the rate of reduction over the period to
zero:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,540;
December 2010: 18,056;
December 2011: 15,301;
December 2012: 11,273;
December 2013: 5,974;
December 2014: 0.
Last Month: Slight decline until sharp drop in last month to zero:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,684;
December 2010: 19,449;
December 2011: 19,217;
December 2012: 18,988;
December 2013: 18,761;
December 2014: 0.
Source: GAO analysis of CNMI Labor and Immigration Identification and
Documentation System (LIIDS) data.
Notes: Figures show numbers of CNMI-only work permits for foreign
workers after the beginning of the transition period, assuming that the
transition period begins on June 1, 2009, and that the number of
available CNMI-only work permits never increases. Our analysis does not
address the duration of the permits' validity, which DHS will
determine. Although our analysis assumed that the transition period
begins on June 1, 2009, the delay of the start date to November 28,
2009, does not affect the general findings of our analysis.
For the number of foreign workers before and at the beginning of the
transition period, we relied on CNMI Labor and Immigration
Identification and Documentation System (LIIDS) data showing 19,823
706K foreign worker permits active as of December 31, 2007; commenting
on a draft of our August 2008 report, the CNMI government stated that
the number of 706K permits as of June 30, 2008, was 18,942.
In this analysis, foreign workers shown after the beginning of the
transition period on June 1, 2009, are those with CNMI-only work
permits; this analysis does not include any foreign workers allowed to
remain in the CNMI without a CNMI-only work permit. The legislation
specifies that foreign workers legally present in the CNMI as of the
transition program effective date, but who do not obtain U.S.
immigration status, may continue residing and working in the CNMI for a
limited time--2 years after the effective date of the transition
program or when the CNMI-issued permit expires, whichever is earlier.
[End of section]
Attachment IV: Illustrations of Potential Department of Homeland
Security and Department of Labor Decisions' Joint Effects on Access to
CNMI-Only Work Permits for Foreign Workers:
Nine line graphs indicating:
Department of Homeland Security decisions about the rate of reduction
of CNMI-only permits in three manners: Linear; Increasing rate; and
last Month.
Plotted against:
Department of Labor decisions about whether and when to extend CNMI-
only permit program: in three timeframes: Every 2 years; Every 4.5
years; and, No extension.
Linear Rate: Department of Labor decisions about whether and when to
extend CNMI-only permit program: Every 2 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 17,751;
December 2010: 14,201;
December 2011: 11,393;
December 2012: 9,114;
December 2013: 7,311;
December 2014: 5,849;
December 2015: 4,679;
December 2016: 3,509;
December 2017: 2,807;
December 2018: 2,105;
December 2019: 1,684;
December 2020: 1,263;
December 2021: 1,010;
December 2022: 758;
December 2023: 606;
December 2024: 454;
December 2025: 363;
December 2026: 272;
December 2027: 218;
December 2028: 163.
Linear Rate: Department of Labor decisions about whether and when to
extend CNMI-only permit program: Every 4.5 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 18,047;
December 2010: 14,793;
December 2011: 11,242;
December 2012: 7,692;
December 2013: 4,142;
December 2014: 3,214;
December 2015: 2,583;
December 2016: 1,963;
December 2017: 1,343;
December 2018: 723;
December 2019: 289;
December 2020: 227;
December 2021: 165;
December 2022: 41;
December 2023: 25;
December 2024: 19;
December 2025: 13;
December 2026: 7;
December 2027: 2;
December 2027: 1.
Linear Rate: Department of Labor decisions about whether and when to
extend CNMI-only permit program: No extension: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 17,751;
December 2010: 14,201;
December 2011: 10,651;
December 2012: 7,100;
December 2013: 3,550;
December 2014: 1;
December 2015: 1;
December 2016: 1;
December 2017: 1;
December 2018: 1;
December 2019: 1;
December 2020: 1;
December 2021: 1;
December 2022: 1;
December 2023: 1;
December 2024: 1;
December 2025: 1;
December 2026: 1;
December 2027: 1;
December 2028: 1.
Increasing Rate: Department of Labor decisions about whether and when
to extend CNMI-only permit program: Every 2 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,606;
December 2010: 18,228;
December 2011: 17,090;
December 2012: 15,889;
December 2013: 14,897;
December 2014: 13,851;
December 2015: 13,296;
December 2016: 11,634;
December 2017: 11,169;
December 2018: 9,773;
December 2019: 9,382;
December 2020: 8,209;
December 2021: 7,881;
December 2022: 6,896;
December 2023: 6,620;
December 2024: 5,792;
December 2025: 5,560;
December 2026: 4,865;
December 2027: 4,671;
December 2028: 4,087.
Increasing Rate: Department of Labor decisions about whether and when
to extend CNMI-only permit program: Every 4.5 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,606;
December 2010: 18,228;
December 2011: 15,579;
December 2012: 11,658;
December 2013: 6,944;
December 2014: 6,684;
December 2015: 6,417;
December 2016: 5,615;
December 2017: 4,278;
December 2018: 2,406;
December 2019: 1,257;
December 2020: 1,155;
December 2021: 952;
December 2022: 647;
December 2023: 241;
December 2024: 231;
December 2025: 202;
December 2026: 154;
December 2027: 86;
December 2028: 45.
Increasing Rate: Department of Labor decisions about whether and when
to extend CNMI-only permit program: No extension: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,664;
December 2009: 18,392;
December 2010: 15,848;
December 2011: 12,033;
December 2012: 6,946;
December 2013: 587;
December 2014: 1;
December 2015: 1;
December 2016: 1;
December 2017: 1;
December 2018: 1;
December 2019: 1;
December 2020: 1;
December 2021: 1;
December 2022: 1;
December 2023: 1;
December 2024: 1;
December 2025: 1;
December 2026: 1;
December 2027: 1;
December 2028: 1.
Last Month: Department of Labor decisions about whether and when to
extend CNMI-only permit program: Every 2 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,684;
December 2010: 19,449;
December 2011: 19,217;
December 2012: 18,988;
December 2013: 18,761;
December 2014: 18,537;
December 2015: 18,316;
December 2016: 18,097;
December 2017: 17,881;
December 2018: 17,668;
December 2019: 17,457;
December 2020: 17,249;
December 2021: 17,043;
December 2022: 16,840;
December 2023: 16,639;
December 2024: 16,440;
December 2025: 16,050;
December 2026: 15,858;
December 2027: 15,669;
December 2028: 15,669.
Last Month: Department of Labor decisions about whether and when to
extend CNMI-only permit program: Every 4.5 years: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,684;
December 2010: 19,449;
December 2011: 19,217;
December 2012: 18,988;
December 2013: 18,761;
December 2014: 18,537;
December 2015: 18,298;
December 2016: 18,079;
December 2017: 17,864;
December 2018: 17,650;
December 2019: 17,440;
December 2020: 17,232;
December 2021: 17,026;
December 2022: 16,823;
December 2023: 16,622;
December 2024: 16,424;
December 2025: 16,228;
December 2026: 16,034;
December 2027: 15,843;
December 2028: 15,669.
Last Month: Department of Labor decisions about whether and when to
extend CNMI-only permit program: No extension: (Number of foreign
workers)
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,684;
December 2010: 19,449;
December 2011: 19,236;
December 2012: 19,007;
December 2013: 18,780;
December 2014: 18,556;
December 2015: 1;
December 2016: 1;
December 2017: 1;
December 2018: 1;
December 2019: 1;
December 2020: 1;
December 2021: 1;
December 2022: 1;
December 2023: 1;
December 2024: 1;
December 2025: 1;
December 2026: 1;
December 2027: 1;
December 2028: 1.
Notes: The thin lines represent DOL's decision to extend the CNMI-only
permit program every 2 years, the heavy gray lines represent DOL's
decision to extend the program every 4.5 years, and the heavy black
lines represent DOL's decision not to extend the program. We selected
the frequency of DOL extensions to be 4.5 years in order to reflect an
extension just before permits would have been reduced to zero at the
end of the 5-year period.
Figures show numbers of CNMI-only work permits, based on the
assumptions that the transition period begins on June 1, 2009, and the
number of permits never increases. Our analysis does not address the
length of the permits' validity. Although our analysis assumed that the
transition period begins on June 1, 2009, the delay of the start date
to November 28, 2009, does not affect the general findings of our
analysis.
For the number of foreign workers before and at the beginning of the
transition period, we relied on CNMI LIIDS data showing 19,823 706K
foreign worker permits active as of December 31, 2007; commenting on a
draft of our August 2008 report, the CNMI government stated that the
number of 706K permits as of June 30, 2008, was 18,942.
In this analysis, foreign workers shown after the beginning of the
transition period on June 1, 2009, are those with CNMI-only work
permits; this analysis does not include any foreign workers allowed to
remain in the CNMI without a CNMI-only work permit. The legislation
specifies that foreign workers legally present in the CNMI as of the
transition program effective date, but who do not obtain U.S.
immigration status, may continue residing and working in the CNMI for a
limited time--2 years after the effective date of the transition
program or when the CNMI-issued permit expires, whichever is earlier.
Although DOL may extend the program for 5 years or less at a time, our
analysis assumes a 5-year duration for any extensions occurring after
the transition period. Our analysis also assumes that if the program is
extended after the end of the initial transition period, the timing for
frequency of extensions will begin in January 2015.
The figures extend through 2028 to show the year in which CNMI-only
work permits approach zero for the majority of the joint decisions.
[End of section]
Attachment V: Examples of Scenarios Illustrating U.S. Agency Decisions'
Potential Joint Impact on Access to CNMI-Only Work Permits for Foreign
Workers and CNMI Gross Domestic Product:
As the scenarios in the figure below demonstrate, a greater decline in
permits for foreign workers leads to a larger drop in gross domestic
product (GDP), as well as a greater range of possible effects across
the simulations.
* Scenario 1 shows that a steep decline in CNMI-only permits for
foreign workers, from about 20,000 to about 1,000 by 2021[Footnote 24]-
-caused by a linear reduction in the number of CNMI-only work permits
and a renewal of the permit program every 2 years--would lower the
CNMI's GDP to a range of about 21 percent to 73 percent of its current
value by 2021.
* Scenario 2 shows that a less precipitous decline in CNMI-only permits
for foreign workers, from about 20,000 to about 8,000 by 2021--caused
by an increasing reduction in the number of CNMI-only work permits and
a renewal of the permit program every 2 years (before the years with
the steepest decline in foreign workers)--would lower the CNMI's GDP to
a range of about 64 percent to 85 percent of its current value by 2021.
* Scenario 3 shows that a much smaller decline in CNMI-only permits for
foreign workers, from about 20,000 to about 17,000 by 2021--caused by a
rapid reduction in the number of CNMI-only permits in the last month of
the program and a renewal of the permit program every 2 years (before
the month when the greatest reduction in permits occurs)--would lower
the CNMI's GDP to a range of about 98 percent to no less than about 92
percent of its current value by 2021.
Figure: Department of Labor decision to extend CNMI-only permit program
every two years:
[Refer to PDF for image: Six line graphs]
Plotting:
Department of Homeland Security decisions about the rate of reduction
of CNMI-only permits (Linear, Increasing rate, and Last month):
Against:
Department of Labor decision to extend CNMI-only permit program every
two years. Each of three scenarios depicts number of foreign workers
and GDP index. The GDP index is depicted as representing: 1) bounds of
the maximum value; 2) 25th to 75% percentile of results; and 3) bounds
of the minimum value.
Over a timeframe of December 2007 through December 2021.
Department of Labor decision to extend CNMI-only permit program every
two years: Scenario 1:
Department of Homeland Security decisions about the rate of reduction of
CNMI-only permits, Linear:
Foreign workers:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 17,752;
December 2010: 14,201;
December 2011: 11,393;
December 2012: 9,114;
December 2013: 7,311;
December 2014: 5,849;
December 2015: 4,679;
December 2016: 3,509;
December 2017: 2,807;
December 2018: 2,105;
December 2019: 1,684;
December 2020: 1,263;
December 2021: 1,010;
GDP Index:
December 2007:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2008:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2009:
Bounds of the minimum value: 94-96%;
25th to 75th percentile of results: 96-97%;
Bound of the maximum value: 97-98%.
December 2010:
Bounds of the minimum value: 84-88%;
25th to 75th percentile of results: 88-91%;
Bound of the maximum value: 91-95%.
December 2011:
Bounds of the minimum value: 75-82%;
25th to 75th percentile of results: 82-86%;
Bound of the maximum value: 86-91%.
December 2012:
Bounds of the minimum value: 68-75%;
25th to 75th percentile of results: 75-81%;
Bound of the maximum value: 81-87%.
December 2013:
Bounds of the minimum value: 61-69%;
25th to 75th percentile of results: 69-76%;
Bound of the maximum value: 76-83%.
December 2014:
Bounds of the minimum value: 55-64%;
25th to 75th percentile of results: 64-72%;
Bound of the maximum value: 72-80%.
December 2015:
Bounds of the minimum value: 50-60%;
25th to 75th percentile of results: 60-69%;
Bound of the maximum value: 69-79%.
December 2016:
Bounds of the minimum value: 43-55%;
25th to 75th percentile of results: 55-65%;
Bound of the maximum value: 65-77%.
December 2017:
Bounds of the minimum value: 38-51%;
25th to 75th percentile of results: 51-62%;
Bound of the maximum value: 62-76%.
December 2018:
Bounds of the minimum value: 33-48%;
25th to 75th percentile of results: 48-59%;
Bound of the maximum value: 59-74%.
December 2019:
Bounds of the minimum value: 29-44%;
25th to 75th percentile of results: 44-57%;
Bound of the maximum value: 57-74%.
December 2020:
Bounds of the minimum value: 25-41%;
25th to 75th percentile of results: 41-54%;
Bound of the maximum value: 54-73%.
December 2021:
Bounds of the minimum value: 22-38%;
25th to 75th percentile of results: 38-52%;
Bound of the maximum value: 52-72%.
Department of Labor decision to extend CNMI-only permit program every
two years: Scenario 2:
Department of Homeland Security decisions about the rate of reduction
of CNMI-only permits, Increasing rate:
Foreign workers:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,606;
December 2010: 18,228;
December 2011: 17,090;
December 2012: 15,889;
December 2013: 14,897;
December 2014: 13,851;
December 2015: 13,296;
December 2016: 11,634;
December 2017: 11,169;
December 2018: 9,773;
December 2019: 9,382;
December 2020: 8,209;
December 2021: 7,881;
GDP Index:
December 2007:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2008:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2009:
Bounds of the minimum value: 99.4-99.6%;
25th to 75th percentile of results: 99.6-99.7%;
Bound of the maximum value: 99.7-99.8%.
December 2010:
Bounds of the minimum value: 95.6-96.8%;
25th to 75th percentile of results: 96.8-97.7%;
Bound of the maximum value: 97.7-98.7%.
December 2011:
Bounds of the minimum value: 92.5-94.5%;
25th to 75th percentile of results: 94.5-95.9%;
Bound of the maximum value: 95.9-97.6%.
December 2012:
Bounds of the minimum value: 89.1-92%;
25th to 75th percentile of results: 92-94%;
Bound of the maximum value: 94.9-96.4%.
December 2013:
Bounds of the minimum value: 86.3-89.8%;
25th to 75th percentile of results: 89.8-92.3%;
Bound of the maximum value: 92.3-95.4%.
December 2014:
Bounds of the minimum value: 83.3-87.5%;
25th to 75th percentile of results: 87.5-90.5%;
Bound of the maximum value: 90.5-94.2%.
December 2015:
Bounds of the minimum value: 81.6-86.2%;
25th to 75th percentile of results: 86.2-89.5%;
Bound of the maximum value: 89.5-93.5%.
December 2016:
Bounds of the minimum value: 75.6-82.1%;
25th to 75th percentile of results: 82.1-86.4%;
Bound of the maximum value: 86.4-91.2%.
December 2017:
Bounds of the minimum value:75.1-80.9%;
25th to 75th percentile of results: 80.9-85.4%;
Bound of the maximum value: 85.4-90.5%.
December 2018:
Bounds of the minimum value: 70.7-77.2%;
25th to 75th percentile of results: 77.2-82.6%;
Bound of the maximum value: 82.6-88.2%.
December 2019:
Bounds of the minimum value: 69.4-76.1%;
25th to 75th percentile of results: 76.1-81.7%;
Bound of the maximum value: 81.7-87.5%.
December 2020:
Bounds of the minimum value: 65.5-72.7%;
25th to 75th percentile of results: 72.7-78.0%;
Bound of the maximum value: 78.0-85.2%.
December 2021:
Bounds of the minimum value: 64.3-71.7%;
25th to 75th percentile of results: 71.7-78.2%;
Bound of the maximum value: 78.2-84.6%.
Department of Labor decision to extend CNMI-only permit program every
two years: Scenario 3:
Department of Homeland Security decisions about the rate of reduction
of CNMI-only permits, Last month:
Foreign workers:
December 2007: 19,823;
December 2008: 19,823;
December 2009: 19,684;
December 2010: 19,449;
December 2011: 19,217;
December 2012: 18,988;
December 2013: 18,761;
December 2014: 18,537;
December 2015: 18,316;
December 2016: 18,097;
December 2017: 17,881;
December 2018: 17,668;
December 2019: 17,457;
December 2020: 17,249;
December 2021: 17,043;
GDP Index:
December 2007:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2008:
Bounds of the minimum value: 100%;
25th to 75th percentile of results: 100%;
Bound of the maximum value: 100%.
December 2009:
Bounds of the minimum value: 99.6-99.7%;
25th to 75th percentile of results: 99.7-99.8%;
Bound of the maximum value: 99.8-99.9%.
December 2010:
Bounds of the minimum value: 98.9-99.3%;
25th to 75th percentile of results: 99.3-99.5%;
Bound of the maximum value: 99.5-97.7%.
December 2011:
Bounds of the minimum value: 98.3-98.8%;
25th to 75th percentile of results: 98.8-99.1%;
Bound of the maximum value: 99.1-99.5%.
December 2012:
Bounds of the minimum value: 97.6-98.4%;
25th to 75th percentile of results: 98.4-98.8%;
Bound of the maximum value: 98.8-99.3%.
December 2013:
Bounds of the minimum value: 97.0-97.9%;
25th to 75th percentile of results: 97.9-98.5%;
Bound of the maximum value: 98.5-99.1%.
December 2014:
Bounds of the minimum value: 96.4-97.5%;
25th to 75th percentile of results: 97.5-98.1%;
Bound of the maximum value: 98.1-98.9%.
December 2015:
Bounds of the minimum value: 95.7-97.0%;
25th to 75th percentile of results: 97.0-97.8%;
Bound of the maximum value: 97.8-98.7%.
December 2016:
Bounds of the minimum value: 955.1-96.6%;
25th to 75th percentile of results: 96.6-97.5%;
Bound of the maximum value: 97.5-98.5%.
December 2017:
Bounds of the minimum value:94.5-96.2%;
25th to 75th percentile of results: 96.2-97.2%;
Bound of the maximum value: 97.2-98.4%.
December 2018:
Bounds of the minimum value: 93.9-95.7%;
25th to 75th percentile of results: 95.7-96.8%;
Bound of the maximum value: 96.8-98.2%.
December 2019:
Bounds of the minimum value: 93.3-95.3%;
25th to 75th percentile of results: 95.3-96.5%;
Bound of the maximum value: 96.5-97.9%.
December 2020:
Bounds of the minimum value: 92.7-94.9%;
25th to 75th percentile of results: 94.9-96.2%;
Bound of the maximum value: 96.2-97.8%.
December 2021:
Bounds of the minimum value: 92.1-94.5%;
25th to 75th percentile of results: 94.5-95.9%;
Bound of the maximum value: 95.9-97.6%.
Notes: This analysis is based on some of the possible joint effects of
DHS and DOL decisions illustrated in attachment IV (A), (D), and (G).
Because this analysis does not allow for other changes in the CNMI over
the coming years, it should not be considered as predictive of future
GDP.
In the graphs on the left-hand side of each scenario, the lines
represent the reduction in the numbers of CNMI-only work permits for
foreign workers. The graphs on the right-hand side of each scenario
represent 10,000 simulations of the CNMI GDP (indexed to be 100 in
2007) under various assumptions. The darker area represents the middle
50 percent of results, specifically the 25th to 75th percentile, while
the lighter area represents the bounds of the minimum and maximum
value.
This analysis assumes that technology, capital, and the total number of
employed CNMI residents remain constant. In addition, this analysis
treats all foreign workers as being employed in full-time positions.
Further, this analysis does not reflect potential changes in demand for
foreign workers absent the legislation. Finally, this analysis does not
account for the role of foreign workers under programs other than the
CNMI-only permit program. See appendix VI of GAO-08-791 for more
details.
In this analysis, foreign workers shown after the beginning of the
transition period on June 1, 2009, are those with CNMI-only work
permits; this analysis does not include any foreign workers allowed to
remain in the CNMI without a CNMI-only work permit. The legislation
specifies that foreign workers legally present in the CNMI as of the
transition program effective date, but who do not obtain U.S.
immigration status, may continue residing and working in the CNMI for a
limited time--2 years after the effective date of the transition
program or when the CNMI-issued permit expires, whichever is earlier.
Although our analysis assumed that the transition period begins on June
1, 2009, the delay of the start date to November 28, 2009, does not
affect the general findings of our analysis.
Because of the nature of the functional form used, we could not use it
to evaluate the portion of those scenarios in which the number of CNMI-
only work permits is equal to zero.
[End of figure]
[End of section]
Attachment VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
For more information regarding this testimony, please contact David
Gootnick at (202) 512-3149 or gootnickd@gao.gov, or Tom McCool at (202)
512-2642 or mccoolt@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Emil Friberg (Assistant
Director); Mark Speight (Assistant General Counsel); Ashley Alley;
Diana Blumenfeld; Benjamin Bolitzer; Ming Chen; Keesha Egebrecht;
Marissa Jones; Reid Lowe; Mary Moutsos; and Eddie Uyekawa made key
contributions to this testimony. Technical assistance was provided by
Shirley Brothwell, Holly Dye, Etana Finkler, Michael Hoffman, Michael
Kendix, Rhiannon Patterson, Nina Pfeiffer, Diahanna Post, Jeremy
Sebest, Berel Spivack, and Seyda Wentworth.
[End of section]
Footnotes:
[1] Consolidated Natural Resources Act of 2008, Pub. L. No. 110-229,
Title VII, 122 Stat. 754, 853 (May 8, 2008).
[2] In this testimony, "foreign workers" refers to workers in the CNMI
who are not U.S. citizens or U.S. lawful permanent residents. Other
sources sometimes call these workers "nonresident workers," "guest
workers," "noncitizen workers," "alien workers," or "nonimmigrant
workers." We do not use the term to refer to workers from the Freely
Associated States--the Federated States of Micronesia, Republic of the
Marshall Islands, and Republic of Palau--who are permitted to work in
the United States, including the CNMI, under the Compacts of Free
Association (48 U.S.C. § 1901 note, 1921 note, and 1931 note).
[3] For a list of related products, see GAO, Commonwealth of the
Northern Mariana Islands: Managing Potential Economic Impact of
Applying U.S. Immigration Law Requires Coordinated Federal Decisions
and Additional Data, [hyperlink,
http://www.gao.gov/products/GAO-08-791] (Washington, D.C.: Aug. 4,
2008).
[4] The Secretary of Homeland Security announced the delay of the
transition period on March 31, 2009.
[5] The legislation requires the Secretary of Homeland Security, in
consultation with the Secretaries of the Interior, Labor, and State,
and the Attorney General, to negotiate and implement interagency
agreements to identify and assign their respective duties for timely
implementation of the transition program. The agreements must address
procedures to ensure that CNMI employers have access to adequate labor
and that tourists, students, retirees, and other visitors have access
to the CNMI without unnecessary obstacles. Some federal decisions
require consultation with the CNMI Governor. In addition, the
legislation requires the CNMI government to provide the Secretary of
Homeland Security all immigration records or other information that the
Secretary deems necessary to assist its implementation.
[6] GAO, Commonwealth of the Northern Mariana Islands: Managing
Potential Economic Impact of Applying U.S. Immigration Law Requires
Coordinated Federal Decisions and Additional Data, [hyperlink,
http://www.gao.gov/products/GAO-08-791] (Washington, D.C.: Aug. 4,
2008). This report was based on our March 2008 review of the then
pending legislation, which was signed into law on May 8, 2008. See GAO,
Commonwealth of the Northern Mariana Islands: Pending Legislation Would
Apply U.S. Immigration Law to the CNMI with a Transition Period,
[hyperlink, http://www.gao.gov/products/GAO-08-466] (Washington, D.C.:
Mar. 28, 2008).
[7] See GAO-08-791, appendix I, for a full description of our report's
scope and methodology.
[8] Decisions requiring consultation with the CNMI Governor include,
among others, whether to delay the start date of the transition period
by up to 180 days and which countries to include in the CNMI-Guam visa
waiver program.
[9] See [hyperlink, http://www.gao.gov/products/GAO-08-791] for a
fuller description of the agencies' and the CNMI's written comments and
our response; reproductions of DHS's, DOI's, and the CNMI government's
comments appear in appendixes X, XI, and XII, respectively. DHS, DOI,
and the CNMI government also provided technical comments regarding our
August 2008 report, which we incorporated in the report as appropriate.
[10] The legislation instructs DHS to reduce annual allocation of CNMI-
only permits to zero by the end of the transition period or any
extensions of the CNMI-only permit program; attempt to promote the
maximum use of U.S. citizens and, if needed, lawful permanent residents
and citizens of the Freely Associated States, and attempt to prevent
adverse effects on the wages and working conditions of those workers;
and set fees for the permits so as to recover the full cost of
providing services, including administrative costs, by charging
employers an annual supplemental fee of $150 per permit to fund CNMI
vocational education.
[11] According to the legislation, DOL may extend the program
indefinitely for up to 5 years at a time. DOL may issue the extension
as early as desired within the transition period and up to 180 days
before the end of the transition period or any extensions of the CNMI-
only permit program. The legislation instructs DOL to base its decision
on the labor needs of legitimate businesses in the CNMI. To determine
these needs, DOL may consider (1) workforce studies on the need for
foreign workers, (2) the unemployment rate of U.S. citizen workers in
the CNMI, and (3) the number of unemployed foreign workers in the CNMI,
as well as other information related to foreign worker trends. In
addition, DOL is to consult with DHS, DOI, the Department of Defense,
and the Governor of the CNMI.
[12] U.S. Department of Labor, Office of the Assistant Secretary for
Policy, Impact of Increased Minimum Wages on the Economies of American
Samoa and the Commonwealth of the Northern Mariana Islands (Washington,
D.C., 2008). DOI's Office of Insular Affairs has provided technical
assistance to the CNMI to help with data collection, including funding
for the 2005 Household, Income, and Expenditures Survey (HIES) and past
surveys of the CNMI. However, this assistance has not generated the
scope of data collected by federal sources for the United States more
generally.
[13] We selected the frequency of DOL extensions to be 4.5 years in
order to reflect an extension just before permits would have been
reduced to zero at the end of the 5-year period.
[14] Because these simulations do not allow for other changes in the
CNMI over the coming years, they should not be considered as predictive
of future GDP. Rather, these simulations are intended to illustrate a
range of potential impacts on the CNMI's GDP that could result from
some of the joint U.S. agency decisions depicted in attachment IV.
[15] From 2000 to 2005, the number of noncitizen workers, many of whom
are foreign workers, dropped from about 35,000 in 2000 to about 28,000
in 2005, and we reported in August 2008 that CNMI data showed that the
number of foreign workers had continued to fall.
[16] Until 2007, the CNMI's workforce was subject to a minimum wage set
by the CNMI government. At the beginning of 2007, the CNMI's minimum
wage was $3.05 per hour, substantially lower than the U.S. federal
minimum wage of $5.15 per hour but higher than wages for comparable
positions in China, the Philippines, Vietnam, and other Asian
countries. In 2007, Congress enacted the U.S. Troop Readiness,
Veterans' Care, Katrina Recovery, and Iraq Accountability
Appropriations Act, gradually increasing the CNMI minimum wage until it
meets federal minimum wage requirements, Pub. L. No. 110-28, § 8103,
121 Stat. 188 (May 25, 2007). The American Recovery and Reinvestment
Act of 2009 mandates that GAO issue a study in April 2010 of past and
future minimum wage increases in the CNMI and American Samoa, and in
each year thereafter, until the minimum wages in the insular areas
reach $7.25 per hour.
[17] For example, the $150 fee charged to employers obtaining a CNMI-
only work permit is to be used to fund ongoing vocational education
curricula and program development by CNMI educational entities.
Moreover, the legislation requires the Secretary of the Interior to
provide technical assistance to the CNMI to promote economic growth; to
assist employers in recruiting, training, and hiring U.S. citizens and,
if necessary, lawful permanent residents in the CNMI; and to develop
CNMI job skills as needed.
[18] The joint visa waiver program exempts tourism and business
visitors from certain countries who are traveling to the CNMI and Guam
for up to 45 days from the standard U.S. visa documentation
requirements. One stated intent of the legislation is to expand tourism
and economic development in the CNMI, including aiding prospective
tourists in gaining access to the CNMI's tourist attractions, such as
memorials, beaches, parks, and dive sites.
[19] The legislation required DHS to identify countries within 180 days
of enactment of the legislation, by November 4, 2008. The countries
shall include any country from which the CNMI has received a
significant economic benefit from the number of visitors for pleasure
for the prior year, unless the country's inclusion would pose a
security threat. Governors of the CNMI and Guam may petition to have
countries added.
[20] 74 Fed. Reg. 2824-02 (2009). The rule also states that DHS will
determine whether nationals of China and Russia can participate in the
CNMI-Guam visa waiver program after additional layered security
measures, which may include, but are not limited to, electronic travel
authorization to screen and approve potential visitors to Guam and the
CNMI, and other border security infrastructure measures.
[21] The CNMI offers a perpetual foreign investor entry permit, valid
for an indefinite period of time, to individuals who maintain certain
levels of investment in the CNMI, among other requirements. In
addition, the CNMI offers a long-term business entry permit (valid for
2 years at a time) with specified investment requirements, as well as a
regular-term business entry permit (valid for up to 90 days) with no
investment requirements. The CNMI also offers a retiree foreign
investor entry permit requiring a minimum investment in residential
property by an applicant 55 years or older; however, because the
retiree foreign investor entry permit does not require investment in a
CNMI business, we assume that investors holding this permit will not be
grandfathered.
[22] Although the status can be awarded only during the transition
period, the legislation imposes no limit on the grandfathered status's
length of validity. If and when the grandfathered status expires, and
for new CNMI foreign investors, DHS will adjudicate applications under
the regular treaty investor status and under the other immigrant or
nonimmigrant categories generally available under U.S. immigration law.
See GAO-08-466 for more information about the legislation's
requirements related to foreign investment in the CNMI.
[23] The U.S. Department of Commerce's Bureau of Economic Analysis
collects information on foreign direct investments in states and other
territories, but data for the CNMI are combined with data for other
territories such as Guam, American Samoa, and the U.S. Virgin Islands.
In addition, the 2002 Economic Census of the Northern Mariana Islands
includes information on CNMI businesses by owner citizenship status;
however, these data are incomplete.
[24] Because foreign workers comprise 60 percent of the CNMI labor
market, the decline in these workers shown in scenario 1 would reduce
total CNMI employment by almost 60 percent.
[End of section]
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