The Commonwealth of the Northern Mariana Islands benefits from substantial subsidies and development assistance from the federal government of the United States. The economy also relies heavily on tourism, especially from Japan, and the rapidly dwindling garment manufacturing sector. The tourism industry has also been dwindling since late 2005. Since late 2006, tourist arrivals fell 15.23 percent (73,000 potential visitors) from the eleven months prior.
The Northern Mariana Islands has successfully used its position as a free trade area with the U.S., while at the same time not being subject to the same labor laws. For example, the $3.05 per hour minimum wage in the Commonwealth, which lasted from 1997 to 2007, was lower than in the U.S. and some other worker protections are weaker, leading to lower production costs. That allows garments to be labeled “Made in USA” without having to comply with all U.S. labor laws. However, the U.S. minimum wage law signed by President Bush on May 25, 2007, will result in stepped increases in the Northern Marianas’ minimum wage to reach U.S. level by 2015.[10] The first step (to $3.55) became effective July 25, 2007, and a yearly increase of $0.50 will take effect every May thereafter until the CNMI minimum wage equals the nationwide minimum wage.
In the extreme, the island’s exemption from U.S. labor laws has led to many alleged exploitations including recent claims of sweatshops, child labor, child prostitution and even forced abortions.
A separate immigration system outside of federal U.S. control has resulted in a large number of Chinese migrant workers (about 15,000 during the peak years) employed in the Islands’ garment trade. However, the lifting of World Trade Organization restrictions on Chinese imports to the US has put the Commonwealth-based trade under severe pressure, leading to a number of recent factory closures. Adding to the U.S.-imposed scheduled wage increases, the garment industry is expected to become extinct by 2009.[13]
Agricultural production, primarily of tapioca, cattle, coconuts, breadfruit, tomatoes, and melons exists, but is relatively unimportant in the economy.
