Northern Mariana Islands - Economy

Economy

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. As of late 2006, tourist arrivals fell 15.23% (73,000 potential visitors) from the eleven months prior.

The Northern Mariana Islands had 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 allowed 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, resulted in stepped increases in the Northern Marianas' minimum wage, which will allow it to reach the U.S. level by 2015. 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. However, a law signed in December 2009 delayed the yearly increase from May to September. As of September 30, 2010, the minimum wage is $5.05 per hour.

In the extreme, the island's exemption from U.S. labor laws had led to many alleged exploitations including recent claims of sweatshops, child labor, child prostitution, and even forced abortions.

An immigration system mostly outside of federal U.S. control (which ended on November 28, 2009) 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 U.S. in 2005 had 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 became extinct by 2009.

Agricultural production, primarily of tapioca, cattle, coconuts, breadfruit, tomatoes, and melons, exists, but is relatively unimportant in the economy.

Non-native islanders are not allowed to own land, but can lease it.