(SNIMC) — The 17th Saipan and Northern Islands Municipal Council leadership shares with the chairwoman of the 23rd House Committee on Commerce & Tourism, Rep. Julie Ogo, an alternative approach to price control proposed in her House Bill 23-102, which would create a price council under the governor’s office.
The bill takes the Northern Mariana Islands more than 50 years to June 1973, when the nation had its historic first price control issued from the White House as President Richard M. Nixon went on national television to inform the nation of his executive order freezing prices and wages throughout the United States for 60 days, and how the CNMI followed a similar pathway 23 years later in 1996 with CNMI Public Law 10-17, finding “a serious and continuing problem with retail stores raising the prices of certain vital items during and immediately after typhoons and other similar natural disasters.”
Like Nixon’s price and wage freeze via executive order and the CNMI price freeze by statute, the two approaches have one thing in common: both are time constrained and their effect limited in their application. On the one hand, President Nixon needed time to correct the imbalance on supply and demand of commodities caused in part by diminished supply due to increased demand for U.S. products and goods abroad. The CNMI, on the other hand, empowered the governor with statutory authority to freeze commodity prices during and after natural disasters.
In 2016, the CNMI authorized another fix by statute over an attempt to control commodity pricing in Public Law 19-62, waiving the wharfage fees for shipping to Tinian and Rota on imported merchandise unloaded on Saipan. Expectedly, P.L. 19-62 resulted in lost revenues for the Commonwealth Ports Authority that year (2016) at nearly $20,000 and continued in 2017 and 2018 at $160,000 and $141,000 respectively and over $160,325 in June 2019 the total of which was nearly half a million dollars of revenues lost to CPA.
H.B. 23-102 openly admits that “[d[espite…attempts to lower…unreasonable prices…(in)…waiving inter-island wharfage fees…the average cost of commodities…continues to rise,” not a surprising revelation, because former CPA board member Barrie Toves admitted in 2016 that “the prices on Rota have still escalated despite the waiver.”
A Tinian businessman during the early implementation stages of P.L. 19-62 also complained about arbitrary pricing because “Tinian’s only inter-island shipping company has no scale to weigh items for shipment nor does it have a measurement scale or chart to verify volume.”
Earlier in the year in January, an article featured by KUAM titled, “What is the cost of doing business on Rota…and is it worth it?” reporter Thomas Manglona conducted interviews with Rota businesses, which highlighted how “shipping is definitely one of the biggest issues here” and how the status quo has become costly and labor intensive, because “we (Rota) don’t have the ideal marina setup.” The Rota businessman said the lack of one stop business licensing and permitting available in Rota, in addition to the delays in issuing licenses by Saipan are two “red flags to starting new business and just all the taxes and fees.”
This month, Rota businessman Pedro Dela Cruz lodged a complaint regarding the “sudden (unexpected) rate increase the Rota Terminal and Transfer Company imposed for stevedoring services and equipment at the Rota port will create ‘economic chaos’ on Rota.” The rate for crane is reportedly assessed at $500 per hour while the use of forklift now costs $325 per hour.
CPA Executive Director Leo Tudela reportedly shared the concerns raised by Rota businessman Pedro Dela Cruz, saying “CPA will see what it can do to address concerns regarding Rota Terminal & Transfer’s stevedoring service rates.” (A definite timetable on when CPA intends to resolve the matter was indicated).
Given the layers of issues and concerns affecting the cost of living and cost of doing business in Rota and Tinian, it begs the question as to whether House Bill 23-102 adequately addresses the unique challenges confronting the two islands on escalating commodity prices and shipping-related service costs existing businesses have been challenged with, in addition to Rota’s inability to approve and issue business licenses and construction related permits.
Is H.B. 23-102 a solution to a situation caused by escalating commodity prices and extraordinary costs for stevedoring services especially in Rota, which ultimately dampens an already struggling municipal economy coupled by the unique challenges Rota businesses complain over the lack of authority to process and issue business license or development permits, for instance?
It should be recalled what President Nixon warned 50 years ago on price control: “Let there be no mistake: If our economy is to remain dynamic, we must never slip into the temptation of imagining that in the long run, controls can substitute for a free economy or permit us to escape the need for discipline in fiscal and monetary policy. We must not let controls become a narcotic; we must not become addicted.”
In making his point, Nixon emphasized that “Congress should give the President authority to reduce tariffs in selected cases in order to increase supplies of scarce goods and thereby hold down their prices. This action will help on such scarce items…. And in particular, the tariff we now have on imported meat (for example) should be removed.”
The current pricing controversy in the CNMI is further heightened by the recent flare up over United Airlines air fare on a 30-minute hop from Saipan to Guam. A situation similar to the shipping and related costing on ocean transportation to Tinian and Rota that appear as a chokehold to Rota and Tinian residents on store shelves with commodity price fluctuations and apparent predatory pricing on shipping services, thus making H.B. 23-102 a potential remedy.
A price council proposed by H.B. 23-102, however, is far from preventing the avalanche in escalating commodity prices on store shelves, or the outrageous shipping related service cost that was envisioned when Public Law 19-62 was enacted in 2016 waiving wharfage on Tinian and Rota from Saipan which ultimately resulted in lost revenues to CPA and also emptied the pockets of Rota and Tinian residents from a host of shipping-induced charges on commodity pricing in retail stores.
The alternative remedy to the price council envisioned in HB 23-103 as the local council leadership sees it is to amend the existing statute governing the Department of Commerce’s Enforcement and Compliance Division and add to its statutory duty and responsibility the regular monitoring and enforcement not only of activities related to weights and measures, but also commodity price and service compliance with applicable regulations on prices, weights and measures standards, so as to prevent unfair and deceptive dealing by pricing, weights or measures, including the description of any commodity of service advertised, packaged, sold and/or purchase, and promote compliance on applicable or reasonable uniformity (e.g. markup versus margin pricing) on prices, weights and measures in all aspects of commerce and business requirements throughout the CNMI and those of the states and federal agencies.
The council’s proposed amendment provides a wholistic approach to commodity pricing in store shelves and shipping related service charges at the port of entry on Rota and Tinian to be under the jurisdiction and authority of the commerce department, in order to promote a seamless, coordinated and comprehensive approach. It would, in other words, enable the CNMI commerce to work hand-in-hand within the same commerce department involving the Central Statistics Division tasked by law (in Public Law 7- 35) with compiling and streamlining all statistical information for the CNMI and federal user agencies, in addition to working on the decennial census reports, economic indicator reports, consumer price index, and other surveys and censuses conducted over the years by and for the Commonwealth, and in tandem with commerce’s comprehensive economic development strategy.
Of greater relevance when it comes to pricing is the jurisdiction of the statistics division over the CNMI’s consumer price index, which the CPI deals with the average price change of fixed market baskets on certain goods and services compiled, analyzed, and regularly reported to stakeholders, including the governor, the Legislature, and federal agencies, not less the Commonwealth Ports Authority, the Commonwealth Economic Development Authority, the Northern Marianas Housing Authority, and the business community.
Per the council, the enforcement and compliance division in the local commerce should also be statutorily mandated together with the CNMI office of consumer counsel in the attorney general’s office to collaborate and work cooperatively in investigating complaints of unfair price practices and for the consumer counsel take the lead in taking appropriate actionable remedies at law or in equity, and authorized to include appropriate federal agencies, when needed or required to do so.
The office of consumer counsel is statutorily designated in Public Law 6-46, and as amended, to be within the Office of the Attorney General to coordinate preventive and remedial consumer protection programs of the Commonwealth government, and to prosecute those who violate the consumer protection laws of the Commonwealth, as the office advances the interests of consumers and the effective functioning of free enterprise market economy by educating the consumer about the choices available in the marketplace; protecting the consumer from the use of deceptive methods, acts, or practices in the sale of goods or services; fostering competition; and promoting effective representation of consumers’ interests in all branches and levels of government.
It behooves the House Commerce Committee and Tourism Committee, therefore, to assign the responsibility and task enumerated in H.B. 23-102 to the existing Department of Commerce’s enforcement and compliance division, by statutorily granting to it the additional responsibility and charge for monitoring and enforcing not only weights and measures activities it presently is assigned to, but also take on the responsibility for commodity price and service compliance with applicable regulations on prices, weights and measures standards.
In this way, unfair and deceptive dealing on price, weight or measure, including description of any commodity or service advertised, packaged, sold and/or purchase is prevented. Moreover, this approach would ensure compliance on applicable or reasonable uniformity on prices, weights and measures in all aspects of commerce and business requirements throughout the CNMI and those of the states and federal agencies. This collaborative and symbiotic working partnership among the central statistics division especially on consumer price indexing with the commerce department’s enforcement and compliance division in cooperative relationship with the consumer counsel’s office at the Office of the Attorney General should prove formidable in curbing predatory commodity pricing and abusive service cost indexing throughout the CNMI.
