ACTING Department of Commerce Secretary Frank Cabrera supports the Saipan Chamber of Commerce’s request to exempt the CNMI from the China-U.S. flight cap imposed by the U.S. Department of Transportation.
In an interview on Tuesday, Cabrera said limiting flights “is injuring” the local economy, which relies solely on tourism.
But he also said that “we need to be more proactive and more cautious” in light of the “sensitive geopolitical situation now,” referring to the frayed relations between the U.S. and China.
In a letter to USDOT Secretary Pete Buttigieg, Saipan Chamber of Commerce President Joe C. Guerrero said the chamber believes that “granting [an] exemption [to the CNMI] is necessary for the economic recovery and sustainable growth of our region.”
Guerrero said the Commonwealth Ports Authority, which has also asked the USDOT for an exemption, has provided “a comprehensive insight into the CNMI’s unique economic landscape, especially in the aftermath of the Covid-19 pandemic. The application [for exemption] underscores the challenges our local businesses face, many of which continue to grapple with the repercussions of the pandemic.”
Guerrero added, “To emphasize the gravity of the situation, I would like to provide you with additional statistics on the state of the CNMI’s private sector as it strives to recover. According to the U.S. Census Bureau’s Economic Census, in 2019, the CNMI housed 1,719 business establishments across all sectors of the economy. By 2021, we witnessed a sharp decline of 13% in the total number of businesses across all sectors due to the pandemic’s devastating impact. These impacts have had repercussions across the economy. Between 2019 and 2021, total employment across CNMI businesses declined by 30.9%, and annual payroll paid to employees within the economy fell by 30%, resulting in a loss of $129 million in annual employee compensation compared to the year before the pandemic.”
Guerrero said “the loss of income and ability to support consumption expenditures in the domestic economy will have continued ramifications to business revenue, employment opportunities and government tax receipts.”
He said based on available government data, they estimate that total business revenue dropped by $1 billion between 2019 and 2022 — a decline of 38%.
“As pandemic-related restrictions on commercial activity have lifted throughout the CNMI and the world, the only constraint that remains on the ability of the CNMI to recover from the economic losses is the lack of a fuller recovery of its tourism sector,” Guerrero said.
“We urge you to consider this application favorably, recognizing its immense potential to bolster economic activity and improve the lives of countless residents in our community,” Guerrero added.
Prior to the pandemic, China was the CNMI’s second largest tourism market.
Earlier this year, Gov. Arnold I. Palacios announced “the CNMI’s pivot away from its reliance on the Chinese tourism market, which comprised more than 50% of our tourism base, or about 200,000 visitors (pre-pandemic).”
In return, he requested the U.S. military’s support “in seeking direct aid to replace the economic loss that we have experienced as a result of the CNMI’s pivot away from China.”
