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. New foreign investors can apply for U.S. nonimmigrant treaty investor  status. Recent Legislation’s Potential Impact on CNMI Labor Market and Economy Will Depend Largely on Federal Decisions, but U.S. In particular, the interaction of DHS and DOL  decisions about, respectively, the number of permits to allocate annually  and whether and when to extend the permit program will significantly  affect employers’ access to foreign workers. Further, the agencies have not yet identified an  interagency process to coordinate such decisions. Given foreign workers’  prominence in key CNMI industries, any substantial and rapid decline in  the availability of CNMI-only work permits for foreign workers would have  a negative effect on the CNMI economy. At the same time, continuing declines 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 economy. Although the legislation and the CNMI government have stated goals of  preparing CNMI residents to replace foreign workers, factors such as the  limited number of available CNMI residents may impede these efforts’  effectiveness. However, federal agencies may make more  modest reductions in CNMI-only permits, resulting in minimal effects on  the economy. Recent Legislation’s Possible Impact on CNMI Tourism Depends Largely on Federal Agency Decisions

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. For countries likely to be included  in the joint visa waiver program because they currently are included in the  Guam visa waiver program, such as Japan and South Korea, the impact is  likely to be minimal. For countries that may not be part of the joint visa  waiver program because they currently are not included in the Guam visa  waiver program, possibly including China and Russia, applying for a visa  from U.S. embassies or consulates will likely be more costly and more  time-consuming than obtaining a visitor entry permit under CNMI  immigration law. However, lack of data, such as data on overall foreign investment  in the CNMI, makes it difficult to assess the likely impact of these  decisions and may hamper DHS’s ability to make informed decisions. Moreover, any  impact on foreign investment in the CNMI will likely affect the labor  market and tourism sector, and any impact on the labor market and  tourism sector may also affect foreign investment. Investment associated with foreign investor entry permits. However, if DHS extends the  grandfathering provision to long-term business entry permit holders, many  more investors will qualify. Conclusions

The recent legislation applying U.S. immigration law to the CNMI provides  federal agencies some flexibility in preserving the CNMI’s access to  foreign workers, tourists, and foreign investors during the transition to the  federal system. Because current data gaps limit federal agencies’ ability to make key  implementation decisions to best meet the goals of the legislation, we  recommend that the Secretary of Homeland Security and the Secretary of  Labor take the following two actions:    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. Appendix I: Objectives, Scope, and Methodology

This report examines the factors that will affect the impact of recent  legislation applying U.S. immigration law to the Commonwealth of the  Northern Mariana Islands (CNMI) on the CNMI economy, in particular the  CNMI’s (1) labor market, including foreign workers; (2) tourism sector;  and (3) foreign investment. Labor market. GAO-08-466.
Why GAO Did This Study

The United States enacted legislation in May 2008 applying federal immigration law to the Commonwealth of the Northern Mariana Islands (CNMI) subject to a transition period. The CNMI is subject to most U.S. laws but has administered its own immigration system, including admitting foreign workers, tourists, and foreign investors. 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 a transition program. GAO was asked to review how the legislation's implementation may affect the CNMI economy, in particular the CNMI's (1) labor market, including foreign workers; (2) tourism sector; and (3) foreign investment. This report is based on GAO's March 2008 report (GAO-08-466) and analysis of data on the CNMI's labor market, tourism sector, and foreign investment.

What GAO Found

The potential impact on the CNMI's labor market of the recent legislation applying U.S. immigration law will largely depend on decisions that the U.S. Departments of Homeland Security (DHS) and Labor (DOL) make in implementing a required permit program for foreign workers. The interaction of DHS and DOL decisions about, respectively, the number of permits to allocate annually and whether and when to extend the permit program past 2014 will significantly affect employers' access to foreign workers. However, federal agencies have not yet identified an interagency process to coordinate such decisions. Further, the agencies may have difficulty obtaining relevant data on the CNMI labor market. Given foreign workers' prominence in key CNMI industries, any substantial and rapid decline in permits for foreign workers would have a negative effect on the CNMI economy. However, federal agencies may reduce permits more modestly, resulting in minimal effects on the economy. At the same time, continuing declines 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 economy. Although the legislation and the CNMI government have stated goals of preparing CNMI residents to replace foreign workers, factors such as the limited number of available CNMI residents may impede these efforts' effectiveness. Any impact of the recent legislation on the CNMI's tourism sector will depend largely on federal regulations specifying the countries to be included in a joint CNMI-Guam visa waiver program required by the legislation. For countries likely to be included in this program, such as Japan and South Korea, the impact is likely to be minimal. For countries that may not be part of the joint visa waiver program, possibly including China and Russia, applying for a visa from U.S. embassies or consulates will likely be more costly and more time-consuming than obtaining a visitor entry permit under CNMI immigration law. To the extent that any increase in the cost and time required to obtain a visa discourages tourists from visiting the CNMI, the legislation could negatively affect CNMI tourism. The recent legislation's impact on CNMI foreign investment will depend in part on DHS decisions regarding the application of U.S. nonimmigrant treaty investor status--"grandfathering"--for investors with CNMI foreign investor entry permits. However, lack of data on foreign investment in the CNMI makes it difficult to assess the likely impact of these decisions and may hamper DHS's ability to make informed decisions. Because long-term business entry permits account for a large proportion of CNMI foreign investor entry permits, more CNMI foreign investors will be grandfathered if DHS applies the status to these permit holders. Any impact on foreign investment in the CNMI will likely affect the labor market and tourism sector, and any impact on the labor market or tourism sector may also affect foreign investment.