Our Man in Saipan

Dick Armey thinks he's found a free-market paradise in the Marianas Islands, a U.S. territory where the workers never complain, the factories never quit, and wages are so low, even welfare mothers can hire a Filipino maid

To free-market conservatives, the Marianas--a chain of tiny, palm-shrouded islands in the western Pacific--are, well, paradise. According to this ideological spin, the Commonwealth of the Northern Marianas is a capitalist Eden, a Rock Candy Mountain of commerce bustling with folks willing to cut and stitch and sew in the service of hot American clothing labels such as Ralph Lauren and Tommy Hilfiger--as well as U.S. consumers who demand a designer tag at a bargain price.

The Marianas and its capital, Saipan, are U.S. territories, and the locals are American citizens. But--thanks be to Adam Smith--their economy isn't burdened by the mainland's lofty $5.15-an-hour minimum wage. At this luau of laissez-faire, there aren't all those heavy-handed bureaucrats enforcing the 40-hour work week or labor safety standards or other tiresome rules and edicts of big government.

The resulting prosperity has generated tax rebates for citizens and corporations alike, money that has fallen like so many lotus blossoms on a place historically long on sea breezes and short on entrepreneurial spirit.

All of this is so awe-inspiring to right-thinking individuals that five top aides of House Majority Leader Dick Armey have taken time away from fighting the dark forces in Washington to witness the invisible hand at work.

Their boss, who has made opposition to the minimum wage his political mantra, hasn't taken the 9,000-mile trip himself, although last month he dispatched his press secretary, Michelle Davis. Armey's fellow Texan and right-hand man, House Majority Whip Tom DeLay, from Sugar Land, made the journey too.

Armey and DeLay had already drawn a line in the Marianas' sand last summer, when the Clinton administration began grousing about a few unpleasant side effects of Saipan's economic miracle.

The two Republicans wrote to the islands' governor how "impressed" they were with the Marianas' commitment to "advancing the principles of free markets, enterprise...tax reform and other innovative approaches to governance."

DeLay was so taken with the Saipan way of doing business that when he returned from there last month, he suggested the United States emulate the way the islands' employers ship in eager Chinese and Filipinos to fill low-wage jobs in their garment factories and hotels. He suggested the United States institute a similar "guest worker" program "where particular companies can bring Mexican workers in" to fill jobs that Americans won't take, paid at "whatever wage the market will bear."

With so much good news being generated in that far-off corner of the world--and with Armey's staff spending so much time studying it--it seemed appropriate to ring them up in Washington to learn a bit about it.

The Dallas Observer called three times last week, and three times the week before. But press chief Michelle Davis, whose taxpayer-financed job it is to talk to the press, wouldn't return a single call. Even her "Texas press" assistant declined to take a few minutes to share a word or two about all the wonderful things Armey's office has seen taking root in Saipan.

Given all the job-seeking Mexicans in this state, it seemed that Saipan's economic miracle would be of particular relevance here.

But try as we might to get Armey or his peripatetic staff to respond, we were unable to establish communications with our hometown congressman. We were unable to raise our man in Saipan.

And there are good reasons why.

Two years ago, Yin Shan-zi thought she would be spending some time in the United States fulfilling a not uncommon dream among educated men and women in China.

The 34-year-old nurse and wife of a Beijing cardiologist had wanted to work in an American office and refine her English. That explains why she was willing to pay to get a job--forking over $4,000 to a recruiter who agreed to deliver her to a position in Saipan.

What Yin found, though, was something lifted from a Charles Dickens novel--or an account of U.S. labor conditions circa 1898, not 1998. Rather than being directed to a secretarial job, Yin was put to work in the Venus garment factory--which was just the start of her odyssey into what Clinton administration officials say is a corrupt and pitiless system of indentured servitude in Saipan's garment industry.

Yin entered a world of 18-hour workdays and payless paydays. Her wages shrunk to almost nothing after her employer deducted charges for room, board, and transportation. Those rare times she wasn't at the factory, she lived in a tiny room shared with 15 other women in a barracks guarded by armed men and surrounded by a barbed-wire fence. A close look at the fence indicated just what the guards were guarding: The strands of barbs angled inward.

Bound to fulfill a two-year contract she signed during her recruitment, Yin had no option of quitting. Tied to specific employers, Saipan's "guest workers" don't have the liberty to shop around for another job.

"She'd tell me she worked 'many hours,'" recalls Peggy Japko, a nursing student who returned to McKinney last year after two years of living and working in Saipan. "She was so tired, she'd start crying. Sometimes they [the garment shop's managers] would forget to feed them."

Japko had met the struggling Chinese woman at the Immanuel United Methodist Church, which Yin attended on the few Sundays she was free from her factory post and the toil of inspecting finished garments. "A lot of Sundays they wouldn't let her come," Japko says. "She had to sneak out."

With help from Japko and her church, Yin somehow broke free of her contract last spring. She retrieved about $700 from a Saipan bank--all she'd managed to save up after more than a year and six months of constant labor--and boarded a plane back to China.

Japko says she watched as a garment factory official returned to Yin the passport confiscated when she'd arrived on the island. Holding the workers' passports hostage, as much as anything, demonstrated to Japko how little freedom these garment laborers truly have.

A photograph Yin sent her friend in Texas this past Christmas shows her reunited with her two young sons--one in suspenders, the other holding a soccer ball--and her husband, a serious-looking man in a sport coat and tie, standing in front of a grove of pink-blossomed trees in a hospital yard somewhere in Beijing. "So many of our people hope to go to a rich country and work and earn money," she writes in the accompanying letter, pointing out that in China she would make only $80 a month as a nurse. "A wife or husband goes [to] Korea or Japan working. Some of it is not legally."

Japko thought she'd left Saipan and its problems far behind when she returned to Texas last year. It's eight time zones from Dallas, or, as she puts it, "a long way away." But she has been drawn back to her recollections of the scenic island, as Saipan's human rights abuses and substandard labor conditions have surfaced, however weakly, in Washington.

Over the past six months, Armey and DeLay have been mounting a spirited defense of the status quo in the Marianas despite well-documented claims by Clinton administration officials, church groups, and citizens such as Japko that the islands have become a national disgrace.

The two powerful Texans have staked out a high-profile stance in favor of leaving the island's garment industry alone.

The Marianas' garment factories exploit the commonwealth's exemption from a number of American labor and immigration laws, allowing the factories--most of which are owned by Chinese or South Korean nationals--to pay less than the minimum wage and ship nearly $800 million worth of clothes annually to the United States.

The arrangement is unique to the Marianas. Its minimum wage is about $2 per hour less than the U.S. wage of $5.15 an hour--and even lower rates are set for maids and farm workers.

Because the Marianas are a U.S. territory, the blouses, cotton trousers, wool suits, and other finished clothes--which are free of import quotas and duties that would otherwise add up to $100 million a year--proudly display the label "Made in the USA."

Dozens of high-quality designer labels have contracted with Saipan's 28 recognized garment manufacturers, including Ralph Lauren, Tommy Hilfiger, Liz Claiborne, Jones New York, Abercrombie & Fitch, Nautica, and Levi Strauss. (Several "pirate" factories are believed to operate in the shadows.) The island has become a center of production for high-priced goods because they are exempt from tariffs that would be charged if the garments were assembled in, say, China.

Armey and DeLay, opposing a Clinton administration proposal to bring the Marianas under U.S. minimum wage and immigration laws, wrote a letter last year to Gov. Frolian Tenorio (the top Marianas official who was replaced last month by a relative, Pedro Tenorio). They assured Tenorio they would block any move to reform the Marianas' unique wage and immigration laws.

The administration's proposed changes, they wrote, "are counter to the principles of the Republican Party, and this Congress has no intention of voting on such legislation."

Given their clout in the majority party, Armey and DeLay have made good on that promise. An aide to U.S. Rep. George Miller, a California Democrat who has been active in exposing the truth about the Marianas, says he hasn't even been able to get a hearing scheduled on the matter.

The trips DeLay and the five senior Armey staff members have made to the islands have been on the Marianas government's tab, trips typically costing $4,000 to $6,000 per person. Most got rooms at the Hyatt Regency Saipan, a $250-to-$2,500-a-night luxury hotel that, as its Web site seductively notes, "lies on 14 acres of lush tropical garden, lagoons, and a magnificent beach," with amenities such as a championship golf course and snorkeling above coral reefs.

The Nation, which published an article last month appropriately titled "Congress' Beach Boys," pointed out that more than 70 congressional and party officials--mostly Republicans--have traveled to the island on these all-expenses-paid trips over the last two years, along with squadrons of conservative journalists and think-tank types. The magazine described the trips as a "lavishly funded public relations effort by the island's governor...Numerous junketeers have come back singing the praises of the [Marianas]."

Perhaps none more brazenly than DeLay.
Returning last month from his fact-finding trip, a mission on which he took his wife and daughter and got in two rounds of golf at the first-class Lao Loa Bay Golf Resort, DeLay blasted critics of what he called Saipan's "free market success." He went on to explain how he wants to use a set of Chinese-owned sweatshops on a far-off U.S. territory--factories manned by low-paid Chinese or Sri Lankan indentured servants living in squalor--as a model for Mexican labor camps here on the mainland.

He told a reporter for the Guam-based Pacific Daily News that the workers' barracks "by some U.S. standards could be criticized," but the garment factories he toured were air-conditioned and clean.

"I didn't see anyone sweating," DeLay said, reportedly with a laugh.

It was a picture of a palm tree on a trade journal employment ad that drew Peggy Japko and her husband to apply for their two-year contract jobs at the Commonwealth Medical Center, a government-run facility that serves as the only hospital in Saipan.

"You think, 'Wow, this looks good.' Everyone wants to escape to a tropical island," the outgoing, 41-year-old Japko recalled over coffee at a pancake house in McKinney.

The Japkos went to work as medical records administrators and took in the pleasures of their tropical paradise. The volcanic island, about 47 square miles of beaches and tropical jungle, is visited by more than 500,000 Japanese tourists a year. "It's like their Caribbean," says Japko, pointing out that Tokyo is about 1,460 miles away.

Studded with war memorials, Saipan remains littered with beached ships, tanks, and other remnants of the June 1944 invasion of 71,000 U.S. Marines, 3,400 of whom lost their lives in taking the island from the Japanese. At the island's northernmost point lies Suicide Cliff, where hundreds of Japanese civilians jumped to their death when the U.S. victory became clear.

Over the next year, Saipan became a prime base for U.S. air attacks on the Japanese islands. The Enola Gay took off from nearby Tinian, which is among the 14 islands in the Marianas chain, when it dropped the atomic bomb on Hiroshima.

Although unexploded ordnance is still found on Saipan from time to time, its beautiful beaches are now occupied by the more leisure-minded. "You'd never see the garment workers and the problems from the hotels," Japko says. "There are miles and miles of roads in the jungles. You hardly know the factories are there. There aren't signs saying these are barracks or garment factories."

The locals--mostly Chamorro or Carolinian islanders--number 27,478, and 14 percent of those are unemployed, according to 1995 census statistics. Because only local citizens--who since 1986 have had the privilege of full U.S. citizenship--can legally own property on the islands, rents from the hotels and factories provide considerable incomes to some local families. "I was surprised to find the level of wealth; it was really amazing," Japko recalls.

By the most recent census, there were 31,000 non-citizen laborers on the islands, outnumbering citizens. The huge supply of imported low-wage workers has so skewed the island's economy that many of the 4,000 Marianas-born families "poor" enough to qualify for food stamps somehow manage to afford Filipino maids.

According to Japko, the work ethic among the locals is so low and the wages so uninspiring that when a McDonald's opened in 1996, "they said they were gonna hire only locals. But the locals showed up to work so infrequently that they had trouble keeping it open. Eventually, they hired Filipinos to get the work done."

Japko says she never met or much considered the garment workers until a year into her stay, when she met Yin at her church. Getting to know her was difficult, Japko recalls. "She was afraid to talk. She was afraid that she'd lose her job and be sent home deeply in debt. I said, 'I'd like to see where you live,' and she said, 'No. That's not allowed. There are guards.'"

One time Japko and several other church members forced themselves past the armed Bangladeshi guards at Yin's dorm, and left her and her 15 roommates enough food for a holiday party. The workers got home from work that day at about 2 a.m.

"I felt morally obligated to tell someone, so we wrote to the authorities," Japko says.

The letter, composed by the Rev. Barbara Grace Ripple, the United Methodist pastor of Japko's church, took note of a host of injustices: withholding pay for transportation, housing, and food costs that ultimately swallow up most of the workers' wages; compulsory uncompensated overtime; no rest breaks; curfews; and confiscation of passports.

"If we didn't know better, we would think that Saipan was a Third World country, blatantly allowing these practices without conscience...A garment factory worker working without pay is a slave. Withholding the passport of a garment factory worker is degrading and makes a prison of the island of Saipan."

Ripple, answering a set of questions posed via e-mail this month, says, "Many of the problems can be traced to ethnic discrimination. The local people tend to look down upon those who do menial work, such as those who work as waitresses, as household help, or farmers. In the six years I have been here, I have heard children speak derogatorily about persons of other ethnic groups--people from the Philippines, Bangladesh, and China."

Crimes against those in the lower "caste" often go unpunished because of large webs of family ties and "a code that says we do not tell on a family member, no matter what crime has been committed or what hurt has been done," she says.

Ripple's letter made little headway with the government, however, which claims to be improving working conditions in the factories and defends the low wages as crucial to the country's economy.

But when Japko left Saipan last year, she left behind another Chinese garment worker friend, Li Zhen Hua, who also borrowed $4,000 for the right to a $300-a-month job. That enormous debt in China is what keeps her enslaved in Saipan today.

The 29-year-old's letters to her American friend--sent in envelopes from the Uno Moda Corp., a garment factory--tell a story as bleak as Yin's: "I am very tired. I want to go back to my country but I can't because we must be keep [sic] two years...I change my job from line to complete dept. Very busy. So hard. Every day work up to 1:30. I've to work on Sunday. Too much to respond to your letters."

By all accounts, the unusual set of rules and regulations that has built Saipan into an Americanized Kuwait--where low-paid, second-class foreigners do the drudge work--did not come about by design.

The "covenant" under which the Marianas joined the United States was approved by 78 percent of the people in 1976. It went into effect in 1986, when U.S. citizenship was extended to the islanders.

Under the agreement, the islands were subject to all U.S. laws, with a few important exceptions originally designed to help the country catch up with U.S. economic standards--including exemptions from minimum wage laws and customs restrictions. The Marianas negotiators were also concerned that people from neighboring Asian countries would flood to Saipan, rather than the U.S. mainland, thereby altering the islands' cultural identity. So the islands were given control of their own immigration policies.

The garment industry didn't surface until 10 years after the pact was approved, when entrepreneurs found a way to exploit this extraordinary series of loopholes. "Someone finally realized what they had," says David North, a spokesman for the U.S. Department of the Interior's Office of Insular Affairs. "An Asian-owned, Asian-manned garment industry was transplanted to U.S. soil."

Figures compiled by the U.S. Commerce Department show that the value of garments shipped to the United States from the Marianas has grown steadily--an amazing 40 percent in 1997 alone--and that the garments now account for about 5 percent of finished clothing shipped into the mainland United States. The wholesale value of garments shipped from the Marianas this year could easily top $1 billion.

"They said they didn't want to be overwhelmed by immigrants, but they have used their powers to overwhelm themselves with cheap foreign labor," says an aide to Sen. Daniel Akaka, a Hawaii Democrat.

Complaints of poor worker conditions have followed the Saipan garment industry from the start. In 1992, Willie Tan, a Hong Kong businessman who became a naturalized U.S. citizen, settled a case brought by the U.S. Labor Department by agreeing to pay garment workers $9 million in back wages for unpaid overtime. Tan's workers were toiling 85 hours a week in Saipan without overtime pay.

Photos taken last August by Stephen Fischel, a U.S. State Department worker, paint a bleak picture of garment workers' barracks: open sewers; garment workers packed two to a bed; filthy toilets; dilapidated kitchens outfitted with rotting, rusted sinks and tables; jury-rigged electrical lines.

A report released last month by the bipartisan, congressionally created U.S. Commission on Immigration Reform concluded that foreign contract workers in the Marianas have been "easily exploited" by the local population. "There are numerous reported cases of retaliation against workers filing complaints," the report states. "Foreign contract workers report being victims of such crimes as rape, assault, and forced prostitution by those who have recruited them to work in the [Marianas]. There are numerous documented cases of foreign workers paying exorbitant recruitment fees in their home country...In many cases the entire recruitment was a scam, with no job existing when the worker arrives in the [Marianas]."

A contract obtained by the Interior Department that was signed by a Chinese carpenter forbids dating or marrying, participating in any religious or political activities, and requesting a change in work or increase in wages.

Worse yet, farm laborers and household workers are paid an even lower wage, about $1 an hour, the immigration commission report points out. "Domestic workers are particularly vulnerable to exploitation...There is also ample evidence that prostitution is one of the occupations practiced by some female contract workers in bars and nightclubs."

Says the Rev. Ripple, "They are easily controlled by their employers, who for the most part are not U.S. citizens, who do not do business in the Western way and do not honor human rights and respect the individual as we do.

"As one example, a local person told me she could get all the workers I might need from Nepal, and there would be no charge to me at all. What that means is all expenses would be paid by those workers, paid up-front in loans or by selling all they have."

Since the days of the Reagan administration, official Washington has been concerned about how this Asian garment industry, transplanted to U.S. soil, has affected domestic textile and apparel manufacturers, which are already fighting to compete with imports from low-wage Third World countries.

A July 1997 Interior Department report pointed out that advocates for the Marianas' garment industry sometimes argue that their factories compete with China and other Asian countries. But this is not the case, the report concludes.

Major suppliers of textiles and apparel to the United States, including Asian countries, have quota limitations that severely restrict their ability to increase their exports to the United States.

Mexico and the Caribbean have preferential access to the United States for garments made from U.S.-made textiles--not Chinese fabric, as in the Marianas. Were the work done in Mexico or China, U.S. textiles corporations would get hundreds of millions in sales--generating several thousand more jobs in the United States, which would also receive millions in duty and taxes. "Currently, with its Chinese fabric and workers, [Marianas] garment production is largely at the expense of the 50 states and other territories," the report concludes.

With 60,000 apparel manufacturing jobs, mostly concentrated in El Paso and San Antonio, Texas ranks third in the nation in numbers of garment-industry employees. Joe Allen, a garment business consultant in Dallas, says the actual number is lower today because of widespread factory closings last year in El Paso. There is no significant clothing manufacturing in Dallas, which was once a garment-producing center. Allen says competition from abroad beginning in the 1970s and illegal domestic home sewing are mostly to blame.

The Clinton administration set off the current discussion about the Marianas last summer when it recommended that Congress end the island's exemptions from federal law. In a letter to the islands' governor, President Clinton called labor practices in the Marianas "inconsistent with our country's values" and said the U.S. government has been patient long enough.

To deal with the garment sector, the administration proposed to raise the minimum wage to mainland standards, ban the use of temporary workers in permanent jobs, and encourage the hiring of U.S. citizens in the Marianas' labor force. For products to be shipped to the U.S. mainland tariff-free, 50 percent of the workers in a factory would have to be U.S. citizens or legal immigrants eligible for citizenship. The proposal would be phased in over the next two years.

Armey and DeLay vowed within a week that they would fight to preserve the current system.

Their June 6, 1997, letter to the Marianas' governor mentioned that "a number of our colleagues and their staff have visited the commonwealth in recent months," and saw nothing but progress in conditions and living standards. Five Armey staffers, including his chief of staff, have to date taken their all-expenses-paid tours of Saipan. The trips were arranged by the Seattle-based law firm of Preston, Gates Ellis & Rouvelas Meeds, which the Marianas hired and paid more than $4 million over the past two years to lobby for the status quo. The islands also hired Manuel Lujan, interior secretary in the Reagan administration, to help lobby Congress. He was paid $208,000.

Jack Abramoff, a Preston Gates lobbyist, contributed $500 to Armey's 1996 campaign, $2,000 to DeLay's 1996 campaign, and, together with his wife, $4,000 to DeLay for this year's race, campaign finance records show.

"On the junkets, they're getting wined, dined, tattooed, and screwed," says Joe Allen, a harsh critic of Armey and DeLay. "It's difficult to get much of a picture there by touring a couple of showpiece factories and a model barracks or two."

Indeed, DeLay, whose New Year's holiday junket received considerable press attention, wasn't on the island more than a day when he gave the Marianas' garment industry his seal of approval.

On his first night on the island, DeLay was invited to a reception at the posh, beachfront Pacific Islands Club hosted by Willie Tan, the powerful garment factory king. According to a promotional brochure, Tan Holdings Corp. owns the island's largest garment factories, several hotels, a bank, and businesses ranging from travel agencies to ice cream parlors.

"When one of my closest and dearest friends, Jack Abramoff, your most able representative in Washington, D.C., invited me to the islands, I wanted to see firsthand the free-market success and the progress and reform you have made," DeLay said, after thanking Tan for "that great introduction."

"Even though I have only been here for 24 hours, I have witnessed the economic success of the Marianas."

DeLay told Tan and his group that the Clinton administration wanted to "kill prosperity on the islands."

"You are up against the forces of big labor and the radical left," he said.
DeLay repeated the promise that "Dick Armey and I made" to defend the island's present system. He finished his remarks by telling the group: "Stand firm. Resist evil. Remember that all truth and blessings emanate from our Creator."

Photographs taken by a U.S. Labor Department employee last August of a workers' barracks owned by the L&T Group of Companies, a Tan subsidiary, show that life for Tan's workers is no day at the beach. They paint a foul picture of hallways puddled with water, foam-pad mattresses packed end-to-end on the floors, piles of garbage drifting up in a courtyard outside, and dank, grungy bathrooms inside. A yellowing health-department notice taped to a wall serves as a testament to the effectiveness of local enforcement. Addressed to Tan and several others, it's a "reminder" that "all our housing facilities be kept clean, in sanitary condition and safe."

Congressman Miller, who has introduced the administration's proposal on the Marianas in the House, traveled to the Marianas on the U.S. government tab just two weeks after DeLay.

At the conclusion of his five-day trip, he told island officials that their immigration laws are "being exploited by individuals seeking to make enormous financial gains at the expense of some of the most vulnerable and impoverished citizens in the world. This is unacceptable to me.

"The immigration system has mutated into a mechanism for luring and holding unsuspecting people--mostly very young women--in horrific situations that cannot be justified."

Peggy Japko, who until recently lived in Armey's district, says she tried telling the same thing to her congressman via e-mail upon her return to the States last year. "I never got a response," she says. "Before DeLay and Armey's staff people went over there this last time, I tried telling them they have to look deeper into this."

She says she resents DeLay for characterizing opponents as "radicals."
"Armey and Delay seem to have their minds made up about what a wonderful little economy they have over there," says Japko. "They're the ones being extreme on this.

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