ASG blames fed actions for territory’s economic woes
The American Samoa Government claims that federal actions pertaining to mandated minimum wage hikes, the loss of federal corporate tax credits and US trade agreements with other countries have worsened the territory’s economy in recent years.
ASG's claims are made in its request for proposals (RFP) for an air transport marketing study, funded by a $600,000 US Dept. of Interior grant, to assess the needs and market for expanded air cargo and passenger transportation services in and out of Pago Pago International Airport. (See story last week for more details on the study.)
ASG states in the RFP that American Samoa’s real gross domestic product (GDP) per capita in 2007 was only $7,874 compared to a US per capita GDP of $46,400. By comparison, real GDP per capita in 2007 was $16,494 for the Commonwealth of the Northern Mariana Islands, $22,991 for Guam and $40,124 for the US Virgin Islands.
ASG estimates that total employment could have declined as much as 18% in 2009 and this employment loss could have increased the unemployment rate to 22% in 2009 in American Samoa.
ASG cites some conditions contributing to the territory's low per capita income and high unemployment rates relative to the US: “Among them are enormous distances to markets and sources of supply, a small labor force with deficiencies in a range of critical skills, a relatively small market and other factors associated with small, distant and isolated economies”.
It also cites the 2009 earthquake and tsunami as well as hurricane conditions exacerbating American Samoa’s economic condition and points out that efforts to save and relieve victims of the 2009 tsunami were “severely hampered, because infrequent air service prevented rescue personnel and emergency supplies from being immediately dispatched to the territory”.
“However, American Samoa’s economy has worsened in recent years primarily for other reasons,” according to the government. “Those other reasons were related to actions by the US Government.”
Among them, say ASG, were the loss of federal corporate tax credits and the US trade agreements which compromised American Samoa’s largest employer, the tuna canning industry. Another “critical factor," ASG claims, was the mandatory wage increases for American Samoa that went into effect in 2007, having an adverse effect on the canneries and causing severe employment losses in other industries.
“It virtually wiped out most of American Samoa’s competitive advantage for any effective economic recovery,” said ASG. “These conditions can be addressed by appropriate initiatives for sustainable economic development.”