OFFICE OF THE GOVERNOR
PRESS RELEASE
(for immediate release – June 13, 2007)
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Governor Togiola meets with
DOI Sec. Dirk Kempthorne

(UTULEI) - Governor Togiola Tulafono today met with Secretary of the Interior – Dirk  Kempthorne at Government House on Maugaoali’i to discuss a variety of concerns and needs of the Territory.

Joined by Lieutenant Governor Ipulasi Aitofele Sunia, Chief Justice Michael Kruse, Senate President Lolo Moliga and House Speaker Savali Talavou Ale, Governor Togiola welcomed the Honorable Secretary to American Samoa and shared the Territory’s unique history and political bond with the U.S. and its 107-year relationship.

In the one-hour meeting this morning, Governor Togiola noted the extraordinary progress that has been made since World War II and the many strides in modern economic, education, health care and infrastructure systems in American Samoa while aligning self-governance under the general guidance of Department of the Interior.

Governor Togiola highlighted several economic disparities, most notably American Samoa’s low per capita personal income.

“Between 1979 and 1999, per capita income in American Samoa (not adjusted for inflation) increased an average of 4.3 percent per year. With inflation rates averaging about 3 percent per year during the period, money income in the Territory, has increased only 1.3 percent annually over the 20-year period,” said Governor Togiola. “Furthermore, family poverty rates in American Samoa were 58.2 percent compared with a U.S. rate of 9.3 percent in 2000.”

Governor Togiola told Secretary Kempthorne that in many respects, the income inequality reflects fundamental differences in the economies of major industrialized countries and smaller insular areas.

“It is true that the personal income estimates are not strictly comparable, but these comparability problems could not account for this disparity with the rest of the U.S.,” said Governor Togiola.

Other economic challenges provided by Governor Togiola at the meeting included the structure of American Samoa's economy, where 92 percent of the Territory’s entire economy is based directly, or indirectly, on canned fish exports and federal expenditures.

“This basic inflow of funds is what the remainder of American Samoa's economy depends on. This territory is not only in a state of long term low economic growth, high unemployment and excessively low per capita income, it is now threatened with sudden and severe economic dislocation,” said Governor Togiola. “Our largest industry, tuna canning, could face greatly reduced operations or closures in the near future.”

Governor Togiola told Secretary Kempthorne that the canneries represent about 90 percent of American Samoa’s private sector and about one-third of the total jobs in the Territory. He said the threat to the tuna industry is in the impending loss of federal territorial corporate tax credits, more competitive locations in other parts of the world, and other forces adversely affecting the industry in American Samoa.

In regards to the recent federal minimum wage increase in American Samoa and the Commonwealth of the Northern Mariana Islands, which would be increased each year until it reaches the U.S. average, Governor Togiola said the hike would double wages in the canneries in approximately seven years, representing an average increase in wages of about 10 percent per year.

Governor Togiola reported on some trends in American Samoa, as well as across the globe, which require a more robust and intensive Federal-Territorial partnership, especially in economic development.

“Most of the economic development issues we face have to do with falling barriers to international trade and foreign investment. This trend in international economic relations has become even more pronounced with the advent of the World Trade Organization,” said Governor Togiola. “The U.S. sees an exodus of traditional high paying manufacturing jobs to lower wage developing nations. The U.S. must make up for this by playing to its strengths especially in industries relying on rapidly advancing technology.”

Governor Togiola said to some extent American Samoa must do the same even though the average wage structure is well below that of the U.S. He said it is substantially higher than developing nations, which are benefiting from the loss of U.S. manufacturing jobs.

“Because of this wage-cost differential between American Samoa and developing nations, the Territory has had to rely on selected incentives to remain competitive, namely the duty free arrangements we enjoyed with the U.S. and U.S. corporate tax incentives,” said Governor Togiola. “As we are now all aware, these incentives are disappearing while American Samoa’s competitive position worsens.”

Governor Togiola said the U.S. Congress, having had to face difficult choices recently on both the U.S. corporate income tax credit for American Samoa and raising the minimum wage, seems to be concerned about its economic policy towards the Territories. He said, in fact, in the law extending tax credits to American Samoa to the end of this year, Congress ordered in a staff report that it establish a long-term comprehensive economic policy for American Samoa.

“Indeed, in that language, the reference was also to the Territories suggesting possible congressional interest in reexamining its policies for the Territories in general,” said Governor Togiola. “I call upon you, Mr. Secretary and your delegation to ensure a consistent U.S. policy that will assist and support local action in diversifying our economy.”

Governor Togiola said his concerns about unemployment, personal income disparities, high inflation, and the serious threat to the viability of our cannery industry, translate directly into a lower tax base for American Samoa for both government operating needs and especially long term infrastructure needs.

At the meeting, Governor Togiola also reported that a letter of intent was under review in regards to the submarine fiber optic cable project (Pacific Rim East cable) and will be finalized next week.

“This will build local infrastructure and attract foreign investors to the Territory as well as build and promote a local skilled labor force,” Governor Togiola.

In regards to the minimum wage, Governor Togiola encourages Congress and the Office of Insular Affairs to proceed immediately to implement Congressman Faleomavaega - Congressman Miller’s agreement on HR 1591. The agreement requires Department of Labor to report to Congress on the immediate and future impacts of the new minimum wage on American Samoa’s economy.

Governor Togiola said he supports of H.R. 1075, which establishes a Territorial Bond Bank. The Bank is intended to provide low-cost financing for the Territories to construct infrastructure or refinance debt to create a bond bank to address critical long-term infrastructure needs in the Territories.

Secretary Kempthorne, whose department administers the financial assistance provided to American Samoa, was accompanied by BJ Penn, Assistant Secretary of the Navy for Installations and Environment, Donald Schregardus, Deputy Assistant Secretary of the Navy for Environment and Papali’i David Cohen, Interior’s Deputy Assistant Secretary for Insular Affairs.

The Honorable Secretary was bestowed the high chiefly title of Pulelei’ite (ruler who foretells the future) at an ava ceremony held at Gagamoe, Pago Pago today, before touring the National Park of American Samoa in Vatia and the StarKist Samoa cannery plant in Atu’u.

Secretary Kempthorne and his delegation will depart the Territory tomorrow (Thursday) at 11am after a press conference to be held at the airport fale.