In 1898, US occupation of Puerto Rico opened possibilities for experimentation with manufacturing, investment, tariffs, and citizenship because the Treaty of Paris did not address territorial incorporation. Imperial experimentation started immediately and continued through the liberal policies of the New Deal and World War II, consistently reproducing drastic exceptions. These exceptions were neither permanent nor complete, but the rearrangements of sovereignty and citizenship established Puerto Rico as a site of potential and persistent exemption. Puerto Rican needleworkers were central to the resulting colonial industrialization-not as dormant labor awaiting outside developmental forces but as skilled workers experienced in production. Following US occupation, continental trade agents and manufacturers noted the intricate needlework of Puerto Rican women and their employment in homes and small shops for contractors across the island. Their cooptation and adaptation of this contracting system led to the colonial industrialization, generating bureaucratic, financial, and legal infrastructure later used in Operation Bootstrap, a long-term economic plan devised in the 1940s and 1950s. Labor unions and aggrieved workers contested and resisted this colonial industrialization. They advocated their own proposals and pushed against US economic policies and insular business management. Throughout these fights, the asymmetrical power of the federal government and industrial capital allowed the colonial regime to assert US sovereignty while continually realigning exemptions and redefining citizenship for liberal economic objectives. Rather than representing a weakening of the nation-state, this strong interventionist approach provided scaffolding for Operation Bootstrap, which became a model for the neoliberal projects called export processing zones (EPZs).