BILL ANALYSIS                                                                                                                                                                                                    







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        |Hearing Date:August 9, 2010        |Bill No:AJR                        |
        |                                   |27                                 |
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                     SENATE COMMITTEE ON BU.S.INESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                         Senator Gloria Negrete McLeod, Chair

                         Bill No:        AJR 27Author:Torrico
                        As Amended:May 3, 2010   Fiscal:    No

        
        SUBJECT:     Colombia-United States free trade agreement. 
        
        SUMMARY:  Memorializes Congress that the California Legislature  
        opposes the United States-Colombia Trade Promotion Agreement (Colombia  
        Agreement).  

        Existing law:
        
        1)The United States Constitution gives the federal government the  
          power to enter into trade agreements.  Federal law requires Congress  
          to approve international agreements.

        2)Specifies that the Governor is the primary state officer  
          representing California's interest in international affairs.

        3)Specifies the Business, Transportation and Housing Agency (BT&H) as  
          the primary state agency authorized to attract foreign investments,  
          cooperate in international public infrastructure projects, and  
          support California businesses, not otherwise assisted by California  
          Department of Food and Agriculture (CDFA), in accessing markets, and  
          requires the Secretary of BT&H to develop an international trade and  
          investment policy.

        4)Specifies that the State's Single Point of Contact (SPOC), within  
          the executive branch, acts, in compliance with federal practice, as  
          the liaison between the state and the Office of the United States  
          Trade Representative (USTR) on trade-related matters.

        5)Clarifies that the SPOC is often provided the opportunity to review  
          and comment on ongoing trade negotiations and requires the SPOC, in  
          addition to other duties assigned by the Governor, to do all of the  





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          following:

           a)   Promptly disseminate information from the USTR to the  
             appropriate state agencies, departments, and legislative  
             committees.

           b)   Work with the Legislature and appropriate state agencies to  
             review the effects of any proposed or enacted trade agreement  
             provisions on California environment, businesses, workers, and  
             general lawmaking authority and to communicate those findings to  
             the USTR.

           c)   Serve as the liaison to the Legislature on matters of trade  
             policy oversight.

        1)Requires the Office of Planning and Research (OPR) to maintain and  
          update, a full and comprehensive list of all state agreements made  
          with foreign governments, updated within 30 days of the effective  
          date of each new agreement.

        This bill declares that:

        1) Violence against trade unionists persists to this day, with over  
           500 unionists having been murdered during the administration of  
           current Colombian President Alvaro Uribe.  

        2) The Office of the Attorney General of Colombia has secured  
           convictions in only about 5% of the over 2,700 cases of murder of  
           trade unionists, and in the vast majority of cases, the person  
           convicted of the crime is not the originator of the crime, but  
           rather carried out the order to kill.

        3) Defamatory remarks regarding trade unionists and human rights  
           defenders in Colombia delegitimize the important and valued work of  
           human rights defenders and place individuals and entire  
           organizations at the grave risk of physical retaliation.

        4) According to a 2008 Human Rights Watch report, numerous  
           politicians, including members of the Colombian Congress, have come  
           under criminal investigation for collaborating with paramilitaries;  
           the groups responsible for the majority of crimes against trade  
           unionists.

        5) According to Human Rights Watch, there is overwhelming evidence of  
           broad, systematic, and illegal surveillance conducted by the  
           government of Colombia against hundreds of members of human rights  





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           organizations, political opposition parties and unions, as well as  
           journalists, and even clergy.

        6) The United Nations Special Rapporteur on Extrajudicial Executions,  
           Phillip Alston, recently found that killings of innocent civilians  
           by the armed forces have occurred throughout the country.

        7) According to the International Labor Organization, the labor laws  
           of Colombia fall short of minimum international labor standards.

        FISCAL EFFECT:  None

        COMMENTS:
        
        1. Purpose.  This measure is sponsored by the  California Labor  
           Federation  .  According to the Author, "In Colombia, those who  
           advocate for workers rights literally must fear for their lives.   
           In 2009 alone there were 48 unionists murdered in Colombia.  Over  
           500 unionists have been murdered during the administration of  
           out-going Colombian President Alvaro Uribe.  The Office of the  
           Attorney General of Colombia has secured convictions in just 5  
           percent of the murder cases involving trade unionists and only  
           after international pressure to do so.  Paramilitary organizations  
           associated with powerful local and regional economic and political  
           interests make the threat of death all too real for workers who are  
           simply exercising their right to organize, bargain collectively,  
           and, if necessary, to strike.  Human rights violations frequently  
           occur and there is widespread, systematic, illegal surveillance  
           conducted by the national intelligence of Colombia.  The  
           International Labor Organization says Colombia's labor laws fall  
           far short of minimum labor standards."  

        2. Office of the U.S. Trade Representative (U.S.T.R).  Created in 1962  
           by Executive Order as an agency within the Executive Office of the  
           President, the USTR negotiates directly with foreign governments on  
           internal trade agreements.  The USTR consults states on provisions  
           of a trade agreement through: direct consultation with a state  
           Governor; a state SPOC and Intergovernmental Policy Advisory  
           Committee (IGPAC).  Currently, when a trade agreement is under  
           negotiation, the USTR sends all correspondence and requests to  
           Governors.  If a Governor agrees to bind the state or state agency  
           to the provisions or a procurement agreement, the USTR includes the  
           state or state agency as a bound party in the appendix to the  
           specific trade agreement.  Past California governors have bound the  
           state to the terms of specific government procurement provisions  
           via the USTR directly.





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        3. U.S. Trade Agreements.  The U.S. Constitution grants the federal  
           government the power to enter into treaties and trade agreements.   
           The power, however, is vested in the U.S. Congress to ratify trade  
           agreements with a two-thirds vote of approval.  Throughout the  
           trade agreement negotiation process, the U.S. has potential to  
           influence policy reforms, using a relationship with the U.S. as  
           leverage and incentive to bring about potential and positive  
           change.  

           The U.S. has trade agreements in force with 17 countries including  
           Australia, Bahrain, Canada, Chile, Costa Rica, Dominican Republic,  
           El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco,  
           Nicaragua, Oman, Peru, and Singapore.  Congressional approval has  
           not been provided for trade agreements with Colombia, Korea, and  
           Panama.  Canada has also negotiated, but not ratified, a trade  
           agreement with Colombia.

           Besides trade agreements, the U.S. has a number of trade preference  
           programs that allow special access to U.S. markets for countries  
           that are considered developing markets and/or where the U.S. wants  
           to develop a stronger relationship.  Colombia currently has access  
           to U.S. markets through the nation's general preference provisions  
           and the Andean Trade Preference Act (ATPA).  The ATPA (enacted in  
           1991) is designed to assist Bolivia, Colombia, Ecuador, and Peru in  
           their fight against drug production and trafficking by expanding  
           their economic alternatives.

           In addition to trade support, the U.S. funds Plan Colombia, a  
           multi-year initiative to reduce drug trafficking and promote  
           development.  According to the Congressional Research Bureau, more  
           than $7 billion has been provided to Colombia (2000 to 2009)  
           pursuant to this initiative.

        4. The Columbia Agreement.  According to the USTR, the Colombia  
           Agreement was signed on November 22, 2006.  When the Agreement  
           takes effect, Colombia will immediately eliminate most of its  
           tariffs on U.S. exports, with all remaining tariffs phased out over  
           defined time periods.  The Colombia Agreement also includes  
           standards relating to customs administration and trade  
           facilitation, technical barriers to trade, government procurement,  
           investment, telecommunications, electronic commerce, intellectual  
           property rights, and labor and environmental protection.  The USTR  
           states that U.S. firms will have better access to Colombia's  
           services sector than other WTO Members have under the General  
           Agreement on Tariffs and Trade. 





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           Colombia's Congress approved the Agreement and a protocol of  
           amendment in 2007.  Colombia's Constitutional Court completed its  
           review in July 2008, and concluded that the Agreement conforms to  
           Colombia's Constitution. President Obama tasked the USTR with  
           seeking a path to address outstanding issues surrounding the  
           Agreement.

        5. Human Rights Violations in Columbia.  The United Nations' Office of  
           the High Commissioner for Human Rights (OHCHR) has had an official  
           presence in Colombia since 1997.  The Colombia OHCHR office plays a  
           number of roles, including serving as an observer and reporter on  
           human rights and international humanitarian law violations.  In  
           addition to the country level-efforts of the OHCHR, the Human  
           Rights Council of the General Assembly of the United Nations has  
           sent representatives to Colombia to assess conditions.  

           Most recently, the Special Rapporteur on the situation of human  
           rights defenders, i.e. people who advocate for human rights,  
           released a summary report on her September 2009 onsite review.   
           During the trip, she met with senior government officials, human  
           rights defenders and people in the communities.  In her findings,  
           she acknowledges that Colombia has made significant progress in  
           improving the overall security of the country between 2002, when  
           President Uribe took office, and 2008, including having a  
           measurable decrease in the number of homicides.  She also states,  
           however, that she is deeply concerned about the widespread  
           phenomenon of threats being made against human rights defenders  
           (including unionists) and their families, often through pamphlets,  
           obituaries, emails, phone calls and text messages.  She states that  
           she received numerous accounts of threats in all places she visited  
           in the country. This phenomenon has reportedly worsened since the  
           beginning of 2009 and this fact was corroborated to her by the Head  
           of the National Police.

           The report specially addresses the plight of trade unionists and  
           the increased threats and especially the continued practice of  
           "enforced disappearance and execution."  Also included in the  
           report are concerns raised about the treatment of indigenous  
           leaders; Afro-Colombian leaders; activists for displaced persons;  
           women human rights defenders; journalists; youth activists; church  
           workers; lesbian, gay, bisexual and transgender; and magistrates.

           Her recommendation to the international community is that it should  
           continue monitoring the situation of human rights defenders, in  
           particular the most targeted and vulnerable ones, and to express  
           support for the work of the human rights defenders, among other  





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           venues, before international and regional human rights compliance  
           mechanisms.

        6. Colombia's Workers.  International labor leaders and those in the  
           U.S. and California have repeatedly raised concerns that the  
           Colombian government does not have sufficient laws, nor does it  
           systematically enforce the laws it does have, in order to protect  
           the rights and lives of trade unionists.  

           In addition to the 48 trade unionists murdered in 2009, 29 trade  
           unionists have been murdered in 2010.  Labor leaders have stated  
           that the Colombian government has been extremely slow to arrest and  
           bring to trial the people who were responsible for the more than  
           2,700 murders of Colombian trade unionists since 1986.  Many of  
           those that have been tried have been tried in abstentia, resulting  
           in no real justice for those who have suffered at their hands.

        7. California's Trade Economy.  International trade is a key component  
           of California's $1.8 billion economy.  If California were a  
           country, it would be the 11th largest exporter in the world.   
           Mexico is California's top trading partner, receiving $17.4 billion  
           in goods in 2009.  The state's second and third largest trading  
           partners are Canada and Japan with $14.2 billion and $10.9 billion,  
           respectively.  Other top-ranking export destinations include China,  
           South Korea, Taiwan, the United Kingdom, Hong Kong, Germany, and  
           Singapore.  In 2008, 2.7 million people were employed by business  
           related to trade, transportation and utilities.

           Colombia's $400 billion economy supported the importation of $11.3  
           billion of U.S. products in 2008.  Top imports from all countries  
           to Colombia include industrial equipment, transportation equipment,  
           consumer goods, chemicals, paper, and fuels.  In 2009, $319.8  
           million in goods from California were exported to Colombia.   


           ---------------------------------------------------------- 
          |          California Exports to Colombia in 2009          |
           ---------------------------------------------------------- 
          |------------------------+------------------+--------------|
          |        Product         |    Value ($)     |   Percent    |
          |------------------------+------------------+--------------|
          |334 _Computers &        |                  |        30.3 %|
          |Electronic Prod.        |                  |              |
          |                        |96,813,070        |              |
          |------------------------+------------------+--------------|
          |325 _Chemical           |        41,425,146|          13 %|





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          |Manufactures            |                  |              |
          |------------------------+------------------+--------------|
          |336 _Transportation     |        38,276,120|          12 %|
          |Equipment               |                  |              |
          |------------------------+------------------+--------------|
          |324 Petroleum & Coal    |        31,884,175|          10 %|
          |Products                |                  |              |
          |------------------------+------------------+--------------|
          |All Others              |       111,402,388|          34 %|
          |------------------------+------------------+--------------|
          |Total                   |       319,800,899|          100%|
           ---------------------------------------------------------- 
           ---------------------------------------------------------- 
          |Source:  TradeStats Express                               |
          |                                                          |
           ---------------------------------------------------------- 

          Supporters of the Colombia Agreement state that it offers tremendous  
          opportunities for California exporters.  Most significantly, they  
          cite a number of tariffs, which will be immediately eliminated  
          (80%); the remaining tariffs will be phased out over 10 years.   
          Based on information from the U.S. Department of Commerce, the  
          following are examples of current tariffs and their proposed  
          reductions under the Colombia Agreement:

            a)   Computers and Electronic Products  :  Current tariffs are  
             between 8 and 15%.  The Colombia Agreement covers 100% of U.S.  
             exports under the Information Technology Agreement, which will  
             receive 100% duty free treatment immediately upon the effective  
             date of the Colombia Agreement.

            b)   Chemical Manufacturers  :  Current tariffs are between 8 and  
             20%.  Upon the effective date of the Colombia Agreement, 82% of  
             U.S. chemical exports will receive duty free treatment, with the  
             remaining tariffs being phased out over 10 years.  Examples of  
             chemical and related products include pharmaceuticals, cosmetics,  
             fertilizers, and agrochemicals.  Strong economic opportunities  
             cited in the literature include chloride, styrene, and  
             polyethylene.

            c)   Agricultural Products  :  Upon the effective date of the  
             Colombia Agreement, 53% of tariffs on agricultural products will  
             receive duty free treatment.  As an example, this includes 100%  
             elimination of the price band system that results in tariffs as  
             high as 159% on U.S. dairy products.  All Colombian duties on  
             U.S. dairy products will be eliminated in 15 years.





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        8. Related Legislation.   AB 2443  (Perez) requires the SPOC to provide  
           specified Legislative committees with copies of any official  
           position taken or comments, that any entity within the executive  
           branch of state government provided to the USTR relating to a  
           pending trade agreement.  The measure is currently on Senate Third  
           Reading.   

            AB 1276  (Skinner) of 2009, would have prohibited a state official,  
           including the Governor, from binding the state, or giving consent  
           to the federal government to bind the state, to provisions of a  
           proposed International Trade Agreement, including the government  
           procurement rules, unless a statute is enacted that explicitly  
           authorizes a state official to bind the state or to give consent to  
           bind the state to that trade agreement.  The measure was vetoed by  
           the Governor.  

            AJR 55  (Villines) of 2008, memorialized Congress that the  
           California Legislature supports the Colombia Agreement.  The  
           measure was refused adoption in the Assembly Committee on Jobs,  
           Economic Development, and the Economy.

            AB 3021  (Nu?ez, Chapter 621, Statutes of 2006).  This bill  
           established the six-member California-Mexico Border Relations  
           Council (Border Council) comprised of all Agency Secretaries and  
           the Director of the Office of Emergency Services for the purpose of  
           coordinating activities of state agencies.  The Border Council is  
           required to report to the Legislature on its activities annually.  

            AJR 14  (Jeffries, Chapter 73, Statutes of 2007).  This resolution  
           memorialized the President of the U.S. and Congress to enact  
           legislation to ensure that a substantial increment of new revenues  
           derived from customs duties and importation fees be dedicated to  
           mitigating the economic, mobility, security, and environmental  
           impacts of trade in California and other trade-affected states  
           across the U.S.  

            SB 1513  (Romero, Chapter 663, Statutes of 2006) established the  
           California Trade and Investment Act of 2008.  This bill gave  
           authority to BTH to undertake international trade and investment  
           activities and directed the development of a comprehensive state  
           trade policy, implemented through a trade strategy that engages  
           California's business community in a meaningful way.  

           SB 1762  (Figueroa, 2006) This bill would have prohibited the  
          Governor from binding California to provisions of international  





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          trade agreements without consent from the Legislature.  The measure  
          was held in the Assembly Committee on Jobs, Economic Development and  
          the Economy.

           SB 348  (Figueroa, 2005).  This bill would have prohibited a state  
          official, including the Governor, from binding the state, or giving  
          consent to the federal government to bind the state, to provisions  
          of a proposed International Trade Agreement, including the  
          government procurement rules, unless a statute is enacted that  
          explicitly authorizes a state official to bind the state or to give  
          consent to bind the state to that trade agreement.  The bill was  
          vetoed by the Governor.  

        9. Arguments in Support.  Supporters argue that trade agreements can  
           provide great economic benefits to all impacted nations, or "they  
           can create a race to the bottom, increasing unemployment and  
           lowering wages for all workers.  For an international trade  
           agreement to generate real economic development, it must be  
           premised upon enforceable labor standards."  Supporters also note  
           that free trade agreements can work when good paying jobs and  
           enforceable standards are in place.   

        10.Arguments in Opposition.  Opponents believe that current tariffs  
           prohibit successful trading in the Colombian market and elimination  
           of duties will create new opportunities for California exporters.   
           Opponents also note that this resolution is not legally binding and  
           would cast Colombia, an important trading partner, in an  
           unproductive light and believe that the Colombia Agreement is "a  
           critical element of the U.S. strategy to liberalize trade through  
           multilateral, regional and bilateral initiatives."  They  
           additionally cite the rapid growth of exports to Colombia by small  
           and medium sized U.S. firms.    
        
        SUPPORT AND OPPOSITION:
        
         Support:  

        California Labor Federation (Sponsor)
        American Federation State, County, Municipal Employees, AFL-CIO 
        California Conference Board of the Amalgamated Transit Union
        California Conference of Machinists
        California Federation of Teachers
        California Nurses Association
        California Teamsters Public Affairs Council
        Central Labor Council, AFL-CIO, of San Bernardino and Riverside  
        Counties





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        Engineers and Scientists of California
        International Longshore & Warehouse Union - AFL-CIO
        National Lawyers Guild, Labor & Employment Committee
                                                              National Nurses Organizing Committee
        North Bay Labor Council - AFL-CIO
        Northern California District Council of the International  Longshore  
        and Warehouse Union 
        Professional & Technical Engineers, Local 21
        San Diego-Imperial Counties Labor Council AFL-CIO
        San Joaquin Calaveras Central Labor Council 
        StanislaU.S. and Tuolomne Counties Central Labor Council AFL-CIO
        UNITE HERE!
        United Food and Commercial Workers Union, Western States Council

         Opposition:  

        California Chamber of Commerce
        California Farm Bureau Federation
        Embassy of Colombia in Washington D.C. 
        Gathers Strategies
        Palm Desert Chamber of Commerce
        U.S.S-POSCO Industries
        W.J. Byrnes and Co.



        Consultant:Sarah Mason