BILL ANALYSIS AB 1276 Page 1 Date of Hearing: May 6, 2009 ASSEMBLY COMMITTEE ON APPROPRIATIONS Kevin De Leon, Chair AB 1276 (Skinner) - As Introduced: February 27, 2009 Policy Committee: Jobs Vote:5 - 2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill prohibits 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, unless a statute is enacted explicitly authorizing the state official to bind the state to a specific trade agreement. FISCAL EFFECT No direct fiscal impact. (If a governor was unable to get subsequent legislative authority to bind the state and a future international trade agreement, there would be unknown fiscal implications.) COMMENTS 1)Rationale . Currently, when a trade agreement is under negotiation, the United States Trade Representative (USTR) directs all correspondence and requests to state governors. According to the author, past California governors have granted their consent for the state to be bound to the rules regarding government procurement contained in trade agreements even though there is no process for this in state law and even though the California Legislative branch is charged with setting the state's procurement policy. Under the current system, the legislature is not informed of USTR requests and is excluded from the trade-related consultation and decision-making. The proponents of AB 1276 state that the decision to provide the federal government consent to bind the state to the rules AB 1276 Page 2 of an international trade agreement is a legislative function because it has the potential of altering the legal rights and duties of the state, as well as setting state policies. This is because once the state is bound to an agreement, the state is constrained from implementing or enforcing legislation that falls outside of the rules set forth in the trade agreement. Further, the state is open to challenges in foreign trade tribunals of its laws and regulations brought by foreign businesses seeking preferential treatments guaranteed by the trade agreements. As an example, California has a number of state policies and laws relating to procurement which direct state resources to small businesses, business located in enterprise zones, and disabled veteran-owned business enterprises. Potentially, these types of laws could be found to be trade barriers to foreign businesses who want to compete for state contracts. The proponents state that the decision to commit a state to an international trade agreement involves the state evaluating its principles and priorities, weighing environmental, labor, human rights, foreign relations, business, and budget considerations against the opportunities and limitations of being bound to an agreement. While it is the role of the governor to implement state laws, it is the role of the Legislature to set policy. Therefore, the governor cannot unilaterally undertake a legislative function. AB 1276 is intended to establish a legislative review of the potential impacts of a trade agreement and limit the ability of the governor to bind the state to an agreement without the consent of the Legislature. 2)Related Legislation . In 2005, SB 348 (Figueroa), a substantially similar bill, was vetoed by the governor. In his veto message he wrote that the bill would not accomplish its intended goal because, under the Supremacy Clause of the United States Constitution, international trade agreements are treaties that preempt state law. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081