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
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            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