BILL ANALYSIS
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|Hearing Date:June 29, 2009 |Bill No:AB |
| |1276 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND
ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 1276Author:Skinner
As Introduced: February 27, 2009 Fiscal: Yes
SUBJECT: International Trade.
SUMMARY: Prohibits any state official, including the Governor, from
giving consent to the federal government to bind the State to
provisions of international trade agreements, including procurement
rules, without the explicit consent of the State Legislature through a
change in California Law.
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 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.
This bill:
1)Sets forth findings and declarations detailing: lack of state
participation in trade negotiations;failure by the federal government
to seek state consent on international trade agreements;impact on
state policy in the event of conflicts with international trade
agreements; historicalprecedent pertaining to state procurement
processes and role the Legislature and Governorplay in those
processes.
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2)Defines "Proposed International Trade Agreement" as one negotiated
or in the process of
being negotiated between the federal government and a foreign country.
3)Prohibits any state official from binding the state, or giving
consent to the federal governmentto bind the state to provisions of a
Proposed International Trade Agreement
FISCAL EFFECT: According to the Assembly Appropriations Committee,
this bill has no direct fiscal impact.
COMMENTS:
1.Purpose. According to the Author, this measure will restore
democratic control over important trade issues by requiring public
deliberation and legislative consideration on any trade agreement
provision that involves California. The Author notes that all too
often California policy, including state procurement practices, may
be in direct conflict with international trade agreements over which
the state had no input or approval. "California has experienced the
unintended consequences associated with trade-related preemption of
state regulatory authority." The Author states, "The bill is needed
to prevent future trade challenges against California law, and to
grant the Legislature a formal role in federal-state consultations
regarding trade." This bill is about the state's internal process,
in that any decision to bind California to chapters of trade
agreements that could affect existing state procurement laws and
future policy options should be made by both the Governor and the
Legislature, providing opportunities for public input.
2.Office of the U.S. Trade Representative (USTR). 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 Single Point of Contact (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
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California governors have bound the state to the terms of specific
government procurement provisions via the USTR directly. Under this
measure, if California is given the option to participate in a
provision of a trade agreement by the USTR, the Governor and
Legislature would jointly agree before the state is committed.
3.Challenges to State Policy. Under the WTO and NAFTA, other nations
can challenge U.S. federal, state or local laws in closed-door trade
tribunals. Once a tribunal rules against a country's law or
regulation, it must be eliminated or changed before trade sanctions
are applied. California policies could be threatened under federal
preemption due to the rules of various trade agreements, including:
"Buy Local" efforts; small business preference; environmental
standards; renewable energy purchasing requirements; higher
education subsidies; state gambling restrictions and many more.
4.Recent Experiences with Binding Agreements. On May 6, 2004,
Governor Schwarzenegger agreed to bind the state to terms of the
U.S. - Australia Free Trade Agreement. In response, 21 legislators
sent a letter on May 28, 2004 expressing their concern that the
state be bound to the procurement chapter of that agreement and
requesting the Governor to not commit to procurement chapters of
upcoming agreements, noting that "international procurement
agreements could jeopardize important California procurement laws
promoting economic development, environmental protection and human
rights."
In January 2005, the USTR sent letters to state Governors detailing
trade agreement negotiations with several Central American
countries. In November of that year, legislators sent the Governor
a letter requesting that he not voluntarily agree to be bound to a
trade pact that could arguably preempt California law; ask that a
bipartisan and bicameral group of California Legislators be
appointed to IGPAC; commit to weighing in on trade agreements in a
bipartisan fashion before commitments are made.
5.Action in Other States. Four other states, Maryland, Rhode Island,
Hawaii and Minnesota have enacted legislation similar to this bill
to require approval by those states' legislatures prior to requiring
compliance with trade requests and enhancing the system for
federal-state communication about trade agreements.
6.Related Legislation.
SB 348 (Figueroa) was almost identical to this measure when it went
to the Governor's desk in 2005, establishing an internal process for
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how the state responds to federal trade agreement requests. This
bill was vetoed by the Governor.
SB 1513 (Romero, Chapter 663, Statutes of 2006) established the
California Trade and Investment Act of 2008. This bill gave
authority to the State Business, Transportation and Housing Agency
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.
7.Arguments in Support. Proponents note that this measure brings
about openness and transparency to ensure inclusive decision making
on California's role in the non-trade regulatory policy constraints
found in trade agreements. They argue that the bill provides
sunshine on the process and allows for state level input when state
issues are raised.
8.Arguments in Opposition. The California Chamber of Commerce argues
that California is already able to provide guidance on trade
agreements via the USTR.
SUPPORT AND OPPOSITION:
Support:
California Conference of Machinists (Sponsor)
AFSCME
California Teamsters Public Affairs Council
California Conference Board of the Amalgamated Transit Union
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
Strategic Committee of Public Employees, LIUNA
United Food and Commercial Workers Union, Western States Council
UNITE HERE
Opposition:
California Chamber of Commerce
Consultant:Sarah Mason
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