BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1276|
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THIRD READING
Bill No: AB 1276
Author: Skinner (D), et al
Amended: As introduced
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM : 7-2, 6/29/09
AYES: Negrete McLeod, Wyland, Corbett, Florez, Oropeza,
Romero, Yee
NOES: Aanestad, Walters
NO VOTE RECORDED: Correa
SENATE APPROPRIATIONS COMMITTEE : 8-4, 7/13/09
AYES: Kehoe, Corbett, Hancock, Leno, Price, Wolk, Wyland,
Yee
NOES: Cox, Denham, Runner, Walters
NO VOTE RECORDED: Oropeza
ASSEMBLY FLOOR : 50-29, 5/28/09 - See last page for vote
SUBJECT : International trade
SOURCE : California Conference of Machinists
DIGEST : This bill 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.
CONTINUED
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ANALYSIS : 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 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 Department of Food
and Agriculture (DFA), 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; historical precedent
pertaining to state procurement processes and role the
Legislature and Governor play in those processes.
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 government to
bind the state to provisions of a Proposed
International Trade Agreement
Comments
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
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Point of Contact; 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. Under this bill, 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.
Challenges to State Policy . Under the World Trade
Organization and the North American Free Trade Agreement,
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.
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
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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.
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 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Prohibition on trade No new costs;
unknown potential General/
agreement participation foregone
savings or costs in future Special
years depending on future action by
Legislature and Governor
SUPPORT : (Verified 7/14/09)
California Conference of Machinists (source)
American Federation of Labor and Congress of Industrial
Organizations
American Federation of State, County and Municipal
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Employees
California Conference Board of the Amalgamated Transit
Union
California Labor Federation
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
Sierra Club
Strategic Committee of Public Employees, LIUNA
UNITE HERE
United Food and Commercial Workers Union, Western States
Council
OPPOSITION : (Verified 7/14/09)
California Chamber of Commerce
ARGUMENTS IN SUPPORT : According to the author's office,
this bill 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.
ARGUMENTS IN OPPOSITION : The California Chamber of
Commerce argues that California is already able to provide
guidance on trade agreements via the USTR, and states in
opposition that "The United States Constitution, Article
VI, provides that treaties and international trade
agreements are laws of the United States, and as such, are
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supreme over the laws of the states. Under the Executive
branch, the Office of the United States Trade
Representative serves as an agency of over 200 people, a
highly committed group of professionals who have decades of
specialized experience in trade issues and regions of the
world.
"Under the directive from the Trade Act of 1974, the U.S.
Trade Representative is required to seek advice from the
Intergovernmental Policy Advisory Committee; a group
established to provide guidance regarding issues that may
affect the U.S. states or cities. Currently, California is
represented on this committee."
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Hall, Hayashi, Hernandez,
Hill, Huber, Huffman, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez, V.
Manuel Perez, Portantino, Price, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,
Harkey, Jeffries, Knight, Logue, Miller, Nestande,
Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran,
Villines
NO VOTE RECORDED: Galgiani
JA:nl 7/15/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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