BILL ANALYSIS Ó
AB 1409
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Date of Hearing: April 12, 2011
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Pérez, Chair
AB 1409 (Committee on Jobs, Economic Development, and the
Economy) - As Introduced: March 10, 2011
SUBJECT : International trade and investment strategy: goods
movement
SUMMARY : Requires that the next update of the international
trade and investment strategy include policy goals, objectives
and recommendations from the state Goods Movement Plan (GMAP),
as well as related measurable outcomes and timelines.
EXISTING LAW :
1)Authorizes BTH to undertake international trade and investment
activities, and as a condition of that authority, directs the
development of a comprehensive international trade and
investment policy for California.
2)Requires BTH to prepare a study every five years on the
potential roles of the state and global markets. The study is
required to make recommendations on policy, program and
funding needs in the near- and long-term. Among other things,
the recommendations may include infrastructure improvements,
workforce training needs, and/or incentives for business.
3)Based on the study, requires BTH to develop an international
trade and investment strategy every five years thereafter.
The Legislature is required to review the study within 90 days
of being submitted to the Chief Clerk in each house. The next
strategy is due February 2013.
4)Requires BTH to convene a statewide business partnership to
advise BTH on business needs and priorities for inclusion on
the strategy.
5)Provides for the issuance of more than $19 billion (2006 Bond
Acts) in transportation related infrastructure bonds, which
included $3 billion for projects that benefit trade corridors
and freight and to mitigate air quality issues.
FISCAL EFFECT : Unknown
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COMMENTS :
1)Purpose: According to the author, California must ensure that
it has a robust trade infrastructure including its airports,
seaports and land ports of entry in order to facilitate the
efficient transfer of exports and imports. If prepared,
California will benefit under the National Export Initiative,
a federal effort to double American exports from 2010 to 2015
and support the growth of two million jobs across the United
States.
2)California's trade strategy : Up until 2004, the Technology,
Trade and Commerce Agency (Agency) was the responsible
government entity for promoting economic development,
international trade, and foreign investment in California.
When the agency was eliminated, due to its poor administrative
performance, the authority for all state trade activity was
also struck from statute.
Beginning in the 2005-06 session, several legislative measures
were introduced to reinstate the state's trade authority. No
measures were successful until a compromise was negotiated by
the Assembly Committee on Jobs, Economic Development and the
Economy (JEDE), SB 1530 Ý(Romero), Chapter 663, Statutes of
2006]. As part of its work JEDE produced a white paper on
international trade and the state's global competitiveness
which can be found at www.assembly.ca.gov .
During the deliberations on the re-establishment of the
state's trade authority, concerns were repeatedly raised that
the state lacked a comprehensive, or even generally
understandable, statutory scheme related to trade and foreign
relations. SB 1530 addressed these concerns by first
requiring BTH to undertake a trade study to determine what
role, if any, the state should play in international trade and
foreign investment activities. Second, the bill required BTH
to establish a business advisory committee to provide
California businesses with direct access to the policy making
process. Third, the bill required the development of a trade
strategy that is consistent with the trade study and acts as
the vehicle for implementing the state's trade policy. The
first strategy was published in February 2008. The next
update is required in February 2013.
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3)The Goods Movement Action Plan: The purpose of the GMAP is to
improve and expand California's goods movement industry and
infrastructure in a manner which will generate jobs, increase
mobility, reduce traffic congestion, improve air quality,
protect public health, enhance port safety, and improve
people's quality of life.
The GMAP work done to date takes a very macro look at the
goods movement industry currently serving California business,
and makes recommendations for projects on California's
highway, rail, and air transport goods movement networks. Some
of the recommendations made are as follows:
a) Provide an assessment of projects as part of a statewide
goods movement system;
b) Prioritize regions and corridors within the state;
c) Develop a preliminary list of candidate projects; and
d) Apply a timeframe to those projects to be designated as
immediate, short term or long-term.
As stated above the current GMAP is a macro-level plan, and
does not necessarily reflect the unique needs of different
industry sectors or the infrastructure needs of varying size
businesses including small and microenterprise. With these
small size businesses representing such a significant portion
of the state's trade activity, it is important that this issue
is addressed in some policy and priority making document.
Implementation of AB 1409 would build upon the good work of
the GMAP by adding this more refined assessment of trade
infrastructure needs.
4)The California Economy and Trade: California is the one of
the largest and most diversified economies in the world with a
gross domestic product (GDP) of over $1.9 trillion in 2009.
Worldwide GDP data in rank order is as follows: United States
($14.3 trillion), Japan ($5.10 trillion), China ($4.90
trillion), Germany ($3.35 trillion), France ($2.65 trillion),
United Kingdom ($2.17 trillion), Italy ($2.11 trillion),
Brazil ($1.57 trillion), Spain ($1.46 trillion), Canada ($1.34
trillion) and India ($1.30 trillion), and the Russian
Federation ($1.23 trillion). If California were an
independent nation it would rank as the eighth largest economy
in the world.
Historically, the state's significance in the global
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marketplace resulted from a variety of factors, including its
strategic west coast location, its economically diverse
regional economies, its skilled workforce and its culture of
innovation and entrepreneurship, particularly in the area of
technology.
Economic growth in California has also historically outpaced
the growth rate of the nation as a whole. In 2007, as an
example, California's GDP growth rate was 33.9% as compared to
the U.S. at 30.4%. Among other economic distinctions, the
state leads the nation in export-related jobs, small business
development, and business start-ups, in general.
The chart to the left, prepared by the California Employment
Development Department, provides detail on California's
largest industry sectors in 2008 including the total number of
jobs.
International trade is a very important component of
California's $1.9 trillion economy driving approximately one
quarter of the state GDP. Currently, Mexico is our top
trading partner, receiving $17.4 billion in goods in 2009.
The state's second and third largest trading partners are
Canada ($14.2 billion) and Japan ($10.9 billion). 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.
The most recent trade numbers coming from the U.S. Department
of Commerce indicate that California trade (exports and
imports) is continuing to move in a positive direction. In
2010, $10.38 billion in products was exported from California.
This was a 13.7% increase over the previous year and the
fourth straight month increases were reported based on
year-to-year gains. Imports through California ports also
rose faster in February reporting a 38.3% increase ($22.53)
over the previous year. The number of loaded shipping
containers leaving Long Beach, Los Angeles and Oakland was up
by 27% from last year and similar increases were reported for
outbound cargo tonnage.
5)California Goods Movement: California shipped to over 226
foreign destinations in 2010. The state's three major
container ports, Long Beach, Los Angeles, and Oakland, carry
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more than 99% of California's total container cargo volume.
However, California's trade infrastructure is old and in need
of rehabilitation, expansion and updating.
Containerization, just-in-time delivery, and package express
are having significant impacts on transportation and supply
chain management. In the early years, globalization benefited
from cheap transportation costs and increased access to
telecommunications. Today, transportation costs are rising,
long-term access to relatively low cost oil is being
questioned, and global markets are shifting. Companies and
manufacturers are moving to China and India not only because
it is perceived to be cheaper, but because the middle class in
these countries is growing and creating their own new markets
for products and services.
For California, expanded supply chains for manufacturing and
product distribution have resulted in congested ports, where
cargo ships are often delayed for extended periods of time
waiting to unload. Truck access is often cited for the
delays. At international airports, truck access is also a
problem, and expansion of major airports is severely limited
by urbanization, ground access, air quality impacts, and local
opposition.
6)Proposition IB Transportation Bonds : California voters
approved Proposition 1B, which authorized the sale of $19
billion in general obligation bonds for a variety of
transportation purposes in November 2006. The funds are for
improving and increasing California's highway capacity,
freight rail system, projects to enhance the efficiency of
ports, truck corridor improvements and Border access
improvements that enhance goods movement between California
and Mexico.
7)Proposed amendments:
a) Clarify that only those portions of the Goods Movement
Plan that the Secretary deems appropriate are to be
included in international trade and investment strategy.
b) Delete a portion of the statute that is no longer
relevant to the 2013 strategy update.
8)Related legislation from previous legislative sessions : The
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following is a list of bills that were introduced in previous
legislative sessions related to goods movement:
a) AB 761 (Coto) Small Business Procurement: State
Infrastructure Construction Goals : This bill requires each
state agency awarding contracts that are financed with
proceeds from the infrastructure bonds approved by voters
in November 2006 to establish a 25% small business
participation goal for state infrastructure construction
contracts and to provide specified assistance to small
businesses bidding on state infrastructure bond-related
contracts. Status: This bill was signed by the Governor,
Chapter 611, Statutes of 2007.
b) AB 1107 (Arambula) Goods Movement: Small Business and
Microenterprise: As passed by JEDE, this bill would have
required the California Small Business Board within the
Business, Transportation and Housing Agency in
collaboration with the Labor and Workforce Development
Agency and the California Department of Food and
Agriculture to assess the goods movement needs of small
business and microenterprise in California, and to make
recommendations thereupon, for incorporation in the
California Economic Development Strategic Plan and the
State Transportation Plan. Status: JEDE-related content
removed. The bill was vetoed by the Governor in 2008.
c) AB 1672 (Nunez) California Transportation Commission :
This bill makes various findings regarding transportation
infrastructure in California, and states certain goals and
policies for the expenditure of Proposition 1B bond funds,
including the expenditure of money in the Trade Corridor
Infrastructure Fund. Status: The bill was signed by the
Governor, Chapter 717, Statutes of 2007.
d) AB 2896 (Karnette) Commercial Development Trade Council :
This bill would have created the Commercial Transportation
Council in Business, Transportation and Housing Agency to
review and collect data, and to provide advice concerning
commercial transportation needs in California. Status:
The bill was held in the Senate Committee on Governmental
Organization in 2006.
e) SB 19 (Lowenthal) Trade Corridors: Emissions Reduction :
This bill declared legislative intent with regard to the
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expenditure of Proposition 1B bond money for Trade
Corridors. Status: The bill was held under submission in
Assembly Committee on Appropriations in 2008.
f) SB 262 (Runner) Trade Corridor Improvements : This bill
would have required the California Transportation
Commission, when allocating Proposition 1B Trade Corridor
Infrastructure money, to consider the impact of a project
on goods movement and port operations in the Southern
California region, and impacts and benefits of an inland
port on reducing congestion at or in the vicinity of the
Ports of Los Angeles and Long Beach. Status: The bill was
held in the Senate Committee on Transportation and Housing
in 2008.
g) SB 1513 (Perata) California International Trade and
Investment Act: Requires the Secretary of the Business,
Transportation and Housing Agency to study the feasibility
and desirability of establishing permanent international
trade and investment programs and authorizes the Secretary
to develop a strategic plan for state involvement in
international trade and investment. Status: The bill was
signed by the Governor, Chapter 633, Statutes of 2006.
h) SB 1266 (Perata) Highway Safety, Traffic Reduction, Air
Quality, and Port Security Bond Act of 2006 : This bill
provided for $19 billion in transportation infrastructure
bonds including $3.5 billion to be deposited in the Trade
Corridors Infrastructure Fund. Status: The bill was
signed by the Governor, Chapter 25, Statutes of 2006.
REGISTERED SUPPORT / OPPOSITION :
Support
Assembly Committee on Jobs, Economic Development and the Economy
(sponsor)
Opposition
None received
Analysis Prepared by : Mercedes Flores / J., E.D. & E. / (916)
319-2090
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