BILL ANALYSIS Ó
-----------------------------------------------------------------------
|Hearing Date:June 27, 2011 |Bill No:AB |
| |1409 |
-----------------------------------------------------------------------
SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 1409Author:Jobs, Economic Development
And the Economy
As Amended:April 25, 2011 Fiscal:Yes
SUBJECT: Economic development: international trade and investment.
SUMMARY: Requires that the next update of the international trade and
investment strategy by the Business, Transportation and Housing Agency
(BT&H) include policy goals, objectives and recommendations from the
state Goods Movement Action Plan (GMAP), as well as related measurable
outcomes and timelines.
Existing law:
1)Specifies that the Governor is the primary state officer
representing California's interest in international affairs. (GC §
99500)
2)Sets forth findings and declarations detailing: (1) The importance
of strengthening collaborative linkages among remaining
California-based international trade and investment promotion
programs operated at federal, state, regional and local levels in
light of the repeal of the statutory authority for the Technology,
Trade and Commerce Agency (TTCA) in 2003;
(2) Data from 2000 shows that international trade and investment
activity in the state supports one in every seven jobs; (3) Public
Policy Institute of California (PPIC) data as to the productivity of
export business; (4) California has elements to form the foundation
for a global market-related economy; (5) California's multicultural
and ethnic populations offer unique opportunities for international
trade and investment; (6) High numbers of California workers are
employed by subsidiaries of foreign companies; and, (7) California's
trade and investment policy is a living document that should be
AB 1409
Page 2
regularly updated to reflect emerging business trends and the
changing needs of California businesses and workers. (GC § 13996.4)
3)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 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 (henceforth, the Strategy). (GC § 13996.45)
4)Requires BT&H 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. (GC § 13996.5)
5)Requires BT&H to develop an international trade and investment
strategy, based on the study, every five years thereafter. Requires
the Legislature to review the study within 90 days of being
submitted to the Chief Clerk in each house. (GC § 13996.55)
6)Requires BT&H to convene a statewide business partnership to advise
on business needs and priorities for inclusion on the strategy. (GC
§ 13996.6)
7)Provides for the issuance of more than $19 billion in transportation
related infrastructure bonds (2006 Bond Acts), which included $3
billion for projects that benefit trade corridors and freight and to
mitigate air quality issues. (GC § 8879.23)
8)Provides for two billion dollars to the Trade Corridors Improvement
Fund, and in determining the projects eligible for funding, the
California Transportation Commission (CTC) shall consult the trade
infrastructure and goods movement plan (GMAP) submitted to the
commission by the Secretary of Business Transportation and Housing
and the Secretary for Environmental Protection. (GC § 8879.23)
This bill:
1) Declares that California must ensure that it has an adequate and
robust trade infrastructure in place at its airports, seaports, and
land ports of entry for the efficient facilitation of exports and
imports of cargo
AB 1409
Page 3
2) Declares that California's exporters will play a critical role in
the National Export Initiative (NEI) and support efforts towards
NEI's implementation.
3) Requires the Secretary of BT&H to include in its strategic report
on international trade and investment to the Legislature:
a) Policy goals, objectives and recommendations adopted in GMAP.
b) Measurable outcomes and timelines for the goals, objectives,
and actions for the completion of those aspects of GMAP.
c) Identification of public agencies and private sector entities
necessary to implement GMAP.
FISCAL EFFECT: According to the Assembly Committee on Appropriations
analysis dated May 4, 2011, BT&H indicates that the updates, including
changes to the requirements of the strategy, can be done within
existing resources.
COMMENTS:
1. Purpose. This bill is sponsored by the Author . 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 NEI, a federal
effort to double American exports from 2010 to 2015 and support the
growth of two million jobs across the United States.
2. Background. According to information provided by the Author, the
International Trade White Paper prepared in 2006 by the Assembly
Committee on Jobs, Economic Development, and the Economy and this
committee found that California is the eighth largest economy in
the world with a state gross product of over $1.5 trillion.
International trade-related commerce represents approximately
one-quarter of California's economy and California-made exports
directly account for about 8% of gross state product.
The state leads the nation in export related jobs. According to
U.S. Department of Commerce estimates, for every one million
dollars of increased trade activity, 11 new jobs are supported.
Workers in trade earn on average 13 to 28% higher wages than the
national average. If California were a country, it would be the
11th largest exporter in the world.
AB 1409
Page 4
Up until 2004, the Technology, Trade and Commerce Agency (TTCA) was
the responsible government entity for promoting economic
development, international trade, and foreign investment in
California. When TTCA 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. SB 1530 (Romero, 2006) addressed
these concerns by requiring BT&H to undertake a trade study to
determine what role the state should play in international trade
and foreign investment activities and required them to establish a
business advisory committee, and development of a trade strategy
consistent with the study and acts as the vehicle for implementing
the state's trade policy. The first strategy was published in
February 2008 and the next update is required in February 2013.
The strategy includes policy goals, objectives and recommendations
necessary to implement an international trade and investment
program, measurable outcomes and timelines, impediments for
achieving goals and objectives, identification of key stakeholder
partnerships, funding options, and an organizational structure for
administration of policies, programs and services.
The overarching policy of the strategy is to increase jobs by
promoting the export of California products and services, while
also promoting foreign direct investment. Five primary objectives
are: (1) Leverage existing services to provide export assistance to
companies in prioritized industry clusters; (2) Develop a foreign
direct investment program; (3) Promote and leverage the California
brand; (4) Monitor and engage the federal government in regards to
U.S. trade policy; and (5) Integrate international trade and
investment into the state's overall economic development strategy.
3. President Obama's National Export Initiative (NEI). On March 11,
2010, President Obama signed Executive Order 13534, the National
Export Initiative (NEI). The aim of the initiative is to address
the "economic and financial crisis that has led to the loss of
millions of U.S. jobs" by "ensuring businesses can actively
participate in international markets by increasing their exports of
goods, services, and agricultural products" and improving
"conditions that directly affect the private sector's ability to
export."
NEI aims to create jobs and improve the economy through its five
objectives: (1) improving advocacy efforts on behalf of U.S.
exporters; (2) increased access to export financing; (3) reinforced
efforts to remove barriers to trade; (4) enforcement of trade
AB 1409
Page 5
rules; and (5) international promotion of policies leading to
strong, sustainable and balanced economic growth.
Additionally, it established an Export Promotion Cabinet to develop
and coordinate the implementation of NEI which meets periodically
and reports to the President on the progress of NEI. The Cabinet
coordinates with the Trade Promotion Coordinating Committee,
established by Executive Order 12870.
According to the NEI Website, the result of these new policies
coupled with the global economic rebound led to an almost 17
percent growth in exports in the first four months of 2010 from the
same period in 2009, putting the U.S. on track to reach the
President's goal of doubling exports and supporting several million
new jobs over five years.
As a result of the initiative, the Department of Commerce
coordinated 18 trade missions with over 160 companies participating
in 24 countries. Chinese markets to U.S. pork and pork products
have been reopened as well as the Russian market to U.S. poultry
exports. Secretary Geithner is promoting balanced and strong
growth in the global economy through the G-20 process. The WTO
ruled in favor of the U.S. on a case that found that European
government subsidies worth billions have been used to subsidize the
creation of every model of large civil aircraft produced by Airbus,
which has damaged Boeing and its workers.
4. The Goods Movement Action Plan (GMAP). GMAP is prepared by BT&H and
the California Environmental Protection Agency (Cal-EPA). In
December 2004, the Schwarzenegger Administration formed the Goods
Movement Cabinet Work Group, co-chaired by Secretary Sunne Wright
McPeak of BT&H and Secretary Alan Lloyd of Cal-EPA, leading to the
publication of the Administration Goods Movement Policy, "Goods
Movement in California," in January 2005.
The development of the GMAP has been a two-phase process. The Phase
I report includes a compiled inventory of existing and proposed
goods movement infrastructure projects and was released on
September 2, 2005. Phase II of GMAP is a statewide action plan for
goods movement capacity expansion, goods movement-related public
health and environmental impact mitigation and community impact
mitigation, and goods movement-related security and public safety
enhancements. It specifically presents a framework for decision
making regarding candidate actions and potential "solution sets" to
achieve simultaneous and continuous improvement for each of the
subject areas.
AB 1409
Page 6
GMAP presents a framework for action. It is built on a performance
measurement platform that provides a means to evaluate, select, and
fund candidate projects and actions relative to desired outcomes.
It seeks to generate jobs, increase mobility and relieve traffic
congestion, improve air quality and protect public health, enhance
public and port safety, and improve California's quality of life.
It identifies approximately 200 actions and projects recommended
for further investigation, review or implementation totaling $15
billion in collective capital costs. Costs for goods
movement-related emission reduction strategies are estimated to be
between $6 billion and $10 billion.
5. Similar and Related Legislation. SB 460 (Price) of 2011, requires
the Secretary of BT&H to convene a statewide business partnership
for international trade marketing and promotion that includes, but
is not limited to, representatives of public airports, land ports
of entry, seaports, ocean carriers, marine terminal operators, air
carriers, warehouse operators, railroads, trucking companies,
foreign trade zones, and shippers, specifically including
agricultural exporters, manufacturers, post-consumer secondary
material handlers, and retailers. The bill also requires the
partnership to advise the Secretary on what role the state should
play in international trade marketing and promotion, as specified.
The bill is pending before the Assembly Committee on Jobs, Economic
Development and the Economy.
SCR 33 (Price) of 2011, expresses the sentiment of the Legislature
that the federal EB-5 visa program is beneficial to California's
economic development and provides important opportunities for
foreign direct investment to California. The bill is pending
assignment in the Assembly.
AB 1410 (Assembly Committee on Jobs, Economic Development and the
Economy) of 2011, reorganizes the statutory placement of the
California-Mexico Affairs Office and the California-Mexico Border
Relations Council from a general title within state government to a
more specific title on foreign relations within the Government
Code, but does not make any changes to the content of sections.
The bill passed this Committee June 13 on an 8-0 vote.
SB 1175 (Price) of 2010, would have required the Secretary to
direct the California Travel and Tourism Commission (Commission) to
conduct a review of its principal mission and core competencies in
order to determine if the Commission should include trade promotion
in its strategic marketing plan or other future plans of the
AB 1409
Page 7
commission and provide a report to the Legislature. The bill was
held in the Senate Committee on Rules.
AB 2443 (Perez) of 2010, would have required the state point of
contact for trade agreements to provide specified Legislative
committees with copies of any official position taken or comments,
that any entity within the executive branch of state government
provided to the U.S. Trade Representative relating to a pending
trade agreement. The bill also created a new process for the
establishment of Sister State relationships with a purpose of
promoting economic growth and trade and investment opportunities.
The measure was vetoed by the Governor. In his veto message, the
Governor wrote that the "bill would not only cause confusion but
also undermine the strength of California's position by allowing
the Legislature to insert itself into international trade agreement
discussions and negotiations."
AB 1558 (Assembly Committee on Jobs, Economic Development and the
Economy) of 2009, recodified and reorganized sections of the
Government Code to create one comprehensive code for the state's
international trade activities and programs. The measure was
amended to deal with reorganization of the state's economic
development programs. The bill was held in the Senate Committee on
Appropriations in 2010.
AB 1276 (Skinner) of 2009, would have prohibited 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, including the government
procurement rules, unless a statute is enacted that explicitly
authorizes a state official to bind the state or to give consent to
bind the state to that trade agreement. The bill was vetoed by the
Governor. In his veto message, the Governor wrote that the bill
"places unnecessary hurdles on international trade and
unnecessarily complicates processes. Additionally, the bill would
defy current agreements with the World Trade Organization and
existing trade agreements."
AJR 27 (Torrico, Chapter 145, Statutes of 2010) memorializes
Congress that the California Legislature opposes the United
States-Colombia Trade Promotion Agreement.
AB 89 (Garcia) of 2008, would have required BT&H to prepare a study
by January 1, 2010, regarding infrastructure development along the
California/Mexico border, including an assessment of whether
alternative financing mechanisms may be necessary to meet the
AB 1409
Page 8
development needs of the bi-national region. The bill was vetoed
by the Governor. In his veto message, the Governor stated that its
provisions are already addressed through international, federal,
and state planning and coordinating channels and that the bill was
therefore unnecessary.
AB 1719 (Assembly Committee on Jobs, Economic Development and the
Economy) of 2008, would have made technical and non-substantive
changes to codes relating to the state's international trade
activities but was later amended to deal with an entirely different
subject matter. The bill was held in the Assembly Committee on
Rules.
AB 1722 (Committee on Jobs, Economic Development, and the Economy,
2008) would have required BT&H to provide the Legislature with a
copy of the international trade and investment policy, which is a
result of its work on the required international trade study and
strategy. The bill was vetoed by the Governor. In his veto
message, the Governor stated that he was unable to sign the bill
citing state budget time constraints and a belief that the bill did
not meet a high enough priority to be signed.
AJR 55 (Villines,) of 2008, would have memorialized Congress that
the California Legislature supports the United States-Colombia
Trade Promotion Agreement. The bill failed passage in the Assembly
Committee on Jobs, Economic Development, and the Economy.
AJR 14 (Jeffries, Chapter 73, Statutes of 2007) memorializes the
President of the U.S. and Congress to enact legislation to ensure
that a substantial increment of new revenues derived from customs
duties and importation fees be dedicated to mitigating the
economic, mobility, security, and environmental impacts of trade in
California and other trade-affected states across the U.S.
SB 1513 (Romero, Chapter 663, Statutes of 2006) provides new
authority for BT&H to undertake international trade and investment
activities, and as a condition of that new authority, directs the
development of a comprehensive international trade and investment
policy for California.
SUPPORT AND OPPOSITION:
Support: None received as of June 20, 2011
Opposition: None received as of June 20, 2011
AB 1409
Page 9
Consultant:Jonathan Ma and Sarah Mason