BILL ANALYSIS Ó AB 690 Page 1 ASSEMBLY THIRD READING AB 690 (Campos and Medina) As Amended January 23, 2014 Majority vote ECONOMIC DEVELOPMENT 9-0 -------------------------------- |Ayes:|Medina, Mansoor, Campos, | | |Daly, Fong, Fox, Linder, | | |Melendez, | | |V. Manuel Pérez | | | | -------------------------------- SUMMARY : Repeals and recasts statutory provisions within the Government Code relating to California and Mexico relations including adding the Director of the Governor's Office of Business and Economic Development (GO-Biz) to the membership of the California-Mexico Border Relations Council (Border Relations Council) and designating him or her as Chair. Specifically, this bill: 1)Expands the membership of the Border Relations Council to include the Director of GO-Biz. 2)Transfers the responsibility to chair the Border Relations Council from the Secretary of the Environmental Protection Agency (EPA) to the Director of GO-Biz. 3)Reorganizes the statutory placement of the Office of California-Mexico Affairs (Mexico Affairs Office) and the Border Relations Council from a general title within state government to a more specific title on foreign relations within the Government Code. EXISTING LAW : 1)Establishes a separate Government Code title for issues relating to foreign relations, which includes the assignment of responsibilities to specific government entities. GO-Biz is designated as the primary state agency responsible for international trade and foreign investment activities, excluding agriculture. The Natural Resources (NRA) and Environmental Protection (EPA) Agencies are designated as the AB 690 Page 2 primary state agencies responsible for the international exchange of environmental protection and alternative energy technologies. 2)Establishes the Mexico Affairs Office for the purpose of furthering and developing favorable economic, educational, and cultural relations with bordering Mexican and U.S. states. The Mexico Affairs Office is the successor entity to the California Office of the Southwest Border Regional Conference and the Commission of the Californias. The members of the Southwest Border Regional Conference are specified as the Governors of the four American border states: California, Arizona, New Mexico, and Texas. 3)Establishes the Border Relations Council consisting of the California state agency Secretaries of EPA (chair), NRA, Health and Human Services, Transportation, Food and Agriculture, and the Director of the Governor's Office of Emergency Services. FISCAL EFFECT : None COMMENTS : The United States and Mexican economies have become increasingly integrated, which has brought both opportunities and challenges to California, most notably in the areas of business development, labor relations, health care, and environmental protection. Beginning in 1999, Mexico became California's number one trade partner, receiving $26 billion (16% of all exports) in goods in 2012. California's top five exports to Mexico in 2012 were: Computer and Electronic Products ($8.3 billion); Transportation Equipment ($2.4 billion); Machinery, except Electrical ($2 billion); Petroleum and Coal Products ($1.8 billion); and Chemicals ($1.5 billion). According to a Public Policy Institute study, much of the California-Mexico trade is two-way within the same commodity class, suggesting extensive production sharing. Components made in California are assembled or further processed in Mexico, and shipped back to California for distribution. One estimate is that 40% of the content of U.S. imports from Mexico were originally made in the U.S. That means a large portion of the money U.S. consumers spend on Mexican imports goes to U.S. AB 690 Page 3 companies and workers. Given the significance of California's trade with Mexico, it is unfortunate that the state's two key forums for engaging with Mexico do not include a role for the state's top economic and business development organization, GO-Biz. This bill addresses this policy oversight by adding GO-Biz to the Border Relations Council and designates the Director of GO-Biz as Chair. The policy committee analysis includes additional information on the history of the California-Mexico coordinating bodies and how reorganization implementation legislation inadvertently overlook the inclusion of GO-Biz when replacing the Business, Transportation, and Housing Agency on the Border Relations Council. The policy committee analysis also includes a description of current activities of the Border Relations Council, background on international trade's contribution to the California economy, and a list of related legislation. Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090 FN: 0002976