BILL ANALYSIS Ó
AB 1400
Page 1
Date of Hearing: April 23, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
AB 1400 (Jobs, Economic Development and the Economy) - As Amended:
April 16, 2013
SUBJECT : Export Label Certificates
SUMMARY : Makes changes in the state's administration of the Export
Document Program to address an existing backlog and streamline the
process in the future. Specifically, this bill :
1)Requires the Department of Public Health (DPH), to accept requests
for an export document through electronic methods, including email.
2)Requires DPH to develop procedures to expedite approval of export
document requests when the department previously approved a request
and the label remains unchanged.
3)Extends the term of the export document from 180 days (six months)
to one year.
EXISTING LAW , the Sherman Food, Drug, and Cosmetic Law, authorizes a
person who ships to another state or country to request the DPH to
issue a specified export document, which states that the department
does not object to the sale of the food, drug, device, or cosmetic in
this state or the shipment of the product to any state or country.
In order to make the request, the food, drug, device, or cosmetic is
required to be manufactured or produced in this state by an individual
who has a valid registration, license, certificate, or permit, as
specified. The document request must include all labels and
advertising relating to the product, and the approximate date of the
shipment. Applicants may also request and additional statements be
incorporated into the export document. The export label is required
to be provided within five days of application and expires after 180
days.
FISCAL EFFECT : Unknown
COMMENTS :
1)Framing the Policy Issue : This measure, a committee bill, was
introduced to address the significant backlog of requests for export
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documents from the DPH. Statute requires export documents to be
provided within five days, however, the department admits to delays
of up to five to eight weeks.
While businesses are not required to obtain certificates under
California law, other countries often require the certificates for
imported products in order to certify that the manufacturer and its
products are subject to the health standards required by the DPH.
Prior to applying for these export documents, the manufacturer must
already hold valid permits, certificates, registrations, and
licenses to produce products in California.
By improving the process times and extending the term of the export
document, businesses will be able to arrange export transportation
with more certainty and thereby reduce costs and meet contractual
obligations. The analysis includes information on the Export
Document Program, a pending budget change proposal (BCP) to increase
program staffing, and California's trade related economy.
2)Export Document Program : The Export Document Program was
established in 1991 for the purpose of ensuring the public of the
safety of foods, drugs, medical devices, and cosmetics.
There are two factors that the Food and Drug Branch (FDB) of the DPH
uses to determine whether an export document should be issued to
manufacturers. First, following inspections of the state's
manufacturers, distributors, and wholesalers, FDB determines whether
the system of manufacture and quality control used to produce the
product is adequate. The second factor the FDB considers is whether
the product is labeled properly, which is determined by a review of
the product at the time the export document is requested.
Foreign countries are increasingly requiring export documents. In
2001, there were 1,731 requests vs. 9,500 requests in 2012.
Although the program has seen significant increases in export
document requests, the staffing levels have remained at their
initial 1991 levels of one full-time staff service analyst and a
half-time office technician. As described below, funding for the
program is provided through user fees, which draws into question why
the backlog hasn't been addressed sooner.
3)Special Funds : The Export Label Program is funded through user
fees, which are deposited in the Export Document Program Fund and
available through an appropriation by the Legislature. By statute,
applicants pay a one-time fee of $100 and a service charge at the
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rate of $80 per hour, at a minimum of $25 per request. Additional
costs incurred by DPH may also be required, such as the need for
additional inspection, priority mailing, or notary services. All
fees are required to be itemized and disclosed on the statement or
invoice. In no case can the fees exceed the reasonable costs of
administering the program.
4)Budget Change Proposal : According to Budget Committee documents,
the FDB believes that the eight week backlog is, in part, due to the
increase in specialized applications, which require multiple product
labels, labeling and advertising, special wording, and notary
services. These requests are further complicated by FDB's lack of
scientific or research staff to assist in the more technical and
specialized label reviews.
The FDB has requested permanent expenditure authority from Special
Funds of $287,000 in 2013-14 and $281,000 ongoing and three
full-time permanent positions for the Export Document Program. The
Legislative Analyst Office analysis has reviewed the proposal and
states that they have not identified any issues. The Assembly
Budget Subcommittee 1 on Health and Human Services took testimony on
the issue at their March 1, 2013 hearing.
Hearing testimony in support of the budget augmentation by the
Grocery Manufacturer Association also included recommendations to
extend the term of the certificate from 180 day to one year and to
allow for electronic, on-line submittal of applications. AB 1400
makes the statutory changes to implement these recommendations.
5)California's Global Economy : International trade and foreign
investment are very important components of California's $1.9
trillion economy. If California were a country, it would be the
11th largest exporter in the world. Exports from California
accounted for over 10.5% of total U.S. exports in goods, shipping to
over 220 foreign destinations in 2012.
California's land, sea, and air ports of entry serve as key
international commercial gateways for products entering the country.
California exported $161 billion in goods in 2012 (up from $159
billion in 2011), ranking only second to Texas with $265.3 billion
in export goods. Computers and electronic products were
California's top exports in 2012, accounting for 27.6% of all state
exports, or $44.5 billion.
AB 1400
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--------------------------------------------------------
| 2012 Exports From California to the World |
--------------------------------------------------------
|-----------------------+-----------------+---------------|
| Product | Value ($ |Percent |
| | billions) | |
|-----------------------+-----------------+---------------|
|334 Computers & | 44.5 | 27.6 % |
|Electronic Prod. | | |
|-----------------------+-----------------+---------------|
|333 Machinery (except | 14.8 | 9.2 % |
|electrical) | | |
|-----------------------+-----------------+---------------|
|336 Transportation | 16.1 | 10.0 % |
|Equipment | | |
|-----------------------+-----------------+---------------|
|325 Chemical | 12.7 | 7.9 % |
|Manufactures | | |
|-----------------------+-----------------+---------------|
|339 Misc. Manufacture | 13.8 | 8.6 % |
|Commodities | | |
|-----------------------+-----------------+---------------|
|111 Agricultural | 11.9 | 7.4 % |
|Products | | |
|-----------------------+-----------------+---------------|
|All Others | 47.2 | 29.3 |
| | | % |
|-----------------------+-----------------+---------------|
|Total | | 100 |
| | $161 |% |
---------------------------------------------------------
--------------------------------------------------------
|Source: |
|Tradestates.com |
--------------------------------------------------------
Manufacturing is California's most export-intensive activity.
Overall, manufacturing exports represent 9.4% of California's gross
domestic product. More than one-fifth (21.9%) of all manufacturing
workers in California directly depend on exports for their jobs.
Small- and medium-sized firms generated more than two-fifths (43%)
of California's total exports of merchandise. This represents the
seventh highest percentage among states and is well above the 29%
national average export share for these firms.
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Mexico is California's top trading partner, receiving $26.3 billion
(16%) in goods in 2012. The state's second and third largest
trading partners are Canada and China with $17.3 billion (10.7%) and
$13.9 billion (8.6%), respectively. Other top-ranking export
destinations include Japan, South Korea, Taiwan, the United Kingdom,
Hong Kong, Germany, and Singapore.
REGISTERED SUPPORT / OPPOSITION :
Support
The Grocery Manufacturers Association
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090