BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 12|
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THIRD READING
Bill No: SB 12
Author: Corbett (D)
Amended: As introduced
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVEL. COMMITTEE : 9-0, 4/1/13
AYES: Price, Block, Corbett, Galgiani, Hernandez, Hill,
Padilla, Wyland, Yee
NO VOTE RECORDED: Emmerson
SENATE JUDICIARY COMMITTEE : 5-2, 4/16/13
AYES: Evans, Corbett, Jackson, Leno, Monning
NOES: Walters, Anderson
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Consumer affairs: Made in California
SOURCE : Small Business California
DIGEST : This bill creates the Made in California Program
within the Governors Office of Business and Economic Development
(GO-Biz) for the purpose of encouraging consumer product
awareness and to foster the purchases of products manufactured
in California; and provides that it is an unfair method of
competition or unfair business practice to use the designated
"Made in California" label without participating in the Made in
California Program.
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ANALYSIS :
Existing law:
1. Prohibits unfair methods of competition, acts or practices by
any person which either results in or is intended to result
in the sale or lease of goods or services to any consumer.
Enumerates several methods of unfair competition, acts or
practices.
2. Provides that any consumer who suffers damage as a result of
a practice declared to be unlawful under the Consumer Legal
Remedies Act (CLRA) may bring an action against that person
to recover damages, as specified. Allows for a class action
suit to be filed on behalf of a class of consumers adversely
affected by an unfair method of competition, act or practice.
3. Provides for California to enter into marketing agreements
and to create the "Buy California Program."
4. States that it is unlawful for any person, firm, corporation
or association to sell or offer any merchandise in California
that uses the words "Made in U.S.A." "Made in America,"
"U.S.A.," or similar words when the merchandise or any
article, unit, or part thereof, has been entirely or
substantially made, manufactured, or produced outside of the
United States.
5. Establishes GO-Biz within the Governor's Office for the
purpose of serving as the lead state entity for economic
strategy and marketing of California on issues relating to
business development, private sector investment and economic
growth. GO-Biz also serves as the administrative oversight
for the California Business Investment Service and the Office
of the Small Business Advocate.
6. Establishes processes and accountability measures for GO-Biz
to accept private monies to fund, establish and operate
international trade offices.
This bill:
1. Creates a "Made in California Program" within GO-Biz as a
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public and private collaboration; states that the purpose of
the program is to encourage consumer product awareness and to
foster purchases of high-quality products manufactured in
this state, and allows GO-Biz to develop and adopt standards
that permit a company to represent that a product is made in
California.
2. Specifies that representing that a product is made in
California when it does not comply with the standards adopted
by GO-Biz will be an unfair or deceptive act or practice
under the CLRA; and clarifies that provisions relating to the
CLRA will only be operative after GO-Biz has adopted
standards for the Made in California Program.
3. Defines "manufacture" as the process of taking raw materials
or components and adding value to those materials and
components in order to create a final, recognizable product;
specifies that manufacture does not include the process
completing a final assembly from subassemblies made
elsewhere, or the act of packaging a product; and outlines
the standards adopted by GO-Biz which allow a company to
represent that a product is made in California.
4. Authorizes GO-Biz to issue and make effective marketing
agreements, including, but not limited to, issuance of a Made
in California label; and allows California companies to
participate in the program on a voluntary basis.
5. Requires companies to apply to GO-Biz for use of the Made in
California label and authorizes GO-Biz to charge an
application fee, the proceeds from which will support the
Made in California program; creates the Made in California
Fund in the State Treasury; and allows GO-Biz to begin
accepting applications prior to fully developing and
implementing the program.
6. Authorizes GO-Biz to accept private donations for the purpose
of implementing the Made in California Program.
7. Requires GO-Biz to provide a report to the Legislature by
January 1, 2015, and each January 1, thereafter, outlining
expenditures, progress and ongoing priorities for the Made in
California Program.
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Background
CLRA . In order to keep business competition fair and to protect
consumers from deceptive practices, the CLRA was created in 1970
"to protect consumers against unfair and deceptive business
practices and to provide efficient and economical procedures to
secure such protection." The CLRA also authorizes a consumer to
bring a civil action for damages resulting from violations of
the CLRA.
Buy California Program . In 2001, the "Buy California Program"
was created within the Department of Food and Agriculture for
the purpose of "encouraging consumer nutritional and food
awareness and to foster purchases of high-quality California
agricultural products." The "California Grown" label was
created for this program, which gave farmers an opportunity to
participate in the marketing campaign promoting California
products. In 2010, a private California-based marketing and
management consulting firm of the California Grown program
released a study. The study found that the specialty crops in
the California Grown program created $15.9 billion in economic
output annually. The study also found that more than 137,435
jobs were created as a result of the program. Further, the
study found that nearly $567.7 million in indirect business
taxes, not including income taxes, was generated from specialty
agricultural products in California. In addition to the vast
agricultural products grown in California, several other
products are made and produced in this state, many by small
businesses.
GO-Biz . In February 2010, the Little Hoover Commission
undertook a review of the state's economic and workforce
development programs. In its final report, Making up for Lost
Ground: Creating a Governor's Office of Economic Development
(GOED), it analyzed the status and effectiveness of current
programs since the 2003 demise of the Technology, Trade and
Commerce Agency and recommended the creation of a new
governmental entity to fill the void left by the dismantled
agency.
The report called for a single entity that promotes greater
economic development, foster job creation, serve as a policy
advisor and deliver specific services (i.e., permitting, tax,
regulatory, and other information) directly to the California
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business community. In April 2010, Governor Schwarzenegger
issued Executive Order S-05-10 as a means to operationalize the
report recommendations including the creation of GOED.
In October 2011, the Governor signed AB 29 (John A. Perez,
Chapter 475, Statutes of 2011) which effectively codified GOED
and changed its name to GO-Biz, effective January 1, 2012.
Since its inception, the office has served over 3,000
businesses, 95% of which are small. The most frequent types of
assistance include help with permit streamlining, starting a
businesses, relocation and expansion of businesses, and
regulatory challenges.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, costs depend
on the size of the program and number of participants. GO-Biz
estimates ongoing costs to be roughly $500,000 (General Fund),
consisting of three people to administer the program and an
annual marketing budget of $200,000. Once the program is fully
established, contributions from participating businesses and
donations may help offset the General Fund costs of the program.
SUPPORT : (Verified 5/23/13)
Small Business California (source)
AFSCME
California Small Business Association
dB Control
Plastikon Industries
Primus Power
Tesla Motors, Inc.
OPPOSITION : (Verified 5/23/13)
Department of Finance
ARGUMENTS IN SUPPORT : According to the author, "California
businesses need a unifying brand targeted at consumers who care
about California jobs, the environment and quality." The author
asserts that, "a "Made in California" label assures consumers
that the product was manufactured in California and carries the
excellence and standards that this state offers." The author
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also notes that, "manufacturers that embrace California's high
quality, safety, and environmental standards as a vital
component of their business strategy should have this marketing
advantage. The myriad of similar products on the market make it
difficult for consumers to differentiate between products that
are made in California versus elsewhere." The author adds that,
"California is known worldwide for its products, so the "Made in
California" label can help add value to products made in the
Golden State. Because of the high cost of living in California,
companies that choose to manufacture products in California do
so at a higher cost than they might pay in another state, or on
foreign soil, and have made a conscious decision to embrace
local manufacturing as a vital component of their business
strategy." The author believes that "this bill would help these
businesses in their marketing efforts."
The California Small Business Association notes that they
believe this bill will help small businesses be competitive by
promoting the production of goods in California. They state,
"We are proud to be Californians and should promote products
made in California. The more production that takes place in
California[,] the more jobs will be available."
ARGUMENTS IN OPPOSITION : The Department of Finance is opposed
to this bill because it creates a new program with no guarantee
of funding and is inconsistent with the current budget.
MW:d 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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