BILL ANALYSIS Ó
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|Hearing Date:April 1, 2013 |Bill No:SB |
| |592 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 592Author:Price
As Introduced: February 22, 2013 Fiscal:Yes
SUBJECT: Trade promotion of California ports. (Urgency)
SUMMARY: An urgency measure that requires the Governor's Office of
Business and Economic Development (GO-Biz) to provide a port trade
promotion strategy to the Legislature on or before April 1, 2014.
Requires GO-Biz to convene a statewide business partnership for port
trade promotion and makes various findings and declarations about the
economic impact of California's ports and possible threats to ports
from the expansion of the Panama Canal.
Existing law, The Government Code (GC):
1)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. (GC §§ 12096
- 12098.5)
2)The California Tourism Marketing Act establishes the California
Travel and Tourism Commission (Commission) as a separate,
independent California nonprofit mutual benefit corporation with the
purpose of increasing the number of persons traveling to and within
California and requires the Commission to prepare a written
marketing plan.
(GC §§ 13995.40-13995.45.)
3)Sets forth findings and declarations detailing: (1) The importance
of strengthening collaborative linkages among remaining
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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
regularly updated to reflect emerging business trends and the
changing needs of California businesses and workers. (GC § 13996.4)
4)Specifies that GO-Biz is the primary state agency authorized to
attract foreign investments, cooperate in international public
infrastructure projects, and support California businesses in
accessing markets, and requires the Director of GO-Biz to develop an
international trade and investment program (Program) attracting
employment-producing direct foreign investment to the state and
provides support for California businesses in accessing
international markets and increasing exports. (GC § 13996.41)
5)Authorizes GO-Biz to establish international trade and investment
(ITI) offices outside of the U.S. according to certain requirements.
(GC § 13996.42)
6)Requires GO-Biz to prepare an international trade and investment
strategy and provide a report to the Legislature on or before
February 1, 2014, updated once every five years that includes:
a) Policy goals, objectives and recommendations necessary to
implement a comprehensive international trade and investment
program.
b) Measurable outcomes and timelines for the goals,
objectives and actions for the program.
c) Impediments to achieving goals and objectives.
d) Key stakeholder partnerships that will be used to
implement the strategy.
e) Options for funding.
f) An organizational structure for state administration of
international trade and investment policies, programs and
services. (GC § 13996.55)
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1)Requires the Director of GO-Biz to prepare the following:
a) A budget for the Program and a separately stated budget
for each ITI office, with specified information.
b) A strategy and business plan for the Program, with
specified information, that is developed with input from
California businesses that shall include, but not be limited
to, measurable goals, objectives, and outcomes and timelines
necessary to attract employment-producing direct foreign
investment to the state and increase California exports.
c) A written review of the implementation of the prior year's
strategy and business plan for the Program that addresses the
performance of the program and each ITI Office.
(GC § 13996.65)
2)Provides that the Controller shall not allocate any state funds to
GO-Biz for international trade and investment activities unless the
strategy for international trade and investment has been submitted
to the Legislature by May 1, 2014. (GC § 13996.75)
3)Establishes processes and accountability measures for GO-Biz to
accept private monies to fund, establish and operate international
trade offices. (GC § 13997)
This bill:
1) Sets forth findings and declarations detailing: (1) the importance
of California ports of entry and seaport facilities in the state's
economy and status as a gateway for good movement;
(2) more than 40 percent of cargo entering the United States arrived
at California ports, almost 30 percent of exports moved through
California ports and port activities employ more than 500,000
people and generate close to $7 billion; (3) the compelling
interest of the state in the success of California ports; (4) the
significant impact of the expansion of the Panama Canal; (5) the
possibility that California ports may lose as much as 25 percent of
cargo business; (6) the need for an international trade and
investment strategy to reflect port utilization; (7) the need to
resolve ongoing issues related to ports and promote greater use of
ports through an international trade and investment strategy.
2) Requires GO-Biz to provide a port trade promotion strategy for
California ports to the Legislature on or before April 1, 2014,
that includes:
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a) Policy goals, objectives and recommendations necessary to
implement a comprehensive port trade promotion strategy.
b) Measurable outcomes and timelines for the goals,
objectives and actions for promoting trade at ports.
c) Impediments to achieving goals and objectives.
d) Key stakeholder partnerships that will be used to
implement the strategy.
e) Options for funding.
1) Requires GO-Biz to convene a statewide business partnership that
advises GO-Biz on the port trade promotion strategy on or before
February 1, 2014 that includes, but is not limited to
representatives from:
a) Ports of entry.
b) Ocean carriers.
c) Marine terminal operators.
d) Warehouse operators.
e) Railroads.
f) Trucking companies.
g) Labor representatives.
h) Foreign trade zones.
i) Environmental group representatives.
j) Shippers, including agricultural exporters,
manufacturers, postconsumer secondary material handlers and
retailers.
4)States that this is an urgency measure necessary to take effect
immediately so that the state can identify the impact of the Panama
Canal expansion on California ports and port-related jobs and
promote port trade activity
FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by the
Legislative Counsel.
COMMENTS:
1. Purpose. The Author is the Sponsor of this bill. According to the
Author, international trade accounts for nearly 25 percent of the
state's economy and relies on land ports of entry and the largest
seaport facilities in the United States to maintain California's
status as a major gateway for products entering and leaving the
United States, including many goods moving through California
ports, such as industrial, technology and postconsumer secondary
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materials originated in, or destined for other states. The state
has a compelling interest in the success of ports because of the
significant economic benefit in terms of jobs, personal income,
business revenue, and taxes. Ports are the vital interface between
water and land transportation for trade with the Pacific Rim
countries and other trade.
2. Background. Ports are local government agencies governed by port
commissions that are responsible for developing, maintaining, and
overseeing the operation of shoreside facilities for the intermodal
transfer of cargo between ships, trucks, and railroads. In some
cases, certain ports have jurisdiction over affiliated airports,
build and maintain terminals for the passenger cruise ship
industry, or manage marinas and other public facilities. Existing
law establishes 11 ports in the state: Hueneme, Humboldt Bay, Long
Beach, Los Angeles, Oakland, Redwood City, Richmond, Sacramento,
San Diego, San Francisco, and Stockton. The law allows each port
to establish a general plan and port system improvements and
prescribe the specifications for such improvements.
According to the California Marine and Intermodal Transportation
System Advisory Council, more than 40 percent of the total
containerized cargo entering the United States arrived at
California ports, and almost 30 percent of the nation's exports
flowed through ports in the Golden State. Port activities employ
more than 500,000 people in California and generate an estimated
seven billion dollars in state and local taxes annually. It is
estimated that nationwide, more than two million jobs are linked to
California's public ports.
According to data from the Department of Commerce, California
exported $159 billion in products in 2011, up from 143.1 billion in
2010. California's largest export market is Mexico, where the
value of exports totals close to $26 billion in 2011. After
Mexico, California's top export markets in 2011 were: Canada
($17.1billion), China ($14.1 billion), Japan ($13 billion), and
South Korea ($8.4 billion). California's top five exports in 2011
were: Computer & Electronic Products ($46 billion); Transportation
Equipment ($14.9 billion); Machinery, Except Electrical ($14.7
billion); Miscellaneous Manufactured Commodities ($13 billion)
Chemicals ($12.4 billion). China is the largest source of imports
into California; the 2011 value of Chinese imports was $120
billion. China is followed by Japan ($39.7 billion); Mexico ($33.6
billion); Canada ($20.4 billion); and South Korea ($11.7 billion).
California's top five imports in 2011 were: Computer & Electronic
Products ($107.6 billion); Transportation Equipment ($48.8
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billion); Oil & Gas ($30 billion); Miscellaneous Manufactured
Commodities ($19.1 billion); and Apparel & Accessories ($18.9
billion).
3. The Threat of Expansion of the Panama Canal. Panama is currently
underway with an over $5 billion project to greatly expand the
Panama Canal making it deeper and wider, raising the possibility of
a significant impact on the flow of goods coming into California's
ports. The project will double the capacity of the existing canal
by adding wider, deeper and longer locks on both the Atlantic and
Pacific sides. The project also includes digging a new access
channel on the Pacific side, deepening and widening the entrance to
the new locks and the navigational channels in Lake Gatun and in
the Culebra Cut, and elevating Lake Gatun's maximum operating
level. The expanded Panama Canal will be able to accommodate
larger cargo ships, called Post Panamax vessels, which could result
in large freighters loaded with goods from Asia destined for the
Eastern United States, thus bypassing California all-together and
instead using the canal to reach the other side of the country.
There is some concern that California ports now have to compete
against one another and expansion of the canal holds the potential
for California ports to lose as much as 25 percent of their cargo
business, by some estimates, which may in turn result in an impact
of millions of dollars to local economies and over 100,000 jobs.
The Panama Canal Authority, which runs the canal, has entered into
memorandums of understandings (MOUs) with 20 ports on the Gulf and
East coasts, including New Orleans, Miami and Baltimore that are
intended to promote freight passage through the canal to those
ports. In the absence of a California effort to market
opportunities throughout the state, ports themselves, like the Port
of Long Beach, are approaching the Panama Canal Authority
individually to enter into their own MOU.
This Committee held a hearing on February 22, 2013 entitled "What
Does the Expansion of the Panama Canal Mean for Economic
Development and Jobs in California?" Testimony focused on efforts
the state of California should take to remain competitive with
other states and other seaports, including intermodal connection
improvements, streamlined approval for infrastructure and port
improvement projects and promoting trade at California ports
through a comprehensive, collaborative trade promotion strategy.
4. International Trade Efforts in California. Between 1986 and 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
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the agency was eliminated due to its poor administrative
performance, the authority for all state trade activity was also
eliminated and the few remaining programs came under the umbrella
of the Business, Transportation and Housing Agency (BT&H). The
former International Investment Division under TTCA had 91
employees and a budget of $43 million, allowing it to engage in
activities like formal marketing. 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 2014.
Until the creation of GO-Biz there were only a very small number of
former International Investment Division staff working on trade
related issues and activities for the state. GO-Biz now has
authority for undertaking international trade and foreign
investment activities, including establishing any international
trade and investment office (AB 2012, Perez, Statutes of 2012).
GO-Biz has partnered with the Bay Area Council to open a
California-China Trade and Investment office in Shanghai's downtown
Yangpu district. In a March 2013 report to the Legislature on the
status of this effort, GO-Biz described the office's goals "to
drive increased employment, revenues at California enterprises, tax
revenues, and international competitiveness in California" which
will be accomplished through promoting investment in California;
facilitating two-way international business growth, with an
emphasis on expanding foreign sales by California employers,
including not only manufacturers, agricultural enterprises, and
commodity producers, but also service providers such as
universities, banks, consulting companies, and the like; supporting
continued growth of California's role as a gateway state for goods
movement and passenger travel, and; identifying and addressing
barriers to international expansion by California employers.
5. Federal Trade and Export Activity. Created in 1962 by Executive
Order as an agency within the Executive Office of the President,
the United States Trade Representative (USTR) negotiates directly
with foreign governments on internal trade agreements. The USTR
consults states on provisions of a trade agreement through: direct
consultation with a state Governor; a state point of contact (SPOC)
and Intergovernmental Policy Advisory Committee (IGPAC).
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The U.S. has trade agreements in force with 20 countries including
Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican
Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea,
Mexico, Morocco, Nicaragua, Oman, Panama, Peru
and Singapore. In addition to trade agreements, the U.S. has a
number of trade preference programs that allow special access to
U.S. markets for countries that are considered developing markets
and/or where the U.S. wants to develop a stronger relationship.
The U.S. is also in negotiations for a regional, Asia-Pacific trade
agreement, known as the Trans-Pacific Partnership (TPP) Agreement
with the objective of shaping a high-standard, broad-based regional
pact.
On March 11, 2010, President Barack Obama signed an Executive Order
creating a National Export Initiative (NEI) with a goal of doubling
exports over the next 5 years by working to remove trade barriers
abroad and helping firms, especially small business, overcome
hurdles to entering new export markets. The NEI stated a need to
enhance and coordinate Federal efforts to facilitate the creation
of jobs in the United States through the promotion of exports, and
to ensure the effective use of Federal resources in support of
these goals. The NEI recognized that "a critical component of
stimulating economic growth in the U.S is ensuring that U.S.
businesses can actively participate in international markets by
increasing their exports of goods, services, and agricultural
products." The NEI sets forth that improved export performance
will, in turn, create good high-paying jobs.
6. Related Legislation. SB 810 (Price) authorizes the California
Transportation Financing Authority to award $500 million in tax
credit certificates to exporters and importers, as defined, for the
specified increases in cargo tonnage or value, net increases in the
number of qualified full-time employees hired in California, or
capital investment in a cargo facility. The bill will be heard in
the Senate Committee on Transportation April 9, 2013.
AB 337 (Allen) makes various findings about the importance of
California's network of ports to the continued economic vibrancy of
the state and role in job creation. The bill is currently pending
in the Assembly Committee on Jobs, Economic Development and the
Economy.
AB 412 (Allen) states the intent of the Legislature to enact
legislation to enhance and expand opportunities for California
businesses to engage in international trade. The bill will be
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heard in the Assembly Committee on Jobs, Economic Development and
the Economy on April 9, 2013.
AB 886 (Allen) states the intent of the Legislature to enact
legislation that would address issues that enhance and expand
opportunities for California business to engage in international
trade with Latin America and other nations. The bill will be heard
in the Assembly Committee on Jobs, Economic Development and the
Economy on April 9, 2013.
AB 1067 (Medina) creates the California Foreign Investment Program
which authorizes GO-Biz to take all necessary action to assist
individuals seeking to invest in this state through the EB-5
Program. The bill will be heard in the Assembly Committee on Jobs,
Economic Development and the Economy on April 9, 2013.
AB 1081 (Medina) requires the international trade and investment
strategy prepared by GO-Biz to include the identification of
trade-related infrastructure enhancements to support the state's
international trade policies, programs, and services and requires
the interregional transportation improvement program prepared by
the Department of Transportation to include projects to improve
international movement of goods through air, land, and water ports.
The bill will be heard in the Assembly Committee on Jobs, Economic
Development and the Economy on April 9, 2013.
AB 1201 (Allen) states the intent of the Legislature to enact
legislation that would address issues that enhance and expand
opportunities for California business to engage in international
trade with the European Union and other nations. The bill is
currently pending in the Assembly Committee on Jobs, Economic
Development and the Economy.
AJR 4 (Hueso, Pérez) urges the federal government to fund necessary
improvements at the San Ysidro, Calexico, and Otay Mesa Ports of
Entry. The bill is currently pending in the Senate Committee on
Rules.
AB 1545 (Pérez) of 2012 would have expanded the role of the
California Infrastructure and Economic Development Bank to include
facilitating infrastructure and economic development financing
activities within the California and Mexico border region. The
bill was held in the Senate Committee on Appropriations.
AB 2012 (Perez, Chapter 294, Statutes of 2012) transferred the
authority for undertaking international trade and foreign
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investment activities from BT&H to GO-Biz, including establishing
any international trade and investment office.
SB 460 (Price) of 2011 required 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. Required
the partnership to advise the Secretary of the BT&H on what role
the state should play in international trade marketing and
promotion, as specified. This measure was held in the Assembly
Committee on Appropriations.
SB 830 (Wright) of 2011 is virtually identical to the Author's SB
810 in the current session. This measure failed passage in the
Senate Committee on Revenue and Taxation.
SCR 33 (Price, Resolution Chapter 60, Statutes of 2011) expressed
the sentiment of the Legislature that the EB-5 visa program is
beneficial to the state's economic development and provides
important opportunities for foreign direct investment to
California.
SJR 4 (Harmon) of 2011 would have memorialized Congress to approve
and enact the United States-Korea Free Trade Agreement. The bill
failed passage in this Committee.
AB 29 (John A. Pérez, Chapter 475, Statutes of 2011) established
GO-Biz within the Governor's Office for the purpose of serving as
the lead entity for economic strategy and marketing of California
on issues relating to business development, private sector
investment and economic growth.
AB 1137 (V. Manuel Pérez) of 2011 would have facilitated local
economic development and job creation by assisting small business
to access new export markets for their goods and services, updating
the law relating to free trade zones, and authorizing the use of
new federal funds under the Small Business Jobs Act of 2010. This
measure was held in the Senate Committee on Appropriations.
AB 2656 (Calderon) of 2011 is virtually identical to the Author's
SB 810 in the current session. This measure was held in the
Assembly Committee on Appropriations.
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SB 1175 (Price) of 2010 would have required the Secretary of BT&H
to direct the California Travel and Tourism 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 commission
and provide a report to the Legislature. This measure was held in
the Senate Committee on Rules.
AB 2443 (Perez) of 2010 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. This measure was vetoed by the
Governor.
AB 1558 (Assembly Committee on Jobs) of 2009 aimed to recodify and
reorganize 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. This measure 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. This measure was vetoed by
the Governor.
AJR 27 (Torrico, Resolution Chapter 145, Statutes of 2010)
memorialized 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
development needs of the bi-national region. This measure was
vetoed by the Governor.
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AB 1722 (Committee on Jobs, Economic Development, and the Economy)
of 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. This measure was vetoed by the Governor.
AJR 55 (Villines) of 2008 memorialized Congress that the California
Legislature supports the United States-Colombia Trade Promotion
Agreement. This measure failed passage in the Assembly Committee
on Jobs, Economic Development, and the Economy.
AJR 14 (Jeffries, Resolution Chapter 73, Statutes of 2007)
memorialized 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) provided 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:
Pacific Merchant Shipping Association
Opposition:
None on file as of March 25, 2013
Consultant: Sarah Mason