BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SCR 25 Hearing Date: April 6,
2015
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|Author: |Block, Allen, Hertzberg, Jackson, Leno, Stone, Wolk |
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|Version: |March 5, 2015 |
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|Urgency: | No |Fiscal: |No |
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|Consultant|Sarah Mason |
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Subject: Trade: Israel: memorandum of understanding.
SUMMARY: States the Legislature's recognition and support for
the memorandum of understanding for strategic partnerships for
joint innovation, exchanges, and cooperation between California
and Israel which was signed March 5, 2014.
Existing federal law:
1)Gives the federal government the power to enter into treaties
and trade agreements. Federal law requires Congress to
approve international agreements.
(United States (U.S.) Constitution, Article II)
2)States that treaties and international agreements are laws of
the U.S. and as such, are supreme over the laws of the States.
(U.S. Constitution Article VI)
3)Establishes, by executive order, the United States Trade
Representative (USTR) as an agency within the Executive Office
of the President to be responsible for international trade
negotiations. (Executive Order 12188)
Existing law:
1)Establishes the Governor's Office of Business and Economic
Development (GO-Biz) within the Governor's Office for the
purpose of serving as the lead state entity for economic
SCR 25 (Block) Page 2
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strategy and marketing of California on issues relating to
business development, private sector investment and economic
growth. (Government Code (GC) §§ 12096 - 12098.5)
2)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 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)
3)Authorizes GO-Biz to establish international trade and
investment (ITI) offices outside of the U.S. according to
certain requirements. (GC § 13996.42)
This Resolution:
1) States that the Legislature recognizes the many ties that
inexorably bind the State of California to the nation of
Israel.
2) States that two-way trade between Israel and California
totaled over $4.2 billion in 2014 - one of the largest
two-way relationships between Israel and a state in the
United States.
3) States that California and Israel share close ties and are
global leaders in the alternative energy, environmental
technology and other technology-based industry sectors.
4) States that California is home to the largest in-state
innovation network in the United States, which offers
technology-commercialization opportunities for Israel.
5) States that March, 5, 2015, marks the one year anniversary of
the historic meeting at which the Governor of California and
the Prime Minister of Israel signed a memorandum of
understanding (MOU) for strategic partnerships for joint
SCR 25 (Block) Page 3
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innovation, exchanges, and cooperation between California and
Israel.
6) States that the MOU was the culmination of an effort started
in the California Legislature as Assembly Bill 1032 of the
2009-10 Regular Session, calling for the creation of the MOU
geared toward fostering the exchange of information and
research. States that the MOU will strengthen relationships
with Israel and help California and Israel grow in these
areas.
7) States that the participants in this MOU seek to expand the
current level of cooperation between Israel and California in
areas including, but not limited to, alternative energy,
environmental technology, health, food and agriculture, and
other technology-based industry sectors, business innovation,
research, development, and academia.
8) States that the unfettered collaboration between Israeli and
California universities will benefit multiple disciplines and
enhances the academic experience of the faculty and students
of both countries.
9) States that the MOU will also establish a formal relationship
between the two parties to foster economic cooperation and
economic development, facilitate joint industrial research
and development, and enhance business relationships and
educational opportunities between all Israeli universities
and all California universities to foster job creation and
incubate global solutions from joint California-Israel
innovation initiatives.
10)States that collaboration with Israel will foster peace and
democracy in the Middle East.
11)States that to achieve these aims, the MOU envisions
undertaking the following actions: convening bilateral,
interagency working groups with international expertise to
coordinate initiatives; facilitating collaborations between
Israeli and Californian entrepreneurs and researchers through
the California innovation hub network; supporting and
encouraging further development of interpersonal contacts and
exchanges and promoting mutual cooperation, understanding,
and friendship by encouraging ad hoc task forces, trade
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delegations, and professional exchanges between Israel and
California in key sectors; creating public-private
partnerships between Californian and Israeli entities in the
areas of economic development, social entrepreneurship, and
academic research; strengthening the sister city program; and
facilitating collaboration between universities in California
and Israel to foster research and development.
12)Resolves that the Legislature hereby supports the MOU for
establishing strategic partnerships between California and
Israel that support joint innovation in clean technologies,
water conservation, health, biotechnology, cybersecurity,
education, agricultural technology, research, and other
informational exchanges, and that also promote mutual
cooperation, understanding, and friendship by encouraging
trade delegations and collaboration on mutual projects and
issues of interest.
FISCAL EFFECT: None. This resolution is keyed
nonfiscal.
COMMENTS:
1. Purpose. The Author is the sponsor of this resolution.
According to the Author, "SCR 25 would establish the
Legislature's recognition and support for the memorandum of
understanding for strategic partnerships for joint
innovation, exchanges, and cooperation between California and
Israel."
2. Background.
a) Israel-California Strategic Partnership. On March 5,
2014, Governor Jerry Brown and Israeli Prime Minister
Benjamin Netanyahu signed the Israel-California Strategic
Partnership "for the purposes of establishing a formal
relationship between them to foster economic cooperation
and economic development, facilitate joint industrial
research and development, and enhance business
relationships and educational opportunities to foster job
creation and incubate global solutions from joint
California-Israel innovation initiatives." California
would boost economic, cultural, and academic cooperation
between California and Israel in the areas of
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cybersecurity, health, biotechnology, education,
agricultural technology, water conservation, and
alternative energy."
Since the MOU was signed, there have been a number of
collaborative efforts initiated to meet the goals of the
agreement. A new California iHub program was developed,
iHub Worldwide Innovation Network, to facilitate the
introduction of foreign companies, investment and partners,
including those in Israel, to the state's iHubs. Cyber
security discussions, including workshops and seminars on
business expansion partnerships with Israeli experts and
firms are in the works. Leading Israeli water experts
visited California to learn more about water management in
the state. Israel and the California Department of Food
and Agriculture are in contact and GO-Biz works with
agri-tech companies from both California and Israel to
advance partnership and business opportunities.
Alternative energy and clean technology efforts between
California and Israel are being advanced through
discussions at the California Energy Commission and a
delegation visit of Israeli companies, led by Israeli
officials, to the Los Angeles Clean Tech Global Showcase.
Arts and cultural exchanges are underway, including
partnership between the California Arts Council and Israel.
California officials have spearheaded introductions
between Israel and the UC Office of the President and CSU
Chancellors Office to further develop educational
partnerships.
b) Trade with Israel. The United States currently has free
trade agreements in force with 20 countries, which
accounted for $70.4 billion (40 percent) of California's
exports in 2014. During the past 10 years (2005-2014),
exports from California to these markets grew by 50
percent.
According to the Office of the United States Trade
Representative (USITR), the United States and Israel signed
the United States-Israel Free Trade Agreement on August 19,
1985, the first free trade agreement entered into by the
United States. According to USITR, it continues to serve
as the foundation for expanding trade and investment
between the United States and Israel by reducing barriers
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and promoting regulatory transparency. U.S. exports to
Israel are up 526% from 1984, prior to the signing of the
free trade agreement.
Israel is currently the nation's 25th largest goods trading
partner with $36 billion in total (two ways) goods trade
during 2013, including exports of $14 billion and goods
imports totaling $23 billion. The top export categories in
2013 were precious stones (diamonds) ($5.8 billion),
electrical machinery ($1.6 billion), machinery ($1.0
billion), aircraft ($823 million), and optic and medical
instruments ($666 million). U.S. exports of agricultural
products to Israel totaled $627 million in 2013, including
leading categories of tree nuts ($89 million), soybeans
($83 million), and wheat ($61 million). U.S. exports of
private commercial services (excluding military and
government) to Israel were $4.1 billion in 2012, 3.5% ($138
million) more than 2011. Other private services (business,
professional, and technical services), travel and other
transportation (port services) categories accounted for
most of U.S. exports.
Israel was the United States' 21st largest supplier of
goods imports in 2013. U.S. imports from Israel accounted
for 1.0% of overall U.S. imports in 2013. The five largest
import categories in 2013 were precious stones (diamonds)
($9.0 billion), pharmaceutical products ($5.4 billion),
electrical machinery ($1.4 billion), machinery ($1.4
billion), and optic and medical instruments ($1.3 billion).
U.S. imports of agricultural products from Israel totaled
$327 million in 2013, including leading categories of snack
foods including chocolate ($54 million) and planting seeds
($35 million).
Israel foreign direct investment in the United States was
$9.8 billion in 2012.
3. Related Legislation. AB 826 (Chau) defines regional center
for the purposes of listing contact information for each
regional center functioning as part of the state's
participation in the federal EB-5 investment program and adds
attracting foreign and domestic investors to the priorities
of the California Business Investment Services Program under
GO-Biz. The bill would also requires the Director of GO-Biz
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to work cooperatively with marketing institutions and trade
organizations in attracting, retaining, and helping
investments grow and be successful in the state.
( Status: The bill is currently pending in the Assembly
Committee on Jobs, Economic Development and the Economy.)
4. Prior Related Legislation. SB 928 (Correa) of 2014 would
have required GO-Biz to establish an international trade and
investment office in Mexico City, Mexico by January 1, 2016.
( Status: The measure was vetoed by Governor Brown who
indicated that he is not "convinced we need a
legislatively-mandated trade office to continue our growing
partnership with Mexico.)
AB 2713 (Quirk-Silva) of 2014 would have authorized GO-Biz to
establish public-private partnerships to help guide state
activities related to the export of California products and
required GO-Biz to establish the South Korean Trade Promotion
Advisory Committee to help guide state activities related to
the export of California products to South Korea and the
attraction of employment-producing direct foreign investment
by South Korean investors. ( Status: The bill was held in
the Senate Committee on Appropriations.)
AB 412 (Allen) of 2013 stated the intent of the Legislature
to enact legislation to enhance and expand opportunities for
California businesses to engage in international trade.
( Status: The bill was held in the Assembly Committee on
Appropriations.)
AB 886 (Allen) of 2013 stated 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.
( Status: The bill was held in the Assembly Committee on
Appropriations.)
AB 1088 (Muratsuchi) of 2013 would have required GO-Biz, no
later than January 1, 2016, to establish an overseas trade
office in Tokyo, Japan. ( Status : This bill was never heard
in a policy committee.)
AB 1166 (Blumenfield) of 2013 would have established the
California and Israel Trade and Economic Development Act of
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2013 to facilitate greater economic development and job
creation opportunities. The bill directed GO-Biz to
formalize an economic relationship between California and
Israel and to build a framework to explore new research and
development opportunities to increase investments for
renewable energy and increase clean technology, promote
development of green collar jobs, and expand employment
opportunities in the state. ( Status: The bill was never
heard in a policy committee.)
AB 1201 (Allen) of 2013 stated 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. ( Status: The bill was never heard in a policy
committee.)
AJR 4 (Hueso, Pérez, Res. Chapter 24, Statutes of 2013) urges
the federal government to fund necessary improvements at the
San Ysidro, Calexico, and Otay Mesa Ports of Entry.
AB 2012 (Perez, Chapter 294, Statutes of 2012) transferred
the authority for undertaking international trade and foreign
investment activities from BTH to GO-Biz, including
establishing any international trade and investment office.
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.
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 1032 (Blumenfield) of 2010 would have required the
governor to establish a MOU to formalize the relationship
between California and the state of Israel for the purpose of
fostering technology and business development and education
opportunities in solar energy and environmental technology
industries.
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( Status: The bill was held in the Assembly Committee on
Appropriations.)
AB 2443 (V. Manuel Perez) of 2009 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. ( Status: This measure
was vetoed by the Governor.)
AB 1558 (Assembly Committee on Jobs, 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. ( Status: 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 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. ( Status:
This measure was vetoed by the Governor.)
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.
5. Arguments in Support. According to AJC Global Jewish
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Advocacy, San Francisco Regional Office , this resolution
sends a powerful message about the state's support for the
MOU signed in 2014 which will forge a strategic partnership
of mutual benefit, noting that "joint innovation in clean
technologies, water conservation, health, biotechnology,
cyber-security, education and agricultural technology
promises far-reaching and profound impact.
The Anti-Defamation League writes in support of this
resolution, stating that there are multiple reasons why the
MOU makes sense and is beneficial including California and
Israel's global leadership in the alternative energy,
environmental and other technology-based industry sectors as
well as job creation, a key area of concern and focus for the
state and the nation.
According to the Bay Area Council and California Israel
Chamber of Commerce , this resolution would assist both
California and Israel to fulfill their mutual goals of job
creation and economic prosperity.
The Consulates General of Israel in Los Angeles and San
Francisco supports this resolution, stating that "as we mark
the first anniversary of the signing of this historical
agreement, we are proud of the remarkable progress we have
made in strengthening the Israel - California relationship
and we look forward to an even brighter future together."
According to the Jewish Public Affairs Committee (JPAC) ,
there are multiple reasons why an MOU between Israel and
California is beneficial, including: two way trade between
Israel and California totaled over $4 billion in 2014;
California and Israel are global leaders in the alternative
energy, environmental and other technology-based industry
sectors; and job creation, a key area of concern and focus
for the state and the nation, is a clear outcome of the MOU.
San Francisco County Supervisor Scott Weiner writes that
"fostering a formal relationship between these two states
sends the clear message that a shared future of prosperity
exists, particularly in the areas of alternative energy,
environmental technology, and other technology-based sectors.
By sharing resources and increasing collaborative efforts,
Israel and California can pursue our economic and strategic
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goals together."
SUPPORT AND OPPOSITION:
Support:
AJC Global Jewish Advocacy, San Francisco Regional Office
Anti-Defamation League
Bay Area Council
California Israel Chamber of Commerce
Consultates General of Israel in Los Angeles and San Francisco
Jewish Public Affairs Committee of California (JPAC)
Scott Weiner, San Francisco County Supervisor
Opposition:
None on file as of March 31, 2015.
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