BILL ANALYSIS Ó
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SENATE THIRD READING
SCR
25 (Block, et al.)
As Amended June 30, 2015
Majority vote
SENATE VOTE: 34-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Jobs |9-0 |Eduardo Garcia, Kim, | |
| | |Brough, Brown, Chau, | |
| | |Chu, Gipson, Irwin, | |
| | |Mathis | |
| | | | |
| | | | |
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SUMMARY: Memorializes the Legislature's support for the March
2014 memorandum of understanding (MOU) between California and
Israel. Specifically, this resolution:
1)Makes declarations, which among other things, state:
a) Two-way trade between Israel and California totaled over
$4.2 billion in 2014, representing one of the largest
two-way trade relationships between Israel and a United
States (U.S.) state;
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b) California and Israel share close ties and are global
leaders in the alternative energy, environmental
technology, and other technology-based industry sectors;
c) March 5, 2015, marks the one-year anniversary of the
signing of a MOU between California and Israel which called
for new strategic partnerships, exchanges, and cooperation
on issues of mutual interest;
d) The signing of the MOU was the culmination of an effort
started by the California Legislature in 2009;
e) The MOU solidifies a formal relationship between the two
parties by fostering economic cooperation and economic
development, facilitating joint industrial research and
development, and enhancing business relationships between
Israeli universities and universities throughout
California.
2)Recognizes activities that have already been undertaken as a
result of the MOU (described under "Comments").
3)Resolves that the Legislature supports the purposes of the MOU
and the actions that encourage the facilitation of strategic
partnerships that advance joint innovation, exchanges, and
cooperation between California and Israel on issues related to
clean technologies, water conservation, health, biotechnology,
cybersecurity, education, agricultural technology, research,
and other issues of mutual interest.
FISCAL EFFECT: None
COMMENTS: This resolution formalizes the nature of the
Legislature's support for the March 2014 MOU between California
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and Israel. Among other actions, the MOU encourages the
establishment of new business, academic, and government
partnerships related to clean technologies, water conservation,
health, biotechnology, cybersecurity, education, agricultural
technology, research, and other areas of mutual interest.
Update on MOU Activities: In March 2015, the Governor's Office
of Business and Economic Development (GO-Biz) submitted a
one-year review of MOU activities and outcomes to the government
of Israel. The review includes highlights from new agreements,
as well as updates on each of the industry focus areas
identified in the MOU. Among other highlighted activities and
accomplishments:
1)Two supplementary agreements have been signed including an
addendum agreement to include an economic development
component to the bilateral relationship, and an agreement to
facilitate matching grants for stem cell research and
development (R&D) between the California Institute of
Regenerative Medicine and the Israel Ministry of Economy.
GO-Biz facilitated both of these agreements.
2)GO-Biz organized an interagency team to discuss elements of
the MOU related to trade and investment. Two meetings were
held, one in November 2014 and another in February 2015.
3)GO-Biz established a new Innovation Hub (iHub), the Worldwide
Innovation Network, to facilitate the introduction of foreign
companies, foreign investment, and foreign partners to the
iHub industry-based networks. While this new iHub will be
available to assist businesses from all nations, GO-Biz is
specifically assessing potential Israeli companies with the
intention of individually introducing them to the industry
partners at relevant iHubs. The targeted start date for the
Worldwide Innovation Network is the summer of 2015 and a
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counterpart network is being planned for Israel.
4)The Governor's Office of Emergency Services and Israeli
officials are developing a Cyber-Security Strategic Plan for
the purpose of exploring potential binational business
opportunities. Key areas include, but are not limited to,
responding to targeted attacks and helping businesses gain
access to markets in California and Israel. GO-Biz is serving
as a consultant to the business development related issues.
Upcoming projects include individual company introductions,
government-to-government exchanges, cyber-security workshops,
and a cyber-security seminar focusing on business expansion
and new partnerships.
5)The California Energy Commission has met with Israel officials
to discuss possible inclusion within existing energy
industrial R&D grant programs. An Israeli company delegation
attended the Los Angeles Clean Tech Global Showcase and
Israeli officials have created the Los Angeles-Eilat Clean
Tech Task Force, as part of an existing sister city
relationship.
Short Profile on Israel: In 2014, Israel's gross domestic
product (GDP) was $268.3 billion, making it the 56th largest
economy in the world. The U.S. State Department in assessing
Israel's investment climate describes Israel as being open to
foreign investment and that the government actively encourages
and supports the inflow of foreign capital. Israel's GDP is
driven by services (71.9%), industry, (25.7%), agriculture
(2.4%). In 2011, Israel spent the highest percentage of its GDP
on research and development than any other industrialized
country at 4.38%; this was higher than second place Finland at
3.78% of GDP.
While describing the country as having a "stable domestic
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environment", the U.S. State Department also notes that the
"conflict between Israel and the Palestinians is unresolved, and
the risk of politically motivated violence continues." Further,
"heightened tensions with Iran due to concerns over Tehran's
nuclear program and its support for terrorism also present the
potential for regional conflict. Israel's borders with Lebanon
and Syria are closed, but instability in Syria and threats from
the Iran-backed terrorist group Hezbollah in Lebanon also
present some risk of violent incidents or conflict. Israel
signed peace treaties with Egypt (1979) and Jordan (1994)."
A significant part of Israel's high tech economy is driven by
its significant public investments in education and scientific
research. Among other things, Israel provides a variety of
support programs to assist the development and commercialization
of new technologies including incubators for early stage
start-ups. The Office of the Chief Scientist within the Israel
Ministry of Economy operates on a yearly budget of $400 million.
As a result of these and similar public investments, Israel has
also become an attractive investment location for the deployment
of private venture capital funds.
Key industries in Israel include, but are not limited to,
high-technology products (including aviation, communications,
computer-aided design and manufactures, medical electronics,
fiber optics), wood and paper products, metal products, chemical
products, plastics, cut diamonds, textiles, and footwear. Top
exports include machinery and equipment, software, cut diamonds,
agricultural products, chemicals, textiles and apparel. The
U.S. is Israel's largest trade partner, receiving 26.5% of
exports in 2013.
Israel and California share two key industry sections:
information and communication technology (ICT) and
biotechnology. While California remains a global leader, Israel
has one of the most concentrated and extensive networks of
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high-tech outside of the Silicon Valley. The ICT sector in 2012
employed 7% of the labor force, made up 17% of total GDP, and
contributed up to 31% of total Israeli exports. Biotechnology
offers another sector where joint research and collaboration
could be beneficial for both governments. In a 2010 report,
Israeli biotech firms consistently identified the lack of
national research infrastructures and the lack of suitable
partners to carry out specific research operations as
considerable factors in obstructing the growth of the industry.
With the most recent MOU in place, it is anticipated that both
Israeli and California biotech firms will have greater access to
new business and investment opportunities.
Analysis Prepared by:
Toni Symonds / J., E.D., & E. / (916) 319-2090
FN:
0001150