BILL ANALYSIS                                                                                                                                                                                                    Ó



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       Date of Hearing:  June 23, 2015


          ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY


                                Eduardo Garcia, Chair


       SCR  
       6 (Monning) - As Introduced January 12, 2015


       SENATE VOTE:  33-0


       SUBJECT:  Santa Fe, Argentina:  sister state relationship


       SUMMARY:  Memorializes the intent and commitment of the California  
       Legislature to formalize a sister state relationship with the Province  
       of Santa Fe, Argentina, for the purpose of encouraging and facilitating  
       social, economic, scientific, educational, and cultural exchanges that  
       further promote the prosperity of both regions and to improve the  
       international understanding and goodwill between both regions.  Upon  
       adoption, the Secretary of the Senate is to transmit copies of the  
       resolution to the author for distribution.


       FISCAL EFFECT:  None


       POLICY ISSUE FRAME


       This resolution proposes the commitment of the Legislature to establish  
       a sister state relationship between California and the Province of  
       Santa Fe, Argentina.  









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       A sister state relationship is a formal declaration between two  
       regions, states, or nations.  Such an agreement is a symbol of mutual  
       goodwill.  Additionally, it is an effort to encourage and facilitate  
       mutually beneficial social, economic, educational, and cultural  
       exchanges.  Both the Legislative and the Administrative branches of  
       government have the authority to establish sister state relationships.





       The California Senate has had an ongoing exchange over a decade with  
       both the government of the Province of Santa Fe and a Santa Fe-based  
       foundation whose mission is to promote civic awareness and democracy,  
       the Fundación Nueva Generación Argentina (FNGA).





       The California Senate has sent official delegations to Argentina in  
       2004, 2007, and 2010.  The FNGA has sponsored delegations to California  
       in 2005, 2007, and 2012.  Among other non-government meetings, the FNGA  
       meets with California business and trade related organizations  
       including the California Chamber of Commerce.  Another round of  
       meetings is planned for 2015/2016.  According to the author, SCR 6  
       would build on these relationships in formalizing a sister state  
       relationship with the Province of Santa Fe.





       COMMENTS:   


       1)Author's Purpose:  According to the author's statement, "The State of  







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         California and the Province of Santa Fe have developed a strong  
         bilateral relationship over the last decade, bolstered through a  
         number of educational visits by official legislative delegations.   
         These reciprocal visits, including an upcoming delegation visit to  
         Argentina in fall of 2015, have provided leaders of both states an  
         opportunity to share knowledge and ideas, as well as establish  
         meaningful relationships that promote goodwill and partnership  
         between both regions. 



         California and Santa Fe have strong economic ties rooted in their  
         agricultural sectors, and share important connections between their  
         public higher education institutions.  SCR 6 will legislatively  
         recognize the important relationship that exists between these states  
         and will promote and create more opportunities for collaboration  
         between the regions, foster growth in trade, and encourage greater  
         cultural exchanges.





         The California Legislature has already established a precedent of  
         recognizing special bonds between states through the passage of 26  
         official Sister State relationship resolutions. The Santa Fe Province  
         plans to enact a similar measure establishing a sister state  
         relationship, and SCR 6 will reciprocate the gesture and solidify the  
         political, economic, and cultural bond between our two regions."


       2)Background on Argentina and the Santa Fe Province:  Argentina is  
         located in South America, bordering the South Atlantic Ocean, between  
         Chile and Uruguay.  The area became independent from Spain in 1816  
         with the dissolution of the United Provinces of the Rio Plata.  It is  
         the eighth largest country in the world, second largest in South  
         America after Brazil, and is just under one-third the size of the  
         U.S.









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         As of 2014, Argentina had a population of 43 million people, with a  
         median age of 31.2 years.  Youth between the ages of 15-24 have  
         reached a record high proportion of the population (15.7%),  
         contributing to a growing labor force in the short run.  





         Buenos Aires is the capital and the largest urban center in  
         Argentina, with 13.5 million inhabitants. Other large urban areas  
         include Cordoba (1.5 million population), Rosario (1.2 million  
         population), Mendoza (917,000 population), and San Miguel de Tucuman  
         (831,000 population) (2011).  





         According to the CIA Fact Book, Argentina suffers from a range of  
         environmental problems typical of an industrializing economy such as  
         deforestation, soil degradation, desertification, air pollution, and  
         water pollution.  The country, however, is a world leader in setting  
         voluntary greenhouse gas targets.





         Argentina's economy is one of the largest in Latin America; currently  
         ranked 26th in the world, with a 2014 GDP (purchasing power parity)  
         of $927.4 billion, and a real growth rate of -1.7% from 2013-2014.  





         Argentina benefits from an abundance of natural resources, a highly  
         literate population, an export-oriented agricultural sector, and  







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         diversified industry.  In 2014, Argentina exported $76.47 billion in  
         goods and imported $1 Billion in goods.  The country's top trade  
         partners include:  Brazil, China, U.S., Germany, and Chile.  Today,  
         more than 500 U.S. companies are among the top investors in  
         Argentina, with nearly $15 billion worth of investments.





         Of the 23 provinces in Argentina, the Province of Santa Fe has one of  
         the most significant economies, accounting for nearly 10% of the  
         nation's output. More than 20% of the cultivated lands of Argentina  
         are in Santa Fe, whose main crops include soybeans, sunflowers,  
         maize, wheat, and rice. In addition, the Province of Santa Fe is home  
         to 20% of the nation's livestock in meat and dairy.





         The U.S. is Argentina's third-largest trading partner.  In 2014,  
         exports from California ranked 8th in the nation.  Merchandise  
         exported from California to Argentina in 2014 totaled $333 million,  
         down 11.9% from $378 million exported in 2013.  Argentina is  
         California's 45th largest export destination, after Denmark and South  
         Africa.  





         In 2014, the top 5 major California exports to Argentina included:  
         Computer and Electronic Products ($130 million), Chemicals ($88.2  
         million), Machinery, except electrical ($35.4 million), Misc.  
         Manufactured Commodities ($21.2 million), and Agricultural Products  
         ($16.5 million). 










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         California and the Province of Santa Fe, Argentina have an ongoing  
         reciprocal exchange program, which began in 2004 between the  
         California Senate International Relations Foundation and the FNGA.   
         The goal of their activities is to increase the governments'  
         political and economic ties, and increase the discussion of specific  
         public policy issues including sustainable energy, port security,  
         goods movement, and public safety. 





       3)Origins of Sister Programs:  U.S. sister affiliations began shortly  
         after WWII and developed into a national initiative when President  
         Dwight D. Eisenhower proposed the people-to-people program at a White  
         House Conference in 1956.  According to research on Maryland's Sister  
         State webpage, President Eisenhower's intention was to involve people  
         and organized groups at all levels of society in personal, citizen  
         diplomacy with the hope that people-to-people relationships, fostered  
         through sister city affiliations, would lessen the chance of future  
         world conflicts.  Many sister city relationships are coordinated  
         through the nonprofit network, Sister Cities International.



       4)Sister State Programs:  States differ in their approach to selecting  
         and implementing sister state relationships.  Some states, such as  
         Hawaii, require a detailed application from the foreign state wishing  
         to enter into partnership.  The application form includes information  
         on prospective partner's economic structure, cultural resources,  
         primary industries and foreign trade and investment.  Applications  
         are reviewed by the Hawaiian Governor, who refers applications he or  
         she supports for further review by the Legislature.  The Legislature  
         expresses their approval through the adoption of a concurrent  
         resolution authorizing the Governor to proceed in negotiating a  
         sister state agreement with the applicant state.   









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         One recurrent model for managing the sister state relationship is the  
         establishment or designation of a sister organization.  Iowa, for  
         example, has Iowa Sister State, a non-profit, volunteer organization  
         whose mission is to "develop and implement international programs  
         that promote the interests of the State of Iowa and its citizens."   
         Activities for each of Iowa's nine sister state relationships is  
         coordinated through a special committee, which organizes events and  
         exchanges.   





         Several states have information on their webpages regarding  
         longstanding sister state relationships.  Michigan, as an example,  
         has had a sister state relationship with Shiga Prefecture, Japan,  
         since 1968, and stills hosts several exchanges per year.  For the  
         40th Anniversary of the sister state relationship between HyMgo  
         Prefecture, Japan, and Washington state, the two governor's attended  
         several special events including "Kobe Day" at a Seattle Mariner's  
         Game, with 260 delegates from HyMgo and Governor Toshizo Ido throwing  
         the first pitch. 





         Another core component of sister state relationships is education.   
         Michigan and other states often emphasize educational exchanges, as  
         well as cultural exchanges.  South Carolina even offers fee waivers  
         to foreign students from their sister state who wish to attend public  
         universities.  





         Many sister state relationships also include economic and business  
         development priorities, as well as cultural and educational  







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         exchanges.  The Alberta, Canada, and Jalisco, Mexico, sister state  
         relationship focuses on enhancing the economic cooperation between  
         the two regions.  The Albert-Jalisco sister state relationship is  
         guided by the initial and 13 supplemental agreements including  
         agreements that support joint research funding on micro and  
         nanotechnology, e-heath, radio-frequency identification and  
         multimedia; and value added food processing.  





         California has no formal structure for establishing, negotiating, or  
         maintaining sister state relationships.   This resolution contains no  
         provisions to track the development of a sister state agreement or be  
         informed on future sister state activities between California and the  
         Province of Santa Fe.





       5)Offices of International Relations:  Both the Assembly and the Senate  
         maintain respective offices that serve as the key point of contact  
         for foreign relations and protocol for each House.  The California  
         Senate Office of International Relations (SOIR) was established in  
         1987 and the Assembly Office of International Relations and Protocol  
         (AOIRP) was established in 2000.  Through these offices Legislators  
         find assistance in furthering strong economic and diplomatic ties  
         between California and the rest of the world.  Both SOIR and AOIRP  
         host international delegations at the State Capitol, as well as  
         facilitate and occasionally host Member-delegations to foreign  
         countries.  Over the years, SOIR has also established special and  
         longer term relationships between California and foreign countries  
         including the California Brazil Partnership and the California and  
         Japan Scholars Program.  



         SOIR additionally maintains a website, which is the only known source  







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         for identifying sister state resolutions the California Legislature  
         has approved.  According to the website, the Legislature passed 26  
         resolutions expressing an interest in establishing an sister  
         state/friendship state relationship including resolutions related to  
         State of Baja California Sur, Mexico; Archipelago of the Azores,  
         Portugal; and Catalonia, Spain.  Neither SOIR nor AOIRP have any  
         specific mandated duties in regards to sister state relationships.  





       6)California Trade-Related Activities:  California's economy benefits  
         significantly from trade and foreign investment.  If California were  
         a country, it would be the 31st largest exporter and the 15th largest  
         importer in the world.  Merchandise exports from California ($174  
         billion) accounted for over 10.7% of total U.S. exports in goods,  
         shipping to over 220 foreign destinations in 2014.  California's  
         land, sea, and air ports of entry served as key international  
         commercial gateways for the $577 billion in products entering and  
         exiting the U.S. in 2014.  Statewide, 4.4 million California jobs are  
         dependent on foreign trade.  Over 562,700 California workers benefit  
         from jobs with foreign-owned firms, which accounts for 5.1% of all  
         private sector jobs in the state.  



         California's importance within the global marketplace results from a  
         variety of factors, including: its strategic southwest and coastal  
         location offering direct access to growing foreign markets in Mexico,  
         Latin America, and Asia; its nine diverse regional economies; its  
         large, ethnically diverse population, representing both a ready  
         workforce and significant consumer base; its access to a wide variety  
         of venture and other private capital; its broad base of small- and  
         medium-sized businesses; and its culture of innovation and  
         entrepreneurship, particularly in the area of high technology. 











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         Mexico has been California's top trading partner since 1999 and, in  
         2014, California exported $25.4 billion (14.5%) in goods.  The chart  
         shows export data on the state's top five trade partners.  Other  
         top-ranking export destinations not shown on the chart include the  
         Netherlands and the United Kingdom.








          ----------------------------------------------------------------- 
         |       California Exports 2011 to 2014 (billions of dollars)     |
          ----------------------------------------------------------------- 
         |---+-----------+-----------+-----------+-----------+-----------|
         |   |  Partner  |   2011    |   2012    |   2013    |   2014    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |   |World      |   159.4   |   161.7   |   168.0   |   174.1   |
         |---+-----------+-----------+-----------+-----------+-----------|
         |1  |Mexico     |   25.8    |   26.3    |   23.9    |   25.4    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |2  |Canada     |   17.2    |   17.4    |   18.8    |   18.2    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |3  |China      |   14.2    |   13.9    |   16.2    |   16.0    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |4  |Japan      |   13.1    |   13.0    |   12.7    |   12.2    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |5  |South      |    8.4    |    8.2    |    8.3    |    8.5    |
         |   |Korea      |           |           |           |           |
         |---+-----------+-----------+-----------+-----------+-----------|
         |6  |Hong Kong  |    7.6    |    7.8    |    7.7    |    8.5    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |7  |Taiwan     |    6.2    |    6.3    |    7.5    |    7.4    |
         |---+-----------+-----------+-----------+-----------+-----------|
         |8  |Germany    |    5.3    |    4.9    |    5.5    |    5.4    |
          --------------------------------------------------------------- 
          ----------------------------------------------------------------- 







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         |International Trade Administration, accessed                     |
         |4/11/2015                                                        |
          ----------------------------------------------------------------- 



         California's largest industry sector by employment is Trade,  
         Transportation, and Utilities, which encompasses everything from  
         major retail outlets, to import-export businesses, to transportation  
         and warehousing.  California leads the nation in export-related jobs.  
          The U.S. Department of Commerce estimates that for every one million  
         dollars of increased trade activity, 11 new jobs are supported.   
         Workers in trade-related jobs earn on average 13% to 28% higher wages  
         than the national average.  





         In today's globally linked economy, manufacturing utilizes products  
         from across the U.S., as well as from other nations.  In 2012, 61%  
         ($1.3 trillion) of the products imported into the U.S. were inputs  
         and components intended for use by American producers.  In addition,  
         U.S. imports often include components or benefit from services  
         provided by U.S. firms, including many California companies.  The  
         Wilson Center estimates that Mexican imports and Canadian imports  
         contain 40% and 20% of U.S. components, respectively.





         Trade and foreign investment support new job creation, bring new  
         technologies and skills to California workers, generate local and  
         state revenues, and generally strengthen the state's economic base.   
         In the future, California's economy will become increasingly reliant  
         on accessing foreign markets where a majority of global economic  
         growth is expected to occur.  









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       7)Related Legislation:  Below is a list of bills from the current and  
         prior sessions.

          a)   ACR 100 (Alejo) Relations with El Salvador:  This bill  
            memorializes the Legislature's commitment to work cooperatively  
            with the Governor's Office of Business and Economic Development on  
            trade promotion and foreign investment activities that enhance the  
            state's economic relations with El Salvador, as specified.   
            Status:  Adopted by the Legislature, Resolution 172, Statutes of  
            2014.      
       
          b)   SCR 82 (Hueso) Jalisco, Mexico: Sister State Relationship:   
            This bill memorializes the Legislature's desire to recommit to the  
            formalizing of a sister state relationship between California and  
            the State of Jalisco, Mexico, for the purpose of promoting  
            economic growth and well-being of small, medium, and large  
            corporations and by increasing their potential trade and  
            investment within the State of Jalisco.  Status:  Adopted by the  
            Legislature, Resolution 70, Statues of 2014.   
       


       REGISTERED SUPPORT / OPPOSITION:




       Support - American Federation of State, County, and Municipal Employees




       Opposition - None received











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       Analysis Prepared by:Toni Symonds / J., E.D., & E. / (916)  
       319-2090