BILL ANALYSIS
AJR 27
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
AJR 27 (Torrico) - As Amended: April 13, 2010
SUBJECT : Columbia-U.S. free trade agreement
SUMMARY : Memorializes Congress that the California Legislature
opposes the United States-Colombia Trade Promotion Agreement
(CTPA), which was signed on November 22, 2006, and is currently
being reviewed by the Office of the United States Trade
Representative (USTR). Among other things, the resolution
declares that:
1)Violence against trade unionists persists to this day, with
over 500 unionists having been murdered during the
administration of current Colombian President Alvaro Uribe;
2)The continued murders and death threats have a chilling effect
on union activity, as workers continue to have good reason to
fear for their lives when they exercise their fundamental
labor rights, especially the crucial rights to organize,
bargain collectively, and strike;
3)The Office of the Attorney General of Colombia has secured
convictions in only about 5% of the over 2,700 cases of murder
of trade unionists, and only following significant
international pressure to do so;
4)In the vast majority of cases, the person convicted of the
crime is not the originator of the crime, but rather carried
out the order to kill and, in roughly 40% of the sentences,
the person found responsible for the crime was either tried in
absentia or is otherwise not in custody and thus potentially
still at large;
5)Many of the groups carrying out the murders and intimidation
are associated with powerful local or regional economic and
political interests and continue the violent legacy of the
paramilitaries, including narcotics trafficking and targeted
assassinations;
6)Defamatory remarks regarding trade unionists and human rights
defenders in Colombia delegitimize the important and valued
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work of human rights defenders and place individuals and
entire organizations at the grave risk of physical retaliation
from members of illegal armed groups;
7)According to a 2008 Human Rights Watch report, numerous
politicians, including members of the Colombian Congress, have
come under criminal investigation for collaborating with
paramilitaries--the groups responsible for the majority of
crimes against trade unionists;
8)According to Human Rights Watch, there is overwhelming
evidence of broad, systematic, and illegal surveillance
conducted by the Administrative Security Department, the
national intelligence service of Colombia, against hundreds of
members of human rights organizations, political opposition
parties and unions, as well as Supreme Court justices,
journalists, and even clergy; and
9)The United Nations Special Rapporteur on Extrajudicial
Executions, Phillip Alston, recently found that killings of
innocent civilians by the armed forces have occurred
throughout the country.
FISCAL EFFECT : None
COMMENTS:
1)Author's purpose : "Across the globe there continue to be
civil struggles that impact our daily lives in the United
States. This resolution is about fundamental workers' rights.
It's about international trade and the excessive power of
corporations and about justice.
In Colombia, those who advocate for worker rights must fear
for their lives. Over 500 unionists have been murdered during
the administration of current Colombian President Alvaro
Uribe. The Office of the Attorney General of Colombia has
secured convictions in just 5 percent of the murder cases
involving trade unionists and only after international
pressure to do so.
Paramilitary organizations associated with powerful local and
regional economic and
political interests make the threat of death all too real for
workers who are simply exercising their right to organize,
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bargain collectively, and, if necessary, to strike.
Human rights violations frequently occur and there is
widespread, systematic, illegal
surveillance conducted by the national intelligence of
Colombia. The International Labor
Organization says Colombia's labor laws fall far short of
minimum labor standards.
The Colombia Free Trade agreement was signed on Nov. 22, 2006
and is currently under review by the USTR. Those of us who are
friends of labor must unite and urge Congress to oppose this
trade agreement. It is the right and just thing to do. It is
imperative that we send a message to Congress and other
countries that we do not support doing business with a country
who commit unjust crimes."
2)U.S. trade policy and state consultation process : The US
Constitution grants the federal government the power to enter
into treaties and trade agreements and provides that these
treaties and agreements are laws of the US and, as such, are
supreme over the laws of states. By Executive Order, the USTR
was created within the Executive Office of the President and
is assigned the responsibility for international trade
negotiations.
Due to the broad impact of federal trade actions, Congress
directed the USTR to seek advice from states through several
avenues, including the Intergovernmental Policy Advisory
Committee (IGPAC). IGPAC is one of 28 advisory committees
currently supported by the USTR. IGPAC is comprised of state
and local officials, including members of state legislatures,
state trade directors, and related national associations.
California state government does not have a position on IGPAC,
however, there is one California member, Carlos J. Valderrama,
who represents the Los Angeles Area Chamber of Commerce.
The USTR also maintains a state point of contact (SPOC) system
in which the governor of each state designates a single point
of contact within the state that is responsible for
transmitting information to the USTR and disseminating
information from the USTR to state officials. Pursuant to the
statutory provisions in SB 1513 (Chapter 663, Statutes of
2006), the SPOC serves as the official liaison between the
USTR, the Administration, and the Legislature.
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The US has trade agreements in force with 17 countries
including Australia, Bahrain, Canada, Chile, Costa Rica,
Dominican Republic, El Salvador, Guatemala, Honduras, Israel,
Jordan, Mexico, Morocco, Nicaragua, Oman, Peru, and Singapore.
The US has negotiated and signed trade agreements with
Colombia , Korea, and Panama. In order for these agreements to
go into effect, however, Congress is required to demonstrate
its support through the enactment of legislation. When
considering approval of a trade agreement, Congress may not
make amendments to the agreement, but must agree to support
the trade agreement in its entirety.
The US also has a number of trade preference programs that
allow special access to US markets for countries that are
considered developing markets and/or where the US wants to
develop a stronger relationship. Colombia currently has
access to US markets through the nation's general preference
provisions and the Andean Trade Preference Act (ATPA). The
ATPA (enacted in 1991) is designed to assist Bolivia,
Colombia, Ecuador, and Peru in their fight against drug
production and trafficking by expanding their economic
alternatives.
3)California's role in foreign trade agreements : Over the years
Members have expressed concern regarding the California
Legislature's involvement in what they deem to be federal
issues. Some have commented that these types of discussions,
international trade agreements as an example, distract Members
from their core responsibilities of approving and overseeing
the implementation of legislation and the state budget.
Other Members, however, believe that the US trade model
clearly envisions a state role and provides the opportunity
through IGPAC and the SPOC for states, including Legislatures,
to engage the USTR. Further, given the ever expanding scope
of trade agreements, it is important that states remain
vigilant to ensure that agreements which disadvantage their
communities do not go into force. As more California
companies seek new foreign markets for their products and
services, ensuring that trade agreements commit nations to
basic human rights, workers rights, investor rights and
environmental standards also helps to maintain a more level
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playing field.
4)Background on Colombia : Colombia has a population of over
43.6 million with a literacy rate of 90.2%. The country is
located in the north-west corner of South America. It borders
the Caribbean Sea between Panama and Venezuela and borders the
Pacific Ocean between Ecuador and Panama. As a size
comparison, Colombia is slightly less than twice the size of
the state of Texas. In 2009, Colombia's GDP was estimated at
$400 billion.
According to the CIA Fact Book which provides national
profiles on countries, "a four-decade conflict between
government forces and anti-government insurgent groups,
principally the Revolutionary Armed Forces of Colombia (FARC)
heavily funded by the drug trade, escalated during the 1990s.
The insurgents lack the military or popular support necessary
to overthrow the government, and violence has been decreasing
since about 2002, but insurgents continue attacks against
civilians and large swaths of the countryside are under
guerrilla influence or contested by security forces." In
2003, the Colombian government started a process of collective
demobilization of paramilitary groups, which led to the
adoption of what is commonly referred to as the Justice and
Peace Act, under which more than 31,000 members of
paramilitary groups were reportedly demobilized. However,
according to the CIA Fact Book, following demobilization a
number of criminal groups emerged with some of their
membership being those formerly in the paramilitary. The CIA
Fact Book confirms that the Colombian government has stepped
up efforts to reassert government control throughout the
country and now has a presence in every one of its
administrative departments.
The CIA Fact Book also reports that Colombia's economy has
experienced positive growth over the past five years despite
the ongoing armed conflict. Foreign direct investment hit a
record $10 billion in 2008 due to, according to the CIA Fact
Book, a series of pro-business and open market reforms
advanced by President Uribe and the opportunities provided by
the Andean Trade Promotion and Drug Eradication Act.
Ongoing economic problems facing the Colombian government, as
cited by the CIA, include inequality, underemployment, and
narcotrafficking. Colombia remains a key producer of illegal
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drugs, according to the CIA Fact Book, being the world leader
in coca cultivation with a significant portion of narcotics
proceeds being either laundered or invested in Colombia
through black market peso exchanges. While coca cultivation
was up 6% in 2007, opium cultivation fell 25% in Colombia.
The World Trade Organization's (WTO) most recent trade policy
review states that "Colombia has made definite progress [since
the1996 review] in the modernization and liberalization of its
trade regime; non-tariff barriers to trade have been
significantly reduced, although average tariff protection has
increased slightly. In parallel, Colombia has embarked on
ambitious reforms of many economic sectors, particularly
services, resulting in increased competition, lower prices,
and an expanded choice for consumers."
One important element in the country's trade liberalization
policies was a 1999 Constitutional amendment that eliminated
the government's power to expropriate private property for
"equity reasons" without compensation. Colombia's investment
statutes, however, still allow the government to limit foreign
investment in any sector, although this has never been
exercised to date. The WTO report recommended that Colombia
address a number of issues, including certain practices
related to customs, import licensing, local content
requirements, internal taxes, and the regulation of certain
services. Also noted in the WTO report is the need to
reassess export promotion and incentive schemes to ensure they
are consistent with open market standards.
According to the International Monetary Fund (IMF), Colombia
has survived the current economic crisis fairly well
considering the scope of global recession. This is due, in
part, to the quick actions taken by the government to address
the crisis. As an example, in April 2009, Colombia requested
and was given access to a special $10.4 billion line of
credit. The Flexible Line of Credit initiative was established
by the IMP for the exclusive use of countries that have
strongly performing economies with a sustained record of sound
economic policies and a track record of policy implementation.
Access to the line of credit is limited to countries meeting
the criteria, rather than contingent upon fulfilling
performance criteria after receiving the money.
5)Human rights violations : The United Nations' Office of the
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High Commisioner for Human Rights (OHCHR) has had an official
presence in Colombia since 1997. The Colombia OHCHR office
plays a number of roles, including serving as an observer and
reporter on human rights and international humanitarian law
violations. In addition to the country level-efforts of the
OHCHR, the Human Rights Council of the General Assembly of the
United Nations has sent representatives to Colombia.
Most recently, the Special Rapporteur on the situation of
human rights defenders, i.e. people who advocate for human
rights, released a summary report on her September 2009 onsite
review. During the trip, she met with senior government
officials, human rights defenders and people in the
communities. In her findings, she acknowledges that Colombia
has made significant progress in improving the overall
security of the country between 2002, when President Uribe
took office, and 2008, including having a measurable decrease
in the number of homicides.
She also states, however, that she is deeply concerned about
the widespread phenomenon of threats being made against human
rights defenders (including unionists) and their families,
often through pamphlets, obituaries, emails, phone calls and
text messages. She states that she received numerous accounts
of threats in all places she visited in the country. This
phenomenon has reportedly worsened since the beginning of 2009
and this fact was corroborated to her by the Head of the
National Police.
The report specially addresses the plight of trade unionists
and the increased threats and especially the continued
practice of "enforced disappearance and execution." Also
included in the report are concerns raised about the treatment
of indigenous leaders; Afro-Colombian leaders; activists for
displaced persons; women human rights defenders; journalists;
youth activities; church workers; lesbian, gay, bisexual and
transgender; and magistrates.
Her report concludes with 25 recommendations for improving the
safety of human rights defenders, including such things as
"the Government should fully guarantee that personnel assigned
to the protection of human rights defenders do not gather
information for intelligence purposes" and "the
Attorney-General's Office should review all criminal
investigations against human rights defenders, close
AJR 27
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immediately all cases found to be baseless, and prosecute
State officials, including prosecutors, who maliciously
investigated defenders."
Her recommendation to the international community is that it
should continue monitoring the situation of human rights
defenders, in particular the most targeted and vulnerable
ones.
6)Concern for Colombian workers : International labor leaders
and those in the US and California have repeatedly raised
concerns that the Colombian government does not have
sufficient laws, nor does it systematically enforce the laws
it does have, in order to protect the rights and lives of
trade unionists.
According to the California Labor Federation, 40 people were
murdered in Colombia in 2009 because of their status as trade
unionists. Among other criticisms, a number of labor leaders
have stated that the Colombian government has been slow to
arrest and bring to trial the
people who were responsible for the more than 2,500 murders of
Colombian trade unionists since 1986.
Labor groups agree that international trade agreements can
provide great economic opportunities for workers, however,
they also believe that trade agreements can create a "race to
the bottom" by increasing unemployment and lowering wages for
all workers. A key indicator of success, they say, is whether
or not the trade agreement is premised on enforceable labor
standards. Without enforceable standards, that are actually
enforced, corporations will leave countries with worker
protections for those that allow workers to be exploited.
Union leaders in the U.S. are strongly opposed to an
affirmative vote from Congress on the CTPA. Based on the
documented human right abuses in Colombia, they ask that the
US not ratify the CTPA until a basic level of human rights is
available to the workers of Colombia.
7)Colombia and California trade relations : The current
recession, like in many countries, has weakened demand for
Colombian exports. In 2009, Colombia exported approximately
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$31.3 billion in products, primarily comprised of petroleum,
coffee, coal, nickel, emeralds, apparel, bananas, and cut
flowers. The US is Colombia's top export market followed by
China.
Relative to products being imported to Colombia, top imports
include industrial equipment, transportation equipment,
consumer goods, chemicals, paper, fuels and electricity.
Colombia was the US' 26th largest goods export market in 2008,
for a total of $11.8 billion. Top states for exporting to
Colombia in ranked order are Texas, Florida, Louisiana,
Illinois, Alabama and California (2006).
In 2009, California exported $319.8 million in goods to
Colombia. Below is a chart providing more detailed
information on California exports to Colombia in 2009.
---------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------
Supporters of the CTPA state that the agreement offers
tremendous opportunities for California exporters. Most
significantly, they cite a number of tariffs, which will be
immediately eliminated (80%); the remaining tariffs will be
phased out over 10 years. Based on information from the U.S.
Department of Commerce, the following are examples of current
tariffs and their proposed reductions under CTPA:
a) Computers and Electronic Products : Current tariffs are
between 8 and 15%. The CTPA covers 100% of U.S. exports
under the Information Technology Agreement, which will
receive 100% duty free treatment immediately upon the
effective date of the CTPA.
b) Chemical Manufacturers : Current tariffs are between 8
and 20%. Upon the effective date of the CTPA, 82% of U.S.
chemical exports will receive duty free treatment, with the
remaining tariffs being phased out over 10 years. Examples
of chemical and related products include pharmaceuticals,
cosmetics, fertilizers, and agrochemicals. Strong economic
opportunities cited in the literature include chloride,
styrene, and polyethylene.
c) Machinery Manufacturers : Current tariffs are as high as
20%. Upon the effective date of the CTPA, 70% of U.S.
infrastructure and machinery products will receive duty
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free treatment, including pumps and compressors, filtration
equipment, and earth sorting equipment. Ninety-two
percent of agricultural equipment and 88% of construction
equipment, including bulldozers, mechanical shovels, boring
and sinking machinery, and dumpers, will immediately
receive duty free treatment, with the remaining tariffs
phased out over 10 years.
d) Agricultural Products : Upon the effective date of the
CTPA, 53% of tariffs on agricultural products will receive
duty free treatment. As an example, this includes 100%
elimination of the price band system that results in
tariffs as high as 159% on U.S. dairy products. All
Colombian duties on U.S. dairy products will be eliminated
in 15 years.
According to the CIA Fact Book, the Colombian business sector
continues to be concerned about the failure of the U.S.
Congress to approve the signed CTPA. Canada also has a
negotiated, but not ratified, trade agreement with Colombia.
8)Policy issue : The Colombian government, generally
corroborated by such groups as the CIA and the WTO, state that
Colombia has made great strides since President Uribe took
office in 2002. Even worker rights organizations agree that
progress has been made in many areas. The policy question is,
however, whether progress is sufficient or is there certain
basic standards of civil society and human rights that must be
achieved in order for the US to fully embrace a nation as a
free trade partner.
Opponents of the resolution, including the Government of
Colombia, believe that demonstrated progress is sufficient.
International trade organization leaders, such as Christy
Thornton, executive director of the North American Congress on
Latin America, have been quoted as saying that the CTPA
represents not just a more open market for US goods but a
reward offered by the Bush Administration to one of the US'
last allies in Latin America.
The supporters of AJR 27, however, believe that while progress
should be commended, civil society in Colombia has not yet
achieved the conditions under which the US should move forward
on a trade agreement. The AFL CIO, in its formal comments to
the USTR on CTPA, in September 2009, state that many of the
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roots of the political, economic and social crisis in Colombia
remain, that a country needs to first meet some set of minimum
standards prior to the US entering into an agreement, and
offers a suggestion for moving forward. The recommendation is
to have the US commit to closely monitor Colombia's efforts
over the next three years. At the close of that time period,
if Colombia has achieved the key minimum civil society
objectives, then the US could freely enter into the agreement.
If Colombia has not met the objectives in both law and in
practice, the US could still agree to annually review its
progress and move forward once standards are met.
9)California's trade-based economy : International trade is a
very important component of California's $1.8 trillion
economy. If California were a country, it would be the 11th
largest exporter in the world. Exports from California
accounted for over 11% of total U.S. exports in goods,
shipping to over 220 foreign destinations in 2009.
California's land, sea, and air ports of entry serve as key
international commercial gateways for products entering the
country. California exported $120 billion in goods in 2009,
ranking only second to Texas with $163 billion in export
goods. Computers and electronic products were California's
top exports in 2009, accounting for 29.3% of all state
exports, or $35 billion.
-------------------------------------------------------------
|2009 Exports From California to the World |
-------------------------------------------------------------
|------------------------+------------------+------------------|
| Product | Value ($) | Percent |
|------------------------+------------------+------------------|
|334 _Computers & | 35,182,767,377| 29.3 % |
|Electronic Prod. | | |
|------------------------+------------------+------------------|
|36 _Transportation | 12,826,967,941| 10.7 % |
|Equipment | | |
|------------------------+------------------+------------------|
|333 _Machinery | 10,709,240,936| 8.9 % |
|Manufactures | | |
|------------------------+------------------+------------------|
|325 _Chemical | 10,233,994,524| 8.5 % |
|Manufactures | | |
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|------------------------+------------------+------------------|
|339 _Misc. Manufactures | 9,130,040,605| 7.6 % |
|------------------------+------------------+------------------|
|111 _Crop Production | 7,848,804,565| 6.5 % |
|------------------------+------------------+------------------|
|All Others | 34,210,404,051| 28.5 % |
|------------------------+------------------+------------------|
|Total | 120,142,219,999|100% |
| | | |
--------------------------------------------------------------
Manufacturing is California's most export-intensive activity.
Overall, manufacturing exports represent 9.4% of California's
gross domestic product. More than one-fifth (21.9%) of all
manufacturing workers in California directly depend on exports
for their jobs.
Small- and medium-sized firms generated more than two-fifths
(43%) of California's total exports of merchandise. This
represents the seventh highest percentage among states and is
well above the 29% national average export share for these
firms.
Mexico is California's top trading partner, receiving $17.4
billion in goods in 2009. The state's second and third
largest trading partners are Canada and Japan with $14.2
billion and $10.9 billion, respectively. Other top-ranking
export destinations include China, South Korea, Taiwan, the
United Kingdom, Hong Kong, Germany, and Singapore. In 2008,
2.7 million people were employed by business related to trade,
transportation and utilities.
The economic crisis has had significant effects on top
California trading partners. According to the International
Monetary Fund's draft 2010 World Economic Outlook, global GDP
is expected to be down from earlier estimates in January.
Global GDP is forecast to be 4.1%, the US at 3.0, Euro Area at
0.8%, and China at 10.0%.
Overall, the export of California products to other counties
was down in 2009 by $24.8 billion from 2008 ($120 billion v.
$144.8 billion). Exports to the state's top trading partners
were down as follows: Mexico $3.1 billion, Canada $3.6
billion, Japan $2.1 billion, and China $1.2 billion less than
the prior year.
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The most recent trade numbers coming from the US Department of
Commerce, however, indicate that California trade (exports and
imports) is moving in a positive direction. In February,
2010, $10.38 billion in products was exported from California.
This was a 13.7% increase over the previous year and the
fourth straight month increases were reported based on
year-to-year gains. Imports through California ports also
rose faster in February reporting a 38.3% increase ($22.53)
over the previous year. The number of loaded shipping
containers leaving Long Beach, Los Angeles and Oakland was up
by 27% from last year and similar increases were reported for
outbound cargo tonnage.
10)Amendments : Staff understands that the author will offer
amendments to:
a) Increase the reported number of trade unionists who were
killed in Colombia in 2009 from 24 to 40.
b) Add co-authors.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation (sponsor)
American Federation State, County, Municipal Employees, AFL-CIO
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Federation of Teachers
California Nurses Association
California Teamsters Public Affairs Council
Central Labor Council, AFL-CIO, of San Bernardino and Riverside
Counties
Engineers and Scientists of California
International Longshore & Warehouse Union - AFL-CIO
National Lawyers Guild, Labor & Employment Committee
North Bay Labor Council - AFL-CIO
Northern California District Council of the International
Longshore and Warehouse Union
Professional & Technical Engineers, Local 21
San Diego-Imperial Counties Labor Council AFL-CIO
UNITE HERE!
United Food and Commercial Workers Union, Western States Council
1 individual
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Opposition
Bay Area Council
California Chamber of Commerce
Cange International, Inc.
Chamber of Commerce of the United States
Council for International Trade
Gathers Strategies
Palm Desert Chamber of Commerce
USS-POSCO Industries
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090