BILL ANALYSIS
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|Hearing Date:June 28, 2010 |Bill No:AB |
| |2443 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 2443Author:V. Manuel Perez
As Amended: June 21, 2010Fiscal:Yes
SUBJECT: State government: international relations.
SUMMARY: Requires the state point of contact (SPOC) 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 (USTR)
relating to a pending trade agreement. Authorizes the establishment
of Sister State relationships for the purpose of promoting economic
growth and trade and investment opportunities.
Existing law:
1)The United States Constitution gives the federal government the
power to enter into trade agreements. Federal law requires Congress
to approve international agreements.
2)Specifies that the Governor is the primary state officer
representing California's interest in international affairs.
3)Specifies the Business, Transportation and Housing Agency (BT&H) as
the primary state agency authorized to attract foreign investments,
cooperate in international public infrastructure projects, and
support California businesses, not otherwise assisted by California
Department of Food and Agriculture (CDFA), in accessing markets, and
requires the Secretary of BT&H to develop an international trade and
investment policy.
4)Specifies that the SPOC, within the executive branch, acts, in
compliance with federal practice, as the liaison between the state
and the Office of the USTR on trade-related matters.
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5)Clarifies that the SPOC is often provided the opportunity to review
and comment on ongoing trade negotiations and requires the SPOC, in
addition to other duties assigned by the Governor, to do all of the
following:
a) Promptly disseminate information from the USTR to the
appropriate state agencies, departments, and legislative
committees.
b) Work with the Legislature and appropriate state agencies to
review the effects of any proposed or enacted trade agreement
provisions on California environment, businesses, workers, and
general lawmaking authority and to communicate those findings to
the USTR.
c) Serve as the liaison to the Legislature on matters of trade
policy oversight.
1)Requires the Office of Planning and Research (OPR) to maintain and
update, a full and comprehensive list of all state agreements made
with foreign governments, updated within 30 days of the effective
date of each new agreement.
This bill:
1) Requires the SPOC to provide any official position or comments that
any entity within the executive branch of state government provided
to the USTR, within five days, to the legislative committees
assigned responsibility for international trade issues.
2) Enacts the Sister State Relationship Act of 2010 (Act).
3) Defines Sister State as a foreign nation or particular jurisdiction
within a foreign nation.
4) Defines Sister State relationship as one characterized by a mutual
interest in collaboration and the sharing of information to further
educational, economic and cultural exchanges between California and
a Sister State. Clarifies that a Sister State relationship does
not create any legal relationship. Clarifies the purpose of a
Sister State relationship may include, but is not limited to:
a) Promoting the economic growth and well-being of small, medium
and large companies in both states by increasing their potential
for trade and investment.
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b) Providing a forum for sustained goodwill and cooperation
between the elected leaders of the states.
c) Promoting bilateral ties that lead to a more indelible and
lasting relationship between the citizens of the states.
1) Authorizes a Sister State to be initiated by the enactment of a
concurrent resolution by either house of the Legislature or an
Executive Order issued by the Governor, expressing a desire to
enter into a Sister State relationship for the purpose of
encouraging and facilitating mutually beneficial educational,
economic and cultural exchanges.
2) Sets forth a policy to certify and officially recognize Sister
State relationships that:
a) Demonstrate a mutual interest by the State of California and
the Sister State.
b) Designate a contact person in each state responsible for
developing and implementing sister state activities.
c) Specify in writing the goals and objectives sought to be
accomplished during the term of the Sister State relationship.
d) Establish a term for the initial Sister State relationship not
to exceed four years.
e) Ensure that the contact person will prepare and submit a
report for the OPR, no later than six months after the term of a
Sister State relationship, summarizing all known activities
conducted pursuant to the sister state relationship.
f) Show that the Sister State is not on the United States
Department of State (State Department) list of countries that
condone or engage in inhumane treatment of individuals or is
otherwise prohibited from entering into such a relationship under
federal law.
1)Maintains that a Sister State relationship is not officially
recognized or implemented until it has been certified by OPR.
2)Requires OPR to maintain a list of all certified Sister State
relationships, updated within 30 days of the expiration of the term
of each existing Sister State relationship or certification of a new
relationship.
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3)Grants OPR authority to decertify a previously certified Sister
State relationship if the Sister State subsequently appears on the
State Department list.
FISCAL EFFECT: According to the May 5, 2010 Assembly Committee on
Appropriations analysis, there are no significant costs associated
with this legislation.
COMMENTS:
1. Purpose. According to the Author, "In California the SPOC serves,
by statute, as the official liaison between the USTR, the
Administration, and the Legislature. As the liaison, the SPOC is
required to share key correspondence from the USTR to the relevant
state agencies, departments, and legislative policy committees and
to work with the Administration and Legislature to review and
comment to the USTR on the effects of proposed and enacted trade
agreements. The SPOC, however, is not currently required to share
a copy of the Administration's comments to the USTR. This includes
when the Governor takes a formal position and/or comments on a
pending trade agreement. Given the importance of international
trade and foreign investment in the California economy, the free
exchange of information between the state's executive and
legislative branches is imperative."
The Author also adds that establishing Sister State relationships
with a refined purpose of promoting the economic growth and
well-being of small, medium and large companies can increase their
potential for trade and investment but also promote a more
"indelible and lasting relationship between the citizens of
California and the citizens of a Sister State". The Author
believes that establishing a process for the creation of Sister
State relationships promotes accountability and transparency in the
state's international relations. Additionally, Sister State
relationships can have a significant positive impact on rural
economies in terms of broad based promotion and marketing of those
communities.
2. California's Trade Economy. According to information provided by
the Author, international trade is a key component of California's
$1.8 billion 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.
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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
2008, accounting for 29.3% of all state exports, or $35 billion.
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.
3. Office of the U.S. Trade Representative (USTR). Created in 1962 by
Executive Order as an agency within the Executive Office of the
President, the 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 SPOC and Intergovernmental Policy Advisory
Committee (IGPAC). Currently, when a trade agreement is under
negotiation, the USTR sends all correspondence and requests to
Governors. If a Governor agrees to bind the state or state agency
to the provisions or a procurement agreement, the USTR includes the
state or state agency as a bound party in the appendix to the
specific trade agreement. Past California governors have bound the
state to the terms of specific government procurement provisions
via the USTR directly.
4. Recent Experiences with Binding Agreements. On May 6, 2004,
Governor Schwarzenegger agreed to bind the state to terms of the
U.S. - Australia Free Trade Agreement. In response, 21 legislators
sent a letter on May 28, 2004 expressing their concern that the
state be bound to the procurement chapter of that agreement and
requesting the Governor to not commit to procurement chapters of
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upcoming agreements, noting that "international procurement
agreements could jeopardize important California procurement laws
promoting economic development, environmental protection and human
rights."
In January 2005, the USTR sent letters to state Governors detailing
trade agreement negotiations with several Central American
countries. In November of that year, legislators sent the Governor
a letter requesting that he not voluntarily agree to be bound to a
trade pact that could arguably preempt California law; ask that a
bipartisan and bicameral group of California Legislators be
appointed to IGPAC; commit to weighing in on trade agreements in a
bipartisan fashion before commitments are made.
5. Sister State Relationships. According to information provided by
the California State Senate Office of International Relations, a
Sister State relationship is a formal declaration of friendship
between two regions, states, or nations. These agreements are seen
as a symbol of mutual goodwill and serve as an effort to encourage
and facilitate mutually beneficial social, economic, educational,
and cultural exchange. Under current law, Sister State agreements
are brought to the Senate or Assembly floor by a Member in the form
of a resolution and must be passed by a simple majority. Once the
resolution is approved, a Sister State relationship is established
but this process does not provide the formality usually associated
with international agreements, particularly since there is no
requirement for a request to be submitted to the Sister State or
any mechanism to determine that state's role in the relationship.
Additionally, there is not a state entity that officially monitors
and tracks these relationships or the outcomes that come from
Sister State relationships.
California currently has 24 Sister State relationships:
Areas marked with * are a Cooperation Agreement
Areas marked with ** are a Friendship State Relationship
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|Region/Country |Legislation |Established |
|---------------------------+-----------------+------------|
|Taiwan/Republic of China |Resolution Ch. | 1983 |
| |120 | |
| |(SCR 40 - | |
| |Polanco) | |
|---------------------------+-----------------+------------|
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|Jiangsu Province, |Resolution Ch. | 1985 |
|People's Republic of |66 | |
|China** |(SCR 19 - | |
| |Garamendi) | |
|---------------------------+-----------------+------------|
|Catalonia, Spain |Resolution Ch. | 1986 |
| |71 | |
| |(SCR 71 - Mello) | |
|---------------------------+-----------------+------------|
|Republic of Korea** |Resolution Ch. | 1987 |
| |97 | |
| |(SCR 6 - | |
| |Montoya) | |
|---------------------------+-----------------+------------|
|Queretaro, Mexico |Resolution Ch. |1988 |
| |110 | |
| |(ACR 137 - | |
| |Cortese) | |
|---------------------------+-----------------+------------|
|Provence-Alpes-Cote d'Azur |Resolution Ch. | 1990 |
|Region, France |135 | |
| |(SCR 115 - | |
| |Roberti) | |
|---------------------------+-----------------+------------|
|Khanty-Mansiysk Autonomous |Resolution Ch. | 1994 |
|District, Russian |87 | |
|Federation |(SCR 49 - | |
| |Rosenthal) | |
|---------------------------+-----------------+------------|
|Altai Republic, |Resolution Ch. | 1995 |
|Russian Federation |45 | |
| |(SCR 11 - | |
| |Johnston) | |
|---------------------------+-----------------+------------|
|Special Province of |Resolution Ch. | 1995 |
|Yogyakarta, |62 | |
|Indonesia |(SCR 23 - Marks) | |
|---------------------------+-----------------+------------|
|Umbria, Italy |Resolution Ch. | 1995 |
| |39 | |
| |(SCR 4 - Petris) | |
|---------------------------+-----------------+------------|
|Chungchongnam-do Province, |Resolution Ch. | 1996 |
|Republic of Korea |33 | |
| |(SCR 54 - Marks) | |
|---------------------------+-----------------+------------|
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|New South Wales, |Resolution Ch. | 1997 |
|Australia |52 | |
| |(SCR 19 - | |
| |Brulte) | |
|---------------------------+-----------------+------------|
|Alberta, Canada |Resolution Ch. | 1997 |
| |29 | |
| |(SCR 8 - | |
| |Thompson) | |
|---------------------------+-----------------+------------|
|San Salvador, El Salvador |Resolution Ch. | 1998 |
| |103 | |
| |(SCR 81 - | |
| |Hayden) | |
|---------------------------+-----------------+------------|
|Baja California (Norte), |Resolution Ch. | 1999 |
|Mexico |46 | |
| |(SCR 5 - Kelley) | |
|---------------------------+-----------------+------------|
|Parana, Brazil |Resolution Ch. | 1999 |
| |92 | |
| |(SCR 8 - Costa) | |
|---------------------------+-----------------+------------|
|Inner Mongolia Autonomous |Resolution Ch. | 1999 |
|Region, China** |93 | |
| |(SCR 26 - Costa) | |
|---------------------------+-----------------+------------|
|Governorate of Cairo, |Resolution Ch. | 1999 |
|Egypt |130 | |
| |(SCR 41 - | |
| |Murray) | |
|---------------------------+-----------------+------------|
|Western Cape Province, |Resolution Ch. 2 | 2000 |
|South Africa |(SCR 42 - | |
| |Murray) | |
|---------------------------+-----------------+------------|
|Jalisco, Mexico |Resolution Ch. | 2000 |
| |148 | |
| |(ACR 183 - | |
| |Firebaugh) | |
|---------------------------+-----------------+------------|
|Punjab State, India |Resolution Ch. | 2001 |
| |12 | |
| |(SCR 3 - Burton) | |
| | | |
|---------------------------+-----------------+------------|
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|Gujarat State, India |Resolution Ch. | 2001 |
| |13 | |
| |(SCR 4 - Burton) | |
| | | |
|---------------------------+-----------------+------------|
|Azores, Portugal |Resolution Ch. | 2002 |
| |124 | |
| |(SCR 84 - Costa) | |
|---------------------------+-----------------+------------|
|Baja California (Sur), |Resolution Ch. | 2002 |
|Mexico |131 | |
| |(SCR 95 - | |
| |Torlakson) | |
|---------------------------+-----------------+------------|
|Province of Jeju, |Resolution Ch.80 |2005 |
|Republic of |(ACR 42 - Chu) | |
| | | |
|Korea | | |
| | | |
| | | |
| | | |
----------------------------------------------------------
Despite the presence of Sister State relationships in many states
throughout the U.S., there is no one national framework or
association for these relationships. Sister City relationships, on
the other hand, do have an official organization. Sister Cities
International (SCI) links jurisdictions from the U.S. to
communities across the globe and recognizes, registers, and
coordinates Sister City relationships. The U.S. Sister City
program originated in 1956, when President Dwight D. Eisenhower
proposed a people-to-people, citizen diplomacy initiative.
According to information from SCI, there are currently more than
2,000 cities, states and counties that are partnered in 136
countries around the world. These relationships have historically
been key to local community development, but were also important in
setting the stage for international diplomacy.
6. Related Legislation. AJR 27 (Torrico) of 2010, memorializes
Congress that the California Legislature opposes the United
States-Colombia Trade Promotion Agreement. This resolution is
pending in the Assembly Committee on Jobs, Economic Development,
and the Economy.
AB 1276 (Skinner) of 2009, would have prohibited a state official,
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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. The measure was vetoed by
the Governor.
AJR 55 (Villines) of 2008, memoralized Congress that the California
Legislature supports the United States-Colombia Trade Promotion
Agreement. The measure was refused adoption in the Assembly
Committee on Jobs, Economic Development, and the Economy.
AB 3021 (Nu?ez, Chapter 621, Statutes of 2006). This bill
established the six-member California-Mexico Border Relations
Council (Border Council) comprised of all Agency Secretaries and
the Director of the Office of Emergency Services for the purpose of
coordinating activities of state agencies. The Border Council is
required to report to the Legislature on its activities annually.
AJR 14 (Jeffries, Chapter 73, Statutes of 2007). This resolution
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) established the
California Trade and Investment Act of 2008. This bill gave
authority to BTH to undertake international trade and investment
activities and directed the development of a comprehensive state
trade policy, implemented through a trade strategy that engages
California's business community in a meaningful way.
SB 1762 (Figueroa, 2006) This bill would have prohibited the
Governor from binding California to provisions of international
trade agreements without consent from the Legislature. The measure
was held in the Assembly Committee on Jobs, Economic Development and
the Economy.
SB 348 (Figueroa, 2005). This bill 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
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explicitly authorizes a state official to bind the state or to give
consent to bind the state to that trade agreement. The bill was
vetoed by the Governor.
7. Recent Amendments. In response to concerns about completely doing
away with existing Sister State relationships and disrupting the
goodwill these foster and promote in California throughout the
world, the Author removed a provision that would have terminated
existing Sister State relationships. While it was the Author's
intention to have all Sister State relationships be established
pursuant to the standards set forth in this bill, it may not be
necessary to repeal existing Sister State relationships that were
previously established by a resolution. Members of the Legislature
currently have the ability to author a subsequent resolution,
expressing intent to modify or cancel a Sister State relationship.
That effort would be considered by policy committees as well as the
full body of both houses.
8. Policy Issue : Use of Office of Planning and Research. At the May
20, 2010 hearing of the Senate Committee on Budget and Fiscal
Review, Subcommittee No. 4 (State Administration) voted 3-0 to
deny the Governor's recommendation that OPR be eliminated. The
Legislative Analyst's Office has long recommended eliminating OPR
and there are currently a number of measures pending before the
Legislature that modify OPR's role in different policy areas.
While the Committee denied eliminating OPR, it did vote to
eliminate a number of positions and maintain the following critical
core functions within OPR: CEQA Clearinghouse, Environmental
Planning and Coordination, CaliforniaVolunteers Program and the
Small Business Advisor. The Author may wish to consider specifying
a different state entity to certify and monitor Sister State
relationships .
SUPPORT AND OPPOSITION:
Support:
None on file as of June 22, 2010.
Opposition:
None on file as of June 22, 2010.
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Consultant: Sarah Mason