BILL ANALYSIS �
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|Hearing Date:August 11, 2014 |Bill No:ACR |
| |100 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: ACR 100Author:Alejo
As Amended:August 4, 2014 Fiscal: Yes
SUBJECT: Relations with El Salvador
SUMMARY: Encourages the Governor's Office of Business and Economic
Development (GO-Biz) to work in coordination with the Legislature to
develop comprehensive trade promotion and foreign investment
activities that encourage stronger economic ties with El Salvador.
Existing law:
1)Establishes GO-Biz within the Governor's Office for the purpose of
serving as the lead state entity for economic strategy and marketing
of California on issues relating to business development, private
sector investment and economic growth. GO-Biz also serves as the
administrative oversight for the California Business Investment
Service and the Office of the Small Business Advocate. (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 (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)
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Page 2
This resolution declares that:
1) California is currently the eighth largest economy in the world and
depends on international trade, which can be enhanced by the
economic development of foreign trade partners.
2) More than 4.4 million jobs in California depend on international
trade, with trade-related employment being one of the strongest
growing and well-paying labor sectors in the state.
3) El Salvador has an emerging global economy with close cultural and
demographic ties to California, providing the state a unique
opportunity to engage in binational economic development
activities.
4) Salvadoran-Americans constitute the second largest Latino community
in California, totaling over one million throughout the state and 6
percent of all immigrants nationwide.
5) Salvadoran-American workers in California support our economy with
indispensable labor, which in turn provides remittances to families
in El Salvador, totaling 16.7 percent of El Salvador's gross
domestic product in 2012, the largest percentage in any Latin
American country.
6) The United States prospered from a $731 million trade surplus with
El Salvador in 2013.
7) El Salvador and California would both benefit from increased trade,
investment, tourism, and business partnerships.
8) The United States dollar is used as a medium of exchange in El
Salvador, which encourages the United States to import and export
goods and services.
9) President Barack Obama initiated the Presidential Policy Directive
on Global Development in 2010, which identified El Salvador as one
of four select countries chosen for increased foreign investment
based on their track record of partnering with the United States,
policy performance, and the potential for continued economic
growth.
10)In September 2013, the United States awarded El Salvador a $277
million grant to improve
El Salvador's competitiveness and productivity in international
markets.
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11)Currently, the World Bank lending portfolio in El Salvador
comprises $290 million in commitments for projects including
training services and job placement for poor people in urban areas,
increasing access to the labor market, strengthening local
governments, and improving public education.
12)The California Legislature recognizes the potential for mutually
beneficial gains resulting from El Salvador's economic development
and is committed to encouraging exchanges with
El Salvador in order to promote better economic ties through means
including, but not limited to, all of the following:
a) Supporting economic development activities of the Salvadoran
foreign consulate trade officials located in California to
establish partnerships to serve as platforms for expanding
California exports and promoting California as a destination for
investment.
b) Developing a series of export-related seminars and webinars on
best exporting practices, protecting intellectual property
rights, and utilizing GO-Biz support services and other related
topics.
c) Hosting incoming Salvadoran delegations in order to promote
Californian products and services, encourage foreign investment,
and expand economic exchange.
d) Facilitating trade missions to El Salvador to promote
California products and services in prioritized industries.
1) El Salvador is also committed to pursuing mutually beneficial
economic activities with California.
FISCAL EFFECT: Unknown. This bill is keyed fiscal.
COMMENTS:
1. Purpose. The Author is the Sponsor of this measure. According to
the Author, "Salvadoran-Americans are the second largest Latino
community in California, and El Salvador has been recognized by the
Obama Administration as one of four select countries targeted for
increased economic investment. In light of this, ACR 100 seeks to
enhance California trade relations with a country that is an
ACR 100
Page 4
emerging global economic actor and which we share cultural and
demographic ties."
2. Governor's Office of Business and Economic Development (GO-Biz) and
International Trade Efforts in California. In February 2010, the
Little Hoover Commission undertook a review of the state's economic
and workforce development programs. In its final report, Making up
for Lost Ground: Creating a Governor's Office of Economic
Development, it analyzed the status and effectiveness of current
programs since the 2003 demise of the Technology, Trade and
Commerce Agency and recommended the creation of a new governmental
entity to fill the void left by the dismantled agency.
The report called for a single entity that would promote greater
economic development, foster job creation, serve as a policy
advisor and deliver specific services (i.e., permitting, tax,
regulatory, and other information) directly to the California
business community. In April 2010, Governor Schwarzenegger issued
Executive Order S-05-10 as a means to operationalize the report
recommendations including the creation of the Governor's Office of
Economic Development (GOED).
In October 2011, the Governor signed AB 29 (cited and described
below), which effectively codified GOED and changed its name to
GO-Biz, effective January 1, 2012. Since its inception, the office
has served over 3,000 businesses, 95% of which are small. The most
frequent types of assistance include help with permit streamlining,
starting a businesses, relocation and expansion of businesses, and
regulatory challenges.
When the Technology Trade and Commerce Agency (TTCA) was eliminated
in 2004, due to its poor administrative performance, the authority
for all state trade activity was also eliminated and the few
remaining programs came under the umbrella of the Business,
Transportation and Housing Agency (BT&H). The former International
Investment Division under TTCA had 91 employees and a budget of $43
million, allowing it to engage in activities like formal marketing.
Beginning in the 2005-06 Session, several legislative measures
were introduced to reinstate the state's trade authority. SB 1530
(Romero, 2006) addressed these concerns by requiring BT&H to
undertake a trade study to determine what role the state should
play in international trade and foreign investment activities and
required them to establish a business advisory committee, and
development of a trade strategy consistent with the study and acts
as the vehicle for implementing the state's trade policy. The
first strategy was published in February 2008 and most recent was
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issued in February 2014.
The strategy highlighted strategic objectives intended to implement
an overall policy of creating jobs, increasing revenues for
California enterprises, and improving California's international
competitiveness by expanding the export of California goods and
services and by increasing foreign direct investment into the
state. The objectives include:
Developing a comprehensive, coordinated and cohesive
strategy development framework with a clear vision to expand
trade and investment, which includes other relevant state
agencies, with input from private and public sector
stakeholders.
Implementing more proactive outreach, awareness,
education and engagement programs both within the state for
California-based companies and through foreign partners and
trade office(s).
Maximizing China Trade Office resources and
opportunities to expand exports and investment.
Developing an action plan to address key challenges
facing California's ports and related infrastructure to ensure
their competitiveness.
Re-engaging and strengthening working relationships with
the Office of the U.S. Trade Representative and the state's
Congressional delegation to advocate California interests
related to international trade and investment.
Developing and implementing a more user-friendly,
comprehensive, interactive and useful website to assist
California companies wanting to export and to attract foreign
investment.
In the report, GO-Biz advised it will reevaluate, when appropriate
or necessary, the recommended objectives and actions in order to
achieve the state's overall international trade and investment
policy goals.
In February 2014, Governor Brown announced the creation of a
California International Trade and Investment Advisory Council
(Council) which will advise GO-Biz on strategies to expand
international trade and investment for California businesses.
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Specifically, in announcing its creation, the Governor noted that
the Council "will assist GO-Biz in identifying foreign markets with
the greatest potential for export expansion and in developing
specific export strategies for those markets - including the
state's top trading partners, Canada, Mexico and China, and
emerging markets such as Brazil and India."
Until the creation of GO-Biz there were only a very small number of
former International Investment Division staff working on trade
related issues and activities for the state. GO-Biz now has
authority for undertaking international trade and foreign
investment activities, including establishing any international
trade and investment office ( AB 2012 , Perez, Statutes of 2012).
GO-Biz has partnered with the Bay Area Council to open a
California-China Trade and Investment office in Shanghai's downtown
Yangpu district. In a March 2013 report to the Legislature on the
status of this effort, GO-Biz described the office's goals "to
drive increased employment, revenues at California enterprises, tax
revenues, and international competitiveness in California" which
will be accomplished through promoting investment in California;
facilitating two-way international business growth, with an
emphasis on expanding foreign sales by California employers,
including not only manufacturers, agricultural enterprises, and
commodity producers, but also service providers such as
universities, banks, consulting companies, and the like; supporting
continued growth of California's role as a gateway state for goods
movement and passenger travel; and identifying and addressing
barriers to international expansion by California employers.
1. Related Legislation This Year. SB 511 (Lieu) of 2014 would require
GO-Biz to convene a statewide business partnership for port trade
promotion and would create an export finance office to provide
export assistance to small and medium sized companies. ( Status:
The bill is currently pending in the Assembly Committee on
Appropriations.)
SB 928 (Correa) of 2014 requires GO-Biz to establish an
international trade and investment office in Mexico City, Mexico by
January 1, 2016. ( Status: The bill is pending in the Assembly.)
AB 337 (Allen) of 2014 updates requirements for the international
trade strategy prepared by GO-Biz to be based on current and
emerging market conditions and the needs of investors, businesses,
and workers to be competitive in global markets. ( Status: The
bill is pending in the Senate.)
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AB 2713 (Quirk-Silva) of 2014 authorizes GO-Biz to establish
public-private partnerships to help guide state activities related
to the export of California products and requires 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 is pending in the Senate.)
2. Prior Related Legislation. SB 592 (Lieu) of 2013 was identical to
SB 511 and also would have required GO-Biz to provide a port trade
promotion strategy to the Legislature on or before April 1, 2014.
( Status: The bill was held in the Assembly 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) 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 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, P�rez, 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.
SB 460 (Price) of 2011 included similar language as contained in SB
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511 and SB 592 above. ( Status : The bill was held in the
Assembly Committee on Appropriations.)
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. P�rez, 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.
SB 1175 (Price, 2010) would have required the Secretary of BTH to
direct the California Travel and Tourism Commission to conduct a
review of its principal mission and core competencies in order to
determine if the commission should include trade promotion in its
strategic marketing plan or other future plans of the commission
and provide a report to the Legislature. ( Status: This measure
was held in the Senate Committee on Rules.)
AB 2443 (Perez, 2010) 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.)
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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.
SUPPORT AND OPPOSITION:
Support:
Consul General of El Salvador
Salvadoran Committee of Santa Cruz County
Opposition:
None on file as of August 6, 2014.
Consultant:Sarah Mason