BILL ANALYSIS �
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|Hearing Date:June 16, 2014 |Bill No:AB |
| |337 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 337Author:Allen
As Amended:May 19, 2014 Fiscal: Yes
SUBJECT: Economic development: international trade and investment
strategy.
SUMMARY: Updates requirements for the international trade strategy
prepared by the Governor's Office of Business and Economic Development
(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.
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.
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(GC � 13996.42)
4)Requires GO-Biz to prepare an international trade and investment
strategy (Strategy) and provide a report to the Legislature on or
before February 1, 2014, updated once every five years that
includes: (GC � 13996.55)
a) Policy goals, objectives and recommendations necessary to
implement a comprehensive international trade and investment
program.
b) Measurable outcomes and timelines for the goals, objectives
and actions for the program.
c) Impediments to achieving goals and objectives.
d) Key stakeholder partnerships that will be used to implement
the strategy.
e) Options for funding.
f) An organizational structure for state administration of
international trade and investment policies, programs and
services.
1)Requires the Director of GO-Biz to prepare the following: (GC �
13996.65)
a) A budget for the Program and a separately stated budget for
each ITI office, with specified information.
b) A strategy and business plan for the Program, with specified
information, that is developed with input from California
businesses that shall include, but not be limited to, measurable
goals, objectives, and outcomes and timelines necessary to
attract employment-producing direct foreign investment to the
state and increase California exports.
c) A written review of the implementation of the prior year's
strategy and business plan for the Program that addresses the
performance of the program and each ITI Office.
1)Provides that the Controller shall not allocate any state funds to
GO-Biz for international trade and investment activities unless the
strategy for international trade and investment has been submitted
to the Legislature by May 1, 2014. (GC � 13996.75)
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2)Establishes processes and accountability measures for GO-Biz to
accept private monies to fund, establish and operate international
trade offices. Authorizes GO-Biz to accept private sector moneys in
an amount not in excess of ten thousand dollars ($10,000) per
donation made to the state for the purpose of promoting
international trade and investment, subject to the Political Reform
Act requirements, and not in excess of a total of ten thousand
dollars ($10,000) per quarter per donor, and specifies the purposes
for which moneys may be used. (GC � 13997)
3)Creates the California Economic Development Fund (Fund) in the State
Treasury for the purpose of receiving federal, state, local and
private economic development funds, and receiving repayment of loans
or grant proceeds and interest on those loans and grants, and
provides that upon appropriation by the Legislature, moneys in the
Fund may be expended by the GO-Biz to provide matching funds for
loans or grants to public agencies, nonprofit organizations, and
private entities, and for other economic development purposes,
consistent with the purposes for which moneys were received.
4)Specifies that GO-Biz is the primary state agency responsible for
international trade and investment activities in areas other than
those covered by the Department of Food and Agriculture.
This bill: Requires the next Strategy, on or before February 1, 2019,
to be based on current and emerging market conditions and the needs of
investors, businesses, and workers to be competitive in markets as
reflected in a framework that enables GO-Biz to evaluate current
workforce, capital, marketing, infrastructure, research and
development, and other needs of small and large firms, including, but
not limited to, highways, airports, and rail that link businesses with
the state's ports of entry and foreign and domestic markets.
Authorizes GO-Biz to base the Strategy, to the extent relevant and
feasible, on existing studies and reports, including, but not limited
to, the Goods Movement Action Plan, the California Strategic Workforce
Development Plan, the California Export of Recycled Materials Report,
the California Five-Year Infrastructure Plan, and the Environmental
Goals and Policy Report.
FISCAL EFFECT: This bill is keyed fiscal . According to the Assembly
Committee on Appropriations analysis dated January 24, 2014, this bill
will result in General Fund costs to GO-Biz of approximately $50,000.
COMMENTS:
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1. Purpose. The Author is the Sponsor of this measure. According to
the Author, "California has not fully studied our current trade
infrastructure system and the capacity needs that can promote our
International Trade abilities, yet the state continues to try and
push forward with policies that may not be addressing the actual
needs of our trade infrastructure throughout the state." The
Author believes that while it is necessary to begin to look for
economic development opportunities and set goals to achieve those,
including the crucial role international trade should play, the
current criteria required to be a part of the Strategy do not go
far enough. In response, the Author intends for this bill to
require a full analysis of the transportation infrastructure and
physical capacity necessary to meet the import and export needs of
California's land, sea and air ports of entry.
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,
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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
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
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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.
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. Infrastructure Needs and Prior Evaluations. This bill allows
GO-Biz to base the state's trade and investment strategy on
existing studies and reports like the Goods Movement Action Plan,
the California Strategic Workforce Development Plan, the California
Export of Recycled Materials Report, the California Five-Year
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Infrastructure Plan, and the Environmental Goals and Policy Report.
a) Goods Movement Action Plan. In 2006, California voters
approved Proposition 1B, the Highway Safety, Traffic Reduction,
Air Quality, and Port Security Bond Act of 2006 to authorize
$19.925 billion of state general obligation bonds for specified
purposes, including high-priority transportation corridor
improvements, State Route 99 corridor enhancements, trade
infrastructure and port security projects, school bus retrofit
and replacement purposes, state transportation improvement
program augmentation, transit and passenger rail improvements,
state-local partnership transportation projects, transit security
projects, local bridge seismic retrofit projects,
highway-railroad grade separation and crossing improvement
projects, state highway safety and rehabilitation projects, and
local street and road improvement, congestion relief, and traffic
safety. Prop 1B required the California Transportation
Commission to consult a "trade infrastructure and goods movement
plan submitted to CTC by the Secretary of the former Business,
Transportation and Housing Agency (BT&H) and California
Environmental Protection Agency (Cal-EPA) in determining the
allocation of around $3 billion of the over $19 billion
authorized by the bond. The Goods Movement Action Plan (GMAP)
was issued in 2007 as a comprehensive plan to address economic
and environmental issues associated with moving goods via the
state's highways, railways, and ports. Last year, AB 14
(Lowenthal, Chapter 223, Statutes of 2013) created a new plan,
the Freight Mobility Plan, to comply with the federally enacted
Moving Ahead for Progress in the 21st Century Act, known as
MAP-21 which authorizes federal transportation funding to states
through September 30, 2014. The new California plan is intended
to provide a comprehensive plan to govern the state's short- and
long-term planning activities and capital investments relating to
freight movement.
b) California Strategic Workforce Development Plan. The federal
Workforce Investment Act (WIA) requires the Governor to submit a
WIA/Wagner-Peyser Act (WPA) State Plan to the United States
Department of Labor (DOL). This plan outlines a five-year
strategy for the investment of federal workforce training and
employment services dollars. SB 293 (Ducheny, Chapter 630,
Statutes of 2006) required the California Workforce Investment
Board (CWIB) to collaborate with the Chancellor of the California
Community Colleges, the State Department of Education, other
appropriate state agencies, and local workforce investment boards
to develop a comprehensive state plan that serves as a framework
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for public policy, fiscal investment, and operation of all state
labor exchange, workforce education, and training programs. The
current plan prepared by the CWIB for 2013-2017, Shared Strategy
for Shared Prosperity, states that public and private
institutions, including education, training, unemployment, and
re-employment systems, must support a "retraining economy" for
California to maintain its status as a place of innovation and
shared prosperity and that workers must be learners who can
traverse a labor market landscape that is less about "jobs" and
more about a set of marketable skills broadly relevant to
industry sectors within regional economies.
c) California Export of Recycled Materials Report. Issued in
July 2013, the report contains information about the types of
recyclables exported from California's ports, the amount shipped,
and their value. The report found that overall, recyclables
exported by sea made up over one quarter of the total weight
(28%) shipped from California ports in 2012 and these recyclables
accounted for approximately 8% of the total value of all exports
shipped from California. The report also noted that China
continues to be the largest market for recycled materials,
receiving over half of the total weight shipped out from
California by sea.
d) California Five-Year Infrastructure Plan. The California
Infrastructure Planning Act requires the Governor to submit a
five-year infrastructure plan to the Legislature for
consideration with the annual budget bill. According to the 2014
plan, it evaluates the state's infrastructure needs in the
overall context of available funding sources, what the state can
afford, and how the state can grow in the most sustainable way
possible. The plan states that the preservation of the state's
long-term fiscal stability means the General Fund cannot afford
to shoulder the cost of all potential infrastructure investments
and instead, the state must focus its limited infrastructure
dollars on core state responsibilities. The plan proposes to
invest $56.7 billion in capital funding to renovate and augment
California's aging infrastructure over the next five years.
e) Environmental Goals and Policy Report. AB 2070 , passed in
1970, created the Governor's Office of Planning and Research
(OPR) and called for OPR to prepare and maintain an Environmental
Goals and Policy Report (EGPR). The EGPR aims to provide an
overview of the state's environmental goals, keys steps to
achieving these goals, and develop a framework of metrics and
indicators to help inform decision making, at all levels, to help
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track progress toward reaching these goals. The 2013 draft EGPR,
"California's Climate Future," states that "as the state
continues to grow, we must do so in a way that is in harmony with
the state's environment and natural resources." The report also
seeks to consider growth in the context of climate change,
"undoubtedly the biggest environmental challenge of our time.
Climate change and the state's efforts to confront it will touch
nearly every aspect of the state's planning and investment for
the future."
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 Jobs,
Economic Development and the Economy.)
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 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 also up in this Committee on June 9)
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.)
SB 810 (Price, 2013) would have authorized the California
Transportation Financing Authority to award $500 million in tax
credit certificates to exporters and importers, as defined, for the
specified increases in cargo tonnage or value, net increases in the
number of qualified full-time employees hired in California, or
capital investment in a cargo facility. ( Status: The bill is
pending in the Senate Committee on Governance and Finance.)
AB 412 (Allen) of 2013 stated the intent of the Legislature to
enact legislation to enhance and expand opportunities for
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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 1081 (Medina) of 2013 would have required the international
trade and investment strategy prepared by GO-Biz to include the
identification of trade-related infrastructure enhancements to
support the state's international trade policies, programs, and
services and requires the interregional transportation improvement
program prepared by the Department of Transportation to include
projects to improve international movement of goods through air,
land, and water ports. ( 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
511 and SB 592 above, ( Status : The bill was held in the
Assembly Committee on Appropriations.)
SB 830 (Wright, 2011) is virtually identical SB 810 of 2013.
( Status: This measure failed passage in the Senate Committee on
Revenue and Taxation.)
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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.
AB 1137 (V. Manuel P�rez, 2011) would have facilitated local
economic development and job creation by assisting small business
to access new export markets for their goods and services, updating
the law relating to free trade zones, and authorizing the use of
new federal funds under the Small Business Jobs Act of 2010.
( Status: This measure was held in the Senate Committee on
Appropriations.)
AB 2656 (Calderon, 2011) is virtually identical to SB 810 of 2013.
( Status: This measure was held in the Assembly Committee on
Appropriations.)
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 1409 (Jobs, Economic Development and the Economy Committee) of
2011 would have required that the next update by BTH of the
international trade and investment strategy to include policy
goals, objectives and recommendations from the state Goods Movement
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Action Plan. ( Status : The bill was amended to deal with another
subject matter and held in the Senate Committee on Rules in 2012.)
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.)
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.
3. Arguments in Support. The California Asian Pacific Chamber of
Commerce believes that "it is important to ensure there is a clear
understanding of foreign investment and trade and that it should
include the role that the ports of entry in California have on the
overall economy of the state."
According to the Harbor Association of Industry and Commerce, "the
twin ports of Los Angeles-Long Beach are the driving economic force
in Southern California and we need to help not only Los Angeles-Long
Beach ports but all California ports to keep their leading edge".
SUPPORT AND OPPOSITION:
Support:
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California Asian Pacific Chamber of Commerce
Harbor Association of Industry and Commerce
Opposition: None on file as of June 11, 2014.
Consultant:Sarah Mason