BILL ANALYSIS �
SCR 82
Page 1
Date of Hearing: June 10, 2014
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
SCR 82 (Hueso) - As Amended: June 4, 2014
SENATE VOTE : 37-0
SUBJECT : Jalisco, Mexico: sister state relationship
SUMMARY : Memorializes the Legislature's desire to recommit to the
formalizing of the a sister state relationship between California and
the State of Jalisco, Mexico, for the purpose of promoting economic
growth and well-being of small, medium, and large corporations and by
increasing their potential trade and investment within the State of
Jalisco. Specifically, this bill :
1)Makes declarations, which among other things, state:
a) California and Jalisco share a mutually beneficial economic
relationship that includes trade, investment, and commerce in
areas of high technology, manufacturing, agriculture and tourism,
among other important industries;
b) Guadalajara is the largest technology center in Mexico and is
increasingly recognized as an incubator for small-scale
technology start-ups and a main producer of software,
electronics, and digital products;
c) Generations of people from Jalisco reside in California and
represent the most populous community from Mexico in California;
and
d) Since the approval of ACR 183 (Firebaugh), Resolution Chapter
148, Statutes of 2000, which called for the establishment of a
sister state relationship with the State of Jalisco, many
delegates from the California Legislature have visited Jalisco,
as well as hosted delegations from Jalisco in California in order
to support the exchange of business and culture.
2)Resolves that the Legislature recommits to formalizing a sister
state relationship between California and the State of Jalisco,
Mexico, for the purpose of promoting economic growth and well-being
of small, medium, and large corporations and by increasing their
potential trade and investment within the State of Jalisco.
SCR 82
Page 2
EXISTING LAW establishes the Office of Business and Economic
Development (GO-Biz) within the Governor's Office and designates it as
the state's lead entity on international trade and foreign investment
activities, excluding agricultural trade.
FISCAL EFFECT : None
COMMENTS :
1)Author's Purpose : According to the author, "This bill was
introduced to celebrate the sister state relationship between
Jalisco, Mexico and California for its mutually beneficial economic
relationship in the areas of high technology manufacturing,
education, agriculture, tourism, and other important industries.
In the year 2000, the California State Legislature extended an
invitation to the people of the State of Jalisco, Mexico, to join
with California in a sister state relationship. The sister state
relationship would establish a formal declaration of friendship
between the two states. Fourteen years have gone by since this
declaration, yet the relationship was never formalized. As a result,
it is fitting to recommit to the formalization of this relationship
and the mutually beneficial outcomes of this declaration.
This resolution honors the sister state relationship by continuing
to promote the economic growth and well-being of companies in
California by increasing their potential for trade and investment
with the State of Jalisco, to provide a forum for sustained goodwill
and cooperation between elected leaders, and to promote bilateral
ties."
2)Framing the Policy Issue : This resolution proposes the recommitment
of the Legislature to establish a sister state relationship between
California and the Mexican State of Jalisco. No relationship
currently exists, although a proposal was put forth in 2000, but
never finalized.
A sister state relationship is a formal declaration between two
regions, states, or nations. Such an agreement is a symbol of
mutual goodwill. Additionally, it is an effort to encourage and
facilitate mutually beneficial social, economic, educational, and
cultural exchanges. Both the Legislative and the Administrative
branches of government have the authority to establish sister state
relationships.
SCR 82
Page 3
While the California Legislature has proposed 24 sister state
relationships, it appears that few have actually been brought to
fruition and, of those, there are no records of what actions have
been taken or the tracking of results of those actions. Research
shows that successful sister state programs appear to be those with
sponsors who take responsibility for bringing the parties together
and reporting results. As part of deliberating SCR 82, the
Committee may also wish to adopt a policy for moving forward with
sister state relationships, in general.
3)U.S. Trade Agreements : Within a globally connected economy, trade
agreements create the framework by which a significant number of
businesses and workers must compete, collaborate, and create
economic value. The U.S. is currently negotiating two major trade
promotion agreements, the Trans-Pacific Partnership and the
Transatlantic Trade and Investment Partnership. In their current
iterations, these trade agreements will cover 21% of the world's
population, with the U.S. at the nexus. These agreements are
especially important to local and regional governments which have
been proactive in using trade promotion activities as a springboard
for their own economic program.
The U.S. has trade agreements in force with 20 countries, including
Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican
Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea,
Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore. In
addition to trade agreements, the U.S. maintains a number of trade
preference programs that allow special access to U.S. markets for
countries that are considered developing markets and/or where the
U.S. wants to cultivate a stronger relationship. The Andean Trade
Preference Act (ATPA) and the Andean Trade Promotion and Drug
Eradication Act (ATPDEA) are examples of two such trade programs.
4) Background on Jalisco : The state of Jalisco is located in the west
central part of Mexico. Bordered by the Pacific Ocean in the west,
the 31,210 square miles of Jalisco make up 4.1% of the total area of
Mexico and touches seven other Mexican states. Jalisco is dominated
by the southern end of the Sierra Madre Occidental and the western
extremity of the chain of volcanic mountains extending across
central Mexico including the active volcano, Volc�n de Fuego. In
the central part of Jalisco is Lake Chapala, Mexico's largest lake.
Geographically it is the seventh largest of Mexico's thirty-one
states and is home to the second largest urban population. The
total population of Jalisco is estimated at 7.55 million people
SCR 82
Page 4
(2012).
Because of the variety of climate, landform, and elevation, nearly
every kind of fruit and vegetable grows within one of the regions in
Jalisco. Corn and wheat from the central plateau make it known as
the "granary of Mexico;" rice and wheat are grown in the south; and
the mountains yield timber and minerals (especially iron, silver,
some gold, and precious stones). The raising of livestock and the
production of food products and blue agave for tequila are also
important, making it the country's number one producer for these
products.
The economy of the state accounted for 6.24% of Mexico's GDP in
2012. The main sectors of the economy are trade at 21.3%;
manufacturing at 18.8%; financial services and real estate at 13.9%
and construction at 9.1%. Together they account for 63.1% of the
state GDP. Jalisco earns just under six percent of Mexico foreign
earnings from tourism and employment from the various multinational
corporations located in the state exporting more than $5 billion
annually to 81 countries. It ranks first among the states in
agricultural products, electronics, telecommunications, and the
manufacturing of jewelry and is the second largest producer of
furniture, beef, sugar cane, and honey. Jalisco received $772
million in foreign direct investment (FDI) in 2012, representing
6.5% of Mexico's total FDI; the majority which was directed toward
the manufacturing industry.
More people in California have roots in Jalisco than any other state
in Mexico. In fact, many of the things that Californians consider
typically Mexican, such as mariachi music, charreadas (rodeos), the
Mexican Hat Dance, tequila, and the broad-rimmed sombrero hat, are
all derived from Jalisco's cultural heritage and are not necessarily
typical of the culture of other Mexican states.
The state of Jalisco is currently a sister state with Washington
state and Alberta, Canada.
5)Origins of Sister Programs : U.S. sister affiliations began shortly
after WWII and developed into a national initiative when President
Dwight D. Eisenhower proposed the people-to-people program at a
White House Conference in 1956. According to research on Maryland's
Sister State webpage, President Eisenhower's intention was to
involve people and organized groups at all levels of society in
personal, citizen diplomacy with the hope that people-to-people
relationships, fostered through sister city affiliations, would
SCR 82
Page 5
lessen the chance of future world conflicts. Many sister-city
relationships are coordinated through the nonprofit network, Sister
Cities International.
6)Sister State Programs : States differ in their approach to selecting
and implementing sister state relationships. Some states, such as
Hawaii, require a detailed application from the foreign state
wishing to enter into partnership. The application form includes
information on prospective partner's economic structure, cultural
resources, primary industries and foreign trade and investment.
Applications are reviewed by the Hawaiian Governor, who refers
applications he or she is supportive of to Legislature for their
review. The Legislature expresses their approval through the
adoption of a concurrent resolution authorizing the Governor to
proceed in negotiating a sister state agreement with the applicant
state.
One recurrent model for managing the sister state relationship is
the establishment or designation of a sister organization. Iowa,
for an example, has Iowa Sister State, a non-profit, volunteer
organization whose mission is to "develop and implement
international programs that promote the interests of the State of
Iowa and its citizens." Activities for each of Iowa's nine sister
state relationships is coordinated through a special committee,
which organizes events and coordinates with people in the sister
state.
Several states have information on their webpages regarding
longstanding sister state relationships. Michigan, as an example,
has had a sister state relationship with Shiga Prefecture, Japan,
since 1968, and stills hosts several exchanges per year. For the
40th Anniversary of the sister state relationship between HyMgo
Prefecture, Japan, and Washington state, the two governor's attended
several special events including "Kobe Day" at a Seattle Mariner's
Game, with 260 delegates from HyMgo and Governor Toshizo Ido
throwing the first pitch.
Education is often a core component of the sister state
relationship. As an example, Michigan and other states often
emphasize educational exchanges, as well as cultural exchanges.
South Carolina even offers fee waivers to foreign students from
their sister state who wish to attend public universities.
Many sister state relationships include economic and business
development priorities, as well as cultural and educational
SCR 82
Page 6
exchanges. The Alberta, Canada, and Jalisco, Mexico, established in
1999, has a focus on economic cooperation with 13 supplemental
agreements entered into that further the technology focused exchange
including: support for joint research funding on micro and
nanotechnology, e-heath, radio-frequency identification and
multimedia; and value added food processing.
California has no formal structure for establishing, negotiating, or
maintaining sister state relationships. The Committee may wish to
consider adopting overall policies and procedures to ensure
California creates and maintains vibrant sister state relationships.
This would be an appropriate project for the fall legislative
calendar.
7)California's Trade Economy : International trade and foreign
investment serve as critical components of California's $2.0
trillion economy. If California were a country, it would be the
17th largest exporter and the 14th largest importer in the world.
Merchandise exports from California ($168 billion) accounted for
over 10.6% of total U.S. exports in goods, shipping to over 220
foreign destinations in 2013. California's land, sea, and air ports
of entry served as key international commercial gateways for the
$538 billion in products entering and exiting the U.S. in 2012.
Statewide, 4.4 million California jobs are dependent on foreign
trade. Over 562,700 California workers benefit from jobs with
foreign-owned firms, which accounts for 5.1% of all private sector
jobs in the state.
California's significance in the global marketplace results from a
variety of factors, including: its strategic southwest and coastal
location offering direct access to growing foreign markets in
Mexico, Latin America, and Asia; its nine diverse regional
economies; its large, ethnically diverse population, representing
both a ready workforce and significant consumer base; its access to
a wide variety of venture and other private capital; its broad base
of small- and medium-sized businesses; and its culture of innovation
and entrepreneurship, particularly in the area of high technology.
Mexico is California's top trading partner, receiving $23.9 billion
(14%) in goods in 2013. The chart below shows export data on the
state's top five trade partners. Other top-ranking export
destinations not shown on the chart include Hong Kong, Taiwan,
Germany, the Netherlands, and the United Kingdom.
SCR 82
Page 7
--------------------------------------------------------------------
| California Export based on Movement of Goods 2012 and 2013 |
--------------------------------------------------------------------
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| Rank | Country | 2012 Value | 2013 Value | 2012 % Share | 2013 % Share | % Change, |
| | | | | | | 2012 - 2013 |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| --- |Total | 161,880| 168,128| 10.5| 10.6| 3.9|
| |California | | | | | |
| |Exports and % | | | | | |
| |Share of U.S. | | | | | |
| |Total | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| --- |Total, Top 25 | 143,671| 149,020| 88.8| 88.6| 3.7|
| |Countries and | | | | | |
| |% Share of | | | | | |
| |State Total | | | | | |
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 1 |Mexico | 26,370| 23,933| 16.3| 14.2| -9.2|
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 2 |Canada | 17,424| 18,819| 10.8| 11.2| 8.0|
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 3 |China | 13,970| 16,359| 8.6| 9.7| 17.1|
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 4 |Japan | 13,033| 12,711| 8.1| 7.6| -2.5|
|--------------+--------------+--------------+--------------+--------------+--------------+--------------|
| 5 |South Korea | 8,246| 8,394| 5.1| 5.0| 1.8|
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
|Source: tradeport.org |
| |
--------------------------------------------------------------------
California's largest industry sector by employment is Trade,
Transportation, and Utilities, which encompasses everything from
major retail outlets, to import-export businesses, to transportation
and warehousing. California leads the nation in export-related
jobs. The U.S. Department of Commerce estimates that for every one
million dollars of increased trade activity, 11 new jobs are
supported. Workers in trade-related jobs earn on average 13% to 28%
higher wages than the national average.
In today's globally linked economy, manufacturing utilizes products
from across the U.S., as well as from other nations. In 2012, 61%
($1.3 trillion) of the products imported into the U.S. were inputs
SCR 82
Page 8
and components intended for use by American producers. In addition,
U.S. imports often include components or utilize services provided
by U.S. firms, including many California companies. The Wilson
Center estimates that Mexican imports and Canadian imports contain
40% and 20% U.S. components, respectively.
Trade and foreign investment support new job creation, bring new
technologies and skills to California workers, generate local and
state revenues, and generally strengthen the state's economic base.
In the future, California's economy will become increasingly reliant
on accessing foreign markets where a majority of global economic
growth is expected to occur.
8)Offices of International Relations : Both the Assembly and the
Senate maintain offices that serve as each Houses key point of
contact for foreign relations and protocol. The California Senate
Office of International Relations (SOIR) was established in 1987 and
the Assembly Office of Foreign Relations (AOIR) was established in
2000. Through these offices Legislators find assistance in
furthering strong economic and diplomatic ties between California
and the rest of the world. Both SOIR and AOIR host international
delegations at the State Capitol, as well as facilitate and
occasionally host Member-delegations to foreign countries. Over the
years, SOIR has also established special and longer term
relationships between California and foreign countries including the
California Brazil Partnership and the California and Japan Scholars
Program.
SOIR additionally maintains a website, which is the only known
source for identifying California's existing Sister State
Relationships. According to the website, the Legislature has
approved 24 Sister State Relationships including State of Baja
California Sur, Mexico; Archipelago of the Azores, Portugal; and
Catalonia, Spain. Neither SOIR or AOIR have any specific duties in
regards to sister state relationships.
9)Related Legislation : Below is a list of legislation from the
current and prior legislative sessions.
a) AB 690 (Campos) California-Mexico Border Relations Council:
This bill repeals and recasts statutory provisions within the
Government Code relating to California and Mexico relations by
adding the Director of the Governor's Office of Business and
Economic Development to the membership of the California-Mexico
Border Relations Council and designating him or her as Chair.
SCR 82
Page 9
Status: Pending in the Senate Committee on Business,
Professions, and Economic Development.
b) AB 2012 (John A. P�rez) Economic Development Reorganization:
This bill transferred the authority for undertaking international
trade and foreign investment activities from the Business,
Transportation and Housing Agency to the Governor's Office of
Business and Economic Development. In addition, the bill
transferred the responsibility for establishing an Internet-based
permit assistance center from the Secretary of the California
Environmental Protection Agency to GO-Biz. Status: Signed by
the Governor, Chapter 294, Statutes of 2012.
c) AB 2443 (V. Manuel P�rez) International Trade Program and
Sister State Relationships:
This bill would have required the State Point of Contact to
provide the Legislature with copies of any official position
taken or comments to the U.S. Trade Representative relating to a
pending trade agreement and would have authorized the
establishment of Sister State relationships for the purpose of
promoting economic growth and trade and investment opportunities.
Status: Vetoed by the Governor, September 2010.
d) AB 2713 (Quirk-Silva) Public Private Partnerships to Promote
Trade: This bill authorizes the Governor's Office of Business
and Economic Development to establish public-private partnerships
to help guide state activities related to the export of
California products and the attraction of employment-producing
foreign investment. The bill requires the establishment of a
subaccount to hold private donation for county and
industry-specific marketing activities. The bill also requires
the establishment of a partnership to support California trade
and investment within South Korea. Status: Pending in the
Senate.
e) ACR 100 (Alejo) El Salvador and California Partnership: This
resolution memorializes the Legislature's recognition of the
special relationship between California and the county of El
Salvador. In furthering this special relationship, the
Legislature, extends an invitation to the people of El Salvador
to partner with California to commit to the development of
programs to foster social, economic, educational, scientific, and
cultural programs in order to strengthen the democratization
process and economic development of El Salvador and to promote
economic ties and improve international understanding and
SCR 82
Page 10
goodwill. Status: Scheduled to be heard in JEDE on June 10,
2014.
f) ACR 183 (Firebaugh) Recommitment to Jalisco Sister State:
This resolution extends an invitation to the people of the State
of Jalisco, Mexico, to join with California in a sister state
relationship/relacion de hermanidad con el Estado de Jalisco,
Mexico. Status: Approved, Resolution Chapter 148, Statutes of
2000.
g) SCR 103 (De Le�n) El Salvador and California Partnership:
This resolution memorializes the Legislature's recognition of the
special relationship between California and the country of El
Salvador. In furthering this special relationship, the
Legislature, on behalf of the people of the State of California,
extends an invitation to the government of El Salvador to partner
with California to promote democratic institutions, the rule of
law, and economic opportunity and growth, and to foster
international understanding through increased trade and
investment and mutually beneficial educational, economic, and
cultural exchanges between California's and El Salvador's
institutions. Status: Scheduled to be heard in JEDE on June 10,
2014.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090