BILL ANALYSIS �
SB 928
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SENATE THIRD READING
SB 928 (Correa and Huff)
As Amended August 4, 2014
Majority vote
SENATE VOTE :32-0
ECONOMIC DEVELOPMENT 8-0 APPROPRIATIONS 17-0
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|Ayes:|Medina, Mansoor, Campos, |Ayes:|Gatto, Bigelow, |
| |Daly, Fong, Fox, Linder, | |Bocanegra, Bradford, Ian |
| |Melendez | |Calderon, Campos, |
| | | |Donnelly, Eggman, Gomez, |
| | | |Holden, Jones, Linder, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the Director of the Governor's Office of
Business and Economic Development (GO-Biz) to establish and
operate, or to create a public-private partnership for the
purpose of establishing and operating, a trade office in Mexico
City, Mexico, by January 1, 2016.
EXISTING LAW authorizes the Director of GO-Biz to establish and
terminate trade offices outside the United States, as he or she
determines as appropriate and the following requirements are met:
1)A budget that is prepared for the overall international trade
and investment program, which includes a separately stated
budget for each trade office;
2)A description of how the overall program and each individual
office will be staffed;
3)A description of staffing levels and the positions needed to
operate each trade office; and
4)A strategy and business plan for the overall international
trade and investment program including a description of
staffing levels and how a newly proposed trade office will
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facilitate an increase in direct foreign investment in
California or an increase in California exports, or both.
FISCAL EFFECT : This bill requires that the operation of the
Mexico Trade Office only be performed to the extent private funds
are available. According to the Assembly Appropriations
Committee, implementation of this measure would have unknown
General Fund cost pressures in the event that private funding was
not available. GO-Biz indicates that this would require four
positions and roughly $700,000 annually to staff the trade
office. No private funds have been identified at this time.
COMMENTS : This bill mandates the establishment of a foreign
trade office in Mexico City, Mexico. Mexico is California's
number one trade partner and the opening of a Mexico trade office
has been, and continues to be, a priority of many Members of the
California Legislature, including the California Legislative
Latino Caucus. In proposing to mandate the establishment of this
office, however, this bill would set precedence for the
Legislature's involvement in establishing trade offices through
statute.
Establishment of Foreign Trade Offices: Over the past several
decades, the state has used a variety of methods for establishing
trade offices. In 2003, when the Legislature and the Governor
agreed to eliminate the Technology, Trade, and Commerce Agency
(TTCA), the state directly operated or contracted for the
operation of 12 trade offices including offices in Shanghai,
Mexico City, Buenos Aires, London, Frankfurt, Jerusalem,
Johannesburg, Seoul, Tokyo, Hong Kong, Taipei, and Singapore.
With the closure of TTCA, nearly all related programs were
removed from statute including the authority to engage in
international trade activities and operate trade offices. One
trade office remained, that being a "self-supporting" office in
Armenia, which had been established through a separate statute,
SB 1657 (Scott), Chapter 863, Statutes of 2002, and later
extended through SB 897 (Scott), Chapter 604, Statutes of 2005.
It was not until 2006, that the Governor and Legislature were
able to come to agreement about a new trade framework, which was
included in SB 1513 (Romero), Chapter 663, Statutes of 2006. As
a condition for re-granting the Governor's authority to open
trade offices, the Legislature required the Governor to obtain
its pre-approval in the form of a resolution or statute. With
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the implementation of AB 2012 (John A. P�rez), Chapter 294,
Statutes of 2012, the state's trade program was transferred to
GO-Biz and the Legislature's pre-approval of trade offices was
removed. In April 2013, Governor Brown opened a trade office in
Shanghai, China, which was the first trade office opened under
the AB 2012 rules. The Shanghai trade office was established
pursuant to a public-private partnership between the state and
the Bay Area Council. The operation of the Shanghai office is
dependent on private donations and the collection of those
donations is the responsibility of the Bay Area Council.
This bill reasserts the Legislature's involvement in the
selection and timing of new trade offices. This bill proposes
the opening of a trade office in Mexico City either by GO-Biz or
under a public private partnership, similar to the Shanghai
office. Funding for the operation of the Mexico City trade
office is limited to private funding.
California's Trade Economy: International trade and foreign
investment serve as critical components of California's $2
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.
Beginning in 1999, Mexico became California's number one trade
partner, receiving $23.9 billion in goods (14% of all exports) in
2013. The top five exports to Mexico were: computer and
electronic products ($5 billion); transportation equipment ($2.5
billion); machinery, except electrical ($2 billion); petroleum
and coal products ($1.5 billion); and chemicals ($1.5 billion).
In 2013, California imported $36 billion worth of goods and
services from Mexico. Mexican imports accounted for 9.5% share
of total imports to California.
The policy committee analysis includes additional background on
California trade and foreign investment activities.
Analysis Prepared by : Toni Symonds and Norma Huerta / J., E.D.
& E. / (916) 319-2090
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FN: 0004738