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ACR 104 (Holden) — Assembly Committee on Jobs, Economic Development, and the Economy (September 2, 2021)

Summary

An analysis of ACR 104 (Holden), as amended August 23, 2021, prepared for the Assembly Committee on Jobs, Economic Development, and the Economy, whose Chair is Sabrina Cervantes, for the hearing of September 2, 2021. The subject is a sister state relationship with Punjab, Pakistan. The resolution would extend an invitation to the Legislature of Punjab, Pakistan, to join California in a sister state relationship until December 31, 2026, for economic, educational, environmental, and cultural exchanges. The analysis states that there is no known opposition, and the registered support entry lists the Consulate General of Pakistan, Los Angeles.

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“ACR 104 (Holden) — Assembly Committee on Jobs, Economic Development, and the Economy (September 2, 2021).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-09-02-acr-104-jede-analysis-303482288f/, SHA-256 de75452d86cbb6b85b9856d33f3f7b28922615041d313eafc3cd882852866bc8.

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                                                                                                    ACR 104
                                                                                                     Page 1

Date of Hearing: September 2, 2021

    ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
                             Sabrina Cervantes, Chair
                  ACR 104 (Holden) – As Amended August 23, 2021

SUBJECT: Punjab, Pakistan: sister state relationship

POLICY FRAME: This resolution seeks the permission of the State Assembly and the State Senate to
extend an invitation to the Legislature of Punjab, Pakistan, to establish a sister state relationship.

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 the California government have the authority to establish sister state
relationships.

The analysis includes information on the origins of sister state programs, a summary of the Legislature's
sister state relationships, California's trade-based economy, and an economic profile on Pakistan,
including the Punjab Province. There is no known opposition to this resolution.

SUMMARY: Memorializes the intent and commitment of the California Legislature to extend an
invitation to formalize a sister state relationship with the Province of Punjab, Pakistan, for the purpose of
encouraging and facilitating economic, educational, and cultural exchanges that further promote the
prosperity of both regions and to improve the international understanding and goodwill between the
regions. Specifically, this bill:

1) Makes the following findings and declarations:
   a) Punjab is Pakistan’s most populous province, with a population of about 110,000,000.

   b) Punjab’s capital, Lahore, is a cultural, historical, economic, and cosmopolitan center of Pakistan
      where the country’s cinema industry and much of its fashion industry are based, similar to
      California.
   c) Agriculture continues to be the largest sector of Punjab’s economy. The province is the
      breadbasket of the country, similar to California.
   d) There are over 250,000 Punjabi Americans in California, many of whom first settled in
      California’s central valley to do agricultural work.
   e) Punjab has the largest economy in Pakistan. In 2007, Punjab achieved a growth rate of 7.8%.
      During the period from 2002–03 to 2007–08, its economy grew at rates between 7% to 8% each
      year. During the 2008–09 fiscal year, Punjab’s economy grew at a rate of 6%, substantially faster
      than the total gross domestic product growth of Pakistan.
   f) A sister-state relationship between the State of California and the Province of Punjab would
      promote mutual trade and commerce and increase the potential for educational, environmental,
      and cultural relations between the Province of Punjab and the State of California.

2) Resolves the following:
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   a) The California Legislature, on behalf of the people of California, extends to the people of the
      province of Punjab, Pakistan, an invitation to join with California in a sister state relationship until
      December 31, 2026, for the purpose of encouraging and facilitating mutually beneficial economic,
      educational, environmental, and cultural exchanges, which will lead to a more indelible and lasting
      relationship between Californians and the people of the province of Punjab, Pakistan.
   b) Any sister state agreement developed will identify objectives, areas of mutual interest, a list of
      potential activities, and an initial list of public and private partners that will help to advance the
      purposes of the sister state agreement, including one or more entities that will serve as facilitators
      and general points of contact; and be it further
   c) The Chief Clerk of the Assembly transmit copies of this resolution to the Governor of California,
      to the Governor of Punjab, to the Legislature of Punjab, and to each Senator and Representative
      from California in the Congress of the United States.

FISCAL EFFECT: None – The bill was incorrectly keyed fiscal, correction amendments are being
drafted.

COMMENTS & CONTEXT:

1) Origins of the Sister Programs: Sister affiliations involving the US 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 lessen the chance of future world conflicts. Many sister
   city relationships are coordinated through the nonprofit network Sister Cities International.

2) How are Sister State Programs Structured? States differ from cities 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 asks for
   information on the prospective partner's economic structure, cultural resources, primary industries,
   and foreign trade and investment. Applications are reviewed by the Governor of Hawaii, who refers
   applications she or he supports to the Legislature for further review. The Legislature expresses their
   approval through the adoption of a concurrent resolution which authorizes 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 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 exchanges.

   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 Hyōgo Prefecture, Japan, and Washington state, the two governors attended several special
   events including, "Kobe Day" at a Seattle Mariners baseball game, with 260 delegates from Hyōgo
   attending and Governor Toshizo Ido throwing the first pitch.
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   Another core component of sister state relationships is education. 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 states who wish to attend public universities.

   Many sister state relationships also include economic and business development priorities, as well as
   cultural and educational exchanges. The Alberta, Canada, and Jalisco, Mexico, sister state
   relationship focuses on enhancing the economic cooperation between the two regions. The Alberta-
   Jalisco sister state relationship is guided by the initial and 13 supplemental agreements, including
   agreements that support joint research funding on micro- and nanotechnology, e-health, radio-
   frequency identification, and value-added food processing.

   California has no formal structure for establishing, negotiating, or maintaining sister state
   relationships. ACR 105 addresses this lack of structure by requiring the final negotiated sister state
   agreement to include all of the following:
          Objectives and areas of mutual interest;
          A list of potential activities that are contemplated through the enactment of the agreement;
          An initial list of public and private partners that will help to advance the purposes of the sister
           state agreement; and
          Identification of one or more entities that will serve as a facilitator and general point of contact
           during the term of the agreement.

3) Leadership Offices of International Relations: Both the Assembly and the Senate maintain
   respective offices that serve as the key point of contact for foreign relations and protocol for each
   House. The California Senate Office of International Relations (SOIR) was established in 1987, and
   the Assembly Office of International Relations and Protocol (AOIRP) 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 AOIRP 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-Japan Scholars Program.

   While these offices may facilitate trips and other activities with foreign countries, neither SOIR nor
   AOIRP have any specific mandated duties in regards to sister state relationships.

4) Sister State Relationships in California: Although SOIR has no mandated duties relative to sister
   state agreement, the office does maintain a website that is the only known source for identifying sister
   state resolutions the California Legislature has approved. According to the website, the Legislature
   has passed 26 resolutions expressing an interest in establishing a sister state/friendship state
   relationship. Chart 1 includes a list of currently authorized sister state agreements. It is important to
   note that not every resolution authorizing a sister state agreement culminates in a signed agreement.

                          Chart 1 ̶ California Sister State Agreement Authorizations
      Country                   Region                          Legislation/ Agreement                 Year
    Argentina       Santa Fe Province              Resolution Ch. 91 (SCR 6 - Monning)                 2015
    Australia       State of New South Wales       Resolution Ch. 52 (SCR 19 - Brulte)                 1997
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    Brazil           Parana State                       Resolution Ch. 92 (SCR 8 - Costa)                1999
    Canada           Province of Alberta                Resolution Ch. 29 (SCR 8 - Thompson)             1997

                     Guangdong Province                 Sister State Agreement                           2014

                     Inner Mongolia Autonomous
        China                                           Resolution Ch. 93 (SCR 26 - Costa)               1999
                     Region**
                                                        Sister State Relationship Agreement and
                                                                                                         2011
                     Jiangsu Province                   Framework Agreement on New Energy Cooperation
                                                        Resolution Ch. 66 (SCR 19 - Garamendi)           1985
    Egypt            Governorate of Cairo               Resolution Ch. 130 (SCR 41 - Murray)             1999
    El Salvador      San Salvador Department            Resolution Ch. 103 (SCR 81 - Hayden)             1998
                     Provence-Alpes-Cote d'Azur
    France                                              Resolution Ch. 135 (SCR 115 - Roberti)           1990
                     Region
    Germany          State of Baden-Württemberg         SR 90 - Pan                                      2018
                     Gujarat State                      Resolution Ch. 13 (SCR 4 - Burton)               2001
    India
                     Punjab State                       Resolution Ch. 12 (SCR 3 - Burton)               2001
    Indonesia        Special Province of Yogyakarta     Resolution Ch. 62 (SCR 23 - Marks)               1995
    Italy            Umbria Region                      Resolution Ch. 39 (SCR 4 - Petris)               1995
    Japan            Osaka Prefecture*                  Resolution Ch. 116 (ACR 113 - Vasconcellos)      1994
                     State of Baja California (Norte)   Resolution Ch. 46 (SCR 5 - Kelley)               1999
                     State of Baja California (Sur)     Resolution Ch. 131 (SCR 95 - Torlakson)          2002
                                                        Resolution Ch. 70 (SCR 82 - Hueso)               2014
    Mexico           State of Jalisco
                                                        Resolution Ch. 148 (ACR 183 - Firebaugh)         2000
                    State of Nayarit                    Resolution Ch. 185 (SCR 81 - Lara)               2017
                    State of Queretaro                  Resolution Ch. 110 (ACR 137 - Cortese)           1988
    Portugal        Region of the Azores                Resolution Ch. 124 (SCR 84 - Costa)              2002
                    Chungcheongnam-do Province          Resolution Ch. 33 (SCR 54 - Marks)               1996
    Korea           Jeju Province                       Resolution Chapter 80 (ACR 42 – Chu)             2005
                    Republic of Korea**                 Resolution Ch. 97 (SCR 6 - Montoya)              1987
                    Altai Republic                      Resolution Ch. 45 (SCR 11 - Johnston)            1995
    Russia          Khanty-Mansiysk Autonomous
                                                        Resolution Ch. 87 (SCR 49 - Rosenthal)           1994
                    District
    South Africa    Western Cape Province               Resolution Ch. 2 (SCR 42 - Murray)               2000
    Spain           Catalonia Region                    Resolution Ch. 71 (SCR 71 - Mello)               1986
                    Taiwan                              Resolution Ch. 120 (SCR 40 - Polanco)            1983
    Areas marked with * denote a Cooperation Agreement
    Areas marked with ** denote a Friendship State Relationship


5) Profile on Pakistan: The Islamic Republic of Pakistan (Pakistan) is located in southern Asia,
   bordering the Arabian Sea, between India on the east and Iran and Afghanistan on the west and China
   in the north. It has a total land mass of 796,095 sq km, making it the 37th largest country in the world.
   It has over 1,000 km of coastline. For comparison, Pakistan is just slightly smaller than twice the size
   of California.

   Pakistan can be divided into three major geographic areas: the northern highlands, the Indus River
   plain in the center and east, and the Balochistan Plateau in the south and west. Pakistan is recorded as
   having frequent earthquakes which can occasionally be severe, especially in north and west. Flooding
   along the Indus River after heavy rains (July and August) is not uncommon.

   There are 238.1 million living in Pakistan with a majority of the population located in and around the
   Indus River and its tributaries. The largest cities in Pakistan are as follows:
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   Karachi - 16.459 million people
   Lahore - 13.095 million people
   Faisalabad - 3.542 million people
   Rawalpindi - 2.281 million people
   Gujranwala - 2.290 million people
   Islamabad - 1.164 million people

While Urdu is the official language of Pakistan, the CIA World
Factbook reports that only approximately 8% of the population
speaks Urdu. Approximately 48% of the population speaks
Punjabi 48%, 12% Sindhi, 10% Saraiki (a Punjabi variant), 8%
Pashto (alternate name, Pashtu), 3% Balochi, 2% Hindko, 1%
Brahui. English is also spoken and considered the “lingua
franca of Pakistani elite and most government ministries”.

Muslim is the official religion of Pakistan with 96.5% of the population being either Sunni (85-90%)
or Shia (10-15%). About 3.5% of the population is Christian and Hindu.

The executive branch of the Pakistani government is led by a president who serves as the chief of state
and prime minister, who is the head of government. The Cabinet is appointed by the president upon
the advice of the prime minister. The president is indirectly elected by the Electoral College
consisting of members of the Senate, National Assembly, and provincial assemblies for a five-year
term. Presidents are limited to two consecutive terms. President Arif Alvi was elected in September
2018 and Prime Minister Imran Khan was elected by the National Assembly in August 2018.

There is a bicameral Parliament or Majlis-e-Shoora which consists of a 100 member Senate and a 342
seat National Assembly. Senators are indirectly elected by the four provincial assemblies and the
territories' representatives by proportional representation vote. Senators serve six-year terms with
one-half of the membership renewed every three years. Members of the National Assembly serve for
five-year terms. A majority, 272 Members, are directly elected in single-seat constituencies by simple
majority vote. The remaining 70 members (60 women and 10 non-Muslims) are directly elected by
proportional representation vote.

The Supreme Court of Pakistan consists of the chief justice and 16 judges. The justices are nominated
by an eight-member parliamentary committee upon the recommendation of the Judicial Commission,
which is a nine-member body of judges and other judicial professionals, appointed by the president.

According to the CIA World Factbook, “decades of internal political disputes and low levels of
foreign investment have led to underdevelopment in Pakistan…Despite some progress in recent years
in both security and energy, a challenging security environment, electricity shortages, and a
burdensome investment climate have traditionally deterred investors. Agriculture accounts for one-
fifth of output and two-fifths of employment. Textiles and apparel account for more than half of
Pakistan's export earnings…

“In an effort to boost development, Pakistan and China are implementing the "China-Pakistan
Economic Corridor" (CPEC) with $60 billion in investments targeted towards energy and other
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infrastructure projects. Pakistan believes CPEC investments will enable growth rates of over 6% of
GDP by laying the groundwork for increased exports. CPEC-related obligations, however, have
raised IMF concern about Pakistan’s capital outflows and external financing needs over the medium
term.”

Pakistan GDP in 2019, based on purchasing power parity, is estimated to be over $1 trillion ranking it
25th highest in the world. Over 56% of GDP is driven by service sectors, agriculture (24.4% in 2016),
and industry (19.1% in 2016). Top agricultural products include sugar cane, buffalo milk, wheat,
milk, rice, maize, potatoes, cotton, fruit, and mangoes/guavas. Industrial production is led by textiles
and apparel, food processing, pharmaceuticals, surgical instruments, construction materials, paper
products, fertilizer, and shrimp.

There are 61.71 million (2017) workers in the Pakistani labor force, much of which is exported to
other countries, primarily to the Middle East. Approximately 42.2% of jobs are in agriculture, 35.1%
in services, and 22% in industry.

In 2019, Pakistan exported $31.5 billion in goods, including textiles, clothing and apparel, rice, leather
goods, and surgical instruments. Top export markets in 2019 include: US 14%, China 8%, Germany
7%, and the United Kingdom 6%.

California exported $155.8 billion in goods in 2020. Over $229.3 million in California goods were
exported to Pakistan in 2020, making the state the 3rd largest exporter to Pakistan in the US. Pakistan
is California’s 53rd largest export market in 2020. Chart 2, shows California’s top exports to Pakistan
for 2016 through 2020.

                    Chart 2 – California Goods Exports to Pakistan, 2016-2020 (in dollars)
                Item                    2016             2017             2018              2019              2020
 Total for All Exports              $301,191,846     $278,439,165     $191,680,559      $20,114,5780      $229,363,785
 Agricultural Products               $88,483,961      $98,797,174      $76,778,006       $82,332,254       $94,136,800
 Waste and Scrape                    $28,911,114      $47,699,787      $25,660,442       $31,222,931       $50,680,222
 Food Manufacturing                  $46,229,961      $42,186,321      $27,888,501       $29,355,619       $21,832,469
 Transportation Equipment            $13,901,988      $17,752,115      $8,765,168        $7,706,765        $15,918,496
 Computer and Electronic Products    $20,570,580      $28,874,474      $17,547,488       $22,889,806       $11,984,094
 Machinery, Except Electrical        $75,399,856      $9,386,546       $7,076,678        $6,856,617        $10,722,676
                                                     Source: International Trade Administration, accessed August 31, 2021


Pakistan imported $42.2 billion in goods in 2019. In 2019, the largest categories of imports included
refined petroleum, crude petroleum, natural gas, palm oil, and scrap iron. Key import partners in 2019
include China (28%), United Arab Emirates (11%), and the US (5%).

The US imported $3.8 billion in goods from Pakistan in 2020. Imports into California from all
nations were valued at $398.8 billion in 2020. California imported the highest in dollar value of
goods ($446.8 million) from Pakistan than any other US state in 2020. Chart 3 provides additional
information of California’s import activity with Armenia for 2016 through 2020.

                  Chart 3 – California Goods Imported from Pakistan, 2016-2020 (in dollars)
                  Item                   2016            2017              2018              2019             2020
           Total of All Imports       $486,241,458    $481,001,770      $445,520,102     $497,238,475      $446,875,925
  Apparel Manufacturing Products      $201,992,884    $193,353,500      $179,611,073     $198,774,170      $169,882,124
  Textile Mills Products              $199,591,852    $195,733,363      $165,870,154     $179,162,981      $133,785,560
  Textiles & Fabrics                  $16,899,393     $20,515,816       $18,493,280       $25,266,016      $38,348,584
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     Chemicals                           $621,586        $4,197,747        $5,924,002       $20,427,848         $27,572,130
     Food Manufactures                  $21,155,913     $19,896,747       $18,927,051       $19,241,908         $24,977,765
     Miscellaneous Manufactured
                                        $23,607,006     $21,867,726       $27,587,838       $29,103,872         $24,636,797
     Commodities
     Minerals & Ores                    $3,424,551        $4,623,028         4,265,088       $4,608,381         $7,721,653
                                         Source: https://tse.export.gov/stateimports/TSIReports.aspx Accessed August 31, 2021

   According to the CIA World Factbook, there is severe localized food insecurity due to “population
   displacements, economic constraints, and high prices of the main food staples.” COVID-19 has
   intensified the impacts of recurrent natural disasters, rising food prices, and limited employment
   opportunities. Pakistan has experienced severe floods in August 2020 in Sindh Province which
   affected the incomes of 2 million people and caused severe damage to housing and infrastructure.
   Pakistan has also served as hosts for an ever increasing number of registered and unregistered Afghan
   refugees. The World Factbook states that most of these refugees “are in need of humanitarian
   assistance and are straining the already limited resources of the host communities.”

6) Spotlight on Punjab, Pakistan: Punjab is located in eastern Pakistan and has an international border
   with India. It is largest province in Pakistan, based on population. There are over 110 million people
   living in Punjab, equivalent to 52.95% of the national
   population. Approximately 36.7% of the population
   lived in urban areas in 2017, up from 27.6% in 1981.

   Economic activity within Punjab represented 54.2% of
   Pakistani economy in 2017-18. The per capita income
   in Punjab is 2% higher than the national average. GDP
   growth in Punjab was 4.9% annually between 2012-13
   and 2017-18. Approximately 62.4% of the economy is
   comprised of service industries, 20% agriculture, and
   17.6% industry.

   According to the Punjab Growth Strategy 2023, the
   province’s economy has a higher share of private and
   public investment (17.7% v. 16.4% of GDP) and net
   income from abroad than the nation as a whole. However, the industrial sector in Punjab is slightly
   less than the nation (20%) and the net trade deficit of Punjab is somewhat higher than that at the
   national level.

   Punjab has a higher labor force participation rate than the national average, which is primarily
   attributable to the higher participation rates of females in Punjab. Chart 4 provides comparative data
   on the distribution of labor in Punjab as compared to Pakistan. Between 2013-14 and 2017-18,
   Punjab’s labor average participation rate was 48.4 as compared to national rate of 44.9. Punjab also
   has a higher employment rate than the country average.

        Chart 4 – Sectoral Distribution of Employment, Punjab and Pakistan, 2012-13 and 2017-18
                                                          Punjab                                   Pakistan
                Industry Sectors                2012-13            2017-18               2012-13              2017-18
   Agriculture, Forestry, and Fishing            44.7%              40.0%                 43.7%                38.5%
   Manufacturing                                 15.4%              17.7%                 14.1%                16.1%
   Construction                                  7.4%               7.0%                  7.4%                 7.6%
   Wholesale and Retail Trade                    15.3%              14.2%                 14.4%                14.9%
   Transport and Communications                  4.4%               4.9%                  5.5%                 6.2%
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   Community, Social, and Personal Services    10.8%          10.8%               13.3            14.7%
   Other Sectors                               2.0%           5.4%               1.6%             2.0%
   Total                                       100%           100%               100%             100%
                                                                          Source: Punjab Growth Strategy 2023


   Based on data obtained during the development of the Punjab Growth Strategy 2023, Punjab has the
   greatest comparative advantage in three sectors - major crops (37.5%), small-scale manufacturing
   (26.3%), and cotton ginning (24%). Other sectors with significant comparative advantage include
   livestock, social and community services, transport, storage and communications, minor crops, and
   construction. The report also identifies three emerging sectors of comparative advantage, which are
   finance and insurance, wholesale and retail trade, and public administration and defense.

   Among other key recommendations, the Punjab Growth Strategy 2023 calls for a strategic shift in
   government development priorities by moving away from mega structures to investing more in human
   capital, water, small- and medium-size businesses, and on attaining regional balance. The vision for
   the Punjab Growth Strategy 2023 is for “A globally connected and competitive, equitable, culturally
   vibrant and technologically advanced Punjab with sustainable economic growth driven through a
   dynamic private sector, an efficient public sector, rich and productive human capital and, a regionally
   equalized development footprint by 2023.”

7) Current Trade and Investment-Related Activities: While sister state agreements are not intended
   to exclusively promote cross border trade and investment, economic development is generally an
   underlying consideration. California’s trade and foreign investment activities are statutorily placed
   within the Governor’s Office of Business and Economic Development (GO-Biz).

   The GO-Biz International Trade and Investment Office is led by a Deputy Director and staffed by a
   foreign direct investment (FDI) specialist, three regional trade and investment representatives
   (regional representatives), and a special advisor for international affairs and trade. GO-Biz hosts a
   monthly conference call and publishes a monthly newsletter to keep connected to economic
   developers, businesses involved in trade, foreign investment professionals, and members of the
   consular corp.

   The three regional representatives each cover one or more of the major trade regions in the world.
   Trade activities in Asia are assigned to one regional representative; another trade representative covers
   Europe, the Middle East, and Africa; and the third trade representative oversees Mexico and Central
   and South America. While based in California, the regional representatives have the authority to
   travel in order to solicit investment leads, support California businesses in regional trade shows, and
   undertake other activities designed to increase export opportunities and FDI. Total funding for the
   three positions in 2019-20 was $592,000: $427,000 in wages and benefits and $165,000 in operating
   expenses, including $72,000 for travel. Funding for the overall International Affairs and Trade unit
   within GO-Biz amounted to $992,007 for Fiscal Year 2019/2020.

   In implementing its trade and foreign investment activities, GO-Biz also relies on a “service desk”
   model, which is described by GO-Biz as partnering with local organizations to make physical space
   available to California Trade and Investment Specialists at no cost to the state. The GO-Biz regional
   representatives leverage the relationships of the service desk hosts to maintain the state’s global
   presence. The state currently operates three trade service desks, including one in Yerevan, Armenia,
   which was officially launched on June 21, 2021. The Armenia trade and services desk serves as a
   resource to GO-Biz’ trade and investment activities throughout Europe.
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The Shanghai, China, trade service desk opened in 2013 to support trade and investment leads
originating from within China. Mexico is the location of California’s third trade service desk, which
opened in October 2019 and now supports trade activity throughout the Americas.

The federal Small Business Administration supports California’s trade and investment program
through its State Trade Expansion Program (STEP). In calendar year 2020, California received
$600,000 in STEP, which required a committed match of $323,076. Chart 5 provides additional
information on the seven STEP-supported international activities in 2020.

                       Chart 5 – 2020 California State Expansion Program Activities
    Date        Activity                             Companies supported            STEP funds allocated
    Jan 2020    Arab Health Show                                10                  $75,000
    Feb 2020    Singapore Airshow                                4                  $24,000
    Aug 2020    Chile Virtual Trade Mission                     19                  $21,600
    Sept 2020   Colombia Virtual Trade Mission                  24                  $21,600
    Sept 2020   Mexico Virtual Trade Mission                    22                  $21,600
    Oct 2020    Virtual Trade Show of the Americas               6                  $2,280
    On-going    Individual Company Export Stipends              10                  $30,000
    Total:                                                      95                  $196,080
                                                                         Source: GO-Biz, accessed April 23, 2021


In January 2020, GO-Biz joined other trade and investment partners to launch the California Export
Training Network (Training Network) to expand the state’s exports and export training efforts. With a
goal of promoting, supporting, and increasing the number of exporters in all regions of California, the
Training Network includes over 14 organizations, including, but not limited to:

     California Manufacturing Technology Consulting (CMTC)
     Economic Development Collaborative (EDC), Ventura County
     Fresno Center for International Trade Development
     GlobalSF
     Inland Empire Center for Entrepreneurship, CSU San Bernardino
     International Trade Center powered by the California Community Colleges
     Los Rios CCD Center for International Trade Development (now closed)
     Mission College Business and Workforce Engagement
     Northern California World Trade Center
     Butte College Small Business Development Center (SBDC)
     North Coast Small Business Development Center (SBDC)
     Tuolumne County Economic Development Department
     World Trade Center San Diego

The Training Network is supported by a number of business development partners, including:

     U.S. Commercial Service, U.S. Department of Commerce
     U.S. Small Business Administration Office of International Trade
     Export-Import Bank of the United States
     California Department of Food and Agriculture
     California Office of the Small Business Advocate
     California Small Business Development Centers
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   According to GO-Biz, like many foreign trade activities during COVID-19 pandemic restrictions,
   some Export Training Network partners have continued to provide export-related technical assistance,
   while others have had to limit support given funding and staffing impacts related to COVID-19.
   Overall, GO-Biz believes that the network partners remain committed and are slowly moving back
   toward normal operations. The network lost one partner during COVID-19, when the Los Rios
   Community College District’s Center for International Trade Development closed their doors in
   August 2020.

   In addition to the International Trade and Investment Office, GO-Biz has historically used a service
   delivery model that flows across and through different GO-Biz units, depending on the business’
   needs. As an example, a foreign company planning to expand in California may have initially become
   acquainted with GO-Biz through an in-bound trade mission hosted by the International Trade and
   Investment Office but may ultimately also be assisted by the California Business Investment Program
   and the Permit Assistance Office.

8) International Affairs and Trade Development Interagency Committee: In February 2019,
   Governor Newsom supplemented the statutory role of GO-Biz by issuing executive order N-19-08
   which designated Lieutenant Governor Eleni Kounalakis as the Governor’s top representative for
   international affairs and trade development. As part of those duties, Lieutenant Governor Kounalakis,
   who formerly served as the United States Ambassador to Hungary, chairs a cabinet-level International
   Affairs and Trade Development Interagency Committee (Interagency Committee). The Interagency
   Committee is vice chaired by the Governor’s Chief Economic and Business Advisor Dee Dee Myers,
   who also serves as the director of GO-Biz.

   The executive order charges the Interagency Committee with advising the Governor and facilitating
   the coordination of state activities relating to the promotion and expansion of trade, investment, and
   international relations. Other members of the Interagency Committee include representatives of the
   California Energy Commission, California Department of Food and Agriculture, Governor’s Office of
   Emergency Services, California Environmental Protection Agency, California Natural Resources
   Agency, California Transportation Agency, Visit California, and GO-Biz. The work of the
   Interagency Committee is supported by the GO-Biz International Trade and Investment Office.

9) California’s Trade Economy: International trade and foreign investment are important components
   of California’s $3.1 trillion economy (2019 most recent data) supporting nearly 5 million California
   jobs (2020 most recent data). The importance of trade to the California economy is increasing, as
   reflected in the percentage of California jobs tied to trade having more than tripled from 1992 (10.6%)
   to 2020 (nearly 30.3%).

   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. Workers in trade-related jobs earn on average 15% to 20% higher wages than jobs in
   industries not tied to trade (2015 most recent data). California is second in the nation, just behind
   Texas, in the number of export-related jobs (2016 most recent data).

   Advances in transportation and communication technologies are encouraging the development of
   previously undeveloped markets and expanding multinational business opportunities for California
   firms. With more than 95% of consumers located outside the US and emerging economies
   experiencing a growing middle class, accessing these global markets is key to California’s continued
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   economic growth. Today, four of California’s top five exports include component parts, which leave
   the state to be combined and assembled into final products in foreign countries.

   Chart 6, shows data of the export of goods to the state’s top six trade partners, based on origin of
   movement. [Please note that federal reporting separates data from China and Hong Kong.]
   California’s largest export market in 2020 was Mexico, who received over $24.0 billion in California
   products. Top-ranking export destinations not shown on the chart include Germany, the Netherlands,
   and the United Kingdom.
                        Chart 6 – California Export of Goods, 2013-2020 (billions of dollars)
           Partner       2013       2014       2015        2016       2017           2018           2019             2020
        World           $168.1     $173.8     $165.3      $163.2     $171.9         $178.1         $173.7           $155.8
     1 Mexico            $23.9      $25.4      $26.7      $25.2       $26.7          $30.7          $27.8            $24.0
     2 Canada            $18.8      $18.3      $17.2      $16.2       $16.8          $17.6          $16.6            $16.0
     3 China             $16.2      $16.0      $14.3      $14.3       $16.4          $16.3          $15.8            $15.0
     4 Japan             $12.7      $12.2      $11.7      $11.7       $12.8          $13.0          $11.8            $10.5
     5 South Korea       $8.3       $8.6        $8.6       $8.2        $9.5           $9.9           $9.1            $9.7
     6 Taiwan            $7.5       $7.4        $7.7       $6.9        $6.3           $6.8           $7.2            $7.3
                                                                    Source: International Trade Administration, accessed 3/26/21


   Between 2006 and 2020, the export of California services increased 59.8%, increasing from $422
   billion to $705 billion in services. California’s largest export service sectors in 2020 included:
          Other Business Services at $183.1 billion
          Financial Services at $144.3 billion
          Charges for the Use of Intellectual Property (not included elsewhere) at $113.7 billion
          Travel Services at $72.8 billion
          Telecommunications, Computer, and Information Services at $56.6 billion
          Transport Services at $56.7 billion

   The United Kingdom has been California’s largest service export market, having receiving $62.6
   billion in services in 2020 and supported an estimated 427,000 California jobs in 2015 (most recent
   data). California’s second largest service export market has been Canada, with $53.6 billion in
   services in 2020 and having supported 360,000 jobs in 2015 (most recent data). Service exports from
   California to Mexico ranked seventh among all countries, with $23.4 billion in services exported in
   2020, and having supported 201,000 jobs in 2015 (most recent data).

   In addition to exporting goods and services, the California economy benefits from foreign-owned
   firms. The Federal International Trade Administration estimates that in 2015 (most recent data),
   769,200 California workers have benefited from jobs with foreign-owned firms.

   California has had the highest level of employment in foreign-owned firms in the nation since at least
   1997. In 2015 (most recent data), jobs in California foreign-owned firms represented 5.1% of all
   private sector jobs in the state, up from 4.1% in 2013. Along with employment, foreign-owned firms
   own more property, plants, and equipment in California than in any other state.

10) Related Legislation: Below is a list of bills from the current and prior sessions. Not every
    authorization to establish a sister state relationship has been consummated.
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   a) ACR 105 (Holden) Relations with Syunik, Armenia: This bill memorializes the intent and
      commitment of the California Legislature to extend an invitation to formalize a sister state
      relationship with Syunik, Armenia, for the purpose of encouraging and facilitating economic,
      educational, and cultural exchanges that further promote the prosperity of both regions, and to
      improve the international understanding and goodwill between the regions. Status: Pending in the
      Assembly Committee on Jobs, Economic Development, and the Economy.
   b) ACR 100 (Alejo) Trade Relationship with El Salvador: This bill memorializes the Legislature's
      commitment to work cooperatively with the Governor's Office of Business and Economic
      Development on trade promotion and foreign investment activities that enhance the state's
      economic relations with El Salvador, as specified. Status: Adopted by the Legislature, Resolution
      Chapter 172, Statutes of 2014.
   c) SCR 6 (Monning) Sister State Relationship with Santa Fe, Argentina: This bill memorializes
      the Legislature's desire to recommit to the formalizing of a sister state relationship between
      California and the Province of Santa Fe, Argentina, 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. Status: Adopted by the Legislature, Resolution
      Chapter 70, Statutes of 2014.
   d) SCR 81 (Lara) Sister State Relationship with Nayarit, Mexico: This bill memorializes the intent
      and commitment of the California Legislature to extend an invitation to formalize a sister state
      relationship with the State of Nayarit, Mexico, for the purpose of encouraging and facilitating
      economic, educational, and cultural exchanges that further promote the prosperity of both regions
      and to improve the international understanding and goodwill between the regions. Status:
      Adopted by the Legislature, Resolution Chapter 85, Statutes of 2017.
   e) SCR 82 (Hueso) Sister State Relationship with Jalisco, Mexico: This bill memorializes the
      Legislature's desire to recommit to the formalizing of 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. Status: Adopted by the Legislature, Resolution Chapter 70, Statutes of
      2014.

REGISTERED SUPPORT / OPPOSITION:

Support
Consulate General of Pakistan, Los Angeles

Opposition

None on File

Analysis Prepared by: Toni Symonds / J., E.D., & E. / (916) 319-2090


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