Legislature(2005 - 2006)BELTZ 211
02/08/2005 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB12 | |
| SB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 12 | TELECONFERENCED | |
| *+ | SB 76 | TELECONFERENCED | |
SB 12-LIMIT RELATIONS WITH CERTAIN NATIONS
CHAIR THERRIAULT announced SB 12 to be up for consideration and
invited Senator Dyson to come forward.
3:37:03 PM
SENATOR FRED DYSON, primary sponsor, informed members that
Ambassador John Miller, who is in charge of trafficking of
persons for the State Department, was online and he would like
the committee to hear from him first. Ambassador Miller would
give a history of the federal efforts to stop human trafficking,
but he couldn't render an opinion on the bill.
CHAIR THERRIAULT recognized Ambassador Miller and told him that
members had copies of "Facts About Human Trafficking." He noted
in particular that the second and third pages explain the tier
system and which countries fall into each tier.
3:38:46 PM
AMBASSADOR JOHN MILLER testified via teleconference and said he
was pleased to speak to the trafficking challenge they face
around the world and to comment on the impact the federal
sanctions have had.
3:39:06 PM
The U.S. Government estimates that up to 800,000 men women and
children are trafficked across international boarders every year
for the purpose of slavery. Because that figure doesn't count
domestic slavery, the real figure could be in the millions.
Modern slavery takes many forms, but sex slavery is the largest
category.
Congress and the President want the U.S. to take the lead in
addressing the issue as evidenced by the fact that 20 percent of
the President's speech at the UN General Assembly more than a
year ago was devoted to slavery and what nations can do about
it.
3:41:42 PM
AMBASSADOR MILLER said the State Department is addressing the
challenge through diplomacy, and by instituting plans for
prevention, protection of victims and prosecution. Several years
ago the State Department developed a three-tier system to
evaluate how governments are addressing human trafficking and
the Secretary of State evaluates those efforts in an annual
report. Tier 1 governments meet minimum standards to protect
victims from traffickers. Tier 2 includes governments that don't
meet minimum standards, but that are making significant effort
to address trafficking. The Tier 2 Watch List contains the
countries that are in danger of dropping into Tier 3, which
includes those governments that are not making significant
effort.
A government classified as Tier 3 is given three months to take
steps to increase protection, prevention and prosecution of
human trafficking after which the Secretary of State advises the
President and discussion ensues as to whether sanctions should
be applied by removing certain U.S. aid.
3:44:22 PM
Non-compliance sanctions have had a salutary affect as evidenced
by the fact that friendly governments took significant steps to
address human trafficking after they were classified as Tier 3
in the June 2003 report. This, he said, is an issue that impacts
national stability because human trafficking is a major source
of revenue for organized crime.
3:45:59 PM
3:46:53 PM
AMBASSADOR MILLER reported there were nearly 3,000 global
trafficking convictions last year and that over 50 countries
have now passed anti-human trafficking of laws. The progress is
a result of diplomacy, increased visibility, and the threat of
sanctions in the form of reduced aid by the U.S., he concluded.
3:47:35 PM
CHAIR THERRIAULT asked whether committee members had any
questions.
3:47:45 PM
SENATOR DYSON noted that federal legislation says the U.S. may
not impose humanitarian aid or trade sanctions and he questioned
why trade sanctions aren't allowed.
AMBASSADOR MILLER said he assumes that Congress believes that
humanitarian aid and trade aid are so important that those
sanctions shouldn't be used.
SENATOR DYSON noted the emphasis on domestic organizations that
are involved in sex tourism and questioned whether American
companies doing business in Tier 3 countries receive similar
pressure.
AMBASSADOR MILLER said they haven't received pressure, but
Congress did pass legislation asking federal agencies to work
with the travel industry to warn Americans going abroad of the
dangers of sex tourism and to make it clear that conviction on
child sex charges brings up to 30 years U.S. prison time.
3:50:46 PM
CHAIR THERRIAULT stated that the proposed legislation would
place permissible restrictions on the three branches of
government and he was curious whether the federal law had the
same mechanism.
3:51:12 PM
AMBASSADOR MILLER replied the intersection of state and federal
law is outside his area of expertise, but Alaska is the first
state he knows of to consider legislation addressing the issue
of modern day slavery.
3:52:06 PM
SENATOR DYSON explained he has also considered whether or not to
have this effort apply to the Permanent Fund. Currently, the
fund is guided by the Prudent Investor Rule, which calls for
careful financial scrutiny but precludes investigation of other
criteria. He questioned whether the World Bank or others
consider criteria such as human rights when making investments.
3:53:17 PM
AMBASSADOR MILLER said that too is outside his area of
expertise.
3:53:51 PM
SENATOR DYSON thanked Ambassador Miller for his efforts.
AMBASSADOR MILLER said he appreciates the interest in the issue.
3:54:46 PM
CHAIR THERRIAULT thanked Ambassador Miller and asked Senator
Dyson to introduce the bill.
SENATOR DYSON noted companion legislation then informed members
that Alaska has a larger human trafficking problem than most
people would ever imagine. He detailed instances of child sex
trafficking to Southeast cruise ship passengers and Asian women
held in captivity in the Spenard area to emphasize that this is
an ongoing issue and that he is zealously working with
Representative Croft to criminalize the sexual tourism industry
in Alaska.
3:57:52 PM
SENATOR DYSON pointed out that the Legislature could elect to
make compliance mandatory and that version \F would include the
investment of the Permanent Fund. The Legislature has policy
choices and deliberation should be thoughtful.
3:59:17 PM
JASON HOOLEY, staff to Senator Dyson, explained the intent of
the proposed \F version committee substitute (CS) is to include
quasi-governmental corporations such as the Permanent Fund
Corporation. However, he was unclear whether the language
actually does that.
3:59:51 PM
CHAIR THERRIAULT asked why the sponsor changed the language in
Sections 2, 3, and 4 from "prohibiting or eliminating" financial
relationships to "restricting" financial relationships.
JASON HOOLEY said it was intended to give agencies more
flexibility.
4:01:00 PM
CHAIR THERRIAULT questioned how the agencies would determine
whether suppliers have a financial relationship with a Tier 3
country.
SENATOR DYSON replied the State Department would be a good
resource for doing that. Also, he understands that Governor
Murkowski drafted an Executive Order that accomplishes what the
bill talks about.
4:02:14 PM
SENATOR DYSON said whenever he's received feedback from
international company headquarters, the feedback has always been
supportive. The bill would provide a clear policy that would
then be easier to implement in the field, he said.
He envisions that Alaska agencies would ask companies about
their policy to keep employees from becoming involved in
exploiting children and to mitigate slavery if they do business
in a Tier 3 nation. A process would be established to determine
whether or not the companies' word is good on those activities.
4:04:08 PM
CHAIR THERRIAULT referred to Section 4 and asked whether the \F
version was drafted to include quasi-governmental agencies such
as the railroad and AIDEA whereas the original version didn't
include them.
JASON HOOLEY said yes.
4:04:32 PM
CHAIR THERRIAULT called for questions.
SENATOR KIM ELTON referenced Section 4 of the \F version and
asked how the administration might deal with a major North Slope
producer that was interested in participating in the gas
pipeline, but also had an interest in a refinery in an oil-
producing Tier 3 country.
4:06:25 PM
SENATOR DYSON replied there is nothing in the law that precludes
doing business with a company doing business in a Tier 3
country. The company would have to certify that they are not
exacerbating the problem and that they are doing whatever is in
their purview to mitigate the problem.
The day may come when the Administration and or we
legislators will face the decision. Are we willing to
do business with a company or a country that is
flagrantly and blatantly trafficking in children and
destroying lives? Are we willing to sell our soul to
do that? And fortunately for us, our mineral and
natural resource wealth is such that it's almost never
that there's a single bidder wanting to do business
with us. I think we will never face the situation
where the utilization of our resources or provision of
service won't happen if we turn down doing business
with pimps.
4:08:44 PM
SENATOR ELTON noted that restricting financial relationships
seemed to be the suggested remedy yet the Executive could make a
determination that the activities of a company doing business in
a Tier 3 country wouldn't necessarily be sanctioned if they
weren't exacerbating trafficking.
4:09:35 PM
SENATOR DYSON said that's probable, but if the Legislature
decides that state investments, including the Permanent Fund,
may not include Tier 3 countries, they may have to face
decisions about imposing sanctions. He warned that he would
withdraw the bill if it were amended beyond trafficking of
persons.
4:10:49 PM
CHAIR THERRIAULT compared version \A and \F and commented that
it's a leap of faith to believe that the regulations won't say,
if you're doing business with a Tier 3 country then you're not
doing business with the State of Alaska period. You wouldn't
necessarily want to deny access to a multi-national corporation
that may very well be the best source of employment in the
country, he said.
SENATOR DYSON agreed.
4:11:54 PM
CHAIR THERRIAULT asked Vern Jones to come forward.
VERN JONES, chief procurement officer for the State of Alaska,
reported that the administration has worked with the sponsor on
this issue for considerable time. Although they don't believe
it's practical to cut ties with all U.S. companies that do
business in Tier 3 countries, they do believe they could
implement procedures to comply with the intent of the
legislation. For future contracts they would ask businesses to
disclose whether they have locations in or do business in the
Tier 3 countries. If they do, the company would be required to
submit their policy on human trafficking for evaluation.
4:14:24 PM
CHAIR THERRIAULT commented that RFPs [request for proposal]
would be modified, but he was curious whether a contract might
be terminated if a company were found to be noncompliant.
MR. JONES said certainly if the conditions were in place when
they did the procurement. The policy would have to be well
planned to anticipate those sorts of things. He suggested
establishing a policy with some teeth would make sense as long
as it was clear up front.
4:15:36 PM
SENATOR ELTON asked if awarding contracts to companies that do
business in Tier 3 countries might not increase contract
challenges.
JONES replied, "Anytime you add requirements to a procurement
that would have us go and check external conditions, you are
increasing the risk of that procurement. You are increasing the
availability or the probability that competitors will - if the
business is significant enough - try and make a case." That's a
cost of doing business.
SENATOR ELTON said he wasn't necessarily suggesting that it's
bad, but it is a possibility.
CHAIR THERRIAULT asked Mr. Jones if the wording in Section 4 of
the \F version would include the Railroad and AIDEA in his view.
MR. JONES acknowledged he hadn't looked at it from that
perspective and he hadn't seen version \F before, but he prefers
language that calls for "restricting" rather than "prohibiting
and eliminating" relationships.
4:17:52 PM
CHAIR THERRIAULT noted that \F version language appears to be
preferable and has the additional reference to the investment
issue, but he would accept a motion to adopt one version or the
other as the working document.
4:18:13 PM
SENATOR BETTYE DAVIS motioned to adopt \F Version of SB 12 as
the working document. There being no objection, it was so
ordered.
4:18:38 PM
SENATOR CHARLIE HUGGINS said he supports the bill, but he knows
that unilateral economic sanctions can be problematic. He asked
Mr. Jones whether he thought this would actually have
consequences.
MR. JONES said it's likely that the state doesn't offer enough
business and therefore doesn't have the clout to cause a multi
national corporation to stop doing business in a Tier 3 country
where they are making a profit. However, the sponsor's intent is
to highlight the situation so that businesses operating in Tier
3 countries are made aware that the issue is important to
Americans and Alaskans specifically. It's a step in the right
direction.
4:20:44 PM
SENATOR DYSON commented that the elimination of apartheid in
South Africa was a slow process and many people struggled with
the associated philosophical questions. The development of
resources in Alaska is a large prize, he emphasized, and
companies that are eager to do business in the state will change
practices to ensure that they are able to vie for that prize.
Some companies will establish and implement policies so that
they can do business in Alaska. It's too early to tell whether
it will change other nations, but petroleum companies that are
doing business in Alaska often times have large holdings
overseas. If they have to develop and implement an acceptable
policy to do business in Alaska they will eventually have an
affect in the Tier 3 countries where they operate.
4:22:37 PM
SENATOR HUGGINS referenced the list of Tier 3 countries and
remarked that North Korea traded in weapons systems for the most
part and he questioned whether Alaska maintained any trade
relationship with the country.
MR. JONES admitted he wasn't sure which business relationships
Alaska maintains that also operate in North Korea, but the South
American countries caught his attention because of the number of
highly recognizable companies doing business there.
4:23:23 PM
SENATOR ELTON questioned whether legal issues might arise as a
consequence of entering a business relationship with a company
that does business in a country that falls to Tier 3 when the
list is updated.
MR. JONES replied there probably would be issues. The question
is whether the state would have to go back and get policies from
a company with which it already maintained a business
relationship. In procurement, such issues are addressed up
front, he said.
4:25:18 PM
SENATOR DYSON suggested that Mr. Jones would probably address
that in the RFP [request for proposal] and make it clear that if
the list were to change the state would reserve the right to ask
about human slavery policies and practices.
MR. JONES replied they would certainly have the proviso in all
procurements and could reserve the right to go back. However,
the practical question of how you'd know of a tier change in mid
contract is another matter.
4:26:20 PM
CHAIR THERRIAULT commented he wasn't sure how a company that
responded to an RFP would be able to evaluate what a country
they do business with might do or not do in the future.
SENATOR DYSON replied that is why Ambassador Miller initiated
the Tier 2 watch list. Those countries bear watching.
4:27:08 PM
CHAIR THERRIAULT referenced Section 4 and asked whether this
would apply to lease agreements with major North Slope oil
companies because that is certainly a financial arrangement.
Since the pro-development and anti-development forces are
usually at odds, he questioned whether this provision might help
to hold up leases that would otherwise move forward. "Have you
spoken to anybody in the administration about how that could be
used as a tool against the State of Alaska," he asked.
4:28:32 PM
SENATOR DYSON acknowledged he hadn't done that, but it was a
good point. He asked the Chair to take no action on the bill
that day to provide time for someone from the administration to
address the issue and to give the PFD Board the opportunity to
speak to Section 4 and its allegiance to the Prudent Investor
Rule, which doesn't consider humanitarian or social values.
CHAIR THERRIAULT noted there were no further questions for
Senator Dyson and asked Karla Schofield to come forward.
4:29:47 PM
KARLA SCHOFIELD, Legislative Affairs Agency (LAA), explained
that procurement procedures are under the auspices of the
Legislative Council so they would adopt procurement policies and
procedures as directed. Companies could certify what
relationships they might have with various countries and the
council chair would likely make the decision whether or not to
do business with them.
CHAIR THERRIALUT noted that a pencil he used recently came from
Vietnam, which caused him to question how far down the line the
agency might try to reach with the regulation.
MS. SCHOFIELD said she wasn't sure how far down the inquiry
would go. She added it's quite easy to get a hold of the Tier 3
list, but it would be a lot of work to try and keep track of who
is and is not on other lists. LAA buys a lot of large and small
items and it could be quite a chore to keep track of the various
and changing business relationships.
CHAIR THERRIALUT remarked the pencils certainly are down the
line, but LAA would be dealing with an office supply wholesaler
instead of the pencil manufacturer.
There were no further questions for Ms. Schofield and he noted
that someone from the court system might be available at the
next hearing.
4:32:56 PM
CHAIR THERRIAULT asked Senator Dyson to explain his reference to
"other list of countries" and questioned why you wouldn't want
to use the established tier system list. If that system fell out
of favor the Legislature could always make a policy call to
switch to another known quantity, he said.
4:33:26 PM
JASON HOOLEY, staff to Senator Dyson, explained the phrase in
question was added in the drafting and not at their request. The
drafters thought that the name of the report might change so the
phrase was included to indicate that a similar report would be
required.
CHAIR THERRIALUT suggested making the reference specific to the
tier list. The language should make it clear that this is the
list to use until the State Department makes a change.
SENATOR DYSON said the point was well taken.
4:34:48 PM
CHAIR THERRIALUT remarked that it's unclear whether the Tier 3
list is drafted under 22 U.S.C. 7107(b)(1)(C).
SENATOR DYSON said they would clarify that.
4:35:11 PM
CHAIR THERRIALUT announced that at the prime sponsor's request,
he would hold \F version SB 12 in committee.
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