Legislature(1993 - 1994)

03/04/1993 05:00 PM ITT

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   HOUSE SPECIAL COMMITTEE ON                                  
                  INTERNATIONAL TRADE & TOURISM                                
                          March 4, 1993                                        
                            5:00 p.m.                                          
  MEMBERS PRESENT                                                              
  Representative Jeannette James, Chair                                        
  Representative Joe Green                                                     
  Representative Jerry Sanders                                                 
  Representative Cynthia Toohey                                                
  Representative Jim Nordlund                                                  
  MEMBERS ABSENT                                                               
  Representative Terry Martin                                                  
  Representative Curt Menard                                                   
  COMMITTEE CALENDAR                                                           
       Glenn Olds, DNR Subcommittee on ITT                                     
       Alaska Visitors Association Presentation on Destination                 
       Alaska and Cooperative Marketing                                        
       Department of Tourism                                                   
  HJR 20    Urging modification of the North American Free                     
            Trade Agreement.                                                   
            HELD IN COMMITTEE FOR FURTHER CONSIDERATION                        
  WITNESS REGISTER                                                             
  Glenn Olds, Commissioner                                                     
  Department of Natural Resources                                              
  400 Willoughby Avenue                                                        
  Juneau, AK  99801-1724                                                       
  (907) 465-2400                                                               
  POSITION STATEMENT: Provided information on the DNR's                        
                      subcommittee on international trade and                  
  Neil Johannsen, Director                                                     
  Alaska State Parks                                                           
  3601 C Street                                                                
  Anchorage, AK  99510                                                         
  (907) 762-2600                                                               
  POSITION STATEMENT: Provided information regarding state                     
                      park lands                                               
  Karen Cowart, Executive Director                                             
  Alaska Visitors Association                                                  
  3201 C. Street, Suite 403                                                    
  Anchorage, AK  99503                                                         
  POSITION STATEMENT: Provided information regarding the AVA                   
  Connel Murray, Director                                                      
  Division of Tourism                                                          
  Department of Commerce and Economic Development                              
  P.O. Box 110801                                                              
  Juneau, AK  99811-0801                                                       
  (907) 465-2012                                                               
  POSITION STATEMENT: Provided information on the division's                   
  Johne Binkley                                                                
  Riverboat Discovery                                                          
  PO Box 80447                                                                 
  Fairbanks, AK  99708                                                         
  (907) 479-6006                                                               
  POSITION STATEMENT: Provided information regarding the                       
                      Tourism and Marketing Council                            
  Representative Kay Brown                                                     
  State Capitol, Room 517                                                      
  Alaska State Legislature                                                     
  Juneau, AK  99801                                                            
  (907) 465-4998                                                               
  POSITION STATEMENT: Prime Sponsor of HJR 20                                  
  PREVIOUS ACTION                                                              
  BILL:  HJR 20                                                                
  BILL VERSION:                                                                
  SPONSOR(S):  REPRESENTATIVE(S) BROWN                                         
  TITLE: Urging modification of the North American Free Trade                  
  JRN-DATE     JRN-PG               ACTION                                     
  01/29/93       176    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/29/93       176    (H)   INTERNATIONAL TRADE & TOURISM,                   
  02/18/93              (H)   ITT AT 05:00 PM CAPITOL 102                      
  02/18/93              (H)   MINUTE(ITT)                                      
  02/18/93              (H)   MINUTE(TRA)                                      
  03/04/93              (H)   ITT AT 05:00 PM CAPITOL 102                      
  ACTION NARRATIVE                                                             
  TAPE 93-3, SIDE A                                                            
  Number 000                                                                   
  CHAIR JEANNETTE JAMES called the meeting of the Special                      
  House Committee on International Trade and Tourism to order                  
  on March 4, 1993, at 5:00 p.m.                                               
  Number 015                                                                   
  (DNR), addressed the committee regarding the DNR's                           
  Subcommittee on International Trade and Tourism, stating                     
  that tourism was now the largest and fastest-growing                         
  industry in the world, and the earliest cash crop of the                     
  third world, providing a remarkable cultural bridge.  He                     
  continued that in Alaska, tourism had increased five percent                 
  annually, and Alaska's location was critical to both tourism                 
  and international trade.  He cited as an example the fact                    
  that 85% of China's industrial economy was driven by soft                    
  and very polluting coal; that Alaska had 60% of North                        
  America's coal reserves and new technology to make coal non-                 
  polluting and competitive with petroleum and, further,                       
  Alaska could ship coal worldwide, year-round, via the                        
  northern sea passage, providing an opportunity to address                    
  and redress the United States' trade imbalance.                              
  DR. OLDS reported Alaska shipped mostly raw resources and                    
  could multiply the value of these resources at least three                   
  times by value-added processing, explaining Alaska's own                     
  gasoline costs $.60 more per gallon in Juneau, Alaska, than                  
  in Washington D.C., because of the cost of shipping it out                   
  of Alaska for processing and then back to Alaska for                         
  DR. OLDS stated tourism provided Alaska with 16,000 full-                    
  time jobs and 38,000 part time jobs; was a $2 billion                        
  industry; and was non-polluting, but critically needed                       
  better access and infrastructure.  He suggested developing                   
  the St. Elias/Copper Valley area.                                            
  Number 339                                                                   
  REPRESENTATIVE CYNTHIA TOOHEY asked for clarification on the                 
  amount of land in state parks in Alaska compared to other                    
  NEIL JOHANNSEN, DIRECTOR OF STATE PARKS, replied that Alaska                 
  had one-third of the United States' state park acreage,                      
  which was 3.3 million acres of the ten million acres of                      
  state park land in America, that Alaska spent about $4.3                     
  million a year to operate the state park system, and had 6.4                 
  million visitors in 1992.  He stated two-thirds of the                       
  national park lands in the United States, or 54 million                      
  acres, were in Alaska and had 1.4 million visitors, meaning                  
  the state parks got four times the visitation of the                         
  national parks in Alaska, but the operating budget for the                   
  national parks in Alaska was $32 million.  He added other                    
  states had far less acreage in state parks than Alaska.                      
  Number 389                                                                   
  DR. OLDS hoped to see an acceleration in opening access to                   
  Russia and China.                                                            
  Number 403                                                                   
  ASSOCIATION (AVA), reported that the AVA is the trade                        
  association representing the tourism industry, was formed in                 
  1950, and began a study, "Destination Alaska," two years ago                 
  to document awareness of the importance of tourism in                        
  Alaska.  It showed that tourism in Alaska grew 20% between                   
  1989 and 1992, provided over 19,000 jobs, $256 million in                    
  wages, and impacted over 52,000 additional jobs.                             
  Number 460                                                                   
  REPRESENTATIVE JOE GREEN asked about the possibility of                      
  using federal funding.                                                       
  Number 468                                                                   
  MS. COWART was unaware of any federal funding available for                  
  cooperative marketing.  Federal emergency marketing funds                    
  had been provided after the Exxon oil spill for disaster                     
  relief, but no other monies were available to her knowledge.                 
  Number 489                                                                   
  REPRESENTATIVE GREEN asked why this had not been pursued.                    
  Number 489                                                                   
  MS. COWART replied that, if such funds were available, many                  
  other destinations would also be trying to get them.  She                    
  then discussed cooperative marketing, referring to the AVA's                 
  Marketing Council, which had been successful for seventeen                   
  years as an informal arrangement between the industry and                    
  the state.  However, legislation enacted in 1988 created the                 
  Alaska Tourism Marketing Council as a legal entity                           
  consisting of 21 members:  10 appointed by the governor, 10                  
  appointed by the AVA, and one from the Division of Tourism                   
  as Chair.  She said the budget was determined yearly by                      
  legislative appropriation plus private funds, with a 15%                     
  match mandated by legislation in a contract with the                         
  Department of Commerce and Economic Development (DCED).                      
  MS. COWART explained that the Council raised their portion                   
  of the match by selling ads in the Vacation Planner, which                   
  varied from two-page spreads for $181,000 to small narrative                 
  ads for $250, and by generating address labels for tourism                   
  businesses.  She added that employment of Alaskans was their                 
  primary concern, with 84% Alaska hire, which is the highest                  
  of any industry in Alaska, and one in three people in the                    
  state were employed, or a family member was employed,                        
  directly or secondarily, by a visitor industry business.                     
  She mentioned that for many small Mom and Pop businesses                     
  with a limited advertising budget, the Vacation Planner was                  
  often the only possible access to such a wide advertising                    
  Number 620                                                                   
  CHAIR JAMES asked what additional tourist-related activities                 
  in the state Ms. Coward had in mind.                                         
  Number 625                                                                   
  MS. COWART replied that previously the market was age 55+,                   
  passive travelers content to ride through and look.  The                     
  current market was more active and education-oriented.  She                  
  cited Native Tourism as an example of an activity which                      
  would satisfy this new market.                                               
  Number 638                                                                   
  explained the difference between the responsibilities of the                 
  Alaska Tourism Marketing Council (the Council), the AVA, and                 
  the Division of Tourism, saying that the Council and the                     
  Division of Tourism, both of which operated under the DCED,                  
  were given the same broad responsibility, which was to                       
  attract visitors to Alaska, and had arrived at an informal                   
  division of responsibilities.  The Council handled all                       
  domestic tourism marketing for the United States and Canada,                 
  and carried out research with a two-person staff.  The                       
  Division of Tourism's areas of responsibility were defined                   
  by statute to include research, development of                               
  infrastructure, new facilities, and attractions.                             
  TAPE 93-3, SIDE B                                                            
  Number 000                                                                   
  MR. MURRAY continued listing Division of Tourism                             
  responsibilities, including coordination with other                          
  agencies, providing Alaskan jobs, international promotion,                   
  promotion of highway business, incorporation of communities'                 
  goals, operation of the Visitor Information Center at Tok,                   
  development of tourism matching grants, travel shows, trade                  
  shows, and familiarization trips.  He added that the state                   
  provided an umbrella for small communities, marketing                        
  groups, and convention and visitor's bureaus, to enable them                 
  to participate in national and international marketing                       
  efforts.  This was also the purpose of reinstating the                       
  Alaska Host Tourism Training Program, he said.                               
  MR. MURRAY hoped responsibilities would soon be added to the                 
  statute that would include maintaining the Alaskan film                      
  office in Anchorage, developing new overseas markets, and                    
  answering 130,000 inquiries per year.  He said the question                  
  was often asked, "Why should public funds be used to support                 
  the visitor industry?"  And replied the primary reason was                   
  to create a healthy economy, adding that all fifty states                    
  had state supported tourism programs.  In answer to the                      
  earlier question regarding federal funds, he said up to                      
  $600,000 in matching funds was available for overseas                        
  MR. MURRAY mentioned "in passing" that "LBA (the Legislative                 
  Budget and Audit Committee) had recommended sunsetting the                   
  Tourism Coordinating Committee in spite of the fact that                     
  it....really cost nothing," to reduce boards and                             
  commissions, and "we concurred with the Department in that                   
  recommendation, for the primary reason that we are expecting                 
  we are going to continue to operate that on an informal                      
  basis and without some of the restrictions placed on us by                   
  being an officially sanctioned state agency."                                
  Number 355                                                                   
  CHAIR JAMES stated that about 600,000 people visited Denali                  
  but only 200,000 were able to get into the park, and half of                 
  those were disappointed that the highway system was                          
  overburdened.  She asked how this could be solved.                           
  Number 365                                                                   
  MR. MURRAY answered that this was an attitudinal problem,                    
  and another road was required, hopefully the Kantishna                       
  access, and maybe also another road on the south side, which                 
  would increase the visitation five- to eight-fold without                    
  any adverse impact.  An alternative would be to shift some                   
  of the visitation to the Wrangell-St.Elias area on state                     
  Number 392                                                                   
  REPRESENTATIVE TOOHEY asked who the Council answered to.                     
  Number 394                                                                   
  MR. MURRAY replied, "the Commissioner of Commerce and                        
  Economic Development," adding the AVA had a contract with                    
  the DCED, renewable on an annual basis, and "the ATMC                        
  reports to the Commissioner in the same way that I do."                      
  Number 410                                                                   
  JOHNE BINKLEY added eleven of the twenty-one Council members                 
  were appointed by the Commissioner or the Governor, giving                   
  the Governor ultimate control.                                               
  HJR 20:  AMEND N. AMERICAN FREE TRADE AGREEMENT                              
  Number 439                                                                   
  CHAIR JAMES next turned the committee's attention to the                     
  Committee Substitute for HJR 20 (CSHJR 20), stating that she                 
  did not intend to move it out at this meeting but wanted to                  
  hear testimony.                                                              
  Number 446                                                                   
  REPRESENTATIVE KAY BROWN, PRIME SPONSOR of HJR 20, asked                     
  that the overview paper be distributed, and said,  "I                        
  appreciate you taking this up.  I think this is an important                 
  state's rights issue.  The North American Free Trade                         
  Agreement, or NAFTA, was signed last year by the United                      
  States, Canada, and Mexico, and it's going to have major                     
  implications on the American states.  Many of these                          
  implications are uncertain right now.  There are some things                 
  we know that NAFTA is going to impose on the states.  We                     
  don't know, as this paper suggests, how all of those                         
  ramifications will play themselves out, but there are some                   
  examples that are troubling with respect to incursions into                  
  what have traditionally been the rights of states in all                     
  kinds of areas."                                                             
  REPRESENTATIVE BROWN continued, "And that is the purpose of                  
  my resolution, Madame Chair, to bring to the attention of                    
  our new president and Congress as they grapple with how to                   
  implement this free trade agreement, which the President has                 
  said that he supports but will not implement without                         
  additional protection for America, and he specifically                       
  referred to worker protection and the environment.  I wish                   
  that Alaska, and other states as well, would bring to his                    
  attention the fundamental changes that could occur if the                    
  rights of states are not considered and expressly written                    
  into these side agreements.  It is my understanding that the                 
  way this will work is that the free trade agreement itself                   
  is not subject to amendment, so the changes that the                         
  President has said he will seek will be either in side                       
  legislation or in side agreements, so we are timely in                       
  bringing up our concerns and asking that they be taken into                  
  Number 487                                                                   
  REPRESENTATIVE BROWN said, "One element to be aware of is                    
  that whenever the President does submit the agreement to                     
  congress, there was a previous law that set up this fast                     
  track process, and so from the time it's submitted the whole                 
  thing will be accrued to ninety days or Congress, I believe,                 
  only has ninety days to consider it, and they can't make any                 
  changes to it, so we need to express our opinion if we are                   
  going to do that in a timely way.  I am now referring to                     
  page two of the Center for Policy Alternatives report; about                 
  midway down there....is the most important issue....will the                 
  basic constitutional powers of American states be subject to                 
  international challenge under NAFTA?"                                        
  REPRESENTATIVE BROWN referred to pages five and six,                         
  "sanitary and photosanitary standards" within NAFTA, which                   
  determined how trade conditions would be considered, stating                 
  this was aimed at getting uniform trade standards worldwide                  
  and adding, "This is a good goal, but how much do we want to                 
  sacrifice everything else to that one goal?  I don't want to                 
  see our country enter into an agreement without thinking                     
  about what's going to happen to all things on the books in                   
  the states....I learned about this last summer at a workshop                 
  and then began trying to investigate what laws we had in                     
  Alaska that might be or would be coming under this and                       
  potentially subject to challenge, and we identified a number                 
  where we now give subsidies to particular industries, fish                   
  hatcheries or other things where we are putting the product                  
  procurement code where we give a preference to people who                    
  manufacture in Alaska.  Somebody who didn't get that benefit                 
  could challenge our law and say, 'This is a barrier to                       
  trade, because you are giving someone an unfair advantage                    
  over me.'"                                                                   
  Number 540                                                                   
  REPRESENTATIVE BROWN said, "I am concerned because I think                   
  that many good things have come out of our federal state                     
  system of the states having the ability to take on problems,                 
  experiment with solutions, work on things, and to harmonize                  
  everything to a standard that we don't know exactly what it                  
  is and how it will affect us, I think is at least raising                    
  the issue.  This resolution (SJR 20) doesn't say we're                       
  against free trade or against NAFTA; it says when you're                     
  looking into these other concerns please consider the rights                 
  of states.  And one particular thing that is of concern is                   
  the dispute resolution process.  If someone should challenge                 
  us, how would the state of Alaska defend a law that we had                   
  on the books or wanted to preserve?  Right now these                         
  procedures in the dispute resolution process are                             
  confidential and restricted only to federal officials being                  
  able to attend, so it's not even clear how we would                          
  participate when it was our law that was under attack."                      
  REPRESENTATIVE BROWN said further, "That seems like one of                   
  the major problems, and the states were not very involved,                   
  or state participation was not present, during the                           
  development of these.  They did have some advisory bodies,                   
  they had a lot of participation by various industries, but                   
  some of the concerns peculiar to the states and particularly                 
  the right to legislate and to try to give benefits to people                 
  who live in our state, to try to encourage economic                          
  development through incentives or things that are related to                 
  our state, would be questionable if they went into effect                    
  just like it is.  But because we have this opportunity and                   
  our president is looking at how he can make some                             
  modifications through side agreements, I think there is a                    
  good chance that some of these concerns could be addressed.                  
  They are valid concerns, and we would like to see Congress                   
  take it up."                                                                 
  Number 561                                                                   
  REPRESENTATIVE GREEN asked if this potential problem between                 
  federal and state could also lead to arguments between                       
  Number 568                                                                   
  REPRESENTATIVE BROWN said she had not thought of this, but                   
  it did seem possible.  She mentioned the referral on page 4                  
  to "GATT" which disallowed the favoring of local                             
  distributors over foreign exporters, thus showing how states                 
  could be brought into compliance by "the feds," adding that                  
  this was not merely theoretical.  She advised that when she                  
  attended a workshop last summer, this whole agreement was                    
  secret and no one even had a copy of it, but she now wanted                  
  to call people's attention to it.                                            
  Number 611                                                                   
  REPRESENTATIVE JIM NORDLUND asked how CSHJR 20 differed from                 
  HJR 20.                                                                      
  REPRESENTATIVE BROWN replied, "It (CSHJR 20) mostly fleshes                  
  it (HJR 20) out....It's (CSHJR 20) a little more explicit."                  
  Number 619                                                                   
  CHAIR JAMES read the attached letter from the Coalition of                   
  Labor Union Women into the record, and requested each                        
  committee member study the information regarding HJR 20.                     
  CHAIR JAMES adjourned the meeting at 6:35.                                   

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