Legislature(1993 - 1994)
03/04/1993 05:00 PM ITT
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Presentations: 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 tourism 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 responsibilities 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 SHORT TITLE: AMEND N. AMERICAN FREE TRADE AGREEMENT BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) BROWN TITLE: Urging modification of the North American Free Trade Agreement. JRN-DATE JRN-PG ACTION 01/29/93 176 (H) READ THE FIRST TIME/REFERRAL(S) 01/29/93 176 (H) INTERNATIONAL TRADE & TOURISM, RESOURCES 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 GLENN OLDS, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES (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 distribution. 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 states. 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 KAREN COWART, EXECUTIVE DIRECTOR OF THE ALASKA VISITORS 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 market. 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 CONNEL MURRAY, DIRECTOR, DIVISION OF TOURISM, DCED, 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 markets. 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 lands. 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 account." 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 states. 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. ADJOURNMENT CHAIR JAMES adjourned the meeting at 6:35.