H-1694

AN ACT Relating to the small business export finance assistance center; amending RCW 43.210.030; reenacting and amending RCW 43.210.050; adding new sections to chapter 43.210 RCW; adding new sections to chapter 43.131 RCW; creating new sections; repealing RCW 43.131.325 and 43.131.326; making an appropriation; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds:

(1) The exporting of value-added manufactured goods, which for the purposes of sections 1 through 5 of this act shall include processed food and agricultural products, from Washington state and the Pacific Northwest region to international markets is vitally important for the public good, for maintaining our high standard of living, keeping our business community competitive in global markets, and in providing secure family-supporting jobs for our citizens.

(2) Comprehensive export assistance programs should be managed in a proactive, aggressive, and consistent manner to provide small manufacturers with easily accessible contacts, information, and services.

(3) Washington state must improve the coordination of various export promotion programs and develop new, targeted, trade promotion services.

(4) International marketing education, language training, and cultural awareness are vitally important for the success of international export initiatives.

(5) Impediments to the entry of many small and medium-sized manufacturers into export markets have restricted growth in exports from Washington state and the Pacific Northwest region.

(6) Small and medium-sized manufacturers relatively new to exporting with gross annual revenues less than twenty-five million dollars require a comprehensive public export assistance program designed specifically to devise and manage complete introductory export strategies and secure export financing and credit guarantees. This comprehensive program for small and medium-sized manufacturers shall complement existing export assistance services offered by the department of trade and economic development and the Washington state department of agriculture by working with them in a close, cooperative, and strategic manner to promote the sale of Washington state products abroad.

(7) There is a need for a Pacific Northwest export assistance project which will specialize in providing comprehensive export assistance to small and medium-sized manufacturers relatively new to exporting throughout the state in acquiring international business information, designing and managing introductory export strategies, and in securing company specific financing and credit guarantees for exporting.

(8) The economic health of our neighboring states and provinces has a direct impact on commercial activity in Washington state. Washington's ports, private export management firms, commercial banking institutions, business community at large, and consumers rely on strong exporting sectors in our neighboring states and provinces to stimulate business activity in Washington state. It is in the best interest of Washington state, and each state and province in the Pacific Northwest region, to work cooperatively in building a strong and competitive exporting base of value-added manufacturing businesses.

NEW SECTION. Sec. 2. (1) The Pacific Northwest export assistance project is hereby created for the following purposes:

(a) To assist small to medium-sized manufacturers relatively new to exporting with gross annual revenues less than twenty-five million dollars with comprehensive services for designing and managing introductory export strategies and in securing financing and credit guarantees for export transactions;

(b) To provide, in cooperation with the export promotion services offered by the department of trade and economic development and the Washington state department of agriculture, information and assistance to businesses with gross annual revenues less than twenty-five million dollars about the methods and procedures of structuring company specific export financing and credit guarantee alternatives; or

(c) To provide information to their clients about opportunities in organizing cooperative export networks, foreign sales corporations, or export trading companies under the United States export trading company act of 1982, for the purpose of increasing their comparative sales volume and ability to export their products to foreign markets.

(2) The Pacific Northwest export assistance project is a separate branch of the small business export finance assistance center for accounting and auditing purposes.

(3) The Pacific Northwest export assistance project is subject to the authority of the small business export finance assistance center, under RCW 43.210.020, and shall be governed and managed by the board of directors, under RCW 43.210.030.

NEW SECTION. Sec. 3. (1) The small business export finance assistance center has the following powers and duties when exercising its authority under section 2(3) of this act:

(a) Solicit and accept grants, contributions, and any other financial assistance from the federal government, federal agencies, and any other public or private sources to carry out its purposes;

(b) Offer comprehensive export assistance and counseling to manufacturers relatively new to exporting with gross annual revenues less than twenty-five million dollars. As close to ninety percent as possible of each year's new cadre of clients must have gross annual revenues of less than five million dollars at the time of their initial contract. Counseling may include, but not be limited to, helping clients obtain debt or equity financing, in constructing competent proposals, and assessing federal guarantee and/or insurance programs that underwrite exporting risk; assisting clients in evaluating their international marketplace by developing marketing materials, assessing and selecting targeted markets; assisting firms in finding foreign customers by conducting foreign market research, evaluating distribution systems, selecting and assisting in identification of and/or negotiations with foreign agents, distributors, retailers, and by promoting products through attending trade shows abroad; advising companies on their products, guarantees, and after sales service requirements necessary to compete effectively in a foreign market; designing a competitive strategy for a firm's products in targeted markets and methods of minimizing their commercial and political risks; securing for clients specific assistance as needed, outside the center's field of expertise, by referrals to other public or private organizations. The Pacific Northwest export assistance project shall focus its efforts on facilitating export transactions for its clients, and in doing so, provide such technical services as are appropriate to accomplish its mission either with staff or outside consultants;

(c) Sign three-year counseling agreements with its clients that provide for termination if adequate funding for the Pacific Northwest export assistance project is not provided in future appropriations. Counseling agreements shall not be renewed unless there are compelling reasons to do so, and under no circumstances shall they be renewed for more than two additional years. A counseling agreement may not be renewed more than once. The counseling agreements shall have mutual performance clauses, that if not met, will be grounds for releasing each party, without penalty, from the provisions of the agreement. Clients shall be immediately released from a counseling agreement with the Pacific Northwest export assistance project, without penalty, if a client wishes to switch to a private export management service and produces a valid contract signed with a private export management service, or if the president of the small business export finance assistance center determines there are compelling reasons to release a client from the provisions of the marketing agreement;

(d) May contract with private or public international trade education services to provide Pacific Northwest export assistance project clients with training in international business. The president and board of directors shall decide the amount of funding allocated for educational services based on the availability of resources in the operating budget of the budget of the Pacific Northwest export assistance project;

(e) May contract with the Washington state international trade fair to provide services for Pacific Northwest export assistance project clients to participate in one trade show annually. The president and board of directors shall decide the amount of funding allocated for trade fair assistance based on the availability of resources in the operating budget of the Pacific Northwest export assistance project;

(f) Provide biennial assessments of its performance. The Pacific Northwest export assistance project is an innovative program for the promotion of international trade. As such, the project personnel shall work with the department of revenue and employment security department to confidentially track the performance of the project's clients in increasing tax revenues to the state, increasing gross sales revenues and volume of products destined to foreign clients, and in creating new jobs for Washington citizens. A biennial report shall be prepared for the governor and legislature to assess the costs and benefits to the state from creating the project. The president of the small business export finance assistance center shall design an appropriate methodology for biennial assessments in consultation with the director of the department of trade and economic development and the director of the Washington state department of agriculture. The department of revenue and the employment security department shall provide data necessary to complete this biennial evaluation, if the data being requested is available from existing data bases. Client-specific information generated from the files of the department of revenue and the employment security department for the purposes of this evaluation shall be kept strictly confidential by each department and the small business export finance assistance center;

(g) Take whatever action may be necessary to accomplish the purposes set forth in sections 1 through 5 of this act; and

(h) Limit its assistance to promoting the exportation of value-added manufactured goods. The project shall not provide counseling or assistance, under any circumstances, for the importation of foreign made goods into the United States.

(2) The Pacific Northwest export assistance project shall not, under any circumstances, assume ownership or take title to the goods of its clients.

(3) The Pacific Northwest export assistance project may not use any Washington state funds which come from the public treasury of the state of Washington to make loans or to make any payment under a loan guarantee agreement. Under no circumstances may the center use any funds received under RCW 43.210.050 to make or assist in making any loan or to pay or assist in paying any amount under a loan guarantee agreement. Debts of the center shall be center debts only and may be satisfied only from the resources of the center. The state of Washington shall not in any way be liable for such debts.

(4) The Pacific Northwest export assistance project shall make every effort to seek nonstate funds to supplement its operations.

(5) The Pacific Northwest export assistance project shall take whatever steps are necessary to provide its services, if requested, to the states of Oregon, Idaho, Montana, Alaska, and the Canadian provinces of British Columbia and Alberta. Interstate services shall not be provided by the Pacific Northwest export assistance project during its first biennium of operation. The provision of services may be temporary and subject to the payment of fees, or each state may request permanent services contingent upon a level of permanent funding adequate for services provided. Temporary services and fees may be negotiated by the small business export finance assistance center's president subject to approval of the board of directors. The president of the small business export finance assistance center may enter into negotiations with neighboring states to contract for delivery of the project's services. Final contracts for providing the project's counseling and services outside of the state of Washington on a permanent basis shall be subject to approval of the governor, appropriate legislative oversight committees, and the small business export finance assistance center's board of directors.

(6) The small business export finance assistance center may receive such gifts, grants, and endowments from public or private sources as may be made from time to time, in trust or otherwise, for the use and benefit of the purposes of the Pacific Northwest export assistance project and expend the same or any income therefrom according to the terms of the gifts, grants, or endowments.

(7) The president of the small business export finance assistance center, in consultation with the board of directors, may use the following formula in determining the number of clients that can be reasonably served by the Pacific Northwest export assistance project relative to its appropriation. Divide the amount appropriated for administration of the Pacific Northwest export assistance project by the marginal cost of adding each additional Pacific Northwest export assistance project client. For the purposes of this calculation, and only for the first biennium of operation, the biennial marginal cost of adding each additional Pacific Northwest export assistance project client shall be fifty-seven thousand ninety-five dollars. The biennial marginal cost of adding each additional client after the first biennium of operation shall be established from the actual operating experience of the Pacific Northwest export assistance project.

(8) All receipts from the Pacific Northwest export assistance project shall be deposited into the general fund.

NEW SECTION. Sec. 4. The department of trade and economic development shall adopt rules under chapter 34.05 RCW as necessary to carry out the purposes of sections 1 through 5 of this act.

NEW SECTION. Sec. 5. The small business export finance assistance center fund is created in the custody of the state treasurer. Expenditures from the fund may be used only for the purposes of funding the services of the small business export finance assistance center and its projects under this chapter. Only the director of the department of trade and economic development or the director's designee may authorize expenditures from the fund. The director of the department of trade and economic development shall not withhold funds appropriated for the administration of the small business export finance assistance center and its projects, if the small business export finance assistance center complies with the provisions of its contract under RCW 43.210.050 and section 2 of this act. Funding appropriated by the state of Washington shall not be used to provide services to other states or provinces. The fund is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

NEW SECTION. Sec. 6. Sections 1 through 5 of this act are each added to chapter 43.210 RCW.

Sec. 7. RCW 43.210.030 and 1985 c 231 s 3 are each amended to read as follows:

The small business export finance assistance center and its branches shall be governed and managed by a board of ((~~seventeen~~)) nineteen directors appointed by the governor and confirmed by the senate. The directors shall serve terms of six years except that two of the original directors shall serve for two years and two of the original directors shall serve for four years. The directors may provide for the payment of their expenses. The directors shall include a representative of a not‑for‑profit corporation formed for the purpose of facilitating economic development, at least two representatives of state financial institutions engaged in the financing of export transactions, a representative of a port district, and a representative of organized labor. Of the remaining board members, there shall be ((~~a representative of the governor,~~)) one representative of business from the area west of Puget Sound, one representative of business from the area east of Puget Sound and west of the Cascade range, one representative of business from the area east of the Cascade range and west of the Columbia river, ((~~and~~)) one representative of business from the area east of the Columbia river, the director of the department of trade and economic development, and the director of the Washington state department of agriculture. One of the directors shall be a representative of the public selected from the area in the state west of the Cascade mountain range and one director shall be a representative of the public selected from that area of the state east of the Cascade mountain range. One director shall be a representative of the public at large. The directors shall be broadly representative of geographic areas of the state, and the representatives of businesses shall represent at least four different industries in different sized businesses as follows: (a) One representative of a company employing fewer than one hundred persons; (b) one representative of a company employing between one hundred and five hundred persons; ((~~and~~)) (c) ((~~two~~)) one representative((s)) of companies employing more than five hundred persons; (d) one representative from an export management company; and (e) one representative from an agricultural or food processing company. Any vacancies on the board due to the expiration of a term or for any other reason shall be filled by appointment by the governor for the unexpired term.

Sec. 8. RCW 43.210.050 and 1985 c 466 s 64 and 1985 c 231 s 5 are each reenacted and amended to read as follows:

The small business export finance assistance center formed under RCW 43.210.020 and 43.210.030 ((~~is eligible to receive consideration for~~)) shall enter into a contract under this chapter ((~~from the~~)) with the department of trade and economic development or its statutory successor. The contract shall require the center to provide export assistance services, ((~~may not have a duration of longer than two years,~~)) consistent with sections 1 through 5 of this act, shall have a duration of two years, and shall require the center to aggressively seek to fund its continued operation from nonstate funds. The contract shall also require the center to report ((~~at least twice~~)) annually to the department on its success in obtaining nonstate funding. Upon expiration of the contract, any provisions within the contract applicable to the Pacific Northwest export assistance project shall be automatically renewed without change provided the legislature appropriates funds for administration of the small business export assistance center and the Pacific Northwest export assistance project. The provisions of the contract related to the Pacific Northwest export assistance project may be changed at any time if the director of the department of trade and economic development or the president of the small business export finance assistance center present compelling reasons supporting the need for a contract change to the board of directors and a majority of the board of directors agrees to the changes. The department of agriculture shall be included in the contracting negotiations with the department of trade and economic development and the small business export finance assistance center when the Pacific Northwest export assistance project provides export services to industrial sectors within the administrative domain of the Washington state department of agriculture. The department of trade and economic development, the small business export finance assistance center, and, if appropriate, the department of agriculture, shall report annually, as one group, to the appropriate legislative oversight committees on the progress of the Pacific Northwest export assistance project.

NEW SECTION. Sec. 9. The following acts or parts of acts are each repealed:

(1) RCW 43.131.325 and 1985 c 231 s 10; and

(2) RCW 43.131.326 and 1985 c 231 s 11.

NEW SECTION. Sec. 10. A new section is added to chapter 43.131 RCW to read as follows:

The Pacific Northwest export assistance project shall be terminated on June 30, 1996, as provided in section 11 of this act.

NEW SECTION. Sec. 11. A new section is added to chapter 43.131 RCW to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 1997:

(1) Section 1 of this act;

(2) Section 2 of this act;

(3) Section 3 of this act;

(4) Section 4 of this act; and

(5) Section 5 of this act.

NEW SECTION. Sec. 12. The sum of ........ dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the small business export finance assistance center fund, under section 5 of this act, for the small business export finance assistance center of which ....... dollars are provided solely for the Pacific Northwest export assistance project for the purposes of this act.

NEW SECTION. Sec. 13. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.

NEW SECTION. Sec. 14. If specific funding for the small business export finance assistance center, referencing this act by bill number, is not provided by June 30, 1991, in the omnibus appropriations act, this act shall be null and void.

NEW SECTION. Sec. 15. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.