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To: Representative Judd, Chairman

From: Inayet Hadi, Policy Analyst


Date: October 22nd, 2007
Subject: Analysis of House Bill 07-1015

Additional Responsibilities for the International Trade Office

Executive Summary

As requested, I have analyzed the problems associated with the State of Colorado non-existing
authorizing legislation to empower Colorado International Trade Office (C-ITO) to analyze, review,
influence and affect U.S. International Trade Agreements in favor of Colorado. Based on five important
criteria – political feasibility, administrative feasibility, cost-effectiveness, effectiveness, and beneficiary
I have concluded that the best policy is the adoption of HB07-1015.
By not reviewing and analyzing international trade agreements for potential impact on
Colorado’s produced goods and services is not wise a decision to make in a globalized economy. For
example the free trade agreements signed by the U.S. has accounted “for then $900 billion in two-way
trade” (Heritage, p. 4). The total trade the US had with the rest of the world in 2005 was $1.2 trillion
(Heritage, p. 2). This in sharp contrast to Colorado’s export in 2006 totaled to $8 billion (export.gov,
para. 11). Authorizing ITO to analyze, review, influence Federal government trade negotiation will
allow Colorado increase its international trade with the rest of the world.
Also, the policy is required in order for Colorado’s legal structure to conform to treaties the
Federal government has signed and accepted. By not having laws conformed to international trade
agreements signed by the U.S. government can create legal vulnerability for Colorado State.

Goal Definition

Establish rules, legislation, or other means through which the State of Colorado’s ITO can
influence international trade agreements. The State will be empowered to become aware of and
influence U.S. trade policies that will benefit Colorado’s economy and legal structure.

Alternatives

1. House Bill (HB) 07-1015 if passed in present form will add additional duties to C-ITO to review,
analyze, and provide input to the office of the United States trade representative to reflect the
concerns of the State of Colorado.
2. Contracting with a private firm to lobby the office of the United States trade representative to
consult with Colorado’s government when negotiating international trade agreements. The firm
by its proprietary methods will influence U.S. trade representative office to institutionalize the
consultation process with Colorado State government.
3. Funding ITO Offices outside of Colorado to become aware of international agreements that will
affect Colorado’s economy and legal structure. By having office outside Colorado, the ITO will
be able to meaningfully engage in discussions regarding international trade agreements at the
source.
4. Status Quo will continue to rely on US Trade Representative (US-TR) to lobby for the interest of
Colorado as part of the United States. This option will not require the ITO to do anything
differently. However, this option will not be able to accomplish the goals stated above.

Criteria’s Definitions.

1. Political Feasibility - is defined, as weather a proposed policy alternative will be acceptable by


relevant actors such as legislators, governor, and special interest groups. A Low value means
that there is a high likelihood of meeting resistance from political actors.
2. Administrative Feasibility – is defined as weather the agency responsible has the capacity to
implement the proposed policy in terms of competent staff, necessary skills, and funds to
implement the policy. A High value implies the responsible agency has the necessary
competency to implement the policy.
3. Cost – Effectiveness measures weather the input (funding, human resources, and time) to a
giving option will be able to produce greater output. A High value indicates that output exceeds
the input.
4. Effectiveness – is defined as whether the desired outcome will enable Colorado to meaningfully
affect U.S. International Trade Policy in favor of Colorado. A High value indicates that the
proposed alternative will achieve its desired outcome. (good)
5. Beneficiary - is defined here as the benefits to Colorado versus other actors (federal government,
other states, etc.). A High value indicates that the State of Colorado will be the most to benefit.

Maintaining the status quo has two low ratings in the Beneficiary and Effectiveness category. This is
the worst alternative compared with the other available options. However, the status quo option is high
on administrative feasibility because nothing further needs to be done. On Cost-Effectiveness it scored
medium to high because no additional expenditure of personnel, time, or money is required.
The policy option HB07-1015 scored high on four of the five criteria and medium on effectiveness.
The high ratings giving to HB07-1015 are in the categories of cost-effectiveness, political feasibility and
administrative feasibility. It scored high on Beneficiary and medium on the Effectiveness criteria. The
high rankings being received by HB07-1015 option is recommended because being aware of updated
trade policies does translate to increased exports for Colorado.
The Abroad ITO Offices in foreign markets received a high rating in the beneficiary category only
because Colorado will be taking a more direct approach to benefit from international trade. However, it
received low to medium on effectiveness because ITO will target a predefined geographic area. It did
receive low to medium in political feasibility, and low on the administrative feasibility criterion. This
can be attributed to some legislators being opposed to spending Colorado’s money in foreign markets.
Current employees at ITO could be reluctant to moving abroad. The ITO Abroad option is therefore not
a recommended solution.
Contracting out with a firm to help Colorado increase its exports is low on the political feasibility
because resistance from responsible agency administrators and from sponsors of ITO in the State
Assembly will be great. The beneficiary criterion is medium because the chance of Colorado expanding
its exports will be low. On effectiveness, it is medium because the firms motive at the end of the day
will be getting paid regardless of weather their work increases Colorado’s exports or not.

Policy Recommendation
Passing the proposed HB 07-1015 is the recommended policy option to address the low share of
exports compared with the rest of the country. This decision was reached with the aide of five criteria
such as cost-effectiveness, beneficiary, political feasibility, administrative feasibility, and effectiveness.
Evaluation Beneficiary? Cost Feasibility Feasibility Effectiveness Summary and
Matrix Effectiveness (Political) (Administrative) Recommendation
Status Quo Low Medium to High Medium High Low Low on 3 of the 5
Benefits dispersed No additional No strong interests Nothing further The Director of criteria. An
across the 50 States expenditure of exist to support the needs to be done. ITO is constrained alternative solution
as result of U.S. personnel, time, status quo. But on to actually affect is highly desirable.
government or money. the other hand, no U.S. Trade Policy
International Trade one might be
Agreements. opposed to it either,
HB07-1015 High High High High Medium High on 5 of the 5
Colorado would No fiscal impact Strong support Competent office (C- The C-ITO has the criteria. Solution is
actively influence on State’s exists among ITO) already exists authority, capacity, Recommended.
U.S. Trade Policy, expenses or Committee to implement this and support of the
thus benefiting revenues. members for Bill. State. Does not
Colorado directly. accepting the Bill. necessarily
translate to
influence.
Abroad ITO High Low to Medium Low to Medium Low Low to Medium Low to Medium on all
Offices Colorado is taking a The potential for Opposition by The administrative The limited four criteria. This
more direct foreign direct decision makers and security cost number of foreign alternative has future
approach to benefit investment to and legislators to associated with offices will be tied potential as need
from International exceed cost sending jobs over- maintaining overseas to geographic arises. Different
Trade. associated with seas at taxpayers offices will be areas. Will not be alternative
abroad offices is expense. – what difficult to flexible enough to preferred.
slim. about the costs as implement and benefit from
well? They might maintain. globalized
be opposed to that. economy.
Contracting Medium Medium Low Medium Medium The Medium on three
with a Firm The Federal Current funding Resistance from Additional duties private firm has the criteria, contracting
government might will be re- sponsors of ITO in will be created to potential to become out duties from a state
not be convinced to allocated to the State Assembly. monitor, evaluate, effective at agency to a private
consult with private firm. Legislators and audit contract. influencing U.S. firm does not
Colorado’s influenced by This may not be Trade Policy guarantee goals will
government. powerful interests low, but certainly benefiting be met.
groups and medium- it doesn’t Colorado. The issue
Administrators. sound like these of loyalty will likely
would be arise. The firm is
prohibitive duties, loyal to profit and
so I would say it is may not be loyal to
medium, the state’s needs.