[Senate Hearing 105-253]
[From the U.S. Government Publishing Office]
S. Hrg. 105-253
U.S. IMPLEMENTATION OF PRISON LABOR AGREEMENTS WITH CHINA
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
MAY 21, 1997
__________
Printed for the use of the Committee on Foreign Relations
U.S. GOVERNMENT PRINTING OFFICE
41-198 CC WASHINGTON : 1997
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
CRAIG THOMAS, Wyoming CHARLES S. ROBB, Virginia
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
JOHN ASHCROFT, Missouri DIANNE FEINSTEIN, California
BILL FRIST, Tennessee PAUL D. WELLSTONE, Minnesota
SAM BROWNBACK, Kansas
James W. Nance, Staff Director
Edwin K. Hall, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
Bader, Jeffrey A., Deputy Assistant Secretary for East Asian and
Pacific Affairs, U.S. Department of State...................... 16
Prepared statement........................................... 18
Fiedler, Jeffrey L., President, Food and Allied Service Trades
Department, AFL-CIO, Washington, DC............................ 73
Prepared statement........................................... 75
Johnson, Hon. James E., Assistant Secretary for Enforcement, U.S.
Department of the Treasury..................................... 2
Prepared statement........................................... 5
Levy, Peter B., President, Labelon/Noesting Company, Mt. Vernon,
New York....................................................... 64
Prepared statement........................................... 67
Shenqi, Fu, Chinese dissident and Laogai Survivor, New York, New
York........................................................... 72
Weise, Hon. George, Commissioner, U.S. Customs Service........... 7
Prepared statement........................................... 9
Wu, Harry, Executive Director, Laogai Research Foundation,
Milpitas, California........................................... 44
Prepared statement........................................... 48
Shieh, Maranda, President, Greater Washington Network for
Democracy in China and Friends of Hong Kong and Macao
Association.................................................... 68
Prepared statement........................................... 71
Appendix
Letter from Barbara Larkin, Assistant Secretary, Legislative
Affairs, Department of State, to Chairman Helms................ 83
Responses of Mr. Bader to Questions Asked by Senator Helms....... 83
Letter from Liam Higgins, Office of Legislative Affairs,
Department of the Treasury, to Chairman Helms.................. 155
Responses of Mr. Johnson to Questions Asked by Senator Wellstone. 155
Responses of Mr. Bader to Questions Asked by Senator Wellstone... 156
(iii)
U.S. IMPLEMENTATION OF PRISON LABOR AGREEMENTS WITH CHINA
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WEDNESDAY, MAY 21, 1997
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met at 10:02 a.m., in room SD-419, Dirksen
Senate Office Building, Hon. Craig Thomas, presiding.
Present: Senators Thomas, Ashcroft, Biden, Robb, Feingold,
Feinstein, and Wellstone.
Senator Thomas. Thank you very much, gentlemen. I will call
the meeting of the committee to order.
Let me first express the chairman's regrets that he is not
here, but I think he will probably be here shortly. He is on
the floor dealing with some issues and will be here, but we
wanted to go forward with the hearing at the time that was
prescribed.
Let me ask consent to place into the record the chairman's
statement. If he comes and wants to do it, of course he will be
able to do that. Otherwise, it will be in the record.
[The prepared statement of Chairman Helms follows:]
Prepared Statement of Chairman Helms
The Committee will come to order. The Foreign Relations Committee
will this morning address the matter of U.S. enforcement of prison
labor agreements with the People's Republic of China, which the
Committee has not considered since 1991. Since then, a lot has
happened. The United States has signed two agreements with China on
prison labor. However, there continues to be evidence of Chinese prison
labor imports to the United States and a disturbing lack of cooperation
from the Chinese government.
China's penal system relies on an extensive system of forced labor
camps, farms, and factories. Prisoners can be sentenced to ``reform
through labor'' as part of the judicial process, that is, as criminals,
or administratively to ``reeducation through labor.'' This distinction
has created a major problem in enforcement of the agreement between
China and the U.S. on prison labor, with China refusing access to
``reeducation through labor'' facilities on the grounds that they are
not prisons.
Prisoners sentenced through the administrative process have not
been tried or convicted of a crime. Often, prisoners are held in labor
camps long after the completion of their sentences.
By one estimate, over half of China's prison labor goods are
exported. Labor reform facilities produce everything from agricultural
products to manufactured goods, or as we will hear from the second
panel of witnesses, everything from brake rotors to Christmas lights.
Chinese authorities aggressively target foreign markets and business
partners for joint ventures. We will hear from our witnesses today
about American companies who knowingly contract for prison labor goods
and sell them to the American public.
An economy that relies heavily on prison labor is an awful truth of
the Chinese system. But China's intentional export of prison labor
exports to the U.S., China's largest market, is not simply repulsive--
it is a violation of U.S. law.
U.S. law has prohibited the importation of prison labor products
from anywhere in the world since 1932. However, prison labor imports
from the People's Republic of China constitute the largest group of
cases open within the U.S. Customs Service.
In an effort to enlist Chinese cooperation in enforcement of U.S.
law, the U.S. concluded two agreements with the Chinese government on
prison labor--a 1992 Memorandum of Understanding, or M.O.U., and 1994
agreement called the Statement of Cooperation, or S.O.C.
These agreements are not working. This isn't my opinion--it is the
conclusion of the Clinton Administration which in its annual human
rights reports, testimony to the Congress and publicly quoted internal
documents has concluded that China is failing to comply with its
obligations in the 1992 M.O.U. on prison labor.
In fact, in December 1995, Customs Commissioner Weise, told his
colleagues at the State Department and the U.S. Trade Representative's
Office that in the Customs Service's view, the Memorandum of
Understanding and the Statement of Cooperation are ``not working at
this point and there is nothing more U.S. Customs can do to make [them]
work.''
The State Department also has concluded that China is not complying
with its obligations under the prison labor memorandum of
understanding. In this year and previous years, the annual human rights
report on China has noted ``limited'' or ``stalled'' cooperation with
the M.O.U.. According to the State Department, China categorically
refuses to admit American officials to visit ``re-education through
labor'' facilities on the grounds that these are not prisons and are
not therefore covered by the M.O.U. I suspect there is a great deal
more the State Department can say than these sparing comments in the
human rights reports.
I look forward to hearing from the Administration witnesses,
Commissioner of Customs, George Weise (Weiss), Assistant Secretary of
the Treasury for Enforcement, James Johnson, and Deputy Assistant
Secretary of State for East Asian and Pacific Affairs, Jeffrey Bader.
These witnesses will be followed by a second panel, which I will
introduce later.
Senator Thomas. Our first panel consists of the Honorable
James Johnson, Assistant Secretary for Enforcement, U.S.
Department of the Treasury; the Honorable George Weise,
Commissioner, U.S. Customs Service; and Mr. Jeffrey Bader,
Deputy Assistant Secretary for East Asian and Pacific Affairs.
Why do we not begin then with Mr. Johnson, if you will,
sir?
STATEMENT OF HON. JAMES E. JOHNSON, ASSISTANT SECRETARY FOR
ENFORCEMENT, U.S. DEPARTMENT OF THE TREASURY
Mr. Johnson. Thank you, Senator Thomas.
To you, Senator Thomas, and to the members and the staff of
this committee, I appreciate the opportunity to discuss with
you today a very important trade issue: Our responsibility to
ban from U.S. markets products of forced labor manufactured in
the People's Republic of China.
In my written testimony, I cover in greater detail three
issues. One, I provide an overview of the Custom Service's role
in forced labor enforcement. Two, I discuss the status and
outlook for enforcement arrangements with China and, three, I
discuss avenues for strengthening our law enforcement efforts.
I respectfully request that my written testimony be made
part of the record of these proceedings. I will use the balance
of my time to summarize the foregoing points.
Senator Thomas. Without objection, all of your statements
will be made a part of the record.
Mr. Johnson. Key provisions of Federal law prohibit the
importation of goods of any kind that are the product of forced
or convict labor. The Customs Service enforces those laws,
along with 400 other Federal laws and regulations, at our
borders. It is the responsibility of the Treasury's Office of
Enforcement to provide policy direction and regulatory
oversight to the Customs Service as it carries out these
important responsibilities.
Section 1307 of the Customs title of the U.S. Code
prohibits the importation of merchandise mined, produced, or
manufactured wholly or in part, in any foreign country by
convict, forced, or indentured labor.
Another statute, section 1761 of title 18, U.S. Code, makes
it a criminal offense to knowingly import or transport in
interstate commerce prison-made goods.
These laws, originally intended solely as trade laws, now
serve two purposes. First, they protect the U.S. economy and
U.S. businesses and laborers from unfair foreign competition,
and second, they provide an important means of expressing our
foreign policy concerns about certain human rights abuses
abroad. In exercising these statutory powers, the
administration has imposed prohibitions against a broad range
of trade goods from China.
In carrying out its mandate to enforce the laws concerning
forced labor, Customs has the power to take two types of
action, one provisional, the other permanent. These actions
would prevent forced labor merchandise from clearing Customs
and entering the U.S. market.
First, Customs can issue a detention order based on
information that reasonably indicates that the merchandise is
the product of forced or prison labor. Products subject to a
detention order may not be released from Customs custody for
importation until that order is lifted. Normally an
investigation would follow to determine whether a detention
order should be replaced by a finding. If the Commissioner of
Customs makes a determination based on probable cause that the
merchandise in question falls within the purview of the
statute, a finding to that effect would be published in the
Federal Register. Publications of such findings are subject to
the approval of the Secretary of the Treasury. In effect, the
publication of a finding imposes a permanent ban on the
importation of merchandise from the facility in question until
the finding is revoked. In practice, the Office of Enforcement,
acting on behalf of the Secretary of the Treasury, has the
responsibility for reviewing and approving these Customs
actions.
I would like to outline briefly our efforts to enforce the
convict labor statutes, particularly with respect to our focus
on China, currently the country most frequently associated with
the export of products of forced or prison labor to the United
States.
Firm enforcement to prevent entry of convict-made goods
into the United States is a matter on which there has long been
bipartisan agreement. This administration, from its first
months in office, has used the legal tools available to deny
the U.S. market to forced labor products, as did the previous
administration before it. Seven of the 20 detention orders now
in effect against Chinese merchandise and two of the four
findings that have been issued against China have been issued
under this administration.
In an effort to improve enforcement with respect to exports
of convict-made goods from China, the United States and China
entered into a Memorandum of Understanding in August 1992. The
Memorandum of Understanding calls for, among other things,
prompt investigation of suspected violations of either party,
that is, either nation's laws, respecting prison labor
products. It provides for the exchange of information on
enforcement efforts, and finally it provides for the prompt
facilitation of visits to relevant facilities upon the request
of either nation.
Since the MOU was executed, we have experienced
difficulties with China in implementation. The Chinese have
been slow to respond to our requests and their responses have
at times lacked detail. Following complaints by the State
Department, the United States and China negotiated a Statement
of Cooperation that was signed in March 1994. The purpose of
this Statement of Cooperation was to establish clear rules for
the implementation of the MOU.
As Commissioner George Weise will describe in further
detail, our experience under the MOU has been mixed. While we
have had some measure of success, several problems have
continued. The Chinese Government has frequently denied the
facilities in which Customs is interested are in fact prisons.
Moreover, where facilities are conceded to be prisons, the
Government of China has taken the position that the products of
that prison are not exported to the United States.
Commissioner Weise, in his prepared statement and I believe
in his oral testimony, will report in greater detail on our
recent experience with the MOU and with the Statement of
Cooperation. Obviously, that history is not a cause for
celebration. Nonetheless, recent experience suggests to those
who observe matters closely from our embassy in Beijing that a
page may be turning.
At the end of February, for example, the embassy was able
to arrange with the Chinese Ministry of Justice for the
investigation of two new alleged cases of prison labor exports
to the United States. Although it is too early to tell whether
this represents full cooperation on the MOU, the Government of
China appears willing to engage with the U.S. on this sensitive
issue.
I would note more broadly that Treasury and State have
raised United States concerns on human rights at every
available meeting with the People's Republic of China. Treasury
raised the issue with the Chinese Minister of Finance when he
was in Washington in November for bilateral Joint Economic
Commission discussions. Secretaries Christopher and Albright
raised human rights at each of their meetings during their
trips to Beijing in November and February, respectively.
Finally, Secretary Rubin raised the issue of prison labor
during his bilateral with Vice Premier Qian Qichan in April in
Washington.
As suggested above, more recent indications from our
embassy are that the Chinese Ministry of Justice is expected to
improve cooperation over the coming months. Customs attaches at
the embassy are prepared to take advantage of this opening
should it occur. Our first objective would be to clean up a
backlog of over a dozen cases that require investigation in
China.
We intend continually to remind the Chinese Government of
our expectation that they respect the agreements they have
signed with us dealing with forced labor and that they
cooperate with us to enable us to obtain the information we
need to respond to allegations that convict-made goods from
China are entering the United States.
We also intend to continue cultivating strong working
relationships with our counterparts in the Chinese Government
and particularly in Chinese customs administration.
In our efforts to enforce the law, we will continue to use
the law enforcement sources and methods currently in place and
expect to explore other avenues for obtaining better
information.
In conclusion, I would like to strongly reaffirm the
importance that the administration, the Treasury Department,
and the Customs Service attach to the enforcement of the forced
labor laws. These laws are important instruments for the
implementation of both our trade and economic policy and our
foreign policy.
I thank the committee for its interest in our enforcement
of the forced labor laws and I look forward to your questions.
[The prepared statement of Mr. Johnson follows:]
Prepared Statement of James E. Johnson
I appreciate the opportunity to discuss a very important trade
issue, our critical enforcement responsibility to deny the U.S. market
to products of forced labor manufactured in the People's Republic of
China that may be intended for the United States. Key provisions of
Federal law prohibit the importation of goods of any kind that are the
product of forced or convict labor. The United States Customs Service
enforces those laws along with over 400 other Federal laws and
regulations at our borders. It is the responsibility of the Office of
Enforcement of the Treasury Department to provide policy direction and
regulatory oversight to the Customs Service in carrying out these
important responsibilities.
Section 1307 of the Customs title of the U.S. Code prohibits the
importation of merchandise mined, produced, or manufactured wholly or
in part, in any foreign country by convict, forced or indentured labor.
Another statute, section 1761 of Title 18, makes its a criminal offense
to knowingly transport in interstate commerce or to import prison-made
goods. These laws, originally intended solely as trade laws, now serve
two roles; they protect the U.S. economy from unfair foreign
competition and provide an important means of expressing our foreign
policy concerns about certain human rights abuses abroad. In exercising
these statutory powers, the Administration has imposed prohibitions
against a broad range of trade goods from China.
Today, I would like to review with you a number of issues:
An overview of the Customs role in forced labor enforcement
The status and outlook for our enforcement arrangements with
China, and
Avenues for strengthening our law enforcement measures
In carrying out its mandate to enforce the laws concerning forced
labor, Customs has the power to take two types of action--one
provisional, one permanent--that prevent forced labor merchandise from
clearing Customs and entering the U.S. market. First, Customs can issue
a detention order based on information that reasonably, but not
necessarily conclusively, indicates that the merchandise is the product
of forced or prison labor. Products subject to a detention order will
not be released from Customs custody for importation while the order is
in effect. Normally an investigation would follow to deter-mine whether
a detention order should be replaced by a ``finding''. If the
Commissioner of Customs makes a determination based on probable cause,
with the approval of the Secretary of the Treasury, that the
merchandise falls within the purview of the statute, a ``finding'' to
that effect is published in the Federal Register.
The publication of this finding has the effect of imposing a
permanent ban on importation of merchandise from the facility until the
finding is revoked. In practice, the Office of Enforcement has the
responsibility for reviewing and approving these Customs actions for
the Secretary of the Treasury.
The People's Republic of China (PRC) is currently the country most
frequently associated with the export of products of forced or prison
labor to the United States, although the former Soviet Union, Mexico,
and Japan have been the subject of prison labor allegations. Of the 21
detention orders currently in effect, 20 apply to China and one applies
to Japan. Of the six current findings, four apply to China and two
rather old findings apply to Mexican facilities.
Administration's Commitment to Enforcement
I would like to outline our efforts to enforce the convict labor
statute, particularly with respect to our current focus on China. Firm
enforcement to prevent entry of convict-made goods into the United
States is a matter on which there has long been bipartisan agreement.
This Administration, from its first months in office, has used the
legal tools available to deny the U.S. market to forced labor products,
as did the previous Administration and others before it. Seven of the
20 detention orders in effect against Chinese merchandise, and two of
the four ``findings'' have been issued under this Administration. These
actions have barred a wide variety of goods -electric fans, hoists,
surgical gloves, raincoats, artificial flowers, tea, sheepskin and
leather, and iron pipe fittings--from entering the U.S. market.
Our Experience With Implementation of our Agreements with China
In an effort to improve enforcement with respect to exports of
convict-made goods from China, the United States and China entered into
a Memorandum of Understanding (MOU) in August of 1992. The MOU calls
for, inter alia, prompt investigation of suspected violations of the
either party's laws respecting prison labor products, exchange of
information on enforcement efforts, and the prompt facilitation of
visits to relevant facilities upon the request of either party.
Since the MOU was reached, we have experienced difficulties with
China in implementation. The Chinese have been slow to respond to our
requests and their responses lacked detail. Following complaints by the
State Department, the U.S. and China negotiated a Statement of
Cooperation (SOC) that was signed in March of 1994. The purpose of the
SOC was to establish clear rules for implementation of the MOU.
Our experience under the MOU has been mixed. Since the MOU was
signed, Customs has referred 58 inquiries to the Ministry of Justice
for investigation, and has received responses to 52. Customs has
requested inspection visits to 20 facilities and 13 have been
conducted. Over the last two years, Customs attaches at our embassy in
Beijing have been permitted to make only one visit to a suspect
facility, that visit occurring in April of last year. Twenty-seven
detention orders have been issued since 1991, the year before the MOU
was signed, and 20 of those are still in effect; 6 others were revoked
after Customs determined that the facilities in question did not use
convict labor and one was replaced with a finding.
Notwithstanding the foregoing agreements, several problems have
continued. The Chinese Government has frequently denied that facilities
in which Customs is interested are prisons. On the other hand, where
facilities are conceded to be prisons, the government takes the
position that the products of that prison are not exported to the
United States.
Commissioner Weise's prepared statement reports in greater detail
our recent experience with the MOU and the SOC. Obviously that history
is not a cause for rejoicing. Nonetheless, recent experience suggests
to those who observe matters closely from our embassy in Beijing that a
page may be turning.
The U.S. Embassy in Beijing has continued to raise the issue of
implementation of the prison labor MOU with the Chinese. At the end of
February, the Embassy was able to arrange with the Chinese Ministry of
Justice for investigation of two new alleged cases of prison labor
exports to the U.S. Although it is too early to tell whether this
represents full cooperation on the MOU, the PRC appears willing to
engage with the U.S. Government on this sensitive issue.
I would note more broadly that Treasury and State have raised U.S.
concerns on human rights at every available meeting with the PRC.
Treasury raised the issue with the Chinese Minister of Finance when he
was in Washington in November for bilateral Joint Economic Commission
discussions. Secretaries Christopher and Albright raised human rights
at each of their meetings during their trips to Beijing, in November
and February respectively. Finally, Secretary Rubin raised the issue
during his bilateral with Vice Premier Qian Qichan in April in
Washington.
More recent indications from our embassy are that the Chinese
Ministry of Justice is expected to improve cooperation over the coming
months. Customs attaches at the embassy are prepared to take advantage
of this opening if it occurs. Our first objective is to clean up a
backlog of over a dozen cases that require investigation in China. We
are cautiously hopeful that the level of cooperation will improve
somewhat.
Plans to Improve Enforcement Regarding Convict-made Goods from China
We intend continually to remind the Chinese Government of our
expectation that they respect the agreements they have signed with us
dealing with forced labor, and that they will cooperate to enable us to
obtain the information we need to respond to allegations that convict
made goods from China are entering the United States. Thus our approach
through our attache's office in Beijing should be one of diplomatic
persistence. Among other things, if any provision of the MOU or the SOC
seems to be unclear or is being interpreted by the Chinese in a way
detrimental to our enforcement efforts, we will not hesitate to
recommend consultations or renegotiation of these documents.
We also intend to continue cultivating strong working relationships
with our counterparts in the Chinese Government, and particularly in
China's customs administration. We expect that this cooperation will
pay dividends across the spectrum of our enforcement concerns,
including forced labor. The U.S. Customs Service has an excellent
record of establishing strong working relations' s with the services of
other nations, through training and cooperation on enforcement IO
matters. We want to cultivate the elements within China who see the
obvious benefits of a cordial working relationship with a key U.S.
agency such as Customs.
As we work to strengthen cooperative arrangements with the Chinese
Government, we also expect that the broadening and deepening of U.S.
business involvement in China as a result of normal trade relations
will increase the amount and accessibility of information about China's
business enterprises, for law enforcement purposes as well as business
purposes.
In our efforts to enforce the law, we will continue to use the law
enforcement sources and methods currently in place and expect to
explore other avenues for obtaining better information. Among the most
important resources we can draw upon are the competitors of forced
labor facilities and competitors of those who import from them. It has
been a consistent experience of the Treasury Department and the Customs
Service that information from competitors plays an important role in
making cases against violators of the Customs laws, the export and
munitions control laws, and the economic sanctions programs.
Additionally, former employees or even current employees of U.S.
firms often can be counted on to come forward with critical information
if they perceive that their employers are profiting from international
trade that violates our laws. To maximize the value of these law
enforcement assets, we will strengthen our educational and outreach
efforts in the forced labor area as we have in the areas of narcotics,
money laundering, and sanctions enforcement.
Also, importers can be reminded of the legal risks that they take
in not knowing their suppliers or others with whom they deal. Indeed,
in some cases private businesses may have sufficient financial
influence over their suppliers to be able to obtain information about
the conditions under which their products are produced overseas or even
to request plant visits. Failure on the part of U.S. importers to
exercise reasonable care regarding those with whom they deal can
increase their risk of Customs violations.
Conclusion
In conclusion, I would like to strongly reaffirm the importance
that the Administration, the Treasury Department and the Customs
Service attach to the enforcement of the forced labor laws. These laws
are important instruments for the implementation of both our trade and
economic policy and our foreign policy. We are going to do everything
within our power to ensure that these laws are vigorously enforced.
I thank the Committee for its interest in our enforcement of the
forced labor laws, and look forward to your questions.
Senator Thomas. Thank you very much, Mr. Johnson.
Commissioner, would you begin, sir?
STATEMENT OF HON. GEORGE WEISE, COMMISSIONER, U.S. CUSTOMS
SERVICE
Mr. Weise. Thank you very much, Senator. I very much
appreciate the committee holding these hearings on this very
important subject and appreciate being a part of it. I also
appreciate the fact that you would put my entire statement in
the record, as you have indicated.
Since Assistant Secretary Johnson has rather
comprehensively outlined the Customs roles and responsibilities
in this particular area and since my statement, I think,
completes that as well, I will try to be very brief and just
talk for a few moments about the problems that we have been
facing.
I would start by saying that there are really few issues
that the Customs Service takes more seriously than our
responsibility to enforce the laws that prohibit the
importation of goods manufactured by prison or forced labor. I
will tell you, however, even though we take these areas of
responsibility very, very seriously, we have been frustrated. I
cannot stand before you as a committee and tell you that I
believe that we have been very successful in our efforts over
the course of the last 4 years, although it has been a high
priority.
We have attempted to work very closely with the business
community by making it as widely known as possible what these
prohibitions are and to make them more aware of the constraints
about bringing products in that were produced from prison
labor. We have used publications and seminars and all sorts of
programs along those lines.
We have taken an awful lot of effort to try to train our
people, to train our agents and our important specialists, to
be as attuned to these issues as we possibly can.
We have obviously worked with the State Department,
Treasury Department, and others to try to enforce the
memorandum of understanding of 1992 that the Assistant
Secretary has alluded to, as well as the statement of
cooperation of 1994, to work with our Chinese counterparts to
ensure that we are doing everything humanly possible, as the
organization responsible for enforcing these important
provisions, and to ensure that we are investigating thoroughly
and completely any allegations that we receive with regard to
products allegedly being produced in these prisons are with
forced labor.
Our success has been uneven. There have been times when we
have had very good responses from the Chinese Government, but
there have been extended periods of time when we have been
extremely frustrated. We have actually, having made requests to
get into facilities under the terms of the memorandum of
understanding and the statement of cooperation, been asked to
wait often as much as 4 years before we can get into a facility
to actually examine what is going on in that facility.
Our experience, when we have been successful in getting
into some of these facilities, has been uneven as well. We have
had instances where we have actually confirmed the production
of products by prisoners in prisons, but in those instances, we
have not been able to corroborate any evidence that those
products had been exported to the United States. So, it is a
tremendous challenge as far as U.S. Customs is concerned to
meet the requirements of the two statutes that the Assistant
Secretary had alluded to.
Under section 307, which is just a prohibition of these
goods entering the commerce of the United States, we have to
prove that the goods that we have before us were actually
traced back to their production in a prison with prisoner
forced labor. That is often very difficult without having the
cooperation of the host government.
If we are going to try to go under the other statute, which
is basically a criminal statute, we have to show some intent on
the part of the importer himself that he had some knowledge at
least or was willfully importing these products, that is, he
knew the products were being produced in prisons in China with
prison labor. Again, that is a terribly difficult burden to
achieve. We have made two prison labor related criminal cases
over the course of the last several years. In another example
of the difficulties we face in prosecuting companies or
individuals who knowingly violate these statutes, we recently
had a U.S. Attorney decline a referral when he felt that there
was insufficient evidence to prosecute the case.
So, these are the kinds of issues that we face as far as
Customs is concerned, and we do have some issues of
interpretation of the actual MOU and the statement of
cooperation, a couple of issues that the Assistant Secretary
has alluded to. Clearly, we look at the term ``prison'' in a
broad sense. The Chinese try to make some distinction between
various types of education facilities--reeducation through
labor camps they call them--that they argue are not within the
terms of the MOU which deals with prisons. We think it is a
broad term. It includes both. So, there have been times when
they have tried to keep us from visiting a facility under the
distinction that this facility, although it uses forced,
indentured labor, is not covered by the terms of the memorandum
of understanding.
There have been some questions raised from time to time as
to, when they do let us in, what capacity we have when we get
into the facility. The terms of the memorandum of understanding
refer to visits. We look at visits as our opportunity to go and
examine fully all of the issues that are covered by the law and
by the terms of the MOU which means we want to ensure that we
observe very, very thoroughly what is going on in that
facility, including the paper trail and any documents of where
the goods would have been shipped. They look at the term
``visit'' as being perhaps less comprehensive.
So, in conclusion, I would say, Mr. Chairman, that this is
an issue we take seriously in the Customs Service. We are
working very hard to do as effective a job as we possibly can
to carry out this very important responsibility. I would not
say to you that we have been 100 percent successful. We have
had some successes. We currently have outstanding 20 detention
orders on products from China and 4 findings based on evidence
that we have been able to put together from a number of
different sources, but have not yet had a case which I would
say really showed the full system working all the way through
corroboration and confirmation in the facility, finding a so-
called smoking gun. That is something we are going to continue
to struggle to be as successful as we possibly can.
Thank you for the opportunity to appear before you.
[The prepared statement of Mr. Weise follows:]
Prepared Statement of George J. Weise
Mr. Chairman and Members of the Committee, I would like to thank
you for this opportunity to appear before you today to discuss the
issue of prison-made goods in the People's Republic of China. Regarding
China, Customs has been primarily involved with two issues --
preventing the importation of prison-made goods and investigating and
acting against violative trade practices such as textile transhipment,
intellectual property rights, and antidumping matters. These issues are
complex and sometimes present challenging obstacles. Today, at your
request, I will focus on the 1992 Memorandum of Understanding (MOU) and
the 1994 Statement of Cooperation (SOC) between the United States and
the People's Republic of China.
Legal Background
The issue of enforcing the laws and regulations prohibiting the
importation of convict-made goods is one of U.S. Customs national trade
enforcement priorities.
Section 1307 of Title 19 of the United States Code prohibits the
importation of prison made goods. The prohibition in section 1307
covers merchandise mined, produced, or manufactured wholly or in part,
in any foreign country by convict, forced, or indentured labor under
penal sanctions. In addition, the statute provides that the prohibition
concerning forced and indentured labor does not apply to the extent
that the merchandise is not produced in the United States in such
quantities to meet consumptive demands in the United States.
Section 1761 of Title 18 of the United States Code criminalizes the
knowing transportation and importation of prison-made goods. The
penalties for the willful violation of this statute are 2 years in
prison and/or a fine of $50,000.
The implementing regulations to section 1307 are contained in 19
CFR 12-42et sec. The regulations provide authority for the Commissioner
of Customs to issue withhold release orders (detention orders) when the
information available concerning importation of goods produced by
convict labor ``reasonably, but not conclusively'' indicates the
subject merchandise falls within the purview of the statute.
Furthermore, if the Commissioner of Customs, with the approval of the
Secretary of the Treasury, determines that the merchandise falls within
the purview of the statute, a finding to that effect is published in
theFederal Registerand in theCustoms Bulletin.
Customs has interpreted the term ``reasonably, but not
conclusively,'' the standard used to issue detention orders, to mean
reasonable suspicion. The evidentiary standard used to issue findings
has been determined to be probable cause.
Under Customs regulations, merchandise imported in violation of
section 1307 can be detained and may be exported at any time before it
is deemed to have been abandoned. In addition, the importer, within 3
months after the merchandise is imported, may produce evidence to show
that the merchandise does not fall within the prohibition of the
statute. Merchandise determined to be inadmissible shall be excluded
from entry and may be reexported. An inadmissible determination can
also be protested under 19 U.S.C. 1514.
Merchandise imported in violation of 18 U.S.C. 1761 or 1762 can be
seized and subject to forfeiture as an importation contrary to law, 18
U.S.C. 545.
China has had regulations of its own since 1990 banning the
exportation of prison-made merchandise.
Memorandum of Understanding and Statement of Cooperation
With regard to the trade and commercial aspects of the prison labor
problem, the Administration has taken the initiative to prevent the
importation of prison-made products into the United States. For its
part, the Customs Service has taken steps to identify and prevent the
importation of products produced by prison labor. We have done so by
actively pursuing leads which have resulted in seizures, detention
orders, findings, and criminal prosecutions. Leads have come from a
variety of sources including the importer community, the LAOGAI
RESEARCH FOUNDATION and other human rights organizations, and
individuals.
Our history with China related to prison made goods dates back to
1990. In March 1990, U.S. Customs initiated operation LAO-GAIDUI, which
targeted companies alleged to be importing prison labor-made products
from China into the United States. Our first detention order against
Chinese products was issued October 3, 1991.
In 1992, the State Department negotiated a Memorandum of
Understanding with China relating to their exportation of prison labor-
made products to the United States. This agreement, signed in August
1992, provided the framework for the prompt investigation of
allegations that imports from China were produced by prison labor.
Specifically, the MOU provides the United States with a procedure by
which it may request that the Chinese government conduct investigations
of facilities ``based on specific information'' that a facility is
``suspected of violating relative regulations and laws.''
The major difficulty in implementing the MOU arose from the lack of
specific procedures for the verification process. As a result, the
Statement of Cooperation was subsequently negotiated and signed by
China and the United States on March 14, 1994.
Together, these agreements provide procedures to be used to request
investigations of suspected prison labor facilities which are alleged
to be exporting their products into each respective signatory's
country. The agreements state that the Customs Service can request an
investigation of such suspicions by either the host country or by a
personal visit to a suspected prison labor facility by U.S. Customs
personnel. When the Customs Service requests a visit to a suspected
prison labor facility, China is responsible for arranging a visit to
that facility within 60 days of the request. Both types of requests are
required to be in writing and should provide specific information
justifying the investigation. Written reports are required within 60
days of the completion of each investigation/visit.
Although we experienced a period of success in requesting and
having investigations conducted by the Chinese government and with U.S.
Customs personally visiting suspected prison labor facilities after the
signing of the MOU, problems again became evident.
The Chinese Penal System
Persons imprisoned by the courts on relatively serious charges are
sent either to prisons or to labor reform camps, depending on the
length of their sentences. Petty criminals, or others whose behavior is
deemed ``anti-social,'' may be assigned by the police or nonjudicial
administrative boards to reeducation camps for up to 3 years. Suspects
awaiting trial are held in detention centers. The maximum length of
pretrial detention under Chinese law is 5 and 1/2 months. Convicts
sentenced to less than 1 year can be retained in detention centers.
Persons may be required to remain in prison camps if they are deemed
not to have reformed.
Prison Labor
The Chinese consider prison labor an integral part of the reform
process. The Chinese government says prisoners work about 6 hours per
day and have political study for 3 hours per day. They receive labor
protection and health care equivalent to workers in state corporations;
wages, however, are generally minimal. Prison laborers include those
jailed for ``counter-revolutionary offenses.'' We have not seen
evidence that prisoners in pre-trial detention are required to work.
Prison Exports
Last year U.S. Customs processed over 16 million import entries and
collected about $22 billion in customs duties on nearly $800 billion of
trade. Our imports from China in 1996 totaled over $51 billion. It is
impossible to determine how much of that figure came from prison labor
facilities.
1990, the Chinese Justice Ministry officials gave us conflicting
figures ranging from as low as $300 million to as high as $1 billion
for the value of goods produced by prison farms and factories. Some 70
percent, they say, is consumed within the prison system with the
balance sold domestically.
However, the 1989 China Law Yearbook stated that China exported
$100 million worth of goods produced within the prison system. Like
most written information we have about the Chinese prison and labor
reform systems, these reports on exports are dated and no current
figures are available.
Further clouding the situation are factories that the Chinese tell
us are associated with prisons, but do not employ prison labor. These
so-called ``worker enterprises'' employ relatives of prison employees
and ex-convicts who remain near the prison after release. We are told
that there are about 400,000 workers in such units separate from the
prisons. These enterprises are specifically exempted from the
government rules banning export of goods from the prison system.
Chinese officials have shown us one such family member enterprise and
asserted that these institutions account for the $100 million of prison
system exports the government has acknowledged.
Another practice complicating our enforcement efforts is that
Chinese manufacturers use a network of middlemen, including trading
companies in China and Hong Kong, leaving the source very difficult to
trace. Importation documents usually list the names of these trading
companies whose representatives heretofore have not been forthcoming in
providing information about the manufacturers they represent.
Scope of Problem
China is currently by far the country most frequently associated
with the export of prison labor-made goods to the United States. The
Former Soviet Union, Japan, Mexico and other countries have also been
the subject of prison labor allegations. Of the 21 detention orders
presently in effect, 20 pertain to China. Of the six findings in
effect, four pertain to China. China was the subject of three more
detention orders and two more findings that have been revoked.
Additionally, of the 76 investigations involving prison labor currently
open within Customs, 69 pertain to China.
Customs opened an office in Beijing in October 1993, largely to
deal with prison labor matters. Two special agents were assigned to
Beijing. Foremost on their agenda was the investigation of accusations
of prison labor made products being imported into the United States.
To date, the Customs Service has requested 58 investigations of the
Chinese government, and 52 have been conducted. We have also requested
20 visits to suspected forced labor camps, 13 of which have been
granted (including two which we did not request). We revoked four
detention orders and two findings as a result of our visits.
In our opinion, the investigation process has not fully satisfied
our requirements and needs. Although Customs has had some intermittent
success, we have had lengthy periods where we were not able to visit
any facility. To illustrate, on April 25, 1995, Customs agents were
allowed to visit the Shandong Laiyang Heavy Duty Machinery Factory. In
May 1995, it was announced that Taiwan's President Lee Teng-hui was
going to visit the United States. China's angry reaction, including
recalling its ambassador had a chilling effect on Customs as well. On
October 13, 1995, U.S. Embassy officials in Beijing met with Chinese
officials to discuss lack of activity relating to prison labor
investigations. Subsequent meetings were held on November 2, 1995,
December 6, 1995, and December 22, 1995. In December 1995, I drafted
letters to both the Assistant Secretary of State for East Asian and
Pacific Affairs, and to the U.S. Trade Representative, detailing the
difficulties Customs was having in gaining China's adherence to our
MOU/SOC.
On March 11, 1996, the Chinese Ministry of Justice notified the
Customs Attache that she would be allowed to visit the Shanghai Laodong
Machinery Factory. (The request to visit this factory was first made by
the Attache in November 1992, and was rerequested again in March 1993
and September 1994.) The Attache was finally allowed to visit the
facility on April 24, 1996. She found no evidence of forced labor at
the facility. Customs subsequently revoked the existing detention order
on the company.
Problems with Chinese cooperation continued even after the April
1996, visit to the Shanghai Laodong Machinery Factory. The new
Assistant Attache, who arrived in July 1996, was given the prison labor
program. He quickly sought to introduce himself to his counterparts in
the Chinese government. He was rebuffed. In fact, he was not even
allowed to meet with Ministry of Justice officials until February 3,
1997. At that meeting the Assistant Attache presented a request asking
China to conduct two investigations for us in accordance with our MOU.
Chinese officials agreed. On March 31, 1997, they provided the results
of the two investigations. On April 22, 1997, Customs requested a site
visit to the Beishu Graphite Mine and the Nanshu Graphite Mine. Those
requests are pending at this time (China has 60 days from the date of
the request to arrange this).
Conclusion
In recent months, Chinese cooperation on prison labor cases has
improved. This improvement is due to various reasons, among which
include Secretary Rubin's personal involvement. The Secretary raised
the issue in his bilateral with Vice Premier Qian Qichan in April in
Washington.
Whether this improvement is permanent is difficult to say. I would
like to close with some assurances as to Customs efforts and intentions
on the Chinese prison labor issue. Customs is offering classes on the
subject of forced labor to our special agents and import specialists.
Six of these classes have been scheduled for this Fiscal Year.
Customs will continue to pursue any and all allegations brought to
our attention relating to the prison labor statutes and regulations. We
do, however, recognize the constraints of being unable to obtain the
necessary proof to apply them without the consent of the alleged
violator. We simply do not have the tools within our present arsenal at
Customs to gain the timely and indepth verification that we need.
Presently, we believe that we are only seeing part of the picture.
Customs will, however, continue to prohibit the entry of
merchandise produced from prison labor in accordance with U.S. law and
relevant international agreements. I look forward to working with
Congress, the Administration and the Chinese government to accomplish
this goal.
Mr. Chairman, this concludes my statement. Thank you for this
opportunity to address this issue.
Senator Thomas. I appreciate your being candid.
Let me interrupt just a second to recognize the Senators
that have joined us. The Senator from Missouri, do you have any
comments, sir?
Senator Ashcroft. I want to thank you for holding this
hearing.
As you know, the cooperation of China or lack of
cooperation is relevant and has been cited in decisions by the
administration in terms of shaping our relationship with China.
This important set of considerations I think is something we
need to know about and learn about, and I am eager to
participate in the hearings with that in mind.
Senator Thomas. Thank you.
For your information, the chairman is tied up on the floor
and I am pinch-hitting a little. I think he will be here later.
Our Ranking Member, Senator Biden?
Senator Biden. Mr. Chairman, thank you very much. I
apologize for being late.
I would ask unanimous consent that my entire statement be
placed in the record, but I would like to just make two brief
comments.
I apologize to Mr. Bader for interrupting the beginning of
his comments.
There is little doubt about what China's obligations are,
and there is little doubt that they have been uncooperative.
There is little doubt some progress has been made, but there is
little doubt that China continues to obstruct our
investigations, even though all we have to do is suspect a
violation of our agreements--not determine what is reliable or
unreliable information--to request an inspection.
The obvious question is how are we going to deal with this
issue. Some say the best way is to cutoff all trade. This is
going to add to the MFN debate. This is going to be a major
piece of that. I think it does go to the question of whether
China can be trusted to keep any of its agreements, and so it
will have some impact with me and with other people. In
general, though, I prefer a more discriminating approach in how
to deal with China and her actions.
Behind the influence that we have through diplomacy, lies
the strength of our free market and our consumers. I would
suggest that separate and apart from the agreements that China
is obviously not keeping, that with accurate information at the
command of consumers, they will take care of a lot of this
themselves.
Notwithstanding the fact that China is being transformed by
the economic marketplace, it is also being transformed by its
exposure to ideas. It is kind of ironic that maybe even 4 years
ago, but clearly 5, 6, 7 years ago, we would not even be having
this hearing because China had not even begun to discuss any of
these issues with us. We would not even have had such an
agreement, granted, one they are not keeping, but we would not
even have had such an agreement.
But I am of the view, Mr. Chairman--and I will cease with
this--that using the marketplace of ideas is our best weapon,
not our diplomacy. We have to match our diplomacy with
patience, China's transition with patience, but patience alone
is not going to do this. Let me just cite an example.
It would not be a violation of any existing trade agreement
if we permitted all American companies who sold textiles, sold
finished products, if they wished to, to attach a label that
said ``not made with child labor, not made with prison labor.''
We would not rely on saying it could not come into the country.
Rather, if we had accurate information to suggest it was
manufactured free from such unfair trade practices, we could
set up a standard by which American companies could use a label
like the ``Dolphin safe'' label.
When I came up with that idea years ago, everybody thought
that was a crazy idea, but I knew every kid in America would
stop his mother from buying tuna--you think I am joking. I am
not joking. Every company in America said this is a dumb idea.
Within 6 months, after the Heinz Company affixed the label
saying ``Dolphin safe,'' every other company in America said,
whoa, wait a minute. They are buying that stuff even though it
is more expensive.
I think the way to deal with China, is to keep the
diplomatic route going but also go another route, come up with
standards by which companies can affix labels. They do not have
to affix the label. They can sell it without the label. You
watch. If we start down that route, people will not buy even
cheaper products made in China with prison labor or child
labor.
At any rate, I ask unanimous consent my whole statement be
put in the record.
Senator Thomas. Without objection.
Senator Biden. I have questions for the witnesses when we
get to that.
I thank you, Mr. Chairman, for allowing me to interrupt.
[The prepared statement of Senator Biden follows:]
Prepared Statement of Senator Biden
Mr. Chairman, today we are examining how to enforce our ban on the
importation of goods produced by convict labor in China. In a larger
sense, though, we are examining how to deal with China, an emerging
great power that at times will have interests that diverge from our
own. The answer may lie in the marketplace--the powerful influence of
the American consumer and the irresistible lure of the American ideals
of democracy and personal liberty.
The issue of prison labor is not by any stretch of the imagination
the most difficult challenge we will face with China. But our success
in resolving this issue satisfactorily will be one indication of our
likely success or failure in advancing other critical U.S. interests
with China. That is why this hearing is important, and I commend the
Chairman for holding it.
Poor Chinese cooperation
Despite two bilateral agreements designed to stop Chinese prison
labor exports to the United States, exports reportedly continue and our
enforcement efforts still lack teeth. This is outrageous. The American
consumer doesn't want to buy goods produced under brutal conditions by
forced labor in China.
Some knowledgeable observers, including Customs Commissioner George
Weise who appears before the committee today, have suggested that China
may have no intention of abiding by the terms of its agreements. I
would like to believe otherwise, but China's leaders are testing my
patience and that of the American people. We must make it clear for
Beijing to hear and understand: We intend to hold Chinese leaders to
the letter and spirit of their word.
Clear obligations
There can be little doubt about what China's obligations are. In
1994, China and the U.S. set forth detailed procedures and guidelines
to govern the investigation of suspected prison labor exports. The
language is plain; the process is clear. Among other things, China has
agreed to allow U.S. diplomats to visit facilities suspected of using
prison labor within 60 days of a request for a visit.
Unfortunately, Beijing has raised objections to U.S. inspections.
In all of 1996, China granted U.S. authorities access to only one
suspected prison labor facility. This level of cooperation is
unacceptable.
China has complained that our information comes from ``unreliable''
sources--by which they mean their critics, including some of our
witnesses today. Even if that were true, it would be irrelevant. We
need only have a ``suspicion'' that merchandise is tainted to request a
visit.
Promoting our core interests with China.
How then should we deal with this issue? Some say that the best way
to proceed is to cut off trade with China altogether. Revoke MFN. Well,
that's certainly one way to ensure that no Chinese prison labor goods
make it to our shores. Cut off all trade. The problem with this
approach is that it is like spreading a powerful herbicide on your lawn
to kill crab grass and then learning that you've also killed your prize
roses. It won't work, and it doesn't make sense.
Empowering the consumer
In general, I prefer a more discriminating approach that empowers
the American consumer. Of course we must do everything we can eliminate
the gruesome practices we will hear about today. However, diplomacy can
go just so far. Our regulations cannot reach into China and transform
the way they do business.
But behind the influence of our international diplomacy lies our
real strength--our free market economy. We should put that market power
to use.
We should let American consumers know about the sources of the
products they buy. These hearings are one important voice in that
campaign, but other voices, from American consumer advocates to
international human rights organizations, must be part of this
campaign, as well.
With accurate information at their command, I am absolutely
convinced that American mothers will stay away from products made with
child labor, that American workers will refuse to spend their paychecks
on products tainted by the use of prison labor or unsafe environmental
practices. These products will pile up on the docks while American
consumers spend the wages of their free labor on the products that
reflect their values, their true ``bottom line.''
Eventually, with their products shut out of the biggest market in
the world, countries and companies will change their ways or go the way
of other failures in a truly free market, where consumers--equipped
with complete information--are sovereign.
Combining purpose with patience
China is being transformed not only by the economic marketplace,
but also by the marketplace of ideas. I believe that is why we must
combine purpose with patience to foster a more democratic China that
upholds human rights and is a responsible member of the global
community.
Some patience is not unwarranted. Sometimes we forget that five or
ten years ago we wouldn't have been here fretting about China's failure
to comply adequately with the provisions of our prison labor
agreements. We didn't have any. In fact, until very recently, China
would have refused even to discuss the issue.
Since the introduction of Deng Xiaoping's reforms almost 20 years
ago, China has evinced increasing accommodation to international norms.
Some have dismissed this trend as mere ``tactics'' designed to win
access to western markets and technologies.
I believe they are mistaken. They misunderstand the profound
changes China has undergone since the end of Mao's ``cultural
revolution.'' Perhaps only in a Chinese historical context measured in
dynasties and centuries could a consistent policy of two decades be
dismissed as ``tactics.''
Using the marketplace of ideas
But our patience is not limitless, and patience alone will get us
nowhere. We must use the marketplace of ideas. Diplomatic contacts and
educational and cultural exchanges--some supported by congress through
organizations like the East-West center in Hawaii--will play a role.
Chinese students educated in the united states are shaping China's
future. The protesters in Tiananmen Square did not build the ``Goddess
of Liberty'' and quote the words of Thomas Jefferson by chance.
Radio Free Asia
There is more we can do. The key is to use tools that work.
Democracy is built on ideas. That is why I am proud to be the author of
legislation that created Radio Free Asia. Modeled on the Radio Free
Europe/Radio Liberty broadcasts that helped spur democratic movements
in the Soviet Empire, Radio Free Asia is already having an impact in
China.
The Dalai Lama is an avid listener, and he reports that Tibetans
value the broadcasts, which provide more news on Tibet than other
shortwave programming. I am delighted that House Speaker Gingrich
recently suggested expanding Radio Free Asia so that more people in
China can receive its broadcasts--especially in areas where repression
is greatest and the access to reliable information most precarious.
We must complement programs on the airwaves with programs on the
ground. The congressionally-funded Asia Foundation recently launched an
innovative program combining voter education with outside monitoring of
village elections. This experiment in democratic governance is a first
for China, and it shows how we can nudge China along the right path.
Welcome to witnesses
Finally, I wish to welcome our distinguished witnesses today and
express my hope that they will not confine their remarks to the
brutality of China's prison labor system and our current efforts to ban
prison labor imports. I hope they will also suggest ways in which we
can deal more effectively on this and other issues with China--
including ways we can enlist the American consumer and the power of the
American market place to help us.
Senator Thomas. We have also been joined by Senator Robb.
Any comments, sir?
Senator Robb. Thank you, Mr. Chairman. No. I will pass on
the opening statement. I look forward to hearing from our
witnesses.
Senator Thomas. Thank you very much.
Let me just comment that I think that is one of the
reasons--Senator Biden's comments--why this hearing is
particularly important, that it does give some insight into how
we can deal with the lack of conformity with agreements on an
individual, more specific basis than the broad Most Favored
Nation of a thing I believe.
Mr. Bader, I am sorry we set you back a little, sir, but
now we would like to hear from you.
STATEMENT OF JEFFREY A. BADER, DEPUTY ASSISTANT SECRETARY FOR
EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Bader. It is good to see you again, Mr. Chairman.
Senator Thomas. Thank you.
Mr. Bader. Mr. Chairman, I also will excerpt my statement.
I am pleased to appear before the committee to provide an
update on our efforts to prevent Chinese products of prison
labor from entering the United States. U.S. law prohibits the
importation of all goods produced in any foreign country by
convict or forced labor.
Early efforts to obtain information about illegal PRC
prison labor exports were not successful, in part, because we
were unable to visit the facilities in question. Accordingly,
the U.S. sought agreement with the PRC on cooperative
procedures for prompt investigation of allegations that imports
into the U.S. were produced by prison labor. As a result,
former Under Secretary of State Arnold Kanter and Chinese Vice
Foreign Minister Liu Huaqiu signed a memorandum of
understanding on trade and prison labor products on August 7,
1992. The MOU provides for prompt investigation of suspected
violations relating to trade in prison labor products and the
prompt facilitation of visits to relevant facilities.
Initial implementation of the MOU was spotty. In order to
improve it, after several months of discussion, the Department
of State and Chinese Ministry of Justice signed a statement of
cooperation in Beijing in March 1994 that established clearer
guidelines for implementation of the MOU.
Under the statement, both sides agreed to provide reports
of investigation within 60 days of request from the other side.
Requests for visits to suspected prison labor facilities must
also be arranged within 60 days, and following the visit, the
requesting side has 60 days to provide the receiving side with
a report of the visit.
I would underline it is to China's detriment if it fails to
comply. Detention orders on suspect goods remain in effect
until Customs is able to make a clear determination that the
facility in question does not utilize prison labor in the
production of exports.
The signing of the statement fostered a somewhat more
productive relationship between Customs and the Ministry of
Justice. Between March 1994 and April 1995, Customs was
permitted to visit five facilities. This more cooperative
spirit exhibited by the Ministry, however, did not extend to
two areas: Access by Customs to facilities for which the
Ministry of Justice claimed there was insufficient evidence and
access to reeducation through labor facilities, so-called
laogai.
Cooperation on prison labor issues took a general downturn
in the spring of 1995 following the visit of Taiwan President
Lee Tenghui to the U.S. Cooperation came to a virtual
standstill during that summer with the arrest and deportation
of Harry Wu by the Chinese authorities.
In an attempt to reinvigorate cooperation, embassy
officials met with Ministry of Foreign Trade and Economic
Cooperation officials in October 1995.
In December 1995, the State Department's Deputy Assistant
Secretary for East Asian Affairs, Kent Wiedemann, met with
Ministry of Justice officials during a visit to Beijing to
stress the need for prompt access to prison labor facilities,
and later that month embassy officials reiterated Wiedemann's
concerns in a follow up meeting with the Ministry of Justice.
The arrival of Ambassador Sasser in Beijing in February
1996 induced a thaw in the beginning of resumed cooperation.
Embassy officials stressed in February to both Ministry of
Justice and Ministry of Foreign Trade officials that prison
labor exports were a major concern to the Ambassador. Shortly
after, the Ministry of Justice granted Customs access to a
facility for which Customs had initially requested access in
1992.
Embassy officials from State and Customs met with Ministry
of Justice officials in February of this year to request an
investigation of two alleged cases of prison labor exports. In
March, within the 60-day statement time limit, the Ministry of
Justice responded to the investigation requests.
Most recently, as Jim Johnson noted, Secretary Rubin raised
the issue of cooperation under the MOU during his meeting with
Vice Premier Qian Qichan during Vice Premier Qian's visit to
Washington in April. Qian agreed that improved overall
cooperation was essential, including enhanced cooperation on
prison labor export issues.
Implementation of the 1992 MOU has never been smooth or
straightforward. As in many other issues in China/U.S.
relations, the decentralization of authority within China has
hampered prompt enforcement of the agreements. Chinese
cooperation has also often been a function of the state of
bilateral relations.
We have taken steps, including the negotiation of the
statements and raising the issue at high level meetings, to
address the problem of implementation. Chinese cooperation is
essential to successful performance and enforcement. Improved
cooperation is most likely to result from steady, determined
diplomacy and engagement by the embassy, solid investigations
by Customs, and the relationships our officials develop on the
ground with Chinese counterparts.
Mr. Chairman, in conclusion, I wish to assure you that the
administration will continue to actively pursue President
Clinton's commitment to implement this agreement effectively.
Thank you very much.
[The prepared statement of Mr. Bader follows:]
Prepared Statement of Jeffrey J. Bader
Mr. Chairman, Members of the Committee, I appreciate the
opportunity to appear before this committee to provide an update on our
efforts to implement the Memorandum of Understanding (MOU) between the
U.S. and China Prohibiting Import and Export Trade in Prison Labor
Products.
Legal Principles
To briefly summarize, U.S. law [Section 307 of the Tariff Act of
1930 (19 U.S.C. 1307)] prohibits the importation of ``all goods, wares,
articles and merchandise mined, produced, or manufactured wholly or in
part in any foreign country by convict labor or/and forced labor or/and
indentured labor under penal sanctions.'' Regulations issued by the
U.S. Customs Service establish procedures for detaining, investigating,
and excluding goods believed to violate this section.
The U.S. Government does not challenge the principle of employing
prisoners; we too expect prisoners to work. Our opposition is to prison
labor exports to the U.S. and is predicated on fair trade and human
rights concerns. We oppose the use of forced/indentured labor to
produce prison labor exports and the unfair price advantage gained by
such labor in an open economy. Section 307 cited above is intended
primarily to protect U.S. producer, consumer, and worker rights. In
addition, we have concerns regarding labor by prisoners who were tried
without due process protections meeting international norms; and we
have concerns regarding the possible export of products made by their
labor. Goods and services produced in U.S. federal prisons can only be
sold to U.S. Government agencies in the U.S. However, there are no
regulations against exporting state prison-made goods to any country
which will legally accept them.
The U.S. Government has devoted great effort to preventing prison
labor exports from entering our country. The State Department works
closely with the U.S. Customs Service to support law enforcement both
at our borders and overseas. With specific regard to China, the problem
of Chinese prison labor exports entering the U.S. first came to our
attention in 1989. In response to growing concern that China was
compelling political prisoners to produce goods for export, the State
Department and Customs began an intensive campaign to investigate the
importation of Chinese prison labor products. Since that time, we have
worked aggressively to ensure that goods made with Chinese prison labor
are not exported to the U.S. in violation of our laws.
History of U.S. Efforts: MOU
Early efforts to obtain more information about illegal PRC exports
were not successful, in part, because we were unable to visit the
facilities in question. In 1991, in an attempt to allay our concerns,
the Chinese issued in public form their existing law prohibiting the
export of prison labor products. Continuing concerns, however, prompted
the U.S. to seek agreement with the PRC on cooperative procedures for
prompt investigation of allegations that imports into the U.S. were
produced by prison labor.
As a result, U.S. Under Secretary of State Arnold Kanter and
Chinese Vice Minister Liu Huaqiu signed a Memorandum of Understanding
(MOU) on trade in prison labor products on August 7, 1992. This was a
significant step forward in strengthening compliance with both U.S. and
Chinese laws and regulations prohibiting trade in prison labor
products.
The MOU on prison labor exports provides for:
prompt investigation of suspected violations of the laws and
regulations of either side relating to trade in prison labor
products;
exchanges of information on law enforcement efforts;
meetings between officials and experts of the two sides;
the furnishing of evidence that can be used in judicial or
administrative proceedings against violators; and
the prompt facilitation of visits to relevant facilities
upon the request of either party.
Initial implementation of the MOU was spotty. The Chinese were slow
to respond to our requests for investigation, and the responses, when
provided two to three months later, often lacked detail. The Chinese
were even slower to respond to our requests for visits to suspect
facilities.
History of U.S. Efforts: Statement of Cooperation
Accordingly, the U.S. sought to establish specific guidelines for
implementing the MOU. After several months of discussion, the U.S.
Department of State and the Chinese Ministry of Justice signed a
Statement of Cooperation (SOC) in Beijing on March 13, 1994 that
established clearer guidelines for implementation of the MOU.
Under the SOC, both sides agreed to provide reports of
investigations within 60 days of request from the other side. Requests
for visits to suspected prison labor facilities must also be arranged
within 60 days. Following the visit, the requesting side has 60 days to
provide the receiving side with a report of its visit. Visits to other
suspected facilities will only be arranged if the visit to a previous
facility has ``completely ended,'' and a visit report has been
submitted. In addition, the Chinese agreed to reinvestigate and, if
necessary, arrange follow-up visits to sites if the U.S. provides new
information about a previously investigated facility. It is to China's
detriment if they fail to comply. Detention orders on suspect goods
remain in effect until Customs is able to make a clear determination
that the facility in question does not utilize prison labor in the
production of exports.
The signing of the SOC fostered a more productive relationship
between Customs and the Ministry of Justice and accelerated the pace of
implementation under the MOU. Between March 1994 and April 1995,
Customs was permitted to visit the following five facilities: the
Guangzhou Flower City Enterprise, the Guangdong Reform through Labor
(laogai) Bureau, the Zhejiang Number Four Prison Factory and its
associated Hangzhou Wulin Machinery Works and Hangzhou Superpower Hoist
Works, the Shanghai Number Seven Reform through Labor Detachment, and
the Shandong Laiyang Heavy Duty Machinery Factory.
This more cooperative spirit exhibited by the Ministry of Justice,
however, did not extend to two areas: 1) access by Customs to
facilities for which Ministry of Justice claimed there was
``insufficient evidence,'' and 2) access to ``reeducation through
labor'' facilities (laojiao).
Chinese justice officials have questioned the credibility of our
evidence, claiming it is outdated or unreliable. Despite repeated
explanations that U.S. law requires Customs to consider all reasonable
information from sources on prison labor exports, Chinese stated
skepticism about U.S. sources has made the implementation of the MOU
more difficult. Much of our preliminary evidence comes from Chinese
publications, including provincial yearbooks, commerce and industry
enterprise directories, catalogs of export facilities, and studies of
reform through labor (laogai) and reeducation through labor (laojiao).
In some cases, government publications and business directories are
dated and may include exaggerated or misleading claims about a
company's activities. Still other allegations are based on a
combination of evidence, including testimony, statements, documents,
and videotapes. For example, human rights activist Harry Wu's Laogai
Research Foundation has provided initial information on a number of
Customs cases of suspected prison labor exports from China.
Access to ``reeducation through labor'' facilities has been a topic
of disagreement with the Chinese since the first negotiations on the
MOU took place. It emerged as an issue in early March, 1995 when the
Ministry of Justice refused a request to visit the Guangzhou Number One
Reeducation through Labor Camp, claiming that it was beyond the scope
of the MOU. However, later that month, embassy officials met with
Ministry of Foreign Trade and Economic Cooperation officials who
concurred that ``reeducation through labor'' facilities were covered by
the MOU and who indicated they would try to persuade the Ministry Of
Justice to grant us access. Although the Ministry of Justice did
provide an initial investigative report on this camp, the issue was
never fully resolved, and the detention order against the Guangzhou
Number One Reeducation through Labor Camp remains in effect. Customs
has not, to date, visited any reeducation camps.
Cooperation on prison labor issues took a general downturn in the
spring of 1995 following the visit of Taiwan President Lee Tenghui to
the U.S. and the subsequent recall of the Chinese ambassador in
protest. Cooperation on prison labor issues came to a virtual
standstill during that summer with the arrest and deportation of Harry
Wu by the Chinese authorities on espionage charges. The State
Department worked vigorously to secure the release of Mr. Wu who was
arrested while attempting to enter China to gather evidence on prison
labor facilities. Subsequent repeated requests for visits to suspected
facilities were denied.
In an attempt to reinvigorate cooperation, embassy officials met
with Ministry of Foreign Trade and Economic Cooperation officials in
October 1995 to express concern over the slowdown in implementation of
the MOU. The Chinese acknowledged the significance of the problem and
agreed to arrange an interagency meeting to include officials from the
embassy, the Ministry of Foreign Affairs, the Ministry of Foreign Trade
and Economic Cooperation, and the Ministry of Justice in order to
address the problem.
In November 1995, embassy officials met with Ministry of Foreign
Trade and Economic Cooperation and Ministry of Justice officials in an
attempt to gain access to several prison labor sites. The Ministry of
Justice complained that Customs had not provided conclusive reports on
previous site visits and that current allegations lacked credibility.
In December 1995, State Deputy Assistant Secretary for East Asian
Affairs Kent Wiedemann met with Ministry of Justice officials during a
visit to Beijing to stress the need for prompt access to prison labor
facilities and for getting the 1992 MOU back on track. Later that
month, embassy officials reiterated Wiedemann's concerns in a follow-up
meeting with Ministry of Justice Foreign Affairs Office Deputy Director
Wang Rongkang.
Recent Improvements
The arrival of Ambassador Sasser in Beijing in February 1996
finally broke the deadlock with the Ministry of Justice. Embassy
officials stressed in February to both Ministry of Justice and Ministry
of Foreign Trade and Economic Cooperation officials that alleged prison
labor exports were a major concern of the Ambassador. Shortly after,
the Ministry of Justice granted Customs access to a facility for which
Customs had initially requested access in 1992. No other investigation
requests were sent to the Ministry of Justice by Customs in 1996.
Embassy officials from both State and Customs met with the Ministry
of Justice officials on February 28 of this year to request an
investigation of two alleged cases of prison labor exports and to
introduce the new Customs officer handling labor issues. On March 3 1,
well within the 60-day Statement time limit, the Ministry of Justice
responded to the investigation requests. Based on the information
provided by the Ministry of Justice, Customs was able to close one case
and is currently, at the request of the Ministry of Justice, pursuing
information on the other case through the Ministry of Foreign Affairs.
On April 22, Customs submitted to the Ministry Of Justice via
letter a formal request to visit the Beishu/Nanshu Graphite Mines in
Shandong Province. The initial investigation request on this case was
submitted by Customs in February 1994, but this was Customs' first
request to visit the facility. Just last week, on May 15, Customs
submitted a request to visit and review sales records from the Hangzhou
Qianjing Hardware Tools Plant, also known as Hangzhou Shenda Tool
Factory, and associated with prison facility Zhejiang Number 2 Prison.
The Ministry of Justice has 60 days, per the SO, in which to respond to
these visit requests.
Most recently, Secretary Rubin raised the issue of cooperation
under the MOU during his meeting with Vice Premier Qian Qichen in April
in Washington. Qian agreed that improved overall cooperation was
essential, including enhanced cooperation on prison labor export
issues.
Results; Future Directions
By Customs calculations, it has made 58 referrals to the Ministry
of Justice for investigation since the signing of the MOU in August
1992, of which the Ministry of Justice has responded to 52. Customs has
formally requested to visit 20 facilities suspected of exporting prison
labor products and has been allowed to visit 13. Since 1991, Customs
has issued 27 detention orders of suspected prison labor imports from
China, six of which were subsequently revoked after Customs determined
that the facility in question did not utilize prison labor. The
remaining detention orders, dating as far as back as 1991, are still in
effect due to the lack of any contradicting information which would
allow Customs to revoke the order. The suspect goods cannot enter the
United States and represent a financial loss to the exporters. Customs
has also issued six findings banning importation of suspect goods from
China, two of which were subsequently revoked.
Implementation of the 1992 MOU prohibiting import and export trade
in prison labor products has never been smooth or straightforward.
Cooperation from the Ministry Of Justice has been erratic. There are
certain facilities to which the Chinese government has been reluctant
to give Customs access, perhaps because they present national security
concerns or are in sensitive locations. As in many other issues in
Sino-U.S. relations, the decentralization of authority within China has
hampered prompt enforcement of our agreement. Ministry of Justice
officials have sometimes attributed a lack of more rapid progress on
investigations and visits to the intransigence of local officials. In
addition, inadequate record keeping by prison officials has not
facilitated investigation. Also, Chinese cooperation has often been a
function of the state of bilateral relations.
We have taken steps--beginning with negotiation of the SOC to
raising the issue at high level meetings--to address the problem of
implementation under the MOU. Chinese cooperation is essential to
successful performance and enforcement. We need to conduct site visits
and have direct access to information since we lack means of
independent verification. We will continue to explore ways to enhance
Chinese willingness to cooperate. This willingness is not something
which can effectively be written into an agreement. Rather improved
cooperation is more likely to result from steady, determined diplomacy
and engagement by the Embassy, solid investigations by U.S. Customs,
and the relationships our officials develop on the ground with Chinese
counterparts.
At present, it appears that the Ministry of Justice may be prepared
to improve cooperation on this sensitive issue. We believe the best
strategy is to regularly send investigation/visit requests to clear up
the current backlog of cases. U.S. Customs will continue to present new
cases to the Chinese as we develop information. We will also continue
to raise the issue of cooperation and the importance of effective MOU
implementation at every appropriate opportunity.
Mr. Chairman, in conclusion, I wish to assure you that the
Administration will continue to actively pursue President Clinton's
commitment to implement this agreement effectively. Our goal is to
ensure that no goods produced by prison labor enter this country in
violation of U.S. law.
Thank you, Mr. Chairman.
Senator Thomas. Thank you, sir.
Senator Wellstone, welcome. Glad to have you join us.
Senator Wellstone. Thank you, Mr. Chairman.
Senator Thomas. Do you have any comment or shall we go to
questioning?
Senator Wellstone. I have questions, but let us go to
questions. I appreciate it.
Senator Thomas. Why do we not do a 5-minute round and then
we will go around again if we still need to do that.
Mr. Bader, the State Department's human rights report this
year and last year contained almost identical language. This is
it. ``Although the signing of the SOC initially helped to
foster some more productive relationships with the authorities,
cooperation has been limited recently''--that's this year's
report--``or stalled since mid-1995.'' That's last year's
report. Both reports said, ``Repeated delays in arranging
prison site visits called into question Chinese intentions
regarding the implementation of the MOU.''
Let us kind of cut through the bureaucratese there. Is
China complying with the obligations under the MOU?
Mr. Bader. They are not complying to the degree that we
would like to see. We have had----
Senator Thomas. Are they complying with the obligations?
Mr. Bader. I think we would have to look at the numbers,
Mr. Chairman, to make a judgment on that. There have been some
60 some odd requests for information, and they have responded
in about 50 of those cases. There have been about 20 requests
for visits to facilities and about 13 of those have been
facilitated. So, there has been a degree of cooperation but not
the degree of cooperation that we would like.
Senator Thomas. So, if we ask then a logical question, is
China breaking U.S. law, what would be your answer?
Mr. Bader. I do not think that China is breaking U.S. law.
I would say we believe there are facilities that may be
exporting products of prison labor to the United States. That
would be a violation of U.S. law. That would be a violation of
Chinese law, but that would be the action of the entity
concerned that would be a violation of the law.
We need Chinese cooperation in order to identify those
facilities and that cooperation, as I say, has not been what we
would like.
Senator Thomas. In your prepared testimony, in March 1995,
U.S. and China agreed that reeducation through labor facilities
was--those were covered under the MOU. However, then you say
that Customs has not to date visited any reeducation camps.
Also this year's human rights report which covers 1996 again
repeats, ``Chinese authorities assert that the facilities are
not prisons and have denied access under the 1992 MOU.''
Does China allow Customs to visit reeducation labor
facilities?
Mr. Bader. Thus far, as I understand it, Customs has not
been permitted to visit any reeducation through labor
facilities.
Senator Thomas. Mr. Weise, on December 7, 1995, you wrote
both Assistant Secretary Lord and Trade Representative Kantor
to tell them that in your opinion--and I quote--``it is the
U.S. Customs Service view that the MOU and SOC's are not
working at this point and there is nothing more U.S. Customs
can do to make it work.''
What response did you get on your letters to Secretary Lord
and Trade Representative Kantor?
Mr. Weise. I did not receive a written response to that
letter.
Senator Thomas. Did the State Department follow up on your
comment in any way?
Mr. Weise. My understanding is the State Department took
some actions vis-a-vis the Chinese, but I didn't get a report
directly until preparation for this hearing.
Senator Thomas. How about the U.S. Trade Representative?
Mr. Weise. No, Senator.
Senator Thomas. Mr. Johnson, the Department of the Treasury
has supervisory and policy responsibility for the Customs
Service. Is that not correct?
Mr. Johnson. That is correct, sir.
Senator Thomas. What efforts did Treasury make to address
the difficulties Customs is having in enforcing the MOU?
Mr. Johnson. Well, there have been several. Primarily the
issues have been raised by Secretary Rubin at the highest
levels with the Chinese Government at the JEC last November and
recently in a bilateral meeting in April of this year.
Senator Thomas. You know, we hear a lot about your
difficulties and I guess I sympathize. But when we have
something that is fairly clear in terms of MOU's and statements
of cooperation, does simply raising the issue up enforcement
represent a success? Is raising the issue enough to make us
feel as if we have accomplished our task?
Mr. Johnson. Raising the issue or engaging in dialog, when
we do not get the results, does not feel as if we have
accomplished our task, but we continue to press those issues
and intend to continue to use whatever lever we can.
Senator Thomas. Is raising the issue the only remedy?
Mr. Johnson. At a policy level, that is one of the
remedies. On the ground, the agreements themselves provide a
limited ability for enforceability, and that would be this.
When the Customs Service wants to visit a facility because they
have a basis for believing that the goods in question have been
manufactured in a prison facility, Customs can impose a
detention order and keep that order in place until they are
granted access to that facility. That is a limited means of
enforcing----
Senator Thomas. What does the detention order mean?
Mr. Johnson. A detention order? A detention order means
that there is a reasonable suspicion--I believe that is the
standard--that the goods in question were produced with prison
labor.
Senator Thomas. Are they held or restrained at all?
Mr. Weise. If I may, Senator. What that does is put a
burden on the importer who is bringing that product in to
demonstrate to our satisfaction that the goods that are before
us were not produced by prison labor.
Senator Thomas. And if you make that finding, what happens?
Mr. Johnson. Then the product will not be let in unless the
importer within a 3-month period satisfies the burden that he
has demonstrated to us that goods that we have before us were
not actually produced in prison.
Senator Thomas. In the meantime, they cannot be moved?
Mr. Weise. In the meantime, the products cannot enter the
commerce of the United States.
Senator Thomas. Senator Biden.
Senator Biden. Thanks, Mr. Chairman.
Mr. Weise, how many detention orders have you issued?
Mr. Johnson. We have issued a total of 27. There are
currently 20 outstanding--21 outstanding, 20 of which are
China. There was one other country.
Senator Biden. 20 Chinese detention orders.
Mr. Weise. That is correct.
Senator Biden. Have any of them resulted in inspections?
Mr. Weise. Inspections?
Senator Biden. Well, there is a detention order.
Mr. Weise. Right.
Senator Biden. With a detention order, you have to have the
importer prove to you that it is not made with, in this case,
prison labor. The only way I assume you can be satisfied that
they are telling you the truth is to inspect the facility where
the product was made. I assume. Right?
Mr. Weise. We have had 20 requests for visits that we have
made to Chinese prisons.
Senator Biden. Let us back up here. Let us make this real
simple. I am not with the State Department or Customs. I am
just a plain old Senator. OK? I know you are not State, but you
are talking like a State guy.
Here is what I want to know. Let us just be real basic so I
can understand it and everybody at home can understand it.
Somebody comes to you and says, either our Government or
out of Government, the product that is being brought in by XYZ
Importers was made with prison labor. You have a reasonable
suspicion that that is true. You or somebody in the Federal
Government says, XYZ Importer, you cannot bring that product
off the dock or off the ship. You cannot put it in the U.S.
market until you satisfy us that that product was not made with
prison labor, and here is why we think it was made with prison
labor.
You have done that 20 times. Now, of the 20 times you have
done that, how many times has somebody said to you, OK, I can
prove it to you? Come with me. I will show you where it was
made.
One of the reasons for the detention order and the reason
why Mickey put it in was to get you access. Now, how many times
has it gotten you access to facilities you had otherwise not
gotten access to or gotten access in the first instance at the
first request?
Mr. Weise. We have only had access 13 times out of the 20.
Senator Biden. Out of the 20 you have issued. Let us be
real precise. OK? 20 detention orders, 20 requests that flow
from the detention orders, 13 requests granted. Right?
Mr. Weise. That is right.
Senator Biden. Now, what happened to those 13 requests that
were granted? Was it confirmed or was it left ambiguous or what
was the result?
Mr. Weise. There was no instance where we confirmed both
the fact that the product was being produced within the prison
by prison labor and that the product had been exported to the
United States. We have had instances where we have confirmed
that indeed there was a product as described to us that was
being produced in that prison, but we were not able to prove
the connection that that product was then exported to the
United States.
The thing I need to clarify, Senator, is that more often
than not, the process does not begin with an importation in
front of us. The process generally begins with an allegation
that a particular kind of product was being produced in a
prison. That is when we then look at the evidence. We look at
the information that is provided to us, and if we have a
reasonable suspicion that there is something there, that is
when a detention order is issued. Usually we do not have a
shipment at our docks when this process begins.
Senator Biden. No, I got that, but it could be at your
dock.
Mr. Weise. It could be at our dock.
Senator Biden. It could be at your dock, could be on its
way, or it could be in the future.
Mr. Weise. That is right, but once a detention order is in
place, we try working on both ends. We immediately get word out
to all of our field operations to be on the lookout for this
product coming from this place. Meanwhile we start working the
other end to try to get into the facility to see if we can
confirm, as I said, the two elements, both the fact that the
product is produced there and some evidence that it indeed has
been shipped to the United States.
Senator Biden. Let me ask State and Treasury. Do we know
how many reeducation camps there are in China? Do we have an
estimate of what we think there are? How many?
Mr. Bader. We have an estimate of how many people are
detained in such facilities. The number runs about 200,000.
Senator Biden. 200,000 people. Now, can you estimate the
value of goods produced in these camps? Do you have any idea?
Not whether or not they are importing to the United States. Do
we have any sense of the value of goods produced in these
reeducation camps?
Mr. Johnson. Senator, I do not.
Senator Biden. Well, not you. Does anybody who works with
you? I know you are smart, but there may be somebody else who
knows something you do not. Do you have any idea? Does anybody
in the Federal Government have any idea?
Mr. Johnson. That would be something that I would want to
get back to you on, Senator.
Senator Biden. The answer is you do not know. Right?
Mr. Johnson. That is correct, Senator.
Senator Biden. I am not trying to put you on the spot. I
just want straight answers. OK? If you do not know, you do not
know.
Now, my time is about up. Let me--my time is up.
Senator Thomas. Saved by the bell.
Senator Biden. Fortunately.
Senator Thomas. The Senator from Missouri.
Senator Ashcroft. Thank you, Mr. Chairman.
Mr. Bader, I think I heard you say that Chinese compliance
is a function of the state of bilateral relations. Does this
mean that Chinese choose to comply at some times and not to
comply at others and they disregard the agreements based on the
way they feel about the U.S. at a particular time?
Mr. Bader. Yes, I would say that is what it means, Senator.
During periods when the relationship has been going through
difficult times, Chinese cooperation has either halted or been
grudging.
Senator Ashcroft. Is this true about more than the
agreements about prison labor things? Would that explain, for
instance, the willingness of the Chinese to repudiate by their
conduct the missile technology control regime and things like
that?
Mr. Bader. Senator, looking back over the last few years, I
think we have seen on the missile technology side less
scrupulous behavior by the Chinese during periods when
relations have been bad. That is my view, yes.
Senator Ashcroft. So, in general, agreements with China are
honored when they sort of feel like it and feel good toward us
and dishonored when they do not feel good toward us.
Mr. Bader. I would say that the Chinese are more prone to
exploit gray areas in their favor during periods when relations
are difficult. Yes.
Senator Ashcroft. You seemed to suggest that these goods
might be imported but it wouldn't be a responsibility of the
Government, that these were actions by the entity concerned.
What did you mean by the entity concerned as opposed to the
Government?
Mr. Bader. I am not a lawyer, but I was making what I hoped
was a narrow legal point, that if there is a violation of U.S.
law, it would be by the facility that was producing the product
and that the law I think would not implicate the Chinese
Government.
Senator Ashcroft. Which facilities are these? Are these
prison facilities?
Mr. Bader. Well, the facilities in question, some are
prison facilities, yes, and some are corporate entities with
relations with prisons and some are not.
Senator Ashcroft. So, a product that is once removed from
the prison and either packaged by another entity or----
Mr. Bader. That is right. You might have a state-owned
enterprise or a private enterprise with a relationship with a
prison facility.
Senator Ashcroft. The 200,000 individuals that are part of
these laogai. Have these individuals been tried and convicted
of a crime?
Mr. Bader. No, they have not. They have been sentenced to
up to 3 years by administrative proceedings by local
authorities. They have not gone through the Chinese justice
system.
Senator Ashcroft. For what purpose have they been
sentenced?
Mr. Bader. There is a whole range of offenses, Senator. I
would have to get back to you with the specifics on that.
[The following material was subsequently supplied for the
hearing record by Mr. Bader.]
According to a 1982 State Council internal communique to
the Public Security Bureau, suspects thought to be ``counter-
revolutionary elements, anti-party and anti-socialist
elements'' are among those who may be sentenced to ``laogai.''
Senator Ashcroft. So, they are sentenced for offenses, but
they have not really been tried.
Mr. Bader. They have not gone through a trial with due
process through the Chinese justice system. That is right.
Senator Ashcroft. Are they free to leave these facilities?
Mr. Bader. No, they are not.
Senator Ashcroft. And are they required to work in these
facilities?
Mr. Bader. Yes, they are.
Senator Ashcroft. And there is this category of facilities
where 200,000 people are detained and we have no access
whatever to those facilities under our agreement?
Mr. Bader. Our interpretation of the agreement is that
these are prison or forced labor products and that we should
have access. The Chinese have not granted us access to date.
That is right.
Senator Ashcroft. So, we have no access. We interpret
ourselves as having the right of access. So, we have the
potential without the right of inspection now, at least by the
Chinese, of 200,000 people being forced to manufacture items
which might come into our country, and we have no ability to
even ascertain whether or not that is----
Mr. Bader. That is correct, Senator. Just one or two brief
points on that.
Recently the Chinese have agreed to respond to a request
for information on a laogai case, although they have not
granted access to the facility.
The other point is, as Jim Johnson pointed out, we can put
the detention order on the product if we believe it is from a
laogai facility. But you are right. We have not been able to
inspect such facilities.
Senator Ashcroft. Is it your view that we have never had
adequate information to ask the Chinese in any of these
situations to cease behavior related to a specific case?
Mr. Bader. I am not sure I am the best member of the panel
to address that question. Customs might be in a better position
to judge the adequacy of information.
Senator Ashcroft. Is that your way of saying you do not
know or do not have a view?
Mr. Bader. Well, the information we get is usually spotty,
and that is why we have this process for investigation.
Senator Ashcroft. At least the agreement has not provided
us with access to these 200,000 individuals.
Mr. Bader. That is correct.
Senator Thomas. Senator Robb?
Senator Robb. Thank you, Mr. Chairman.
Mr. Johnson, on page 3 of your testimony you indicated
there are ``recent indications from our embassy that the
Chinese Ministry of Justice is expected to improve cooperation
over the coming months.'' Could you tell us exactly what are
those recent indications?
Mr. Johnson. Those would be the two cases that--allegations
that they have agreed to assist us to look into.
Senator Robb. So, it's simply an expressed willingness to
look into allegations that have been raised.
Mr. Johnson. That is correct within recent months.
Senator Robb. I am not sure which one of the three
panelists might know the answer. I do not remember at this
point which one of the three or if all three of you accompanied
the Vice President on his recent visit to China. But do you
know if this question of prison labor was specifically raised
and discussed in his conversations with the appropriate
officials one way or another?
Mr. Bader. I do not know.
Mr. Johnson. No, I do not know, sir.
Mr. Weise. I do not know.
Senator Robb. Were any of you on that trip? I met with him
briefly. Some of us did, but I did not take a look at who all--
--
Mr. Johnson. No, sir, I was not. I do not believe anyone
was.
Senator Robb. Mr. Bader, if I may, the U.S., as I
understand, has issued six findings actually banning the
importation of goods. There were some 20 detentions, 13 access,
if I understand all this and the relationship. First of all, I
gather, for again the laymen to understand, that a detention
might be something on the order of an indictment in a criminal
proceeding and a finding would be a conviction and an access
would be a trial or whatever the case may be. In other words,
is that a logical sequence of events?
Mr. Weise. If I may, Senator, it is not quite analogous to
that. A detention order basically results when we have what is
called a reasonable suspicion that an allegation has been made
and there is something to it.
Senator Robb. Well, then a warrant issued for an arrest
perhaps would be a better analogy.
Mr. Weise. The finding actually is something where we have
found that there is--when we say probable cause that the
allegation is accurate, and then we would take a more
restrictive action. We would, in effect, prohibit. These goods
just could not be imported until we could resolve that matter
completely once we got to a finding state.
Senator Robb. Given the difficulties that we are
encountering at the moment with lack of access that were raised
by Senator Ashcroft, would that indicate that a new memorandum
of agreement or understanding ought to be entered into at this
point?
Mr. Weise. As far as U.S. Customs is concerned--and we
have the responsibility for enforcing and administering this--
we feel that the basic terms of the memorandum of understanding
allow us to do our work. What the frustration has been is the
Chinese apparent unwillingness to abide by the terms of the
memorandum of understanding as supplemented by the supplemental
agreement of 1994.
For example, under the terms of that, when we make a
request to visit a facility, within 60 days after that request
is made, we ought to be able to visit that facility. If they
were complying with the terms of the current understandings, I
think we could do a more effective enforcement job. The problem
is not so much with what is not in those understandings and
agreements, it is that they are not being carried out.
Senator Robb. Given the fact that there appears to be
progress on the IPR front, are there any lessons to be drawn
from this in terms of how we might approach the prison labor
question? Mr. Bader, that is probably best directed to you.
Mr. Bader. Well, I think as the Commissioner said, the
statement of cooperation and the memorandum do have what we
need. I am not sure what changes would result in better
implementation.
I think the key point here is the ability of Customs to
slap a detention order on products so that puts the burden on
the Chinese to satisfy us. We can take another look and see if
there are other ways to assure better implementation. But right
now, the way it is structured, the Chinese have an incentive to
cooperate. In the case of the IPR agreement, we were dealing
with illegal facilities in China producing products and the
Chinese Government was asked to shut them down and
substantially has. In this case, of course, we are dealing not
with illegal facilities, but we are dealing with violations of
Chinese law, as well as American law.
Senator Robb. Let me ask just one final question and that
is how other nations in Asia and Europe are responding to the
concerns that we are addressing here about prison labor. Is
there support for the U.S. position either rhetorically or----
Mr. Bader. Sorry, Senator. There has been interest in the
subject of prison labor in Europe, and I think a member of your
next panel, Harry Wu, deserves a good deal of the credit for
raising consciousness in Europe on that subject. I am not aware
of to what degree European laws or European actions have
paralleled our own, but there is a consciousness.
Senator Robb. Are you aware of any European country that
has attempted to deal with the situation the way we have?
Mr. Bader. I personally am not. I do not know if the
Commissioner is. I can get back to you with a formal answer on
that, but I personally am not.
[The following material was subsequently supplied for the
hearing record by Mr. Bader.]
The U.S. and EU share the common goal of integrating China
into the international community. We have consistently conveyed
to the EU the need for a common approach to China on human
rights, non-proliferation, and other concerns.
U.S. officials have raised the specific issue of prison
labor in China with EU officials. The EU supports strengthening
provisions for monitoring ILO conventions on core labor
standards. However, the EU has no agreement with China on the
use of forced labor. European Commission Vice President Sir
Leon Brittan has stated that the EU would not withdraw GSP from
China as a result of allegations of the use of forced labor
there even if the International Confederation of Free Trade
Unions or other body were to present a formal petition in this
regard.
On separate occasions, government officials from the United
Kingdom, Germany, Canada and Australia have indicated that
Chinese prison labor exports are not an issue of concern in
their bilateral relations with China.
Senator Robb. My time is expired. Thank you, Mr. Chairman.
Senator Thomas. Senator Wellstone.
Senator Wellstone. Thank you, Mr. Chairman.
I will wait for Mr. Wu's testimony, but a recent CRS report
stated, ``Evidence suggests that China may be utilizing forced
labor on a large scale in order to boost its exports, a large
portion of which may be targeted in the United States. In 1991,
the Library of Congress expert estimated that over 50 percent
of the prison-made goods in China are exported.''
What I am having a little bit of trouble understanding is
this--I am a kind of lay person to this, but I was following
closely the questions on this whole issue of access. What is
the procedure again? What do you call it when you stop
something? You call it a----
Mr. Weise. A detention order.
Senator Wellstone. A detention order.
Mr. Weise. And then a finding.
Senator Wellstone. I am just trying to figure out exactly
how this works. Why would China give you access to forced
prison labor camps? They are not going to do that. What does
access really mean? You go where they want you to go and
nowhere else. Correct?
Mr. Weise. Well, in practicality that perhaps has been the
way it has worked out, but they have entered into this
memorandum of understanding of 1992 where they have agreed to
give us access on our request when we have an allegation, and
in the follow up agreement of 1994, they have even agreed
within a set timeframe, within 60 days, of our request they
would allow us access.
Senator Wellstone. And you think you are getting that
access?
Mr. Weise. We have been into 13 facilities, but the
problem has been that there has been a long delay from the
point where the initial request has been made before we have
actually gotten into some of these facilities.
Senator Wellstone. What reason in the world would we have
to believe--I mean, they are not stupid. They are not going to
take you onsite and give you the smoking gun and let you take
pictures of people in forced prison labor camps. I just do not
understand.
Mr. Weise. Senator, they have never denied that they have
prisoners producing products. The issue really is are the
products that they produce being exported to the United States.
Senator Wellstone. That is correct.
Mr. Weise. And they have a law, or at least a regulation,
since I guess it was 1991 that under Chinese law prohibits the
exportation of these products to the United States.
The issue is whether we can find evidence that the products
that were produced--and we have seen directly these products
being produced by prisoners, but we have not yet seen any
evidence that those products were exported directly to the
United States based on our visits.
Senator Wellstone. And I am saying I doubt whether or not
they are going to provide you with the smoking gun for you to
do that. They do not seem to be me to be stupid. They do seem
to me to commit monstrous violations of human rights of
citizens in the country.
I guess my question, Mr. Chairman, is I look at the recent
CRS report and I hear from Customs and State today that
certainly the People's Republic of China is not fully complying
with this MOU on prison labor. I do not see, therefore, what is
the alternative. How are we going to in fact make sure that our
law is not violated and in fact there is some living up to
this?
Mr. Fiedler, AFL-CIO, in his prepared statement, Mr.
Chairman, urges that Customs, based on credible information,
ban entire categories of products from China if it is found
that forced labor products of the same type are being sent to
the United States. I guess my question for Mr. Johnson and Mr.
Weise is, do you agree that this should be done? Why do we not
come up with something?
We know full well they are not fully complying. Some of us
think they are not complying really at all. We know what our
law of the land says. We know the President made MFN
conditional upon living up to this agreement. Why not this
alternative? What are we going to do to make this serious?
Mr. Weise. The first thing I would say, if I may, is that
under current law, as our counsel has interpreted it, we are
not permitted to take the kind of action you have suggested. If
we were going to do that, the law would need to be changed to
permit Customs to take that kind of action, and then it becomes
a policy question as to whether the Congress and the
administration feel that is the right approach.
Obviously, there would be an awful lot of people who are
dealing in legitimate business who would be potentially
adversely impacted by that and products that were actually not
produced in prisons would be impacted by that. But that is a
policy question for----
Senator Wellstone. Customs could only take this action
based upon credible information. Would you agree that this
would be an alternative that would make sense since what we are
doing right now, clearly we do not have anything close to full
compliance of our memorandum of understanding?
Mr. Weise. It is difficult. It is a policy issue. As the
Commissioner of Customs responsible for enforcing law and not
for making policy, I would defer to the State Department and
the Treasury Department on making a policy judgment on that.
Senator Wellstone. Mr. Johnson?
Mr. Johnson. With respect to the issue of credible
information, are we talking about information that currently is
not being considered in the process that is in place now, not
the MOU process but in the detention order process.
The difficulty that we have had with detention orders is
precisely what we are talking about, lack of credible
information. So, I am not certain how efficacious--if we impose
a regime that was contingent upon us getting credible
information, I do not see how, given our difficulty in getting
information, that would solve the problem. I think the
detention order and then the regime that we have in place,
contingent as it is on our getting information, would work
better if we were able to get more information, which is just
the frustration that the investigators and Commissioner Weise
have been talking about.
Senator Wellstone. Mr. Chairman, I will not go any further
right now. I think if I could just make one quick point.
The issue of operational definition of credible information
is out there, but on the other hand, we are talking about
Customs then really banning entire categories of products from
China. We are talking about rather sweeping action. I grant you
this is a challenge, but I think we ought to be thinking about
something more serious that will lead to some real enforcement
because right now this is a charade.
Senator Thomas. Senator Feingold.
Senator Feingold. Thank you, Mr. Chairman. I want to thank
the witnesses and the chair for holding this hearing.
I have some questions that I would like to submit for the
record but we are only given limited time here, and given the
significance of this subject, I am going to use my time to
simply help try to send a message, the kind of message that
Senator Wellstone was just sending, by making a statement about
my feelings on this.
Unfortunately, for those of us who are concerned about
human rights issues in China, there are just an awful lot of
areas we can focus on, a lot of choices. General freedoms that
most Americans take for granted are not guaranteed in China.
Freedoms of speech, of assembly, of association, of religious
practice, as we learned at a hearing last week with regard to
Tibet, and of privacy are severely restricted and massive human
rights abuses continue throughout China.
The forced use of prison labor is another issue that should
concern us, and I think it's interesting to note. Unlike some
of the other ones where people say, well, this is about
religious practices or about other issues, this actually does
have to do with trade. This does have to do with goods that
come into this country.
Since the Communist Chinese Party took power in 1949,
reform through labor has been a key component of the party's
effort to maintain its monopoly on power. Previously in the
time of Chairman Mao Tse-tung, the Communist regime forced
intellectuals and dissenters to toil at labor camps as a way to
humiliate them and break their spirit. Harry Wu, who will
testify later on, knows this system firsthand. Over the course
of his 19-year imprisonment in China, Mr. Wu was forced to work
on farms, in steel mills, and in coal mines.
The condition of these prison labor camps has always been
horrendous. According to reports by Human Rights Watch-Asia,
prisoners are routinely denied proper food and medical care.
Some, particularly political prisoners, are subject to
beatings, electric shocks, and other forms of torture. On top
of this, many are forced to do back-breaking labor for as much
as 14 hours a day.
Today prison labor is still being used as a means of
political control in China. With the Chinese leadership
determined to boost economic growth, prison labor has also
become a means of increasing China's exports. As many as 20
million people are estimated to be working in Chinese labor
camps, many producing products specifically for export.
As you know, Mr. Chairman, the United States and the
People's Republic of China did sign this memorandum of
understanding in 1992 whereby China agreed not to export goods
made with prison labor to the United States. China has failed
to live up to the agreement. Since 1992, our Customs Service
has had to confiscate shipments of nearly 2 dozen types of
products, including hand tools, artificial flowers, and even
diesel engines, after it was discovered these goods were being
made using forced prison labor.
Most observers of this problem estimate that only a tiny
fraction of prison goods are actually detected and the
majority, potentially billions of dollars worth, every year
appear on store shelves in the United States. As with so many
human rights issues, the Chinese leadership has chosen a path
of deception rather than openness. According to the State
Department's 1996 report on Human Rights, Chinese authorities
granted U.S. Customs inspectors access to only one prison labor
facility in the entire year of 1996.
In short, Mr. Chairman, Chinese compliance with the 1992
MOU and subsequent agreements has been a joke. The continued
human rights abuses in China's prison system and the use of
forced labor is just one of many reasons why I oppose extending
China's Most Favored Nation trade status. The United States
should not grant trade privileges to nations which attempt to
dump into our markets products made in appalling safety and
health conditions by prisoners forced to work virtually all of
their waking hours. What makes the situation even more
deplorable is that fact that under Chinese law people can be
sentenced to up to 3 years of hard labor without any kind of
trial.
Mr. Chairman, I believe this hearing is already shedding
some light on the true situation in China's prison labor camps.
I hope more light is shed, but this is obviously a matter that
is of increasing interest on both sides of the aisle and is a
message that I think should be sent straight across to the
People's Republic of China. We are deeply concerned that these
practices continue.
Thank you, Mr. Chairman.
Senator Thomas. Thank you, Senator.
Senator Feinstein.
Senator Feinstein. Mr. Chairman, I would ask unanimous
consent that my remarks be included in the record.
Senator Thomas. Without objection.
[The prepared statement of Senator Feinstein follows:]
Prepared Statement of Senator Feinstein
Mr. Chairman, thank you for calling this hearing today. I want to
welcome our witnesses here to discuss the important problem of
enforcing our agreements with the People's Republic of China relating
to prison labor.
Prison labor is not a new issue, neither in general nor for
Congress. Prison labor is widely practiced in various forms around the
world, including in the United States. But, Congress has always had the
concern that the United States should not import goods produced by
prison labor overseas, especially from non-democratic countries, whose
prisons are more likely to be abusive.
So 67 years ago, as part of the Tariff Act of 1930, Congress passed
a law banning the import of any item ``mined, produced, or manufactured
wholly or in part in any foreign country by convict labor or/and forced
labor or/and indentured labor.'' This act remains the law of the land
to this day, and some have raised concerns about whether it is
sufficient to deal with the problems presented by today's global
economy.
In the case of China, there have been serious concerns that the
United States has not been able to prevent the importation of prison
labor goods. These concerns led to the Memorandum of Understanding of
1992 and the Statement of Cooperation of. 1994. These agreements, if
properly enforced, give the United States the ability to screen prison
labor products through information-sharing and site visits.
The focus of this hearing, I hope, will be on whether these
agreements have been adequate mechanisms for keeping Chinese prison
labor goods out of the United States. If the answer is no, then the
next question must be, what additional tools do we need to achieve this
goal? I look forward to hearing our witnesses answers to these
questions.
More broadly, I think it is important to take note of how far we
have come on this issue, and its implications for U.S.-China
cooperation across the board. Reaching agreements with China on the
issue of prison labor is an impressive achievement, which could not
have been reached several years ago. Now, as is often the case with
China, we need to work with them to establish an acceptable level of
implementation of the agreements.
Undoubtedly there are some who would conclude from our problems
implementing these agreements that we have no choice but to throw up
our hands and say, ``We cannot do business with the Chinese.'' Well, I
believe that would be the wrong conclusion.
We have every right to expect China to live up to agreements it
signs. But we must understand that the rule of law is only beginning to
take root in China, after 5,000 years of the rule of man.
The application of the rule of law is still uneven. On the one
hand, we have very positive developments, like the news this week that
China has sentenced four people to lengthy prison terms for smuggling
AK-47 assault weapons to the United States. That is an extremely
positive sign. There are also very encouraging reports that China is
now enforcing our intellectual property rights agreements with genuine
vigor.
But on the other hand, there are significant gaps. The subject of
today's hearing may well be one of those gaps, as are many of China's
human rights practices.
It seems to me that the solution to this problem, the way to bridge
these gaps, is to work even more closely with China and insist that
agreements be upheld and that commitments be kept. The first step in
any negotiation is to reach an agreement, and we should not
underestimate the accomplishment these prison labor agreements
represent. Now we must continue to press China for meaningful
implementation of these and other agreements -- but we can only do that
if we remain engaged.
In this regard, I want to take this opportunity to express my
strong support for President Clinton's wise decision this week to
extend China's Most Favored Nation status for another year. Some people
have expressed frustration with various Chinese policies, and have
concluded that the only solution is to punish China by depriving it of
MFN.
Well, not only would ending MFN punish ourselves more than the
Chinese, but it would also be counterproductive to every issue that has
been raised as a concern. If we want to make any progress on human
rights in China, if we want to make any progress on non-proliferation,
if we want to protect the rights of the people of Hong Kong, and yes,
if we want to make progress on the issue of prison labor, we only can
only do so if we are fully engaged with China, as we only can be with
MFN in place.
Thank you, Mr. Chairman. I look forward to today's testimony.
Senator Feinstein. I do not agree--and I very much respect
my colleague from Wisconsin--that shutting down MFN is the way
to deal with this. I think that would only isolate China and
certainly would not in any way, shape, or form change the
conditions that we are talking about here.
I just read the memorandum of understanding and, Mr. Bader,
let me address these questions to you. It sets forward a pretty
straightforward process to be entered into by both sides.
Treasury has said, well, 20 sites under this process have been
pointed out and the United States has been given access to 13
of them. Now, that leaves seven of those sites.
What have we done to bring to the attention of the highest
levels of the Chinese Government the problems that we believe
exist in these seven sites, and what response have we had to
that?
Mr. Bader. Senator, we have raised the issue of prison
labor generally at the highest levels of the Chinese
Government, as was mentioned earlier, with Vice Premier Qian
Qichan during his visit.
As for the specific cases, I do not recall discussion of
specific cases at the highest levels. The way that the cases
that you are mentioning now are handled is through detention
orders. If we cannot satisfy ourselves that there are no prison
labor products coming from these facilities, detention orders
can remain in effect.
Senator Feinstein. Well, just for whatever it is worth, my
experience once again is that very often--and this was true in
the IPR problem--the highest level of the Chinese Government
does not know what some of the ministries are doing with
specifics. If we accept the fact that both the statement of
cooperation and the memorandum of understanding were entered
into in good faith and if we accept the fact that there are
violations and that we want to change those violations, it
would seem to me that a State Department policy, respectfully,
should be to bring the specific camps or laogais or laogias,
whatever you want to say they are, to the attention of the
highest level with names and dates and places.
I found out that in the IPR, once the 30-plus specific
factories which the Governor of Guangdong Province had said
were closed were not closed, were brought to the attention of
the highest levels of the government, they were closed.
I would only suggest that--I hear the instant condemnation
here, and yet I also hear that the specifics have never been
brought to the highest levels of the government. I would
respectfully submit that I think that should happen.
I would furthermore request copies of any letters that have
been sent by the State Department or any other Department,
Treasury, Customs, to high level government officials pointing
out an abrogation of this MOU or the SOC be given to this
committee. I intend to follow up and see what specifics have
been brought to their attention. I think this is the signal
lapse in our policy of engagement, following up on specifics in
precise ways.
If you would like to comment on that any further, any of
you, I would appreciate it.
Neither the United States nor China has abrogated the MOU or the
SOC. The State Department has consistently raised the issue of prison
labor exports with Chinese authorities, both orally and in writing.
Embassy officials also reference specific cases as the situation
warrants.
With specific regard to senior administration officials, Deputy
Assistant Secretary of State for East Asian Affairs Kent Wiedemann met
with Ministry of Justice officials during a December 1995 visit to
Beijing to stress the need for prompt access to prison labor facilities
and for getting the 1992 MOU back on track.
Most recently, Secretary Rubin during his April meeting with Vice
Premier Qian Qichen raised the issue of cooperation under the MOU in
Washington. Qian agreed that improved overall cooperation was
essential, including enhanced cooperation on prison labor export
issues.
Attached:
June 1997 letter from U.S. Ambassador to China James Sasser
to Chinese Minister of Justice.
September 1994 letter from Minister-Counselor for Economic
Affairs to Ministry of Justice Bureau of Prison Management
Deputy Director.
[GRAPHIC] [TIFF OMITTED] T7725.001
[GRAPHIC] [TIFF OMITTED] T7725.002
[GRAPHIC] [TIFF OMITTED] T7725.003
[GRAPHIC] [TIFF OMITTED] T7725.004
Mr. Bader. I certainly take your point, Senator. I think it
is a good point. I have absolutely no quarrel with it. We will
get back to you with the documentation.
In my statement I noted one of the problems in
enforcement--and there are numerous problems in this area--but
one has been the decentralization of authority in the Chinese
system in recent years, like the IPR issue that Senator Robb
alluded to. So, sometimes you have an intention to cooperate at
the center but you have resistance in the field. So, the kind
of approach that you are talking about might help shake loose
that kind of resistance.
Senator Feinstein. See, my view is once anybody can commit
documentation that the specifics have been brought to the
attention of the leadership--the leadership--in Beijing and
Beijing does nothing to correct it, then I think we must take
action rapidly. What I want to see is those specifics. When I
have looked through, I have looked for those specifics and
maybe others testifying shortly will bring some of those
specifics forward. But what is important to me is that those
specifics get to the high level leadership. If there is no
response, then we take action. But it sort of goes around in
this never-never land of kind of--I will not say low level but
mid-level diplomatic, vague discussion and we never really get
down to the specifics.
I thank the chair.
Senator Thomas. Thank you, Senator.
It appears that there is still more interest in
questioning, so we can go around again. Maybe we can do it a
little more rapidly.
Let me just make the observation that it seems to me,
particularly as we enter into the Most-Favored-Nation debate,
that the alternative to pursuing an MFN cut-off is to enforce
these more specific actions or sanctions and that we keep
talking about. We know that things are going on there we do not
like.
The question is why does what we are doing not work better?
And why, having had your experience, gentlemen, has there not
been some suggestion that doing what we are doing is not going
to work? Unless we change what we are doing, the results are
going to stay the same. So, I get a little bit impatient that
we do not accept that we ought to be doing something a little
different.
Mr. Weise, in your testimony you referred to almost a 4-
year delay in the Shanghai Laodong Machinery Factory. Customs
made a request in 1992, renewed again in 1993 and 1994. The
request was finally granted in 1996.
Mr. Bader, your testimony referred to the case and used
this as evidence of recent improvements. Now, do you suggest
this case is compliance with the MOU?
Mr. Bader. Well, that would not be in compliance with the
MOU since the statement of cooperation specifies a 60-day
response time.
Senator Thomas. You cited it as a recent improvement.
Mr. Bader. Yes, I did but I would not say it is in
compliance, no. The record you just pointed out clearly is not
in compliance.
Senator Thomas. As a result of the visit, Customs withdrew
the detention order against the products, pipe fittings. Did
Customs make the request to visit this on the basis of credible
information?
Mr. Weise. Well, again, in order to have a detention
order, we had a reasonable suspicion. We had information
provided to us. When we actually finally got into the plant, we
did not see any evidence of prison labor producing the product.
Senator Thomas. Well, after 4 years of having suspicion,
would you expect to be successful?
Mr. Weise. Well, that raises the obvious question, what
had happened in the intervening 4 years. Had we gotten in a
timely fashion within 60 days, would we have observed something
differently than we saw 4 years later, and we can only
speculate on that. But when we finally got into the plant, what
we observed was they were not prisoners. This was not a prison
facility and, on the basis of what we observed, we removed the
detention order.
Senator Thomas. I guess I would go back then to my first
inquiry about your letters to the State Department and to the
Trade Representative saying, in effect, that this is not
working and there is nothing more you can do. What did you
anticipate? What did you expect? What did you hope would happen
as a result of those letters?
Mr. Weise. Well, it was our expectation and our hope--this
is a bit frustrating when we are the Customs Service. Our
primary mission is here on the main part of the United States,
but we have attache offices around the world. We have an
important responsibility in China, but we are not the
organization that typically interacts at senior levels within
foreign governments. We depend a great deal on the embassy
there and the State Department.
We were hoping, as a result of our letter, that we would
have at a much higher level--as suggested by the Senator,
brought to the attention of senior levels of the Chinese
Government and that we would see some progress made in our
working level carrying out our enforcement responsibilities.
Senator Thomas. Have you made any suggestions to Treasury
or anyone as to how this system might be made to work better?
Mr. Weise. Well, we have had many discussions with the
Treasury Department and the Secretary, as the Assistant
Secretary has indicated, has at every opportunity raised this
when he has had the opportunity when meeting with the Chinese.
Frankly, the frustration we have is that if we are going to
be successful ultimately in proving a case to the satisfaction
of a U.S. court of law, we really have to be able to have some
evidence that would be upheld in a U.S. court of law. So, it is
difficult for me to see how we in the United States can mandate
a foreign nation to do what is expected of them other than
through protocols and through interaction at very senior levels
between our Government and theirs in terms of consequences for
lack of carrying out their responsibilities.
Senator Thomas. So, you are basically saying this system
does not work and has little chance of working. Is that right?
Mr. Weise. What I suggested in my opening comments is I
would not be able to sit before you today and say that we, as
far as the Customs Service in terms of our responsibility for
carrying out this very important responsibility, feel that it
is working as it was intended. It needs to be improved.
Senator Thomas. Well, it seems to me what we do is we have
these things that do not work, and instead of seeking to fix
them, then we turn to something broader to try and find a
remedy and that does not work.
Senator Biden.
Senator Biden. I will pass but I will say only one thing. I
think the last point you just made is absolutely accurate. The
alternative to not enforcing this is going to be you are going
to have trouble getting MFN.
I yield.
Senator Feinstein. Could I ask one quick question?
Senator Thomas. Sure.
Senator Feinstein. The letter, Mr. Chairman, that you just
referred to, to whom was it addressed?
Senator Thomas. The letter was addressed from Customs to
our friend, Ambassador Lord, and also to U.S. Trade
Representative Mickey Kantor. It said basically--and I quote--
``It is the U.S. Customs Service view that the MOU/SOC is not
working at this point and there is nothing more U.S. Customs
can do to make it work.''
I presume the gentleman was asking for some remedy, some
change, some authority because what we are doing ain't working.
Senator Feinstein. Then the question would be, well, what
has our side done about it, and maybe Mr. Bader might, if you
would allow him, respond.
Senator Thomas. Sure.
Mr. Bader. If I could give a brief additional comment to
what the Commissioner said. Thank you, Senator.
Because we were aware of the concerns that Customs had at
the time, we took advantage of a trip by my predecessor, Deputy
Assistant Secretary of State Wiedemann, to Beijing at that time
to raise at higher levels than had been raised before our
concerns over non-implementation of the memorandum. This, you
will recall, Senator, was at a time when we were getting no
cooperation at all. It was in late 1995 when our relationship
was in generally terrible shape.
Mr. Wiedemann got not a completely forthcoming answer but
indications that the Chinese were prepared to resume
cooperation, and then we followed up 2 or 3 months later at
working levels and we began to--well, in 1996 we had the first
clearing up of an old case that we had had for over a year.
So, again, I am not defending this as remotely satisfactory
in terms of implementation, but we did take seriously the
Commissioner's letter and tried to do something about it.
Senator Feinstein. Could I just ask what the result of that
was?
Mr. Bader. In 1996, after a year break, the Chinese did
clear up one outstanding case, and in 1997, as was indicated in
the testimony, we have had two more cases presented to the
Chinese to which we have gotten responses.
Senator Feinstein. Thank you, Mr. Chairman.
Senator Thomas. Senator Robb?
Senator Robb. Mr. Chairman, I am interested in hearing the
next panel, so I just have one brief question with respect to
this panel. Mr. Bader I think would be the appropriate person
to ask.
Obviously our bilateral relationships with the PRC involve
multi-dimensional, multi-faceted issues. Where would you say
that the question of prison labor ranks in terms of importance
vis-a-vis IPR, Hong Kong reversion, PRC/Taiwan relations,
security relationships, missile technology control, nuclear
proliferation? Where does it come on the chart in terms of the
relative importance in terms of the advancement of our
bilateral relationship?
Mr. Bader. The first point, Senator, is it involves
enforcement of our laws. So, therefore, obviously we take it
very seriously.
In terms of issues with the PRC, typically in our
conversations over the last year or 2, there have been five
issues that have recurred over and over because of their
importance, and they are Taiwan, nonproliferation, trade
issues, human rights, and most recently Hong Kong.
Additionally, we have regularly, including at senior
levels, raised law enforcement issues. We see law enforcement
as an area where we should be cooperating more, and in that
context prison labor is one of the law enforcement issues that
has been raised.
As you are correctly implying, Senator, when you have a 2-
hour meeting with the Chinese once every 3 months or 6 months
at a senior level, it is very difficult to get through your
entire agenda, and that is one of the reasons why I think it is
essential that we have a deeper and broader engagement with the
Chinese so that we can deal with the whole range of issues and
not have to have this kind of triage of priorities when you
have got an hour-and-a-half or 2-hour meeting.
Senator Robb. ``Triage'' is perhaps an appropriate way to
describe some of the negotiations.
Thank you, Mr. Chairman.
Senator Feinstein. Just one quick observation, and this is
just my opinion based on what I know but the SOC is signed by
relatively low levels, on our side, the economic counselor at
the U.S. Embassy in Beijing. I would assume, although I am not
familiar in Chinese with the name on the document, it is a
correspondingly low level. For something this sensitive, to
have agreements that are signed by essentially low level people
is a huge mistake. It may work in other countries, but in China
I do not believe it does. I think the imprimatur really of the
highest levels of the Government have to be on sensitive
documents and particularly when they point out a whole path,
step by step, of a process that has to be followed. So, I will
just leave you with that for whatever it is worth.
Senator Thomas. Senator Wellstone.
Senator Wellstone. Mr. Chairman, one comment because we
have a debate on some amendments and some of us have to go down
on the floor, and I do want to hear from Mr. Wu and others.
This is just a quick comment, just a place where we may
respectfully disagree, my colleague from California and I.
I am under the impression that when it comes to forced
prison labor conditions and exporting of products, that the
central Government of China is fully aware of what is going on.
I do not have any illusions that this is happening at the local
level and somehow people in the higher positions of authority
just are not aware of it. I think they are quite well aware of
it.
Senator Thomas. We have a law against the importation of
those things, you know.
Maybe I will just ask one more and then we will change. Mr.
Weise, with respect to the Beishu graphite mine, Customs
learned I believe about that in June 1995. The President of the
importer admitted on national TV he knew the source was a
prison camp. What is the status of that investigation?
Mr. Weise. Mr. Thomas, I have information that we did
begin this process, we first became aware of this in 1994. We
drafted a detention order effective in mid-1995. Part of our
information was provided by the Laogai Research Foundation.
After a legal review by our chief counsel, it was determined
that even though it was clear that Beishu was a prison labor
facility, that Customs could not reasonably conclude that the
graphite would likely be imported into the United States.
Although we withdrew the detention order, we continued to
follow up on this and as recently as April of this year, our
attache in Beijing requested a visit to Beishu and we are
awaiting reply on that request.
Senator Thomas. So, even though the importer indicated that
that was the case, then there does not seem to be satisfactory
evidence to do anything about it.
Mr. Weise. We are still looking to try to get better
evidence of that allegation.
Senator Thomas. Gentlemen, thank you. We appreciated very
much having you here. I hope that we can find some ways to
cause this process to be a little more workable.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Bader. Thank you.
Senator Thomas. If we could call the next panel please. Mr.
Harry Wu, Executive Director of the Laogai Research Foundation;
Mr. Jeffrey Fiedler, President, Food and Allied Service Trades,
AFL-CIO; Ms. Maranda Shieh, Associate, Laogai Research
Foundation; and Mr. Fu, a dissident from New York.
Well, thanks to all of you for being here. We want you to
say what you came to say, but try to keep it concise. Why don't
we start with Mr. Wu please.
STATEMENT OF HARRY WU, EXECUTIVE DIRECTOR, LAOGAI RESEARCH
FOUNDATION, MILPITAS, CALIFORNIA
Mr. Wu. Mr. Chairman, the honorable Senator, it is my great
honor to be here again. It happened first in 1991. This is 6
years later. We are still talking about the forced labor
products coming from China. I want to make some comments before
I get into my testimony.
First of all, in so-called reeducation through labor camps,
the number of the prisoners Mr. Bader says is 200,000. This is
incorrect. Chinese recent information says it should be 1.78
million. This is according to Chinese information.
My appearance today has only one purpose: To show that the
Chinese Government has repeatedly lied about its efforts to
stop the trade in Chinese forced labor products. There can be
no denying the facts. Although I have been disappointed by the
American Government's resolve in the past, I remain hopeful
that our efforts here today will result in a new commitment to
the prevention of the trade in forced labor products from
China.
You can see today we present all of these products right
here that are found in the United States. It is only a part of
it. Some of them are too large. For example, the diesel engine
and stamping machine I do not think we can bring over here. All
these products we found. Not the Customs Service. Not the
American State Department.
I think in August 1992 the Bush administration negotiated
the memorandum of understanding of prison labor products with
the Chinese Government, the so-called MOU, as a way to get the
documents from the Chinese Government and to gain access to the
labor camps to make a positive identification. I would like to
say this is a terrible idea.
Does anyone think the Chinese will willingly provide
evidence that proves the export of forced labor products to the
U.S.? The labor camp system is the darkest place in that
communist system. They really do not want you to see it.
But after the MOU was signed, the laogai products continued
to come to the United States.
In May 1993, President Clinton made the MOU as a must-do
condition in the extension of MFN for 1994. It was a public
stance that I supported at the time. President Clinton said,
unless the Chinese follow the agreement, then MFN status will
end in spring 1994.
But the Chinese still sent the laogai products to the U.S.
The Customs Service found four more laogai products come to the
United States between August 1992 and March 1994. Even
Commissioner George Weise said in November 1993 in testimony
before the House of Representatives, ``We have substantial
concerns about ongoing implementation and Chinese compliance
with the letter and spirit of the agreement.''
At that same hearing, Assistant Secretary Winston Lord
repeated the pledge to end MFN if the MOU was not followed by
the Chinese Government.
All evidence showed the Chinese did not follow the MOU, but
President Clinton did not go through with his threat. Instead,
the American Government gave the Chinese Government a way out.
Officials from the State Department and Treasury Department
went to Beijing in late 1993 to negotiate a second binding
agreement, a so-called SOC.
Then Secretary of State Warren Christopher deceived all of
America for the Chinese. He said because the Chinese Government
signed a new agreement, they had complied with the old
agreement. So, they met the must-do condition and deserve MFN.
President Clinton delinked MFN and the MOU and rewarded the
Chinese lie. I know the Chinese did not deserve our favor. They
still do not deserve our favor.
Since then the forced labor continue to come into our
country. For example, in 1993 officials of Columbus McKinnon
Company located in Buffalo admitted a long-term relationship
with the Zhejiang Wulin Machinery Plant for the manufacture of
chain hoists. In 1994, we visited the camp and brought back all
the videotapes, and I want to show you the slides.
[Slides shown.]
Mr. Wu. This is entrance of Wulin. The Customs Service was
supposed to have a visit, but there was no result. Under this
watch tower, more than 2,000 prisoners, forced to labor, make
the chain hoists, sell it to Europe and also sell it to United
States.
This is the chain hoist, but when it comes to the United
States, put on a CM brand, not the Chinese brand.
On the back door, you will see there is another sign board.
This time they will tell you the nature. This is No. 2 Prison
of Zhejiang Wulin.
Just last week, a couple of days ago, Customs issued
another detention order against hand tools which we learned
involved a Houston company called Cosmo Trading knowingly--I am
pretty sure Customs has that evidence that can prove that Cosmo
knowingly imported Diamond brand hand tools from the Zhejiang
No. 2 Prison.
Particularly in 1994, I visited the camp and I want to show
you. This is the entrance, just like a normal factory. The sign
board says Zhejiang Hand Tool and Hardware Factory, but you
look at it carefully. At the entrance before there. One is a
policeman and the other is a prisoner.
In the back yard there is another sign board, Zhejiang No.
2 Prison. I do not think Customs can see that kind of sign
board if they got agreement to visit Chinese prison camp.
This is the picture we took. This is the real workers,
forced to labor, no pay, and make the products that come to the
United States.
Now, recently the central government make a decision, all
the labor camps have to set up another entrance. This is the
same entrance for the Zhejiang hand tools manufacturing. A new
name, a new design, a new entrance. They can invite you to see
that.
I think Customs did not tell you another example from
Yunnan Province No. 1 prison. The American importer sued
American Government. Because they were supported by the Chinese
Government, they filmed the sanitized facility and submitted a
tape to the court to prove this is not a prison. American
representatives visited the sanitized prison and did not see
anything. But around the area the representative interviewed
many, many common Chinese. They told the truth, it is a prison
system.
My research into laogai shows that both the number of the
camps and the population of the camps is increasing. The State
Department representative just said that so-called reeducation
through labor category--their information say there is 200,000
people. This is not true. The recent Chinese information said
in 1996 in this particular categories, so-called reeducation
through labor, the number is 1.78 million. We do know in 1979
when Deng Xiaoping come to power in this category, almost a
couple hundred, very small. Under Deng Xiaoping, 20 years, this
number increased to 1.78 million.
In China they have a special term, so-called prison
economy. This has never happened in any country in the world,
only in the People's Republic of China. Before that, they
called it laogai economy. Right now they are using the term
``prison economy.''
What is that? Does America have a prison economy or Japan
have a prison economy? Only in China because all these
prisoners are forced to labor, not only engaged in labor in the
desert, in the construction site, building a highway, railway,
but also to make products.
Chinese information said--central government information
said there are 200 different kinds of products qualified to
export to the foreign countries. We only identify a few of
them.
I want to give you another example. This is a document we
obtained from China. The document is a Prison Work Newsletter
issued by Guangdong Provincial Prison Bureau, 1996, June. It is
particularly talking about one prison camp close to the Special
Economic Zone, Shantou. A new facility.
In 1992, it was a very small camp growing tea, fruits,
something like that. Expanding. Last year the prisoners' number
increased to almost 3,900. So, they needed a new facility. They
moved down close to the special economic zone. The information
said this prison camp cooperates with Hong Kong businessmen
making mineral water and also exporting artificial Christmas
trees.
We have a very brave woman, Maranda Shieh, and we recently
made an investigation for this prison camp because according to
Chinese information, this facility arranged more than 1,500
prisoners making garments.
Senator Biden. Making garments?
Mr. Wu. Yes. Ms. Shieh later will give you detailed
information. She has it firsthand. She went to China a couple
of times with her camera.
The laogai is the largest forced labor system in the world
today. It is growing and the money is supporting this system.
I want to introduce another brave man sitting here today,
Peter Levy. He will tell you the story how he found the
products in the United States processing by the female
prisoners.
Particularly today I want to talk to you about one case. If
your automobile is having problems, if you send your automobile
to a Midas Muffler, here is the brake made in China, Shanxi
Province No. 3 Prison Camp. We find one purchase order include
the other parts, 160,000 pieces sell it to United States. Also
the parts sell it to Beijing Jeep, Cherokee Jeep. It means
cooperate with Chrysler in Beijing.
In this particular case, these products were brought into
the United States by a Chinese Government-owned trading
company, Minmetals. They sell the products to the American
company and the Americans sell the products to the secondary
market, including Midas Muffler.
Later I will introduce you to another brave young man over
here, Mr. Fu Shenqi. He is a prominent Chinese dissident. He
would be in the jail many times, and he will tell you his
experience in his labor camp about the Christmas lights.
Senator Thomas. Can you begin to sum up please so that we
can----
Mr. Wu. Yes.
I believe no American wants to buy Christmas lights or
artificial Christmas trees if made by blood and tears.
Mr. Chairman, we must stop this trade. If the law is
broken, then it must be fixed. If the Chinese continue to
violate our sovereignty, then we must act without them.
Thank you.
[The prepared statement of Mr. Wu follows:]
Prepared Statement of Harry Wu
U.S. Implementation of Prison Labor Agreement with China
Thank you for the opportunity to express my concerns on the import
of forced labor products from China. Thank you, Mr. Chairman, for your
steadfast commitment to improving the lives of the Chinese people.
My appearance today has only one purpose: to show that the Chinese
government has repeatedly lied about its efforts to stop the trade in
Chinese forced labor products. There can be no denying this fact.
Although I have been disappointed by the American government's resolve
in the past, I remain hopeful that our efforts here today will result
in a new commitment to the prevention of the trade in forced labor
goods from China.
The Senate Foreign Relations Committee in 1991 was the first body
in the world to hear about the Laogai - China's forced labor camp
system- as an important sector of the Chinese economy. I presented the
photos and the official Chinese documents which showed the vital role
the export of forced labor goods played in funding the Laogai.
The United States has had a law banning the import of forced labor
goods since 1932, so my revelations caused a swift reaction by the
American government. The Customs Service used its authority to identify
Laogai products and ban their entry into the United States. Despite
official Chinese statements that denied the export of Laogai goods, the
Customs Service between October 1991 and August 1992 banned seventeen
different Laogai products from the US. One American company, E.W. Bliss
of Michigan, was brought to court on criminal charges, pled guilty and
was fined $75,000. Another American company, China Diesel Engines of
California, sued the US government in the Court of International Trade
to have the ban on its goods removed. The Court agreed with the
government in 1994 and those Laogai diesel engines were removed from
the country.
In August 1992, however, something changed. The US government
lowered its guard against the Chinese government and the Laogai and its
blood-stained products. At that time, the Bush Administration
negotiated the Memorandum of Understanding on Prison Labor Products
with the Chinese government. A certain level of evidence is needed in
US courts to convict American companies importing the Laogai goods. The
US wanted a means to identify the origins of suspected products. So the
MOU was meant as a way to get documents from the Chinese government and
gain access to the Laogai camps to make a positive identification. This
was a terrible idea. Does anyone think the Chinese would willingly
provide the evidence that proved they exported forced labor goods to
the US? The MOU was doomed to failure.
After the MOU was signed, the Laogai products continued to come to
the United States. In May 1993, President Clinton made the MOU a must-
do condition in the extension of MFN for 1994. It was a public stance
that I supported at the time. He said unless the Chinese followed the
agreement, then MFN status would end in spring 1994.
But the Chinese still sent Laogai products to the US. The Customs
Service found four more Laogai products coming to the US between August
1992 and March 1994. The president of the Columbus McKinnon Company of
New York admitted to having a long- term import relationship with a
Laogai camp. The Chinese denied American requests for visits or tried
to deceive the Customs Service. Even Commissioner Weise said in
November 1993 in testimony before the House of Representatives, ``We
have substantial concerns about ongoing implementation and Chinese
compliance with the letter and spirit of the agreement.'' At that same
hearing, Assistant Secretary Winston Lord repeated the pledge to end
MFN if the MOU was not followed by the Chinese government.
All evidence showed the Chinese did not follow the MOU. But
President Clinton didn't go through with his threat. Instead, the
American government gave the Chinese government a way out. Officials
from the State Department and Treasury Department went to Beijing in
late 1993 to negotiate a second binding agreement. This agreement, the
Statement of Cooperation on the Implementation of the MOU (SOC), was
signed in March 1994. The SOC set a 60 day time limit for answers from
the Chinese government as well as other adjustments to the MOU. Then
Secretary of State Warren Christopher deceived all of America for the
Chinese: he said because the Chinese government signed the new
agreement, they had complied with the old agreement, so they met the
must-do condition and deserve MFN. President Clinton delinked MFN and
the MOU and rewarded the Chinese lies. I know the Chinese didn't
deserve our favor. They still do not deserve our favor.
Since then, the forced labor products law has had no commitment by
either government, the MOU and SOC have proved worthless and Laogai
products still, come into the United States.
In May 1993, officials of the Columbus McKinnon Company admitted to
a longterm relationship with the Zhejiang Wulin Machinery Plant for the
manufacture of chain hoists. The Customs Service had evidence showing
Wulin is in fact the Zhejiang No. 4 Prison. Customs investigated Wulin,
banned its chain hoists, and turned the case over to the Justice
Department for prosecution. And nothing happened.
In 1993, we learned that a Houston company called Cosmo Trading
knowingly imported ``Diamond'' brand hand tools from the Zhejiang
Province No. 2 Prison. We presented our findings to the Customs Service
for investigation. And nothing happened.
In December 1994, the Chinese denied access to a 'reeducation
through labor' camp, where a prisoner is given a three-year sentence
without trial and is forced to labor, which the Customs Service
identified as shipping artificial flowers to the US. The Chinese denied
access by saying reeducation-through-labor camps were not part of the
MOU and cannot be investigated under its rules. And nothing happened.
In May 1995, the president of Asbury Graphite of New Jersey
admitted on the NBC national news broadcast that his company got
expandable graphite from the Shandong Province Beishu Prison mine. And
nothing happened.
The 1996 State Department Human Rights Report for China said about
the MOU, ``cooperation has stalled since mid-1995. As of the end of
1995, the authorities had not granted access to a prison labor facility
since April 30 (1995).'' And nothing happened.
The Chinese allowed a visit in 1996 to a camp first investigated in
1991. Customs went to the camp and removed the detention order on the
Laogai product. Other requests first made in 1992 have been ignored.
But nothing happened.
The 1997 State Department Human Rights Report for China said,
``Repeated delays in arranging prison labor site visits called into
question the Government's intentions regarding the implementation of
the MOU and SOC.'' But nothing happened.
Not only are we allowing the Chinese government to ignore the
binding agreements, we are failing to enforce our own laws.
My research into the Laogai shows that both the number of camps and
the population of the camps is increasing. The Chinese government views
the prisoner as simply a production unit; the Laogai has the lowest
cost labor in China. This labor is exploited to the profit of the
state. And the Laogai is using the profits from its trade to get
bigger. According to Chinese statistics, which are never complete,
there were 1.4 million prisoners in the reform-through-labor camps in
1997 and 1.78 million in the reeducation-through-labor camps in 1996.
These numbers do not include the local detention center prisoners or
the forced-job-placement personnel, laborers who have finished their
sentence but are still forced to labor at the camps. All indications
show that the Chinese jails and labor camps are filled to capacity. We
believe there are between six and eight million prisoners forced to
labor in the Laogai today. New facilities are being built with the
profits, especially new reeducation-through-labor camps.
The Chinese government calls this their Prison Economy. It is a
stated policy of the government to turn all camps into profitable
enterprises. I'll give you one example, from information dated June
1996. I will submit the original document with translations for the
record. A conference was held on April 8, 1996 to discuss the economic
development policy of Jieyang Prison in Guangdong Province. The
attendees all gave speeches about the need to improve production and
earnings in the various production units at the prison. This Laogai
camp initially was a farm growing tea and fruits and it operated a
quarry. In 1982, its population was 700. By 1986, it had grown to
1,800. By 1990, it was 2,100. At the end of 1995, this camp had nearly
3,900 prisoners. The review of the conference states, ``The proportion
of prisoners working indoors has grown from 20% in 1989 to the current
80%. Economic benefits have also risen markedly.'' The prison turned a
profit for the first time in 1994 and had earnings of US$14,000 in
1995. How did it become profitable? By making products like chinaware,
rosaries, watchbands, mineral water, artificial Christmas trees and
garments for the domestic and international markets. There are 1,500
prisoners committed to producing garments like these for the
international market. The profits will be put to good use: the warden
says he wants to build seven more prisons with the earnings.
The Laogai is the largest forced labor system in the world today.
Trade is crucial to the growth of the Laogai and thus the growth of the
Chinese communist dictatorship., The Laogai Research Foundation wants
to see an end to the Laogai. We feel one way of achieving this is to
stop the trade of the products and the ability of the Laogai to gain
hard currency. The Laogai Research Foundation has monitored the system
and the trade in its goods. We have recently finished investigations
that show that Laogai products continue to come to the United States in
violation of the MOU, SOC and American law.
In the case of Jieyang Prison, the prison's own documents
identified the legitimate companies that act as their pipeline to the
business world. The brochure names the Jixiang Knitting Factory in
Shantou, Guangdong as one of the plants that has established a long-
term contract with the prison. We recently sent someone to the Jixiang
factory to confirm the connection between Jieyang Prison and Jixiang
Factory. In taped conversations the plant officials confirmed that they
sub-contracted work to the prison. They even quoted us the price of
goods made by the prison as being one-third less than other textiles.
We also learned that Jixiang has contracts from a number of Hong Kong
companies to manufacture clothes. These companies include the Sam Wing
Garment Factory, World Wise Industries Ltd., the Roxy Garment Factory
and Chaifa Holdings Ltd. Chaifa Holdings holds the exclusive license to
manufacture clothes under the Garfield, Arnold Palmer and Playboy brand
names. In addition, Jixiang Factory provided samples of their work for
the Esprit name brand. The Jixiang facility is very small with perhaps
one-hundred workers, but they were able to sign a contract for a large
quantity of product in a very short time. The contract we signed is
still valid, and if we executed it, we would receive finished garments
that came from the Jieyang Prison to the US market.
There is a brave man sitting here today, Mr. Peter Levy. Mr. Levy
will tell you about how a competitor that sources its products at a
female Laogai camp in China is taking over the market and threatening
legitimate business. Mr. Levy is the first businessman to conduct his
own investigation of the Laogai and I want to thank him for his
efforts.
The company that is illegally selling forced labor imports is
called Officemate International Corporation, or OIC, of New Jersey. The
President of OIC has created a company in Nanjing, China named Allied
International Manufacturers or Ainico. These binder clips are assembled
by women prisoners at the Nanjing Detention Center Women's Division for
hours a day. Production output is measured to assess labor attitude and
performance in accepting reform; one former prisoner said the silver
clips were inserted into the black pieces until her fingers bled. This
is terrible labor. These laborers cost only a quarter of the normal
worker in China. Shipping documents show that OIC received 79,500
kilograms of binder clips from Amico in the month of February 1997
alone. News reports said that OIC has around one-third of the domestic
market for binder clips. OIC sells these forced labor products to
office supply stores around the country, including Staples, Boise
Cascade Office Products and BT Office Products.
This company knowingly uses forced labor and then profits from the
suffering of the Chinese prisoners. Staples should stop buying OIC
products. The Customs Service should immediately seize all binder clips
shipped to OIC by Amico and ban the products. The American government
should investigate this company.
The Laogai Research Foundation has learned of two California court
cases about a forced labor auto parts plant in Shanxi Province that was
importing its products to the United States. Excel Industries, an
American company, bought brake rotors from a company called MM Rotors
in California. MM Rotors is a US-based subsidiary of China National
Minerals & Metals Corporation, known as Minmetals. The President of MM
Rotors and Minmetals Inc. LA is Su Hailin. The Vice-president of MM
Rotors is Li Bai. Buyers from Excel Industries were brought to China in
1993 by Su Hailin and Li Bai to inspect the source factories of
products sold by MM Rotors and Minmetals. Mr. Li Xiang, an official of
Excel Industries, is a Chinese man who said in his sworn testimony that
Minmetals brought them to the Shanxi Province Number 3 Prison in
December 1993. This Laogai, using the name Shanxi Linfen Automobile
Manufacturing Plant, made brake rotors for MM Rotors for export. Mr. Li
states in his deposition that he read the signpost at the Linfen
factory that identified it as a prison and saw armed guards, walls and
electric fences surrounding the compound. He was told that Mimnetals
was buying most of the brake parts made by the Shanxi Linfen prison
factory.
Directories of Chinese manufacturing published by the China State
Planning Publishers in 1991 and 1996 provide extensive information on
Shanxi Linfen. The 1991 entry for brake discs made at Shanxi Linfen
show that the annual output at 12,500 units is 100% for export for use
as ``American automobile parts.'' The 1995 entry for brake discs made
at Shanxi Linfen shows that the annual output had grown to 300,000
units with 100% for export and use in the ``Beijing Cherokee, (and)
Shanghai Santana.'' Chrysler manufactures the Cherokee at a joint-
venture in China called Beijing Jeep. Volkswagen manufactures the
Santana at a joint-venture in Shanghai called the Shanghai Volkswagen
Automobile Manufacturer. We call on both Chrysler and Volkswagen to
stop buying brake parts from Shanxi until they can determine the
origins of the suspect parts.
The financial reporting company Dun & Bradstreet has also research
Shanxi Linfen. In its 1995/96 Directory of Key Manufacturing Companies
in P.R. China, D&B gives production output of RMB12,254,000 and sales
of RMB12,084,000.
MM Rotors receives tons of auto parts from China annually. In one
shipment in February 1994, MM Rotors received 161,500 brake drums, hub
rotors and brake discs from China Mimnetals. Commercially available
shipping records show that MM Rotors received 561 metric tons of auto
parts from China in 1995 and 612 metric tons of auto parts from China
in 1996. In a ``Defective Parts List'' dated July 22, 1996, MM Rotors
lists 81 companies that bought its products between 1993 and 1996. This
list includes such large auto parts companies as Autocraft, Midas
Muffler Co., and Monroe Motor Parts. We don't know how many brake parts
manufactured at Shanxi Linfen were imported to the US by MM Rotors or
how many were eventually sold by American retailers.
MM Rotors, a company owned by the Chinese government operating
freely in the United States, is importing forced labor goods. This
company should be investigated and its license to operate in the US
should be revoked. MM Rotors knowingly imported auto parts from the
Shanxi Province Number 3 Prison. All other subsidiaries of the state-
owned China National Minerals & Metals Corporation should be
investigated for other products from the Laogai. This is further
evidence that the Chinese government has no intention of preventing the
export of Laogai goods.
Mr. Fu Shenqi is a prominent Chinese dissident who has been jailed
many times for his public stance promoting democracy in China. He is an
eyewitness to the manufacture of Christmas lights inside a Laogai
factory . There is no market for Christmas lights inside China, a
country where Christians are targeted and arrested for their beliefs.
Christmas lights are for export. The US is almost 40% of China's export
market, so it is reasonable to say that at least 40% of the Christmas
lights are for America. We do not know under what brand these lights
are sold. Or in what store the lights are sold. The American government
must investigate this facility to determine the whole story.
I believe no American would buy Christmas lights from China if they
thought they came from the Laogai . I believe no American would buy
artificial Christmas trees from China if they thought they came from
the Laogai. I don't want to see any of these blood-stained trees and
lights taint our holy nights.
Mr. Chairman, we must stop this trade. If the law is broken, then
it must be fixed. If the Chinese continue to violate our sovereignty,
then we must act without them. Our government must commit the time and
energy to stop the Laogai trade. If we ignore the issue of Laogai
imports, it means we are ignoring existing American law. If we ignore
our law, it means we are willing to enjoy the products made by Chinese
blood and tears. We cannot forget our principles. Americans say again
and again they don't want these goods. The government must never put
money ahead of our belief in human rights. If we care only about money
and not human suffering, then we insult our traditions.
The Laogai is the Chinese communist dictatorship's primary tool for
crushing its citizens. The trade makes it grow. The Foreign Relations
Committee has been concerned with the Laogai since 1991, yet it is
still growing. We must take action now. Thank you.
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Senator Thomas. Thank you, sir. Mr. Levy, please.
STATEMENT OF PETER B. LEVY, PRESIDENT, LABELON/NOESTING
COMPANY, MT. VERNON, NEW YORK
Mr. Levy. Mr. Chairman, distinguished Members, I appreciate
the opportunity to appear today to discuss the problem of
forced labor in China from the perspective of an American
businessman.
My name is Peter Levy. I am the President of the Labelon/
Noesting Company, a small manufacturer of paper clips and
fasteners for the office products industry. We employ
approximately 20 people in Mt. Vernon, New York, and have been
in existence since 1913. In addition to our manufacturing plant
in New York, we also import products from China.
My adventure sprang from a conversation in the first half
of 1995 about a competitor who was able to sell a certain
product, binder clips, which is something that most of us that
are using paper are using every day, and these are an example
of binder clips. The competitor we discussed was Officemate
International of Edison, New Jersey.
During that conversation I was told that Officemate was
purchasing their binder clips from a Chinese manufacturer that
was using prison labor to assemble the product. Since then I
have learned that the binder clip manufacturer in question is
Allied International Manufacturers (Nanjing) Stationery Co.,
Ltd., also known as AIMCO Nanjing, which was incorporated as a
subsidiary of a New Jersey corporation named Allied
International Manufacturers Co., also known as AIMCO New
Jersey, by a Mr. Peter Chen. Mr. Chen is listed as Chairman of
the Board on the 1992 business license issued in China for
AIMCO Nanjing. Mr. Chen and his wife, Shwu Chen, are listed as
the major owners of Officemate International.
In January 1996, before I made the decision to undertake my
own research, I informally contacted both the Department of
State and the U.S. Customs Service regarding my suspicions. I
was told that the State Department did not feel that the
Chinese Government was living up to the memorandum of
understanding on prison labor, and I was told by the Customs
Service that they suggested we petition them as specified in
section 12.42 of title 19 of the U.S. Code.
However, the State Department had also told me that the
Customs Service was not allowed to make unscheduled inspections
of the camps. It was my opinion that the U.S. Government was
not in any position to effectively investigate this matter, and
it was at that time that I made the decision to research this
matter on my own.
From import information I obtained from PIERS, which is the
Port Import Export Reporting Service, I was able to ascertain
that Officemate International was importing binder clips from
AIMCO Nanjing. From the name, it was apparent that the plant
was located in Nanjing, China.
In March 1996, I made a special stop in Nanjing as part of
a business trip to China. With the help of a translator, we
made arrangements for transportation and located the AIMCO
factory.
The next day of my visit to Nanjing, we parked outside the
entrance of the AIMCO Nanjing factory. After a wait of a few
hours, a large truck left the plant. As the crates on the truck
were not covered, it appeared that they were transporting
unassembled binder clip parts and we began to follow the truck.
At a point where the truck stopped due to traffic conditions, I
got out of the car and looked into the cartons stacked on the
truck. I was able to confirm that the truck was transporting
unassembled parts for the number 20 small binder clip. When the
traffic cleared, we continued to follow the truck across the
Yangtze River to what I was told was a Chinese prison camp.
Now, here is the tape that was taken. Here it shows the
AIMCO Nanjing factory.
[Videotape shown.]
Mr. Levy. Here we are following the truck. Here you can see
the unassembled binder clip parts. This particular tape was
just taken last week.
Again, what we are talking about is here are the bodies and
here are the handles, and what they are making people do is
take these and insert them. If you will try it yourself, you
will see that it is not a very easy task.
Here we are as the truck is going over the Yangtze River.
Here you can see the walls of the camp. In that section
there used to be barbed wire. In other sections there is still
barbed wire at the top of the fence. Right there is an example
of the barbed wire on the top.
This was an edited tape to protect some of the people that
assisted me in this.
Now we are going to go by the entrance of the plant, and
there we have a picture of the sign which says the Nanjing
Women's Detention and Reform.
Here we have the truck pulling out and you can see the name
of the truck which has Allied Nanjing on it.
This is also the same truck--I have photographs from the
first trip I made in March 1996 which shows again here you have
the handles visible on the back of the truck and you have the
same license plate as on this picture.
So, again, what we did was we followed the truck from the
factory in Nanjing. We determined it had unassembled parts
which were these parts. When the truck came back, we were able
to get on the truck and determine the parts had been assembled,
and then we followed it back to the factory.
Senator Biden. I think you are in the wrong business. 20/20
could use you.
Mr. Levy. Well, shortly after my return to the United
States--this is after my first trip--I contacted a
representative of the AFL-CIO. My employees happen to be
represented by a union affiliated with the AFL-CIO. The
representative there put me in contact with the Laogai Research
Foundation, and the foundation was able to independently
confirm that the facility in question was a prison camp.
Again, I recently made another trip to Nanjing which we
just depicted on the tape there and went through what I saw on
that trip.
During my two visits to Nanjing, I spent only 2 days
watching for a truck to take parts to the prison camp for
assembly. Both days the truck was in action and I saw parts for
three different products move back and forth.
The laws of the United States address the issue of
importation and sale of goods manufactured with Chinese prison
labor in two key areas. First, the U.S. Code title 19 regarding
customs duties prohibits the importation of convict-made goods.
The Code of Federal Regulations section 12.42 of title 19
states that ``if the Commissioner of Customs finds at any time
that information available reasonably but not conclusively
indicates that merchandise within the purview of section 307 is
being, or is likely to be, imported, he will promptly advise
all port directors accordingly and the port directors shall
thereupon withhold release of any such merchandise pending
instructions from the Commissioner.'' To me, this does not set
such a high standard as what they were talking about during
their testimony.
The second key area of the U.S. Code that addresses this
subject is title 18, Crimes and Criminal Procedure. There are
two sections that address this matter. Section 1761 refers to
knowingly. Section 1762, however, sets a much lower standard
for determining whether or not a crime has been committed, and
that section makes no reference to the word ``knowingly.''
Violation of either section is punishable by a fine of not more
than $50,000 and, more importantly, merchandise transported in
violation of this section shall be forfeited to the United
States.
I think one of the main points of section 1762 is to
prevent unsuspecting consumers from having a fraud perpetrated
on them. Very few people would go into the store and purchase
merchandise that was marked made in a Chinese prison.
I did not come here to vilify China today. In 1939 the very
few members of my family that escaped the Nazi holocaust found
refuge in Shanghai where they lived until 1948. I think the
interaction with the thousands of Westerners doing business in
China helps to move forward the cause of human rights there.
I have discussed the problem of prison labor with a number
of my Chinese suppliers. They have all been aware that they are
not allowed to ship products made with prison labor to the
United States. They have also told me that while they are aware
that the practice continues, the Chinese factories shipping
goods manufactured with prison labor are doing so against the
dictates of Beijing. If this practice is to be stopped, we must
continue to push the Chinese central government to exert more
control at the local level.
My purpose in testifying today is to present the results of
my research and to request that the Customs Service and the
appropriate U.S. Attorney immediately investigate this matter
to ensure that the laws of the United States are enforced.
Before I conclude, I should make clear that there is
absolutely no evidence and absolutely no thought that the
distributors of Officemate products have any idea that the
product they are purchasing may have been made in a Chinese
prison.
Mr. Chairman, few small businesses can afford to hire
lawyers and lobbyists to get their point heard. That is why I
so greatly appreciate the opportunity to speak to you on this
important matter today. Thank you.
[The prepared statement of Mr. Levy follows:]
Prepared Statement of Peter B. Levy
Mr. Chairman, distinguished Members, I appreciate the opportunity
to appear today to discuss the problem of forced labor in China from
the perspective of an American businessman.
My name is Peter Levy. I am the President of the Labelon/Noesting
Company, a small manufacturer of paper clips and fasteners for the
office products industry. We employ approximately 20 people in Mt.
Vernon, New York. The company has been in existence since 1913. Some of
our products are manufactured in China.
My adventure sprang from a conversation in the first half of 1995
about a competitor who was able to sell a certain product, binder
clips, at very low prices. The competitor discussed was Officemate
International of Edison, New Jersey. During that conversation I was
told that Officemate was purchasing their binder clips from a Chinese
manufacturer that was using prison labor to assemble the product. Since
then I have learned that the binder-clip manufacturer in question is
Allied International Manufacturers (Nanjing) Stationery Co., Ltd. (also
known as AIMCO Nanjing), which was incorporated as a subsidiary of a
New Jersey corporation named Allied International Manufacturers Co.
(also known as AIMCO New Jersey) by a Mr. Peter Chen. Mr. Chen is
listed as the Chairman of the Board on the 1992 business license issued
in China for AIMCO Nanjing. Mr. Chen and his wife, Shwu Chen, are
listed as the major owners of Officemate International.
In January 1996, before I made the decision to undertake my own
research, I informally contacted both the Department of State and the
U.S. Customs Service regarding my suspicions. I was told that the State
Department did not feel that the Chinese government was living up to
the Memorandum of Understanding on prison labor. The Customs Service
suggested that we petition the Service as specified in Section 12.42 of
Title 19 of the United States Code. However, the State Department had
also told me that the Customs Service was not allowed to make
unscheduled inspections of the prison camps. It was my opinion that the
United States government was not in a position to effectively
investigate this matter. It was at that time that I made the decision
to research this matter on my own.
From import information I obtained from PIERS (Port Import Export
Reporting Service) I was able to ascertain that Officemate
International was importing binder clips from AIMCO Nanjing. From the
name it was apparent that the plant was located in Nanjing, China.
In March, 1996 I made a special stop in Nanjing as part of a
business trip to China. With the help of a translator we made
arrangements for transportation and located the AIMCO factory.
The next day of my visit to Nanjing we parked outside the entrance
of the AIMCO Nanjing factory. After a wait of a few hours a large truck
left the plant. As the crates on the truck were not covered it appeared
that they were transporting unassembled binder clip parts and we began
to follow the truck. At a point the truck stopped due to traffic
conditions I got out of the car and looked into the cartons stacked on
the truck. I was able to confirm that the truck was transporting
unassembled parts for the #20 (small) binder clip- When the traffic
cleared, we continued to follow the truck across the Yangzte River to
what I was told was a Chinese prison camp.
Shortly after my return to the United States I contacted a
representative of the AFL-CIO. (My employees are represented by a union
affiliated with the AFL-CIO.) The representative put me in contact with
the Laogai Research Foundation. The Foundation was able to
independently confirm that the facility in question was a prison camp.
I recently made another trip to Nanjing. We again parked ourselves
outside the AIMCO Nanjing Plant. When we arrived we saw the same truck
that I had photographed on my previous trip waiting inside the gates of
the plant. The truck has the name of AIMCO Nanjing on the doors. After
a short wait the truck pulled out and we began to follow it on the same
route that it had taken on my previous visit. During a traffic stop I
was able to inspect the material on the truck. Again it was unassembled
binder clip parts. This time it was handles for the #50 (medium) binder
clips and colored bodies for the #20 (small) binder clips. Again we
followed the truck to the prison camp and waited a short distance from
the gate. Approximately 2 hours later the truck drove out of the camp
and we began to follow it again. During the drive back to the factory
the truck stopped in traffic and I was able to determine that it was
carrying assembled #20 binder clips. We then followed the truck back to
the AIMCO Nanjing factory.
During my two visits to Nanjing I spent two days watching for a
truck to take parts to the prison camp for assembly. Both days the
truck was in action and I saw parts for three different products move
back and forth. I understand from a 1992 letter that AIMCO Nanjing's
main products are binder clips, staple removers, paper clips, letter
openers, hole punches and hanging folder frames.
The laws of the United States address the issue of the importation
and sale of goods manufactured with Chinese prison labor in two key
areas.
First, United States Code Title 19 - Customs Duties prohibits the
importation of convict-made goods. Code of Federal Regulations Section
12.42 of Title 19 Customs Duties states that ``if the Commissioner of
Customs finds at any time that information available reasonably but not
conclusively indicates that merchandise within the purview of section
307 is being, or is likely to be, imported, he will promptly advise all
port directors accordingly and the port directors shall thereupon
withhold release of any such merchandise pending instructions from the
Commissioner as to whether the merchandise may be released otherwise
than for exportation.''
The second key area of the United States Code that addresses this
subject is Title 18 - Crimes and Criminal Procedure. Section 1761 makes
it a criminal offense to knowingly transport in interstate commerce or
from any foreign country into the United States any goods manufactured,
wholly or in.part, by convicts or prisoners. Section 1762 states that
all packages containing any product manufactured, wholly or in part, by
convicts or prisoners when shipped or transported in interstate or
foreign commerce shall be plainly and clearly marked so that the name
and location of the penal institution where produced may be readily
ascertained on an inspection of the outside of such package. Violation
of this section is punishable by a fine of not more than $50,000 and
any merchandise transported in violation of this section or section
1761 shall be forfeited to the United States. Section 1762 sets a much
lower standard for determining whether or not a crime has been
committed. This section makes no reference to the word ``knowingly.''
One of the points of Section 1762 is to prevent unsuspecting
consumers from having a fraud perpetrated on them. Very few people
would go into a store and purchase merchandise that was marked ``Made
in a Chinese prison.''
In 1939, the very few members of my family that escaped the Nazi
holocaust found refuge in Shanghai where they lived until 1948. 1 think
the interaction with the thousands of Westerners doing business in
China helps to move forward the cause of human rights there, I have
discussed the problem of prison labor with a number of my Chinese
suppliers. They have all been aware that they are not allowed to ship
products made with prison labor to the United States. They also told me
that while they are aware that the practice continues, the Chinese
factories shipping goods manufactured with prison labor are doing so
against the dictates of Beijing. If this practice is to be stopped we
must continue to push the Chinese Central government to exert more
control at the local level.
My purpose in testifying here today is to present the results of my
research and to request that the Customs Service and the appropriate US
Attorney immediately investigate this matter to ensure that the laws of
the United States are enforced.
Like most industries, the office products industry is extremely
competitive. The industry is undergoing a tremendous consolidation. All
of the manufacturers, particularly the smaller ones like my firm, are
fighting to survive this shakeout. Products like paper clips and binder
clips are considered commodities and sold by the lowest bidder. We are
all looking for a competitive advantage, but the use of prison labor
goes too far.
Before I conclude, I should make clear that there is absolutely no
evidence and absolutely no thought that the distributors of Officemate
products have any idea that the product they are purchasing may have
been made in a Chinese prison.
Few small businesses can afford to hire lawyers and lobbyists to
get their point heard. That is why, Mr. Chairman and Members of the
committee, that I greatly appreciate this opportunity to make my voice
heard.
Thank you.
Senator Thomas. Thank you very much. Ms. Shieh.
STATEMENT OF MARANDA SHIEH, PRESIDENT, GREATER WASHINGTON
NETWORK FOR DEMOCRACY IN CHINA AND FRIENDS OF HONG KONG AND
MACAO ASSOCIATION
Ms. Shieh. Mr. Chairman and distinguished members of this
committee, my name is Maranda Shieh. I am the President of the
Greater Washington Network for Democracy in China and the
Friends of Hong Kong and Macao Association. I also work on
special projects for the Laogai Research Foundation.
I am here today to testify about the laogai products that
can easily be exported to the United States market.
This March I made a trip to China. The reason for this
mission was because we wanted to check about what is indicated
in this magazine. Based on the information from this special
edition of Prison Work Newsletter, the Chinese Government's
publication, we decided to take a look at the prison and the
factory there to get a firsthand knowledge of the garment
factory.
Recently under the guidance of the prison economic
development policy of the Chinese Government, as indicated in
the magazine, it planned to move its garment factory to the new
location at Jieyang County and expand its prison labor force
making garments from 150 to 1,500. Its goals were to reach an
annual revenue of 8 million RMB, which is about $1 million U.S.
dollars, by 1996. They also aggressively pursued larger markets
by way of securing long-term stable relationship with Guangdong
Shantou Jixiang Knitting Garment Factory--and later I will call
this Jixiang Factory--and working with businesses in Hong Kong.
Shantou is one of three Special Economic Zones in coastal
Guangdong Province. The new Jieyang Prison is about 32 miles
north to Shantou S.E.Z. Jixiang Factory specializes in
manufacturing garments with material and patterns provided by
the buyer and which is also how Jieyang Prison operates their
garment factory, as indicated in this publication.
I made my investigation posing as an American
businesswoman, and I was able to order samples and sign
contracts with Jixiang Knitting Garment Factory. I also was
able to arrange for the textile quota with Shantou Textile
Import and Export Corporation, which is the designated company
to grant quota for exporting in Shantou area. I also managed to
order samples to be sent both the United States and France, and
we do not know if these samples and products came from the
laogai factory but it is highly possible.
The contract we signed could be fulfilled once we agree
upon the price for the textile quota, 338/9S, and pay quota
charge, and issue a letter of credit to the supplier. Then the
textile products we ordered would be shipped from Shantou to
Chicago via Hong Kong. Laogai products can reach the United
States through the legitimate Jixiang Factory.
I visited Jixiang Factory four times, and there are several
observations I made which are all backed up with visual and
audio records.
I also made a trip to the prison twice, as is shown here in
this slide.
[Slides shown.]
Ms. Shieh. This is a new location of the prison, and as you
can see, it has a lot of high rise buildings, and with prison
forbidden area signs near the entrances, I did not venture in,
but I was really shocked by the brand new, modern high rise
buildings in that desolated countryside.
When I visited the Jixiang Factory, this is the front
entrance of the Jixiang Factory, I took some pictures of their
garment facility there and talked to Mr. Lee. I mean, Mr. Lee
is the one with glasses in the picture here.
Senator Biden. This is at the factory not at the prison.
Ms. Shieh. Not at the prison. This is a factory.
Senator Biden. Got it. Thank you.
Ms. Shieh. This factory was indicated actually in this
publication, and the prison admitted that they have a
relationship with this factory.
When I talked to Mr. Lee to see if he can actually arrange
our contracts to be made by the prison, his reply was
circumspect. Later when I asked if he could make arrangements
for me to visit the prison, he indicated that he could make the
arrangements.
Senator Biden. Why did he think you asked to be able to
visit the prison? In order to inspect the quality of the work?
Ms. Shieh. To inspect the quality of the work.
Senator Biden. To inspect the quality of the work.
Ms. Shieh. Yes.
Senator Biden. I see.
Ms. Shieh. Another information I obtained from Mr. Lee
clearly indicated that he really knows something about the
prison factory and had experience of working with them. When I
asked him how much I could save if the products are made by the
prisoners, he knew exactly how much, and he said for an order
of $50, it probably would cost me only $35 per dozen. For an
order of $60 per dozen, it would probably cost only $40 per
dozen. But he also indicated that I would probably have to
spend $8 to $10 per dozen on the bribes to prison officers. He
said especially for people like me who is from overseas, they
probably would ask me to buy something for them on my next
trip.
When I asked how the prison distributes their profit, Mr.
Lee said that it would all go to the prison and officers. He
said sometimes they might reward prisoners if they perform
well, but he said, ``They are forced to labor, you know. They
don't have to pay them anything.''
Also in this publication, it indicated clearly that Hong
Kong business has some relationship with the prison, as
indicated in my written testimony.
According to Mr. Lee, he actually gave me the name cards of
some companies in Hong Kong, and there are four companies he
admitted that he deals with them closely. One is Roxy Garment
Factory, Ltd. Which actually sells Esprit brand products; the
Sam Wing Garment Factory, Ltd.; and Chaifa Holdings, Ltd.,
which sells Playboy, Garfield, and Arnold Palmer brand
products; and Worldwide Industrial.
Senator Biden. These are all Hong Kong distributors?
Ms. Shieh. Hong Kong companies.
Senator Biden. Companies that purchase from these
facilities.
Ms. Shieh. Yes.
Senator Biden. Will the fellow with the camera move? Thank
you. Good idea.
Ms. Shieh. Probably I should indicate this paragraph is
stated in this publication, and it indicates that Hong Kong
businesses want to cooperate with Jieyang in the garment
project because their representatives saw the advantage which
we have in management and the labor force. Now, a garment
project is our first large-scale production and processing line
where we cooperate with foreign businesses. The orders are
abundant and our production runs relatively effectively. It is
a parlor enterprise which will bring economic development at
the Jieyang Prison.
In conclusion, there are three major findings from this
investigation. One, we found out it is extremely easy for
laogai garments to reach the world market, including the
American market even with government textile quota restriction.
Second, the Chinese Government clearly does not show any
concern or worry about selling forced labor products to the
world market, and there is no indication they will stop doing
so.
And third, we learned that any private enterprise, new or
old, including those in Hong Kong, can be established and used
as front companies for the export of laogai products. The
laogai products can then easily be exported to the American
market without any trace of the original source.
Thank you.
[The prepared statement of Ms. Shieh follows:]
Prepared Statement of Maranda Shieh
U.S. Implementation of Prison Labor Agreements with China
My name is Maranda Shieh. I am the President of the Greater
Washington Network for Democracy in China and Friends of Hong Kong and
Macao Association. I am here today to testify about the Laogai products
that can easily be exported to the United States market.
Based on information from this June 1996 special edition of
bimonthly ``Prison Work Newsletter'', a publication of the Chinese
government, I took a trip to China this March under the direction of
the Laogai Research Foundation to investigate the textile products
exported from China to the United States. According to this
publication, the Jieyang Prison, Guangdong Province formerly Dongjing
Labor Reform Detachment, has been in the garment business for 12 years.
Recently, under the guidance of the prison economic development
policy of the Chinese government, it planned to move its garment
factory to the new location at Jieyang county and expand its prison
labor force making garments from 150 to 1500. Its goals were to reach
an annual revenue of 8 million RMB, which is about one million US
dollars, by 1996. They also aggressively pursued larger markets by way
of securing long-term stable relationship with Guangdong Shantou S.E.Z.
Jixiang Knitting Garment Factory (later called Jixiang Factory) and
working with businesses in Hong Kong.
Shantou is one of three Special Economic Zones (S.E.Z.) in coastal
Guangdong Province. The new Jieyang Prison is about 32 miles north to
Shantou S.E.Z. Jixiang Factory specializes in manufacturing garments
with material and patterns provided by the buyer, and which is also how
Jieyang Prison operates their garment factory, as indicated in this
publication.
I made my investigation posing as an American businesswoman. I was
able to order samples and sign contracts with Jixiang Knitting Garment
Factory. I arranged 338/9S quota for the contract signed with the
Guandong Shantou Textile Import/Export Company, the designated company
for obtaining textile quota for export in Shantou area. I also managed
to order samples to be sent to both the United States and Europe. We
don't know if these samples and products came from the Laogai factory,
but it is highly possible.
This contract will be fulfilled once we agree upon the price for
the 338/9S quota, pay quota charge, and issue a Letter of Credit (L/C)
to the supplier. Then the textile products we ordered will be shipped
from Shantou to Chicago via Hong Kong. Laogai products can reach the
United States through the legitimate Jixiang Factory.
I visited Jixiang Factory four times, and there are several
observations I made, which are all backed, up with,visual and audio
records:
The factory is small. Mr. Lee, the owner, claimed it has I 00 workers
and monthly production of 50,000 pieces, but I only saw less than forty
workers on a delivery day. Mr. Lee admitted he sometimes contracts out
certain types of orders when the order exceeds their capacity. He also
admitted he had a contract relationship with Jieyang Prison and he had
gone to the prison himself to oversee the work many times.
Mr. Lee was first asked if he could contract out our order to the
Prison, his reply was circumspect. Later I asked if he could make
arrangements for me to visit the Prison and he indicated that he could
make those arrangements.
When Mr. Lee was asked about how much I could save if products are made
by prisoners, he knew exactly how much. He said an order at $50 per
dozen would probably cost only $35 per dozen; an order at $60 per dozen
would probably cost only $40. He also mentioned the buyer needs to
spend $8 to $10 per dozen on bribes to prison officers. He said for
people like me who is from overseas, they will probably ask me to buy
something for them on my next trip. When asked how the prison
distribute their profits, Mr. Lee said that all goes to the prison and
officers. The prisoners sometimes will get some reward if they perform
well, but he said, ``they are forced to labor, you know, they don't
have to pay them anything''.
One of the articles in this ``Prison Work Newsletter'' stated:
``Hong Kong businesses want to cooperate with Jieyang in the garment
project because their representatives saw the advantage we have in
management and labor force. Our garment project is our first large
scale production and processing line where we cooperate with foreign
businesses; the orders are abundant; and our production runs relatively
effectively. It is the pillar enterprise which will bring economic
development at Jieyang Prison...''
According to Mr. Lee, Jixiang Factory has business relationship
with four companies in Hong Kong. Later we called four companies in
Hong Kong that admitted they have business relationships with Jixiang
Factory. They are: Roxy Garment Factory Ltd. (sells Esprit brand
products); Sam Wing Garment Factory Ltd; Chaifa Holdings Ltd. (sells
Playboy, Garfield, and Arnold Palmer brand products); and Worldwise
Industrial Ltd. All of them very active in the international market.
I went to Jieyang Prison twice to take a look at the facility. With
``Prison Forbidden Area'' signs near the entrances, I didn't venture
in. However, I was shocked by the brand-new modem high-rise buildings
in that desolated countryside.
In conclusion, there are three major findings from this
investigation:
1. We found out it is extremely easy for Laogai garments to reach
the world market, including the American market, even with government
textile quota restriction;
2. The Chinese government clearly does not show any concern or
worry about selling forced labor products to the world market, and
there is no indication they would stop doing this; and
3. We learned that any private enterprise, new or old, including
those in Hong Kong, can be established and used as front companies for
the export of Laogai goods. The Laogai products can then easily be
exported to the American market without any trace of the original
source.
Thank you.
Senator Biden [presiding]. Thank you very much.
Who is the next witness, Mr. Wu?
Mr. Wu. Let me introduce a prominent dissident, Fu Shenqi.
He participated in the democracy movement in the late 1970's.
The first he was arrested by Chinese Government in April 1981,
sentenced 7 years to the jail. The second time he was arrested
again in 1991. He was involved in Tiananmen Square incident,
and then put in the jail 1 year and 9 months, no trial at all.
In 1993 he was arrested again in July 1993, sentenced to a so-
called reeducation through labor, and he was released October
1995. Under American access, he came here last year and is
granted asylum in the United States today. Senator Biden. Thank
you very much. Welcome.
STATEMENT OF FU SHENQI, CHINESE DISSIDENT AND LAOGAI SURVIVOR,
NEW YORK, NEW YORK
Mr. Fu. Mr. Chairman and honorable Senators, it is my
greatest honor to testify before your committee. Let me begin
please.
From January 1983, I was put in jail at the Shanghai
Municipal Prison because of my political sentiment. The
government had a system of work points to control the
prisoners. The prisoners were forced to labor. Work points were
deducted for failure to meet quotas. Once or twice a week
prisoners could watch TV. Once a month they could watch a
movie, buy food, or meet with their family. These benefits were
deprived for failure to meet quotas or for bad performance in
reform. Hence, many prisoners were forced to labor overtime to
maintain the work points. Those who were slower could have only
3 or 4 hours of sleep a day. I witnessed how the prison built a
radio assembly shop. As I learned from the other prisoners and
policemen, the prison also ran a regular print shop and other
shops.
From July 1993 to April 1994, I was held at the 2nd
Company, 3rd Battalion, Shanghai Reeducation Through Labor Farm
located at Dafeng County, Jiangsu Province. Again my political
activities were my crime. With the Shanghai No. 18 Knitting
Mill, the battalion made woven jerseys. Reeducation through
labor inmates were forced to labor and reform their thinking.
In the busiest of times, they had to labor nearly 20 hours a
day. Inmates, while working at machines, often fell asleep. In
slack season, several hours a day inmates sat on the benches
studying, writing reports on what they learned from the
studies. The 1st Company, 3rd Battalion made a shop for making
teaching slides.
In April 1994, I was transferred to the 5th Battalion. In
1994 and 1995 I witnessed how from June to October the
battalion's 2nd Company made Christmas lights for export for
the Haiman Lamps Factory and a lamps and lanterns factory of
Jiangsu Province. Each box consisted of 36, 50, 100, or 200
lights on a string. The lights I have at hand are similar with
those made at the 2nd Company. The task was hard. Every inmate
had to labor overtime, many laboring until 1 or 2 at night.
Those who failed to meet quotas were punished. Inmates at the
woolen sweaters mill also often labored overtime. Inmates in
farming had to labor overtime even more. For instance, inmates
who planted rice often labored from 7 in the morning till 8 at
night.
On laogai farms, inmates were routinely beaten and cursed.
Government officials cuffed and kicked them at will. Those
laogai inmates trusted to supervise other inmates beat and
cursed them even more. I was also beaten by them.
In China reform through labor and the laogai facilities are
not common prisons, but the Communist Party's tools for keeping
its one-party laws. Not only do the camps force prisoners to
labor for profit, they also force the inmates to accept
brainwashing. The thought reform makes them surrender to the
Communist Party.
Thank you.
Senator Biden. Thank you very much. Sir?
STATEMENT OF JEFFREY L. FIEDLER, PRESIDENT, FOOD AND ALLIED
SERVICE TRADES DEPARTMENT, AFL-CIO, WASHINGTON, D.C.
Mr. Fiedler. Mr. Chairman, I would like to enter my remarks
in the record.
Senator Biden. Without objection, they will be placed in
the record.
Mr. Fiedler. I want to make very clear that the
legislation----
Senator Biden. Mr. Wu, why do you not turn that off? That
would be a good idea for the sound. It would help.
Mr. Fiedler. Let me back up. The Government testified this
morning, if you did not even listen carefully, that the MOU
does not work, the SOC does not work, and that the law has
higher thresholds for prosecuting Americans, which is
understandable and necessary and we are not proposing change.
I think it is fair to say that the Government has not tried
any alternatives in the face of complete evidence that the MOU
and the SOC do not work.
I want to make one thing very clear. This is not a
discussion of MFN. I do not believe that ending the laogai
trade, forced labor product trade, should be caught up in MFN.
It is U.S. law. We should end it and we should take action
which goes directly to ending the trade, not prosecuting the
few culpable American citizens in the United States who may be
engaged in that trade.
Right now our focus is in the wrong place. We are focused
on some guilty people, to be sure, but the thresholds for
prosecution are too high. We know the trade exists. We must end
it. The Government does not have the current power to do it.
The Customs Service does not currently have the same power that
you were discussing, Senator, this morning on IPR.
If we find that CD's are being produced in Guangdong, if I
recall correctly, we threatened sanctions that involved shoes.
A greater innocent you could not find involving IPR. So, we
have established two things, that we will use sanctions for
trade and that we will punish or catch innocent, legitimate
businesses at the same time.
The only way to give the Chinese Government incentive in my
view is to empower the Government to ban categories of
products, and I mean not any other category of products. If
hand tools are being imported by forced labor, then we can come
down on hand tools and they will no longer come in from China
until we are satisfied----
Senator Biden. Regardless of where they are manufactured.
Mr. Fiedler. Absolutely, from that point forward. That is
what is called incentivizing in a free market fashion the
Chinese Government. That is the same principle that we were
using in IPR.
I just want to repeat this. Let us take the MFN discussion
out of forced labor. The President did what he did. I disagree.
I even disagree with you on MFN. That is not what we are
talking about today. We are talking about ending an illegal
trade, and I think that the proposals that I have in the record
are the basis.
Just one thing. I think the President must show his own
interest in the forced labor issue by setting up a commission
where we all sit down, Treasury, Customs, State, labor,
business, and come up with realistic proposals to end this
trade. The President did this with child labor. He did it with
apparel. I think that it requires and demands that level of
visibility, separates it from the political debate, and takes
us down to what we really want to accomplish, which is end this
trade in inhuman products.
Thank you.
[The prepared statement of Mr. Fiedler follows:]
Prepared Statement of Jeffrey L. Fiedler
Mr. Chairman, members of the Committee, thank you for the
opportunity to appear again before you. My name is Jeffrey Fiedler and
I am President of the Food and Allied Service Trades Department of the
AFL-CIO. I also serve as a director of the Laogai Research Foundation.
We have heard testimony which provides evidence that the Memorandum
of Understanding on Prison Labor (MOU) negotiated by the Bush
Administration and the Statement of Cooperation (SOC) negotiated by the
Clinton Administration have not worked.
These agreements have not stopped the illegal trade in forced labor
products from China because the Chinese government has undermined them
from the start.
The most fundamental, and fatal flaw in both the MOU and SOC is
that U.S. efforts to use them to enforce our laws is dependent upon the
willingness of the Chinese government to provide evidence that is self-
incriminating. No one in America would be expected to do so, and the
Chinese communists who want to profit from this trade certainly will
not.
The reality is that U.S. government attorneys are unwilling to
prosecute cases against American citizens based upon evidence gathered
in China. The only exception to this is when another American citizen
is willing to come forward to provide eyewitness testimony. As a
result, the Chinese Laogai camps and trading companies continue to do
business, albeit a little further underground.
The MOU and SOC are empty diplomatic tools. I believe they were
originally negotiated to merely give the appearance that the U.S. and
Chinese governments were intent upon solving the problem, so as to
diffuse what both governments perceived to be a growing and potentially
explosive political problem.
Current U.S. law concerning forced labor products is directed at
punishing U.S. importers who knowingly import these products. While
this is certainly justifiable, the real goal should be to end the trade
in forced labor products. In other words, U.S. law should also be
designed to punish the mainland Chinese companies which engage in this
illegal trade. Under current law they escape punishment almost
entirely. We should establish a series of significant penalties in law
which would have the effect of forcing the Chinese government to end
this illegal trade.
I am not suggesting that the rules of evidence for prosecuting
American citizens suspected of committing a crime be changed. These
thresholds should remain high. But, when it comes to providing China
with access to the U.S. market, different standards are appropriate and
necessary. This principle is already in practice in such areas as
intellectual property and textile transshipments.
We propose that Congress enact new legislation which would:
1. Direct the Customs Service, based upon credible information, to
ban entire categories of products from China if it is found
that forced labor products of the same type are being sent
into the United States. For example, if China is found to
be exporting brake rotors from a Laogai camp, Customs would
have the authority to ban all brake rotor imports from
China for a set period of time. We suggest that a three
year ban would be an appropriate period to create a strong
disincentive. This would address the current problem of
China mixing Laogai products with legitimately produced
products as a way of hiding the former.
2. Direct the Customs Service, based upon credible information, to
ban all imports from the Chinese state trading company
which cooperates in the illegal importation of forced labor
products. For example, if MinMetals is sending in the brake
rotors it can no longer do any import business with the
United States.
3. Direct the State Department and/or the Immigration and
Naturalization Service to revoke the business visa of any
PRC national working in the United States for a company or
any of its subsidiaries which has been found by the Customs
Service to be involved in the illegal trade of forced labor
products.
4. Ban U.S. companies from doing business (buying, selling or
establishing joint ventures with) in China with any company
or its subsidiaries which has been found by the U.S.
Customs Service to be dealing in forced labor products.
In addition to the changes in the law we are proposing, it would be
necessary to provide modest additional funding for the Customs Service
and State Department. We estimate this to be no more than $2 million a
year. This is a small price to pay for ending U.S. complicity in the
forced labor products trade.
Some would object by saying these changes might punish legitimate
companies in China. But access to the U.S. market is not a right, and
Congress has the responsibility to determine the conditions under which
goods and services enter this market. We believe these proposals are
the best way to create the incentive inside China to end trade in
forced labor goods.
Our proposal shifts the negotiating power to the United States in
dealing with this problem, and replaces an empty diplomatic agreement
with real tools of enforcement directed at the source of the illegal
trade. It removes from the process dependence on the Chinese government
for information implicating themselves, and by narrowly focusing on
those products which are found to be made by forced labor, provides the
means to insure these goods do not enter the U.S. market.
The Administration recently created, with great fanfare, a
commission focused on labor conditions in the apparel industry. We
think the time is long overdue to create a similar commission on forced
labor in China. This commission, which could be composed of officials
from Customs, Treasury, the State Department, and citizens representing
business, labor, and the human rights community, should be charged with
making proposals to deal with forced labor products. The result, I
believe, would be legislation which would pass both the Senate and
House by overwhelming majorities.
Thank you.
Senator Biden. Let me ask you a question, if I may start
with you, sir, to make sure I understand. You do not believe
that based upon what we have heard today that we should deny
MFN because of the practice----
Mr. Fiedler. I do not want to get into MFN. I do not think
we should grant MFN to China. I am separating out this problem,
the forced labor trade problem, from the general discussion,
the political discussion, of MFN.
Senator Biden. Right. But assume this were the only problem
we had in our bilateral relations with China. It is an
important point.
Mr. Fiedler. If it is the only problem that we have in our
bilateral relationship, I think that my proposals would go to
solve it.
Senator Biden. And you would not use MFN to solve it.
Mr. Fiedler. To solve that particular one by itself? No.
Senator Biden. I am not trying to get you to endorse MFN. I
am trying to make sure I understand what you are saying.
Sir, unfortunately, your names are covered up, but it is
Mr. Levy?
Mr. Levy. Yes.
Senator Biden. Mr. Levy, the chairman was sent a letter
from your competitor, dated May 20th, saying that ``Officemate
International Corporation learned earlier this week that one of
our China suppliers may have utilized convict labor for
assembling of binder clips sold to us. We are shocked and
dismayed by the report.''
Then it goes on. ``We have today suspended all shipments
from this factory and have dispatched senior U.S. management
personnel to the factory to investigate this allegation. We
will not associate or do business with firms or individuals who
do not share our views regarding convict labor.''
The reason I bother to mention it is, (A), I think it
warrants being mentioned since it was sent to the chairman, but
also, (B), to ask you your opinion as a businessman. If we had
a labeling process whereby a company could, if it were able to,
prove by meeting certain standards that the product they were
selling was either not made with child labor or not made with
prison labor, that they could put that on their product--now,
not the alternative, not the Government labeling a product of
having been made with child labor, but the affirmative, being
able to assert having met a standard or criteria that was
real--what is your view based upon your customers, whether or
not customers would respond and not purchase the lower-priced
product that could not guarantee that it was not made with, in
this case, forced labor? As a businessman, what is your view?
[The letter of Officemate International Corporation
follows:]
[GRAPHIC] [TIFF OMITTED] T7725.017
[GRAPHIC] [TIFF OMITTED] T7725.018
Mr. Levy. The first thing I would like to do is respond to
this letter briefly. As I mentioned in my testimony, the
factory in Nanjing is owned by a New Jersey corporation. It is
a subsidiary of a New Jersey corporation, and you have common
ownership with those two plants and Officemate International.
So, while I cannot say there is any direct knowledge, again
there is a common ownership between these three different
entities.
Senator Biden. Well, let me put it this way. Your
photographs at least did one thing, whether they knew or did
not know, unless they are lying to the chairman and the
committee, they are no longer going to, at least for the time
being, import that product.
Mr. Levy. Right.
Senator Biden. So, you accomplished something.
Mr. Levy. Well, I think they have another problem also
which is now--they admitted that they have used prison labor to
assemble these parts.
Senator Biden. No, they did not do that. Just so we make it
clear. The letter does not do that.
Mr. Levy. OK.
Senator Biden. It says--I do not want to get into a
question of indicting this company or not this company. I
understand why it is a point you would like to make and you
have made. But it says that ``We are shocked and dismayed by
this report.'' We have always been opposed to the practice. It
says, we have learned earlier this week that our China
suppliers have utilized prison labor for assembling these
clips. We have always been opposed to the practice. I guess
they did admit they have used it.
Anyway, get to the second question and you can take care of
your competitor. I think you pretty well have taken care of
your competitor. But let us move to the second point and the
more important point from my standpoint and that is would your
wholesalers, you think, respond?
Mr. Levy. I think more and more, as this issue becomes--you
know, as with Kathy Lee Gifford and these different issues that
have come up, this issue of prison labor and child labor is
becoming more and more important to people. If no one knows
about it and they do not know it is an issue, it makes no
difference, but as you start to educate people as to what the
problems are and what the issues are and what is at stake here,
I think people will care and will pay a little bit more to know
that someone has inspected the plant and knows that it was not
made with prison labor. So, I think it is a very interesting
idea you have presented.
Senator Biden. Let me ask one other question with my
colleague's permission and then I will yield her all the time
that she would like.
Sir, you were in a prison camp. If I may ask, how old are
you?
Mr. Fu. Forty-four.
Senator Biden. Forty-four. You first were imprisoned in
1983?
Mr. Fu. Eighty-three.
Senator Biden. 1983.
Now, you spoke specifically of the reform through labor
camps which you were sent to and you indicate that these
facilities are not common prisons but the Communist Party's
tools for consolidating its one-party rule. Not only do the
facilities force prisoners to labor for profit, they also force
inmates to accept brainwashing. The thought--excuse me. The
through reform made--excuse me. The thought--I do not
understand this.
Mr. Wu. Thought reform.
Senator Biden. The thought reform made them surrender to
the Communist Party ideologically and psychologically.
Now, you make a clear distinction between essentially
political prison camps and prisons where there are legitimate,
by any country's standards, thugs, prisoners, people who would
violate the norm in any society. I am sure there are some in
China. Not everyone in prison is a political prisoner, although
I am not suggesting there are not tens of thousands of
political prisoners.
My question is this. To the best of your knowledge or
anyone else's knowledge here, does the government operate, as
it relates to forced labor, differently with the so-called
reform through labor prison camps and prisons where the robber,
the murderer, the arsonist is sent? I mean, is there a
difference? I am just curious, not that it makes a fundamental
difference other than determining where these products come
from. Is there a difference in the labor they force prisoners
to engage in?
Mr. Wu. Senator, can I answer?
Senator Thomas. Please.
Mr. Wu. Because I do my research many years.
Laogai, l-a-o-g-a-i, is a Chinese popular word. It means
labor and reform.
Senator Biden. Right.
Mr. Wu. A Chinese official term reform through labor or
another category, so-called reeducation through labor.
Senator Biden. Right.
Mr. Wu. All the prisoners--it does not matter if you are a
penal criminal or a political criminal--are forced to labor
through the labor to reform, as you know, brainwashing.
Senator Biden. So, it is not merely political prisoners who
go to one camp.
Mr. Wu. They do not divide it, no.
Senator Biden. Now, the camp that your colleague was in,
the prison he was in, is it likely that he may have very well
been a cell mate or next to someone who was a common thief?
Mr. Wu. Yes.
Senator Biden. I see, OK.
Mr. Wu. I spent 19 years. I was always mixed together with
the thief or robber, murderer.
Senator Biden. I see. So, there is no distinction. That
answers my question. I thank you very much.
I yield to my colleague. I not only yield her the floor, I
yield her the gavel because I have to run upstairs to another
meeting very shortly. If the meeting is still going on, I will
come back down and follow up.
But I want to thank all the witnesses. It did take some
great courage to do what you did, and congratulations to you,
Mr. Levy.
Senator Feinstein [presiding]. Thank you very much,
Senator.
I think a couple of things are clear. One is, as Mr. Wu
pointed out in his remarks, since 1932 the United States has
had a law which prohibits prison labor. It is a law we should
observe. It is a law that is important. Economically, maybe not
societally, but economically we are a very strong economy. We
are also an economy with all of its bumps and rocks and up
sides and down sides going into a global economy. What Mr.
Levy's example has pointed out I think is how tough and tight
competition is in this global economy.
Therefore, if we do not take some action with respect to
really enforcing our law, it is going to proliferate. Forced
labor is going to proliferate and I believe it is
proliferating. I am not sure China is the only country where
forced labor exists, but having said that, I do believe it
exists in China.
Now, the question really becomes how do we effectively deal
with it. What is clear that a low level signed memorandum of
understanding is not going to cut the mustard. It is not going
to do it and it has not done it.
I really believe that, Mr. Fiedler, you have in your four
points really the germ of an important statement, and that is
to ask our Government to engage in a different agreement and
that agreement would be at the highest level, to have both our
Governments make the statement that we will not countenance
forced labor as a part of our bilateral trade.
Then second, if it is found that that agreement is not
adhered to and that in fact products are coming that are a
product of forced labor--and I think, Mr. Levy, your
contribution to this is a very careful tracing on videotape
that is comprehensible and understandable that it does exist.
Then if it does exist, I think we ought to have the kind of law
that really takes a broader approach and says we will not
import from the country any products of the same generic kind.
Now, I think that is an important step in exerting the kind
of peer pressure, which is also a part of Mr. Levy's example.
He is in the same business. This is a competitor. He could not
understand how he was getting underbid and he went to find out
and he found out. So, it would exert a kind of peer pressure to
see that forced labor is not a part of this global competition.
Then your point number four is really the strong sanction,
that if it continues, United States companies would be, as a
part of the sanction, banned from doing business.
It may well be that, at least in my view, we have to go to
something like this.
I do not really want to ask any questions. I think you have
provided us with some very good food for thought, some very
specific commentary, and I am very grateful for that.
But what is crystal clear to me is that an MOU signed by an
economic counselor, even as much as we might endorse it, does
not have the stature or the status as having an agreement
between the highest levels of our Government that we will not
countenance forced labor.
Mr. Fiedler, do you want to comment?
Mr. Fiedler. I just want to make one other comment that
what is absolutely necessary to the solving of this problem
which I believe is absent today. Is the will within our
Government to do something about it. It personally pains me to
say so. I think we lack the will to use the tools or to gather
up the tools to end this trade.
I think it is caught up unnecessarily in the
administration--and not just this administration, but the
previous administration's views of the politics of the world.
This trade must be stopped. We must have the will. The American
people do not want these products. They are violative of human
rights. But I think that the Senate's role is to provide the
administration the will.
Thank you.
Senator Feinstein. Well, I think this is an enormously
complicated area, in response to your comments. I think as Mr.
Wu pointed out, you point something out, you have a period of
time before anybody gets there. Clearly it is telescoped that
there is the thought that there is prison labor in this
setting, and there is ample time to change the setting. So, I
do not think the process is very effective in rooting this out.
I do think that China has to understand that the issue of
forced labor is very important to us, and it is important to us
at our highest levels, and that what we are asking is that, as
equals, it also be important to them.
I think what Senator Biden said, it is one thing to have
tags and to have a consumer public that is willing not to buy
the product. It would be interesting to see how well that
works. I would hope it would work. I am not really so sure it
would knowing the competition to get a break in price.
Having said that, I think the issue is really for high
level discussion and hopefully we have elevated to that.
I want to just thank everybody here for bringing your
commentary and for your work and would like you to know that I
think there are many members of this committee that would like
to see us move in a stronger direction.
Mr. Fu, I can only say I wish I spoke Chinese as well as
you speak English. Congratulations and thank you for your
testimony.
To you too, Mr. Wu, we appreciate it. Mr. Levy, Mrs. Shieh,
Mr. Fiedler, thank you very much and I will adjourn this
hearing. Thank you.
[Whereupon, at 12:29 p.m., the committee was adjourned,
subject to the call of the Chair.]
A P P E N D I X
----------
United States Department of State,
Washington, DC. 20520,
August 11, 1997.
The Hon. Jesse Helms,
Chairman,
Committee on Foreign Relations,
United States Senate.
Dear Mr. Chairman: Following the May 21, 1997 hearing at which
Deputy Assistant Secretary of State Jeffrey A. Bader testified,
additional questions were submitted for the record. Please find
enclosed the responses to those questions.
If we can be of further assistance to you, please do not hesitate
to contact us.
Sincerely,
Barbara Larkin,
Assistant Secretary,
Legislative Affairs.
Responses of Mr. Bader to Questions asked by Senator Helms
Question 1. Mr. Bader stated, ``Between March 1994 and April 1995,
Customs was permitted to visit the following five facilities:
Guangdong Flower City Enterprise
Guangdong Reform Through Labor Bureau
Zhejiang Number 4 Prison Factory and its associated Hangzhou
Wulin Machinery Works and Hangzhou Superpower Hoist Works
Shanghai Number 7 Reform Through Labor Detachment
Shandong Laiyang Heavy Duty Machinery Factory.''
1.1 Please provide summaries of these visits and the details of the
cases, including the origins of the cases (i.e. what products
were suspected, how Customs obtained the initial complaint,
etc.), when the U.S. made its initial request for an
investigation, the results of the Chinese investigation, when
the Customs Service conducted the visit, the conclusions
reached by Customs after the visits and the present status of
the investigation.
1.2 For each case, please reply to the question: does the State
Department feel the Chinese government complied with the MOU/
SOC guidelines?
Answer. The following summaries were provided by Customs:
1.1(a) Guangzhou Flower City Enterprise AKA Red Star Tea Farm
11/30/91 - South China Morning Post Article reports Red Star Tea
Farm is a labor reform camp that produces tea which is sold to
Guangdong Flower City Enterprise.
12/8/91 - Letter to American Consulate in Guangzhou from Guangdong
Tea I & E Corp. states Red Star Tea Farm is a labor camp tea farm.
2/25/92 - Customs issued detention order
8/25/92 Customs sends referral for investigation to MOFERT.
10/23/92 Chinese response from Reform Through Labor Bureaus. Tea
leaves are only for domestic market and not for export.
11/10/92 Customs sends visit request to MoJ
3/23/93 Customs sends 2nd visit request to MoJ
1/19/94 Customs and embassy officers visit Red Star Tea Farm.
Report that records at site generally support contention by Chinese
that tea was not for export; however, evidence was obtained which
indicated that tea sales were made to Guangdong Flower City Enterprise,
a retail sales and reputed export operation for Guangdong Reform
Through Labor Bureau Goods. Follow up on this lead was unsuccessful.
2/7/94 - Customs requests access to records at Guangdong Flower
City Enterprise.
3/7/94 - MoJ advise that permission was granted for Customs access.
4/6/94 - Customs visited Guangdong Flower City Enterprise. No
evidence found to indicate that tea leaves were sold for export and/or
exported.
No other activity found in file
1.2(a) The State Department considers the Chinese government to be in
compliance with the MOU/SOC in this case.
1.1(b) Guangdong Reform Through Labor Bureau
2/7/94 - Customs requested an interview with Reform Through Labor
Bureau officials in connection with the Red Star Tea/Guangdong Flower
City case.
3/28/94 - Second request for interview.
4/20/94 - Customs visited with Reform Through Labor Bureau
official.
1.2 (b) The State Department considers the Chinese government to be in
compliance with the MOU/SOC in this case.
1.1(c) Zhejiang No. 4 Prison Factory
5/18/93 - Laogai Foundation report that Zhejiang No. 4 Prison
Factory AKA Hangzhou Wulin Machinery is a prison labor facility which
is exporting chain and lever hoists to U.S.
6/17/93 - Embassy official sends referral to Wang Mingdi, Deputy
Director, MoJ Bureau of Reform through Labor
7/8/93 - Commissioner of Customs disseminates memo to all offices
to withhold release of hoists made by Wulin Machinery aka Zhejiang No.
4. Hoists are considered products of prison labor.
9/7/93 - MoJ respond to referral. Chinese position is that products
i.e. hoists that were exported were manufactured by ordinary workers
who were not in the prison system. The workshop that produces the
hoists is under the administration of the Zhejiang Provincial Machinery
Industry Bureau. Chinese also stated that Hangzhou Wulin Machinery now
only produces machinery for the domestic market.
3/13/94 - CA/BJ sends letter to MoJ requesting visit/access to
Zhejiang No. 4 Prison Factory.
5/10/94 - MoJ notify Embassy that Embassy request to visit is
granted and scheduled for 5/19-5/20.
5/20/94 - Embassy officer and Consular officer (Shanghai) make
visit to Zhejiang No. 4 Prison Factory. Per visit, no direct evidence
of the export of prison labor products to the U.S. by the Wulin
factory, past or present, was found. Per report, Wulin Factory is a
prison factory and is the production facility for the Zhejiang No. 4
prison. Final comment by visiting officers, the factory officials could
not or would not provide any production records or other evidence which
would substantiate their claims that exports and domestic products were
separated/divided such that only ordinary workers produced hoists for
export.
1.2(c) The State Department considers the Chinese government to be in
compliance with the MOU/SOC in this case.
1.1(d) Shanghai No. 7 Reform Through Labor Detachment
9/23/91 - Harry Wu testified before Subcommittee on Human Rights
and International Organizations that Shanghai No. 7 Reform Through
Labor Detachment aka Shanghai Laodong Pipe Works is a prison labor run
factory exporting to US.
10/3/91 - Detention order on products from above factory issued by
Customs Commissioner. Commodity involved: hand tools such as adjustable
monkey wrench, open end spanners and socket wrenches.
10/21/91 - Request to visit/referral sent by Embassy to MoJ 11/26/
91 - 2nd letter for visit to factory sent to MoJ
8/25/92 - Letter sent to MOFERT for investigative referral/check if
above factory is prison labor factory.
10/23/92 - Response from MoJ ref. referral for investigation. Per
Chinese, Shanghai Laodong Pipe Factory is a worker's enterprise and not
a prison factory.
3/23/93 - Embassy sends letter ref. outstanding request to visit
above factory. Letter sent to MoJ.
9/15/94 - MoJ sends letter to Embassy granting visit request to
factory.
12/17/94 - Embassy officers make visit to Shanghai Laodong Steel
Pipe Factory AKA above names. The reporting officers found no direct
evidence of the export of prison labor products to the U.S. The
facility is definitely a prison complex and has been one since 1992.
Prior to 1992, according to officials, the factory was administered by
the No. 7 Reform Through Labor Detachment but did not employ prisoners
in production.
Case now closed.
1.2(d) The State Department considers that, in this case, the Chinese
government did not violate any legal commitment. The last USG request
for information/visit was made prior to March 13, 1994, the date of
entry into force of the Statement of Cooperation which applies only
prospectively.
1.1(e) Shandong Laiyang Heavy Duty Machinery Factory
2/24/92 - US Customs issues detention order to withhold release of
galvanized steel butt-welded pipes believed to be made by forced labor.
Allegation based on extract from 1989 Shandong Province Yearbook which
lists high quality products made by labor reform units in Shandong
Province. The Shandong Laiyang Heavy Duty Machinery Factory is
identified as a labor reform enterprise that produces galvanized steel
pipe.
8/25/92 - Embassy officers meet with representatives of MOFERT
(Ministry of Foreign Economic Relations and Trade), MoJ (Ministry of
Justice) and MFA (Ministry of Foreign Affairs) to discuss prison labor.
Referral for investigation made under the provisions of MOU. Letter to
same effect sent to MOFERT.
10/23/92 - MOFERT provides written response to referral to effect:
factory is a worker's enterprise under the administration of the labor
reform system. Productions is undertaken entirely by the workers and
there are no exports to U.S. Info (advertisement) supplied in the past
was only for publicity. Products for the domestic market were formerly
produced by prison laborers. Chinese state that they have handled
investigation properly and according to relevant Chinese regulations.
11/10/92 - Request by Embassy to visit factory 3/3/93 - 2nd letter
request to visit factory
4/12/95 - MoJ approve of Customs visit to factory for last week of
April.
4/25/95 - Customs visits factory. Visit disclosed that factory was
converted to a prison under the Administration of the Yantai Judicial
Bureau in 1984. A civilian workshop for the production of galvanized
welded steel pipe was maintained within the prison until 1990.
Galvanized steel pipe production was not resumed until latter half of
1994. Visit disclosed no evidence of the export or sale for export of
galvanized welded steel pipe manufactured with use of prison labor.
U.S. personnel granted access to all areas of factory. Chinese were
cooperative.
Latter half of 1995 - Customs' domestic offices in Cleveland, OH,
Jacksonville, FL, and San Diego, CA interview three American companies
alleged to have purchased steel pipe from above factory. Interviews of
all three companies developed no direct evidence to substantiate
allegations about the factory.
1/18/96 - Customs case into factory formally closed.
1.2(e) The State Department considers that, in this case, the Chinese
government did not violate any legal commitment. The last USG request
for information/visit was made prior to March 13, 1994, the date of
entry into force of the Statement of Cooperation which applies only
prospectively.
Question 2. Mr. Bader stated, ``The arrival of Ambassador Sasser in
Beijing in February 1996 finally broke the deadlock with the Ministry
of Justice ... Shortly after, the Ministry of Justice granted Customs
access to a facility for which Customs had initially requested access
in 1992.''
2.1 Please provide a summary of this visit and the details of the case,
including what products were suspected, origin of the complaint, the
dates of the requests for investigation and visit, the results of the
Chinese investigation and the Customs Service visit, and conclusions
reached by Customs.
2.2 In this case, does the State Department feel the Chinese complied
with the MOU/SOC guidelines?
Answer. The following summary was provided by Customs:
2.1 Shanghai Laodong Machinery Plant
This investigation concerns the Shanghai Laodong Machinery Plant
which produces band tools. This case originated from information from
Harry Wu's testimony before the House Foreign Affairs committee that
this factory utilizes prison labor to produce tools that are imported
into the United States.
9/23/91 - Harry Wu testifies before House Foreign Affairs.
10/3/91 - Withhold release order by U.S. Customs on goods produced
at plant
10/18/91 - Withhold release order expanded to include all tools
with Elephant and Laodong brand and also that all hand tools
manufactured in the city Shanghai be withheld from release.
10/21/91 - First request for investigation made. 2/92 - First
request for visit made.
2/21/92 - Request approved, along with visits to four others.
3/10/92 - Visit made by Shanghai consular officers. Results of
visit were inconclusive.
4/7/92 - request for second visit made to revisit plant and also
the #1 labor detachment. Reply from Chinese that #1 labor detachment is
not open to the public.
6/24/92 - withhold release order expanded to include Shanghai
Machinery Import/Export Corp.
5/18/92 - Another request for visit by Attache.
11/10/92 - Another request for visit by Attache.
3/23/93 - Another request for visit by Attache.
9/19/94 - Attache asks MoJ to renew their efforts.
3/17/95 - Another request to visit is made.
3/30/95 - Chinese say cannot visit now because of personnel
adjustments at the Prison Management Bureau.
3/27/96 - China MoJ grant visit to prison.
4/24/96 - visit to Shanghai Laodong Machinery Plant by a Customs
Attach6 and a Shanghai U.S. Consulate official. U.S. officials were
given a background on the plant's operation. Plant is state owned and
led by the Shanghai Administration Bureau for Prisons. The plant has
680 employees. About 12% of the employees were former prisoners. Plants
were encouraged to hire released prisoners to keep them from going back
to a life of crime. Employees were paid on the average about 400
renminbi a month. Plant official allowed Embassy officials to view
sales records for last 3 years. Embassy officials were given a tour of
the factory and were permitted to speak to several employees. Result
of. visit - there was no direct evidence found to substantiate the
allegation that this factory utilized prison labor.
6/21/96 - Report of visit sent to China MoJ.
10/28/96 - Withhold Release order canceled by U.S. Customs.
12/6/96 - China MoJ informed that Withhold Release order was
canceled.
2.2 The State Department considers the Chinese government not to be in
compliance with the MOU/SOC in this case.
Question 3. Mr. Bader stated, ``On April 22, Customs submitted to
the Ministry of Justice via letter a formal request to visit the
Beishu/Nanshu Graphite Mines in Shandong Province. The initial
investigation request on this case was submitted by Customs in February
1994, but this was Customs' first request to visit the facility.''
3.1 Please provide a summary of the investigation report returned to
Customs by the Chinese, as well as all details in the case including
what products were suspected, origin of the complaint, the dates of the
requests for investigation and visit, the results of the Chinese
investigation and the Customs Service visit, and conclusions reached by
Customs.
3.2 In this case, does the State Department feel the Chinese government
complied with the MOU/SOC guidelines?
Answer. The following summary was provided by Customs:
3.1 Beishu/Nanshu Graphite Mine
The original information that Beishu Graphite mine was a prison
labor industry came from a Chinese internal use only journal titled
``Research on Committing Crime and Reform''. This is published every
two months by the MoJ Crime Prevention and Labor Reform institute of
Beijing. This information was sent from Hong Kong on November 7, 1991.
This request for investigation, one of the original 20 sent forward
to MoJ of March 1, 1994, is based on information provided by Harry Wu
to Commissioner of Customs.
Published Chinese materials claimed that products were being
exported to U.S.
The 6/9/94 Chinese response to investigative request states that
the mine was established in 1954, it produces high, middle, and low
carbon graphite and expandable graphite. The mine has 500 permanent
workers and exports 7,000 tons annually. In 1991 the name was changed
to Qingdao Graphite Mine. Moreover, the mine also provides space for
2,000 prisoners labor reform and vocational and technical training
including, mainly fruit and vegetable planting, poultry and pig
raising, building, brick and tile making as well as low carbon graphite
production for domestic market and general machinery processing, never
engaged in the production of export products.
7/6/94 - U.S. advises that Customs will conduct further
investigation into Beishu.
10/6/94 Information from a Consular officer that an interview with
U.S. businessman who visited Beishu when he was looking for suppliers
of graphite. Businessman on his visit realized that Beishu appeared to
be a prison operation and this was confirmed by his guides. Businessman
stated be would not do business with Beishu because it is a prison.
?/2/95 South China Post writer who visited the mine under pretense
of looking to buy graphite observed that it was a prison. Chinese
official of Beishu advised that the mine was exporting to United
Kingdom and Germany.
5/30/95 - U.S. Customs receives information that NBC will broadcast
an interview with the Vice President of Ashbury Graphite Co., who
claims that they were importing graphite from Beishu and that they knew
it was produced with prison labor.
Review of import records shows Ashbury graphite came from Nanshu.
5/31/95 - Vice President of Ashbury Graphite Co. and father
interviewed by Customs Agents. Father stated that they no longer import
from Beishu because of the low quality of its graphite. They quit
between 1976 and 1980.
6/16/95 - Collateral request to Hong Kong, London, Los Angeles, New
York, Orlando, Chicago, Cleveland. and Newark from Beijing.
June 1995 report by Laogai Foundation identifying Beishu/Qingdao as
a prison labor facility exporting to the U.S.
6/30/95 - Superior Graphite executive is interviewed. States he
went to Beishu and saw that it is a prison so he does not buy from
Beishu. He explains that he must take the word of the Chinese exporters
that the products are not produced by prison labor.
6/29/95 - Customs interviews Valencia, CA resident. He explains
that he visited the mine in November 1993 to observe conditions for
possible future business dealings. He immediately recognized it as a
prison.
7/4/95 - U.S. Customs HK interviews South China Post Writer. He
states that on his visit to Beishu he was told that there were two
plants, Beishu and Qingdao, that Beishu uses prison labor and produces
only for domestic market, Qingdao uses paid workers and produces for
export. He could see that this was really one plant, not two. He is
given brochures from Beishu and Qingdao and observes that they have the
same address, phone numbers, Fax numbers, cable number, and same bank
account number, and that Shandong Metals and Minerals, Import and
Export Corporation (MINMETALS) is the state run import/export agent for
both mines. In a taped interview with a representative of MINMETALS,
representative said, NN most graphite exported comes form Beishu for
the last 25 years.''
8/3/95 SAC/Philadelphia presents case to U.S. Attorneys Office,
they need information from China concerning exports.
9/7/95 RAC/Orlando Agents interview representatives from Dixon
Ticonderoga who state that they don't import graphite from Beishu but
they do from Nanshu and also buy from Ashbury. And since they use
freight forwarders they don't know for sure where the graphite comes
from.
12/13/95 - results of interview with North American Refractories:
no indication that they are currently buying from China but they used
to and had seen Beishu and had observed military guards at the plant.
12/18/95 - Newark Customs reports interviews with Alumina Trading
Company who states they stopped importing from Beishu over 5 years ago
when they learned it was a prison.
4/3/96 - Report of interview with a representative of China
Enterprises, New York, his major trade representatives for graphite
includes MINMETALS. He stopped his business dealings with Beishu when
he learned it used prison labor. He learned that Beishu changed its
name to Qingdao Graphite Mill.
4/22/96 report from Customs Attache/London, U.K. firms Beishu was
not listed as a supplier but Qingdao Tianxiang Graphite Company Ltd.,
Shandong Metals and Minerals Import and Export Corp. were suppliers.
Based on the information gained in investigations to date, there is
strong evidence that Beishu is a prison and that they were exporting to
the United States and other countries. Also evidence gathered strongly
indicates that products produced at Beishu are imported into the U.S.
through trading companies and under the names of other graphite mines
such as Nanshu Graphite Mine.
4/22/97 - Visit requested.
6/19/97 - MOJ sent letter detailing situation at mines. it asserts
that no prison labor was used for export goods. Defers decision to
grant access, expresses desire to cooperate pending communication with
relevant parties.
3.2 The State Department considers the Chinese government not to be in
compliance with the MOU/SOC in this case.
Question. 4. Mr. Bader stated, ``just last week, on May 15, Customs
submitted a request to visit and review sales records from the
Qianjiang Hardware Tools Plant, also known as Hangzhou Shenda Tool
Factory and associated with prison facility Zhejiang Number 2 Prison.''
4.1 What was the evidence that caused Customs to investigate this case?
4.2 When was this evidence first obtained by the Customs Service?
4.3 Was the decision to pursue this case at all tied to the hearing of
this committee on May 21?
Answer 4.1-4.2. The following information was provided by Customs:
Qianjiang Hardware Tools Plant, a.k.a. Hangzhou Shenda Tool
Factory, and associated prison facility Zhejiang Number 2 Prison.
The original information on this case came from a documented source
of information and was given to the U.S. Customs office in Hong Kong in
September 1993. The informant alleged that this factory was utilizing
prison labor to manufacture adjustable and combination wrenches that
are marketed through the Zhejiang Machinery and Equipment Import/Export
Company.
This was one of the original 20 investigations presented to the
Chinese March 1, 1994. Harry Wu also identified this factory as
utilizing prison labor and obtained information that the company was
exporting to the U.S. to Cosmos Trading Company, Houston, Texas.
June 9, 1994, China MoJ responds to investigation request by
stating that ``during the period of 1975 to October 1991 the hand tools
produced by Hangzhou Qianjiang Hardware Tool Factory were undertaken by
the workers, no prison labor had ever involved in it. After October
1991 some prisoners have been engaged in producing Jianxin Brand hand
tools, but only for the domestic market and has never been exported
overseas.''
July 6, 1994, Embassy responds to MOJ letter by stating that in
this case an importer (Cosmos) has been identified in the U.S. and is
currently under investigation by U.S. Customs. That depending on the
results of the investigation of this importer, it may be necessary to
request additional investigation by MoJ or a visit to facility.
January 23, 1995, result of Houston investigation reported that
Customs Agents visited the office of Cosmos Trading on June 23, 1994
and interviewed the manager. She stated that she had not knowingly
imported any goods that she knew to be manufactured by prison labor.
She stated that she was not allowed to visit the factories that
produced merchandise that she imported and that she had to rely totally
on the government (PRC) export agents as to the origin of items
purchased. U.S. Customs Agents checked the Cosmos warehouse, took
samples of some of the tools in stock and reviewed correspondence
files. Agents took three files for translation. None of the above
revealed any indication that Cosmos was importing prison labor made
goods.
Question 4.3. Was the decision to pursue this case at all tied to
the hearing of this committee on May 21?
Answer 4.3. Customs provided the following information.
The decision to pursue this case, one of 58 open cases awaiting
conclusion, was based the reinitiation of dialogue by the Ministry of
Justice. It was not at all tied to the hearing of this committee on May
21.
Question 5. Mr. Bader stated, ``By Customs calculations, it has
made 58 referrals to the Ministry of Justice for investigation since
the signing of the MOU in August 1992, of which the Ministry of Justice
has responded to 52.''
5.1 What constitutes a ``response'' to such a request? Is a refusal to
answer counted as a ``response?''
5.2 Please provide a list of all facilities for which Customs requested
investigations by the Chinese government. Please include the date the
initial request for investigation was made by Customs, the date of the
``response'' by the Chinese side, the exact language of each Chinese
``response'', and the conclusion of the Customs Service based on the
information provided by the Chinese.
5.3 Does the State Department feel that the Chinese have complied with
the MOU/SOC guidelines in the 'investigation process' in each of the 58
cases?
Answer 5.1. The following information was provided by Customs:
Any information which allows Customs to make a decision in a case
is considered a response. A refusal is not considered a response.
Question 5.2-5.3.
5.2 Please provide a list of all facilities for which Customs requested
investigations by the Chinese government. Please include the date the
initial request for investigation was made by Customs, the date of the
``response'' by the Chinese side, the exact language of each Chinese
``response'', and the conclusion of the Customs Service based on the
information provided by the Chinese.
5.3 Does the State Department feel that the Chinese have complied with
the MOU/SOC guidelines in the 'investigation process' in each of the 58
cases?
Answer 5.2-5.3. The following summaries were provided by Customs:
Key for compliance answers:
Yes--The State Department considers the Chinese government to be in
compliance with the MOU/SOC in this case.
No--The State Department considers the Chinese government not to be in
compliance with the MOU/SOC in this case.
**--The State Department considers that, in this case, the Chinese
government did not violate any legal commitment. The last USG
request for information/visit was made prior to March 13, 1994,
the date of entry into force of the Statement of Cooperation
which applies only prosectively.
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The following information was provided by Customs:
6.2.1 Appendix: Guangzhou Number 1 Education Through Labor Camp
9/27/94 - Fraud investigations Division received report from the
Laogai Research Foundation indicating that prisoners at a facility
known as the Guangzhou Number 1 Reeducation through Labor Camp are
manufacturing artificial flowers for export to the U.S.
10/5/94 - Above report sent to CA/BJ (Customs Attach6, Beijing) and
SCR/HK for investigation of Meitak Floral Ltd. a Hong Kong, exporter
identified as exporting artificial flowers from China to U.S.
importers.
10/14/94 - Fraud Division received a fax copy of an unsigned and
undated document on letterhead stationery of the PRC Embassy in DC that
states the above mentioned facility did not export its products (hand
made flowers) and the reform through labor process used in the facility
is in their words entirely different from that taken in prisons.
10/24/94 - CA/BJ submitted referral to MoJ.
1/4/95 - CA/BJ receives letter from MoJ Prison Management Bureau.
Letter stated that the factory in question only produced flowers for
the domestic market. No products were exported overseas. In addition,
an education through labor camp is not the same as a prison and is not
within the constraints of the Chinese government's ban on export of
prison labor products.
2/7/95 - CA/BJ requests visit of factory. Letter sent to MoJ
3/9/95 - CA/BJ receives letter from MoJ ref. above. Request denied
by MoJ. They state that factory did not produce products for export and
factory does not fall under purview of the MOU on prison labor.
3/17/95 - CA/BJ submits letter to MoJ stating that review of MOU
indicates that re-education camps fall under the MOU. And that our
request for a visit still stands. In addition, letter stated that in
order to maintain progress in the area of prison labor, CA/BJ will
request MoJ to arrange to visit another facility.
3/31/95 - CA/BJ submits letter restating opinion of USG that
education through labor facilities are covered by the provisions of the
MOU and requesting access to visit factory.
4/6/95 - MoJ Foreign Affairs Dept. responded that MoJ is of the
opinion that Guangdong No. 1 Education Through Labor Camp is not
covered by MOU and there is no way to satisfy request for visit.
5/30/95 - CA/BJ sent another letter reiterating U.S. position.
The following summary was provided by Customs:
6.2.4 Appendix: Beishu/Nanshu Graphite Mine
The original information that Beishu Graphite mine was a prison
labor industry came from a Chinese internal use only journal titled
``Research on Committing Crime and Reform''. This is published every
two months by the MoJ Crime Prevention and Labor Reform institute of
Beijing. This information was sent in Unclassified #14687 cable from
Hong Kong dated 11/7/91.
2/28/94 - This request for investigation, one of the original 20
sent forward to MoJ of March 1, 1994, is based on information provided
by Harry Wu to Commissioner of Customs.
Published Chinese materials claimed that products were being
exported to U.S. The Chinese response to investigative request dated 6/
9/94 states that the
mine was established in 1954, it produces high, middle, and low
carbon graphite and expandable graphite. The mine has 500 permanent
workers and exports 7,000 tons annually. In 1991 the name was changed
to Qingdao Graphite Mine. Moreover, the mine also provides space for
2,000 prisoners labor reform and vocational and technical training
including, mainly fruit and vegetable planting, poultry and pig
raising, building, brick and tile making as well as low carbon graphite
production for domestic market and general machinery processing, never
engaged in the production of export products.
7/6/94 - U.S. advises that Customs will conduct further
investigation into Beishu.
10/6/94 Information from a Consular officer that an interview with
U.S. businessman who visited Beishu when he was looking for suppliers
of graphite. Mr. Beaumont on his visit realized that Beishu appeared to
be a prison operation and this was confirmed by his guides. Mr.
Beaumont stated be would not do business with Beishu because it is a
prison.
?/2/95 South China Post writer who visited the mine under pretense
of looking to buy graphite observed that it was a prison. Mr. Zheng of
Beishu advised that the mine was exporting to United Kingdom and
Germany.
5/30/95 - U.S. Customs receives information that NBC will broadcast
an interview with the Vice President of Ashbury Graphite Co., who
claims that they were importing graphite from Beishu and that they knew
it was produced with prison labor.
Review of import records shows Ashbury graphite came from Nanshu.
5/31/95 - Vice President of Ashbury Graphite Co. and father
interviewed by Customs Agents. Father stated that they no longer import
from Beishu because of the low quality of its graphite. They quit
between 1976 and 1980.
6/16/95 - Collateral request to Hong Kong, London, Los Angeles, New
York, Orlando, Chicago, Cleveland. and Newark from Beijing.
June 1995 report by Laogai Foundation identifying Beishu/Qingdao as
a prison labor facility exporting to the U.S.
6/30/95 - Superior Graphite executive is interviewed. States he
went to Beishu and saw that it is a prison so he does not buy from
Beishu. He explains that he must take the word of the Chinese exporters
that the products are not produced by prison labor.
6/29/95 - Customs interviews Valencia, CA resident. He explains
that he visited the mine in November 1993 to observe conditions for
possible future business dealings. He immediately recognized it as a
prison.
7/4/95 - U.S. Customs HK interviews South China Post Writer. He
states that on his visit to Beishu he was told that there were two
plants, Beishu and Qingdao, that Beishu uses prison labor and produces
only for domestic market, Qingdao uses paid workers and produces for
export. He could see that this was really one plant, not two. He is
given brochures from Beishu and Qingdao and observes that they have the
same address, phone numbers, Fax numbers, cable number, and same bank
account number, and that Shandong Metals and Minerals, Import and
Export Corporation (MINMETALS) is the state run import/export agent for
both mines. In a taped interview with a representative of MINMETALS,
Mr. Qiang said, ``most graphite exported comes form Beishu for the last
25 years.''
8/3/95 SAC/Philadelphia presents case to U.S. Attorneys Office,
they need information from China concerning exports.
9/7/95 RAC/Orlando Agents interview representatives from Dixon
Ticonderoga who state that they don't import graphite from Beishu but
they do from Nanshu and also buy from Ashbury. And since they use
freight forwarders they don't know for sure where the graphite comes
from.
12/13/95 - results of interview with North American Refractories:
no indication that they are currently buying from China but they used
to and had seen Beishu and had observed military guards at the plant.
12/18/95 - Newark Capstones reports interviews with Alumina Trading
Company who states they stopped importing from Beishu over 5 years ago
when they learned it was a prison.
4/3/96 - Report of interview with a representative of China
Enterprises, New York, his major trade representatives for graphite
includes MINMETALS. He stopped his business dealings with Beishu when
he learned it used prison labor. He learned that Beishu changed its
name to Qingdao Graphite Mill.
4/22/96 report from CA/London, U.K. firms Beishu was not listed as
a supplier but Qingdao Tianxiang, Graphite Company Ltd., Shandong
Metals and Minerals Import and Export Corp. were suppliers.
Based on the information gained in investigations to date, there is
strong evidence that Beishu is a prison and that they were exporting to
the United States and other countries. Also evidence gathered strongly
indicates that products produced at Beishu are imported into the U.S.
through trading companies and under the names of other graphite mines
such as Nanshu Graphite Mine.
4/22/97 - Visit requested.
6/19/97 - MOJ sent letter detailing situation at mines. it asserts
that no prison labor was used for export goods. Defers decision to
grant access, expresses desire to cooperate pending communication with
relevant parties. The following summaries were provided by Customs:
6.2.5 Appendix: Shandong Laiyang Heavy Duty Machinery Factory
2/24/92 - US Customs issues detention order to withhold release of
galvanized steel butt-welded pipes believed to be made by forced labor.
Allegation based on extract from 1989 Shandong Province Yearbook which
lists high quality products made by labor reform units in Shandong
Province. The Shandong Laiyang Heavy Duty Machinery Factory is
identified as a labor reform enterprise that produces galvanized steel
pipe.
8/25/92 - Embassy officers meet with representatives of MOFERT
(Ministry of Foreign Economic Relations and Trade), MoJ (Ministry of
Justice) and MFA (Ministry of Foreign Affairs) to discuss prison labor.
Referral for investigation made under the provisions of MOU. Letter to
same effect sent to MOFERT.
10/23/92 - MOFERT provides written response to referral to effect:
factory is a worker's enterprise under the administration of the labor
reform system. Productions is undertaken entirely by the workers and
there are no exports to U.S. Info (advertisement) supplied in the past
was only for publicity. Products for the domestic market were formerly
produced by prison laborers. Chinese state that they have handled
investigation properly and according to relevant Chinese regulations.
11/10/92 - Request by Embassy to visit factory 3/3/93 - 2nd letter
request to visit factory
4/12/95 - MoJ approve of Customs visit to factory for last week of
April.
4/25/95 - Customs visits factory. Visit disclosed that factory was
converted to a prison under the Administration of the Yantai Judicial
Bureau in 1984. A civilian workshop for the production of galvanized
welded steel pipe was maintained within the prison until 1990.
Galvanized steel pipe production was not resumed until latter half of
1994. Visit disclosed no evidence of the export or sale for export of
galvanized welded steel pipe manufactured with use of prison labor.
U.S. personnel granted access to all areas of factory. Chinese were
cooperative.
Latter half of 1995 - Customs' domestic offices in Cleveland, OH,
Jacksonville, FL, and San Diego, CA interview three American companies
alleged to have purchased steel pipe from above factory. Interviews of
all three companies developed no direct evidence to substantiate
allegations about the factory.
1/18/96 - Customs case into factory formally closed.
The following summaries were provided by Customs:
6.2.6 Appendix: Guangdong Flower City Enterprise AKA Red Star Tea Farm
11/30/91 - South China Morning Post Article reports Red Star Tea
Farm is a labor reform camp that produces tea which is sold to
Guangdong Flower City Enterprise.
12/8/91 - Letter to American Consulate in Guangzhou from Guangdong
Tea I & E Corp. states Red Star Tea Farm is a labor camp tea farm.
2/25/92 - Customs issued detention order
8/25/92 - Customs sends referral for investigation to MOFERT.
10/23/92 - Chinese response from Reform Through Labor Bureaus. Tea
leaves are only for domestic market and not for export.
11/10/92 Customs sends visit request to Moi 3/23/93 Customs sends
2nd visit request to MoJ
1/19/94 Customs and embassy officers visit Red Star Tea Farm.
Report that records at site generally support contention by Chinese
that tea was not for export; however, evidence was obtained which
indicated that tea sales were made to Guangdong Flower City Enterprise,
a retail sales and reputed export operation for Guangdong Reform
Through Labor Bureau Goods. Follow up on this lead was unsuccessful.
2/7/94 - Customs requests access to records at Guangdong Flower
City Enterprise.
3/7/94 - Moi advise that permission was granted for Customs access.
4/6/94 - Customs visited Guangdong Flower City Enterprise. No
evidence found to indicate that tea leaves were sold for export and/or
exported.
No other activity found in file
The following summaries were provided by Customs:
6.2.7 Appendix: Shanghai Laodong Machinery Plant
This investigation concerns the Shanghai Laodong Machinery Plant
which produces band tools. This case originated from information from
Harry Wuls testimony before the House Foreign Affairs committee that
this factory utilizes prison labor to produce tools that are imported
into the United States.
9/23/91 - Harry Wu testifies before House Foreign Affairs
10/3/91 - Withhold release order by U.S. Customs on goods produced
at plant
10/18/91 - Withhold release order expanded to include all tools
with Elephant and Laodong brand and also that all hand tools
manufactured in the city Shanghai be withheld from release.
10/21/91 - First request for investigation made. 2/92 - First
request for visit made.
2/21/92 - Request approved, along with visits to four others.
3/10/92 - Visit made by Shanghai consular officers. Results of
visit were inconclusive.
4/7/92 - request for second visit made to revisit plant and also
the #1 labor detachment Reply from Chinese that #1 labor detachment is
not open to the public.
6/24/92 - withhold release order expanded to include Shanghai
Machinery Import/Export Corp.
5/18/92 - Another request for visit by Attach6 11/10/92 - Another
request for visit by Attache.
3/23/93 - Another request for visit by Attach6 9/19/94 - Attache
asks MoJ to renew their efforts. 3/17/95 - Another request to visit is
made.
3/30/95 - Chinese say cannot visit now because of personnel
adjustments at the Prison Management Bureau.
3/27/96 - China MoJ grant visit to prison.
4/24/96 - visit to Shanghai Laodong Machinery Plant by a Customs
Attach6 and a Shanghai U.S. Consulate official. U.S. officials were
given a background on the plant's operation. Plant is state owned and
led by the Shanghai Administration Bureau for Prisons. The plant as 0
employees. About 12% of the employees were former prisoners. Plants
were encouraged to hire released prisoners to keep them from going back
to a life of crime. Employees were paid on the average about 400
renminbi a month. Plant official allowed Embassy officials to view
sales records for last 3 years. Embassy officials were given a tour of
the factory and were permitted to speak to several employees. Result
of. visit - there was no direct evidence found to substantiate the
allegation that this factory utilized prison labor.
6/21/96 - Report of visit sent to China MoJ.
10/28/96 - Withhold Release order canceled by U.S. Customs.
12/6/96 - China MoJ informed that Withhold Release order was
canceled.
The following information was provided by Customs:
6.2.8 Appendix: Qianjiang Hardware Tools Plant, a.k.a. Hangzhou Shenda
Tool Factory, and associated prison facility Zhejiang Number 2 Prison.
The original information on this case came from a documented source
of information and was given to the U.S. Customs office in Hong Kong in
September 1993. The informant alleged that this factory was utilizing
prison labor to manufacture adjustable and combination wrenches that
are marketed through the Zhejiang Machinery and Equipment Import/Export
Company.
This was one of the original 20 investigations presented to the
Chinese March 1, 1994. Harry Wu also identified this factory as
utilizing prison labor and obtained information that the company was
exporting to the U.S. to Cosmos Trading Company, Houston, Texas.
June 9, 1994, China MoJ responds to investigation request by
stating that ``during the period of 1975 to October 1991 the hand tools
produced by Hangzhou Qianjiang Hardware Tool Factory were undertaken by
the workers, no prison labor had ever involved in it. After October
1991 some prisoners have been engaged in producing Jianxin Brand hand
tools, but only for the domestic market and has never been exported
overseas.''
July 6, 1994, Embassy responds to MoJ letter by stating that in
this case an importer (Cosmos) has been identified in the U.S. is
currently under investigation by U.S. Customs. That depending on the
results of the investigation of this importer, it may be necessary to
request additional investigation by MoJ or a visit to facility.
January 23, 1995, result of Houston investigation reported that
Customs Agents visited the office of Cosmo Trading on June 23, 1994 and
interviewed the manager. She stated that she had not knowingly imported
any goods that she knew to be manufactured by prison labor. She stated
that she was not allowed to visit the factories that produced
merchandise that she imported and that she had to rely totally on the
government (PRC) export agents as to the origin of items purchased.
U.S. Customs Agents checked the Cosmos warehouse, took samples of some
of the tools in stock and reviewed correspondence files. Agents took
three files for translation. None of the above revealed any indication
that Cosmos was importing prison labor made goods.
The decision to pursue this case was based on the fact that the
China Ministry of Justice has allowed us to reinitiate a dialogue and
that this is one of 58 open cases that needs completion.
The following information was provided by Customs:
6.2.9 Appendix: Zhejiang No. 4 Prison Factory
5/18/93 - Laogai Foundation report that Zhejiang No. 4 Prison
Factory AKA Hangzhou Wulin Machinery is a prison labor facility which
is exporting chain and lever hoists to U.S.
6/17/93 - Embassy official sends referral to Wang Mingdi, Deputy
Director, MoJ Bureau of Reform through Labor
7/8/93 - Commissioner of Customs disseminates memo to all offices
to withhold release of hoists made by Wulin Machinery aka Zhejiang No.
4. Hoists are considered products of prison labor.
9/7/93 - MoJ respond to referral. Chinese position is that products
i.e. hoists that were exported were manufactured by ordinary workers
who were not in the prison system. The workshop that produces the
hoists is under the administration of the Zhejiang Provincial Machinery
Industry Bureau. Chinese also stated that Hangzhou Wulin Machinery now
only produces machinery for the domestic market.
3/15/94 - CA/BJ sends letter to MoJ requesting visit/access to
Zhejiang No. 4 Prison Factory.
5/10/94 - MoJ notify Embassy that Embassy request to visit is
granted and scheduled for 5/19-5/20.
5/20/94 - Embassy officer and Consular officer (Shanghai) make
visit to Zhejiang No. 4 Prison Factory. Per visit, no direct evidence
of the export of prison labor products to the U.S. by the Wulin
factory, past or present, was found. Per report, Wulin Factory is a
prison factory and is the production facility for the Zhejiang No. 4
prison. Final comment by visiting officers, the factory officials could
not or would not provide any production records or other evidence which
would substantiate their claims that exports and domestic products were
separated/divided such that only ordinary workers produced hoists for
export.
The following information was provided by Customs:
6.2.10 Appendix: Shanghai No. 7 Reform Through Labor Detachment
9/23/91 - Harry Wu testified before Subcommittee on Human Rights
and International Organizations that Shanghai No. 7 Reform Through
Labor Detachment aka Shanghai Laodong Pipe Works is a prison labor run
factory exporting to US.
10/3/91 - Detention order on products from above factory issued by
Customs Commissioner. Commodity involved: hand tools such as adjustable
monkey wrench, open end spanners and socket wrenches.
10/21/91 - Request to visit/referral sent by Embassy to MoJ 11/26/
91 - 2nd letter for visit to factory sent to MoJ
8/25/92 - Letter sent to MOFERT for investigative referral/check if
above factory is prison labor factory.
10/23/92 - Response from MoJ ref. referral for investigation. Per
Chinese, Shanghai Laodong Pipe Factory is a worker's enterprise and not
a prison factory.
3/23/93 - Embassy sends letter ref. outstanding request to visit
above factory. Letter sent to MoJ.
9/15/94 - MoJ sends letter to Embassy granting visit request to
factory.
12/17/94 - Embassy officers make visit to Shanghai Laodong Steel
Pipe Factory AKA above names. The reporting officers found no direct
evidence of the export of prison labor products to the U.S. The
facility is definitely a prison complex and has been one since 1992.
Prior to 1992, according to officials, the factory was administered by
the No. 7 Reform Through Labor Detachment but did not employ prisoners
in production.
Case now closed.
Question 7. Mr. Bader stated, ``We believe the best strategy is to
regularly send investigation/visit requests to clear up the backlog of
cases. U.S. Customs will continue to present new cases to the Chinese
as we develop information.''
7.1 How many requests did the Customs Service make for investigations
and visits in 1996? How is new information 'developed' by the Customs
Service or the State Department?
Answer 7.1. The following information was provided by Customs:
There was very little dialogue with the Ministry of Justice, Prison
Labor Division, except for the visit which was made in April 1996 by
the Customs Attach6 to Shanghai Laodong Machinery Plant. The Customs
Attach6 attempted to arrange a meeting with the Ministry of Justice to
introduce the newly arrived Assistant Attach6 several times from July
1996 through December 1996 and was put off for the reasons that
officials were out of town, that personnel were being reassigned, and
that the office was being moved. After several phone calls and letters
by the Customs Attache and the Embassy Economics section, a meeting was
finally arranged in February 1997. At this meeting, Customs presented
two cases for investigation.
Customs develops new information on prison labor cases in much the
same way as for any other types of investigations. Information is
provided by the public, by business people, by Customs Inspectors and
Import Specialists, and by other sources of information. Currently the
Beijing Customs office has eighteen open prison labor cases that are
the result of information developed by Customs domestic offices and
other foreign U.S. Customs offices.
Question 7.2. Please provide a list of all laogai camps known to
the State Department, including reform through labor facilities,
reeducation through labor facilities, detention centers, and prisons.
Answer. The State Department does not maintain a comprehensive list
of laogai camps and related facilities in China. The State Department
does not have an operational requirement for such a list. However, the
Embassy in Beijing does maintain a list of several hundred facilities
based on information from internal Chinese journals. This information
is dated, and no further issues of the journals have been obtained.
We also utilize publicly available lists such as those published by
the Laogai Research Foundation and other human rights NGO'S, as does
Customs.
Inquiries with several other US agencies with possible interest in
such lists revealed that none of them attempts to maintain a
comprehensive list of prison and labor camps in China.
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Question 7.3. How does the State Department or Customs identify
products manufactured at these facilities?
Answer 7.3. The following information was provided by Customs:
Customs usually identifies the commodity through the allegation,
i.e. someone alleges that hand tools are manufactured at prison X in
China. The name of the commodity is usually provided along with the
alleged manufacturer. Customs also uses the Laogai Research Foundation
Handbook, existing files, TECS, etc. to identify products manufactured
at these facilities.
Question 8. How many Customs Service officials are committed to
working on the forced labor issues full time? How many part time?
Answer. The following information was provided by Customs:
Customs employs approximately 3,000 special agents within its
Office of Investigations. About 300 are dedicated to the Fraud program.
Fraud deals with the importation of merchandise which includes prison
labor-made products. No fraud agents are specifically assigned to
prison labor but to the general area of fraud investigations.
Within Customs, there are about 10,000 inspectors. Again, none are
specifically assigned to deal with prison labor importations. All,
however, are made aware of the prohibition and are trained to be on the
lookout for such merchandise.
Question 9. How many State Department officials are committed to
working on the forced labor issue full time? How many part time?
Answer. There are five State Department officials, in Washington
and Beijing, who work on forced labor issues part time to varying
degrees as part of their overall portfolios. There are no State
Department officials who work on forced labor issues full time.
Question 10. How many intelligence analysts are committed to
working on the forced labor issues full time? How many part time?
Answer. No Department of State analysts work full-time on forced
labor issues. In the China Division of the Office of East Asia Analysis
in the Bureau of Intelligence and Research, there are two analysts and
a Division Chief who address issues such as labor and human rights as
part of their portfolios.
This reply does not address the analytic strength in the rest of
the intelligence community.
Question 11. What training do Foreign Service officers receive on
the forced labor products issue?
Answer. Foreign Service officers are instructed in their
introductory training that the U.S. government has a policy goal of
encouraging respect for internationally recognized worker rights,
including prohibition of forced and compulsory labor. This goal is also
reiterated in political and economic tradecraft training five years or
so into an officer's career. Foreign Service Labor Officers receive
more detailed training in forced and compulsory labor issues, including
the problem of policing trade in products made with such labor. Ten to
twelve new Labor Officers are trained each year. To date, no Labor
Officer position has been established in China and officers assigned to
China who handle labor issues are briefed as the need arises.
Question 12. Are the MOU and SOC binding agreements? What is the
State Department policy to communicate to the Chinese when the MOU and
SOC are not followed? How many demarches have been sent to the Chinese
over their noncompliance to the MOU/SOC?
Answer. The United States considers the 1992 Memorandum of
Understanding between the United States of America and the People's
Republic of China on Prohibiting Import and Export Trade in Prison
Labor Products and the 1994 Statement of Cooperation to be legally
binding instruments.
Chinese cooperation has been erratic. We have communicated to
Chinese officials on numerous occasions, both verbally and in writing,
our concern that compliance be timely and consistent, and that it not
be subject to the influence of other developments in our bilateral
relations. We have indicated to the Chinese, including in a recent
letter from Ambassador Sasser to the Minister of Justice, that
satisfactory resolution of prison labor allegations is important to the
overall health of the bilateral relationship.
__________
Department of the Treasury
Washington, DC 20220,
June 24, 1997
Ms. Betty Alonso,
Committee on Foreign Relations,
United States Senate,
SD-450 Dirksen Bldg.,
Washington, DC 20510-6225
Dear Ms. Alonso:Enclosed are Treasury Assistant Secretary James E.
Johnson's responses to questions from Senator Wellstone before the
Senate Foreign Relations Committee's hearing on Prison Labor Agreements
with China held on May 21, 1997.
If you have any questions, please feel free to call me at 622-2038.
Sincerely,
Liam Higgins,
Office of Legislative Affairs,
Room 3457, Main Treasury.
Responses of Mr. Johnson to Questions Asked by Senator Wellstone
Question 1. Is the Government taking sufficient steps to ensure
that U.S. businesses are not unwittingly abetting Chinese exports of
goods produced by forced labor? If not, what measures do you believe
should be implemented?
Answer. The most important steps that we can take are the measures
to enforce the prison labor statutes that were described in the
testimony. However, the Customs Service has an excellent record of
engaging in constructive dialogue with private industry to promote
strong voluntary compliance with the Customs and trade laws. As I
stated in my testimony, to maximize the value of our law enforcement
assets, we will strengthen our education and outreach efforts in the
forced labor area as we have in the areas of narcotics, money
laundering, and sanctions enforcement.
As part of this effort, I plan to use the June 27, 1997 meeting of
the Treasury Advisory Committee on Commercial Operations of the U.S.
Customs Service, a statutory body which I chair, as a forum to provide
the business community with an opportunity to more clearly engage with
us on their recommendations regarding the prison labor problem. I have
asked the twenty senior U.S. business executives who serve on the
Committee to share their insights into the nature and extent of forced
labor production in China 'and its role in export trade and also their
ideas on involving the U.S. business community in promoting compliance
with U.S. laws on forced and prison labor. We then can consider
involving other business groups that may helpful in promoting
compliance with these important statutes.
Customs has promoted awareness of these laws in the business
community by highlighting forced labor enforcement in various
publications circulated in the trade community including Global Trade
Talk, the Customs bimonthly publication of the International Trade
Ombudsman. Customs will review its strategic and annual plans, trade
pamphlets and similar documents to ensure that the importance we attach
to forced labor enforcement receives prominent treatment.
Question 2. Do you believe it is feasible to devise an effective
system of verifying Chinese compliance with curbs on exports of goods
made by forced labor. If so, please describe how such a system would
work?
Answer. We believe that the system we currently have in place is,
in principle, an effective system if we can succeed in improving the
level of cooperation that we are receiving from the Chinese under our
agreements with them. Under current circumstances where our Embassy has
indicated an expectation of improved cooperation of the Chinese
Ministry of Justice in the coming months, we should invest our energy
in clearing up a backlog of over a dozen cases that require
investigation in China. In this regard, Ambassador Sasser is initiating
a strong followup request to the Chinese Government for inspection
visits to a list of production facilities identified by Customs. Over
the longer term, in a continuing atmosphere of normal trade relations,
it ma3rbe possible to secure greater Chinese cooperation in identif34ng
forced labor facilities from which U.S. importers should not make
purchases for the U.S. market
In the interim, we will continue to maximize our usage of
conventional law enforcement sources and methods including reliance on
information supplied by responsible competitors of forced labor
facilities and their customers as well as other reliable business
sources. Among other matters, we plan a program of debriefing of
returning business visitors to China as well as emigres and other
travelers who may possess useful information regarding forced labor
Facilities.
__________
Responses of Mr. Bader to Questions Asked by Senator Wellstone
Question 1. Since both State and Customs agree that the PRC is not
complying with the MOU on prison labor, what measures do you recommend
to ensure compliance?
Answer. Chinese cooperation has been erratic. We have communicated
to Chinese officials on numerous occasions our concern that compliance
be timely and consistent, and that it not be subject to the influence
of other developments in our bilateral relations.
We continue to explore ways to enhance Chinese cooperation and
encourage full compliance with the MOU. Improved cooperation by the
Chinese is likely to result from steady diplomacy, solid investigations
of specific cases by U.S. Customs, and the relationships our officials
develop on the ground with Chinese counterparts. We have indicated to
the Chinese, including in a recent letter from Ambassador Sasser to the
Minister of Justice, that satisfactory resolution of prison labor
allegations is important to the overall health of the bilateral
relationship.
Question 2. Both the MOU and MOU/SOC appear to have been based on
the premise that we can depend on the PRC to provide information
regarding prison labor exports to the U.S. and investigate suspected
prison labor exports destined for the U.S. Since the Chinese government
is at least complicit, if not culpable, in exporting such goods to the
U.S. how could we expect Beijing to provide more than token compliance
with the MOU and MOU/SOC?
Answer. We would not agree with the premise that the Chinese
government is necessarily ``at least complicit, if not culpable'' in
cases of prison labor exports to the U.S. On the contrary, the Chinese
made a public commitment to cooperate on this issue when they signed
the MOU and MOU/SOC, the only nation to make such a commitment with
respect to our laws concerning import of goods made by prison labor.
Although Chinese cooperation in implementing the MOU has been
neither satisfactory nor consistent, the solution to the problem is not
to scrap the existing agreement. We would not be able to conduct
investigations outside the procedures established in the agreement.
Chinese cooperation is essential to successful prosecution of
violators. Information on suspected prison labor obtained from
informers is often enough to issue a detention order on a suspected
shipment, but rarely sufficient to sustain a finding of fact or to
obtain a conviction in U.S. courts.
The most effective way to get that cooperation is to convince the
Chinese that it is in their own interest to do so. The agreement,
backed by patient diplomacy and solid evidence, is the best mechanism
for getting that cooperation.
Question 3. When President Clinton issued an executive order in
1993 presenting conditions for renewal of China's MFN trade status for
1994, he included PRC compliance with the prison labor MOU as a
condition for MFN renewal. What role did problems in enforcing the
prison labor MOU have in the President's subsequent decision to de-link
human rights issues from renewal of China's MFN status and other trade
issues?
Answer. The decision in 1994 to de-link MFN from human rights
reflected the judgment that, in terms of our overall relationship with
China, we had achieved as much as we could from the linkage and that
maintaining it would not be productive either in human rights terms or
in terms of other significant U.S. interests.
Question 4. Is the Administration taking actions to encourage key
allies to curb importation of Chinese goods made by prison labor? If
so, please describe these actions.
Answer. The U.S. and EU share the common goal of integrating China
into the international community. We have consistently conveyed to the
EU the need for a common approach to China on human rights, non-
proliferation, and other concerns.
U.S. officials have raised the specific issue of prison labor in
China with EU officials. The EU supports strengthening provisions for
monitoring ILO conventions on core labor standards. However, the EU has
no agreement with China on the use of forced labor. European Commission
Vice President Sir Leon Brittan has stated that the EU would not
withdraw GSP from China as a result of allegations of the use of forced
labor there even if the International Confederation of Free Trade
Unions or other body were to present a formal petition in this regard.
On separate occasions, government officials from the United
Kingdom, Germany, Canada and Australia have indicated that Chinese
prison labor exports are not an issue of concern in their bilateral
relations with China.