[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]



 
                  LABOR RIGHTS AND CONDITIONS IN CHINA

=======================================================================


                               ROUNDTABLE

                               before the

              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 18, 2002
                               __________

 Printed for the use of the Congressional-Executive Commission on China















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              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                    LEGISLATIVE BRANCH COMMISSIONERS


Senate                               House

MAX BAUCUS, Montana, Chairman        DOUG BEREUTER, Nebraska, Co-
CARL LEVIN, Michigan                 Chairman
DIANNE FEINSTEIN, California         JIM LEACH, Iowa
BYRON DORGAN, North Dakota           DAVID DREIER, California
EVAN BAYH, Indiana                   FRANK WOLF, Virginia
CHUCK HAGEL, Nebraska                JOE PITTS, Pennsylvania
BOB SMITH, New Hampshire             SANDER LEVIN, Michigan
SAM BROWNBACK, Kansas                MARCY KAPTUR, Ohio
TIM HUTCHINSON, Arkansas             NANCY PELOSI, California
                                     JIM DAVIS, Florida

                     EXECUTIVE BRANCH COMMISSIONERS

                 PAULA DOBRIANSKY, Department of State
                 GRANT ALDONAS, Department of Commerce
                D. CAMERON FINDLAY, Department of Labor
                   LORNE CRANER, Department of State
                    JAMES KELLY, Department of State

                        Ira Wolf, Staff Director
                   John Foarde, Deputy Staff Director

                                  (ii)











                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

Opening statement of Ira Wolf, Staff Director, Congressional-
  Executive Commission on China..................................     1
Hankin, Mark, Coordinator for Program Development, the American 
  Center for International Labor Solidarity, AFL-CIO.............     2
Athreya, Bama, Deputy Director, International Labor Rights Fund..     6
Freeman, Anthony G., Dirctor, Washington Branch Office, 
  International Labor Organization...............................    11

                                APPENDIX
                          Prepared Statements

Hankin, Mark.....................................................    30
Athreya, Bama....................................................    34

                       Submissions for the Record

Memorandum of Understanding for Cooperation Between the 
  International Labour Office and the Ministry of Labour and 
  Social Security of the People's Republic of China, submitted by 
  Anthony G. Freeman.............................................    39
Briefing notes prepared by the ILO Washington Branch Office, 
  submitted by Anthony G. Freeman................................    47









                  LABOR RIGHTS AND CONDITIONS IN CHINA

                              ----------                              


                         MONDAY, MARCH 18, 2002

                    Congressional-Executive
                               Commission on China,
                                               U.S. Senate,
                                                    Washington, DC.
    The roundtable was convened, pursuant to notice, at 2:30 
p.m., in room SD-215, Dirksen Senate Office Building, Mr. Ira 
Wolf (staff director of the Commission) presiding.
    Also present: Mr. John Foarde, Deputy Staff Director; Ms. 
Holly Vineyard, U.S. Department of Commerce; Mr. Melvin Ang, 
Office of Senator Feinstein; Mr. Robert Shepard, U.S. 
Department of Labor; Ms. Jennifer Goedke, Office of 
Congresswoman Kaptur; and Mr. Dave Dettoni, Office of 
Congressman Wolf.

 OPENING STATEMENT OF IRA WOLF, STAFF DIRECTOR, CONGRESSIONAL-
                 EXECUTIVE COMMISSION ON CHINA

    Mr. Wolf. Let us get started. I would like to welcome 
everyone to the second staff-led public roundtable of the 
Congressional-Executive Commission on China.
    These roundtables were created by Senator Baucus and 
Congressman Bereuter, our chair and co-chair, in order to delve 
into the issues that the Commission is responsible for in 
greater depth than in larger hearings. Today, the topic is 
labor rights and labor conditions in China.
    Next week, in this room, Monday, March 25 at 2:30, we will 
hold the third roundtable, which will be on the issue of 
religious freedom in China. I just want to note that on April 
11, there will be a full Commission hearing chaired by Senator 
Baucus and Congressman Bereuter on human rights and legal 
reform. You can check our Web site at www.cecc.gov for further 
information about hearings and roundtables.
    Today, we have three witnesses. First, we have Mark Hankin, 
who is program development coordinator for the American Center 
for International Labor Solidarity, and who has a long 
background in international labor concerns; Bama Athreya, who 
is deputy director of the International Labor Rights Fund; and 
Tony Freeman, who is director of the Washington office of the 
International Labor Organization [ILO].
    Originally, we had a fourth witness, Jeff Fiedler, who is 
the former president of the Food and Allied Services Trade 
Department of the AFL-CIO. But because of a death of a very 
close friend and colleague, at the last minute Jeff had to 
cancel his appearance today. We hope to have him at another 
session to bring his wealth of experience in China labor issues 
to the Commission.
    The format today will be a 10-minute presentation by each 
of the presenters, and then the staff will each engage in 5 
minutes of questions, and hopefully some interaction and 
discussion. We will continue until we have exhausted ourselves 
and exhausted the three of you.
    So, Mark, if you do not mind starting. We are going to use 
these lights right in front of you, so after 9 minutes you will 
see the yellow light, then you will hear the ping at 10. You do 
not have to stretch 9 minutes of comments into the 10th minute.
    Please, Mark, go ahead.

STATEMENT OF MARK HANKIN, COORDINATOR FOR PROGRAM DEVELOPMENT, 
THE AMERICAN CENTER FOR INTERNATIONAL LABOR SOLIDARITY, AFL-CIO

    Mr. Hankin. Thank you, Ira. I appreciate the opportunity to 
present our views on the labor rights situation in China and to 
comment on strategies that address labor rights violations 
there.
    The discussion we are having today is an extremely 
important one. It will become more important in the future, not 
only to our Nation, but especially developing countries around 
the world who compete in the world economy with China now that 
China is a member of the World Trade Organization [WTO]. That 
is a long and complicated story and deserves a separate session 
all by itself.
    There is little doubt that China has made amazing economic 
progress since 1978 when Deng Xiaoping opened the country to 
the outside world, and later initiated the first socialist 
market economic reforms.
    With all of this good news then, why do many scholars talk 
about the possibility of China imploding?
    Uniformly, they say that China is a nation where greed and 
corruption are endemic and where the rule of law means little 
or nothing. They tell us that it is a country where people have 
no institutions that represent their interests and which serve 
their social welfare needs.
    When placed in these situations, people feel powerless. 
Suddenly, without warning, they explode. That is what we are 
glimpsing in China today.
    Many years ago, the first president of the AFL-CIO, George 
Meany, uttered a simple truism: ``There is no democracy without 
free trade unions and no free trade unions without democracy.''
    As the State Department's most recent annual report on 
human rights points out, there is neither democracy nor free 
trade unions in China. In the place of democratic unions, China 
has state-controlled organizations that have a monopoly on 
purporting to represent workers.
    No one disputes that the Communist Party controls these 
unions. The Party dictates their mission, not workers. That is 
why the Politburo installed one of their own as the head of the 
All China Federation of Trade Unions [ACFTU].
    I have referenced the State Department's annual human 
rights report because we believe it is generally an accurate 
report and a good baseline from which to start a discussion on 
labor rights.
    Let us be clear. The report is by no means perfect. Part of 
the problem with the report, is it reflects a general 
misunderstanding of how democratic industrial relations systems 
work.
    Fundamentally, democracy and democratic industrial 
relations are peas in the same pod. One cannot talk about 
collective bargaining without free trade unions.
    I would urge the staff of this Commission, as it reviews 
the human rights report, to keep this in mind and not think 
that the thousands of so-called collective agreements that the 
Chinese Government now says are in existence are actually 
legitimate collective bargaining agreements.
    I would also urge the Commission to look at the new trade 
union law to see whether it really expands the authority of the 
ACFTU to allegedly represent workers' interests in the private 
sector.
    When you do, you will see it is an instrument that reflects 
the government's desire to control workers as much or more than 
it does to represent their social welfare interests. In that 
revised law, higher-level ACFTU organizations approve 
``workplace trade unions.'' These factory-level structures are 
also subject to their discipline.
    For the record, there is no legal right to strike in China. 
The government uses forced labor in prisons. We see a rise in 
children working as the country's education system falls apart, 
and we know that discrimination against women workers is 
increasing, especially in the state enterprise sector.
    Let us not forget. Worker leaders have been, and are being, 
arrested in China. The International Labor Organization, among 
others, has made pleas on their behalf, which are almost always 
ignored by the Chinese Government.
    A real problem is that outsiders have almost an impossible 
time tracking these events, since word of them usually does not 
leak out to the outside world.
    Any discussion on labor rights and standards in China is 
really a discussion of two separate economic sectors: the State 
enterprise sector, and for lack of a better term, the non-state 
sector.
    Discussions of labor relations in the state sector center 
on broken promises to workers about the impacts of economic 
reform, corrupt managers who steal State assets for personal 
profit, and a lack of social safety nets (health, education, 
and housing) to replace traditional enterprise benefit 
structures that were paid for by the enterprise.
    In the State sector, the so-called trade union was and is a 
cost of doing business to an enterprise. The trade union's role 
is to deliver recreational and some social services to workers.
    Workers in the State sector did not expect their union to 
be an advocacy organization, and they certainly do not see it 
that way now.
    The primary role now of the ACFTU in China's rust-belt 
cities is to help workers find new jobs. Long lines of workers 
seeking day jobs betray the fact that the unions are unable to 
fill this function. They do not have the resources, and the 
jobs simply do not exist.
    The government has also charged the ACFTU with providing 
legal services to workers. Few ACFTU unions have taken this 
charge seriously. The growing number of street demonstrations 
that occur on a daily basis in China testify to this fact.
    The non-state sector in China employs workers in joint 
enterprises and township enterprises, and solely owned 
enterprises. This sector has become the main engine of economic 
growth in the country, and the employer of millions of migrant 
workers.
    With limited resources and no experience, ACFTU branches 
have shied away from reaching out to workers in these 
enterprises, especially since foreign employers and their local 
partners have made it clear they are not wanted.
    The employers view these unions as economic rent-seekers 
who offer little value. Their workers are already docile. Anita 
Chan, a keen observer of Taiwan-and Hong Kong-run and/or-owned 
factories, has described these plants as militarized facilities 
where there are strict rules and a series of set punishments.
    Workers employed in these enterprises have no knowledge of 
their rights or the country's labor law. Not surprisingly, they 
have no understanding of what a union is.
    I will not dwell in detail on the serious labor standards 
law violations that exist in these factories. They start with 
violations of occupational safety and health codes, include 
physical punishment of workers, non-payment of wages, forced 
overtime, and forms of bonded labor.
    Nor need I tell you that embarrassed United States and 
European purchasing companies have been scrambling to find ways 
to protect their brand reputations from the charges that they 
source from Dickinsonian sweat shops in China.
    China's newly revised trade union law has been praised by 
some as a step forward because it enhances the ability of the 
All China Federation of Trade Unions to enter into private 
sector factories.
    How far local officials will go to allow ACFTU cadres to 
use the provisions of the new law to establish unions in 
private sector factories is unknown. Clearly, past practice 
indicates that, where local officials have an economic stake in 
the enterprise to either through hidden ownership or pay-offs, 
the ACFTU will be told to stay away.
    While in this testimony I have pointed to the enormous 
problems in the labor rights area in China, I have not meant to 
imply that we are powerless to assist Chinese worker activists 
who are seeking to promote positive change. Indeed, the AFL-CIO 
has had a commitment to promote democratic change and labor 
rights in China for many years.
    Now, let me turn to the opportunities we see for future 
work. In late January of this year, the Solidarity Center held 
a session with its partners and leading experts on China in 
Washington, DC to review strategies on China.
    Participants at the meeting recognized that the Chinese 
Government has tried to put into place legal systems to ensure 
an orderly transition from a state-controlled to a market 
economy.
    These new legal avenues present important opportunities for 
labor rights promotion. Discussions at the meeting pointed to 
the need to help educate Chinese workers about their rights 
under law.
    Participants also agreed that it was vital to test newly 
developing spaces in China through these legal mechanisms to 
determine if worker rights can be advanced using such issues as 
occupational safety and health and gender discrimination as 
door-openers.
    Meeting participants also acknowledged the continuing need 
for research on emerging trends in China related to worker 
rights, especially given China's economic reforms and entry 
into the WTO.
    They also agreed that it was vital to build consensus in 
the international trade union community about how to approach 
the ACFTU and the Chinese Government concerning labor rights 
issues.
    In particular, we feel it is essential to support worker 
rights advocacy and information dissemination about the labor 
rights situation in China. This information can be made more 
readily available to workers in the country and to other 
interested parties in and outside of China, including foreign 
trade unions, in an effort to stimulate creative ways to solve 
labor-related disputes.
    In that regard, we strongly support the continuation of 
Radio Free Asia programming on labor subjects. We also believe 
that the use of new Web-based technologies should be expanding 
as a means to provide information to workers.
    As I indicated earlier, the space that may now be available 
in the non-state sector to promote the development of 
independent worker organizations should be explored. This can 
be done in a variety of ways, including looking at the 
possibility of enlisting cooperation of U.S. companies and 
other foreign companies.
    Also, support should be given to those organizations able 
to identify Chinese worker activists in the county, and through 
them information on labor rights and strategies to achieve 
these rights should be made available to rank-and-file workers.
    Efforts should also be supported to build the capacity of 
law schools, lawyers, and legal aid workers, to respond to the 
growing demand among private sector workers for legal services 
dealing with labor and employment law issues.
    This effort would also support training legal workers and 
would seek to move from individual to collective cases. It 
would also involve the establishment of outreach centers that 
offer social services, as well as rights information.
    In addition, initial discussions must be broadened 
concerning labor and employment issues, occupational safety and 
health, and gender with key interlocutors in the State sector 
in the specific locations where restructuring State enterprises 
is occurring.
    This would involve bringing United States experts to China. 
Pragmatic approaches would stress mechanisms that empower 
workers that take advantage of existing legal options.
    Finally, there is a dearth of academics studying labor 
relations in China and our knowledge of what is going on inside 
the ACFTU is extremely limited.
    While the ACFTU is not a trade union, there are people in 
the ACFTU that want to increase its advocacy role. Other 
individuals within the organization understand that a 
prosperous and stable China needs to have free trade unions as 
an essential actor in solving labor disputes.
    Interested observers should reach out and encourage these 
individuals without conferring legitimacy on the overall 
organization. Academics and academic institutions are best 
suited to play this role. Thank you.
    [The prepared statement of Mr. Hankin appears in the 
appendix.]
    Mr. Wolf. Thanks a lot, Mark.
    Bama.

STATEMENT OF BAMA ATHREYA, DEPUTY DIRECTOR, INTERNATIONAL LABOR 
                          RIGHTS FUND

    Ms. Athreya. Thank you very much. Thanks very much to the 
Commission for the opportunity to present this statement today.
    In the race to the bottom, China is the bottom. The most 
extreme cases of labor rights repression can be found in China, 
thanks to the fact that its enormous and desperate population 
of unemployed have no choice but to accept starvation wages and 
to suffer abuse.
    With well over a billion people, of course China has the 
world's largest labor force. In addition, despite the GDP 
growth rates that appear on paper, there are nowhere near 
enough jobs, so most of these billion-plus people are barely 
surviving.
    In the countryside, where 900 million of these people live, 
the land cannot support the growing population.
    Even those peasants who had been getting by are now faced 
with competition from foreign agricultural markets, a result of 
expanded trade ties and China's recent entry into the WTO. That 
will put tens of millions more out of work.
    These tens of millions will flee to urban areas to seek 
work. However, China's cities are also plagued with vast 
numbers of unemployed. Again, as a result of free market 
pressures, many of China's state-owned enterprises have gone 
out of business in recent years, and many more will be forced 
to shut their doors over the next few years.
    This has already put an estimated 30 million workers--that 
is the Chinese Government's estimate, and very conservative--
out of work, and according to a report by a major United States 
investment firm, approximately 40 million more will lose their 
jobs over the next 5 years. This may ultimately add up to 100 
million or more unemployed and their families.
    To make matters worse, these millions are unable to 
organize and mobilize for government protection or assistance. 
China remains a dictatorship, where any attempt to organize 
brings imprisonment, and possibly torture or execution.
    What does this mean for those workers who are lucky enough 
to have jobs? It means they face every type of labor rights 
abuse. Child labor? China has it. Last year, an elementary 
school in a rural area exploded, killing and injuring several 
children.
    The Chinese Government tried to cover up this story, 
claiming that a disgruntled former employee had planted a bomb 
in the school. Soon, however, the international press was able 
to reveal the true story. The school was a fireworks factory, 
where young children were forced to work under extremely 
hazardous conditions.
    Worse yet, it was later exposed that this was far from the 
only school that was actually a factory staffed by child 
laborers. Shrinking resources for China's school districts had 
led to a central government directive to the schools throughout 
the country to find creative means of raising their own 
budgets.
    This apparently had led many schools in China's countryside 
to set up their own businesses in recent years. Naturally, 
those businesses often turn to the most immediately available 
source of labor, the children who are not in any case being 
educated.
    Although, in the wake of the exposes the Chinese Government 
did claim it would be putting a stop to this policy, there may 
be hundreds, or even thousands, of such factories still hidden 
away in China's countryside.
    Prison labor? China has it. Indeed. It is China's official 
policy to punish prisoners in reform-through-labor programs. 
However, the Chinese Government may be turning a pretty profit 
on prison labor, which means there is quite an incentive to 
keep people in prison.
    In 1998, a Chinese dissident who had been exiled to the 
United States revealed that, while he was in a China prison 
camp, he had been forced to make soccer balls for Adidas 
Corporation. Adidas management apparently had no idea that the 
factory from which it was sourcing was, in fact, a prison camp.
    They claimed that they not only stopped sourcing in this 
particular factory, but also instituted more rigorous policies 
to monitor all of their factories in China.
    Unfortunately, thorough monitoring may be impossible for 
most retailers, as many retailers have hundreds, or even 
thousands, of supplier factories and only a handful of 
monitoring staff.
    Equally unfortunate, other multi-national corporations were 
apparently not deterred by the Adidas example and continue to 
source products from locations which they do not fully know, 
and some of which are prison camps.
    Just 2 months ago, a Chinese refuge in Australia, for 
example, came forward to reveal that she had been forced to 
produce toy rabbits for Nestle Corporation in a Chinese prison. 
Nestle's defense was ignorance of the conditions of its 
supplier. China's lack of transparency provides a very 
convenient shelter for labor exploitation.
    One could continue for hours to detail the litany of abuses 
routinely suffered by Chinese factory workers. For the moment, 
I would only like to note that my organization, the 
International Labor Rights Fund, has been in dialog with a 
number of multinational corporations that are attempting to 
monitor their suppliers in China.
    The companies themselves admit that the following chronic 
problems exist in their factories: Failure to pay minimum wage, 
failure to pay proper overtime, excessive hours of overtime, 
missing, blocked, or locked fire exits, improper deductions 
from wages, and failure to properly document the age of 
workers.
    I would like to stress here the fact that these are 
apparently common problems among that small handful of 
companies that are actually trying to do the right thing and 
monitor labor standards.
    We can only imagine that even worse abuses are suffered in 
factories among the vast majority of companies which are not 
trying to institute labor codes of conduct.
    That there are problems, is indisputable. Therefore, the 
two real questions that this Commission now faces are, why 
should we care, and what can we do about it?
    The short answer to the former question, is the U.S. 
Government should care because the U.S. public cares. The 
average United States citizen may benefit from labor repression 
in China in two ways. First, they benefit as consumers of cheap 
products. Second, they benefit as shareholders in companies 
that are invested in China.
    A number of recent consumer actions and shareholder actions 
highlight the reality that the average U.S. citizen is not 
merely acting out of pure greed. Consumers do care about the 
production conditions connected with the products they buy. 
Investors do care about the ethical behavior of the 
corporations in which they invest. Both of these groups care 
about human rights.
    I would like to mention just a few actions targeting major 
United States corporations as evidence of why neither United 
States companies, nor the United States Government, can afford 
to ignore labor rights abuses in China.
    A very recent expose of Wal-Mart's factories in China 
revealed excessively long working hours, failure to pay a 
living wage, and unsafe and unsanitary working conditions. . As 
a result of these reports, the Domini 400 Social Index removed 
Wal-Mart from its portfolio.
    Another case. A Hong Kong-based human rights group 
investigated Chinese factories producing for Disney Corporation 
and found a similarly long list of labor rights abuses.
    To quote from the report, the workers suffered 
``excessively long hours of work, poverty wages, unreasonable 
fines, workplace hazards, poor food, and dangerously 
overcrowded dormitories.''
    Now not only have Disney stores been the target of protests 
by concerned consumers, but Disney is also facing a shareholder 
resolution for its poor labor practices.
    Shareholders are also broadly concerned with the actions of 
United States companies in supporting the Chinese Government. 
In the past several months, for example, AOL Time-Warner has 
been the subject of media criticism, and is also facing a 
shareholder resolution for its decision to invest in China.
    Despite the fact that the company's flagship Time Magazine 
has been banned in China, apparently the issue of freedom of 
speech is not of concern for AOL Time-Warner.
    According to a recent article in the Weekly Standard, ``AOL 
is quietly weighing the pros and cons of informing on 
dissidents if the Public Security Bureau so requests; the right 
decision would clearly speed Chinese approval for AOL to offer 
Internet services and perhaps get a foothold in the Chinese 
television market.''
    There are numerous other examples of company practices in 
China that have generated shareholder concern here in the 
United States. Time constraints prevent me from describing all 
of these in detail, but I do want to call this Commission's 
attention to the fact that other U.S. companies in the high-
tech sector, including Sun Microsystems and Cisco Systems are 
also facing shareholder actions based on the exposure of those 
companies' work to assist the Chinese police to develop 
surveillance capacities.
    Companies whose very existence can be attributed to an 
environment that allows the free flow of ideas vital to 
innovation apparently have no difficulty profiting from 
suppressing those freedoms elsewhere. Fortunately, although 
Chinese workers cannot protest, United States shareholders can.
    This is a panel about labor rights, so I do not want to 
venture too far into the overall themes of human rights and 
corporate responsibility. However, I bring up these latter 
cases because I want to stress the importance of ensuring that 
U.S. official rhetoric conforms with actual U.S. policy, and 
that is something this Commission is empowered to do.
    The United States Government has claimed repeatedly in 
recent years that, by opening up China to United States 
business, we would be opening up China to democratic values as 
well.
    President Clinton made this point in a number of speeches 
related to the promotion of normalized trade relations with 
China. Just last year, Secretary of State Colin Powell made a 
similar statement on the eve of a visit to China. Powell's 
statement claimed that United States businesses were bringing 
management and worker relations concepts, including improved 
health and safety practices, to China. As the above examples 
illustrate, this is a somewhat controversial claim.
    There are several things the United States Government might 
do to truly promote better respect for labor rights in China. 
First of all, the United States Congress should revise the 
long-standing idea of a binding set of human rights principles 
for United States business in China.
    The United States business community claims it is already 
promoting better workplace conditions and standards in China. 
As I have just noted, many U.S. officials are eager to be able 
to echo those claims.
    Therefore, there should be no objection on any side to 
articulating clearly the labor rights standards which should be 
operational among all United States businesses in China, and 
United States companies should not have anything to fear from 
public scrutiny on these matters.
    The idea of a legislative set of principles for United 
States business in China is not new. Many of you may be 
familiar with the ``Miller Principles,'' first articulated by 
Congressman John Miller in 1991, also introduced in the Senate 
in the early 1990's by Senator Ted Kennedy.
    The Miller principles won both House and Senate 
ratification in the early 1990's, although they never passed 
both Houses at once. It is time to update and reintroduce those 
principles and to ensure that they contain a public review 
component similar to those contained in the OPIC legislation.
    Also on the subject of the United States Government 
rhetoric versus reality, I note that a number of United States 
officials publicly claimed that China's entry into the WTO 
would inevitably lead to better respect for rule of law in 
China. I am going to abbreviate my comments somewhat, since I 
see that my time is limited.
    But I do want to note that that has not been the case in 
other countries. We have not seen that expanded trade ties 
necessarily lead to better implementation of labor rights 
protections, for example, in Bangladesh, Malaysia, Indonesia, 
and the list goes on. Quite the opposite, they seem to have 
undermined labor standards.
    Therefore, we should not assume that the WTO entry will 
automatically lead to better enforcement of Chinese labor 
protections. The U.S. Government can be a positive force for 
change in this area by advocating proactively for legal reform 
rather than simply waiting for the WTO to solve all ills.
    The Chinese Government has recently passed a new trade 
union act, as my colleague Mark Hankin has mentioned, and a new 
occupational safety and health law. The United States 
Government should engage relevant Chinese Government officials 
to encourage further labor code revisions and that those labor 
code revisions be conducted with the input of international 
labor experts to ensure that reforms bring China into full 
conformity with ILO standards.
    The United States Government can also encourage China to 
fully implement its commitments to the ILO's Declaration of 
Fundamental Principles and Rights at Work. While in many 
aspects China's labor laws already do conform to ILO standards, 
in two important areas, freedom of association and forced 
labor, they do not.
    Rather than ignoring ILO recommendations, as it has done 
for several years, the Chinese Government should be encouraged 
to engage in a productive dialog with the ILO on the subject of 
legal reforms to bring its laws into full compliance with these 
international standards.
    If I may be permitted, Ira, I would like to just continue 
with a few recommendations. It will take about another minute.
    Mr. Wolf. All right.
    Ms. Athreya. Thank you.
    The United States Government should also independently 
support rule of law initiatives in China, not only the new 
Trade Union Act, but also China's basic labor code are in need 
of clarification in several areas, as, again, my colleague Mark 
Hankin has mentioned.
    Assisting local labor advocates to bring test cases is one 
way in which the United States Government could help bring 
about clarification in this area, and also strengthen the 
network of lawyers and legal advocates who are capable of 
taking on such cases in China.
    The United States Government should also advocate on behalf 
of those who are imprisoned each year for attempting to 
exercise their basic rights. There are a number of cases each 
year. Amnesty International has excellent documentation on 
these, as does John Kamm's Dui Hua Foundation, of labor leaders 
who are jailed for attempting to organize or attempting to 
otherwise speak out on the problem of labor rights abuses.
    What is important here, is that United States officials not 
only bring up on a case-by-case basis the names of those 
jailed, but in their dialog with Chinese officials make clear 
the basis on which we understand these cases to be violations 
of fundamental internationally recognized labor rights, that 
these are not criminals, these are individuals who are 
attempting to organize rights which are recognized 
internationally.
    Finally, I would like to note that the 2008 Olympic Games 
in Beijing will present another opportunity to influence the 
Chinese Government. It should not be a given that, under any 
circumstances, the United States will participate in the 2008 
Games.
    I do want to note that we expect to have to keep an eye on 
things as the construction for the facilities of the Olympic 
Games continues, and it would be helpful if the U.S. Government 
did so as well.
    Thank you very much to the Commission for accepting this 
statement.
    [The prepared statement of Ms. Athreya appears in the 
appendix.]
    Mr. Wolf. Thanks. Since we are keeping an official record, 
your statement will be printed and posted as well. We will put 
in whatever written statements you have, and other back-up 
documents as well.
    Tony Freeman, please. Tony.

 STATEMENT OF ANTHONY G. FREEMAN, DIRECTOR, WASHINGTON BRANCH 
            OFFICE, INTERNATIONAL LABOR ORGANIZATION

    Mr. Freeman. I want to express my appreciation also to the 
Commission for the opportunity to discuss ILO programs in 
China. I am not going to talk much about the conditions in 
China, but rather what our objectives are in China. Bama 
Athreya has already laid out the ILO's mandate. A good part of 
what we seek to do is what she has suggested.
    I want to start, first, on the standards side because that 
is the oldest function of the ILO, standards setting, getting 
countries to ratify the standards, and then encouraging 
countries to comply with those standards in law and practice.
    China has ratified a total of 23 conventions so far, of 
which 19 are still in force. Two of them are fundamental human 
rights conventions, one on equal pay for equal work, and the 
other a minimum age convention. The other ratified conventions 
are what we would call technical or social welfare conventions.
    Hong Kong and Macao have a greater number of conventions 
that the People's Republic of China has accepted. Hong Kong is 
bound by 40 conventions, Macao by 30.
    I have prepared more detailed background notes, which are 
available in the back of the room. I am going to just touch on 
highlights here in the 10 minutes that are available to me.
    When a country ratifies an ILO convention, it is obliged to 
submit periodic reports to the Organization on how its law and 
practice meet the terms of the convention. There are various 
supervisory bodies in the ILO which regularly review these 
ratifications to see whether the commitment is actually being 
met.
    Since China has not ratified either the core freedom of 
association conventions or the core forced labor conventions, 
we have other ways of trying to get at that. An important 
mechanism is the Committee on Freedom of Association which 
receives complaints, whether a country has ratified the 
conventions or not. There have been a number of China cases 
which I have sought to summarize in the background notes.
    Basically, there has been sharp criticism from the 
Committee on Freedom of Association for the failure of Chinese 
law and practice to meet the requirements of the Freedom of 
Association Principles.
    The committee has sharply criticized the arrests of workers 
who have tried to organize outside the official trade union 
movement, which is illegal in China. And there have been 
detentions or arrests, under the Education through Labor 
system, which the Committee on Freedom of Association finds to 
be a form of forced labor and unacceptable.
    So, our principal problems, as Bama has laid out already, 
in the standards area in China are freedom of association and 
forced labor.
    Nevertheless, China has accepted--in fact, voted for--and 
is bound by the 1998 Declaration of Fundamental Principles and 
Rights at Work, which declares it to be an obligation of 
membership in the ILO to respect, promote, and realize in good 
faith, in accordance with the constitution, the principles that 
lie behind the eight conventions that have been identified as 
fundamental conventions.
    These principles are listed in the Declaration as being 
freedom of association and effective recognition of the right 
to collective bargaining; elimination of all forms of forced or 
compulsory labor; the effective abolition of child labor; and 
elimination of discrimination in respect to employment and 
occupation.
    We have been engaged with China now for about 10 years or 
so in promoting increased ratification and application by China 
of ILO conventions. There are eight conventions that have been 
ratified since the PRC took over the China seat in 1983.
    Along with the Declaration principles comes a complicated 
set of so-called ``follow-up'' procedures which require new 
reporting by member states on all four of the principles that I 
have mentioned, whether the countries are able to ratify the 
relevant conventions or not.
    The countries submit an annual report. It is a self-
assessment, alongside of which however, trade unions and 
business organizations may submit their own critiques. That is 
to say, such organizations within the country and also 
international trade union and business organizations.
    So, we are beginning to get a rich amount of information 
from and about China and we are also getting increased 
ratifications. China has been providing a fairly comprehensive 
amount of reporting and there has been a certain amount of 
labor law reform as China has proceeded with its notification 
of ILO conventions.
    A good part of the advice that has been provided by the ILO 
over the last 10 years has to do with changing of law, and then 
monitoring implementation of those laws.
    There has been an ILO technical cooperation program in 
China since the early 1980s. There was a pull-back after the 
Tiananmen Square events in 1989, but since 1996 there has been 
a renewal of assistance.
    There were a number of projects between 1996 and 2001 in 
the area of urban employment promotion, rural employment 
promotion, small enterprise development, and a greater Mekong 
multi-country program for elimination of trafficking in women 
and in children.
    In May of last year, our director general, for the first 
time, visited China, or at least the first time since the 
Tiananmen Square events, and inaugurated a new era in China-ILO 
relations with the signing of a Memorandum of Understanding 
[MOU] on a broad front of labor issues.
    I do not want to say it was all peaches and cream during 
this visit. The director general and the Minister of Labor of 
China agreed to disagree on whether China was or was not in 
conformity with freedom of association and forced labor 
principles.
    The ILO requested further information from China on the 
detention cases that had been raised in the freedom of 
association complaints that had been examined previously, 
including the whereabouts of trade union detainees and 
requesting that they be released.
    The important thing about this new Memorandum of 
Understanding, is that China has agreed to the four principal 
objectives of what we call the ILO's Decent Work Agenda. Those 
four basic aims are: Promotion of the ILO Declaration on worker 
rights and principles and international labor standards; 
employment creation; social protection and improvement of 
social network; the promotion of tripartism and worker/
employer/government cooperation.
    So, these four things form an integrated package. There is 
a commitment on the part of the government to work on all four 
objectives, including, most importantly for us, the first 
objective, which is the fundamental rights and principles of 
work.
    The program as I have already tried to illustrate, includes 
advice, consultations, and visits and the promotion of 
ratification and implementation of ILO conventions is part of 
that program.
    Let me just read very quickly what the mutually agreed 
priorities in the MOU are under the first objective of 
promoting international labor standards and the ILO 
Declaration.
    They are: (1) Activities to promote and realize the ILO 
Declaration; (2) to provide technical advice and assistance for 
ratification and application of ILO conventions, including the 
fundamental and priority conventions; (3) to provide assistance 
in the implementation of ratified ILO conventions; (4) to 
conduct information and educational activities to promote 
greater awareness of international labor standards; and (5) to 
strengthen the institutional capacity of labor inspections to 
promote the effective application of ILO conventions, taking 
into account the relevant conventions on labor inspection.
    We have seen two new ratifications this year and we have 
two or three that China is working on which we expect to come 
to fruition shortly.
    I have a statement that I have received from my 
headquarters today which states the following with regard to 
fundamental workers' rights.

    China is in the process of ratifying Convention 182.

    That is a convention on the worst forms of child labor.

    It has already ratified Convention 100 and 138. Convention 
100, as I said, is on equal work for equal pay, and 138 is on 
minimum age.
    It is foreseen that work on discrimination will continue, 
leading in due time to the ratification of the corresponding 
instrument, Convention 111.
    Given that there is a growing interest, in knowledge, and 
experience in collective bargaining for which workshops have 
been organized, it is possible to think that in China the road 
to an eventual recognition of the principles of freedom of 
association may lead to an increased practice of collective 
bargaining as the economy is restructured.
    At this stage the ILO is pursuing this approach, which may 
in due time lead to ratification of Convention 98 on collective 
bargaining.
    In the short run, no breakthrough on forced labor would 
seem to be imminent. The position of the ILO, as stated by the 
director general when the MOU was signed, is identical to that 
of the U.N. High Commissioner for Human Rights.
    The ILO has underlined that it is ready to help the 
government to implement the principles of abolition of forced 
labor, including help with ratification of the relevant 
conventions.

    In the area of employment promotion, a major initiative 
will be a major employment forum that will take place in 
October of this year, which will bring international experts 
together with China to discuss all aspects of the global 
employment agenda in China and develop a comprehensive plan of 
action.
    We are also working on a comprehensive social security 
program which is vitally needed because of all of the layoffs 
that have begun as part of the structural reforms, massive 
layoffs which are going to get worse, not better, in the 
interim period of 18 months or so. There needs to be put in 
place an effective social security system, which they do not 
have.
    Last, I want to touch on what is probably a critical issue, 
and that is the question of whether or not, and how, you deal 
with the official so-called trade unions in China, the ACFTU. 
It is a decision of the ILO to work with the official trade 
union movement. There is no doubt that there is no freedom of 
association currently in China. There is an official trade 
union monopoly established by law. Until such time as that 
official monopoly is removed we have violation of freedom of 
association.
    Nevertheless, there is a statement of intent on the part of 
this institution, which at the current time is a part of the 
government system like any other government institution in 
China, to cease playing the role of transmission belt for the 
party and for the government and to become a more independent 
body. So, they are committed, this institution, to acting more 
in defense of the worker interests.
    It remains to be seen to what degree they will fulfill 
that, but we are prepared to work with them. Our workers' 
activities branch, which is an independent or semi-independent 
branch of the ILO, which is run by the workers, of the workers, 
for the workers, has agreed to do this and has entered into an 
MOU directly with the ACFTU.
    We have programs and projects which are aimed at working at 
the enterprise level, trying to get collective bargaining 
started there aimed at reforming the plant-level worker 
organizations into genuinely representative bodies more along 
the lines of the worker committees in European countries.
    My time is up, so I will stop there. Thank you.
    [The information submitted for the record by Mr. Freeman 
appears in the appendix.]
    Mr. Wolf. Thanks. I am sorry, Mark, that you did not get a 
chance to squeeze out an extra 2 minutes, but you live and 
learn.
    Mr. Hankin. Well, we have plenty of time now.
    Mr. Wolf. My first question is for you, Mark. In terms of 
AFL-CIO goals for labor inside China, are you looking at this 
from a perspective of American-based labor standards or from a 
perspective of internationally based labor standards?
    Mr. Hankin. Well, that is a simple one. We always look at 
it on the basis of international labor standards. We have never 
thought that our minimum wage should be adopted by China.
    The ILO has basic, minimal standards. Those are always the 
ones that we look toward, especially in a developing country 
context. Now, obviously we would like people to be paid more 
than those minimal standards, but that is not where we are at.
    Mr. Wolf. What about in areas other than pay?
    Mr. Hankin. Sure. The same thing goes with occupational 
safety and health, child labor. For example, the child labor 
standard that the ILO has is less than the U.S. standard, so 
that is the standard that we would go by. That is what we have 
always talked about. It cuts across all of the labor standards.
    Mr. Wolf. This is a question for all three of you. I think 
everyone has read over the last week about the problems in the 
Daqing oil fields. Clearly, this type of problem about what to 
do with retrenched labor is going to continue.
    Is there any indication that senior elements in the Chinese 
Government who are concerned about this have begun a planning 
process to deal with similar types of unrest and potential 
instability in ways other than to crack down? In other words, 
do you see the beginning of any long-term planning on how to 
deal with the issue.
    Ms. Athreya. I will start. Yes, I do think that we have 
some indication, just in looking at those statements that 
appear publicly, that there are senior China officials who 
would like to find a way to let the system let off steam.
    The one thing that some of our friends in China tell us is 
happening, is there a real black-out on information on protests 
in a lot of different areas. The reason for that, we are told, 
is senior level officials are worried that if information 
starts to freely flow between one area and another, for 
example, with this recent Daqing oil field strike, that if 
workers in other areas found out too much about how workers 
were dealing in one place, that the problem might become too 
widespread to contain.
    So, right now the containment strategy, the dealing-with-
the-crisis strategy, is just to only isolate incidents and deal 
with one incident at a time.
    On the other hand, I do think that, for example, senior 
labor ministry officials are floundering on, what do we do to 
deal with this? I think this is one reason why they are so 
interested in working with the ILO on a larger safety net 
program.
    I also think that passage of the new Trade Union Act, which 
does contain some slightly more space, at least on the subject 
of bargaining and a little bit on the subject of organizing 
than the previous trade union law, that that is an attempt to 
vent off this steam.
    Mr. Freeman. I would endorse that. Certainly there have 
been some changes in the law. We see signs of increased 
mediation/arbitration structures being put in place.
    The government has recognized that the massive layoffs that 
are taking place which are creating a potential for social 
disruption in China, that there is a need to put in place a 
health insurance and social security insurance system that they 
do not have now.
    The law is permitting more space, as Bama just said, for 
defending worker interests. There is something in the new law, 
the amendments of last year, about accepting which recognizes 
that there could be strikes or could be disruptions, and in 
which case it is the role of the trade unions to defend the 
workers' interests in trying to reach resolution.
    Mr. Hankin. Let me agree with much of what has been said 
and see if I can expand a little bit. First of all, I think 
there are two major problems in China. One, is what is 
happening in rural areas now where workers and peasants are in 
open revolt against excess taxes.
    In the urban areas, in the State enterprise sector, clearly 
the authorities are very, very worried about these protests and 
do not have very many simple answers. That is why they are 
doing what Bama said, which is to take one at a time and buy 
off workers, and at the same time they are often arresting 
worker leaders.
    In fact, we are seeing reports out of China all the time in 
which workers are now saying, we do not want to identify our 
leaders because we are afraid they will be arrested. So, that 
is one of the problems.
    Now, this is a very poor country and it does not have a lot 
of resources to throw into social safety nets. That is a major 
issue for the Chinese, how they are going to deal with that.
    Now, our friends, people that think about this a lot who 
are Chinese, tell us that one way to deal with that is to have 
negotiations between workers and authorities when these 
enterprises go out of business--to open up the process so 
workers see what is happening to the assets of these 
enterprises when they go out of business.
    That is where the problem is. The Chinese Government is 
having a hard time, because of the nature of the government, 
because of the nature of the system, because of the lack of 
rule of law, of opening up the process.
    Until they do that, Ira and the rest of you, I think there 
are going to continue to be these problems in China. I do not 
see any easy solutions.
    As I alluded to in my testimony, the trade union is 
supposed to play a role in defending these workers' interests 
and helping them get new jobs. They do not have the resources 
to do that either. The trade unions were financed by these 
State enterprises. Those trade unions are going out of business 
right now.
    Mr. Wolf. Thanks.
    Next, is John Foarde, Deputy Staff Director of the 
Commission.
    Mr. Foarde. First of all, thank all three of you for 
sharing your expertise with us this afternoon. It is really 
interesting.
    I have got a question that really any of you, or all of 
you, might want to address. That is, picking up on the labor 
unrest. I take it we do not have a good sense of the total 
number of incidents of labor unrest, say, in calendar year 
2000. Do we have a sense of their geographic distribution? Are 
they more prevalent in part of the country or another?
    Mr. Hankin. Do you want me to take a crack at that? 
Certainly, as I tried to say in my testimony, there are really 
two Chinas. There is the old state enterprise sector, then 
there is the newer private sector.
    Clearly, labor unrest is taking place most in the rust-belt 
cities where the State enterprises are going out of business. 
So, where you find those old enterprises going out of business, 
you are going to see a lot of unrest.
    Now, people tell us that go to China that almost every day 
you can see a labor demonstration in a city. Oftentimes, it is 
from retired workers.
    In the private sector, where you see a lot of the joint 
ventures, you see much less labor unrest or big demonstrations.
    There are several reasons for that. For one thing, most of 
the workers in those enterprises are migrant workers. They are 
not a part of the communities, so it is harder for them to get 
out on the streets and demonstrate. In those rust-belt cities, 
you actually have the community supporting the workers.
    So, that is where we see it. It is really hard to know how 
many of these disputes happen. It is funny. In the last several 
days, I have seen reports about demonstrations in China, three 
reports in the last week. That may be because of the major 
demonstrations we heard about in the oil fields, and the press 
is just picking up on it. So, it is really hard to know, but 
there is no doubt that they are increasing.
    Mr. Freeman. I would just note official government 
statistics on that, for what they are worth. The Ministry of 
Labor reported for 2000 that there were 135,000 labor disputes, 
which, according to their statistics, was a 12.5 percent 
increase over the previous year.
    Mr. Foarde. I am going to shift gears just slightly with 
the time remaining and pick up on something, Bama, that you 
mentioned, and that is the Olympics.
    We are very interested in the whole question of the Olympic 
Games in Beijing and the possible positive effect that they 
could have on human rights practices if everybody does some 
heavy lifting between now and 2008.
    Do you have some specific things that you think ought to be 
done, just in the area of labor rights, that this Commission 
should do or that the U.S. Government should do that you would 
share with us?
    Ms. Athreya. Thank you, John, for the opportunity to expand 
actually on what was sort of a footnote to my comments earlier. 
Yes, I think this is a tremendous opportunity.
    We all, I think, are well aware of the political resources 
China put into winning this Olympic bid. This is an 
opportunity, from the point of view of the government, to step 
onto the world stage. They are interested in looking good, to 
sort of wrap it up very quickly.
    We know that if we just look overall at the context for 
labor rights and construction facilities throughout China, 
there will undoubtedly be a migrant workforce that is largely 
involved with constructing the Olympic sites.
    It is going to be a monumental project. There already have 
been forced displacements of villagers who lived on the sites 
that will now become the Olympic facilities. So we think it is 
very important to keep an eye on this.
    The point here is not to create a sort of labor paradise 
for this very small handful of workers who happen to be working 
on the Olympic facilities, but the point is really to use this 
as an opportunity to raise an issue in the context of the 
Olympics, which we know China will be paying attention to, and 
to then broaden, from looking at that one small subset, to 
saying, these sorts of problems plague workers through China 
and we hope that the standards that you apply to production and 
construction of these facilities will apply elsewhere as well 
to big public works projects.
    Mr. Foarde. Anybody else want to step up to that one, 
either of the other two of you?
    Mr. Hankin. Well, just very briefly, clearly, I think we 
have to look at those workers and others who are in prison and 
use meetings to raise those issues every time there is a 
meeting on the Olympics. Why can we not talk about prisoners, 
or what has happened to them, and seek access? I think those 
are the sorts of practical things we can do.
    Mr. Foarde. We have a number of other people who want to 
ask questions, so let us go on.
    Mr. Wolf. Next, is Bob Shepard from the Labor Department.
    Mr. Shepard. A number of you had discussed the need for 
outsiders to work on worker rights issues in China.
    Who should outsiders be working with, specifically? Any of 
you.
    Mr. Hankin. Well, I mentioned in my testimony a couple of 
things. Let me just give you a little bit more detail. First of 
all, we talk about rule of law approaches in China. We know now 
that there are lawyers and law schools that are interested in 
taking up cases of workers.
    They have little or no experience with labor and employment 
law. There is much that we could do to help them, and it is my 
impression that they are interested in getting that help. So, 
that is certainly one thing we can do.
    I think there are authorities that are dealing with safety 
net areas that we have to look at seriously. We have to do it 
cautiously, but we should look at it and see what we can do in 
that area. The same thing goes for occupational safety and 
health. There are appalling problems in the coal mine industry. 
I think we have to look at it again.
    I do not think it should simply be a transfer of technical 
assistance to agencies, but a way to empower workers to protect 
their health, because we all know who work in the labor area 
that the best way to protect a worker's health is to make the 
worker an advocate for his or her health in the workplace. So, 
those are some of the ideas that we have.
    Let me add there are people inside China who would welcome 
information on labor rights and assistance. There are ways to 
do that, and I would be pleased to talk about that in a more 
private session with some of you. But I think that is possible. 
It has to be done cautiously.
    Mr. Shepard. Bama or Tony.
    Ms. Athreya. Sure. I would essentially agree with Mark's 
assessment. We know that there are lawyers' associations in 
China and those could be potential partners. We do know there 
is a dearth of trained labor lawyers in China, so one thing 
that could be done is to work with existing lawyers and legal 
associations to provide training that would enable a core of 
labor lawyers to exist.
    We also know that there are informal labor advocates, 
something that I would call barefoot lawyers, along the same 
lines as barefoot doctors, which are advocates that are 
springing up, particularly from what we understand in south 
China, to assist workers who are not really sure if they have a 
problem or not. They are not sure if their rights have been 
violated or if the law protects them in a particular case or 
not.
    So, there are informal advisors who are providing, for a 
fee, services to such workers just answering questions. I think 
we could direct resources to strengthen those sorts of advocacy 
services as well, and do it in a way that would not conflict 
with formal policy priorities within China.
    Mr. Freeman. Just to add to that. If the former Soviet 
Union is any guide, I would say it is important to keep an eye 
on the human resources that are in the official system, the 
think tanks. My recollection of the Soviet evolution was that a 
good part of the leaders of the independent trade unions came 
out of the think tanks of the official institutes. So, there is 
something there to keep an eye on.
    Also, as I suggested earlier, work down at the grassroots 
level, if you can, with enterprises. Start at the enterprise 
level. This is where democracy hits the road. Under an emerging 
market situation, management needs to talk to worker 
representatives about conditions of labor. There are statements 
on the part of the official system that they want to work in 
this area, so we intend to work there.
    Mr. Shepard. Bama, you stressed the importance of working 
with the U.S. companies. Do you think there are demonstration 
effect that will overflow to other companies, or do you think 
we will just end up by doing that bolstering worker rights 
within the U.S. companies and foreign investment companies?
    Ms. Athreya. That is an important question. I do think 
there is a demonstration effect. But I think the trick is, what 
we have now, the current situation in which you have a half-
dozen companies, United States companies that are trying to do 
the right thing, and the vast majority of United States 
companies are sort of free riders on the examples set by a few 
that end up freely feeding into this rhetoric that United 
States businesses are bringing good values to China.
    I think one thing this Commission could do, one thing the 
United States Government could do, is effectively engage United 
States business in China in a much broader way. Capture more 
U.S. companies in the net, and you will find there is a 
significant demonstration effect on other companies as well.
    Mr. Shepard. Tony, I have a question for you. You have been 
on both sides of this. I am curious as to your opinion on the 
relative advantages of working on worker rights issues, core 
labor standards, from a bilateral perspective versus working 
through multinational organizations. Which would be more 
effective and which would be more advantageous for us?
    Mr. Freeman. Well, given the fact that I am currently 
representing the ILO, I obviously favor a multilateral 
approach. There was an earlier question about whether you 
wanted to impose U.S. standards or international standards. The 
answer to that is obvious.
    You need to speak in terms of international standards, and 
there are international bodies that have jurisdiction over 
those standards that are an obvious vehicle for this.
    Let me just go back to a question you asked Bama earlier. I 
am told that, while there is enormous resistance from China and 
other developing countries regarding the whole question of 
linkage of trade and labor standards, that there is a 
recognition of another side of the issue, which is that if 
these countries, including China, want to develop the United 
States as a market for their products, they need to be 
concerned about consumer attitudes. This is where you get into 
demonstration effects.
    There is concern and interest in official Chinese circles 
in promoting the positive side of things because of their 
interests in promoting their products to the United States. I 
think it is worth reflecting further on that.
    Mr. Shepard. Thank you.
    Mr. Wolf. Thanks, Bob.
    Jennifer Goedke, with Congresswoman Marcy Kaptur.
    Ms. Goedke. Representing Congresswoman Kaptur, the 
Congresswoman is not only on the Commission, but she is also a 
member of the Appropriations Committee.
    As we are looking to funding projects for the next fiscal 
year, we are looking at projects like NED and other government 
programs that support democracy and internationally recognized 
labor rights.
    What do you think the priorities should be for domestic 
versus possibly China-based programs, either working with NGO's 
or working with ILO?
    Mr. Hankin. Just for the record, the Solidarity Center gets 
resources from NED. I must tell you that those monies have been 
especially helpful for organizations that want to work in or 
around China. I think each individual program has to be looked 
at on its merits. But I can tell you that, without those NED 
resources, there would not have been a major push on labor 
rights in China.
    Han Dongfang is a leading workers rights advocate on China 
and has been supported throughout the years by the National 
Endowment. I think his work has been enormously important. To 
the extent that those programs can continue to be supported, I 
think it is very worthwhile.
    Now, it is a difficult place to work, for sur