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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

(

Available via the World Wide Web: http://www.cecc.gov

CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

LEGISLATIVE BRANCH COMMISSIONERS

Senate House

MAX BAUCUS, Montana, Chairman

CARL LEVIN, Michigan

DIANNE FEINSTEIN, California

BYRON DORGAN, North Dakota

EVAN BAYH, Indiana

CHUCK HAGEL, Nebraska

BOB SMITH, New Hampshire

SAM BROWNBACK, Kansas

TIM HUTCHINSON, Arkansas

DOUG BEREUTER, Nebraska, Co-Chairman

JIM LEACH, Iowa

DAVID DREIER, California

FRANK WOLF, Virginia

JOE PITTS, Pennsylvania

SANDER LEVIN, Michigan

MARCY KAPTUR, Ohio

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)

(III)

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

(1)

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

2

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.

3

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

4

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 deterVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 78878.TXT China1 PsN: China1
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mine 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.

6

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 govVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 78878.TXT China1 PsN: China1
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ernment 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.

8

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.

9

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 examVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 78878.TXT China1 PsN: China1
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ple, 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

11

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.

12

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.

13

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.

14

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.

15

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.

16

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?

17

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

18

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

19

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?

20

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 sure. That means that no

one approach is probably right, because you are always experimenting. But based on the small amounts of money that we have

spent, they have been well-spent.

Ms. ATHREYA. I would say that, to the extent possible, it is highly

desirable to fund programs that can find a way to work directly inside of China and with Chinese partners. It is extremely difficult

to do.

I want to acknowledge the fact that you cannot fund things directly in China. You need to fund some international entity, whethVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 78878.TXT China1 PsN: China1
21

er it is the ILO, whether it is an NGO, whether it is an international trade union, to be the primary implementer of the project.

I also would stress the importance of really trying to diversify

and support a number of different approaches. It is a huge country,

I do not need to tell any of you. It is extremely complicated, as we

have all discussed in this session, problems springing up everywhere and very different sorts of problems. So, we do not know

what is going to work, so best, if possible, to try to spread the initiative around and let various approaches be tried.

Mr. FREEMAN. Just in answer to that, I should say that the ILO

does have a commitment to the government of China to act in the

area of resource mobilization. This program that I have laid out for

you, the four-point program, calls for international resource mobilization. So, we are seeking funding from all of our member states,

donor governments for the program in China.

Specifically in the area of democracy and human rights at the

workplace, we have one program which is evolving and we are

seeking funding for.

The exact shape it will take will be determined in discussions

with the potential donors, including, possibly, the U.S. Government, through the U.S. Department of Labor.

Ms. GOEDKE. One quick question before our light goes yellow

again. How can the administration try to engage their Chinese

counterparts? I know that in recent years there has been some outreach, but how can we now take some more concrete steps?

Ms. ATHREYA. Yes. One thing we have been suggesting for a long

time, is the Chinese Minister of Labor visited the United States,

if memory serves me correctly, in 1999. A reciprocal visit was intended to be made in 2000, which did not happen for various reasons.

It is extremely important to have an exchange at that level. That

means that the United States Secretary of Labor traveling to

China. It is important because it is our belief that the dialog is not

going to happen unless there is something that happens at that

level that really is an opportunity to showcase opportunity that is

going to get the dialog going.

I think that is why, for example, the ILO secretary general’s visit

was so important, just to get the dialog going and raise the issues

at that level.

Mr. HANKIN. Can I say a few brief words? First of all, I would

like to compliment a lot of the foreign service officers in China who

I think are now more aware than ever of the centrality of labor

rights issues in China. They need to be encouraged to continue to

work on these issues, and be given time to work on these issues

by the State Department. That has changed some. It needs to continue to change. People in the Chinese Government have to understand that this is an important issue to us.

That means, for example, on the forced labor agreement, an

agreement that has never really been implemented, we need to pay

more attention. We need to pay more attention to worker prisoners.

There are things like that which can be done that I think are very,

very important.

Ms. GOEDKE. Thank you.

Mr. WOLF. Holly Vineyard with the Commerce Department.

22

Ms. VINEYARD. Thank you. Thank you for your testimony today.

I was wondering if you could comment on the longer term trends

in terms of labor rights. One of the figures that we are often told,

is that over the past couple of decades over 200 million people in

China have been lifted from poverty. I was wondering with how

that meshes with what you have seen in terms of what has been

going on in labor rights.

Mr. HANKIN. It is hard for me to evaluate a figure like that, quite

frankly. China is a very different country than it was before the

opening to the west occurred. Early on, agriculture was freed from

old constraints, and there was an enormous increase of incomes in

agricultural areas. I am not sure that is happening any more.

I think we may see real problems in the future in agriculture,

as Bama alluded to. Clearly, if you talk to people who are covered

by safety nets, where there was the iron rice bowl, they are talking

about their kids not being able to go to school, not getting medical

services. There are real concerns here.

There has been some work done on women working in the south,

and whether they are really making sufficient wages, being able to

transfer that money back to villages. It is unclear what that data

is right now.

Clearly, some people are doing very, very well in China. We just

saw an article in the Washington Post, what was it, 2 days ago

that talked about the new millionaires. I think one always has to

look at this widening gap. I am not sure, because of the type of

country it is, we really know. There are real questions, as someone

said here today, about what the real growth rate in China has been

over the last 10 or 12 years.

It is clearly less than the government has said. So, we have to

watch these things very carefully and be skeptical with the numbers that have been reported out.

Ms. ATHREYA. I absolutely agree. I think it is impossible to do

justice with these sorts of broad-brush figures to what is really

happening in China. I would stress the point that Mark just raised

about the widening income gap, the inequality that exists.

I would also stress the fact that, for example, we could say that

the old Communist China effectively eliminated child labor. Well,

child labor is reappearing in China. So, perhaps some people are

getting richer, but some are also experiencing new forms of oppression that arguably did not exist maybe 15, 20 years ago. So, you

cannot say things are worse, things are better. I do not think it is

helpful, really, to go down that road.

I think the things that we can say, are we know there are a

number of strikes, wildcat strikes, that take place every day. The

figure that Tony cited, that was the first time I heard that figure

of 135,000 disputes that were officially recognized last year. That

is phenomenal.

We know that there is growing unrest. We know there is growing

unemployment. We know that there is a huge problem in the State

enterprises because they are shutting down and these millions of

workers are being laid off.

I think it is more helpful to focus on and address those particular

problems than to try to look and see if, in aggregate, people are

better off or worse off. It is just impossible to say.

23

Mr. FREEMAN. I would not doubt it. I think that is a very comprehensive statement. For us, the figures show great strides, no

questions about it, and GNP increases. But I remember this old

saying in Brazil. They used to say, ‘‘the economy is going very well,

but the people aren’t doing so well.’’ There is a difference between

the gross GNP and what happens to individual people. There is no

doubt that there is growing inequality in China.

But for the ILO, a major focus is on the fact that in the next 18

months, there is going to be enormous unemployment. There is

going to be an unemployment crunch in China and we need to help

China address that question.

Ms. VINEYARD. I have a question for Bama. You mentioned that

you are working with several multinationals and working with

their suppliers. Could you give us a little more detail or background on what it is you are doing with them, and if you are allowed to say who these companies are?

Ms. ATHREYA. Sure, I will name names. It is in the nature of a

dialog. It is a working group, which is a term that, as you know,

can apply to many different things.

But our idea was, it was very important for us to be able to raise

and discuss our concerns with the very systemic, chronic sorts of

labor rights violations that occur among suppliers for multinational

corporations with the corporations themselves and see what sorts

of practices they were willing to implement themselves on a sort

of self-policing basis to address those problems.

It is a small handful of companies that we have been talking to

that include Reebok, Intel, Target, Mattel, and there are one or two

others. I am sort of blanking for the moment.

As I said, there are a half-dozen companies that have been willing to step up and say, yes, we are trying to self-monitor. We are

going and looking in our factories and these are the sorts of problems we are finding, and we are not sure what to do about it. We

have been discussing with them, what can you do about the fact

that these suppliers are all chronically violating China’s overtime

laws.

Ms. VINEYARD. Thank you.

Mr. WOLF. We will have one more round of questions.

Other than the actual wording in the new trade law, do you see

any empirical evidence of a change in attitude by leaders or the

cadre within the ACFTU, or within the Chinese leadership outside

of the ACFTU, that they want a change in the nature of the monopoly state-run union?

Mr. HANKIN. Listen, China has got a different economy than it

had 10 years ago. Ten years ago, it was all State enterprise and

very little employment outside of that.

All of these countries that moved from that sort of system into

a market economy, or what may be described as something that is

moving toward a market economy, have to deal with workers in

this new economy, so the ACFTU and the Chinese Government is

trying to do that.

So, there is clearly an attitude that there are all these workers

that we have to direct our attention to, and service in some way

or another. That is our role. That is what the state has assigned

us to do, to represent workers’ interests.

24

So, clearly, that attitude has changed. They know they have to

fill this vacuum. At the same time, they have to do it because they

are losing their base of support in the old sector. Resources are drying up. The ACFTU is an enormous bureaucracy. So, that is one

reason they are moving now. They just have to. Someone has to fill

those needs.

Second, I think the Chinese Government is embarrassed by some

of the things that you see happening in the south and along the

coastal areas where people are being killed in fires, where they find

child labor.

I think they are embarrassed about it. It does not look good for

a government that is supposed to be a workers’ government to

allow these things to happen. So, there is an attitudinal change

there. They need to cover their flanks.

I do not think there is any change in attitude concerning whether they really want independent worker organizations to exist at

the factory level. That does not mean that there are not people inside the ACFTU that do not think that is important at some point

for whatever reasons. But the organization has not changed.

You have to understand that this is an organization where, more

often than not, the factory manager may be the head of the union,

or his brother may be the head of the union, although they have

tried to change that in this new law, I guess.

This is a place where oftentimes the personnel manager is the

head of the union, if there is even a head of the union. Sometimes

workers do not even know that the union exists in the factory. So

there has not been much change there, I do not think.

Mr. WOLF. Anyone else?

Mr. FREEMAN. Just to add to that. We do have anecdotal information that, at the factory level, there are cases where the Party,

or more importantly, the ACFTU representative, does strike out

and try to support workers in a dispute. We have some examples

of that.

However, as we have heard, the system is very contradictory and

they have a long way to go, and no one can predict whether they

are going to make this or not. At the top level, the head of the

ACFTU is still whatever he is, the third person in the Politburo.

That is a contradiction in terms. So, at the top level there currently

is no independence.

They have stated that they want to work in this direction.

Whether they are going to make it or not, we do not know. But our

view is, you need to get in there and work with the human resources that you have and cultivate the most progressive elements

in the situation beginning especially at the enterprise level.

Mr. HANKIN. Can I just read a part of the law?

This is the new law. It says, ‘‘The trade union shall . . . take

economic development as an essential task; uphold the socialist

road, the People’s Democratic dictatorship, the leadership by the

Communist Party of China, and Marxist-Leninist Mao Tse-tung

thought, and Deng Xiao-ping theory; persevere and reform in the

open policy.’’ I mean, these are the central guidelines for ‘‘trade unions’’ in

China. I agree with Tony, that there are people who have become

advocates in the ACFTU. There are also people in their trade union

25

college who seem to understand that they have to move in different

directions also. So one cannot say that every person in the organization is a flack. It is not true. But whether they represent organizational change is another question.

Mr. WOLF. John.

Mr. FOARDE. Tony, I am interested in how the Chinese Government participates in the ILO. Is the PRC an active participant in

ILO?

Mr. FREEMAN. Yes. All three elements are active. The Chinese

Government sends a large official tripartite delegation to the annual conference of the ILO. The ACFTU also had a seat on the governing body, I believe, but lost it.

What I have left out until now is the management side. There

is a growing management organization which is an official organization, just like the ACFTU. But they, too, State that they understand the need to differentiate roles in the future. We are also trying to help them and they are becoming more active in the ILO.

So, all three delegations are active.

Mr. FOARDE. Are the Chinese delegations principally ACFTU

people or are they Ministry of Labor as well?

Mr. FREEMAN. Well, there are three delegations. There is a government delegation, an ACFTU delegation, and CEC, or whatever

it is called, the employers’ association delegation that comes.

Mr. FOARDE. Let me shift gears again and go back to a comment

that you made, Bama, about companies that are and are not monitoring the labor practices, at the very least, of their suppliers in

China.

Is there any difference between United States companies doing

their own manufacturing in China under their own names and

those who are principally using suppliers in how they handle that?

Ms. ATHREYA. There is a difference, although I am going to sort

of caution you that my own statements are based on what is really

anecdotal evidence. There have not been any systematic studies

done of what the labor standards are in facilities that are wholly

operated by the principal and facilities that are suppliers.

But, yes, at least in that sort of observational experience, you

take a company like Intel, for example. They own and operate their

own facilities in China and they are able to, on the subject of, for

example, forced overtime, there is no forced overtime. They are

able to verify that fairly effectively, but it is because they really

have total control of the plant.

Whereas, if we look at some of the retailers who are sourcing

through suppliers, it seems as though even though, in theory, they

have these codes of conduct, in theory they have monitoring staff

who go in once in a while to check, and they really do not seem

to be able to control the problem.

Mr. FOARDE. Do you have any sense if this is an issue at all in

service industries that are not manufacturing things?

Ms. ATHREYA. I have to confess, we do not look at service. We

have really been primarily looking at the manufacturing sector.

Mr. FOARDE. All right. Thanks.

Mr. WOLF. Bob.

Mr. SHEPARD. In a lot of your comments, all of you have depicted

workers’ protests as being channeled often toward economic issues

26

or working conditions, and have all noted the usefulness of supported projects that help safety and health, mine safety and health,

the workplace.

I do not have a good sense, and I am wondering if any of you

could furnish a sense, of how much interest is there on worker

rights within China, or how much of the protests—and I have seen

the number Tony cited, 135,000 slow-downs—and most of the worker grievances local and directed at their specific work environment?

Mr. HANKIN. Let me just correct something. I think that the

large number of disputes that were reported by the government are

not collective disputes. They may be individual disputes over nonpayment of wages, or something like that. I do not know what the

number of collective disputes are in China. So, that is a number

that you have to be careful about.

Now, you asked an interesting question that could go to any

country in the world: How much is a worker concerned about the

right of association and how much is he or she concerned about getting a decent wage, in getting some respect in the workplace and

being treated fairly?

I would say that most Chinese workers want those things. They

want a decent wage, they want to be treated fairly, and they want

to know that they can provide for their kids.

The fact of the matter is, most Chinese workers who are demonstrating do not see a transparent process. They have seen the

government promise certain things and that it has not kept its

word.

They do not know about labor rights because, according to some

Chinese worker activists that I have talked to, the Chinese Government has always told workers they are different. They have lived

in a different country where the party in power is their party, so

they are not to worry about these things.

Clearly, when you get into a factory and you start talking to

workers about their conditions, we have seen this not only in China

but in other places, then they start to get concerned about their

rights.

Years ago in Indonesia, we did a survey of workers. Do you get

paid minimum wage? Do you get paid social security? The first

thing they did when they learned they did not do that, is they tried

to form independent organizations where they could try to have

some redress. I suspect in China we would see the same thing.

That is what happened. Then they started to think about their

rights. But they do not think about rights before.

Ms. ATHREYA. I would also add, and Bob, I think you have followed China long enough to know this, that there is no language

really to even discuss human rights in China properly until this

past decade.

I was a student in China two decades ago, and there was no term

for ‘‘human rights’’ that was widely known as a vocabulary word.

Now there is a term. Similarly, there is a term for labor rights.

Part of the answer to the question, is it is very hard to gauge

that when there is no language to discuss it, and that is a problem.

Mr. SHEPARD. The underlying question that I wonder about is

whether the Chinese Government is going to—and I think they

are—try very hard, I think, to address the economic issues. They

27

seem to be trying to do that, while bypassing the more political

issues.

That has been done with some success in some Asian countries,

such as Singapore. I am kind of curious how successful the Chinese

might be in trying to do that.

Ms. ATHREYA. I would argue, completely unsuccessful, because

the nature of the economic problems is just so incredibly difficult,

that it is not going to be Singapore.

Mr. SHEPARD. At least not soon.

There are enormous regional differences. Another question is the

nature of enforcement around the country. The Chinese Ministry of

Labor and Social Security has something like 250 people. It is tiny

compared to our own Department of Labor.

Who is enforcing all of the controls over the workers? Is it done

in the factories? Is it done by the local governments, by the Party,

all of those, some of those?

Mr. HANKIN. What do you mean by ‘‘controls over workers?’’

Mr. SHEPARD. The limits on protests, the limits on organizations

of any type.

Mr. HANKIN. Well, let us take a dispute in a rust-belt city. What

happens is, workers go out and protest, usually in front of a government agency, the city hall, whatever, and they demand to see

an official or they tie up a rail line and then the police come out.

Someone gets upset in the government and they say, hey, we

have got to talk to these workers and see what is going on. Then

there is some sort of negotiation. Either that, or else someone is

arrested and they are put into jail.

Or some sort of negotiation where the central government or the

provincial government comes up with some money to at least buy

people off for a while. So, there is really no one in charge. I mean,

there is a system of arbitration committees. There are a local labor

bureaus.

But these people are not used to doing this. They are befuddled

by it, especially the trade unions. They are completely befuddled.

This is not something they know how to deal with.

Mr. WOLF. All right. Holly.

Ms. VINEYARD. Dr. Supachi, who will begin his term as director

general of the WTO later this year, has indicated that the best way

for dealing with labor rights is within the ILO, not directly in the

WTO itself, in general, and especially in terms for China.

What do you think about that?

Mr. FREEMAN. Do you want me to answer with my ILO hat on

or off?

Ms. VINEYARD. Both.

Mr. FREEMAN. My answer is that getting compliance on labor

rights is a very complex matter. The history of this is, no matter

whether you are talking about positive measures or positive inducements complemented by some kind of sanctions system.

You can look at the history of the United States’ implementation

of GSP and CBI labor conditionality clauses. You have had a history now of, what, 10, 15 years of this. Each one of us could do our

own analysis of how effective that kind of a system has been.

My personal assessment is that, whether you are talking about

a positive system of inducements or a system that has some kind

28

of sanctions involved, you are going to find that you get so many

years of progress, then something happens in the country and they

go back again years into another cycle of deterioration, for example

because of a change in the government. This is the history of the

application of international labor standards.

The ILO official response, and the response of the official international community to the whole trade/labor standards debate, reflects the fact that a majority of countries do not accept a trade

sanction system to enforce labor rights. So, the next best thing is

to try to work on positive linkages. That is what this Declaration

program is all about.

But the Declaration program is supposed to be assisted by resource mobilization. Frankly, the resource mobilization has not

been there in adequate amounts for those countries that want assistance.

But, personally, I believe in both rewards and punishments. We

live in a world where everything has some rewards and some punishments attached. But there is no easy solution to this question.

You are not going to get improvement in basic human rights or

basic labor rights overnight in any country. It is not a question of

economics alone. I mean, the whole labor rights debate has been

tied to trade and economic issues, whereas, in my view, a major

part of the issue has to do with political power in these countries.

The labor laws and labor-management relations system of any

country are closely tied to the political power structure of that

country. This is what makes the labor relations system so sensitive

in many countries. Of course the political power structure and economic power structure are interrelated. But if the labor rights you

are trying to encourage are perceived by the country’s power elite

as directly challenging their power, there is no guarantee that the

threat of economic sanctions or trade sanctions will work any better than the offer of positive inducements such as technical cooperation.

There are things besides trade and economics that motivate politicians. It is going to take a long time and a comprehensive international regime to nudge countries along to improve their worker

rights and human rights situation using both rewards and punishments.

Ms. VINEYARD. Thank you.

Mr. WOLF. All right. Well, thanks very much on behalf of Senator

Baucus and Congressman Bereuter. This was a very useful session.

I think it made a major contribution to the input we are looking

for as we prepare our first annual report, which our commissioners

will send to the President and to the Congress in October.

We appreciate the time, the preparation, and the active participation of all three of you. Thank you all for coming.

[Whereupon, at 4:02 p.m. the roundtable was concluded.]

(29)

A P P E N D I X

30

PREPARED STATEMENTS

PREPARED STATEMENT OF MARK HANKIN

MARCH 18, 2002

OVERVIEW

I want to thank you for 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 to developing countries around the world who compete in the world economy with China

now that China is a member of the World Trade Organization. Simply put, our

brothers and sisters in many developing countries have told us that they have already lost jobs to a China that flouts International Labor Organization Conventions.

They expect to lose many more jobs in the future. And they tell us that employers

from multinational companies make it clear to them that China is the baseline they

want to use when talking about wages and working conditions. This 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 Xiao-ping opened the country to the outside world and later initiated

the first socialist market economic reforms. Today, China boasts thousands of joint

ventures and private enterprises that produce for world markets. Chinese workers

are now free to seek jobs in different parts of the country. In the process literally

millions of workers have moved from villages, where they were underemployed

farmers, to factories. Many of these jobs are located hundreds of miles away from

where they live. In addition, the authorities have allowed many failing State enterprises to go out of business, in theory freeing up government funds once used for

subsidies for more productive uses. We know that major multinational corporations

are now operating facilities in China that are among the most modern in the world,

bringing with them advanced training for Chinese workers and managers, some of

whom have already left to form their own companies.

With all this good news why then 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 or which serve their social welfare needs. When placed in these situations, people feel powerless and suddenly without warning they explode. That is exactly what

we are glimpsing in China today. Just last week for example we received a report

that tens of thousands of retrenched workers participated in demonstrations to protest broken promises regarding pensions and severance pay. When they formed an

independent ‘‘union,’’ the authorities immediately declared it illegal and readied

paramilitary troops to intervene. We are in the process of ascertaining the facts surrounding this particular incident. We do know that worker demonstrations are taking place all over China on a daily basis over issues such as these.

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.

China gets an F on the ILO core labor rights report card because of this central

fact. In the place of democratic unions, China has state-controlled organizations that

have a monopoly on purporting to represent workers. No one disputes the Communist Party control of these organizations. It is there plain and simple in the

newly revised trade union law issued last October. To be clear, these organizations,

grouped under the banner of the All China Federation of Trade Unions receive their

legitimacy not from the workers but from the government and the party. The Party

dictates their mission, not workers. That’s why the Politburo installed one of their

own as the head of the 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 of labor rights. Let’s be clear, the report is by no means perfect. Part

of the problem with the report is that 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. In China there may be workplace unions

whose leaders were elected by workers and whose existence the All China FederaVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00034 Fmt 6601 Sfmt 6621 78878.TXT China1 PsN: China1
31

1The new trade union law seems to enlarge the space for collective bargaining in China. At

the same time, Article Four of the new law says the ACFTU should ‘‘take economic development

as the central task, uphold the socialist road, the peoples democratic dictatorship, [and] leadership by the Communist Party of China. . . .’’ 2There is also no direct prohibition in law on the right to strike but clearly the ACFTU has

not supported striking workers. Indeed, its job is to get them back to work as soon as possible.

In a democratic industrial relations context, the right strike is defined by law. In China, there

is no legal basis for workers to strike. The authorities may or may not tolerate a strike, based

on their whim. 3One could add the public sector also. We are learning that public sector workers especially

teachers are facing harsh times as local governments fail to pay their wages. 4For an example of the challenges facing China, see Willy Wo-Lap Lam’s article on CNN.com,

‘‘Beijing Fears Argentinean-Style Unrest,’’ January 2, 2002. Lam says, ‘‘at least 150 million

peasants are either unemployed or severely underemployed.’’ 5See the American Chamber of Commerce in China’s website: www. Amcham-china.org.cn/

publications/white/en–8.htm for its review of Labor and Benefits issues in China.

tion of Trade Unions tolerates. However, there is no real collective bargaining in

China.1 I would urge the staff of this committee 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 urge the staff to be highly skeptical of proposals aimed at helping ACFTU officials learn about collective bargaining. Despite what the new law says, the ACFTU is not ultimately responsible

to those people on whose behalf it is negotiating. It is responsible to the party. Finally and most importantly, I would urge the committee 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 as

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.2 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.

Any discussion of 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.3 As I have indicated above, there is an absence of freedom of

association in both sectors and occupational safety and health is a serious problem

in each but there are many differences.

LABOR RIGHTS IN THE 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 the lack of safety nets (health, education, 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 was 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. Han

Dongfang, a worker rights advocate living in Hong Kong repeatedly talks via telephone to workers and union officials in China’s State sector. His conversations reveal a sense of worker helplessness and frustration and a portrait of union officials

who are trying to uphold the Party’s line and stay out of the line of fire. The Chinese government is now privatizing many of these enterprises, and many are failing

to make the transition. Some scholars think that ultimately 40 million Chinese will

lose their jobs as a result of State enterprise reform when coupled with the impacts

of China’s membership in the World Trade Organization.4

A number of large State enterprises deemed important by the government are

surviving. Some survive because of favors granted by officials that make it possible

to protect their markets. Others have been given infusions of cash. These survivors

appear to be operating in a traditional fashion and are performing many of the same

welfare functions as in the past. Some of these enterprises have relationships with

multinational firms. Not surprisingly, American multinationals complain fiercely

that they are forced to take on excess personnel and shoulder undue welfare costs.5

The primary role of the ACFTU in China’s rust-belt cities is now to help workers

find new jobs. Long lines of workers seeking day jobs betray the fact the unions are

unable to fulfill this function. They do not have the resources and the jobs simply

32

6See for example Tim Pringle’s paper, ‘‘Industrial Unrest in China- A Labour Movement in

the Making?’’ delivered at the Forum on Industrial Relations and Labour Policies in a

Globalizing World, Beijing, January 2002. Pringle puts the number of collective labor disputes

at over 6,000 in 2000. According to the Hong Kong-based Centre for Human Rights and Democracy, there were 100,000 disputes in 1999; see ‘‘Fighting to Organize,’’ Far Eastern Economic

Review, September 6, 2001. Thus far the Chinese authorities have been able to keep the unrest

from boiling over through a policy of providing some compensation to former State enterprise

workers while arresting ‘‘trouble makers.’’ 7 ‘‘High Tide of Labor Unrest in China—Striking Workers Risk Arrest to Protest Pay Cuts,

Corruption,’’ The Washington Post, January 21, 2002. 8 ‘‘Trade Unionists Still Detained in China as of the Last Examination of the Relevant Cases

by the Committee on Freedom of Association,’’ given to Jiang Zemin by ILO Director General

Juan Somavia in May 2001. 9There are a small number of 100 percent foreign-owned enterprises from developed nations.

They have a very limited impact on the Chinese economy. 10Some observers believe that it may also create space for workers to form bottom-up unions

that are nominally affiliated to the ACFTU.

do not exist. The government has also charged the ACFTU with providing legal

services to workers. Few ACFTU units have taken this charge seriously. The growing number of street demonstrations that occur on a daily basis in the China testify

to this fact.6 Given the ACFTU’s declining financial base in the State sector, it is

problematic that the old style worker organizations will be able to service the needs

of workers in the future despite party entreaties to do this work.

Several months ago, an article in the Washington Post described the story of a

group of former State enterprise workers who lost their jobs and savings when corrupt officials stole the factory’s assets after it went bankrupt. The story lays out in

graphic detail the lack of legal channels available to workers to resolve their grievances. The article underlines the fact that workers feel that they have no organizations to represent them. More importantly, it reveals the fear they have of the authorities and their belief that efforts to create representative unions will ultimately

lead to the arrest of their leaders.7 We know their fears are real. Worker leaders

have 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.8 A real problem is that outsiders have an almost impossible time

tracking these arrests since word of them usually does not leak out to the outside

world.

THE NON-STATE SECTOR

The non-state sector in China employs workers in joint ventures, in township enterprises and solely owned enterprises.9 This sector has become the main engine of

economic growth in the country and the employer of millions of migrant workers.

The industries in the private sector are generally low-tech. Many are assembly operations and either directly export their products or are a part of the ‘‘food chain’’ that

supply the exporting factories. State-run worker organizations have largely ignored

the needs of these workers in the past. 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 that

they are not wanted. The employers view these unions as economic rent seekers who

offer little value. Their workers are already generally docile. Anita Chan, a keen observer of Taiwan and Hong Kong run-and/or-owned factories in China, 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. Random surveys show that they even lack knowledge of the role

played by traditional Chinese-government run worker organizations.

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 do I need tell you that embarrassed U.S. and European

purchasing companies have been and continue to scramble to find ways to protect

their brand reputations from charges that they source from Dickensian-style sweatshops in China. While codes of conduct go back more than 25 years, they came into

vogue when President Clinton called on companies to adopt voluntary standards following his decision to renew Most Favored Nation trading status for China soon

after he was elected.

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

private sector factories.10 The law also says that the role of unions is to represent

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11 ‘‘China Tells Lawyer Who Aids Injured Workers to Close His Office,’’ The New York Times,

January 3, 2002. 12This may be one reason why the All China Women’s Federation has become more interested

in cases of women workers. 13The Chinese government has requested assistance from both the International Labor Organization and the U.S. Government.

workers interests. The changes in the law are in part a response to the embarrassment Chinese government officials feel about the exploitation of workers in these

factories. More ominously, they may be an effort to extend government control into

private factories through the All China Federation of Trade Unions.

How far local officials will go to allow ACFTU cadres to use the provisions of new

law to establish units in private factories is unknown. Clearly, past practice indicates that where these local officials have an economic stake in the enterprise

through either hidden ownership or payoffs, the ACFTU will be told to stay away.

In that regard the case of a labor lawyer, Zhou Litai, is instructive. Zhou has become famous for taking on the cases of industrial accident victims in Shenzhen, an

economic zone next to Hong Kong. Most of his cases concern migrant workers employed in factories producing goods for export. Zhou angered local party officials who

complained about his aggressive tactics and who feared he would drive away foreign

investors. Their response was to shut down his legal practice.11

OPPORTUNITIES TO ADVANCE LABOR RIGHTS IN CHINA

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. Given our country’s already extensive and growing economic engagement in China we have moral and pragmatic reasons to support respect for the

labor rights of Chinese workers. At the same time, I do not wish to overstate what

we can accomplish. Now let me turn to the opportunities we see for future work.

Over the past 12 years, the Chinese government has tried to put into place legal

systems to ensure an orderly transition from a state-controlled to a market economy. While one can point to some successes, for most Chinese these new laws are

meaningless. Even if they are aware of their existence, they do not know how to

use the law to their advantage nor do they have the money to advance their cases

through the legal process. Very often, when workers seek to redress grievances in

the courts, determinations are made on the basis of whim or who has the most personal influence. The reasons for this are many. Some are common to developing

countries and include a widespread lack of understanding about how the rule of law

operates, insufficient numbers of trained personnel available in the legal system, a

lack of resources to run the courts and other dispute settlement organizations, and

legal codes that are either vague or contradictory in nature.

Today the Chinese government is also permitting an expansion of some private

legal activity. Legal aid clinics seem to have more flexibility to take labor and employment law cases, while private lawyers in growing numbers are willing to represent workers. Such representation is especially important for women workers who

are often the first to be laid off and who make up the majority of workers in the

country’s export sector.12 Law schools and law students are becoming more interested in labor and employment law issues.

As I have already indicated, in factories that produce for foreign buyers, changes

in the Chinese trade union law make it easier for the ACFTU to insert itself into

workplaces. It is unclear whether this will actually help curb current abuses. More

importantly, there appears to be some space opening up for workers to organize

groups independent of the ACFTU (such as plant-based worker safety committees)

because of concerns by American and European brand name companies about being

seen as socially irresponsible actors. This space is extremely limited and little testing has been done to see how far it can be expanded. Meanwhile, China’s disastrous

record in the field of workplace safety and health has become a national scandal

prompting government leaders to reach out to a variety of international organizations and governments for help.13 The challenge here is to go beyond the transfer

of technical information to government departments and toward empowering workers so they will be able to protect themselves from safety hazards. The Solidarity

Center has, since 1991, supported efforts to both document the actual labor rights

situation in China and to promote adherence to ILO core labor rights standards

there. In the process, the Center has worked closely with the International ConfedVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00037 Fmt 6601 Sfmt 6621 78878.TXT China1 PsN: China1
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eration of Free Trade Unions (ICFTU) and with a number of non-governmental organizations.

In late January of this year, the Center held a session with its partners and leading experts on China in Washington, D.C. to review strategies on China. Discussions

at the meeting pointed to the need to help educate Chinese workers about their

rights under law and that this could be done through a variety of different mechanisms. Participants also agreed that it was vital to test newly developing spaces in

China through these 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

Information about the labor rights situation and rights of Chinese workers can

be made more readily available to workers in the country and to other interested

parties in and outside China including foreign trade unionists in an effort to stimulate creative ways to solve labor-related disputes. 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 expanded.

• Promote Worker Rights at the Workplace Level

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 enlisting the cooperation of U.S. companies and other

foreign companies, by making available information materials on labor rights to

Chinese worker activists in the country and through them to educate workers on

an informal basis about their rights under law.

• Promote the Rule of Law in the Non-State Sector of the Chinese Economy Related to the Enforcement of Labor and Employment Law

Efforts should be supported that 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.

• Promote the Rule of Law in the State Sector of the Chinese Economy Related

to the Enforcement of Labor and Employment Law

Initial discussions must be broadened concerning labor and employment issues

(occupational safety and health, and gender) with key interlocutors in the specific

locations where restructuring of State enterprises is occurring. This would involve

bringing U.S. experts to China. Programmatic approaches would stress mechanisms

that empower workers to take advantage of existing legal options.

• Promote Scholarly Study of China’s Labor Relations System Engaging All the

Relevant Actors in China including the All China Federation of Trade Unions

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 elements 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.

PREPARED STATEMENT OF BAMA ATHREYA

MARCH 18, 2002

CHINA’S LABOR RIGHTS PROBLEMS

In the race to the bottom, China is the bottom. The most extreme cases of misery

and repression can all 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 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 those billion plus people are barely

35

surviving. In the countryside, where 900 million of those 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, and 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 number 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 out

of work, and according to a report by a major U.S. 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 starving

workers 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 workers brings imprisonment and possibly

torture or even 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 ever catalogued. 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 the story, claiming that

a disgruntled former employee had planted a bomb in the school. Soon, however,

the real story leaked to the international press: the school was actually 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, and a central government directive to the schools to find creative

means of raising their own budgets, had apparently led many schools in China’s

countryside to set up their own businesses in recent years. Naturally, those businesses often turned to the immediately available workforce: children who were not

going to be receiving an education, anyway. Although in the wake of the exposes,

the Chinese government claimed 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 Chinese prison camp, he was 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, and following this expose, claimed that it had not only stopped sourcing from that factory,

but also instituted more rigorous policies to monitor all its factories in China. Unfortunately, thorough monitoring may be impossible, as many retailers have hundreds,

or even thousands, of supplier factories in China and only a handful of monitoring

staff. Equally unfortunately, other multinational corporations were apparently not

particularly concerned by the Adidas example, and continue to source products from

prison camps. Just 2 months ago, a Chinese refugee in Australia came forward to

reveal that she was forced to produce toy rabbits for Nestle corporation while 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 exploiters.

One could continue for hours to detail the litany of abuses routinely suffered by

Chinese factory workers. For the moment I will only 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, and the companies themselves admit the following chronic problems: problems: 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 document properly age of workers. I’d like to stress 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. One can only imagine the even

worse abuses suffered in the factories of the vast majority of companies, that are

not even trying.

U.S. CONSUMER AND SHAREHOLDER CONCERN OVER CHINA

That there are problems is undisputable. Therefore there are two real questions

this Commission now faces: why should we care, and what can we do about it?

36

The short answer to the former question is: the U.S. government should care because the U.S. public cares. The average U.S. 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 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 care about the production conditions connected with the products they buy. Investors care about the

ethical behavior of the corporations in which they invest. Both these groups care

about human rights.

I’d like to discuss just a few recent actions targeting major U.S. corporations as

evidence of why neither U.S. companies nor the U.S. government can afford to ignore labor rights abuses in China. A recent expose of Wal-Mart’s factories in China

revealed excessively long working hours, failure to pay a living wage, and unsafe

and unsanitary work conditions. As a result of these reports, the Domini 400 Social

Index removed Wal-Mart from its portfolio.

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 the report, workers suffered ‘‘excessively long hours of work, poverty wages,

unreasonable fines, workplace hazards, poor food and dangerously overcrowded dormitories.’’ Not only have Disney stores been the targets of protests by concerned consumers, but Disney is now also facing a shareholder resolution for its poor labor

rights practices.

Shareholders are also broadly concerned with the actions of U.S. companies in

supporting an extremely repressive government. In the past several months, AOL

Time Warner has been the subject of media criticism, and has also faced 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 a 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 U.S.; time constraints prevent me from describing 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 capabilities.

Companies whose very existence can be attributed to an environment allowing the

free flow of ideas vital to innovation, apparently have no difficulty profiting from

suppressing those freedoms elsewhere. Fortunately, although Chinese workers cannot protest, U.S. shareholders can.

POSSIBLE U.S. GOVERNMENT ACTIONS TO IMPROVE LABOR RIGHTS IN CHINA

This is a panel about labor rights, so I do not want to venture too far into the

overall area 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. The U.S. Government has claimed repeatedly in recent years that by opening up China to U.S. business, we would be opening up China to democratic values as well. President Clinton made this point in

speeches related to the promotion of normalized trade relations with China; and 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 U.S. business were bringing management and worker relations concepts, including improved health and safety practices, to China. As all of the above examples illustrate, this is a somewhat controversial claim.

There are several things the U.S. Government might do to truly promote better

respect for labor rights in China. First of all, the U.S. Congress should revive the

longstanding idea of a binding set of human rights principles for U.S. business in

China. The U.S. business community claims it is already promoting better workplace conditions and standards in China. As I’ve just noted, 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 U.S. businesses in China, and U.S. companies should not have anything to fear

from public scrutiny on these matters.

The idea of a legislated set of principles for U.S. business in China is not new;

many of you may be familiar with the ‘‘Miller Principles,’’ first circulated by ConVerDate 11-MAY-2000 14:24 May 21, 2002 Jkt 000000 PO 00000 Frm 00040 Fmt 6601 Sfmt 6621 78878.TXT China1 PsN: China1
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gressman John Miller in 1991, and introduced also in the Senate by Senator Ted

Kennedy. The Miller principles won both House and Senate ratification in the early

1990’s but never passed both houses at once; it is time to update and reintroduce

the principles, and to ensure that they contain a public review component, similar

to that contained in the legislation authorizing OPIC.

Also on the subject of U.S. Government rhetoric vs. reality, I note that a number

of U.S. officials publicly claimed that China’s entry into the WTO would inevitably

lead to better respect for rule of law in China. Apparently the very fact of WTO

membership obligates China to implement some changes in its commercial laws, but

this will not automatically lead to better implementation of all of China’s laws. Indeed if evidence from other developing countries is any guide, increased trade ties

may even lead to weakening of labor standards. The evidence from elsewhere in

Asia illustrates that as countries compete to win foreign investment, they often

adopt policies to keep their workforces weak and unorganized. To cite just a couple

of examples, Bangladesh and Malaysia have laws on the books that prevent union

organizing in export processing zones. The Cambodian government, when establishing its minimum wage, first researched wages in neighboring countries to make

sure that Cambodian wages were lower than wages in competing economies. Moreover, investors also encourage the depression of labor standards; in Indonesia last

year, employers’ associations pressured the government not to implement a minimum wage hike.

Why, then, should we think that WTO entry will lead to better enforcement of

Chinese labor protections? Until there is domestic pressure for better laws, and better implementation of existing laws, we are unlikely to see this sort of upward harmonization. However, the U.S. Government could be a positive force for change in

this area, not by simply relying on WTO entry to solve all ills, but by advocating

proactively for legal reform. The Chinese government recently passed both a new

trade union act, and a new occupational safety and health law. While imperfect,

both these new laws represent some improvement over previous laws, simply by virtue of the fact that they carry sanctions for violation. Reform of China’s basic labor

code is also under discussion; the U.S. government should engage relevant Chinese

government officials to encourage that 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 U.S. government can also encourage China to

fully implement its commitments to the ILO’s Declaration of Fundamental Principles and Rights at Work. While China’s labor laws in many aspects already meet

or exceed 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 that would bring it closer

toward full compliance with core international labor standards.

The U.S. 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. Assisting local labor advocates to bring test

cases is one way in which the U.S. government could help bring about this clarification, and also strengthen the network of lawyers and legal advocates in China who

are capable of taking on such cases.

The U.S. Government should also advocate on behalf of those who are imprisoned

for attempting to exercise their basic rights. In particular, there are a number of

cases each year in which workers are jailed for attempting to organize unions and

bargain for better working conditions. In the past few weeks, the case of the Daqing

oil fields has been highlighted by the international press. At every opportunity, U.S.

officials should impress upon Chinese officials the importance of allowing workers

to organize and bargain freely. In cases where labor leaders are detained, in addition to simply advocating for their release, U.S. officials should make clear the basis

on which we determine that such cases are not mere criminal cases, but violations

of fundamental, internationally recognized rights.

Finally, 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 U.S. will participate in Beijing 2008 games; there should be some markers of progress set down along the way. The Chinese government lobbied hard to

host the games, and was extremely disappointed to have lost the bid for the 2000

games to Sydney. I mention this to highlight the fact that the Chinese government

is invested in the 2008 games as a symbolic opportunity to show the entire world

that China is a world leader, and thus the government is vulnerable to any pressure

that might negatively affect that opportunity. On the other hand, I note with some

disappointment that the International Olympic Committee squandered a valuable

opportunity for influence by awarding the bid to China without noting even the few

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human rights issue directly connected with construction of the Olympic facilities. Already, Human Rights in China has noted that the Chinese government has displaced thousands of villagers to clear the construction site, and given the overall

labor rights situation, I have no doubt that cheap migrant labor will be used for

construction of the facilities, probably under extremely hazardous conditions. At a

minimum we are obligated to raise concerns with the development and construction

of Olympic facilities under standards that conform with international labor norms;

better yet, we ought to take advantage of this opportunity under the world’s spotlight to push for better respect for fundamental freedoms in China.

Thank you very much for the opportunity to present this statement today.

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