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[Joint House and Senate Hearing, 108 Congress]
[From the U.S. Government Publishing Office]

 
               FREEDOM OF ASSOCIATION FOR CHINESE WORKERS

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

                               ROUNDTABLE

                               before the

              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 7, 2003

                               __________

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

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

                                 ______

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                            WASHINGTON : 2003
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              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                    LEGISLATIVE BRANCH COMMISSIONERS

House                                Senate

JIM LEACH, Iowa, Chairman            CHUCK HAGEL, Nebraska, Co-Chairman
DOUG BEREUTER, Nebraska              CRAIG THOMAS, Wyoming
DAVID DREIER, California             SAM BROWNBACK, Kansas
FRANK WOLF, Virginia                 PAT ROBERTS, Kansas
JOE PITTS, Pennsylvania              GORDON SMITH, Oregon
SANDER LEVIN, Michigan               MAX BAUCUS, Montana
MARCY KAPTUR, Ohio                   CARL LEVIN, Michigan
SHERROD BROWN, Ohio                  DIANNE FEINSTEIN, California
DAVID WU, Oregon                     BYRON DORGAN, North Dakota
                                     

                     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*

                      John Foarde, Staff Director

                  David Dorman, Deputy Staff Director

* Appointed in the 107th Congress; not yet formally appointed in 
  the 108th Congress.

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

Hall, Amy, manager for social accountability, Eileen Fisher, 
  Inc., and member, the advisory board, Social Accountability 
  International, Irvington, NY...................................     2
Fishman, Phil, assistant director for international affairs, AFL-
  CIO, Washington, DC............................................     5

                                APPENDIX
                          Prepared Statements

Hall, Amy........................................................    28
Fishman, Phil....................................................    32

                   FREEDOM OF ASSOCIATION FOR WORKERS

                              ----------                              

                          MONDAY, JULY 7, 2003

                            Congressional-Executive
                                       Commission on China,
                                                    Washington, DC.
    The roundtable was convened, pursuant to notice, at 12:39 
p.m., in room 2255, Rayburn House Office building, John Foarde 
[staff director] presiding.
    Also present: David Dorman, deputy staff director; Sarah 
Dudley, office of Senator Max Baucus; Andrea Yaffe, office of 
Senator Carl Levin; Michael Castellano, office of 
Representative Sander Levin; Alicia O'Donnell, office of 
Representative Doug Bereuter; Robert Shepard, office of Deputy 
Secretary of Labor D. Cameron Findlay; Susan O'Sullivan, office 
of Assistant Secretary of State Lorne Craner; and Susan Weld, 
general counsel.
    Mr. Foarde. I would like to welcome everyone to this issues 
roundtable of the Congressional-Executive Commission on China. 
On behalf of Chairman Jim Leach and Co-chairman Senator Chuck 
Hagel, welcome to our panelists, as well as all of you who are 
attending today.
    This afternoon we want to continue our look at freedom of 
association issues in China by looking specifically at the 
limits of freedom of association and its effect on Chinese 
working men and women.
    To help us delve into those issues more deeply, we have two 
very distinguished panelists. Amy Hall is manager for social 
accountability at Eileen Fisher, Inc. She is here in her 
capacity as a member of the advisory board for Social 
Accountability International [SAI]. She is going to talk to us 
about representation, SA8000 
industry standards, et cetera.
    Phil Fishman joins us from Washington, where he is 
assistant 
director of international affairs at the AFL-CIO, and we look 
forward to hearing from Phil on Chinese union law and its 
impact on workers organized in China.
    In keeping with the practices that we have had now for 
about a year and a half at these issues roundtables, we will 
give each panelist 10 minutes to make an initial presentation, 
understanding that you will not be able to cover everything. We 
will probably be able to pick up the points that you cannot get 
to initially during our question and answer session.
    I will let you know when 8 minutes has elapsed. When there 
are 2 minutes left, that is your signal to wrap things up.
    After both of you have spoken, then we will then open it up 
to the staff panel to ask questions and we will keep the 
conversation going as long as it is interesting, or 4 o'clock, 
whichever comes first.
    So with that, let me recognize Amy Hall. You can go ahead.

   STATEMENT OF AMY HALL, MANAGER FOR SOCIAL ACCOUNTABILITY, 
  EILEEN FISHER, INC., AND MEMBER, THE ADVISORY BOARD, SOCIAL 
          ACCOUNTABILITY INTERNATIONAL, IRVINGTON, NY

    Ms. Hall. Good afternoon. I am here, as John said, 
representing both Social Accountability International, where I 
serve on the advisory board, and women's clothing company 
Eileen Fisher, where I manage our Social Accountability 
Program.
    Both roles have taken me to China several times in recent 
years to work with our clothing factories, non-governmental 
organizations [NGOs], and other brands on improving factory 
working 
conditions. Freedom of association is just one issue area where 
we have been challenged and where we see some rays of hope 
emerging.
    I am sure we all agree that freedom of association and 
collective bargaining do not, in any meaningful terms, exist in 
China. Under Chinese law, workers may only form or belong to 
unions which are part of the All China Federation of Trade 
Unions [ACFTU], the sole official trade union organization.
    The ACFTU is generally recognized as a conduit for the 
relay of policies from the Communist Party and the state to 
workers. Even the current Chinese President, Hu Jintao, has 
defined the ACFTU role in such a way.
    Despite its being part of the state apparatus, the ACFTU 
appears to be organized in less than 5 percent of non-state-
owned enterprises. Nevertheless, we feel it may be possible to 
work on 
improving workers' rights to freedom of association through 
active engagement at the factory level.
    We are seeking to help create more opportunities for 
workers in China to learn about their voice and to access their 
rights. Recent developments on the ground in China indicate 
that there are openings for encouraging such opportunities, and 
I will give you three examples.
    First, some worker rights groups--such as the Institute of 
Contemporary Observation in Shenzhen, and the Migrant Workers 
Centers in Beijing and Panyu--have become active in mainland 
China.
    Second, there are indications that the ACFTU may be looking 
at how to become more effective as China continues its rapid 
transition from a planned economy to a market economy.
    In October 2001, China passed a new trade union law, 
granting ACFTU more legal leverage to defend workers' 
interests. In January 2003, the official Xinhua News Agency 
reported that the ACFTU was conducting experiments to encourage 
the direct election of its union leaders at the factory level, 
particularly in small and medium-sized enterprises.
    Third, some international companies have joined with NGOs 
to launch encouraging initiatives to promote worker 
representation in China. The most recent example is the direct 
election of union leaders at Taiwan-owned footwear factories in 
a process in which the main buyer, Reebok, together with 
workers' rights groups, played a pivotal role.
    According to SAI sources in China, Reebok gained positive 
comments from the ACFTU Guangzhou branch, which considered it 
``a model worthwhile to replicate.'' Doug Cahn of Reebok has 
briefly testified to the Commission on these cases.
    Although it is unlikely that thorough democratic changes 
will occur from the top down anytime soon, these examples 
illustrate the limited space that is emerging in which 
international organizations can foster respect for workers' 
rights.
    It is important to recognize the broader political 
challenges that these trends could face, while continuing to 
work directly with managers and workers on ensuring rights in 
the workplace.
    At Eileen Fisher, we ask our suppliers to adhere to the 
SA8000 standard, and we are working with SAI and others on 
various factory-level training programs. For those who are not 
too familiar with SA8000, briefly, this standard is the result 
of a consensus-based drafting process by trade unions, NGOs, 
and business representatives from around the world.
    The SAI advisory board, which is responsible for drafting 
SA8000 and advising on policies related to the certification 
system includes members from Amnesty International and the 
International Textile, Garment, and Leather Workers Federation 
[ITGLWF], among others.
    The SA8000 standard covers eight core workplace issues: the 
right to freedom of association and collective bargaining, 
child labor, forced and bonded labor, discrimination, 
discipline, health and safety, working hours, and remuneration. 
The requirements in these eight areas are based on 12 
International Labor Organization [ILO] conventions and other 
international human rights norms.
    A ninth element consists of management systems needed to 
ensure ongoing compliance with the standard and to encourage 
continuous improvement.
    In drafting SA8000 standards, the SAI advisory board agreed 
that we could not exclude Chinese factories from such a 
certification program. We saw direct engagement on workers' 
rights as crucial to fostering change and having an impact on 
the lives of millions of workers.
    SA8000 encourages change by providing an incentive to 
achieve certification. At the same time, certification is an 
important means to enable workers and their advocates to file a 
complaint if they detect some failing in compliance with the 
minimums defined in SA8000.
    Because there are legal restrictions on freedom of 
association in China, the SAI advisory board came up with the 
following requirement: ``the company shall, in those situations 
in which the right to freedom of association and collective 
bargaining are restricted under law, facilitate parallel means 
in independent and free association and bargaining for all such 
personnel.''
    The chief purpose of parallel means is to ensure that 
workers in countries such as China have the means to address 
their concerns and seek solutions without fear of repercussion. 
This requirement draws on the spirit of the Sullivan Principles 
implemented by companies doing business in South Africa during 
the apartheid regime.
    In the same way that the Sullivan Principles called for 
companies to implement parallel means for protecting human 
rights by providing a non-discriminatory environment within the 
workplace that they managed, the SA8000 standard adopts a 
similar 
approach.
    Companies are encouraged to provide opportunities for 
workers and their factories to organize themselves, to assist 
communications between workers and management, and to work to 
assure compliance with Chinese law.
    SA8000 requires companies to let workers know that they are 
free to organize and elect representatives in order to raise 
their concerns with management on key issues and, essentially, 
to negotiate solutions.
    The company I work for, Eileen Fisher, uses eight factories 
in southern China, representing about 60 percent of our total 
production. We do not own or in any way manage these factories. 
In fact, our share of the total capacity in these factories 
ranges from 10 to 30 percent, depending on the season.
    Many other brands use the same factories and apply their 
own labor standards to these facilities. All of the factories 
have agreed to adopt SA8000, and we engage in a program of 
monitoring, continuous improvement, and education to help 
facilitate this process.
    Early in the process we realized that we cannot simply 
provide the standard and walk away. Neither the factory workers 
nor the managers have the cultural context with which to fully 
comprehend or utilize the elements of the standard.
    After all, how can we expect a manager to eliminate all 
forms of unacceptable disciplinary practices or forced labor 
when the act of putting padlocks on women's dormitories is 
generally accepted practice in order to keep the female workers 
safe?
    How can we expect a worker to voice concern about sexual 
harassment when she or he does not even recognize when it is 
occurring? How can we expect workers to speak up about anything 
when they are raised with such a deep-seated, Confucian respect 
for their elders, and when freedom of speech is limited?
    In the cases I have been sharing where management 
facilitates parallel means to freely associate, we have found 
it difficult to encourage workers to make active use of worker 
committees.
    This is likely due to some or all of the following reasons: 
the workforce is largely made up of migrant workers who fear 
they could be sent back to their provinces; management does not 
understand how to enable workers to form such committees; 
workers 
distrust management claims that such committees will be 
independent and unproblematic for workers who join them; 
workers are inexperienced in organizing and participating in 
such a dialog with management and lack prior experience with 
real change resulting from committee work; or, finally, payment 
structures may not allow workers to participate in worker 
committees without losing incentive-based income.
    What is needed is change, not a ``Westernization'' of the 
cultural norms of the factory people, but a movement to foster 
greater understanding of their universally recognized rights, 
the ability to talk about those rights when they are being 
violated, knowledge of how these rights can be exercised, and 
the ability for managers to respond to those comments in a 
compassionate, non-discriminatory, effective manner. This was 
not something we could leave in the hands of the managers to 
coordinate, nor was it something that could happen in a 
classroom on a single day.
    We have been engaging in training programs for our managers 
and our workers through two organizations, SAI and Verite, a 
nonprofit, U.S.-based research and monitoring organization.
    I will not go into detail at the moment, but suffice it to 
say that these two programs have provided a wonderful 
foundation for the workers and the managers to begin to 
understand how to communicate with each other and how to 
recognize and understand their rights.
    We are about to offer three of our factories to SAI to 
participate in a worker training program that they are creating 
in China, based on a program that has taken place already now 
in 12 other countries, to train workers on how to use codes of 
conduct as an additional tool to defend their rights and 
interests. This program will begin later this year, and I will 
be happy to tell people about it later on if they are 
interested.
    In summary, we believe that for anyone concerned with 
worker rights, China certainly represents both risks and 
opportunities. We understand that substantial change will take 
time, but we must recognize the important role that all of us 
can play by fostering that change from within and from the 
bottom up.
    We have a choice. We can walk away from this challenge, 
jeopardizing the jobs and livelihoods of millions of workers, 
or we can be a catalyst for something better, and we believe in 
the possibilities.
    [The prepared statement of Ms. Hall appears in the 
appendix.]
    Mr. Foarde. You are admirably disciplined and you are right 
on time. Thank you.
    Phil, please.

STATEMENT OF PHIL FISHMAN, ASSISTANT DIRECTOR FOR INTERNATIONAL 
                AFFAIRS, AFL-CIO, WASHINGTON, DC

    Mr. Fishman. Thank you. I thank you for the opportunity to 
present the views of the AFL-CIO of freedom of association in 
China and its effects on workers.
    Let me emphasize at the outset that the AFL-CIO has been 
watching quite closely, and with an open mind, the efforts of 
some companies to more effectively apply their codes of conduct 
to workplaces in China.
    We understand clearly the magnitude of change China has 
been undergoing for the past two decades and the challenges 
created by this change to international worker rights and labor 
standards.
    We also have a growing awareness of the impact of such 
profound change on Chinese people. It is staggering that as 
many as 20 million people a year are leaving the rural areas of 
China for urban areas in search of work.
    To put this in some perspective, a single year's inflow of 
new urban workers in China is equivalent to the entire 
manufacturing employment base of the United States, a 
manufacturing base which everyone in this room knows is 
shrinking, in part, because jobs are moving to China.
    But it is not only the developed countries that are losing 
jobs to China. Developing countries are also losing a growing 
number of jobs to China, and this process is accelerating. 
There is a United Nations Development Program [UNDP] estimate, 
for example, that Bangladesh will lose more than a million jobs 
to China once the Multifiber Agreement [MFA] on Apparel expires 
in 2005.
    For these reasons, we are watching with keen interest 
developments that may contribute to arresting the race to the 
bottom, as many have characterized the shifting of much of the 
world's production to China.
    We see some opportunity in the efforts made by some 
companies to enforce their codes and we will continue to 
evaluate such efforts based on our knowledge of what the 
realities are for Chinese workers on the ground.
    However, I want to emphasize that companies with codes are 
only a small proportion of companies doing business in China. 
Moreover, companies that take their codes seriously are, in our 
view, a very small subset of this already very small group.
    Let me briefly turn to how the ILO defines freedom of 
association and the right to organize and bargain collectively. 
You can find these definitions, of course, in ILO Conventions 
87 and 98.
    The former has been ratified by 80 percent of the ILO's 176 
member countries, while 87 percent has ratified the latter. 
Sadly, two of the countries that have refused to ratify 
Conventions 87 and 98 are China and the United States.
    Decades of review and comment by the ILO standards 
enforcement machinery have defined what these words mean in 
real situations in countries and workplaces around the world. 
Based on this jurisprudence, it is clear beyond any doubt, as 
Amy indicated, that China's laws and practices are in 
fundamental contravention of both these core Conventions and 
the principles they embody. It is also clear that the notion of 
parallel means, in and of itself, does not satisfy the ILO 
definition of freedom of association.
    There are differing views regarding the significance of the 
changes to the Trade Union Law introduced in 2001, and it is 
too soon for a definitive assessment. A couple of things seem 
clear.
    First, the changes were designed to strengthen the role of 
the ACFTU in private sector workplaces. There are many reasons 
for this objective. Clearly, the old ACFTU, an ACFTU confined 
to dying state enterprises, was becoming an irrelevant 
organization.
    Second, the government was clearly embarrassed by repeated 
stories of exploitation. Finally, and perhaps most importantly, 
the Communist Party needed a means to prevent the establishment 
of independent worker organizations and to combat the growing 
number of spontaneous work actions.
    At the same time, the state and Party bolstered its hold on 
the ACFTU. The Trade Union Law, as amended in 2001, maintains 
the trade union monopoly enjoyed by the ACFTU--article 10--and 
strengthens the link between the ACFTU structure, the Chinese 
Communist Party [CCP], and the government, clearly identifying 
in more specific language than before the union's obligation to 
follow the leadership of the Communist party and to assist in 
maintaining the Party's monopoly of power.
    Article 11 stipulates that the establishment of basic-level 
trade union organizations, local trade union federations, and 
national or local industrial trade unions shall be submitted to 
higher level trade union authority organizations for approval.
    Not only is this article in clear violation of ILO 
Convention 87, which states that workers should be able to 
organize into unions of their own choosing, but is also a major 
obstacle to independent attempts to organize trade unions. The 
only way such efforts can succeed under the law is by 
submitting to the authority of the ACFTU.
    This scheme is further strengthened by the fact that 
company-level unions are totally dependent on higher level 
ACFTU structures for income.
    Companies are required to pay the equivalent of 2 percent 
of payroll in union dues to the higher ACFTU structure, which 
in turn is supposed to return a percentage back to the factory-
level union, at least in theory.
    So, under the current law, a factory union is wholly 
dependent on the higher level ACFTU to receive even a 
percentage of the dues paid by its own members.
    In sum, the current trade union law specifically provides 
for a trade union monopoly in the ACFTU; the program and 
activities of the ACFTU are subordinate to the wishes of the 
Party and state; questions of affiliation to international 
trade union bodies are subject to the approval of the state; 
workers who attempt to organize independent trade unions or 
carry out what we would define as normal trade union activity, 
such as participating in protests; all of these things and many 
others, demonstrate the distance China must travel for freedom 
of association and free collective bargaining to be respected 
in both law and practice.
    This is not to say that good, well-meaning people cannot be 
found in the ACFTU. It is to say, however, that institutionally 
the ACFTU is a creature of the Chinese state and the Communist 
party and is obligated by its own rules to act as a 
transmission belt for party and state policy.
    I want to emphasize that the International Confederation of 
Free Trade Unions, which represents 158 million workers in 150 
countries, shares this view. I also want to emphasize that 
differences among various trade union organizations do not 
focus on the nature of the ACFTU as a government entity. On 
this point, most are quite clear.
    But on whether or not the ACFTU can be reformed, indeed, 
the fact that the ACFTU is widely viewed as a government entity 
is precisely why most codes of conduct have included in them 
the concept of parallel means.
    With this in mind, let me turn to company efforts to 
enforce labor rights through their codes and through various 
monitoring schemes such as SA8000.
    It is our view that the most effective way to monitor 
factory compliance with national law, international standards, 
and company codes is by empowering workers themselves to play 
this role collectively and independently in an atmosphere 
absent of fear and 
intimidation.
    Workers have an obvious interest in ending abuses and 
violations as a way to improve their daily lives and can 
provide the daily continuity necessarily for monitoring to be 
truly effective. It is virtually impossible to monitor 
workplaces effectively without such continuity.
    What meets standards in a factory one day can be quite 
different 3 months later, unless there is daily vigilance. This 
has been demonstrated by the fact that SAI and other monitoring 
groups have had to remove certification of several facilities 
when it was disclosed that they did not, in fact, meet the 
standards.
    In most, if not all, of these cases, it was outside 
watchdog NGOs such as the National Labor Committee that 
uncovered the labor rights abuses, and only when they went 
public were the factories de-certified.
    We find this troubling, especially when combined with the 
fact that over one-third of the factories certified under 
SA8000 are located in China and Vietnam, where freedom of 
association does not exist.
    According to SAI, parallel means is designed to encourage 
nascent forms of worker self-representation in countries like 
China where independent unions are prohibited. While we look 
upon such efforts with interest, we remain skeptical as to 
where such effort actually lead.
    Our experience in China suggests that if a parallel 
organization formed in China is to survive, let alone lead to 
real freedom of 
association, a sustained effort must be made to nurture the 
organization through the provision of training and a commitment 
to maintaining the space in which the parallel organization can 
operate.
    We have not yet seen more than a handful of companies, such 
as Reebok, make such a commitment. It is unclear even then that 
they will succeed in individual workplaces, let alone 
influencing what happens outside of them.
    I do want to note with particular interest the two 
elections in facilities producing for Reebok. While we see some 
problems, such as the insistence by the ACFTU at the second 
facility to provide all worker education and training rather 
than respected NGOs from Hong Kong, as was the case at the 
first facility, we hope that the empirical evidence begins to 
emerge that such experiments lead to freedom of association.
    The experiences of countries such as South Korea and 
Indonesia suggest that workers became empowered only after both 
countries underwent fundamental political change, despite long-
time support by the international trade union community.
    So the value of parallel means is problematic for us, 
absent similar political change in China. Without empirical 
evidence that notions like parallel means leads to real freedom 
of association, it is our view that companies outside and 
inside China, with a code of conduct that includes freedom of 
association, are in fundamental violation of their own codes.
    Furthermore, until such evidence begins to emerge, there 
will be a continuing concern that at the end of the day, 
improving labor standards without legitimate trade union 
representation is an acceptable, even preferred, outcome to 
companies involved in such schemes.
    Let me conclude by saying that we believe that inevitably 
workers will win the right to freely associate in China. We do 
not expect this right to be handed to them by the business 
community. That has never happened. That has never been the 
case anywhere, as far as we know.
    In Taiwan and Indonesia, workers won the right by 
challenging tired, old state-run organizations that neither had 
the energy or the interest to represent workers' interests. In 
China, we are seeing that happen now in the old state 
enterprise sector, where workers are challenging the ACFTU on 
almost a daily basis.
    Similarly, representative groups are beginning to develop 
in the private sector, where workers are beginning to organize. 
American companies can help by finding effective ways to 
support these groups and resisting the temptation to adopt 
schemes that only pretend to meet the obligations of their own 
codes of conduct. Thank you.
    [The prepared statement of Mr. Fishman appears in the 
appendix.]
    Mr. Foarde. Thanks very much, Phil. You have given us great 
food for thought and great grist for the question mill. So I 
think I will exercise the prerogative of the Chair and begin.
    Picking up on something you said, Phil, about the presence 
of good people in the ACFTU, and not confusing the fact that 
they work for an organization that is an apparatus of the state 
or the Communist Party, how can people who care about freedom 
of association identify those people working at ACFTU at 
various levels and give them encouragement, either training or 
exchanges, whatever might work to help strengthen their hand. 
Is there anything that can be done?
    Mr. Fishman. We have had our own experiences in other 
countries where freedom of association was challenged. I 
mentioned Indonesia, for example, and South Korea. In both of 
those situations, we were able to operate openly, with 
sufficient space to identify those people and to work with 
them.
    The challenge that we face in China is that if the AFL-CIO 
would attempt to work inside China, the ACFTU would not allow 
us to identify those people and to work with them.
    I base that comment not only our view of the fundamental 
lack of space to operate, but I also base it on the experience 
of many trade union organizations that have been, in fact, 
operating inside China for many years.
    None of them say, as far as I know, that their years of 
experience have produced significant results in being able to 
identify and reach the more legitimate elements within the 
official structure, if in fact they do exist.
    Mr. Foarde. Amy, can you explain briefly why Eileen Fisher 
decided to go with SA8000? What was the logic in that?
    Ms. Hall. Well, we are a medium-sized company. We are, in 
the whole scheme of things, not a very large company. At the 
time when we were exploring this question, we felt that there 
were so many options out there already. Why create another code 
of conduct?
    We were invited to help develop SA8000, precisely because 
of the size of our company, to see if it could work for a 
smaller company.
    Most of the companies that we know of out there who are 
involved in this tend to be larger, so you want to make sure 
that companies of our size could afford doing this and that it 
could be applied to workforces of the smaller size that we tend 
to encounter.
    That was initially why we got involved with SA8000. But 
having now gotten to know many of the other options out there, 
we feel that the management systems component is quite strong 
and really sets it apart from the other standards, because it 
creates an innate mechanism with which this system just 
perpetuates itself and continues to improve, where at least 
most of the other systems do not have it. Parallel means sets 
it apart, and living wage sets it apart as well. So, we felt, 
for all those reasons, it was a stronger option.
    Mr. Foarde. Well, could you venture an opinion about how 
well SA8000 has been received compared to the other standards? 
Are people flocking to it, or is it building momentum? Roughly 
how many companies are signed up for the SA8000 compared to 
some of the other standards?
    Ms. Hall. They are not flocking to it, as they are not 
flocking to any of the other competing systems, with the 
exception possibly of WRAPP. I do not know if I am going to get 
into what all these are, but WRAPP is the Worldwide Responsible 
Apparel Production Principles.
    I would say that a lot of companies are sitting back, 
waiting to see which one emerges as the successful option. That 
is my personal opinion.
    How many companies are involved? I would say the ones that 
are actively involved as signatory members are probably fewer 
than 20. They are all over the world, European brands, American 
brands, and others. There are, I believe, about 250 certified 
facilities out there now.
    I think that takes into account, as Phil mentioned, that 
several have been taken off the list because they lost the 
certification through discoveries made after they were first 
certified. So that gives me an idea that the number of 
certified facilities is growing 
consistently.
    So I would say that, although it is not a hugely popular 
standard yet, it has definitely caught the attention of many 
organizations and companies around the world who are interested 
right now in looking at it.
    Mr. Foarde. Even if they have not actually signed onto it.
    Ms. Hall. Right.
    Mr. Foarde. They are waiting to see what happens.
    Ms. Hall. Yes. There is a lot of conversation happening out 
there. I think it is just going to wait and see.
    Mr. Foarde. All right. Thank you.
    It is now my pleasure to recognize my friend and partner, 
Dave Dorman, representing our Co-chairman, Senator Chuck Hagel. 
David.
    Mr. Dorman. First of all, let me thank both of you for 
taking the time today to share your wisdom and knowledge on 
these important subjects. I know each of our commissioners will 
be very interested in this testimony and find it useful in 
building their understanding of the topic.
    I have a short question for each of you. Phil, Amy made a 
very interesting statement I would like you to comment on. Amy 
quoted the Guangzhou branch or the Shenzhen branch of the All 
China Federation of Trade Unions saying in early March that the 
Reebok initiative actually saying ``this is a model worth 
replicating.'' Am I remembering right, Amy?
    Ms. Hall. Yes.
    Mr. Dorman. Phil, what would be your guidance to business 
leaders, NGOs, and this Commission? How do you interpret the 
ACFTU statement of support? Is this an opening we should 
pursue?
    Mr. Fishman. I think it is clearly the case that the ACFTU 
has not been supportive of any of the hundreds of worker 
actions each year that take place throughout southern China, in 
particular.
    Even in the Reebok example, the first facility that had an 
election brought in reputable NGOs from Hong Kong to do a lot 
of the training. That was stopped, we understand, by local 
security authorities who wrote to the company and said that it 
cannot go on any more.
    We have also heard reports that the local ACFTU was 
involved in the decision to stop that kind of training. Indeed, 
when you take a look at the second facility, the ACFTU, as I 
said in my initial statement, has insisted that only it provide 
training.
    So I think you have to take a look at what Reebok is doing 
in light of this. In fact, we are hearing stories now that even 
the second facility is causing some issues for Reebok and the 
training might be suspended. If that is the case, I would be 
very surprised to see the ACFTU rally to the defense of that 
experiment.
    Mr. Dorman. You made a comment, Ms. Hall, I believe, in 
your testimony concerning the necessity of worker collaboration 
to sustain these efforts. To what extent has SAI or Eileen 
Fisher been successful in building the collaboration across 
factories, across brands, and across NGOs that could make this 
happen?
    Ms. Hall. In terms of SAI, I believe that the multi-
stakeholder approach can be seen most in how it has been 
building its advisory board, to start with, because that is 
where a lot of the decisions are made as to how to implement 
the standard.
    First of all, the advisory board was created with members 
of--I think I mentioned this--the International Leather, 
Textile, and Garment Workers Union. There are now members from 
another major union, as well as NGOs from Vietnam, and I want 
to say China, I believe, brand-new, brought on board.
    So the idea is not only to expand into the NGO community, 
but also to make sure there is representation from all parts of 
the world, recognizing that this is a multi-industry standard 
that can be applied anywhere in the world.
    In terms of carrying out its work, SA8000 is very 
interested in partnering with any NGO out there that has the 
relationships with factories. In terms of China, I mentioned 
this one that I had already mentioned in the testimony, the 
Institute for Contemporary Observation.
    I believe the director has been brought on as an advisory 
board member, a representative from that organization. They 
have conducted some really interesting multi-stakeholder 
discussions, one that happened a couple of years ago in 
southern China, to address the topic of wages and hours, where 
we had members from the ACFTU, members of the local labor 
bureau, and other small organizations around the area, as well 
as other brands.
    They also work with other organizations, such as Business 
for Social Responsibility. So there is really an effort out 
there to work with these other organizations. There is a 
relationship now developing with the FLA, for example, or some 
discussion, we hope, to see if we can tackle some of these 
issues together.
    The only organizations Eileen Fisher has directly dealt 
with are SAI, Verite, and the Chinese Working Women's Network, 
which is based in Hong Kong but does work solely in southern 
China on 
behalf of factory workers.
    Mr. Foarde. We will move on and recognize some of our 
colleagues who are personal staff members to our Commission 
members, beginning with Bob Shepard. Bob.
    Mr. Shepard. Yes. I would like to ask a general question. 
Despite some amazing, broad changes in Chinese society and 
China's economy over the past decade and even longer, it sounds 
to me, from what has been said here and in other places, that 
there has been basically no progress nationally for China on 
freedom of association.
    There are little pockets of change within companies. It is 
interesting, because even in the labor field generally there 
has been some heightened consciousness within China on issues 
like minimum wages, some recognition of the importance of 
safety and health in certain areas, and a number of other 
things.
    It seems to me that the Chinese very consciously are trying 
to emulate what used to be called the Asian model. I think Mr. 
Fishman made some reference to this, where they tried to 
address workers' concerns by ramping up some of the economic 
benefits, making the economic side of things more comfortable, 
while continuing to keep workers out of the political side.
    Both of you seem to indicate in some ways that you had some 
optimism that things might change. But in East Asia and 
Southeast Asia, they have been able to hold on to that model 
for an extremely long period. It is still going on in some 
countries.
    Maybe you could speak a little bit about the chances that 
the Chinese Government has of implementing that type of model 
and keeping workers out of the political side of things, 
keeping freedom of association limited as it is.
    Mr. Fishman. The major place where I think a country has 
been successful in holding on to that model is, I think, 
Singapore, at least in Asia. I would argue that Singapore is 
actually unique. It is a city state. There are aspects of 
Singapore that are not shared by any of its neighboring 
countries.
    If you look even at a place like Taiwan, which is one of 
the few examples I can think of where you actually saw 
political liberalization before trade union liberalization or 
labor law reform, if there was an attempt on the part of the 
ruling party to hold onto restrictions or trade unions, it did 
not succeed.
    In most other countries such as Korea, it was really the 
trade unions that led the way to push for change that obviously 
the authorities were resisting. In China, I just find it hard 
to believe that the authorities will be able to keep the kind 
of control that they want. I think we are already seeing 
indications of them losing hold. The rising number of wildcat 
strikes, I think, is an indication of that dynamic.
    This situation is fueled by continuing exploitation, 
despite the efforts made by some companies. The reality is that 
if you compare the labor standards in China to most other 
countries in the world, it is really quite shocking.
    You hear stories all the time of workers who work 30 days a 
month without a day off. You hear stories all the time of 
workers working 16 hours a day. I think that this exploitation 
fuels a lot of the desperation and the anger that you see on 
the part of workers.
    My argument would be that China has grown to the point 
where it could survive an independent trade union movement. I 
think, as a matter of policy, both national policy for the 
United States but also international policy, that this 
objective ought to be a major price to pay for China becoming a 
member of the international community.
    They need to be told, effectively, that the price you have 
to pay for full admission to the WTO, for becoming a full, 
respected member of the family of nations, is to allow your 
workers to organize.
    You might find out that when you do that, it will not be 
the political threat that you think it might be. It would 
certainly promote change. Workers will have a voice. We see 
that in a positive way. We hope some day that the authorities 
themselves will also see that in a positive way.
    Mr. Dorman. Amy, did you want to comment?
    Ms. Hall. I do not think I have anything else to add.
    Mr. Foarde. We were just about out of time anyway, so let 
us go on. Next, representing Senator Max Baucus, our chairman 
last year, is Sarah Dudley. Sarah, it is good to have you here 
today. Do you have a question?
    Ms. Dudley. Yes. I am actually a relative newcomer to some 
of these issues, but one of the things that struck me in Mr. 
Fishman's testimony was his comment that empowering workers to 
play the role of the day-to-day monitoring of continuity of 
conditions is a must in these factories. This is kind of a 
loaded question. How do you do that with such a void of 
institutional role models?
    Mr. Fishman. Well, I think you have asked the most 
difficult question. I mean, that is really the issue: how do 
you empower workers in China to play not only the role of 
monitoring labor conditions, but effectively to represent their 
interests, both with 
employers and also with the government.
    It is a very difficult question at this point. I can tell 
you that we are grappling with it. We are experimenting as part 
of the international trade union community, with all sorts of 
programs and approaches to try to address that question. We are 
very open-minded about it.
    Whether we like it or not, China is the fundamental issue 
for workers around the world. Unless workers around the world 
figure out a way to arrest the downward spiral on labor 
standards and wages that China represents, then workers are 
going to be increasingly affected all over the world.
    As I said, it is even true in developing countries where 
you are seeing a shift of jobs from very poor developing 
countries to China for all sorts of reasons.
    So, I have trouble answering your question. I think that 
you have to try to do all sorts of things and you have to be 
open-minded and you have to experiment. But the measure at the 
end of the day is freedom of association. That is, I think, the 
key point.
    What is required is that workers are able to represent 
themselves, as defined by the international community. I think 
we have to be careful not to allow that measure to slide into 
something else.
    Ms. Dudley. Thank you.
    Mr. Foarde. Let us go on to Andrea Yaffe, who represents 
Senator Carl Levin.
    Ms. Yaffe. I am wondering what role the American populace 
and American legislators can play in enforcing or encouraging 
freedom of association in China. I mean, would boycotting 
products help, or legislation and resolutions?
    Mr. Fishman. Amy and I were actually talking about some of 
this before the hearing started. There clearly needs to be a 
much greater effort, I think, in the United States to educate 
consumers.
    As the father of two teenage sons, it seems to me to be 
entirely reasonable to try to inculcate some sort of culture 
that they ought to be sensitive to how products are made around 
the world, that they do not need 10 basketball shorts, that 
three will do, and that those three might cost a little bit 
more. But in the process of them costing more, that these 
products could be produced under much more humane conditions.
    You do not see that, and it is almost taboo to discuss. It 
has somehow been cast as being anti-free market to try to 
introduce that kind of education. I think it is tremendously 
important.
    In a broader sense, again, I think there are all sorts of 
ways. We surely missed an opportunity when China joined the 
WTO, but I think the international community has to communicate 
to China that its behavior is unacceptable.
    Until they change, there will be efforts at the U.N. 
Commission on Human Rights, there will be efforts at the ILO, 
and every international body to bring up the realities of the 
lack of freedom of association in China, and in fact the lack 
of other basic human rights.
    I think the international community has not done its job in 
that regard, and I think in some ways the American Government 
has not done its job. I think there is much more that can be 
done in that regard.
    Ms. Hall. I wish I knew what the U.S. Government could be 
doing. It is not easy to answer. But I would say that boycotts 
have never appealed to me. I feel that in terms of China, one 
of the reasons that Eileen Fisher produces in China is that we 
feel we can, as small as we are, have a small impact on 
workplace conditions there. We can somehow show that it is 
possible to do things a little differently.
    From the little seeds that we might be planting, greater 
things can grow. If we were to boycott China and just let 
millions of workers flounder and lose the opportunities that we 
might offer--although Eileen Fisher is not working itself with 
millions of workers.
    But similar to the experiences of other companies, if we 
were to leave them to figure this out on their own, change may 
not happen as quickly as it could happen with our influence. 
Now, we cannot do it alone. I do not know the answer to the 
question. I agree, actually, with what Phil said, that a lot of 
it has to come from the public, and perhaps the media, to 
educate everyone on what is going on.
    Mr. Foarde. We are out of time. We are going to go on to 
Alicia O'Donnell, who represents Congressman Doug Bereuter. Do 
you have any questions? Please go ahead and pose one.
    Ms. O'Donnell. I apologize for running late here today, so 
I have not heard your full testimony. But thank you for 
participating in this discussion. You may have covered this 
already, I do not know.
    Can you tell us about some of the demographics of the 
people that you are working with the most and from where their 
interest stems? Who are they, what age groups? Are you reaching 
the younger workers? Are they interested and excited about 
organizing and working for workers' rights, or are they 
indifferent?
    Ms. Hall. I guess I will start with that. Being a 
relatively small company, we use, right now, only eight 
factories in China, probably with a total of maybe 2,000 
workers in them. It is not a huge number, but it can be looked 
at as kind of a model for what is possible.
    On the whole, most of the workers are on the young side, 
probably around 20. Most of them are migrant workers--not all 
of them--which means they come from other parts of China and 
stay at the factory for 1 to 5 years, depending on their 
situation, to make money and go home and start their own 
business, or whatever it is, or start a family.
    What was the rest of your question? That is the 
demographics.
    Ms. O'Donnell. Who you are working with in terms of working 
toward freedom of association.
    Ms. Hall. Oh, right. Are they excited. Honestly, they did 
not understand what the concept was. They may still not 
completely. They probably do not still completely understand it 
because it just does not exist in their world.
    That is why we felt it was important to provide some kind 
of education to them and not leave it up to the managers to 
take the SA8000 standard and figure it out for themselves. I 
could not figure it out for myself. I needed to be trained. So, 
of course, we felt we needed to facilitate that training and 
education.
    Now that we have given them an opportunity to organize some 
worker committees, they are not too big on negotiating wages 
yet. We are not there yet. But they are self-designated worker 
representatives from the factories addressing issues that are 
relatively innocuous, things like dormitory conditions, 
cafeteria conditions, things like that. But at least they feel 
they have a voice. They are beginning to find their voice. I 
think that they are enjoying it.
    We are helping them. They are keeping logs. I think they 
have seen the benefit of this approach. Now, when it comes time 
to negotiate things like wages and some of the other tougher 
issues, we will see what really happens.
    Mr. Fishman. We have had a long relationship with some of 
the Chinese trade unionists in Hong Kong. Han Dongfang is an 
exiled trade unionist who was a leader of the Beijing Workers 
Autonomous Federation in Tiananmen Square in 1989. We supported 
many of his subsequent activities. There are NGOs in Hong Kong 
that operate in southern China, do monitoring, do education. We 
have had a long relationship with them.
    We have a relationship with the Hong Kong Confederation of 
Trade Unions [CTU], which is the largest independent trade 
union in mainland China. I might add that the CTU played a 
major role in organizing the demonstrations that took place in 
Hong Kong just the other day protesting the draft security law. 
That seems to have brought about a suspension of the effort by 
the government to push this bill forward.
    We have relationships with some Chinese workers exiled here 
in the United States who continue to have relationships inside 
China, one of whom is based in New York named Li Qiang, who, up 
until a couple of years ago, actually was organizing 
underground unions in southern China. So, he's really the only 
union organizer that has come out.
    Finally, as part of the international trade union network, 
we work closely within the International Confederation of Free 
Trade Unions, and the global union federation structure, on a 
variety of China issues. There is a China working party within 
the ICFTU structure. We are an active participant in those 
discussions.
    The China working party has an office in Hong Kong. We 
support that office. That office is trying to do some research. 
They have a Web site, and we have played an active role in 
supporting their work.
    Mr. Foarde. Next, we will recognize our friend and 
colleague Susan O'Sullivan, who represents Assistant Secretary 
of State Lorne Craner, one of our commissioners.
    Susan.
    Ms. O'Sullivan. Well, thanks very much for your 
presentations. I would like to pick up a little bit on what Mr. 
Fishman touched on, on the problem of the enormous overtime 
that workers are working. I understand this is a significant 
issue that companies are facing.
    It is sort of a two-part question. One, how do you deal 
with what must be falsification of information given over to 
companies, and what can companies do to get to the bottom of 
what is really happening in the factories that they are 
operating in and certifying.
    Two, is whether or not the training programs that are being 
conducted have been successful at all in convincing factory 
managers that workers might in fact be more productive if they 
were not so overworked. Is that an issue that you are dealing 
with?
    Ms. Hall. This is a big issue for our company, and for most 
apparel companies. I would not try to deny that fact. First of 
all, in terms of falsification of documents and weeding those 
out, here in the States, as well as in China, it is a big 
issue. The most we can do is look at all the different sources 
of information and try to verify back and forth between things. 
One of the most effective sources, of course, is to speak to 
workers themselves and find out how long they have been working 
and what they have been paid.
    You hope, through doing this over a period of time, that 
you weed out those who have been coached also and provided 
false information for whatever reason, to protect themselves 
for whatever reason. It is an ongoing challenge, but that is 
why we have a number of different ways of tackling it.
    We might look at these documents and speak to workers 
ourselves. We might hire an outside agency to do it. We might 
go on the advice of an NGO or somebody who has gone in to give 
us feedback that they have heard. All of that is welcome 
information.
    Training programs can help with overtime. We were just 
talking about this earlier today. Overtime is not necessarily 
directly related to worker wishes or management wishes.
    Here I am, representing an apparel manufacturer, and 
sometimes it is imposed by us, the brands, because of the 
amount of product that we need to have made within a very short 
period of time, the deadlines that we impose.
    This is an ongoing discussion that we have internally, as 
well as with other brands in how to stretch that out so we are 
not forcing overtime on our own factories, the very ones we are 
asking not to have overtime.
    But the training to help managers negotiate better with the 
brands to say, you know what? I cannot take that order now 
because you already gave me an order next week, and I cannot do 
it without having too much overtime.
    Or I can instruct them in how to have a legitimate sub-
supplier system with factories that are also engaged in these 
values. So, there can be a positive impact. We have not gotten 
that far in terms of training programs with this issue to know 
if it is going to be effective.
    Mr. Fishman. Just a couple of brief comments on this. 
Obviously, the magnitude of the problem in China is so 
enormous, given the tens of thousands of factories that are 
producing.
    We see a couple of possibilities that relate to the brands 
themselves. First of all, we think it would be helpful if the 
brands would make a commitment to consolidate their sourcing to 
a smaller number of companies. That would increase their own 
leverage with these companies.
    Second, the companies should make their sourcing public so 
that NGOs and other independent organizations could actually go 
in and confirm whatever they are being told.
    Third, there seems to be information that brands, on one 
hand, are demanding that the producers improve labor standards, 
but on the other hand, are unwilling to pay for it. So you find 
that some of these companies producing in China have to meet 
new demands, but not having, or claiming not have, the 
resources to do it.
    I think it is important that brands themselves, to the 
extent that they take their codes seriously, take on the 
commitment of ending the squeeze on the producer companies 
inside China by providing the resources necessary to improve 
their labor standards.
    Mr. Foarde. Next, I would call upon our friend and 
colleague, Mike Castellano, who represents Congressman Sander 
Levin.
    Mike.
    Mr. Castellano. Thank you very much. I apologize as well 
for arriving late.
    We often talk about labor standards in the trade context as 
being an important aspect of international competitiveness in 
attracting foreign direct investment, and sometimes in trade 
directly, because those factories are building something and 
usually exporting it to other countries.
    Do you think that is accurate? How big of a role do you 
think that the labor rights situation has played in China's 
ability to attract FDI, foreign direct investment? Has it 
helped it because it is a cheaper and ``more docile'' 
influence, or has it hurt it because of the negative perception 
attached to it? Is it as simple as helped or hurt?
    Mr. Fishman. Well, I think there is no question that there 
is something that is attracting incredible amounts of 
investment and shifting of production away from other parts of 
the world to China.
    Clearly, an aspect of that attraction is both the cheap 
labor costs--and China is not the cheapest place in the world. 
But when you combine the fact that China is a relatively 
inexpensive place to produce goods, together with the fact that 
China's infrastructure is surely much better than a place like 
Bangladesh, and the perception that there is some degree of 
political stability, it is a very 
attractive place.
    I mentioned the expiration of the Multifiber Agreement. It 
is really a major concern that when this agreement expires, you 
are going to see garment industries in developing countries 
literally wiped out overnight.
    You are going to see garment industries in countries such 
as the Philippines or Cambodia, where you have seen some 
progress made toward respect for workers' rights and labor 
standards, shift overnight to China, because it will be seen as 
a more attractive place to buy product.
    So what the MFA has done--and I am saying this in 
relationship to your comments about the impact of trade--is 
force a distribution of production to various countries around 
the world. Many of these countries are, in fact, more 
democratic than China, and respect the rule of law, worker 
rights, and human rights.
    As a result, progress has been made for their workers. That 
is all going to end to a great extent. I am sure you have seen 
the studies of what countries' industries might survive once 
the MFA expires.
    We see that as not only tremendously tragic but also a 
vivid example of how both American trade policy and 
international trade policy can have a profound effect on 
promoting the rule of law and protecting human rights and 
worker rights.
    Mr. Foarde. Amy, do you want to comment?
    Ms. Hall. My only thought when you asked the question, is 
that I feel there are probably many more companies, certainly 
many more companies that will invest in China but do not care a 
lot about labor rights than there are that do. I think that 
says a lot by itself. It is really not going to have much 
impact.
    Mr. Foarde. I would now recognize our colleague, Susan 
Roosevelt Weld, who is the general counsel for the Commission.
    Susan.
    Ms. Weld. Thank you. I am hearing some pessimism as to how 
much impact some of these efforts will have on conditions in 
China. Do you think other kinds of efforts would work better? 
For example, I would like to hear your opinions on whether the 
new Trade Union Law is better for workers, or worse. I think, 
Phil, you felt it may have been worse for workers in certain 
ways.
    Would legislative changes by China or administrative 
changes within one of China's subunits, perhaps Shenzhen, 
smaller and more developed be effective? Is there some way that 
conditions could be improved by local action? Could the United 
States do anything that would foster those kinds of changes?
    Mr. Fishman. Just a couple of comments. I think one has to 
be sober about trying to assess what is going to happen in the 
future. I think one of the points that I was trying to make is 
that these experiments that are taking place, some of which we 
see in a very hopeful light, are really only the beginning. We 
are only scraping the surface. Again, even the SA8000 scheme, 
affects only a very small percentage of workplaces in China.
    So, I think we want to emphasize the point that this is 
really only the beginning, and we hope that it grows and we 
hope that it goes in directions that we find substantive and 
important, and we will continue to watch it.
    But we are nowhere near that at this point. I do not want 
to convey a sense of pessimism. But I also want to put it 
within the perspective that I think it deserves.
    We are at a situation where we are trying to find ways to 
encourage, and perhaps coerce, the Chinese authorities to 
accept things that they really do not want to accept. We have 
done that in this world. We have done that, surely, in the case 
of South Africa. Amy mentioned South Africa. We are trying to 
do that in the case of Burma. We have done that in the case of 
Pinochet's Chile.
    We have to find a way not only to provide incentives but 
also to communicate to the Chinese Government that its 
behavior, is unacceptable, and if it continues there will be 
repercussions.
    Because of the size of China and because it is such an 
attractive potential market, I think there has been a prejudice 
toward emphasizing the carrot and not emphasizing enough the 
stick. I think the Chinese understand that dynamic quite well 
and have taken advantage of that difference in emphasis.
    Ms. Hall. I just wanted to mention something that is 
happening in Vietnam right now. I do not know if this is really 
going to directly answer your question or not, but I thought it 
was a good place to mention it.
    Vietnam is encouraging the use of SA8000 throughout the 
apparel industry. I could be wrong on that, but I believe it is 
just the apparel industry.
    As a result, SAI has just opened an office in Ho Chi Minh 
City to facilitate this process, to see if it can work to 
create sort of a national movement. Obviously, there are many 
challenges. It just started. The office just opened within the 
past few months. But it is something that is very promising.
    I think Vietnam is large enough that, if this works--and it 
is going to take quite a long time for us to see if this is 
going to work--this possibly could be something to be looked at 
for a larger country such as China, for example.
    Of course, how we would bring that to China, I have no 
idea. But maybe using the results of these smaller efforts that 
we are all undertaking now and showing them as a model that 
China could replicate, and showing Vietnam's success, we hope, 
would have an 
impact.
    Ms. Weld. Vietnam--is that program being submitted through 
the parallel organization to the All China Federation of Trade 
Unions? They have a government union there in Vietnam, too, do 
they not?
    Ms. Hall. That is a good question. I really do not have all 
the details. I know this is happening, but I do not know how 
exactly. I would have to tell you later. I would have to look 
into that. I do not want to give you wrong information on that.
    Ms. Weld. One of my correspondents asked me to put this 
question to, I guess, to Amy. Does this effort on parallel 
representation in some essential way conflict with the SAI 
standards on freedom of association, or does it empty out the 
idea of freedom of association so that the whole standard 
slips? Will that have a future bad impact?
    Ms. Hall. Well, it is only meant to apply to countries 
where freedom of association is legally forbidden. So until 
China changes--we hope there is a day when it does change--then 
this solution, to us, is the best solution.
    When the moment comes that free association is legally 
allowed, then this will no longer apply, and perhaps it can be 
removed. This document is changed every 2 years and updated to 
reflect current needs, so I hope that the day will come when we 
do not need to talk about it.
    Mr. Fishman. Can I make one comment on that? It is our 
understanding that parallel means has been applied to 
Bangladesh. 
Bangladesh is a country that does have freedom of association 
protected in its laws. So, that creates certain suspicions as 
to the use of parallel means. It is not only being applied, it 
seems, in countries that do not respect freedom of association.
    For trade unions, there is always a concern of an effort on 
the part of companies and governments to create what we would 
call yellow unions, or fake organizations. We see that in Latin 
America and South America with the growth of the Solidarismo 
movement.
    I think one of the challenges for SA8000 is precisely to 
find ways to satisfy those concerns, those legitimate concerns 
on the part of worker organizations around the world. And, of 
course, the proof of the pudding is in the tasting.
    When there is enough evidence that emerges that parallel 
means actually translates into legitimate freedom of 
association as defined by the ILO, then I think you will see a 
lot more trade unions jump on board.
    Again, I think the challenge for China is that we have not 
seen that happen elsewhere without a fundamental political 
change. So, I think it is going to be a very daunting task.
    Mr. Foarde. Let me continue, picking up on something that 
Phil just said and Amy brought up in her main presentation, and 
that is the Sullivan Principles. I think, to a man and woman, 
our commissioners are very interested in the experience of the 
Sullivan Principles in South Africa and wonder, and have asked 
me many times, whether we on staff think that there are any 
parallels or any way that Sullivan-type principles can be 
adopted for China. This is not a new question. It has been 
around for a number of years.
    But I would like to hear from both of you on that question. 
What was it about Sullivan with respect to South Africa that 
made it--particularly in the context of labor and labor 
rights--is there any way that Sullivan Principles might be 
arrived at for China, for example?
    Ms. Hall. What I am about to say will contradict something 
I said earlier. But SAI's feeling about this, explicitly, is 
that in the case of South Africa, the Sullivan Principles 
probably would not have been effective without divestment.
    So if you were to translate that to China, we would 
therefore have to boycott, as well as implement parallel means, 
or whatever you want to call it. That would be, to me, the 
parallel model.
    Mr. Fishman. I, too, want to emphasize some of the 
differences that make it difficult to apply Sullivan-like 
principles.
    First, there was clearly an international movement that 
communicated to the apartheid regime in South Africa that its 
behavior was not acceptable. It had become a pariah state. I 
think that was the international climate in which the Sullivan 
Principles could become effective. Part of that is the 
divestment movement.
    Second, even under the worst days of apartheid, there were 
black trade unions. There were trade unions that existed in 
South Africa, even under a repressive atmosphere, that do not 
exist in China. So, there were partners, both inside and 
outside, that were able to work together to make the Sullivan 
Principles work.
    If that existed in China, then I think the Sullivan 
Principles, or something like them, should be looked at. But at 
this point, it just does not. So it is hard for us to imagine 
at this point that the Sullivan Principles, or an effort like 
it, would be very effective.
    Mr. Foarde. Dave, another question?
    Mr. Dorman. I have a two-part question. I'll start with 
Amy, and certainly Phil you are more than welcome to comment as 
well. Amy, you mentioned Eileen Fisher's working relationship 
with eight factories in China. To what extent have the owners 
of these factories realized economic benefit from adopting the 
SA8000 principles beyond, obviously, Eileen Fisher contracts? 
Have other brands been attracted to these factories because 
they adopted SA8000 principles?
    A second part, and this goes back to a comment that Phil 
made. Obviously, Eileen Fisher has invested time, money, and 
personnel into developing a positive relationship with its 
factories in China. To what extent do you feel your consumer 
base in this country is aware of what Eileen Fisher is doing, 
and the purchases by these consumers are informed by that 
knowledge?
    Ms. Hall. In terms of the first question, the factory 
managers realizing economic benefit from using SA8000, we 
actually used that as a reason for them to adopt it, initially, 
in convincing them that this was going to help them.
    I mean, we really want them to adopt it because they 
believe in it, but in the beginning we had to kind of use every 
carrot we could think of. Honestly, I do not think it has made 
an impact on them yet.
    I believe they probably spent more money than they have 
made in having had SA8000 there, and sometimes simply by losing 
workers to interviewers every time somebody comes around to 
talk to them.
    So, yes, so far I do not think there has really been a 
measurable advantage to SA8000. I think it is too early. But we 
believe there is one. Down the road, there will be one, 
ultimately.
    As far as our own consumer base, we do not really talk 
about what we do in our factories a lot. We certainly are happy 
to talk about it if somebody asks us, but we do not broadcast 
it. It is available on our web site. We have a handout in the 
stores if somebody asked about it, but you would never find it, 
by just walking in.
    We do get our share of letters from consumers asking about 
conditions. They are always interested in China. It is the one 
thing they always ask about. We are very open with what we have 
done, what has worked, what has not worked, et cetera.
    We are looking at, long-term, how to communicate this more 
effectively, because we feel that consumers need to understand 
why we choose to stay in China and work for women, as well as 
manufacture here in the States. Whether or not this helps to 
sell clothing, it is just about helping move the movement 
forward, we think. But, anyway, we are just talking about that 
right now.
    Mr. Foarde. We are closing in on the end of our session 
this afternoon, but I would like to give the last set of 
questions to our friend and colleague, Bob Shepard.
    Bob.
    Mr. Shepard. Let me ask you a practical question. We in the 
U.S. Government, when we do programs in the labor area--working 
in the tripartite mode with business, government, and labor--in 
the case of China we are restricted from working with the 
ACFTU. The reasons are obvious. It is not an independent free 
trade union federation.
    On the other hand, who else might we work with? I was 
curious to get your opinions on whether those restrictions 
should continue to be in place, and if so, who we should work 
with? Should we make any attempt to work with Chinese workers, 
or should we just focus on working with government entities?
    Mr. Fishman. I guess that question is for me. Well, as you 
probably know, Bob, we played a major role in getting that 
language into the legislation. So, as a representative of the 
AFL-CIO, I would have to say to you that we believe in the 
notion that the American Government ought not to be supporting 
the ACFTU.
    You raised an interesting question with your last comment. 
It is not clear to me that the best role for the American 
Government is, in fact, to try to reach out to workers 
directly, especially in the 
context of a country like China, to do education and training, 
or whatever.
    Our experience has been that the people who do that the 
best are workers themselves. Surely that has been our 
experience in many of the countries where we work. We are quite 
immodest, I think, about our own effectiveness in providing 
worker education. Again, the challenge in China is, how do you 
gain access? That is very 
difficult.
    I will say to you we do have discreet and indirect ways of 
reaching workers in workplaces through universities, through 
legal help clinics, through, as I said before, NGOs in China. 
We are trying to expand our efforts to create space and to sort 
of develop support under the radar.
    Again, if it becomes known that the AFL-CIO is working 
inside China, the ACFTU would, I think, very quickly and very 
actively attempt to either stop it or co-opt it.
    Mr. Shepard. Do workers ever come to you, to SAI or to the 
companies, with questions about how they might play a stronger 
role with respect to organizing or with respect to reforming 
their branch of the ACFTU? Do they ever ask those questions?
    Do you get any sense that there is consciousness about the 
whole notion of freedom of association, or are their questions 
or demands focused mainly on specific economic benefits?
    Ms. Hall. Yes. They are not quite at that point where they 
have a big picture in their head. I think this training that we 
are hoping to undertake with SAI soon, this very long-term 
worker training, will create that consciousness for them. It is 
really going to put them in the context of the world as opposed 
to just in their factory and just making money to send back 
home. But, really, why are we all doing this?
    So, anyway, that has not happened yet, and we will be 
restarting it later this year. I wish, if somebody had come 
forward or we would come forward, I think it would be 
wonderful. It has not happened yet.
    Mr. Foarde. Well, as we do have some time left, perhaps, 
Mike Castellano, do you have another question? Mike.
    Mr. Castellano. I have got a question. You mentioned that 
the Vietnamese Government had adopted this SA8000 standard on 
apparel. I was wondering whether or not you thought it was 
possible to adopt something like that in China. I wonder if you 
could just kind of think that through right now. What would be 
the clear difficulties that would first come to mind?
    Ms. Hall. Well, a couple of things just jumped to mind 
right now. I mean, China already has an established economy 
going on. It does not need this. In fact, this is a huge fly in 
the ointment for them.
    Vietnam is looking to gain a competitive edge and feels 
that, if it can get all of its factories to aspire to something 
great, greater than just the law, then they will attract 
business from all over the world. That is the reason why they 
are undertaking this.
    So how do you create that need for China? I am not sure if 
it is possible because it is a huge economic expense, for them. 
It would be wonderful, but, honestly, I am not really sure how 
to make it practical. Perhaps to start it in one area of China, 
maybe a depressed area. I am just talking out loud. I really 
have no idea. But that might be a possibility.
    I always wondered, one of the reasons there are so many 
issues going on in China--one of many reasons--is migrant labor 
causes so many issues all by itself. Why not open the factories 
where labor is? Why do we have to bring labor to the coastline 
all the time? So, maybe that is one way to address it.
    Mr. Castellano. Let me switch gears. We talk about raising 
consumer consciousness. How do we make it so more consumers 
make it an issue when they buy things, to consider the labor 
issues innate in the goods. It seems to me there could be a 
role for government there.
    I am wondering if you two have any thoughts about ways in 
which government can raise the profile of the issue, increase 
the information that is available to make it easier to make 
those choices, and other ways in which the government could 
help raise consumer awareness and make it more of a consumer 
choice issue.
    Ms. Hall. I do not really have anything. Nothing is coming 
to mind.
    Mr. Fishman. Clearly, I think there is a role that the 
government can play to provide more information on countries. I 
think the Department of Labor, at least under the previous 
administration, was moving in that direction, where there was 
an attempt to look at worker rights conditions in countries and 
to make that 
information more public. I think that would be valuable.
    How to make that information accessible and attractive to 
consumers, I think, is the challenge. I think, with all the 
good work the Department of Labor had done in the past, there 
are not that many Americans who get online every day and look 
at the DOL Web site.
    But I do think there is a role for government to provide 
education on the status of worker rights and labor standards in 
various countries, and to be positive about those countries 
that, in fact, have made progress or meet standards and make 
sure that consumers understand that.
    I spent a fair amount of years in the Philippines. It is 
really quite remarkable that we are promoting a trade policy 
that will penalize the Philippines because it has made more 
progress in terms of democratization, in terms of rule of law, 
in terms of respect for human and worker rights. I think that 
is exactly the case. When you see 2005 come along, I would be 
surprised if the garment and apparel industry in the 
Philippines survives. I think it is going to end.
    Mr. Foarde. We have reached the magic hour of 4 o'clock. To 
avoid imposing upon the tolerance and good nature of our 
panelists any longer, we will bring this session to a close.
    First, on behalf of our chairman and co-chairman, and all 
of our commissioners, thanks to Amy Hall and Phil Fishman; Amy, 
for coming all the way to Washington to share your views with 
us, and Phil, although you are here, we welcome having a AFL-
CIO representative and our long association with some of your 
colleagues who are also here in the room.
    Thanks to all of you for coming to attend. We will probably 
not have another roundtable now until September, after the 
August break, because we are going to have a formal hearing on 
Thursday, July 24, 2003.
    I will send out a notice soon. If you are not on our notice 
list, you can sign up on our Web site. If you are, the exact 
time and place are unclear, as we are still negotiating over a 
room. It will be a full Commission hearing having to do with 
both freedom of religion and the new Chinese leadership.
    So with that, let me thank everyone once again and bring 
this issues roundtable to a close. Good afternoon.
    Thank you.
    [Whereupon, at 4:03 p.m. the roundtable was concluded.]

                            A P P E N D I X

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

                          Prepared Statements

                              ----------                              

                     Prepared Statement of Amy Hall

                              JULY 7, 2003

 Promoting Worker Representation in Chinese Factories--The SAI Approach

    As a member of the Advisory Board of Social Accountability 
International and as Manager of Social Accountability for clothing 
designer and retailer Eileen Fisher, I bring both the NGO and corporate 
perspectives to the table. On a personal level, I have studied and 
traveled extensively in China and have visited our clothing factories 
there several times.
    But let me begin with a little background.

                        OPPORTUNITIES FOR CHANGE

    Existing legal barriers to forming independent trade unions in 
China notwithstanding, we feel it is possible to work on improving 
workers' rights to freedom of association through active engagement at 
the factory level. We are seeking to help create more opportunities for 
workers in China to learn about, voice, and access their rights. Recent 
developments on the ground in China indicate that there are openings 
for encouraging such opportunities, such as:

    (1) Some worker rights groups have become active in mainland China 
recently, for example: the Institute of Contemporary Observation in 
Shenzhen and the migrant worker centers in Beijing and Panyu.
    (2) There are indications that the All China Federation of Trade 
Unions (ACFTU), the Chinese official trade union, is looking at how to 
become more effective as the Chinese economy continues its rapid 
transition from a planned economy to a market economy. In October 2001, 
in a positive gain for the ACFTU, China passed a new trade union law 
granting the ACFTU more legal leverage to defend worker's interests. In 
January 2003, the official Xinhua News Agency reported that the ACFTU 
is conducting experiments to encourage the direct election of union 
leaders at the factory level.
    (3) Some international companies have joined with NGOs to launch 
encouraging initiatives to promote worker representation in China. The 
most recent example is the direct election of union leaders at a 
Taiwanese-owned footwear factory, in a process in which the main buyer 
(Reebok)--together with workers' rights groups--played a pivotal role. 
According to SAI sources in China, Reebok's effort even gained positive 
comments from the ACFTU Guangzhou branch, which considers it ``a model 
worthwhile to replicate.'' Doug Kahn of Reebok has previously testified 
to this Commission on these cases.

    Although it is unlikely that thorough democratic changes will occur 
from the top down any time in the near future, these examples 
illustrate the limited space that is emerging in which international 
organizations can foster respect for workers' rights. It is important 
to recognize the broader political challenges that these trends could 
face, while continuing to work directly with managers and workers on 
ensuring rights in the workplace.

 PARALLEL MEANS OF FREEDOM OF ASSOCIATION: THE SAI APPROACH TO PROMOTE 
                         WORKER REPRESENTATION

    We at Eileen Fisher are asking our suppliers to adhere to the 
SA8000 standard and are working with SAI and others on various factory-
level training programs. The SA8000 standard is the result of a 
consensus-based drafting process by trade union, NGO and business 
representatives from around the world. The SAI Advisory Board, which is 
responsible for drafting SA8000 and advising on policies related to the 
SA8000 certification system, includes members from Amnesty 
International and the International Textile, Garment and Leather 
Workers' Federation (ITFLWF), among others (see attached). The SA8000 
standard (also attached) covers eight core workplace issues: child 
labor, forced and bonded labor, discrimination, discipline, health and 
safety, working hours, remuneration, and the right to freedom of 
association and collective bargaining. The requirements in these eight 
areas are based on 12 ILO conventions and other international human 
rights instruments. A ninth element consists of requirements that focus 
on the management systems needed to ensure ongoing compliance with the 
standard and encourage continuous improvement even after a factory is 
certified for having met the minimum requirements of the standard.
    In drafting the SA8000 standard this group--now the SAI Advisory 
Board--agreed we could not exclude Chinese factories' access to such a 
certification program. We saw direct engagement on workers' rights as 
crucial to fostering change. SA8000 encourages change by providing an 
incentive to achieve certification. At the same time, certification is 
also an important means to enable workers and their advocates to file 
complaints if they detect some failing in the factories' compliance 
with the minimums defined in SA8000.
    SA8000 does require additional efforts on free association for 
factories in countries like China where there are legal restrictions on 
free association. To that end, the SAI Advisory Board came up with the 
following requirement (clause 4.2 of SA8000):

          The company shall, in those situations in which the right to 
        freedom of association and collective bargaining are restricted 
        under law, facilitate parallel means of independent and free 
        association and bargaining for all such personnel.

    The chief purpose of such ``parallel means'' is to ensure that 
workers in countries such as China have the means to address their 
concerns and seek solutions without fear of repercussions. This 
requirement draws on the spirit of the Sullivan Principles implemented 
by companies doing business in South Africa during the apartheid 
regime.
    The experience of the Sullivan Principles in South Africa shows 
that in cases where a government policy restricts an international 
human right, companies are able to implement parallel means for 
protecting that right within the factory walls. Despite Apartheid, the 
Sullivan Principles stated in Principle that companies would promote: 
``Non-segregation of the races in all eating, comfort, locker rooms, 
and work facilities.'' Compliance with the principles were audited by 
the consulting firm Arthur D. Little. Companies adhering to the 
Sullivan Principles in their South Africa operations during the 
apartheid era were able to make a strong statement against 
discrimination by providing a non-discriminatory environment within the 
workplaces they managed. The Sullivan principles helped to develop a 
movement of business leaders objecting to apartheid, who were thus able 
to raise an influential voice against discrimination.
    The SA8000 standard adopts a similar approach, with companies 
providing additional opportunities for workers in their factory to 
organize themselves independently. SA8000 requires companies to let 
workers know they are free to organize and elect representatives in 
order to raise their concerns with management and, essentially, 
negotiate solutions.

                      EILEEN FISHER: A CASE STUDY

    Eileen Fisher utilizes the services of eight factories in southern 
China, representing about 60 percent of our total production. (The 
balance is manufactured in the U.S.) We do not own or in any way manage 
these factories. In fact, our share of the total capacity in these 
factories ranges from 10 to 30 percent, depending on the season. Many 
other well-known brands use the same factories and apply their own 
labor standards to these facilities. All of the factories have agreed 
to adopt SA8000, and we engage in a program of monitoring, continuous 
improvement and education to help facilitate this process.
    Early in the process, Eileen Fisher realized that we cannot simply 
provide the SA8000 standard and walk away. Neither the factory workers 
nor the managers has the cultural context with which to fully 
comprehend or utilize the elements of the standard. For example: How 
can we expect a manager to eliminate all forms of unacceptable 
disciplinary practices or forced labor when putting padlocks on women's 
dormitories is generally accepted practice in order to keep them safe? 
How can we expect a worker to voice concern about sexual harassment 
when she or he doesn't even recognize when it's occurring? How can we 
expect workers to speak up about anything when they are raised with 
such a deep-seated respect for their elders (a.k.a. managers, 
supervisors, teachers, parents, etc.) and freedom of speech is limited?
    In the case of ensuring that management facilitates parallel means 
to freely associate, we have found it difficult to encourage workers to 
make active use of worker committees. This is likely due to a 
combination of reasons, including:

   Management not doing enough nor understanding how to enable 
    workers to form such committees;
   Worker distrust of any management information that such 
    committees will be independent and unproblematic for workers who 
    join them;
   Worker inexperience in organizing and in participating in 
    such a dialog with management (especially since many workers come 
    from farming communities) and a lack prior experience with real 
    change resulting from committee work; and
   Payment structures do not allow workers to participate in 
    worker committees without losing incentive-based income.

    What is needed is change--not a ``westernization'' of the cultural 
norms of the factory people, but rather to foster greater understanding 
of their universally recognized rights, how to talk about those rights 
when they are being violated, and how managers can respond to those 
comments in a compassionate, non-discriminatory, effective manner. This 
was not something we could leave in the hands of the managers to 
coordinate. Neither was this something that could happen in a classroom 
on a single day.

                   WORKING TOGETHER TO FOSTER CHANGE

    Eileen Fisher engaged the services of SAI and Verite, a non-profit 
U.S.-based research and monitoring organization, to conduct SA8000 
training for the managers of our China factories. This training is 
conducted annually or as needed, with an emphasis on specific issues 
that the managers face in achieving compliance to the SA8000 standard. 
Verite also provides training to our factory workers through its mobile 
worker training van program. The van brings educators to each of our 
three primary factories once a month to inform the workers on such 
topics as minimum wage calculation, occupational health and safety, and 
China's labor law. All of these efforts are intended to lay the 
groundwork on which to build effective worker representation and 
worker-manager communication systems in each factory.
    To illustrate how this process has impacted workers at our China 
factories, let me describe an experience in one factory that represents 
our experience across the board. When talking with the factory manager 
about parallel means of free association, we found that he was eager to 
facilitate the formation of worker committees. Initially, though, he 
offered to simply form the committees himself. (Why bother with an 
election when management already knows who will be chosen based on 
popularity of the workers?) When we explained that the process is not 
legitimate unless it entails an open worker election, he was skeptical. 
Surely he feared that this would lead to unrest among the worker 
population. When pressed, however, the manager gave in, knowing that 
our business relationship with the factory was at stake. Months later, 
when we returned to visit the factory, we were pleasantly surprised to 
find a well-functioning worker committee. Skeptical ourselves, we 
privately asked the worker reps about the process, and they told us 
that, yes, they were elected by their peers (from among their work 
groups) and that management does listen to their concerns. Issues 
raised have ranged from the quality of food in the cafeteria to 
complaints about co-workers being too messy. In every case, management 
has addressed the concern in a reasonable manner. And every issue was 
documented in a worker-controlled notebook. Time will tell if this 
committee continues to function effectively, through employee turnover 
and the simple passing of time. But we remain hopeful.
    As an SAI Advisory Board member, Eileen Fisher has followed SAI's 
worker training program with particular interest. Since 2001, SAI, in 
collaboration with the International Textile, Garment, and Leather 
Worker's Federation, has been conducting a program in 12 countries to 
train 6,000 workers on how to use codes of conduct as an additional 
tool to defend their rights and interests (in countries where there is 
not restriction on freedom of association).
    In 2003-2004, SAI will expand on this program to develop an 
innovative worker training for the Chinese context. The primary 
objectives of the program are to raise worker's awareness of and to 
introduce skills to use all available opportunities, including the 
parallel means of freedom of association, to improve working 
conditions. Another important objective is to train a group of workers 
(who will be selected by their peer workers through secret ballot, 
multiple candidate elections) who have the potential and skills to 
serve as peer workers' representatives. The group will possibly set up 
their own agenda for further activities, such as to train other workers 
on how to protect themselves, or to set up worker committee on issues 
of their own concerns. Managers will be also trained separately on how 
to take proactive action to address workers' concerns and grievances.
    Eileen Fisher has offered three of its factories to participate in 
the pilot of SAI's China worker training program, to begin later this 
year. This program will be conducted with the assistance from local 
partners such as the Institute of Contemporary Observation, the and 
others. Both organizations have rich experience in training and working 
with workers in South China.
    Both SAI and Eileen Fisher recognize that, in the case of the right 
to free association and collective bargaining, both training and 
ongoing assistance are needed. This support work needs to be done 
through a multi-stakeholder collaboration so as to foster a sustainable 
and credible process. U.S. brands can play a critical role, but they 
need to work in partnership with U.S. and international labor, NGOs, as 
well as local Chinese organizations.
    In summary, SAI and Eileen Fisher believe that, for anyone 
concerned with worker rights, China represents both risks and 
opportunities. We understand that substantial change will take time. 
But we must recognize the important role that all of us can play by 
fostering that change from within. We have a choice: We can walk away 
from this challenge, jeopardizing the jobs and livelihoods of millions 
of workers, or we can be a catalyst for something better. We believe in 
the possibilities.

       Social Accountability International--SA8000 Advisory Board
  It is SAI's policy to balance its Advisory Board (AB) equally between
business and non-business (non-governmental organizations, trade unions,
   socially responsible investors and government) members. Parentheses
    below indicate the geographic work location of the Advisory Board
                                 member.

 Affiliated with Non-Governmental Organizations, Trade Unions, Socially
                 Responsible Investing and Government\1\

Dorianne Beyer/David Zwiebel (alternate)..  National Child Labor
                                             Committee (USA)
Jan Furstenborg...........................  Union Network International
                                             (Switzerland)
Oded Grajew/Helio Mattar (alternate)......  Abrinq Foundation for
                                             Children's Rights (Brazil)
Joseph Iarocci............................  CARE International (USA)
Neil Kearney..............................  International Textile,
                                             Garment & Leather Workers
                                             Federation (Belgium)
Kaiming Liu...............................  Institute of Contemporary
                                             Observation (China)
Alice Tepper Marlin.......................  Social Accountability
                                             International (USA)
The Honorable William Thompson/Ken          Office of the Comptroller,
 Sylvester (alternate).                      City of New York (USA)
Morton Winston............................  Amnesty International (USA)
Lynda Yanz................................  Maquila Solidarity Network
                                             (Canada)

                       Affiliated with Business\1\

Ivano Barberini/Alessandra Vaccari          Legacoop and Coop Italia
 (alternate).                                (Italy)
Sylvain Cuperlier.........................  Dole Food Company (France)
Tom DeLuca (Chair)........................  Toys ``R'' Us (USA)
Durai Duraiswamy/Robin Cornelius            Prem Durai Exports (India)
 (alternate).                                and Switcher SA
                                             (Switzerland)
Pietro Foschi/Andrew Kirkby (alternate)...  Bureau Veritas Quality
                                             International Holding SA
                                             (United Kingdom)
Amy Hall..................................  Eileen Fisher (USA)
Fitz Hilaire..............................  Hilaire Associates (USA)
                                             (formerly of Avon Products,
                                             Inc.)
David McLaughlin/George Jaksch (alternate)  Chiquita Brands
                                             International (Costa Rica &
                                             Belgium)
Dr. Johannes Merck/Achim Lohrie             OTTO-Versand (Germany)
 (alternate).
Frits Nagel...............................  WE Europe (The Netherlands)

\1\Affiliations are for identification only.

                                 ______
                                 

                   Prepared Statement of Phil Fishman

                              JULY 7, 2003

    Let me thank you for the opportunity to present the views of the 
AFL-CIO on Freedom of Association in China and its Effects on Workers. 
I realize that representatives of the AFL-CIO have participated in your 
discussions in the past and I want you to know that we greatly 
appreciate the fact that this Commission has solicited our opinions on 
a number of important issues for both workers in the United States and 
in China, and indeed for workers around the world.
    I will try not to repeat what we have said in the past and I wish 
to cite the testimony provided by Mark Hankin from our Solidarity 
Center last year concerning the labor rights situation in China.\1\ His 
comprehensive analysis continues to represent the views of the AFL-CIO 
today as we attempt to better understand the worker rights situation in 
China during these rapidly changing times and to develop and revise 
strategies to effectively support efforts by workers and their allies 
to gain 
effective union representation at the workplace.
---------------------------------------------------------------------------
    \1\ Testimony presented by Mark Hankin, Coordinator for Program 
Development, American Center for International Labor Solidarity AFL-
CIO, March 18, 2002.
---------------------------------------------------------------------------
    I will focus today on three areas to supplement what has already 
been said. First, I want to spend a few moments looking at how the 
International Labor Organization defines Freedom of Association and the 
Right to Organize and Bargain Collectively given that these rights are 
included in most of the Codes of Conduct of U.S. companies operating in 
one manner or another inside China. Second, I will express our views as 
well as those of much of the international trade union community 
regarding the All China Federation of Trade Unions (ACFTU), again 
trying not to repeat what we have said already. A few comments about 
the 2001 amendments to the trade union law will be offered in this 
context. And finally, given that I am sharing this occasion with Amy 
Hall who represents a company that bases its social accountability 
monitoring on the SA8000 system, I will speak to the challenges posed 
and questions raised by such notions as ``parallel means'' contained in 
the SA8000 standards and guidance.
    I wish to emphasize at the outset that the AFL-CIO has been 
watching quite closely and with an open mind the efforts by some 
companies to more effectively apply their codes of conduct to 
workplaces in China. We understand quite clearly the magnitude of 
change China has been undergoing for the past two decades and the 
challenges created by this change to international worker rights and 
labor standards. We also have a growing awareness of the impact of such 
profound change on China's people. It is staggering that as many as 20 
million people a year are leaving the rural areas of China for urban 
areas in search of work. To put this in perspective, a single year's 
inflow of new urban workers in China is equivalent to the entire 
manufacturing employment base of the United States--a manufacturing 
base which everyone in this room knows is shrinking in part because 
jobs are 
moving to China.
    But it is not only the developed countries that are losing jobs to 
China. Developing countries also are losing a growing number of jobs to 
China and this process is accelerating. There is a UNDP estimate, for 
example, that Bangladesh will lose more than a million jobs to China 
once the Multifiber Agreement on Apparel expires in 2005. For these 
reasons, we are watching with keen interest developments that may 
contribute to arresting ``the race to the bottom,'' as many have 
characterized the shifting of much of the world's production to China. 
We see some opportunity in the efforts made by some companies to 
enforce their codes and we will continue to evaluate such efforts based 
on our knowledge of what the realities are for Chinese workers on the 
ground. However I want to emphasize that companies with codes are only 
a small proportion of companies doing business in China and these 
companies remain confined overwhelmingly to the soft-goods industries. 
Moreover companies that take their codes seriously are in our view a 
very small subset of this 
already very small number.
    So let me turn to how the ILO defines Freedom of Association and 
the Right to Organize and Bargain Collectively, subjects with which I 
am intimately familiar given my years of membership on the Committee on 
the Application of Conventions and Recommendations at the ILO. You can 
find the definitions in ILO Conventions 87 and 98. The former has been 
ratified by 142 of the 176 member countries of the ILO or over 80 
percent while 153 member countries or 87 percent has ratified the 
latter. I should note that the voluntary ratification of an ILO 
Convention such as C. 87 has the force of an international treaty. It 
obligates a country to adhere to the specific provisions of the 
ratified instrument in both law and practice and subjects it to the 
ILO's standards enforcement machinery. Sadly, two of the countries that 
have refused to ratify C. 87 and C. 98 are China and the United States.
    I have attached to my written testimony a copy of C. 87 and C. 98, 
which like all ILO instruments were drafted on a tripartite basis with 
the full participation of government, worker and employer 
representatives. The language in both Conventions is quite simple and 
straightforward. C. 87 states that workers and employers, without 
distinction whatsoever, have the right to establish and to join 
organizations of their own choosing with a view to furthering and 
defending their respective interests. Such organizations have the right 
to draw up their own constitutions and rules, to elect their 
representatives in full freedom, to organize their administration and 
activities and to formulate their programs. Public authorities shall 
refrain from any interference which would restrict this right or impede 
the lawful exercise of this right. The organizations shall not be 
liable to be dissolved or suspended by administrative authority. 
Organizations have the right to establish and join federations and 
confederations which shall enjoy the same rights and guarantee. The 
Convention also provides for the right to affiliate with international 
organizations. The acquisition of legal personality by all these 
organizations shall not be subject to restrictive conditions. In 
exercising the rights provided for in the Convention, employers and 
workers and their respective organizations shall respect the law of the 
land. The law of the land and the way in which it is applied, however, 
shall not impair the guarantees provide for in the Conventions.
    The key provisions of C. 98 focus on the need for workers to enjoy 
adequate protection against acts of anti-union discrimination, 
specifically against refusal to employ them by reason of their trade 
union membership and against dismissal or any other prejudice by reason 
of union membership or participation in union activities. This 
protection is extended in particular against acts designed to promote 
the domination, the financing or the control of workers' organizations 
by employers. C. 98 also call for measures to be taken to encourage and 
promote the development and utilization of voluntary collective 
bargaining to regulate terms and conditions of 
employment.
    Decades of review and comment by the ILO's standards enforcement 
machinery\2\ have defined what these words mean in real situations in 
countries and workplaces around the world. There is very little 
controversy or disagreement, therefore, over what C. 87 and C. 98 mean 
given the voluminous jurisprudence developed on a tripartite basis over 
the years. And taken together, conventions 87 and 98 comprise one of 
the four core areas of fundamental worker rights identified in the 
ILO's Declaration of Fundamental Principles and Rights at Work adopted 
in 1998.
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    \2\ The Committee on Freedom of Association, the Committee of 
Experts and the Committee on the Application of Conventions and 
Recommendations in particular.
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    Based on this jurisprudence, it is clear beyond any doubt that 
China's laws and practice are in fundamental contravention with both of 
these core labor conventions and the principles they embody. Freedom of 
association and the right to organize and bargain collectively as 
defined by the ILO simply do not exist in China. It is also quite clear 
that any notion of ``parallel means'' in and of itself does not satisfy 
the ILO definition of freedom of association.
    There are differing views regarding the significance of the changes 
to the trade union law introduced in 2001 and it is too soon for a 
definitive assessment. A couple of things seem clear. First, the 
changes were designed to strengthen the role of the ACFTU in private 
sector work places. There are many reasons for this. Clearly the old 
ACFTU--an ACFTU confined to dying State enterprises--was becoming an 
irrelevant organization. Second the government was clearly embarrassed 
by repeated stories of exploitation, and finally, and perhaps most 
importantly, the Party needed a means to prevent the organization of 
independent worker organizations and a growing number of spontaneous 
work actions.
    At the same time, the State and party bolstered its hold on the 
ACFTU. The trade union law as amended in 2001 maintains the trade union 
monopoly enjoyed by the ACFTU (article 10) and strengthens the link 
between the ACFTU structure, the Chinese Communist Party (CCP) and the 
government, clearly identifying in more specific language than before 
the unions' obligation to follow the leadership of the CCP (article 4) 
and to assist in maintaining the state's monopoly of power (article 5). 
Article 11 stipulates that ``the establishment of basic-level trade 
union organizations, local trade union federations, and national or 
local industrial trade unions shall be submitted to higher-level trade 
union authority organizations for approval.'' Not only is this in clear 
violation of C. 87, which states that workers should be able to 
organize into unions of their own choosing but it also is a major 
obstacle to independent attempts to organize trade unions. The only way 
such efforts can ``succeed'' under the law is by submitting to the 
authority of the ACFTU. This is further strengthened by the fact that 
company level unions are totally dependent on higher-level ACFTU 
structures for income. Companies are required to pay the equivalent of 
2 percent of payroll in union dues to the higher ACFTU structure, which 
then in turn is supposed to return a percentage back to the factory 
level union, at least in theory. So under the current law a factory 
union is wholly dependent on the higher-level ACFTU to receive even a 
percentage of the dues paid by its own members.
    Even if you accept the view that there are provisions of the trade 
union law as amended that show some promise for the possibility of 
creating space for more independent and democratic worker 
representation, the actual practice in this regard suggests another 
picture. We should first remember the leaders of most units 
organized by the ACFTU in the private sector are management personnel. 
And the ``collective bargaining agreements'' that exist are documents 
that neither rank-and-file workers nor their democratically elected 
representatives have had any part in negotiating.
    The well-known case of the workers in Liaoyang Province protesting 
widespread corruption is but the latest example that independent worker 
activity will not be tolerated. Two of the leaders of the large 
demonstrations that took place last year have been sentenced to 4 and 7 
years in prison for ``subverting the state.'' Their appeals were just 
rejected last week in an opaque process not even their defense lawyers 
knew about. The ACFTU refused to play any role defending the interests 
of the Liaoyang workers or even to defuse tensions. One of its top 
leaders even called one of the worker leaders a ``car bomber'' which is 
a serious accusation post September 11.
    In March of this year the Governing Body of the ILO adopted the 
report of the Committee on Freedom of Association in which serious 
abuses committed by the Chinese government were cited concerning its 
detention and prosecution of worker leaders in Liaoyang. The Governing 
Body called on the Chinese authorities to release all workers still in 
detention, drop any charges against them and institute an impartial and 
independent investigation into the detentions. These recommendations 
have been completely ignored despite the fact that China is a member of 
the ILO Governing Body.
    That the ACFTU's major preoccupation is to strictly enforce its 
trade union 
monopoly was clearly demonstrated regarding the establishment of at 
least two 
associations to assist migrant workers address work-related grievances 
such as non-payment of wages. Ruian city in the coastal province of 
Zhejiang has a migrant population of 230,000. Concerned that they did 
not have the structures to control and administer such a large number 
of ``outsiders'', the local authorities allowed the setting up of what 
appeared to be a semi-independent labor association. The hope was that 
it could help to avoid or settle labor disputes between the migrant 
workers and their local employers before they became a threat to social 
stability. The association also hoped to head off major collective 
disputes by representing workers in cases of illegal fees charged by 
employers and wage arrears. Even the local police approved and the 
experiment was extended to the nearby city of Tangxia. While certainly 
not trade unions, these associations were viewed as a protector, if not 
representative of migrant workers and there are documented cases of 
them intervening on behalf of workers in at least three labor disputes. 
This sanctioned approach was initially greeted in the media with 
enthusiasm and a major newspaper in Guangdong ran an article headlined, 
``Setting Up of Autonomous Organizations by Migrant Workers Deserves 
Encouragement.'' This was not a view shared by the Guangdong Federation 
of Trade Unions, the provincial arm of the ACFTU. It was reported in 
the international press including the Washington Post that both efforts 
were abandoned 
because the ACFTU objected to them citing the provisions of the trade 
union law that gave it the sole authority to approve of the 
establishment of any worker organization.
    In sum, that the current trade union law specifically provides for 
a trade union monopoly to the All China Federation of Trade Unions, 
that the program and activities of the ACFTU are subordinate to the 
wishes of the party and state, that questions of affiliation to 
international trade union bodies are subject to the approval of the 
state, that workers who attempt to organize independent trade unions or 
carry out what we would define as normal trade union activity such as 
participating in protest--all of these things and many others 
demonstrate the distance China must travel in order for freedom of 
association and free collective bargaining to be respected in both law 
and practice.
    This is not to say, of course, that good, well meaning people 
cannot be found within the ACFTU structure. It is to say, however, that 
institutionally the ACFTU is a creature of the Chinese State and 
Communist Party and is obligated by its own rules to act as a 
transmission belt for party and State policy. I want to emphasize that 
the International Confederation of Trade Unions, which represents 158 
million workers in 150 countries, shares this view. I am attaching the 
China section of the ICFTU's recently released 2003 Survey of Trade 
Union Rights Around the World. I also want to emphasize that 
differences among various trade union organizations do not focus on the 
nature of the ACFTU as a government entity--on this point most are 
quite clear--but on whether or not the ACFTU can be reformed. Indeed 
the fact that the ACFTU is widely viewed as a government entity is 
precisely why most codes of conduct have included in them the concept 
of ``parallel means.''
    With this in mind let me turn to company efforts to enforce labor 
rights through their codes and through various monitoring schemes such 
as SA8000. Wages in China's labor-intensive export sector are 
artificially depressed with no mechanisms for amelioration in place. 
Concerted action among employers, local government, police, the central 
government and the ACFTU unfortunately keeps wages depressed and 
insures work force discipline. This is precisely why foreign companies 
locate their production in China in the first place. Getting any 
lower--Haiti, Burma, parts of South Asia, for example--puts companies 
out of range of acceptable infrastructure and often into politically 
unstable situations. China has installed good infrastructure for 
exporting industries. This infrastructure together with depressed wages 
and apparent political stability attracts companies. Two features of 
China's labor market contribute to the depression of wages. First, 
workers do not have the unfettered right to exit from unacceptable 
employment situations. Second, workers have no voice mechanism for 
affecting wages and other conditions at work.
    Chinese labor especially migrant labor is not free even in the 
minimal sense of being able to exit unacceptable employment. Residency 
(hukou) rules make the predominately rural migrant labor force in the 
export industries beholden to the employer so that freedom of movement 
is impeded. The employer will often keep the workers' papers. Without 
these papers, workers are subject to arrest. To this extent, the hukou 
system operates like the pass system in apartheid South Africa. 
Furthermore, most employers routinely withhold at least 2 months of 
wages (one sixth of the yearly wage). This keeps workers from leaving; 
they hope to get those wages back. Finally, workers cannot exert wage 
pressure via trade unions due to the absence of freedom of association. 
Despite this, workers in the export sector often strike simply because 
they have no legal way to remedy their situation. These strikes are 
brutally suppressed. We have no way to know how many strikes there have 
been because in China the lack of a free press means they are hardly 
ever 
reported.
    In regard to monitoring, it is our view based on our own experience 
here in the U.S. as well as working to strengthen relations with 
workers in developing countries for many decades that the most 
effective way to monitor factory compliance with national law, 
international standards, and company codes is by empowering workers 
themselves to play this role collectively and independently in an 
atmosphere absent of fear and intimidation. The Fair Labor Association 
seems to have come to a similar conclusion stating in its recent report 
that ``freedom of association is essential to the resolution of many 
other compliance problems, in that the most sustainable approach to 
compliance lies in developing the capacity of workers and employers to 
regulate their own workplaces.'' \3\ Workers have an obvious interest 
in ending abuses and violations as a way to improve their daily lives 
and can provide the daily continuity necessary for monitoring to be 
truly effective. It is virtually impossible to monitor workplaces 
effectively without such continuity. What meets standards in a factory 
one day can be quite different 3 months later unless there is daily 
vigilance. This has been demonstrated by the fact that SAI and other 
monitoring groups have had to remove certification of several 
facilities when it was disclosed that they did not in fact meet the 
standards. In most if not all of these cases reported in the press, it 
was outside ``watchdog'' NGOs such as the National Labor Committee that 
uncovered the labor rights abuses and only when they went public were 
the factories decertified. We find this troubling especially when 
combined with the fact that over one third of the factories certified 
under SA8000 are located in China and Vietnam where freedom of 
association does not exist and where independent NGOs with the freedom 
and wherewithal to contact workers are not tolerated.
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    \3\ Fair Labor Association First Public Report: Toward Improving 
Workers' Lives, August 1, 2001--July 31, 2002.
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    According to SAI, ``parallel means'' is designed to encourage 
nascent forms of worker self-representation in countries like China 
where independent unions are prohibited.\4\ While we look upon such 
efforts with interest, we remain skeptical as to where such efforts 
actually lead. The limited experience that we have in China seems to 
demonstrate that if a parallel organization formed in China is to 
survive, let alone lead to real freedom of association, then a 
sustained effort must be made to nurture the organization through the 
provision of training and a commitment to maintaining the space in 
which the parallel organization can operate. We have not yet seen more 
than a handful of companies such as Reebok make such a commitment and 
it is unclear even then that they will succeed in individual 
workplaces, let alone influencing what happens outside them. I do want 
to note with particular interest the two elections at facilities 
producing for Reebok. While we see some problems such as the insistence 
by the ACFTU at the second facility to provide all worker education and 
training rather than respected NGOs in Hong Kong, as was the case at 
the first facility, we hope that the empirical evidence begins to 
emerge that such experiments lead to freedom of association.
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    \4\ SAI has applied the notion of ``parallel means'' to factories 
in Bangladesh, a country that protects freedom of association in its 
labor code except in Export Processing Zones. This creates concerns 
that ``parallel means'' as a substitute for freedom of association 
rather than a process for advancing it as claimed.
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    The experiences of countries like South Korea and Indonesia suggest 
that workers became empowered only after both countries underwent real 
political change despite long time support by the international trade 
union community. In other words, only when South Korea began to rapidly 
move toward democracy in the 1980s and transition from Suharto was well 
underway and irreversible did freedom of association for workers begin 
to emerge. So the value of ``parallel means'' absent similar such 
political change in China is problematic. Without empirical evidence 
that notions like ``parallel means'' leads to real freedom of 
association, it is our view that companies operating inside China with 
a code of conduct that includes freedom of association are in 
fundamental violation of their own codes. Furthermore, until such 
evidence begins to emerge, there will be continuing concern that at the 
end of the day improving labor standards without legitimate trade union 
representation is an acceptable, even preferred, outcome to companies 
involved is such schemes.
    Let me conclude by saying that we believe that inevitably workers 
will win the right to freely associate in China. We do not expect that 
this right to be handed to them by the business community--that has 
never been the case anywhere. In Taiwan and Indonesia, workers won that 
right by challenging tired, old state-run organizations that neither 
had the energy or the interest in representing worker interests. In 
China we are seeing that happen now in the old State enterprise sector 
where workers are challenging the ACFTU on almost a daily basis. 
Similarly, representative groups are beginning to develop in the 
private sector where workers are beginning to organize. American 
companies can help by finding effective ways to support these groups 
and resisting the temptation to adopt schemes that only 
pretend to meet the obligations of their own codes of conduct.


```