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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

CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

LEGISLATIVE BRANCH COMMISSIONERS

House Senate

JIM LEACH, Iowa, Chairman

DOUG BEREUTER, Nebraska

DAVID DREIER, California

FRANK WOLF, Virginia

JOE PITTS, Pennsylvania

SANDER LEVIN, Michigan

MARCY KAPTUR, Ohio

SHERROD BROWN, Ohio

DAVID WU, Oregon

CHUCK HAGEL, Nebraska, Co-Chairman

CRAIG THOMAS, Wyoming

SAM BROWNBACK, Kansas

PAT ROBERTS, Kansas

GORDON SMITH, Oregon

MAX BAUCUS, Montana

CARL LEVIN, Michigan

DIANNE FEINSTEIN, California

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)

(III)

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

(1)

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

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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

3

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 consensusbased 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.

4

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

5

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.

6

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.

7

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 companylevel 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.

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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.

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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

10

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

11

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

12

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.

13

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.

14

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, actuVerDate 11-MAY-2000 11:42 Sep 08, 2003 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 89103.TXT China1 PsN: China1
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ally, 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

16

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.

17

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.

18

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.

19

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.

20

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.

21

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

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22

ers 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

23

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

24

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.

25

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.]

(27)

A P P E N D I X

28

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

29

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;

30

• 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.

31

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 Government1

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 Sylvester (alternate).Office of the Comptroller, City of

New York (USA)

Morton Winston ............................................... Amnesty International (USA)

Lynda Yanz ...................................................... Maquila Solidarity Network (Canada)

Affiliated with Business1

Ivano Barberini/Alessandra Vaccari (alternate).Legacoop and Coop Italia (Italy)

Sylvain Cuperlier ............................................. Dole Food Company (France)

Tom DeLuca (Chair) ........................................ Toys ‘‘R’’ Us (USA)

Durai Duraiswamy/Robin Cornelius (alternate).Prem Durai Exports (India) 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 (alternate) OTTO-Versand (Germany)

Frits Nagel ....................................................... WE Europe (The Netherlands)

1Affiliations are for identification only.

32

1Testimony presented by Mark Hankin, Coordinator for Program Development, American

Center for International Labor Solidarity AFL–CIO, March 18, 2002.

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.

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 subVerDate 11-MAY-2000 11:42 Sep 08, 2003 Jkt 000000 PO 00000 Frm 00036 Fmt 6601 Sfmt 6621 89103.TXT China1 PsN: China1
33

2The Committee on Freedom of Association, the Committee of Experts and the Committee on

the Application of Conventions and Recommendations in particular.

jects 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 machinery2

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.

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

34

strengthened by the fact that company level unions are totally dependent on higherlevel 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-andfile 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 nonpayment 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

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3Fair Labor Association First Public Report: Toward Improving Workers’ Lives, August 1,

2001—July 31, 2002.

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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4SAI 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.

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.

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.

Æ