[Joint House and Senate Hearing, 107 Congress] [From the U.S. Government Publishing Office] LABOR RIGHTS AND CONDITIONS IN CHINA ======================================================================= ROUNDTABLE before the CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA ONE HUNDRED SEVENTH CONGRESS SECOND SESSION __________ MARCH 18, 2002 __________ Printed for the use of the Congressional-Executive Commission on China Available via the World Wide Web: http://www.cecc.gov U.S. GOVERNMENT PRINTING OFFICE 78-878 WASHINGTON : 2002 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA LEGISLATIVE BRANCH COMMISSIONERS Senate House MAX BAUCUS, Montana, Chairman DOUG BEREUTER, Nebraska, Co- CARL LEVIN, Michigan Chairman DIANNE FEINSTEIN, California JIM LEACH, Iowa BYRON DORGAN, North Dakota DAVID DREIER, California EVAN BAYH, Indiana FRANK WOLF, Virginia CHUCK HAGEL, Nebraska JOE PITTS, Pennsylvania BOB SMITH, New Hampshire SANDER LEVIN, Michigan SAM BROWNBACK, Kansas MARCY KAPTUR, Ohio TIM HUTCHINSON, Arkansas NANCY PELOSI, California JIM DAVIS, Florida EXECUTIVE BRANCH COMMISSIONERS PAULA DOBRIANSKY, Department of State GRANT ALDONAS, Department of Commerce D. CAMERON FINDLAY, Department of Labor LORNE CRANER, Department of State JAMES KELLY, Department of State Ira Wolf, Staff Director John Foarde, Deputy Staff Director (ii) C O N T E N T S ---------- Page STATEMENTS Opening statement of Ira Wolf, Staff Director, Congressional- Executive Commission on China.................................. 1 Hankin, Mark, Coordinator for Program Development, the American Center for International Labor Solidarity, AFL-CIO............. 2 Athreya, Bama, Deputy Director, International Labor Rights Fund.. 6 Freeman, Anthony G., Dirctor, Washington Branch Office, International Labor Organization............................... 11 APPENDIX Prepared Statements Hankin, Mark..................................................... 30 Athreya, Bama.................................................... 34 Submissions for the Record Memorandum of Understanding for Cooperation Between the International Labour Office and the Ministry of Labour and Social Security of the People's Republic of China, submitted by Anthony G. Freeman............................................. 39 Briefing notes prepared by the ILO Washington Branch Office, submitted by Anthony G. Freeman................................ 47 LABOR RIGHTS AND CONDITIONS IN CHINA ---------- MONDAY, MARCH 18, 2002 Congressional-Executive Commission on China, U.S. Senate, Washington, DC. The roundtable was convened, pursuant to notice, at 2:30 p.m., in room SD-215, Dirksen Senate Office Building, Mr. Ira Wolf (staff director of the Commission) presiding. Also present: Mr. John Foarde, Deputy Staff Director; Ms. Holly Vineyard, U.S. Department of Commerce; Mr. Melvin Ang, Office of Senator Feinstein; Mr. Robert Shepard, U.S. Department of Labor; Ms. Jennifer Goedke, Office of Congresswoman Kaptur; and Mr. Dave Dettoni, Office of Congressman Wolf. OPENING STATEMENT OF IRA WOLF, STAFF DIRECTOR, CONGRESSIONAL- EXECUTIVE COMMISSION ON CHINA Mr. Wolf. Let us get started. I would like to welcome everyone to the second staff-led public roundtable of the Congressional-Executive Commission on China. These roundtables were created by Senator Baucus and Congressman Bereuter, our chair and co-chair, in order to delve into the issues that the Commission is responsible for in greater depth than in larger hearings. Today, the topic is labor rights and labor conditions in China. Next week, in this room, Monday, March 25 at 2:30, we will hold the third roundtable, which will be on the issue of religious freedom in China. I just want to note that on April 11, there will be a full Commission hearing chaired by Senator Baucus and Congressman Bereuter on human rights and legal reform. You can check our Web site at www.cecc.gov for further information about hearings and roundtables. Today, we have three witnesses. First, we have Mark Hankin, who is program development coordinator for the American Center for International Labor Solidarity, and who has a long background in international labor concerns; Bama Athreya, who is deputy director of the International Labor Rights Fund; and Tony Freeman, who is director of the Washington office of the International Labor Organization [ILO]. Originally, we had a fourth witness, Jeff Fiedler, who is the former president of the Food and Allied Services Trade Department of the AFL-CIO. But because of a death of a very close friend and colleague, at the last minute Jeff had to cancel his appearance today. We hope to have him at another session to bring his wealth of experience in China labor issues to the Commission. The format today will be a 10-minute presentation by each of the presenters, and then the staff will each engage in 5 minutes of questions, and hopefully some interaction and discussion. We will continue until we have exhausted ourselves and exhausted the three of you. So, Mark, if you do not mind starting. We are going to use these lights right in front of you, so after 9 minutes you will see the yellow light, then you will hear the ping at 10. You do not have to stretch 9 minutes of comments into the 10th minute. Please, Mark, go ahead. STATEMENT OF MARK HANKIN, COORDINATOR FOR PROGRAM DEVELOPMENT, THE AMERICAN CENTER FOR INTERNATIONAL LABOR SOLIDARITY, AFL-CIO Mr. Hankin. Thank you, Ira. I appreciate the opportunity to present our views on the labor rights situation in China and to comment on strategies that address labor rights violations there. The discussion we are having today is an extremely important one. It will become more important in the future, not only to our Nation, but especially developing countries around the world who compete in the world economy with China now that China is a member of the World Trade Organization [WTO]. That is a long and complicated story and deserves a separate session all by itself. There is little doubt that China has made amazing economic progress since 1978 when Deng Xiaoping opened the country to the outside world, and later initiated the first socialist market economic reforms. With all of this good news then, why do many scholars talk about the possibility of China imploding? Uniformly, they say that China is a nation where greed and corruption are endemic and where the rule of law means little or nothing. They tell us that it is a country where people have no institutions that represent their interests and which serve their social welfare needs. When placed in these situations, people feel powerless. Suddenly, without warning, they explode. That is what we are glimpsing in China today. Many years ago, the first president of the AFL-CIO, George Meany, uttered a simple truism: ``There is no democracy without free trade unions and no free trade unions without democracy.'' As the State Department's most recent annual report on human rights points out, there is neither democracy nor free trade unions in China. In the place of democratic unions, China has state-controlled organizations that have a monopoly on purporting to represent workers. No one disputes that the Communist Party controls these unions. The Party dictates their mission, not workers. That is why the Politburo installed one of their own as the head of the All China Federation of Trade Unions [ACFTU]. I have referenced the State Department's annual human rights report because we believe it is generally an accurate report and a good baseline from which to start a discussion on labor rights. Let us be clear. The report is by no means perfect. Part of the problem with the report, is it reflects a general misunderstanding of how democratic industrial relations systems work. Fundamentally, democracy and democratic industrial relations are peas in the same pod. One cannot talk about collective bargaining without free trade unions. I would urge the staff of this Commission, as it reviews the human rights report, to keep this in mind and not think that the thousands of so-called collective agreements that the Chinese Government now says are in existence are actually legitimate collective bargaining agreements. I would also urge the Commission to look at the new trade union law to see whether it really expands the authority of the ACFTU to allegedly represent workers' interests in the private sector. When you do, you will see it is an instrument that reflects the government's desire to control workers as much or more than it does to represent their social welfare interests. In that revised law, higher-level ACFTU organizations approve ``workplace trade unions.'' These factory-level structures are also subject to their discipline. For the record, there is no legal right to strike in China. The government uses forced labor in prisons. We see a rise in children working as the country's education system falls apart, and we know that discrimination against women workers is increasing, especially in the state enterprise sector. Let us not forget. Worker leaders have been, and are being, arrested in China. The International Labor Organization, among others, has made pleas on their behalf, which are almost always ignored by the Chinese Government. A real problem is that outsiders have almost an impossible time tracking these events, since word of them usually does not leak out to the outside world. Any discussion on labor rights and standards in China is really a discussion of two separate economic sectors: the State enterprise sector, and for lack of a better term, the non-state sector. Discussions of labor relations in the state sector center on broken promises to workers about the impacts of economic reform, corrupt managers who steal State assets for personal profit, and a lack of social safety nets (health, education, and housing) to replace traditional enterprise benefit structures that were paid for by the enterprise. In the State sector, the so-called trade union was and is a cost of doing business to an enterprise. The trade union's role is to deliver recreational and some social services to workers. Workers in the State sector did not expect their union to be an advocacy organization, and they certainly do not see it that way now. The primary role now of the ACFTU in China's rust-belt cities is to help workers find new jobs. Long lines of workers seeking day jobs betray the fact that the unions are unable to fill this function. They do not have the resources, and the jobs simply do not exist. The government has also charged the ACFTU with providing legal services to workers. Few ACFTU unions have taken this charge seriously. The growing number of street demonstrations that occur on a daily basis in China testify to this fact. The non-state sector in China employs workers in joint enterprises and township enterprises, and solely owned enterprises. This sector has become the main engine of economic growth in the country, and the employer of millions of migrant workers. With limited resources and no experience, ACFTU branches have shied away from reaching out to workers in these enterprises, especially since foreign employers and their local partners have made it clear they are not wanted. The employers view these unions as economic rent-seekers who offer little value. Their workers are already docile. Anita Chan, a keen observer of Taiwan-and Hong Kong-run and/or-owned factories, has described these plants as militarized facilities where there are strict rules and a series of set punishments. Workers employed in these enterprises have no knowledge of their rights or the country's labor law. Not surprisingly, they have no understanding of what a union is. I will not dwell in detail on the serious labor standards law violations that exist in these factories. They start with violations of occupational safety and health codes, include physical punishment of workers, non-payment of wages, forced overtime, and forms of bonded labor. Nor need I tell you that embarrassed United States and European purchasing companies have been scrambling to find ways to protect their brand reputations from the charges that they source from Dickinsonian sweat shops in China. China's newly revised trade union law has been praised by some as a step forward because it enhances the ability of the All China Federation of Trade Unions to enter into private sector factories. How far local officials will go to allow ACFTU cadres to use the provisions of the new law to establish unions in private sector factories is unknown. Clearly, past practice indicates that, where local officials have an economic stake in the enterprise to either through hidden ownership or pay-offs, the ACFTU will be told to stay away. While in this testimony I have pointed to the enormous problems in the labor rights area in China, I have not meant to imply that we are powerless to assist Chinese worker activists who are seeking to promote positive change. Indeed, the AFL-CIO has had a commitment to promote democratic change and labor rights in China for many years. Now, let me turn to the opportunities we see for future work. In late January of this year, the Solidarity Center held a session with its partners and leading experts on China in Washington, DC to review strategies on China. Participants at the meeting recognized that the Chinese Government has tried to put into place legal systems to ensure an orderly transition from a state-controlled to a market economy. These new legal avenues present important opportunities for labor rights promotion. Discussions at the meeting pointed to the need to help educate Chinese workers about their rights under law. Participants also agreed that it was vital to test newly developing spaces in China through these legal mechanisms to determine if worker rights can be advanced using such issues as occupational safety and health and gender discrimination as door-openers. Meeting participants also acknowledged the continuing need for research on emerging trends in China related to worker rights, especially given China's economic reforms and entry into the WTO. They also agreed that it was vital to build consensus in the international trade union community about how to approach the ACFTU and the Chinese Government concerning labor rights issues. In particular, we feel it is essential to support worker rights advocacy and information dissemination about the labor rights situation in China. This information can be made more readily available to workers in the country and to other interested parties in and outside of China, including foreign trade unions, in an effort to stimulate creative ways to solve labor-related disputes. In that regard, we strongly support the continuation of Radio Free Asia programming on labor subjects. We also believe that the use of new Web-based technologies should be expanding as a means to provide information to workers. As I indicated earlier, the space that may now be available in the non-state sector to promote the development of independent worker organizations should be explored. This can be done in a variety of ways, including looking at the possibility of enlisting cooperation of U.S. companies and other foreign companies. Also, support should be given to those organizations able to identify Chinese worker activists in the county, and through them information on labor rights and strategies to achieve these rights should be made available to rank-and-file workers. Efforts should also be supported to build the capacity of law schools, lawyers, and legal aid workers, to respond to the growing demand among private sector workers for legal services dealing with labor and employment law issues. This effort would also support training legal workers and would seek to move from individual to collective cases. It would also involve the establishment of outreach centers that offer social services, as well as rights information. In addition, initial discussions must be broadened concerning labor and employment issues, occupational safety and health, and gender with key interlocutors in the State sector in the specific locations where restructuring State enterprises is occurring. This would involve bringing United States experts to China. Pragmatic approaches would stress mechanisms that empower workers that take advantage of existing legal options. Finally, there is a dearth of academics studying labor relations in China and our knowledge of what is going on inside the ACFTU is extremely limited. While the ACFTU is not a trade union, there are people in the ACFTU that want to increase its advocacy role. Other individuals within the organization understand that a prosperous and stable China needs to have free trade unions as an essential actor in solving labor disputes. Interested observers should reach out and encourage these individuals without conferring legitimacy on the overall organization. Academics and academic institutions are best suited to play this role. Thank you. [The prepared statement of Mr. Hankin appears in the appendix.] Mr. Wolf. Thanks a lot, Mark. Bama. STATEMENT OF BAMA ATHREYA, DEPUTY DIRECTOR, INTERNATIONAL LABOR RIGHTS FUND Ms. Athreya. Thank you very much. Thanks very much to the Commission for the opportunity to present this statement today. In the race to the bottom, China is the bottom. The most extreme cases of labor rights repression can be found in China, thanks to the fact that its enormous and desperate population of unemployed have no choice but to accept starvation wages and to suffer abuse. With well over a billion people, of course China has the world's largest labor force. In addition, despite the GDP growth rates that appear on paper, there are nowhere near enough jobs, so most of these billion-plus people are barely surviving. In the countryside, where 900 million of these people live, the land cannot support the growing population. Even those peasants who had been getting by are now faced with competition from foreign agricultural markets, a result of expanded trade ties and China's recent entry into the WTO. That will put tens of millions more out of work. These tens of millions will flee to urban areas to seek work. However, China's cities are also plagued with vast numbers of unemployed. Again, as a result of free market pressures, many of China's state-owned enterprises have gone out of business in recent years, and many more will be forced to shut their doors over the next few years. This has already put an estimated 30 million workers--that is the Chinese Government's estimate, and very conservative-- out of work, and according to a report by a major United States investment firm, approximately 40 million more will lose their jobs over the next 5 years. This may ultimately add up to 100 million or more unemployed and their families. To make matters worse, these millions are unable to organize and mobilize for government protection or assistance. China remains a dictatorship, where any attempt to organize brings imprisonment, and possibly torture or execution. What does this mean for those workers who are lucky enough to have jobs? It means they face every type of labor rights abuse. Child labor? China has it. Last year, an elementary school in a rural area exploded, killing and injuring several children. The Chinese Government tried to cover up this story, claiming that a disgruntled former employee had planted a bomb in the school. Soon, however, the international press was able to reveal the true story. The school was a fireworks factory, where young children were forced to work under extremely hazardous conditions. Worse yet, it was later exposed that this was far from the only school that was actually a factory staffed by child laborers. Shrinking resources for China's school districts had led to a central government directive to the schools throughout the country to find creative means of raising their own budgets. This apparently had led many schools in China's countryside to set up their own businesses in recent years. Naturally, those businesses often turn to the most immediately available source of labor, the children who are not in any case being educated. Although, in the wake of the exposes the Chinese Government did claim it would be putting a stop to this policy, there may be hundreds, or even thousands, of such factories still hidden away in China's countryside. Prison labor? China has it. Indeed. It is China's official policy to punish prisoners in reform-through-labor programs. However, the Chinese Government may be turning a pretty profit on prison labor, which means there is quite an incentive to keep people in prison. In 1998, a Chinese dissident who had been exiled to the United States revealed that, while he was in a China prison camp, he had been forced to make soccer balls for Adidas Corporation. Adidas management apparently had no idea that the factory from which it was sourcing was, in fact, a prison camp. They claimed that they not only stopped sourcing in this particular factory, but also instituted more rigorous policies to monitor all of their factories in China. Unfortunately, thorough monitoring may be impossible for most retailers, as many retailers have hundreds, or even thousands, of supplier factories and only a handful of monitoring staff. Equally unfortunate, other multi-national corporations were apparently not deterred by the Adidas example and continue to source products from locations which they do not fully know, and some of which are prison camps. Just 2 months ago, a Chinese refuge in Australia, for example, came forward to reveal that she had been forced to produce toy rabbits for Nestle Corporation in a Chinese prison. Nestle's defense was ignorance of the conditions of its supplier. China's lack of transparency provides a very convenient shelter for labor exploitation. One could continue for hours to detail the litany of abuses routinely suffered by Chinese factory workers. For the moment, I would only like to note that my organization, the International Labor Rights Fund, has been in dialog with a number of multinational corporations that are attempting to monitor their suppliers in China. The companies themselves admit that the following chronic problems exist in their factories: Failure to pay minimum wage, failure to pay proper overtime, excessive hours of overtime, missing, blocked, or locked fire exits, improper deductions from wages, and failure to properly document the age of workers. I would like to stress here the fact that these are apparently common problems among that small handful of companies that are actually trying to do the right thing and monitor labor standards. We can only imagine that even worse abuses are suffered in factories among the vast majority of companies which are not trying to institute labor codes of conduct. That there are problems, is indisputable. Therefore, the two real questions that this Commission now faces are, why should we care, and what can we do about it? The short answer to the former question, is the U.S. Government should care because the U.S. public cares. The average United States citizen may benefit from labor repression in China in two ways. First, they benefit as consumers of cheap products. Second, they benefit as shareholders in companies that are invested in China. A number of recent consumer actions and shareholder actions highlight the reality that the average U.S. citizen is not merely acting out of pure greed. Consumers do care about the production conditions connected with the products they buy. Investors do care about the ethical behavior of the corporations in which they invest. Both of these groups care about human rights. I would like to mention just a few actions targeting major United States corporations as evidence of why neither United States companies, nor the United States Government, can afford to ignore labor rights abuses in China. A very recent expose of Wal-Mart's factories in China revealed excessively long working hours, failure to pay a living wage, and unsafe and unsanitary working conditions. . As a result of these reports, the Domini 400 Social Index removed Wal-Mart from its portfolio. Another case. A Hong Kong-based human rights group investigated Chinese factories producing for Disney Corporation and found a similarly long list of labor rights abuses. To quote from the report, the workers suffered ``excessively long hours of work, poverty wages, unreasonable fines, workplace hazards, poor food, and dangerously overcrowded dormitories.'' Now not only have Disney stores been the target of protests by concerned consumers, but Disney is also facing a shareholder resolution for its poor labor practices. Shareholders are also broadly concerned with the actions of United States companies in supporting the Chinese Government. In the past several months, for example, AOL Time-Warner has been the subject of media criticism, and is also facing a shareholder resolution for its decision to invest in China. Despite the fact that the company's flagship Time Magazine has been banned in China, apparently the issue of freedom of speech is not of concern for AOL Time-Warner. According to a recent article in the Weekly Standard, ``AOL is quietly weighing the pros and cons of informing on dissidents if the Public Security Bureau so requests; the right decision would clearly speed Chinese approval for AOL to offer Internet services and perhaps get a foothold in the Chinese television market.'' There are numerous other examples of company practices in China that have generated shareholder concern here in the United States. Time constraints prevent me from describing all of these in detail, but I do want to call this Commission's attention to the fact that other U.S. companies in the high- tech sector, including Sun Microsystems and Cisco Systems are also facing shareholder actions based on the exposure of those companies' work to assist the Chinese police to develop surveillance capacities. Companies whose very existence can be attributed to an environment that allows the free flow of ideas vital to innovation apparently have no difficulty profiting from suppressing those freedoms elsewhere. Fortunately, although Chinese workers cannot protest, United States shareholders can. This is a panel about labor rights, so I do not want to venture too far into the overall themes of human rights and corporate responsibility. However, I bring up these latter cases because I want to stress the importance of ensuring that U.S. official rhetoric conforms with actual U.S. policy, and that is something this Commission is empowered to do. The United States Government has claimed repeatedly in recent years that, by opening up China to United States business, we would be opening up China to democratic values as well. President Clinton made this point in a number of speeches related to the promotion of normalized trade relations with China. Just last year, Secretary of State Colin Powell made a similar statement on the eve of a visit to China. Powell's statement claimed that United States businesses were bringing management and worker relations concepts, including improved health and safety practices, to China. As the above examples illustrate, this is a somewhat controversial claim. There are several things the United States Government might do to truly promote better respect for labor rights in China. First of all, the United States Congress should revise the long-standing idea of a binding set of human rights principles for United States business in China. The United States business community claims it is already promoting better workplace conditions and standards in China. As I have just noted, many U.S. officials are eager to be able to echo those claims. Therefore, there should be no objection on any side to articulating clearly the labor rights standards which should be operational among all United States businesses in China, and United States companies should not have anything to fear from public scrutiny on these matters. The idea of a legislative set of principles for United States business in China is not new. Many of you may be familiar with the ``Miller Principles,'' first articulated by Congressman John Miller in 1991, also introduced in the Senate in the early 1990's by Senator Ted Kennedy. The Miller principles won both House and Senate ratification in the early 1990's, although they never passed both Houses at once. It is time to update and reintroduce those principles and to ensure that they contain a public review component similar to those contained in the OPIC legislation. Also on the subject of the United States Government rhetoric versus reality, I note that a number of United States officials publicly claimed that China's entry into the WTO would inevitably lead to better respect for rule of law in China. I am going to abbreviate my comments somewhat, since I see that my time is limited. But I do want to note that that has not been the case in other countries. We have not seen that expanded trade ties necessarily lead to better implementation of labor rights protections, for example, in Bangladesh, Malaysia, Indonesia, and the list goes on. Quite the opposite, they seem to have undermined labor standards. Therefore, we should not assume that the WTO entry will automatically lead to better enforcement of Chinese labor protections. The U.S. Government can be a positive force for change in this area by advocating proactively for legal reform rather than simply waiting for the WTO to solve all ills. The Chinese Government has recently passed a new trade union act, as my colleague Mark Hankin has mentioned, and a new occupational safety and health law. The United States Government should engage relevant Chinese Government officials to encourage further labor code revisions and that those labor code revisions be conducted with the input of international labor experts to ensure that reforms bring China into full conformity with ILO standards. The United States Government can also encourage China to fully implement its commitments to the ILO's Declaration of Fundamental Principles and Rights at Work. While in many aspects China's labor laws already do conform to ILO standards, in two important areas, freedom of association and forced labor, they do not. Rather than ignoring ILO recommendations, as it has done for several years, the Chinese Government should be encouraged to engage in a productive dialog with the ILO on the subject of legal reforms to bring its laws into full compliance with these international standards. If I may be permitted, Ira, I would like to just continue with a few recommendations. It will take about another minute. Mr. Wolf. All right. Ms. Athreya. Thank you. The United States Government should also independently support rule of law initiatives in China, not only the new Trade Union Act, but also China's basic labor code are in need of clarification in several areas, as, again, my colleague Mark Hankin has mentioned. Assisting local labor advocates to bring test cases is one way in which the United States Government could help bring about clarification in this area, and also strengthen the network of lawyers and legal advocates who are capable of taking on such cases in China. The United States Government should also advocate on behalf of those who are imprisoned each year for attempting to exercise their basic rights. There are a number of cases each year. Amnesty International has excellent documentation on these, as does John Kamm's Dui Hua Foundation, of labor leaders who are jailed for attempting to organize or attempting to otherwise speak out on the problem of labor rights abuses. What is important here, is that United States officials not only bring up on a case-by-case basis the names of those jailed, but in their dialog with Chinese officials make clear the basis on which we understand these cases to be violations of fundamental internationally recognized labor rights, that these are not criminals, these are individuals who are attempting to organize rights which are recognized internationally. Finally, I would like to note that the 2008 Olympic Games in Beijing will present another opportunity to influence the Chinese Government. It should not be a given that, under any circumstances, the United States will participate in the 2008 Games. I do want to note that we expect to have to keep an eye on things as the construction for the facilities of the Olympic Games continues, and it would be helpful if the U.S. Government did so as well. Thank you very much to the Commission for accepting this statement. [The prepared statement of Ms. Athreya appears in the appendix.] Mr. Wolf. Thanks. Since we are keeping an official record, your statement will be printed and posted as well. We will put in whatever written statements you have, and other back-up documents as well. Tony Freeman, please. Tony. STATEMENT OF ANTHONY G. FREEMAN, DIRECTOR, WASHINGTON BRANCH OFFICE, INTERNATIONAL LABOR ORGANIZATION Mr. Freeman. I want to express my appreciation also to the Commission for the opportunity to discuss ILO programs in China. I am not going to talk much about the conditions in China, but rather what our objectives are in China. Bama Athreya has already laid out the ILO's mandate. A good part of what we seek to do is what she has suggested. I want to start, first, on the standards side because that is the oldest function of the ILO, standards setting, getting countries to ratify the standards, and then encouraging countries to comply with those standards in law and practice. China has ratified a total of 23 conventions so far, of which 19 are still in force. Two of them are fundamental human rights conventions, one on equal pay for equal work, and the other a minimum age convention. The other ratified conventions are what we would call technical or social welfare conventions. Hong Kong and Macao have a greater number of conventions that the People's Republic of China has accepted. Hong Kong is bound by 40 conventions, Macao by 30. I have prepared more detailed background notes, which are available in the back of the room. I am going to just touch on highlights here in the 10 minutes that are available to me. When a country ratifies an ILO convention, it is obliged to submit periodic reports to the Organization on how its law and practice meet the terms of the convention. There are various supervisory bodies in the ILO which regularly review these ratifications to see whether the commitment is actually being met. Since China has not ratified either the core freedom of association conventions or the core forced labor conventions, we have other ways of trying to get at that. An important mechanism is the Committee on Freedom of Association which receives complaints, whether a country has ratified the conventions or not. There have been a number of China cases which I have sought to summarize in the background notes. Basically, there has been sharp criticism from the Committee on Freedom of Association for the failure of Chinese law and practice to meet the requirements of the Freedom of Association Principles. The committee has sharply criticized the arrests of workers who have tried to organize outside the official trade union movement, which is illegal in China. And there have been detentions or arrests, under the Education through Labor system, which the Committee on Freedom of Association finds to be a form of forced labor and unacceptable. So, our principal problems, as Bama has laid out already, in the standards area in China are freedom of association and forced labor. Nevertheless, China has accepted--in fact, voted for--and is bound by the 1998 Declaration of Fundamental Principles and Rights at Work, which declares it to be an obligation of membership in the ILO to respect, promote, and realize in good faith, in accordance with the constitution, the principles that lie behind the eight conventions that have been identified as fundamental conventions. These principles are listed in the Declaration as being freedom of association and effective recognition of the right to collective bargaining; elimination of all forms of forced or compulsory labor; the effective abolition of child labor; and elimination of discrimination in respect to employment and occupation. We have been engaged with China now for about 10 years or so in promoting increased ratification and application by China of ILO conventions. There are eight conventions that have been ratified since the PRC took over the China seat in 1983. Along with the Declaration principles comes a complicated set of so-called ``follow-up'' procedures which require new reporting by member states on all four of the principles that I have mentioned, whether the countries are able to ratify the relevant conventions or not. The countries submit an annual report. It is a self- assessment, alongside of which however, trade unions and business organizations may submit their own critiques. That is to say, such organizations within the country and also international trade union and business organizations. So, we are beginning to get a rich amount of information from and about China and we are also getting increased ratifications. China has been providing a fairly comprehensive amount of reporting and there has been a certain amount of labor law reform as China has proceeded with its notification of ILO conventions. A good part of the advice that has been provided by the ILO over the last 10 years has to do with changing of law, and then monitoring implementation of those laws. There has been an ILO technical cooperation program in China since the early 1980s. There was a pull-back after the Tiananmen Square events in 1989, but since 1996 there has been a renewal of assistance. There were a number of projects between 1996 and 2001 in the area of urban employment promotion, rural employment promotion, small enterprise development, and a greater Mekong multi-country program for elimination of trafficking in women and in children. In May of last year, our director general, for the first time, visited China, or at least the first time since the Tiananmen Square events, and inaugurated a new era in China-ILO relations with the signing of a Memorandum of Understanding [MOU] on a broad front of labor issues. I do not want to say it was all peaches and cream during this visit. The director general and the Minister of Labor of China agreed to disagree on whether China was or was not in conformity with freedom of association and forced labor principles. The ILO requested further information from China on the detention cases that had been raised in the freedom of association complaints that had been examined previously, including the whereabouts of trade union detainees and requesting that they be released. The important thing about this new Memorandum of Understanding, is that China has agreed to the four principal objectives of what we call the ILO's Decent Work Agenda. Those four basic aims are: Promotion of the ILO Declaration on worker rights and principles and international labor standards; employment creation; social protection and improvement of social network; the promotion of tripartism and worker/ employer/government cooperation. So, these four things form an integrated package. There is a commitment on the part of the government to work on all four objectives, including, most importantly for us, the first objective, which is the fundamental rights and principles of work. The program as I have already tried to illustrate, includes advice, consultations, and visits and the promotion of ratification and implementation of ILO conventions is part of that program. Let me just read very quickly what the mutually agreed priorities in the MOU are under the first objective of promoting international labor standards and the ILO Declaration. They are: (1) Activities to promote and realize the ILO Declaration; (2) to provide technical advice and assistance for ratification and application of ILO conventions, including the fundamental and priority conventions; (3) to provide assistance in the implementation of ratified ILO conventions; (4) to conduct information and educational activities to promote greater awareness of international labor standards; and (5) to strengthen the institutional capacity of labor inspections to promote the effective application of ILO conventions, taking into account the relevant conventions on labor inspection. We have seen two new ratifications this year and we have two or three that China is working on which we expect to come to fruition shortly. I have a statement that I have received from my headquarters today which states the following with regard to fundamental workers' rights. China is in the process of ratifying Convention 182. That is a convention on the worst forms of child labor. It has already ratified Convention 100 and 138. Convention 100, as I said, is on equal work for equal pay, and 138 is on minimum age. It is foreseen that work on discrimination will continue, leading in due time to the ratification of the corresponding instrument, Convention 111. Given that there is a growing interest, in knowledge, and experience in collective bargaining for which workshops have been organized, it is possible to think that in China the road to an eventual recognition of the principles of freedom of association may lead to an increased practice of collective bargaining as the economy is restructured. At this stage the ILO is pursuing this approach, which may in due time lead to ratification of Convention 98 on collective bargaining. In the short run, no breakthrough on forced labor would seem to be imminent. The position of the ILO, as stated by the director general when the MOU was signed, is identical to that of the U.N. High Commissioner for Human Rights. The ILO has underlined that it is ready to help the government to implement the principles of abolition of forced labor, including help with ratification of the relevant conventions. In the area of employment promotion, a major initiative will be a major employment forum that will take place in October of this year, which will bring international experts together with China to discuss all aspects of the global employment agenda in China and develop a comprehensive plan of action. We are also working on a comprehensive social security program which is vitally needed because of all of the layoffs that have begun as part of the structural reforms, massive layoffs which are going to get worse, not better, in the interim period of 18 months or so. There needs to be put in place an effective social security system, which they do not have. Last, I want to touch on what is probably a critical issue, and that is the question of whether or not, and how, you deal with the official so-called trade unions in China, the ACFTU. It is a decision of the ILO to work with the official trade union movement. There is no doubt that there is no freedom of association currently in China. There is an official trade union monopoly established by law. Until such time as that official monopoly is removed we have violation of freedom of association. Nevertheless, there is a statement of intent on the part of this institution, which at the current time is a part of the government system like any other government institution in China, to cease playing the role of transmission belt for the party and for the government and to become a more independent body. So, they are committed, this institution, to acting more in defense of the worker interests. It remains to be seen to what degree they will fulfill that, but we are prepared to work with them. Our workers' activities branch, which is an independent or semi-independent branch of the ILO, which is run by the workers, of the workers, for the workers, has agreed to do this and has entered into an MOU directly with the ACFTU. We have programs and projects which are aimed at working at the enterprise level, trying to get collective bargaining started there aimed at reforming the plant-level worker organizations into genuinely representative bodies more along the lines of the worker committees in European countries. My time is up, so I will stop there. Thank you. [The information submitted for the record by Mr. Freeman appears in the appendix.] Mr. Wolf. Thanks. I am sorry, Mark, that you did not get a chance to squeeze out an extra 2 minutes, but you live and learn. Mr. Hankin. Well, we have plenty of time now. Mr. Wolf. My first question is for you, Mark. In terms of AFL-CIO goals for labor inside China, are you looking at this from a perspective of American-based labor standards or from a perspective of internationally based labor standards? Mr. Hankin. Well, that is a simple one. We always look at it on the basis of international labor standards. We have never thought that our minimum wage should be adopted by China. The ILO has basic, minimal standards. Those are always the ones that we look toward, especially in a developing country context. Now, obviously we would like people to be paid more than those minimal standards, but that is not where we are at. Mr. Wolf. What about in areas other than pay? Mr. Hankin. Sure. The same thing goes with occupational safety and health, child labor. For example, the child labor standard that the ILO has is less than the U.S. standard, so that is the standard that we would go by. That is what we have always talked about. It cuts across all of the labor standards. Mr. Wolf. This is a question for all three of you. I think everyone has read over the last week about the problems in the Daqing oil fields. Clearly, this type of problem about what to do with retrenched labor is going to continue. Is there any indication that senior elements in the Chinese Government who are concerned about this have begun a planning process to deal with similar types of unrest and potential instability in ways other than to crack down? In other words, do you see the beginning of any long-term planning on how to deal with the issue. Ms. Athreya. I will start. Yes, I do think that we have some indication, just in looking at those statements that appear publicly, that there are senior China officials who would like to find a way to let the system let off steam. The one thing that some of our friends in China tell us is happening, is there a real black-out on information on protests in a lot of different areas. The reason for that, we are told, is senior level officials are worried that if information starts to freely flow between one area and another, for example, with this recent Daqing oil field strike, that if workers in other areas found out too much about how workers were dealing in one place, that the problem might become too widespread to contain. So, right now the containment strategy, the dealing-with- the-crisis strategy, is just to only isolate incidents and deal with one incident at a time. On the other hand, I do think that, for example, senior labor ministry officials are floundering on, what do we do to deal with this? I think this is one reason why they are so interested in working with the ILO on a larger safety net program. I also think that passage of the new Trade Union Act, which does contain some slightly more space, at least on the subject of bargaining and a little bit on the subject of organizing than the previous trade union law, that that is an attempt to vent off this steam. Mr. Freeman. I would endorse that. Certainly there have been some changes in the law. We see signs of increased mediation/arbitration structures being put in place. The government has recognized that the massive layoffs that are taking place which are creating a potential for social disruption in China, that there is a need to put in place a health insurance and social security insurance system that they do not have now. The law is permitting more space, as Bama just said, for defending worker interests. There is something in the new law, the amendments of last year, about accepting which recognizes that there could be strikes or could be disruptions, and in which case it is the role of the trade unions to defend the workers' interests in trying to reach resolution. Mr. Hankin. Let me agree with much of what has been said and see if I can expand a little bit. First of all, I think there are two major problems in China. One, is what is happening in rural areas now where workers and peasants are in open revolt against excess taxes. In the urban areas, in the State enterprise sector, clearly the authorities are very, very worried about these protests and do not have very many simple answers. That is why they are doing what Bama said, which is to take one at a time and buy off workers, and at the same time they are often arresting worker leaders. In fact, we are seeing reports out of China all the time in which workers are now saying, we do not want to identify our leaders because we are afraid they will be arrested. So, that is one of the problems. Now, this is a very poor country and it does not have a lot of resources to throw into social safety nets. That is a major issue for the Chinese, how they are going to deal with that. Now, our friends, people that think about this a lot who are Chinese, tell us that one way to deal with that is to have negotiations between workers and authorities when these enterprises go out of business--to open up the process so workers see what is happening to the assets of these enterprises when they go out of business. That is where the problem is. The Chinese Government is having a hard time, because of the nature of the government, because of the nature of the system, because of the lack of rule of law, of opening up the process. Until they do that, Ira and the rest of you, I think there are going to continue to be these problems in China. I do not see any easy solutions. As I alluded to in my testimony, the trade union is supposed to play a role in defending these workers' interests and helping them get new jobs. They do not have the resources to do that either. The trade unions were financed by these State enterprises. Those trade unions are going out of business right now. Mr. Wolf. Thanks. Next, is John Foarde, Deputy Staff Director of the Commission. Mr. Foarde. First of all, thank all three of you for sharing your expertise with us this afternoon. It is really interesting. I have got a question that really any of you, or all of you, might want to address. That is, picking up on the labor unrest. I take it we do not have a good sense of the total number of incidents of labor unrest, say, in calendar year 2000. Do we have a sense of their geographic distribution? Are they more prevalent in part of the country or another? Mr. Hankin. Do you want me to take a crack at that? Certainly, as I tried to say in my testimony, there are really two Chinas. There is the old state enterprise sector, then there is the newer private sector. Clearly, labor unrest is taking place most in the rust-belt cities where the State enterprises are going out of business. So, where you find those old enterprises going out of business, you are going to see a lot of unrest. Now, people tell us that go to China that almost every day you can see a labor demonstration in a city. Oftentimes, it is from retired workers. In the private sector, where you see a lot of the joint ventures, you see much less labor unrest or big demonstrations. There are several reasons for that. For one thing, most of the workers in those enterprises are migrant workers. They are not a part of the communities, so it is harder for them to get out on the streets and demonstrate. In those rust-belt cities, you actually have the community supporting the workers. So, that is where we see it. It is really hard to know how many of these disputes happen. It is funny. In the last several days, I have seen reports about demonstrations in China, three reports in the last week. That may be because of the major demonstrations we heard about in the oil fields, and the press is just picking up on it. So, it is really hard to know, but there is no doubt that they are increasing. Mr. Freeman. I would just note official government statistics on that, for what they are worth. The Ministry of Labor reported for 2000 that there were 135,000 labor disputes, which, according to their statistics, was a 12.5 percent increase over the previous year. Mr. Foarde. I am going to shift gears just slightly with the time remaining and pick up on something, Bama, that you mentioned, and that is the Olympics. We are very interested in the whole question of the Olympic Games in Beijing and the possible positive effect that they could have on human rights practices if everybody does some heavy lifting between now and 2008. Do you have some specific things that you think ought to be done, just in the area of labor rights, that this Commission should do or that the U.S. Government should do that you would share with us? Ms. Athreya. Thank you, John, for the opportunity to expand actually on what was sort of a footnote to my comments earlier. Yes, I think this is a tremendous opportunity. We all, I think, are well aware of the political resources China put into winning this Olympic bid. This is an opportunity, from the point of view of the government, to step onto the world stage. They are interested in looking good, to sort of wrap it up very quickly. We know that if we just look overall at the context for labor rights and construction facilities throughout China, there will undoubtedly be a migrant workforce that is largely involved with constructing the Olympic sites. It is going to be a monumental project. There already have been forced displacements of villagers who lived on the sites that will now become the Olympic facilities. So we think it is very important to keep an eye on this. The point here is not to create a sort of labor paradise for this very small handful of workers who happen to be working on the Olympic facilities, but the point is really to use this as an opportunity to raise an issue in the context of the Olympics, which we know China will be paying attention to, and to then broaden, from looking at that one small subset, to saying, these sorts of problems plague workers through China and we hope that the standards that you apply to production and construction of these facilities will apply elsewhere as well to big public works projects. Mr. Foarde. Anybody else want to step up to that one, either of the other two of you? Mr. Hankin. Well, just very briefly, clearly, I think we have to look at those workers and others who are in prison and use meetings to raise those issues every time there is a meeting on the Olympics. Why can we not talk about prisoners, or what has happened to them, and seek access? I think those are the sorts of practical things we can do. Mr. Foarde. We have a number of other people who want to ask questions, so let us go on. Mr. Wolf. Next, is Bob Shepard from the Labor Department. Mr. Shepard. A number of you had discussed the need for outsiders to work on worker rights issues in China. Who should outsiders be working with, specifically? Any of you. Mr. Hankin. Well, I mentioned in my testimony a couple of things. Let me just give you a little bit more detail. First of all, we talk about rule of law approaches in China. We know now that there are lawyers and law schools that are interested in taking up cases of workers. They have little or no experience with labor and employment law. There is much that we could do to help them, and it is my impression that they are interested in getting that help. So, that is certainly one thing we can do. I think there are authorities that are dealing with safety net areas that we have to look at seriously. We have to do it cautiously, but we should look at it and see what we can do in that area. The same thing goes for occupational safety and health. There are appalling problems in the coal mine industry. I think we have to look at it again. I do not think it should simply be a transfer of technical assistance to agencies, but a way to empower workers to protect their health, because we all know who work in the labor area that the best way to protect a worker's health is to make the worker an advocate for his or her health in the workplace. So, those are some of the ideas that we have. Let me add there are people inside China who would welcome information on labor rights and assistance. There are ways to do that, and I would be pleased to talk about that in a more private session with some of you. But I think that is possible. It has to be done cautiously. Mr. Shepard. Bama or Tony. Ms. Athreya. Sure. I would essentially agree with Mark's assessment. We know that there are lawyers' associations in China and those could be potential partners. We do know there is a dearth of trained labor lawyers in China, so one thing that could be done is to work with existing lawyers and legal associations to provide training that would enable a core of labor lawyers to exist. We also know that there are informal labor advocates, something that I would call barefoot lawyers, along the same lines as barefoot doctors, which are advocates that are springing up, particularly from what we understand in south China, to assist workers who are not really sure if they have a problem or not. They are not sure if their rights have been violated or if the law protects them in a particular case or not. So, there are informal advisors who are providing, for a fee, services to such workers just answering questions. I think we could direct resources to strengthen those sorts of advocacy services as well, and do it in a way that would not conflict with formal policy priorities within China. Mr. Freeman. Just to add to that. If the former Soviet Union is any guide, I would say it is important to keep an eye on the human resources that are in the official system, the think tanks. My recollection of the Soviet evolution was that a good part of the leaders of the independent trade unions came out of the think tanks of the official institutes. So, there is something there to keep an eye on. Also, as I suggested earlier, work down at the grassroots level, if you can, with enterprises. Start at the enterprise level. This is where democracy hits the road. Under an emerging market situation, management needs to talk to worker representatives about conditions of labor. There are statements on the part of the official system that they want to work in this area, so we intend to work there. Mr. Shepard. Bama, you stressed the importance of working with the U.S. companies. Do you think there are demonstration effect that will overflow to other companies, or do you think we will just end up by doing that bolstering worker rights within the U.S. companies and foreign investment companies? Ms. Athreya. That is an important question. I do think there is a demonstration effect. But I think the trick is, what we have now, the current situation in which you have a half- dozen companies, United States companies that are trying to do the right thing, and the vast majority of United States companies are sort of free riders on the examples set by a few that end up freely feeding into this rhetoric that United States businesses are bringing good values to China. I think one thing this Commission could do, one thing the United States Government could do, is effectively engage United States business in China in a much broader way. Capture more U.S. companies in the net, and you will find there is a significant demonstration effect on other companies as well. Mr. Shepard. Tony, I have a question for you. You have been on both sides of this. I am curious as to your opinion on the relative advantages of working on worker rights issues, core labor standards, from a bilateral perspective versus working through multinational organizations. Which would be more effective and which would be more advantageous for us? Mr. Freeman. Well, given the fact that I am currently representing the ILO, I obviously favor a multilateral approach. There was an earlier question about whether you wanted to impose U.S. standards or international standards. The answer to that is obvious. You need to speak in terms of international standards, and there are international bodies that have jurisdiction over those standards that are an obvious vehicle for this. Let me just go back to a question you asked Bama earlier. I am told that, while there is enormous resistance from China and other developing countries regarding the whole question of linkage of trade and labor standards, that there is a recognition of another side of the issue, which is that if these countries, including China, want to develop the United States as a market for their products, they need to be concerned about consumer attitudes. This is where you get into demonstration effects. There is concern and interest in official Chinese circles in promoting the positive side of things because of their interests in promoting their products to the United States. I think it is worth reflecting further on that. Mr. Shepard. Thank you. Mr. Wolf. Thanks, Bob. Jennifer Goedke, with Congresswoman Marcy Kaptur. Ms. Goedke. Representing Congresswoman Kaptur, the Congresswoman is not only on the Commission, but she is also a member of the Appropriations Committee. As we are looking to funding projects for the next fiscal year, we are looking at projects like NED and other government programs that support democracy and internationally recognized labor rights. What do you think the priorities should be for domestic versus possibly China-based programs, either working with NGO's or working with ILO? Mr. Hankin. Just for the record, the Solidarity Center gets resources from NED. I must tell you that those monies have been especially helpful for organizations that want to work in or around China. I think each individual program has to be looked at on its merits. But I can tell you that, without those NED resources, there would not have been a major push on labor rights in China. Han Dongfang is a leading workers rights advocate on China and has been supported throughout the years by the National Endowment. I think his work has been enormously important. To the extent that those programs can continue to be supported, I think it is very worthwhile. Now, it is a difficult place to work, for sur