TEXT: DAS BADER ON U.S.-CHINA PRISON LABOR AGREEMENTS
(MOU prohibits importation of prison labor goods)

Washington -- Deputy Assistant Secretary of State for East Asian and Pacific Affairs Jeffrey Bader provided the Senate Foreign Relations Committee with an update on U.S. efforts to implement the Memorandum of Understanding (MOU) between the U.S. and China Prohibiting Import and Export Trade in Prison Labor Products at a May 21 hearing.

"The U.S. Government does not challenge the principle of employing prisoners; we too expect prisoners to work. Our opposition is to prison labor exports to the U.S. and is predicated on fair trade and human rights concerns," Bader said.

"We oppose the use of forced/indentured labor to produce prison labor exports and the unfair price advantage gained by such labor in an open economy," he continued. "In addition, we have concerns regarding labor by prisoners who were tried without due process protections meeting international norms; and we have concerns regarding the possible export of products made by their labor."

According to Bader, the MOU on prison labor exports provides for prompt investigation of suspected violations of the laws and regulations of either side relating to trade in prison labor products; exchanges of information on law enforcement efforts; meetings between officials and experts of the two sides; the furnishing of evidence that can be used in judicial or administrative proceedings against violators; and the prompt facilitation of visits to relevant facilities upon the request of either party.

"Our goal is to ensure that no goods produced by prison labor enter this country in violation of U.S. law," Bader said.

"Chinese cooperation is essential to successful performance and enforcement," Bader said. "We need to conduct site visits and have direct access to information since we lack means of independent verification. We will continue to explore ways to enhance Chinese willingness to cooperate. This willingness is not something which can effectively be written into an agreement. Rather improved cooperation is more likely to result from steady, determined diplomacy and engagement by the Embassy, solid investigations by U.S. Customs, and the relationships our officials develop on the ground with Chinese counterparts."

Following is the text of Bader's remarks, as prepared for delivery:

(begin text)

TESTIMONY BY JEFFREY BADER
DEPUTY ASSISTANT SECRETARY
FOR EAST ASIAN AND PACIFIC AFFAIRS
BEFORE THE SENATE FOREIGN RELATIONS COMMITTEE
MAY 21, 1997

Mr. Chairman, Members of the Committee,

I appreciate the opportunity to appear before this committee to provide an update on our efforts to implement the Memorandum of Understanding (MOU) between the U.S. and China Prohibiting Import and Export Trade in Prison Labor Products.

Legal Principles

To briefly summarize, U.S. law (Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307)) prohibits the importation of "all goods, wares, articles and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions." Regulations issued by the U.S. Customs Service establish procedures for detaining, investigating, and excluding goods believed to violate this section.

The U.S. Government does not challenge the principle of employing prisoners; we too expect prisoners to work. Our opposition is to prison labor exports to the U.S. and is predicated on fair trade and human rights concerns. We oppose the use of forced/indentured labor to produce prison labor exports and the unfair price advantage gained by such labor in an open economy. Section 307 cited above is intended primarily to protect U.S. producer, consumer, and worker rights. In addition, we have concerns regarding labor by prisoners who were tried without due process protections meeting international norms; and we have concerns regarding the possible export of products made by their labor. Goods and services produced in U.S. federal prisons can only be sold to U.S. Government agencies in the U.S. However, there are no regulations against exporting state prison-made goods to any country which will legally accept them.

The U.S. Government has devoted great effort to preventing prison labor exports from entering our country. The State Department works closely with the U.S. Customs Service to support law enforcement both at our borders and overseas. With specific regard to China, the problem of Chinese prison labor exports entering the U.S. first came to our attention in 1989. In response to growing concern that China was compelling political prisoners to produce goods for export, the State Department and Customs began an intensive campaign to investigate the importation of Chinese prison labor products. Since that time, we have worked aggressively to ensure that goods made with Chinese prison labor are not exported to the U.S. in violation of our laws.

History of U.S. Efforts: MOU

Early efforts to obtain more information about illegal PRC exports were not successful, in part, because we were unable to visit the facilities in question. In 1991, in an attempt to allay our concerns, the Chinese issued in public form their existing law prohibiting the export of prison labor products. Continuing concerns, however, prompted the U.S. to seek agreement with the PRC on cooperative procedures for prompt investigation of allegations that imports into the U.S. were produced by prison labor.

As a result, U.S. Under Secretary of State Arnold Kanter and Chinese Vice Minister Liu Huaqiu signed a Memorandum of Understanding (MOU) on trade in prison labor products on August 7, 1992. This was a significant step forward in strengthening compliance with both U.S. and Chinese laws and regulations prohibiting trade in prison labor products.

The MOU on prison labor exports provides for:

-- prompt investigation of suspected violations of the laws and regulations of either side relating to trade in prison labor products;

-- exchanges of information on law enforcement efforts;

-- meetings between officials and experts of the two sides;

-- the furnishing of evidence that can be used in judicial or administrative proceedings against violators; and

-- the prompt facilitation of visits to relevant facilities upon the request of either party.

Initial implementation of the MOU was spotty. The Chinese were slow to respond to our requests for investigation, and the responses, when provided two to three months later, often lacked detail. The Chinese were even slower to respond to our requests for visits to suspect facilities.

History of U.S. Efforts: Statement of Cooperation

Accordingly, the U.S. sought to establish specific guidelines for implementing the MOU. After several months of discussion, the U.S. Department of State and the Chinese Ministry of Justice signed a Statement of Cooperation (SOC) in Beijing on March 13, 1994 that established clearer guidelines for implementation of the MOU.

Under the SOC, both sides agreed to provide reports of investigations within 60 days of request from the other side. Requests for visits to suspected prison labor facilities must also be arranged within 60 days. Following the visit, the requesting side has 60 days to provide the receiving side with a report of its visit. Visits to other suspected facilities will only be arranged if the visit to a previous facility has "completely ended," and a visit report has been submitted. In addition, the Chinese agreed to reinvestigate and, if necessary, arrange follow-up visits to sites if the U.S. provides new information about a previously investigated facility. It is to China's detriment if they fail to comply. Detention orders on suspect goods remain in effect until Customs is able to make a clear determination that the facility in question does not utilize prison labor in the production of exports.

The signing of the SOC fostered a more productive relationship between Customs and the Ministry of Justice and accelerated the pace of implementation under the MOU. Between March 1994 and April 1995, Customs was permitted to visit the following five facilities: the Guangzhou Flower City Enterprise, the Guangdong Reform through Labor (laogai) Bureau, the Zhejiang Number Four Prison Factory and its associated Hangzhou Wulin Machinery Works and Hangzhou Superpower Hoist Works, the Shanghai Number Seven Reform through Labor Detachment, and the Shandong Laiyang Heavy Duty Machinery Factory.

This more cooperative spirit exhibited by the Ministry of Justice, however, did not extend to two areas: 1) access by Customs to facilities for which Ministry of Justice claimed there was "insufficient evidence," and 2) access to "reeducation through labor" facilities (laojiao).

Chinese justice officials have questioned the credibility of our evidence, claiming it is outdated or unreliable. Despite repeated explanations that U.S. law requires Customs to consider all reasonable information from sources on prison labor exports, Chinese stated skepticism about U.S. sources has made the implementation of the MOU more difficult. Much of our preliminary evidence comes from Chinese publications, including provincial yearbooks, commerce and industry enterprise directories, catalogs of export facilities, and studies of reform through labor (laogai) and reeducation through labor (laojiao). In some cases, government publications and business directories are dated and may include exaggerated or misleading claims about a company's activities. Still other allegations are based on a combination of evidence, including testimony, statements, documents, and videotapes. For example, human rights activist Harry Wu's Laogai Research Foundation has provided initial information on a number of Customs cases of suspected prison labor exports from China.

Access to "reeducation through labor" facilities has been a topic of disagreement with the Chinese since the first negotiations on the MOU took place. It emerged as an issue in early March, 1995 when the Ministry of Justice refused a request to visit the Guangzhou Number One Reeducation through Labor Camp, claiming that it was beyond the scope of the MOU. However, later that month, embassy officials met with Ministry of Foreign Trade and Economic Cooperation officials who concurred that "reeducation through labor" facilities were covered by the MOU and who indicated they would try to persuade the Ministry Of Justice to grant us access. Although the Ministry of Justice did provide an initial investigative report on this camp, the issue was never fully resolved, and the detention order against the Guangzhou Number One Reeducation through Labor Camp remains in effect. Customs has not, to date, visited any reeducation camps.

Cooperation on prison labor issues took a general downturn in the spring of 1995 following the visit of Taiwan President Lee Teng-hui to the U.S. and the subsequent recall of the Chinese ambassador in protest. Cooperation on prison labor issues came to a virtual standstill during that summer with the arrest and deportation of Harry Wu by the Chinese authorities on espionage charges. The State Department worked vigorously to secure the release of Mr. Wu who was arrested while attempting to enter China to gather evidence on prison labor facilities. Subsequent repeated requests for visits to suspected facilities were denied.

In an attempt to reinvigorate cooperation, embassy officials met with Ministry of Foreign Trade and Economic Cooperation officials in October 1995 to express concern over the slowdown in implementation of the MOU. The Chinese acknowledged the significance of the problem and agreed to arrange an interagency meeting to include officials from the embassy, the Ministry of Foreign Affairs, the Ministry of Foreign Trade and Economic Cooperation, and the Ministry of Justice in order to address the problem.

In November 1995, embassy officials met with Ministry of Foreign Trade and Economic Cooperation and Ministry of Justice officials in an attempt to gain access to several prison labor sites. The Ministry of Justice complained that Customs had not provided conclusive reports on previous site visits and that current allegations lacked credibility.

In December 1995, State Deputy Assistant Secretary for East Asian Affairs Kent Wiedemann met with Ministry of Justice officials during a visit to Beijing to stress the need for prompt access to prison labor facilities and for getting the 1992 MOU back on track. Later that month, embassy officials reiterated Wiedemann's concerns in a follow-up meeting with Ministry of Justice Foreign Affairs Office Deputy Director Wang Rongkang.

Recent Improvements

The arrival of Ambassador Sasser in Beijing in February 1996 finally broke the deadlock with the Ministry of Justice. Embassy officials stressed in February to both Ministry of Justice and Ministry of Foreign Trade and Economic Cooperation officials that alleged prison labor exports were a major concern of the Ambassador. Shortly after, the Ministry of Justice granted Customs access to a facility for which Customs had initially requested access in 1992. No other investigation requests were sent to the Ministry of Justice by Customs in 1996.

Embassy officials from both State and Customs met with the Ministry of Justice officials on February 28 of this year to request an investigation of two alleged cases of prison labor exports and to introduce the new Customs officer handling labor issues. On March 31, well within the 60-day Statement time limit, the Ministry of Justice responded to the investigation requests. Based on the information provided by the Ministry of Justice, Customs was able to close one case and is currently, at the request of the Ministry of Justice, pursuing information on the other case through the Ministry of Foreign Affairs.

On April 22, Customs submitted to the Ministry Of Justice via letter a formal request to visit the Beishu/Nanshu Graphite Mines in Shandong Province. The initial investigation request on this case was submitted by Customs in February 1994, but this was Customs' first request to visit the facility. Just last week, on May 15, Customs submitted a request to visit and review sales records from the Hangzhou Qianjing Hardware Tools Plant, also known as Hangzhou Shenda Tool Factory, and associated with prison facility Zhejiang Number 2 Prison. The Ministry of Justice has 60 days, per the SOC, in which to respond to these visit requests.

Most recently, Secretary Rubin raised the issue of cooperation under the MOU during his meeting with Vice Premier Qian Qichen in April in Washington. Qian agreed that improved overall cooperation was essential, including enhanced cooperation on prison labor export issues.

Results; Future Directions

By Customs calculations, it has made 58 referrals to the Ministry of Justice for investigation since the signing of the MOU in August 1992, of which the Ministry of Justice has responded to 52. Customs has formally requested to visit 20 facilities suspected of exporting prison labor products and has been allowed to visit 13. Since 1991, Customs has issued 27 detention orders of suspected prison labor imports from China, six of which were subsequently revoked after Customs determined that the facility in question did not utilize prison labor. The remaining detention orders, dating as far as back as 1991, are still in effect due to the lack of any contradicting information which would allow Customs to revoke the order. The suspect goods cannot enter the United States and represent a financial loss to the exporters. Customs has also issued six findings banning importation of suspect goods from China, two of which were subsequently revoked.

Implementation of the 1992 MOU prohibiting import and export trade in prison labor products has never been smooth or straightforward. Cooperation from the Ministry Of Justice has been erratic. There are certain facilities to which the Chinese government has been reluctant to give Customs access, perhaps because they present national security concerns or are in sensitive locations. As in many other issues in Sino-U.S. relations, the decentralization of authority within China has hampered prompt enforcement of our agreement. Ministry of Justice officials have sometimes attributed a lack of more rapid progress on investigations and visits to the intransigence of local officials. In addition, inadequate record keeping by prison officials has not facilitated investigation. Also, Chinese cooperation has often been a function of the state of bilateral relations.

We have taken steps -- beginning with negotiation of the SOC to raising the issue at high level meetings -- to address the problem of implementation under the MOU. Chinese cooperation is essential to successful performance and enforcement. We need to conduct site visits and have direct access to information since we lack means of independent verification. We will continue to explore ways to enhance Chinese willingness to cooperate. This willingness is not something which can effectively be written into an agreement. Rather improved cooperation is more likely to result from steady, determined diplomacy and engagement by the Embassy, solid investigations by U.S. Customs, and the relationships our officials develop on the ground with Chinese counterparts.

At present, it appears that the Ministry of Justice may be prepared to improve cooperation on this sensitive issue. We believe the best strategy is to regularly send investigation/visit requests to clear up the current backlog of cases. U.S. Customs will continue to present new cases to the Chinese as we develop information. We will also continue to raise the issue of cooperation and the importance of effective MOU implementation at every appropriate opportunity.

Mr. Chairman, in conclusion, I wish to assure you that the Administration will continue to actively pursue President Clinton's commitment to implement this agreement effectively. Our goal is to ensure that no goods produced by prison labor enter this country in violation of U.S. law.

Thank you, Mr. Chairman.

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