TEXT: CUSTOMS CHIEF ON U.S.-CHINA PRISON LABOR AGREEMENTS
(Recent improvements, but process not satisfactory)

Washington -- In recent months, Chinese cooperation on prison labor cases has improved, but the investigation process has not fully satisfied U.S. requirements and needs, according to George Weise, commissioner of the U.S. Customs Service.

In testimony before the Senate Foreign Relations Committee May 21, Weise said the improvement was probably due to Treasury Secretary Rubin's personal involvement. "The Secretary raised the issue in his bilateral with Vice Premier Qian Qichan in April in Washington," he said. "Whether this improvement is permanent is difficult to say."

"In our opinion, the investigation process has not fully satisfied our requirements and needs. Although Customs has had some intermittent success, we have had lengthy periods where we were not able to visit any facility," he said.

"Customs," Weise said, "will continue to pursue any and all allegations brought to our attention relating to the prison labor statutes and regulations. We do, however, recognize the constraints of being unable to obtain the necessary proof to apply them without the consent of the alleged violator. We simply do not have the tools within our present arsenal at Customs to gain the timely and in-depth verification that we need. Presently, we believe that we are only seeing part of the picture.'

Following is the official text of Wiese's testimony, as prepared for delivery:

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STATEMENT OF GEORGE J. WEISE
COMMISSIONER
UNITED STATES CUSTOMS SERVICE
BEFORE THE SENATE COMMITTEE ON FOREIGN RELATIONS
MAY 21, 1997

Mr. Chairman and Members of the Committee, I would like to thank you for this opportunity to appear before you today to discuss the issue of prison-made goods in the People's Republic of China. Regarding China, Customs has been primarily involved with two issues -- preventing the importation of prison-made goods and investigating and acting against violative trade practices such as textile transshipment, intellectual property rights, and anti-dumping matters. These issues are complex and sometimes present challenging obstacles. Today, at your request, I will focus on the 1992 Memorandum of Understanding (MOU) and the 1994 Statement of Cooperation (SOC) between the United States and the People's Republic of China.

Legal Background

The issue of enforcing the laws and regulations prohibiting the importation of convict-made goods is one of U.S. Customs national trade enforcement priorities.

Section 1307 of Title 19 of the United States Code prohibits the importation of prison made goods. The prohibition in section 1307 covers merchandise mined, produced, or manufactured wholly or in part, in any foreign country by convict, forced, or indentured labor under penal sanctions. In addition, the statute provides that the prohibition concerning forced and indentured labor does not apply to the extent that the merchandise is not produced in the United States in such quantities to meet consumptive demands in the United States.

Section 1761 of Title 18 of the United States Code criminalizes the knowing transportation and importation of prison-made goods.

The penalties for the willful violation of this statute are 2 years in prison and/or a fine of $50,000.

The implementing regulations to section 1307 are contained in 19 CFR 12.42 et seq. The regulations provide authority for the Commissioner of Customs to issue withhold release orders (detention orders) when the information available concerning importation of goods produced by convict labor "reasonably, but not conclusively" indicates the subject merchandise falls within the purview of the statute. Furthermore, if the Commissioner of Customs, with the approval of the Secretary of the Treasury, determines that the merchandise falls within the purview of the statute, a finding to that effect is published in the Federal Register and in the Customs Bulletin.

Customs has interpreted the term "reasonably, but not conclusively," the standard used to issue detention orders, to mean reasonable suspicion. The evidentiary standard used to issue findings has been determined to be probable cause.

Under Customs regulations, merchandise imported in violation of section 1307 can be detained and may be exported at any time before it is deemed to have been abandoned. In addition, the importer, within 3 months after the merchandise is imported, may produce evidence to show that the merchandise does not fall within the prohibition of the statute. Merchandise determined to be inadmissible shall be excluded from entry and may be reexported. An inadmissible determination can also be protested under 19 U.S.C. 1514.

Merchandise imported in violation of 18 U.S.C. 1761 or 1762 can be seized and subject to forfeiture as an importation contrary to law, 18 U.S.C. 545.

China has had regulations of its own since 1990 banning the exportation of prison-made merchandise.

Memorandum of Understanding and Statement of Cooperation

With regard to the trade and commercial aspects of the prison labor problem, the Administration has taken the initiative to prevent the importation of prison-made products into the United States. For its part, the Customs Service has taken steps to identify and prevent the importation of products produced by prison labor. We have done so by actively pursuing leads which have resulted in seizures, detention orders, findings, and criminal prosecutions. Leads have come from a variety of sources including the importer community, the LAOGAI RESEARCH FOUNDATION and other human rights organizations, and individuals.

Our history with China related to prison made goods dates back to 1990. In March 1990, U.S. Customs initiated Operation LAO-GAI-DUI, which targeted companies alleged to be importing prison labor-made products from China into the United States. Our first detention order against Chinese products was issued October 3, 1991.

In 1992, the State Department negotiated a Memorandum of Understanding with China relating to their exportation of prison labor-made products to the United States. This agreement, signed in August 1992, provided the framework for the prompt investigation of allegations that imports from China were produced by prison labor. Specifically, the MOU provides the United States with a procedure by which it may request that the Chinese government conduct investigations of facilities "based on specific information" that a facility is "suspected of violating relative regulations and laws."

The major difficulty in implementing the MOU arose from the lack of specific procedures for the verification process. As a result, the Statement of Cooperation was subsequently negotiated and signed by China and the United States on March 14, 1994.

Together, these agreements provide procedures to be used to request investigations of suspected prison labor facilities which are alleged to be exporting their products into each respective signatory's country. The agreements state that the Customs Service can request an investigation of such suspicions by either the host country or by a personal visit to a suspected prison labor facility by U.S. Customs personnel. When the Customs Service requests a visit to a suspected prison labor facility, China is responsible for arranging a visit to that facility within 60 days of the request. Both types of requests are required to be in writing and should provide specific information justifying the investigation. Written reports are required within 60 days of the completion of each investigation/visit.

Although we experienced a period of success in requesting and having investigations conducted by the Chinese government and with U.S. Customs personally visiting suspected prison labor facilities after the signing of the MOU, problems again became evident.

The Chinese Penal System

Persons imprisoned by the courts on relatively serious charges are sent either to prisons or to labor reform camps, depending on the length of their sentences. Petty criminals, or others whose behavior is deemed "anti-social," may be assigned by the police or nonjudicial administrative boards to reeducation camps for up to 3 years. Suspects awaiting trial are held in detention centers. The maximum length of pretrial detention under Chinese law is 5 and 1/2 months. Convicts sentenced to less than 1 year can be retained in detention centers. Persons may be required to remain in prison camps if they are deemed not to have reformed.

Prison Labor

The Chinese consider prison labor an integral part of the reform process. The Chinese government says prisoners work about 6 hours per day and have political study for 3 hours per day. They receive labor protection and health care equivalent to workers in state corporations; wages, however, are generally minimal. Prison laborers include those jailed for "counter-revolutionary offenses." We have not seen evidence that prisoners in pre-trial detention are required to work.

Prison Exports

Last year U.S. Customs processed over 16 million import entries and collected about $22 billion in customs duties on nearly $800 billion of trade. Our imports from China in 1996 totaled over $51 billion. It is impossible to determine how much of that figure came from prison labor facilities.

In 1990, the Chinese Justice Ministry officials gave us conflicting figures ranging from as low as $300 million to as high as $1 billion for the value of goods produced by prison farms and factories. Some 70 percent, they say, is consumed within the prison system with the balance sold domestically.

However, the 1989 China Law Yearbook stated that China exported $100 million worth of goods produced within the prison system. Like most written information we have about the Chinese prison and labor reform systems, these reports on exports are dated and no current figures are available.

Further clouding the situation are factories that the Chinese tell us are associated with prisons, but do not employ prison labor. These so-called "worker enterprises" employ relatives of prison employees and ex-convicts who remain near the prison after release. We are told that there are about 400,000 workers in such units separate from the prisons. These enterprises are specifically exempted from the government rules banning export of goods from the prison system. Chinese officials have shown us one such family member enterprise and asserted that these institutions account for the $100 million of prison system exports the government has acknowledged.

Another practice complicating our enforcement efforts is that Chinese manufacturers use a network of middlemen, including trading companies in China and Hong Kong, leaving the source very difficult to trace. Importation documents usually list the names of these trading companies whose representatives heretofore have not been forthcoming in providing information about the manufacturers they represent.

Scope of Problem

China is currently by far the country most frequently associated with the export of prison labor-made goods to the United States. The Former Soviet Union, Japan, Mexico and other countries have also been the subject of prison labor allegations. Of the 21 detention orders presently in effect, 20 pertain to China. Of the six findings in effect, four pertain to China. China was the subject of three more detention orders and two more findings that have been revoked. Additionally, of the 76 investigations involving prison labor currently open within Customs, 69 pertain to China.

Customs opened an office in Beijing in October 1993, largely to deal with prison labor matters. Two special agents were assigned to Beijing. Foremost on their agenda was the investigation of accusations of prison labor made products being imported into the United States.

To date, the Customs Service has requested 58 investigations of the Chinese government, and 52 have been conducted. We have also requested 20 visits to suspected forced labor camps, 13 of which have been granted (including two which we did not request). We revoked four detention orders and two findings as a result of our visits.

In our opinion, the investigation process has not fully satisfied our requirements and needs. Although Customs has had some intermittent success, we have had lengthy periods where we were not able to visit any facility. To illustrate, on April 25, 1995, Customs agents were allowed to visit the Shandong Laiyang Heavy Duty Machinery Factory. In May 1995, it was announced that Taiwan's President Lee Teng-hui was going to visit the United States. China's angry reaction, including recalling its ambassador had a chilling effect on Customs as well. On October 13, 1995, U.S. Embassy officials in Beijing met with Chinese officials to discuss lack of activity relating to prison labor investigations. Subsequent meetings were held on November 2, 1995, December 6, 1995, and December 22, 1995. In December 1995, I drafted letters to both the Assistant Secretary of State for East Asian and Pacific Affairs, and to the U.S. Trade Representative, detailing the difficulties Customs was having in gaining China's adherence to our MOU/SOC.

On March 11, 1996, the Chinese Ministry of Justice notified the Customs Attache that she would be allowed to visit the Shanghai Laodong Machinery Factory. (The request to visit this factory was first made by the Attache in November 1992, and was re-requested again in March 1993 and September 1994.) The Attache was finally allowed to visit the facility on April 24, 1996. She found no evidence of forced labor at the facility. Customs subsequently revoked the existing detention order on the company.

Problems with Chinese cooperation continued even after the April 1996, visit to the Shanghai Laodong Machinery Factory. The new Assistant Attache, who arrived in July 1996, was given the prison labor program. He quickly sought to introduce himself to his counterparts in the Chinese government. He was rebuffed. In fact, he was not even allowed to meet with Ministry of Justice officials until February 3, 1997. At that meeting the Assistant Attache presented a request asking China to conduct two investigations for us in accordance with our MOU. Chinese officials agreed. On March 31, 1997, they provided the results of the two investigations. On April 22, 1997, Customs requested a site visit to the Beishu Graphite Mine and the Nanshu Graphite Mine. Those requests are pending at this time (China has 60 days from the date of the request to arrange this).

Conclusion

In recent months, Chinese cooperation on prison labor cases has improved. This improvement is due to various reasons, among which include Secretary Rubin's personal involvement. The Secretary raised the issue in his bilateral with Vice Premier Qian Qichan in April in Washington.

Whether this improvement is permanent is difficult to say. I would like to close with some assurances as to Customs efforts and intentions on the Chinese prison labor issue. Customs is offering classes on the subject of forced labor to our special agents and import specialists. Six of these classes have been scheduled for this Fiscal Year.

Customs will continue to pursue any and all allegations brought to our attention relating to the prison labor statutes and regulations. We do, however, recognize the constraints of being unable to obtain the necessary proof to apply them without the consent of the alleged violator. We simply do not have the tools within our present arsenal at Customs to gain the timely and in-depth verification that we need. Presently, we believe that we are only seeing part of the picture.

Customs will, however, continue to prohibit the entry of merchandise produced from prison labor in accordance with U.S. law and relevant international agreements. I look forward to working with Congress, the Administration and the Chinese government to accomplish this goal.

Mr. Chairman, this concludes my statement. Thank you for this opportunity to address this issue.

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