S. HRG. 105±253 U.S. IMPLEMENTATION OF PRISON LABOR AGREEMENTS WITH CHINA HEARING BEFORE THE COMMITTEE ON FOREIGN RELATIONS UNITED STATES SENATE ONE HUNDRED FIFTH CONGRESS FIRST SESSION MAY 21, 1997 Printed for the use of the Committee on Foreign Relations ( U.S. GOVERNMENT PRINTING OFFICE 41±198 CC WASHINGTON : 1997 COMMITTEE ON FOREIGN RELATIONS JESSE HELMS, North Carolina, Chairman RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, JR., Delaware PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts CRAIG THOMAS, Wyoming CHARLES S. ROBB, Virginia ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin JOHN ASHCROFT, Missouri DIANNE FEINSTEIN, California BILL FRIST, Tennessee PAUL D. WELLSTONE, Minnesota SAM BROWNBACK, Kansas JAMES W. NANCE, Staff Director EDWIN K. HALL, Minority Staff Director (II) CONTENTS Page Bader, Jeffrey A., Deputy Assistant Secretary for East Asian and Pacific Affairs, U.S. Department of State ...................................................................... 16 Prepared statement .......................................................................................... 18 Fiedler, Jeffrey L., President, Food and Allied Service Trades Department, AFL±CIO, Washington, DC ................................................................................. 73 Prepared statement .......................................................................................... 75 Johnson, Hon. James E., Assistant Secretary for Enforcement, U.S. Depart- ment of the Treasury ........................................................................................... 2 Prepared statement .......................................................................................... 5 Levy, Peter B., President, Labelon/Noesting Company, Mt. Vernon, New York 64 Prepared statement .......................................................................................... 67 Shenqi, Fu, Chinese dissident and Laogai Survivor, New York, New York ....... 72 Weise, Hon. George, Commissioner, U.S. Customs Service ................................. 7 Prepared statement .......................................................................................... 9 Wu, Harry, Executive Director, Laogai Research Foundation, Milpitas, Cali- fornia ..................................................................................................................... 44 Prepared statement .......................................................................................... 48 Shieh, Maranda, President, Greater Washington Network for Democracy in China and Friends of Hong Kong and Macao Association ............................... 68 Prepared statement .......................................................................................... 71 APPENDIX Letter from Barbara Larkin, Assistant Secretary, Legislative Affairs, Depart- ment of State, to Chairman Helms ..................................................................... 83 Responses of Mr. Bader to Questions Asked by Senator Helms .......................... 83 Letter from Liam Higgins, Office of Legislative Affairs, Department of the Treasury, to Chairman Helms ............................................................................ 155 Responses of Mr. Johnson to Questions Asked by Senator Wellstone ................ 155 Responses of Mr. Bader to Questions Asked by Senator Wellstone .................... 156 (III) U.S. IMPLEMENTATION OF PRISON LABOR AGREEMENTS WITH CHINA WEDNESDAY, MAY 21, 1997 U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. The committee met at 10:02 a.m., in room SD±419, Dirksen Sen- ate Office Building, Hon. Craig Thomas, presiding. Present: Senators Thomas, Ashcroft, Biden, Robb, Feingold, Fein- stein, and Wellstone. Senator THOMAS. Thank you very much, gentlemen. I will call the meeting of the committee to order. Let me first express the chairman's regrets that he is not here, but I think he will probably be here shortly. He is on the floor deal- ing with some issues and will be here, but we wanted to go forward with the hearing at the time that was prescribed. Let me ask consent to place into the record the chairman's state- ment. If he comes and wants to do it, of course he will be able to do that. Otherwise, it will be in the record. [The prepared statement of Chairman Helms follows:] PREPARED STATEMENT OF CHAIRMAN HELMS The Committee will come to order. The Foreign Relations Committee will this morning address the matter of U.S. enforcement of prison labor agreements with the People's Republic of China, which the Committee has not considered since 1991. Since then, a lot has happened. The United States has signed two agreements with China on prison labor. However, there continues to be evidence of Chinese prison labor imports to the United States and a disturbing lack of cooperation from the Chinese government. China's penal system relies on an extensive system of forced labor camps, farms, and factories. Prisoners can be sentenced to ``reform through labor'' as part of the judicial process, that is, as criminals, or administratively to ``reeducation through labor.'' This distinction has created a major problem in enforcement of the agree- ment between China and the U.S. on prison labor, with China refusing access to ``reeducation through labor'' facilities on the grounds that they are not prisons. Prisoners sentenced through the administrative process have not been tried or convicted of a crime. Often, prisoners are held in labor camps long after the comple- tion of their sentences. By one estimate, over half of China's prison labor goods are exported. Labor re- form facilities produce everything from agricultural products to manufactured goods, or as we will hear from the second panel of witnesses, everything from brake rotors to Christmas lights. Chinese authorities aggressively target foreign markets and business partners for joint ventures. We will hear from our witnesses today about American companies who knowingly contract for prison labor goods and sell them to the American public. An economy that relies heavily on prison labor is an awful truth of the Chinese system. But China's intentional export of prison labor exports to the U.S., China's largest market, is not simply repulsiveÐit is a violation of U.S. law. (1) 2 U.S. law has prohibited the importation of prison labor products from anywhere in the world since 1932. However, prison labor imports from the People's Republic of China constitute the largest group of cases open within the U.S. Customs Service. In an effort to enlist Chinese cooperation in enforcement of U.S. law, the U.S. con- cluded two agreements with the Chinese government on prison laborÐa 1992 Memorandum of Understanding, or M.O.U., and 1994 agreement called the State- ment of Cooperation, or S.O.C. These agreements are not working. This isn't my opinionÐit is the conclusion of the Clinton Administration which in its annual human rights reports, testimony to the Congress and publicly quoted internal documents has concluded that China is failing to comply with its obligations in the 1992 M.O.U. on prison labor. In fact, in December 1995, Customs Commissioner Weise, told his colleagues at the State Department and the U.S. Trade Representative's Office that in the Cus- toms Service's view, the Memorandum of Understanding and the Statement of Co- operation are ``not working at this point and there is nothing more U.S. Customs can do to make [them] work.'' The State Department also has concluded that China is not complying with its obligations under the prison labor memorandum of understanding. In this year and previous years, the annual human rights report on China has noted ``limited'' or ``stalled'' cooperation with the M.O.U.. According to the State Department, China categorically refuses to admit American officials to visit ``re-education through labor'' facilities on the grounds that these are not prisons and are not therefore covered by the M.O.U. I suspect there is a great deal more the State Department can say than these sparing comments in the human rights reports. I look forward to hearing from the Administration witnesses, Commissioner of Customs, George Weise (Weiss), Assistant Secretary of the Treasury for Enforce- ment, James Johnson, and Deputy Assistant Secretary of State for East Asian and Pacific Affairs, Jeffrey Bader. These witnesses will be followed by a second panel, which I will introduce later. Senator THOMAS. Our first panel consists of the Honorable James Johnson, Assistant Secretary for Enforcement, U.S. Department of the Treasury; the Honorable George Weise, Commissioner, U.S. Customs Service; and Mr. Jeffrey Bader, Deputy Assistant Sec- retary for East Asian and Pacific Affairs. Why do we not begin then with Mr. Johnson, if you will, sir? STATEMENT OF HON. JAMES E. JOHNSON, ASSISTANT SEC- RETARY FOR ENFORCEMENT, U.S. DEPARTMENT OF THE TREASURY Mr. JOHNSON. Thank you, Senator Thomas. To you, Senator Thomas, and to the members and the staff of this committee, I appreciate the opportunity to discuss with you today a very important trade issue: Our responsibility to ban from U.S. markets products of forced labor manufactured in the People's Republic of China. In my written testimony, I cover in greater detail three issues. One, I provide an overview of the Custom Service's role in forced labor enforcement. Two, I discuss the status and outlook for en- forcement arrangements with China and,