TED Case Studies

Chinese Prison Labor Trade With The United States

• IDENTIFICATION
• LEGAL CLUSTERS
• GEOGRAPHIC CLUSTERS
• TRADE CLUSTERS
• ENVIRONMENT CLUSTERS
• OTHER FACTORS

I. Identification

1. The Issue

The Chinese have exported products manufactured by Chinese prison laborers. The exportation into the United States violates both American law and two bilateral agreements signed by the United States and the People's Republic of China. Many critics characterize the US effort to block the exportation as lackluster. Others point to the moral issue of the Chinese penal system as a justification for the exportation ban.

2. Description

• Throughout the Cold War, the United States saw Communism as an enemy. In today’s world, the People’s Republic of China remains the last communist opponent to the American ideals of democracy. The issue of the international trade of products produced by prison laborers is something that the United States and China are in disagreement with. The United States has determined that forced prison labor is not an acceptable means of producing products on the international market. Therefore, it has adopted a policy of not allowing the importation of goods or services that involve prison labor into its' borders. The United States government sustains this policy of anti-prison labor through various US laws and bilateral agreements with the People’s Republic of China. However, while the US government has decided that goods produced by prisoners is not acceptable for importation into the United States, it still strongly supports the usage of prison labor in its own country. Surprisingly, the United States even allows products made by its own prisoners to be exported. Hypocritical policies such as this one weaken the American government in the eyes of the informed people. It is important that if the United States is going to implement and enforce an import ban on prison labor, then the United States should not export prisoner made products. Products made by prison labor in China should not be exported to the United States and the United States needs to take a stronger stance against these products entering the United States.

  Firstly, it is important to identify the official US position towards the importation of prison made goods. Beginning with the Tariff Act of 1930 Section 307, the importation of prison made goods was declared illegal. The law states that:

  •  
  • "All goods, wares, articles, and merchandise . . . manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited...; but in no case shall such provisions be applicable to goods, wares, articles, or merchandise so mined, produced, or manufactured which are not mined, produced, or manufactured in such quantities in the United States as to meet the consumptive demands of the United States" (Supreme Court).

  In essence, this provision of the Tariff Act of 1930 states that prison labor produced goods may not enter the United States, unless the United States is not able to produce that good solely on its own. While this is not a firm and complete moral stand against the usage of foreign prison labor, it can be considered a half-hearted stand against the exportation of prisoner goods into the United States. While the act outlaws the importation of the immorally produced goods, it only illegalizes the importation when the United States is not able to produce the goods for its own consumer market.

  However, since 1930 the United States has aspired to sign two separate agreements with China, agreeing not to export prisoner made goods into the United States (Helms). In 1992, the United States and China signed a "Memorandum of Understanding," and in 1994, the two countries signed a "Statement of Cooperation" where both countries declared that the American officials may request to inspect facilities believed to be involved in prison labor (State Department). In this agreement, China agreed not to export goods made by prison labor to the United States (State Department). However, despite these two agreements, the Chinese has continued to export prison labor goods and the US has failed miserably to enforce its regulations.

  The American regulations outline that port directors in the United States have the right to detain any product suspected of being produced by prison labor (US Customs Duties). However, even though the port directors are given this ability, it still has not stopped the flow of prison made goods from China into the United States. In the 1992 Memorandum of Understanding (MOU) mentioned above, the Chinese government is requested to provide information about any goods or production facilities suspected of being produced by prison laborers. Relying on Chinese cooperation is the fundamental flaw in the agreement and it signifies the Chinese lack of cooperation on this issue (ABC Nightline). The response by Chinese officials to US attorneys regarding illegally exported goods has not been cooperative (State Department). US Customs Commissioner George Weise has stated that there is no "smoking gun" evidence that signifies prisoner made goods. Mr. Weise added: "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" (White House). Deputy Secretary of State Jeffrey Bader adds that the Chinese are half-heartingly cooperating once US Customs suspects prison made products are being exported (ABC Nightline). According to Mr. Bader, Customs officials have requested to visit 20 facilities suspected of exporting prison-made goods, but have only been able to visit 13 (ABC Nightline).

  However, Jeffrey Fiedler, a representative of AFL-CIO who investigates violations of US labor laws, draws a distinction between the visitations granted to US inspectors and actually inspecting the production plants. Mr. Fiedler argues that, "there is no such word in the [1992 MOU and 1994 SOC Agreements] as inspect and the Chinese have explicitly said that that’s a violation of their sovereignty. [US Customs] can visit when [it] wants and when they want means four years, five years after the US has requested such a visit" (ABC Nightline). Mr. Fiedler says that the visitations of Chinese production camps are solely subject to US visitation whenever the Chinese allow it, which makes it difficult for a proper and effective inspection to take place (ABC Nightline). Mr. Fielder’s comments cast a dark shadow of doubt on the quality of any previous "inspection" of Chinese workplaces.

  Mr. Fiedler’s shadow of doubt extends beyond the effectiveness of US inspections to the question of the overall commitment of the United States government in stopping prison labor product from entering the United States. Mr. Fiedler has stated that in his organization, there are three or four people devoted to investigating the exportation of Chinese prison labor products. When asked on ABC’s Nightline why his organization is able to uncover prison labor violations while the US government can not, he responded: "Because I think we want to and they don’t" (ABC Nightline). In response, Deputy Secretary of State Jeffrey Bader said they the two Customs officials in the US Beijing Embassy rely upon information that is supplied by the Chinese and by private inspectors such as Mr. Fiedler (ABC Nightline). How is it possible to accurately judge Chinese compliance with US regulations, when it is the Chinese who are being investigated and it is the Chinese who are supplying the information? It simply is not possible to do so accurately. The US simply does not devote adequate resources to investigate violations of the US-China agreements.

  Because of this lack of devotion, many in the private sector have taken it upon themselves to investigate violations of these agreements. One such example is Peter Levy, a less than altruistic businessman who privately videotaped the production of notebook binder rings being assembled by Chinese women prisoners. While his motivation was not out of concern for human rights, he was mainly concerned about his competitors receiving an advantage (ABC Nightline). Mr. Levy exposed the Chinese usage of prison labor. The ease of Mr. Levy’s discovery, when compared to the difficulty of the US to effectively investigate violations of US labor laws, exemplifies American lack of concern of the export violations.

  In addition to this lack of devotion for investigating violations, the United States government has fallen into a hypocritical trap. Within the United States’ penal system prison labor is not only used, but it is encouraged. The Justice Department reports that 1.7 million inmates in American prisons are used for labor (Armour, 1998; 1B). These prisoners are paid 23 cents to $1.15 per hour for their services (Armour, 1998; 1B)

  Not only is the United States using prison labor as well as the Chinese, but American companies are exporting some of the goods that are produced by the prisoners. In a US Supreme Court Case of Whitfield vs. the State of Ohio, it was decided that states do have the right to make prison made goods illegal (US Supreme Court). However, while it is illegal for US firms to import prison made goods, and the sale of prison made goods is restricted across state lines, it is still legal for the United States to export prison made goods.

  In fact, the number of US Federal Prison Industries has increased from 5,000 in 1989 to 20,000 in 1998 (Armour, 1998; 1B). Pamela Jo Davis, president of Pride Enterprises, an organization that pays 4,300 Florida prisoners 20 to 50 cents an hour, has outlined several prisoner made products that are exported from the United States (Blustien, 1997; C1). "Boots made by Florida prisoners have been sent to Trinidad, license plates have been sent to Nicaragua, and cedar-lined boxes have been exported to the Dominican Republic" (Blustien, 1997; C1). On the other hand, an important distinction between the Chinese and American penal systems should be drawn (SEE BELOW), it is hypocritical for the American government to restrict the importation of prisoner made goods, when it does the same.

  The question arises of how it is possible for the United States to have such a two-faced policy. There are several reasons including the humanitarian concern, the differences in the two penal systems and the cultural differences of the two nations, and also the xenophobic-economic fear placed in the hearts of many Americans. In an editorial essay, Harold Kleinberg exemplifies this xenophobic-economic fear by pointing out how the cheap labor of China is undercutting the American market. For example:

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  • "As more and more U.S. corporations ducked the American labor market and went to the Far East, jobs were lost in this country. Now, practically everything being sold in this country - with the possible exception of the Congressional Medal of Honor - is being manufactured elsewhere. It not only costs American jobs, but it also tilts the balance of trade to astronomical numbers" (Klienberg, 1995, pg 6).

  While Mr. Kleinberg's point is debatable, it is important to understand that his opposition to trade with China is solely based on economic rather than moral means. When dealing with a moral issue such as forced prison labor, it is essential that policy makers pay less attention to those who are seeking increased economic revenue regarding a governmental policy. Rather, the US legislators should listen to observers on both sides of the issue who seek a certain policy for moral reasons, rather than monetary gain - such as Mr. Kleinberg.

3. Related Cases

Directly Related TED Cases:

There are no cases directly related to Chinese prison labor in the TED Database. (As of the time of the authoring of this case.)

Indirectly Related TED Cases:

China's Three Gorges Dam Project #1

China's Three Gorges Dam Project #2

Chinese Coal and Pollution

Other Interesting TED cases:

Human Body Parts Trade

Mnt.. Everest Tourism

Sydney Olympics and Environment

The Role of Trade in Transmitting the Bubonic Plague

Danish Beer Bottle Laws

4. Draft Author:

James T. Reeves

Note Date: April 7, 1999

II. Legal Clusters

5. Discourse and Status:

DISagreement and it is in progress

6. Forum and Scope:

Bilateral

7. Decision Breadth:

2 Countries are effected by any decisions: China and the United States.

8. Legal Standing:

The legal standing of this issue is concerns US law and two key agreements with the Chinese. (See above)

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: ASIA

b. Geographic Site: eastern ASIA

c. Geographic Impact: China and United States

10. Sub-National Factors:

NO

11. Type of Habitat:

VARIOUS

IV. Trade Clusters

12. Type of Measure:

Export Ban

13. Direct v. Indirect Impacts:

Direct

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: N/A

b. Indirectly Related to Product: N/A

c. Not Related to Product: N/A

d. Related to Process: N/A

15. Trade Product Identification:

Labor intensive-manufactured goods.

16. Economic Data

17. Impact of Trade Restriction:

Low

18. Industry Sector:

Manufactured Goods.

19. Exporters and Importers:

China and the United States.

V. Environment Clusters

20. Environmental Problem Type:

N/A

21. Name, Type, and Diversity of Species

Name: N/A

Type: N/A

Diversity: N/A

22. Resource Impact and Effect:

N/A

23. Urgency and Lifetime:

N/A

24. Substitutes:

N/A

VI. Other Factors

25. Culture:

Americans have cherished the right to speak freely regarding governmental decisions. This right is a large part of the American culture. The Chinese, on the other hand, are not given this right. In this, exists a different cultural aspect that has bearing on this trade dispute.

The overall opinion of American prison labor is in agreement with the justifications given by the Chinese government: that prison labor benefits both the prisoners and society. Proponents of using American prisoners as a labor force state:

“America’s growing inmate population could become a national asset as a work force, providing jobs that boost the economy while mitigating tensions in overcrowded facilities and teaching prisoners life skills that will ease their return to society" (Correctional Educational Bulletin).

The Chinese cite similar reasons for using prison labor. The Chinese feel that by employing prisoners as laborers without pay, it will contribute to the prisoners repayment to society for their crimes (Armour, 1998; 1B).

Critics of the use of prison labor often draw upon this similarity to show the injustices of prison labor. However, an important distinction can be drawn. In China, there is no due process of the law. In China any person accused of theft or any other misdemeanors can be sentenced up to three years based solely on the decisions of local law enforcement. More importantly, a person in China can be placed into prison for political beliefs that are deemed counterrevolutionary. By an estimate of the US government, there are nearly 3,000 political prisoners in the Chinese penal system.

The two judicial systems are completely different. The American system based upon the notion of innocent until proven guilty, the Chinese based upon the opposite.

26. Trans-Boundary Issues:

27. Rights:

Basic human rights are not respected in China, especially prisoners' rights. It is appalling the extent that the Chinese do not respect the basic human rights of their citizens and prisoners. Palden Gyatso, a Tibetan monk who was imprisoned for 30 years, provides many horrible stories of how awful and cruel the Chinese penal system is. In a speech in Hartford, Connecticut, he describes how the prisoners are deprived of eating edible food and after working for nine hours straight, the prisoners are reduced to eating grass, leaves, insects, and rats. On at least one occasion, Gysato explains, he ate his leather shoes and shared the scraps with his fellow prisoners (Dee, 1996; B9)

In addition, Gyatso describes how some prisoners who remained silent during interrogations were put through unspeakable humiliation and torture. Their hands would be tied behind their backs and hung from the ceiling. Meanwhile, a fire would be lit beneath their feet and boiling water would be poured over their heads - causing their skin to blister and peel. Other prisoners would be subjected to electric shock treatment without medical attention, and would be forced to work the next day. For the prisoners who were to be executed, they would be humiliated before their death and a bill for the rope and bullet used would be sent to their relatives for payment (Dee, 1996; B9).

It is essential when debating the issue of importing prisoner made goods from China that one understand the cruelties within the Chinese penal system. This is not a human system. The prisoners are tortured, murdered, and are forced to do labor. The United States simply should not accept products made by people in such an inhumane manner.

28. Relevant Literature

ABC Nightline. "American Business and Chinese Prison Labor Camps." ABC News. May 21, 1997. 11:35 ET.

Armour, Stephanie. "Prison labor shackled with complaints." USA TODAY. October 20, 1998. Page 1B

The Arizona Republic. "Spotlight Focused on the Chinese Prison Labor." The Arizona Republic. May 22, 1997. Pg. A10

Blustein, Paul. "Prison Labor: Can U.S. Point Finger at China? American Inmates Manufacture Products, But Trade Debate Centers on Beijing's Policies." The Washington Post. June 3, 1997. Pg. C01.

China Diesel Imports, Inc v. The United States. United States Court of International Trade. June 4, 1996.*

Cockburn, Alexander. "Tough Talk To China masks Selfish Ends; The Credentials of the Trade-or-Die Model Are Looking More Wretched By The Day." Los Angeles Times. March 4, 1999. Part B; Page 9

Correctional Educational Bulletin. "Groups Urge Private Sector To View Prison Industries as Teaching Tool; Legislation Could Change Prison Labor Market." Correctional Educational Bulletin. July, 1998: Vol 1, No. 10.

Customs Duties. Title 19, Chapter I, United States Customs Service, Dept. Of the Treasury, Part 12 - Special Classes of Merchandise: merchandise Produced By Convict, Forced, or Indentured Labor.*

Dee, Jane. Tibetan Buddhist Monk Details Horrors of Imprisonment In Chinese Jails, Camps." The Hartford Courant. June 20, 1996. Pg. B9

Helms, Jesse. "Testimony May 21, 1997. Jesse Helms, Senator, Senate Foreign Relations. China Prison Labor Agreements." Federal Document Clearing House Congressional Testimony. May 21, 1997*

"Adidas gives football penalty." Financial Times. July 2, 1998. London Edition. Pg. 08

"Adidas-Salomon denies claim." Financial Times. August 20, 1998. London Edition.Pg. 05

Hirsch, David J. "Guilt-Free Imports From China" The Plain Dealer. June 26, 1997. Pg. 11B

Kleingberg, Howard. "Will the US ever stand up to China?" The Tampa Tribune. January 8, 1995. Pg. 6

Roberts, William. "China trade debate puts focus on prison labor exports to US." Journal of Commerce. May 23, 1997. Pg. 1A

Simon, William and Robert Weisberg. "Prison Labor in China And U.S. Trade Policy." The San Francisco Chronicle. May 13, 1994. Pg. A21

State Department. "Chinese Prison Labor Exports Fact sheet released by the Bureau of Public Affairs." <"http://www.state.gov/www/regions/eap/fs-china_prison_exp_970617.html"> U.S. Department of State. June 17, 1997.

"US Companies Accused Of Importing Goods Made By Chinese Prison Labor." The White House Bulletin. May 21, 1997.

WHITFIELD v. OHIO. United States Supreme Court. March 2, 1936.*

* = Sources were found on the Lexis Nexis search engine, hard copies could not be obtained.