Public Law, Private Actors: The Impact of Human Rights on Business Investors in China Symposium: Doing Business in China
Corporationsand Human Rights
Public Law, Private Actors: The Impact of Human Rights on Business Investors in China Symposium: Doing Business in China
Diane F. Orentlicher 0 1
Timothy A. Gelatt 0 1
0 This Article is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of International Law & Business by an authorized administrator of Northwestern University School of Law Scholarly Commons
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Follow this and additional works at: http://scholarlycommons.law.northwestern.edu/njilb Recommended Citation
The astonishing brutality of Beijing's clampdown on pro-democracy
advocates near Tiananmen Square four years ago placed human rights in
the forefront of U.S. policy concerns in the People's Republic of China
(PRC). Perhaps inevitably, the debate over U.S. human rights policy
toward Beijing has had a profound impact on the expanding web of trade
and investment between the United States and China-itself a central
concern of U.S. policy. The Tiananmen incident thus wove together two
strands of U.S. policy toward the PRC that had previously been thought
to be unrelated, raising a raft of complex policy dilemmas to which
satisfactory solutions still remain to be fashioned.
The focus of debate has been the annual renewal of China's
mostfavored-nation (MFN) trade status, but concerns about China's enduring
human rights problems have pervaded virtually every aspect of
U.S.China trade and investment relations. However inconsistently enforced,
sanctions ranging from a ban on military and high-technology sales to
* Associate Professor of Law, Washington College of Law, The American University.
** Adjunct Professor of Law, New York University; Of Counsel, O'Melveny & Myers.
1 A few portions of this article build upon an earlier study by the co-authors which was
published by the International League for Human Rights, entitled GETTING DOWN TO BUSINESS:
THE HUMAN RIGHTS RESPONSIBILITIES OF CHINA'S INVESTORS AND TRADE PARTNERS, July 1992
[hereinafter GETTING DOWN TO BUSINESS]. The authors are grateful to Kimberly Y. Beg, Douglas
Cahn, Bruce Campbell, Robert H. Dunn, Steven J. Gerber, Michael Jendrzejczyk, John J. Keller,
Sidney Jones, James Owens, Elliot Schrage and Michael H. Shuman for their invaluable comments
on earlier drafts and for other contributions.
China2 to a prohibition on involvement by the Overseas Private
Investment Corporation in Chinese projects3 have been used to promote human
But if the most visible debates have centered on U.S. trade and aid
policies, a potentially more far-reaching debate is taking place in the
boardrooms of corporate America. From Levi Strauss & Co. to
PhillipsVan Heusen, from Sears, Roebuck and Co. to Reebok International Ltd.,
companies are asking how their role as investors can and should be
shaped by human rights concerns in the PRC and other countries.
The answers that have emerged from these companies' deliberations
reflect a pathbreaking reconception of corporate responsibility-one in
which human rights occupy a central place. In March 1992, Sears,
Roebuck and Co. announced that it would not import products produced by
prison or other involuntary labor in China, and established a monitoring
procedure to ensure compliance with its policy. In November 1990,
Reebok International Ltd. condemned military repression in China and
vowed that it "will not operate under martial law conditions" or "allow
any military presence on its premises." Two years later, Reebok adopted
a human rights code of conduct governing workplace conditions in all of
its overseas operations, including those in China. Phillips-Van Heusen
currently threatens to terminate orders from suppliers that violate
human rights principles enshrined in its ethical code.4 Adopting the
most far-reaching policies, Levi Strauss & Co. and the Timberland
Company apply human rights criteria in their selection of business partners,
and avoid investing at all in countries where there are pervasive
violations of basic human rights. In February 1993, the Timberland
Company decided to end its sourcing from China. Two months later, Levi
Strauss & Co. announced that it would end its relations with business
partners in China, and would not initiate any direct investment there.
While these companies are in the vanguard of an emerging trend,
their approach to human rights remains exceptional within the business
community. Still, their initiatives have presented a bold challenge to the
conventional view that business practice and human rights policy should
remain largely separate, and have spurred a broader debate about the
role of human rights in corporations' overseas investment decisions.
Should companies invest at all in countries, like China, where severe
2 Appropriations Act of 1990, Pub. L. No. 101-162, § 610, 103 Stat. 988, 1038 (1989).
3 Foreign Relations Authorization Act, Pub. L. No. 1-1-246, § 902(a)(1)-(2), 104 Stat. 15, 83
4 John McCormick & Mark Levinson, The Supply Police: The Demandfor SocialResponsibility
Forces Business to Look FarBeyond its own FrontDoor, NEWSWEEK, Feb.
, at 48.
human rights abuses are pervasive? If they do invest, should they restrict
their operations to areas of the country that have a comparatively good
human rights record? Are there basic principles that transnational
companies should observe to ensure, at a minimum, that they do not become
complicit in a host government's abrogation of universally-recognized
human rights? Should such principles be enforced by Executive or
congressional fiat, or should companies take primary responsibility for
policing themselves? How can companies that wish to factor human rights
considerations into their business decisions be assured that they will not
pay a price in lost investment opportunities or reduced market share?
This article addresses these questions in light of relevant principles
of international law and U.S. foreign policy. A central thesis of this
article is that businesses that may or do invest in China bear a responsibility
to ensure that their actions do not, however inadvertently, contribute to
the systematic denial of human rights in the PRC. We believe, moreover,
that international human rights law provides an objective basis for
identifying those responsibilities.
We also believe that, in some circumstances, companies that invest
in China can and should play a more proactive role in advancing respect
for human rights. This view is based, above all, on the unique influence
of major foreign investors in China. Today, after a temporary downturn
in business activity in the year following the Tiananmen incident, the
U.S. business presence in China is at an all-time high. With total
committed investment close to six billion dollars, in 1993 the United States is
China's second largest foreign investor. In the 1980s, U.S. companies
became one of China's top providers of foreign investment, technology
and management expertise. Few sectors of U.S. industry are absent, with
substantial U.S. investment projects across the length and breadth of the
country. Major U.S. petroleum companies have been among the most
active in both offshore and onshore exploration, as have the service
companies that complement them. In locations from Beijing to Lhasa, from
Guangzhou to Xian, U.S. companies manufacture everything from air
conditioners to airplanes, from baby food to ball bearings, and from cars
to computers. Major U.S. hotel chains are in business as investors,
managers or both. U.S. companies involved in business projects in China
include numerous household names-Boeing, H.J. Heinz, Coca-Cola,
PepsiCo, 3M, Xerox, IBM and AT&T, to name just a few-as well as a
large number of smaller companies on and off the Fortune 500 list that
have made important commitments to China. Thousands of U.S.
managers and company representatives live in China and interact with Chinese
business and legal officials on a daily basis.
The importance of this large and growing U.S. presence to China's
drive for economic and technical modernization cannot be
overestimated. With the renewed ascendancy of the pragmatic, economic
reform-oriented elements in the leadership, China is now pressing its
economic reform process full speed ahead. To advance that process, the
PRC has an overwhelming need for the investment, technology and
managerial skills that U.S. business has been providing. U.S. businesses are
thus in a unique position to capitalize on their importance to China by
upholding basic principles of respect for human rights in their daily
business activities in China.
Greater involvement by the U.S. business community in promoting
human rights in China is, to be sure, no substitute for the type of leverage
that can and should result from well planned and appropriately defined
governmental actions. We believe that more effective government
policies are essential to an overall strategy for improving China's human
rights record. But increasingly, effective government action is likely to
include measures that directly affect transnational corporations.
Indeed, a key premise of our analysis is that questions relating to the
human rights responsibilities of transnational investors stand at the
intersection of public and private spheres of law and policy. The powerful
influence of transnational corporations on human rights conditions in the
countries where they invest makes it both appropriate, and necessary, to
assure that the behavior of these private actors comports with the human
rights standards established by public international law and enforced by
While the role of regulatory regimes-national and international-is
an important part of any analysis of transnational corporations' human
rights responsibilities, effective leadership in defining those
responsibilities must come from the business community itself. In this, the
challenges will be considerable. How to balance the imperatives of economic
growth in a highly competitive international market against the most
profound interests of human beings presents dilemmas to which no easy
solutions suggest themselves. In the final decade of the Twentieth
Century, the business community will be summoned to turn the same
ingenuity and commitment that rebuilt Japan and Germany in the postwar
years on the equally tortuous challenge presented by a country, like
China, that is marred by systematic violations of fundamental rights, and
at the same time is in massive need of support in reaching its
development and modernization goals. By forging a new cooperation between
business and the deepest interests of humanity, America's corporate
leadership will continue in the future, as in the past, to promote basic
standards of human decency across national borders.
The current debate over corporate responsibility vis-a-vis human
rights in China has been driven by three principal developments: 1) the
persistence of systematic violations of basic rights in the PRC since the
June 1989 crackdown near Tiananmen Square; 2) the inadequacy of U.S.,
as well as multilateral, sanctions in addressing those violations; and 3)
the surge in U.S. business investment in China in recent years, and the
correspondingly significant leverage that U.S. businesses have to promote
improvements in China's human rights record. With violations
persisting on a massive scale, U.S. companies that have substantial investments
in China are being pressed to account for the human rights consequences
of their China operations.
Human Rights Conditions in the PRC
Four years after the Tiananmen tragedy, the human rights situation
in the PRC remains critical. Despite repeated pronouncements by
Chinese officials that the cases of individuals involved in the Tiananmen
affair have "basically been resolved,"' political trials of dissident figures
involved in the 1989 events, Tibetan independence advocates, religious
figures and other political offenders apprehended for reasons unrelated to
Tiananmen have continued at a steady pace in the past year. Their trials
have been characterized by repeated violations of China's own legal
procedures as well as international standards of due process and fair trial
Reports of maltreatment and torture of prisoners detained in China
are widely documented. Severe restrictions on freedoms of expression
5 Nicholas D. Kristof, Chinais Reported toPlan Release of Some PoliticalPrisonersSoon, N.Y.
TIMES, May 6, 1992, at A12. On February 17, 1993, Tiananmen student leaders Wang Dan and
Guo Haifang were released from prison, both having served their full terms. The PRC government
claimed that these releases left no "students" in prison from the Tiananmen incident, a claim that
appeared to be patently untrue in light of information gathered by the human rights organization
Asia Watch, and in any event is misleading in view of the large number of prisoners of conscience
other than students-workers, intellectuals and others-who remain detained in the PRC for
activities during and long after the 1989 events. See ASIA WATCH, HUMAN RIGHTS WATCH, ECONOMIC
REFORM, POLITICAL REPRESSION: ARRESTS OF DISSIDENTS IN CHINA SINCE MID-1992 (1993)
[hereinafter MAR. 1993 ASIA WATCH REPORT]; Chinese Confirm Two
Pro-DemocracyStudentLeaders Stillin Jail,ASSOCIATED PRESS, Feb. 26, 1993, availablein LEXIS, Nexis Library, AP File.
6 See generally LAWYERS COMMITTEE FOR HUMAN RIGHTS, CRIMINAL JUSTICE WITH
CHINESE CHARACTERISTICS: CHINA'S CRIMINAL PROCESS AND VIOLATIONS OF HUMAN RIGHTS
(1993) [hereinafter LAWYERS COMMITTEE REPORT].
and association guaranteed by the Chinese Constitution remain the order
of the day. So, too, do lengthy periods of incommunicado administrative
detention, not subject to any formal legal procedures, for those who
challenge the political orthodoxy. Documentation of the extensive use of
prison labor, operating under dismal conditions to produce profitable
export goods, has focused attention on still another highly disturbing
dimension of China's human rights situation.
Other human rights violations that have been particularly
pronounced during the past several years have included the persecution of
individuals for the exercise of religious freedom (guaranteed by the
PRC's Constitution7) and the suppression of emerging expressions of
minority rights in Tibet and other "autonomous regions" of China. On the
religious front, the past few years have seen an intensification of the PRC
authorities' crackdown on independent religious groups, Christian,
Buddhist and Muslim, that refuse to practice their religion through official
government-supervised bodies.8 In Tibet there has been no let-up, and
even some intensification, of the persecution of peaceful advocates of
independence as well as those engaged in religious and cultural activities
that threaten the dominance of PRC state control.9 A major crackdown
has also been underway in Inner Mongolia, where the authorities have
disbanded associations formed to promote Mongolian language and
culture and arrested peaceful advocates of greater ethnic rights for
Mongolians in this "autonomous region" of China.10
The past few years have seen a newfound willingness of the Chinese
government to engage in a measure of dialogue and exchange with
foreign countries on human rights issues. The government has allowed a
number of delegations from Australia, France, Britain and other
countries to visit China on human rights missions in the past two years.
These groups have, however, been hampered by limitations on contacts
with individual dissidents and restricted access to judicial and prison
facilities. They have had extensive discussions with relevant Chinese
agencies about human rights issues, and in some cases have issued detailed
7 XIANFA [Constitution] arts. 4, 36, 48 (P.R.C.).
8 ASIA WATCH, HUMAN RIGHTS WATCH, FREEDOM OF RELIGION IN CHINA (1992); ASIA
WATCH, HUMAN RIGHTS WATCH, CONTINUING RELIGIOUS REPRESSION IN CHINA (1993).
9 AMNESTY INTERNATIONAL, People'sRepublic of China:Repression in Tibet, Al Index: ASA
17/19/92, May 1992. See also INTERNATIONAL LEAGUE FOR HUMAN RIGHTS, HUMAN RIGHTS
VIOLATIONS IN TIBET, submitted to the Secretary General of the United Nations, Jan. 1992,
reprintedin Situation in Tibet"Note by the Secretary-General,U.N. Doe. E/CN.4/1992/37, at 50;
Nicholas D. Kristof, CommunistParty ChiefCallsfor a Purgein Tibet, N.Y. TIMES, Feb.
10 ASIA WATCH, HUMAN RIGHTS WATCH, CRACKDOWN IN INNER MONGOLIA (1991); ASIA
WATCH, HUMAN RIGHTS WATCH, CONTINUING CRACKDOWN IN INNER MONGOLIA (1992).
and highly critical reports. The Chinese government, for its part, sent
two academically oriented groups to the United States in the last quarter
of 1991, and also sent groups to several European and Asian countries in
1992, to discuss human rights with academic bodies, human rights
organizations, and members of the legislative and executive branches in those
These initial efforts to address human rights questions through
contacts and discussion are highly preferable to the previous approach of the
Chinese government, which was to reject out of hand human rights as an
issue for bilateral or international debate. But while the government has
engaged in some measure of discussion of human rights, it continues both
to deny that well-documented violations occur in China, and to reassert
its position that China's domestic human rights record is an internal
affair not subject to outside action. In November 1991, the PRC State
Council issued a "Human Rights White Paper" that attempts, through a
variety of techniques ranging from propagandistic rhetoric to outright
distortion, to paint China as not only a leader in the guarantee of
economic and social rights for its citizens but as a country where the
criminal justice system, the policy toward religious believers and minority
groups and other policies fully protect human rights."1 This report was
followed by two similar reports on the treatment of prisoners and the
situation in Tibet.12
The approach taken by Premier Li Peng in his January
speech to the U.N. Security Council and by the Chinese delegation at the
past several sessions of the U.N. Commission on Human Rights was to
express a willingness for dialogue on human rights "on an equal footing"
and up to a certain point, but to reject any criticism of human rights
conditions in any country-including China's own practices in Tibet and
elsewhere-as "interference in internal affairs" and a violation of state
sovereignty. 13 The PRC continued to press this position at the June 1993
World Conference on Human Rights in Vienna. 4
The United States Response
Daily violations of human rights in China continue to evoke
condemnation and concern in the United States and elsewhere. Despite
concerted efforts by the PRC government to shed its pariah status, its human
rights record remains a prominent concern of U.S. policy and a barrier to
China's full partnership in the community of nations. When, for
example, Beijing launched a massive campaign to be selected as host of the
2000 Olympics, U.S. Senator Bill Bradley (D-N.J.) mobilized Senate
opposition,15 and the House overwhelmingly adopted a resolution urging
the U.S. member of the International Olympic Committee to deny
China's bid. 6 But while human rights pressure has elicited some
positive responses from Beijing, such as the periodic release of prominent
political prisoners, the international community's response to ongoing
violations in China has thus far been ineffective in ending broad patterns of
"Constructive Engagement"."The Bush Administration
This was notably true of the Bush Administration's policy of
renewing political and economic ties with the PRC that had been
suspended following the Tiananmen incident, relying on what it termed "a
constructive policy of engagement with China" to address human rights
concerns.17 Then Secretary of State James Baker was acting in
accordance with that policy when, in November 1991, he visited China. The
circumstances surrounding Secretary Baker's visit seemed to underline
the inadequacy of the Bush Administration's China policy. Flouting the
U.S. government's asserted concern for human rights, the Chinese
government detained two leading Chinese activists, Hou Xiaotian and
journalist Dai Qing, to prevent them from meeting with the Secretary or his
staff during their visit. Although Dai Qing was subsequently allowed to
travel to the United States, she was temporarily prevented from
reentering China when she sought to return home on May 30, 1992.18
While Secretary Baker raised human rights concerns during his
visit, he left with little in the way of concrete improvements to show for
his efforts. Although the Chinese government promised to stop exports
to the United States of prisoner-produced goods, it was subsequently
caught violating that pledge. 19 And while the government did produce a
promised accounting for some 800 political prisoners, it "provided just
the barest of information on each one, some of which has been proven
incorrect," according to congressional officials cited by The New York
Bush Administration officials acknowledged that Chinese
authorities made little progress in human rights in response to the
Administration's efforts, and, according to The New York Times, "have taken
actions that almost seemed designed to 'rub our noses init,' as one
official put it."2 Nonetheless, the policy of "constructive engagement" was
continued by President Bush through the end of his presidency.
2. Enforcement of Ban on ProductsProducedby Prisoners
The revelation in April 1991 that China was using prison labor on a
significant scale to generate export earnings was a major factor in
reviving attention, both in the United States and elsewhere, to China's
continuing violations of human rights. In the United States, this issue raised a
legal problem under the provisions of a 1930 statute, the Smoot-Hawley
Tariff Act, which prohibits the import into the United States of products
of convict labor,2 2 and provided an important focus of debate on
mostfavored-nation status for China's exports to the U.S. in the past two
years.2 3 Prompted by these revelations, the U.S. Customs
Administration initiated an investigation into the prison labor allegations. In the
course of this investigation, specific Chinese products known to be
produced with prison labor were barred from entering the United States.
In the wake of Secretary Baker's November 1991 visit to Beijing, it
was announced that the United States and China had reached basic
agreement on a memorandum of understanding that would allow the
U.S. Customs Service to make inspections in China to assure that
products being exported to the U.S. were not produced with prison labor. It
dents who will not be allowed to reenter China after traveling abroad. Kang Tieshang, Banishment
and Exile: New Tacticsfor Dealing with Dissidents, CHINA F., Mar. 30, 1993, at 5.
19 See Bush is Setting the Bloodhounds on BeUing, Bus. WEEK, Dec. 23, 1991, at 36.
20 Friedman, supra note 17, at A13. See also AsIA WATCH, HUMAN RIGHTS WATCH,
EVIDENCE OF CRACKDOWN ON LABOR MOVEMENT MouNTs (1992).
21 Friedman, supra note 17.
22 (Smoot-Hawley) Tariff Act of 1930, 19 U.S.C. § 1307 (1988).
23 See discussion infra part I.B.4.
took another nine months before the agreement was actually signed,
however, and in the period since then Chinese authorities have allowed
U.S. Customs officials limited access to a handful of prison factories,
vitiating the possibility of meaningfully monitoring compliance.24
During the Bush presidency Congress sought to invigorate U.S.
human rights policy toward China by imposing sanctions more stringent
than those adopted by the Administration.25 But President Bush
repeatedly thwarted these efforts by using his veto power to block key
legislation and by making liberal use of the presidential waiver authority built
into laws that Congress had enacted.26 Still, the very threat of legislated
sanctions elicited some human rights concessions from Beijing-notably
including the release of prominent political prisoners during key periods
of congressional debate-and concerned legislators helped maintain
public attention to human rights conditions in China. In larger perspective,
Congress' past efforts to fortify U.S. human rights policy toward China
laid the groundwork for a more constructive Executive policy under the
Clinton Administration, the basic contours of which are examined below.
Further, by forcing President Bush to justify his opposition, those
initiatives triggered a rich public debate about U.S. human rights policy
One of the most significant results of that debate has been a
reexamination of the relationship between human rights concerns and U.S. trade
policy. Congress has sought to promote human rights in China by
harnessing the potentially powerful leverage available by virtue of the
United States' importance to China as its major trading partner.
Inevitably, these efforts have drawn the U.S.-based business community into
public debate about U.S. human rights policy toward China, and that
community has emerged as a singularly important voice in the debate.
Most FavoredNation TradingStatus
The most visible and important congressional initiatives have
focused on the annual determination about renewal of the PRC's
mostfavored-nation (MFN) trading status, which gives China the lowest
possible tariffs on its exports to the United States.27 Several factors have
24 Mike Jendrzejczyk, No Waffling on China, WASH. PosT, Feb.
, at A13 (opinion
25 For analysis of those sanctions, see GETrNG DowN TO BUSINESS, supra note 1.
26 For discussion of the latter, see GFrING DowN TO BUSINESS, supra note 1.
27 Pursuant to a 1975 law, § 402 of the Trade Act of 1974, the President may not extend MFN
elevated the importance of MFN status in the overall debate about U.S.
policy toward the PRC. First, the granting of MEFN status is far and
away the most significant economic lever available to the U.S.
government to promote human rights in the PRC. The United States is China's
largest overseas market, giving China a surplus of some $18 billion in its
trade with the United States in 1992.28 The loss of MFN status would
thus have a substantial impact on China's exports. Second, the U.S.
business community regards continuation of China's MFN status as vital to
its own economic interests. In its view, China's MFN status is the
keystone of the U.S.-China economic relationship, and U.S. companies fear
that nonrenewal of that status would imperil their access to China's vast
and expanding market, as well as the continuation of investment and
other business opportunities in China. In consequence, the U.S. business
community has mobilized strong opposition to both congressional and
Executive efforts that could threaten continuation of China's MFN
status. Third, by law the President is required to notify Congress whether
he plans to renew China's MFN status on June 3 of each year-almost to
the day the anniversary of the massacre near Tiananmen Square.2 9 This
coincidence has, together with the first two factors, lent special
prominence to the annual debate over continuation of China's MFN status.
President Bush's Policy and Congressional Initiatives
In each year of his presidency following the Tiananmen incident,
President Bush notified Congress of his intention unconditionally to
renew China's MFN status. Each time, his stance triggered congressional
efforts to link renewal to human rights improvements in the PRC. But
while the resulting clash between Congress and the Executive focused
public attention on deficiencies in the Administration's China policy,
President Bush was able each year to secure unconditional renewal of
China's MFN status despite congressional opposition. In 1990, the
status to countries with non-market economies that deny their citizens "the right or opportunity to
emigrate." 19 U.S.C. § 2432 (commonly referred to as the Jackson-Vanik amendment to the Trade
Act of 1974). The President may waive this restriction if a waiver would "lead substantially to the
achievement of the objectives" of the law. The first provision of the law asserts that its object is "[t]o
assure the continued dedication of the United States to fundamental human rights," and MFN
determinations have sometimes taken into consideration human rights considerations unrelated to
emigration. Although China does not allow free emigration, the U.S. government has waived the
Jackson-Vanik restriction since 1980.
28 Daniel Southerland, Clinton Sending First TradeDelegation to China,WASH. POST, Feb. 27,
1993, at Cl.
29 The violent assault on pro-democracy activists in Beijing began on the night of June 3, 1989,
and continued through June 4. Most of the killings occurred on June 4, 1989, and the incident is now
widely referred to in China simply as "June 4."
House passed two bills, one denying China MFN status and the other
extending MFN until 1991, with renewal then conditioned on the
satisfaction of strong human rights standards. The Senate did not consider
either bill before adjourning. In 1991 and in the Spring of 1992, both the
House and Senate enacted legislation attaching human rights conditions
to renewal of China's MFN status. But the Senate version failed to
marshal enough votes to override a presidential veto, issued in keeping with
the Bush Administration's "constructive engagement" policy.
In the Summer of 1992, several congressional leaders sought to
break the MFN impasse by introducing refined versions of earlier
proposals to attach human rights conditions. Following President Bush's
announcement on June 2, 1992 that he planned to extend MFN status to
China for another year, a modified version of a proposal developed by the
human rights organization Asia Watch was introduced by Rep. Nancy
Pelosi (D.-California) and Rep. Don Pease (D.-Ohio) in the House of
Representatives and by Majority Leader George J. Mitchell (D.-Maine)
in the Senate. Each of these Congresspersons had been chief architects of
the conditional approach to MFN in the past. The initiative abandoned
the "all or nothing" approach built into existing MFN legislation, which
had forced Congress to choose between unconditional renewal of MFN
on the one hand and, on the other, non-renewal or renewal with
conditions that would apply across the board-requiring penalization of
China's reform-oriented privatizing economic sectors along with all
others. The legislation sought to impose measurable and effective human
rights conditions-the release of political prisoners, an end to religious
persecution, and the like. China's failure to meet such conditions would
result in the loss of MFN benefits only for exports of PRC state
enterprises, from which the repressive regime derives the most significant
Under these bills, exports that could be demonstrated to emanate
from non-state enterprises-private businesses, collectives, and
enterprises with foreign investment-would not lose the trade benefits. The
legislation thus sought to penalize the government for failing to improve
the human rights situation, while minimizing the risk of harming sectors
of China's economy and society that contribute to liberalization.
Significantly, too, this approach addressed one basis for opposition within the
30 Although economic authority in the PRC has become significantly diffused and products
whose export is monopolized by one particular state agency have diminished in number and in
percentage of China's trade, state enterprises at one level or another of the Chinese trade
structurewhether central or local-still account for a significant proportion of China's exports to the United
States and other countries. See generally NICHOLAS R. LARDY, FOREIGN TRADE AND ECONOMIC
REFORM IN CHINA, 1978-1990 (1992).
business community to earlier efforts to attach human rights conditions
to MFN renewal-the potential loss of tariff benefits for products
produced by joint ventures between U.S. and Chinese businesses. Like its
predecessors, this legislative initiative passed both the House and Senate
but failed in the Senate to override President Bush's September 28, 1992
veto by a margin of seven votes.31
On April 21, 1993, Congresswoman Pelosi and Senator Mitchell
introduced in the House and Senate, respectively, bills patterned on the
legislation they had introduced last year, with various technical
refinements. Under this legislation, failure by the PRC to meet specific human
rights conditions would result the following year in denial of MFN
treatment to Chinese state enterprise products. The proposed human rights
conditions included continued release of Chinese citizens detained as a
result of nonviolent expression of political and/or religious beliefs,
unrestricted immigration of PRC citizens desiring to leave China for
political, religious or other valid reasons, and compliance by China with the
August 7, 1992 Memorandum of Undertaking on Prohibiting Import and
Export Trade in Prison Labor Products.3 2
President Clinton's Executive Order
By the time these bills were introduced, a new Administration had
taken office. Although President Clinton had not yet made known what
action he would take on renewal of China's MFN status, it seemed likely
that he would reverse his predecessor's policy of unconditional renewal.
As a presidential candidate, Bill Clinton had indicated that he was likely
to support some form of human rights conditionality.3 3 During the early
months of the Clinton presidency, key members of his administration
repeatedly indicated the President's intention to link continued MFN
treatment to human rights improvements in China.34
On May 28, 1993, President Clinton issued an Executive Order that
continued China's MFN status for another year, but set forth human
rights conditions that China would have to satisfy to qualify for renewal
in 1994. The Executive Order identifies seven human rights criteria
relevant to the renewal determination. Only two are cast as absolute
requirements, and both of these criteria relate to preexisting requirements of
U.S. law. The first, that renewal "will substantially promote the freedom
of emigration objectives" of the Trade Act of 1974, in effect restates the
criterion for renewal of China's MFN status already imposed by that
law.35 The second, that "China is complying with the 1992 bilateral
agreement between the United States and China concerning prison
labor," by its terms incorporates a preexisting commitment, which in turn
implements the Smoot-Hawley law discussed in Part I.B.2. China is
required to demonstrate only "overall, significant progress" in meeting the
other five criteria, which relate to such goals as the release of political
prisoners and access of international humanitarian agencies to PRC
Against a recent history of assurance to Chinese leaders that,
whatever Congress may say or do, the U.S. President will stand by them,
the MFN conditionality imposed by President Clinton signals a serious
U.S. intention to demand meaningful human rights improvements in
exchange for continued trade privileges, despite the generality with which
the human rights conditions are expressed in the Order. At the same
time, the leader-to-leader approach also is better suited to the type of
flexibility that may be necessary in addressing the complex issues that are
sure to arise during implementation of a conditional MFN approach.
But if presidentially-mandated conditionality is preferable, it remains
desirable for Congress to sustain pressure to move the Administration
clearly in the direction to which the Executive Order points.36 Whether
the policy established in President Clinton's Order is effective will
depend, above all, on actions taken by the Administration in the months
ahead. In particular, the Administration should communicate to
Chinese authorities clear standards by which the PRC's compliance with the
Executive Order criteria will be evaluated, and should actively press for
progress in satisfying those standards. Further, as elaborated below, the
Executive Order opens a unique window of opportunity for the
Adminiswish to go forward on that basis, depending on events." Susumu Awanohara, ChinaConsensus, FAR
E. ECON. REv., Apr. 22, 1993, at 13.
35 See supra note 27.
36 Congress has made clear its support for President Clinton's initiative by overwhelmingly
voting against a bill that would have superseded the Executive Order and immediately terminated
China's MFN status. H.R.J. Res. 208, 103d Cong., 1st Sess. (1993).
tration to mobilize U.S. investors in China to act as a constructive force
for human rights progress.
c. The Role of the Business Community
While views within the business community have not been
monolithic, U.S. companies that invest in China have, on the whole, strongly
opposed efforts to attach human rights conditions to renewal of China's
MFN status. The loss of MFN status would directly affect some U.S.
companies engaged in joint venture operations in China, resulting in
some cases in a multi-fold increase in tariffs for joint-venture products
destined for a U.S. market. But the chief concern of U.S. companies is
that termination of China's MFN status would provoke retaliation
against U.S. companies that invest in and send exports to China. U.S.
companies have already experienced significant difficulties penetrating
the China market when faced with competition from exporters in Japan
and Europe, who enjoy a substantial advantage by virtue of their
governments' export-assistance programs and often more flexible pricing
policies. U.S. companies fear that political tension between China and the
United States could only exacerbate these endemic commercial problems.
Demonstrating a sophisticated grasp of the U.S. political process,
the PRC government exploited these apprehensions in the period
preceding President Clinton's decision about renewal of China's MFN status.
As the MFN debate approached, Chinese trade delegations went on a
buying frenzy throughout the United States, spending more than $800
million for jetliners, $160 million for cars, and $200 million for oil
exploration equipment. After years of favoring French and other
non-American telecommunications companies for entry into this key part of the
China market, the PRC concluded a major agreement with AT&T,
worth several billion dollars, for telecommunications equipment and
technology. China reached a tentative agreement with Hughes Space
Communications Co. to build communications satellites worth $750
million. Though characteristically frugal, Chinese representatives offered to
buy U.S. steel at slightly higher prices than those charged in Japan and
Korea."7 Throughout this process, China made it clear that it expected
U.S. companies to lobby for continuation of its MFN status in return for
its purchases. U.S. companies are "regularly threatened with
cancellation of orders or loss of future deals if China loses its preferred status,"
according to business sources cited in The Washington Post3. 8 The
Corporations and Human Rights
message was not lost on U.S. companies, who mounted a campaign of
unprecedented scope and intensity to secure unconditional renewal of
China's MFN status in the period leading up to President Clinton's
determination on this issue.
By letter dated May 12, 1993, some 370 companies and business
associations, representing virtually every U.S. company active in China,
stated their case to President Clinton:
...W. e represent companies that exported products to China worth nearly
$7.5 billion in 1992, and that employ an estimated 157,000 American
workers producing those goods. We represent the aerospace industry which
exported products to China worth over $2 billion in 1992, and which expects
China to purchase approximately $40 billion in new aircraft over the next
twenty years. We represent the farmers whose largest market for wheat is
China .... America's economic stake in maintaining trade relations with
China is high. Withdrawing or placing further conditions on MFN could
terminate the large potential benefits of the trading relationship, lead the
Chinese to engage in retaliatory actions that would harm U.S. exporters,
farmers, laborers and consumers. ... 39
But while emphasizing U.S. economic stakes, the signatories to this letter
endorsed the human rights goals of the Clinton Administration's policy
toward Beijing. Echoing arguments by spokesmen for business interests
that had become increasingly common during previous debates about
renewal of China's MFN status, they asserted:
We in the business community... believe that our continued commercial
interaction fuels positive elements for change in Chinese society. The
expansion of trade and free market reforms has strengthened the
pro-democratic forces in China ....40
Significantly, the letter expressed agreement with the President "that the
Chinese must continue to make progress in... human rights. '4 1
However much the business community may have hoped to avoid
MFN conditionality, it now has a substantial interest in assuring that
China makes sufficient progress on human rights to avoid termination of
its MFN status in 1994. In this setting, U.S. policy would be most
effective if the political leadership in Washington actively encouraged U.S.
investors in China to promote human rights there. The Administration
should build on the asserted commitment to its human rights goals
expressed in the above-quoted letter by urging the signatories actively to
promote human rights progress in China. While some Administration
39 Letter from Business Coalition for U.S.-China Trade to President Bill Clinton (May 12, 1993),
40 Id. at 1.
Northwestern Journal of
International Law & Business
officials have already done so in general terms,4 2 these efforts would be
most effective if those same officials developed concrete proposals for
measures that U.S. companies can take to promote human rights in
China, and urged the chief executive officers of major U.S. investors to
undertake those measures or others more suited to the nature of their
business relationships in the PRC.
Code of Conduct Legislation
While MFN conditionality has dominated the U.S. human rights
policy debate about China, a little-noticed legislative initiative has
introduced a new, and potentially vital, plank in the policy options. Senator
Edward Kennedy (D-Massachusetts) and Representative Jolene Unsoeld
(D-Washington) have agreed to sponsor bills, in the Senate and House
respectively, to establish a voluntary code of conduct governing the
Chinese operations of U.S. companies. By directly focusing on the role of
U.S. corporations in addressing human rights concerns in China, this
legislation sharpens the broader debate about corporate responsibility
vis-avis human rights violations in the PRC.
The Kennedy and Unsoeld initiatives build upon a similar effort by
then-Congressman John Miller (R.-Washington), who on June 21, 1991,
introduced legislation4 3 that would have established a set of human
rights principles governing the conduct of U.S. companies with
investments and other business operations in the PRC. On October 30, 1991,
the bill passed the House as part of the Omnibus Export Amendment
Act of 1991 and was subsequently taken up in a joint House-Senate
conference. A conference bill passed the Senate on October 8, 1992, but
failed to come to a vote in the House for reasons unrelated to the code of
conduct itself. The discussion that follows is based upon the original
The proposed code-of-conduct bill does not seek to impose sanctions
on China for failing to meet human rights standards, nor does it
discourage U.S. businesses from investing in China. Instead, the bill asks
companies with a significant presence in China to adhere to a set of basic
human rights principles, on a "best efforts" basis, in the course of their
In this way, the proposed law seeks to assure that U.S. business
activities in the PRC do not inadvertently encourage or themselves
contribute to repressive practices, but instead make a constructive contribution
to human rights. Under the proposed law, these goals would be
promoted by encouraging U.S. nationals conducting industrial cooperation
projects in China to adhere to nine principles that have the cumulative
effect of (1) assuring that U.S. businesses operating in China extend to
their foreign employees the same type of minimum human rights
protections that they have long been required to provide to employees in the
United States, such as protections against discrimination on the basis of
religious beliefs, political views, gender and ethnic or national
background; (2) assuring that the premises of U.S. business operations are not
used in a fashion that violates fundamental rights (for example, the
proposed code of conduct includes a pledge to discourage compulsory
political indoctrination programs from taking place on the premises of U.S.
nationals' industrial cooperation projects in the PRC); and (3) bringing
the considerable-and indeed unique-influence of the U.S. business
community to bear to promote an end to flagrant violations of human
rights (for example, the proposed code of conduct urges U.S. nationals to
use their access to Chinese officials informally to raise cases of
individuals detained solely because of their nonviolent expression of political
There are no penalties for failure to comply with the principles, and
in this respect compliance with the code depends upon the voluntary
efforts of U.S. companies. The bill itself is framed as a "sense of Congress
45 Somewhat analogous codes have been developed to promote human rights in other countries.
The best known of these are the Sullivan Principles for businesses operating in South Africa. First
developed in 1977 and subsequently amplified, the Sullivan Principles were for many years adopted
by corporations on a voluntary basis. In 1985, President Reagan issued an executive order that
included a provision forbidding U.S. export assistance to any U.S. firm with 25 or more employees
that had not adopted the principles enumerated in the Sullivan code. The Anti-Apartheid Act of
1986, which superseded President Reagan's executive order, incorporated the Sullivan Principles by,
interalia, requiring "[a]ny national of the United States that employs more than 25 persons in South
Africa [to] take the necessary steps to insure that the Code ofConduct [based on the Sullivan
Principles] is implemented with respect to the employment of those persons." Comprehensive
AntiApartheid Act of 1986 § 207(a), 22 U.S.C. § 5034(a) (1988). Another precedent is the MacBride
Principles, which set forth employment standards for companies operating in Northern Ireland. A
number of city and state governments have enacted laws supporting the MacBride Principles (by, for
example, threatening to bar firms that do not adhere to the Principles from city contracts).
that any United States economic cooperation project in the People's
Republic of China or Tibet should adhere to." "Adherence" is defined as
"agreeing to implement the principles set forth" in the bill,
"implementing those principles by taking good faith measures with respect to each
such principle," and "reporting accurately to the Department of State on
the measures taken to implement those principles."
The bill imposes only two "requirements" on U.S. companies: 1) the
U.S. parent company of a PRC investment project must register with the
Secretary of State and indicate whether it will implement the principles;
and 2) the parent company must report on an annual basis to the
Department of State describing the China project's adherence to the code. The
Secretary of State is directed to review these reports to determine
whether the project is adhering to the principles, and may request
additional information to supplement company reports. The Secretary is
further required to submit an annual report to Congress and the Secretariat
of the Organization for Economic Cooperation and Development
(OECD) describing the level of adherence to the principles by U.S.
company projects in China.'
The code-of-conduct bill sets forth a constructive approach to what
has often seemed an intractable problem of competing policy goals. In
effect, the bill takes up the claim of the U.S. business community,
repeatedly asserted in the context of annual debates over renewal of China's
MFN status, that U.S. corporations can more effectively promote human
rights improvements in China by remaining an active presence there than
by severing or contracting ties. By encouraging U.S. corporations to
adhere to basic human rights principles in China, the proposed law seeks to
assure that U.S. investment does in fact have a constructive impact on
human rights in China. At the same time, the bill would assure that U.S.
investment in China does not undermine U.S. human rights goals by
inadvertently lending support to the PRC government's ongoing violations
of fundamental rights.
Nevertheless, while some members of the U.S. business community
have expressed support for the principles established in the legislation,
many others have spoken out against it. The critics have raised two
principal objections. The first, in essence, is that Congress should not dictate
business practices to U.S. companies operating in China, and that the
latter should not appear to be the "lackeys" of U.S. policy. According to
one press account, a letter to U.S. Congresspersons from the American
46 The Secretary is also directed to encourage OECD nations to promote similar principles. An
international approach to business efforts on human rights is essential if such efforts are to achieve
meaningful success. See discussion infra part III.C.
Reebok International Ltd. adopted a human rights policy that
responded to specific concerns raised by the human rights situation in
China, and subsequently adopted a more comprehensive set of human
rights principles governing workplace conditions in all of its overseas
operations, including those in China. 2 1 The first policy, adopted in
November 1990, provided:
1. Reebok will not operate under martial law conditions or allow any
military presence on its premises.
2. Reebok encourages free association and assembly among its employees.
3. Reebok will seek to ensure that opportunities for advancement are
based on initiative, leadership and contributions to the business, not
political beliefs. Further, no one is to be dismissed from working at its factories
for political views or non-violent involvement.
4. Reebok will seek to prevent compulsory political indoctrination
programs from taking place on its premises.
5. Reebok reafflirms that it deplores the use of force against human rights.
Like Reebok International Ltd. and Levi Strauss & Co., both
Phillips-Van Heusen and the Timberland Company have developed ethical
guidelines governing their relations with suppliers, contractors and
business partners.12 2 Timberland's policy further bans the company from
pursuing altogether business relations in a country "where basic human
rights are pervasively violated." Although Timberland's human rights
policy governs all of its overseas business relationships, the policy's
development was driven by the company's desire to address issues raised by
China in particular. In February 1993, Timberland decided to begin a
gradual termination of its sourcing from China, a process it plans to
complete by the end of 1993.
Variations among these three policies reflect each company's unique
corporate values. All, however, do incorporate
internationally-recognized human rights standards, and seek to assure that the companies'
investment practices conform to those standards.
UNIVERSAL HUMAN RIGHTS PRINCIPLES FOR TRANSNATIONAL
As noted in Part II.B, international law provides objective standards
for determining the human rights responsibilities of transnational
corporations. We now turn to that law for guidance in identifying
universally121 Those standards, adopted in December 1992, are set forth in Appendix B.
122 The human rights provisions of Phillips-Van Heusen's policy are set forth in Appendix C.
Although Timberland has already begun to apply its policy, it has not, as of this writing, adopted its
policy in final form. The company is expected to have done so by the time this article is published;
copies of the policy will be available from the Office of Legal Counsel of the Timberland Company.
relevant human rights principles for transnational corporations. Our
analysis in the next section focuses on an area of international law that is
particularly pertinent to conditions over which transnational investors
often have substantial control-workplace conditions in their overseas
operations and in the facilities of their business partners. As we have
noted elsewhere, however, the canvass of appropriate human rights
concerns of transnational corporations is considerably broader than the
A. International Human Rights Law
International law has protected a core set of universally-recognized
human rights since World War II. Those rights, and states' duty to
respect them, are recognized in the Charter of the United Nations 123 and
have been elaborated in numerous international instruments since 1948.
Although international law protecting human rights was "born in,
and out of the Second World War," it had several pre-war
antecedents, 24 including international law protecting various workers' rights.
While that law dates back at least to early 19th Century protections
against slavery, the foundation of most contemporary international
standards protecting rights of workers is the 1919 Treaty of Versailles, which
asserted that the signatories would "endeavor to secure and maintain fair
and humane conditions of labor for men, women, and children, both in
their own countries and in all countries to which their commercial and
industrial nations extend.. ."125 The treaty also established the
International Labour Organisation (ILO), a tripartite organization comprising
governments and representatives of employers and workers, which has
established and monitored compliance with a broad array of labor
standards. The ILO has promulgated some 170 international conventions
elaborating labor standards, and members of the ILO are automatically
bound to respect the core principles of freedom of association.1 26
Basic workers' rights have also been incorporated in various
international human rights instruments, such as the Universal Declaration of
Human Rights, the International Covenant on Civil and Political Rights,
and the International Covenant on Economic, Social and Cultural
Rights, which collectively are considered the international equivalent of
123 See, eg., U.N. CHARTER, supra note 48, at arts. 55-56.
124 Louis Henkin, Introduction to THE INTERNATIONAL BILL OF RIGHTS: THE COVENANT ON
CIVIL AND POLITICAL RIGHTS 5 (Louis Henkin ed. 1981).
125 See BUREAU OF INT'L LABOR AFFAIRS, U.S. DEP'T OF LABOR, WORKER RIGHTS IN U.S.
POLICY 2 (1991).
126 See id.
the U.S. Bill of Rights. Over the course of the past decade, moreover, the
United States has adopted a range of laws that incorporate these
international standards into U.S. trade policy.
For example, in 1983 Congress passed the Caribbean Basin
Economic Recovery Act,1 27 which establishes a system for designating
certain Caribbean countries that are eligible for duty-free benefits in their
exports to the United States. The law directs the President, when
determining a country's eligibility, to "take into account the degree to which
workers in such country are afforded reasonable workplace conditions
and enjoy the right to organize and bargain collectively. '"12 8
In 1984 Congress enacted a law12 9 that incorporated workers rights
criteria in the General System of Preferences (GSP) program initiated in
1974.130 That program authorizes the President to grant duty-free
treatment to eligible imports from certain developing countries. The GSP law
conditions duty-free treatment to otherwise eligible imports on whether
the exporting country whether a country "has taken or is taking steps to
afford to workers in that country (including any designated zone in that
country) internationally recognized worker rights." Drawing on
ILOestablished standards, the GSP law defines "internationally recognized
worker rights" to include:
1) the right of association;
2) the right to organize and bargain collectively;
3) a prohibition on the use of any form of forced or compulsory labor;
4) a minimum age for the employment of children; and
5) acceptable conditions of work with respect to minimum wages, hours of
work, and occupational safety and health.
As this and other legislation tying U.S. trade privileges to worker
rights suggest, international law establishes a core set of
universally-protected labor rights, and those rights can be fully protected only through
international cooperation in enforcement. And as our previous analysis
suggests, a key component of an effective international strategy for
protecting workers' rights is adherence by multinational corporations to
minimum standards. In the following section we propose a set of
princi127 Caribbean Basin Economic Recovery Act, Pub. L. No. 98-67, 97 Stat. 384 (codified at 19
U.S.C. §§ 2071-2706 (1988)).
128 Subsequent legislation, the Caribbean Basin Economic Recovery Act, made workers rights
criteria mandatory. 19 U.S.C. § 2702(c)(8) (1988).
129 Title V of the Trade and Tariff Act of 1984, the Generalized System of Preferences Renewal
Act of 1984, Pub. L. No. 98-573, § 501, 98 Stat. 2948, 3018 (codified as note to 19 U.S.C. § 2461
130 Trade Act of 1974, Pub. L. No. 93-618, § 501, 88 Stat. 1978, 2066 (codified at 19 U.S.C.
§ 2461 (1988)).
pies that identify such minimum standards, drawing on relevant
Universal Human Rights Principles for Transnational
Adherence to the following proposed principles would help assure
that the employment practices of overseas production facilities owned or
utilized by transnational companies comport with
internationally-recognized human rights, particularly workers' rights:
Proposed Principles for Transnational Companies
Corporations with direct investments in other countries shall uphold the
following principles in their overseas production facilities, and
transnational companies also shall select business partners, including contractors,
subcontractors and suppliers, who share their commitment to these
1. SAFE AND HEALTHY WORK ENVIRONMENT: The production facilities
owned or utilized by transnational companies shall assure employees a safe
and healthy workplace. Employees shall not be exposed to hazardous
2. NON-DISCRIMINATION: The production facilities owned or utilized by
transnational companies shall not discriminate in hiring and employment
practices on such grounds as race, color, national origin, gender, sexual
orientation, religion or other belief, or political or other opinion.
3. FAIR WAGES: The production facilities owned or utilized by
transnational companies shall pay wages that support the basic needs of workers
and their families. In no case shall they pay less than the minimum wage
required by local law.
4. WORKING HouRs AND OVERTIME: In general, the production facilities
owned or utilized by transnational companies should not require employees
to work more than 48 hours per week, except for voluntary and
appropriately compensated overtime, and should allow employees one day off each
week. Employees shall not work in excess of the maximum hours permitted
by local law.
5. CHILD LABOR: The production facilities owned or utilized by
transnational companies shall not use child labor. "Child" generally refers to
persons who are less than 14 years of age, or younger than the age for
completing compulsory education if that age is higher than 14. In countries
where the law defines "child" to include individuals who are older than 14,
business investors should apply that definition.
6. CONVICT OR FORCED LABOR: The production facilities owned or
utilized by transnational companies shall not permit the use of forced or
compulsory labor, or labor by persons who are detained or imprisoned, in the
manufacture of its products. Such companies should undertake affirmative
measures, such as on-site inspection of production facilities, to assure that
they do not manufacture or purchase materials that were produced by
forced or prison labor, and should terminate business relationships with any
sources found to utilize such labor.
7. FREEDOM OF ASSOCIATION: The production facilities owned or
utilized by transnational companies shall respect the right of employees to
establish and join organizations of their own choosing, without previous
authorization. Such companies should attempt to assure that no employee
is dismissed from a facility that produces their products or is otherwise
penalized because of his or her non-violent exercise of the right of
8. TRADE UNION RIGHTS: The overseas production facilities owned or
utilized by transnational companies shall respect the right of all employees
to organize and bargain collectively.
9. MILITARY PRESENCE ON PREMISES OF PRODUCTION FACILITIES:
Companies that own or utilize overseas production facilities should oppose
any military effort to suppress internationally-protected labor activities of
the facilities' employees.
Each of these proposed principles is based upon well-established
international legal standards.
SAFE AND HEALTHY WORK ENVIRONMENT: The ILO has adopted
a number of recommendations and standards on specific health and
safety risks, some dating back to 1919. The broadest set of standards is
set forth in Convention No. 155 (Occupational Safety and Health and the
Working Environment, 1981), which aims at the establishment of a
national policy on occupational safety, occupational health and the work
environment that would prevent work-related accidents and injury to
health by minimizing hazards in the working environment. 3 1 The
convention calls for an inspection system,13 2 provision by employers of
protective clothing and equipment,1 3 and protection for workers who
remove themselves from work situations to avoid serious dangers to their
lives or health.134 The right to "[s]afe and healthy working conditions"
is also recognized in the International Covenant on Economic, Social and
NON-DISCRIMINATION: The right to non-discrimination is a
bedrock principle of international human rights law. All of the guarantees
set forth in the International Covenant on Economic, Social and Cultural
Rights, including those that pertain to employment, 136 are subject to a
general guarantee of non-discrimination.13 7 In addition, a number of
131 2 INTERNATIONAL LABOUR CONVENTIONS AND RECOMMENDATIONS, Convention No. 155,
OccupationalSafety and Health Convention, 1981, art. 4, at 1230-
31, ILO (1992
132 Id. art. 9, at 1232.
133 Id. art. 16(3), at 1234.
134 Id. art. 13, at 1233.
135 InternationalCovenanton Economic,Social and CulturalRights,G.A. Res. 2200, art. 7, U.N.
GAOR, 21st Sess., Supp. No. 16, at 50, U.N. Doc. A/6316 (1966) (adopted Dec. 16, 1966 and
enteredintoforce Jan. 3, 1976) [hereinafter ICESCR].
136 Id. arts. 7-8.
137 Id. art. 2(2).
ILO instruments recognize the right to non-discrimination in
employment matters. For example a 1949 Recommendation concerning Labour
Clauses in Public Contracts provides: "It shall be an aim of policy to
abolish all discrimination among workers on grounds of race, colour, sex,
belief, tribal association or trade union affiliation in respect of" various
specified aspects of employment.
FAIR WAGES: Of the various ILO conventions relating to wages, the
most important one on minimum wages is the 1970 Convention
concerning Minimum Wage Fixing, with Special Reference to Developing
Countries.1 38 Article 3 states that the elements that States Parties should take
into consideration in determining the level of minimum wages shall, so
far as possible and appropriate in relation to national practice and
(a) the needs of workers and their families, taking into account the general
level of wages in the country, the cost of living, social security benefits, and
relative standards of other social groups; and
(b) economic factors, including the requirements of economic
development, levels of productivity and the desirability of attaining and
maintaining a high level of employment. 139
The ILO's Recommendation No. 135, also adopted in 1970, provides in
3. In determining the level of minimum wages, account should be taken of
the following criteria, amongst others:
(a) the needs of workers and their families;
(b) the general level of wages in the country;
(c) the cost of living and changes therein;
(d) social security benefits;
(e) economic factors, including the requirements of economic development,
levels of productivity and the desirability of attaining and maintaining a
high level of employment. '4
WORKING HouRs: The first ILO convention, adopted in 1919,
established a general rule, subject to various specific exceptions, limiting
the hours of work in industry to eight per day and no more than
forty138 ILO, Convention No. 131, Minimum Wage FixingConvention, 1970, supra note 131, at 949.
139 Id. art. 3, at 950; Article 23(3) of the Universal Declaration of Human Rights also recognizes
a right to fair wages: "Everyone who works has the right to just and favourable remuneration
ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary,
by other means of social protection." Universal Declaration ofHuman Rights, art. 23(3), supranote
48, at 75. Article 7 of the International Covenant on Economic, Social, and Cultural Rights also
recognizes, as part of the right to the "enjoyment ofjust and favourable conditions of work,"
remuneration that provides workers, "at a minimum," with "[flair wages" and "[a] decent living for
themselves and their families." ICESCR, art. 7, supra note 135, at 50.
140 ILO, Recommendation No. 135, Minimum Wage FixingRecommendation, 1970, supra note
131, at 949.
eight per week. 14 1 Convention No. 14, adopted in 1921, provides that
workers employed in industry should have at least twenty-four
consecutive hours of rest in every seven-day period. 4 2 (Like other general rules
established by ILO conventions, this one admits of some possible
exceptions.) The right to reasonable working hours is also recognized in
general human rights instruments. For example Article 24 of the Universal
Declaration of Human Rights 143 provides: "Everyone has the right to
rest and leisure, including reasonable limitation of working hours and
periodic holidays with pay." Virtually every country's law recognizes a
forty-eight hour work week (not including overtime). 1"
CHILD LABOR: The ILO adopted several conventions designed to
protect child workers in the 1930s and 40s, but its most comprehensive
convention on youth employment, Convention No. 138, was adopted in
1973. That convention provides that the minimum age for employment
"shall not be less than the age of completion of compulsory schooling
and, in any case, shall not be less than 15 years."' 14 But the convention
goes on to say that an underdeveloped country may, after consulting
with the ILO, initially set the minimum age at 14.146 There are a few
other variations, such as a minimum age of 18 for dangerous work (or 16
under specified conditions); an exception allowing apprenticeship
training for children at least 14 years old; and an exception for light work for
children between 13 and 15 (or at least 12 in countries where the
minimum age is 14). 147
CONVICT OR FORCED LABOR: ILO Convention No. 29, which was
adopted in 1930, aimed at the suppression of forced or compulsory labor
"within the shortest possible period."' 48 The convention defines "forced
or compulsory labour" as "all work or service which is exacted from any
141 1 INTERNATIONAL LABOUR CONVENTION AND RECOMMENDATIONS, Convention No. 1,
Hoursof Work (Industry)Convention, 1919, at 1.
142 ILO, Convention No. 14, Weekly Rest (Industry)Convention, 1921, art. 2(1), supranote 141,
143 UniversalDeclarationof Human Rights, art. 24, supra note 48, at 75.
144 Chinese law recognizes the concept of overtime, though it generally provides for more
favorable remuneration for overtime work for workers in foreign investment enterprises than for
those working in purely Chinese companies. China is party to at least 16 ILO conventions.
145 ILO, Convention No. 138, Minimum Age Convention, 1973, art. 2(3), supranote 131, at 1031.
146 ILO, Convention No. 138, Minimum Age Convention, 1973, art. 2(4), supranote 131, at 1031.
147 China is a party to ILO Convention No. 59, which fixes the minimum age for children in
industrial employment. That convention establishes a general minimum age of 15, subject to several
exceptions (such as a higher age for dangerous work; exceptions for work done in technical schools
and work in family businesses). ILO, Convention No. 59, Minimum Age (Industry) Convention
(Revised), 1937, supra note 141, at 240.
148 1 INTERNATIONAL LABOUR CONVENTION AND RECOMMENDATIONS, Convention No. 29,
Forced LabourConvention, 1930, art. 1(1), at 115.
person under the menace of penalty and for which the said person has
not offered himself voluntarily."' 14 9 The convention identifies
circumstances that are not considered "forced or compulsory labour," including
"work or service exacted from any person as a consequence of a
conviction in a court of law, provided that the said work or service is carried
out under the supervision and control of a public authority and that the
said person is not hired to or placed at the disposal of private individuals,
companies or associations."' 15 0 Further, the convention specifically
provides that the competent state authority "shall not... permit the
imposition of forced or compulsory labour for the benefit of private individuals,
companies or associations." ' Any forced or compulsory labor for such
individuals/companies/associations is to be suppressed completely and
immediately.1 52 Although Convention No. 29 does not prohibit forced/
compulsory labor by convicted prisoners working under the supervision
of a public authority, a 1930 U.S. law, the Smoot-Hawley Tariff Act
discussed in part I.B.2, prohibits the importation into the United States of
goods produced in whole or part by "convict labor" as well as "forced
labor or/and indentured labor under penal sanctions."1'53 ILO
Convention No. 105, adopted in 1957, sets forth an outright prohibition of
forced or compulsory labor in five specified circumstances.
FREEDOM OF ASSOCIATION AND THE RIGHT TO ORGANIZE AND
BARGAIN COLLECTIVELY: These two principles are considered the
bedrock of international workers' rights,15 4 and are protected by ILO
Conventions No. 87 (1948) and No. 98 (1949) respectively. The proposed
principle on the right of association tracks the pertinent language of ILO
Convention No. 87. These two rights are also recognized in the
Universal Declaration of Human Rights 155; the International Covenant on Civil
and Political Rights156 ; and the International Covenant on Economic,
Social and Cultural Rights. 157 The final recommended principle,
assert149 Id. art. 2(1), at 115.
150 Id. art. 2(2)(c), at 116.
151 Id. art. 4(1), at 116.
152 Id. art. 4(2), at 116.
153 19 U.S.C. § 1307 (1989).
154 See WORKER RIGHTS IN U.S. POLICY, supra note 125, at 4 ("The most fundamental of all
worker rights [are] the right to freedom of association... and the right to organize and bargain
155 UniversalDeclarationof Human Rights, art. 20, supra note 48, at 75 (right of association); id.
art. 23 ("right to form and to join trade unions for the protection of [one's] interests").
156 ICCPR, art. 22(1), supra note 48, at 55 (right to "freedom of association with others,
including the right to form and join trade unions for the protection of [one's] interests").
157 ICESCR, art. 8, supranote 135, at 50 (right to form trade unions and join trade union ofone's
choice; right of trade unions to function freely).
ing opposition to military efforts to suppress labor activities, is a specific
assertion of these general principles.
Finally, the recommended provisions asserting support for workers'
rights to freedom of association and the right to form and join trade
unions would open the door to the possibility of companies intervening with
their contacts in a host government on behalf of employees who were,
e.g., detained and/or tortured because of their non-violent participation
in a study group, whether or not the violation occurred on the premises
of the companies' production facilities.
If the principles proposed in section B have a solid foundation in
international law, they still have scant support in international
practiceat least in the sense of universal compliance by multinational
corporations with these standards. Indeed, as noted earlier the globalization of
labor markets has, at least in some areas, served to drive down wage
levels and to that extent has undermined international assurances of
adequate pay. Thus, any meaningful effort to promote adherence to global
principles along the lines suggested above would require coordination
among companies from major investing nations.
The most appropriate forum for such coordination may be the
Group of Seven Major Industrialized Democracies (G-7), whose
members include Japan, Canada and the major industrialized democracies of
Western Europe as well as the United States. The authors believe that
the United States government should take the lead in urging other G-7
countries to agree to promote corporate adherence to international
human rights standards along the lines outlined in section B-and,
indeed, to utilize all appropriate multilateral fora to promote such
coordinated efforts. 158
In particular, it is critically important to bring Japan along in any
coordinated effort to apply human rights standards to investment in
China. Japan, with the United States, is among the PRC's top few
trading and investment partners, and U.S. companies are often in tight
competition with their Japanese counterparts for the same contracts in the
PRC. Japan's adherence to a set of human rights principles is thus
clearly crucial. The United States should add this issue to the list of
trade issues it is currently discussing with Tokyo. In this regard, it is
relevant to note that in 1992 the Japanese government adopted new
prin158 As previously noted, the code-of-conduct legislation sponsored by Senator Kennedy and
Representative Unsoeld, respectively, directs the U.S. Secretary of State to encourage OECD nations to
promote similar principles for companies that invest in China.
ciples, which include a reference to human rights considerations, in its
overseas development aid program.15 9
To Invest or Not?
The proposals advanced in the preceding two sections seek to give
substance to the general principle that corporations must assure that
their own investment practices overseas do not contravene
internationally-recognized human rights. To the extent that the principles proposed
in section B assume that corporations have already undertaken overseas
investments, they beg the hard question whether there are situations in
which corporations should, on human rights grounds, avoid altogether
investing in a country.
Adherence to the principles proposed in section B would diminish
the significance of this issue by seeking to assure that foreign companies'
presence in a repressive country does not contribute to human rights
violations and potentially contributes to improvement. Still, there may be
times when foreign investment in itself contributes to violations, if only
by bolstering a highly repressive regime that might otherwise be more
responsive to internal or external pressures to ameliorate violations.
Moreover potential investors may in some cases be able to exert
considerable positive influence on a government if they make it known that their
investment determination will turn, in part, on human rights conditions.
Accordingly if, as we have suggested, transnational companies' business
decisions and practices should be guided by the principle that their
conduct should not contribute to human rights violations and their influence
should be harnessed on behalf of human rights, it surely is appropriate
for companies to consider whether contemplated business decisions will
have an impact on human rights conditions.
The approach taken by Levi Strauss & Co. serves as a useful model
in this regard. As noted in part II.B., Levi Strauss & Co. has adopted a
policy pursuant to which it will not "initiate or renew contractual
relationships in countries where there are pervasive violations of basic
human rights," and has determined that this standard is a bar to
investment in both China and Myanmar (Burma)."6 At the same time, Levi
Strauss & Co.'s "Business Partner Terms of Engagement" help assure
that its operations in countries that have human rights problems-albeit
159 Jendrzejczyk, supra note 24. For discussion of Japanese companies' role in undermining
international sanctions imposed in the wake of the Tiananmen incident, see INT'L LEAGUE FOR
HUMAN RIGHTS, BUSINESS AS USUAL.. .?: THE INTERNATIONAL RESPONSE TO HUMAN RIGHTS
VIOLATIONS IN CHINA (1991).
160 See supra note 120 and accompanying text.
not rising to the level of "pervasive violations of basic human
rights"do not contribute to violations, and instead help raise the level of
enjoyment of basic rights in host countries. As noted in part II.B., Levi
Strauss & Co. has effectively applied the latter criteria to elicit
meaningful reforms in the employment practices of a number of business
Levi Strauss & Co.'s approach is based on the sound premise that a
company's leverage to promote human rights is maximized when it
combines a credible threat that it will terminate business relations either in a
country or with individual business partners with identifiable criteria for
non-termination, new investment, or contractual arrangements. Critical
to the success of such a policy is Levi Strauss & Co.'s determination to
identify specific conditions that must be satisfied-whether by a potential
business partner or a country-to qualify for investment or business
Levi Strauss & Co.'s adoption of standards governing both
engagement with individual business partners and investment in countries is a
sophisticated approach to the vexing issue whether a company should
invest at all in a repressive country. The Levi Strauss & Co. policy
moves in a constructive fashion away from the "all or nothing" approach
that has long characterized public debate about transnational investors'
responsibilities vis-a-vis repressive governments. Total withdrawal from
business and investment is reserved under this approach for countries
where, in the company's estimation, "pervasive violations of basic human
rights" make it impossible for Levi Strauss & Co. to play a constructive
human rights role by investing there. The two-track approach embodied
in Levi Strauss & Co.'s policy clearly has the potential to maximize its
leverage to promote constructive change, while allowing the company
appropriate flexibility to respond appropriately and effectively to myriad
variations in relevant conditions.
Tailoring Corporate Initiatives to the Host Country Situation
While the proposals advanced in previous sections are universally
relevant, meaningful efforts to implement them will require that
transnational investors adopt policies that are responsive to the peculiar
problems of individual countries. 162 With this in mind, we offer the
fol161 See supra note 120.
162 The approach taken by Levi Strauss & Co. in implementing its ethical code exemplifies this
recommendation. When the company decides to withdraw from a country that engages in
"pervasive violations of basic human rights," it identifies concrete human rights reforms that must be made
before it will reverse its decision. Those criteria are based upon a detailed analysis by corporate staff
lowing recommendations for companies that invest in China.
Endorse and Adhere to China Code of Conduct
We believe that the human rights principles set forth in the
code-ofconduct legislation described in part I.B.5 represent minimum standards
for U.S. and other foreign companies operating in China. Accordingly,
we urge companies voluntarily to adhere to those principles, regardless of
whether the legislation is enacted into law. The effectiveness of corporate
adherence to these principles would be maximized if companies publicly
acknowledged their adherence.
We also believe that these principles would be most effective if they
were adopted by the American Chambers of Commerce in Hong Kong,
Beijing, and Shanghai and the Washington-based U.S.-China Business
Council to govern the activities of their member companies in China.
The endorsement of human rights principles by these organizations
would carry crucial significance both within the business community
itself and with the Chinese government. Further, their adoption by the
above-named organizations would expand the impact of the principles,
since membership in these organizations is not entirely coextensive with
corporations covered by the code-of-conduct legislation (principally
because of de minimis limitations on investments covered by the legislation
and similar jurisdictional provisions).
Assure Compliance with Code-of-Conduct Through Monitoringby
Each of the professional organizations noted under our first
recommendation should establish a human rights committee to oversee
implementation by member companies of the code of conduct, as well as other
human rights activities by companies. In the latter regard, these
committees should act in a ombudsman's role to provide advice and counsel to
companies that encounter human rights problems in their operations or
need help in reaching relevant Chinese officials to discuss human rights,
and generally should act as a clearing house for information and sharing
of relevant experiences among member companies.
Member companies should be required to file with the associations'
human rights committees annual reports describing their compliance
with the principles endorsed by each organization. These reports would
in many cases be the same as those to be submitted to the State
Departof the chief human rights concerns in the relevant country. Similarly, Levi Strauss & Co. identifies
concrete human rights goals that it will attempt to promote in countries where it maintains an
investment despite human rights problems.
ment under the code-of-conduct bill described in part I.B.5. In addition,
member companies should be encouraged to submit, on an ongoing basis,
reports describing particular problems or successes encountered in the
course of their efforts to promote human rights, whether or not relevant
to specific principles set forth in a code of conduct. Such reports would
enable the human rights committees to consolidate experience and
establish a data base of precedents that could be drawn upon in assisting
member companies to deal effectively with human rights issues in their China
Work for Release of PoliticalPrisoners
As indicated in part I.B.5.(8), we believe that companies could play
a particularly constructive role in securing the release of persons detained
solely because of peaceful political activities. We recommend that
foreign companies operating in China "adopt" the cases of political
prisoners held in the regions in which the companies' China operations are
most substantial. When, for example, senior executives of major U.S.
investors visit China, they should raise these cases in the course of their
meetings with high-level officials in Beijing.
A few examples of situations in which U.S. companies active in
China could exert their influence suggests both the magnitude of human
rights violations in the PRC and the considerable impact that the
business community could have in addressing them. The U.S. automobile
industry has been among the most active investors in the PRC, providing
China with badly needed capital, technology and management expertise
to upgrade the country's moribund vehicle production industry for both
commercial and industrial use. The Chrysler Corporation, for example,
has an important cooperative project in Changchun, Jilin Province, often
referred to as the "Detroit of China." In that city, Tang Yuanjuan, an
assistant engineer at an automobile plant, was sentenced to 20 years'
imprisonment in November 1990 for "counterrevolution" as a result of his
activities in support of the 1989 democracy movement.1 63
General Motors has concluded a major investment project in
Liaoning Province in northeast China, a province whose Lingyuan labor
camp has been particularly notorious for the number of political
prisoners held there and for its abysmal living and working conditions. One
resident of the camp, Liu Gang, one of the 1989 student leaders, was
reported to have had his arm broken by jail warders and to have been
force-fed when he attempted to go on a hunger strike last November to
protest conditions in the camp.
The area comprising Shanghai and neighboring Jiangsu province, in
the heart of China's richest agricultural region, is home to numerous
important U.S. investment ventures: Hoechst Celanese manufactures
ingredients for cigarette filters in Nantong; McDonnell-Douglas engages in
coproduction of aircraft in Shanghai; also in Shanghai, Squibb, S.C.
Johnson, and Johnson & Johnson have operations producing
pharmaceuticals, medical products and various other items, and Xerox
has a major joint venture project; Sheraton, Holiday Inn and other major
hotel companies play a key role as investors and/or managers of major
tourist hotels in this heart of China's tourist industry. This list could be
continued at length.
In this same area, prisoners are detained for the non-violent
expression of political opinion and the exercise of other
internationally-recognized human rights. To cite just a few examples, Ma Zhiqiang, a worker
from Shanghai in his late 20s, was arrested in June 1989, reportedly for
attempting to form an independent trade union during the Spring 1989
democracy movement. Ma was apparently tried and sentenced to a
fiveyear term on charges of "counterrevolution."" 6 More recently, Fu
Shengi, who had previously served two terms in detention for political
dissidence, was sent to "reeducation through labor" for three years on
June 26, 1993, for his peaceful activities in support of other political
dissidents in Shanghai.165 One of the individuals Fu was accused of
"agitating" is a worker currently being held in a police-run mental institution in
Shanghai, having attempted to form an independent trade union.
In Nanjing, Jiangsu province, Wu Jianmin, a 31-year-old worker in
the Nanjing Passenger Train Factory, was sentenced to 10 years'
imprisonment in April 1991 for starting a "counterrevolutionary
organization"-the Democratic United Front. Yang Tongyan, an employee of
the Jiangsu Academy of Social Sciences, was sentenced to 10 years'
imprisonment in 1991 for founding the China Democracy Party.
In fact, one need look no further than China's capital city to find
numerous examples of cases where U.S. companies with large-scale
operations could play an effective role. As the nerve center of the 1989
democracy movement, Beijing has an especially large population of citizens
held in prisons or administrative detention centers on charges stemming
from their exercising the rights of free expression and freedom of
tion. Many have been detained in the past year-long after the
Tiananmen incident-for ongoing attempts to promote human rights and
political change. In addition to names relatively well known abroad,
such as dissident leaders Wang Juntao, Chen Ziming and Ren Wanding,
Beijing's political prisoner population includes less known individuals
such as Zhang Yafei and Chen Yanbin, student organizers currently
serving 11- and 13-year sentences, respectively, for "counterrevolution."
More recent additions to Beijing's population of detained political
activists include Chen Wei, a former student at the Beijing University of
Science and Engineering who was arrested (for the fourth time since June
1989) in May 1992 for his continuing involvement in underground
prodemocracy activities, and Liao Jia'an, a graduate student at People's
University in Beijing, who was active in study groups and publications that
address democracy and political reform issues, and was recently tried for
Examples of companies with major investment projects in Beijing
that could take up these and other cases in the course of their
interactions with Beijing and central authorities include Hewlett Packard, with
a large-scale cooperative computer operation in the capital, Babcock &
Wilcox, with a major joint venture producing boilers, and the PepsiCo
Corporation, whose participation in the several Kentucky Fried Chicken
and Pizza Hut outlets in Beijing (and numerous other projects in
different parts of China) give it a particularly high profile.
4. Include Human Rights Considerationsin FeasibilityStudies
We further recommend that U.S. and other foreign companies
contemplating activities in China include human rights considerations in the
feasibility studies generally required for investment projects. Just as
there is now generally included in such studies by U.S. corporations an
environmental impact report, so too there should be a human rights
impact report. Thus, for example, in considering an investment project in
the new special economic zone reportedly being created in Tibet to
attract foreign investment, 16 a potential investor should consider such
matters as the impact of the project on improving working conditions
and economic opportunities for ethnic Tibetans and the possibility of
prison labor being exploited for the venture. If a competing investment
opportunity is offered to the same company in, for example, the
Shenzhen Special Economic Zone, the company should consider not only
the comparative economic advantages of each option, but also pertinent
human rights considerations.
In general, potential investors should favor investment opportunities
in regions that have a relatively positive human rights environment.
Competition among different locations in China for foreign investment
dollars is the order of the day, as reflected in a steady stream of local
regulations seeking to offer competitive deals on land fees, labor policies,
tax incentives, and the like. Foreign companies should advance this
competition by adding a new consideration to the list-human rights.
Decisions to invest in highly repressive regions should be made only
with a strong, and unambiguous, commitment to play a proactive role in
promoting human rights improvements, and a willingness to pull out if
such improvements do not materialize. For example, in an area like
Tibet, a U.S. company should undertake an investment venture only if it is
prepared to insist upon applying fair hiring practices that give an
appropriate role to Tibetans in both management and skilled labor positions,
providing training to Tibetans that is equal to that afforded Han Chinese
staff, and making strong representations against any interference in
peaceful activities of Tibetan staff, such as participating in study groups
on Tibetan history and culture, and using the Tibetan language.
Similarly, current and future investors in Tibet should use appropriate
opportunities to request information about and release of those imprisoned for
the peaceful advocacy of political views as well as for religious activities.
The point is that companies should consider, in advance of their
decision on an investment project, the human rights conditions in the
area where a project is contemplated and their potential ability to have a
positive influence on such problems as may exist or arise. A decision not
to make a particular investment would be appropriate if local human
rights conditions were poor and the company's position in the
contemplated venture or the economic importance of the project would not
enable it to have a significant impact on human rights conditions.
Similarly, a company should not undertake an investment in a highly
repressive area if the benefit of the investment to the regime would likely
outweigh any positive impact the project could have.
Assemble Data on Human Rights Conditions by Region
To facilitate investors' consideration of human rights factors,
professional organizations, such as the American Chamber of Commerce in
Hong Kong and the U.S.-China Business Council, that publish for their
members periodic assessments of investment conditions in various parts
of China should add human rights conditions to the factors they
currently address-regulatory incentives, fiscal conditions, environmental
issues, and the like. These human rights data should include such
information as the nature of working conditions, discrimination against
minority groups, and numbers of political prisoners in regions covered.
Such reporting could draw on the extensive reporting of
non-governmental human rights organizations and the State Department's annual
human rights reports.
In addition, member companies should be asked to submit
information concerning their observations about human rights conditions in
areas where they operate. This information could significantly enhance the
base of currently available information, as businesspersons employed
full-time in China are in a position to develop greater familiarity with
certain practices than representatives of organizations based outside
China and of the U.S. government.
None of the proposals advanced in this section would require U.S.
businesses or business associations to engage in activity that would
violate Chinese law or policy. They would, however, go a long way toward
assuring that U.S. business activities in China promote basic human
rights values and do not in any way condone or participate in their
A nascent corps of transnational businesses are establishing new
mileposts for corporate responsibility in respect of human rights. Their
initiatives have been shaped, above all, by the daunting challenges
presented to foreign investors in China in the wake of the June 1989
clampdown by the PRC. But if their efforts have been largely propelled
by Tiananmen, their impact will reach far beyond China. Indeed, the
human rights policies adopted by these companies have already been
extended beyond the PRC to the global market. And while only a small
number of businesses have adopted comprehensive human rights policies,
they already have succeeded in refraining the terms of debate within
corporate boardrooms about the appropriate role of businesses in addressing
human rights abroad. It is no small measure of their impact that the
center of public debate has now shifted from the issue whether businesses
should be expected to address human rights conditions in their overseas
operations, to the question of what, precisely, their responsibilities are.
Human Rights Provisions of Levi Strauss & Co.'s "Business Partner
Terms of Engagement"
Our concerns include the practices of individual business partners as well
as the political and social issues in those countries where we might
This defines Terms of Engagement which addresses issues that are
substantially controllable by our individual business partners. We have
defined business partners as contractors and suppliers who provide labor
and/or material (including fabric, sundries, chemicals and/or stones)
utilized in the manufacture and finishing of our products.
3. HEALTH & SAFETY
We will only utilize business partners who provide workers with a safe
and healthy work environment. Business partners who provide
residential facilities for their workers must provide safe and healthy facilities.
5. EMPLOYMENT PRACTICES
We will only do business with partners whose workers are in all cases
present voluntarily, not put at risk of physical harm, fairly compensated,
allowed the right of free association and not exploited in any way. In
addition, the following specific guidelines will be followed.
* WAGES AND BENEFITS
We will only do business with partners who provide wages and benefits
that comply with any applicable law or match the prevailing local
manufacturing or finishing industry practices. We will also favor business
partners who share our commitment to contribute to the betterment of
* WORKING HouRs
While permitting flexibility in scheduling, we will identify prevailing
local work hours and seek business partners who do not exceed them
except for appropriately compensated overtime. While we favor partners
who utilize less than sixty-hour work weeks, we will not use contractors
who, on a regularly scheduled basis, require in excess of a sixty-hour
week. Employees should be allowed one day off in seven days.
* CHILD LABOR
Use of child labor is not permissible. "Child" is defined as less than 14
years of age or younger than the compulsory age to be in school. We will
not utilize partners who use child labor in any of their facilities. We
support the development of legitimate workplace apprenticeship
programs for the educational benefit of younger people.
* PRISON LABOR/FORCED LABOR
We will not knowingly utilize prison or forced labor in contracting or
subcontracting relationships in the manufacture of our products. We
will not knowingly utilize or purchase materials from a business partner
utilizing prison or forced labor.
While we recognize and respect cultural differences, we believe that
workers should be employed on the basis of their ability to do the job,
rather than on the basis of personal characteristics or beliefs. We will
favor business partners who share this value.
* DISCIPLINARY PRACTICES
We will not utilize business partners who use corporal punishment or
other forms of mental or physical coercion.
Reebok International Ltd.'s "Human Rights Production Standards"
Reebok's devotion to human rights worldwide is a hallmark of our
corporate culture. As a corporation in an ever-more global economy we will
not be indifferent to the standards of our business partners around the
We believe that the incorporation of internationally recognized human
rights standards into our business practice improves worker morale and
results in a higher quality working environment and higher quality
In developing this policy, we have sought to use standards that are fair,
that are appropriate to diverse cultures and that encourage workers to
take pride in their work.
Reebok will seek business partners that do not discriminate in hiring and
employment practices on grounds of race, color, national origin, gender,
religion, or political or other opinion.
Reebok will seek business partners who do not require more than
60hour work weeks on a regularly scheduled basis, except for appropriately
compensated overtime in compliance with local laws, and we will favor
business partners who use 48-hour work weeks as their maximum normal
Forcedor Compulsory Labor
Reebok will not work with business partners that use forced or other
compulsory labor, including labor that is required as a means of political
coercion or as punishment for holding or for peacefully expressing
political views. In the manufacture of its products, Reebok will not purchase
materials that were produced by forced prison or other compulsory labor
and will terminate business relationships with any sources found to
utilize such labor.
Reebok will seek business partners who share our commitment to the
betterment of wage and benefits levels that address the basic needs of
workers and their families so far as possible and appropriate in light of
national practices and conditions. Reebok will not select business
partners that pay less than the minimum wage required by local law or that
pay less than prevailing local industry practices (whichever is higher).
Reebok will not work with business partners that use child labor. The
term "child" generally refers to a person who is less than 14 years of age,
or younger than the age of completing compulsory education if that age
is higher than 14. In countries where the law defines "child" to include
individuals who are older than 14, Reebok will apply that definition.
Reebok will seek business partners that share its commitment to the
rights of employees to establish and join organizations of their own
choosing. Reebok will seek to assure that no employee is penalized
because of his or her non-violent exercise of this right. Reebok recognizes
and respects the right of all employees to organize and bargain
Safe and Healthy Work Environment
Reebok will seek business partners that strive to assure employees a safe
and healthy workplace and that do not expose workers to hazardous
"Guidelines for Vendors"
... The following guidelines address issues which are substantially
controllable by our vendors:
We will not do business with any vendor who discriminates based on
race, gender or religion. We will not do business with any vendor who
violates the legal and moral rights of employees in any way.
We will not do business with any vendor who fails to consistently treat
employees fairly with regard to wages, benefits and working conditions.
Specifically, the following guidelines apply: We will only do business
with vendors who provide reasonable wages and benefits that match or
exceed the prevailing local industry standard.
While permitting flexibility in scheduling, we will only do business with
vendors who do not exceed prevailing local work hours and who
appropriately compensate overtime. No employee should be scheduled for
more than sixty hours of work per week, and we will favor vendors who
utilize work weeks of less than sixty hours. Employees should be allowed
at least one day off per seven day week.
We will not be associated with any vendor who uses any form of mental
or physical coercion. We will not do business with any vendor who
utilizes prison or forced labor.
We will not do business with any vendor who denies their employees
appropriate access to education, health care, religious observance or
We will favor vendors who share our commitment to contribute to the
betterment of the communities in which they operate.
11 Information Office of the People's Republic of China State Council, Human Rights White Paper,English translation in FBIS- CHI- 91 -225-S, Nov . 21 , 1991 , Chapters III , VI-VIII. For a critique of the White Paper's discussion of the Chinese criminal justice system, see LAWYER'S COMMITTEE FOR HUMAN RIGHTS, CHINA'S WHITE PAPER ON HUMAN RIGHTS: A CRITIQUE OF CHAPTER 4 ON GUARANTEES OF HUMAN'RIGHTS IN CHINA'S JUDICIAL WORK ( 1992 ).
12 See generally Information Office of the PRC State Council , CriminalReform in China,Aug. 1992 ; Information Office of the PRC State Council , Tibet-Its Ownershipand Human RightsSituation , Sept. 1992 , English translation in FBIS-CHI- 92 -197-S, Oct. 9 , 1992 .
13 U.N. ESCOR , 4th Sess., 3046th mtg. at 92-93, U.N. Doc . S/PV.3046 (prov. ed. 1992 ). See Zhang Zhengdong, Unjust Cause Finds Little Support, BEUING REV ., Mar . 22 - 23 , 1993 , at 10.
14 See Zhou Qingchang , Western Views on Human Rights Opposed, BEIJING REv., July 5 - 11 , 1993 , at 8; Proposalsfor Human Rights Protectionand Promotion , BEUING REV., June 28-July 4 , 1993 , at 8.
15 See Lena H. Sun , ChinaPulls OutStops in Olympic Bid: PoliticalFactorsDominatein Beiing Tryfor 2000 Games, With Chances Uncertain, WASH . POST, July 15 , 1993 , at D7.
16 Nicholas D. Kristof , Whither that Torch? China'sBurningto Have It , N.Y. TIMES , July 28 , 1993 , at A4.
17 Thomas L. Friedman, Bush Seeks Trade Benefits for China, N.Y. TiMEs, June 3, 1992 , at A13.
18 Ms. Dai was allowed to return to China on June 7, 1992, to return to the United States in August 1992 and then to return permanently to China in early 1993. But the PRC apparently intends to continue to deny reentry to other dissidents who travel abroad. A December 1992 document issued internally by the PRC State Council reportedly establishes a blacklist of political dissi3.
31 The Senate voted to sustain President Bush's veto by a count of 59- 40 on Oct. 1 , 1992 . 138 CONG. REC. S15957 (daily ed. Oct. 1 , 1992 ).
32 139 CONG . REC. S4662, H2023 (daily ed. Apr. 22 , 1993 ).
33 See Jendrzejczyk , supra note 24.
34 In his first congressional testimony after being confirmed as U.S. Trade Representative, Mickey Kantor noted the repeated failure of the Bush Administration to impose conditions on renewal of MFN for China, and stated that "the Clinton Administration will address all of these concerns - human rights, [arms] proliferation, and trade - and we will address them aggressively." Michael Chugani, U.S. Takes Tough Standon Trade,S. CHINA MORNING POST , Mar . 11 , 1993 , at 2. Secretary of State Warren Christopher told a congressional committee in March that "it is my hope that we can go forward with MFN this year but conditioned on [China] making very substantial progress." Michael Chugani, U.S. Spells Out MFN Renewal Conditions,S. CHINA MORNING POST , Mar . 12 , 1993 , at 2. In his Senate confirmation hearing, Assistant Secretary of State for East Asia and Pacific Affairs Winston Lord said that "conditional MFN is the position of the President and we
37 Michael Weisskopf , Backbone of the New ChinaLobby: U.S. Firms, WASH . POsr, June 14, 1993 , at A12.
38 Id. 5.
42 During a briefing on the Executive Order, the Assistant Secretary of State for East Asian and Pacific Affairs, Winston Lord, said "[i]t would be very helpful indeed if the business community lobbied the Chinese government to make progress in these areas as effectively as they are lobbying Congress and the President. I think it would help American policy ... [if U.S. business leaders] would take actions and express their views to the Chinese on human rights concerns .... " Winston Lord , Most FavoredNation Trading Status to China,May 28 , 1993 , availablein LEXIS , Nexis Library , Reuter Transcript Report File (State Department on-the-Record Briefing).
43 H.R. 3489 , 102d Cong., 1st Sess . ( 1991 ).
44 It is the authors' understanding that the offices of both Senator Kennedy and Representative Unsoeld are likely to introduce legislation patterned on the original Miller bill . 3 .