U.S.-China Trade

Following the crackdown on protesters in Tiananmen Square, U.S. government officials began debating whether to link renewal of China's most-favored-nation status to improving human rights in China. Among the issues raised was Chinese exports made with prison labor. In May 1993, President Clinton signed an executive order requiring the review of Chinese compliance with a 1992 U.S.-China prison labor memorandum of understanding as part of the annual assessment of China's most-favored nation status in 1994. The memorandum required both countries to exchange information on prison facilities. Not only does U.S. law prohibit imports of prison labor products, but China itself prohibits such exports. Although the U.S. Customs Service was concerned in 1993 that China had not shown a willingness to fulfill its responsibilities under the memorandum, Customs said that Chinese officials had been more cooperative of late. Customs officials said that they had obtained information from the Chinese that allowed them to pinpoint imported goods made with prison labor. However, Justice Department officials are concerned whether any memorandum or agreement could provide Justice attorneys with the information necessary to defend Customs' decisions in an efficient and inexpensive manner because of the evidence that might be required under U.S. law.

GAO found that: (1) while China had not sufficiently demonstrated a willingness to meet its responsibilities under the agreement, Customs reported more recent signs of cooperation; (2) China recently signed an implementation agreement that could enhance mutual compliance and increase Customs' ability to visit prisons suspected of producing goods for export; (3) recordkeeping practices in China's prison system may inhibit its ability to comply with the agreement; (4) recently Customs has succeeded in obtaining information sufficient to make administrative determinations regarding potential prison-labor goods; (5) the Department of Justice was concerned that it might not get sufficient information to cost-effectively defend Customs' decisions; (6) Justice attorneys must produce information before the U.S. Court of International Trade (CIT) to defend Customs determinations to exclude apparent prison-labor imports; (7) in December 1994, a CIT decision that affirmed a Customs finding was upheld for the first time; and (8) Justice officials are concerned that its ability to sustain Customs' findings may be inhibited because much of the information necessary to uphold Customs' findings is no longer published in China.