CRITICISM OF AMERICAN BUSINESS FOR

UNCLAS SECTION 01 OF 02 BEIJING 024304

SIPDIS

SIPDIS
SENSITIVE

DEPT PASS USTR FOR KARESH, A. ROSENBERG, MCCARTIN
DEPT PASS NSC FOR R. HUNTER
LABOR FOR ILAB
TREAS FOR OASIA/ISA-CUSHMAN
USDOC FOR 4420/ITA/MAC/MCQUEEN
GENEVA FOR CHAMBERLIN

E.O. 12958: N/A
TAGS: ELAB EINV PGOV CH
SUBJECT: CRITICISM OF AMERICAN BUSINESS FOR
SUBMITTING COMMENTS ON DRAFT LABOR CONTRACT LAW

REF: BEIJING 9677


1. (SBU) Mission has recently become aware of
criticism leveled at American businesses in China from
western media and Congressional sources, particularly
aimed at members of the American Chamber of Commerce
in China (Amcham),for responding in March 2006 to an
invitation for public comment on China's draft Labor
Contract Law. This criticism has been put forward or
reported in the following publications and letters:

-- Global Labor Strategies report, "Behind the Great
Wall: U.S. Corporations Opposing New Rights for
Chinese Workers"

-- The New York Times, "China Drafts Law to Empower
Unions and End Labor Abuse," October 13, 2006

-- Letter from Congressman Rangel to Amcham Shanghai
and US-China Business Council, dated October 24, 2006,
(copy made available to us by AmCham)

-- Letter from Congress of the United States to
President Bush dated October 31, 2006, (available on
the Internet). In response, the US-China Business
Council (USCBC) wrote to President Bush on November 7,
2006, to present its side of the story (copy provided
to Embassy Beijing).


3. (SBU) In light of ongoing publicity and
discussion of this issue, post notes that in May 2006,
we provided an analysis (reftel) of the draft Labor
Contract Law, noting the concerns raised by various
businesses about specific provisions. We offer the
following additional information for Washington
agencies' consideration concerning the role of United
States companies in the debate over the draft:

The National People?s Congress (NPC) published the
draft Labor Contract Law in March 2006, and openly
solicited public comment. This was an unusual (but
not unprecedented) step for the NPC. (Comment.
Embassy agrees with the numerous contacts who have
interpreted the NPC's solicitation of comments as
implying that the Chinese Government understands the
potential implications such a law can have on the
investment climate, suggesting a desire to get things
right. The Chinese Government is clearly sensitive
about projecting China?s image as an open economy and
a good place to do business. End Comment.)

-- Amcham provided the NPC with written comments on
April 17, 2006, commending it for attempting to
address problems China is encountering in
implementation of the existing labor laws, while also
pointing out what Amcham members perceived to be
potential problems in the draft law. Amcham provided
respectful, well-reasoned arguments to support their
position. The USCBC also provided comments.

-- Although the comments and positions taken by these
organizations have drawn criticism, post is unaware of
any lobbying effort against the Labor Contract Law, or
any attempt to prevent the draft law from moving
forward, by Amcham or any other party. The USCBC's
letter to President Bush specifically stated that
"beyond submitting comments on the draft law, USCBC
has not engaged or 'lobbied' the PRC Government on
this issue."


3. (SBU) Amcham and the USCBC have received no
response to their comments from the NPC. Whether or
not the NPC takes the comments of United States
business into account will be apparent when the next

BEIJING 00024304 002 OF 002


draft of the Labor Contract Law is made public.


4. (SBU) Post can provide copies of the articles and
letters referenced in this message. Please send
requests to Laboff Bruce Levine at LevineBJ@state.gov.

RANDT