2022coursework代写国际商法essay范文

2022coursework代写国际商法essay范文

DoingBusiness in China: The Latest ChallengesYee Wah is Senior Counsel in the Washington, D.C. office, practicing in theFederal Section. She has extensive experience in antitrust matters, in additionto commercial litigation and transactional counseling.Yee Wah has been involved with global antitrust and competition-relatedmatters for multi-billion dollar companies. She provides antitrust counselingand analysis on all transactions, including acquisitions, divestitures and jointventures, and antitrust advice on relations with competitors, suppliers andcustomers, as well as on licenses and distribution relationships.In addition, Yee Wah has represented clients in litigation, including antitrust,securities, commodities, intellectual property, contracts, insurance coverage,constitutional, consumer protection, bankruptcy and trusts and estatesdisputes. She has also represented clients with regard to tender offers,acquisition agreements, patent and technology licensing, R&D collaborationsand trademark licenses.Prior to joining the firm, Yee Wah was a partner at two New York City lawfirms where she was responsible for providing advice on regulatorycompliance, marketing and all matters with potential antitrust exposure. Shewas also antitrust counsel in the law department of a Fortune 200 company.指导法律essay Yee Wah is admitted to practice in New York and the District of Columbia. Sheearned her S.B. from the Massachusetts Institute of Technology, and wasawarded her J.D. from Columbia University Law School. She is an active barassociation leader and frequent writer and speaker on antitrust subjects. YeeWah is the Co-Chair of the 2005 Spring Meeting of the ABA Section ofInternational Law, and a member of the Section’s Council. She is the immediatepast Co-Chair of the International Antitrust Law Committee of the ABASection of International Law, and the author of the chapter “Antitrust Issues inthe United States,” in A Practitioner’s Guide to the Acquisition of Companies inthe United States (City & Financial Publishing 2002). Yee Wah served on theABA task forces that drafted the 2003 and 2005 ABA Comments on theproposed Anti-Monopoly Law of the People’s Republic of China and the 2004and 2005 ABA Section of International Law Comments to the AntitrustModernization Commission. She also participated in drafting the ABAComments on the European Commission Technology Transfer BlockExemption in 2002 and 2003, and testified regarding those Comments at theJoint Federal Trade Commission/ Department of Justice Hearings onCompetition and Intellectual Property Law and Policy in the Knowledge-BasedEconomy in 2002. She is regular speaker at the Practising Law Institute on#p#分页标题#e#antitrust issues in intellectual property. Yee Wah is a member of the OECDAdvisory Group on China Investment Policies and the U.S. Chamber ofCommerce China Industrial Policy Steering Committee.Elizabeth Chien-Hale钱德纯律師学历 (Education):LL.M. (“With Distinction”), Georgetown University Law Center, Washington DC, 1997Concentration in international and comparative lawJD, University of Hawaii School of Law, Honolulu, HI, 1994Articles Editor, University of Hawaii Law ReviewFounding member of the Pacific Asia Law JournalMA, University of California, Berkeley, CA, 1989Concentration in artificial intelligence/computational linguisticsBSME, University of California, Berkeley, CA, 1983Member of member of Pi Tau Sigma专长 (Specialization):Intellectual property law, international law经历 (Experience):Ms. Chien-Hale is a U.S. attorney specializing in patent and other forms of intellectualproperty protection in the United States and abroad. She is also the founder of aninformation-based non-profit organization Institute for Intellectual Property in Asia.Prior to consulting, she headed the patent practice at Baker & McKenzie’s Hong Kongoffice. She also worked for other law firms in Silicon Valley including Wilson SonsiniGoodrich & Rosati, and Fish & Richardson.Ms. Chien-Hale has substantial technical knowledge in a variety of electrical and electromechanicalarts, having drafted and prosecuted patent applications in telecommunication,software, wireless and Internet-enabled devices, language-based data processing,semiconductor processing and computer-related mechanical devices. She was alsoinvolved in a number of intellectual property litigation cases, including cases in theInternational Trade Commission and the U.S. District Court, relating to patentinfringements and trade secrets violation.Ms. Chien-Hale has lectured and written, in both English and Chinese, on the topics ofinternational intellectual property protection and the Chinese constitutional structure. Shewas a research scholar at the College of Law of the Peking University and taught at thegraduate school of the Chinese Academy of Social Sciences in 1995. She is a registeredpatent attorney before the U.S. Patent and Trademark Office, and is licensed to practice inthe states of California, Hawaii, and the District of Columbia. She is also admitted to theBar of the U.S. Supreme Court. Her name has been included in the Who’s Who inAmerica, Who’s Who in American Law, and Who’s Who in American WomenMs. Chien-Hale is also an active participant in the professional organizations. For theAmerican Bar Association, she currently co-chairs the Committee on International PatentTreaties and Laws for the Intellectual Property Law Section, and co-chairs the Joint Task#p#分页标题#e#Force between the Intellectual Property Law Section and the International Law Sectionon PRC Intellectual Property Laws Amendments. She is also a co-chair of theIntellectual Property Law Interest Group and the vice-chair of the Pacific Rim InterestGroup of the American Society of International Law.Greg S. Slater, Senior Trade Counsel at Intel Corporation, provides legal and policyadvice on regulatory and trade issues affecting the Company’s products andmanufacturing sites worldwide. Mr. Slater also is responsible for the negotiation of allthe government agreements related to Intel’s multi billion dollar factory investmentslocated in various countries across the world.Prior to joining Intel in 1997, Mr. Slater was in private practice at Steptoe & Johnson andthen at Latham & Watkins in Washington, D.C. While at those law firms, he engaged inprivatization work sponsored by the World Bank and specialized in administrative lawand environmental, health and safety by handling U.S. and international regulatory issuesfor a number of Fortune 500 companies. Mr. Slater began his law career as a clerk forformer Chief Judge Albert Engel on the U.S. Court of Appeals, 6th Circuit, aftergraduating summa cum laude from the J. Reuben Clark Law School at Brigham YoungUniversity.H. Stephen Harris, Jr., a partner with Alston & Bird, is Chair of the firm’sAntitrust Practice Group. Steve has litigated numerous complex cases in federalcourts throughout the United States, including the defense of numerous publiclyheldcorporations in civil and criminal antitrust matters, including class actionsand multidistrict litigation. He has also represented numerous U.S. and non-U.S.companies before antitrust agencies of the U.S. and other jurisdictions, includingthe European Commission’s DG COMP, the Japan Fair Trade Commission, andthe antitrust agencies of Brazil. Steve has arbitrated complex commercialdisputes under the rules of the International Chamber of Commerce (ICC), theJapan Commercial Arbitration Association (JCAA), and the American ArbitrationAssociation (AAA). Steve received a J.D. from Columbia University School ofLaw in 1982, where he was a Harlan Fiske Stone Scholar and certified withhonors by the Parker School of Foreign and Comparative Law. Steve receivedan A.B., magna cum laude, from Cornell University in 1977, where he was aCornell University College Scholar of the College of Arts & Sciences. Steve isadmitted to the bars of the District of Columbia, Georgia, and New York. Hecurrently serves as a member of the Council of the American Bar Association’sSection of Antitrust Law, and a member of the Antitrust Committee of theInternational Bar Association. Steve is co-author and Editor-in-Chief of the twovolume treatise, Competition Laws Outside the United States, published by the#p#分页标题#e#ABA, and the author of the U.S. chapter in International Agency & DistributionLaw, published by the Center for International Law. Steve has been selected forlisting in The International Who’s Who of Competition Lawyers (antitrust), TheBest Lawyers in America (litigation and antitrust), and Chambers USA: America’sLeading Business Lawyers (antitrust).Judge of the Supreme People’s Court (SPC) of the People’s Republicof China:Staff member since 1991, and appointed as a judge of the IntellectualProperty Division of the SPC in 1999.Dealt with assorted intellectual property civil cases and partiallyadministrative cases, particularly patent and technology contract cases.Member of the Judicial Interpretations Panel of the Contract Law of theSPC, drafted out the Judicial Interpretations on Implementation of theContract Law with regard to Technology Contracts, and also wrote thedraft of the Judicial Interpretations on Criteria of Adjudicating uponPatent Infringement.Legal researcher of many important IPR research programs, e.g.,Criminal Law Protection on IPRs, Compensation on CopyrightInfringements, and Improvement on the Judicial Protection Mechanism ofIPRs.Education:Juris Doctor candidate (IP law), China Academy of Social Science(CASS, 2004)Master of Arts (MA) in International & Comparative Legal Studies (IPLaw), School of Oriental and African Studies (SOAS), University ofLondon (UL, 2002)Master of Laws, Peking University (PKU, 2000)LL.B, China University of Politics & Law (CUPL, 1991).Works:Co-author or co-editor of books, e.g., Cases & Commentary on theContract Law, Judicial Guidelines & Reference for Intellectual PropertyTrials.Articles have been published in legal journals, e.g., People’s Judicature(Ren Min Si Fa), National Judges College Law Journal (Fa Lv Shi Yong),Intellectual Property（Zhi Shi Chan Quan），and Intellectual PropertyReview of Spain.1Lectures and Speeches:Giving regular lectures in the National Judges College (for senior IPRjudges’ training programs since 1999) and irregular lectures in localJudges Colleges, universities and institutesEnglish lectures in:University of Cambridge (2002), School of Oriental and African Studiesof the University of London (2002), Peking University (2003 – 2005)English speeches:Week-speeches on Intellectual Property Training Program for VietnameseJudges organized by USAID STAR-Vietnam (United State Agency forInternational Development, Support for Trade AccelerationProject-Vietnam, March 6-12, 2005, Bangkok）Luncheon Speech on the ITL Forum: Patent Procurement, Licensing andLitigation in China (Institute for Law and Technology, the Centre forAmerican and International Law, January 20, 2006, San Francisco)#p#分页标题#e#Other Professional Activities:Standing Director & Deputy Secretary-General of the China IntellectualProperty Society (CIPS)Founder-Director of the United Kingdom Chinese Law Association(UKCLA, 2001)Contracts:Address: No.27, Dongjiaominxiang, Beijing 100745, P. R. ChinaEmail: [email protected] > Faculty > Ronald C. BrownRonald C. BrownBS, University of Toledo, 1965; JD, University of Toledo, 1968;LLM, University of Michigan, 1970.Formerly Professor of Law on the Faculty of William and MarySchool of Law, Professor Brown joined the faculty at Hawai’i in1981 and has served as Associate Dean and as Director of thePacific-Asian Legal Studies Program. Presently, ProfessorBrown also serves as the University’s Director of the Center forChinese Studies. His experience includes working as an attorneywith the National Labor Relations Board, representingmanagement and labor in labor relations matters, acting asprivate impartial arbitrator in labor-management disputes andserving as state-appointed public fact-finder in Hawai’i publicsector disputes. Professor Brown’s teaching specialties includelabor and employment law, employment discrimination law,arbitration, Chinese law and Asia-Pacific comparative labor law.He has authored numerous articles and recently published a bookentitled Understanding Chinese Courts and Legal Process: Law with ChineseCharacteristics. Professor Brown has worked in China under the USIA’s professional-inresidenceprogram, has served as a Consultant with the World Bank, and has lecturedthroughout Asia on comparative labor law topics. He has taught Comparative Labor Lawat Beijing University Law School and currently serves as a foreign advisor to BEIDA ongraduate law programs. He conducts legal exchange and international training programsfor Chinese lawyers, judges, law drafters, and prosecutors under arrangements with thekey government legal agencies. In 2004-2005, Professor Brown was in China as aFulbright Distinguished Scholar, teaching at both Peking University Law School andTsinghua University Law School.Ronald C. BrownProfessor of Law2515 Dole St.Honolulu, HI 96822Office 241(808) [email protected] Areas:Chinese Law, Employment Discrimination Law, Labor Law, Employment Law, USChinaComparative Labor LawRecent and Forthcoming Publications:Understanding Chinese Courts and Legal Process: Law with Chinese Characteristics(Kluwer).China’s Collective Contract Provisions: Can Collective Negotiations Embody CollectiveBargaining? 16 Duke Journal of Comparative and International Law 35 (2005).China’s Employment Discrimination Laws During Economic Transition, 19.2 Columbia#p#分页标题#e#J. of Asian Law 361 (2006).U.S.-China Labor Mediation and Arbitration Compared, __ American L. Rev. __ (2006).CHINA’S EMPLOYMENTDISCRIMINATION LAWS DURINGECONOMIC TRANSITIONRONALD C. BROWN∗I. INTRODUCTION …………………………………………………………………… 362II. CHINA’S CURRENT CONDITIONS AFFECTING HUMANRESOURCES MANAGEMENT …………………………………………….. 363A. ECONOMIC TRANSITION TO A SOCIALIST MARKET ECONOMY…… 363B. HUMAN RIGHTS MANAGEMENT PRACTICES IN CHINA ……………… 3651. Regulation of Labor Market Management ………………………… 3652. Workplace Discrimination: Anecdotal Glimpses ……………….. 371III. CHINA’S ANTI-DISCRIMINATION LAWS…………………………… 386A. LAWS PROVIDING “PROTECTED STATUS”……………………………….. 3861. The 1994 Labor Law ……………………………………………………… 3872. Other Anti-Discrimination Laws ……………………………………… 3903. Local Government Discrimination Bans …………………………… 401B. LAW AND HRM PRACTICES ………………………………………………….. 4021. Recruitment ………………………………………………………………….. 4022. Employment and Termination …………………………………………. 408C. ENFORCEMENT ……………………………………………………………………. 4101. Administrative Process …………………………………………………… 4102. Proving Discrimination…………………………………………………… 4133. Remedies ……………………………………………………………………… 4154. External Incentives ………………………………………………………… 419IV. CONCLUSION……………………………………………………………………….. 420A. CHALLENGES TO REMEDYING EMPLOYMENT DISCRIMINATION … 421B. CLARIFYING CHINA’S ANTI-DISCRIMINATION LAWS……………….. 4231. “Protected Classes” of Workers……………………………………….. 4242. “Labor Disputes” and Legislative Rights of “Applicants” …… 425∗ Professor of Law, University of Hawaii Law School; Director, Center for Chinese Studies,University of Hawaii; 2004-2005 Fulbright Distinguished Lecturer, Peking University Law Schooland Tsinghua University Law School.362 COLUMBIA JOURNAL OF ASIAN LAW [19:23. Enhancing Enforcement: Remedies asDeterrent and Incentive ………………………………………………….. 426I. INTRODUCTIONWhile working as a consultant to the World Bank on China’slabor legislation in 1996, I was waiting outside the gate of the Ministry of#p#分页标题#e#Labor, when I noticed a job advertisement posted on a pole. It read,Seeking an office clerk. Female, decent height andappearance. All five facial organs must be in the rightplace (wu guan duan zheng).1In 2005, job advertisements with identical facial requirements arewidely seen. That, of course, is but one frank articulation of what manyemployers around the world take note of in the employment hiringprocess. Other factors in considering applicants and employees in Chinamay include sex, ethnicity, social origin, health, disability, age, or migrantstatus, some of which are considerations prohibited by Chinese laborlaws.2This article describes the current status of the above factors asused in human resource management (HRM) practices during China’scurrent economic transition, and further examines China’s existing antidiscriminationlabor legislation. Some comparative references are madeto labor standards under International Labor Organization (ILO)Conventions and U.S. legislative approaches. This article furthersuggests areas for legal reform to both clarify coverage and enhanceenforcement and remedies, which would in turn arrest some of the more1 Though the Chinese disagree on which organs constitute the “five sense organs,” they have beendefined as “ears, eyes, lips, nose, and tongue,” and mean “regular features; pleasant-looking facewith the five organs in normal shape and position.” THE ABC ENGLISH-CHINESE COMPREHENSIVEDICTIONARY 1004 (John DeFrancis et al. eds., 2003).2 See Jing Tao, Gender Discrimination in the Chinese Labor Market is Severe (Apr. 12, 2005)(unpublished manuscript, on file with author); 酒店招工听口音, 未聘用只因方言不地道 [HotelRejected Job Applicant For Speaking Tongue-Tied Dialect], 北京青年报[BEIJING YOUTH DAILY],Feb. 11, 2004, at 6, available at http://edu.sina.com.cn/l/2004-02-12/60863.html [hereinafterTongue-Tied Dialect]; 尚水, 就业歧视案例聚焦 [Shang Shui, Cases on EmploymentDiscrimination], 人民日报[PEOPLE’S DAILY], June 15, 2005, at 15, available at http://legal.people.com.cn/GB/42731/3469925.html [hereinafter Shang Shui]; 炒掉百名乙肝患者惹纠纷 [DisputeArises When Employer Fired Hundreds of Hepatitis B Carriers], 信息时报[INFO. CHRON.], Apr. 1,2004, at D03 [hereinafter Dispute Arises].2006] CHINA’S EMPLOYMENT DISCRIMINATION 363pernicious illegal hiring and employment practices currently found inChina’s HRM.In addition to obtaining justice for the victims of improper HRMpractices, there are several underlying inquiries for China to consider.These include (1) the social and economic costs and consequencesresulting from a failure to address issues of employment discrimination,#p#分页标题#e#inequality, and impediments to equal employment opportunity, and (2)whether there is sufficient national commitment to simultaneously seekalternatives to end these problems, while balancing and advancingeconomic development interests.II. CHINA’S CURRENT CONDITIONS AFFECTING HUMANRESOURCES MANAGEMENTA. Economic Transition to a Socialist Market EconomyIn the late 1980s, the economic developments following the FourModernizations of 1979 produced workplaces that were increasinglyregulated by labor contracts, displacing the “iron-rice bowl” model ofearlier years.3 The transition to a socialist market economy in the 1990scoincided with a growing assumption of managerial control foremployers.4 Due to market forces, employers were forced to maximizeprofits if they hoped to survive without government subsidies of theformer planned economy, and lawmakers responded by allowing greateremployer autonomy. This liberalization of employee management tendedto result in employers cutting labor costs, and, all too frequently, ignoringlabor laws. This trend was particularly prevalent among employersoutside of the state-owned enterprise (SOE) system.This market transition has had both positive and negativeeconomic consequences. One bright side has been phenomenal economicgrowth and development for the country as a whole; however, a dark sidehas been its impact on individual workers, including layoffs,unemployment, and emerging wage disparities. These disparities arefound in dramatic wage level differences between urban and ruralworkers as well as between regions—especially between the Special3 Jaeyoun Won, Withering Away of the Iron Rice Bowl? The Reemployment Project of Post-SocialistChina, 39 STUD. IN COMP. INT’L DEV. 71, 71 (2004). See also Randall Peerenboom, Globalization,Path Dependency and the Limits of Law: Administrative Law Reform and Rule of Law in thePeople’s Republic of China, 19 BERKELEY J. INT’L L. 161, 208 (2001).4 Victor Nee & Yang Cao, Market Transition and the Firm: Institutional Change and IncomeInequality in Urban China, 1 MGMT. & ORG. REV. 23 (2005). See also Jonathan P. Hiatt &Deborah Greenfield, The Importance of Core Labor Rights in World Development, 26 MICH. J.INT’L L. 39, 40 (2004).364 COLUMBIA JOURNAL OF ASIAN LAW [19:2Economic Zones (SEZs) in the coastal areas and the non-SEZs in theWestern inland provinces.5 Large wage disparities also exist, as they doin many countries, between management officers and workers. 6According to former World Bank President Wolfenson, these wage gapsare increasing at an alarming rate, and he warns that history suggests suchgaps could lead to social unrest and protests.7These economic disparities in China’s labor force affect certain#p#分页标题#e#cohorts of workers more than others, both as a result of socio-economicfactors and because of illegal discrimination. This discrimination occursprimarily against women, migrant workers, national ethnic minorities,and workers perceived to have health problems or disabilities. Forexample, women in China working at urban jobs earn only about 70% ofwhat men make for similar work, and female executive and seniorprofessionals earn about 58% and 68% of their male counterparts,respectively. Further, professional fields are generally comprised of onlyabout 20% women, and female doctors earn about 63% of the amountearned by male doctors.8Women are not alone in their fight against employmentdiscrimination. Another group of citizens affected by the China’seconomic transition is its “floating population” of some 100 to 150million migrant workers moving from poor rural areas to developed urbanareas seeking better job opportunities.9 Recently, much attention has5 See generally Bjorn Gustafsson & Li Shi, The Anatomy of Rising Earnings Inequality in UrbanChina, 29 J. COMP. ECON. 118 (2001). See also Cliff Waldman, The Labor Market in Post-ReformChina: History, Evidence, and Implications, 39 BUS. ECON. 50, 54-56 (2004).6 国务院发展研究中心[The Development Research Center of the State Council], 中国企业人力资源管理调查报告 [Report of Chinese Enterprises on Human Resource Management] (2004), citedin老总员工收入差距最大超50 倍 [Manager Earns Fifty Times More than Staff], 广州日报[GUANGZHOU DAILY] , Apr. 25, 2004, at A2, available at http://gzdaily.dayoo.com/gb/content/2004-04/25/content_1517025.htm.7 David Murphy, The Dangers of Too Much Success, 167 FAR E. ECON. REV. 28, 28-29 (2004). TheChinese Government has taken notice of the increase in mass protests. It is reported that ZhouYongkang, the Public Security Chief and State Councilor, stated that the "’rising conflicts amongthe people’ had been triggered by domestic economic factors, the behaviour of cadres, and by a lackof justice" with the number of mass protests increasing from about "10,000 in 1994 to more than74,000 last year [2004]". Shi Ting, Acceptance of Rights Replacing Reflex Fear of Protests, S.CHINA MORNING POST, July 7, 2005, at 1.8 Margaret Maurer-Fazio & James Hughes, The Effect of Institutional Change on the Labor MarketOutcomes of Chinese Women: Traditional Values vs. Market Forces (1999) (unpublished paper),cited in Elizabeth Brainerd, Women in Transition: Changes in Gender Wage Differentials inEastern Europe and the Former Soviet Union, 54 IND. & LAB. REL. REV. 138, 162 (2000). In theU.S. the figure for relative wage disparity is 76% for blacks versus whites, and 64% for Hispanicwomen. Id. at 146 (2000).#p#分页标题#e#9 China’s Floating Population Exceeded 10% of Total Population, 中国新闻网 [CHINANEWS.CN],Jan. 6, 2005, at http://www.chinanews.cn/news/2004/2005-01-06/772.shtml.2006] CHINA’S EMPLOYMENT DISCRIMINATION 365been given to their plight, as millions either go unpaid or are grosslyunderpaid—in violation of labor laws—and are otherwise discriminatedagainst because of their migrant status.Health discrimination for those with hepatitis B is anothercommon area of employment discrimination in China. It has beenreported that “up to 120 million Chinese people, a number equivalent tothe total population of France and Britain combined, are thought to becarriers of the disease.” 10 It is also reported that some twenty-twodiseases, such as severe heart disease and high blood pressure, disqualifypeople from being hired for public office. 11 There are also nearly onemillion HIV/AIDS carriers in China against whom employers alsodiscriminate.12Lastly, China has roughly 100 million citizens it classifies asethnic minorities, 13 whose economic status is often lower than otherChinese. When they seek to migrate outside of their communities forbetter jobs, they face possible discrimination not only for their minoritystatus, but also for their social status as rural citizens.14B. Human Rights Management Practices in China1. Regulation of Labor Market ManagementAs China relaxed its socialist planned economy and movedtoward a free market, the systems of government placement andallocation of personnel from colleges and elsewhere were modified,10 Liang Chao, Law Drafted to Fight Hep B Discrimination, CHINA DAILY, Aug. 11, 2004, athttp://www.china.org.cn/english/government/103598.htm.11 Id.12 Hong Kong Liaison Office of the International Trade Union, HIV/AIDS in China: A WorkersIssue, http://www.ihlo.org/LRC/SW/001004b.html (last visited Feb. 27, 2006).13 中共中央统一战线工作部 [The United Front Work Department of CPC Central Committee], 中国民族的基本特点 [Basic Characteristics of Chinese Nationalities], http://www.zytzb.org.cn/ssmz/ziliao/ssmz12.htm (last visited Feb. 1, 2006).14 Due to economic pressure, ethnical minorities from the remote countryside are migrating to bigcities to look for employment opportunities. This group of workers can be classified as bothminorities and migrants. It is likely they face further discrimination based on their status asmigrants, in addition to their ethnicity. For a general discussion, see 新疆区统计局 [XinjiangBureau of Statistics], 转移农村劳动力是解决新疆“三农”问题的根本出路 [To Transfer PeasantLabor Is The Fundamental Solution to Xinjiang’s Three Main Problems In Villages], 中国统计信息网 [CHINA STAT. INFO.WEB], Aug. 31, 2005, http://www.stats.gov.cn/was40/#p#分页标题#e#detail?record=286&channelid=33728.366 COLUMBIA JOURNAL OF ASIAN LAW [19:2giving way to current hiring practices based largely on self-selection.15With the demise of the “iron-rice bowl,” children no longer “inherited”their parents’ factory job, and workers no longer enjoyed job security; andwith that trend came the new practice of HRM, consisting of recruitment,hiring, employment, and termination.16 The Chinese labor force soondiscovered that employment decisions were not always based on merit oreven political color (i.e. Chinese Communist Party membership). In2005, employment discrimination under this new system of employerautonomy came to the point where even a delegate to the NationalPeople’s Congress (NPC) proclaimed,A law on fair employment is an urgent need in China . . . .A harmonious society should give adequate space totalents competing on an equal footing and developing . . .their capability to the full . . . waste of any humanresources does not facilitate economic and socialdevelopment.17The current HRM hiring route is multi-faceted, and usuallyinvolves advertising for positions (rather than having labor suppliedthrough labor bureaus), word of mouth, use of labor supply brokers(including labor bureaus and employment agencies), and posting noticeson walls and the Internet. Special rules, however, still apply to foreigninvestedenterprises (FIEs), as will be discussed infra. With the exceptionof civil service jobs and jobs needing certain proficiencies, recruitment15 China’s Employment Market Challenged by Two Million Graduates, PEOPLE’S DAILY, Jan. 10,2003, http://english.people.com.cn/200301/10/eng20030110_109906.shtml. .16 Won, supra note 3, at 71. See also Mary E. Gallagher, "Time is Money, Efficiency is Life": TheTransformation of Labor Relations in China, 39 STUD. IN COMP. INT’L DEV. 3, 11-44 (Summer2004). See generally, Ying Zhu and Malcolm Warner, Changing Patterns of Human ResourceManagement in Contemporary China: WTO Accession and Enterprise Responses, 35 INDUS. REL. J.311, 311-28 (2004).17 Deputy Wang Yuan’an from Tai’an City in East China’s Shandong Province, cited from NPCDeputy Proposes Law against Employment Discrimination, 人民网 [PEOPLE’S DAILY ONLINE],Mar. 4, 2005, http://english.people.com.cn/200503/04/eng20050304_175554.html. For other callsfor legislation, see 凌锋, 反对就业歧视, 法律不应沉默 [Ling Feng, Law Shall Not Be SilentAgainst Employment Discrimination], 法制日报 [LEGAL DAILY], June 20, 2005, at 5. As of July2005, there is consideration on an Employment Promotion Law that may contain anti-discriminationprovisions. 就业促进法[Employment Promotion Law] (Tentative Draft 2005) (P.R.C.) (on file#p#分页标题#e#with author) [hereinafter Employment Promotion Law Draft].2006] CHINA’S EMPLOYMENT DISCRIMINATION 367does not usually require testing.18 Employment and working conditionsare usually governed by the employer and its rules, with the employerauthorized to make evaluative decisions. Both, however, are limitedsomewhat by labor laws, labor contracts, and collective contracts. 19Dismissals and other labor disputes are regulated by statutes andgenerally are resolved intra-enterprise by mediation or by resort togovernment labor arbitration commissions and tribunals, with de novoreview provided by the courts.20In 2000, the Ministry of Labor and Social Security (MOLSS)sought to regularize and bring more order to labor market management byissuing its Regulations on Labor Market Management (hereinafter LaborMarket Regulations).21 Its stated purpose is to protect the legal interestsof employees and employers, to develop and standardize the labor market,and to promote employment.22 The Labor Market Regulations apply tothe laborer’s job application and work, the employer’s recruiting process,and to the “career introduction activities” of job centers. 23 TheRegulations are administered by the labor bureaus above the countylevel.2418 See 中华人民共和国公务员法 [Civil Service Law] arts. 21-32 (promulgated by the StandingComm. Nat’l People’s Cong., Apr. 27, 2005, effective Jan. 1, 2006) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=101410. See Robert Taylor, China’s HumanResource Management Strategies: The Role of Enterprise and Government, 4 ASIAN BUS. &MGMT. 5, 11-18 (2005).Commercial services are available in China for pre-employment screening. See, e.g., Inquest PreEmployment Screening Service, at http://www.inquestscreening.com/international_asia.asp (lastvisited Feb. 28, 2006).19 中华人民共和国劳动法 [Labor Law ] art. 19(2) (promulgated by Standing Comm. Nat’lPeople’s Cong., July 5, 1994, effective Jan. 1, 1995) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=20195; 集体合同规定 [Provisions on Collective Contract]art. 8 (promulgated by the Ministry of Labor and Social Security, Jan. 20, 2004, effective May 1,2004) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=91497.20 劳动部关于实行劳动合同制度若干问题的规定 [Regulation of the Ministry of Labor onInstitution of Labor Contract System] art. 14 (promulgated by the Ministry of Labor, Oct. 31, 1996,effective Oct. 31, 1996) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=26814; 浅谈民商仲裁与劳动仲裁的司法监督 [Some Opinions on the Judicial Review ofCommercial Arbitration and Labor Arbitration], 中国劳动[CHINA LABOR], May 2003, at 25#p#分页标题#e#[hereinafter Some Opinions].21 劳动力市场管理规定 [Regulations on Labor Market Management] (promulgated by the Ministryof Labor and Social Security, Dec. 8, 2000, effective Dec. 8, 2000) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=36355 [hereinafter Regulations on LaborMarket Management].22 Id. art. 1.23 Id. art. 2.24 Id. art. 4. The hired person also must register with the Labor Bureau within 30 days of beinghired. Id.368 COLUMBIA JOURNAL OF ASIAN LAW [19:2The regulations relating to recruitment25 provide for “public andfair competition,”26 and states that employers can acquire employees innumerous ways, including the use of job centers and advertising in themass media. 27 Interestingly, Article 9 requires employers placing ads forvacancies in the mass media to first obtain the approval of the local laborsecurity administrative authorities. 28 The Regulations also prohibit anumber of well-documented employer abuses, including charging thehired person a deposit fee or holding worker documents such as identitypapers.29The most significant provision in Labor Market Regulations isArticle 11, which bans employment discrimination in recruitment. Itreads: “[w]hile hiring a person, the employer shall not refuse to hire orenhance the hiring standard on the basis of gender, nationality, race, orreligion, except those provided by state laws concerning unsuitable typesof work or positions.”30The Labor Market Regulations also cover “careerrecommendation organs,” or employment services and agencies, bothnon-profit and for-profit.31 Article 21 is of significance, as it prohibitscareer recommendation agencies from certain activities including“recommending jobs prevented by laws and regulations”.32 This wouldseem to ban recommendation of a job advertised by an employer as “formen only,” where there is no legal basis for a sex-specific limitation.33Sanctions for violations of these regulations provide for generalfines of ¥1,000 (for violations of Article 10 or 14), and fines ranging from¥10,000 to ¥30,000 for a violation of several enumerated articles,including Article 21. 34 Penalties may also include revocation of the25 Id. arts. 7-14.26 Id. art. 7.27 Id. art. 8. These ways include (1) entrusting a job center; (2) participating in labor exchangingactivities; (3) publishing advertisements for employers in mass media; (4) recruiting on the Internet;and (5) other means stipulated by laws and regulations. Id.28 Id. art. 9.29 Id. art. 10(4)-(5).30 Id. art. 11.31 Id. arts. 15-25.32 Id. art. 21.33 See 中华人民共和国广告法 [Advertisements Law] art. 7(7) (promulgated by the Standing#p#分页标题#e#Comm. of the Nat’l People’s Cong., Oct. 27, 1994, effective Feb. 1, 1995), 1994 全国人民代表大会常务委员会公报[STANDING COMM. NAT’L PEOPLE’S CONG. GAZ.] (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=20976 (banning discriminatory advertising bystipulating the ad shall not contain any racial, ethnic, gender, or religious discrimination language).34 The Regulations on Labor Market Management, supra note 21, at arts. 34-38. Article 10 prohibitsfalse information etc., and article 14 requires registration of employees. Id. arts. 10, 14.2006] CHINA’S EMPLOYMENT DISCRIMINATION 369employer’s business license.35 Of greatest significance, however, is theabsence of sanction for violations of Article 11 prohibitions onemployment discrimination.In 2001, the Ministry of Personnel and the State Administrationfor Industry and Commerce issued the Rules on the Administration ofHuman Resources Markets (hereinafter Rules on HRM).36 These rulesapply to the administration of labor agency services, including the generalhiring activities of employers and the treatment of individual jobapplications.37 Article 3 mandates that “human resource market activitiesmust abide by the laws, regulations, and policies of this country, persist inthe principles of openness, equality, competition, and selection of the best. . . .”38The agencies are required to have the “capacity to independentlybear civil liabilities; and sanctions are provided for violations, rangingfrom ¥10,000 to ¥30,000. 39 Of greatest significance is Article 39, whichprovidesAny employing unit that, in violation of these Rules,refuses to recruit talents or heightens the qualificationsfor these talents by such reason as nationality, sex, andreligion or recruits personnel who should not berecruited . . . shall be ordered to make corrections bythe administrative department in charge of personnel ofthe people’s government . . . if the circumstances areserious, there shall be imposed a fine of less than¥10,000.40FIEs 41 have special requirements that apply to all employees,including expatriates and personnel from Taiwan, Hong Kong, and35 Id. art. 37.36人才市场管理规定 [Rules on the Administration of Human Resources Market] (promulgated bythe Ministry of Personnel, Sept. 11, 2001, effective Oct. 1, 2001, revised Mar. 22, 2005) (P.R.C),available at http://www.chinacourt.org/flwk/show1.php?file_id=101542.37 Id. art. 2.38 Id. art. 3.39 Id. arts. 6(4) and 35.40 Id. art. 39 (emphasis added).41 These include China-foreign joint equity ventures, China-foreign cooperative ventures, whollyforeign-owned enterprises, and China-foreign joint stock limited companies. 外商投资企业劳动管#p#分页标题#e#理规定 [Provisions on the Labor Administration in Enterprises with Foreign Investment] art. 2(promulgated by the Ministry of Labor & the Ministry of Foreign Trade & Econ. Coop., Aug. 11,1994, effective Aug. 11, 1994), 14 P.R.C. LAWS & REGS V-05-00-303, available athttp://www.chinacourt.org/flwk/show1.php?file_id=20454 .370 COLUMBIA JOURNAL OF ASIAN LAW [19:2Macao.42 Additionally, there are special rules on the employment offoreigners in China, including the requirement that their employer mustobtain employment permission.43Since Chinese labor laws apply to FIE employees,44 many FIEshave developed a practice whereby foreign employees sign employmentcontracts that stipulate that the law of the enterprises’ home country willgovern. 45 In 2003, new provisions were issued regulating themanagement of intermediary employment agencies servicing FIEs. 46These provisions require any FIE using intermediary services to conductits “activities through a specialized job intermediary agency jointlyestablished with a Chinese company, enterprise or other economicorganization for offering job intermediary services.”47 These agencies areauthorized to collect data about the employment market, provide jobrecommendations, conduct recruitment activities, job testing andappraising, and provide training courses. 48 They must abide by “theprinciples of voluntary participation, equity and good faith.” 49 Sanctionsare outlined, ranging from fines of ¥10,000 to ¥30,000, to loss of businesslicense.50Other HRM policies for FIEs fall under the 1994 Regulations.For recruitment, FIEs, including representative offices, are allowed to usethe labor services of an intermediary agency to hire Chinese employees.51These policies also regulate wage equities between Chinese and foreignpersonnel and embrace the requirement of equal pay for equal work.5242 劳动部关于贯彻外商投资企业劳动管理规定有关问题的复函 [Reply of the Ministry of Laboron Relevant Issues Regarding the Implementation of Provisions on Labor Administration inEnterprises with Foreign Investment] art. 1 (promulgated by the Ministry of Labor, July 14, 1995,effective July 14,1995) (P.R.C), available at http://www.chinacourt.org/flwkshow1.php?file_id=23070.43 外国人在中国就业管理规定 [Regulations on the Management of Employment of Foreigners inChina], art. 5 (promulgated by the Ministry of Labor and Pub. Sec., Jan. 22, 1996, effective May 1,1996) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=24485 (availableby subscription only).44 Jeremy B. Fox et al., Beyond the Image of Foreign Direct Investment in China: Where EthicsMeets Public Relations, 56 J. BUS. ETHICS 317, 317 (2005).45 More Foreign Employees Working in Shanghai, CHINA STAFF, Jan. 2005, at 34.#p#分页标题#e#46 中外合资人才中介机构管理暂行规定 [Interim Provisions Concerning the Management ofChinese-foreign Joint Job Intermediary Agencies] (promulgated by the Ministry of Personnel, theMinistry of Commerce and State Administration for Industry & Commerce, Sept. 4, 2003, effectiveNov. 11, 2003) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=89004.47 Id. art. 3. Wholly foreign-owned job intermediary agencies are prohibited. Id.48 Id. art. 11.49 Id. art. 12.50 Id. arts. 16-18.51 Provisions on the Administration of Labor in Foreign-Invested Enterprises, supra note 41, at art.5.52 Id. art. 14.2006] CHINA’S EMPLOYMENT DISCRIMINATION 371Two regulations related to this area were promulgated in 1997 by theMinistry of Labor: the Measures for the Trial Enforcement of theGuidelines for Wage Level System in Pilot Areas and the ProvisionalMeasures for the Administration of Wage Income in Foreign-InvestedEnterprises.53In sum, the Chinese government is seeking to regularize andstandardize HRM practices in China through labor market regulation.However, the government is still struggling to respond to persistentclaims of inequality and inadequate legislative remedies.2. Workplace Discrimination: Anecdotal GlimpsesInequality and discrimination against different categories ofemployees occur in every society. China is interesting both because ofthe diversity of workers reportedly facing obstacles to equal employmentopportunities, and because of the sheer size of its labor force. That sizemakes the number of workers within each category economicallysignificant in terms of the potential waste of capable and employablehuman resources. Categories of reported victims of discriminationinclude gender, race, ethnicity, health, disability, religious belief, age,height, and migrant status.54While it is true that anecdotal incidents of employmentdiscrimination can be isolated and atypical, they also may represent widerpatterns of practice; the question of which it actually is should be left forfurther study by government and social scientists. This study attempts toshow only that there are winds of activity blowing, ringing a bell ofconcern. That concern, raised by the anecdotal glimpses which followbelow, should prompt discussion and analysis as to the current status ofChina’s anti-discrimination employment laws.a. GenderIn 1955, Mao Zedong said,53 试点地区工资指导线制度试行办法 [Measures for the Trial Enforcement of the Guidelines forWage Level System in Pilot Areas] (promulgated by the Ministry of Labor, Jan. 30, 1997, effectiveJan. 30, 1997) (P.R.C), available at http://www.molss.gov.cn/correlate/lbf199727.htm; 外商投资企业工资收入管理暂行办法 [Provisional Measures for the Administration of Wage income in#p#分页标题#e#Foreign-Invested Enterprises] (promulgated by the Ministry of Labor, Feb. 14, 1997, effective Feb.14, 1997) (P.R.C.), available at http://www.molss.gov.cn/correlate/lbf199746.htm.54 See Tao, supra note 2; Tongue-Tied Dialect, supra note 2; Shang Shui, supra note 2; and DisputeArises, supra note 2.372 COLUMBIA JOURNAL OF ASIAN LAW [19:2Enable every woman who can work to take her place onthe labor front under the principle of equal pay forequal work. This should be done as soon as possible.55In 1990, China ratified the ILO Convention on EqualRemuneration for Equal Work56 and, with subsequent legislation andgovernment policies discussed below, sought to curb genderdiscrimination in many areas of society, including education, politicaloffice and economic opportunity. 57 Nonetheless, wage disparitiesbetween men and women remain, with urban women earning aboutseventy cents for every dollar earned by men for similar work and ruralwomen earning less than sixty cents per dollar earned by their malepeers.58 The MOLSS reported that an investigation of sixty-two selectedcities “clearly shows that 67% of the work units set gender limits andexpressly stipulate in writing that females must not become pregnant orbear children during the term of their employment.”5955 JOHN DEFRANCIS, ANNOTATED QUOTATIONS FROM CHAIRMAN MAO 136 (1975); and seeEquality Called for Women, CHINA DAILY, July 2, 2004, available at http://www.china.org.cn/english/China/100112.htm.56 International Labour Organization, Convention Concerning Equal Remuneration for Men andWomen Workers for Work of Equal Value, 165 U.N.T.S. 32 (1951). For ratification status, seehttp://www.ilo.org/ilolex/cgi-lex/ratifce.pl?C100.57 U.N. Committee on the Elimination of Discrimination against Women, 20th Sess., Third andFourth Periodic Reports of States Parties, 2-9, U.N. Doc. CEDAW/C/CHN/3-4 (1997). In a recentreport by the United Nations Committee on Economic, Social and Cultural Rights reviewing China’sreport on its implementation of Articles 16 and 17 of the International Covenant on Economic,Social and Cultural Rights, G.A. Res. 2200, U.N. GAOR, 21st Sess., Supp. No. 16, at 64, U.N. Doc.A/6316 (1966), the Committee, in its Concluding Observations, included as one of its “Principles ofConcerns,” “the persistence of gender inequalities in practice in the State party, particularly withregard to employment and participation in decision-making. Article 16 of the Covenant requiresState Parties of the Convention to submit periodical reports to the Secretary-General of the UnitedNations, on the measures which they have adopted and the progress made in achieving theobservance of the rights recognized under the Convention. Article 17 further requires that reportsmay indicate factors and difficulties affecting the degree of fulfillment rights recognized under the#p#分页标题#e#Convention, and reports shall have a precise reference of information. International Covenant onEconomic, Social and Cultural Rights, arts. 16-17, G.A. Res. 2200, U.N. GAOR, 21st Sess., Supp.No. 16, at 64, U.N. Doc. A/6316 (1966). The Committee regrets that it has not received sufficientinformation from the State party regarding affirmative action to promote gender equality andmeasures to prevent sexual harassment in the workplace.” U.N. Committee on Economic, Socialand Cultural Rights, 34th Sess., Concluding Observations of the Committee on Economic, Socialand Cultural Rights People’s Republic of China, at 3, U.N. Doc. E/C.12/1/Add.107 (2005)[Hereinafter U.N. Concluding Observations]. It recommends “the State party to undertake effectivemeasures to ensure the equal right of men and women to enjoy economic, social and cultural rightsas provided for in Article 3 of the Covenant, including through implementing the principle of equalpay for work of equal value, the elimination of wage gaps between men and women, and providingequal opportunities for both men and women.” Id. at 7.58 U.S. DEPT. OF STATE, COUNTRY REPORTS ON HUMAN RIGHTS PRACTICES (2004), available athttp://www.state.gov/g/drl/rls/hrrpt/2004/41640.htm (last visited Feb. 27, 2006) [hereinafter StateDept. Rpt.].59 Tao, supra note 2.2006] CHINA’S EMPLOYMENT DISCRIMINATION 373The All China Federation of Trade Unions (ACFTU) has reportedsome of the stark conditions women face in the workplace. 60 TheACFTU compiled information gathered between 1978 and 2002, andfound reforms and transition to a market economy were less kind towomen workers and, among other findings, noted that the layoff ofwomen occurs at a significantly higher percentage than men. 61 Inaddition, women were reported to find reemployment at only a 39% rate,compared with men at 63.9%.62 The study found that between 1990 and2000—the early years of market transition—the wage gap betweenfemale and male workers dropped from 77.5% to 70.1%. 63 In 2002,“there were twice as many women [as men] in jobs below the ¥500(approximately US$60) monthly income level, with 1.5 times as manymen holding ¥2,000 (approximately US$240) jobs as women.” Inaddition, women were said to hold only 1.3% of management posts in allorganizations during 2002. 64 The ACFTU Report concluded that“problems faced by female employees result from the influence of [a]market economy and society.”65 Of course, there are in fact many factorsthat cause inequality in society, including education level, experience,qualifications, and an employers’ intention to discriminate.Recent female college graduates have indicated their frustrationwhile looking for jobs. It is said to be “an open secret in China that#p#分页标题#e#female college graduates suffer discrimination from employers whenapplying for jobs, with the inequality known to almost all collegestudents, including graduate students.” 66 Some graduates have even60 The report, cited in CHINA DAILY, was compiled after studying information gathered between1978 and 2002, on the working lives of female workers in Shanghai, Chongqing and provinces suchas Liaoning, Jiangsu, Zhejiang, Guangdong and Gansu. It found that as reforms have beenimplemented in the transition to a market economy, industries such as the textile sector and someother female-dominated areas have sustained large-scale layoffs. Not surprisingly, adisproportionate number of women were laid off. See Equality Called for Women, supra note 55.61 Id.62 Id. The All China Federation of Women (ACFW) confirmed these findings in its own report,cited in Equality Called for Women, supra note 60.63 Id.64 Id.65 Id.66 Xing Zhigang, Job Hunt a Battle for Female Grads, CHINA DAILY, Apr. 3, 2004, available athttp://www.chinadaily.com.cn/english/doc/2004-04/02/content_320244.htm..374 COLUMBIA JOURNAL OF ASIAN LAW [19:2opted to include revealing photos—some wearing bikinis or short skirts—on their resumes.67The ACFTU Report showed that many employers, in clearviolation of labor laws, refused to issue labor contracts to womenworkers, especially younger women. These employers often requiredthem to work long overtime hours, ranging from seventy-six to ninetyhours per week, and assigned female workers to hazardous jobs inviolation of labor laws.68 The Report stated,Non-SOEs very rarely provide maternity benefits, nordo they accommodate the special needs of womenduring menstrual periods, pregnancy, or after the birthof a child. Some female employees still work highabove the ground or in low temperatures, or carry outhard physical labor while menstruating. Women whoare seven months pregnant are scheduled to work nightshifts in some factories.69The ACFTU Report concludes by noting that “sex discriminationis the norm in today’s workplace. The progress made in the early decadesof the PRC has in many cases been abandoned in the years sinceeconomic reform began.”70An increasing number of sexual harassment cases are now beingbrought before the courts in China.71 With some 86% of women in arecent survey by the Beijing-based China Times newspaper identifyingthemselves as “victims of sexual harassment” in the workplace, in publictransportation, and in hospitals, a draft amendment to outlaw sexual67 Id. Xiaqqo Yu, a female undergraduate at Beijing Normal University reports that her job searchesat job fairs and elsewhere were often met with “[I]f only you were a boy.” Reportedly, it is not#p#分页标题#e#uncommon for employers to openly state their requirement or preference for male applicants andthis attitude is enhanced by the usual age of a female college graduate, which, at 22, is thought bysome employers to be entering their time for marriage and family. A personnel manager at aBeijing electronics firm reportedly stated his view that “employing more women will push up ourproduction cost because female workers have to be given pregnancy and maternity benefits in linewith labour laws.” Id.68 Wang Zhiyong, Women in the Workplace: A Great Leap Backward, 中国网 [CHINA.ORG.CN],(Mar. 22, 2004), available at http://www.china.org.cn/english/2004/Mar/90950.htm. This source,China Internet Information, is under the auspices of China International Publishing Group and StateCouncil Information Office.69 Id.70 Id.71 Wang Ying, Women to Get Protection From Harassment, CHINA DAILY, Mar. 5, 2005, availableat http://www.chinadaily.com.cn/english/doc/2005-03/05/content_421943.htm.2006] CHINA’S EMPLOYMENT DISCRIMINATION 375harassment was introduced to the NPC Standing Committee in June 2005,and was enacted into law on August 28, 2005.72b. Migrant WorkersAppearing to urbanites as aimless and ominous aserrant waters, China’s sojourning peasant transients inthe cities are outsiders, out of place. In their millions,they seem to city folk and their supervisors to bestreaming in, as if incessantly, out of control. In theminds of their metropolitan detractors, they are aptlylabeled: they are unrooted noncitizens, wanderers; theyare the elements of the “floating population.” 73The number of migrant workers flowing between the rural andurban locations of China is estimated to be at least 130 million,74 andsome project that this number will reach 300 million by 2010.75 The2000 census figures reported that 65% of the flow was intra-province,with young and middle-aged people between fifteen and thirty-five yearsof age constituting more than 70% of all migrant workers.76 Much of themovement is a result of China’s transition to a market economy and itsrelaxation of the household registration (hukou) system which prior to thereforms had restricted citizen movement.77Migrant workers eager for better wages travel to urban areas tofind jobs better than those available near home. Urban centers have manysuch jobs and the labor of migrant workers contributes to China’seconomic development and its transition to a market economy. Despitethis economic contribution, many stories have emerged that highlight howmigrant workers are often taken advantage of in the workplace: migrant72 Id.; An Epic Struggle Against Sexual Harassment, CHINA DAILY, Aug. 29, 2005, at 5, available athttp://www.china.org.cn/english/China/140117.htm; Liu Li, Revised Law Aims to Protect Women’s#p#分页标题#e#Rights, CHINA DAILY, June 27, 2005, at 1, available at available at http://www.chinadaily.com.cn/english/doc/2005-08/29/content_472897.htm.73 DOROTHY J. SOLINGER, CONTESTING CITIZENSHIP IN URBAN CHINA: PEASANT MIGRANTS, THESTATE AND THE LOGIC OF THE MARKET 1 (1999) (footnotes omitted).74 Reforms of China’s Household Registration System Underway, 中 国 网 [CHINA.ORG.CN],available at http://www.china.org.cn/baodao/english/newsandreport/2002sep1/18-4.htm (last visitedFeb. 23, 2006). See also, China’s Floating Population Exceeded 10% of Total Population, supranote 9. Other estimates put the figure at 140 million in 2003, rising from 70 million in 1993. Id.75 David Lague, The Human Tide Sweeps into Cities, 166 FAR E. ECON. REV. 24, 25 (2003).76 Id.77 For discussion of the hukou system, see FEI-LING WANG, ORGANIZING THROUGH DIVISION ANDEXCLUSION: CHINA’S HUKOU SYSTEM (2005). For more information on the early uses of hukouand its ties to employment, housing, education, and social security, see Reform of China’sHousehold Registration System Underway, supra note 74.376 COLUMBIA JOURNAL OF ASIAN LAW [19:2workers are often given dirty, difficult, and dangerous jobs, made to workunder sub-standard working conditions, or sometimes not paid for monthsat a time.78Many hardships exist for such workers who are far from homeand in need of money.79 Certainly, migrant workers’ lack of awareness oftheir legal rights combined with urban employers’ HRM methods, illegalpractices of withholding wages, overtime pay, and long working hourrequirements, all contribute to workplace discrimination against migrantworkers. This migrant status can arguably be associated with one’s“social origin,” a topic discussed later in the section dealing with workerdefinitions under international covenants.80Gender also often blends with migrant worker discrimination inthe workplace as female migrant workers (dagong mei) are oftenpreferred to work in certain factory jobs.81 The connection has beendescribed as follows.More than 10 million migrant laborers work inGuangdong Province according to China’s 2000national census, and the Guangdong Statistical Bureauestimates that more than 60% of these are women.Migrant workers tend to staff wholly-foreign-ownedenterprises, joint ventures, township and villageenterprises, and private enterprises that produce toys,clothing, footwear, electronics, and other consumergoods. Female workers usually come to Guangdongfrom poorer provinces along the Yangzi River such asHubei, Hunan, Jiangsu, Jiangxi, and Sichuan. Theyfind jobs in Guangdong factories through labor bureaus,78 See Zhiqiang Liu, Institution and Inequality: The Hukou System in China, 33 J. COMP. ECON. 133,#p#分页标题#e#137 (2005). Vice-Premier Zeng Peiyan revealed in a 2004 national conference that more than ¥360billion (US$43 billion) in unpaid wages remain owed to migrant workers at thousands of real estateprojects. See Zeng: Pay All Owned Wages to Migrants, CHINA DAILY, Aug. 24, 2004, available at2004 WLNR 11949200; see also, AM. CTR. FOR INT’L LABOR SOLIDARITY, JUSTICE FOR ALL: THESTRUGGLE FOR WORKER RIGHTS IN CHINA 39-40 (2004).79 See Pun Ngai, Women Workers and Precarious Employment in Shenzhen Special Economic Zone,China, 12 GENDER & DEV. 29, 30 (July 2004).80 It is argued that the use of “social origin” in ILO Convention No. 111 covers China’s internalmigrant workers. U.S. Dept. of Labor, International Labor Standards: Discrimination andEquality, available at http://www.dol.gov/ilab/webmils/intllaborstandards/discrimination.html (lastvisited Feb. 27, 2006) [hereinafter International Labor Standards]; see infra notes 163 and 164under IIIA.2.b.81 Zhang Ye et al., Hope for China’s Migrant Women Workers, THE CHINA BUS. REV., May/June2002, at 30, 31; see also Xiao-Yuan Dong et al., Gender Segmentation at Work in China’sPrivatized Rural Industry: Some Evidence from Shandong and Jiangsu, 32 WORLD DEV. 979,(2004). Pun Ngai, supra note 79, at 29.2006] CHINA’S EMPLOYMENT DISCRIMINATION 377from relatives and friends, or by word of month.Guangdong’s economy has grown more than 14% peryear on average during the last decade, and the provincehas accounted for about half of the country’s total GDPgrowth. Guangdong alone generates more than 40% ofChina’s foreign trade in terms of value. While both thecentral and local governments have recognized theindispensable contribution of migrant labor, so fargovernment policy [as of 2002] has provided migrantlaborers few protections.82This situation is confirmed by other sources:In 2003, some 70% of the 5.5 million migrant workersin the Shenzhen special economic zone were women.In Shenzhen’s industrial district of Nanshan, 80% of thehalf-million workers were women; their average agewas 23.83Thus, the cheap cost of labor provided by migrant workers formsa very large segment of China’s workforce, and seems to be a significantpart of China’s economic development during its economic transition.Whether migrant status should or will be designated as a protected classsimilar to gender, however, remains uncertain. But the continuingpresence and growth of this “floating population” of migrant workers willcertainly impact China’s labor and social security laws significantly,especially in the areas of labor contracts, worker injuries, and82 Ye et al., supra note 81, at 31. New protections under the labor laws were issued by the central#p#分页标题#e#government in 2003 and 2004, discussed infra in IIIA.2.b.83 AM. CTR. FOR INT’L LABOR SOLIDARITY, supra note 78, at 39 (original footnote omitted). Seealso Yuchao Zhu, Workers, Unions and the State: Migrant Workers in China’s Labour-intensiveForeign Enterprises, 35 DEV. & CHANGE,1011(Nov. 2004).378 COLUMBIA JOURNAL OF ASIAN LAW [19:2unemployment.84 If illegal employment discrimination is present becauseof the worker’s migrant status, the remaining question is whether and howChina’s anti-discrimination laws will address it.c. Race / EthnicityThough China has a relatively homogeneous population as 92percent of its people are of the Han ethnicity, the remaining 8% includesover 100 million Chinese of fifty-five different ethnic minorities. 85Therefore, “race” in China is often considered in the context of ethnicity.Defining “race” can be a complex undertaking in China, or any othercountry. For example, the U.S. Supreme Court defined “race” under an1800s civil rights law as being “genetically part of an ethnically andphysiognomically distinctive subgrouping of homo sapiens.”86The Chinese government in its report under the InternationalConvention on the Elimination of All Forms of Racial Discrimination(ICERD) (agreed to since 1981) has defined “race” as “race, colour,descent, or national or ethnic origin.”87 According to the InternationalCommittee’s comments, this report urges China to:84 Ingrid Nielsen et. al., Unemployment within China ‘s Floating Population: Empirical evidencefrom Jiangsu Survey Data, CHINESE ECON. (forthcoming 2006), manuscript available athttp://www.buseco.monash.edu.au/units/aberu/papers/unemployment-china-floating-population.pdf(last visited July 4, 2005). In a recent report by the United Nations’ Committee on Economic, Socialand Cultural Rights reviewing China’s report on its implementation of Articles 16 and 17 of theInternational Covenant on Economic, Social and Cultural Rights, the Committee, in its ConcludingObservations, stated as one of its "Principles of Concern", “the de facto discrimination againstinternal migrants in the fields of employment, social security, health service, housing and educationthat indirectly result, inter alia, from the restrictive national household registration system (hukou)which continues to be in place despite official announcements regarding reforms;” and theCommittee is “deeply concerned about the insufficient implementation of existing labour legislationin the State party that has resulted in generally poor conditions of work, including excessiveworking hours, lack of sufficient rest breaks and hazardous working conditions.” U.N. ConcludingObservations, supra note 57.#p#分页标题#e#85 U.N. Committee on the Elimination of Racial Discrimination, 59th Sess., Ninth Periodic ReportsSubmitted by States Parties, at 3, U.N. Doc. CERD/C/357 Add. 4 (Part I) (2001).86 St. Francis College v. Al-Khazraji, 481 U.S. 604, 613 (1987). Justice Brennan, in a concurringopinion noted, “I write separately only to point out the line between discrimination based on‘ancestry or ethnic characteristics’ and discrimination based on place of origin—the country ‘wherea person was born, or more broadly, the country from which his or her ancestors came.’ [internalcitations omitted] Often, the two are identical as a factual matter.” Id. at 614. National origindiscrimination then can include “place of origin, physical, culture or linguistic characteristics of thatgroup.” Id.87 International Convention on the Elimination of All Forms of Racial Discrimination, art.1, openedfor signature Dec. 21, 1965, 660 U.N.T.S. 195 (entered into force Jan. 4, 1969) [HereinafterICERD]; see also summary in Ninth Periodic Reports Submitted by States Parties, supra note 85, at5-7.2006] CHINA’S EMPLOYMENT DISCRIMINATION 379consider giving full effect to the provisions in theConvention in its domestic legal order and that it ensurethe penalization of racial discrimination; and also, thatit ensure access to effective protection and remediesthrough the competent national tribunals or other stateinstitutions, against all acts of racial discrimination. Itshould be noted that the structural inadequacies inrespect of anti-discrimination laws are in violation ofArticle 4 of ICERD.88This Report clearly calls for prohibitions on all acts of racialdiscrimination. It therefore promotes the elimination of anydiscrimination based on ethnicity, including that of national ethnicminorities.While China must be credited with great success for the economicprogress of regions with substantial racial minority populations, theICERD Report makes the point “that economic development in minorityregions does not ipso facto entail the equal enjoyment of economic,social, and cultural rights in accordance with Article 5(e) of theConvention.”89 Anecdotal information about hiring practices in Chinasuggests that some employers continue to show racial prejudice againstoutsiders (those not of the local area), migrants, ethnic minorities, thosespeaking a different language, and those “looking different”.90 Whetherthese purported instances of racial discrimination in employment reflect apattern or are isolated instances is best left to further scientific inquiry.Of course, even if China were to enact and enforce a plethora of antidiscriminationlaws, as has been done in the United State, such would not#p#分页标题#e#guarantee the eradication of racial discrimination.9188 U.N. Committee on the Elimination of Racial Discrimination, 59th Sess., 1648th & 1649th mtg.at 3-5, U.N. Doc. CERD.C.59.Misc.16.Rev.3 (2001) [emphasis added].89 See Report of the Committee on the Elimination of Racial Discrimination, U.N. GAOR, 59thSess., Supp. No. 18, at 48, U.N. Doc. A/56/18 (2001); see also Information Office of the StateCouncil of the People’s Republic of China (Beijing), Regional Autonomy for Ethnic Minorities inChina, available at http://www.china.org.cn/e-white/20050301 (last visited Feb. 27, 2006).90 In a reported case, a Hangzhou-based hotel refused to hire a job applicant, simply because theapplicant spoke in a non-local dialect. See Tongue-Tied Dialect, supra note 2. Whether some or allof these categories may fall under “social origin” is discussed in III.2.b, infra.91 HAROLD S. LEWIS, JR. & ELIZABETH J. NORMAN, LEWIS AND NORMAN’S HORNBOOK ONEMPLOYMENT DISCRIMINATION LAW AND PRACTICE 215-25 (2d ed. 2004) [Hereinafter LEWIS &NORMAN]. During fiscal year 2004, The U.S. Equal Employment Opportunity Commission(EEOC) received 27,696 charges of race discrimination. The EEOC has observed an increasingnumber of color/race discrimination charges. Color/race bias filings have increased by 125% sincethe mid-1990s. U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, RACE/COLORDISCRIMINATION, http://www.eeoc.gov/types/race.html (last visited Feb. 27, 2006).380 COLUMBIA JOURNAL OF ASIAN LAW [19:2Ethnicity is another category of worker status, and can be closelyassociated with race, as discussed above.92 In China, the population ofethnic national minorities exceeds 106 million (about 8.4% ofpopulation), and it is argued that there continues to be job discriminationat the hands of the majority Han, particularly in border areas near theminority-dominated autonomous regions.93 There have been anecdotalreports of preference for Hans over minorities for new construction jobsin Xinjiang, Inner Mongolia, and Tibet.94 These reported incidents maymerely reflect preference for education and technical skills, such as wouldbe required in some of the new projects on oil and gas pipelines. In themid-1990s, some reports by foreign advocates claimed discriminatorytreatment was occurring in Tibet as to wages and preference forproficiency in Mandarin, the national language, over the local language ofTibetan. 95 It is reported that in Hangzhou, the capital of ZhejiangProvince, bus drivers and attendants must speak standard Mandarin(Putonghua) during working hours, and face employer-imposed fines ifcaught speaking local dialects.96In the United States, employment discrimination based on“physical, cultural, or linguistic characteristics of a national group” is#p#分页标题#e#prohibited by law where it is not shown to be a “bona fide occupationalqualification” or “business necessity.” 97 Discrimination based onlanguage has been categorized as both “race” and “national origin”discrimination, as there is often a clear connection between ethnicity and92 Merriam-Webster’s Collegiate Dictionary defines ethnicity as particular affiliation of “largegroups of people classed according to common racial, national, tribal, religious, linguistic, orcultural origin or background.” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 326 (11th ed.2003). The U.S. Supreme Court defined “race” as being “genetically part of an ethnically andphysiognomically distinctive subgrouping of home sapiens.” St. Francis College v. Al-Khazraji,481 U.S. 604, 607 (1987).93 State Dept. Rpt., supra note 58. In a recent report by the United Nations’ Committee onEconomic, Social and Cultural Rights reviewing China’s report on its implementation of Articles 16and 17 of the International Covenant on Economic, Social and Cultural Rights, the Committee, in itsConcluding Observations, stated as one of its "Principles of Concern", “the reports regarding thediscrimination of ethnic minorities in the State party, in particular in the field of employment,adequate standard of living, health, education and culture.” U.N. Concluding Observation, supranote 57, at 5.94 State Dept. Rpt., supra note 58.95 It is reported that a minimum wage has been introduces everywhere in China except for the TibetAutonomous Region. Tibetan Centre for Human Rights And Democracy, 1997 Annual Report:Human Rights Violations In Tibet (on file with author). See also Osman Chuah, Muslims in China:The Social and Economic Situation of the Hui Chinese, 24 J. MUSLIM MINORITY AFF.155, 155,(Apr. 2004).96 Bus Personnel Must Speak Putonghua Or Else, CHINA DAILY, June 4, 2005, http://www.chinadaily.com.cn/english/doc/2005-06/04/content_448499.htm.97 See 29 C.F.R. § 1606.1 (2005); 42 U.S.C. § 2000e-2(e)(i) (2005); 42 U.S.C. §§ 2000e-2(k)(1)(A)(i) (2005).2006] CHINA’S EMPLOYMENT DISCRIMINATION 381language.98 Employer policies of speak-English-only still generate legalcontroversy.99d. Disability / HealthThe term “disability” potentially includes many areas, including aperson’s physical or mental limitations (such as blindness, deafness, etc.)or health status (such as having SARS, hepatitis B, or HIV/AIDS, injuredworkers, etc.).100 Protecting against improper disability discrimination inthe workplace is usually balanced against an employer’s desire to have anotherwise qualified worker. China has an estimated sixty million disabledpeople (about 5% of the population), with about 80% residing in rural#p#分页标题#e#areas.101 In 2000 it was estimated that 75% of disabled people had sometype of employment.102 In 1990, China passed a law titled the Protectionof Disabled Persons,103 the primary emphasis of which was prohibiting98 Hernandez v. N.Y., 500 U.S. 352, 364 (1991) (in the context of a community with substantialforeign-speaking ethnic population, classification based on language can purposeful discriminationagainst ethnicity).99 See Garcia v. Spun Steak Co., 998 F.2d 1480 (9th Cir. 1993), cert. denied, 512 U.S. 1228 (1994);for general discussion, see AMERICAN CIVIL LIBERTIES UNION OF NORTH CALIFORNIA, LANGUAGERIGHTS, http://www.aclunc.org/language/lang-report.html (last visited Feb. 27, 2006).100 BLACK’S LAW DICTIONARY 474 (8th ed. 2004).101 CENTER FOR INTERNATIONAL REHABILITATION, PEOPLE’S REPUBLIC OF CHINA RIGHTS OFPEOPLE WITH DISABILITIES, available at http://www.cirnetwork.org/idrm/reports/compendium/china.cfm (last visited Feb. 27, 2006). In May, 2005 it was reported that of “China’s 25 milliondisabled job seekers . . . 1 million live in urban areas with Beijing home to over half their number,according to China’s Disabled Persons Federation (CDPF). The employment rate of the disabled inBeijing, those of working age and capable of employment, is around 85%.” The Federationreported though many have jobs, “their general employment situation remains grave and they arefacing increasing pressure and difficulty in finding a job.” Liu Li & Wu Chong, Nation to CreateMore Jobs for Disabled, CHINA DAILY, May 16, 2005 at 2, available at http://www.chinadaily.com.cn/english/doc/2005-05/16/content_442328.htm.102 Center for International Rehabilitation, supra note 101.103 中华人民共和国残疾人保障法 [Law on the Protection of Disabled Persons] (promulgated bythe Standing Comm. Nat’l People’s Cong., Dec. 28, 1990, effective May 15, 1991) 14 P.R.C. LAWS& REGS V-03-00-101, available at http://www.chinacourt.org/flwk/show1.php?file_id=11967[hereinafter Law on Protection of Disabled Persons]. “Disability” is defined as “one who suffersfrom abnormalities or loss of a certain organ or function, psychologically, physiologically or inanatomical structure, and who has lost wholly or in part the ability to engage in activities in anormal way.” Id. art. 2.382 COLUMBIA JOURNAL OF ASIAN LAW [19:2discrimination in general,104 and this law covers employment situations inprohibiting disability-based discrimination.105On the international level, while participating in a United NationsWorking Group on the Convention on Rights of Persons with Disabilities,China proposed a draft “[aimed] at recognizing and protecting the rightsof persons with disabilities,” eliminating discrimination, and promoting#p#分页标题#e#equal opportunity.106Whether employment discrimination based on disability exists oris widespread in the Chinese workplace depends somewhat upon the legalinterpretation of disability, discussed in greater detail in a later section.The number of Chinese workers screened out from equal employmentopportunities by an appearances requirement (“five facial organs in theright place”), mental or physical condition, or health consideration awaitsfurther research and discovery by social scientists.107Worker health is another factor commonly scrutinized in theemployment of workers and is closely associated with disabilities.Chinese employers have broad discretion in the selection of employees,and often screen out those whom they feel may be a problem, includingthose with certain health ailments such as hepatitis B and HIV/AIDS.The number of Chinese citizens afflicted by these two diseases number120 million (approximately 10% of the population) and 840,000,respectively.108104 Center for International Rehabilitation, supra note 101. In a recent report by the United Nations’Committee on Economic, Social and Cultural Rights reviewing China’s report on its implementationof Articles 16 and 17 of the International Covenant on Economic, Social and Cultural Rights, theCommittee, in its Concluding Observations, stated as one of its “Principles of Concern,” the“reported persistence of discrimination against persons with physical and mental disabilities,especially in the fields of work, social security, education and health.” UN ConcludingObservations, supra note 57, at 3.105 Law on Protection of Disabled Persons provides that “[g]overnmental departments concernedshall, in determining the quota for employing and engaging workers and staff members, allot acertain proportion of the quota to disabled persons.” Law on Protection of Disabled Persons, supranote 103, at art. 33.106 See Proposed Draft by China on U.N. Ad Hoc Committee Convention on Rights of Persons withDisabilities, §§ 1-3 (2003), art. 1, available at http://www.un.org/esa/socdev/enable/rights/wgcontrib-china.htm (last visited Feb. 27, 2006). The Convention, in Article 8, dealing withemployment, recognizes the right to employment under equal conditions and “equal pay for equalwork by eradicating any discriminatory regulations and practices that restrict or deny persons withdisabilities in job-seeking, job retention and professional promotion.” Id. art. 8.107 Examples of anecdotal incidents of disability discrimination reported in newspaper accountsinclude disfigurement on a hand, “ugly appearance,” and being too short by 5 millimeters. SeeShang Shui, supra note 2.108 Statistics Released by Ministry of Health (May 1, 2005) (on file with author); YE JINGYI &WEI#p#分页标题#e#QIAN, LEGAL PROBLEMS CONCERNING HEALTH DISCRIMINATION IN EMPLOYMENT,http://www.humanrights.cn/zt/magazine/200402004921170301.htm (last visited Feb. 27, 2006); seealso Liang Chao, supra note 10.2006] CHINA’S EMPLOYMENT DISCRIMINATION 383A survey conducted by Britain’s Synovate Healthcare reportedthat 52% of 425 hepatitis patients said they once lost a job or educationalchance because of their disease; further, about 47% were concerned thatemployers would terminate them if the disease were discovered.109 OneGuangdong machinery and electronics company compelled 107 hepatitisB carriers to quit because of their condition.110In April 2003, one university student in his senior year applied fora government position in Zhejiang Province and passed both theexamination and the interview. However, he was rejected once theemployer discovered he was a hepatitis B carrier. Distressed, the student,Zhou Yichao, retaliated by stabbing two officials, killing one. Zhou waslater tried and sentenced to death.111 His case aroused public attentionand stirred national pressure for protective legislation.112Another student who was also rejected for a government job aftertesting positive for hepatitis B chose to file a law suit against thegovernment, challenging the rejection.113 The People’s Court in XinwuDistrict of Wuhu City in Anhui Province accepted the case, China’s firsthepatitis B discrimination case. In April, 2004 the court ruled in thestudent’s favor upon a finding of improper discrimination.114 However,the court did not order the government to provide a job for the student.115Some local governments, including the government of HunanProvince in central China, have reportedly dropped bans on hiringHepatitis B carriers, perhaps in anticipation of new legislation regulatingdisability and health qualifications for jobs in government service. 116However, as late as 2004, health/disability requirements for governmentjobs seemed to persist. For example, in Guangdong any applicant whomanifests listed diseases or physiological deficiencies is deemed to beunqualified for a position in the Guangdong public service. A partial listincludes, an obvious squint (xie shi), cleft lip, torticollis (wry neck),pigmentation moles, curvature of the spine, certain incomplete fingers,109 Hep B Carriers Allowed to Join Public Service, CHINA DAILY, Jan. 21, 2005, http://www.chinadaily.com.cn/english/doc/2005-01/21/content_411013.htm.110 Dispute Arises, supra note 2.111 See Liang Chao, supra note 10.112 曹林, 周一超悲剧的肝炎歧视成本 [Cao Lin, See the Cost of Discrimination against HBVCarriers from the Zhou Yichao Murder Case], 新闻周刊[CHINA NEWS WK.], Sep. 15, 2003, at 8,available at http://www.chinanewsweek.com.cn/2003-09-22/1/2262.html; See also Ye & Wei,#p#分页标题#e#supra note 108.113 See Liang Chao, supra note 10.114 Court Confirms Right of Hepatitis B Carrier, CHINA DAILY, Apr. 3, 2004, http://www.chinadaily.com.cn/english/doc/2004-04/02/content_320351.htm; Government Loses Hep. BDiscrimination Case, SHENZHEN DAILY, June 1, 2004, at 4.115 Liang Chao, supra note 10.116 Hep B Carriers Allowed to Join Public Service, supra note 109.384 COLUMBIA JOURNAL OF ASIAN LAW [19:2vision tests lower than 4.9, hearing deficiencies, stuttering, a history ofenuresis (bed-wetting), signs of heart disease, hypertension,bronchiectasis, diabetes, hepatitis, too many fillings in their teeth, orlower jaw arthritis.117 Certain tests are available to allow an applicant toshow that his or her past history of disease is fully under control.118 Thislist may need to be revisited after a review of China’s recent laws andregulations.119e. Religious BeliefWhile discrimination based on religious beliefs is expresslyprohibited by the Labor Law, there are also other laws pertaining toreligion and religious discrimination that could, on a limited basis, beused to limit employment discrimination.120 However, there seems to bea paucity of reported incidents involving employment discriminationunder any of the laws relating to religious belief.f. Other Categories: Age and Heighti. Age117 广东省国家公务员录用体检实施细则(试行) [Regulations of Guangdong Province for PhysicalExamination on Hiring Public Servants (provisional)] art. 11 (Apr. 29, 2002), available athttp://www.rsj.sz.gov.cn/gzdt/200511/t8107.htm [hereinafter Guangdong Regulations].118 Id. art. 12.119 中华人民共和国传染病防治法 [Law on Prevention and Treatment of Contagious Disease](promulgated by the Standing Comm. of the Nat’l People’s Cong., Feb. 21, 1989, effective Sept. 1,1989, amended Aug. 28, 2004) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=96086 [hereinafter Contagious Disease Law]; 公务员录用体检通用标准(试行)[Health Qualifications for Hiring Civil Servants (provisional)] (promulgated by the Ministries ofHealth and the Ministry of Personnel, Jan. 17, 2005) (P.R.C.), available at http://www.dffy.com/faguixiazai/xzf/200501/20050123163654.htm [hereinafter Health Qualifications for Hiring CivilServants].120 Any public official interfering with the exercise of protected religious activities will facecriminal penalties. 中华人民共和国刑法 [Criminal Law] art. 251 (promulgated by the StandingComm. of the Nat’l People’s Cong., Mar. 14, 1997, effective Oct. 1, 1997, revised Feb. 28, 2005)03/1997 全国人民代表大会常务委员会公报[STANDING COMM. NAT’L PEOPLE’S CONG. GAZ.]138 (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=27762 [hereinafter#p#分页标题#e#Criminal Law]. Local government has the obligation to protect the religious freedom in ethnicminority regions. 中华人民共和国民族区域自治法 [Law on Regional National Autonomy] art. 11(promulgated by the Standing Comm. of the Nat’l People’s Cong., May 31, 1984, effective Oct. 1,1984, revised Feb. 28, 2001) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=36850 [hereinafter Law on Regional National Autonomy].2006] CHINA’S EMPLOYMENT DISCRIMINATION 385In China, there are reported to be many job advertisementsrequiring applicants to be, for example, “below 35-years old.”121 Thoughold age is generally revered in China, ads like this underscore theattitudes of many employers who hold stereotypes about the abilities ofolder people to work. But as the average age in China rises and as laborshortages appear from time to time, some employers have turned toemploying “older” workers with satisfactory results.122The age of retirement in China for some years has been set at fiftyfor female workers, fifty-five for female cadres, and sixty for maleworkers and cadres.123 Such policies may need to be adjusted in view ofthe increasing age of the population and the demands placed on pensionsduring long years of retirement.124 It seems the government must chosebetween eliminating this form of employment discrimination, or payingenormous amounts in unemployment and pension insurance.ii. HeightThough the Constitutions of both the United States and Chinaprovide that all citizens are equal,125 neither country’s anti-discriminationlabor legislation explicitly identify height as a protected status in the sameway that other characteristics such as race and gender are. Interestingly,history teaches that short people can become great leaders of countries aswell as companies.126121 白天亮, 招聘有歧视,依法促公平 [Bai Tianliang, Discrimination Exists in Hiring Process;Equality To Be Achieved Through Law], 人民日报[PEOPLES’ DAILY], Feb 11, 2003, at E1,available at http://past.people.com.cn/GB/shenghuo/78/116/20030211/920873.html.122 Dali L. Yang, China’s Looming Labor Shortage, 168 FAR E. ECON. REV. 19, 20 (2005).123 See 劳动和社会保障部办公厅关于企业职工”法定退休年龄”涵义的复函 [Reply by theMinistry of Labor and Social Security on the Meaning of “Legal Retirement Age” of the Workers inState-Owned Enterprises] (May 11, 2001), http://www.chinacourt.org/flwk/show1.php?file_id=37327 [hereinafter Reply on Legal Retirement Age]; certain female teachers, doctors, andscientific and technical personnel can retire at age sixty, but men in the same positions may workuntil age sixty-five. Christine M. Bulger, Note, Fighting Gender Discrimination in the Chinese#p#分页标题#e#Workplace, 20 B.C. THIRD WORLD L.J. 345, 358 (2000). Labor Law states that employees canenjoy social security benefits only after legal retirement. Labor Law, supra note 19, at art. 73(1).124 This issue will continue to grow as the rapidly aging population in China of persons aged sixtyfiveand over will have grown in 2000 to 2007 from 100 million to 200 million (which willconstitute 14% of China’s total population) increasing more than 14 million per year. Fu Jing, HugeSum to Be Put Into Social Security, CHINA DAILY, Sep. 18, 2004, http://www.chinadaily.com.cn/english/doc/2004-09/18/content_375540.htm.125 U.S. CONST. amend. XIV, § 1; 宪法 [CONST.] art. 33 (2004) (P.R.C.).126 For example, Deng Xiaoping’s height was 4 feet 11 inches and the shortest U.S. President, JamesMadison, was 5 feet 4 inches. See Dan Harbord, Famous People Height List, http://members.shaw.ca/harbord/heights3.html (last visited Feb. 27, 2006). For an essay on being short, seeJonathan Rauch, Short Guys Finish Last, ECONOMIST, Dec. 23, 1995, at 19.386 COLUMBIA JOURNAL OF ASIAN LAW [19:2In the United States, the anti-discrimination laws do not protectheight itself, but do so indirectly through other protected statuses, such asgender or national origin.127 An employer’s use of non-job-related heightrequirements for job applicants (e.g., prison guards) whichdisproportionately disqualified large numbers of potential women andapplicants of Asian descent was held to be in violation of the law.128Despite finding no discriminatory intent to the policy, the court ruled itsindirect effect (“disparate impact”) of denying jobs to many qualifiedpersons violated anti-discrimination protections.While height limitations are often spelled out in government jobqualifications in China,129 they are less likely to be found in the jobrequirements of private employers. Government limitations on heightmay often be found in the physical requirements for governmentpositions. For example, in the Physical Examination Regulations forHiring Public Servants in Guangdong Province, Clause 11 of Article 12states, “[M]en must be above 1.6 meters [five feet, three inches] andforty-eight kilograms [105.8 pounds]; females must be above 1.5 meters[four feet, eleven inches] and forty-two kilograms [92.59 pounds]”;whereas, Article 14 says, “police must be taller and have bettereyesight.”130 Such height restrictions may well eliminate women andcertain ethnic groups from the applicant pool without consideration oftheir merits.III. CHINA’S ANTI-DISCRIMINATION LAWSA. Laws Providing “Protected Status”At the end of 2004, China reported having 752 million people inits workforce, including 264.8 million urban workers.131 Among that#p#分页标题#e#group, 45.5% were women, of whom 97.3 million were employed asurban workers. 132 Among the 100-150 million migrant workers,127 16B AM. JUR. 2D Constitutional Law §§ 808-17; and see, statutory interpretation of Title VIIdealing with height in Dothard v. Rawlinson 433 U.S. 321 (1977).128 Dothard v. Rawlinson, 433 U.S. 321 (1977).129 Guangdong Regulations, supra note 117. See also Joseph Kahn, Chinese People’s Republic IsUnfair to Its Short People, N. Y. TIMES, May 21, 2004, at A13.130 Guangdong Regulations, supra note 117.131 劳动及社会保障部, 国家统计局, 2004 年度劳动和社会保障事业发展统计 [MINISTRY OFLABOR AND SOCIAL SECURITY & NATIONAL BUREAU OF STATISTICS, 2004 STATISTICS ON THELABOR AND SOCIAL SECURITY ACHIEVEMENTS] (Feb. 1, 2005) [hereinafter 2004 STATISTICS] (onfile with author).132 INFORMATION OFFICE OF THE STATE COUNCIL OF THE PEOPLE’S REPUBLIC OF CHINA,PROGRESS IN CHINA’S HUMAN RIGHTS CAUSE IN 2003, http://news.xinhuanet.com/zhengfu/2004-04/01/content_1396172.htm (last visited Feb. 28, 2006).2006] CHINA’S EMPLOYMENT DISCRIMINATION 387approximately 70% were reportedly in the urban workforce.133 However,the number of urban workers with disabilities, hepatitis B or HIV/AIDS isuncertain.1341. The 1994 Labor Lawa. Race, Ethnicity, Sex, and Religious BeliefApplicable current legislation prohibiting employmentdiscrimination comes from various sources, not just labor laws.135 Article12 of the 1994 Labor Law states that “laborers, regardless of their ethnicgroups, race, sex, or religious belief, shall not be discriminated against inemployment.” 136 However, Article 14 exempts “people of minorityethnic groups,” along with the disabled and demobilized army men where“special stipulations in laws, rules and regulations” apply.137Race does not appear to be a much-used category in employmentdiscrimination, except to the degree it is intertwined with ethnicity or oneof its indirect manifestations such as language, dress, or customs. Thequestion concerning ethnicity is whether or not it is exempted by Article14 of the Labor Law (discussed below), leaving race as a protected status133 China’s Floating Population Exceeded 10% of Total Population, supra note 9. KennethRoberts, Female Labor Migrants to Shanghai: Temporary "Floaters" or Potential Settlers?, 36INT’L MIGRATION REV. 492, 496 (2002).134 Daniel Goodkind & Loraine A. West, China’s Floating Population: Definitions, Data and RecentFindings, 39 URB. STUD. 2237, 2238 (2002); see also Center for International Rehabilitation, supranote 101.135 For example, special legislations on women’s rights partially override the application ofworkplace anti-discrimination laws. 中华人民共和国妇女权益保障法 [Law on Protection of#p#分页标题#e#Women’s Rights and Interests] arts. 23-27 (promulgated by the Standing Comm. of the Nat’lPeople’s Cong., Apr. 3, 1992, effective Oct. 1, 1992, revised Aug. 28, 2005) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=14697 [hereinafter Women’s Rights Law].136 Labor Law, supra note 19, at art. 12.137 Id. art. 14.388 COLUMBIA JOURNAL OF ASIAN LAW [19:2vacant of use, except perhaps as it overlaps with ethnicity and as it isapplied to either foreigners or Chinese citizens of non-Chinese descent.138Gender is a protected status under Article 12 of the Labor Lawand several other laws. Women are also covered by Article 13 of theLabor Law, which provides,[W]omen shall enjoy the equal employment right withmen. With exception of the special types of work orposts unsuitable to women as prescribed by the State[Articles 59-63], no unit may, in employing staff andworkers, refuse to employ women by reason of sex orraise the employment standards for women.139The “unsuitable work” exceptions apply to work in mine pits,140work on high ground, low temperatures, in cold water, in Grade IIIphysical labor during a woman’s menstrual cycle, 141 work duringpregnancy, 142 and provide entitlement to maternity leave for childbirth. 143 The exceptions further limit work during periods of breastfeedingfor children less than one-year old.144Religious belief is another protected status insulated againstemployment discrimination under the Labor Law. 145 As in manycountries, religious beliefs are often intertwined with other protectedstatuses, such as ethnic background and race.146138 A person can obtain Chinese citizenship by blood or by birth. The law says “When the parents,who have no nationality or whose nationality is uncertain, reside in China, and the child was born inChina, then the child automatically obtains Chinese citizenship.” 中华人民共和国国籍法[Nationality Law] art. 6 (promulgated by the Standing Comm. of the Nat’l People’s Cong., Sept. 10,1980, effective Sept. 10, 1980) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=1543.It was a dead provision for years because it was extremely difficult to get permanent residence inChina. However, as of recent China allows a foreigner and his/her spouse to become permanentresidents, if, among other conditions, the foreigner invests at least US $ 500,000. 外国人在中国永久居留审批管理办法 [Provisions For the Administration of Examination and Approval ofForeigners’ Permanent Residence in China] art. 7 (promulgated by the St. Council, Ministry ofForeign Affairs, and Ministry of Pub. Sec., Aug. 15, 2004, effective Aug. 15, 2004) (P.R.C.),available at http://www.bjqb.gov.cn/data/news/fgtl/2004830113528.htm. Other ways to obtain#p#分页标题#e#Chinese permanent residence include employment and teaching. Id. art. 8.139 See Labor Law, supra note 19, at art. 13.140 Id. art. 59141 Id. art. 60142 Id. art. 61143 Id. art. 62.144 Id. art. 63145 Id. art. 12.146 Under U.S. discrimination law, language, accents, and customs can be categorized as race,religion, or national origin. See LEWIS & NORMAN, supra note 91, at 45-48.2006] CHINA’S EMPLOYMENT DISCRIMINATION 389b. “Exemption” for Ethnic MinoritiesArticle 14 of the Labor Law exempts ethnic minorities and thedisabled from coverage where “special stipulations” that otherwiseprovide protection exist. If special stipulations for the disabled andpeople of minority ethnic groups do exist, ethnic minorities would beexempted from the coverage and protection of the Labor Law per Article14. The exemption for the disabled, however, appears meaningless sincedisability was not covered by Article 12 in the first instance.147As to the possible Article 14 exemption of “people of minorityethnic groups,” some laws protect national ethnic minorities148 but do notinclude a specific prohibition on employment discrimination. 149Therefore, in the author’s judgment, it would seem that this group wouldnot be exempted from coverage under the Labor Law.Pursuant to international conventions, China has agreed to treatthe issues of welfare and employment discrimination against ethnicgroups under the category of “race.”150 Therefore, there appears to be adual legislative avenue of relief for those claiming employmentdiscrimination based on ethnic minority status through either “race” or“ethnic minority” status. In China, it is difficult to discuss race (except asto “foreigners”) as apart from ethnicity.147 “[S]pecial stipulations in laws, rules and regulations” do exist for the “disabled” and therefore, atany rate, those laws control discrimination against disabled workers. The 1990 Law on theProtection of Disabled Persons prohibits discrimination, in society generally, against the disabled.Law on Protection of Disabled Persons, supra note 102, at art. 3. It also specifically bansdiscrimination in job “recruitment, employment, obtainment of permanent status, promotion” andother areas discussed more fully in a subsequent section. Id. art. 34. See also安徽省按比例安排残疾人就业办法 [Regulations of Anhui Province on Arranging Employment for the Disabled PersonsAccording to Employment Quota], art. 7 (promulgated by the People’s Government of AnhuiProvince, May 30, 2004, effective July 1, 2004) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=95143.148 For example, Law on Regional National Autonomy prohibits discrimination against minority#p#分页标题#e#ethnic groups. Law on Regional National Autonomy, supra note 120, at art. 9; 中华人民共和国工会法 [Trade Union Law] art. 3 (promulgated by the Standing Comm. of the Nat’l People’s Cong.,Apr. 3, 1992, effective Apr. 3, 1992, revised Oct. 27, 2001) (P.R.C.), available athttp://people.com.cn/GB/shizheng/8198/29614/29642/2071559.html (prohibiting racialdiscrimination on Union benefits). See also the Law on Regional National Autonomy, supra note120, at art. 23 (requiring enterprises in national autonomous areas to give priority to minoritygroups when recruiting personnel).149 See Labor Law, supra note 19, at art. 14. In the author’s judgment, the Labor Law defers toother regulations on ethnic minority employment issues, only if there are job discriminationprovisions that would include the full employment status.150 ICERD, supra note 87, at art. 14.390 COLUMBIA JOURNAL OF ASIAN LAW [19:22. Other Anti-Discrimination LawsIn addition to China’s Labor Law, there are other sources of antidiscriminationlaws in the employment context that cover gender, migrantworker status, ethnic minority status, disability/health conditions, andreligious beliefs.151a. GenderChina faces major challenges in achieving gender equity. TheWorld Bank issued a report describing those challenges as follows:As in many other countries, China is having somedifficulty monitoring and enforcing its own Labor Law,especially in the private sector—let alone the informalsector. State affirmative action policies have recededwhile traditional gender stereotypes and values have reemerged,including gender discrimination in the labormarket. Women are often employed in lower status,lower paid jobs. During the transition, women have hada harder time than men obtaining and keeping jobs . . . .Women appear to be disproportionately representedamong laid-off workers, suffer from a higherunemployment rate and have greater difficulty findingalternate employment.152China’s Constitution guarantees women equal rights with men,protects the rights and interests of women, and provides that there shall beequal pay for equal work.153 However, China’s Constitution is non-selfexecuting,or in other words, it is aspirational and cannot by itself be151 For example, any public official interfering with exercise of protected religion activities will facecriminal penalties. Criminal Law, supra note 120, at art. 251. See also国务院办公厅关于进一步做好改善农民进城就业环境的通知 [NOTICE FROM THE STATE COUNCIL ON FURTHERIMPROVING WORKING CONDITIONS FOR MIGRANT WORKERS] (Dec, 27, 2004), available athttp://www.gov.cn/zwgk/2005-08/15/content_23262.htm [hereinafter Notice on Improving WorkingConditions for Migrant Workers].#p#分页标题#e#152 E. ASIA ENV’T & SOC. DEV. UNIT, WORLD BANK, CHINA COUNTRY GENDER REVIEW 14-18(2002), available at http://info.worldbank.org/etools/library/view_p.asp?152361 (last visited Feb.27, 2006) [hereinafter CHINA COUNTRY GENDER REVIEW].153 宪法 [CONST.] art. 48 (2004) (P.R.C.); see also Bulger, supra note 123, at 352.2006] CHINA’S EMPLOYMENT DISCRIMINATION 391enforced in Chinese courts; constitutional doctrines must be incorporatedinto laws promulgated by the government.154Other possible sources of government obligation to protect againstgender discrimination in the workplace are international agreements.China has ratified the United Nation’s Convention on the Elimination ofAll Forms of Discrimination Against Women (CEDAW) and submittedreports on its progress under this Convention.155 China also has ratifiedthe International Covenant on Economic, Social, and Cultural Rights(ICESCR), which obligates the government to work toward theelimination of discrimination against women in a variety of areas,including employment.156Other international commitments undertaken by China include itsratification of ILO Convention No. 100 concerning equal pay for equalwork.157 However, it has not yet ratified ILO Convention 111, whichbans discrimination based on race, color, sex, religion, political opinion,national extraction, and social origin.158Domestically, China’s Law on Protection of Women’s Rights andInterests (hereinafter “Women’s Rights Law”) provides legal prohibitionsagainst employment discrimination based on gender.159 Under this law,women and men enjoy equal employment rights.160 The law prohibitsany hiring discrimination against women, and, unless the job position isunsuitable for females, the hiring standard for men and women must bethe same.161 For promotions as well, under the equality principle menand women are to be treated equally.162 Likewise, women and men shall154 宪法 [CONST.] arts. 58, 62(2), 89(1) (2004) (P.R.C.).155 United Nations Convention on the Elimination of All Forms of Discrimination against Women,G.A. Res. 34/180, 34 U.N. GAOR Supp. (No. 46) at 193, U.N. Doc. A/34/46 (1980) (States Partiesagree to take all appropriate measures, including legislation, to ensure full development andadvancement of women in political, social, economic, and cultural fields, in order to guarantee themthe exercise and enjoyment of human rights and fundamental freedoms on basis equal to that ofmen) [hereinafter CEDAW]. For China’s periodic reports, see U.N. Committee on the Eliminationof Discrimination against Women, 20th Sess., Third and Fourth Periodic Reports of States Parties,at 1-27, U.N.Doc.CEDAW/C/CHN/3-4 (1997); U.N. Committee on the Elimination ofDiscrimination against Women, Combined Fifth and Sixth Periodic Reports of States Parties at 1-#p#分页标题#e#129, U.N.Doc.CEDAW/C/CHN/5-6/Add.1 (2004).156 U.N. Committee on Economic, Social and Cultural Rights, 33d Sess., Initial Reported Submittedby the People’s Republic of China at 1-128, U.N. Doc. E/1990/5/Add.59 (2003).157 International Labour Organization Convention (No. 100) Concerns Equal Remuneration for Menand Women Workers for Work of Equal Value, June 29, 1951 165 U.N.T.S. 32.158 International Labour Organization Convention (No. 111) Concerning Discrimination in Respectof Employment and Occupation, June 25, 1958, 362 U.N.T.S. 31.159 Women’s Rights Law, supra note 135, at arts. 23-27.160 Id. art. 22. It appears therefore, that in most situations, the ban on gender discrimination isequally available to male victims.161 Id. art. 23.162 Id. art. 25.392 COLUMBIA JOURNAL OF ASIAN LAW [19:2be paid the same rate when they are working on the same job,163 and theemployer may not terminate any female employee on the grounds ofmarriage, pregnancy, maternity leave, or nursing.164Currently in China, the law fixes different retirement ages for menand women.165 As a result, women receive substantially smaller pensionsthan men do, even though other employee benefits are equal.Correspondingly, men are discriminated against by not having the sameearly retirement age as women. Though this difference is based ongender and is thus perhaps in conflict with China’s Constitution, it doesnot appear to violate any employment discrimination laws, and is in factauthorized by law. Interestingly, a gender discrimination case wasrecently reported in Jinjiang District Court in Chengdu, Sichuan, wherethe court held an employer illegally discriminated against women workerswhen it did not provide them the same retirement options as men.166A newly-emerging right for women is protection against sexualharassment in the workplace. Though as of yet there is no clear legaldefinition of this right, it is based upon gender discrimination and is stillbeing developed in court litigation. Such a right would arguably fallunder either or both of the Labor Law and the Women’s Rights Law.167The All China Women’s Federation had recommended an amendment tothe Women’s Rights Law to explicitly prohibit sexual harassment andrequire employers to take measures to prevent it. The NPC Standing163 Id. art. 24.164 Id. art. 27.165 The retirement age is 60 for men, 50 for female workers, and 55 for women cadres. See Replyon Legal Retirement Age, supra note 123. See also Bulger, supra note 123, at 358. See generallythe Ninth Women’s National Congress, http://www.cctv.com/lm/124/41/90118.html (last visitedMar. 31, 2006).166 Huang Zhiling, Women Win Sexual Discrimination Case, CHINA DAILY, June 20, 2005, at 3,#p#分页标题#e#available at http://www.chinadaily.com.cn/english/doc/2005-06/20/content_452706.htm. Theseven women plaintiffs’ case had been denied by the Chengdu Municipal Labor ArbitrationCommittee before they brought the suit to the court. The legal basis of the claim is gender, but it isunclear whether the court’s finding was based on the Labor Law, the Women’s Rights Law, theConstitution, or some other basis. Article 27 of the new amendments to the Women’s Rights Lawstates “(a)ny unit shall not discriminate against women by reason of gender when implementing thenational retirement system.” This amendment became effective December 1, 2005. See Women’sRights Law, supra note 135, at art. 27.167 Women’s Rights Law, supra note 135, at arts. 40, 58; Labor Law, supra note 19, at arts. 12, 13.2006] CHINA’S EMPLOYMENT DISCRIMINATION 393Committee on August 28, 2005 passed the amendment outlawing theformer, but it did not go so far as to require the latter.168The most common forms of sexual harassment are reported to bebody touching and verbal harassment, as well as emails and cell phonetext messages. 169 Though there have been only a few court cases,plaintiffs have prevailed in at least two instances. In Beijing, a maleemployee was awarded ¥2000 (US$242) for harassment by a middle-agedwoman who would not stop seeking his sexual favors.170 In a secondsuccessful lawsuit, a female teacher in Wuhan proved her superior hadsexually harassed her.171 The court verdict provided only for a publicapology and denied her request of ¥2000 (US$242) compensation forpsychological suffering because, as the court determined, “the harassmentdid not have any serious effect on the accuser.” 172 In other cases,plaintiffs have been denied relief due to insufficient evidence.173168 Zhongpeng Zhao, Legislative Recommendation by the All China Women’s Federation Puts ForthConcept of “Sexual Harassment” for the First Time, BEIJING MORNING DAILY, Mar. 4, 2005,http://www.chinalawdigest.com/article.php?aid=123 (accessible by free registration).[T]he changes proposed by the ACWF include stopping discriminationagainst women in the workplace. For the first time in China, the veryconcept of sexual harassment will enter the national legal system. Theproposed amendment requires all employers to try to stop harassment atwork. And there will also be new clauses that insist on gender equality inretirement terms. Once the ACWF’s definition is accepted by the NPC,sexual harassment is likely to be made a criminal offence.The Yin and Yang of a Harmonious Society, CHINA DAILY, Mar. 8, 2005, http://english.people.com.cn/200503/08/eng20050308_176060.html.The NPC standing committee declined to include the clauses imposing mandatory duties on#p#分页标题#e#employers to prevent sexual harassment in work places, on the grounds that it could not formulate anational standard of such duty and such duty would rather limit the effort of anti-harassment tonarrowly defined workplace settings. 新妇女权益保障法: 我国法律首此对性骚扰说不 [A NewLaw on Protection of Women’s Rights and Interests: Law Says No to Sexual Harassment for theFirst Time], 新华网 [XINHUA NEWS AGENCY], Aug. 28, 2005, http://news.xinhuanet.com/legal/2005-08/28/content_3414548.htm; see also 全国人大常委会关于修改中华人民共和国妇女权益保障法的决定[Decision of the Standing Committee of the National People’s Congress aboutAmending the Law on Protection of Women’s Rights and Interests] (promulgated by StandingComm. of the Nat’l People’s Cong., Aug. 28, 2005, effective Dec. 1, 2005) (P.R.C.), available athttp://www.legaldaily.com.cn/misc/2005-11/08/content_216846.htm.169 Zhao, supra note 168.170 Manager Wins Harassment Case, CHINA DAILY, Sept. 18, 2003, http://www.chinadaily.com.cn/en/doc/2003-09/18/content_265337.htm.171 Judgment was granted on Nov. 6, 2003. See City’s 1st Sex Harassment Case Heard, PEOPLE’SDAILY, Nov. 7, 2003, http://english.people.com.cn/200311/07/eng20031107_127778.shtml. ChinaDaily has reported the lawsuit. See In Brief, CHINA DAILY, Oct. 30, 2003, at 3, and Stalemate inSex Lawsuit, CHINA DAILY, June 1, 2003, available at http://www1.chinadaily.com.cn/en/doc/2003-07/01/content_242114.htm.172 In Brief, supra note 171.173 Id.394 COLUMBIA JOURNAL OF ASIAN LAW [19:2b. Migrant WorkersDiscrimination based on “social origin,” as would seem to be theproper classification of biases against Chinese migrant workers, isrecognized by the United Nation’s Universal Declaration of HumanRights and the International Covenant on Civil and Political Rights(ICCPR), both of which China has ratified. 174 Additionally, ILOConvention 111, which China has not ratified, eliminates all forms ofdiscrimination, including “social origin.”175 However, since Convention111 is a “core labor standard,” nations are thought to be bound to theprinciple of providing equal employment opportunity, including theprevention of discrimination due to “social origin.”176Impediments to equal employment opportunities for migrantworkers exist in China’s historic use of the hukou system, which restrictsthe ability of migrating workers to obtain residential status, as well astheir eligibility for social insurance and social benefits in geographic174 Universal Declaration of Human Rights, art. 2, G.A. Res. 217A (III), U.N. Doc A/810 at 71(1948), International Covenant on Civil and Political Rights, art. 2, G.A. Res. 2200A (XXI), 21#p#分页标题#e#U.N. GAOR Supp. (No. 16) at 52, U.N. Doc. A/6316 (1966), 999 U.N.T.S. 171, entered into forceMar. 23, 1976. China ratified ICCPR on Oct. 5, 1998. See also Constance Thomas & Yuki Horii,FUNDAMENTAL RIGHTS AT WORK AND INTERNATIONAL LABOUR STANDARDS 62 (2003) (“Socialorigin” is frequently used in major international human rights treaties without a precise definition inthe treaties themselves). The ILO in its Convention No. 111 uses “social origin” as a statusprotected against employment discrimination. International Labour Organization Convention (No.111) Concerning Discrimination in Respect of Employment and Occupation, June 25, 1958, 362U.N.T.S. 31. “Social origin” has been defined as “[t]his criterion refers to situations in which anindividual’s membership of a class, socio-occupational category or caste determines his or heroccupational future, either because he or she is denied access to certain jobs or activities, or becausehe or she is only assigned certain jobs. Even in societies with considerable social mobility, anumber of obstacles continue to prevent perfect equality of opportunity for the various socialcategories.” Id. at art. 1.175 International Labour Organization Convention (No. 111) Concerning Discrimination in Respectof Employment and Occupation, June 25, 1958, 362 U.N.T.S. 31. In a document prepared by anILO Committee of Experts, “[c]ertain principles relating to the application of the Conventions,which are not explicitly set out in the instruments” but have been “developed in the comments ofthe Committee of Experts.” Thomas & Horii, supra note 174, at 72. Regarding “social origin,” theExperts commented, “[p]rejudices and preferences based on social origin may persist when a rigiddivision of society into classes determines an individual’s opportunities in employment andoccupation, or when certain ‘castes’ are considered to be inferior and are therefore confined to themost menial jobs.” Id. at 73. Moreover, the U.S. Department of Labor in a report on internationallabor standards, noted that “in response to concerns that internal migrant workers in China are notcovered by Convention 111, an ILO official noted that they are considered to be covered by theprohibition on discrimination on the basis of social origin.” International Labor Standards, supranote 80.176 Harry Arthurs, Reinventing Labor Law for the Global Economy, 22 BERKELEY J. EMP.&LAB. L.271, 294 n.46 (2001).2006] CHINA’S EMPLOYMENT DISCRIMINATION 395areas other than that of their original employment.177 Notwithstandingthese residential restrictions, some changes, both legal and de facto, aretaking place. For example, in response to wide-spread reports of labor#p#分页标题#e#exploitation, discrimination and abuse by employers of migrantworkers,178 China’s central government has issued new regulations toprotect the labor rights of migrant workers. In December 2004, the StateCouncil issued its Notice on Migrant Worker’s Employment. 179 Itprovides that migrant workers enjoy all of the rights provided by theLabor Law,180 and that for hiring purposes they must be treated equallywith urban residents. 181 The State Council also sought to stop localgovernment use of administration detention against migrant workers,177 For detailed description of the history, development, functions, impact and operationalmechanisms of China’s hukou system, see generally FEI-LING WANG, supra note 77. For a briefsummary, see CANADA IMMIGRATION AND REFUGEE BOARD, CHINA: REFORMS OF THEHOUSEHOLD REGISTRATION SYSTEM (HUKOU) (1998-2004), http://www.irb-cisr.gc.ca/en/research/publications/index_e.htm?docid=279&cid=50 (last visited Feb. 27, 2006); People on theMove, Old Residence Registration System in Being Unified, BEIJING REV., Jan. 1, 2004, at 32.178 Let’s Protect Migrant Workers, CHINA DAILY, Apr. 4, 2005, http://news.xinhuanet.com/english/2005-04/04/content_2783301.htm; Ensure Equal Payment, CHINA DAILY, Mar. 29, 2005,http://www.chinadaily.com.cn/english/doc/2005-03/29/content_428901.htm; City Job HurdlesCleared for Migrants, CHINA DAILY, Feb. 21, 2005, http://www.chinadaily.com.cn/english/doc/2005-02/21/content_417890.htm. John Knight & Linda Yueh, Job Mobility of Residents andMigrants in Urban China, 32(4) J. COMP. ECON. 637, 642 (2004).A legal notice provides that migrant workers have equal rights to participate in worker’scompensation. See 关于农民工参加工伤保险有关的通知 [Notice on Migrant Workers’ Right toWork-related Social Insurance] (promulgated by the Ministry of Labor & Soc. Sec., June 1, 2004)(P.R.C.), available at http://news.xinhuanet.com/zhengfu/2004-06/18/content_1533078.htm. In2003, the State Council issued a legal opinion on migrant labor which added that the governmentshall eliminate all the discriminatory, restrictive regulations aimed at migrant labor. See 关于做好农民进城务工就业管理和服务工作的通知 [Notice on Managing and Servicing Migrant Workers](promulgated by the General Office of the State Council, Jan. 5, 2003, effective Jan. 5, 2003)(P.R.C.), available at http://www.molss.gov.cn/correlate/gbf200301.htm.. The Agriculture Lawstandardizes procedures for recruiting rural laborers. This provides additional assistance to migrantworkers, though not necessarily protecting against job discrimination. See 中华人民共和国农业法[Agriculture Law] art. 82 (promulgated by the Standing Comm. of the Nat’l People’s Cong., July 2,1993, effective July 2, 1993, revised Mar. 1, 2003) (P.R.C.), available at#p#分页标题#e#http://www.chinacourt.org/flwk/show1.php?file_id=81931.179 Notice on Improving Working Conditions for Migrant Workers provides that “in every field ofindustry, migrant workers shall enjoy the equal treatment of job qualification requirement withfellow urban resident workers.” Notice on Improving Working Conditions for Migrant Workers,supra note 151, at art. 1. Local government shall “vigorously [enforce] the law to crack downover-time, default payment, child labor and other violations of migrant workers’ legal rights.” Id.art. 2(2). Local government shall “support and encourage labor unions’ activities under the LaborUnion Law and protect migrant workers’ legal rights.” Id. art. 2(4).180 Notice on Managing and Servicing Migrant Workers, supra note 178, at art. 3.181 Id. art. 2396 COLUMBIA JOURNAL OF ASIAN LAW [19:2declaring that local governments shall not restrict migrant workers’employment opportunities by such methods.182c. Race / EthnicityBoth race and ethnicity statuses are explicitly protected by the1994 Labor Law against employment discrimination.183 Other than thisexample, there appears to be no additional anti-discrimination laws inplace184 but for those which subsume race under ethnicity.185As for ethnic minorities, there are several laws relating to theirwell-being, but no substantive provisions directly prohibiting employmentdiscrimination in the workplace except for the ethnicity provision in theLabor Law. 186 Therefore, employment discrimination against ethnicminorities is controlled by the Labor Law.d. Disability / HealthNeither discrimination according to “disability” nor “health”status is prohibited by the Labor Law. 187 But, as stated earlier, theDisability Law prohibits employment discrimination against disabledpersons.188 Law on Protection of Disabled Persons was promulgated in182 Id. art. 2. This notice also requires employers in certain construction projects to provide decentliving conditions whenever the job requires migrant workers to live on the project premises. Id. art.4.183 Labor Law, supra note 19, at art. 12.184 See discussion supra on III-A-1.185 For example, though not reflected in domestic laws, China appears to combine race and ethnicitywhen reporting its progress under the International Convention on the Elimination of All Forms ofRacial Discrimination, G.A. Res. 2106, Annex, U.N. GAOR 20th Sess., Supp. No. 14, U.N. DocA/6014 (Dec. 20, 1965). See Ninth Periodic Reports Submitted by States Parties, supra note 85, at6. See also, Bai Guimei, The International Covenant on Civil and Political Rights and the ChineseLaw on the Protection of the Rights of Minority Nationalities, 3 CHINESE J. INT’L L. 2, 441 (2004).#p#分页标题#e#186 The State Council suggested that local governments of the autonomous ethnic minority regionsmay organize and export their surplus labor to more developed cities, but they shall be “fairlytreated” in the new workplace. 实施中华人民共和国民族区域自治法若干规定 [ImplementingMeasures on Autonomous Ethnic Region Law] art. 18 (promulgated by the St. Council, May 19,2005, effective May 31, 2005) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=101946 (available by subscription only). However, the regulation contained no provisionabout the available remedies, when an employer violates Article 18. There are also generalprotections. See also Law on Regional National Autonomy, supra note 120, at art. 23 (requiringenterprises to have preferential treatment of minority group in recruitment). See generally, ShupingWang, The People’s Republic Of China’s Policy on Minorities and International Approaches toEthnic Groups: A Comparative Study, 11 INT’L J. ON MINORITY & GROUP RTS. 159 (2004).187 Labor Law, supra note 19, at art.12.188 Law on Protection of Disabled Persons, supra note 103, at art. 34; see also, INTERNATIONALDISABILITY RIGHTS MONITOR, PEOPLE’S REPUBLIC OF CHINA: RIGHTS OF PEOPLE WITHDISABILITIES, http://www.cirnetwork.org/idrm/reports/compendium/china.cfm (last visited Feb. 28,2006).2006] CHINA’S EMPLOYMENT DISCRIMINATION 3971990, when the role of the private sector was yet to be recognized by theChinese Communist Party. Therefore, the entire Law on Protection ofDisabled Persons does not specifically refer to private employers.However, it is arguable that the law now appears to apply to all types ofemployers, including the newly-recognized group of private employers.The Disability Law prohibits “discrimination against, insult ofand infringement upon disabled persons,” and provides “equal rights withother citizens in political, economic, cultural and social fields, in familylife and other aspects.”189 It describes a “disabled person” as one with“visual, hearing, speech or physical disabilities, mental retardation,mental disorder, multiple disabilities and/or other disabilities.” 190Another clause provides that “disabled person refers to one who suffersfrom abnormalities or loss of a certain organ or function, psychologicallyor physiologically, or in an anatomical structure and has lost wholly or inpart the ability to perform an activity in the way considered normal.”191Chapter IV of the Law deals with employment and Section 27protects the “disabled person’s right to work,” combining it with “guidingprinciples” to promote and establish preferential hiring by state organs,nongovernmental organizations, enterprises, institutions, and urban and#p#分页标题#e#rural collective economic organizations.192 Section 34 clarifies that “nodiscrimination shall be practiced against disabled persons in recruitment,employment, obtainment of permanent status, promotion, determiningtechnical or professional titles, payment, welfare, labor insurance or inother aspects.”193 While arguably this law aims to promote and protectthe rights of disabled persons working in “protected industries or jobs,”the language may clearly be read as broadly prohibiting employmentdiscrimination based on disability by all employers throughout China.194189 Law on the Protection of Disabled Persons, supra note 103, at art. 3.190 Id. art. 2.191 Id.192 Id. arts. 27-34.193 Id. art. 34.194 In 2003, a case of employment discrimination based on disability was decided in favor of thevictims. Three long-term employees, who were handicapped were terminated, but prevailed inarbitration and subsequent court processes based on the Law on the Protection of Disabled Persons.Though they did not have labor contracts, the Beijing Intermediate Level People’s Court determinedthey had de facto contracts and were entitled to a remedy. See北京市法律援助中心, 2003 年北京市法律援助十大案例之八——法律援助为残疾职工撑起一片蓝天 [Legal Aid Center of BeijingMunicipality, The Eighth of Ten Typical Legal Aid Cases in Beijing—Legal Aid Helped DisabledWorkers (on file with author).398 COLUMBIA JOURNAL OF ASIAN LAW [19:2The Disability Law, which predated the 1994 Labor Law, targetsthe needs of the sixty million disabled persons in China.195 It prohibitsdiscrimination based on a disability, and thus would seem to fit under theLabor Law’s Article 14 exemption, removing it from the Labor Law.196If that is the case, it should be noted that there is an administrativeenforcement mechanism built into the law at the national level. 197Therefore, absent such mechanisms at the local level, in their detailedimplementing regulations local regulators could resort to the nationalenforcement mechanism and to the usual dispute resolution processes inresolving actual labor disputes.198Since definitions of “disability” include many health-relatedqualifications,199 there would seem to be an overlapping relationship, andperhaps additional protections, provided to health discrimination underthe disability laws. The Disability Law defines “disability” as includingphysical disabilities, physiological disabilities or other disabilities.200 Anemployer’s use of medical examinations to ascertain health information,such as hepatitis B or HIV/AIDS, might run afoul of protections wherethe information pertains to an enumerated physical disability or to some#p#分页标题#e#“other disabilities.” 201 That being so, there appears to be legislationaddressing employment discrimination based on those diseases, asdiscussed below.202The broadest health law regulating the entire public health systemis the Contagious Disease Law, which was passed in 2004 in the wake ofSARS.203 Under Article 16 of this law, any person suspected of being a195 中华人民共和国国家统计局 [NATIONAL BUREAU OF STATISTICS OF CHINA], 2004 中国统计年鉴[2004 STAT. Y.B. CHINA] § 23-41, http://www.stats.gov.cn/tjsj/ndsj/yb2004-c/html/indexch.htm(last visited Mar. 4, 2006) [hereinafter 2004 STAT. Y.B. CHINA].196 Law on the Protection of Disabled Persons, supra note 103, at arts. 3, 34; Labor Law, supra note19, at art. 14.197 Where the lawful rights and interests of disabled persons are violated, victims or their relatives“shall have the right to appeal to the competent authorities for disposition, or institute lawsuits atpeople’s courts in accordance with the law.” Law on the Protection of Disabled Persons, supra note103, at art. 49. In other words, victims can either petition the relevant local government agency toobtain an administrative decision, or file a civil action in the court for injunctive remedies.198 In addition to the remedy of labor arbitration, victims of discrimination can directly bring the suitto People’s Court. Id. art. 49.199 See 残疾人实用评定标准(试用) [Interim Rules on the Qualification for Disability] (P.R.C) (onfile with author).200 Id. art. 2.201 Id.202 Civil Service Law also covers health/disability issues in public employment. Civil Service Law,supra note 18, at arts. 11-29. For example, qualification is defined under art. 11(5); mandatorydisqualification is defined under art. 24; and the standards for physical exams are governed by therelevant rules from the Ministry of Health. Id. art. 29.203 Contagious Disease Law, supra note 119.2006] CHINA’S EMPLOYMENT DISCRIMINATION 399carrier of a contagious disease, including HIV/AIDS or hepatitis B, mustbe allowed to work unless there is a statutory provision explicitlyprohibiting persons with those conditions from working.204 Therefore,there can be no employment discrimination against workers withHIV/AIDS or hepatitis B unless and except required by statute.Unfortunately, the law itself does not seem to contain any penalties orremedies for victims of such discrimination.205In addition to the above law, the Ministry of Health has issuednew regulations clarifying which types of medical conditions, includingcertain types of hepatitis B and HIV/AIDS, disqualify applicants frombeing hired in the public service.206 These regulations are limited in thatthey apply only to civil servant positions and not to positions in other#p#分页标题#e#sectors.207 Furthermore, the regulations appear to be limited to the justhiring process. 208 Incumbent government employees are not directlycovered by this regulation, but perhaps will benefit indirectly from theclarification since they are otherwise protected by the Contagious DiseaseLaw.209In sum, China has legal protections against health and disabilitydiscrimination, including the specific diseases of HIV/AIDS and hepatitisB, and despite some limitations, the protection from discrimination itselfis rather significant. 210 Since the Contagious Disease Law forbidsHIV/AIDS or hepatitis to be a basis for denying employment except204 Id. art. 16. The law provides that any person who has a contagious disease carries a contagiousdisease, or is suspected of being a carrier of a contagious disease shall not be allowed work inpositions that are susceptible to their spreading, as prohibited by the law, administrative rulings orregulations from the State Council. Contagious disease is defined by Article 3. Id. art. 3.205 Id. art. 16. The new laws may soon be tested; it is reported that a new case has been brought in aBeijing court by an applicant denied a job with Shenzhen Airlines because he had sufferedHepatitis-B in the past. Hep B Discrimination Case Hits Court, CHINA DAILY, July 8, 2005, at 5.206 Health Qualifications for Hiring Civil Servants, supra note 119.207 Id. art. 2.208 Id.209 However, the new Health Qualifications for Hiring Public Servants, while banning some formsof employment discrimination, address and disqualify applicants who may have a number of healthrisks, including serious heart disease and other heart conditions (Id. art. 1), elevated blood pressure(Id. art. 2), TB positive status (Id. art. 4), Hepatitis A, B, C positive status (Id. art. 7), kidney disease(Id. art. 9), STD and HIV positive status (Id. art. 8), diabetes (Id. art. 10), severe vision/hearingimpairment(Id. arts. 19-20), and other medical conditions that effect satisfactory job performance(Id. art. 21).Further detailed analysis of numbers of legal issues (such as privacy) related to healthdiscrimination can be found in Ye & Wei, supra note 108; and see Civil Service Law, supra note18, at arts. 24 and 29, which appear to extend the coverage to all applicants in civil service requiredto take a physical exam.210 There is at least one successful law suit against discrimination based on Hepatitis B whichoccurred in 2004. See, Liang Chao, supra note 10.400 COLUMBIA JOURNAL OF ASIAN LAW [19:2where statutes so require,211 Article 16 indirectly functions as a protectionagainst employment discrimination by public and private sectoremployers (except for civil servant applicants) where no statutoryexceptions exist.212e. Religious BeliefThe Labor Law prohibits workplace discrimination for religious#p#分页标题#e#belief,213 and other laws and regulations relating to religious activities donot include employment discrimination in the workplace.214 There seemsto be little anecdotal evidence that employment discrimination based onreligious belief occurs, except as where discrimination based on religiousbeliefs might be combined with discrimination based on race or ethnicminority status. In one case involving a Muslim member of the Huinationality, a job as a cook was first offered but then later withdrawnupon the employer discovering the Muslim’s religious beliefs would notallow him to cook pork for the customers of the employer.215 The casewas taken to the labor arbitration committee which decided in favor of theemployer.216f. Other Categories: Age and Height211 Contagious Disease Law, supra note 119, at art. 16. The original text is “疑似传染病病人，在治愈前或者在排除传染病嫌疑前，不得从事法律、行政法规和国务院卫生行政部门规定禁止从事的易使该传染病扩散的工作 [Infectious disease patients, pathogen carriers and suspectedinfectious disease patients shall, before they are cured or cleared of suspicion, be barred from jobswhich the health administration department under the State Council prohibits them from doingbecause of the likelihood of causing the spread of infectious diseases].” Id.212 With the addition of China’s 2005 Civil Service Law which also addresses health issues,discussed infra, that statutory prohibition appears limited to contagious “carriers” of hepatitis B, etc.Civil Service Law, supra note 18, at art. 29.213 Labor Law, supra note 19, at art. 12.214 Arguably criminal prosecution could be used in an employment context against violators. SeeCriminal Law, supra note 120, at art. 251 (imposing 2-year imprisonment for violation of religiousrights committed by public officials). For a discussion of religious freedom in China, see generally,Anne S.Y. Cheung, In Search of a Theory of Cult and Freedom of Religion in China: the Case ofFalun Gong, 13 PAC. RIM L. & POL’Y J. 1 (2004).215 劳动法新类型案例精析 [DISCUSSIONS ON THE NEW TYPES OF LABOR LAW CASES] 123-24 (张步洪、张吕好 [Zhang Buhong & Zhang Luhao] eds., 人民法院出版社 [ People’s Court Press],1997) [hereinafter DISCUSSIONS ON THE NEW TYPES OF LABOR LAW CASES]. See also劳动法新释与例解 [NEW ANNOTATED LABOR LAW AND CASES] 58-59 (黄成建 [Huang Chengjian] ed.,同心出版社 [Tongxin Press], 2001).216 DISCUSSIONS ON THE NEW TYPES OF LABOR LAW CASES, supra note 215, at 124.2006] CHINA’S EMPLOYMENT DISCRIMINATION 401i. AgeAge discrimination is not prohibited in employment. In fact, it isembedded in the legal retirement ages, in the requirements of some#p#分页标题#e#government positions, as well as in the practice by many employers.217ii. HeightHeight discrimination has been litigated in at least one case.218Part of the claim was based upon the Constitution, which states “allcitizens of the People’s Republic of China are equal before the law.”219In December 2001, Jing Tao brought a law suit in Wuhou District Courtafter the Chengdu Branch of the People’s Bank of China denied him a jobbecause of his height.220 The advertisement for the job, among otherqualifications, required male applicants to be over 168 centimeters, whichwas estimated to exclude 40% of the men in Sichuan. His case was firstaccepted, but later dismissed as non-justiciable because during the interimthe bank had dropped the height requirement, and because such personneldecisions were determined to be exempt from the AdministrativeLitigation Law. 2213. Local Government Discrimination BansSince China’s legal system produces very general and oftenundefined legislation at the national level, “local detailed implementingregulations” are necessary for the local enforcement of labor laws through217 See discussion in Cai Shangyao, Age Discrimination’s High Cost to Society, SHANGHAI STAR,Dec. 16, 2004, at 4, available at http://www.shanghai-star.com.cn/2004/1216/vo2-1.html.218 See Michael C. Dorf, What a Chinese Height Discrimination Case says about Chinese andAmerican Constitutional Law, FINDLAW, May 26, 2004, at 219 宪法 [CONST.] art. 33 (2004) (P.R.C.).220 Plaintiff argued the local limitations were in conflict with China’s Constitution, See 宪法[CONST.] art. 100 (2004) (P.R.C.); 中华人民共和国立法法 [Legislation Law] arts. 63-64(promulgated by the Standing Comm. of the Nat’l People’s Cong., Mar. 15, 2000, effective July 1,2000) 03/2000 全国人民代表大会常务委员会公报[STANDING COMM. NAT’L PEOPLE’S CONG.GAZ.] 112 (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=34719[hereinafter Legislation Law]; Kahn, supra note 129; see also, Dorf, supra note 218.221 Dorf, supra note 218.402 COLUMBIA JOURNAL OF ASIAN LAW [19:2the local labor bureaus and their labor arbitration commissions.222 Ingeneral, most provinces have incorporated anti-discrimination provisionsinto their local labor regulations. For example, the Tianjin EmploymentRegulation states that an “employee shall enjoy equal protection of thelaw when seeking employment opportunities; [an] employee shall havethe freedom to choose his occupation; [an] employee shall not bediscriminated against on the grounds of gender, race, ethnicity andreligion.” 223B. Law and HRM Practices1. RecruitmentCurrent labor market regulations covering the recruitment of#p#分页标题#e#employees provide both flexibility and limitations for employers in theirsearch for employees. These include allowing job centers, employmentagencies, media advertising, the use of the Internet, job fairs, etc.224 Inaddition to the regulatory requirements and procedures discussed earlier,an additional legal limit on the use of media advertisements is found in222 宪法 [CONST.] art. 100 (2004) (P.R.C.). Legislation Law, supra note 220, at arts. 63-64.223 天津市劳动就业管理条例 [Regulation of Tianjin Municipality on the Management of Laborand Employment] art. 10 (promulgated by the Standing Comm. of Tianjin Municipal People’sCong., Sept. 14, 2000, effective Nov. 1, 2000, revised Mar. 24, 2005) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=100951 [hereinafter Tianjin EmploymentRegulation]; see also江苏省劳动力市场管理条例 [Regulation of Jiangsu Province on theManagement of Labor Market] art. 7 (promulgated by the Standing Comm. of Jiangsu ProvincePeople’s Cong., Aug. 20, 2004, effective Sept. 1, 2004) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=97370 [hereinafter Jiangsu Labor MarketRegulation]; 湖北省劳动合同规定 [Regulation of Hubei Province on Labor Contract] art. 8(promulgated by the Standing Comm. of Hubei Province People’s Cong., Mar. 1, 2005, effectiveMar. 1, 2005) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=100171[hereinafter Hubei Labor Contract Regulation]. Similar protections for women also exist at thelocal levels. See, e.g., 江苏省实施《中华人民共和国妇女权益保障法》办法 [Provisions ofJiangsu Province on Implementing the Law on Protection of Women’s Rights and Interests](promulgated by the Standing Comm. of the Jiangsu People’s Cong., July 31, 1997, effective Mar.1, 1995), available at http://www.chinacourt.org/flwk/show1.php?file_id=52219 [hereinafterJiangsu Women’s Rights Provisions].224 Regulations on Labor Market Management, supra note 21, at art. 8.2006] CHINA’S EMPLOYMENT DISCRIMINATION 403the Advertisement Law, which states the ad shall not contain any racial,ethnic, or religious discriminatory language.225American human resource managers and employers commonlyuse screening techniques, such as minimum qualifications, writtenapplications and examinations, interviews, reference checks, lie detectortests, and medical tests that limit the number of applicants to a moremanageable number.226 However, most of these do not appear to be usedto any noticeable extent in China, except occasionally by some of theFIEs. 227 In the United States, a recent report stated that “[o]ver the pastfew years personality assessment tests have moved from the realm ofexperiment to standard practice at many of the nation’s largest companies#p#分页标题#e#. . . . A recent survey showed that about 30% of all companies usepersonality tests in hiring. To many companies, the tests are as important,if not more important, than applicants’ education, experience andrecommendations.”228 It would appear China has not yet taken this path.One serious issue in China is the question of whether jobapplicants are afforded meaningful protection against discrimination. TheLabor Law grants labor rights only to “laborers who form a laborrelationship” and “laborers who form a labor contract relationship.”229225 Advertisement Law, supra note 33, at art. 7(7). The Regulation of Labor Market Managementalso has this same ban on discrimination, and adds, “except for those provided by state lawsconcerning unsuitable types of work or positions.” The Regulations on Labor Market Management,supra note 21, at art. 11. Under the Labor Market Regulation’s ban on use of discriminatorylanguage, the ad first needs approval from the Labor Bureaus which would screen out improper ads,though practical experience (and reading newspapers) belies that either a request or a ban occurswith any frequency. Id. art. 9. In contrast, in the United States, ads containing discriminatorylanguage or suggestive language, such as gender or age preferences (e.g., “boys or girls,” students,or recent graduates), while not prohibited, may be used as evidence in proving discriminatory intent.29 C.F.R. § 1625.4(a) (2000). The U.S. Supreme Court has found such limitation does not infringeon the free speech guarantees of the First Amendment. Pittsburgh Press Co. v. Pittsburgh Comm’non Human Relations, 413 U.S. 376 (1973).226 David Pollitt, Recruiting for Success: Challenges and Solutions, 12 HUM. RESOURCE MGMT.INT’L DIG. 24, 24, Dec. 2004.227 See Taylor, supra note 18, at 11-18. Commercial services are available in China for preemploymentscreening. See, e.g., Inquest Pre Employment Screening Service, supra note 18.228 Ariana Eunjung Cha, Employers Relying on Personality Tests to Screen Applicants, WASH.POST, Mar. 27, 2005, at A01. Meanwhile, in China recruiting practices seem to be developing,though not always in an understandable way. For example, in Guangzhou, a job ad asked for atleast a B.A. degree for a driver’s position. Other recruiting agencies admit that there are really nofixed guidelines to determine the qualification, or even if there is, the actual screening process maydisregard those stated qualifications. See 木工电工一起招大 学 生 招 聘 门槛低惹非议[Controversy Arises on the Low Job Requirement of College Graduates], 南方日报[S. DAILY],Dec, 27, 2004, http://gd.dayoo.com/gb/content/2004-12/07/content_1841929.htm.229 Labor Law, supra note 19, at art. 2. Though there can be an “implied” labor contract#p#分页标题#e#relationship, these have arisen where a worker has actually been hired and is working without alabor contract. Regulation of the Ministry of labor on Institution of Labor Contract System, supranote 20, at art. 14.404 COLUMBIA JOURNAL OF ASIAN LAW [19:2Therefore, the Labor Law seems inapplicable to applicants, who, withoutan employment relationship, have no “labor dispute.”230The Labor Market Regulation prohibits employers fromdiscriminating in hiring and requires employment agencies to recruit andpromote the employment of job seekers through fair competition. 231While neither the Regulation nor the Rules on HRM provide a right withremedy for individuals, the Rules provide for fines of ¥10,000 to ¥30,000for violations, to be administered by the labor bureaus.232 Most localgovernment regulations follow the national law in not clearly providingrelief for applicants in cases of employment discrimination. 233 Forexample, Hubei Province includes applicants in its prohibition ofdiscrimination, however, the article that does so lacks any apparentenforcement provision.234The 1990 Disability Law protects disabled workers fromdiscrimination in hiring, in addition to its guarantees of ordinary workingconditions, equal pay, promotion, and termination.235 Migrant workersare protected by new anti-discrimination provisions which state the hiringrequirement shall be the same for migrant workers as for localresidents.236 These same provisions grant migrant workers “access tolabor arbitration.”237In sum, though protective labor laws seem to cover applicantswho are victims of employment discrimination, enforcement remainsproblematic. Victims of employment discrimination normally must bringa labor dispute to the Labor Bureau’s Labor Arbitration Commission,which sets up an ad hoc labor arbitration tribunal to resolve the dispute.238A remedy for such applicants is likely unavailable, however, because theylack a true labor dispute. The Labor Law describes a “labor dispute” as230 By contrast, the Women’s Rights Law explicitly purports to protect women applicants with itsprovision against discrimination in hiring. Women’s Rights Law, supra note 135, at art. 22. Fromthe wording of the law, this remedy would arguably appear to be available to male applicants aswell. Id. art. 21 (stating that men and women are to enjoy equal employment rights).231 Regulations on Labor Market Management, supra note 21, at arts. 7, 11.232 Rules on the Administration of Human Resources Market, supra note 36, at art. 39. By contrast,the Regulations only provide sanctions for violations by employment agencies, such as “jobs formen only” or for jobs for which women are ineligible due to “protective” legislation can result in#p#分页标题#e#fines. Regulations on Labor Market Management, supra note 21, at art. 37.233 See, e.g., Jiangsu Labor Market Regulation, supra note 223, at art. 7, and Tianjin EmploymentRegulation, supra note 223, at art. 10, both of which parallel art. 12 of the Labor Law. Labor Law,supra note 19, at art.12.234 Hubei Labor Contract Regulation, supra note 223, at art. 8.235 Law on Protection of Disabled Persons, supra note 103, at art. 34.236 Notice on Improving Working Conditions for Migrant Workers, supra note 151, at art. 1(1). Itmight be noted the provisions target only hiring and not other employment conditions; also, localresident “applicants” are without a labor contract and not covered by the Labor Law.237 Id. art. 2-3.238 Some Opinions, supra note 20.2006] CHINA’S EMPLOYMENT DISCRIMINATION 405being between the employing unit and a laborer.”239 Parties may onlyapply to mediation or arbitration, or take legal proceedings “according tolaw.”240For trials of labor disputes following arbitration, in 2001 theSupreme People’s Court added an interpretation on labor disputes.241 Thelegal issue for the Court was whether a job applicant has a justiciableclaim, and the Court ruled that in cases not involving employmentdiscrimination applicants do not have a claim, the applicant must first goto labor arbitration. 242 However, since applicants do not qualify ashaving labor disputes, they are ineligible to litigate.243In the case of gender discrimination, the Women’s Rights Lawpurports to provide additional arguments and possible alternatives to theapplicant. When a female applicant is discriminated against inemployment decisions,244 she can bring a complaint to the local women’s239 Labor Law, supra note 19, at art. 77.240 Id. “According to law” would seem to encompass Article 79 and require labor arbitrations. Id.art. 79. The parties are also authorized to “directly apply to the labor dispute arbitration committee,”and, if the party is not satisfied with the decision of arbitration, it may bring a lawsuit in thepeople’s court. Id. The regulations on settlement of labor disputes in arbitration are applicable to“labor disputes between the enterprise and employees in China.” (emphasis supplied) 中华人民共和国企业劳动争议处理条例 [Regulations on Settlement of Labor Disputes in Enterprises] art. 2(promulgated by the St. Council, July 6, 1993, effective Aug. 1, 1993) (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=17631. . “Labor disputes” can arise from HRMdecisions in employment, labor contracts, and “implementation of relevant state regulations on . . .labor protection.” Id. art. 2(2). The right to interpret these Regulations is vested in the#p#分页标题#e#administrative department of labor under the State Council. Id. art. 4(2).241 最高人民法院关于审理劳动争议案件适用法律若干问题的解释 [Interpretation of theSupreme People’s Court Concerning Several Issues Regarding the Application of Law to the Trialof Labor Dispute Cases] (promulgated by the Sup. People’s Ct., Apr. 16, 2001, effective Apr. 30,2001) 01/2001(3) 最高人民法院公报 [SUP. PEOPLE’S CT. GAZ.] 88 (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=37160 [hereinafter Interpretation on LaborArbitration].The Interpretation states the Court shall accept and hear the case where, (1) Disputesoccurred between the employee and the employing work unit in the course of performing a laborcontract; and (2) disputes occurred whereby the employee and his employing work unit fail toconclude a written labor contract between them but the labor relationship has existed. Id. art.1(1)(2). Article 2 stipulates where a Labor Dispute Arbitration Commission decides not to acceptthe case on the ground it is not a “labor dispute”, but the party nevertheless files a lawsuit, the courtshall thereafter decide that issue. Id. art. 2.242 Id. art. 2.243 Remedies in this situation appear to be limited since access to labor arbitration is not authorized.There seems to be a strong consensus that the enforcement mechanism in dealing with hiringdiscrimination is rather weak. 就业歧视凸显法律空白 [The Blank Point of EmploymentDiscrimination], 新华网 [XINHUA NEWS AGENCY], Feb. 19, 2005, http://news.xinhuanet.com/focus/2005-02/19/content_2547515.htm.244 The scenario is in violation of Article 23 of Women’s Rights Law. Women’s Rights Law, supranote 135, at art. 23.406 COLUMBIA JOURNAL OF ASIAN LAW [19:2organization to request administrative sanctions, file for arbitration, or filea lawsuit.245 The open question then is whether the complainant, whenattempting to go to court, must “in accordance with the law” have firstgone to labor arbitration over this “labor dispute,” and, if so, whether anapplicant’s lack of an employment relationship will in practical termsforeclose access to the arbitration process and thereafter possibly thecourt.246 If the case is not a proper labor dispute, then whether it fallsunder the other cases within the jurisdiction of the People’s Courtsallowing a court to hear the case, or whether it is possibly channeleddirectly to labor arbitration, remains unclear.247In sum, applicants who have been improperly discriminatedagainst may lack meaningful enforcement procedures and effectiveremedies under current Chinese laws. While U.S. labor laws usuallyprovide labor rights to employees, federal Equal Employment#p#分页标题#e#Opportunity laws protect all individuals against discrimination, includingapplicants.248Applicants for government jobs fall under China’s civil servicesystem, and thus have a distinct administrative avenue not available for245 Women’s Rights Law, supra note 135, at arts. 52-53. 邵晓寅,私营企业劳资冲突的现状和对策 [Shao Xiaoyin, Study on Labor Relations in Private Enterprises], 晋阳学刊[JINYANG J.], Feb.2003, at 56. Some local labor laws offer similar remedial approaches. For example, in JiangsuProvince the government can impose administrative penalties for gender discrimination, includingin “hiring”. Jiangsu Women’s Rights Provisions, supra note 223, at art. 33. Also, it appears someprovinces are considering using additional remedies against discriminatory policies, including useof fines. 辽宁省促进就业规定 [Regulation of Liaoning Province on Promoting Employment] arts.16, 37, 41 (promulgated by the Liaoning Province People’s Government, July 1, 2005, effectiveAug. 15, 2005) (P.R.C.), available at http://www.ln.gov.cn/communique/govfiles/govorder/36_47831.htm.246专家学者悉数劳动法十大缺陷 [Experts and Scholars Name the Ten Deficiencies of LaborLaw], 法制日报[LEGAL DAILY], Oct. 13, 2004, at 10, available at http://www.legaldaily.com.cn/bm/2004-10/13/content_140106.htm.247 Interpretation on Labor Arbitration, supra note 241, at art. 2(2). Victims of disabilitydiscrimination also can “directly access” the court after similar analysis. Law on the Protection ofDisabled Persons, supra note 103, at art. 49.248 For example, under Title VII of the Civil Rights Act, it shall be unlawful to refuse to hire anyindividual or otherwise to discriminate against any individual with respect to his compensation,terms, conditions, or privileges of employment, because of such individual’s race, color, religion,sex, or national origin. Civil Rights Act of 1964, § 703(a)(1), 42 U.S.C. § 2002e (a)(1) (2005).Under the National Labor Relations Act, it is unlawful to discharge or otherwise discriminateagainst an employee because he has filed charges or given testimony. National Labor Relations Act(NLRA), § 8(4), 29 U.S.C. § 158(4) (2005). The NLRA though defining and protecting“employees” also has been interpreted to include applicants who are, for example, denied jobsbecause of their views or activities on unions. See NLRB v. Town & County Electric Inc., 516 U.S.85 (1995) (holding that job applicants are statutory employees). Where legislation is unclear, thecourt will look to common-law definitions of employee. Clackamas Gastroenterology Associates,P.C. v. Wells, 538 U.S. 440, 447 (2002).2006] CHINA’S EMPLOYMENT DISCRIMINATION 407private sector applicants.249 For example, in Beijing, any dissatisfied#p#分页标题#e#applicant for a civil service position may submit a request for anadministrative review to the local personnel bureau.250 Where there is alegal source prohibiting employment discrimination, an applicant mayargue there has been an “abuse of discretion.”251 However, for nonapplicants(i.e. employees) the Supreme People’s Court has issuedprovisions prescribed “in accordance with the Labor Law,” which declarethat “cases over personnel disputes [labor disputes in government service]between public institutions and their staff members” that relate to“resignation, dismissal and implementation of employment contracts,”will be resolved through a “personnel dispute arbitration institution.”252However, arbitration must be sought before bringing a personnel disputesuit in court. The 2005 national Civil Service Law provides for fair andopen recruitment. 253 Under that law, “employment disputes” shall besubmitted for administrative review established by the employer254 withjudicial review governed by the administrative laws (i.e. departing fromordinary court procedures). 255 The 2005 Civil Service Law limitsarbitration to those disputes arising out of the labor contract.256249 Job applicants can obtain administrative re-considerations from local personnel bureau for anyhiring irregularity. Civil Service Law, supra note 18, at art. 101(1). In China, the Labor Lawexcludes civil servants from coverage. 关于《中华人民共和国劳动法》若干条文的说明[Guidance on Certain Provisions of the Labor Law], art. 4 (promulgated by the Ministry of Labor,Sept. 5, 1994, effective Sept. 5, 1994) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=20633.250 北京市人事争议仲裁办法 [Measures of Beijing Municipality for Arbitration of PersonnelDisputes] art. 2 (promulgated by Beijing People’s Government, Mar. 7, 2003, effective May 1,2003) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=84147 [hereinafterBeijing Arbitration Measures].251 Under the new Civil Service Law, a victim of discriminatory employment policy can file acomplaint for administrative reconsideration of personnel decisions. Civil Service Law, supra note18, at art. 90. If the reviewing agency finds sufficient evidence to show any abuse of discretion, thelaw requires reversal of the discretionary decision. 中华人民共和国行政复议法 [AdministrativeReconsideration Law] art. 28 (promulgated by the Standing Comm. of the Nat’l People’s Cong.,Apr. 29, 1999, effective Oct. 1, 1999) 05/1999 全国人民代表大会常务委员会公报[STANDINGCOMM. NAT’L PEOPLE’S CONG. GAZ.] 225 (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=32741.#p#分页标题#e#252 最高人民法院关于人民法院审理事业单位人事争议案件若干问题的规定 [Provisions of theSupreme People’s Court on Issues Related to the People’s Courts’ Trial of Personnel Dispute CasesOccurred in Institutions] art.1 (promulgated by the Sup. People’s Ct., Aug. 27, 2003, effective Sept.5, 2003) 01/2003(5) 最高人民法院公报 [SUP. PEOPLE’S CT. GAZ.] 5 (P.R.C.), available athttp://www.chinacourt.org/flwk/show1.php?file_id=88232; see also, Beijing Arbitration Measures,supra note 250, at art. 2.253 Civil Service Law, supra note 18, at art. 21.254 Id. art. 90.255 Id.256 Id. art.100.408 COLUMBIA JOURNAL OF ASIAN LAW [19:2Administrative review may thus be possible if some provisionprohibiting employment discrimination applies. In the alternative, theremay be an “abuse of discretion” where there is fair and open recruitment.However, review is only possible if applicants are indeed eligible forreview, which, given the nature of the civil service process, seems likely.The remedy for a violation under such process should at least includesending the application back for proper reconsideration.257 Therefore, inthe civil service personnel dispute process involving labor arbitration, theprocedures for review appear to parallel those in the private sector, withthe same issues relating to the eligibility of applicants and justiciability incourts.2. Employment and TerminationIllegal discrimination in the workplace involving terms andconditions of employment can be found in many employment contexts,including job descriptions, positions, hours, overtime, wages, promotions,evaluations, benefits, layoffs, recalls, discipline, and termination.258Overall, disputes were mostly economic in nature, with welfareand social insurance payments being the most common.259 However,occasional reports suggest the presence of a significant number of casesinvolving employment discrimination. Zhang Zheng, an official of thearbitration service of the Xicheng District of Beijing, commenting onarbitration cases involving discrimination against women because ofmarriage, pregnancy, or maternity leave claimed that “[t]he arbitrationservice [in his district] last year received 80 cases involving violation ofwomen workers’ rights . . . and the number of such cases is rising.”260Though the actual number of discrimination-related labor dispute casesmay be difficult to ascertain, there seems to be abundant documentation257 Id. art. 92.258 In the United States, there is a wide variety of discriminatory practices and laws seeking toprohibit them. See LEWIS & NORMAN, supra note 91 and FRED S. STEINGOLD, THE EMPLOYER’SLEGAL HANDBOOK §§ 8.3-8.18 (5th ed. 2002).#p#分页标题#e#259 Jeremy B. Fox et al., The Arbitration of Labor Disputes in China Today: Definition andImplications, 17 EMP. RESP. & RTS. J. 19, 27 (2005).260 Mother or Worker: Chinese Women Face New Challenges, PEOPLE’S DAILY, Aug. 15, 2003,http://english.people.com.cn/200308/24/eng20030824_122955.shtml.2006] CHINA’S EMPLOYMENT DISCRIMINATION 409of incidents in the workplace. 261 It is the terms and conditions ofemployment, created by statute and contract, which, if granted or deniedfor discriminatory reasons, create the basis for a labor dispute. Inaddition to compensation claims, the next largest categories of laborcontract violations in labor arbitration cases are the rescinding andterminating of labor contracts. 262 In view of the earlier-describedanecdotal incidents of discrimination involving layoffs and terminationsof employees, it is reasonable to predict that a number of these casesinvolve illegal employment discrimination.Gender discrimination in the Chinese workplace receives the mostattention.263 In a 2002 report, the World Bank concluded “traditionalgender stereotypes and values have re-emerged, including increasinggender discrimination in the labor market. Women are often employed inlower status, lower paid jobs. During the transition, women have had aharder time than men in obtaining and keeping jobs.” 264 Studies ofChinese government statistics show women tend to be employed inoccupations where average earnings are lowest and in collectively-ownedor privately owned sectors which are on average smaller and with lowerpay and less welfare.265Termination based on discriminatory reasons is notcomprehensively dealt with in the labor contract provisions of the LaborLaw. Instead, these provisions merely mandate that certain terminationprovisions that limit the employer and the employee in the exercise ofending an employment relationship are included in the contract. 266However, it is noteworthy that these provisions prohibit termination based261 Chinese scholars have conducted their own empirical studies on issues of employmentdiscrimination. For example, in 2002 年人口与劳动问题报告 – 城乡就业问题与对策 [A REPORTON POPULATION AND LABOR PROBLEMS IN CHINA IN 2002: EMPLOYMENT PROBLEMS ANDCOUNTERMEASURES IN CITIES AND COUNTY] (蔡昉 [Cai Fang] et al. eds., 社会科学文献出版社[Social Sciences Documents Publishing Co.] 2002), the authors applied the demand-supply of thelabor market to analyze workplace discrimination. See also, AM. CTR. FOR INT’L LABORSOLIDARITY, supra note 78, at 38-58.262 In 2004, there were a reported 76,744 compensation cases, 40,017 rescission cases, and 12,043wrongful termination cases, and 1,540 arbitrations over layoffs. 2004 STAT. Y.B. CHINA, supra#p#分页标题#e#note 195, at § 23-5.263 苏敏, 全国总工会调查: 现行法规难保女职工劳动权益 [Su Min, ACFTU Reports: CurrentLaw Can’t Protect Women Workers’ Rights], 中国青年报[CHINA YOUTH DAILY], Feb. 27, 2004, at2.264 CHINA COUNTRY GENDER REVIEW, supra note 152, at 14.265 Fang Lee Cooke, Equal Opportunity? The Role of Legislation and Public Policies in Women’sEmployment in China, 16 WOMEN IN MGMT. REV. 334, 340 (2002); see also, Charles J. Ogletree &Rangita de Silva-de Alwis, When Gender Difference Become a Trap: The Impact of China’s LaborLaw on Women, 14 YALE J.L. & FEMINISM 69 (2002). See generally, Xiao-Yuan Dong et al., supranote 81, at 979.266 Labor Law, supra note 19, at arts. 19(6), 24-27, 29(3).410 COLUMBIA JOURNAL OF ASIAN LAW [19:2on being female, during pregnancy, or while nursing, but are silent inprotecting employees against being terminated generally on adiscriminatory basis. Instead, they rely upon the general antidiscriminationprovisions of the Labor Law and other labor laws, asdiscussed above.267C. Enforcement1. Administrative ProcessChina’s current system for enforcing individual labor rights is tofirst channel them into intra-enterprise mediation, and then intoarbitration under labor bureaus vertically connected with the MOLSS andhorizontally connected with local governments.268 These labor bureausset up labor arbitration commissions and establish tribunals to resolvelabor disputes as individual cases arise.269 The tribunals are staffed witharbitrators who are usually from the labor bureau, but also includearbitrators from outside of the labor bureau who meet certain qualificationstandards.270The labor tribunals mediate and arbitrate the labor rights issuesthat arise from both contracts and statutes.271 These include individualand collective labor contracts, as well as labor rights under the LaborLaw, the Women’s Rights Law, etc.272 Parties to the arbitration may berepresented by lawyers at the hearing during the preliminary gathering ofevidence, which is conducted by the arbitrator to elicit the facts and267 Id. art. 12.268 Id. arts. 77-84; Regulations on Settlement of Labor Disputes in Enterprises, supra note 240, atarts 7, 12.269 Labor Law, supra note 19, at art. 77.270 For example, the arbitration committee can include some outside arbitrators working on a parttimeschedule. See 广州市劳动争议仲裁办法 [Regulation on Labor Arbitration of GuangzhouMunicipality] art. 14 (promulgated by the Guangzhou Municipality, Aug. 24, 1998, effective Sept.15, 1998) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=64492.271 For jurisdiction over contract claim, see Interpretation on Labor Arbitration, supra note 241, at#p#分页标题#e#art. 1(1). For jurisdiction over statutory claim, such as workers’ com, see劳动和社会保障部办公厅关于处理工伤争议有关问题的复函 [Reply Letter on Labor Dispute over Workplace Injuries] art.2 (promulgated by the Labor & Soc. Sec., Apr. 11, 2000, effective Apr. 11, 2000) (P.R.C.),available at http://www.chinacourt.org/flwk/show1.php?file_id=34897.272 Some Opinions, supra note 20.2006] CHINA’S EMPLOYMENT DISCRIMINATION 411arguments so as to allow for the application of the laws andregulations.273Judicial review is available only after a labor arbitration decisionis made, and, being a de novo procedure, it greatly nullifies the arbitrationprocess and decision but for the experience of preparation.274 The timeand expense of this second procedure is especially burdensome to theclaimants, who are often workers of very modest means. On the otherhand, the judicial proceeding provides supervision for local laborarbitration committees.The administrative process to access mediation or arbitration ortake legal proceedings according to law is the requirement that there be alabor dispute arising out of a labor contract relationship.275 The 1993Regulation on Labor Disputes applies to the following categories of labordisputes:(1) disputes arising out of expulsion, discharge or lay-off ofemployees by enterprises, resignation by employees, oremployees voluntarily leaving their posts;(2) disputes arising out of the implementation of relevant stateregulation on wages, insurance, welfare, training, and laborprotection;(3) disputes arising out of performance of labor contracts; and(4) other labor disputes that shall be handled according to theseRegulations as prescribed by laws or other regulations.276273 企业劳动争议调解委员会组织及工作规则 [Guidelines on the Organization and Work of theCommittee of Arbitration on Labor Disputes in Enterprises] art. 9 (promulgated by the Ministry ofLabor, Nov. 5, 1993, effective Nov. 5, 1993) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=18356 [hereinafter Arbitration Guidelines].274 The standard of review is de novo. See Interpretation on Labor Arbitration, supra note 241, atart. 21(2).275 Id. art. 77. In fact all provisions in the Labor Law relating to arbitration require a labor dispute.Id. arts 78-84.276 Regulations on Settlement of Labor Disputes in Enterprises, supra note 240, at art. 2.Presumably, applicable discrimination prohibitions in the Labor Law and other anti-discriminationlaws are included in these categories. The Supreme People’s Court in an interpretation furtherconfirmed the requirement of a “labor dispute” in order to have the case heard by the courts.Interpretation on Labor Arbitration, supra note 241, at art. 1. It also provides these disputes must#p#分页标题#e#occur “in the course of performing a labor contract” or where a labor relationship had existed. Id.art. 1(1)(2). Judicial review of a labor arbitration commission decision finding no labor dispute willbe “accepted” by the court only if the court disagrees or, finds it “falls under other cases within thejurisdiction of the people’s court.” Id. art. 2(1)(2).412 COLUMBIA JOURNAL OF ASIAN LAW [19:2In 2004, the MOLSS reported there were nearly 260,000 labordisputes nationwide, affecting some 760,000 workers, 277 marking a15.2% increase in the number of disputes over the prior year.278 Of these,93.2% (259,000) were reported to have been resolved: 26% by mediation(67,765), 37% by arbitration (95,774), and 26% (67,340) by othermeans.279 The question for purposes of this article is how many of theabove cases, if any, involved elements of illegal employmentdiscrimination. 280In the United States, the administrative agency which primarilyenforces most anti-discrimination laws is the Equal EmploymentOpportunity Commission (EEOC), created under Title Seven of the CivilRights Act (CRA).281 The administrative procedure requires that a chargemust first be filed with the EEOC prior to litigation,282 and the law callsfor an EEOC investigation, an attempted conciliation where a purportedviolation is found, a right to a hearing after an EEOC complaint is filed,and the right to litigate notwithstanding the agency’s action or inaction.283In 2004, the EEOC dealt with 79,432 charges, settling 8,865 disputes andlitigating 414 cases itself.284277 2004 STATISTICS, supra note 131; see also State Dept. Rpt., supra note 58.278 2004 STATISTICS, supra note 131.279 Id. In 2004, it was recorded that 19,000 cases were labor rights disputes arising under collectivecontracts, which is a remarkable 72.7% increase from the previous year. Id. The detailed 2004statistical breakdown of labor arbitration cases by nature of dispute is as follows:Total PrivateEnterpriseFIE Public Enterprise OthersCompensation 76,774 42,069 7,775 22,805 4,125ContractModification5,494 2,153 480 2,480 381Rescind Contract 40,017 17,019 5,090 15,646 2,262WrongfulTermination12,043 4,245 1,608 5,589 601Lay-off 1,540 388 49 1,008 95Source: 2004 STAT. Y.B. CHINA, supra note 195, at § 23-5.280 Cases appear to fall under the substantive issue raised by a claim of discrimination. For example,wage discrimination would be categorized as a wage claim. It was reported that in 2003 in XichengDistrict of Beijing, the Arbitration Commission had 80 cases involving violation of womenworkers’ rights (“in their special physiological periods”). Mother or Worker: Chinese Women Face#p#分页标题#e#New Challenges, supra note 260.281 Civil Rights Act of 1964, § 705, 42 U.S.C. § 2002e-4 (2005).282 29 C.F.R. 1601.28(a)(3)-(4).283 LEWIS & NORMAN, supra note 91, at 199-252.284 THE U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, ENFORCEMENT STATISTICS ANDLITIGATION, http://www.eeoc.gov/stats/enforcement.html (last visited Feb. 28, 2006). Most casesare litigated by the parties.2006] CHINA’S EMPLOYMENT DISCRIMINATION 4132. Proving DiscriminationProving discrimination in China does not involve the complexburdens of proof and production, and the rules of evidence it does in theUnited States.285 In China, labor disputes brought into labor arbitrationproceedings require an initial application for arbitration, including asubmission of any evidence and the names and addresses of witnesses.286Mediation and an arbitration hearing then follow, and the arbitrationtribunal follows the opinion of the majority.287 Under working rulesissued by MOLSS, the parties present their own cases, but the regulationis silent as to proof requirements.288 Local arbitration regulations seem toparallel this approach; for example, Beijing regulations require that eachparty “provide evidence for his own contentions” and “an award shall bemade according to the opinions of the majority of arbitrators.”289In China, the courts hear labor dispute cases de novo following anappeal from the decision of the labor arbitrator, and the usual rules ofcivil procedure apply.290 Most of China’s employment discriminationcases are brought under the arbitration regulations and Civil ProcedureLaw (CPL), and the Supreme People’s Court has issued an interpretationthat in certain labor disputes the employer has the burden of production:In the event of labor disputes arising from the decisionmade by the employing work unit to discharge, expulse,dismiss, cancel the labor contract, reduce the laborremuneration or to calculate the length of service, theemploying unit shall be liable for the burden ofproducing evidence.291Recent guidance from the Supreme People’s Court further provides thatin civil cases generally, certain rules of evidence and procedure regulate285 For a detailed explanation of the U.S. approach, see LEWIS & NORMAN, supra note 91, at 114-197.286 Regulations on Settlement of Labor Disputes in Enterprises, supra note 240, at art. 24(3).287 Id. arts. 27-29.288 Arbitration Guidelines, supra note 273, at art. 27.289 Beijing Arbitration Measures, supra note 250, at arts. 19, 22.290中华人民共和国民事诉讼法 [Civil Procedure Law] art. 153 (promulgated by the StandingComm. Of Nat’l People’s Cong., Apr. 9, 1991, effective Apr. 9, 1991) (P.R.C.), available at#p#分页标题#e#http://www.chinacourt.org/flwk/show1.php?file_id=12610.291 Interpretation on Labor Arbitration, supra note 241, at art. 13.414 COLUMBIA JOURNAL OF ASIAN LAW [19:2proofs and burdens.292 Under China’s CPL, the claimant must prove hisor her case by what some might liken to a “sufficiency of the evidence”standard, 293 with labor arbitration tribunals employing a similarstandard.294 Evidence in court proceedings comes in many forms and isorganized under the CPL into seven different categories. 295In sum, to pursue an employment discrimination case in China,one must first have a labor dispute arising from an employmentrelationship in order to even access arbitration or the courts. In addition,guidance is sparse as to proving discrimination.296 The results, however,are straightforward: in most cases the parties present their evidence, thetribunal rules unanimously or by a majority, presumably (though notexplicitly) basing its ruling on a standard akin to a sufficiency of theevidence standard. In cases where the employer has the burden ofproducing evidence, the employer may lose due to a failure ofproduction.297In the United States, illegal discrimination under antidiscriminationlaws may generally be proven as intentional or direct(shown by “disparate treatment”), or as unintentional or indirect (shown292 Generally, plaintiff has the burden of proof to present evidence, and the court shall not considerany evidence unless it is cross-examined in court proceedings. See最高人民法院关于民事诉讼证据的若干规定 [Regulations of Supreme People’s Court on Civil Trial Evidence] arts. 2, 47(promulgated by the Sup. People’s Ct., Dec. 21, 2001, effective Apr. 1, 2002) 01/2002(1) 最高人民法院公报 [SUP. PEOPLE’S CTS GAZ.] 19 (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=38863 [hereinafter Regulation on Civil Trial Evidence].293 Claimant has the obligation to produce evidence. Civil Procedure Law, supra note 290, at art. 64(1991). For the standard of proof, the People’s Supreme Court ruled that “evidence should besufficient to establish undisputed facts.” Regulation on Civil Trial Evidence, supra note 292, at art.63. Under the Administrative Procedure Act, the court may rule on the “adequacy of essentialevidence.” 中华人民共和国行政诉讼法 [Administrative Procedure Law] art. 54 (promulgated bythe Standing Comm. of Nat’l People’s Cong., Apr. 4, 1989, effective Oct. 1, 1990) (P.R.C.),available at http://www.chinacourt.org/flwk/show1.php?file_id=8970.294 Beijing Arbitration Measures, supra note 250, at arts. 19-20.295 Civil Procedure Law, supra note 290, at art. 63. These categories are (1) documentary; (2)material; (3) audio-visual; (4) testimony of witnesses; (5) statements of the parties; (6) expert#p#分页标题#e#conclusions; (7) records of inspection. Id.296 The use of evidentiary and procedural devices to prove discrimination, such as prima facie,disparate treatment, disparate impact, mixed motives, affirmative defenses, and burdens of proof, allseem possible to use, though there is little legislative guidance.297 Administrative Procedure Law, supra note 293, at art. 6. It appears sufficient for the plaintiff toprevail where the government has failed its burden of production, arguably, even without a primafacie case. It should be noted that the shift of burden of proof applies to civil litigation in people’scourt. Id. art. 1. It is silent as to whether the rule also applies to other administrative hearings.2006] CHINA’S EMPLOYMENT DISCRIMINATION 415by a “disparate impact). 298 In proving discrimination under eitherstandard, complainants usually must present a prima facie case, and caselaw has developed various burdens of production in terms of evidenceand the weight of proof, the latter burden resting on the claimant andrequiring a preponderance of the evidence.299Besides the procedural issues mentioned above, in China, otherpractical issues remain before discrimination is proved, such asidentifying the basis of the discrimination. For example, while invidiousdiscrimination might be readily evident, differentiation based on migrantworker status may be less apparent. If migrant workers are not paidwages for three months and the employer, though in violation of wagelaws, justifies its action by using the non-payment as a means offinancing his construction project, what is the basis of discrimination? Istheir complaint based on a potential protected status such as ethnicity,race, social origin, or, is it based upon the employer-stated businessjustification?300 Of course, if non-migrant workers are paid and migrantworkers are not paid, or if a more qualified migrant worker is notpromoted, the basis is more clearly based on their status, either migrantworker or social origin.3013. RemediesThough China’s labor laws provide numerous remedies forviolations, there are none specifically for employment discriminationbased on race, ethnicity, or religious belief. The Labor Law authorizescompensation for “any harm done to female staff and workers,”302 andalso provides remedies for other labor law violations, such as nonpaymentof wages for overtime, and presumably the same remedy would298 An example of intentional discrimination is shown by giving a man higher wages than a womanfor equal work. An example of the second is shown by a height minimum for applicants thatscreens a disproportionate number of applicants of a “protected status”, such as women and Asian-Americans who statistically tend to be shorter. LEWIS & NORMAN, supra note 91, at 164-259.#p#分页标题#e#299 Id. at 128-56.300 Of course, under all scenarios a worker who is not paid for whatever reason is entitled to be paidunder a wage claim.301 The difficulty with protecting non-invidious categories of workers, such as social origins, is thatsociety and social statuses (e.g., migrant workers) change over time. If they are to be protected,labor reformers must be vigilant to remove the protection at the point it is no longer viable.302 Labor Law, supra note 19, at art. 95. For harm done to female workers, the maximum penalty is¥3000 ($365) per incidence. See违反《中华人民共和国劳动法》行政处罚办法 [AdministrativePenalties for Violations of Labor Law] art. 13, (promulgated by the Ministry of Labor., Dec. 26,1994, effective Jan. 1, 1995) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=21469.416 COLUMBIA JOURNAL OF ASIAN LAW [19:2apply if the violation was based on a protected status such as gender.303Additionally, where an employer’s rules and regulations violate the law,the Labor Bureau shall enforce the laws and the employer shall be liablefor compensation. 304 For other HRM decisions, such as thediscriminatory denial of promotions or layoffs, it seems the arbitrator orjudge must fashion an appropriate remedy.Provisions dealing with China’s individual labor contracts,contained in the Labor Law, provide damages for the employer’s nonperformanceof duties, such as the failure to pay wages or other workconditions promised in the contract.305 The contract provisions of theLabor Law do not contain separate anti-discrimination provisions, thoughthey do limit the employer’s ability to terminate an employee during apregnancy or nursing period, or for being female generally.306Remedies under the Women’s Rights Law for discriminatoryhiring, 307 wages, 308 or promotion practices 309 include administrativesanctions 310 and damages if its action harmed the woman’s propertyinterests.311China’s 2004 Labor Inspection Regulations require labor bureausto supervise employer compliance with labor laws, regulations and rules,303 Labor Law, supra note 19, at arts. 12, 13, 91; Administrative Penalties for Violations of LaborLaw, supra note 302, at arts. 12-14. The administrative penalties apply to all the “employmentunits” defined under the labor law. For certain types of gender discrimination, penalties apply inaddition to an order to correct the violation. Id. arts. 12-14. For violations of the labor contract, anorder to correct it is provided. Id. art. 16.304 Labor Law, supra note 19, at art. 89.305 违反《劳动法》有关劳动合同规定的赔偿办法 [Measures Governing Compensation forLosses Resulting From Violation of Labor Contract] art. 3 (promulgated by the Ministry of Labor,#p#分页标题#e#May 10, 1995, effective May 10, 1995) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=22531; 上海市劳动合同条例 [Shanghai Labor Contract Regulation] art. 55(promulgated by the Standing Comm. of the Shanghai Municipality People’s Cong., Nov. 15, 2001,effective May 1, 2001) (P.R.C.), available http://www.chinacourt.org/flwk/show1.php?file_id=51174.306 Labor Law, supra note 19, at arts. 19, 29(3). Where violations of the Labor Law occur andpunishment is provided by other laws or administrative rules or regulations, those provisions “shallapply.” Id. art. 105. Whether the other remedies are supplemental or preemptive would appear torequire an interpretation.307 Women’s Rights Law, supra note 135, at art. 22.308 Id. art. 23.309 Id. art. 24.310 Id. art. 50. Violations of Articles 59-63 of the Labor Law are covered by AdministrativePenalties for Violations of Labor Law, supra note 303, at art. 12, and by 劳动保障监察条例[Regulations on Labor Security Supervision] art. 11(4) (promulgated by the Standing Comm. of theNat’l People’s Cong., Nov. 1, 2004, effective Dec. 1, 2004) (P.R.C.), available at http://www.chinacourt.org/flwk/show1.php?file_id=97457. These stipulations are silent regarding violations ofArticle 12 of the Labor Law.311 Women’s Rights Law, supra notes 135, at art. 56 (now also including sexual harassment, id. art.40).2006] CHINA’S EMPLOYMENT DISCRIMINATION 417and contain administrative and monetary penalties to be administeredagainst violators.312 These regulations do not include a general antidiscriminationrequirement, but do include specific provisions relating tofemale employees. In this regard, the Labor Inspection Regulations havethe authority to ensure “the employing entities’ obedience of provisionson special labor protection of female employees and underagelaborers.”313Attorney fee costs in China are normally borne by the partiesthemselves.314 Some have claimed that there are relatively few laborlawyers in China primarily due to the inability to recover fees in laborcases.315 Interestingly, the number of attorneys representing employerson labor and employment issues, though higher than those for employees,is still low. This is likely not because of an inability to be paid for legalcounsel, but because many employers do not sense the relevancy of laborlaws nor fear their enforcement.316Remedies for violations of anti-discrimination prohibitions appearto be rather mild in China when compared with those in the United States,which include compensatory and punitive damages, back pay, front pay,restored benefits, attorney’s fees, reasonable accommodation,reinstatement, and job offers.317 In the United States, punitive damages#p#分页标题#e#may also be included, wherein victims are awarded sums deemedsufficient to punish and deter employers determined to have intentionallyviolated labor laws.318The award of attorney fees to the prevailing party is built intoanti-discrimination legislation in the United States, and is used both as anincentive to claimant’s lawyers to take discrimination cases and tosubstitute them as a “private attorney general,” to more efficiently enforcethe nation’s labor laws in conjunction with often over-burdened312 Regulation on Labor Security Supervision, supra note 310, at arts. 23-32. There is no right tocompensation or other remedy provided to complainants.313 Id. art. 11(4).314律师服务收费管理暂行办法 [Interim Regulation on Attorneys’ Fee] art. 3 (promulgated by theState Planning Comm. & the Ministry of Justice, Mar. 1, 1997, effective Mar. 1, 1997) (P.R.C.),available at http://www.chinacourt.org/flwk/show1.php?file_id=27660 (available by subscriptiononly).315 Interview with Junlu Jiang, Chair, Labor Committee of All China Lawyer’s Association(ACLA), in Beijing, P.R.C. (June 1, 2005) (on file with author).316 Id.317 Such remedies may also be applied against labor unions and employment agencies. LEWIS &NORMAN, supra note 91, at 519, 525-54.318 Id. at 256-298. For example, the Eleventh Circuit upheld a jury verdict of $17 million on racialdiscrimination claims of seven Caucasian librarians. Bogle v. McClure, 332 F.3d 1347 (11th Cir.2003), cert. dismissed, McClure v. Bogle, 540 U.S. 1158 (2004).418 COLUMBIA JOURNAL OF ASIAN LAW [19:2government enforcement agencies.319 As a general rule, attorneys’ feesmay be awarded to the prevailing plaintiff under a variety of antidiscriminationlaws.320 Attorneys in the United States also can use acontingency fee arrangement as means of compensation, allowing them toreceive a percentage of the plaintiff’s remedy.321 The U.S. SupremeCourt has held that the provision for the statutory award of fees does notinvalidate a contingent fee agreement that would require a prevailingplaintiff to pay attorney fees more than those awarded under thestatute.322In the United States, it is believed that such strong remedies andthe awarding of attorney fees provide meaningful incentives to enforceanti-discrimination laws, even above and beyond what the governmentsupervision and enforcement can deliver.323 China has not yet createdthese types of incentives for employers, employees, or labor law319 Award of Attorney Fees in Job Discrimination Cases, 45C AM. JUR. 2D Job Discrimination §2768 (2003). In civil rights action, the U.S. District Court for the Southern District of New Yorkawarded plaintiffs attorney fees of totaling $118,968, consisting of $79,312 based on some 809#p#分页标题#e#hours of work at rates varying from $95 to $105 per hour, plus a 50% "bonus" of $39,656 tocompensate for the complexity of the case, the novelty of the issues, and the "great benefit"achieved. The Second Circuit affirmed. The Supreme Court affirmed the attorney fee award,holding that court is authorized, in its discretion, to allow a prevailing party an upward adjustmentin attorney fees in cases of exceptional success. Blum v. Stenson, 465 U.S. 886, 897 (1984). In arecent example, a California Court of Appeals affirmed a $470,000 attorney fee award whenemployee prevailed in a racial discrimination suit in which she obtained a $400,000 judgment.Jonathan Vo v. Las Virgenes Municipal Water District, 79 Cal.App.4th 440 (2000).320 For example, Title VII of the Civil Rights Act of 1964, §§ 701-718, 42 U.S.C. §§ 2000e-2000e(17) (2005); the Civil Rights Attorney’s Fees Awards Act, 42 U.S.C. § 1988 (2005); the EqualPay Act, 29 U.S.C. § 206 (2005); the Americans with Disabilities Act, 42 U.S.C. §§ 12101-12213(2005); the Immigration Reform Control Act, 8 U.S.C. §§ 1324a-1365 (2005); the EmployeePolygraph Protection Act, 29 U.S.C. §§ 2001-2009 (2005); the Family Medical Leave Act of 1993,29 U.S.C. §§ 2601-2619, 2631-2654 5 U.S.C. §§ 6381-6387 (2005); and the Equal Access to JusticeAct, 5 U.S.C. § 504 (2005).Under the Civil Rights Attorney’s Fees Award Act, federal district court judges have discretion toaward attorney fees. The Civil Rights Attorney’s Fees Awards Act, 42 U.S.C. § 1988 (2005); seealso, e.g., Vocca v Playboy Hotel of Chicago, Inc., 686 F.2d 605, 606 (7th Cir. 1982). The fee maybe awarded even where a complainant prevails through settlement rather than litigation. Maher v.Gagne, 448 U.S. 122 (1980). Litigation costs may also be awarded to a prevailing party under CivilProcedure Rule 54(d)(1). FED. R. CIV. P. 54(d)(1); this includes frivolous litigation. It’s worthnoting that in the United States, even prevailing defendants may occasionally be awarded attorneyfees under the Civil Rights Attorney Fees Awards Act. 42 U.S.C. § 1988(b) (2005). Also, theFederal Rules of Civil Procedure authorizes sanctions, principally in the form of fee awards, againstresponsible persons, if the court determines that legal documents are not "well grounded in fact and. . . warranted by existing law or a good faith argument for the extension, modification, or reversalof existing law." FED. R. CIV. P. 11.321 WILLIAM BURNHAM, INTRODUCTION TO THE LAW OF THE UNITED STATES 142 (3d ed. 2002).322 The Court has distinguished payment of fees to the prevailing party under 42 U.S.C. §1988 frompayment to the attorney under a contingent fee agreement. Venegas v. Mitchell, 495 U.S. 82(1990).#p#分页标题#e#323 45C AM. JUR. 2D Job Discrimination § 2692.2006] CHINA’S EMPLOYMENT DISCRIMINATION 419attorneys. Some argue that without such incentives or sufficient remediesit will remain difficult to enforce labor laws.3244. External IncentivesThe possibility of losing business opportunities because of laborpractices below many international standards is proving an incentive tocomply with the labor laws to some Chinese businesses.325 For example,Social Accountability (SA8000) is a voluntary set of labor standards usedto ensure just and decent working conditions in the workplace, and ismonitored by Social Accountability International (SAI),326 a New Yorkbasedinstitution which is now on location in thirty-six countries and infive industries. 327 Pursuant to the SA8000 certification procedure,Chinese companies can have their factories certified by certificationbodies accredited by SAI; certifications remain valid for three years andsubject the company to surveillance audits either every six months oronce a year.328 The standards used are based on ILO labor standards andthe United Nations’ Declarations and Covenants.329 Reportedly, manymajor companies in China now use SA8000, including Toys R’ Us,Timberlake, and Avon.330 As of 2004, “fifty-four Chinese companies[have been] certified out of 400 companies worldwide which have the324 姜涛, 性别歧视：就业路上一道坎 [Jiang Tao, Gender Discrimination: Obstacle to FemaleWorkers], 中国教育报 [CHINESE EDUC. NEWS], Apr. 12, 2005, at 1, available at http://www.jyb.com.cn/gb/2005/04/12/zy/jryw/7.htm.325 Chua Chin Hon, China Comes to Grips with New Labour Standards, STRAITS TIMES(Singapore), July 17, 2004, available at Lexis, News, The Straits Times.326 SOCIAL ACCOUNTABILITY INTERNATIONAL, SOCIAL ACCOUNTABILITY 8000, § V (2001),available at http://www.sa-intl.org/index.cfm?fuseaction=document.showDocumentByID&nodeID=1&DocumentID=136 (last visited Feb. 28, 2006).Social Accountability 8000 (SA8000), designed as a labor standard, is premised on existingInternational Standardisation Organisation (ISO) quality standards. The ISO is a non-governmentalorganization, but composed of national standards institutes. It has developed more than 11,000international uniform standards to facilitate international exchange of goods and services, but hasrecently developed ISO 9000 (quality assurance systems management) and ISO 14000 (anenvironmental systems management), both of which constitute generic standards applicable to awide range of industries and services.Ilias Bantekas, Corporate Social Responsibility in International Law, 22 B.U. INT’L L.J. 309, 338 n.133 (2004).327 Hon, supra note 325.328 See SOCIAL ACCOUNTABILITY INTERNATIONAL, GUIDANCE ON PURSUING SA8000#p#分页标题#e#CERTIFICATION OF FACILITIES, available at http://www.sa-intl.org/index.cfm?fuseaction=page.viewPage&PageID=617&What%20does%20SA8000%20certifcation%20mean?&stopRedirect=1 (last visited Feb. 28, 2006).329 Id.330 Hon, supra note 325.420 COLUMBIA JOURNAL OF ASIAN LAW [19:2certification.”331 The business incentive is the expectation that certifiedcompanies will be first in line for business opportunities, most likely fromU.S. investors.332SA8000’s Social Accountability Requirements Section IV ondiscrimination reads as follows:5.1 The company shall not engage in or supportdiscrimination in hiring, remuneration, access totraining, promotion, termination or retirement based onrace, caste, national origin, religion, disability, gender,sexual orientation, union membership, politicalaffiliation, or age.5.2 The company shall not interfere with the exercise ofthe rights of personnel to observe tenets or practices, orto meet needs relating to race, caste, national origin,religion, disability, gender, sexual orientation, unionmembership, or political affiliation.5.3 The company shall not allow behavior, includinggestures, language and physical contact, that is sexuallycoercive, threatening, abusive or exploitive.333Other provisions require the certified company to control suppliers,subcontractors, and sub-suppliers. 334 The sanction for non-compliancepresumably would be ineligibility and loss of business with any U.S.company requiring certification. Whether these external standards andmarket-imposed sanctions will prove effective in lessening illegaldiscrimination, or prove to be mere public relations window dressingremains to be seen.IV. CONCLUSION331 Id. Others report forty-nine companies in China. SPARKICE INC. (BEIJING), THE COSTLYSA8000 IN CHINA(2), Sept. 22, 2004, http://www.sparkice.com/sparkiceApp/spcontrol/ecIDPViewNewsDetails?newsId=364.332 China Daily estimated the cost for first time accreditation and subsequent reviews for three yearsfor a Chinese company with 1500 employees would be about ¥230,000 (US$27,811), which isabout US$19 per employee. SA8000 Requires Positive Attitude, CHINA DAILY, July 6, 2004,http://english.people.com.cn/200407/06/eng20040706_148628.html.333 SOCIAL ACCOUNTABILITY 8000, supra note 326, at § IV.5.334 Id. § III.9.6.2006] CHINA’S EMPLOYMENT DISCRIMINATION 421A. Challenges to Remedying Employment DiscriminationThere are currently at least three immediate challenges toaddressing the problem of employment discrimination in China.First, there is a need to educate society in general about theproblems of discrimination. Every society has problems with somecitizens excluding others from opportunities for education, housing,#p#分页标题#e#welfare and jobs, and such exclusion may be for invidious or otherreasons. Discrimination takes a large social and economic toll. It isestimated that in the United States, gender and racial job discriminationwastes the talents of many, causes social divisions and disharmony, andcosts US$194 billion a year.335 The battle against discrimination takesplace in many forums, but perhaps none are as important as education,where citizens must be provided information to combat the exclusionarystereotypes that women are inferior to men, that age determines ability,and that race and ethnicity determine competency. However, asimportant as education is in the United States, it was determined thatemployment needed significant legal protection, and the EEOC wasestablished to protect equal economic opportunity. Without a sufficient“living wage,” other opportunities such as housing and education becomeeven more distant.China’s employment discrimination comes from historical andcultural mores which are exacerbated by the country’s present economictransition to a market economy. Economic development, privatization,and the need to be profitable all argue for cutting costs (often labor costs)and pulling away from the welfare state’s iron-rice bowl approach.Therefore, one of the main challenges facing China is the long-termeducation of the population regarding the fallacies of discrimination, as335 The 194 billion dollars reflects the cost of discrimination in terms of employee’s lost income.The actual number is calculated by: (1) projecting a percentage of earning differentiations by raceand by gender, (2) applying the percentage to aggregate national earnings, and (3) adjusting thecombined cost of sexual and racial discrimination in 1987 dollars. RALPH ESTES, STAKEHOLDERALLIANCE, THE COST OF DISCRIMINATION, http://www.stakeholderalliance.org/discrimination.html(last visited Feb. 28, 2006).In China, costs to society in terms of government costs and legal aid services torecuperate ¥100 billion (US$12 billion) in migrant worker claims for back wages have been put at¥300 billion (US$36 billion). 崔丽, 追讨1000 亿元欠薪，需支付3000 亿元成本 [Cui Li, ItCosts 300 Billion to Collect Back Wages of 100 Billion], 中国青年报 [CHINA YOUTH DAILY]，June 9, 2005, http://zqb.cyol.com/gb/zqb/2005-06/09/content_15960.htm [hereinafter Cui Li].422 COLUMBIA JOURNAL OF ASIAN LAW [19:2well as its costs and dangers to society.336 This must be combined withstrongly-enforced anti-discrimination laws, which “educate” employersby making them pay for their violations.Education and easy access to information about labor rights andremedies is essential and must be provided to employees. The easiest and#p#分页标题#e#most logical place for this information is at the workplace. Postersoutlining rights, remedies and government contracts must be madeavailable to workers for meaningful access to labor rights to exist, asrequired by SA8000.337 Special training sessions can also be provided bytrade unions,338 by governments, or by NGOs. For example, in Shanghai,it is reported that migrant construction workers must pass classes on howto protect their legal rights in order to get a certificate allowing them towork in the city.339 The need for the government to intervene to bringabout changes in society cannot be understated.340A second challenge arises from China’s transition to a marketeconomy and the resulting inequities. The societal disruption broughtabout by economic transition, causing discrimination, must be managedby the government’s guiding hand through legislation allowing allcitizens to participate more equally in the economic benefits brought onby the transition. This requires more than policy pronouncements—itrequires enforceable anti-discrimination laws and procedures that are ableto stop law violators and provide effective remedies for the victims.A third challenge is the inconsistency too often found in lawenforcement. Part of the difficulty is systemic of China’s political legalsystem wherein national legislation is general in nature, leaving the taskof passing detailed implementing regulations to local governments. 341These local laws tend to be slow in coming, too often are as general as thenational law, are not always consistent, and too frequently lack336 For example, the Law School of Beijing University has created a working group on protection ofwomen’s labor rights, dedicated to the general public for long term education regarding jobdiscrimination. More information on the working group is available at http://www.womanlegalaid.org.cn/group/index.php (last visited Feb. 24, 2006). Also, for the costs to the victims inseeking redress, it has been estimated that "for some migrants, it requires hundreds, even thousandsof RMB in transportation, food, lodging, and other costs just to report a case." Cui Li, supra note335.337 SOCIAL ACCOUNTABILITY 8000, supra note 326, at § IV.9.12.338 Id. § IV.9.5.b.339 Yang Lifei, Migrants Learn About Legal Rights, SHANGHAI DAILY, Apr. 19, 2005, at 3,available at http://www.china.org.cn/english/null/126305.htm.340 For discussion on the influence of the role governments, there is some evidence of differenttreatment in China and Vietnam of workers under Taiwanese-managed factories that arguably isattributable to the different roles played by the governments. See Anita Chan & Hong-Zen Wang,The Impact of the State on Workers’ Conditions-Comparing Taiwanese Factories in China and#p#分页标题#e#Vietnam, 77 PACIFIC AFFAIRS 629 (2004).341 DANIEL C. CHOW, THE LEGAL SYSTEM OF THE PEOPLE’S REPUBLIC OF CHINA 153 (2003).2006] CHINA’S EMPLOYMENT DISCRIMINATION 423meaningful government enforcement. 342 The 2004 Labor InspectionRegulation empowers the government to supervise employer compliancewith labor law requirements,343 however, the Regulation’s pertinent partdelegates enforcement:The labor security administration of a local people’sgovernment at the county level or at any level aboveshall be in charge of the labor security supervision workwithin its own administrative area.344Thus, it would seem that the enforcement approach is somewhatcircular, with local governments given responsibility to passimplementing legislation against their local business constituents and toprovide meaningful processes and penalties against those businesses thatviolate anti-discrimination laws. Many local governments passregulations, but those regulations are often no more enforced than thenational regulation.345Related to these challenges is the relative unavailability of legalassistance. Chinese labor lawyers, unlike their commercial lawyercounterparts, have little incentive to take on the cases of victims of illegalemployment discrimination.346 The lawyer fees for such cases are low,victims are often without financial means increasing the likelihood thatthe lawyers may not be paid at all, the cases can be complex, and theemployer always has the right to appeal to the court for a de novo trialfollowing an arbitration decision them. All these factors presentformidable challenges to the meaningful enforcement of antidiscriminationlaws in China.B. Clarifying China’s Anti-Discrimination Laws342 See Legislation Law, which is established to deal with the central-local inconsistencies, but thereis little evidence of its widespread use in formal procedures.343 Regulation on Labor Security Supervision, supra note 310.344 Id. art. 3.345 M. Ulric Killion, Post-WTO China: Quest for Human Right Safeguards in Sexual HarassmentAgainst Working Women, 12 TUL. J. INT’L & COMP. L. 201, 234 (2004).346 It is reported that lawyers charge substantially less in representing employees in labor rightslitigations than they do in representing the employers. See 韦蔡红, 上海律师薪酬调查 [WeiCaihong, Survey on Attorneys’ Income in Shanghai], 新闻晨报 [MORNING DAILY NEWS], June 17,2004424 COLUMBIA JOURNAL OF ASIAN LAW [19:2Some reforms to China’s anti-discrimination labor laws are inorder. Suggested clarifications to existing anti-discrimination laws aremade below, and seek to address some of the legal inefficiencies inChina’s current attempt to combat discrimination in the workplace, as#p#分页标题#e#well as satisfy its commitments to meet and maintain international laborstandards.1. “Protected Classes” of WorkersThe definitions of protected classes of workers should be moreclearly stated. Currently, those workers protected by some type of antidiscriminationlaw must look to a variety of laws and institutions todetermine their rights. Further, the rights of some groups are more clearlyprotected than those of others. For example, while race, ethnicity, gender,and religious belief are protected by the Labor Law, for workers who aredisabled or have hepatitis B or other medical ailments, a search to otherlaws (that often provide even less protection) is required. Race carrieswith it some question as to whether it stands alone, or de facto includesnational minorities, social origin, etc. In its reports to the United Nations,China often discusses all three of these categories and its progress thereinunder the broad category of race, yet there seems to be a scarcity of labordisputes reported dealing with race specifically.The scope of the coverage for protected classes also should beclarified. For example, the Women’s Rights Law purports to protectfemale applicants, while Labor Law only protects female employees.347Disabled workers have varying rights in public and private employment,and those with certain medical ailments may be protected differently ascivil servants than elsewhere. The individual labor contract provisionsfound in the Labor Law do not expressly mandate provisions prohibitingillegal discrimination except as to women.Though China might consider expanding its categories ofprotected classes to better fall in line with international standards, thebreadth of coverage—that is, whether to include age, health, and migrantworkers, etc.—is a discretionary matter left to the national legislature.And legislative coverage varies widely among countries. 348 Whilelawyers in China can successfully search the anti-discrimination laws anddetermine protected status, it is doubtful whether average citizens oremployers can easily find access or answers to the necessary information347 Women’s Rights Law, supra note 135, at art. 22; Labor Law, supra note 19, at art. 2.348 CATHERINE F. HALVORSEN & DIANA C. JAQUE, KEEPING UP WITH NEW LEGAL TITLES: BELL,MARK, ANTI-DISCRIMINATION LAW AND THE EUROPEAN UNION 2-15 (2002).2006] CHINA’S EMPLOYMENT DISCRIMINATION 425regarding coverage and application of these legal rights and duties, and,more importantly, whether victims can therefore have adequate redress.3492. “Labor Disputes” and Legislative Rights of“Applicants”Chinese law requires a labor dispute arising out of an employmentrelationship before a remedy for discrimination can be requested from the#p#分页标题#e#arbitration commission or the courts. 350 By definition, therefore, jobapplicants are not employees and are thus excluded from meaningfulenforcement.The courts also require the claim to arise from a labor disputeunless otherwise authorized in accordance with law.351 There are threeanti-discrimination provisions which arguably could qualify for a courthearing because they are “otherwise authorized.” The first comes fromthe Regulation of Labor Market Management which prohibitsdiscrimination in recruitment, but provides only administrative penaltieswithout specific remedies to the victim of such a violation.352 The secondcomes from the Women’s Rights Law which authorizes direct courtaccess in accordance with the law under Articles 48-49.353 The third isthe Disability Law, which provides for a lawsuit in court.354 The questionhere is two-fold: does the phrase “in accordance with the law” require thevictim in a hiring discrimination case to first have a “labor dispute” (thatcould only possibly arise from an actual employment relationship), ordoes it mean the court will accept the direct appeal, thus bypassing laborarbitration? Further, if the court allows for direct appeals, what remedies349 In the United States, protected classes also arise from a variety of laws, but in recent years therehas been a general (but not fully inclusive) coalescence of enforcement under one nationaladministrative agency (the EEOC) responsible for investigation of claims under many of these lawsand for prosecution. LEWIS & NORMAN, supra note 91, at 199-252. States are permitted to passsimilar legislation that must be substantially similar or broader, but it may not undercut rights andduties under the national law, a principle enforced under the courts. By contrast, China uses oneagency (labor bureaus) to enforce all labor disputes, including employment discrimination.350 The People’s Supreme Court explains that arbitration committees can only take the casesinvolving disputes arising from “labor relationship defined under Article 2 of Labor Law”.Interpretation on Labor Arbitration, supra note 241, at art. 1. Labor Law defines labor relationshipas “all enterprises, individual economic organizations (hereinafter referred to as “employers”), andworkers bound up by contractual employment.” Labor Law, supra note 19, at art. 2.351 Labor Law, supra note 19, at arts. 77 and 79.352 Regulations on Labor Market Management, supra note 21, at arts. 34-38.353 Women’s Rights Law, supra note 135, at arts. 48-49.354 Law on the Protection of Disabled Persons, supra note 103, at art. 49.426 COLUMBIA JOURNAL OF ASIAN LAW [19:2will be granted?355 There appears to be little legal guidance on this issue#p#分页标题#e#of justiciability.356More specifically, China might clarify its labor laws bylegislatively extending the rights against unlawful discrimination toinclude applicants, perhaps in the Labor Law or by supplementaryregulations. A second technique for clarification on this issue could be tointerpret the anti-discrimination laws to apply to individuals, which wouldthereby include applicants for jobs. A third way to approach the lack ofaccess to remedies for applicants under anti-discrimination laws is toclarify “labor dispute” to include applicants, even though such cases donot arise out of an existing employment relationship.3. Enhancing Enforcement: Remedies as Deterrentand IncentiveCertain self-help remedies are available to workers. First, throughtheir trade unions, non-discrimination clauses can be negotiated intocollective contract terms. These terms can also provide for a greaternumber of protected classes—including disability, health and migrantstatus—than do current statutes. These contract protections create rightsthat are supplemental to those within labor statutes and provide laborrights that can be enforced by the labor arbitration commission.Consideration could be given to creating grievance proceduresinternal to the enterprise, utilizing a private third-party arbitrator (or“outside” mediator) to expeditiously resolve claims of employmentdiscrimination. This method would lessen potential liabilities and bring a355 Article 56 of Women’s Rights and Interests Protection Law mandates that perpetrator shall beliable for “property or other damages” as a consequence of his discriminatory conduct. Women’sRights Law, supra note 135, at art. 56. However, the law is silent on the types, amount, andpayment of those damages. Furthermore, Article 56 allows the victim to look to other laws todetermine the amount of damages, if the situation is explicitly covered by other law or regulations.Id. Therefore, local labor regulations or other administrative rules may be dispositive in adiscrimination case.Under the Administrative Penalties for Violations of Labor Law, fines of ¥3,000(US$365) may be levied for violation of enumerated women’s rights (not other areas ofemployment discrimination). See Administrative Penalties for Violations of Labor Law, supra note302, at arts 12-14. But there is no compensation for the victim, except in wage claims. Id. art. 6).All fines are kept by the government. Id. art. 20.356 U.S. anti-discrimination laws avoid this lack of clarity by extending protection to any“individual,” rather than to “employees,” which protects applicants as well as former employeeswho have suffered discrimination. Civil Rights Act of 1964, § 703, 42 U.S.C. § 2002e (2005). See#p#分页标题#e#also discussion in LEWIS & NORMAN, supra note 91, at 14-17. Other labor statutes usually interpretthe law’s application to “employees” to be extended to applicants, such as in the case of employerdiscrimination against an applicant because of his or her union beliefs, membership or activities(protected under the statute). See discussion in LEWIS & NORMAN, supra note 91, at 14-17.2006] CHINA’S EMPLOYMENT DISCRIMINATION 427conclusion that is quicker, less expensive, and more accessible than theuse of either labor arbitration commissions or courts.357Enforcement can be enhanced by strong legislative remedies,which generally serves as both a deterrent to law violators and anincentive to enforce the labor laws. As to the deterrent aspect, profitmotivatedemployers naturally pay better attention to labor laws when thepossibility of large monetary liability exists. Under U.S. antidiscriminationlaws this occurs with regularity, and many corporate giantshave been held liable for millions-of-dollars in monetary penalties forviolations.358 These liabilities, coming in the form of back pay, front pay,compensatory damages, and even punitive damages are thought to act as adeterrent to law-violators. 359 It is assumed that a profit-motivatedemployer will seek to avoid such losses through compliance with thelabor laws.A second function of legislative remedies is to enhanceenforcement of anti-discrimination laws by providing incentives throughthe remedies awarded to victims and their lawyers who prevail in thediscrimination complaint. In the United States, one such incentive is torequire the law-violator (i.e. the employer) to pay for both the court costsand attorney fees of the prevailing party.360 American court judgments,for example, may award all of the court costs incurred by the prevailingparty, including fees for clerks, marshals, witnesses, and filing fees.361Absent specific statutory authorization such as that provided by antidiscriminationlabor laws, these costs do not normally include theattorney fees of the prevailing party.362 The awarding of attorney feescan serve two purposes. First, it enables a complainant who may be357 Article 77 of the Labor Law permits “settlements,” as well as mediation, arbitration, andlitigation. Labor Law, supra note 19, at art. 77. In the United States, private arbitration ofcollective labor contract claims is the norm; and in recent years there has been judicial acceptanceof and deferral to arbitration of certain statutory labor rights, including claims of discrimination,where such arbitration is genuine and not burdensome on the complainant. See Gilmer v.Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).358 A federal jury awarded a former Boeing engineer more than $2.5 million in an agediscrimination#p#分页标题#e#lawsuit against the corporate giant of Boeing Company. The award included $1.5million in punitive damages, $31,000 for back pay, $625,000 for pain and suffering, and $370,000as lost salary as a test pilot. See Goico v. Boeing Co., 347 F. Supp. 2d 986 (D.Kan. 2004).359 LEWIS & NORMAN, supra note 91, at 256-96.360 Id. at 521-47.361 28 U.S.C. § 1920 (2005).362 BURNHAM, supra note 321, at 239-40. Additionally, there are court rules on offers of judgmentby plaintiffs which can promote settlement. The rule is “[I]f a party offers to settle the suit by entryof judgment in a particular amount, the offeree rejects the offer and the result at trial is not at leastas favorable as the offer, the rejecting offeree is liable for the actual costs incurred by the offerorafter the date of the offer. Thus, if a prompt realistic offer is made early in the suit, successfulparties can recover almost all their attorney fees.” Id. at 240. The rule does not apply if thedefendant offeror prevails. Delta Air Lines v. August, 450 U.S. 346 (1981).428 COLUMBIA JOURNAL OF ASIAN LAW [19:2without sufficient funds to find an attorney willing to take their case, andsecond, it has the effect of monetarily inducing the lawyers to serve as“private attorneys general” in enforcing the labor laws. In the UnitedStates, this supplements the government’s use of administrative agenciesin enforcing anti-discrimination laws, as well as the self-help methods ofprivate arbitration.It has been said by some employers in China that labor laws areirrelevant due to the unlikely prospect that employees will complain tothe authorities or that the laws will be enforced.363 Further, there is littleevidence to suggest that either the promise of remedies or the threat ofpenalties enhance enforcement.364 Statutory remedies generally providecompensatory relief with the aim of partially restoring the worker to theeconomic position he or she would have been in but for the violation,365and interest on the amount owed the worker generally is due.366 Suchsituations do not effectively deter most employers, however, as they tendto view such awards merely as a cost of doing business.Further, labor law remedies provide little or no incentive topromote or enhance the enforcement of the anti-discriminationrequirements. There is generally no award of attorney fees to prevailing363 In 2004, there were only 260,000 cases in labor arbitration, and a mere 4,047 arbitration caseswere appealed and accepted by the People’s Court. Fewer yet likely involved discriminationclaims. 2004 STATISTICS, supra note 131. See also, 2004 STAT. Y.B. CHINA, supra note 195, at §23-25.364 For example, in an alleged workplace sexual harassment suit, the People’s Court ordered the#p#分页标题#e#wrongdoer to pay ¥2,000 (US$243) damages for physical and emotional harm. Both partiesappealed and the case was affirmed. 四川首例性骚扰案终审施害人道歉并赔偿2000 元 [FinalJudgment of the First Sexual Harassment Case in Sichuan: the Wrongdoer Apologizes and Pays¥2000 ], 新华网[XINHUA NEWS AGENCY], Aug. 9, 2003, http://news.xinhuanet.com/newscenter/2003-08/09/content_1018164.htm.365 Administrative Penalties for Violations of Labor Law, supra note 302, at arts. 12, 13, and 16.For “repeat violators” of the Labor Law, heavier penalties are authorized (two to five times theoriginal amount). Id. art. 19. But there is little evidence of the use of heavier penalties.366 Id. art. 6.2006] CHINA’S EMPLOYMENT DISCRIMINATION 429plaintiffs under the Chinese legal system, 367 and fees for workercomplainants must be negotiated with attorneys on an individual basisand within regulatory fee guidelines.368 Reforms in this area would likelyrequire modifications of anti-discrimination legislation, attorney feeregulations, and, possibly, in-court procedures.Finally, it is clear that effective laws and their meaningfulenforcement still do not always bring a complete end to illegaldiscrimination in the workplace. This complex problem must be dealtwith at many levels of society. But even while that war is being waged, itis certainly comforting to the victims of discrimination to know that theycan receive some predictable measure of justice when violations of equalemployment occur.369367 赵矗, 民工讨薪欠薪公司应支付律师费 [Zhao Chu, When Workers Collect Default Wage,Default Employers Shall Pay the Attorney Fees], 法制早报 [MORNING LEGAL NEWS], Feb. 13,2006, at 9, available at http://www.chinalegalnews.com.cn/legaltimes/20060213/0901.htm. In atypical civil case, an experienced Chinese attorney will charge a contingent fee around 5%, plus thehourly billing of ¥2000 (US$243) per hour. When the judgment is rather small, the attorney willcharge a minimum fee of ¥5000 (US$603). For details, see王媛律师服务收费标准 [AttorneyWang Yuan’s Fee Schedule] (on file with author). Though fees for employers in labor cases areusually based on an hourly basis, such fees for plaintiffs would clearly preclude most victims ofdiscrimination from obtaining legal assistance. For many attorneys that represent plaintiffs, littleremuneration is expected or paid, as the legal representation is often pro bono or practically so.Interview with Junlu Jiang, supra note 315. In Guangzhou, the “going rate” to charge migrantworkers who can pay for legal services is about ¥3,000 per case. Interview with Qiaoyan Huang,lawyer and faculty member, Law Clinic of Sun Yat-sen University Law School, in Guangzhou,#p#分页标题#e#P.R.C. (June 3, 2005).368 See Interim Regulation on Attorneys’ Fee, supra note 314; see also CHOW, supra note 341, at236-39. The rules governing the collection of attorneys fee are covered under the recentlypromulgated 律师事务所收费程序规则 [Procedures for Law Firms Collecting Attorneys Fee](promulgated by the Ministry of Justice, Mar. 19, 2004, effective May 1, 2004) (P.R.C.), availableat http://www.chinacourt.org/flwk/show1.php?file_id=92696.369 As of July 2005, there is consideration being given to a draft law on Employment Promotionwhich could include anti-discrimination provisions. Draft provisions could include a clarification of“discrimination” (differentiate, exclude, favor), a broadened scope of protected classes (includingresident status, age, and marital status), an extension of rights to applicants, and provisions forcompensatory remedies for victims. Employment Promotion Law Draft, supra note 17.Judicial Protection of Intellectual Property in China1HE Zhonglin2Due to historical reasons, China had no written intellectual property (IP)statutes until the first decade of the twentieth century. However, as for amodern IP legal system which is constantly and effectively implemented,China has no more than thirty years’ history, much shorter than manydeveloped countries. In response to new policies geared towardsmodernizing science and technology, developing a market economy andattracting foreign investments, and in order to enhance the position ofintellectuals in China after the Cultural Revolution, since the early 1980s,China has taken active and continuous measures to develop a comprehensiveIP legal framework governing trademarks, patents, copyright, etc. So far,China has acceded to most IP-related international conventions and treaties(including the TRIPs Agreement) and incorporated basic requirements ofthese conventions and treaties into its domestic laws, and provides a quitebroad range of protection of intellectual property rights (IPRs). To accede tothe two WIPO’s Internet copyright treaties (WCT & WPPT in 1996), theState Council, which is the central government of China, promulgated the1 This paper is prepared for the American Bar Association (ABA) Annual Meeting in Honolulu, Hawaii, on August 4-5,2006.2 Mr. HE Zhonglin is a judge of the Intellectual Property Division of the Supreme People’s Court of the P.R. China.1Regulations on the Protection of the Right of Communication throughInformation Networks, on May 29, 2006.In a broad sense, the IP legal system comprises two major aspects. One isthe procurement of IPRs, namely, the recognition, 3 granting andmaintenance (or revocation) of IPRs. And the other is the enforcement ofIPRs, i.e., mainly dealing with infringements.#p#分页标题#e#As far as the procurement of IPRs is concerned, it is a common practice inthe world that the central government rather than local authorities exercisesthe power of granting IPRs (industrial property rights). In China, all disputesconcerning the validity of industrial property rights should initially go to thecorresponding re-examination boards, before being brought asadministrative lawsuits before a specific court – the No.1 or No.2Intermediate People’s Court of Beijing, and may be finally concluded in theBeijing High People’s Court which is acting as a court of appeal.In terms of the enforcement of IPRs, unlike most jurisdictions where civilcases are normally dealt with by courts, arbitrators and mediators, China hasset up a quite unique model by which, besides the judicial approach, IPinfringement cases can also be proactively or passively dealt with bydesignated IP administrations. Such unique device is called “The Way ofTwo Legs” （“两条腿走路”） which is a Chinese idiom.3 I use "recognition of IPR" here referring to those IPRs such as copyright and neighbouring rights which generallyneed not formalities of grant or registration which are generally required for acquisition of industrial property rightssuch as patents, trademarks.2According to the relevant IP laws, the designated administrations should,without request of the IPR owners, actively investigate and decide onadministrative punishments (imposing administrative liabilities) againstserious IP infringements including those involving piracy, counterfeiting orwith other nature which harm the public order. On the other hand, except forcopyright, the IP owners can initially choose to where they will bring anaction – court or IP administration. The IP administration has the power toorder the infringer to stop infringing act immediately. If the party concernedis not satisfied with the decision, it may, within fifteen days from the receiptof the notification of the order, institute legal proceedings to the courtagainst the IP administration, according to the Administrative ProcedureLaw. However, the administration has no power of making decision ondamages, but may mediate on damages, upon the request of the partiesconcerned. If the mediation does not work, the parties may lodge aninfringement civil lawsuit with the court according to the Civil ProcedureLaw. The administrative and civil lawsuits can be concurrently brought tocourts.This special model was firstly set up for patent cases in 1985 when thePatent Law came into force. Eventually it has covered all kinds of IP case.4Why China adopts such an approach? In China, traditionally theadministrative power could interfere deeply in civil affairs. However, the#p#分页标题#e#initial reason for establishing such a unique device was lack of competent IPjudges to deal with patent cases when the patent system was introduced intoChina in early 1980s. After twenty years development of the IP system and4 Such solution only exists in IP civil cases rather than other civil cases. The other civil cases should generally bebrought to the courts.3with the improvement of judicial competence, many scholars andpractitioners have urged handing over the whole jurisdiction to the courts.However, the latest amendments of the three IP laws (in 2000 and 2001) notonly refuse such suggestion, but extend and unify such approach to all IPfields. The new reason has been explained as that the administrativeintervention has been proved quite effective for crackdown on piracy andcounterfeiting in a so-called "special period".The administrative approach is commonly regarded as cost effective and lesstime consuming comparing to court actions. However, it is not always thesituation and really depends on case by case. As mentioned above, the IPadministration can only decide whether there is an infringement in existencerather than to decide the compensation simultaneously, the dispute maytherefore not be completely resolved in the same proceedings. Assuming thatthe administrative decision will be appealed to the court, two contentiousprocedures (civil and administrative) might process at the same time in oneor two courts, which might lead to contradictory decisions between theadministrative litigation and the civil litigation. In such situation, the partiesmay have to spend much more time and costs for resolving the dispute,comparing with directly bringing the whole case to court.China has made great efforts in developing a more strong and transparent IPjudicial enforcement system. Courts certainly play a vital role in IPprotection and hold the power of final decision-making for all cases.The hierarchy of the Chinese general court system consists of four tiers ofcourts and the structure looks exactly like a pyramid. The Supreme People’s4Court (SPC) is the sole highest judiciary of the state. Each provincial levelhas only one High People’s Court (currently 31 high courts in total). TheIntermediate People’s Courts are set up in big cities and regions in provinces(currently more than 300 such courts). At the lowest level of the Chinesecourt system, there are more than 3000 Primary People’s Courts which arelocated in each counties and districts of cities.Generally speaking, most cases should be started the proceedings of firstinstance in the primary courts. However, the cases concerning importantissues or involving a big sum of disputed property can be directly brought tothe intermediate courts. All general cases can be appealed to its#p#分页标题#e#corresponding appellate courts, in which the judgements or decisions of thesecond instance should be final. Nevertheless, after the second instance andwithin the term of two years, the parties can still apply for instituting theretrial procedure, which is, to some extent, similar to the proceedings ofcertiorari in the US Federal Supreme Court.China does not have independent Patent Court or IP Court exclusivelydealing with all patent or IP civil cases. However, within the Chinese courtsystem, specialized tribunals (i.e., so-called Intellectual Property Division)handling IP cases have been established in all High People’s Courts ofprovinces and most Intermediate People’s Courts in provincial capital citiesand economically advanced cities. The Intellectual Property Division of theSPC was founded in October, 1996.The jurisdiction of the courts over IP infringement cases is relativelycentralized and generally limited to intermediate courts. More strictly, cases5in relation to patent, new varieties of plant and layout-designs of integratedcircuits are limited to those experienced and specifically designatedintermediate courts.5In China, IP judges are specialized in dealing with patent cases and other IPcases. Generally speaking, their routine work is exclusively to try IP caserather than to try general cases that ordinary judges do. All IP judges shouldbe trained in the national or provincial Judges Colleges in regular orirregular bases. Many IP judges are not very old as the IP system in China isalso young compared with that in Western countries.Generally speaking, the Chinese IP legal system is quite similar to the civillaw system, as a result that the Chinese modern legal system has beenessentially influenced by the Continental Law theories and legislativemodels. For example, the German Patent Law has huge impact on theChinese Patent Law. Nevertheless, the judicial practice, to some extent,differs from the European continental countries.The doctrine of precedent does not exist in the Chinese judicial system.However, under the Constitution, the SPC is authorized to interpret lawswhen it is needed and the interpretations themselves are applied as laws (i.e.,having binding force to all courts across the country). The JudicialInterpretations have a special position in the legal framework for IPprotection. Up to the end of 2005, the SPC has issued around fifty judicial5 Up to now, there are totally 404 intermediate courts in China and only 56 hold such jurisdiction over patent cases,namely intermediate courts in all provincial capitals, 4 special economic zones and 18 other big cities. As for cases ofnew plant varieties and layout-designs of integrated circuits, 38 and 43 intermediate courts are exclusively entitled to#p#分页标题#e#try, respectively.6interpretations or opinions as to the trial of IP cases, most of which remain inforce.At present, the SPC is drafting five new Judicial Interpretations on issuesconcerning unfair competition, new varieties of plants, MTV, conflicts ofIPRs and criteria of adjudicating upon patent infringement. The former fourJI drafts have been published seeking for public comments in last November.These four drafts should be formally promulgated in near future. The SPCwill take into account all comments and opinions for refining the drafts. Dueto many complicated technical and legal issues involved, the patent JI draftwill be conducted a further research by the SPC in this year and probablywill be issued in series.A wider range of legal remedies for IP violations is now available, includingincreased fines, statutory damages, injunctive orders and prison sentences ofup to seven years for egregious counterfeiters.The Criminal Law provides seven kinds of IP crimes, covering acts ofcounterfeiting registered trademark, patent and infringing copyright andtrade secret. In addition to the IP crimes, some other names of crime mayalso be concerning IP infringements. For examples, the crime ofmanufacturing and selling fake products are generally related to trademarkinfringements, and many serious copyright piracy cases are punished in thename of crime for illegal business, in which infringers can be sentencedmore than seven years imprisonment.7In the end of 2004, the SPC and the Supreme People’s Procuratorate jointlyissued a remarkable judicial interpretation on the matter of IP crimes tosignificantly lower down the threshold of punitive sanctions. Now it is mucheasier to put IP infringers in jail than before and tougher penalties for IPcrimes will be imposed. In recent years, the IP criminal cases courtsaccepted and concluded increased rapidly. In 2005, the courts throughout thecountry accepted total 3567 IP criminal cases of first instance, an increase of28.36% over the previous year. In which, 524 cases related to criminalinfringing intellectual property, an increase of 35.4%, 1117 were fakeproducts sales cases, an increase of 16.48%, 1926 were illegal businesscases, an increase of 34.4%. The courts totally concluded 3529 IP criminalcases in 2005, an increase of 28.28% over the previous year.As far as IP civil actions are concerned, one special issue should beemphasized, i.e., pre-trial provisional measures, which generally is one ofthe most concerned issues by parties, in addition to preventing an allegedinfringement to continue and calculating compensation. To accord with theArticle 50 of the TRIPs Agreement, three kinds of provisional measureswere introduced into the latest amendments of the Chinese intellectual#p#分页标题#e#property laws in 2000 and 2001, namely, preliminary injunction (also calledpre-trial cessation of infringement in Chinese, which equals to theinterlocutory injunction in the UK), pre-trial preservation of evidence(equals to the search order or Anton Piller order in the UK) and pre-trialpreservation of property (equals to the freezing injunction or Marevainjunction in the UK).8The courts pay great attentions on the adoption of provisional measures, totimely prevent infringements and effectively protect the interests of therightholders. According to a statistics, since 2001 to October 2005, localcourts of the country accepted 301 preliminary injunction applications andconcluded 299 of them, the actual upholding rate reached 88.06% amongcases insisted on by the applicants; accepted 470 applications concerningpre-trial preservation of evidence and concluded 445 of them, the actualupholding rate reached 95.02% among cases insisted on by the applicants;accepted 147 applications concerning pre-trial preservation of property andconcluded 142 of them, the actual upholding rate reached 96.64% amongcases insisted on by the applicants.Notably, according to the Article 134.3 of the General Principles of CivilCode, when hearing civil cases, in addition to imposing civil liabilities uponinfringers, the court may also take civil penalty measures, such as servingadmonitions, ordering the offender to sign a pledge of repentance, andconfiscating the property used in carrying out illegal activities and the illegalincome obtained therefrom. It may also impose fines or detentions asstipulated by law. The SPC now encourage the local courts to apply suchcivil penalty measures to serious IP infringements.In past twenty years, IP cases received by courts are continuously andrapidly increasing (as shown on slides). In recent years, the annual numberof IP civil cases has increased steadily by 20-30% or so. In 2005, the courtstotally accepted 16583 IP civil cases of first instance, second instance andretrial procedure, an increase of 20.66% over the previous year; concluded16453 of them, an increase of 29.6% over the previous year. The new cases9of first instance reached 13424, an increase of 26%, in which, 6096 werecopyright cases, an increase of 42.96%; 2947 were patent cases, an increaseof 15.61%; 1782 were trademark cases, an increase of 34.49%; 1303 wereunfair competition cases, a decrease of 2.1%; 636 were technology contractcases, up 0.95%; 156 were new variety of plant cases, a decrease of 10.26%;other intellectual property cases reached 504, up 31.59%.The time and cost spending in litigation is the prevalent problems faced bycourts worldwide. In reality, the time and cost of IP litigation required in theChinese courts are relatively less than in many other countries. Statistics#p#分页标题#e#show that most civil cases in China were concluded within statutory period6and cases exceeding the prescribed period just cover a very smallpercentage. In practice, the trials of most IP cases can be finished within 6months in first instance and 3 months in second instance, respectively. Asfor cases involving foreign factors, such as involving foreign parties ordisputed assets located outside China, there is no such time limitationexplicitly stipulated in laws. However, the courts do their best to treat thosecases same as domestic case in practice, most of them can be concludedwithin a reasonable term. In this regard, compared with many countries, theefficiency of IP litigation in China is relatively higher or at least, not verylow. It does not seem to demonstrate the story that some people complainedabout the long and tedious legal proceedings in China.One of the hot topics is patent enforcement. The trial of patent infringementsmay go beyond a modest time period, since a number of defendants may6 Under the Civil Procedure Law, PRC domestic cases at first instance should generally be concluded within 6 monthsfrom the date of filing, but may be extended another 6 months under special circumstances. Cases at second instanceshould generally be finalized within 3 months but the time limit may also be deferred under special circumstances.10lodge a counterclaim against the validity of the disputed patent, which maylead to a suspension of the civil court proceedings till the invalidation claimis concluded. The SPC has taken some measures to resolve the problem withthe issuance of Judicial Interpretations in 2001 regulating the discontinuationof action.Now, the Chinese people are more aware of the famous words of the USPresident Abraham Lincoln, “The patent system has added the fuel ofinterest to the fire of genius" (专利制度为智慧之火添加利益之油). It isdefinitely impossible for innovation or creation without the IP protection.Protection for IPR is not only the need for China to build up the internationalcredit and expanding the international co-operation, but more essentially, thedomestic demand to inspire with independent innovation. In January, 2006,the Chinese President Hu Jintao called on turning China into an innovationorientedcountry in 15 years at a landmark national conference on scienceand technology. He urged the government to reinforce the strength of IPprotection, to improve the national IP system, to enhance the IP judicial andadministrative enforcement, to severely punish all IP infringements. This iscertainly a strong signal that China will continuously add the more powerfulfuel of legal resources to the IP protection.The Chinese government is now making further efforts in enhancing the#p#分页标题#e#enforcement of law and the public is more aware of the importance of IPprotection. The Nationwide Special Campaign for IP Protection waslaunched by the central government in August, 2004, to crack down piracyand counterfeiting in some areas and such a scheme will be continued in11future. The State Council set up a standing working organ – the NationalWorking Group for IP Protection – in 2004, to coordinate the various IPadministrations and to lay down annual nationwide working plan. Tofundamentally strengthen the IP system, the National Strategy of IP is underdrafting and is predicted to be issued in near future.The SPC is also working very hard to further strengthen the judicial systemfor IP protection. In early this year, the Grand Chief-Justice and President ofthe SPC, Mr. Xiao Yang reaffirmed that the courts across the country musttry their best to intensify IP judicial protection. An important researchproject on improvement of the judicial system for IP protection is currentlyundertaken by the SPC. Many important issues are fallen into this researchproject, such as, the mechanism for resolving disputes over patent andtrademark invalidation, the coordination of IP civil, administrative andcriminal procedures, the application of IP provisional measures, and thecalculation of damages for IP infringements. In November, 2005, at anational courts conference, the SPC announced that the courts would takesteps to make a more transparent and powerful IP judicial protection. Forexample, the SPC required that all IP judgements and decisions should befully published in time. Since 2000, all SPC’s IP judgements, decisions andopinions can be found from the Internet. Some local courts, e.g. courts inBeijing, Shanghai, Shandong and Guangxi, etc., have done the same thing inpast years. Remarkably, on March 10, 2006, the SPC formally set up anunified official website, http://ipr.chinacourt.org(中国知识产权裁判文书网), to publish all final IP judgements and decisions made by all courts atvarious levels.12All in all, it can be foreseen that the IP protection in China will definitely bea prosperous future.13DRAFT 6/23/2006-1-For China and Other Transitional Economies:Competition Law Lessons Learned in 115 Years∗Yee Wah ChinThis paper surveys some of the lessons learned in several major areas ofcompetition law, primarily from the perspective of the experience in the United States inthe over 115 years since the Sherman Act was enacted, and also from observations ofexperiences in other jurisdictions, primarily the European Union. It reviews how theanalysis and law have evolved in seven areas: (1) the goals of competition law; (2) keyconcepts in competition law; (3) analytic approach; (4) exemptions; (5) enforcement; (6)#p#分页标题#e#remedies; and (7) language and infrastructure. Hopefully, these lessons will be helpful asthe People’s Republic of China implements an Anti-Monopoly Law, and increasingnumbers of other transitional economies embrace competition law as a component of thelegal infrastructure of a market economy.As at least one commentator has found, “[f]ree and fair competition soundssimple to achieve. Nothing is further from the truth: competition upsets intellectuals whoglory in the notion of state benevolence, bureaucrats who administer governmentprogrammes, businesses that receive state favours and, in short, all those who gain,directly or indirectly, from distortions. Competition benefits often-despised outsidersagainst those who are well-connected and entrenched. It also requires the courts andgovernment to work honestly. The surprise may rather be that some countries becamerich than that so many are poor.”11. The Goals of Competition LawWhen competition laws are first enacted, there is often a sense that the law shouldand can help achieve several goals. These goals often include such diverse aims as thepromotion of economic efficiency and consumer welfare, the promotion of industrialpolicy such as the fostering of key industries and national champions, and the promotionof social policies such as the support of small or medium sized businesses and theincrease of employment.2∗ This paper is adapted from a presentation at the “Seminar on Antitrust Law in Transnational M&A,”hosted by School of Law & Competition Law Center, University of International Business & Economics;and T&D Associates, in Beijing, China on November 20, 2005. The author is most grateful for commentson a draft of this paper by Darrell Prescott of Baker & McKenzie, and Prof. Wang Xiaoye of the Institute ofLaw, Chinese Academy of Social Sciences. All errors are, of course, solely the author’s.1 Martin Wolf, “Tyranny of Vested Interests,” Financial Times, January 17, 2006, citing William Lewis,“The Power of Productivity: Wealth, Poverty and the Threat to Global Stability” (University of ChicagoPress, 2004).2 In fact, the proposed Anti-Monopoly Law expressly includes such considerations in determining whetherconduct violates the law.DRAFT 6/23/2006-2-Over time, in most cases, and particularly in the case of the U.S., with its historyof competition law that is among the longest in the world, the recognition is reached thatcompetition law is best suited for one goal, that of promoting economic efficiency andconsumer welfare. There remains debate over whether the efficiency and welfare to bepromoted should be aggregate economic welfare that takes into consideration the welfareof producers and not just consumers, but the fundamental premise that efficiency is the#p#分页标题#e#goal is accepted.In many cases, the attempts to use competition law to pursue a multitude of goalsthat are often inconsistent if not conflicting, led to unsatisfactory results for all the goals.3It became clear that it was not practical to use competition law to promote inconsistentgoals. Other values are better achieved by other laws that are dedicated to promotingthose values. For example, labor laws can promote employment and worker safety.Sector laws can provide sector subsidies and regulations. Such dedicated laws can moredirectly promote those values and make clearer the costs of pursuing these values. In thatway, societal choices and actions can be taken with greater clarity regarding the benefitsand costs involved. Society can make more informed decisions on whether, and to whatextent, to pursue these goals.One example in the U.S. of this evolving viewpoint regarding goals is the goal ofpromoting small and medium sized businesses. The Robinson-Patman Act, enactedduring the Great Depression, was intended to prevent larger businesses from gainingadvantage over smaller ones by obtaining more favorable trading terms from suppliersbecause of greater buying power. After many years, the U.S. federal antitrustenforcement agencies have concluded that this law is not core to their competitionenforcement mission and do not enforce this law.42. Key Concepts in Competition Law2.a. MarketIt is now generally accepted that, with a few exceptions, the impact of theparticular conduct on competition in a specific market must be considered beforeconcluding whether there has been a violation of the competition laws. The exceptions3 In law, as in other areas, it may be true that, as the saying goes, to be a Jack-of-all-trades, is to be themaster of none.4 Nonetheless, so long as the law is not repealed, private parties have the right under the law to sue fordamages suffered as a result of violations of the law, and the courts must enforce the law. This may havecontributed to the recent decision by the Supreme Court in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., No. 04-905, ___ U.S. ___ (2006) http://www.supremecourtus.gov/opinions/05pdf/04-905.pdf http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=000&invol=04-905, which somecommentators feel was a strenuous effort by the Court to lessen the effect of the Robinson-Patman Act withrespect to protecting competitors and to reconcile the law with the other antitrust laws.DRAFT 6/23/2006-3-are situations involving types of conduct which, after repeated review, are now presumedto have anticompetitive effect that violates the law, such as agreements amongcompetitors on the prices to charge customers.Therefore, a crucial part of the analysis is determining the market that is affected#p#分页标题#e#by the challenged conduct, which requires identifying the products or services, and thegeographic areas, involved. Nonetheless, in the U.S., it was not until the mid 1900s thatthere was substantial discussion in court decisions of what is a market and how todetermine the relevant market in a particular situation. In significant part, thatphenomenon may have been because many of the early cases involved conduct that wegenerally, even now, presume to be violations of law, so that it was not necessary toidentify a relevant market. In other cases, there were assumptions made as to what wasthe relevant market, without significant analysis.Eventually, the Supreme Court, in cases such as Brown Shoe5 in the mid-1900s,discussed the economic factors that must be considered in determining the relevantmarket. Nonetheless, as recently as 1966, the Supreme Court accepted as a relevantmarket what two dissenting justices characterized as a “strange red-haired, bearded, oneeyedman-with-a-limp classification.”6 In that case, the Court essentially accepted thescope of the defendant’s business to be the relevant market.The two federal antitrust enforcement agencies began to develop guidelines thatthey published to provide undertakings with some understanding of how the agenciesconsider these issues. The history of these guidelines reflects the evolution of U.S.thinking in this fundamental area of antitrust law. The Merger Guidelines is an exampleof how guidelines promulgated by enforcement authorities may fill an important role inthe interpretation and implementation of antitrust statutes.The first guidelines, issued by the Department of Justice, were published in 1968,relating to mergers.7 It was an innovation that generated much discussion.8 Laterdevelopments in legal and economics thinking about the competitive impact of mergersled to the abandonment of those early Guidelines. In 1982, the Department issued newMerger Guidelines,9 while the Federal Trade Commission issued a Statement ConcerningHorizontal Mergers.10 These 1982 Merger Guidelines reflected how the agencies’5 Brown Shoe Co. v. U.S., 370 U.S. 294 (1962).6 U.S. v. Grinnell Corp., 384 U.S. 563, 591 (1966) (Fortas, J., dissenting).7 Department of Justice Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,101 (1968).8 See, e.g., W. Blumenthal, “Clear Agency Guidelines: Lessons from 1982”, 68 Antitrust L.J. 5 (2000).9 Department of Justice Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,102 (1982).10 Federal Trade Commission Statement Concerning Horizontal Mergers, 4 Trade Reg. Rep. (CCH)¶13,200 (1982).DRAFT 6/23/2006-4-practices had evolved since 1968, and therefore were quite different from the 1968Guidelines. For example, the 1982 Guidelines make no reference to conglomerate#p#分页标题#e#mergers, while the 1968 Guidelines included a significant discussion of the Department’sapproach to such mergers. The Department in 1984 released another set of MergerGuidelines,11 which reflected refinements of the 1982 Guidelines in light of two years’experience. In 1992, the Department and the Commission issued Joint Horizontal MergerGuidelines,12 that reflected the Department’s experience under the 1982 and 1984Guidelines and the Commission’s experience under its 1982 Statement, as well asadvances in legal and economic thinking. The 1992 Guidelines did not reflect anydramatic departure from the 1984 Guidelines. In 1997, the two agencies clarified the1992 Horizontal Merger Guidelines with respect to the analysis of efficiencies that mayresult from a merger.13 Therefore, merger review by the federal antitrust enforcementagencies are now guided by the 1992 Guidelines along with the 1997 revisions regardingefficiencies analysis in the context of horizontal mergers, and by the 1984 Guidelines inthe context of vertical mergers. The current enforcement approach still follows inessential outline the analytic framework first set forth in the 1984 Merger Guidelines,more than 20 years ago.14These guidelines describe how the enforcers apply the economic concepts ofproduct and geographic market to real life situations. The crucial test is how buyers reactwhen prices increase. Do buyers have alternative services or products that they can buyif prices go up, as a practical matter? If there are alternatives, then those alternatives arein the same products/services market. Would buyers realistically go farthergeographically to obtain the same goods/services if prices rise locally? If yes, these moredistant locations are in the same geographic market as the local area.2.b. Monopoly & Monopolistic PowerThere was a similar evolution in the thinking about what is a monopoly and whatis monopolistic power. In many early cases, whether a monopoly existed was either not acrucial factor, or it was presumed that there was a monopoly.The most graphic example of this evolution may be the evolution of the approachof U.S. antitrust law to intellectual property rights. The evolution in the IPR area was11 Department of Justice Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,103 (1984).12 Department of Justice & Federal Trade Commission Horizontal Merger Guidelines, 4 Trade Reg. Rep.(CCH) ¶13,104 (1992); http://www.usdoj.gov/atr/public/guidelines/hmg.htm13 Id.14 In a further evolution, in March 2006 the agencies released their “Commentary on the Horizontal MergerGuidelines 2006,” which clarified how they are actually applying the Guidelines.http://www.usdoj.gov/atr/public/guidelines/215247.pdf The Commentary described dozens of actual#p#分页标题#e#transactions and the agencies’ analysis of them under the Merger Guidelines.DRAFT 6/23/2006-5-from presumptions to a fact-based inquiry.For decades, the assumption was that a patent created a monopoly. This was theassumption even in the 1970s, when the Department of Justice followed what becameknown as “the 9 no-nos”.15 These “9 no-nos” were included in the principles stated in theAntitrust Division’s 1977 Antitrust Guide for International Operations.16 The “9 no-nos”identified nine major types of common conduct involving IPR as presumptively antitrustviolations.In the 1980s, the Department’s view regarding the market power of intellectualproperty rights evolved, and it no longer viewed the existence of IPR as a basis forpresuming the presence of market power.17 By 1988, the Department declared that it“recognizes that intellectual property — even a patent — does not necessarily confer amonopoly or market power in any relevant market.”18 This is the current view of theU.S. antitrust enforcement authorities and most U.S. courts.19There is the recognition that a patent is a form of personal property that does not15 See, e.g., Bruce B. Wilson, Patent and Know-How License Agreements: Field of Use, Territorial, Priceand Quantity Restrictions, in ANTITRUST PRIMER: PATENTS, FRANCHISING, TREBLE DAMAGESUITS 11, 12-14 (1970); Bruce B. Wilson, Deputy Assistant Attorney General, Antitrust Division, U.S.Department of Justice, Remarks to Joint Meeting of Antitrust Law Section and Patent Trademark &Copyright Law Section, Michigan State Bar (Detroit, Michigan, September 21, 1972), 4 Trade Reg. Rep.¶13,126; Bruce B. Wilson, Deputy Assistant Attorney General, Antitrust Division, U.S. Department ofJustice, Straight Talk from “Alice in Wonderland”, before the American Patent Law Association(Washington, D.C., January 21, 1975).16 Part II Cases D – I, 4 Trade Reg. Rep. (CCH) ¶13,110 at 20,649-4 – 20.649-12 (1977).17 See, e.g., Ky P. Ewing, Jr., Deputy Assistant Attorney General, Antitrust Division, U.S. Department ofJustice, Patent-Antitrust Enforcement, 4 Trade Reg. Rep. (CCH) ¶13,128 at n.14 (San Francisco PatentLaw Association, Pebble Beach, California, May 5, 1979); [1969-1983 Transfer Binder] Trade Reg. Rep.(CCH) ¶50,398 at 55,883, 55,887 at n. 34 (May 5, 1979).18 Antitrust Enforcement Guidelines for International Operations Part I §3.6, 4 Trade Reg. Rep. ¶13,109.10at 20,605 (1988). See also, id. at Part II Cases 6, 10, 11, 12, 4 Trade Reg. Rep. ¶¶ 13,109.85, 13,109.89,13,109.90, 13,109.91. These 1988 Guidelines were superseded by two sets of guidelines jointly issued bythe Department of Justice and the Federal Trade Commission in 1995, one of which focused on the#p#分页标题#e#jurisdictional issues in the agencies’ decisions regarding enforcement in the international context and theother addressing intellectual property licenses. Antitrust Enforcement Guidelines for InternationalOperations, April 5, 1996 http://www.usdoj.gov/atr/public/guidelines/internat.htm ; Antitrust Guidelines forthe Licensing of Intellectual Property, April 6, 1995 http://www.usdoj.gov/atr/public/guidelines/0558.htmThe IP Guidelines reaffirmed the position set forth in the 1988 International Guidelines regarding thenature of intellectual property.19 As a reflection of the deliberate and evolutionary nature of the process, it was only in 2006 that the U.S.Supreme Court expressly concluded that a patent does not create a presumption of monopoly power, so thata tie of the patented product with another product is not automatically a violation of the antitrust laws. Theactual effect on competition must be considered. Illinois Tool Works Inc. v. Independent Ink, Inc., ___ U.S.___ (2006) http://www.supremecourtus.gov/opinions/05pdf/04-1329.pdf.DRAFT 6/23/2006-6-automatically confer market power. A patent conveys the right to exclude others from aparticular area. However, if no one else wishes to enter that area, the right to excludethem from the area is not very powerful. In fact, most patents are never commercialized,or, if they are, do not have much impact on the market. For example, there have beenover 1000 patents issued in the U.S. on the design of a paper clip. While the first paperclip patent may have been quite powerful, the 1000th paper clip patent represented littlemarket power at all. The U.S. antitrust enforcement agencies recognized this in their1995 Joint Antitrust Guidelines for the Licensing of Intellectual Property,20 which setforth a fact-based approach to analyzing how various types of conduct involving IPR mayreflect market power and abuse of market power.21This fact-based approach extends to all determinations of the existence ofmonopoly or monopolist power. While in the early days, there was commonly apresumption that a monopoly existed where there is a large market share, the approachtoday in the U.S. is to take market share only as the starting point of the analysis,22 and toconsider whether there is, in fact, the ability to raise prices in the market or lower totaloutput.2320 http://www.usdoj.gov/atr/public/guidelines/0558.htm21 A similar evolution may be seen in the different generations of block exemptions that the EuropeanUnion adopted over the last 20 years regarding technology transfers. Compare, e.g., Commission Reg.(EC) No. 240/96 of 31 January 1996 on the application of Article 85(3) of the Treaty to certain categoriesof technology transfer agreements, Official Journal L. 031, 09/02/1996, P. 0002-013http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServ.do?uri=CELEX:31996R0240:EN:HTML (no#p#分页标题#e#longer in force); with Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application ofArticle 81(3) of the Treaty to categories of technology transfer agreements, Official Journal L 123,27.04.2004, pages 11-17 http://europa.eu.int/eurlex/pri/en/oj/dat/2004/l_123/l_12320040427en00110017.pdf; Guidelines on the application of Article 81 ofthe EC Treaty to technology transfer agreements, Official Journal C 101, 27.04.2004, pages 2-42http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/c_101/c_10120040427en00020042.pdf22 The European Union has also come to the conclusion that market share is only one factor in the analysis.See, e.g., Neelie Kroes, “Preliminary Thoughts on Policy Review of Article 82,” Fordham Corporate LawInstitute (New York, New York, September 23, 2005) at 2-3http://europa.eu.int/rapid/pressReleasesAction.do?reference=SPEECH/05/537&format=HTML&aged=0&language=EN&guiLanguage=en The proposed Anti-Monopoly Law appears to be ambiguous as towhether market share is only one factor or is the dispositive factor in the analysis.23 Neither does the U.S. recognize the concept of “shared monopoly” which is reflected in drafts of theAnti-Monopoly Law. See, e.g., Timothy J. Muris, “Looking Forward: The Federal Trade Commission andthe Future Development of U.S. Competition Policy,” Milton Handler Annual Antitrust Review (NewYork, New York, December 10, 2002) at nn. 68, 69, http://www.ftc.gov/speeches/muris/handler.htm;Charles A. James, “Antitrust in the Early 21st Century: Core Values and Convergence,” Antitrust Policy inthe 21st Century (Brussels, Belgium, May 15, 2002), at III.B.1.a,http://www.usdoj.gov/atr/public/speeches/11148.htm The EU concept of “collective dominance” isconsiderably narrower and requires concerted action by the undertakings involved, as does the U.S. conceptof “conspiracy to monopolize.” This contrasts with the proposed Anti-Monopoly Act, which expresslyincludes the concept of shared monopoly as a suspect condition.DRAFT 6/23/2006-7-2.c. Abuse of Market PowerIn the area of abuse of monopoly power, it was not until almost the mid 1900sthat the courts expressly said that it is not an abuse of monopoly power to sell betterproducts or services at prices buyers are willing to pay and to become a monopolist as aresult.24 Until then, there were prosecutions inspiring a poem that described theprevailing antitrust rules as:You’re gouging on your prices ifYou charge more than the rest.But it’s unfair competition ifYou think you can charge less!A second point that we would makeTo help avoid confusion:Don’t try to charge the same amount!That would be collusion.You must compete — but not too much.#p#分页标题#e#For, if you do, you seeThen the market would be yours –And that would be monopoly!25In contrast, the courts did earlier recognize that an individual undertaking hasmore flexibility in its conduct than a group of undertakings acting in agreement, even ifthe individual undertaking has market power.26 Therefore, in general, an individualundertaking, regardless of market power, may refuse to do business with anotherundertaking.27 While the Supreme Court in Aspen Skiing28 did find an antitrust violationwhen a party changed long-standing practice and refused to deal with a competitor for noreason other than to disadvantage the competitor, the “essential facilities” doctrine is one24 U.S. v. Grinnell Corp., 384 U.S. 563, 571 (1966) (not abuse of dominant market position if it is the resultof “a superior product, business acumen, or historic accident.”).25 R.W. Grant, Tom Smith and His Incredible Bread Machine 32-37 (Competitive Enter. Inst. 1998) (1964);R.W. Grant, The Incredible Bread Machine: A Study of Capitalism, Freedom, & the State (2d Rev. Ed. Fox& Wilkes 1999) (Mr. Smith invented a machine that would bake, slice, and wrap bread for under a penny,and enabled him to dominate the bread business). Someprovisions of the proposed Anti-Monopoly Law would suggest that such an approach to competitiveconduct may be adopted, leading the enforcement authority to become a price regulator instead of apromoter of competition.26 Compare U.S. v. Colgate & Co., 250 U.S. 300 (1919), with Klor’s v. Broadway-Hale Stores, 359 U.S.207 (1959). Therefore, unlike under the proposed Anti-Monopoly Law, individual undertakings are free tocharge any price regardless of their market power under U.S. competition law.27 U.S. v. Colgate & Co., 250 U.S. 300 (1919).28 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).DRAFT 6/23/2006-8-the U.S. has come to view with some skepticism.29 Even in standards developmentcontexts, where a participant in the development process holding intellectual propertyessential to the standard that is developed is generally required under the rules of thestandards development group to fully disclose that fact and agree to license the IP onreasonable and non-discriminatory terms to those who wishes to comply with thestandard, a non-participant in the standard development process holding IP essential tothe standard is not under any obligation to license its IP to enable compliance with thestandard. On the other hand, a group of competitors may not agree not to do businesswith another undertaking or group of undertakings.30This is an area of great ferment in the U.S. The question of how to determinewhen abuse of market power has occurred, is one that is the subject of much debate in#p#分页标题#e#both the U.S. and EU. Different tests have been proposed, such as profit sacrifice, lack ofeconomic rationale (other than to disadvantage a competitor), less restrictive alternativesthan the challenged conduct and a balancing of the pro- and anti-competitive effects ofthe conduct. No consensus has been reached, except perhaps a sense that the current stateof affairs is less than satisfactory. The Antitrust Modernization Commission has includedexclusionary conduct as one of its topics of study, and the European Commission hasrecently released its Green Paper on Article 82 relating to abuse of dominant marketposition. On June 20, 2006, the Antitrust Division and the Federal Trade Commissionopened hearings on Single-Firm Conduct and Antitrust Law, which will hear testimonyfrom leading scholars and practitioners.312.d. Anticompetitive AgreementsIn earlier years, there was often no significant difference in the antitrust rulesapplied to agreements between competitors and agreements between sellers and buyers.Thus, it was (and is) illegal for competitors to agree on their sales prices to third partiesor to divide among themselves groups of customers or geographic areas,32 and it was also29 Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004). Thismay be contrasted with the proposed Anti-Monopoly Law, at least some drafts of which include provisionsthat indicate adoption of the essential facilities doctrine.30 Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959).31 See, Thomas O. Barnett, Assistant Attorney General, Antitrust Division, “The Gales of CreativeDestruction: The Need for Clear and Objective Standards for Enforcing Section 2 of the Sherman Act”,Opening Remarks for the Antitrust Division and Federal Trade Commission Hearings Regarding Section 2of the Sherman Act (Washington, D.C., June 20, 2006)http://www.usdoj.gov/atr/public/speeches/216738.pdfhttp://ftc.gov/os/sectiontwohearings/docs/BarnettPPTSection2ShermanAct.pdfhttp://ftc.gov/os/sectiontwohearings/index.htmhttp://www.usdoj.gov/atr/public/hearings/single_firm/sfchearing.htm32 See, e.g., Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) (pre curiam); Arizona v. Maricopa CountyMedical Society, 457 U.S. 332 (1982); Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980) (percuriam); U.S. v. Sealy, Inc., 388 U.S. 350 (1967); U.S. v. Topco Associates, 405 U.S. 596 (1972); TimkenRoller Bearing Co. v. U.S., 341 U.S. 593 (1951); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340DRAFT 6/23/2006-9-illegal for a seller to agree with its buyers what the buyers’ resale prices to third partieswill be or to agree on where buyers may resell the products purchased from the seller.33It was not until 1977, in the GTE Sylvania34 case, that the U.S. Supreme Court#p#分页标题#e#differentiated clearly between horizontal agreements (or agreements among competitors)and vertical agreements (or agreements between sellers and buyers) to the extent of rulingthat, except for agreements relating to resale prices, vertical agreements will beconsidered under the rule of reason. In the areas of vertical agreements on resale prices,the government actually brought a criminal prosecution in the 1980s.35 It was not until1997 that the Supreme Court concluded that agreements on maximum resale prices wouldbe judged under the rule of reason while minimum resale price agreements betweensellers and buyers remain subject to the per se rule.36In the area of concentrations, there was concern that big concentrations, simply byinvolving undertakings that are large, are anticompetitive. Therefore, there was concernover conglomerate mergers, which involved undertakings that were not competitors oractual or potential competitors, and not in seller-buyer relationships, but were very large.These concerns were reflected in the first set of Merger Guidelines issued by theDepartment of Justice in 1968, which contained an entire section addressingconglomerate mergers.37 Since then, there has been recognition that size alone is not anindicator of likelihood of anticompetitive impact. In fact, the current set of MergerGuidelines does not refer to absolute size at all, but only to relative shares of a relevantmarket.38 Conglomerate mergers are not mentioned in these Guidelines. In contrast,small transactions that may have anticompetitive effect in a relevant market may violatethe U.S. antitrust laws.39U.S. 211 (1951); FTC v. Cement Institute, 333 U.S. 683 (1948); U.S. v. Socony-Vacuum Oil, Co., 310 U.S.150 (1940); Sugar Institute v. U.S., 297 U.S. 553 (1936); U.S. v. Trenton Potteries Co., 273 U.S. 392(1927); Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211 (1899).33 See, e.g., Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717 (1988); Dr. Miles MedicalCo. v. John D. Park & Sons, Co., 220 U.S. 373 (1911); Albrecht v. Herald Co., 390 U.S. 145 (1968); U.S.v. Arnold, Schwinn & Co., 388 U.S. 365 (1967).34 Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977).35 U.S. v. Cuisinarts, Inc., 1981-1 Trade Cas. (CCH) ¶63,979 (D. Conn. 1981) (consent decree).36 State Oil Co. v. Khan, 522 U.S. 3 (1997).37 Department of Justice Merger Guidelines Part III, 4 Trade Reg. Rep. (CCH) ¶13,101 at 20,526 – 20,528.38 Department of Justice & Federal Trade Commission Horizontal Merger Guidelines §1, 4 Trade Reg. Rep.(CCH) ¶13,104 at 20,571 – 20,573-6 (1992); http://www.usdoj.gov/atr/public/guidelines/hmg.htm39 One recent example of how market analysis by the U.S. enforcement agencies is not guided by absolutesize is the case of In the Matter of Teva Pharmaceutical Industries Ltd. and IVAX Corporation, FTC File#p#分页标题#e#No. 0521-0214 (2006), http://www.ftc.gov/os/caselist/0510214/0510214.htm, in which the Federal TradeCommission reached a consent agreement to approve Teva’s acquisition of IVAX, on condition ofDRAFT 6/23/2006-10-3. Analytic ApproachThe U.S. antitrust statutes — Sherman Act, Clayton Act, Robinson-Patman Act,Federal Trade Commission Act — primarily set forth general principles. The courts andenforcement agencies have developed the specifics in light of evolving economicconditions and analytic capability. This system has allowed for greater flexibility andnuance in the evolution and enforcement of the law, because the courts and enforcersoften can react to developments in the economy and analysis more quickly and in waysmore tailored to the specific situation than a legislature can.Section 1 of the Sherman Act, 15 U.S.C. §1,40 is a blanket prohibition againstcontract, combinations and conspiracies in restraint of trade, and sets out criminalsanctions. In the early days, the enforcement approach was straightforward; most caseswere per se cases, without regard to actual market effects of the conduct involved. It wasnot until the Supreme Court’s 1911 decision in Standard Oil Co. of New Jersey v. U.S.,41over 20 years after the passage of the Sherman Act, that it became clear that only“unreasonable” restraints on trade are prohibited. And it was not until several years later,in Chicago Board of Trade v. U.S.,42 that the Supreme Court articulated the generalapproach in a rule of reason analysis. From those beginnings, fact-specific analysisevolved, where the actual effects of conduct on competition in a market must beconsidered. The present approach is that only a small group of activity is presumed to be“unreasonable” and that all other types of activities will be found to be unreasonable anda violation of the antitrust laws only if they are found to be unreasonable under thespecific facts.This evolution of a complex and detailed body of law from statutes of verygeneral nature exemplifies the common law approach of evolving law on a case-by-casebasis from general principles. Nonetheless, in the competition law area, civil law mightbe able to approximate the common law approach. Article 81(1) of the Europeandivestitures in 15 markets, including the market for nicardipine hydrochloride capsules that has annual salesof $674,000. Analysis of Agreement Containing Consent Orders to Aid Public Comment In the Matter ofTeva Pharmaceutical Industries Ltd. and IVAX Corporation at 3;http://www.ftc.gov/os/caselist/0510214/0510214analysis.pdf This should be distinguished from the U.S.premerger notification requirement, which establishes absolute size criteria for notification. That isbecause such objective criteria make the notification regime easier to administer. Undertakings can easily#p#分页标题#e#determine by such objective criteria when they must notify. Whether a transaction must be notified in theU.S. is irrelevant to whether it may be investigated and found to be a violation of the antitrust laws.40 http://www.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00000001—-000-.html41 221 U.S. 1 (1911).42 246 U.S. 231, 238 (1918),http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=246&page=231DRAFT 6/23/2006-11-Community Treaty43 sets forth the general prohibition against “all agreements…whichhave as their object or effect the prevention, restriction or distortion of competition withinthe common market,” including five broad categories of such agreements. Article 81(3)provides for exemptions to that sweeping prohibition. The EU has evolved its blockexemptions to converge towards the rule of reason, by providing in the latest generationof block exemptions that only certain activities will be presumed “unreasonable” andtherefore prohibited (the “black” list), while all other activity will be either alwaysexempt from the prohibitions of Article 81(1) (the “white” list) or will be exempt undercertain fact-specific circumstances (the “gray” list).44 The EU provides guidance, both inthe block exemption and in guidelines,45 as to how “gray” list situations will be analyzed.The earlier block exemptions, which were formalistic, may have been greater straitjacketson business conduct and had a chilling effect on enterprise.The lessons learned overall regarding the analytic approach to competition lawenforcement are that it is both possible and more flexible, in terms of the development ofboth enforcement approaches and business conduct, to have only a general statement ofprinciples, with few presumptions of illegality, and to analyze everything outside thepresumptions under the general principles, by methods that the enforcement authoritydevelops over time with experience of business situations and practices, and in reaction tochanging conditions and developing economic analysis.3.a. Facts v. RulesThe evolution toward the predominantly rule of reason approach means movingaway from a reliance on presumptions and rules and towards analyses of the specific factsin the situation. This has led to increasing use of economic analysis and therefore toconsideration of the efficiency aspects of business conduct. The discussion has advancedin many cases to debates over which types of efficiencies are the important ones and howthey should be considered.Another result is increasing recognition that the analysis should be a dynamic one,not a static one. This was made clear by the Supreme Court in 1974 in the GeneralDynamics46 case, in which the Court found that it is not enough to consider market shares#p#分页标题#e#today; we need to consider whether these market shares reflect actual market power orlikely market power in the future. In General Dynamics, market shares, which reflect43 http://europa.eu.int/comm/competition/legislation/treaties/ec/art81_en.html44 See, e.g., Commission Regulation (EC) No. 772/2004 on the Application of Article 81(3) of the Treaty toCategories of Technology Transfer Agreements (“TTBER”),http://europa.eu.int/comm/competition/legislation/treaties/ec/art81_en.html45 Id.; Guidelines on the Application of Article 81 of the Treaty to Technology Transfer Agreements(“TTBER Guidelines”), http://europa.eu.int/comm/competition/legislation/treaties/ec/art81_en.html46 U.S. v. General Dynamics Corp., 415 U.S. 486 (1974).DRAFT 6/23/2006-12-current revenues, did not reflect actual future market power, because the defendant’sreserves indicated that in the future it would not be able to sell as much product as before.4. ExemptionsThe U.S. accumulated many exemptions to its antitrust laws. Exemptions are onearea of U.S. antitrust law which may be most burdened by history. Each exemption, oreach type of exemption, arose in different contexts. Many were created when antitrustand the economy were viewed differently than they are today. Once created, exemptionsare difficult to change or repeal. This is one area where new competition law regimes,starting with a cleaner slate, may leapfrog over the errors of established competition lawregimes.4.a. Statutory and Judicially Created ExemptionsThe industry or sector exemptions created by statute often resulted from the beliefthat competition is not beneficial in that particular area or that antitrust law is not the bestmethod to promote competition there, and that regulation may be more effective inachieving efficiency in that context. Thus, there are statutory exemptions for insurance,47baseball,48 newspapers,49 agriculture,50 fishing,51 and transportation.52 The experiencehas been that, once an exemption has been created, it either creates or perpetuates specialconstituencies with strong vested interests in the exemption’s continuing existence.53Nonetheless, over the years, often over great opposition by those benefiting from theexemptions, the number of sectoral exemptions has decreased, or their scope greatlycurtailed, especially as sectors are de-regulated. Two prominent examples are the47 McCarran-Ferguson Act, 15 U.S.C. §§ 1011-15.48 Curt Flood Act, Pub. L. No. 105-297, §2, 112 Stat. 2824 (1998). See also, e.g., Fed. Baseball Club ofBaltimore, Inc. v. Nat’l League of Prof’l Baseball Clubs, 259 U.S. 200 (1922); Toolson v. New YorkYankees, Inc., 346 U.S. 356 (1953); Flood v. Kuhn, 407 U.S. 258 (1972).49 Newspaper Preservation Act, 15 U.S.C. §§ 1801-04.#p#分页标题#e#50 Capper-Volstead Act, 7 U.S.C. §§ 291-92; non-profit agricultural cooperatives exemption, 15 U.S.C.§17; Agricultural Marketing Agreement Act, 7 U.S.C. §§ 608b, 608c.51 Fishermen’s Collective Marketing Act, 15 U.S.C. §§ 512-22.52 Shipping Act, 46 U.S.C. App. §§ 1701 et seq.; airline flight schedule exemption, 49 U.S.C. §40129; airtransportation exemption, 49 U.S.C. §§ 41308-09; motor transportation exemption, 49 U.S.C. §13703;railroad transportation exemption, 49 U.S.C. §10706.53 One reflection of this phenomenon is the comments that have been submitted to the AntitrustModernization Commission. The AMC, tasked with the mission of studying what changes should be madein the U.S. law, invited comments from the public on 11 topics. Most topics received less than 15comments. Over 50 comments were submitted on the topic of exemptions and immunities, many fromspecific industry groups defending a particular industry exemption.DRAFT 6/23/2006-13-dissolutions of the Civil Aeronautics Board beginning in 198154 and the InterstateCommerce Commission in 1995,55 concomitant with the deregulation of the airline andtrucking businesses.Conduct exemptions developed from the view that certain types of conduct shouldnot be considered anticompetitive. A major example is the statutory and judiciallycreated exemptions for certain types of collective bargaining and other activities by laborunions.56 Other conduct exemptions include the Webb-Pomerene Act,57 the ExportTrading Company Act,58 National Cooperative Research & Production Act,59 theStandard Setting Development Organization Act,60 and the Small Business Act.614.b. Constitutionally Based ExemptionsOne exemption that may be distinctive to the U.S. is the state action doctrine,which is based on the federal system of the U.S. and the residual sovereignty of thestates.62 This exemption excludes from the U.S. antitrust laws conduct in areas in whicha state has acted to limit competition or to enable a lack of competition, and in which thestate actively monitors competitive activity.63 In addition, under the Local GovernmentAntitrust Act of 1984,64 local governments have immunity from lawsuits for damages,but no immunity from lawsuits for injunctive relief and attorneys’ fees for successfulplaintiffs, if state governments enact statutes authorizing the local governmental units toact in a particular area.65 States have taken advantage of the state action doctrine,54 Public Law 95-504.55 Public Law No. 104-88, Title 1, § 102(a), 109 Stat. 807 (1995).56 15 U.S.C. §17; 29 U.S.C. §§ 52, 101-110, 113-115; Connell Construction Co. v. Plumbers &Steamfitters, 421 U.S. 616 (1975).57 15 U.S.C. §§ 61-66.#p#分页标题#e#58 15 U.S.C. §§ 4001-21.59 15 U.S.C. §§ 4301-06.60 15 U.S.C. §§ 4301-05, 4301 note.61 15 U.S.C. §§ 638(d), 640.62 Parker v. Brown, 317 U.S. 341, 351 (1943); Cantor v. Detroit Edison Co., 428 U.S. 579 (1976).63 California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97, 105 (1980); Southern Motor Carriers RateConference, Inc. v. United States, 471 U.S. 48 (1985).64 15 U.S.C. §§ 34-36.65 See also, Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985); City of Columbia v. Omni OutdoorAdvertising, Inc., 499 U.S. 365 (1991).DRAFT 6/23/2006-14-sometimes from a misunderstanding of competition in a marketplace or from a belief thatcertain industries or constituencies should not be subject to competition.66One important limit on the state action doctrine is the counterbalancingprohibition in the U.S. Constitution against states imposing burdens on interstatecommerce, or seeking to advantage local businesses at the expense of out-of-statecompetitors.67 Therefore, even though states, and local authorities under expresspermission from the states, may limit competition if they actively monitor the activity,they cannot engage in local protectionism.68Another major exemption that is based on the constitutional structure of the U.S.is the Noerr-Pennington doctrine,69 which is based on the First Amendment right of free66 For example, under the exemptions granted by Congress in the 1937 Miller-Tydings Amendment to theSherman Act and the 1952 McGuire Amendment to the FTC Act, 46 states enacted laws that enforcedminimum resale price agreements, both between the parties and against third parties. These laws wereeffective until Congress repealed this “fair trade” exemption with the enactment of the Consumer GoodsPricing Act of 1975, Pub L. No. 94-145, 89 Stat. 801.67 “Congress shall have power…to regulate commerce with foreign nations, and among the several states.”U.S. Constitution, Art. I, §8. The Supreme Court has interpreted this Commerce Clause of the Constitutionto prohibit individual states from regulating commerce with other states, and imposing burdens on nonlocalundertakings that local undertakings do not have. Willson v. Black Bird Creek Marsh Co., 27 U.S. (2Pet.) 245, 252 (1829); Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. (12 How.) 299 (1851);Reading Railroad v. Pennsylvania, 82 U.S. (15 Wall.) 232 (1873); Seaboard Air Line Ry. v. Blackwell, 244U.S. 310 (1917); South Carolina State Highway Dept v. Barnwell Bros., 303 U.S. 177 (1938); Baldwin v.J.E. Dilworth Co., 322 U.S. 327 (1944); H.P. Hood & Sons v. DuMond, 336 U.S. 525 (1949); Dean Milk v.City of Madison, 340 U.S. 349 (1951); Polar Ice Cream & Creamery Co. v. Andrews, 375 U.S. 361 (1964);#p#分页标题#e#Pike v. Bruce Church, 397 U.S. 137 (1970); Associated Indus. of Missouri v. Lohman, 511 U.S. 641 (1994);Fulton Corp. v. Faulkner, 516 U.S. 325 (1996); Camps Newfound/Owatonna v. Town of Harrison, 520U.S. 564 (1997); South Central Bell Tel. Co. v. Alabama, 526 U.S. 160 (1999). In addition, theConstitution also states that “no state shall, without the consent of the Congress, lay any imposts or dutieson imports or exports…and the net produce of all duties and imposts, laid by any state on imports orexports, shall be for the use of the Treasury of the United States; and all such laws shall be subject to therevision and control of the Congress…” Art. I, §10. Furthermore, the Constitution provides that “thecitizens of each State shall be entitled to all privileges and immunities of citizens in the several States.”Art. IV, §2. Other clauses of the Constitution have also been invoked to defeat state action that fosteredanti-competitive activities or effects. For example, the First Amendment right of free speech has been heldto prohibit certain types of regulations that inhibited competition. See, e.g., Virginia State Board ofPharmacy v. Virginia Citizens Consumer Council, 412 U.S. 748 (1976); Bates v. State Bar of Arizona, 433U.S. 350 (1977); Board of Trustees of State University of New York v. Fox, 492 U.S. 469 (1989). Similarly,the Due Process and Equal Protection clauses of the Fourteenth Amendment have been applied to limitstate action that was anticompetitive. See, e.g., Gibson v. Berryhill, 411 U.S. 564 (1973).68 These Constitutional limitations against local protectionism were specifically established as a result ofthe rampant local protectionism that proliferated among the original 13 states under the Articles ofConfederation that preceded the Constitution, to ensure the development of an integrated national economy.H.P. Hood & Sons v. DuMond, 336 U.S. 525 (1949). The prohibitions against administrative monopolies,which were included in some drafts of the proposed Anti-Monopoly Law, would serve the same salutarypurpose of promoting an integrated national economy under China’s unitary political system.69 Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United MineDRAFT 6/23/2006-15-speech and to petition. That doctrine protects lobbying or litigation conducted to achievea competitive advantage. In the case of litigation, the conduct is protected unless thelawsuit is sham, and brought with the goal of using the process of litigation to gain acompetitive advantage, regardless of the outcome of the lawsuit.4.c. Lessons LearnedThe experience in the U.S. with exemptions indicates that they generally not onlyprotect a sector or class of conduct from the antitrust laws, they also tend to freeze in#p#分页标题#e#place the development of antitrust analysis in that area. Even when only certain activityis exempt, the exemption may facilitate activity that is not exempt and make it moredifficult to prove the presence of the non-exempt activity that violates the law.Therefore, it is desirable to have as few exemptions as possible, to create feweropportunities for distortions of the market and losses in allocative efficiency.Exemptions should not be justified on the grounds that they are needed to fostercompetition in a sector or that competition should be avoided in a sector. The goal ofcompetition law is to foster competition; exemptions to competition laws are contrary tothat goal. There may be situations where competition may conflict with other, moreimportant values. Such important values include national security, free speech and thefederal system under which the U.S. was founded. In those situations, competition maybe limited to accommodate these other values, but not because competition is notdesirable in a sector.In creating exemptions, there should be consideration of the costs and benefits.The loss of consumer welfare and allocative efficiency that may result from an exemptionshould be weighed against the extent that the value that is to be promoted by theexemption will gain. An exemption should be narrowly drawn, and not provide blanketprotection. It should be the most limited exemption that can achieve the benefit sought.Therefore, an exemption should not provide blanket protection from liability, but merelylimit the remedies available to injured parties. Finally, the conduct that is exempt shouldbe subject to competition authority oversight to further ensure that the exemption is notabused.To ensure that exemptions do not outlive their usefulness, and impose costsgreater than benefits, the legislation creating them should include a “sunset” clause, toprovide that the exemption will expire after a specified period unless it is expresslyrenewed. This will create the opportunity for periodic review of the continuing need foran exemption in light of changed circumstances. Even for such fundamental sectors asagriculture, it is still wise to include in any exemption for activities in the sector arequirement for periodic review before continuation of the exemption. Especially whereWorkers v. Pennington, 381 U.S. 657 (1965); California Motor Transport Co. v. Trucking Unlimited, 404U.S. 508 (1972); City of Columbus v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991); ProfessionalReal Estate Investors, Inc. v. Columbia Pictures Industries, 508 U.S. 49 (1993).DRAFT 6/23/2006-16-the economy is undergoing fundamental changes, what may seem helpful at one stage ofeconomic evolution may become a burden at another stage.In the U.S., the more recent statutory exemptions have reflected some of the#p#分页标题#e#lessons learned. They are far more narrowly drafted than earlier exemptions, and provideless protection from the antitrust laws. For example, the exemption for standardsdevelopment organizations70 protects the organizations, but not their members. At leastone exemption, that for activities relating to providing financial assistance to universitystudents, has a sunset provision.71 These later exemptions generally protect only指导essay activities that are subject to the rule of reason, that often create efficiencies. Theygenerally provide only that, if the activity is structured in certain ways, and is notified tothe enforcement authorities, then, even if it is found eventually to have an actual anticompetitiveeffect, plaintiffs may recover only single damages, not treble damages. Evenlong-standing exemptions have been narrowed over time as the sense developed that theoriginal rationales for them are no longer valid. For example, amendments to theShipping Act have successively limited the exemption granted to shipping cartels andhave provided more scope for competitive and less for collusive activity.72With the existence of sectoral regulation, and under the federal system in whichstates may restrict competition, the federal competition authorities found that animportant part of their mission was to advocate competition principles to states and othergovernmental authorities. With authorization and budgets provided by Congress, thefederal competition authorities have regularly provided input to other federal agenciesand state legislatures and regulatory agencies regarding the competition implications ofproposed actions. This has been most common in recent years in areas such as real estatebrokerage, title insurance, and the practice of law and medicine, where legal licensingand other requirements are often used as means to disadvantage potential competitors.5. Enforcement5.a. Federal EnforcementSince its establishment in 1914, the Federal Trade Commission has sharedconcurrent jurisdiction with the Department of Justice over antitrust enforcement. Inaddition, in certain sectors, such as telecommunications, financial services andtransportation, sectoral regulators share or have primary jurisdiction over antitrustenforcement.The concurrent jurisdiction of the FTC and the DOJ has been generally effective.70 15 U.S.C. §§ 4301-05, 4301 note.71 Need-Based Educational Aid Act, 15 U.S.C. § 1 note.72 46 U.S.C. app. §§ 1701 et seq.DRAFT 6/23/2006-17-Nonetheless, it is doubtful that such an enforcement structure would have been created ifthe U.S. were to start anew. There are costs in simply coordinating between the twoagencies, to avoid costly duplication of efforts. The most prominent and continuing#p#分页标题#e#example is in the area of merger control. The two agencies have developed a “clearance”process under which they determine which of them will exercise jurisdiction to review atransaction. That process itself of course entails cost. Moreover, occasionally theclearance process is derailed by a dispute between the two agencies over which of themwill exercise jurisdiction. On those occasions, the dispute may not be resolved until verylate in the 30-day initial waiting period of the Hart-Scott-Rodino Antitrust ImprovementsAct of 1976, which leaves the investigating agency little choice but to issue a “secondrequest,” a request for additional information, in order to extend the waiting period andobtain time to review the transaction, unless the parties withdraw their notifications andre-file them to re-start the waiting period. Such a situation imposes costs on thegovernment and the parties that are unrelated to the merits of the transaction beinginvestigated and is not an efficient use of resources. In addition, even where there is nodispute over which agency will exercise jurisdiction, the fact that each agency followsdifferent procedures that may result in different standards being applied means that theoutcome for a particular matter may vary depending on which agency is the investigatingentity.From the experience with overlapping jurisdiction with sectoral regulators, welearn the importance of having a clear hierarchy of laws in such contexts. These issuesare similar to those arising in the interaction between competition and intellectualproperty rights laws.5.b. State EnforcementThe states also have jurisdiction over competition matters, under both the federalantitrust laws and the states’ own antitrust laws. Under the federal laws, states may seekinjunctive relief against violations and damages for injuries suffered as the result ofviolations of federal antitrust laws, both in their proprietary capacity as marketparticipants and on behalf of consumers within their jurisdiction. The ability of the statesto enact their own competition laws stems from the U.S.’s federal system. The state lawsalso provide a range of remedies and penalties.These overlapping layers of jurisdiction present opportunities for complications inenforcement. The prosecution and settlement of antitrust claims by the federalgovernment and several states against Microsoft73 is an example of some of thecomplexities arising from this system. Another recent example is the treatment of thecombination of Federated Department Stores and May Department Stores, two large73 U.S. v. Microsoft Corp., 253 F.3d 34 (D.C. Cir), cert. denied, 534 U.S. 952 (2001); U.S. v. MicrosoftCorp., 2002-2 Trade Cas. (CCH) ¶73,860 (D.D.C. 2002); State of New York v. Microsoft Corp., 2002-2#p#分页标题#e#Trade Cas. (CCH) ¶73,854 (D.D.C. 2002); Commonwealth of Massachusetts v. Microsoft Corp., 373 F.3d1199 (D.D. Cir. 2004).DRAFT 6/23/2006-18-department store chains.74 The federal government investigated and found nocompetition issues while several states required divestitures.There are significant added costs, delay and duplicated effort in such overlappingjurisdiction. This added burden may not result in greater furtherance of competitionpolicy goals, such as increased competition in a marketplace. While the federal agencieshave on rare occasions been accused of acting for political and not competition policyreasons, it is more common for states to act under the antitrust laws to pursue goals thatare not competition goals. Federal enforcement has largely focused on market power andconsumer welfare, while the states frequently consider other goals, including thefostering of small businesses. For example, in the case of Pennsylvania v. Russell StoverCandies,75 the Commonwealth of Pennsylvania challenged the acquisition of a chocolatecompany. The court found that there was insufficient evidence that the transaction wouldresult in higher chocolate prices for Pennsylvania consumers or local chocolatiers goingout of business.76 Nonetheless, the Pennsylvania attorney general obtained a settlementin which the parties paid $45,000, of which $25,000 was to be dedicated to displacedworkers, $10,000 to fund business development near the chocolate plant that was bought,and $10,000 to support state antitrust enforcement.77 The clear motivation for the state’saction was to protect jobs, more than competition or consumer welfare.785.c. Private EnforcementPrivate enforcement has been and continues to be a major factor in the U.S.competition law regime. Private parties injured by an antitrust violation may seekinjunctions against the violation, and generally treble the damages caused by theviolation. There have been concerns over the burden of treble damages and theproliferation of class action lawsuits. Often the cost of defending against such actions is74 Federated Department Stores, Inc./May Dept. Stores Co., FTC File No. 051-0111 (August 30, 2005)(statement of the Commission) http://www.ftc.gov/os/caselist/0510001/050830stmt0510001.pdf ; PressRelease, Cal. Attorney General (August 30, 2005) http://www.ag.ca.gov/newsalerts/release.php?id=1209;Pres Release, Mass. Attorney General (August 30, 2005)http://www.ago.state.ma.us/sp.cfm?pageid=986&id=1466 ; Press Release, N.Y. Attorney General (August30, 2005) http://www.oag.state.ny.us/press//2005/aug/aug30b_05.html75 1993-1 Trade Cas. (CCH) ¶70.224 (E.D. Pa. 1993).76 Id. at 70,090-91.77 Id. (settlement agreement filed April 15, 1993)78 It is perhaps a reflection of how the lessons of mixing goals are not uniformly learned, that many states in#p#分页标题#e#the U.S., which under the federal system retain residual sovereignty and therefore have enacted their owncompetition laws and have established independent enforcement authorities, still view the goals ofcompetition law to encompass a variety of values, including the protection of employment and ofopportunities of small and regional businesses to survive. See, e.g., Me. Rev. Stat. Ann. Tit. 10, §1176(automobile retail dealers); Wis. Stat. §110.30 (below cost pricing; gas, cigarettes, liquor, wine industries);Ca. Bus. & Prof. Code, § 17200 et seq. (discriminatory treatment).DRAFT 6/23/2006-19-so great that, regardless of the merits, defendants settle.79 The Class Action Fairness Actof 200580 was enacted to decrease the opportunities for plaintiffs to impose burdens ondefendants that are disproportionate to the claims, by requiring many claims that mayotherwise be brought in different states simultaneously, to be brought in one federalcourt.Over the years, U.S. courts developed criteria that limited the types of parties thatmay bring lawsuits to recover damages under the antitrust laws. As a result, only thoseplaintiffs who are directly harmed by the anti-competitive effects of defendants’ conductmay recover damages. Moreover, the more recent statutory exemptions, that generallyapply only to conduct judged under the rule of reason that often creates efficiencies, limitantitrust exposure to single, not treble, damages.Nonetheless, regardless of how relief may be limited under federal antitrust law,the states can, and do counteract those limitations by enacting state statutes that enableplaintiffs to recover in situations where they could not recover under federal law. Amajor example of such state laws is the “Illinois Brick repealer” statutes that wereenacted to bypass the Supreme Court’s ruling in Illinois Brick Co. v. Illinois,81 that, inprice fixing cases, only the direct purchaser from the alleged antitrust violator mayrecover damages. The Illinois Brick repealers granted indirect purchasers the right toseek damages under state antitrust laws.82 However, the Class Action Fairness Actrequires many of these cases to be brought in federal court, so that the Supreme Court’sgoal in Illinois Brick of barring such indirect purchaser claims from the federal courts hasbeen circumvented.6. RemediesAlthough the Sherman Act provides that violations are criminal offenses,historically there have been few types of violations subject to criminal penalties. Pricefixing has been the primary offense subject to criminal prosecution. Criminal offensesare the targets of the Department of Justice’s leniency program to foster compliance and79 Of course, in many instances, the costly discovery process in U.S.-style litigation also leads the parties to#p#分页标题#e#develop a complete understanding of the merits of the case that leads them to reach a settlement reflectingthe merits without trial.80 28 U.S.C. §1332; Fed. R. Civ. P. 23.81 431 U.S. 720 (1977).82 See, e.g., Ala. Code §6-5-60(a); Cal. Bus. & Prof. Code §16750(a); D.C. Code Ann. §28-4509(A); Haw.Rev. Stat. §480-3; Idaho Code §48-108; 740 Ill. Comp. Stat. Ann. 10/7(2); Kan. Stat. Ann. §50-161; Me.Rev. Stat. Ann. Tit. 10, §1104(1); Md. Code. Ann. Com. Law II §11-209(b)(2); Mich. Comp. Laws Ann.§445.778; Minn. Stat. Ann. §325D.57; Miss. Code Ann. §75-21-9; Nev. Rev. Stat. §§ 598A.160,598A.210; N.M. Stat. Ann. §57-1-3; N.Y. Gen. Bus. Law §340(6); Or. Rev. Stat. §646.775; R.I. Gen. Laws§6-36-12(g); S.D. Codified Laws Ann. §37-1-33; Vt. Stat. Ann. Tit. 9, §2465; Wis. Stat. Ann.§133.18(1)(a).DRAFT 6/23/2006-20-facilitate enforcement. Under the current program, undertakings or individuals who arethe first to confess to the government about a violation and enter a plea agreement, mayget not only leniency from criminal penalties, but also exposure to private damageslimited to single damages.83 In the past, conspirators have sometimes been hesitant totake advantage of the leniency programs because of the exposure to treble damages fromprivate lawsuits when the violation becomes public knowledge. Recently, there has beena trend by prosecutors to accept, instead, deferred prosecution agreements, under whichundertakings agree to establish antitrust compliance programs and accept a governmentmonitor of its business conduct for a period of years, in exchange for an agreement by thegovernment not to prosecute.Outside of criminal offenses, the use of consent agreements is common. Theymay be less costly and allow more flexibility than might be the case if the matters werefully litigated. The agencies have found through experience that structural remedies aremore effective and less administratively burdensome than conduct remedies. Therefore,the preference is to require divestitures rather than to specify that undertakings conductbusiness in particular ways. The AT&T divestiture of 1982 may be a prime example ofthe relative strengths and weaknesses of structural versus conduct relief, because itinvolved not only divestiture by AT&T of its operating and equipment manufacturingsubsidiaries, but also very detailed requirements over how the businesses were to conductthemselves following divestiture. Judge Greene, the federal judge overseeing the case,essentially spent much of the remainder of his career on the bench adjudicating disputesover compliance with the conduct remedies. It was a common comment during that time,until the enactment of the Telecommunications Act of 1996, that one judge regulated the#p#分页标题#e#entire telecommunications industry in the U.S.In general, consistent with the view that only a few types of conduct are per seviolations requiring criminal penalties, and that all other conduct should be judged by therule of reason, and consistent with the goal of the law to foster competition, the U.S.enforcers generally seek remedies that try to restore competition, rather than only punishthe perpetrators.847. Language & InfrastructureIn considering the lessons learned in the areas of competition law discussedabove, we may draw the following additional lessons regarding the actual drafting of acompetition law and its implementation.83 See, Antitrust Criminal Penalty Enhancements and Reform Act of 2004, Pub. L. No. 108-237, §§ 211-14,118 Stat. 61, 666-67 (2004); U.S. Department of Justice, Leniency Policy for Individuals,http://www.usdoj.gov/atr/public/guidelines/0092.htm ; U.S. Department of Justice Corporate LeniencyPolicy, http://www.usdoj.gov/atr/public/guidelines/0091.htm .84 In contrast, the proposed Anti-Monopoly Law appears to favor punishment more than restoration ofcompetition, in its remedies provisions.DRAFT 6/23/2006-21-In both civil law and common law jurisdictions, in the competition law area, it ispossible to enact statutes that set forth basic, general principles, without too much detail,and still have the flexibility of the rule of reason and be practical. In common lawcountries, the precise details of the law are developed by the courts in applying thestatute’s principles to specific fact situations. The U.S. enforcement agencies have alsodeveloped the method of issuing guidelines regarding how they analyze situations underthe law. In civil law countries, the experience of the EU indicates that a combination ofblock exemptions and guidelines can be developed, setting forth a small black list ofactivities that are always prohibited — the per se violations — along with a white list ofactivities that will always be permitted, while providing for a gray list of all otheractivities that will be judged according to criteria set forth in the block exemption andguidelines. With this approach, the EU has moved toward a competition law thatincreasingly applies the rule of reason rather than the per se rule.This review of the lessons of the past 115 years also highlights the importance ofbuilding sound foundations for the enforcement of a competition law. In both the U.S.and EU, it took decades before substantial levels of enforcement were reached. It wasnot until 1911, over 20 years after the enactment of the Sherman Act, that the SupremeCourt heard arguments in Standard Oil Co. of New Jersey v. U.S.,85 and affirmed thedissolution of the oil trust, building on several lower profile cases that established basic#p#分页标题#e#principles under the law.86In hindsight, it is clearly important to develop enforcement agencies withadequate resources and quality of staff. The agencies may not need thousands ofpersonnel, but they do need at least several dozens of well-trained personnel who areadequately educated in competition law and economics. It is also important to developstrong internal processes to ensure that investigations and prosecutions are conducted in arigorous way.Externally, it is important that the enforcement authority develop a solidreputation. The way the agency is established and staffed will affect its reputation. In theU.S., the different ways the leaders of the two federal enforcement agencies are appointedhave affected their reputation. The Assistant Attorney General in charge of Antitrust, asa senior official of the Executive Branch, has, rightly or wrongly, been subject tooccasional speculation of political control by the President. On the other hand, theFederal Trade Commission was established to be an independent agency, with fivecommissioners, no more than three of whom may be members of the same political party.In theory, the Commission is therefore less subject to political control.85 221 U.S. 1 (1911).86 See, e.g., U.S. v. E.C. Knight Co., 156 U.S. 1 (1895); U.S. v. Trans-Missouri Freight Assn, 166 U.S. 290(1897); U.S. v. Joint Traffic Assn, 171 U.S. 505 (1898); Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211(1899); Northern Securities Co. v. U.S., 193 U.S. 197 (1904).DRAFT 6/23/2006-22-Moreover, if the enforcement authority initially develops a poor reputation forreckless activity, it may be very difficult to recover from that first impression. Therefore,a key function of an enforcement authority is to advocate competition policy, both to thepublic and within the government, to develop and strengthen support and understandingof the principles of competition policy and the competition authority’s actions. A secondcrucial focus is the wise use of prosecutorial discretion, to choose enforcement actionswell, pursuing cases that will help develop competition policy in a positive direction andbuild upon the framework of the law, and that will, together with strong competitionadvocacy, have broad support. The enforcement authority must be strong enough torecognize that non-action does not mean weakness or that the law is inadequate. Forexample, in the last 10 years, under both Democratic and Republican adminstrations,although thousands of concentrations are notified annually to the U.S. government, onlyin one year were more than 4% of the concentrations investigated to the extent of anadditional request for information. The overwhelming majority of concentrations werenotified without any action by the enforcement authorities.#p#分页标题#e#ConclusionThe experience under the Sherman Act demonstrates that, while it is important tohave a well-drafted statute, it is the development of a sound infrastructure for analysisand enforcement based on the statute that ultimately determines the success of acompetition law regime. A well-drafted statute should establish clear goals, soundprinciples, and rigorous fact-based analytic approach. Exemptions to the law should becreated very sparingly, to minimize the distortions in the marketplace that may beintroduced. The enforcement mechanism should be structurally resistant to politicalinfluence. The remedies provided should be crafted with the goal of restoringcompetition, and not just punishing offenders. A statute that has these attributes shouldprove to be a solid foundation for a competition law regime, upon which a soundinfrastructure of analysis and enforcement may be built.July 24, 20061Thoughts on Some Challenges in Implementing China’s Anti-Monopoly LawYee Wah ChinAs the National People’s Congress considers the proposed Anti-Monopoly Law,thoughts turn to implementing the law. Implementation presents many challenges,especially in China’s unique circumstances as a transition economy. This paperconsiders two challenges particularly from the perspective of the U.S. experience overmore than 100 years with competition law enforcement: (1) developing an effectiveenforcement infrastructure; and (2) addressing the local protectionism that may be thegreatest threat to the development of a competitive economy.The development of the enforcement infrastructure for an entirely new lawpresents both substantive and procedural challenges. The substantive rules that theenforcement agencies develop, in implementing the principles set forth in the AML, willsignificantly determine what will be the actual impact of the law. The process fordeveloping these rules and for enforcing the law will have a major influence on both thesubstantive rules and the law’s effectiveness.The AML, as proposed, prohibits administrative monopolies. The need for such aprohibition is generally supported by observations of Chinese commentators regardingthe situation in China; the controversy appears to center more on the appropriate solution.The experience of the U.S. under the Articles of Confederation in the late 1700s, duringwhich there was rampant local protectionism, before the Constitution became effective in1789, indicates that it is important to have fundamental laws prohibiting localprotectionism in order to develop a strong integrated national economy.Enforcement InfrastructureThe importance of building sound foundations for the enforcement of acompetition law cannot be overstated. First, the enforcement agencies must have#p#分页标题#e#adequate resources and high quality staff. The agencies may not need thousands ofpersonnel, but they do need at least several dozens of personnel who are well-educated incompetition policy and economics. It is also important to develop strong internalprocesses to ensure that investigations and prosecutions are conducted in a rigorous way.If there is an independent enforcement agency that is adequately staffed and providedwith resources, crucial factors determining the impact of the law will be the processesand implementing regulations adopted by the agency.Externally, it is important that the enforcement authority develop a strong positivereputation. The way the agency is established and staffed will affect its reputation. In theU.S., the different ways the leaders of the two federal enforcement agencies are appointedhave affected their reputations. The Assistant Attorney General in charge of Antitrust, asa senior official of the Executive Branch, has, rightly or wrongly, been subject tooccasional speculation of political control by the President. On the other hand, theJuly 24, 20062Federal Trade Commission was established to be an independent agency, with fivecommissioners, no more than three of whom may be members of the same political party.In theory, the Commission is therefore less subject to political influence. Theseperceptions, of course, may have little basis in reality, yet may affect the agencies’credibility and therefore effectiveness.Moreover, if the enforcement authority initially develops a reputation for recklessactivity, it may be very difficult to recover from that first impression. Therefore, a keyfunction of an enforcement authority is to advocate competition policy, both to the publicand within the government, to develop and strengthen understanding of and support forthe principles of competition policy and the competition authority’s actions.Also crucial is the wise use of prosecutorial discretion, to choose enforcementactions well, pursuing cases that will help develop competition policy positively andbuild upon the framework of the law, and that will have, with strong competitionadvocacy, broad support. In both the U.S. and European Union, decades passed beforesubstantial levels of enforcement were reached. In the U.S., it was not until 1911, over20 years after enactment of the Sherman Act, that the Supreme Court decided StandardOil Co. of New Jersey v. U.S.,1 and affirmed the dissolution of the oil trust, building onseveral lower profile cases that established basic principles under the law.2The enforcement authority must be strong enough to recognize that non-actiondoes not mean weakness or that the law is inadequate. For example, in the last 10 years,under both Democratic and Republican administrations, although thousands of#p#分页标题#e#concentrations are notified annually to the U.S. government, only in one year were morethan 4% of the concentrations investigated to the extent of an additional request forinformation. The overwhelming majority of concentrations were notified without anyaction by the enforcement authorities.When the agency does act, it must do so in ways that reinforces its reputation forsound enforcement. In order to do so, the enforcement agency must develop stronginternal processes to ensure that standards are rigorous and clear to interested parties, andinvestigations and prosecutions are conducted in an appropriate way. The effectiveness,integrity and credibility of procedures may be greatly enhanced by regulationsdemonstrating the agency’s intention to maintain the fairness and objectivity of itsprocedures and activities. The clarity and transparency that such procedural rules providemay be especially important if the enforcement structure is a novel one and/or one whichmay be considered susceptible to political influence.1 221 U.S. 1 (1911).2 See, e.g., U.S. v. E.C. Knight Co., 156 U.S. 1 (1895); U.S. v. Trans-Missouri Freight Assn, 166 U.S. 290(1897); U.S. v. Joint Traffic Assn, 171 U.S. 505 (1898); Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211(1899); Northern Securities Co. v. U.S., 193 U.S. 197 (1904).July 24, 20063In the U.S., such procedural rules include those that establish the proceduresunder which future regulations will be proposed, considered and issued. For example, therules of the Federal Trade Commission contain detailed provisions on its procedures forrulemaking.3 With transparent, clear and equitable procedures for rulemaking, there isgreater assurance that the resulting rules, both procedural and substantive, will fullyreflect all relevant factors and be equitable.The rules of procedure by which the principles of the law are implemented, andthe law is enforced, are crucial. Regulations that expressly allow parties to submitevidence and arguments and to examine and test the evidence submitted by adverseparties, and require officials who participate in the process to be free of external orspecial influences, consider all relevant evidence and explain the reasoning of decisions,can be vital in establishing the credibility of the law and the process, and in facilitatingcompliance and enforcement. For example, the Department of Justice must conduct itsenforcement actions through the federal courts, where the federal judiciary rules ofprocedure, evidence, and appeal apply. Nevertheless, the Antitrust Division publishes avariety of materials describing how it conducts specific types of investigations and how itinitiates and conducts proceedings before the courts.4Beyond the fundamental procedural rules regarding how future rules will be#p#分页标题#e#developed and how the agencies will conduct investigations, one area in which detailedprocedural rules have proven invaluable is in the area of merger control. The detailedregulations issued by the U.S. enforcement agencies under the Hart-Scott-RodinoAntitrust Improvements Act of 1976,5 setting forth the requirements on the timing, formand schedule for agency consideration of notifications, have been crucial in facilitatingand ensuring compliance. The International Competition Network has recognized thevalue of procedural regulations in the merger control context in its Guiding Principles forMerger Notification and Review Procedures, and Recommended Practices for MergerNotification and Review Procedures.63 16. C.F.R. §§ 1.7 – 1.26. http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=7a8c8ce4d432393eb793b6399d46a5bd&tpl=/ecfrbrowse/Title16/16cfr1_main_02.tpl4 See, for example, http://www.usdoj.gov/atr/foia/divisionmanual/ch4.htm, the portion of the AntitrustDivision Manual that applies to the conduct of civil investigations. Links to the rules governingproceedings of the U.S. Federal Trade Commission may be found athttp://ecfr.gpoaccess.gov/cgi/t/text/textidx?sid=3ad5b48a02eb1707974872e00175bbb5&c=ecfr&tpl=/ecfrbrowse/Title16/16cfrv1_02.tpl,especially the links accessed under the heading “Part 1”, “Part 2”, and “Part 3”.5 16 C.F.R. Parts 801 – 803. http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=7a8c8ce4d432393eb793b6399d46a5bd&tpl=/ecfrbrowse/Title16/16cfr801_main_02.tpl ,http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=7a8c8ce4d432393eb793b6399d46a5bd&tpl=/ecfrbrowse/Title16/16cfr802_main_02.tpland http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=7a8c8ce4d432393eb793b6399d46a5bd&tpl=/ecfrbrowse/Title16/16cfr803_main_02.tpl6 http://www.internationalcompetitionnetwork.org/guidingprinciples.htmlJuly 24, 20064As to the substantive aspects of the law, those who are subject to it mustunderstand what it requires in order to comply with it. At a minimum, they (or their legaladvisers) should be able to read the law itself and the decisions that are adopted by theenforcement authority in specific cases. If the rules are incomprehensible or notavailable, then both the law and the enforcement authority will lack legitimacy andcredibility in the eyes of the public.The results are mixed with detailed regulations that establish substantive rulesgoverning marketplace conduct. For example, the EU individual notification system wasabandoned during the “modernization” culminating in Council Regulation 1/20037 thatbecame effective on May 1, 2004. The resulting approach is analogous to that in theU.S., where the legality of an agreement under the antitrust laws is not determined until it#p#分页标题#e#is challenged. In the meantime, in every major substantive area under Article 81 of theEuropean Community Treaty – vertical agreements, horizontal agreements, technologytransfer agreements – older block exemption regulations were abandoned in favor ofmore flexible block exemptions and guidelines that generally attempt to incorporategreater reliance on economic analysis of conduct.8 Thus, in Europe, where the regulatoryapproach was embraced most enthusiastically at first, detailed formalistic regulationshave significantly been abandoned in favor of incorporation of microeconomic analysisand the statement of analytic principles.The United States has not generally relied on regulations in the implementation ofits most basic substantive antitrust rules. Guidelines have been used more frequently,with mixed results. While regulations have the force of law, guidelines typically do not;they are intended to accommodate a need for discretion and flexibility. Guidelines mayprovide only a description of the methods of competitive analysis and principles ofinterpretation of key elements that determine an enforcement agency’s approach toparticular situations and issues. They are useful to the extent that they provide anaccurate reflection of the agency’s actual practice. They may also play a critical role inexplaining how enforcement decisions that are likely to be made by the agency in certaintypes of cases relate to and support the broader policy objectives of the law and thepriorities of the agency’s current enforcement program.Some U.S. guidelines have provided negative experiences and one set ofguidelines was withdrawn. Other U.S. guidelines are widely regarded as very successfulin facilitating understanding of and compliance with U.S. antitrust law.Perhaps the most successful U.S. guidelines are those applicable toconcentrations. Merger Guidelines were first adopted in the United States by theDepartment of Justice in 1968. They were widely regarded as a major innovation at the7 Links to the Regulation in all official Community languages may be found athttp://europa.eu.int/comm/competition/antitrust/legislation/regulation.html8 To complement its latest Technology Transfer Block Exemption Regulation, the EU also promulgatedGuidelines on the application of Article 81 of the EC Treaty to technology transfer agreements. The latestTTBER and Technology Transfer Guidelines likewise reflect the evolution of antitrust analysis in the EU.July 24, 20065time and were controversial.9 Later developments in legal and economics thinking led tothe abandonment of those early Guidelines. In 1982, the Department issued new MergerGuidelines,10 while the Federal Trade Commission issued a Statement ConcerningHorizontal Mergers.11 The current enforcement approach still follows in essential outline#p#分页标题#e#the analytic framework set forth in the 1984 Merger Guidelines,12 more than 20 yearsago. The United States’ 1982 Merger Guidelines and subsequent revisions13 are widelyregarded as a successful effort to provide guidance to the business community and itslegal advisers in order to aid understanding and compliance.The guidelines describe how the enforcers apply the economic concepts ofproduct and geographic market to actual situations. They do not specify a set of rules tobe mechanically applied. Rather, by clarifying the analytic methods and the types ofevidence regarded as likely to be persuasive, the enforcement agencies have enabledwell-advised parties to understand with some precision how any particular transaction islikely to be analyzed, and to some extent to foresee the likely enforcement outcomes.Thus, the agencies have facilitated voluntary compliance. Parties are less likely topropose transactions that seem likely to be challenged, or they will voluntarily alter theirproposed transaction to conform to the likely enforcement approach. These Guidelineshave also limited the “chilling effect” of enforcement uncertainty – the tendency ofparties to avoid transactions that could be viewed unfavorably, even though they wouldlikely be permitted if examined by the agencies.14 In March 2006, the FTC and the9 See, e.g., W. Blumenthal, “Clear Agency Guidelines: Lessons from 1982”, 68 Antitrust L.J. 5 (2000).10 Department of Justice Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,102 (1982). These 1982 MergerGuidelines reflected how the agencies’ practices had evolved since 1968, and therefore were quite differentfrom the 1968 Guidelines. For example, the 1982 Guidelines make no reference to conglomerate mergers,while the 1968 Guidelines included a significant discussion of the Department’s approach to such mergers.11 Federal Trade Commission Statement Concerning Horizontal Mergers, 4 Trade Reg. Rep. (CCH)¶13,200 (1982).12 The 1984 Merger Guidelines reflected refinements of the 1982 Guidelines in light of two years’experience. Department of Justice Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,103 (1984).13 In 1992, the Department and the Commission issued Joint Horizontal Merger Guidelines, that reflectedthe Department’s experience under the 1982 and 1984 Guidelines and the Commission’s experience underits 1982 Statement, as well as advances in legal and economic thinking. Department of Justice & FederalTrade Commission Horizontal Merger Guidelines, 4 Trade Reg. Rep. (CCH) ¶13,104 (1992);http://www.usdoj.gov/atr/public/guidelines/hmg.htm The 1992 Guidelines did not reflect any dramaticdeparture from the 1984 Guidelines. In 1997, the two agencies clarified the 1992 Horizontal MergerGuidelines with respect to the analysis of efficiencies that may result from a merger. Id. Therefore, merger#p#分页标题#e#review by the federal antitrust enforcement agencies are now guided by the 1992 Guidelines along with the1997 revisions regarding efficiencies analysis in the context of horizontal mergers, and by the 1984Guidelines in the context of vertical mergers.14 The United States has also adopted successive sets of guidelines relating to international operations (thatreflected the evolution in antitrust analysis as the successive Merger Guidelines do), as well as AntitrustGuidelines for the Licensing of Intellectual Property (April, 1995), available athttp://www.usdoj.gov/atr/public/guidelines/0558.htm (“IP Guidelines”). The more recent of the AntitrustEnforcement Guidelines for International Operations (April, 1995), available atJuly 24, 20066Department of Justice jointly issued a Commentary on the Horizontal Merger Guidelines,that clarified how they are actually applying the Guidelines.15 The Commentarydescribed dozens of actual transactions and the agencies’ analysis of them under theMerger Guidelines. The Commentary offers even greater transparency and deeperunderstanding of the agencies’ decision-making process.In contrast, guidelines for antitrust remedies raise complex and often difficultissues, because different aspects of competition law often have distinct remedyrequirements. Illegal agreements and abuse of dominant market position can arise inways that defy categorization. It is almost impossible to specify except in the mostabstract way how and where anticompetitive conduct will arise, and therefore the task ofspecifying in advance how such conduct would be remedied in any particular case wouldbe a giant exercise in speculation. In the U.S., the efficacy and utility of sentencingguidelines – both as a general matter and in antitrust cartel cases – are a matter of intensecurrent debate. This experience may be compared with that of the U.S., EU and otherjurisdictions with leniency programs with regard to both criminal and civil competitionlaw violations. These programs have provided undertakings with clarity regarding theirrisks and rewards of cooperating when an offense is detected, and have substantiallyfacilitated competition authorities’ enforcement of the law.16http://www.usdoj.gov/atr/public/guidelines/internat.htm, and the IP Guidelines have also enjoyed a degreeof success and a considerable amount of emulation in other jurisdictions. For example, in both the U.S. andthe EU, the recognition has developed that IP does not automatically confer a monopoly on its holder, andis but a form of personal property that may confer market power. On the other hand, a set of Guidelines forVertical Restraints adopted in the U.S. in 1986 was withdrawn after several years.15 http://www.usdoj.gov/atr/public/guidelines/215247.pdf ;#p#分页标题#e#http://www.ftc.gov/os/2006/03/CommentaryontheHorizontalMergerGuidelinesMarch2006.pdf.16 See, e.g., U.S. Department of Justice, Leniency Policy for Individuals,http://www.usdoj.gov/atr/public/guidelines/0092.htm ; U.S. Department of Justice Corporate LeniencyPolicy, http://www.usdoj.gov/atr/public/guidelines/0091.htm ; Commission notice on immunity from finesand reduction of fines in cartel cases, OJ C 45, 19.2.2002, http://www.europa.eu.int/eurlex/pri/en/oj/dat/2002/c_045/c_04520020219en00030005.pdf; Amended 2002 Commission Notice onImmunity from fines and reduction of fines in cartel cases, http://www.europa.eu.int/eurlex/pri/en/oj/dat/2002/c_045/c_04520020219en00030005.pdf; Immunity Program under the CanadianCompetition Act, http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=1389&lg=e ; R. HewittPate, Assistant Attorney General, Antitrust Division, U.S. Department of Justice, “International Anti-CartelEnforcement,” Remarks presented at 2004 ICN Cartels Workshop, Sydney, Australia, November 21, 2004,http://www.usdoj.gov/atr/public/speeches/206428.htm ; Scott D. Hammond, Director of CriminalEnforcement, Antitrust Division, U.S. Department of Justice, “Cornerstones of an Effective LeniencyProgram,” Remarks presented before the ICN Workshop on Leniency Programs, Sydney, Australia,November 22-23, 2004, http://www.usdoj.gov/atr/public/speeches/206611.htm ; Philip Lowe, Director-General, DG Competition, European Commission, “What’s the Future for Cartel Enforcement,” address toUnderstanding Global Cartel Enforcement Conference, Brussels, Belgium, February 11, 2003,http://europa.eu.int/comm/competition/speeches/text/sp2003_044_en.pdf ; Colette Downie, AssistantDeputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau of Canada, “The Fixis in Detecting Cartels in Canada,” Speaking notes presented to The Australian Competition & ConsumerCommission Cracking Cartels Conference, Sydney, Australia, November 24, 2004,http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=813&lg=eJuly 24, 20067There is also a growing trend toward the adoption of explicit written policiesconcerning the use of remedies in the case of concentrations. Whereas for criminalantitrust violations the main concerns involve detection and deterrence of manifestlyillegal behavior, the remedial objective with regard to structural transactions is to identifya limited set of divestitures or behavioral constraints on the parties that will addresscompetitive issues without involving the enforcement agencies or the courts inburdensome, long-term or complex regulatory oversight for which they are ill-suited.While an appropriate remedy in a specific merger case frequently involves complex andintensely industry- and firm-specific questions, the general principles by which such#p#分页标题#e#relief is formulated can be articulated.Local ProtectionismThe reality is that much of the distortions in the Chinese economy result fromlocal governmental actions that favor local activity and are inconsistent with centralgovernment policy. Factors significantly underlying the debate regarding the appropriatetreatment of the rampant local protectionism and administrative monopolies appear to be(1) unease with the transition from a command economy that is under, as one pundit putit, “the visible foot” of the government, to one which relies on “the invisible hand” of themarketplace, and (2) a lack of consensus on both the desirability and feasibility ofprohibiting the local protectionism that motivates many administrative monopolies.Some argue that administrative monopolies should be exempt from an AML, justas the state action doctrine in the U.S. exempts state governmental action from the U.S.antitrust laws. This belief is based on a misunderstanding of the source of the U.S. stateaction doctrine and its limits.The state action doctrine is based on the federal system of the U.S. and theresidual sovereignty of the states.17 This exemption excludes from the U.S. antitrust lawsconduct in areas in which a state has acted to limit competition or to enable a lack ofcompetition, and in which the state actively monitors competitive activity.18 In addition,under the Local Government Antitrust Act of 1984,19 local governments have immunityfrom lawsuits for damages, but no immunity from lawsuits for injunctive relief andattorneys’ fees for successful plaintiffs, if state governments enact statutes authorizing thelocal governmental units to act in a particular area.20 States have taken advantage of thestate action doctrine and the Local Government Antitrust Act, sometimes from amisunderstanding of competition in a marketplace or from a belief that certain industries17 Parker v. Brown, 317 U.S. 341, 351 (1943); Cantor v. Detroit Edison Co., 428 U.S. 579 (1976).18 California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97, 105 (1980); Southern Motor Carriers RateConference, Inc. v. United States, 471 U.S. 48 (1985).19 15 U.S.C. §§ 34-36.20 See also, Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985); City of Columbia v. Omni OutdoorAdvertising, Inc., 499 U.S. 365 (1991).July 24, 20068or constituencies should not be subject to competition.21However, one important fundamental limit on the state action doctrine is thecounterbalancing prohibition in the U.S. Constitution against states imposing burdens oninterstate commerce, or seeking to advantage local businesses at the expense of out-ofstatecompetitors. “Congress shall have power…to regulate commerce with foreignnations, and among the several states.” U.S. Constitution, Art. I, §8. The Supreme Court#p#分页标题#e#has interpreted this Commerce Clause of the Constitution to prohibit individual statesfrom regulating commerce with other states, and imposing burdens on non-localundertakings that local undertakings do not have.22In addition, the Constitution also states that “no state shall, without the consent ofthe Congress, lay any imposts or duties on imports or exports…and the net produce of allduties and imposts, laid by any state on imports or exports, shall be for the use of theTreasury of the United States; and all such laws shall be subject to the revision andcontrol of the Congress…” Art. I, §10. Furthermore, the Constitution provides that “thecitizens of each State shall be entitled to all privileges and immunities of citizens in theseveral States.” Art. IV, §2.Other clauses of the Constitution have also been invoked to prohibit state actionthat fostered anti-competitive activities or effects. For example, the First Amendmentright of free speech has been held to prohibit certain types of regulations that inhibitedcompetition.23 Similarly, the Due Process and Equal Protection clauses of the FourteenthAmendment have been applied to limit state action that was anticompetitive.24Therefore, even though states, and local authorities under express permissionfrom the states, may limit competition in the U.S. if they actively monitor the activity,21 For example, under the exemptions granted by Congress in the 1937 Miller-Tydings Amendment to theSherman Act and in the 1952 McGuire Amendment to the FTC Act, 46 states enacted laws that enforcedminimum resale price agreements, both between the parties and against third parties. These laws wereeffective until Congress repealed this “fair trade” exemption with the enactment of the Consumer GoodsPricing Act of 1975, Pub L. No. 94-145, 89 Stat. 801.22 Willson v. Black Bird Creek Marsh Co., 27 U.S. (2 Pet.) 245, 252 (1829); Cooley v. Board of Wardens ofPort of Philadelphia, 53 U.S. (12 How.) 299 (1851); Reading Railroad v. Pennsylvania, 82 U.S. (15 Wall.)232 (1873); Weldon v. Missouri, 91 U.S. 275 (1875); Seaboard Air Line Ry. v. Blackwell, 244 U.S. 310(1917); South Carolina State Highway Dept v. Barnwell Bros., 303 U.S. 177 (1938); Baldwin v. J.E.Dilworth Co., 322 U.S. 327 (1944); H.P. Hood & Sons v. DuMond, 336 U.S. 525 (1949); Dean Milk v. Cityof Madison, 340 U.S. 349 (1951); Polar Ice Cream & Creamery Co. v. Andrews, 375 U.S. 361 (1964); Pikev. Bruce Church, 397 U.S. 137 (1970); Associated Indus. of Missouri v. Lohman, 511 U.S. 641 (1994);Fulton Corp. v. Faulkner, 516 U.S. 325 (1996); Camps Newfound/Owatonna v. Town of Harrison, 520U.S. 564 (1997); South Central Bell Tel. Co. v. Alabama, 526 U.S. 160 (1999).23 See, e.g., Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 412 U.S. 748#p#分页标题#e#(1976); Bates v. State Bar of Arizona, 433 U.S. 350 (1977); Board of Trustees of State University of NewYork v. Fox, 492 U.S. 469 (1989).24 See, e.g., Gibson v. Berryhill, 411 U.S. 564 (1973).July 24, 20069they cannot engage in local protectionism. These Constitutional limitations against localprotectionism were specifically established because of the rampant local protectionismthat proliferated among the original 13 states under the Articles of Confederation thatpreceded the Constitution, to ensure the development of an integrated nationaleconomy.25 During the period following independence from Great Britain, before theConstitution became effective, the 13 original states were united and governed under theArticles of Confederation. The Articles of Confederation provided for a very weakcentral government and did not limit the sovereignty of the states. As a result, individualstates established their own currencies and tariffs, and generally acted to protect theirlocal interests with little regard for the interests of the country. The economy of theUnited States did not thrive, and the central government, along with those of severalstates, was on the brink of bankruptcy. The Constitutional Convention was held todiscuss amendments to the Articles of Confederation to remedy these problems. Theresult was the Constitution which superseded the Articles of Confederation and created astrong central government.This history may be relevant to China. A prohibition against administrativemonopolies would serve the same salutary purpose as the U.S. Constitution, of promotingan integrated national economy under China’s unitary political system.In all events, if detailed provisions regarding administrative monopolies are notincluded in the AML, and only a statement of principle is retained in the final statute,there remains the potential that the principle will take root and lead to development of abody of law and, perhaps more important, a culture that curtail local protectionism. Inorder to realize this potential, it is essential to develop the enforcement infrastructurefully and appropriately.ConclusionWhile it is important to have a well-drafted statute, it is the development of asound infrastructure for analysis and enforcement based on the statute that ultimatelydetermines the success of a competition law regime. A sound infrastructure must bebased on procedural rules that provide due process and that set forth both the process bywhich future rules will be developed and the process by which the agency will implementthe law. The enforcement mechanism should be structurally resistant to politicalinfluence. Exemptions to the law should be drafted and interpreted very narrowly, tominimize the distortions in the marketplace that may be introduced. The experience of#p#分页标题#e#the U.S., under the Articles of Confederation, the Constitution, and the Sherman Act,may offer lessons in these respects.25 H.P. Hood & Sons v. DuMond, 336 U.S. 525 (1949).特许经营在中国:审判上和立法的报告2005-2006(FRANCHISING IN CHINA: Judicial andLegislative Update 2005-2006)Forthcoming in the September issue of the International Journal ofFranchising LawPaul JonesBarrister, Solicitor & Trade-mark AgentJones & Co. 钟保禄 律师事务所 Джоунс и Ко.365 Bay Street , Second FloorToronto, CanadaM5H [email protected]© Paul Jones , 20061A. IntroductionThis article is a review of recent legislative and administrative developmentsaffecting franchising in China, and a review of some significant trade-mark andfranchising cases primarily as decided by China’s courts since the coming intoforce of the new Measures for the Regulation of Commercial Franchises1 (“NewFranchise Measures”) in early 2005.Previously a review of cases would have been difficult if not impossible becausethere is no case reporting system in China, as there is in common lawjurisdictions. But as a growing number of Chinese courts set up their own websites and post their decisions online, and as Chinese lawyers make increasinguse of the internet to post copies of decisions and comments on cases, such areview is now possible.The reporting of significant franchise cases is not universal however, so thedecisions discussed in this article do not reflect a selection of the most significantcases from all such decisions of the Chinese courts, but rather a selection ofwhat is available online. Still the decisions provide significant insight into thethinking of some Chinese courts on franchise and trademark matters.B. Growth of FranchisingChina continues to grow at a rapid pace. GDP reportedly increased 10.2 % in thefirst quarter of 2006,2 and 11.3% in the second quarter.3 But some haveexpressed concern that the reform of China’s legal system has in fact slowed.4The most recent survey from the China Chain Store and Franchise Association5(“CCFA”) reported that China had 2,320 franchise systems at the end of 2005, or10.4 % more than at the same time in the previous year.6 The average number ofoutlets per system increased from 57 in 2004 to 73 in 2005.71 Measures for the Regulation of Commercial Franchises, 商业特许经营管理办法 (ShangyeTexujingying Guanli Ban Fa), Ministry of Commerce Order No. 25 of 2004, in effect February 1,2005.2 Xinhua News Agency, “China’s GDP in first quarter grows 10.2%” China View, April 20, 2006.3 Andrew Browne, “Chinese Economy Surges by 11.3%, Fuelling Concerns,” Wall Street Journal,#p#分页标题#e#July 19, 2006, p. A8.4 James M. Rhodes, “Jerome A. Cohen: China’s Legal System – Notes from a LuncheonAddress,” New York City Bar Association, April 5, 2006.5中国连锁经营协会 (Zhongguo Lian Suo Jing Ying Xie Hui) http://www.ccfa.org.cn/english/index.jsp .6 Press Release, “Year Report on Franchise in China released by CCFA,” CCFA, 2006-03-28.7 Id.2Still franchising accounts for only 3 % of China’s retail sales compared to 40% inthe United States.8 If in the future franchising in China comprises a similarproportion of retail sales as it does in the United States franchising in China hassignificant growth still ahead of it. There are currently an estimated 16,000franchised outlets in Shanghai and the number continues to expand each year.9There are some weaknesses in this growth. Two of the best known foreignfranchise systems in China, KFC and McDonalds, primarily operate corporate orjoint-venture owned locations. McDonalds has just one franchisee, in the city ofTianjin in the north, and of KFC’s approximately 1,500 outlets only about 70 arefranchised.10The other important concern is that many of the domestic franchise systems inChina are still at an early stage of development. The business models are oftennot fully developed or proven and the franchisors have yet to develop the level ofsupport systems that are the norm in North America. CCFA reports that 30% ofdomestic franchisors do not have a franchise manual, and 20% do not have anoperations manual.11There has also been progress in the institutions to study and teach franchisedevelopment methods in China. In 2003 Beijing Normal University established itsInternational Franchise Academy in Zhuhai, in cooperation with FranchiseDevelopment Services China Ltd.12 In March of 2004 the Ministry of Educationformally approved “franchise management” as a new undergraduate major.C. Law ReformIn terms of law reform that is relevant to franchising, the recent National People’sCongress meeting held March 8 – 14, 200613 in Beijing was a disappointment asa number of laws that had been anticipated were not tabled for approval at theCongress.8 Zhiqiong June Wang, “The Development of Franchising in China,” paper presented to the 20thAnnual International Society of Franchising Conference, Palm Springs, California, February 24-26,2006, p. 3.9 Dai Qian, “Investors find franchises an easier way to start a business,” Shanghai Daily, March13, 2006.10 Wang, supra note 5, p. 6.11 CCFA, The 2005 Blue Book Report of Franchising and Chain Performance in China, 2005,http://www.hznet.gov.cn/xxzh/20050414/271105.htm (accessed September 2, 2005) as cited inWang, supra note 5, p.13-14.#p#分页标题#e#12 Wenxian Liu, Andrew Terry, Albert Kong, Xuesi Wang, Jijian Hou, Zhiqiong Wang, and AifeiTang, “Innovation in the Booming market for Franchising in China: A Study of the InternationalFranchise Academy, Beijing Normal University, Zuhai Campus,” paper presented to the 20thAnnual International Society of Franchising Conference, Palm Springs, California, February 24-26,2006. Further information can be obtained from the web site of the Academy athttp;//www.bnuifa.cn or http://www.franchise.com.cn.13 The Fourth Session of the 10th National People’s Congress.3Foremost among them was what is known as the proposed “Property RightsLaw.”14 China is in the process of developing a civil code comparable to thosefound in Europe. This proposed law would have consolidated the many laws andregulations currently in force in a coherent and comprehensive treatment of thetreatment of property rights in both real estate and personal property, and wouldapply to state-owned property as well as private property.China’s rapid development has led to one of the widest disparities in income inthe world. The primary cause for unrest in China’s development has not been thethousands of laid-off workers but the taking of traditional farmland or older cityhousing for the development of new factories and condominium complexes.Violent clashes have occurred when the compensation offered by the localgovernment administration was considered too low.15If it had been tabled the proposed Property Rights law would have clarifiedissues regarding title, leasehold rights, and security interests in land andequipment that have relied upon in developing franchise locations in NorthAmerica and Europe.Another significant disappointment was the failure of the NPC to consider theproposed Anti-Monopoly Law.16 This law would be comparable to the competitionor antitrust laws in Europe or North America. China began working on a draftabout 10 years ago, and has received input from both the European Union andthe American Bar Association.Finally a draft “Law for personal information protection” has been prepared by agroup from the Chinese Academy of Social Sciences and was submitted to theState Council for review early last year.17 The draft law is based on the Europeanmodel. Hong Kong SAR has had a privacy law based on the European modelsince 1996.18 It did not appear, but it is likely that it will first appear as a set ofadministrative rules and regulations, as has occurred with the franchisemeasures.14 物 权法 (Wu Quan Fa)15 See for example Jim Yardley, “Farmers Being Moved Aside by China’s Real Estate Boom,”New York Times, December 8, 2004.16 反垄断 法 (Fan Long Duan Fa). It has now been reported that a draft has been approved by the#p#分页标题#e#State Council (Andrew Batson, “Draft of Antitrust Legislation Wins’s China Cabinet’s Backing,”Wall Street Journal, June 8, 2006 and Cary Huang, “Law aimed at tackling monopoliesapproved,” South China Morning Post Online Edition, June 8, 2006; and was discussed at themeeting of the National People’s Congress Standing Committee, June 19 -22, 2006, Beijing. Forthe Standing Committee members’ comments on the Draft Antimonopoly Law, see17 Shi Ting, “Landmark privacy law submitted for review,” South China Morning Post Online,January 20, 2005; “China to legislate for protection of personal information” People’s Daily Online,January 25, 2005.18 Personal Data (Privacy) Ordinance, Ch. 486, Hong Kong SAR Ordinances.4C. Courts and Civil ProcedureOne of the central problems of the Chinese judicial system has been the fact thatboth the judiciary and the procuratorates (similar to a district attorney’s office) ateach level of the court system are paid out of funds from the equivalent level oflocal government. This has led to what has been described as “localprotectionism” on the part of these officials.In its latest reform plans the Supreme People’s Procuratorate announced theintention to make the local procuratorates financially independent of theirrespective local governments.19 Hopefully this will lead to a similar independencefor the courts in the near future.Late in 2005 the Supreme People’s Court issued the Second National ForeignrelatedCommercial and Maritime Trial Work Meeting Minutes20 intended toprovide guidance to judges called upon to rule on their jurisdiction in casesinvolving foreign parties. Article 126 of China’s Contract Law, the law thatgoverns the new Franchise Measures, stipulates that the parties to a foreignrelated contract may choose the law for the settlement of disputes unless the lawprovides otherwise.21Generally the minutes take an aggressive approach on the jurisdictional reach ofthe Chinese courts by providing that Chinese courts may still hear a case even ifforeign courts have already accepted or decided the case. On the other hand theminutes introduce a forum non conveniens analysis, something not previouslyseen in Chinese law. Parties may argue that a Chinese court should not hear acase if there is a more appropriate forum in another country.But the minutes also provide that if a parties’ choice of foreign law circumventsmandatory or restrictive provisions of Chinese laws or regulations, or violatesChinese public policy, then the foreign law will not apply. It would appear thatattempts to avoid the disclosure requirements or the requirement that afranchisor have operated two locations in China for one year by choosing a#p#分页标题#e#foreign law to govern the contract will not be held valid.19 “Central cash to fund local judicial independence,” China Daily, September 29, 2005.20最高人民法院关于印发<<第二次全国涉外商事海事审判工作会议纪要>>的通知, December 26,2005.21合同法（Hetong Fa） adopted at the Second Session of the Ninth National People’s Congresson March 15, 1999 and came into force on October 1, 1999; 第一百二十六条 涉外合同的当事人可以选择处理合同争议所使用的法律，但法律另外规定的除外。涉外合同的当事人没有选择的，适用与合同有最密切联系的国家的法律. 在中华人民共和国境内履行的中外合资经营企业合同、中外合作经营企业合同、中外合作勘探开发自然资源合同，适用中华人民共和国法律。5D. Intellectual PropertyAny foreign franchisor with an interest in the Chinese market will be concernedwith the state of intellectual property protection in China. This year the news ismostly good. During the 2006 meeting of the National People’s Congress inMarch China’s Supreme People’s Court 22 announced the creation of a specialcourt to prosecute product piracy cases.23 And the web site of the SupremePeople’s Court now publishes many (but not all) intellectual property decisionsonline.24China has its own reasons for improving the enforcement of intellectual propertyrights. This year’s meeting of the NPC endorsed the new five-year plan economicpolicies of relying on rural development and scientific technology andinnovation.25 The goal is to build an innovation oriented country.Another reason is that most product piracy in China harms Chinese businesses.Estimates of the percentage of IP infringement cases that involve foreign-relatedparties range from 5%26 to 20%.271. Conflicts with Business NamesIn the western press the leading trademark case in China in the last year was thedecision of the Shanghai No. 2 Intermediate People’s Court28 with respect to thetrademarks ‘STARBUCKS’ and ‘星巴克’ (Xing ba ke). It was hailed asencouraging others to feel that China’s courts are a place where there is now achance of getting legal redress.29 In fact the case is one of several efforts byStarbucks to monitor and protect their brand in China.h23 Associated Press, “Special Court to enforce intellectual property rules,” South China MorningPost Online, Friday, March 10, 2006. The court is to be called the “Judicial Court of IntellectualProperty.”24 At http://www.ipr.chinacourt.org .25 China Daily, “NPC endorses shift in economic policy,” CHINAdaily.com.cn, March 15, 2006.26 The China IP Blog, IP Dragon, in a posting on March 10, 2006 entitled “Judicial Court of#p#分页标题#e#Intellectual Property Announced and Supreme People’s Court Judge’s Surprising Surprise,”quoted Supreme Court judge Jiang Zhipei as saying “Some 95 percent of product piracy casesinvolve violations against Chinese companies, with only about 5 percent stemming fromcomplaints from foreign companies. So it’s a strange phenomenon that foreign governments, andsome U.S. congressmen, have made very strong complaints about this.”27 Liu Li, “IPR appeals court in the pipeline,” China Daily, March 10, 2006. The article states that“Some 20 per cent of IPR disputes in Chinese courts are foreign-related, and in most such cases,foreign parties are plaintiffs.”28 上海市第二中级人民法院 (Shanghai Shi Di Er Zhong Ji Ren Min Fa Yuan)http://www.shezfy.com/main.aspx . The decision was handed down December 31, 2005. As thedecision is under appeal the written reasons have not yet been released.29 “Starbucks wins Chinese logo case,” BBC News, January 2, 2006.6In 1998 Starbucks Corporation registered the trade-mark “星巴克,” the Chinesecharacters that it was using to represent its main trademark, “STARBUCKS”.30Then in 2000 a Chinese company based in Shanghai registered its corporatename as 上海 星巴克 咖啡 公司 (Shanghai Xingbake Coffee Co.) The ShanghaiXingbake company considered the trademarks “STARBUCKS” and “星巴克” tobe different from its corporate name. Starbucks Corporation argued that they arethe same.While Starbucks Corporation won the first round, the decision is under appeal.Because it is under appeal the court has released only the order, and not the fulljudgment. Accordingly the media stories are based on verbal reports and containerrors and contradictions.31There is a problem in China with competing merchants registering businessesincorporating part or all of a well-known trade-mark when starting their business.When challenged by the trade-mark owner they then claim that their use of thename is authorized.A month and a half before the Shanghai case was decided Starbucks won asimilar case in the Qingdao Intermediate People’s Court in Shandong Province.32The Judge in this case decided that the Chinese version of the “STARBUCKS”was not a famous mark because it had not been used for a sufficiently longperiod of time. Still the Chinese mark was registered so the judge wrote:被告是在中国工商机关登记注册的外资公司，经过合法注册的企业名称应当受到法律的保护，但其前提是，该名称为合法取得且不侵害他人的在先权利，当其使用的字号侵犯了他人的在先权利，并容易导致相关公众误认时，被告就不能以合法注册，作为免除其侵权责任的抗#p#分页标题#e#辩理由。(Defendant has registered as a foreign investedcorporation with Chinese Administration of Industry and Commerce.It is entitled to legal protection only if its’ business name has beenregistered when the prior rights of other are not violated. When the30 “星巴克案美方胜 上海星巴克须更名并登报致歉” (Starbucks US wins victory, ShanghaiStarbucks must change its name and apologize) Xinhuanet January 4, 2006 (in Chinese).31 “Starbucks wins dispute over name” Toronto Star, Tuesday, January 3, 2006, p.E2 (incorrectlyclaiming that the infringer registered its name before Starbucks registered the Chinese version ofits trademark). The BBC article, supra note 27, made the same error.32 星源公司 (Starbucks Corporation) v. 青岛星巴克咖啡餐饮有限公司 (Qingdao Star Ba Ke Coffee& Dining Limited), 山东省青岛市中级人民法院 (Shandong Province Qingdao City IntermediatePeople’s Court) November 16, 20057prior rights of others are encroached upon and its business nameconfuses the public, the defendant is liable and cannot avoid aclaim of infringement based on such registration. )33In support of this proposition the judge cited the Supreme People’s CourtInterpretation on Trademark Disputes promulgated October 12, 2002 andeffective October 16, 2002. 34As was noted earlier it is not only famous North American corporations that sufferthis problem. The Taiwanese owned 上海弘奇食品有限公司 (Shanghai Hong QiFood Limited) that franchises Chinese style restaurants under the trademark “永和” (YONGHE) recently defended its mark in two other Chinese provinces.35 Andfor Chinese franchisors the problem has existed for sometime.362. Chinese Versions of Western MarksThere is a problem with all western trademarks in China that arises in partbecause of the unique characteristics of the Chinese language. Chinese does nothave any form of alphabet and uses only about 400 syllables37 to representapproximately 10,000 characters. This means firstly that a direct phonetictransliteration of a foreign trademark is very rarely possible in Chinese. It alsomeans that a particular sound may be represented by a number of characters,some of which may have entirely unsatisfactory meanings.Further marks that sound alike to western ears may not be consideredconfusingly similar to the average Shanghai resident on the Huaihai Roadomnibus. For example in China Ikea, the Swedish furniture company, has the33 Translation by author.34 最高人民法院关于审理商标民事纠纷案件适用法律若干问题的解释 – Interpretations of theSupreme People’s Court of Several Issues Concerning the Application of the Law to the Trial ofCivil Dispute Cases Involving Trademarks, promulgated October 12, 2002 and effective October#p#分页标题#e#16, 2006.35 上海弘奇食品有限公司 v. 徐明人， 张桔兰， 江苏省连云港市中级人民法院 November 8, 2005(Shanghai Hong Qi Food Limited v. Xu Ming Ren and Zhang Jie Lan, Jiangsu ProvinceLianyungang City Intermediate People’s Court)http://www.jsfy.gov.cn/cpws/cpws_read.jsp?id=978 ; 邱雪伟 v. 上海弘奇食品有限公司， 江西省高级人民法院 April 17 2006 (Qiu Xue Wei v. Shanghai Hong Qi Food Limited, Jiangxi ProvinceHigher People’s Court) http://ipr.chinacourt.org/public/detail_sfws.php?id=3010 .36 See for example 山东金色童年有限公司 v. 周华， 山东省临沂市中级人民法院，September 29,2002 (Shandong Jinse Tongnian Limited v. Zhou Hua, Shandong Province Linyi City IntermediatePeople’s Court) http://www.sdipr.gov.cn/art/2005/07/06/art_3677.html .37 With the use of tones there are about 1300 distinct syllables available. While there is noagreement on the precise number of syllables used in English, one estimate suggests about2,750 out of a possible 11,000. See http://www.ling.ucsd.edu/~barker/Syllables/index.txt8Chinese name “宜家” which is transliterated in pinyin as “Yi Jia.” Together thesecharacters may be translated as “a proper home.” One of its major localcompetitors has adopted the mark “爱家” which is transliterated as “Ai Jia” andmeans “love home.”Not only is this apparently tolerated, but one report38 noted that recently on theopening of a new store Ikea introduced its new slogan “爱的新体验.” Thecompanion English version was “MORE TO LOVE” but a literal translation wouldbe something like “a new experience of love.”The lesson for those wishing to protect their trademark in China is to develop aChinese character version of the trademark as soon as possible and to registerboth the English and the Chinese character versions. In the cases discussedearlier Starbucks won in part because it had done this. But many westernbusinesses have not yet developed a Chinese character trademark.When Ferraro S.p.A., the Italian maker of chocolates, began selling its“FERRERO ROCHER” brand chocolates in China in the 1980’s it used theChinese name “金莎,” which is transliterated as “Jin Sha,” and which may betranslated as “golden name” or “golden place.” However it never bothered toregister the Chinese trademark in China39, although it registered the Chinesemark in Taiwan and Hong Kong.A Chinese dairy company in Jiangsu Province, just north of Shanghai, not onlybegan to use the mark “金莎” and very similar packaging for its chocolates, whichtasted decidedly inferior to those of Ferrero, but it also applied to register the#p#分页标题#e#mark. Even though Ferrero successfully opposed the application the Chinesecompany continued to use the mark and customer confusion resulted.Finally in 2003 Ferrero brought an action40 against its Chinese competitor underChina’s Anti-Unfair Competition Law41 Article 5(2) that prohibits businesses fromadopting the packaging or decoration distinctive of well-known goods42 in Tianjin,38 Dror Poleg, “Bilingual Brands: Love in the time of IKEA” Danwei, May 11, 2006.39 Emma Barraclough, “Why patience brings rewards in Asia,” Managing Intellectual PropertyNews, May 1, 2006.40 意大利费列罗公司 (FERRERO S.p.A.) v. 蒙特 莎 （张家港）食品有限公司， 天津市高级人民法院，January 9, 2006 (Italian Fei Lie Luo Company (Ferrero S.p.A.) v. Mengtesha (Zhangjiagang)Food Company Limited, Tianjin City Higher People’s Court)http://ipr.chinacourt.org/public/detail_sfws.php?id=658 .41 反不正当竞争法 (Fan Bu Zheng Dang Jingzheng Fa) adopted at the 3rd Meeting of theStanding Committee of the National People’s Congress on Spetember 2, 1993; Promulgated byOrder No. 10 of the President of the PRC, and effective as of December 1, 1993.42 Article 5(2) reads: “经营者不得采用下列不正当手段从事市场交易，损害竞争对手: …9a large city that acts as the port for Beijing. In the first hearing in No. 2Intermediate People’s Court Ferrero lost in part because the Court held that thepackaging was not particularly well-known as being associated with Ferrero, andthe Chinese competitor had heavily marketed its products in China for more thanten years of co-existence and held the larger market share. It ruled that althoughthe packaging is similar, it is not so similar as to cause confusion.Ferrero appealed to the Higher People’s Court in Tianjin. The Court ruled in itsfavour for four reasons. Citing the adherence of both China and Italy to the ParisConvention43 the court ruled that in order to determine what is “well-known,”reference cannot only be had to the domestic market. Secondly the Court notedthat in another action the Chinese company had been unable to prove that it hadindependently created its packing design, and held that the packaging had beencopied from Ferrero’s product.Thirdly the court said:根据诚实信用和公认的商业道德准则，知名商品应当是诚实经营的成果。因此，在法律上不能把使用不正当竞争手段获取的经营成果，作为产品知名度的评价依据。( Based on the principles of good faithand recognized business ethics, “well-known” status for a productmust be achieved through management’s own efforts. Thereforeunfair competition as specified in law cannot be used as a method#p#分页标题#e#for management to achieve “well-known” status for a product.)44Accordingly because the Chinese company copied Ferrero’s packaging it cannotuse its resulting status in China against Ferrero. Finally it cited Article 10bis (2) ofthe Paris Convention in support of the proposition that Article 5(2) of China’sUnfair Competition Law should be read liberally. 45（二）擅自使用知名商品特有的名称、包装、装潢，或者使用与知名商品近似的名称、包装、装潢，造成和他人的知名商品相混淆，使购买者误认为是该知名商品；(Operators shallnot adopt any of the following unfair means to carry on transactions in the market and causedamage to competitors: … (2) using, without authorization, the names, packaging or decorationpeculiar to well-known goods or using names, packaging or decoration similar to those of wellknowngoods so that their goods are confused with the well-known goods of others, causingbuyers to mistake them for the goods of others).43 Paris Convention for the Protection of Industrial Property, made March 20, 1883, as revised atBrussels on December 14, 1900, at Washington on June 2, 1911, at The Hague onNovember 6, 1925, at London on June 2, 1934, at Lisbon on October 31, 1958, and at Stockholmon July 14, 1967, and as amended on September 28, 1979.44 Translation by the author.45 Article 10bis (2) reads: “Any act of competition contrary to honest practices in industrial orcommercial matters constitutes an act of unfair competition.”10Although Ferrero was successful in the end, had it registered its Chinesecharacter trade-mark initially it would have avoided the expense and loss ofmarket share that it has endured.3. Contributory InfringementAnother major decision in this area came from the Beijing No. 2 IntermediatePeople’s Court46 when five international design companies sued the landlord ofBeijing’s famed ‘Silk Street Market’ (and the relevant individual tenants of stallsselling counterfeit goods) on the grounds that it had contributed to theinfringement of their trademarks by knowingly allowing counterfeit goods to besold by its tenants. The decisions in favour of the trademark owners were upheldby the Beijing Higher People’s Court47 in mid April of 2006. These decisions arefinal.In each of the cases one of the key questions was whether it had been shownthat the landlord was aware of the infringement by its tenant and had becomeliable for such infringement. Article 50 of the Regulations for the Implementationof the Trademark Law48 provides that it is an infringement if it can be shown thatthe defendant is “intentionally providing facilities such as storage, transport,mailing, concealing, etc. for the purpose of infringing on another person’s#p#分页标题#e#exclusive right to use a registered trade-mark.”The Beijing Higher People’s Court pointed out that the landlord had provisions inthe leases that prohibited the sale of counterfeit goods on pain of termination.The Plaintiffs had in each case first purchased goods from the tenant then hadtheir lawyers courier a letter to the landlord. In the opinion of the court the letterfixed the landlord with knowledge of the infringement.46 北京市 第二 中级人民法院 (Beijing Shi Di Er Zhong Ji Ren Min Fa Yuan)http://bj2zy.chinacourt.org/ .47 The five decisions are: 北京秀水街服装市场有限公司 v. 路易威登马利蒂有限公司 (Louis Vuitton)No. 335; 北京秀水街服装市场有限公司 v. 普拉达有限公司 (Prada) No. 333; 北京秀水街服装市场有限公司 v. 香奈儿股份有限公司 (Chanel) No. 334; 北京秀水街服装市场有限公司 v. 古乔古希股份公司(Gucci) No. 336; 北京秀水街服装市场有限公司 v. 勃贝雷有限公司 (Burberry) No. 337; all on April 18,2006, 北京市 高级人民法院 (Beijing Shi Gao Ji Ren Min Fa Yuan)http://www.bj148.org/bureau/court/bjgfcon.htm . See also “Silk Street Market Loses Appeal inTrademark Case,” China Daily, April 19, 2006.48 商标法实施条例 (Shang Biao Fa Shishi Tiaoli) promulgated by decree No. 358 of the StateCouncil on August 3, 2002, and effective as of September 15, 2002), Article 50(2) reads:第五十条有下列行为之一的，属于商标法第五十二条第（五）项所称侵犯注册商标专用权的行为：….（二）故意为侵犯他人注册商标专用权行为提供仓储、运输、邮寄、隐匿等便利条件的。11Specifically the Court stated:但秀水街公司在收到了律师函后，并未及时与律师取得联系，亦未采取任何有效措施制止涉案销售侵犯注册商标专用权的商品的行为，致使原审被告潘祥春仍能在此后一段时间内继续实施销售侵犯路易威登马利蒂公司注册商标专用权的商品的行为，秀水街公司主观上存在故意，客观上为原审被告潘祥春的侵权行为提供了便利，故一审判决对此认定正确。(But after receiving the letter from thelawyer [for Vuitton], the Silk Street Company [the landlord] did notpromptly contact the lawyer nor take any effective action to keep itfrom being involved in the sale of trademark infringing goods, andallowed the defendant Pan Xiang Chun [the tenant] to continue thesales of goods infringing Vuitton’s trademark. The Silk StreetCompany objectively and intentionally abused its authority andassisted Pan Xiang Chun, and therefore the first trial correctlyrecognized this.)49The damages awarded to each of the plaintiffs however were only about#p#分页标题#e#$2,500.00 USD. Still the cases show that with careful preparation andpresentation of the evidence the courts are willing to enforce the laws to protecttrademarks.E. Franchising1. Laws, Regulations and GuidelinesThe New Franchise Measures50 have now been in effect for over a year. Anumber of foreign franchisors have expressed concerns about certain aspects ofthe New Franchise Measures, and in particular the requirement for two outlets tohave been operated for at least one year.The Chinese Ministry of Commerce (“MOFCOM”) had said that it would releaseguidelines in the Fall of 2005, but at the time of writing a draft “FranchiseManagerial Standard” was still being reviewed.51 However the Chinese team thatreviewed it described it as very practical and as meeting the needs of China’sfranchise development.52In March 2006 there was a reprint of a news item on the CCFA web sitesuggesting that the drafting of the proposed “Commercial Franchise49 Translation by the author.50 Supra note 1.51 CCFA, “Assessment Meeting on Managerial Standard held successfully in Beijing,” Pressrelease, English Version November 14, 2005; Chinese version October 26, 2005.52 Id., This statement appears in the Chinese version only.12Administration Regulation (Tiao Li)” had been completed and that a draft maymake an appearance this year.53 The news item goes on to suggest that the draftregulation will specify clearly the qualifications required to be a franchisor inChina.And most recently there was a news story on the internet stating that thefranchise Tiao Li was under consideration by the State Council.54 The articlegoes on to state that the new Tiao Li will contain further specifications regardingthe qualifications required of a franchisor and for disclosure to prospectivefranchisees.2. Cases in GeneralChina is a civil law jurisdiction, and the structure of its legal system is oftenmodeled on that of Germany. In civil law systems a primary source of law isdoctrine55 rather than cases, and consequently civil law jurisdictions tend not tomake decisions in particular cases publicly available.While this particular aspect of civil law may work in developed legal systems, ithas come to be considered an obstacle to the development of the rule of law,transparency and consistency in transitional civil law systems such as theRussian Federation and the People’s Republic of China.Russia is now setting up a single digital network that is supposed to link all courtsby the end of 2006 so that internet users will be able to track cases from filing toverdict online.56 A proposed law has been submitted to the Duma that wouldrequire judges to publish their verdicts and post them on the internet. As noted#p#分页标题#e#earlier China is now posting many intellectual property cases online.5753 “商务部条法司：商业特许经营管理条例年内颁布,” (Ministry of Commerce RegulationDepartment: Commercial Franchise Administration Regulation (Tiao Li) will be Promulgated thisYear), March 10, 2006, at http://www.ccfa.org.cn/end.jsp?id=25588 . In Chinese law a “tiao li,”while technically still translated as “regulation,” has a higher and more formal status than thecurrent “guan li ban fa.”54中国百姓创业网, “解读特许经营市场法规” (Interpretation of Franchising Regulations ) 2006-07-20. InChinese only).55 These might be described as learned writings. In a Chinese context an example would be thearticle by 汪传才 (Wang Chuan Cai), 特许经营合同中不竞争条款研究 (Study of the Non-CompeteProvisions of Franchise Agreements) online at www.lawpress.com.cn/newsdetail.cfm?iCntno=2252 .Mr. Wang is an Associate Professor at Jinan University in Shenzhen, in Guangdong Province.The article makes extensive use of American materials and cases, and in particular Peter J.Klarfeld, ed. Covenants Against Competition in Franchise Agreements (Chicago: American BarAssociation Forum on Franchising, 1992.56 Nabi Abdullaev, “Supreme Court Touts Automated Justice,” Moscow Times, Tuesday, April 11,2006. The portal will be http://www.sudrf.ru .57 See supra note 24.13Many courts in China now maintain their own web sites, although there does notappear to be a comprehensive policy behind this development as in Russia.Reports of a number of franchise cases can now be found online on such courtweb sites. Commentaries on such cases and on specific topics written byChinese lawyers can now also be found on line.The next part of this paper discusses some of the cases that are available, manyof which were decided since the coming into force of the New FranchiseMeasures. Although in a civil law system cases do not have value as precedentsthat bind judges the next time that the same question arises, cases are collectedby lawyers in civil law systems. They are submitted to judges along with theevidence for their persuasive value. This is also done in China, and a review ofthese cases will also provide some insight into what judges consider relevant infranchise disputes in China.3. Failure to DiscloseIn 黄海燕 (Huang Haiyan) v. 北京汉森 美容有限公司 (Beijing HansenCosmetology Limited Co.) decided in Beijing on November 16, 200558 theplaintiff, a thirty-two year old woman, entered into the franchise agreement onJanuary 2, 2005. She paid a deposit of 30,000.00 Yuan and a franchise fee of150,000.00 Yuan (about $3,750.00 USD and $18,700.00 USD respectively) toset up a cosmetics service for men in Chengdu, a large city in Sichuan Province#p#分页标题#e#in southwest China. Soon after the franchisee discovered that the trademark tobe used was not actually registered, that it was not an international brand asrepresented and that there were problems with the supply of product that had notbeen disclosed.The court noted that the New Franchise Measures required written disclosure ofbasic information in advance and found the franchisor to have intentionallyviolated this regulation. The court described the purpose of the requireddisclosure as follows:该信息披露义务的要旨在于使加盟商能够在掌握了各种信息的程度上作出正确的判断，是决定加盟商能否客观认识特许经营权及能否公平交易的基础。信息披露的目的在于防止欺诈、促进公众的整体利益和促进投资分析。因此，在特许经营中，特许人违反信息披露义务，也构成欺诈。(Theessence of the duty to disclose is to enable the prospectivefranchisee to decide whether it understands the business objectivesand its rights, and whether the franchise offer is fair. The goal of58 北京潮阳区人民法院(Beijing Chaoyang District People’s Court) （2005）朝民初字第 24486 号(File No.).14such disclosure is to prevent fraud and therefore to promoteinvestment analysis and the general public welfare. Therefore infranchising if a franchisor violates the disclosure requirement, thisalso constitutes fraud.)59Citing Articles 54(2) and 58 of China’s Contract Law60 the court declared thefranchise agreement to be therefore lacking in fairness, rescinded the agreement,and ordered the return of the plaintiff’s money.4. Lack of Qualifications to be a FranchisorIn 北京金安泰经贸有限责任公司 (Beijing Jin’an’tai Economics and Trade Ltd.) v.北京联通实华信息网络有限责任公司 (Beijing Liantong Shihua InformationNetwork Ltd.) 61 the parties signed a franchise agreement to open an internetcafé in 2002. Later that year for public policy reasons the government stoppedaccepting or processing applications for such cafes. The franchisee sued for areturn of its funds and lost at trial when the court accepted the defense of forcemajeure.It then appealed and won. The appeal cited Article 9 of China’s Contract Law62which stipulates that a party making a contract must have the correspondingcapacity for civil rights and civil conduct. The franchisor did not have theauthorizations necessary for an internet café. The commentator, Qian Li Hong,suggests that this case illustrates that concluding a contract without suchauthority is a breach of the principle of “good faith,” a primary basis of China’sContract Law.If a company that lacks the qualifications required by the New Franchise#p#分页标题#e#Measures to be franchisor enters into a franchise agreement not all courts see itas a breach of the good faith provisions.In杨素芳 (Yang Su Fang) and 干裕源 (Gan Yu Yuan) v. 张家麟 (Zhang Jia Lin)63the plaintiffs signed a series of contracts with the defendant, a resident of Taiwan,to open two tea shops and to buy their supplies from the defendant in 1999. Thedefendant supplied both the trademark and the training. The second shop failedand the second plaintiff requested a refund of the fees.59 Translation by author.60 Supra note 21.61 钱丽红 (Qian Li Hong), 违反诚实信用原则订立合同给对方造成损失应承担缔约过错责任(Franchisor Liable for Not Making Agreement in Good Faith and Causing Damage to Franchisee) ,posted June 7, 2005 on http://hkfy.chinacourt.org , now no longer available.62 Supra note 21.63 广东省佛山市中级人民法院 (Guangdong Province Foshan City Intermediate People’s Court)No. 15, April 22, 2005, available at: http://www.fszjfy.gov.cn/shownews.asp?newsid=8591 .15The case was first tried in 2002 and then appealed. Although the contract wasdescribed as a “supply contract” both courts came to the conclusion thatsubstance was more important than form, and that this was really a franchiseagreement. However the defendant did not have the qualifications required of afranchisor under the previous franchise measures.Thus the Intermediate People’s Court on retrial cited Article 9 of the ContractLaw64 for the proposition that to enter into a contract a party must have thecorresponding capacity for civil rights and civil capacity. As the defendant wasnot qualified to be a franchisor the agreements were invalid.In China there are also restrictions on foreign investors as to the types ofindustries that they can enter. Previously the distribution sector was restrictedand foreign invested enterprises were not allowed to enter a sector where Chinaconsidered its domestic players to be weak. Until December 11, 2004 franchisingwas restricted to domestic enterprises.This restriction was key to the decision in 韩美艳 (Han Mei Yan) v. 北京印气巴谊印气健美有限公司 (Beijing Yin Qi Ba Yi Yin Qi Jian Mei Limited).65 The plaintifffranchisee entered into a franchise agreement with the defendant on July 2, 2004to operate a cosmetics store under their brand and paid the initial fee of 100,000Yuan (about $12, 485.00 USD), and agreed to pay a further 641,250 Yuan (about$80, 063.00 USD) for equipment later in two installments. When the furtherpayments were not made, the lawyer for the franchisor defendant sent theplaintiff a letter terminating the contract for non-payment and advising that theinitial payment already made would be retained.The franchisor defendant was incorporated on February 18, 2003 as a wholly#p#分页标题#e#foreign-owned enterprise66 (“WFOE”) to operate a business in the health sectorproviding cosmetology services, and to provide skill training and managementservices. The trademark was not registered until March 28, 2005. But at the timeof the decision it still did not have the approval of the authorities to be engaged in64 Article 9 states: 当事人订立合同，应当具有相应的民事权利能力和民事行为能力。当事人依法可以委托代理人订立合同 (The parties shall, when making a contract, have corresponding capacityfor civil rights and civil conduct. A party may, in accordance with the law, entrust an agent tomake a contract).65 北京市朝阳区人民法院(Beijing Chaoyang District People’s Court) No. 5967, August 16, 2005,available at: http://www.lawyer3721.net/index.php3?file=detail.php3&kdir=1657 .66 The decision describes the enterprise as a 外商独资经营 or “foreign sole-ownershipmanagement” enterprise rather than “外资企业” or “wholly foreign-owned Enterprise.”16franchising. As was mentioned earlier franchising was not even opened toWFOEs until December 11, 2004.67As the Court in this case stated:根据国务院《指导外商投资方向规定》及其批准的《外商投资产业指导目录》，特许经营属于中国逐步开放的产业，列为限制类外商投资项目，并明确于2004 年12月11 日后允许外商投资。也就是说，在2004 年12 月11 日之前，国家不允许外商投资企业以特许经营方式从事商业活动。(According to the “Regulationsregarding Foreign Entity Investment in Industry” of the StateCouncil and the “Catalogue Guiding Foreign Investment inIndustry,” franchising is one of the industries that China graduallyopens up, and it was listed as ‘restricted.’ It is clear that foreigninvestment is permitted after December 11, 2004. In other words,before December 11, 2004 China did not permit foreign investedentities to be engaged in franchising.68Accordingly the Court found that the franchisor had violated these requirements.Based on Article 52(5) of the Contract Law69 and Article 10 of the Interpretationsof the Supreme People’s Court of Certain Issues concerning the Application ofthe Contract Law70 the franchise agreement was held invalid and the money wasordered returned to the plaintiff franchisee.67 See 外商投资商业领域管理办法(Waishang Touzi Lingyu Guanli Ban Fa – AdministrativeMeasures on Foreign Investment in Commercial Sectors), approved April 16, 2004, Ministry ofCommerce Regulation No. 8, 2004. This was to fulfill part of China’s commitment to removerestrictions on entry to markets within three years of entry into the WTO. The third anniversary of#p#分页标题#e#such entry was December 11, 2004.63 Translation by author69 Supra note 21. 第五十二条 有下列情形之一的，合同无效：….（五）违反法律、行政法规的强制性规定。(A contract is invalid under any of the following circumstances: … (5) mandatoryprovisions of laws and administrative regulations are violated).70最高人民法院关于适用《中华人民共和国合同法》若干问题的解释（一）（中英文对照）(Interpretations The Supreme People’s Court of Certain Issues concerning The Application of TheContract Law of The People’s Republic of China(Part One) adopted at the 1090th Session of theAdjudication Committee of the Supreme People”s Court on December 1, 1999, and effective asof December 29,1999): 第十条 当事人超越经营范围订立合同，人民法院不因此认定合同无效。但违反国家限制经营、特许经营以及法律, 行政法规禁止经营规定的除外。(Article 10 Where theparties entered into a contract the subject matter of which was outside their scope of business,the People’s Court shall not invalidate the contract on such ground, except where conclusion ofthe contract was in violation of state restriction concerning, or licensing requirement for, aparticular business sector, or in violation of any law or administrative regulation prohibiting theparties from participation in a particular business sector).17A lawyer in Beijing71 had predicted in 2005 that the courts would find thatWFOEs could not legally be engaged in franchising in China until after December11, 2004, 72as the court found in this case. His articles on this topic have beenposted in several places on the internet. He identifies this case as the firstdecision on this issue.73More recently he has gone further and suggested that a foreign franchisorawarding a master franchise directly to a Chinese registered corporation, withoutgoing through a foreign invested enterprise (“FIE”), may be in breach of the NewFranchise Measures as well as the laws regulating foreign investment.74 Hisreasoning is that if the foreign investment laws previously restricted foreigninvestment in franchising, as the Beijing Chaoyang District People’s Court hasfound, then it is illegal to now do so other than through an FIE that complies withthe laws and regulations. In other words foreign investment laws and regulationsshould govern whether or not the grant of a master franchise to a Chinesecorporation constitutes a foreign investment.In contrast to this line of cases, previously the failure to comply with the relevantfranchise measures did not completely invalidate the franchise agreement.In 杭州曼其服饰有限公司 (Hangzhou Graceful It Clothing Limited) v. 国家工商行政管理总局商标评审委员会(State Administration for Industry and Commerce,#p#分页标题#e#Trademark Office, Appraisal Committee) and 深圳市曼其投资发展有限公司(Shenzhen Graceful It Investment Development Limited)75 the Beijing No. 1Intermediate People’s Court had to deal with this issue in respect of the previousFranchise Measures (the “Old Franchise Measures”).76The Shenzhen company, the third party, was registered on June 30, 1994. OnSeptember 16, 1999 it entered into a franchise agreement with Qi Wenrong, the71 林晓 ， 北京博融律师事务所 (Lin Xiao, Bejing Borong Law Office).72 See 林晓，“特许连锁系统的崩溃――当前特许经营合同无效化的危机,” (Lin Xiao, FranchiseSystems Collapse – The Crisis Arising out of the Invalidity of Current Franchise Agreements)available on line at http://www.law-lib.com/lw/lw_view.asp?n0=4107 .73 林晓，”述评：外资违法违规从事特许经营第一案判决 “ (Commentary: First Decision Holding aWFOE Engaging in Franchising to Be Illegal) available at: http://www.lawlib.com/lw/lw_view.asp?n0=5818 .74 林晓，当前国际特许面临的法律问题，(Lin Xiao, Current International Franchise Practices FaceLegal Test) available at: http://www.law-lib.com/lw/lw_view.asp?no=5861 .75 北京市第一中级人民法院(Beijing City No. 1 Intermediate People’s Court) No. 727(Administrative Judgment), December 12, 2005.76商业特许经营管理办法（试行）(Shangye Texujingying Guanli Ban Fa (Shi Xing )) – Measuresfor Administration of Commercial Franchise (Trial Implementation [or Proposed]) promulgated bythe former Ministry of Internal Trade on 14 November, 1997.18legal representative of the Plaintiff, the Hangzhou company. Qi Wenrong thenregistered the Plaintiff company on October 13, 1999.The Plaintiff then registered the trademark “曼其” for use with respect to clothingby an application made December 25, 2000 and approved and registered onFebruary 28, 2002. On April 12, 2002 the third party (the Shenzhen company)objected to the registration and requested its cancellation.The Trademark Appraisal Committee ruled on June 15, 2005 that the Plaintiff’sregistration should be struck out, in part because the registration violated Article15 of the Trademark Law that prohibits agents or distributors from registering thetrademarks of their principals without proper authorization.77The Plaintiff appealed this decision. On appeal it argued that the franchiseagreement signed on October 13, 1999 between the Shenzhen company and thePlaintiff’s principal, Qi Wenrong, was invalid because it was not made incompliance with the 1997 Franchise Measures for Trial Implementation. UnderArticle 52(5) of the Contract Law this makes the franchise agreement invalid.Therefore the Plaintiff was not the agent or distributor of the Shenzhen company,#p#分页标题#e#and could register the trade-mark in its own name under China’s first-to-registersystem.The court did not accept this argument, and added that it was clear from theevidence that the Shenzhen company was already using the mark. Thus theapplication by the Plaintiff was also in violation of Article 31 of the TrademarkLaw.5. Non-Payment of Royalties and Penalty ClausesThe autonomy of the parties to make their own contract is something relativelynew to China, but the courts do respect that right. In 上海金鹰广告公司(Shanghai Golden Eagle Advertising Company) v. 俞晓东(Yu Xiao Dong)78 theparties entered into a franchise agreement for the development service for fourbrands to run from November 16, 2000 to October 31, 2003. The royalty was40,000 Yuan per year (about $5,000.00 USD) payable in quarterly installments. Ifthe franchisee breached the agreement the franchisee had to pay the franchisora penalty of two year’s royalties or 80,000.00 Yuan.77 商标法 -第十五条 未经授权，代理人或者代表人以自己的名义将被代理人或者被代表人的商标进行注册，被代理人或者被代表人提出异议的，不予注册并禁止使用。 (Trademark Law – Article 15Where an agent or representative, without authorization of the client, seeks to register in its ownname the client’s trademark and the client objects, the trademark shall not be registered and itsuse shall be prohibited).78上海市浦东新区人民法院 (Shanghai Pudong New Development Area People’s Court) No. 1,May 18, 2005, available at: http://feilan.com/showarticle.asp?id=1492 .19The plaintiff fulfilled its obligations but the defendant fell behind in the payment ofroyalties. On June 25, 2002 they agreed to terminate the franchise agreement,but the defendant still owed 25,000.00 Yuan. When the defendant sought toavoid payment of the balance, the parties ended up in a series of trials.With respect to royalties owed the Shanghai Pudong Court stated that:本院认为，原审原、被告之间签订的“特许加盟经营协议书”并未违反法律强制性规定，应当确认有效，双方均应依约严格履行。之后签订的“终止特许加盟协议”亦系双方真实意思表示，该协议明确于2002 年6 月25 日终止“特许加盟经营协议书”，故原审被告应当支付截至该日的相应经营使用费。(This Court is of the opinion that theFranchise Agreement is valid if both parties signed the FranchiseAgreement and its provisions do not violate the mandatoryprovisions of any laws, and accordingly both sides should performstrictly as agreed. The parties both having later signed theFranchise Termination Agreement it is clear that the Franchise#p#分页标题#e#Agreement was terminated on June 25, 2002, and that thereforethe defendant must pay the royalties up to this date).79However the court thought that although the penalty clause was valid, a penaltyof 80,000 Yuan on a debt of 25,000 Yuan was excessive, and reduced it to15,000 Yuan.In the Fall of 2003 a case was decided where the franchisee claimed that it hadnot received all the support that it was entitled to. In 北京便宜坊烤鸭集团有限公司(Beijing Pian Yi Fang Roast Duck Limited) v. 北京龙成科工贸公司 (BeijingLong Cheng Ke Gong Mao Company)80 the parties entered into an agreement onJune 16, 2000 to set up a restaurant and operate it for five years. The royaltywas 120,000 Yuan in the first year, and increased 5% each year thereafter. Theagreement also provided for a 5% per day additional penalty for late payments.The restaurant was set up but the defendants were continually behind in theirroyalty payments, so the plaintiff sued. The defendants countersued that theplaintiff had not fulfilled certain obligations with respect to the trademark andsuch failure had caused them heavy losses.79 Translation by the author.80北京市第二中级人民法院(Beijing City No. 2 Intermediate People’s Court) No. 3409, September19, 2003, available at: The court held that the two defendants had not provided sufficient evidence toprove their objections with respect to the trademark, nor to disprove the plaintiff’scontention that the defendants had not provided the required co-operation tocomplete the trademark procedures. They therefore had to pay damages andinterest.However the court concluded that because the penalty for delayed payment wasfar higher than the legal standard the provision was invalid.815. Yonghe Statement of ClaimFinally on June 6, 2005 a suit was filed by a franchisee against 上海永和大王餐饮有限公司 (Shanghai Yonghe Big King Dining Company Limited) and amanagement consulting company in Shanghai No. 1 Intermediate People’s Courtand posted online, presumably by the franchisees’ lawyer.82 The franchisor iswell-known in China and is related to a Taiwanese parent company. It has atrade dress similar to KFC but has a menu featuring Chinese cuisine.The franchise agreement was signed on February 10, 2003 to open anotherlocation in Shanghai and pays a franchise fee of 620,000.00 Yuan (about$77,360.00 USD). It is alleged that the franchisor was responsible for choosingthe location and therefore responsible for the losses that at May 31, 2005 totaled668,513.12 Yuan. The franchisee sent out a letter terminating the agreement andrequesting compensation.The pleadings argue that before December 11, 2004 a foreign-investedenterprise (‘FIE”) could not franchise in China because it was not a permitted#p#分页标题#e#activity; but after December 11, 2004 an FIE could franchise provided thatfranchising was approved as part of its activities. Accordingly at the time whenthe franchise agreement was signed, the franchisor did not have the civil capacity,as was successfully argued in the case mentioned previously. The pleadingsspecifically cite the Supreme People’s Court’s commentary on interpreting theContract Law83.Secondly the pleadings argue that because the franchisor does not have certainregistered trademarks, as required by the previous Franchise Measures and thenew ones, the franchisor has violated Articles 40, 42 and 48 of the Contract81 The Supreme People’s Court issues ‘guidelines’ to the courts regarding penalty standards.82 上海永和大王餐饮有限公司 (Shanghai Yonghe Big King Dining Company Limited) CivilIndictment (Statement of Claim) posted at www.fclaw.com.cn/na.asp?id=668&title=特许经营纠纷 .83 Supra note 70.21Law84. Article 42 imposes liability for a pre-contractual duty of good faith andrequires disclosure of key facts.85Finally it is argued that the franchise agreement violates the fairness principle ofthe Contract Law because the franchisee owns the assets but the franchisorstipulates the method of operation, and because a royalty is charged for a licenseto use a trademark that is not registered.F. Conclusion84 Supra note 21.85第四十二条 当事人在订立合同过程中有下列情形之一，给对方造成损失的，应当承担损害赔偿责任： （一）假借订立合同，恶意进行磋商； （二）故意隐瞒与订立合同有关的重要事实或者提供虚假情况； （三）有其他违背诚实信用原则的行为. (Article 42: In the making of acontract, the party that falls under any of the following circumstances, causing thus loss to theother party, shall hold the liability for the loss. (1) engaging in consultation with malicious intentionin name of making a contract; (2) concealing intentionally key facts related to the making of acontract;(3) taking any other act contrary to the principle of good faith.) In Québec and Germanysuch provisions have been interpreted as requiring a form of pre-contractual disclosure ofmaterial facts. In Québec see Cadieux c. St-A. Photo Corporation, Cour supérieure 500-05-006829-947 (le 9 avril 1997) « La bonne foi est le fondement de toute relation contractuelle. Elledoit gouverner la conduite des parties…La réticence ou l’omission de lui révéler la réalitéentournant le studio a vicié le consentement donné: ce motif justifie l’annulation du contract defranchise et le remboursement des sommes versées. » (Good faith is the basis of all contractual#p#分页标题#e#relations. It should govern the conduct of the parties…The hesitation or omission of the defendant[franchisor] to reveal the reality regarding the studio vitiated the consent given: this justifies theannulment of the franchise agreement and the reimbursement of payments made.) In Germanysee Landgericht Kaiserslautern – Aktenzeichen 4 O 607/00, 26 Mai 2004 „Die Klägerin hat ausdem Gesichtspunkt der culpa in contrahendo wegen Verletzung vorvertraglicher AufklärungsundInformations- pflichten einen Anspruch gegen die Beklagte auf Schadensersatz. DerFranchisegeber hat bei Verhandlungen über den Abschluss eines Vertrages die Verpflichtung,den anderen Teil über Umstände aufzuklären, die zur Vereitelung des Vertrages zweckgeeignetsind und für die Entschließung des anderen Teils von wesentlicher Bedeutung sind (vgl. OLGRostock 1996, 13 ff. m. w. N.). Zu solchen Umständen gehören, ohne dass es weitererBegründung bedarf, insbesondere Angaben über die Gewinnerwartung undRentabilitätsberechnung.“ (The Plaintiff has a claim against the Defendant based on the doctrineof culpa in contrahendo because of its breach of its pre-contractual duty to provide education andinformation, which breach gives rise to compensation. Before concluding a contract theFranchisor has an obligation to explain to the other party facts that would thwart the purpose ofthe contract and that are of substantial importance to the other party in the resolution of thenegotiations (see Rostock 1996, ff. m.w.N.). Such circumstances include particularly, withoutfurther justification, information regarding expected profits and financial feasibility.) Translationsby the author.22One of the more notable aspects of this paper is simply that there are nowsufficient cases easily available that it could be written. For both Chinese andforeigners alike the Chinese legal system is becoming more transparent.The review of the trademark cases suggests that Chinese courts will enforcetrademark rights when they are presented with the appropriate evidence. Itsuggests that notwithstanding China’s reputation for counterfeits and piracy,intellectual property rights can be protected if an extra effort is made on the partof the owner to secure and enforce them.The review of the franchise cases raises new questions for foreign franchisorsabout the validity of franchise agreements entered into before December 11,2004 that may cause considerable concern. It also raises questions about themethod of entry for a foreign franchisor under the New Franchise Measures. Itwould appear that the prudent way for a foreign franchisor to enter the Chinesemarket is to set-up a WFOE that is registered to conduct franchising activities. Inthis regard it will be necessary to monitor the development of further Chinese#p#分页标题#e#cases and regulations on the subject of foreign entry into franchising, includingthe Yong He case.It would be useful to have further commentary from Chinese qualified lawyers onthis topic. A recent news item quoting a Beijing lawyer suggests that theforthcoming Tiao Li will specify that foreign franchisors that require the paymentof funds outside of China will have to register with the government and evidencethe operation of two successful units in China.8686 Supra note 54, “特许经营企业必须到当地经贸管理部门办理备案登记，境外企业或跨境交付的特许企业必须到国家主管部门申请备案，并提交在境外有两个以上成功运营店铺的资料.”23Doing Business in ChinaInsights from an In-House PerspectiveABA Annual MeetingAugust 4, 2006Greg S. SlaterSenior Trade CounselIntel CorporationAdministrative LawTransparency Generally• WTO accession and market reforms have resulted in hundreds of newlaws and thousands of new regulations• China has no APA or federal register equivalent, which createssignificant problems for industry– Many central government ministries are honoring their WTO commitment topublish new laws, but there still are major gaps– Challenge is both obtaining drafts and having a reasonable comment period– Ministries / agencies are at different levels of understanding re theimportance of getting industry input up front• The Legislative Affairs Office (“LAO”) is working on beefing up itsadministrative law and standardizing public participation rights– LAO has reviewed many different legal systems, yet it can’t just copyWestern methods in dealing with the rights/interests of 1.3 billion people– Ensuring transparency with draft laws/regulations is a priority but will taketime due to China’s demographics and its different level of resources– China’s laws and even its regulations tend to be flexible (broadly worded),yet China eventually will also need a right to challenge outdated regulationsAdministrative LawPublic Participation Rights• Case Study: Several years ago, China’s Ministry of Information andIndustry (“MII”) issued the computer products return, repair andreplacement (“3R”) regulation– No opportunity for industry to be heard was given– The regulation offered a lower level of benefits to the consumer than Intel’sworldwide warranty program– But it still required a significant change in our program to accommodate 3Rspecific requirements in China– We also had to set up a customer service center in China– These additional costs of doing business could have been avoided#p#分页标题#e#– The failure of better “collaboration” between private industry & governmentto develop effective and efficient regulations leads to non-compliance• Overcoming obstacles: Consider telling clients to proactively educatethe ministries / agencies that impact their industry on their challenges– E.g., help relevant government officials understand how you or your clientdoes business, maybe even before a pending regulation– Goal is to avoid problems down the road (An EHS example follows)Environmental, Health & Safety• PRC quickly moving to adopt modern (and beyond) EHS standards dueto deteriorating environment from rapid industrial growth– A number of new EHS laws / regulations are ahead of the PRC government’stechnical knowledge, expertise & experience – For e.g.,• Environmental Impact Assessment Law• Proposed SAR limits for products emitting RF emissions• Proposed discharge standards for semiconductor industry– If enforced as initially drafted, they would create significant operationalobstacles for many companies (e.g., energy efficiency regulation)• Case Study: PRC’s “RoHS like” regulation– China has proposed to ban certain substances (e.g., lead, etc.) in electronicproducts sold in China– Proposal is built on Europe’s RoHS directive, but initially was more stringent– We inserted ourselves very early in the process and proactively advised MIIof technical issues concerning the bans and impact on all companies– This gave us the ability to persuade MII of the need for certain exemptionssimilar to those in the EU’s RoHS directive– Result: MII rule will be done in 2 yrs v. 10+ yrs for EU’s directive (weenjoyed more transparency with MII than with EU officials)– Our Strategy: Fill in compliance details with an international standardTechnology StandardsChina’s Strategy• Standards are critical in our industry as they open up markets,ensure compatibility & create new products• China understands this well and wants to be a world leader inboth technology and standard setting by 2020– It can’t effectively participate in international technology standards• Lacks intellectual property (IP)– PRC local standards starting to blossom / examples:• Audio-video coding & decoding (AVS)• 3G mobile telephony (TD-SCDMA)• Like other countries, PRC’s strategy is not monolithic– Some officials understand and follow WTO rules in their desire (andright) to promote local technologies– Others are more nationalistic• They want to undermine foreign IP triggered by standards due to high#p#分页标题#e#royalty rates in some cases (e.g., DVD machines)• And thus use standards to protect local technologies from competition– This can create serious problems for foreign productsTechnology StandardsAdapting to the System• Challenges as a foreign company– Gaining full membership rights in relevant Chinese standardsetting bodies– Persuading the standard body to adopt reasonable, fair andtransparent IP policies re:• Royalties (e.g., RAND v. capped at low rate or RF?)• IP disclosures (e.g., pending patent applications?)– Persuading the government to take a back seat and letmarket forces work to choose the best technology• “Voluntary” means not mandatory, but…• Heavy involvement by SAC, MII and others• Yet it can be done!– AVS is a good (not perfect) example of ability to balanceinterests of IP holders, implementers & other stakeholdersTradeWTO Status• China has made MAJOR changes as a result of WTO accessionand market reforms — A few examples:– Local content measures and export performance requirements arelargely gone– Many tariffs and quotas eliminated / reduced– IP laws revised to reflect majority of TRIPS obligations• Many PRC officials are still learning what WTO requires, whichcreates trade issues and also opportunities– E.g., MII’s notice to WTO TBT committee that IP embedded ininternational standards creates a trade barrier– China has made changes to laws and regulations that it erroneouslythought were compelled by WTO requirements• As with other countries, China is quickly learning how to playthe trade game– E.g., not having signed the Government Procurement Act, it candiscriminate against foreign product in its purchasesTradeOvercoming Obstacles• Case Study:– MII significantly reduced the 17% value added tax forsemiconductors “made in China” to promote local IC industry– Some PRC authorities knew it was a clear GATT violation(i.e., discriminatory tax), but others disagreed– USTR brought a WTO case, 1st one, against China– Case settled before panel assembled• With trade issues, it is important to– Present the whole case early (i.e., don’t piecemeal theproblem, but explain the technical, legal and policy points)– Show how, long term, it’s beneficial for China to follow WTO(other countries have had to learn the hard way too)– Not escalate prematurely, which can aggravate the situationdue to politics inherent in trade issues1DOING BUSINESSIN CHINALABOR AND EMPLOYMENT ISSUES#p#分页标题#e#ABA ANNUAL CONVENTIONAug. 4, 2006Professor Ron BrownUniv. of Hawaii Law School2Issues for U.S. investors• continuing application of U.S. laws− Foreign Corrupt Practices Act,− Whistleblower’s protection of the Sarbanes-Oxley Act,− Title VII.• application of Chinese labor and employmentlaws− labor contracts,− labor standards,− prohibitions on discrimination,− trade unions in collective bargaining,− mandatory arbitration in resolving workplace disputes.3Title VII and other civil rights laws• Apply extraterritorially to qualified U.S. employer− Punitive damages allowed− Attorney’s fee shifting for prevailing parties• Inapplicable to non-U.S. citizens− improper treatment of foreign citizens as “hostileworkplace environment”4Foreign Corrupt Practices Act• Guanxi (connection)− It is customary for many foreign investors to payChinese officials “inducement” or “incentive” toexpedite business projects.• Prohibition− The Foreign Corrupt Practices Act (FCPA) outlaws“bribery” of a foreign office to influence any officialact, induce any unlawful action, induce any action thatwould assist in obtaining or retaining business, orsecure any improper advantage.5Case illustration of FCPA• Diagnostic Products Corporation (DPC)− DPC Tianjin as wholly owned Chinese subsidiary• Prohibited payment− From 1991 to 2002, DPC Tianjin made around $1.6 million cashpayments to physicians employed in state-owned Chinesehospitals− for the purpose and effect of obtaining and retaining businesswith local Chinese hospitals• Consequences− In May 2005, DOJ filed one count of FCPA criminal charges− DPC Tianjin pleaded guilty and agreed to a stipulated fine of $2million.6Whistleblower’s protection underSarbanes-Oxley Act (SOX)• Carnero v. Boston Scientific Corp., 433 F. 3d 1(1st Cir. 2006)− Sarbanes-Oxley’s whistleblower protection does notapply extra-territorially.− Whistle-blowing protections are available only to U.S.citizens whose employment is in the U.S.• U.S. – based employees protected− U.S.-based employers (public companies or theirsubsidiaries)− with China-projects− having employees travel between the U.S. and China7International labor standards• Corporate Social Responsibility− Some companies self-impose and monitor− mandatory disclosure of working conditions and standards as#p#分页标题#e#listing condition on the Shenzhen Stock Exchange• SA8000− International certification− Contractually imposed on Chinese subcontractors• ILO Standards, Convention – enforcement issues8Hiring in China• Anti-discrimination prohibition in the ChineseLabor Law is not applicable until employee ishired.• Women Rights and Interests Law (revised) offerssome protection on gender discrimination in theworkplace and, recently, against sexualharassment.9Chinese employment contract• Employer’s duty to provide a written contract• Mandatory contractual terms• Other statutory benefits− minimum wage rates and hour standards, equal pay, workerscompensation, workplace safety, pensions• Employment handbook (employer disciplinary rules)• New Draft Labor Contract Law (probationary periodsshortened; severance compensation upon expiration offixed-term labor contract; unlawful dismissalcompensation doubled; outsourced “dispatch” workersfrom TP-employer regulated, etc.)10Terminating Chinese employee• Employee rights in labor contract include statutoryprotections• Termination triggered by labor contracts provisions• Termination as disciplinary sanction− Also permissible under employment handbook (e.g., MC rules)• Grievance procedure− Internal mediation participated by union rep.− Arbitration through govt. labor arbitration committee− Arbitration decision reviewed de novo by courts11Dealing with Chinese labor unions• All China Federation of Trade Unions (ACFTU)• Theoretically, employer has no right to block theformation of union branch, once employeesrequest to do so. (Wal-Mart update)• Many foreign-invested-employers have no unionpresence (under 20%).• Union branches are generally supportive ofemployers’ interests in promoting productivityand other labor discipline.12The role of Chinese labor unions• The role often varies by industry and region.• Union can negotiate collective contracts.• The union does have a legal role to play in thesupervision and administration of labor laws anddispute resolution procedures, particularly interminations.• Regular consultation is required in terminations,layoffs, and labor arbitration.13Protecting Against Unfair Competitionby Employees in China• Restrictive covenant is used either as part of employmentcontract or as a separate contract.• Chinese law on “covenant not to compete” seeks toplace limits on geographical distance, time, and liquidated#p#分页标题#e#damages; and requires separate payment to the employee.[New Draft Labor Contract Law –2 year maximum andrequired compensation is year’s compensation; ifemployee breaches, damages limited to 3 times abovecompensation paid.]• Dispute may be subject to labor arbitration, andarbitrators may apply Unfair Competition Law.14Case illustration: Microsoft v. Google• Kai-Fu Lee, head of Microsoft research lab in China• Google hired Lee in 2005 to lead its business inChina.• Microsoft filed a law suit in a Washington statecourt, alleging violation of Lee’s restrictive covenant.• Google filed a counter claim in a federal districtcourt.• The parties settled after Microsoft won a courtruling barring Lee working on certain Googleprojects.15Case illustration: the Chinese approach• Chen, employee of Yamato (Shanghai)− Chen’s restrictive covenant: “if Chen terminates thecontract for any reason, he shall not work in anyother places which makes a similar product or in thesame in industry for 5 years.”• Chen left Yamato and joined CIIC (Hong Kong).• Yamato sued Chen for violation of restrictivecovenant.• Yamato lost the case at both labor arbitration andthe court review, on the ground of unreasonablerestriction (5 years).16• For U.S. citizens working in China, a number ofHRM/labor-related laws may apply extraterritorially.• American FIE’s need to comply with China’sgrowing number of labor laws—it’s no longer cheapto avoid compliance and think of it as a “mere” costof doing business.• Depending on the nature of U.S. investment,Chinese union is an entity of possibly greatsignificance.• Consider using both U.S. contract provisions andChinese labor contracts to protect trade secrets.• Keep an eye on the New Draft Labor ContractLaw—it may well have big consequences for futureemployment practices in ChinaConclusionABA ANNUAL CONVENTION AUGUST 4, 2006PROFESSOR RON BROWNUNIV. OF HAWAII LAW SCHOOLDOING BUSINESS IN CHINA: LABOR AND EMPLOYMENT ISSUESIntroductionDoing business in China in the 70s and 80s hardly ever involved serious legal concernsover labor and employment issues. Times have changed. While businesses still rush into Chinafor markets and cheap labor costs, set up wholly-foreign-owned-enterprises (WFOE), JointVentures (JV), etc. and undertake mergers and acquisitions (M & A), they must now beconcerned with the increasing application of Chinese labor and employment laws, not to mentionthe continuing application of those U.S. labor laws applied extra-territorially.#p#分页标题#e#The laws are all in place and China is working through how best to administer andenforce those laws, while still encouraging economic investment and development. Its use oflabor contracts, labor standards, prohibitions on discrimination, the variant role of trade unions incollective bargaining, and the use of and arbitration in resolving workplace disputes have allcomplicated the ability of foreign employers to manage their workforces. Additionally,protecting the confidential and proprietary business interests of employers through covenants notto compete has also become of increasing importance to business and employment lawyers.Whose Laws?Global Labor Standards?Global labor standards continue to be given local application. For example, the WorldBank’s International Finance Corporation (IFC) which is the Bank’s private sector lending arm,in February 2006 adopted a new loan performance standard on labor rights and workingconditions. All companies that borrow from the IFC will be required to abide by the core labor1standards of the International Labor Organization (ILO). These standards among other thingsprohibit discriminatory practices, require recognition of freedom of association and the right tocollective bargaining. Additional obligations impose duties on basic conditions, including healthand safety standards, protection for contract workers, and a policy for reductions in employment.Some background on global developments and their application to China follow by wayof introducing some areas of China’s developing labor law. There are several themes that can beobserved globally in labor law development. The ongoing social compact between capital andlabor continues to be negotiated globally and nationally, with capital arguably increasing itsprominence in recent times. In the employment context, the employer has gained addedadvantage over labor, though to be sure there is some progress shown by labor.Perhaps because of this alignment, conflicts through work stoppages have decreased(though not necessarily workplace disputes per se), and “mechanisms of cooperation” have beenput into place at the same time as union membership declines. Due both to opportunity and lackof effective union resistance, employers have increased their use of contingent workers and offshoreworkforces. International competitive pressures, it is argued, have resulted in developedcountries, like developing countries, “racing to the bottom” to achieve the lowest costs, andoften, the cost is labor interests.Since WTO’s rebuff in recent years to include labor standards in its mandate, theInternational Labor Organization (ILO) has moved ahead into the area with its core laborstandards. Certainly there are now in place, increasingly sophisticated international labor#p#分页标题#e#standards, largely emanating from United Nation’s covenants and ILO Conventions.2Debate on the practical usefulness of these consensus standards centers on enforceabilityissues when a country doesn’t ratify them or does ratify them, but fails to meaningfullyimplement and enforce them.While the debate on enforceability of ILO standards continues, some countries such asthe U.S. have unilaterally imposed restrictions or granted benefits to U.S. companies who dealwith other countries who adhere to the core ILO labor standards (e.g., U.S. Trade Act, OverseasPrivate Investment Corporation Act). In recent years there has been increasing discussion,emanating from the International Confederation of Free Trade Unions (ICFTU), for theacceptance and use of a “labor clause” in trade agreements—the so-called “social clause.”(Stephen S. Golub, International Labor Standards and International Trade, IMF Working Paper97/37 (Washington, April 1997). As discussed subsequently, Shenzhen, China is beginning towork on guidelines in this area, to be implemented through use of the Shenzhen Stock Exchange.Of the 178 ILO member states, 150 have ratified 6 of the 8 core labor standards; and 116have ratified all 8 (including France, Germany, and the United Kingdom). China has ratified 3core standards and 23 other ILO Conventions and the U.S. has ratified 2 core standards and 14others. Of course, ratification or not, the key is to have meaningful domestic labor legislation,but there are some observations that can be made on most countries, including as to China..(See, Ronald C. Brown, China’s Collective Contract Provisions: Can Collective NegotiationsEmbody Collective Bargaining? 16 Duke J. of Comp. and Int’l Law 35 (2005); and Ronald C.Brown, China’s Employment Discrimination Laws During Economic Transition, 19.2 ColumbiaJ. of Asian Law 361 (2006).How China measures up to specific areas of the ILO core labor standards is discussedbelow.3Freedom of Association and Protection of the Right to Organize and Collectively BargainChina’s only trade union, the All China Federation of Trade Unions (ACFTU), accordingto top union official chairperson Wang Zhaoguo, a member of the Politburo, had 134 milliontrade union members in 2003, which represented about 60 percent of the employees (China:ACFTU boss urges unions to protect workers, Asian Labour News, December 22, 2003).New amendments to the Trade Union Law stipulate that “all enterprises” with 25 or moreemployees must, upon request of employees, establish a labor union and negotiate on matters ofimportance to employees.In China there is a right to associate and form and join a trade union or labororganization – but, not one of the employees’ choice; in all cases it must be affiliated with the#p#分页标题#e#AFCTU which “exercises leadership” over the subordinate levels. The ACFTU since thefounding of the People’s Republic of China (PRC) has had a close working relationship with theGovernment and the Chinese Communist Party (CCP). This relationship, in very recent years,shows some evidence to be undergoing some loosening in practice as to the role it plays in laborrelations and employee advocacy. However, while the role may “morph”, the law is clear, asstated in China’s reservation to the U.N. Covenant on Economic, Social, and Cultural Rights,Article 8.1(a) that limited the right of choice of unions to the laws of China (which do not permitit).According to the ICFTU, there are numbers of reports of China prohibiting attempts tocreate independent trade unions in violation of laws, with violators suffering penalties ofcriminal and/or administrative detainment (reeducation through labor), or sometimes evenpsychiatric detainment.4Provisions on collective negotiations were issued in May, 2004 by the Ministry of Laborand Social Security which purportedly seeks to implement the 1994 Labor Law’s call forcollective contracts. These provisions followed some prior experimentation of this process.Included is regulation of the process, content, government supervision, and a dispute resolutionmechanism.Examining whether this meets the ILO Convention on collective bargaining willbe an interesting undertaking. Already, in a June, 2004 publication, some have expressedskepticism and concluded “that it is primarily the continued integration of the trade union intomanagement at the workplace that prevents collective consultation from providing an adequateframework for the regulation of labor relations.” The ICFTU is likewise critical, saying earlierexperiments show the … “contracts were drawn up by the employers and simply reflect minimumlegal requirements or the continuation of past practice … there is very little collectivebargaining.” (China, PRC: Annual Survey of Violations of Trade Union Rights, available athttp://www.icftu.org).Whether this “Chinese characteristic” will evolve into a process that harmonizes withinternational labor standards, for some, will await inspection of experience under these new legalprovisions and the substantive content of resulting contracts. Related is the fact that labordisputes in China have been on the rise in recent times and this and other legislation seeks toprovide further avenues of legal redress.With fewer than 150,000 lawyers in China, it has been noted “only a few are sufficientlytrained to handle labor disputes, which may slow the “healthy” development of these processes.Strikes likewise occur in China and are not explicitly provided for in law; neither are they#p#分页标题#e#prohibited. Interestingly, the ACFTU, in the Trade Union Law, is called upon … “to assist the5enterprise or institution in making proper preparations for resuming work and restoring workorder as soon as possible.” Also, Article 47 of the new Work Safety Law, issued in 2003,authorizes workers to stop work and leave the workplace if their personal safety is directlyendangered.One could argue there seems to be an emerging legally implicit acceptance of the right tostrike; at the same time, there appears to be clear government disfavor against some of thestriking leaders for bringing “social disorder” or “interfering with production.”Another issue facing China, not only in the administration and enforcement of these laborlaw provisions, is also the need for uniform and consistent enforcement of the laws. China hasbeen somewhat hindered in this regard by the transition from socialism to a socialist marketeconomy, and thereby, from union-enforcement to government-enforcement of labor laws.As China and the U.S. continue with their labor laws relating to the two ILO core laborstandards covering the right to freedom of association and collective bargaining, the ILO notesthat in numerical terms, “… half of the world’s workers remain unprotected by the conventions’provisions. Alarmingly, large countries as Brazil, China, India, and the United States have stillnot ratified fundamental ILO conventions on freedom of association.” (Unfair Advantage:Workers Freedom of Association in the United States under International Human RightsStandards, Human Rights Watch (August, 2000).Discrimination and RemunerationIn China, the Constitution provides that “women enjoy equal rights with men in allspheres of “life.” The 1994 Labor Law likewise prohibits illegal discrimination, and othernational and local laws seek to address inequality of women and minorities. And yet, in practice,the Women’s Federation and others, will point out there is recurring social and employer6discrimination against women in employment opportunities. Likewise, though ethnic nationalminorities, numbering over 100 million people, are provided special “assisting legislativebenefits,” their opportunities are reported to be more limited than the majority Han; andmigrating workers, often minorities, frequently find they are either not protected under existinglabor laws or have no knowledge or access to these laws. (Ronald C. Brown, China’sEmployment Discrimination Laws During Economic Transition, 19 Columbia J. of Asian Law361 (2006).Wide disparities in wage levels and varying labor law protections are sometimesexplained by China’s political-legal system of creating national laws, but having the “local#p#分页标题#e#detailed implementing regulations” drafted by local governments. This creates lawful disparitiesin rights and benefits among men, women, and minorities, both nationally and regionally. Forexample, there is a national minimum wage law requirement, but it allows local standards,according to the local economic situation. These varying standards, while not in themselvesinherently discriminatory, do not easily create an identifiable standard for which fairness,consistency, and anti-discrimination can be measured.China is reportedly working with the ILO to move toward eventual ratification of the corelabor conventions on discrimination.U.S. Laws Applied Extra-Territorially?For U.S. citizens working in China there are a number of HRM/labor-related laws thatmay apply extraterritorially. For a qualified U.S. employer, many of America’s civil rights lawsapply in the foreign workplace. These include Title Seven of the Civil Rights Act, with itspunitive damages and provisions for attorney fees for prevailing parties. They are inapplicable to7non-U.S. citizens, though improper treatment of foreign citizens arguably can establish a “hostileworkplace environment” for the U.S. employees under Title Seven.American law also can arise where an “inducement” or “incentive” is paid to a Chineseofficial in a business project to bring the transaction into fruition. U.S. law prohibits suchtransactions by U.S. businesses or individuals, and imposes civil and criminal liabilities. TheForeign Corrupt Practices Act (FCPA) outlaws “bribery” of a foreign office to influence anyofficial act, induce any unlawful action, induce any action that would assist in obtaining orretaining business, or secure any improper advantage.Prosecution of such a case is illustrated in the Diagnostic Products Corporation casedecided in 2002.Diagnostic Products Corporation (DPC) is a Los Angeles-based top U.S.producer and seller of diagnostic medical equipment. DPC Tianjin is itswholly owned Chinese subsidiary.From late 1991 through December 2002, for the purpose and effect ofobtaining and retaining business with local Chinese hospitals, DPC Tianjinmade cash payments to laboratory personnel and physicians employed incertain state-owned Chinese hospitals in exchange for agreements that thehospitals would obtain DPC Tianjin’s products and services. This practice,authorized by DPC Tianjin’s general manager, involved personnel whowere employed by hospitals owned by the legal authorities in the People’sRepublic of China and, thus, “foreign officials” as defined by the FCPA.In most cases, the bribes were paid in cash and hand-delivered by DPCTianjin salespeople to the person who controlled purchasing decisions for#p#分页标题#e#the particular hospital department. The bribery totaled approximately $1.6million.On May 20, 2005, DOJ filed one count of FCPA criminal charges in theUnited States District Court for the Central District of California. On June20, 2005, DPC Tianjin pleaded guilty and agreed to a stipulated fine of $2million.What if an employee wants to “blow the whistle” under the Sarbanes-Oxley Law (SOX)for perceived fraud? Is the “employer”, its “subsidiary”, or its “subcontractor” subject to the law?Is the “employee” protected under the “whistle-blower” provision? Though a long discussion can8entail, the current case law appears to find SOX does not apply extra-territorially and whistleblowingprotections are available only to U.S. citizens whose employment is in the U.S. (Carnerov. Boston Scientific Corp 433 F. 3d 1 (1st Cir. 2006). However, one can easily imagine situationsof U.S.-based employers with China-projects having employees travel between the U.S. andChina and falling under the coverage of this law. (See DOL interpretation in Ede v. SwatchGroup, 2004-SOX-68 (ALJ Jan, 14, 2005) (employees who worked only in Switzerland, HongKong, Singapore and Beijing not covered).Another labor-related legal issue on the horizon in China comes from new “guidelines”on corporate social responsibility. For example, it has been reported that Shenzhen is working onimproving labor standards and conditions by requiring disclosure of working conditions andstandards, utilizing listing on the Shenzhen Stock Exchange as the triggering factor. (FirstFinancial Daily June 9, 2006).The point of mentioning these extra-territorial applications of U.S. laws in China, is toremind Human Resource Managers and their legal advisors that training, orientation, andcompliance must be geared toward not only Chinese labor laws, but also toward U.S. lawsrelating to labor and management. Additionally, there may be “codes of conduct” (of variouslegal efficacy), and contractual requirements of labor standards imposed on Chinese subcontractors,such as under SA 8000 requirements.Hiring, Conditions, and TerminationOnce on the ground in China, personnel must be hired, a perhaps daunting task for theuninitiated. Assuming however that Chinese citizens are recruited, are there limitations on yourchoices? For example, may an employer select on the bases of gender, age, appearance, absenceof disabilities and ethnicity? Well, yes; because most of the anti-discrimination prohibitions in9the Labor Law, which protect against unlawful discrimination on gender, ethnicity, and religiousbelief first require an employment relationship, usually evidenced by a labor contract. Applicantsare not yet employees and have few enforceable rights. Gender discrimination and sexual#p#分页标题#e#harassment are also covered by the Women Rights and Interests Law whose protections can betaken directly to court, though there is some domestic discussion (and few court cases) whetherthere first must be a “labor dispute” arising from an employment relationship.Once hired, employees (as opposed to independent contractors and possibly, “dispatchedworkers” from a third-party employer) are entitled to the protections under the labor contractprovisions of the Labor Law, which must be provided by their employer, under penalty of law.These include mandatory contractual terms and also incorporate by reference other statutorylabor rights and benefits, which include minimum wage rates and hour standards, equal pay,workers compensation, workplace safety, unemployment, pensions, etc.Discipline and termination are controlled by the labor contract and related statutoryregulations. Discipline is established by the employer under an employer’s work rules put inplace at the workplace, with their only apparent limitation being violation of laws or publicpolicy. Termination and work-related grievances are raised by workers and the union under laborarbitration commissions, part of the government’s labor bureau. The law prescribes internalmediation within the employer’s workplace, followed by labor arbitration, which resolves the“labor dispute”. Arbitrators are empowered to render decisions and awards utilizing contractuallanguage and statutory obligations. One of the most common awards is an order for back wagesnot yet paid by the employer.In a typical labor arbitration case, Huang worked as a janitor at local hospital inGuangdong. Huang had a written labor contract from June 1, 2003 to May 30, 2004. On Apr. 29,102004, Huang told her supervisor that she would not renew her contract because of her medicalconditions. Huang stopped working on May 20, 2004. Huang came back to the hospital on May25, 2004 to get her last paycheck. In June, Huang sued the employer in arbitration committee,seeking severance payment. The arbitrator ruled for Huang, ordered hospital to pay RMB 3000andterminated the contract. The arbitrator reasoned that Huang’s stopping working on May 20 wasnot terminable under the Labor Law, art. 25, since the employment handbook had nomention of such disciplinary sanction. Instead, art. 24 applies, and since Huang was terminatedbefore the end of her term. Severance pay was mandatory. The parties did not appeal. (A laborcontract case, China Labor, April, 2005).An appeal may be made to the courts, which reviews the case de novo. This is a cleardisincentive to the employee grieving and in contrast to the role of the Chinese courts on appealsof commercial arbitration, which are not de novo.Foreigners in China also use the labor arbitration process as illustrated in the#p#分页标题#e#following two cases. Scott, a Canadian citizen, had been working in Shanghai since1989. He worked as a senior executive for a Shanghai retail store from 1989 to 2003.The retail store hired Scott, via a American headhunting firm. Therefore, Scott hadonly one employment contract with the American firm, not the retail employer he wasassigned to and working for. The retail store had sponsored Scott in his Chinese visaand work permit. In 2005, Scott petitioned for labor arbitration, seeking to establish alabor contract with an indefinite term with the retail employer. The employer argued11that Scott was a dispatched worker (a temporary worker of another employer). Thearbitrator ruled for the employer. Scott appealed to court. Later the parties settled.In a second case, Kato, a Japanese citizen was hired by a FIE Design Corp. inShanghai and he worked there from November, 2004 to January, 2005. Before Katostarted to work, he and the employer signed a memo agreement to set his annualsalary at $24,000, which is paid every 15 days. Kato quit the job in January, 2005.The employer still owed him over $3000 in unpaid wages. Kato petitioned for laborarbitration. The arbitrator dismissed the case, on the ground that Kato was workingwithout proper permit. Kato appealed to court. The court accepted the case as a laborK dispute. The parties thereafter settled. (Foreign employee in laborarbitration,Shandong Labor, August, 2005).Union?Another challenge facing employers doing business in China is what role, if any, is to beplayed by the Chinese trade union, the All China Federation of Trade Unions (ACFTU). Whilethe Trade Union Law requires, upon request, a labor union in employers of a certain size,observation shows that many employers, including foreign-invested-employers (FIEs), have nounion – not to mention the case of Wal-Mart (who is said to still be awaiting a request for aunion by its employees!)Recent years experience shows that unions, under the new “market economy” havepulled back from trying to manage companies, and have been quite supportive of employers’12interests in promoting productivity and other labor discipline. This works in tandem withnational goals of economic development. However, the particular type of “cooperation” thattakes place varies in every workplace; and, though the law provides for collective contractsnegotiated by the union, many such agreements traditionally have merely reflected statutoryrequirements, rather than “above-and-beyond” contractual rights and benefits.Union leadership is undertaking continuing discussions about the appropriate role ofunions, including a possibly heightened role as employee advocate; currently its role often variesby industry and region. The union does have a legal role to play in the supervision and#p#分页标题#e#administration of labor laws and dispute resolution procedures. Regular consultation is required,for example in terminations, layoffs, labor arbitration, etc. Depending on the nature of U.S.investment in China, the ACFTU is an entity of possibly great significance to FIEs, and HRMand their legal representatives must address how best to deal with unions in China.The following case is an illustration of how the ACFTU describes the role of the union.Xinfa (Beijing) is the wholly owned subsidiary of a French ConcreteCompany. It has over 500 employees. The workers in Xinfa established aunion since 1995. It is a “model grassroots union” accredited by theACFTU. The union has a special committee to represent workers intermination/dispute issues. In the late 90’s, the union successfullyrepresented a worker to fight against Xinfa’s termination decision. Theworker was caught playing poker in the shower room. The supervisor(Brazilian) was going to fire the worker. The union stood up, pointing outthat playing poker was not “serious misconduct” under the existingemployment manual. Finally, the union had a meeting with Xinfa’sPresident Davis (American). Davis gave in and took back the terminationdecision (Model Union in FIE, China Union, Feb. 2002).Employment-Related IssuesEmployers usually have great interest in preserving confidential and proprietaryinformation, including trade secrets, intellectual property, and other competitively useful data.13Therefore, employers wish to limit and restrain the ability of its employees holding suchinformation from disseminating it, using it or otherwise appropriating it.The usual means of regulating misuse of this protected information in China is bycontract or statute. China has laws on unfair competition, intellectual property, and contracts; andin June 2006 the State Council gave its approval to a new anti-monopoly law, moving it forwardtoward final enactment.The employment-related issue can arise from a restrictive covenant located in a laborcontract or as existing as a separate contract. Issues arising under the former are labeled a “labordispute”, subject to labor arbitration; whereas the latter arises under contract law and goes to thecourt. (Labor Contract Law (draft), art. 16, provides the restrictive covenant can be integratedinto the labor contract). Interestingly, on the labor arbitration case, the arbitrator may also applythe unfair competition law in reaching a decision (Unfair Competition Law art. 20 (1993), Memoregarding commercial secrets, MOLSS (1999). “Dispatched workers” also have legal obligationsin this area, under additional laws (Enterprise Patent Regulation Art. 12 (2000).Restrictive covenants are governed under the labor contract provisions of the Labor Law#p#分页标题#e#(a new draft Labor Contract Law seeks to place limits on geographical distance, time, andliquidated damages; and, require separate payment to the employee for the provision (LaborContract Law (draft) art. 16 (2006).Illustrations of actions to enforce restrictive covenant provisions, both in the U.S. and in Chinaare shown below.Kai-Fu Lee was the head of the Microsoft research lab in China. Lee wasborn in Taiwan and reared in Tennessee. Lee was hired by Google in July2005 to lead its business in China and was given a compensation packageof nearly $10 million. Microsoft filed a suit in a Washington state court,14alleging Lee violated his restrictive covenant within his employmentcontract at Microsoft by joining a competing company within one year ofhis departure. Google filed a counter-suit in a federal court in San Jose,California, attempting to release Lee from the terms of the non-competeagreement he signed with Microsoft.Late in 2005, Microsoft won a court ruling barring Lee from working onprojects at Google.In Dec. 2005, Google and Microsoft settled the case (12/24/05 ChinaDaily).In another case, arising in China, the Chinese court denied enforcement of the covenantas it was found to be an unreasonable restriction on the employee.In that case, Chen started to work for Yamato (Shanghai) in 1997. Yamato (Shanghai) is thewholly owned subsidiary of Yamato Co. (Japan). In 1998, Chen was promoted and renewed hislabor contract. In the labor contract, Yamato (Shanghai) added a restrictive covenant; “if Chenterminates the contract for any reason, he shall not work in any other places which makes asimilar product or in the same in industry for 5 years.In 2000, Chen left Yamato (Shanghai) after giving proper notice. Three months later,Chen joined CIIC (Hong Kong) as sales manager in Shanghai. CIIC (Hong Kong) is an importerof a certain electronic product, which is also manufactured by Yamato (Shanghai).When Yamato (Shanghai) learned about Chen’s new job, it requested Chen to honor therestrictive covenant. Chen refused. In July 2000, Yamato (Shanghai) brought a labor arbitrationcase against Chen.The arbitration committee rejected the case. Yamato (Shanghai) appealed to the court.The court ruled in favor of Chen, on the ground that the covenant was unreasonable (Onrestrictive covenant, China Labor, Oct. 2005; labor arbitration is appropriate where the labor15relationship existed and the dispute arising out of the labor relationship. SPC 2001interpretation.).Issues have also recently arisen regarding possible violations from Chinese workers or“interns” having contact with “protected employer information” when coming to the U.S. to trainor observe. What legal devices may best work to protect employer interests while the Chinese are#p#分页标题#e#in the U.S. raises interesting legal challenges. Perhaps both U.S. contract provisions and Chineselabor contracts, properly drafted, can together provide some legal protections, notwithstandingthe violations occur on U.S. soil.ConclusionThe significance of labor and employment law affecting companies doing business inChina is no longer in issue. There are law firms now specializing in just these issues. Thesignificant point to remember is to become aware of the agenda items dealing with labor andemployment issues and deal with them as you would other legal issues, such as tax, corporate, orbankruptcy law.For more detailed discussion by the author of some of the above Chinese labor law issues, see:China’s Collective Contract Provisions: Can Collective Negotiations Embody CollectiveBargaining? 16 Duke Journal of Comparative and International Law 35 (2005).China’s Employment Discrimination Laws During Economic Transition, 19.2 Columbia J. ofAsian Law 361 (2006).U.S.-China Labor Mediation and Arbitration Compared __, American L. Rev. __ (2006).1635CHINA’S COLLECTIVE CONTRACTPROVISIONS: CAN COLLECTIVENEGOTIATIONS EMBODY COLLECTIVEBARGAINING?RONALD C. BROWN*INTRODUCTIONSome people see things as they are and say, why? I dream of thingsthat never were and say, why not?George Bernard ShawThis article examines whether China’s new “collective negotiations”law, in the context of Chinese conditions, can blossom into“collective bargaining,” as referenced by International Labor Organization(ILO) standards and compared with U.S. approaches. Admittedly,it is hard for many to imagine that multinational corporationssuch as Wal-Mart, Samsung, Dell, along with increasing numbers ofChinese domestic companies, could be negotiating labor terms andbenefits above statutory minimums. It is harder, perhaps, to convincethe Chinese that in doing so, China can still maintain its areas ofcomparative advantage. However, recent developments in China’slabor legislation suggest that, beyond sheer imagination, Chinese laborersnow seem more enabled than ever to negotiate or bargaintheir working standards.On May 1, 2004, Provisions on Collective Contract (Provisions)1issued by the Ministry of Labor and Social Security (MOLSS) becameeffective on a national level. These Provisions build upon China’s experiencesince the mid-1980s with individual labor contracts and withthe 1994 Labor Law’s mandate to create a system of collective con-Copyright © 2006 by Ronald C. Brown* Professor of Law, University of Hawaii Law School; Director, Center for Chinese Studies,University of Hawaii; 2004-2005 Fulbright Distinguished Lecturer, Peking University Law#p#分页标题#e#School and Tsinghua University Law School.1. JITI HETONG GUIDING [hereinafter PROVISIONS] art. 1 (Jan. 20, 2004),http://www.chinacourt.org/flwk/show1.php?file_id=91497 (last visited Nov. 1, 2005). The 2004Provisions repeal the Jiti Hetong Guiding (Provisions on Collective Contract) issued by thenMinistry of Labor on December 5, 1994. See PROVISIONS art. 57.36 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35tracts.2 The 2004 Provisions provide that a collective contract can benegotiated on behalf of the employees to protect their employmentand workplace interests. Prior to 2004, several hundred thousand collectivecontracts, which covered seventy-six million workers, were alreadyin existence under earlier regulations.3 As will be discussed,many of these collective contracts could be described as bare-bonedreflections of labor statutory minimums. In contrast, the 2004 Provisionsprovide more detail and apparently seek to eliminate some ofthe obstacles observed under the earlier negotiated agreements andto achieve more comprehensive contracts.The 2004 Provisions authorize employees to initiate the processthrough more authentic representatives to prepare proposals on awide scope of subjects clearly beyond the usual statutory labor standardsand protections. The process of negotiations is delineated, with“good faith” requirements built in to facilitate cooperative exchangesof proposals. The government’s Labor Bureaus are given regulatoryresponsibility to supe rvise and intervene in the negotiations to ensurefair dealing. They also are authorized to resolve disputes arising priorto final agreement.Lastly, there is a process of formality in “finalizing” the collectivecontract. The enforcement of the rights arising under this concludedcontract are the same as those arising under the law regulating laborcontracts, both of which utilize dispute resolution procedures withinthe enterprise, government-administered labor arbitration and thecourts.This article examines the 2004 Provisions on collective negotiations,sets forth some of the issues of the current Provisions, anddraws comparative references to collective bargaining approaches inthe United States and under the ILO’s labor standards; discusses theirlikely viability in China; and proposes a number of labor reform “pos-2. ZHONGHUA REMIN GONGHEGUO LAODONG FA [hereinafter LABOR LAW] arts. 33-35(July 5, 1994), http://www.chinacourt.org/flwk/show1.php?file_id=20195.3. Reported figure from the Laodong Baozhang Bu [Ministry of Labor and Social Security(MOLSS)], cited in Simon Clarke, Chang -Hee Lee and Qi Li, Collective Consultation andIndustrial Relations in China, British Journal of Industrial Relations, June 2004, at 239-40 [hereinafter#p#分页标题#e#Clarke]. The All China Federation of Trade Unions (ACFTU) claimed 510,000 enterpriseshad concluded such agreements, with 318,000 of these agreements within Foreign InvestedEnterprises (FIEs), Privately Owned Enterprises (POEs), and Town and VillageEnterprises (TVEs). See Quanguo jianli pingdeng xieshang he jiti hetong zhidu qiye yu wushiy iwanhu [Collective Contract Protect Worker’s Rights: over 510,000 enterprises have establishedcollective contract system], RENMIN RIBAO [PEOPLE’S DAILY], Nov. 20, 2001, at 1, available athttp://www.people.com.cn/GB/paper464/4750/519609.html (last visited Nov. 1, 2005) [hereina fterCollective Contract Protect Worker’s Rights].2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 37sibilities,” when viewed in the context of China’s existing and evolvinglabor law environment.I. CHINA’S 2004 COLLECTIVE CONTRACT PROVISIONSA. Legal OriginsThe new collective negotiation Provisions grew from a rathershort legal history. There was interest by China’s trade union, the AllChina Federation of Trade Unions (ACFTU), in the early 1990s andit began to experiment with collective negotiations.4 The 1992 TradeUnion Law in fact first authorized unions at the enterprise level toconclude collective contracts with the employer.5 The 1994 LaborLaw further formalized the process and provided that the ACFTUwas responsible to utilize this system nationally.6 The Trade UnionLaw as amended in 2001 continued to strengthen the union’s mandatein collective wage negotiations.7 Toward the end of 2001, theACFTU reported it had over 510,000 such collective agreements atthe enterprise level covering over 75 million workers.8Other legal documents contributing to the legal origins of collectivenegotiations were issued by the MOLSS in 2000 and 2001. Thefirst, the 2000 Interim Measures of Collective Wage Consultation,9rather comprehensively provides for annual wage negotiations betweenthe employer and union. It includes requirements of “goodfaith” negotiation and “fair representation.”10 This emphasis on“wage” negotiations would seem to reflect the government’s movingtoward market-based determinations by the parties at local levels, yetstill under a nationally -structured regulatory process.4. TAYLOR ET AL., INDUSTRIAL RELATIONS IN CHINA 8 (2004)[hereinafterTAYLOR]5. ZHONGHUA REMIN GONGHEGUO GONGHUI FA [hereinafterTRADE UNION LAW] art.18 (1992) (current version at ZHONGHUA REMIN GONGHEGUO GONGHUI FA [TRADE UNIONLAW] art. 20 (amended 2001)), available athttp://www.chinacourt.org/flwk/show1.php?file_id=38454 (last visited Nov. 1, 2005). Hereina fter,all articles are from a 2001 version.6. LABOR LAW art. 33.7. TRADE UNION LAW art. 10.#p#分页标题#e#8. Collective Contract Protect Worker’s Rights, PEOPLE’S DAILY, supra note 3.9. See GONGZI JITIXIESHANG SHIXING BANFA [INTERIM MEASURES OF COLLECTIVEWAGE CONSULTATION], MOLSS (2000),http://www.chinacourt.org/flwk/show1.php?file_id=36176 (last visited Nov. 1, 2005).10. See id. art. 15. Article 15 mandates that a party shall not harass, threaten, exaggerate,bribe, deceive, or defraud the other party. This section is comparable to the good faith bargainingrequirement in Nat’l Labor Relations Bd. v. Mackay Radio & Telegraph Co., 304 U.S. 333,333 (1938).38 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35A second legal edict was issued on November 14, 2001 by severalinterested government organizations—MOLSS, ACFTU, State Economicand Trade Commission (SETC), and China Enterprise ManagementAssociation, entitled, Joint Circular on Promoting CollectiveConsultation and Collective Contract.11 It reiterated the duty of employersto engage in collective negotiations and it called upon governments,unions, workers’ congresses, and party members to participatein tri-party consultation to accomplish objectives. The likelysignificance of this Joint Circular, promulgated in the month followingthe newly amended Trade Union Law of 2001, is the politicalstatement to the ACFTU, leading the collective negotiations, that theunion must be mindful that there are other important interests andstakeholders in this process and the implementation of the colle ctiveagreement.B. 2004 Provisions on Collective ContractThe 57 new Provisions are divided into eight chapters:One: General Rules (Arts. 1-7)Two: Content of Collective Negotiation (Arts. 8-18)Three: Collective Negotiation Representative (Arts. 19-31)Four:Collective Negotiation Procedures (Arts. 32-35)Five: Conclusion, Alteration, Recession and Termination ofCollective Contract (Arts. 36-41)Six: Review and Examination of Collective Contracts (Arts. 42-48)Seven: Resolution of Disputes on Collective Negotiation (Arts.49-54)Eight: Supplementary Articles (Arts. 55-57)1. Coverage and Purposes. The Provisions are enacted in accordancewith the Labor Law and the Trade Union Law.12 Article 56of the Provisions emphasizes the union’s authority by subjecting the“employing unit” (employers) to the Trade Union Law and other relatedlaws and regulations if employer refuses to engage in collectivenegotiation requirements.13 The purposes of the Provisions are11. GUANYU JINGYIBU TUIXING PINGDENG XIESHANG HE JITI HETONG ZHIDU DETONGZHI [JOINT CIRCULAR ON PROMOTING COLLECTIVE CONSULTATION AND COLLECTIVECONTRACT], MOLSS (Nov.14, 2001), http://www.chinacourt.org/flwk/show1.php?file id=38562(last visited Nov. 1, 2005).#p#分页标题#e#12. PROVISIONS art. 1.13. See id. art. 56.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 39“regulating the behavior of collective negotiation,” the “signing of thecollective contract,” and the “protecting legal rights and interests oflaborers and employing units.”14 All “enterprises and public institutionsthat practice commercialized management within the P.R.C” arecovered by the Provisions.15 This broad coverage parallels the coverageof employers and employees under China’s individual labor contractsystem.162. Negotiating Representatives. There shall be legal negotiatingrepresentatives of equal numbers (at least three) on each side andeach with one chief representative.17 The representative in the “employeeparty” shall be selected by the trade union of the unit (or, ifnone, then by democratic recommendations, agreed upon by one-halfof the staff in that unit).18 The chief representative is the chair of thetrade union unless an alternative is selected by the chair by writtendelegation (or if a union does not exist, the chief representative shallbe elected from the negotiating representatives through democraticmeans).19Perhaps a significant change from past practice, Article 24 of the2004 Provisions stipulates, “negotiation representatives of the employingunit and those of the staff shall not act as each other’s representatives.”20 This would appear to foreclose an employer designa tinga trade union official as a negotiating representative of anemployer, even where that official is a managerial employee of theemployer, a scenario all too familiar under earlier practices. The employerotherwise selects its own negotiating representatives.21An interesting provision, Article 23, permits both sides to select“professional personnel” (Zhuanye Renyuan) to act as the negotiationrepresentative.22 Limitations exist, as their number may not ex-14. Id. art. 1.15. Id. art. 2.16. LABOR LAW arts. 2, 16-32.17. PROVISIONS art. 19.18. Id. art. 20. The original text says that the representative shall be appointed by the existingunion of the unit. It does not appear that the appointed representative has to pa ss the simplemajority vote. The employer has a duty to recognize the existence of such a bargaining unitby making an affirmative response to any negotiation request. Id. art. 32. See also TRADEUNION LAW art. 10.19. PROVISIONS art. 20.20. See id. art. 24.21. Id. art. 21.22. Id. art. 23.40 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35ceed one-third of one side’s representatives, and no person outsideone’s own unit can act as chief representative.23#p#分页标题#e#Certain traditional responsibilities and functions, such as partic ipation,sharing information, etc., are fixed upon the negotiating representatives.24 Additionally, they are called upon to “safeguard thenormal order of work and production and shall not adopt any actionof threatening, buying popular support and deception.”25Employee representatives’ terms of service are determined bythe represented party26 and their employment tenure is protected duringthat term against employer’s retaliation of terminating the representative’slabor contract.27 If the labor contract were to expire duringthe representative’s tenure, Article 28 automatically extends thecontract up to the completion of his representative obligation.28 Exceptionsexist where the representative seriously violates employerrules, other employment-related duties, or has been investigated forcriminal violations.3. Scope of Negotiable Subjects. References to the delineatedsubjects for negotiation are in Article 33 of the Labor Law, and Articles3 and 8-18 of the 2004 Provisions. Article 3 of the Provisions describesthe content of the collective contract as follows:[W]ritten agreement signed through collective negotiation . . . concerninglabor remuneration, working time, rest and holiday, labor,security and sanitation, professional training, and insurance andwelfare in accordance with the stipulation of laws, regulations andrules; the special collective contract as set forth refers to the specialwritten agreement signed between the employing unit and employeesof that unit, in accordance with laws, regulations and rules, concerningthe content of collective negotiation.29Article 8 includes the scope of negotiable subjects that can be coveredin the collective contract listing some 15 categories relating to employment.30 Articles 9-18 then list examples under each category.3123. Id.24. Id. art. 25.25. PROVISIONS art. 26.26. Id. art. 22.27. Id. art. 28.28. Id.29. Id. art. 3 (emphasis added). A “special agreement” usually refers to a wage agreementor other agreement on a specific topic. Article 4 again distinguishes between signing the “collectivecontract or special contract,” and Article 6 states both are legally binding on the employerand employees. Id. arts. 4, 6.30. PROVISIONS art. 8.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 414. Labor Bureau Supervision of Collective Negotiations. GeneralProvisions in Chapter One provide the principles and supervisionfor the conduct of negotiations. Article 4 says negotiation shallmainly adopt the form of consultation “conference.”32 The negotiationconduct shall observe the following principles: act legally, respectfully,#p#分页标题#e#honestly, fairly, consult, cooperate and collaborate equallyand in consideration of legal rights, and finally, “no drastic behavior isallowed.”33Responsibility for supervising the collective negotiation process,and the “signing, reviewing and performing” of the signed collectivecontracts or special collective contracts shall be with the Labor Bureausabove county level.34 For any unresolved disputes that occurduring the collective negotiations, but prior to the signing, either orboth parties may submit a written application to the Labor Bureaurequesting resolution.35 The Labor Bureau may also initiate resolutionprocedures on its own, as necessary. The procedures in mostcases should be ended within thirty days of acceptance of the case bythe Labor Bureau.36 The Labor Bureau at the conclusion of its processformulates an Agreement on Dispute Resolution.37 Thereafter,the Labor Bureau and the parties must agree and sign to be bound bythe Agreement before it is effective.38 Some items in the Agreementwhere there was no unanimous resolution shall be carried on withcontinuous consultation.Separate dispute resolution provisions protect the rights of individualemployees, who are also negotiating representatives, againstimproper termination39 and modification of their normal workstatus.40 Such disputes are to be resolved by the local labor arbitrationcommission.41 The same forum is used to resolve any rights dis-31. Id. arts. 9-18.32. Id. art. 4.33. Id. art. 5.34. Id. art. 7; see also id. arts. 42-48.35. PROVISIONS art. 49.36. Id. art. 52.37. Id. art. 53.38. Id. art. 54. Thus, the Dispute Resolution Agreement appears to remain entirely voluntary.39. Id. art. 28.40. Id. art. 27.41. PROVISIONS art. 29.42 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35putes which arise out of the performance of the concluded collectivecontract.425. Collective Negotiation Procedures. Within the General Rulesof convening a conference, wherein the meetings take place followingprescribed rules of conduct conducive to negotiation, certain otherprocedures are provided in the Provisions. To initiate the process,Article 32 states a party of collective negotiation may make writtenrequest of the other party; and a written response must be givenwithin twenty days; and this request to negotiate may not be refusedwithout proper reason.43 The “preparation phrase” then calls uponparties to familiarize themselves with the laws and regulations concerningcollective negotiations, collective recommendations from theemployer and employees and identify topics for discussion during negotiation.44 After a location, time, recorder are chosen, the parties#p#分页标题#e#are prepared to begin.45The collective negotiation begins with each chief representative,in turn, addressing the agenda and procedures of the meeting.Thereafter, each will put forward concrete proposals and the otherside will respond and discussion ensues regarding the proposals.46During the negotiations, the chief representatives shall make summariesof the recommendations. Those unanimously agreed upon shallbe formed into the collective contract or special collective contractand signed by the chief representatives of both parties.47 In case thereis no agreement on issues, the negotiation may be suspended, and theparties shall negotia te the next meeting place and content.48To conclude the collective contract, the agreed upon draft is presentedto the employees for discussion. Thereafter, a two-thirds quorummust be present, and the draft must be approved by a majority ofthe workers’ congress representatives or a majority of the total employees(if a workers’ congress has not been established).49 Thereafter,the chief representatives of each side sign the contract, which isusually of one to three years in duration and can be extended by re-42. Id. art. 55.43. See id. art. 32.44. Id. art. 33.45. Id.46. Id. art. 34.47. PROVISIONS art. 34(4).48. Id. art. 35.49. Id. art. 36.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 43quest and agreement of the parties.50 The contract, though binding onthe parties, may be modified by the parties, or altered or terminatedby certain conditions causing an inability to perform, such as bankruptcy,force majeure, or conditions in the agreement.51The final step is to submit (register) the concluded collective contractto the Labor Bureau for review and examination.52 It is examinedto ensure compliance with legal requirements.53 If there is an“objection” by the Labor Bureau, the partie s will be notified and thecontract will be referred back to the parties who can renegotiate orre-sign, absent those portions.54 There seems to be a practice of littleor no referral back to the pa rties.55 In the case of no objection by theLabor Bureau, the contract is effective within 15 days of receipt of thedocument.56 The law requires the contract to be promulgated “by thenegotiation representative” to all employees on the day it becomeseffective.576. Duties of Proper Conduct for Collective Negotiations. Theregulatory framework of collective negotiations is set up to be monitoredby a government agency, viz., the Labor Bureau and its specialdivision with responsibility to supervise and to resolve disputes.58 Thenumbers of negotiating obligations, some mentioned earlier, for cla ritycan be organized under the following three categories.#p#分页标题#e#a. Fair and Consultative Representation. The negotiating representativesmust “participate” in the negotiations59 after having consultedwith employees regarding negotiating topics60 and must acceptinquires from their constituency, publicize the status of negotiations,collect opinion,61 and provide information concerning collective negotiations.6250. Id. arts. 37-38.51. Id. arts. 39-41.52. Id. art. 42.53. PROVISIONS art. 44.54. Id. art. 46.55. Clarke , supra note 2, at 246.56. PROVISIONS art. 47.57. Id. art. 48.58. Id. art. 7.59. Id. art. 25(1).60. Id. art. 33(2).61. Id. art. 25(2).62. PROVISIONS art. 25(3).44 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35b. Negotiating Duty. Objective measures of negotiating includethe following. The negotiating representative must be legally authorized63to conduct negotiations on behalf of the represented party’s interests,must “not refuse” to respond to requests to engage in collectivenegotiations,64 and must “participate.”65 The negotiatingrepresentative must provide “information” concerning collective negotiations66and determine the time and place for negotiations.67 Theemployer is prohibited from refusing the collective negotiations requirementswithout “proper reason,” 68 and a violation of said provisionis expressly subject to the Trade Union Law, which confirms inArticle 53(4) that “[R]ejecting consultation on an equal footing withoutjustifiable reasons” is a violation.69 Subjective measures of theconduct of negotiating duty include “honesty,” “keeping promises,”“fair collaboration,” and “consideration of legal rights and interestsfor cooperation.”70The Provisions are based on and incorporate the Labor Law andthe Trade Union Law that also set forth standards on negotiatingconduct as well as duties of fair treatment of employees.71 Furthermore,Article 25(6) of the Provisions obligates the negotiating representativesto those other obligations stipulated by laws, regulationsand rules.72c. Fair Treatment of Employees. While the 2004 Provisions donot directly regulate fair treatment of employees, said Provisions incorporatethe Trade Union Law on the subject, including employees’right to organize and join the union. Article 3 of the 2001 Trade UnionLaw provides in pe rtinent part the following basic guarantee:[Employees] who rely on wages . . . regardless of their nationality,race, sex, occupation, religious beliefs or educational background,63. Id. art. 19.64. Id. art. 32.65. Id. art. 25(1).66. Id. art. 25(3).67. Id. art. 33(4).#p#分页标题#e#68. PROVISIONS art. 56.69. TRADE UNION LAW art. 53(4).70. PROVISIONSart. 5.71. Id. art.1.72. Id. art. 25(6).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 45have the right to organize and join trade unions according to law.No organizations or individuals shall obstruct or restrict them.73Article 11 provides that:[T]rade union organizations at higher levels may dispatch theirmembers to assist and guide the workers and staff members of enterprisesto set up their trade unions, no units or individuals may obstructtheir effort.74Article 50 instructs that if anyone violates Article 3 or 11 by obstructingemployees in joining trade union organizations, or obstructinghigher trade unions in assisting and guiding employees in preparationfor establishing trade unions, then the violation shall be ordered to becorrected by the “administrative department for labor” (Labor Bureau),with appeals to appropriate government offices.75 There is alsopossible criminal violation if there is violence or intimidation.76Article 51 prohibits anyone from retaliating against any staffmember of a trade union by modifying the employee’s job.77 Saidprovision also prohibits insults, slander, or personal injury to any staffmember of a trade union who performs his or her duties “accordingto law.” Punishment for violations includes criminal prosecution oradministrative sanctions by the public security (the police).78 Article52 provides that if an employee or a staff member of the union has hisor her labor contract cancelled because of joining the trade union,there is entitlement to reinstatement with retroactive pay or an orderby the Labor Bureau to pay “two times the amount of his annual income.”79Article 53 prohibits obstructing the trade union in its work to organizeemployees to exert “(1) democratic rights through the congressof the workers and staff members and other forms;” (2) unlawfully“dissolving or merging trade union organizations;” and “(3)preventing a trade union from participating in the investigation intoand solution of an accident causing job-related injuries or death toworkers or staff members or other infringements upon the legitimaterights and interests of the workers and staff members.”8073. TRADE UNION LAW art. 3 (emphasis added).74. Id. art. 11 (emphasis added).75. Id. art. 50.76. Id.77. Id. art. 51.78. Id.79. TRADE UNION LAW art. 52.80. Id. art. 53 (emphasis added).46 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35Employees who are negotiating representatives are protected bythe 2004 Provision from retaliation. For example, an employee whois a negotia ting representative cannot have his or her labor contract#p#分页标题#e#terminated when it expires during performance of representative obligations,rather it must be automatically extended up to the completionof his or her representative obligations.81 Such employee canonly be terminated upon a sufficient showing by the employer of seriousviolation of duty or employer rules.82 Similarly, an employer shallnot adjust or remove the employee’s working position without properreason,83 and the employee shall be regarded as performing normalwork when participating in collective negotiations.84 Moreover, additionalprovisions of the Trade Union Law likewise provide protectionsfor trade union funds, and proscribe improper conduct by tradeunion staff members against employees or the trade union.85The negotiating representative also has two affirmative obligationsunder Article 26 of the Provisions. The representative has aduty to “safeguard the normal order of work and production and shallnot adopt any action of threatening, buying popular support and deception.”86 The first part appears to obligate the union representativeto act affirmatively to avoid or end of any employee disruption of services,while the second part seems to place an obligation of properconduct upon both employee and employer representatives, as leadersin negotiations. The second affirmative obligation is to keep thecommercial secrets of the employer acquired during the collective negotiations.87Disputes relating to “proper conduct” regarding the objectiveand subjective aspects of the negotiations, including disagreements orimpasses on proposals, are to be resolved by the Labor Bureau.88Other disputes that relate to retaliation against employee representative’srights, and under Articles 27 and 28, are to be resolved beforethe local labor arbitration commission.8981. PROVISIONS art. 28.82. Id.83. Id.84. Id. art. 27.85. TRADE UNION LAW arts. 54-55.86. PROVISIONS art. 26.87. Id.88. Id. art. 49. This is for “any disputes” which occur during the collective negotiation.89. Id. art. 29.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 47II. CHINESE CONDITIONS AFFECTING COLLECTIVENEGOTIATIONSChina’s recent history and economic growth both explain the developmentsoccurring in this area of labor law as well as help definethe direction that must be taken. With the transition from the “ironrice bowl system” to labor contracts, the effects of moving China froma socialist planned economy to a socialist market economy have takenhold. Privatization, layoffs, new management strategies emphasizingprofits and competition have produced both “wage consciousness”and feelings of unfairness in view of regional wage disparities, occupational#p#分页标题#e#wage gaps, unequal job opportunities, and sagging labor andsecurity safety nets.The economic growth phenomenon has produced a 100 to 150million person “floating population” seeking to earn their share of thegrowth. It also has produced national scandals of employers refusingto pay the wages of migrant workers, presently an underclass inChina. Coal miners are dying by the thousands each year due to unsafeworking conditions. Consequently, the issue of better enforcementof the labor protections provided in the labor laws is on the laborreform agenda.China is at a crossroads. On the one hand, it has the necessaryingredients to make its labor law system work much better than itdoes; on the other hand, its history of labor relations has seemed toblend with the forces of economic development, and it seems unsureif it makes the choice to better enforce its labor laws, whether it willbe placed at an internationally competitive disadvantage. Employerswho might otherwise follow the labor laws are in a quandary; whyspend the money to follow the labor laws if it doesn’t matter?90Can higher labor standards negotiated into collective contractsprovide a mechanism inside the enterprise by which employees’ laborrights could be better enforced? This, of course, is a different questionthan, will they be enforced, especially since rights under collectivecontract enforcement use the same legal mechanism as for statutoryrights.A. Economic TransitionTo understand the nuances of current labor relations in China,one must put it into the context of China’s fast-moving economic90. Clarke , supra note 2, at 248.48 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35conditions. When economic transition moved from policies establishingspecial economic zones of development into policies transformingall of China’s economy from a socialist planned economy to a socialistmarket economy, social and economic ramifications were expectedand occurred. With a market economy came competition, the needfor more flexible management, and the quest for profits—which requiredcutting costs. For China’s labor-intensive industrial economy,this usually meant keeping labor costs low. Privatization and competitivemeasures brought layoffs (especially in the already overstaffedState Owned Enterprises (SOEs)) and kept wages and benefitsto bare minimums. With individual control waning, conditionslent themselves to workers’ economic improvement through collectivenegotiations.Wage concerns of workers came of increasing importance aswidening gaps occurred in the annual growth of real wages versusGNP, with great numbers of workers feeling left out. The record reflects#p#分页标题#e#that China’s impressive economic growth in GNP for over adecade is not matched in the real wage growth of workers, whichroughly keeps pace with rates of inflation.91 The lawful minimumwage in China varies by locales according to local economic factors,as is the national mandate under China’s Regulations on MinimumWage.92 According to the Regulation, China seeks to accommodatean international labor standard that sets local minimum wages withinthe range of 40 percent to 60 percent of the average wage standard inthe locality.93 One source states that in 1993 China’s average minimumwages met or exceeded the 40 percent minimum, but by the late1990s there had been a steady and consistent erosion below that mini-91. By comparing ILO official statistics (ILO LABORSTA database) to the rate of inflation,it is argued that there was at least a relative wage decline of Chinese manufacturing workers.See Anita Chan, A Race to the Bottom, 46 CHINA PERSPECTIVES 41, 42 (2003). Accordingto data obtained from ILO LABORSTA database , in 1993 the average wages at all economicenterprises was about 281 yuan/month and in 2002 it was 1,035 yuan/month. Not surprisingly,the lowest average in 2002, 533 yuan/month, was in the agricultural services area, whereas thehighest was in the financial sector (1,595 yuan/month). In manufacturing, the average was 917yuan/month. See ILO LABORSTA, Table 5A Wages, by Economic Activity , available athttp://laborsta.ilo.org/ (last visited Mar. 19, 2005).92. ZUIDI GONGZI GUIDING [hereinafter REGULATIONS ON MINIMUM WAGE] art. 6 (Jan.20, 2004), http://www.chinacourt.org/flwk/show1.php?file_id=91496 (last visited Nov. 1, 2005);see also LABOR LAW, arts. 48-49.93. REGULATIONS ON MINIMUM WAGE, Attachment Section 2. Calculations Methods ofMinimum Wage Standard. The 40%-60% range is the international standard used when calculatingminimum wage.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 49mum.94 For Foreign Invested Enterprises (FIEs), in addition tominimum wage requirements, by legal edict the average wage of aFIE should not fall below the local average rate in the same industry.95Increasing wage gaps also concerns workers. Some Chinese citizenswere able to realize Deng Xiaoping’s famous slogan “to get richis glorious” much faster than others, and with economic reforms camegreat wage diversity between regions, between urban and rural, andbetween management and labor. In the year 2000, regional variationsof average income ranged from 1,544 yuan/month in Shanghai to 582yuan/month in Chonqing.96 Minimum wage variations between localgovernments ranged from 620 yuan/month in Nanjing to 545yuan/month in Beijing.97Observations by World Bank President Wolfensohn about#p#分页标题#e#China’s wage gaps have raised alarms; he stated that the likely conse-94. Chan, supra, note 91, at 42. In Beijing in 2000 the average wage was reported at1,362.50 yuan/month and the minimum wage at 412 yuan/month. See Beijing Labor and SocialSecurity Bureau, Guanyu Tiaozheng 2000 Nian Beijingshi Zuidi Gongzi Biaozhun de Tongzhi[Notice on 2000 Beijing Minimal Wage Guideline] (Jun. 27, 2000),http://www.bjld.gov.cn/tszl/zdshbz/t20010907_2142.htm (last visited Mar. 19, 2005). Beijing’sminimum wage in September, 2004 was reported at 545 yuan/month. See Beijing Labor and SocialSecurity Bureau, Guanyu Tiaozheng 2004 Nian Beijingshi Zuidi Gongzi Biaozhun de Tongzhi[Notice on 2004 Beijing Minimal Wage Guideline] (Jun. 30, 2004),http://www.bjld.gov.cn/tszl/zdshbz/t20040924_402234257.htm (last visited Mar. 19, 2005). Theexact average wage of workers earning in China is difficult to ascertain, and it varies by politicaldistricts. According to a 2004 survey conducted by one research institute under the DevelopmentResearch Center of the State Council (DRCSC), 70.8 percent of Chinese urban employeesearn 800 to 2,500 yuan (US$96.74 to US$302. 3) monthly. See Chinese Urban Employees EarnMore, CHINA DAILY, May 31, 2004, http://www.chinadaily.com.cn/english/doc/2004-05/31/content_335250.htm (last visited Mar. 19, 2005).95. WAISHANG TOUZI QIYE GONGZI SHOURU GUANLI ZANXING BANFA [INTERIMMEASURES ON FIE WAGES], art. 4 (Feb. 14, 1997),http://www.chinacourt.org/flwk/show1.php?file_id=27601 (last visited Mar. 19, 2005).96. Chan, supra note 91, at 41, 45 (Figure 2).97. See Jiangsu Xinwen [Jiangsu News], Qiye Zuidi Gongzi Zuoqi Shangtiao NanjingshiFeng Sange Cenci Tiaozheng [Nanjing City Increases Minimal Wages],http://www.jschina.com.cn/gb/jschina/news/jiangsu/in&co/userobject1ai480595.html (last visitedMar. 19, 2005) (citing Nanjing Labor and Social Security Bureau, Guanyu Tiaozheng NanjingshiQiye Zuidi Gongzi Biaozhun de Tongzhi [Notice on Nanjing Minimal Wage] (2004); Beijing Laborand Social Security Bureau, Notice on Beijing Minimal Wage Guideline (Jun. 30, 2004). Fora more detailed report on the changes of local minimal wage standards, see Bufen ShengshiShangtiao Zuidi Gongzi Biaozhun [Provinces Increase Minimal Wage Standards], XINHUANEWS AGENCY, July 27, 2004, http://news.xinhuanet.com/newscenter/2004-07/27/content_1654505.htm (last visited Mar. 19, 2005). See also Compendium of Country Informationon Wages, Benefits, Poverty Line and Meeting Workers Needs: China 2003, UnitedStates Department of Labor, Bureau of International Labor Affairs at II-20,http://www.dol.gov/ILAB/media/reports/oiea/wagestudy/begin.htm (last visited Mar. 19, 2005).50 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35quence is social unrest.98 According to the World Bank, China in the#p#分页标题#e#past 20 years has achieved great progress in poverty reduction (insufficientfood and clothing) from 200 million people to 29 million, butWolfensohn pointed out that China still has 400 million people livingon less than $2/day USD. Incomes are rising, but the rate of increaseof the urban areas is rising two times faster than the rural increase.President Wolfensohn estimated the wage gap in 10 years will be oneof the highest in the world; and he noted that in 2003 China had 10million citizens engaged in protests, not only over labor issues (suchas layoffs and wages), but also over rising rural taxes and forced relocationin urban areas.99Another wage gap exists between workers and managers. A recentsurvey by the State Council has identified that sixty-one percentof Chinese enterprises were paid three to fifteen times higher thanemployees, while twenty-one percent were paid fifteen to fifty timeshigher, and fifteen pe rcent of the FIEs were paid fifty times more.100A December 2003 government survey in China states that seventy-two percent of China’s nearly 100 million migrant workers areowed pay. The Construction Ministry estimates that workers in 2003were owed over “$12 billion in wages” by their employers eventhough the law requires wages be paid at least monthly, and estimatesput the unpaid debts to migrants at one-third of the value of productionin construction and real estate industries.101 Those involved say98. David Murphy, The Dangers of too Much Success, FAR EASTERN ECONOMIC REVIEW,Jun. 10, 2004, at 29.99. Id. at 30. CCP’s Outlook magazine reported recently that three million people staged58,000 protests on labor issues across China in 2003. See also Labor Activists Detect Change andChina Repression, REUTERS NEWS, Jan. 13, 2005, http://www.china -labour.org.hk/iso/article.adp?article_id=6177&category_name=China%20Labour%20Bulletin%20in%20the%20News (last visited Mar. 19, 2005).100. Laozong Yuangong Shouru Chaju Zuida Chao Wushibei [Manager Earns Fifty TimesMore], GUANGZHOU DAILY, (Apr. 25, 2004), A2 (citing Guowuyuan Fazhan Yanjiu Zhongxin[The Development Research Center of the State Council], Zhongguo Qiye Renliziyuan GuanliDiaocha Baogao [Human Resource Report] (2004)). News article available athttp://gzdaily.dayoo.com/gb/content/2004-04/25/content_1517025.htm (last visited Mar. 19,2005). For Chinese senior managers, the law recognizes that their actual income (includingdividends) may be much higher than the nominal income wage payment under an employmentcontract. However, the difference between actual and nominal income of a Chinese seniormanager is subject to the supervision of the union and may be used for the benefits of other employees’welfare, such as housing or pension. See INTERIM MEASURES ON FIEWAGES art. 10.#p#分页标题#e#101. Anthony Kuhn, A High Price to Pay for a Job, FAR EASTERN ECONOMIC REVIEW,Jan. 22, 2004, at 30-32. Other commentators note these violations of labor laws have caused alabor shortage in Guangdong (which account for an estimated 40 percent of the back pay casesin China in 2003), as potential workers stay away. When this is added to demographic trends2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 51most of the workers do not have formal labor contracts as the law requires.It was reported that Beijing Municipal Government in thefirst six months of 2004 helped 110,000 migrant workers recover 290million yuan ($35 million USD) of unpaid wages, causing the first declinein labor disputes in Beijing since 2000.102When adding up some of the ill side -effects of economic reforms,such as slow -rising wages, widening wage gaps, and unpaid wages ofmigrant workers (who make up the “floating population” of 100 to150 million Chinese citizens)—with each affected employee seekingto find his or her share of the new economic development, one canunderstand why the central government has had as a high priorityputting a social security safety net in place with accompanying laborlaw protections. This effort brought into existence the 1994 LaborLaw which broadly outlined labor standards requirements. By 2004,many of the standards had been more formally enacted into specificlaws and regulations including new regulations on minimum wage andhours. Notwithstanding the progress in legislation, employees continuedto demand that the laws be made to work and some collectiveprotests have taken place demanding improved benefits.B. Trade Union’s Role1. Emerging Role. The path was clearer for the governmentendorsedunion, the ACFTU, in the early days of the People’s Republicof China when, “within the state socialist system, the interestsof both management and the trade union were supposed to be identicaland their identification was reinforced by the subordination ofboth to the Party-state.”103 While the Chinese Communist Party(CCP) in recent years during the economic transition has steppedback somewhat from seeking to directly influence management’s micro-market decisions, it continues to maintain a close policy relationshipwith the ACFTU. Although the union is set up as an independthatpredict a shrinkage of entry -level, low-skilled industrial workers, it is argued this will translateinto more “ba rgaining power” for those entering into the labor force in the future. Dali L.Yang, China’s Looming Labor Shortage, FAR EASTERN ECONOMIC REVIEW, Jan.-Feb. 2005, at20, 22.102. Li Jing, Beijing Government Urges Employers to Pay Up, CHINA DAILY, Sep. 14, 2004,at 3, http://www.chinadaily.com.cn/english/doc/2004-09/14/content_374270.htm (last visited Mar.#p#分页标题#e#19, 2005). See also Guoyu jishu gongren de diaoyan baogao [Analyzing Labor Shortage andSkilled Labor Shortage], MOLSS, Sept. 8, 2004, available athttp://www.molss.gov.cn/news/2004/0908b.htm.103. Clarke , supra note 3, at 241.52 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35ent and autonomous body, like the All China Women’s Federation, itis maintained as a quasi-governmental entity.104 The ACFTU is theexclusive trade union in China and any new union must be affiliatedwith it.105China’s dramatic economic development in the past three decadeshas caused the ACFTU to emerge as an organization which underlaw plays “a dual role in the transition towards a market economy.”106 In that dual role of promoting both employee interests andeconomic reforms and social stability, it has also witnessed some internaldiscussion, if not struggles, between those in the union whowant the ACFTU to be more active in the advocacy and representationof the employees’ interests, and those in the CCP who want theunion to be more responsive to the needs of society for social stability.107 In practice, as will be discussed, some observers feel theACFTU’s current predominant function in the workplace is a managementfunction.2. Legal Authority. Chinese labor law in fact requires theACFTU to serve two masters. In addition to representing “the legitimaterights and interests of the workers,”108 it must also assist thegovernment and the CCP in “upholding the overall rights and interestsof the whole nation.”109As to the union’s advocacy role on behalf of the employees, theACFTU is to provide guidance and assistance to workers on obtainingindividual labor and collective contracts and to advance workers’interests against the employers’ regarding compliance with a varietyof health, safety, and labor laws.110 In the event of a work stoppage orslowdown, the ACFTU’s responsibility is to both represent the employees’interests and to assist the employer in properly dealing withthe matter to restore the normal order of production, thus in effect,mediating solutions to the dispute.111 The union distributes this bifurcatedloyalty also by serving on intra-enterprise mediation commit-104. See TRADE UNION LAW art. 4.105. Id. art. 11.106. Clarke, supra note 3, at 241.107. TAYLOR ET AL., supra note 4, at 115.108. TRADE UNION LAW art. 2.109. Id. art. 6.110. Id. arts. 20-25.111. Id. art. 27.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 53tees and the tripartite Labor Arbitration Commissions, both of whichseek to resolve disputes over employees’ labor rights.112While conducting its work “independently,” the union is admonished#p#分页标题#e#to “concentrate on the focus of economic construction, adhereto the socialist road,”113 and, as its basic responsibility, “safeguard therights and interests of workers.”114 Additionally, Article 7 of theTrade Union Law requires that “trade unions should mobilize andorganize employees to participate in the economic construction positively,to complete production duties and working duties with greatefforts. Trade unions shall educate employees . . . to build disciplinedemployee groups.”115The 2001 Trade Union Law protects the union and the employeesagainst improper interference with the rights granted under thislaw, including the rights of employees and trade unions to engage inlawful union activity.116 It also provides remedies for certain violations,discussed above under “fair treatment of employees.”117 The1994 Labor Law obligates the trade unions of various levels to “safeguardthe legitimate rights and interests of the workers and exercisesupervision over the employers with regard to the implementation oflabour discipline and the laws and regulations.”118C. Prior Experience with Collective NegotiationsRecent studies in China on industrial relations aspects of collectivenegotiations concluded before the new 2004 Provisions have examinedSOEs, private enterprises, and FIEs and point out some ofthe deficiencies, which the 2004 Provisions addressed, dealing withprocess, content, and the role of the trade union. First, with regard toprocess, the Clarke study observes the following:[T]he system of collective consultation is not merely a means forthe state to intervene in enterprises, but nor does it provide theframework for a new industrial relations system in China. At thepresent stage of its development, it is essentially a development ofthe anachronistic system of “workers’ participation in management”and a (rather ineffective) adjunct to the juridical regulationof labour relations, providing a means to remind employers and112. LABOR LAW arts. 80-81.113. TRADE UNION LAW art. 4.114. Id. art. 6.115. Id. art. 7.116. Id. art. 3.117. Id. arts. 50-53.118. LABOR LAW art. 88.54 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35trade union officers of their legal obligations and, in principlethough not in practice, a means by which industrial conflict can bedefused by channeling it into juridical procedures.119The authors feel there will be no change “until the enterprise tradeunion develops into an organization that, in its structure and practice,disengages from management to represent the interests of its members.”120 Another recent study concludes on a similar note:#p#分页标题#e#The system of collective contracts, theoretically designed by the superiorauthorities as an effective mechanism to help adjust labourrelations, has undergone major revision when it comes to be appliedin practice. Even though the collective contract could be concludedbetween the management and the union in many enterprises,the whole process of consultation is little more thanadministrative compliance with quotas assigned from above.121Next, with regard to content of the collective contracts, the Clarkestudy concludes the following:Employers remain reluctant to incorporate any substantive detail inthe collective contract, so that the contract adds little or nothing tothe existing legal regulation of the terms and conditions and employment.At best, the collective contract provides a means of remindingemployers of their legal obligations and monitoring theimplementation of labour legislation in the workplace.122In its analysis of the content of collective contracts of SOEs, theChang study observes that there were three categories of contractclauses in the agreements: the first deals with principles and formalities,such as who are the parties, etc.; the second contains the clausesto be implemented by the parties; the third category deals with commitmentsof the parties and duration.123 The study shows the secondcategory of implementation clauses took up an average of about 70percent of the total number of clauses. Further examination revealsover 60 percent of these clauses were defined by the labor law (usuallya duplication), 20 to 30 percent were made in reference to the law(e.g., time schedule for implementing certain required female medicalexaminations), and about 10 percent of the clauses, on average, dealtwith subjects relating to improvement of the employees’ benefits.124119. Clarke, supra note 3, at 251.120. Id. at 251-52.121. TAYLOR, supra note 4, at 206.122. Clarke, supra note 4, at 250.123. TAYLOR, supra note 4, at 193-94.124. Id.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 55Interestingly, the Clarke study observes that wage negotiationswere often conducted separately from the collective contract negotiations,with the negotiated wages reflecting the minimum wages at theenterprise. Likely, this bifurcated approach may be because wagesare often revised annually, whereas a collective contract may stay ineffect for two or three years.125Lastly, the controversial role of the trade union has drawn muchattention in recent studies. The primary hindrance is continuallyidentified as the employees not having a real advocate for their interestsunder the current system in China. It appears to some that “thepredominant functions of the trade union at the workplace still tend#p#分页标题#e#to be management functions.”126 Clarke’s study concluded that thefollowing was the principal function of the trade union:[To] “take economic development as its central task,” encouragingworkers to increase productivity, enforcing labor discipline andconducting extensive propaganda on behalf of management. ‘Protectingthe rights and interests of employees’ is at best interpretedas monitoring managerial practice to ensure that it conforms to allthe relevant laws and regulations, and implementing the social andwelfare policy of the enterprise—visiting sick workers, dealing withpersonal problems, distributing benefits, organizing picnics and arrangingcelebrations.127The concept of the trade union being something other than “just abranch of management” and of representing and protecting employeeinterests “in opposition to those of the employer is something unfamiliar,if not entirely alien, to [the union’s] traditional practice and to[its] traditional conception of [that] role.”128Part of the explanation is the identity of the trade union officials.A typical official at the enterprise level has been described as follows:Trade union officers are drawn largely from the ranks of management.A full-time trade union president is paid by the employerand normally enjoys the status (and salary) of a deputy general directorof the company; the personal careers of union leaders revolvearound the positions of party cadre, union leader and enterprisemanager; they are usually members of the Board of Directorsand/or the Supervisory Board of the company; and they (rightly)regard themselves as members of the senior management team.125. Clarke, supra note 3, at 247.126. Id. at 242.127. Id.128. Id.56 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35Whether or not there is a formal election of the trade union chair,the latter is normally appointed by management.129Clarke’s study found many examples where the “real parties” in interestwere obfuscated; it illustrated the often lock-step harmony ofinterests:In some enterprises senior members of management participated inthe negotiations on the trade union side. In one enterprise the financedirector was a member of the trade union in the consultationcommittee; in another a senior financial manager participated onthe trade union side in an advisory capacity. At the same time, thetrade union president, as a member of the Board of Directors orSupervisory Board, usually participates in the formulation of management’sresponse to the trade union proposals for the collectivecontract.130Left out of the equation is whether the employees feel their interests#p#分页标题#e#are being properly negotiated and protected; although theoretically,and under the law, they can refuse to ratify the proposed final agreement.131In prior years, the CCP would have played a more direct and activerole to ensure the employer and union worked “harmoniously,”but in recent years the CCP works more indirectly, usually throughthe trade union. In that respect, the above study shows that “at leastfive of the 12 trade union presidents also held the post of party secretaryor deputy party secretary.”132This ambiguity of who is the employer and who is the union(though not necessarily who is the boss) is further complicated byChina’s legacy of SOE’s being units of larger integrated bureaucraciesin the planned economy, the periodic use of Workers’ Congresses,and the absence of unions in many enterprises across China. The traditionalSOEs utilized “employers” and trade unions as agents forcontrolling bureaucratic entities of an economic plan. With economicreforms and new laws, legal responsibility is increasingly fixed on the“employing unit”—the employer. However, at the enterprise level,there is little meaningful influence to prevent the union and the employerfrom “wearing each other’s hats” and in the process basicallybecoming the same voice.The Worker’s Congresses, set up in SOEs to provide workers’democratic management, are not used, particularly in private enter-129. Id. at 242-43.130. Id. at 246.131. See PROVISIONS art. 37.132. Clarke, supra note 3, at 243.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 57prises. However, when used in SOEs, they can be one more “player”in the complexities of relationships in the negotiations relating to thewelfare of the employees and the enterprises. They were reestablishedin 1981 to provide for workers at the enterprise level toparticipate in management.133 The Congress is supposed to meet atleast once a year and its executive body, the trade union, generallyexecutes its functions. These functions include review and approvalor disapproval of management’s plans, appointments, and decisions.Its efficacy in practical terms is suspect, and, post-1979 history andrapidly changing governance structures in China seem to have overtakenits usefulness. For example, the current Corporation Lawgreatly diluted and reduced the power and role of Worker’s Congressesto merely “exercise democratic management”134 and “democraticsupervision.”135 The former “legal” functions of the Workers’Congress to appraise and supervise the cadres and elect the Directorof the enterprise are deleted and replaced by a corporate board of directors#p#分页标题#e#and supervisory committee.136 Whether this will be a fatalblow to the Workers’ Congresses in SOEs remains to be seen.Another emerging role of trade unions in collective negotiations,observed in the pre-2004 studies, is the introduction and possible institutionalizationof industrial unions. Due to the increased presenceof small to medium FIEs, Privately Owned Enterprises (POEs), andTown and Village Enterprises (TVEs) in the new socialist ma rketeconomy, a large number of workers coming from rural or less industrializedareas of China are being employed, and, as is well documented,their labor rights are exploited.137 The unionization rate inthese enterprises is very low, and there is little expectation of laborlaw enforcement, let alone negotiation of collective contracts. It hasbeen suggested that these largely overseas-funded enterprises do notnecessarily resist collective negotiations, rather they see unions andnegotiations as “irrelevant” and the government and the CCP as eitherreluctant or impotent to induce the enterprises to sign agree-133. Quanmin Suoyouzhi Gongye Qiye Zhigong Daibiao Dahui Tiaoli [Regulation onState-Owned Enterprise Workers’ Congress] arts. 1-6 (1986),http://www.chinacourt.org/flwk/show1.php?file_id=5586 (last visited Mar. 19, 2005).134. ZHONGHUA RENMIN GONGHEGUO GONGSI FA [CORPORATION LAW] art. 16 (1999),http://www.chinacourt.org/flwk/show1.php?file_id=96089 (last visited Nov. 10, 2005).135. Id. arts. 16, 55.136. TAYLOR, supra note 4, at 1.137. See Clarke, supra note 3, at 248.58 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35ments.138 The ACFTU has taken notice, and as early as 1996 in adocument issued jointly by then Ministry of Labor, the ACFTU, theSETC, and China Enterprise Confederation an approval was givenfor the use of “professional or industrial unions” of the primary tradeunion to negotiate collective contracts on behalf of the employees atthese various enterprises.139Pursuant to this policy of using industrial unions, the ACFTUhas reportedly established these types of local trade union organiz ationsin 25 provinces since 1996.140 The agreements under these industrialunions cover all of the private enterprises in one district orindustrial sector. The union signs the agreements with the “employers’associations” at the same levels. These “associations” are describedas “established under the relevant government departmentsrather than genuine employers’ organizations.”141 Clarke’s study, underpre-2004 Provisions, indicates that in at least one area, Chengdu(where there were some 30 agreements), there has been an increasein union membership following the agreements.142 An added bonus#p#分页标题#e#for workers in Chengdu is that the city-level ACFTU had “successfullybeen taking cases to the City Arbitration Committee when theemployers had failed to abide by the agreement.”143 A downsidenoted, was that it worked because of government intervention (as“employers’ associations” were local government authorities supervisinglocal private enterprises) rather than as voluntary regulation ofcollective negotiations by private employers.144There were some positive aspects observed in the pre-2004 collectivenegotiation process. The “existing system provides an effectivemethod of soliciting the reactions of employees to managementproposals;” however, due to the great amount of discretion a union138. Id.139. TAYLOR, supra note 4, at 196. The Trade Union Law states, “[E]nterprises of someindustries or industries of similar nature may set up national or regional industrial unions as circumstancesrequire.” TRADE UNION LAW art. 10.140. Clarke, supra note 3, at 249. A union in Hangzhou reportedly had recent guarantees of800 yuan per month through collective contracts. Interestingly, a comment by Fu Nanbao,president of the trade union in Xinhe, said that with the help of the trade union and the newwage negotiating system, “the relationship between employers and workers has gone from being‘adversarial’ to ‘cooperative.’” Shao Xiaoyi, Negotiated Salary System Saves Industry, CHINADAILY, Feb. 24, 2005, at 5, http://www.chinadaily.com.cn/english/doc/2005-02/24/content_418852.htm (last visited Mar. 19, 2005).141. Clarke, supra note 3, at 249.142. Id.143. Id.144. Id.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 59has, the ability of employees to have an effective channel to articulatetheir own aspirations is more limited.145 In some cases involving largeFIEs who wish to be “good citizens,” such as Beijing Jeep Ltd., Babcock& Wilcox Company, and Shanghai Volkswagen AutomotiveCompany Ltd., there have been comprehensive collective contracts,though not necessarily prompted by the laws.146 Willing unions havealso evidenced their abilities “to design sophisticated negotiationstrategies involving high, medium and bottom lines for their wage negotiation.”147III. COMPARATIVE REFERENCES: ILO AND UNITEDSTATESBefore further analyzing the 2004 Provisions, some references ofILO labor standards and U.S. approaches are provided for contextand measurement of China’s collective negotiation under the newProvisions.A. ILO Labor StandardsBy providing labor standards reached by a consensus of its some178-member states, the ILO presents countries a choice. Thoughthere are competitive advantages in world markets to maintain low#p#分页标题#e#labor standards so as to maximize profits, support economic development,and attract foreign investment, there still exists a strongmovement among enlightened countries to undertake labor reformsfor the clear purpose of providing their citizens a safe and decentworking environment.In 1998, the ILO put forth conventions of eight “core labor standards”by which it will take measure of countries’ labor conditionsand practices under national laws.148 Nearly eighty-five percent of the145. Id. at 245.146. TAYLOR, supra note 4, at 202-03.147. Id. at 203.148. International Labour Organization Declaration on Fundamental Principles and Rightsat Work, Gen. Conf. Res., 86th Sess. (June 19, 1998), reprinted in 37 I.L.M. 1233 (1998). Fromthe Copenhagen Social Summit in 1995 to the 1998 Declaration on Fundamental Principles andRights at Work, the ILO has pressed for an international consensus on the content of the corelabor standards. In 1998, the ILO adopted the Convention concerning the Prohibition and ImmediateAction for the Elimination of the Worst Forms of Child Labour (Convention No. 182).It also adopted its Declaration on Fundamental Principles and Rights at Work together with afollow-up procedure based upon technical cooperation and reporting. The principles have beenincorporated into codes of conduct by the private sector and also used as a basis for action by60 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35members have ratified six of the core standards, and nearly sixty-fivepercent, including European nations, have ratified all eight.149China, as a “developing” country, continues to progress in its laborlaw reforms, and it has ratified three of the core labor standards,and overall ratified 23 conventions, and has become a member ofILO’s governing board.150 By comparison, the United States has ratifiedtwo of the core standards and 14 conventions overall.151 Ofcourse, the issue always remaining is how well the existing nationallabor laws and practices accord with ILO standards.Relevant to the issue of collective negotiation, this Article examinestwo of the core labor standards—Freedom of Association andProtection of the Right to Organise (Convention No. 87) and theRight to Organise and Collectively Bargain (Convention No. 98).152Neither China nor the United States has ratified these two conventions.1. Freedom of Association and Protection of the Right to Organize.In the United States, there are nearly 16 million unionized workers,consisting of about 8 percent of the workers in the private sectorand about 36 percent in the government sector. 153 The primary federallabor law in this area is the National Labor Relations Act(NLRA), which guarantees the right to freedom of association, the#p#分页标题#e#right to join unions, to bargain collectively, and to engage in “convariousregional organizations. See Dinah Shelton, Protecting Human Rights in a GlobalizedWorld, 25 B.C. INT’L &COMP. L. REV. 273, 306 (2002).149. See Ratifications of the ILO Fundamental Conventions as of 11 Feb 2005,http://webfusion.ilo.org/public/db/standards/normes/appl/appl-ratif8conv.cfm?Lang=EN (lastvisited Nov. 1, 2005).150. For a list of ratification, see ILOLEX, http://www.ilo.org/ilolex/cgi-lex/ratifce.pl?China(last visited Nov. 1, 2005); China Labour E-Bulletin Issue No. 8, Editor’s Note (July 2, 2002),http://www.china -labour.org.hk/iso/newsletter_details.adp? newsletter_id=41 (last visited Mar.19, 2005) (The ACFTU won a seat in the Worker’s Group of the ILO’s Governing Body in June2002).151. See ILOLEX,(last visitedNov. 1, 2005).152. Freedom of association is defined in the Freedom of Association and Protection of theRight to Organise Convention (Convention No. 87) and the Right to Organize and CollectiveBargaining Convention (Convention No. 98).153. “In 2004, 12.5 percent of all wage and salary workers were union members, down from12.9 percent in 2003 . . . . The union membe rship rate has steadily declined from a high of 20.1percent in 1983 . . . . About 36 percent of government workers were union members in 2004,compared with about 8 percent of workers in private-sector industries.” See Bureau of LaborStatistics, Union Members Summary (Jan. 27, 2005),http://www.bls.gov/news.release/union2.nr0.htm.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 61certed” activity, including strikes. The violations of the right to associateunder the NLRA include harassment, surveillance, threats, anddischarge. Such practices are deemed “unfair labor practices,” andthe law provides remedies.China’s only trade union, the ACFTU, according to top union officialChairperson Zhang Junjiu, a member of the Politburo, had 134million trade union members in 2003 out of about 250 million urbanworkers, which represented about less than 60% of the employees(though union membership in private and foreign-invested sectors isestimated to be less than 20%).154 New amendments to the Trade UnionLaw stipulate that all enterprises with 25 or more employees mustestablish a labor union and negotiate on matters of importance toemployees, and there are legal protections for the right to organize.155In China, although there is a right to associate and form a tradeunion, it is not necessarily one of the employees’ choices because inall cases the union must be affiliated with the ACFTU, which exercisesleadership over the subordinate levels.156 The ACFTU, since thefounding of the People’s Republic of China, has had a close working#p#分页标题#e#relationship with the government and the CCP. This relationship, invery recent years, shows evidence of undergoing some loosening inpractice as to the role the union plays in labor relations and employeeadvocacy. However, while the role may “morph,” the law is clear, asstated in China’s reservation to the U.N. Covenant on Economic, Social,and Cultural Rights, Article 8.1(a), which limits the right ofchoice of unions to the laws of China (which do not permit it).157 Accordingto the International Confederation of Free Trade Unions(ICFTU), there are numbers of reports of China prohibiting attemptsto create independent trade unions, which are in violation of Chinese154. Quanguo Gonghui Huiyuan Dadao Yidiansan Yi Ren, Chuang Lishi Zuigao Shuiping[Union Membership Reaches New Historical Peak], Xinghua News Agency, Nov. 11, 2002,http://news.xinhuanet.com/newscenter/2002-11/11/content_625980.htm (last visited Nov. 10,2005).155. TRADE UNION LAW art. 10. See also id. arts. 19-22 (supporting that legal protection isthe practical consequence of Article 10 since all enterprises with 25 or more employees mustestablish a labor union, and that the workers, through a union, can voice their opinions on importantmatters)156. See id. arts. 10-11. Approval is a requisite of affiliation.157. Aaron N. Lehl, Note, China’s Trade Union System Under the International Covenant onEconomic, Social and Cultural Rights: Is China in Compliance with Article 8?, 21 U. HAW. L.REV. 203, 205, 236 (1999).62 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35laws, with violators suffering penalties of criminal and/or administrativedetainment, or sometimes even psychiatric detainment.1582. Right to Organize and Collective Bargaining . Also under theILO labor standards is the right to engage in collective bargaining(implicitly including the right to strike), which derives naturally fromthe freedom of association.159 In the United States, the NLRA againis the primary law granting this right to private employees. Colle ctivebargaining in the United States usually involves vigorous negotiationsand exchanges of proposals with the National Labor Relations Board(NLRB), the administrative body supervising the employer and unionto ensure they conduct their negotiations fairly and in good faith,without committing unfair labor practices, as discussed below. TheNLRB is, in many ways, a model agency for administrative enforcement,backed by the power of the courts to enforce its remedies.However, its effectiveness is tempered by backlogs and inadequatestatutory penalties.American workers and labor unions feel strongly that there mustbe a right to strike so as to permit them to counter the economicpower and pressure of the employers. However, though there is a#p#分页标题#e#statutory right to strike in the private sector, case-law interpretationof that statute permits employers to replace striking workers permanently.160 Most public sector employees are prohibited from striking158. See ICFTU, China, People’s Republic of: Annual Survey of Violations of Trade UnionRights (2004), (lastvisited Mar. 19, 2005).159. “For the Committee of Experts, [under the ILO], although the right to strike is notmentioned explicitly in Convention No. 87 [Freedom of Associa tion], it derives from Article 3,which sets forth the right of organizations to organize their activities and to formulate their programmes.”BERNARD GERNIGON ET AL., FUNDAMENTAL RIGHTS AT WORK ANDINTERNATIONAL LABOUR STANDARDS, 20 n.4 (2003). But see, the U.N.’s International Covenanton Economic Social and Cultural Rights, which proclaims “[t]he right to strike, providedthat it is exercised in conformity with the laws of the particular country.” ICESCR, Art. 8(d).Collective Bargaining Convention (No. 154, art. 2) defines “collective bargaining” as extending“to all negotiations which take place between an employer” and a workers’ organization for:“(a) determining working conditions and terms of employment; and/or (b) regulating relationsbetween employers and workers; and/or (c) regulating relations between employers or their organizationsand a workers’ organization or workers’ organizations.” ILO, C154 Collective BargainingConvention (1981), (last visited Mar.31, 2005).160. Nat’l Labor Relations Bd. v. MacKay Radio and Tel. Co., 304 U.S. 333, 345-46 (1938);Nat’l Labor Relations Bd. v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 790 (1990).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 63because of their “essential” services. In case of federal workers, it is acriminal felony to strike.161Strikes likewise occur in China but are not explicitly provided forin law; neither are they prohibited. As mentioned before, theACFTU, according to Article 27 of the Trade Union Law, is calledupon to mediate and assist the enterprise and employees in makingproper preparations for resuming work and restoring work order assoon as possible when there is a “work stoppage or a slow down.”162Also, Article 47 of the 2002 Work Safety Law authorizes workers tostop work and leave the workplace if their personal safety is directlyendangered.163 One could argue that there seems to be an emerginglegally implicit acceptance of the right to strike. At the same time,however, there appears to be clear government disfavor against someof the strike leaders for bringing socia l disorder or interfering withproduction.164China’s 2004 Provisions purportedly seek to implement the 1994#p#分页标题#e#Labor Law’s call for collective contracts. Included is regulation of theprocess, content, government supervision, and a dispute resolutionmechanism, discussed below. Whether these Provisions and the practicesunder them can meet the standards of the ILO Convention onCollective Bargaining will bear examination in the years ahead.Some China observers have expressed skepticism and concluded fromthe similar practices that preceded the new Provisions that “it is primarilythe continued integration of the trade union into managementat the workplace that prevents collective consultation from providingan adequate framework for the regulation of labour relations.”165 TheICFTU is likewise critical, saying that earlier experiments show the“contracts [were] or are drawn up by employers and simply reflect161. 18 U.S.C. § 1918(3) (2000).162. TRADE UNION LAW, Art. 27.163. ZHONGHUA RENMIN GONGHEGUO ANQUAN SHENGCHAN FA [WORK SAFETY LAW]art. 47 (Jun. 29, 2002).164. FENG CHEN, Subsistence Crises, Managerial Corruption and Labor Protests in China , 44CHINA JOURNAL 41 (2002). See also THE INT’L CTR. FOR TRADE UNION RIGHTS, China: SpecialReport, available at http://www.ictur.labournet.org/China.htm (last visited Mar. 19, 2005).165. Clarke, supra note 3, at 235. The Committee of Experts, under the ILO, states: “To beeffective, the exercise of the right to collective bargaining requires that workers’ organizationsare independent and not under the control of employers or employers’ organizations, and thatthe process of collective bargaining can proceed without undue interference by the authorities.”BERNARD GERNIGON ET AL., supra note 160, at 29.64 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35minimum legal requirements or the continuation of past practice[and] [t]here is very little actual ba rgaining.”166Whether the Chinese collective negotiations under the 2004 Provisionswill evolve into a process that harmonizes with internationallabor standards awaits future examination of (1) practices under thesenew Provisions, (2) the evolving role of the ACFTU, and (3) the substantivecontent of resulting contracts. It is evident that economictransition has awakened wage consciousness, and labor disputes inChina have been on the rise in recent times. Such circumstances mayprovide a positive impetus for utilizing the 2004 Provisions in a waythat could evolve collective negotiations into more meaningful bargaining.As China and the United States continue with their labor lawsrelating to the two ILO core labor standards covering the right tofreedom of association and collective bargaining, the ILO notes thatin numerical terms, “half of the world’s workers remain unprotected#p#分页标题#e#by the conventions’ provisions. Alarmingly, large countries as Brazil,China, India, Mexico, and the United States have still not ratifiedfundamental ILO Conventions on freedom of association.”167B. Comparative U.S.-China Approaches: Collective Bargaining vs.Collective NegotiationsA brief comparison of U.S.-China collective bargaining versuscollective negotiations points out at least five areas of differences inapproaches. First, the parties are quite different in interests and constituencies.In the United States, unions must maintain an “arm’slength” relationship with the employer to avoid being subverted fromthe union’s single purpose of employee advocacy.168 This is explainedby the unions having come into prominence only after fighting employersfor the right. In 1935, the NLRA granted employees in theprivate sector the right to be represented by a union in its workplaceinterests and collectively bargain through that representative free166. ICFTU, China People’s Republic of: Annual Survey of Violations of Trade UnionRights, supra note 157. “[G]iven the non-democratic, Party-dominated nature of unions, colle ctivebargaining fell far short of international standards.” BUREAU OF DEMOCRACY, HUMANRIGHTS, AND LABOR, Country Reports on Human Rights Practices—2003, available athttp://www.state.gov/g/drl/rls/hrrpt/2003/27768.htm (last visited Mar. 19, 2005).167. ICFTU Online, New Report: Half the World’s Workers Denied Fundamental Workers’Rights, available at http://www.icftu.org/displaydocument.asp?Index=991219292&Language=EN(last visited Mar. 19, 2005). For a detailed list of ratification status, see ILO, ILOLEX Conventions,http://www.ilo.org/ilolex/english/convdisp1.htm (last visited Mar. 19, 2005).168. See National Labor Relations Act § 8(a)(2), 29 U.S.C.A. § 158(a)(2) (2000).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 65from employer’s (and later free from union’s) interference.169 Sourceis silent as to whether the collective bargain will be free from unioninterference. The union typically is a local union affiliated with a nationalunion. These national unions usually support the efforts of thelocal union in organizing, bargaining, and, when necessary, striking.The union’s single purpose of employee advocacy is made possible bythe union’s firm and unequivocal duty of fair representation owed tothe employees it represents. The union must deal “fairly” (diligentlyand non-arbitrarily) with the employees, including in the bargaining,contract administration, and the labor arbitration stages. Violation ofthis duty is an unfair labor practice and can also be taken to the courtsfor a remedy.170In contrast, the function of the Chinese trade unions in a socialist#p#分页标题#e#planned economy was sometimes referred to as a “transmission belt”of the CCP; and, under the present socialist market economy, it hasbecome a multi-purposed institution to promote China’s economicdevelopment and social stability, as well as its other role of protectingthe labor rights of employees. This is in stark contrast to the singlepurposerole of the union in the United States.The dual or multi-purpose of the Chinese union has created sufficientambiguity to raise issues whether collective negotiations is aconversation between two parties or a multi-headed monologueamong parties with “harmonious” interests, which may or may notalso capture the real interests of the Chinese employees. This multipurposeapproach might be usefully compared with Japan’s industrialrelations approach where its unions have a dual purpose, advocatingfor employees and the employer’s economic well-being. And, ofcourse, the Chinese employees cannot choose an alternative unionfrom the market place. However, unlike in the United States, underChinese law, employees may more easily “select” a union without anelection process and without an employer campaign trying to persuadeemployees to vote for no union. Even without the presence ofan official union, the Chinese workers have the benefit of bargainingcollectively as if they were unionized by passing the threshold of a169. National Labor Relations Act § 7, 29 U.S.C. §157 (2001) (granted employee’s right toorganize). However, the definition of employee excludes workers hired either by federal orstate governments, see id. § 2(3)-(4).170. See ROBERT A. GORMAN AND MATTHEW W. FINKIN, BASIC TEXT ON LABOR LAW:UNIONIZATION AND COLLECTIVE BARGAINING 981-1018 (2d ed. 2004). See also LABORUNION LAW AND REGULATION 1-10 (William W. Osborne, Jr. et al. eds., 2003).66 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35simply majority vote, to which an employer cannot object.171 Wal-Mart has claimed no groups of employees in any of its many stores inChina have ever asked for a union, which—if the union has decidedit’s bad for business—could be true.172A second area of comparison is the type of employee groups representedby the union. The unions in the United States use exclusiverepresentation of a group of employees within the enterprises or anindustry, whereas the Chinese unions generally utilize “enterprise unionism”to negotiate for most employees within a particular enterprise.Again, the Chinese approach is similar to the traditional bargainingapproach used by Japanese labor unions, though in recentyears the latter also has begun to link with vertical union structures inmore meaningful ways during negotiations. The use of enterprise unionism#p#分页标题#e#diminishes the power of the unions compared with an American-style union relationship, where unions can cross employerboundaries involving multi-employers and within entire industrieswith the ability to bring economic pressures on the larger employergroup. On the other hand, the ACFTU is expressly authorized to setup national or regional industrial trade unions as circumstances requirefor enterprises of some industries or industries of similar nature.173A third difference is in the statutory definition of the scope ofbargaining/negotiation. In the United States, the NLRA uses a singlephrase “wage, hours, and other terms and conditions”174 and lets theadministrative agency and the courts subsequently broaden the coverageby providing more detailed interpretations.175 The Chinese1994 Labor Law and the 2004 Provisions themselves supply greatnumbers of categories and illustrations of the types of items that aredeemed proper subjects for negotiations. Further clarifications of relatedlabor laws can come through various legal interpretations froma variety of government branches and agencies, including the SupremePeople’s Court, the State Council, and the MOLSS. Perhapsthe different approaches reflect a civil law system versus a commonlaw system. However, in reality, the small number of contract termsin the actual Chinese collective contract pales in comparison to the171. PROVISIONS art. 20.172. Wal-Mart Concedes China Can Make Unions, CHINA DAILY, (Nov. 23, 2004),http://www.chinadaily.com.cn/english/doc/2004-11/23/content_394129.htm.173. TRADE UNION LAW art. 12.174. National Labor Relations Act § 8(d).175. 48A Am. Jur. 2d Labor and Labor Relations §§ 3018-19 (2004).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 67substantially thicker multi-terms of a typical U.S. collective bargainingcontract.Fourthly, bargaining duties in the United States and China arearguably similar. Both U.S. and Chinese law say that the parties cannotrefuse to negotiate, must negotiate honestly and in “good faith,”must provide information upon request to the other party, and generallymust engage in a process of proposing and counter-proposing. Inthe United States, the law requires “good faith” bargaining by bothsides over “mandatory subjects” (wages, hours, and other terms andconditions) until agreement or impasse is reached.176 This means havingrepresentatives independent from the other party’s representatives,having authority to reach agreement, meeting at reasonabletimes and places, and generally offering and discussing proposals andcounter-proposals in an attempt to reach an agreement. If genuine“impasse” is reached in negotiations, in most cases after a first contract,#p#分页标题#e#the parties must notify the government’s Federal Mediation andConciliation Services (FMCS), which can assist the parties in trying toreach a mediated agreement.177 Upon impasse, the employer can unilaterallyimplement its last offers made to the union. The union canpicket and strike (as they also could before the impasse), and the employermay legally, temporarily or permanently , replace the strikingemployees.178Some conduct permissible in the United States, such as picketing,striking, and other economic pressures, is not a realistic and practicaloption in China. As discussed, strikes in China do occur and are notlegislatively banned, and the trade union has the responsibility to assistin ending strikes, and, in some work safety situations, work stoppagesmay be acceptable. Yet, under clearly established practiceswhere there may well be government penalties associated with strikeactiv ities.Fifthly, there are clear differences in the U.S. and China approachesto enforcement and remedies against improper conduct. TheChinese Labor Bureau has the responsibility to supervise the negotiationprocess179 and to coordinate the parties in resolving issues180 by176. See id.177. Id. § 8(d)(3).178. GORMAN ET AL., supra note 160, at 600-15. See Mackay Radio & Tel. Co., 304 U.S. at345 (noting that employers may replace striking employees).179. PROVISIONSart. 49.180. TRADE UNION LAW art. 50.68 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35conducting a “dispute resolution process.”181 Thus, it is at least arguable,in theory, that the Labor Bureau could mediate/negotiate a settlementof certain improper conduct, as well as substantive contractissues, both presumably in accordance with legal requirements.However, very significantly, Article 54 of the 2004 Provisions stipulatesthe mediated settlement is not effective until signed by the chiefrepresentatives of each side, thus apparently negating a unilateral decisionby the Labor Bureau.182Remedies may also be available under the Trade Union Law ifthe employer refuses collective negotiations requirements put forwardby the trade union without any proper reason.183 For improperconduct occurring during negotiation or arising later from the performanceof the collective contract that violates the labor rights (contractor statutory) of employees, the disputes are to be resolved byLabor Arbitration Commission, with appeal to the courts for de novoreview. The Trade Union Law also provides a range of remedies forviolation of employee and union member’s labor rights; as such theprevention of an individual’s joining a trade union,184 insulting a tradeunion member,185 hindering trade union investigation of labor right#p#分页标题#e#infringements,186 or refusing to hold equal negotiation without anytenable reasons.187 Remedies range from the trade union requestinggovernment prosecution,188 to compensation (reinstatement withbackpay or double the annual income of the wronged employee).189Comparison also reveals a significant difference in terms of thelocation of statutory remedies for violations of employees’ statutorylabor rights related to collective negotiations. In China, the statutoryremedies are found in many locations involving numbers of laborlaws. One illustration of possible remedies for proscribed negotiationconduct can be found, as just discussed above, in the Trade UnionLaw. Another example is seen in the case of the Labor Law, whichprovides that violations are to be rectified and appropriate compensa-181. Id. art. 53(4).182. Id. art. 54.183. Id. art. 56.184. Id. art. 53.185. Id. art. 51.186. TRADE UNION LAW art. 53(3).187. Id. art. 53(4).188. Id. art. 54.189. Id. art. 52.2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 69tion owed should be paid.190 The 2004 Provisions, likewise, “house”another location for remedies. Presumably, the Labor ArbitrationCommissions through their labor arbitration tribunals will make appropriatereference to and use of these legal rights and remedies.The U.S. approach of enforcement of statutory labor rights violationsdiffers from that of the Chinese in that the United States has asingle bureaucratic administration, the NLRB, and one single governinglaw, the NLRA that supervises the process. The NLRB handlesthe adjudication of unfair labor practice cases, and its General Counsel’sOffice does the investigation and prosecution of law violators.191The NLRB is authorized to provide a range of remedies to “effectuatethe purposes of the Act.”192 These include “cease and desist” orders,notice posting regarding violations, reinstatement, back pay, anda variety of other affirmative remedies.193 The law requires theseremedies to be enforced through the courts.194 As to the enforcementof collective bargaining agreements, the contract rights are enforcedby the parties through private (non-governmental) labor arbitration.195 This is authorized under the law and precludes going directlyto court to enforce the collective bargaining agreement without firstexhausting the arbitration process.196 Judicial review of the arbitrationdecision is limited to a review that usually defers to the arbitrationdecision, as long as the process was fair and regular.IV. “IMAGINING” CHANGE: POSSIBILITIES FOR LABORREFORMAn objective examination of the 2004 Provisions may reveal tosome the possibility that China’s collective negotiations could, with#p#分页标题#e#additional labor reforms, take on essential characteristics of collectivebargaining, as reflected in ILO standards and U.S. experience. Whileactual implementation is yet to be seen, one can be hopeful, withinreason, that the steady evolvement in recent years’ labor legislationcan be matched by labor reforms in practice. Imagining what is possible,tempered by what is likely within “Chinese conditions,” canmove forward the possibilities of real labor reform. It is within that190. LABOR LAW art. 91.191. National Labor Relations Act, § 3.192. Id. § 3(c).193. Id.194. Id. § 10(e).195. Id. § 8(d).196. Id. § 8(d)(4)(C); see also National Labor Relations Act, § 203(d).70 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35spirit that the following possibilities for labor reform in China aresuggested.A. Defining the Parties and Adjusting the Role of the UnionInsisting on an “arm’s length” relationship between the employerand the union in representing entrepreneurial and employee welfareinterests is a beginning and adheres more closely to the ILO laborstandards. Presently, the ACFTU is set up in labor relations to be allthings to all people. It is possible, without systemic changes inChina’s political-legal system, to “de-integrate” the employer and unionin their “symbiotic” relationship and still allow the union to havea dual purpose, similar perhaps to a Japanese-style, functioning torepresent the employees while at the same time protecting the economicbest interests of the enterprise. Arguably, it can even indirectlyserve a third purpose, the economic development of the countryand its social stability. Some years ago, the CCP pulled back from itsdirect intervention in enterprise management activities and perhapsthat policy change could be a model for labor reform in collective negotiations.But clearly under international standards, it should be thebusiness of the employer, not the union, to make the case for its owninterests. Details of separating trade union representatives and managementcould be worked out and consideration might be given to theNLRA’s 8(a)(2) unfair labor practice limiting employer dominationand interference with the labor union (or in China’s case, perhapsalso visa-versa).197The role of the Chinese union can be slightly adjusted under existingpolicies. Because China primarily uses “enterprise unionism”(bargaining at the employer level), as has been mentioned, it has becomeenmeshed with the employer and management interests. Oneway to intervene in this “sweetheart” relationship is to require a regional(or “outside”) union to participate or perhaps have a leading#p#分页标题#e#role in the local negotiations, as the “professional representative” asis provided for in the 2004 Provisions. Current Chinese law nowpermits the ACFTU to have national or regional unions and to provideassistance to local unions. This practice is commonplace in theUnited States, and it allows for more independence in the negotiation.Additionally, this “outside” union representative can bring intothe negotiation examples of “real” model contracts that show numerousnegotiated contractual supplements to statutory labor rights. Pro-197. Id. § 8(a)(2).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 71fessional representatives of the union may also more easily proposelimitations on employer rules and regulations, which under the laborcontract provisions can be the basis for employee discipline and discharge.198 Finally, pe rhaps some creatively delegated responsibilitiesand adherence to established international standards could be devisedto guard the respective interests of the parties, especially those of theemployees, to provide against mixed loyalties and conflicts of interestsby the negotiating parties.An additional method of achieving increased autonomy of theunion during collective negotiations is to place and enforce a stronger“duty of fair representation” on the union, so that the union will haveto be accountable to represent its own constituency. Presently, a dutyof fair representation by the union already exists to a limited degree,as the union bears the responsibilities to solicit input from employees’proposals, to report on the progress of discussions, and then to seekratification by the employees of the negotiated contract. But thereseems to be no effective consequence for the union’s refusing or arbitrarilydisregarding employee input on contract provisions or of notfully or fairly representing the employees’ interests in labor rightsdisputes. Moreover, at the present time, without a stronger duty offair representation, there seems little adverse consequence to the unionrepresentatives for exchanging confidential negotiating positionswith the employer, unless that will indicate “bad faith” negotiating.Placing an affirmative obligation on the union and creating a legalcause of action by which the union’s action or inaction could be challengedby employees (not just through internal union processes)would encourage union responsibility to keep employees’ rights andinterests in mind. Internal union review presently is a mechanism inArticle 55 of the Trade Union Law, which states: “[S]taff members totrade unions who, in violation of this Law, damage employees’ ortrade union interests, shall be ordered to make corrections or be imposed#p#分页标题#e#sanction by trade unions at the same levels or higher trade unions.”199The weakness is the absence of a clear definition of what “damages”employees’ interests; nor is there a clear consequence for thesetypes of violations. As a reference, unions’ constitutions and internalprocesses in the United States were determined to be inadequate bythemselves to address such employee concerns. As a result, the198. LABOR LAW art. 25(2).199. TRADE UNION LAW art. 55.72 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35NLRB and the courts were made guardians of the employees’ treatmentby the union in fair representation cases.Another adjustment that can be made from existing law andpractice is for the union to expand its current use of industrial unions.This provides protection to untold numbers of heretofore unrepresentedemployees in need of protection of their labor rights and theACFTU has already had successes in its use. And, even where theunion is successful, employers can still benefit by avoiding competitivedisadvantages from non-covered employers, as all in the industrywould be subject to the same labor provisions, though perhaps withsome local market variances.B. Adjusting the Scope and Content of Negotiated ContractsFirst, because collective wage negotiations reportedly are oftenconducted independently from collective negotiations, a natural adjustmentwould be to combine the negotiations and put into the negotiatedagreement a “re-opener” clause on wages after one year, but tokeep the remainder of the collective contract in full force for its entireduration. Such a provision is common in the United States. Thiscomprehensive agreement brings economic issues back to the negotiatingtable where there can be part of a larger discussion on paymentof employee welfare and benefit provisions. The past practice inChina of artificially removing wages and related items undercuts theemphasis of the new Provisions, which have a very broad scope foreconomic and non-economic topics for negotiation. But without thesubject of wages, the negotiation on economic issues is diminished.Related to the negotiation process and the statutorily expandednumber of negotiation topics, the union must aim to achieve contractuallabor rights above and supplementary to statutory labor rights. Itwould seem that is part of the CCP’s interest in having the ACFTUpromoting social stability, especially among society’s potentially volatileemployee force. By the same token, the ACFTU can better serveits role of improving employment rights and benefits and channelingthe conflicts into dispute resolution processes as prescribed by theProvisions. The union of course, in its “dual purpose” role, can reasonably#p#分页标题#e#take into consideration the market condition of the employerin formulating realistic negotiating proposals.Lastly and as briefly mentioned earlier, there seems to be, underthe labor contract provisions of the Labor Law, an unnoticed andlargely unlimited ability for employers in the form of “employerrules” to write into labor contracts innumerable grounds for legal2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 73termination. Employer rules and regulations are authorized by Articles4 and 19 of the 1994 Labor Law, and they are apparently limitedonly in that they not be unlawful. Nevertheless, they are rules bywhich employees can be “lawfully” disciplined or terminated undertheir labor contracts. Article 25(2) of the Labor Law states that,where employees seriously violate the employer’s labor discipline(rules and regulations), they may be terminated.200 There is a legalrequirement that these rules be placed in a labor contract; 201 therefore,it is interesting that studies did not find contract clauses in thecontent of the collective contracts that would place contractual limitationson such seemingly unlimited employer power.An example of a case involving employer rules was where anemployee’s termination for quarreling with her supervisor was upheldin arbitration because it violated an employer rule that an employeeshould never “publicly contradict a supe rvisor.”202 In the UnitedStates, while employers may impose certain rules of conduct on employees,the unions always address their concerns over these rulesthrough other provisions in the collective bargaining agreement, suchas a “good cause” limitation or a requirement of “progressive discipline.”C. Clarifying Authority and Remedies of Labor BureauOf great aid to a meaningful and consistent collective negotiationsprocess in China is to consider clarifying and strengthening theadministrative authority and remedies of Labor Bureaus to supervisethe conduct of the collective negotiations. In China, the legal enforcementmechanism of labor rights and interests lies with governmentadministrative agencies, viz., the Labor Bureaus. The LaborBureaus supervise the collective negotiation process, whereas the laborarbitration commission and tribunals adjudicate the labor rightsviolations. However, the Labor Bureau has only a vaguely definedmediation role in seeking to resolve negotiation disputes, and the laborarbitration forum for labor rights is there for employees who usethem. The Chinese system must use the labor arbitration commissionand its tribunal as a “quasi-labor court” handling labor rights disputesarising from all sources, statutory and contractual.200. LABOR LAW art. 25(2).#p#分页标题#e#201. Id. art. 19(5).202. See Lu Shihua, Yuangong shouche tiaozhan laodong fa [Employee Handbook Cha llengesLaw], ZHONGGUO LAODONG BAOZHANG BAO [CHINA LABOR AND SOCIAL SECURITYNEWS], Apr. 24, 2004, http://www.clssn.com/bqty/2004pdf/042401.pdf (last visited Nov. 1, 2005).74 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35In contrast, the United States uses only the NLRB for issues relatingto the statutory negotiation process and related unfair laborpractices but leaves collective contract rights disputes to private arbitrationand the courts. Other statutory rights in the United States aretypically enforced through other government administrative agencies,which are usually “housed” under the governing statutes. There arebenefits to both approaches, single versus multiple forums, assumingeach is equipped with meaningful and effective authority and remediesto correct and stop the labor law violations. However, in the exampleof China’s collective negotiations provisions, an employee, andeven the Labor Bureau itself, may need to search in many “houses”for sources of labor rights and interests that might be violated, andpossible remedies, which may vary. For example, in collective negotiations,obligations can arise from the Labor Law, the Trade UnionLaw or the 2004 Provisions on collective negotiations, as well as fromother miscellaneous legal directives. However, such “diffused” authoritymay ameliorate the efficacy of the laws, even as they now exist.For instance, what if the employer were to engage in negotiationmisconduct, such as “bad faith” bargaining? Is it a violation of a laborinterest for the Labor Bureau to resolve, or a labor right for the LaborArbitration Commission and a Labor Arbitration Tribunal to resolve?And, what is the remedy? Do any of these government laboragencies have the authority to issue a “go back to negotiation” order?And even if so, how will the agency by legal means enforce that orderagainst a recalcitrant employer? The court will enforce a labor arbitrationdecision, but how will the Labor Bureau, in a timely fashion,obtain such an order and also supervise the negotiation conduct ofthe parties? If the negotiation misconduct also violates labor rights,how will the Labor Bureau, if at all, coordinate its supervision withthe potential remedies coming from the Labor Arbitration Tribunals?One reform that could strengthen the administrative authority ofthe Labor Bureau to supervise negotiation conduct is to “clarify” Article54 of the Provisions to broadly interpret “any disputes” as includingdisputes about negotiation conduct. A second clarificationwould be to remove the requirement that the parties must consent to#p#分页标题#e#a “Dispute Settlement Agreement,” as to negotiation conduct violations(as opposed to substantive terms of a collective contract).An alternative to providing the Labor Bureau sufficient authorityto supervise the negotiation conduct is to provide the parties directaccess to the courts. This would allow the employer or the trade un2006]CHINA’S COLLECTIVE CONTRACT PROVISIONS 75ion (and possibly employees) to directly file a lawsuit on the “grouplabor dispute” in the appropriate court to determine if there were anylegal violations of the requirements of negotiation conduct. Presumably,the court could fashion an appropriate remedy if a violationwere found.Appeals from the administrative organs in China again are bifurcated.For disputes arising out of the negotiations, the Provisionsprovide no clear guidance for review beyond the Labor Bureau level.Therefore, it is assumed that there could be a request for an administrativeappeal within the MOLSS, and possible a review by the court.By contrast, for labor rights, employees go to intra-enterprise mediationor directly to the Labor Arbitration Commission that will set upLabor Arbitration Tribunals. An appeal from this decision can bemade to the courts, but it will be a de novo review causing added delayand expense for the worker. Some workers also have shown interestin class-action suits (e.g., on the case of mass non-payment ofwages by an employer).203 In the United States, the courts generallydefer to the administrative decisions of the NLRB over statutory labordisputes and also to the decisions of the private arbitrator in contractlabor disputes, thus providing employees with a much quickerdecision than would exist if the case were re-litigated in the courts inthe normal course of appeals.Workers in China also have sought remedies through optionsother than using the Labor Bureaus. Strikes and economic protests inChina do occur, often when an employer has refused to pay wages orhonor safety conditions, and the employees erupt in frustration.However, strikers, and particularly strike leaders, are not well protectedunder the law and risk legal consequences. Of course, strikesin the United States are not entirely risk-free, as employers have thelegal right to permanently replace private employee strikers in orderto keep their business operating.There are other remedies that could be provided as an alternativeto unregulated strikes and protests and could channel these volatilelabor disputes into a regulated forum. For example, in the UnitedStates, some local government employees are provided “interest arbi-203. Xinhua News Agency reported that 71 workers prevailed in the mass non-payment suitand local People’s Court helped the workers collect the judgment just before the employer#p#分页标题#e#could liquidate his assets. See Laoban er’yi tuoqian gongzi fayuan gongzheng zhifa weihu gongrenquanyi [The People’s Court Protect Workers’ Rights], XINHUA NEWS AGENCY, Oct. 14,2004, http://news.xinhuanet.com/legal/2004-10/14/content_2089502.htm (last visited Mar. 19,2005).76 DUKE JOURNAL OF COMPARATIVE & INTERNATIONAL LAW [Vol 16:35tration” in lieu of a strike.204 Indeed, strikes in state and local governmentare usually outlawed, and proposals have been made for usinginterest arbitration, partial strikes, and other mechanisms as alternativesto the strike.205Of course, national characteristics always dominate, as theyshould, in the formulation and implementation of legislation. In thearea of collective negotiations some of the “Chinese national characteristics,”or “Chinese environment,” include non-confrontational negotiations,unions born as implementers of national policies (ratherthan as employee advocates), enterprise unionism, the legacies of asocialist planned economy (such as the role of the trade union), andlaw enforcement and rule of law concepts that still need further developmentin the minds of everyday citizens. Implementation of theabove suggested “clarifications” could certainly bring the practice ofcollective negotiations closer to meaningful collective bargaining underinternational standards; and, in the process can ultimately lead toa better safeguarding of Chinese workers’ labor rights.CONCLUSIONIn conclusion, there are benefits to an analysis that examines allthe pieces of a particular law and practice. Each can be examinedpiece-meal and/or as a whole. And, one can surely anticipate that explanationsand reasons will be forthcoming on each proposal, “whythis won’t work,” “why this is misunderstood,” and “why this is impracticable.”204. Arbitration emerged as an alternative to strikes in addressing public sector labormanagementinterests. For example, the Ohio Collective Bargaining Act, OHIO REV. CODEANN. 4117.01-23 (2002), provides mechanisms to resolve disputes before strikes occur, and inthe case of police, fire, and safety forces, to resolve disputes so that strikes would not occur. Fora detailed discussion, see James T. O’Reilly, More Magic with Less Smoke: A Ten Year Retrospectiveon Ohio’s Collective Bargaining Law, 19 DAYTON L. REV. 1 (1993). Similarly, the OregonPublic Employee Collective Bargaining Act (OrPECBA), OR. REV. STAT. §§ 243.650-782(2002), prohibits police officers, firefighters, prison and mental health institution guards, and911 operators from striking, but provides them with a right to petition for interest arbitration.Martin H. Malin, Public Employees’ Right to Strike: Law and Experience, 26 U. MICH. J.L.#p#分页标题#e#REFORM 313,348-49 (1993).205. See Merton C. Bernstein, Alternatives to the Strike in Public Labor Relations, 85 HARV.L. REV. 459, 459 (1971) (arguing that an absolute ban on strikes by public employees is ineffective,but proposing other procedures for public labor relations dispute resolution). See alsoBenjamin Aaron, Unfair Labor Practices and the Right to Strike in the Public Sector: Has theNational Labor Relations Act Been a Good Model, 38 STAN. L. REV. 1097, 1118-19 (1986) (discussinglegal alternatives to the strike, as developed by individual U.S. states).2006] CHINA’S COLLECTIVE CONTRACT PROVISIONS 77But just imagine if the labor reformers in China can look past“things as they are” and instead focus on “things that never were”and say, “why not?” Perhaps the use of the collective negotiationsunder the 2004 Provisions can aid in that process and provide the forumthat channels the growing collective demands of workers for improvedlabor rights and benefits.The PendingChina Anti-Monopoly LawH. Stephen Harris, Jr.Doing Business in China –The Latest ChallengesAmerican Bar AssociationAnnual MeetingHonoluluAugust 4, 2006Influence of International Law and Normson Competition Law• Until the 1980s, U.S. was the only majorjurisdiction with strongly enforcedcomprehensive antitrust law regime• Other jurisdictions had laws, but littleenforcement prior to 1980s or later:– Canada (enacted 1889)– Europe (enacted by Treaty of Rome, 1957)– Japan (enacted 1947)Influence of International Law and Normson Competition Law• Explosion of competition laws during1980s and 1990s• Over 100 jurisdictions now have such lawsInfluence of International Law and Normson Competition Law• Several high-profile disagreements highlightedneed for development of norms:– GE/Honeywell merger: approved in U.S., blocked inEU– Boeing/McDonnell-Douglas (same)– Nippon Paper criminal prosecution in U.S. (disputedby Japan as improper extraterritorial enforcement)Influence of International Law and Normson Competition Law• Increasing interaction among antitrust enforcershas tended to develop consensus on broadnorms:– increasing cooperation, formal and informal, amongantitrust enforcement agencies– growth in “positive comity” bilateral agreements– close coordination on cartel investigations andenforcementInfluence of International Law and Normson Competition Law• Formal efforts to develop international norms:– International Competition Policy Advisory#p#分页标题#e#Committee Report (U.S., 2000)– ABA, IBA, OECD, UNCTAD and other NGOworking groups developed proposed norms (e.g.,OECD Merger Recommendation)– International Competition Network (now withagencies from over 85 member countries)– International consortia and symposia and publishedpapersInfluence of International Law and Normson Competition Law• General consensus on certain key points:– “Hard-core” horizontal collusion unlawful:• Price-fixing• Bid-rigging• Allocating territories or customers amongcompetitors• “Naked” agreements not to competeInfluence of International Law and Normson Competition Law• General consensus on certain key points:– Large mergers affecting local markets shouldbe subjected to review to prevent creation ofmonopoliesInfluence of International Law and Normson Competition Law• Less consensus on types of exclusionary,exploitative and discriminatory single-firmconduct violates law– generally prohibitions apply only to “dominant”firms– may apply to “collective dominance” (EU, but notU.S.)– may obligate a dominant party to deal with entities(more broadly applicable in EU than U.S.)– bundling, “unfair pricing”Influence of International Law and Normson Competition Law• Less consensus, especially in developingcountries, re whether “non-pure”competition law factors should beconsidered– Effect on local businesses (“protectingcompetitors, not competition”)– Effect on local jobs– Restriction of import competitionInfluence of International Law and Normson Competition Law• Less consensus on standards, e.g.:– in merger review, should creation ofdominance or substantial lessening ofcompetition be the test?– should complaining party be required todemonstrate substantial harm to competition?Challenges and Obstacles toInternational Competition Law Standards• Commercial traditions and customs– collaborative activities common in manycultures (Japan, Europe)– “culture of competition” takes time toestablishChallenges and Obstacles toInternational Competition Law Standards• Legal systems– Civil jurisdictions usually seriously restrictdiscovery in litigation, rendering privatecompetition litigation generally ineffective– Resistance to “punitive” damages such as U.S.treble damages limits attractiveness ofbringing complaints, impeding “private#p#分页标题#e#enforcement”Challenges and Obstacles toInternational Competition Law Standards• Legal systems– Jurisdictions with strong reliance on administrativeenforcement may emphasize protection ofgovernment interests (including, e.g., protecting localcompetitors) more than the consumers’ interests incompetition– Jurisdictions with recently enacted competition lawslack bar and judiciary familiar with economicconcepts of competition lawChallenges and Obstacles toInternational Competition Law Standards• Legal systems– Jurisdictions without strong reliance oncriminal penalties for non-violent conductresist criminalization of anticompetitiveconductChallenges and Obstacles toInternational Competition Law Standards• Economic systems– Jurisdictions moving from planned economiesto market economies lack infrastructure and“culture of competition”– Enterprises owned by government, or seen as“national champion” may be protected bygovernmentChallenges and Obstacles toInternational Competition Law Standards• Genuine disputes among economists andlegal scholars on “proper” objects ofcompetition law– significant debate on types of single-firmconduct that harm competition– significant debate on methods of provingharm to competitionObservations and Practical Considerations inOvercoming These Obstacles in China• The PRC has never had a comprehensivecompetition law• From 1970s forward, China has adopted abroad policy of movement to a “socialistmarket economy,” including intentions toprivatize State-Owned Enterprises andrestrict “regional blockage”Observations and Practical Considerations inOvercoming These Obstacles in China• Progress has been slow and uneven on thesereforms• From 1993 to date, serious efforts have beenunderway to develop a comprehensivecompetition lawA Observations and Practical Considerationsin Overcoming These Obstacles in China• 1997: Enactment of Price Law (effective 1998),prohibits price-fixing, but created local agenciesthat controlled certain pricing• 1997: Comprehensive competition lawtemporarily shelved as political winds reversedand government supported growth of large SOEsas “major engines of economic growth”Observations and Practical Considerations inOvercoming These Obstacles in China• Late 1990s – early 2000s: much criticismof trademark piracy and otherinfringements of IP rights• Seen as threat to continuing investment#p#分页标题#e#• China adopts some policies to reduce IPinfringement, but criticism continuesObservations and Practical Considerations inOvercoming These Obstacles in China• 2002: China accedes to the WTO• In response to concerns about China’s ability tocomply with WTO requirements, NPC StandingCommittee stated that China would adoptcomprehensive antitrust law• Government officials highlighted the need toaddress anticompetitive conduct by“administrative monopolies” (protected SOEs)Observations and Practical Considerations inOvercoming These Obstacles in China• 2002: MOFTEC adopts notice and reviewprocedures for concentrations of foreignownedenterprises• 2003: MOFCOM and SAIC adoptProvisional Rules on the Prohibition ofMonopolistic Pricing Behaviors(incorporating some elements ofcomprehensive modern competition laws)Observations and Practical Considerations inOvercoming These Obstacles in China• 2002: Reinvigoration of efforts to draftcomprehensive competition law• 2002-2005: MOFCOM, SAIC and the StateCouncil host many conferences andmeetings with Chinese and foreign expertsand officialsObservations and Practical Considerations inOvercoming These Obstacles in China• 2002-2005: numerous requests for input• 2002-2005: comments from IBA, ABA,OECD, UNCTAD, APEC; mostgovernment enforcers, Chinese academicsand others• 2002-2005: numerous drafts of a proposed“Anti-Monopoly Law”Observations and Practical Considerations inOvercoming These Obstacles in China• Significant value from discussion anddebate and movement towards internationalnorms:– Draft M&A review provisions made moreconsistent, substantively and procedurally,with most other jurisdictions– Inclusion of more normative concepts ofmarket definitionObservations and Practical Considerations inOvercoming These Obstacles in China• Significant value from discussion anddebate and movement towards internationalnorms:– Differentiation between horizontal andvertical agreements– Change from prohibition of monopoly statusto prohibition of monopolistic conductRemaining Obstacles and Challengesin November 11, 2005 Draft• The “Essential Facilities Provision”• April 8, 2005 Draft, Article 22:– “In the case that an undertaking is unable to compete with theundertakings with dominant market position without the access to anetwork or other infrastructures owned by those dominant undertakings inrelevant market, the undertakings in dominant position shall not refuse to#p#分页标题#e#grant access to the network or other infrastructures to other undertakingsat reasonable prices. However, the undertaking in dominant position maybe exempted if it can establish that it is impossible or unreasonable togrant access to the network or other infrastructures to other undertakingson account of technology, security or other justifiable reasons.”• Deleted from 11/11/05 Draft (but may indicate policy)Remaining Obstacles and Challengesin November 11, 2005 Draft• The “IP Abuse Provision”• April 8, 2005 Draft, Article 56:– “This Law is not applicable to undertakings who exercise their rightsunder the Patent Law, the Trademark Law and the Copyright Law.However, abuse of intellectual property rights in violation of this Law willbe dealt with pursuant to this Law.”• November 11, 2005 Draft, Article 48:– “This Law is applicable to conduct by undertakings eliminating orrestricting competition by the abuse of rights stipulated by the IntellectualProperty Right Laws or administrative regulationsRemaining Obstacles and Challengesin November 11, 2005 Draft• The Treatment of “Regional Blockage” or“Sectoral Monopolies”• April 8, 2005 Draft, Article 45 and relatedsections– Essentially giving the Anti-Monopoly Authority superiorpower to enforce competition law over sectoral laws andregulations inconsistent with the Anti-Monopoly Law• November, 11, 2005 Draft, Article 38:– Generally delegates sector-specific agencies to take lead oninvestigations of violations in their sectors, and appliessectoral laws and regulationsRemaining Obstacles and Challengesin November 11, 2005 Draft• The Treatment of “Administrative Monopolies”• April 8, 2005 Draft, Article 35– “The Government and its subordinate departments shall notpromulgate rules with provisions eliminating or limitingcompetition in violation of laws and administrativeregulations so as to prevent the establishment of a unified andorderly national market and of a fair competitiveenvironment.”• Deleted in November 11, 2005 DraftRemaining Obstacles and Challengesin November 11, 2005 Draft• The Number, Independence, Powers andStructure of the Enforcement Agency/Agencies• April 8, 2005 Draft:– Single agency under the aegis of the State Council(the most independent approach possible underChina’s political system)• November 11, 2005 Draft:– Multiple agencies with “Anti-Monopoly Committee”of principles of various departments and organsRemaining Obstacles and Challenges#p#分页标题#e#in November 11, 2005 Draft• Legal Liability• April 8, 2005 Draft, Article 52:– “The undertaking that violates the provisions of this law and injures therights and interests of others shall make compensations to the victim. Theamount of compensation will be twice of the actual loss suffered by thevictim. When it is difficult to calculate the loss of the victim, the amountof compensation will be the profit gained by the reasonable expenses ofthe victim incurred during the course of investigation and legalproceedings.”– November 11, 2005 Draft, Article 44:“When an undertaking’s conduct in violation of this Law causes loss toothers, the undertaking shall be responsible for civil liabilities such as tocompensate the injury.”Remaining StructuralObstacles and Challenges• Legal Liability/Court enforcement vs.administrative process• Courts lack training and expertise in competitionlaw and market economics• Courts are controlled by local governments withinterest in protecting SOEs• Agency more likely to create consistentapproach to law• Special competition court?Thank you.1 ABA Annual Meeting All rights reserved 2006 I2PAsiaIntellectual Property Concerns forDoing Business in ChinaElizabeth [email protected] 4, 20062 ABA Annual Meeting All rights reserved 2006 I2PAsiaBusiness Considerations: