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### Viewing cable 06BEIJING23804, CHINESE AND U.S. EXPERTS DISCUSS COAL MINE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06BEIJING23804 | 2006-11-16 05:41 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Beijing

`

    VZCZCXRO0349
    PP RUEHCN RUEHGH
    DE RUEHBJ #3804/01 3200541
    ZNR UUUUU ZZH
    P 160541Z NOV 06
    FM AMEMBASSY BEIJING
    TO RUEHC/SECSTATE WASHDC PRIORITY 2129
    RUEHC/DEPT OF LABOR WASHDC PRIORITY
    INFO RUEATRS/DEPT OF TREASURY WASHDC
    RUCPDOC/USDOC WASHDC
    RUEHSH/AMCONSUL SHENYANG 7151
    RUEHGH/AMCONSUL SHANGHAI 6429
    RUEHCN/AMCONSUL CHENGDU 7503
    RUEHGZ/AMCONSUL GUANGZHOU 1846
    RUEHIN/AIT TAIPEI 6067
    RUEHHK/AMCONSUL HONG KONG 8453
    RUEHGV/USMISSION GENEVA 1429

` `

    UNCLAS SECTION 01 OF 07 BEIJING 023804

    SIPDIS

    SIPDIS
    SENSITIVE

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

    E.O. 12958: N/A
    TAGS: ELAB PGOV PHUM EMIN CH
    SUBJECT: CHINESE AND U.S. EXPERTS DISCUSS COAL MINE
    SAFETY-RELATED LEGAL ISSUES IN CHINA

    (U) SENSITIVE BUT UNCLASSIFIED: NOT FOR INTERNET
    DISTRIBUTION.

    ¶1.  (SBU)  Summary:  On October 21-22, the American
    Center for International Labor Solidarity (ACILS) co-
    hosted a conference on "Legal Means to Address the
    Problem of Mine Accidents" with Chinese experts in
    Beijing.  The Chinese experts were extremely candid
    about the seriousness of China's mine safety problem,
    and the reasons behind it.  They described a failing
    mine safety regime based on an incomplete legal
    framework with poor enforcement.  They described how
    mine owners collude with corrupt government officials
    to undermine this regime, and noted that mine workers
    have virtually no effective means of protecting their
    own rights.  Chinese experts were very interested in
    U.S. experiences, and how U.S. laws, regulations and
    enforcement mechanisms have led to a vastly superior
    safety record.  Most Chinese experts showed a deep-
    rooted suspicion of private ownership of mines, and
    even private sector involvement in providing work
    injury insurance.  U.S. presentations were well
    received, and Embassy believes Chinese experts and
    policy makers are interested in, and would be
    receptive to, more discussion of how the United States
    has achieved its superior record on occupational
    safety and health (OSH) within the context of a market
    economy.  End summary.

    ¶2.  (U)  On October 21-22, ACILS and the China
    University of Political Science and Law co-hosted an
    academic conference on "Legal Means to Address the
    Problem of Mine Accidents."  The proceedings painted a
    picture of a fragmented and ineffective legal
    framework for OSH regulation, enforcement and accident
    compensation.  Participants included an influential
    cross-section of labor, OSH and work injury insurance
    officials and experts.  Several prominent Chinese
    academic institutions were represented, as were the
    Ministry of Labor and Social Security (MOLSS), the
    State Administration for Work Safety (SAWS), the All
    China Federation of Trade Unions (ACFTU), and other
    government and ACFTU-affiliated institutions.  ACILS
    Labor Law Counsel/China Program Director Earl Brown
    and U.S. mine safety consultant Joe Main also
    addressed the conference on the U.S. experience.
    Laboff and Labor Assistant participated as observers.

    A FRAGMENTED LEGAL FRAMEWORK
    ----------------------------

    ¶3.  (U)  China's system for compensating victims of
    mine accidents has two main components according to a
    senior official from MOLSS: 1) a social insurance
    system, based on the Labor Law and Civil Service Law,
    which provides benefits to accident victims directly
    from the local government budget or government
    administered social pooling fund, and 2) civil
    compensation for victims which exempts employers from
    legal liability.  The social insurance system is the
    benefit provider of first resort.

    ¶4.  (U)  The social insurance system currently covers
    95 million Chinese workers, according to MOLSS, 15
    percent of whom are in "high risk" industries.
    Employers in high risk industries pay higher social
    insurance contributions, but the system does not track
    the safety records of individual employers.  Compliant
    employers effectively subsidize non-compliant
    employers.  Benefits are based on lost wages, with
    death benefits set administratively at 48-60 months
    wages.  According to several participants, the social
    insurance is fairly reliable, as long as the employer
    participates in it, but can be slow in paying claims.

    BEIJING 00023804  002 OF 007

    ¶5.  (U)  Under civil law, lump sum or sustained
    compensation payments are based on the victim's
    salary, the level of injury and duration of
    disability.  However, China has no specific
    regulations on what civil damages should be.  These
    appear to be up to the discretion of local judges.  In
    practice, according to conference participants,
    workers and their families rarely seek civil
    compensation, especially if they are covered by social
    insurance.

    ¶6.  (U)  The Law on Production Safety requires
    employers to purchase work injury insurance for
    employees "in accordance with the law," and allows
    workers to pursue compensation claims against the
    employer "if, according to the civil laws, they have
    the right to do so apart from enjoying the employment
    injury insurances."  Conference participants noted
    that in practice this is a very difficult process and
    rarely used.  Courts can also reject such cases if the
    employee is covered by social insurance.

    ¶7.  (SBU)  Commercially available liability insurance
    also plays a role in accident compensation, in some
    locations and some industries.  MOLSS noted that some
    government agencies, e.g., the Ministry of
    Construction, require employers to purchase liability
    insurance policies for workers.  Private insurance
    only comes into play for claims not covered by the
    social insurance program.  One presenter called for a
    greater role for private insurance companies, arguing
    that they could play an important role in bringing
    mines into compliance with health and safety
    standards, but presentations from MOLSS and other
    Chinese presenters revealed deep-rooted doubts about
    private sector involvement in a social welfare
    function.

    ¶8.  (SBU)  There was considerable discussion at the
    conference of the use of administrative orders to set
    minimum compensation standards for injury or death.
    Shanxi Province, for example, enacted a regulation in
    2006 requiring coal mine owners to pay standard
    compensation of 200,000 yuan (about USD 25,000) in the
    case of mine-related deaths.  A participant from MOLSS
    criticized such administrative standards as having no
    basis in any overarching law, and running contrary to
    the principal of risk sharing.  He added that in some
    cases, mine owners stopped contributing (illegally,
    but without consequence) to social insurance programs
    after such administrative orders went into effect.
    These employers argued that there is no reason to pay
    into an insurance system that does not reduce their
    potential liability.  Other participants acknowledged
    that such orders are "extra-legal" but said they are
    effective -- mine deaths dropped 10 percent in Shanxi
    after the regulations when into effect.  Despite
    debate over the legality of administrative
    compensation standards, there is strong support among
    academics at the conference for higher standards of
    compensation to increase the cost to employers of
    accidents.

    ¶9.  (SBU)  Conference participants showed strong
    interest in greater use of criminal penalties to
    prevent and punish mine accidents.  Several conference
    participants noted that articles of the criminal code
    on forced labor and major accidents could potentially
    serve as a basis for criminal penalties, but that the
    criminal code focuses on the results of negligence,
    not on negligence itself.  One participant said that
    under current law, a mine owner who orders production
    operations to proceed under conditions he knows to be
    dangerous cannot be held criminally accountable unless
    there is an accident.  One observer noted that the

    BEIJING 00023804  003 OF 007

    crime of "negligence" is too weak a charge, and that
    the criminal code should be amended to allow charges
    of premeditated murder in cases of mine accidents
    resulting from negligence.

    ¶10.  (U)  The 1992 Law on Mine Safety gives county-
    and higher-level governments authority over mine
    supervision and inspection, but one presenter noted
    that the law has not been revised to reflect the
    economic transition that has taken place since its
    passage.  He pointed out that a strict reading of the
    law would make it non-applicable to illegal mines, for
    example, and that the State Council's creation of the
    State Administration for Work Safety (SAWS) and the
    State Administration for Coal Mine Safety (SACMS), the
    Chinese Government's flagship agencies for protecting
    mine workers, may not technically even be legal.
    Other presenters were critical of the 2002 Law on
    Production Safety, including for being biased in favor
    of production over workers interests.

    UNEVEN IMPLEMENTATION AND ENFORCEMENT
    -------------------------------------

    ¶11.  (SBU)  Almost without exception, Chinese
    presenters described China's legal framework for
    addressing the mine accident problem as "incomplete,"
    and enforcement as weak.  MOLSS noted that although
    participation in the workplace injury insurance system
    is mandatory, many mine owners simply ignore it.
    Penalties for not contributing are limited to a few
    thousand yuan (several hundred dollars), insufficient
    to force compliance.  When accidents occur in mines
    where employers have not paid their insurance
    contributions, some local governments simply bow out,
    advising victims and their families to seek civil
    compensation, rather than paying benefits to the
    victim and pursuing back contributions from the
    employer.  There is no guarantee fund to cover benefit
    payments in cases where the employer is uninsured or
    absconds.  The social insurance contribution
    collection and pooling system is ill-defined and
    varies widely by location.

    ¶12.  (SBU)  Social insurance programs do not cover
    informal employees, and when employers hire labor
    through labor contractors or other middlemen, the law
    provides little guidance regarding how to determine
    who the "employer" is.  (A draft Labor Contract Law,
    currently under consideration in the National People's
    Congress, may help to clarify this point.)  One
    presenter noted that the majority of mine workers are
    migrant workers who do not enjoy full protection under
    the law in any case.  While the Labor Law makes no
    distinction between migrants and other workers with
    respect to rights and benefits, migrants often have
    difficulty participating in local-government
    administered social insurance programs, joining local
    union branches, or receiving legal protection from
    local law enforcement authorities or courts.

    ¶13.  (SBU)  MOLSS reported that 26 million migrant
    workers are covered by work injury insurance in China
    in all industries, but that no one knows how many
    migrants are not covered.  (Estimates of the total
    number of migrant workers in China range from 120-200
    million.)  MOLSS hopes to achieve full workplace
    injury insurance coverage for migrant workers in the
    mining and construction industries by the end of 2008,
    and is currently exploring ways to do this without
    creating a new, duplicative system.

    ¶14.  (SBU)  A participant from the State Council Legal
    Affairs Office criticized the system of accountability
    for mine accidents.  He said Central Government

    BEIJING 00023804  004 OF 007

    policies dating back to 2000, which hold local
    government officials accountable for mine accidents
    that occur within their jurisdictions, perversely
    encourage these officials to cover up accidents or
    pass off mine supervision responsibilities to younger,
    less powerful officials.   He added that regulations
    governing mine accident investigations are overly
    bureaucratic.  Even local governments interested in
    conducting investigations do not have the resources to
    do so, especially given the large number of government
    agencies required by law to be involved.

    ¶15.  (SBU)  Corruption was a major topic of
    discussion.  Numerous presenters blamed the high
    frequency of mine accidents on collusion between mine
    owners and local government officials responsible for
    enforcing mine safety laws.  One professor noted that
    when compensation is paid to accident victims in
    China, there is generally no follow-up to determine
    whether the accident resulted from negligence by local
    officials.  Another professor, illustrating the point
    that too many local government officials own shares in
    small coal mines, described meeting a prison guard
    with a share in a local coal mine.  He added that
    local governments cannot be relied upon to investigate
    accidents.  Local governments perform administrative
    investigations before criminal investigations take
    place, giving guilty parties an opportunity to
    manipulate the accident site.  One presenter noted
    that many mine accidents, including accidents with
    large numbers of fatalities, go unreported, and that
    the actual number of mine fatalities and injuries is
    unknown.   If not for media attention, one participant
    said, there would be even more violations.

    ¶16.  (SBU)  A vocal group of participants argued that
    China should amend the criminal code to create
    meaningful criminal sanctions against mine owners or
    government officials whose negligence leads to mine
    accidents.  One presenter argued that mine owners who
    knowingly allow production to continue under dangerous
    conditions should be charged with premeditated murder.
    Alternatively, he said, China could amend the criminal
    code to create a new crime of "compromising production
    safety," as long as this crime carried heavy sentences
    sufficient to deter illegal behavior.  Another
    presenter suggested that China should add a new crime
    to the criminal code for "dereliction of duty" in
    order to make government officials legally liable when
    they fail to enforce mine safety rules.

    ¶17.  (U)  The definition of what constitutes a
    workplace injury is also an issue.  For example, one
    law school professor said that there is no legal
    framework for dealing with injuries arising from
    prolonged exposure to hazardous conditions, e.g., lung
    disease.  Without a specific accident in the
    workplace, there is no way to compensate workers for
    their injuries.

    ¶18.  (SBU)  Many presenters said China basically has
    an adequate legal and administrative framework for
    mine safety enforcement, but that the problem lies in
    coordination and enforcement.  One presenter argued
    that legal responsibility for different aspects of
    mine safety supervision and enforcement is unclear,
    and that key functions fall through the cracks.  He
    described supervision and inspection activities by
    local mine safety authorities as "perfunctory."  Many
    presenters pointed out that penalties for violations,
    including serious violations, are too weak to deter
    negligence or encourage investment in better safety
    equipment, training and practices.  SAWS reported that
    cooperation between its local mine safety inspectors
    who report to Beijing and those who still report to

    BEIJING 00023804  005 OF 007

    local governments remains problematic.

    THE ROLE OF TRADE UNIONS
    -------------------------

    ¶19.  (SBU)  By most accounts, the ACFTU plays no
    significant role in preventing mine accidents or
    protecting the interests of victims.  The ACFTU has a
    statutory right to supervise enterprise compliance
    with OSH regulations and to participate in mine
    accident investigations.  However, academics at the
    conference sharply attacked the union for its weakness
    and its failure to represent its members in court.
    One academic described the ACFTU to Laboff during a
    coffee break as a "fake union."  One presenter told
    the conference that ACFTU unions are sometimes under
    the control of the enterprise or its managers, and
    that these unions side with management in pursuit of
    their own personal interests.  The presenter added
    that despite the large number of mine accidents that
    have occurred, he knows of no instance in which a
    union branch has ever stood up to confront management
    on behalf of workers' interests.  Several presenters
    noted that despite the special status afforded to
    ACFTU by law, mine workers, especially migrant
    workers, have no bargaining power, and that the union
    does not protect the workers' right to call attention
    to OSH violations in their workplaces.

    ¶20.  (SBU)  ACFTU representatives agreed that the
    union needs to increase its efforts and offered no
    examples of cases in which ACFTU union did stand up
    against employers.  One ACFTU presenter even said that
    the union's level of activity in OSH work at the
    enterprise level is in "obvious decline."  She
    attributed the union's weakness to the lack of a
    formal, legally-established tripartite OSH
    consultative mechanism.  She described ACFTU's legal
    role as participating in the "democratic management"
    and "democratic supervision" of the enterprise,
    meaning that it should encourage and assist the
    government in supervising OSH compliance, point out
    problems and raise "constructive suggestions" that
    benefit both workers and the enterprise.  There was no
    discussion of strikes, halting production at non-
    compliant mines, or defending workers who wish to
    exercise their legal right to remove themselves from
    dangerous working conditions.  ACFTU experts said the
    union is working with the Ministry of Justice to
    establish new legal aid mechanisms for workers, and
    trumpeted a program it is running to train 100,000
    experienced coal miners as mine safety officers.  Even
    in the context of these limited programs, however, the
    ACFTU expert warned against over-inflated
    expectations, given the ownership structure of coal
    mines and the legal framework for protecting workers'
    interests.

    INTERESTED IN U.S. EXPERIENCE
    -----------------------------

    ¶21.  (SBU)  Several Chinese participants cited the far
    superior mine safety record in the United States, and
    showed interest in learning from the U.S. experience.
    Brown's and Main's presentations on U.S. law, accident
    prevention and compensation practices were very well
    received.  Chinese participants were particularly
    interested in how the U.S. keeps track of who holds
    financial interests in coal mines, and whether such
    information is considered trade secrets.  Explanation
    of U.S. public disclosure rules led several Chinese
    participants to conclude glumly that even if similar
    regulations were enacted in China, owners would
    circumvent them by buying and holding shares in
    another person's name, or simply eliminating the paper

    BEIJING 00023804  006 OF 007

    trail that documents their ownership.

    ¶22.  (SBU)  Chinese participants showed strong
    interest in U.S. laws under which employers, equipment
    manufacturers, or other parties could face criminal
    charges for intentional negligence, even in cases
    where no accidents or injuries occur.  Discussion of
    U.S. law sparked debate among Chinese participants
    about how to use criminal law to punish and deter
    illegal or unsafe mining practices.  Some Chinese
    participants were intrigued by the idea that
    misrepresentation or fraud could itself lead to
    criminal sanctions.  Several Chinese participants
    lamented that existing Chinese criminal law focuses on
    the consequences of criminal negligence, rather than
    the criminal negligence itself.

    ¶23.  (SBU)  Chinese participants were interested in
    U.S. rules which allow union members to demand safety
    inspections at any time, at the employer's expense.
    They also showed strong interest in U.S. and third
    country models for Labor-Management Safety Committees.

    LOOKING TO THE STATE FOR SOLUTIONS
    ----------------------------------

    ¶24.  (SBU)  The Chinese participants at the conference
    presented a variety of viewpoints, but were generally
    biased against the private sector, and skeptical that
    market and civil mechanisms could effectively protect
    workers' interests.  Several participants suggested
    that private ownership of mines leads inevitably to
    non-compliance with OSH laws and regulations, that the
    private sector is not "moral" enough to play a
    significant role in providing workplace injury
    insurance, or that the profit motive undermines any
    possibility of achieving a balance between sustained
    production levels and respect for workers' rights.
    Participants were not blind to the Chinese
    Government's failure to adequately resolve mine safety
    problems, but still called for an even greater state
    role -- tougher laws to deter corruption, stronger
    administrative and criminal penalties, and increased
    inspection and oversight to prevent mine accidents and
    improve working conditions.

    A CHANCE TO MAKE AN IMPACT
    --------------------------

    ¶25.  (SBU)  Comment:  The Chinese Government claims to
    be serious about improving mine safety, and worker
    safety in general, but has no clear strategy.  Chinese
    OSH experts at the conference were well aware of the
    problems China faces, and see the United States as one
    country which has valuable experience to offer.
    Events like the conference on "Legal Means to Address
    the Problem of Mine Accidents" provide an opportunity
    for American presenters to introduce ideas that might
    not come naturally to China's bureaucracy or
    influential academics.  At the same time, the candid
    presentations of Chinese experts provided valuable
    insight into China's management of labor-related
    issues that could potentially affect China's social
    stability.  Embassy believes the conference was
    beneficial for both sides, and thoroughly in line with
    the goals of our Letters of Understanding with the
    Chinese Government on labor issues.  The conference
    also brought to light key themes which the USG
    agencies may wish to revisit when discussing OSH
    issues with China.  These include:

    --  OSH is about rule-of-law, not property rights.
    Private ownership of mines and other enterprises is
    not inconsistent with high OSH standards.  For
    example, the U.S. coal industry, with 100 percent of

    BEIJING 00023804  007 OF 007

    mines in private hands, has an OSH record far superior
    to China's.

    --  The key to safe and healthy workplaces is a
    functioning regulatory framework, combined with a
    well-defined system for legal liability and effective
    enforcement.

    --  Civil law can provide just compensation for
    accident victims and their families, and effectively
    deter OSH violations, provided that damages are well-
    defined and significant.

    --  Private insurance can play a very useful function,
    not only in sharing risk, but also by providing an
    additional layer of scrutiny over the enterprises
    covered by their policies.  Private insurance
    companies can base insurance premiums on an employer's
    safety record, effectively forcing the non-compliant
    employers to subsidize the compliant.

    --  Worker involvement in monitoring OSH conditions
    and reporting violations to management and/or relevant
    government agencies can be extremely effective, but
    only when workers are free to perform this function
    without interference or fear of reprisal.

    End comment.

    RANDT

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