Bush Is Setting The Bloodhounds On Beijing

The first tip came in October, in the form of a letter from a disgruntled competitor. Two months later, on Dec. 2, a dozen Customs Service agents showed up at E. W. Bliss Co. in Hastings, Mich., with a search warrant. While employees were quickly sent home, Bliss President Robert A. Fuller looked on in amazement. Customs combed his offices for seven hours and found what they were after: evidence that the company had been importing machine presses manufactured in Chinese prison factories. They seized 31 machines valued at $560,000 and seven boxes of documents that Customs says will prove that Bliss officials knowingly purchased their goods from these prisons. Bliss denies any wrongdoing.

The unprecedented raid is the most dramatic indication yet that the White House is putting the issue of Chinese forced-labor exports on the front burner. In an election year, Bush is feeling the heat from Congress for being soft on Beijing. To combat his critics, Bush has given Customs officials the green light to go get 'em. "We are looking into every allegation that comes down the pike," says Joseph R. Willey, a senior special agent at Customs in Washington. "The guidance we're getting from the Administration is: 'Full speed ahead.' "

Customs is turning up more dirt than anyone expected. Besides the Bliss raid, officials have recently blocked the entry of at least a half-dozen goods made in China's gulag. Under U. S. law, it is illegal to import prison products. Not only is Customs pinpointing consumer goods, such as socks and wrenches, but it also is finding that capital equipment made in Chinese labor camps is being imported by U. S. buyers. In November, Customs in San Diego barred entry of 49 Jinma (Golden Horse) brand diesel engines, valued at $22,000, that were made at Yunnan No. 1 Prison. In the Bliss case, Customs intends to turn over its evidence in the raid to the Justice Dept. If criminal charges are filedthey would be the first ever in such a casesome executives could face fines and even prison.

To blunt a congressional attack on China's most-favored-nation trade status, Bush needs to get tough on illegal imports and other grievances, such as Beijing's human rights abuses and missile sales. The vague memorandum of understanding on prison exports that Secretary of State James A. Baker III hailed during a November visit to Beijing was scorned by Congress. And the notion that cheap prison exports are fueling China's $10 billion trade surplus with the U. S. angers many on Capitol Hill. "American workers may have to compete with people who make $3 a day, but they shouldn't have to compete with people who are in jail," says Representative Sam Gejdenson (D-Conn.).

LUCKY BREAK. For months, Customs officials have been engaged in the cumbersome job of tracing the trail of goods from China's prisons to the U. S. market. In the Bliss case, they got lucky. According to an affidavit for a search warrant filed by Customs in federal court in Grand Rapids, Mich., officials were tipped off by Margaret G. Mathias, chairman of L&J Press Corp. in Elkhart, Ind., a Bliss competitor. In recent years, Bliss had been snaring market share by selling its 35-ton stamping machine for $26,000, while L&J's went for $33,000. When Mathias asked then-L&J Vice-President Larry Crosby, who had worked at Bliss for 25 years, how Bliss could offer such low prices, Crosby said the machines were made in a Chinese prison.

Crosby told Customs that Richard Fackler, Bliss's former president, knew that the presses Bliss planned to import were made in a prison factory. So did Bliss owner Chris Gregorio and the company's current president, Fuller, according to confidential sources in the affidavit. One source says that Bliss supplied the prison with components for the presses and that Bliss officials visited the factory and saw "inmates under armed guards" at work. Fuller says neither he nor Gregorio had "hard evidence that, in fact, we were dealing with a prison." On a 1991 visit to the factory, Fuller says he saw "absolutely nothing" that resembled a prison. Fackler could not be reached for comment.

Customs is also poised to block other imports, such as Red Star tea, and is investigating China's Yingde brand tea. Some in Congress even want to empower Customs to block an entire class of merchandise when some of those products are found to be made in a foreign prison. Customs may now bar only specific goods believed to be prison-made. Even without the proposed changes, the crackdown is showing just how many prison-made goods from China are making their way to the U. S.

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