The National Pulse

Breaking China


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(Illustration by Viktor Koen)

The Internet, its celebrants say, should be unrestricted. China appears to think otherwise; it has successfully censored online communications. What many call the “Great Firewall of China” prevents the vast majority of Chinese from freely accessing websites outside of the country and from obtaining information on politically sensitive topics, such as the Dalai Lama or the Tiananmen Square Massacre.

It’s a human rights issue. But apply a little creative lawyering, and presto: The Great Firewall is a trade barrier that violates China’s obligations under World Trade Organization treaties.

That, at least, is the argument being pushed by free-speech advocates as well as Google, Microsoft and other technology companies. They are lobbying the United States and the European Union to file complaints with the WTO against China.

It’s a surprising way to attack China’s online censorship but it may work, according to some experts in international trade law. “It is a novel theory … [but] if this goes to the WTO, they have good arguments,” says Washington, D.C., attorney Michael E. Burke, a partner in Williams Mullen and former vice-chair of the ABA Section of International Law.

The U.S. hasn’t yet decided whether to file a complaint with the WTO about the Great Firewall. “We are looking at that,” U.S. Trade Representative Ron Kirk said in an interview with Bloomberg Radio in February. But, he added, “it’s less of a trade issue than it is a freedom-of-information issue.” Efforts to contact the USTR office were unsuccessful.

EQUAL TREATMENT

China, like the 139 other countries that are WTO members, is a party to the General Agreement on Trade in Services. The treaty, which went into effect in 1995, basically requires member states to treat foreign service providers the same as domestic service providers. Thus, if the Great Firewall discriminates against foreign companies, it violates GATS.

However, if China’s online censorship clamps down equally on everyone, GATS is satisfied. And that’s the situation, some say.

“All competitors in the Chinese market are living under the same constraints,” says Doug Guthrie, dean of the George Washington University School of Business. “China’s firewalls are the same for everyone.”

Other experts disagree, asserting that China’s online censorship is not applied equally to foreign and domestic providers. “On paper, the censorship looks the same, but it is far more intense for foreign entities,” Burke says.

Even if the Chinese government’s online censorship unfairly burdens foreign companies, that would violate GATS only if China agreed to give equal treatment to online services.

“GATS is a different kind of international agreement,” says Matthew R. Nicely, a partner at Thompson Hine in D.C. and co-chair of the International Trade Committee of the ABA Section of International Law. “Each country has made commitments that are different from other countries. So you must look not just at the language of the GATS agreement but at what specifically each country agreed to. Did it make commitments to a particular service? If so, what type of commitments did it make?”

He adds, “Lots of countries have limited commitments. Services are an imperfect area of protection under the WTO.”

The trade organization has already held that China’s commitments on audio visual services prevent it from discriminating against foreign suppliers of some Internet services. In December 2009, a WTO appellate body ruled that China’s GATS commitment on “sound recording distribution services” covers the electronic distribution of sound recordings. The panel also indicated that China’s GATS commitment on “audiovisual products” covers the electronic distribution of movies, TV shows and other audiovisual works.

China also agreed not to discriminate against foreign companies providing a variety of telecommunications services, including electronic mail, online information retrieval and online data processing (including transaction processing). China added that “all international telecommunications services shall go through gateways established with the approval of China’s telecommunications authorities.”

But the country promised that these authorities would act impartially; so if they come down harder on foreign companies than on domestic firms, that may violate China’s commitments under GATS.

‘GENERAL EXCEPTIONS’

Critics of the great firewall face another legal obstacle: Article XIV of GATS. This “general exceptions” section provides, inter alia, that “nothing in this agreement shall be construed to prevent the adoption or enforcement by any member of measures … necessary to protect public morals or to maintain public order.”

China would likely argue that its Great Firewall is protected by this provision. By blocking access to online pornography, for example, it protects public morals. By blocking access to information that might lead to unrest in the country, the firewall helps maintain public order.

However, it’s tough to get protection under the general exceptions provision. “The general exemptions are hard to get much mileage out of when you’re a defendant,” says John R. Magnus, of counsel at Miller & Chevalier in D.C. “To use this, a defendant must demonstrate that its [trade-discriminatory] activity not only met the exemption but … took the least trade-restrictive means of achieving its objective.”

Both parts of this test may create problems for China. First, the country might find it difficult to show that all the Great Firewall’s restrictions protect public morals and public order.

“When China regulates [online] pornography, that clearly falls within the exemption. When it is filtering information on human rights, that’s a lot harder to fit within the exemption,” says Derek Bambauer, an associate professor at Brooklyn Law School. The public order exception applies only against threats to a “fundamental interest of society,” he says. “It is hard to argue that one-party rule is a fundamental interest of society.”

China could argue it, however, and others might agree. After all, people around the world have very different ideas about public morals and fundamental social interests.

Because any decision would be controversial, the WTO would prefer to sidestep this political issue, according to experts. The organization would be far more likely to focus on the second part of the test: whether China can achieve its goals through less trade-restrictive measures.

So far, China has had little luck defending its information restrictions before the WTO. But neither of the two cases directly challenged China’s ability to censor information.

One case began in March 2008, when the United States and the EU complained to the World Trade Organization about restrictions that China imposed on foreign companies wishing to provide financial information to the Chinese market. China required such companies to work through a state-owned entity, China Economic Information Services. Only CEIS could solicit or sign up Chinese customers for the financial information services.

China settled the matter in December 2008, agreeing to remove the restrictions and treat foreign providers of financial information the same as domestic providers of such information.

EASING TRADE RESTRICTIONS

A second case commenced in April 2007, when the U.S. complained to the WTO about China’s restrictions on the importation and distribution of movies, DVDs, sound recordings, books, newspapers and electronic publications. China mandated that only state-owned enterprises could import and distribute such works domestically. China justified this restriction as necessary for the state to censor these imported works.

A WTO appellate body ruled against China in December of last year. The ruling did not question whether China’s censorship was necessary to protect public morals or maintain public order. Instead, the WTO panel found that China could continue its censorship through less trade-restrictive means: Allow foreign entities to import and distribute works, and give the Chinese government sole responsibility for conducting content review of these works. China agreed to abide by the ruling.

Critics who want to use the WTO to knock down the Great Firewall face a dilemma. They must convince the WTO that either China’s censorship isn’t necessary to protect public morals or public security, or there is a less trade-restrictive alternative by which China can censor the Internet. The former is a politically sensitive topic that the WTO would prefer to avoid. The latter may satisfy foreign high-tech firms that want to do business in China, but it is unlikely to mollify human rights campaigners.

Still, simply filing a complaint with the WTO would put pressure on China to negotiate an easing of its Internet censorship, according to some experts. Others disagree, saying a WTO complaint would hamper negotiations.

“Once the WTO process gets initiated, it becomes difficult to engage the Chinese government in direct talks,” Burke says. “The Chinese government’s view seems to be they will do all the talking in the dispute settlement process.”

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