After proclaiming several days ago that I was sick and tired of all the news about Beijing’s attempts to have all PC makers pre-install web filter software before making any China sales, I put a moratorium on further China Hearsay posts on the subject. At the time, I promised to address the WTO issue, and although I know that the new rules are sort of on hold, it’s worthwhile to look at the issue anyway.

But first, a special smackdown of a New York Times Op/Ed on Green Dam, presumably written by (it pains me to say this) a misguided lefty ideologue.

I would like to reiterate why I reached my limit on stupid Green Dam stories so early. It’s always difficult to predict what the government here is going to do, and even tougher to explain why. Some folks are good at this, some are bad, and others have no idea what they are talking about.

Since the government decided to postpone implementation of the new rules, the blather has continued, with various commentators reaching different conclusions. This one is my favorite (i.e., it is so completely absurd that it reaches the level of entertainment):

Who says the Chinese government isn’t susceptible to pressure? Its last-minute suspension of an order requiring the pre-installation of Internet filtering software called into question the popular notion that China is chronically impervious to pressure. (entire New York Times article here if you need a few laughs)

Anyway, onto a more serious topic. The US government got actively involved a couple of weeks ago on the Green Dam issue by sending this letter to ministry officials in China:

The letter points out that the proposed new rule raises fundamental questions regarding regulatory transparency and notes concerns about compliance with World Trade Organization (WTO) rules, such as notification obligations. Locke and Kirk also listed for MIIT Minister Li Yizhong and MOFCOM Minister Chen Deming numerous concerns raised by global technology companies, Chinese citizens, and the worldwide media about the stability of the software, the scope and extent of the filtering activities and its security weaknesses. All of these problems have serious implications for consumers and businesses

“China is putting companies in an untenable position by requiring them, with virtually no public notice, to pre-install software that appears to have broad-based censorship implications and network security issues,” Locke said.

“Protecting children from inappropriate content is a legitimate objective, but this is an inappropriate means and is likely to have a broader scope. Mandating technically flawed Green Dam software and denying manufacturers and consumers freedom to select filtering software is an unnecessary and unjustified means to achieve that objective, and poses a serious barrier to trade,” Kirk said.

Both U.S. government officials offered China an opportunity to exchange views with U.S. and Chinese government and industry officials on ways in which parental control software can be promoted in the market consistent with the goals of user choice, system reliability, freedom of expression, and the free flow of information.

All right, let’s keep in mind that the General Agreement on Tariffs and Trade (the GATT) is all about two principles: national treatment and most-favored nation treatment (MFN).

So what do we have with the Green Dam mandate? Makers of PCs that will be sold in China must pre-install the software. The purpose of the software is to screen out illegal content, including pornography.

Does this purpose, or the mandate itself, violate GATT principles? Very generally, I don’t think so. The measures apply to all PC makers, foreign and domestic, so I don’t see a national treatment problem. There appears to be no discrimination between trading partners either, so MFN is not an issue.

The letter mentions transparency and notification provisions. Yes, China promised progress on both fronts when it joined the WTO (and has generally followed through since). These are broad commitments, however, that are not generally applied to specific instances. A WTO dispute based on a nation not giving enough notice before passing a specific new law? Absurd, ridiculous, silly — ain’t gonna happen.

Other technical barriers to trade? Unless there is a smoking gun here that can show another purpose, I’m at a loss. USTR Kirk’s comment that the measure is “unnecessary and unjustified” is obligatory rhetoric I’m sure, but I’m not aware of any “necessity” test for domestic legislation.

Bottom line here: there is no WTO/GATT problem with Green Dam. Bad policy perhaps, horrible software apparently, and incompetent rollout of a new legal requirement definitely, but an international law dispute? Uh uh.

Why do I care? The US government really should not be trotting out the WTO every time it has a problem with something that the Chinese government (or any other government) is doing that would have a negative effect on US companies. Doing so not only runs the risk of “crying wolf” so many times that it will not be taken seriously when a “real” trade dispute rolls around, but also any tough language that includes the WTO, and an inherent threat of a formal dispute, can then be used by China to argue that the US is a protectionist country.