Will U.S. File WTO Action Over Google Spat?

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I actually saw this idea floated on a couple of blogs last week and ignored the issue as it is really stupid. Unfortunately it seems to be gaining traction in the media, some trade lawyers have chimed in, and the US Trade Representative’s office has not formally closed the door on the possibility. So I’m kind of being dragged into this kicking and screaming, as it were.

Bottom line: does the U.S. have a solid case against China that would allow them to prevail in a WTO dispute? Someone please shoot me in the head, and be quick about it, please.

Some groups are calling on the United States to challenge China‘s “firewall” before the World Trade Organization, as a bilateral row over cyberattacks on Google adds to trade tensions.

As President Barack Obama awaits answers from Beijing on the cyberstrikes, Washington is being asked to contest China’s Internet censorship as a breach of global trade rules to which the Asian giant, as a WTO member, is subject.

“The US can argue that China’s ‘Great Firewall’ — a system of filters and bottlenecks that effectively shutters the country within its own intranet — is an illegal restraint on international trade because it bars foreign companies from competing, via the Internet, in the vast Chinese market,” argues Peter Scheer, executive director of the First Amendment Coalition. (AFP)

First comment, to this Mr. Scheer: the First Amendment does not apply in China. Apparently this particular organization has taken its US law-based agenda overseas. (OK, that was unduly snarky. I don’t know anything about this group, and while I am on board with their ultimate goals, I think using the WTO as a forum to reach those goals is sorely misguided.)

Second, where’s the restraint on trade? Someone please tell me. With respect to Google, I don’t see a national treatment issue. Google is free to stay in China and operate just like any other search engine (e.g. Baidu) as long as it follows applicable China laws. Where’s the discrimination? (No one has alleged a violation of MFN principles, so I won’t get into that.)

Third, the WTO has no problem with censorship per se, usually discussed in terms of either national security or public morals. Look no further than the A/V Products case, the appeal to which was won by the U.S. last year. Nowhere in that opinion does the panel say anything to suggest that China’s censorship regime is in violation of any WTO law.

More weirdness ensues:

China’s action to halt Internet commerce at its “borders” is akin to a government regulation requiring perishable agricultural exports from the US to sit for days on China’s docks prior to transhipment to internal distribution facilities, Scheer said.

I’m not exactly sure what “Internet commerce” means. E-commerce? Providing content? I’m confused.

This is a complex legal area. China law on what “e-commerce” means has changed quite a lot over the past five years or so. I’ll give Mr. Scheer the benefit of the doubt on the nomenclature issue.

Let’s assume for the moment that he is talking about certain services that are currently restricted (i.e. Value-added Services). These were dealt with in China’s GATS (WTO law dealing with services) Schedule, agreed to when China acceded to the WTO ten years ago.

But even if there is some sort of dispute about Value-added Services and China’s service commitments, I’m not sure what that has to do with Google. I thought the issue was censorship, or perhaps hacking. Either way, that has nothing to do with any restriction on Google that is inconsistent with WTO law.

Not so, say some trade lawyers, who believe that if Google is being treated differently than domestic search engines, then there could be a national treatment matter. Sure. Where’s the evidence for that? I haven’t heard anything so far. Google has been operating over here for a while, and as long as they followed the rules, they were able to carry on with their business, right?

They further say that the censorship exceptions (national security and public morals) have narrowed in recent years and that China’s regime is possibly vulnerable.

I don’t buy it. Granted, I have not researched this issue in depth, although I have looked at China’s services commitments many times in the past. Sure, the language was written a long time ago, things have changed, and some folks might be able to argue about what does/does not constitute Internet commerce and so forth.

Fair enough. But the basis of this challenge is Net censorship, and unless someone can clearly show that Google is being treated differently than other companies here, there is no discrimination. I don’t think anyone would argue (without giggling a lot) that Baidu doesn’t have to follow censorship rules.

I also don’t see any merit in arguing that censorship operates the same way as an import restrictions. Are we supposed to equate imports sitting on the dock, for example held up because of a hygiene standard, with Net content that is being blocked at the border?

That’s just weird. Information, in and of itself, is not a product or service. Providing information can be a service, but that service is subject to the normal rules of any country, which may include censorship. Moreover, if those rules apply to all content providers, there is no discrimination.

I’ve gotten myself into a lather. Better wrap this up.

I would be happy to change my mind on this issue should new facts come to light or if I’m way off on my WTO law, but so far this idea of a WTO case sounds like a lot of wishful thinking by the media, which is trying to milk this Google incident for a couple of extra days’ coverage.

4 responses on “Will U.S. File WTO Action Over Google Spat?

  1. chashao

    Under what law, exactly, is Google required to censor the various websites and keywords that Chinese authorities bully them into censoring? Could it not be argued that China is violating GATT X:3(a), which calls on member states to publish laws in a clear manner?

    I’ve also heard it argued that China violates GATT Article IV because the government fails to offer a review mechanism or tribunal to resolve censorship issues (Article IV requires member states to provide procedures to review any administrative measure that affects service providers).

    1. Stan Post author

      Technically, maybe. Both of these provisions, however, are extremely broad and could be applied to just about anything. I don’t recall a member state ever using either of these as a basis for a formal dispute.

      Moreover, on transparency and administrative reform, China has actually progressed considerably since joining the WTO. A dispute that cited general concerns would run into that problem as well.

      Reasonable argument based on the letter of the law, but I also don’t see it as a winner in the real world.

  2. Jon

    It perhaps can be shown that Google is being treated differently. I don’t recall all the details but some time back there was an issue with Google searches showing pornographic or disagreeable results. It seemed that Baidu which returned many of the same results was not included and didn’t get the negative press/government attention in China. Also, I saw a post somewhere about a fake CCTV report condemning Google. Is CCTV an arm of the government? It seems like an attack to me.
    It does seem to me that at the end of the day the visiting team gets pooped on. The home team has the guan xi. And in fact, local companies can be included in the game of bribes and corruption, even if its forced on them, where foreign companies perhaps cannot so easily be put under the thumb of the government. I would have a hard time imagining that the company the government can have in their pocket doesn’t always get the advantage. Those working for us get promoted and those that we can’t control so well are always going to come up with the short end of the stick. Baidu/Yahoo? Of course details are unknown, but lets not pretend that details are needed to make decisions. in China. Whats good for the party/China goes forward.
    I am no legal expert, but hearing about “the letter of the law” strikes me as odd since it may not matter. Is the judge a lawyer making sound judgments based on law, or are decisions made behind closed doors and judges just see to it that the agreed upon verdict is handed down?
    I hope this post doesn’t come across as to disparaging of China. Chinese people can be great but the systems here need changing. Whether its paying for jobs at the local University, paying for entrance to a decent school, or lubing the wheels of justice it all happens.

    1. Stan Post author

      Even if all of what you say is true (and some of it probably is), having sufficient evidence to prove it to a WTO dispute resolution panel is another thing entirely. Speculation and unsubstantiated rumor doesn’t get you very far. I recall that the US tried using things like newspaper accounts of certain occurrences when submitting their arguments in the A/V Products case — the panel in that instance was not amused.