Chinese Censorship Equals Protectionism – WSJ.com: “Chinese Censorship Equals Protectionism
Freedom of speech violations aside, Beijing may also be violating its WTO obligations.
WSJ, 06 January, 2010
By FREDRIK ERIXON AND HOSUK LEE-MAKIYAMA
Beijing’s methods to censor the Internet are becoming ever more repressive. In recent weeks, at least 700 Web sites seem to have been shut down or blocked—on top of tens of thousands of foreign online services that already were inaccessible. Individuals have been banned from registering new domain names in China, and authorities are turning the heat up on existing domains. This is correctly viewed as a major free-speech problem, but that’s only part of the damage Beijing is doing. Blocking the Internet blocks commerce and trade, and China’s latest moves may well run afoul of its World Trade Organization commitments.
China has the highest number of online users in the world with 300 million, surpassing even the United States. That makes it among the most appealing markets for foreign technology companies. The new censorship drive fences off this market and reserves it only for government-registered actors that are politically reliable in the eyes of Beijing. The regulations apply just as much to Web sites outside China, which must now apply for a license from Chinese authorities to avoid being blocked.
This is the latest and most vigorous manifestation of an old phenomenon. For more than a decade, the so-called Great Firewall of China has restricted access to many common media sites and online services from abroad, especially search engines and user-generated content such as blogs, Twitter, YouTube or photo-sharing site Flickr. Now, though, it’s reaching a point where the measures are attacking core business and revenues. Several international Web sites—like the Chinese and English versions of search engines Google and Bing, or email service providers Gmail and Hotmail—have been shut down by the authorities without much warning.
Beyond Web censorship, regulatory hurdles on technology are an increasing problem throughout China’s economy. The importation of WiFi-equipped phones, routers and laptops capable of wirelessly surfing the Internet is forbidden; they feature encryption technologies that make eavesdropping more difficult for the authorities. Partly for this reason, Apple’s iPhone came to China only in November, two years after it hit the rest of the world, and then without its signature WiFi capability.
Mobile applications are now also subject to censorship; for instance, China Mobile has stopped all sales of paid content until further notice. This is a market already worth 200 million yuan ($29 million) and should be steadily growing as smart phones like the iPhone and Blackberry start to gain traction. Meanwhile, Beijing attempted last July to force all manufacturers to install filtering software and a potential spyware program called Green Dam Youth Escort on computers shipped to China. This ostensibly was to block access to pornography, but could have made it easier for authorities to track politically sensitive communications, too. That proposal was withdrawn but is soon likely to resurface.
Political censorship is the most obvious motive underpinning all these actions, but there is another: Online censorship has become a tool of industrial policy, effectively discriminating against foreign suppliers. The Chinese search engine Baidu has been untouched by the recent crackdown, despite producing similar search results to the blocked Google and Bing Web sites. There also have been reports that users entering Google’s address in their browsers have been automatically rerouted to Baidu. Licensing requirements for Web sites help Beijing control the market share of companies like smaller private-sector travel agents or Internet-telephony companies like Skype that compete with larger Chinese companies with strong relationships to Beijing.
While human-rights activists continue pushing Beijing to ease its restrictions on free-speech rights, foreign governments also need to recognize the protectionist aspects of Chinese Web censorship and respond accordingly. China’s online protectionism goes against its obligations under the WTO. When China acceded to the trade body in 2001, it agreed to give unlimited access and equal treatment to foreign-based or foreign-owned businesses in many categories of services, including online services. These services count as imports to which China is supposed to be opening itself, even if they are delivered over a wire instead of in a shipping crate.
While the WTO agreements allow countries to set their own standard for public morals and order, disguised protectionist measures are forbidden. Nor can China argue that it is using the measures that restrict trade the least, one standard for acceptability under the WTO. The Appellate Body, which is the final authority of WTO dispute settlement, has just turned down an appeal by China in a dispute over its restrictions on the distribution of U.S. printed books, films and music; Beijing is now forced to either open that market or face retaliatory tariffs.
If China does not change its Internet censorship practices, it is likely to soon face another WTO dispute. The online market in China is simply too big for Europe and the U.S. to let trade-distorting regulations pass without action. Victories at the WTO on this front would be wins both for commerce and for civil rights.
Messrs. Erixon and Lee-Makiyama are director and visiting fellow, respectively, of the European Centre for International Political Economy in Brussels.