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Google incident does not break WTO rules

By Zheng Zhihai (chinadaily.com.cn)
Updated: 2010-03-09 15:50

Some NGOs are reportedly accusing the Chinese government of being in breach of its WTO obligations in regulating Google China's search service and urged the Obama administration to take China to WTO to settle the dispute.

Few details are available from news reports, but I would elaborate the case from the legal perspective and I believe that these accusations are groundless, as China's regulations on Google are within the confines of its domestic laws and accords with its promises to the WTO.

Google always enjoys market access and national treatment in China

As an Internet search provider, the services Google provides fall into the categories of "online information and data processing" and "online information and data searching", according to WTO rules and Chinese laws and regulations.

China set clear restrictions on the above services in its promises when it was admitted into the WTO. To enjoy full national treatment, foreign companies must set up joint ventures in China and owns no more than 50 percent of the capital.

Google China did exactly the same.

Its subsidiary in Ireland set up a joint venture with Beijing Feixiangren Information Technology Ltd and registered under the same name of the Beijing company with each sharing 50 percent of the capital, providing services through www.google.cn.

Since its entry into the Chinese market, Google has been enjoying rightful market access and national treatment. Its market share in China jumped from 13 percent at the beginning of 2006 to around 36 percent in the fourth quarter of 2009.

Opening market does not mean waiving the right to govern

However, market access and national treatment are, in fact, not major bones of contention this time. What Google challenges is China's lawful right to govern its Internet, specifically, the right to censor the Internet.

The WTO rules state clearly that the governments of member states have lawful right of supervision, including censoring Internet content. According to the General Agreement on Trade in Services, measures like Internet censorship that are universally applicable to service providers can be applied as long as they are reasonable, impartial and fair. Actually, the Chinese government has always been even-handed in supervising Internet service companies, regardless of whether they are foreign or domestic.

The WTO member states, both developed and developing, have always been emphasizing that openness and supervision are two inseparable parts of market access. The American banking, insurance and telecommunications sectors are all open to foreign investment, but the US government never forgoes its governance on these sectors.

The assertion, therefore, by some US corporations and trade associations that "China should fully and unconditionally open the market in this area" is quite one-sided. An open but governed market is more important in developing countries like China.

In a nutshell, the Chinese government's supervision of its Internet has nothing to do with trade restrictions, but to foster a healthy environment on the Internet, protect young people and prevent some elements from using the Internet to endanger China's national security. If someone intends to challenge China's right to govern its Internet by resorting to WTO rules, they are apparently misguided and bound to fail.

The author is the Deputy Director and Secretary General of China Society for World Trade Organization Studies (CWTO).