Globalization & U.S. International Economic Policy

•From 1997 to 2006 Internet use grewfromhalf a million to 123 million: 60% growtheachyear.

•Since 2008, theChinese internet markethasbeenbiggerthanthe U.S. one,

whichhas 227 millionwith 74 % ofpenetration.

•As of 2010 there are aproximately 400 millionusersoutof 1.3 billionpopulation.

•Itwill continue to becomethebiggestinternet marketintheWorld.

•Total advertisementintheChinese internet amount to $2.5 billiondollars.

Chineseusersspend 34 hoursperweekonline

However, Internet hasbecome a toolfor entertainment, ratherthan a source for politicalinformation.

Internet regulationworksthrough a combinationof active filteringandfullblockingof Web sites andservices – theChinese“Great Firewall.”

82% oftheChinesecitizenssupportsome typeofcensorshiprelated to porn, violenceorotherharmfulinformation to society.

Google came to China in2005, afteritdeveloped a Chineselanguageinterface.

In 2006 Google boughtthedomainGoogle.cnandwasgrantedan ICPlicensethatlegitimizeditspresence.

From a PR perspective Google washitinthewestern media.

In 2002, Baiduhadonly 2% ofthemarketshare andnowhas 60%,Whathappened?

Baiduhas more expertiserelated to cultural interestinentertainmentandissupportedbythegovernment.

Thetotal sizeofthesearchmarketin China is$1 billiondollars. Itisexpected to grow 40% in 2010.

InJanuary 2010, Google announcedthattheywouldpullitsbusinessoutofChina.

Reasonsinclude:- Cyberattacksonits

servertargetedatgmailaccountsofhumanrightsactivistsand a Businessdecision.

TheChineseoperation for Google issmall, roughly 1% ofthe total globalrevenuesof $23.6 billion.

TheyreroutedGoogle.cnto Google.com.hkwhichcouldpotentiallybeblockedinthe

mainlandinthenearfuture.

• Go through a WTO compliance procedure.

• Work with a multi-stake technology association.

•Increase collaboration with Human Rights groups.

• Increase support to technological efforts to bypass firewalls and censorships.

FourModesorwaysofservices:

- Mode 1or “cross-border supply” - is defined as having all services suppliedfrom one country to another.

- Mode 2 or “consumption abroad” - is defined as consumers purchasing services in another country.

- Mode 3 or “commercial presence” – is defined as a foreign companyopening subsidiaries or branches to provide services in another country.

- Mode 4 or “presence of natural persons” – is defined as individuals who are travelling from their own country to supply services in another.

MostfavoriteNationprinciple, whichmeansthatallcountriesinsidetheWTO haveequalrightsinrelation to eachothersmarkets.

Whatwouldbethebasis for a WTO complaint?

WTO precedent – online gamblingcontestedbyAntigua&BarbudaagainsttheU.S

A resolutionwaspublishedbythe UN onJune30, 2000, thatdefinedweb-searchportals to beunder “data processingservices.”

China has no restrictions for “data processingservices” undermode 1 and3 whentheysignedin 2001.

•Revenuesthrough advertisements comingupwith the results of the search.

•Censorshipofthe internet it is harmingrevenues for these companiesandtherefore China isnotabiding to the WTO rules.

•Chinesefirewall blocksentire sites instead of blocking words, which makesitharder to defend the firewall inrelationto moral and politicalcensorship.

•Theeconomicrightsofthe site weretakenaway.

•CensorshiprulesthunderGATS and GATT are relatedto theprotection of publicmorals, butthisisnothow China censors.

Filtering would be less trade restrictive!!

Main argument for a WTO complaint:

Filing a complaint in the WTO will not be used to eliminate censorship in China. It will be used to make censorship more commercially friendly in the Internet environment, using active filtering instead of entirely blocking sites.

If Google and the U.S. administration don’t use WTO to address the underdeveloped and uncommitted countries to its rules, where else would they go?

Global NetworkInitiative (GNI), basedin Cambridge andfoundedin2008.

- GNI works with several Internet and media companies, such as Google, Microsoft, Yahoo!, academics and human rights organizations to create best standards in Internet and filtering policy across borders.

TheseassociationsgivemembersgoodPublicRelationsat a minimal cost.

Google couldhelpgroupslikethisgrowinorderto ensurethefreeflowofinformationandfreetrade

Google shouldalsoconsiderworkingwithHumanRightsgroups

Examples: FreePress, Center for DemocracyandTechnologyandHumanRightsWatch.

Inorder for the U.S. to file a complaintintheWTO, itwillbenecessarytoIncreasepoliticalsupport

Google shouldconsiderinvestingintechnologythatallowsitsusers to bypasstheFirewall.

The Global Internet FreedomConsortium,isoperatedbyvolunteersthatbuilt a software thatisableto constantlyswitchtheusers IP andworksfrom servers aroundtheworld.

Aproximately1 millionusers use thisin China.

As Google moves outoftheChinesemarket, mightbeoftheirinterest to supportsuchorganizations.

•Therecomendationis to take a multi-prongedapproach, butthe WTO complaint•isnecessary to effectivelyInfluencetheChinese Internet market.

•China is committed to “data processing services”under GATS.

•Thisisnot a newissue for the WTO.

•The questionis, does the U.S.want to fightfor thismarket–

•Themainforeign policy of the United States is the spread of democracy“through the free frow ofinformation.”

•Thechineseinternet market is huge and being a member of the WTOcomes with a responsibility of free trade that China must commit to.