When our old wooden spatula showed signs of age, I looked for a replacement on my next trip to a nearby Giant Food supermarket. I found only a plastic model and was about to buy it until I read the small print: “made in China.” In checking other nearby household utensils, I found that almost all came from the People’s Republic.
A day or two later, I mailed a complaint to Giant’s consumer affairs department. “Dear friends,” I wrote, “It shocks me that a company of Giant Food’s distinction would sell goods made in the People’s Republic of China.” The main point of my four-paragraph letter was to criticize the store for depending on China as a major supplier, when it didn’t know how the spatula or other made-in-China products were manufactured. “Can you guarantee,” I asked, “that they were not made by Protestant ministers sentenced to forced labor camps because of their religion? Or by underage children working in sweatshops? Or by college students sentenced to hard labor because they refused to follow the dictates of the Party? Or in a People’s Liberation Army factory whose exports to the United States underwrite the missiles they build for firing toward Taiwan?”
The response I received did not answer my questions. Instead, the assistant director of consumer affairs wrote that over the years Giant had received many requests to boycott various products, but decided not to do so, being unwilling to make such choices for its customers. “Those who choose to boycott products made in the People’s Republic of China have the right to do so,” she explained, “but those who wish to purchase them ought to have that right as well.”
At that time, in late 1995, I also wrote to other supermarket chains. The response from Fresh Fields was the most pointed: it said that one of Fresh Fields’s founding philosophies is “to offer choices to consumers,” and that therefore it was letting customers make their own choices on what to buy.
Both Giant Food and Fresh Fields based their positions on a value held to be basic in the free market system—freedom of choice. President George W. Bush recently expressed his belief in that value. In a speech to the U.S. Hispanic Chamber of Commerce on March 12, he warned that Congress’s failure to pass more free trade agreements would deprive American families of the “choices that they’ve been used to.” He went on: “We want our consumers to have choices when they walk into markets. The more choices available, the better it is for a consumer.”
Milton and Rose Friedman laid down the rationale for that view in 1980, in a 10-week PBS series, “Free to Choose,” and published a book with the same theme and title. They compared the choices made in the supermarket to choices made in the voting booth, both seen as freedom in action.
The trouble with extolling free choice for the American shopper, however, is that something happened to it on our way to globalization. Products made in the United States have almost disappeared from our shelves. They have been massively replaced by imports, above all by imports from China. Consumer choice for U.S.-made products is gone, or almost so.
Internet Censorship and Trade
The services sector is falling victim to the same trend. That fact hit home to me because I am a Yahoo subscriber.
Yahoo, an Internet content provider and Web portal based in California, is a Fortune 500 multinational corporation whose business in China is booming. In China you do as the Chinese do. So Yahoo works closely with China’s security forces in censoring the Internet. Even more serious, it is obligated to turn over to police incriminating information, which has led to jail and other punishments for Chinese Yahoo users who engage in conduct the government deems unbecoming a good citizen of China.
I am especially troubled by what has happened, for example, to Li Zhi, a 32-year-old civil servant, a supporter of the China Democracy Party, who was sentenced to eight years in prison in 2003 for “inciting subversion against the state.” Yahoo helped put him there. The plight of Li and two other citizens of China made the news on Feb. 29, when they filed a lawsuit against Yahoo in a California federal court, charging that they had to endure torture and imprisonment, among other sufferings, after Yahoo handed over their e-mail messages and other Internet information to Chinese authorities.
Yahoo, which does not deny working with the government, may settle the case of Li and his two co-plaintiffs out of court, as it did a similar lawsuit last November with an undisclosed sum of money. That does not end my moral dilemma. I do not like to be connected with a company that helps a government torture people. Yet for 12 years I have run a Web site promoting human rights at home and abroad and have depended on Yahoo for its e-mail and research services.
Quitting Yahoo would not solve my problem either. As a media watchdog group, Reporters Without Borders, says, Yahoo’s competitors, Google, Microsoft and Cisco Systems, all now working in China, also follow the axiom: when in China, do as the Chinese do. Under the pressure of a government equipped with armies of informants and the latest in surveillance technology, Internet companies have agreed to censor their search engines to filter out material overcritical of authorities. “This makes the regime’s job very much easier, because these firms are the main entry-points to the Internet,” Reporters Without Borders says. “If a Web site is not listed by their search engines, material posted on them has about as much chance of being found as a message in a bottle thrown into the sea.”
I may find I can switch from Yahoo to a comparable provider that does not operate in China. That would get me personally off the hook in this instance, but it would change nothing else. Fortunately, another California-based Fortune 500 multinational with a booming business in China, Google, is searching for a solution. Making money on information services while at the same time collaborating with a government to suppress information, and having two of its executives called “moral pygmies” by a congressman at a public hearing last year—all this is not a comfortable position to be in. Google wants the U.S. government’s help to get out of it. Trying to faithful to its slogan, “Don’t be evil,” Google is exploring an approach not tried before. This initiative relies on the logic of international trade law, which, in principle, outlaws barriers to trade. Since government censorship of information is a serious trade barrier for American companies in China, it follows that China’s barrier should be outlawed as such through U.S. bilateral and multilateral trade agreements.
Timothy Wu, associate professor of law at Columbia University and a scholar on telecommunications and trade law, came to the same conclusion on his own: that China’s Internet censorship violates international trade law. In a paper titled The World Trade Law of Internet Filtering, he emphasizes the cross-border character of Internet services: “Much of the Internet can be reached from anywhere, making nearly everyone on the Internet a potential importer or exporter of services (and sometimes goods).”
In China’s case, Dr. Wu contends, the government agreed to reform the protectionist practices of China’s firms in the services sector as a condition of entry into the World Trade Organization in late 2001. Instead, however, China has become one of the “world’s more active filterers of Internet services.” He regards China as probably in conflict with one of the key W.T.O. pacts—the little known General Agreement on Trade in Services, called GATS. The 21st-century expansion of the Internet, Wu insists, has “leaped beyond what was contemplated in GATS or subsequent telecommunications agreements [and] requires new thinking about how barriers come about.”
A West Coast advocacy group, the California First Amendment Coalition, is contributing some new thinking. In an oral and written case to U.S. trade officials, the coalition specifically identifies a W.T.O. and GATS principle that China is violating: “national treatment.” Basic in all trade agreements, this principle requires a country to treat imported goods and services the same as those produced locally. But China uses “a wide range of laws and regulations that result in de jure or de facto” discriminatory treatment of U.S. companies, according to the coalition’s paper, and is thereby actively restricting the operations of U.S. Internet companies “while at the same time promoting Chinese Internet companies in the same or similar activities.”
At a hearing on May 20 of the Senate Judiciary subcommittee on human rights and the law, Nicole Wong, Google’s deputy general counsel, renewed the company position that the U.S. government should make combating Internet censorship a top priority. “It is vital,” she said, “for the U.S. Departments of State and Commerce and the Office of the U.S. Trade Representative—in this and in future administrations—to make censorship a central element of our bilateral and multilateral [trade] agendas.”
U.S. government officials, however, have yet to embrace this precedent-setting approach. After all, the plight of the Internet giants in China is not unique. Other global industries also live under trade policies that have not caught up with the 21st century. Multinational corporations still operate under rules of the world trade and investment system that was patched together in the five decades after the end of World War II.
Under the principles laid down by leaders who established the W.T.O., all its member nations (now 152) are equal and have the same rights in the international marketplace. Dictatorships and autocratic governments enjoy the same rights and privileges as democratic ones. And so China, exploiting its own opportunistic blend of Vladimir Lenin and Adam Smith, naturally takes full advantage of a position of political and economic repression at home—especially its heavily controlled labor force—to mass produce for free markets abroad, especially for the largest free market in the world.
Result: last year the United States imported $321,442,900,000 worth of goods from China, a record sure to be broken again in 2008. Constrained by space, the print media publish those figures only in abbreviated form, if they publish them at all, by using a tiny “b” to replace the final nine digits, thus obscuring the 321,442,900,000 votes we cast by our dollars for repression in China.
In a 2001 policy paper for the U.N. Development Program, The Global Governance of Trade as if Development Really Mattered, Dani Rodrik, professor of international political economy at Harvard, proposed that a reformed trade system include the principle that “non-democratic countries cannot count on the same trade privileges as democratic ones.” The idea did not catch on in 2001, and hasn’t since.
This reform does not seem to stand a chance, mainly because now that China is in the W.T.O., Beijing can veto any reform that would diminish the advantages it now enjoys. Nevertheless, a broad range of ideas ought to be on the table for a serious trade policy review in light of the need to replace the president’s Trade Promotion Authority law, which expired in July 2007. To prepare for that review and the actions that should follow, Congress would be wise to commission an economist like Rodrik to prepare a report with the title “The Global Governance of Trade as if Human Rights Really Mattered.”