China’s ‘Great Firewall’ of censorship is yet another trade barrier … – Press of Atlantic City

The San Francisco-based photo-sharing site Pinterest would seem to rank low on the list of potential threats to China. Beloved by fashion designers, photographers, cooks and hobbyists, the 7-year-old website is a global hub for the sharing of images, trends and ideas on topics ranging from living-room design to what to cook at a Saturday barbecue.

Unfortunately, Pinterests innocuousness couldnt save it from the same fate as other foreign internet companies in China, including Facebook and Alphabet (formerly known as Google). Earlier last month, the Chinese government blocked Chinese internet users from accessing the site. And that should make Pinterest of interest to the Trump administration, as well as China.

Pinterests troubles arent unique. Last year, China banned thousands of U.S. websites from China, including eight of the 25 most-trafficked global sites. Yet there was hardly a word of protest out of Washington against these systematic denials of market access. Similar restrictions against U.S. automakers, say, would almost certainly have prompted complaints to the World Trade Organization.

The costs imposed by this policy are adding up. In 2015, the global value of international data flows came to $2.8 trillion, exceeding the global flow of merchandise for the first time. The U.S. economy has benefited more than most from that trade. In 2014, the U.S. exported nearly $400 billion in digital services, accounting for more than half of all U.S. services exports and generating a $159 billion trade surplus in the sector.

Though its impossible to calculate what Facebook, Google and Twitter mightve earned in Chinas booming internet sector had they been allowed to compete, theres little question that they would have added measurably to that surplus.

The Chinese government is doubtless aware of the opportunities that online protectionism creates for domestic companies. In June 2009, China blocked Twitter; two months later, Sina Corp. launched a wildly successful knock-off microblog, Weibo, that has thrived for years in the absence of foreign competition. Likewise, when Google announced in May 2010 that it was contemplating the total shutdown of its Chinese offices, the stock of Baidu Inc. its leading Chinese competitor and a keen observer and imitator of Googles business rallied 16.6 percent in a single day, while smaller rivals enjoyed similar bumps.

Meanwhile, local Chinese versions of Pinterest have flooded Chinas market since 2012 with middling success. If the recent ban holds, at least one of those companies may enjoy a highly lucrative opportunity to become Chinas Pinterest.

Pinterests options, on the other hand, are limited. The Chinese government is notoriously opaque about why it blocks sites, and there are no formal procedures for appeal.

The idea of dragging China before the WTO to argue that its Great Firewall represents a trade barrier isnt a new idea. The European Union has contemplated such an approach since the late 2000s. And late last year, in a move that could lay the groundwork for a case, the Obama administration argued that Chinas worsening censorship posed a significant burden on foreign internet service providers. The next step, though a formal complaint and case before the WTO is up to the Trump administration.

Such a case wouldnt be a slam dunk. China has long cited WTO clauses that give countries room to impose measures to protect public morality and order. Even if it lost the WTO case, the Chinese government would be highly unlikely to abide by the decision in full.

But the WTO recently ruled against a Chinese attempt to invoke public morality as an excuse to restrict the import and distribution of American books, magazines, films and other published material. And any Chinese attempt to ignore WTO rulings would undermine its recent posturing as a champion of free trade. A negotiated settlement perhaps integrated into a long-delayed U.S.-China investment treaty that opens China to U.S. internet companies while acknowledging Chinas right to censor selectively (not wholesale) for morality and public order, might be the best outcome for all sides.

Adam Minter is a Bloomberg View columnist.

Visit link:
China's 'Great Firewall' of censorship is yet another trade barrier ... - Press of Atlantic City