Google WTO complaint risky strategy for US

• Source: Global Times
• [21:40 March 22 2010]
• Comments

 Macia Harpaz

Editor's Note:

After clashing with China, Google has hinted that it may pressure the US government to take the case to the World Trade Organization (WTO). Will more international companies follow the suit? How can China use the WTO more effectively as a platform to facilitate free trade? Global Times (GT) reporter Wu Mian interviewed Macia Harpaz (Harpaz), professor at the School of International Relations, Hebrew University of Jerusalem, who was a former trade negotiator of WTO, and Jing Yunchuan (Jing), a partner at the law firm King and Partners, on these issues.

GT: Do you think Google will file a complaint over China in WTO? Will companies from other countries follow the suit?

Harpaz: Private companies don't have any legal standing in WTO dispute settlements. Only WTO members can file complaints, so in Google's case, it would be the US government that would have to decide whether or not to file a complaint against China.

And here, the US would have to make its own political and economic cost-benefit calculation. The US government is under domestic pressure, including from anti-censorship lobbies, to complain against China, but I don't think that the US wants to open Pandora's box.

If we don't see Google and the Chinese government reach an agreement, and Google decides to pull out of China, the probability of a US complaint against China on behalf of Google may very well increase.

However, the US would still have to look for legal arguments to justify a WTO complaint, perhaps a violation of the rules which prohibit discrimination against foreign companies compared to domestic ones.

Jing: I believe, along with most experts, that China's policy of allowing Google and other international companies to operate in China but with certain supervision and restriction is in line with the international practice and has a legal basis. So Google has no excuse not to obey China's relevant laws and regulations.

GT: In the past few years, China has received 17 complaints in WTO. Most of the cases have been jointly filed, such as when the US, European communities and Mexico filed complaints against China on the exportation of various raw materials in 2009. Do you think this is a strategy or just a coincidence?

Harpaz: Neither. In today's globalized world, if companies in one country are affected by another country's trade measure, in all likelihood, companies in other countries will also be affected.

Jing: It's more a strategy than a coincidence that several countries file a case together.

Usually it will help better prepare the evidence and claims of the case and thus increase the complaining parties' possibility of winning the case if several countries do it together.

China joined the WTO in December 2001. During the transition period from 2002 to 2006, there were very few cases against China. Since 2007, there have been more than three cases against China every year.

As the global financial crisis persists, and China's economy is still developing very fast, it's expected that more trade protection measures would be taken against China. Thus it's most likely that there are going to be more cases involving China in the coming years.

GT: What other trends or features can you find in the complaints that China received? Are they focused on certain industries or products? Why?

Harpaz: The statistic of 17 complaints against China is somewhat misleading. If we count the cases with multiple complainants as one complaint, China is only a defendant in eight different WTO cases.

These cases have not really focused on certain industries or products, but, for example, in three of the eight cases, illegal subsidy claims have been raised.

Jing: The complaints of other WTO members against China are diversified. Some are related to measures for exportation of raw materials, some are related to IP protection, and some are related to China's tax policy or financial information services. They are not focused on certain industries or products.

GT: Are Western enterprises making better use of the WTO rules than their Chinese counterparts?

Harpaz: China is certainly not yet taking as much advantage of the WTO dispute settlement system to defend its trade interest as the EU and the US do. Historically, the WTO dispute settlement system has only been used by a limited number of countries. It is very costly to use the formal WTO dispute settlement.