Today, the World Trade Organization issued a ruling on a complaint against Chinese media laws by the US and most of the developed world. The rules require that various forms of imported media, from books to movies, be distributed through a single, government-owned company. It also limits foreign ownership of Chinese media companies and allows content produced by domestic companies to bypass state censorship. Much of that, according to the WTO, is working on agreements that China signed when it entered the body. The ruling opens the door for China’s trading partners to impose punitive tariffs on its exports, meaning China could face a choice between exports and control.
To understand the consequences of this ruling, you need to understand a little about how the WTO works. It is a voluntary association, and its members sign up by agreeing to lower prices and open their domestic markets to foreign competitors. Any actions contrary to the documents defining the details of this agreement allow the other members to request mediation and file formal complaints. If the complaints are upheld, the complainant has the right to impose trade sanctions on the offender that would otherwise be in accordance with WTO rules. In theory, those punitive actions should be limited and focused on markets where commercial violations have occurred.
The original complaint was filed by the US in 2007 (WTO at a brief history of it available), or you can go directly to those 469 monster book that explains all the processes). Over time, the EU, Japan, Korea, and Taiwan joined the proponents. The point of the complaint is that Chinese law discriminates against non-domestic media companies in areas such as books and other publications, music, and movies, despite promising to level the playing field. in its WTO Accession Procedure.
Basically, China has different rules for domestic companies, domestic companies supported by foreign investors, and foreign companies. So, for example, if a film is burned to disc and compiled abroad, the only thing that is allowed to be imported is the CNPIEC of the government. If, on the other hand, the film is in digital form and then burned to disk and assembled within China, the process can be maintained by various companies, but all of them are still owned by the government. Similar rules apply to typing and music.
Part of this is defense of the past, but China’s emphasis on social control is also considered a trade barrier, as this section on the country’s content review process makes clear:
China requires all audio recordings, including audio recordings intended for electronic distribution, to undergo a content review. The nature of that review, however, varies greatly depending on whether the audio recording is imported or domestic. Chinese measures require imported audio recordings to undergo content review and approval by the Chinese Government before their electronic distribution. In contrast, domestic audio recordings do not have to obtain prior approval from the Chinese Government. Instead, they review the content of the company, and they just register with the Ministry of Culture.
It’s not so much that the review happens, it’s just that domestic companies are presumably more sensitive to the consequences of releasing content that the government doesn’t approve of, so they are trusted to run the review process themselves.
China’s response to the complaint, for the most part, is that it is a mixture of cultural imperialism and an attempt to suppress the attitudes of Chinese citizens. “Cultural goods and services are common in the fact of being vindicators of cultural identity and values and, as such, of justifying the implementation of specific, yet WTO-compliant, regulatory frameworks,” is the usual answer, which noted elsewhere that, “It is essential for China to impose a high level of protection of public attitudes through an appropriate content review mechanism that prohibits any cultural goods with content that may have a negative impact on general attitudes.”
The actual resolution portion of the document is not fully understood without field guides to Chinese law and its WTO Accession Procedure. (Nine pages of statements such as “The United States has not established that Article 8 of the 1997 Electronic Publications Act results in China operating in accordance with paragraph 5.2 or paragraph 84 (b)) Although it appears clearly the US failed to do so. his case on many fronts, he appears to have succeeded quite a few of them. The final words on page 469 are “We recommend that the Dispute Settlement Body ask China to take appropriate measures to comply with its obligations under those agreements.”
Although it is clearly a victory for the US, there is clearly little chance that China will ease up on its political censorship or porn returns. China may appeal the decision and, even if it loses, other countries may struggle to find punitive measures that are proportionate and strike at normal markets. There is also the real problem that China’s written laws and facts on the ground are often two very different things. However, trade negotiations are an ongoing issue, and being able to bring a WTO decision to the table would be a useful tool.