[Congressional Record Volume 151, Number 87 (Monday, June 27, 2005)]
[Extensions of Remarks]
[Pages E1365-E1366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TECHNOLOGY, TRADE AND CHINA

                                 ______
                                 

                            HON. ZOE LOFGREN

                             of california

                    in the house of representatives

                         Monday, June 27, 2005

  Ms. ZOE LOFGREN of California. Mr. Speaker, Harris Miller, president 
of the Information Technology Association of America, recently wrote an 
opinion piece for the San Jose Mercury News. In this piece, Mr. Miller 
addresses some serious concerns about the Chinese government's trade 
policies and their efforts to control and limit information on the 
internet. Mr. Miller makes some excellent points and I encourage all of 
my colleagues to review his article.

             [From the San Jose Mercury News, May 23, 2005]

   In Walling Off Software Market, China Forgets Trade Goes Two Ways

                         (By Harris N. Miller)

       Chinese trade practices have long been the subject of 
     complaint from U.S. manufacturers, particularly in the 
     textile industry. American high-tech firms now see the storm 
     clouds forming for their own business sectors. Two trends are 
     particularly disturbing: China's leaders are quietly closing 
     the doors to domestic market software competition while 
     simultaneously attempting to expand government control over 
     the Internet.
       Despite U.S. protests, the Chinese government has published 
     draft regulations that effectively would close China's 
     government market to American and other foreign software 
     companies. Software is likely to be the

[[Page E1366]]

     first of many government markets to close to foreign 
     competition.
       When it comes to information technology, China is a waking 
     giant. With a total information and communications technology 
     marketplace of almost $100 billion, the Chinese appetite for 
     computers, software and networks has more than doubled since 
     2000. All things being equal, China's high-tech growth is a 
     good thing. With more than 1 billion people and a rapidly 
     growing economy, China should be a tremendously positive 
     trading partner, and the U.S. information technology industry 
     has championed China's accession to the World Trade 
     Organization.
       But to be widely embraced, the door to global trade must 
     swing both ways. Not even considering a piracy rate exceeding 
     90 percent, China is now considering taking the additional 
     step of rolling back the access that foreign software 
     companies currently enjoy in the Chinese government 
     procurement market.
       China is in the process of implementing a ``buy Chinese'' 
     software procurement policy for government systems, which, if 
     implemented restrictively, will dramatically inhibit foreign 
     involvement in software sales to the Chinese government.
       New draft procurement rules would require foreign software 
     firms seeking Chinese government business to either perform 
     50 percent of the development work in China and assign 
     copyright to a Chinese entity or make substantial R&D and 
     capital investments in China. Even those foreign companies 
     that might meet China's R&D, manufacturing or outsourcing 
     requirements could not compete fairly for government 
     contracts. Any Chinese government entity that wants to 
     procure foreign software eligible for purchase on these 
     grounds would have to apply and obtain a specific waiver.
       Equally troubling, China is asserting a larger government 
     role over the operations of the Internet itself
       In a society like China's, one that represses dissent and 
     rewards conformity, Internet access to news and information 
     from countless points of view is nothing less than a threat. 
     This is no doubt why Chinese officials have jailed dozens of 
     citizens for ``subversive'' Internet-related activity, 
     including issuing warnings about the spread of SARS or 
     advocating greater democracy.
       This also explains China's interest in blocking politically 
     incorrect Web sites, collecting data on the Internet use and 
     site visits of individuals, monitoring Internet service 
     providers--even keeping tabs on Internet cafes.
       Not exactly an advertisement for a government-run Internet. 
     But at the Working Group on Internet Governance, a group 
     affiliated with the United Nations, China said ``the basic 
     principles of the Internet, namely, openness, fairness, and 
     democracy and freedom'' are being diminished by the failure 
     of governments to play a more prominent role in Internet 
     governance.
       Even though the Internet has flourished in a governance 
     environment that brings together government, the private 
     sector and civil society, China rejects this 
     ``trilateralism'' because it denies ``the due responsibility 
     and role of governments in Internet policy-making.''
       China wants full access to the U.S. market while attempting 
     to shut down the access that U.S. companies currently have to 
     its market. At the same time, China's government-first stance 
     on Internet governance threatens to throw sand in the gears 
     of Internet proliferation (and the democratizing influence it 
     represents). The U.S. information technology industry wants 
     to continue to support China's role as a major trading 
     partner. But that is possible only when free trade is truly 
     free.

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