[Congressional Record Volume 157, Number 192 (Wednesday, December 14, 2011)]
[Extensions of Remarks]
[Pages E2263-E2266]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CONGRESSIONAL COMMISSION ON CHINA HEARING ON ``CHINA'S CENSORSHIP OF 
    THE INTERNET AND SOCIAL MEDIA: THE HUMAN TOLL AND TRADE IMPACT''

                                 ______
                                 

                       HON. CHRISTOPHER H. SMITH

                             of new jersey

                    in the house of representatives

                      Wednesday, December 14, 2011

  Mr. SMITH of New Jersey. Mr. Speaker, as Chairman of the 
Congressional-Executive Commission on China, I would ask that the 
following opening statements be submitted to the Record for the 
November 17, 2001 hearing on ``China's Censorship of the Internet and 
Social Media: The Human Toll and Trade Impact.''

China's Censorship of the Internet and Social Media: The Human Toll and 
                              Trade Impact


  STATEMENT OF HON. CHRISTOPHER SMITH, A U.S. REPRESENTATIVE FROM NEW 
     JERSEY, CHAIRMAN, CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

       The Commission will come to order. I want to welcome all of 
     our distinguished witnesses to this very important hearing. 
     We really appreciate the attendance of all of our panelists 
     and guests. It's a pleasure to welcome everyone to this 
     important roundtable on ``China's Censorship of the Internet 
     and Social Media: The Human Toll and Trade Impact.'' As 
     recent events have shown, the issue of Internet censorship 
     has only grown in terms of importance and magnitude, and I 
     thank the Congressional-Executive Commission on China staff 
     for organizing a hearing on this pressing issue, and for the 
     tremendous scholarly work they have done not only in 
     presenting our annual report, which is filled with facts and 
     information that is actionable, but for the ongoing work that 
     they do to monitor the gross abuses of human rights in China.
       As the Congressional-Executive Commission on China's 2011 
     annual human rights report demonstrates, China's leadership 
     has grown more assertive in its violation of rights, 
     disregarding the very laws and international standards that 
     they claim to uphold, while tightening their grip on Chinese 
     society. As Chinese citizens have increasingly called for 
     freedoms and reforms, China has only strengthened its 
     controls over many areas of society--particularly over the 
     Internet.
       While China has witnessed a boom in the popularity of 
     social media and Internet sites, Chinese citizens that access 
     online sites today remain under the watchful eye of the 
     State. By some accounts, China has imprisoned more Internet 
     activists than any other country in the world, and its 
     Internet environment ranks among the most restrictive 
     globally. Chinese citizens are unable to voice a range of 
     criticism that Americans undoubtedly take for granted each 
     day: Chinese citizens that tweet about local corruption may 
     face the threat of abuse or harassment. Citizens that express 
     dissatisfaction over tainted food supplies that injure 
     children--the most vulnerable population of our society--may 
     come to hear a knock at the door. And, citizens that voice 
     the human desire for democracy and rights protections we 
     value so dearly may disappear into the official custody of 
     the State, where they face torture and incarceration.
       For Chinese citizens, the line that can't be crossed is 
     unclear. While mentions of the 1989 Tiananmen protests are 
     surely prohibited, China's censorship remains at the whimsy 
     of governmental agencies that seek to limit what they 
     perceive to be any destabilizing commentary. In China, the 
     Internet provides no transparency--and citizens must weigh 
     their choices each time they click to send an email or press 
     a button or post personal views online. Who can forget Shi 
     Tao, who for merely posting information about what he is not 
     allowed to do, with regards to Tiananmen Square, garnered a 
     ten year prison sentence when Yahoo opened up their 
     personally identifiable information and gave it to the 
     Chinese secret police that lead to his conviction. There are 
     no lists of banned words. There are no registers of 
     prohibited topics. In China, there is no transparency. There 
     are only consequences, and dire ones at that.
       Today, we welcome two panels that will address China's 
     Internet censorship from two perspectives. The witnesses will 
     not only provide personal accounts of how China's censorship 
     affects individuals and families, but also detail how China's 
     actions hinder the rights of U.S. businesses that seek to 
     compete fairly in China. These panels will expose China's 
     bold disregard for its own laws and its international 
     obligations, specifically in terms of its controls on 
     internet activity and expression.
       In the first panel today, we will hear personal accounts of 
     the consequences Chinese citizens face in seeking to express 
     their fundamental rights of expression. We will hear from a 
     son and a pastor that have seen firsthand the anxious and 
     unforgiving hand of China's Internet police. We will hear how 
     the simplest calls for freedom and reforms can lead to the 
     separation of loved ones and partition of families.
       In the second panel, we will hear how China's Internet 
     restrictions and controls not only hurt its citizens, but 
     also hurt countries seeking to better China through 
     international trade and cooperation. On a commercial level, 
     China similarly lacks the kind of transparency and fairness 
     that we expect in global trading partners. China has not only 
     failed to comply with its WTO commitments, it has exploited 
     our expectations to create an unlevel playing field, hurting 
     the competitiveness of U.S. businesses and workers alike.
       We recognize that the Internet and social media can and 
     should be used to provide people with greater access to 
     honest information and to open up commercial opportunities 
     for businesses operating in global markets. We know that the 
     promise of information technology can not be achieved when it 
     is used by repressive governments to find, capture, convict 
     and so often torture ordinary citizens for voicing concerns 
     publicly. Information technology can not be advanced when it 
     involves the systemic exclusion of commercial competitors and 
     rampant disregard for transparency and intellectual property.
       China is one of the most repressive and restrictive 
     countries when it comes to the control of the Internet and 
     the impact goes far beyond the commercial losses for U.S. 
     companies that want to participate in that market. There are 
     serious human rights implications and we have seen the damage 
     inflicted countless times through the arrest of bloggers and 
     prodemocracy activists who have used the Internet to 
     communicate with colleagues or disseminate views and then 
     have been arrested. What makes this situation even worse is 
     that sometimes it is U.S. companies, and my colleagues will 
     recall I held the first of a series of hearings where we had 
     Microsoft, Yahoo, Cisco, and Google before our committee--it 
     was my subcommittee on human rights--held up their hands and 
     promised to tell the whole truth and nothing but, and then 
     said they couldn't tell us what they were censoring and would 
     not tell us how they were being complicit. Harry Wu, who is 
     here, and has been a leader on this issue, pointed out that 
     Cisco has so enabled the secret police to track down people 
     using police net, and that the use of cyber police, 
     ubiquitous throughout all of China, in order to capture the 
     best, bravest, and smartest in China, who will bring that 
     country to democracy if only allowed to do so.

    November 17, 2011 Testimony Before the Congressional-Executive 
Commission on China Hearing on ``China's Censorship of the Internet and 
            Social Media: The Human Toll and Trade Impact''


 Gilbert B. Kaplan, Partner, King & Spalding, President, Committee To 
                 Support U.S. Trade Laws--Introduction

       China's censorship of the Internet and its restrictions on 
     the free flow of information have a very significant impact 
     on U.S. economic and trade interests. China continues to 
     impose debilitating burdens on foreign Internet service 
     providers through its censorship regime, its blocking of 
     foreign websites, and its ``Great Firewall'' infrastructure, 
     which inhibit or prevent all together U.S. companies' ability 
     to do business in China, and their ability to compete with 
     Chinese domestic companies. China's Internet service 
     providers have capitalized on this discriminatory treatment 
     of U.S. companies and have consequently experienced great 
     success. Earlier this year, for example, RenRen (known as 
     ``China's Facebook'') filed for a U.S. public offering, 
     symbolizing its success to date and its plans for expansion. 
     Meanwhile, Facebook is blocked in China. These measures have 
     been ongoing for years, and have had an overwhelming adverse 
     impact on market share for U.S. companies perhaps to the 
     extent that such market share can never be recovered.
       China's blocking and filtering measures, and the fog of 
     uncertainty surrounding what China's censors will and will 
     not permit, violate numerous of China's international 
     obligations, including provisions of the WTO General 
     Agreement on Trade and Services (``GATS'') and China's WTO 
     Protocol of Accession.
       The negative impact of these violations on America's 
     premier Internet companies is profound. There are several 
     corporate victims of China's exclusionary practices. Although 
     there is public information identifying several large 
     companies that have been

[[Page E2264]]

     blocked or restricted by the Great Firewall, including 
     YouTube, Facebook, Twitter, Vimeo, Google, and the Huffington 
     Post, to name a few, there are many other companies that have 
     been blocked from access in China that I am not able to 
     identify by name specifically because these companies fear 
     retaliation. These companies come from various sectors, 
     including energy, labor mediation, tourism, education, web 
     hosting, and advertising, among others. The fact that 
     these large, well-established companies and other fast-
     growing U.S. firms, so successful in every other major 
     market in the world, are reluctant to come forward with 
     specific information that would form the basis of a WTO 
     complaint against the Chinese government is powerful 
     testament to 1) the importance of the Chinese Internet 
     market--the largest in the world--to these firms' 
     continued success, and 2) the risk of retaliation that 
     these firms face if they are seen as lending direct 
     support to a trade complaint against China. Moreover, 
     companies not yet in existence, but for which China could 
     represent a significant business opportunity, do not even 
     have a voice in the matter and perhaps never will.
       I represent the First Amendment Coalition, an award-
     winning, non-profit public interest organization dedicated to 
     advancing free speech for individuals and companies just like 
     those denied access to China's Internet market. 1 have been 
     working with them to address the issue of China's Internet 
     restrictiveness since 2007. The issues regarding internet 
     censorship and internet blockage are trade issues cognizable 
     under the WTO, as well as freedom of speech issues. They are 
     a harmful trade barrier to U.S. business which must be ended.
       The First Amendment Coalition was able to persuade the 
     Office of the U.S. Trade Representative (``USTR'') to take 
     the critical step of requesting detailed information from 
     China on its internet restrictions under Article 111:4 of 
     GATS, which mandates transparency in a Member's application 
     of measures affecting services. OATS Article 111:4 reads as 
     follows.
       Each Member shall publish promptly and, except in emergency 
     situations, at the latest by the time of their entry into 
     force, all relevant measures of general application which 
     pertain to or affect the operation of this Agreement.
       USTR's request to China follows a three year effort by the 
     First Amendment Coalition to get the U.S. government to take 
     a tough stance to address China internet restrictions in 
     violation of international trade rules, free speech, and 
     human rights. The U.S. request to China under GATS Article 
     111:4 is highly significant not only because it is the very 
     first time any WTO Member has utilized that provision of the 
     GATS agreement, but also because it is the first time that 
     the U.S. government, or any country, has made a formal 
     submission through the WTO to China to address internet 
     censorship.
       Contrary to GATS Article 111:4, China's measures with 
     respect to Internet services have not been published 
     promptly, and in fact, the blocking and filtering measures 
     have not been published at all. In this regard, we have been 
     unable to document written directives or specific 
     governmental instructions concerning China's measures 
     constituting the ``Great Firewall,'' but this in effect lends 
     support to the argument that China is not transparent in its 
     practices related to controlling and censoring Internet 
     content. Indeed, China has published few, if any, regulations 
     related to Internet services. The Chinese government recently 
     issued an official decision, currently available only in 
     Chinese, which appears not to contain ``any new concrete 
     policies but it does set the stage for future moves to rein 
     in parts of the Internet at the possible expense of the 
     commercial Internet companies.''
       The historic action taken by USTR is also a significant and 
     important step because, in addition to promoting transparency 
     and free speech, it may result in China providing information 
     in response to U.S. questions that will assist small and 
     medium-sized U.S. businesses in entering the Chinese market, 
     which they currently are unable to do given the lack of 
     certain vital information involving use of the Internet. As 
     USTR indicated in its press release,
       [a]n Internet website that can be accessed in China is 
     increasingly a critical element for service suppliers aiming 
     to reach Chinese consumers, and a number of U.S. businesses, 
     especially small- and medium-sized enterprises, have 
     expressed concerns regarding the adverse business impacts 
     from periodic disruptions to the availability of their 
     websites in China.
       Small and medium-sized U.S. businesses are particularly 
     disadvantaged by China's Great Firewall because, unlike 
     bigger U.S. companies, they do not have the resources to 
     physically set up shop in China so they are simply excluded 
     from the Chinese market Some of the information requested 
     from China by USTR included the following:
       With respect to China's rules governing website blocking: 
     Who is responsible for determining when a website should be 
     blocked? What are the criteria for blocking access? Where are 
     the guidelines published? Who does the actual blocking? How 
     can a service supplier know if their website has been 
     blocked? Are decisions to block appealable? Is the process 
     used to prevent access the same or different for foreign and 
     domestic content?
       With respect to the State Internet Information Office 
     (``SIIO) established by the State Council: What are the 
     responsibilities and authorities of SIIO? Will SIIO handle 
     licenses, approval processes, and questions on filtering and 
     other laws?
       With respect to inadvertent blocking where one site is 
     blocked when it shares an IP address with a website China has 
     deemed harmful: How does it occur? Can it be avoided? Will 
     Chinese authorities notify the owner of the web hosting 
     service so that it may ensure other sites are not 
     inadvertently blocked? How can companies resolve inadvertent 
     blocking?
       With respect to the broad nature of the eleven categories 
     of content which Internet service providers may not 
     disseminate: Are there any criteria to determine when content 
     falls within the eleven categories? Are government requests 
     to filer specific terms communicated directly to Internet 
     information service providers? Are the same terms subject to 
     filtering made available to Internet information service 
     providers inside and outside of China?
       With respect to the prevention of ``illegal information'' 
     as that term is used in the White Paper on the Internet in 
     China: How is illegal information defined? Is a written 
     government order required for a private corporation or 
     relevant authority to block the transmission of illegal 
     information? What types of technical measures are service 
     suppliers expected to use to prevent transmission of the 
     illegal information? Are the technical measures to block 
     illegal information applied automatically to domestic and 
     foreign traffic? If not, how are they applied? Does Internet 
     content from outside of China go through a separate 
     monitoring process for illegal information than Internet 
     content created inside of China? If so, how do they differ?
       We hope and expect that the Government of China will answer 
     these questions fully and promptly, fulfilling its 
     obligations under the WTO to maintain an open internet and 
     not discriminate against U.S. business.
       The remainder of this submission will review in greater 
     detail the Internet restrictions in China, the adverse trade 
     impact caused by those restrictions, and how those 
     restrictions would appear to violate China's international 
     trade obligations.


                    I. China's Internet Restrictions

       U.S. and foreign Internet companies have faced a long 
     history of discriminatory treatment in China, to their 
     disadvantage and to the advantage of their Chinese 
     competitors. China has for many years maintained a policy, 
     popularly known as the ``Great Firewall,'' under which it has 
     exerted strict control over the use of the limited system of 
     fiber optic cables that connects networks in China to the 
     outside world. As we understand it, China has installed 
     certain hardware, known as ``tappers'' or ``network 
     sniffers,'' at each entry point so that when a user in China 
     attempts to access a good or service located on a server 
     outside of China, the tappers create mirror copies of the 
     data packets that flow back and forth between the two 
     servers, and the mirror copies are delivered to a set of 
     computers that automatically review the data packets. The 
     computers can be, and often are, pre-progammed to block a 
     particular domain name server (``DNS''), Internet Protocol 
     (``IP'') address, or Universal Resource Locator (``URL'') 
     address.
       The government of China (``GOC'') also employs tens of 
     thousands of individuals whose sole mission is to search the 
     Internet for objectionable content. Their work often results 
     in the blocking of additional DNS, IP, and URL addresses.
       Following USTR's Article 111:4 request, China defended its 
     Internet censorship as an effort to ``safeguard the public.'' 
     Although the ruling Communist Party claims its monitoring and 
     blocking is to promote ``constructive'' websites, stop the 
     spread of ``harmful information,'' and develop what it calls 
     a healthy intemet culture, it is unclear what content is 
     subject to blocking and often the blocked content has nothing 
     resembling ``harmful information.'' Additionally, the 
     blocking appears motivated by other competitive or political 
     agendas. For example, access to the Android Marketplace was 
     blocked within China just after Google announced it would 
     help the Dalai Lama to visit South Africa virtually.


                  Harm Caused By China's Restrictions

       Chinese internet restrictions have disadvantaged American 
     businesses, to the benefit of Chinese businesses. According 
     to news reports, Facebook and Twitter, for example, have been 
     blocked in China. In their absence, copycat websites based in 
     China (with censored content) have been able to flourish. It 
     seems unlikely that Facebook and Twitter will be able to 
     regain the market share lost to their Chinese competitors 
     even if they were unblocked at some point in the future. 
     Chinese users have already developed a preference for certain 
     social media sites, and it is doubtful that they would have 
     an incentive to switch services. The loss of a huge potential 
     market for these companies indicates the extent of the harm 
     caused by the Chinese actions. In addition to the direct loss 
     of access to Chinese consumers by these companies comes the 
loss from all of the advertisers that would ordinarily be offering 
their services on the Internet pages of these social media service 
providers. The number of Internet users in China has exceeded 500 
     million, growing at double digit rates since 2008, roughly 
     twice the size of the U.S. market, which grew only 2.5 to 
     4.5 percent in the same timeframe.

[[Page E2265]]

     China is now the largest market for Internet users and 
     U.S. businesses are effectively being blocked from or only 
     given highly restricted access to that market. U.S. 
     companies excluded from the Chinese market are not just 
     large tech companies but small and medium businesses 
     including ``travel sites, engineering firms and consulting 
     firms, which have found their sites blocked and have 
     complained to the trade office.'' A 2011 report by the 
     McKinsey Global Institute estimates that there is a ten 
     percent increase in productivity for small and medium 
     businesses from internet usage. This productivity growth 
     is denied U.S. companies that are blocked from providing 
     their services in China.
       U.S. companies are subject to the strict controls that 
     completely disrupt their service, or at a minimum seriously 
     delay the transmission of information. Users of these 
     websites, if they actually endure the wait and do not move to 
     a competitor service supplier, suffer from a decrease in the 
     quality of service, causing commercial harm to U.S. 
     companies.
       It would be very useful for this Commission to undertake, 
     directly or perhaps through an economic consulting firm, an 
     economic analysis of the overall harm caused to U.S. 
     companies by the Chinese blockage and censorship of the 
     internet. I think that would be one useful follow-up to this 
     hearing.


  III. China's Internet Restrictions Violate Its International Trade 
                              Obligations

       The Chinese Government's actions appear to constitute 
     various violations of WTO agreements to which China is a 
     party, particularly the GATS Agreement. The Chinese actions 
     in question, although often based on unwritten policies and 
     practices, would still constitute ``measures'' that can be 
     challenged under the World Trade Organization Dispute 
     Settlement procedures. In this regard, the Appellate Body and 
     various WTO panels have confirmed that actionable 
     ``measures'' subject to WTO dispute settlement include not 
     only written laws and regulations, but other government 
     actions as well. Panels have also recognized the subtleties 
     of government pressure on private companies as ``measures'' 
     that may be challenged at the WTO.
       In addition to USTR's current GATS Article 111:4 request, 
     there are more aggressive steps that the United States could 
     take to protect its vital economic interests. While we 
     believe that China currently is preparing its official 
     response to USTR's Article 111:4 request, if China fails to 
     respond or fails to respond meaningfully, the United States 
     would then have a readily apparent basis to initiate formal 
     dispute settlement proceedings in the WTO. Paragraph 1 of 
     GATS Article XXIII says ``[i]f any Member should consider 
     that any other Member fails to carry out its obligations or 
     specific commitments under this Agreement, it may with a view 
     to reaching a mutually satisfactory resolution of the matter 
     have recourse to the dispute settlement understanding.''
       In addition to a potential violation under GATS Article III 
     on transparency, there are other WTO obligations that China 
     appears to violate with its Internet restrictions, including 
     other GATS provisions, as is discussed below.
       Initiation of a WTO dispute settlement proceeding against 
     Chinese Internet restrictions by the United States would 
     signal to the U.S. business community, to consumers around 
     the world, and to China, that the U.S. government will assert 
     its rights under WTO agreements when China fails to fulfill 
     its WTO obligations, even in those areas that may be of a 
     more sensitive nature. Unfortunately, these sensitivities 
     give rise to a number of obstacles to U.S. initiation and 
     prosecution of a formal WTO dispute against China.
       As noted, it is difficult to find companies willing to come 
     forward to support a potential case against China for fear of 
     retaliation. Due to this fear, specific facts needed by the 
     U.S. government to support many claims under the WTO are 
     difficult to document. In addition, also as noted, many of 
     the Chinese laws, regulations, policies, and practices 
     regarding Internet services are not written down, although 
     they are enforced de facto.


    A. China's Internet Censorship Violates Other Provisions Of GATS

       China made specific commitments regarding market access and 
     national treatment for services in various service sectors. 
     China's Internet policies would appear to violate many of 
     these specific commitments under the GATS, including in the 
     areas of Data Processing Services, Photographic Services, 
     Telecommunication Services, Mobile Voice and Data Services, 
     Audiovisual Services, Tourism and Travel Related Services, 
     and Transport Services. By pursuing these policies, China 
     denies market access to U.S. companies and discriminates 
     against the services of U.S. companies in favor of Chinese 
     companies.
       Although U.S. companies offer a wide range of services over 
     the Internet, four service sectors that would appear to 
     suffer disproportionately under Chinese policies are: (1) 
     Advertising services (the primary revenue source for U.S. 
     suppliers of Internet-based services, particularly those 
     operating search engines, social networking, and data/photo 
     sharing, is through advertising and U.S. services suppliers 
     obtain revenue from the development and posting of targeted 
     advertisements on their webpages and facilitating access to 
     other websites by their users clicking on the 
     advertisements); (2) Data processing and tabulation services 
     (relevant U.S. services suppliers are providing consumers 
     with the ability to access certain tools over the Internet 
     that enable them to make, edit, and share videos or photos, 
     or other data and that allow them to search for content on 
     other websites and the U.S. services supplier is necessarily 
     processing data for the consumer and providing a tool to 
     access defined data bases or the Internet generally); (3) On-
     line information and database retrieval; and (4) Videos, 
     including entertainment software and (CPC 83202), 
     distribution services (``Video/entertainment distribution 
     services'').
       There follows below a brief discussion of some of the 
     specific GATS claims that might be made against the Chinese 
     measures in question and some of the factors that would need 
     to be considered in prosecuting such claims.


                         I. National Treatment

       China's restrictions on U.S. Internet companies appear to 
     violate the national treatment provision in Article XVII of 
     the GATS, which provides that ``each Member shall accord to 
     services and service suppliers of any other Member, in 
     respect of all measures affecting the supply of services, 
     treatment no less favourable than that it accords to its own 
     like services and service suppliers.''
       The Chinese measures at issue would seem to fall within one 
     or more of at least four services subsectors for which China 
     has inscribed a specific commitment, without limitation on 
     national treatment, in its WTO Services Schedule. As such, 
     China's measures must comply with the obligations in Article 
     XVII for these subsectors. Current Chinese treatment of U.S. 
     Internet companies, including filtering and blocking through 
     the ``Great Firewall'' and mandated disabling of certain 
     service functions, modifies the conditions of competition in 
     favor of Chinese suppliers such as Baidu (considered the 
     ``Google'' of China); as such, these measures are 
     inconsistent with Article XVII of the GATS.
       If China's measures were challenged in a WTO proceeding, a 
     Panel would first determine whether China's measures are 
     indeed ``affecting'' the supply of these services. As noted 
     by the Appellate Body in EC-Bananas III:
       [T]he term of ``affecting'' reflects the intent of the 
     drafters to give a broad reach to the GATS. The ordinary 
     meaning of the word ``affecting'' implies a measure that has 
     ``an effect on'', which indicates a broad scope of 
     application. This interpretation is further reinforced by the 
     conclusions of previous panels that the term `affecting' in 
     the context of Article III of the GATT is wider in scope than 
     such terms as `regulating' or `governing.'
       It is therefore not necessary for China's measures to be 
     directly regulating or governing the business of U.S. 
     Internet service providers, but merely that the measures have 
     an effect on these services, and their providers' ability to 
     do business in China. China's measures clearly have ``an 
     effect on'' these services--indeed, a very detrimental one.
       Second, the United States would need to demonstrate that 
     China's measures accord ``less favorable'' treatment to U.S. 
     suppliers than to China's domestic suppliers of ``like'' 
     services. As set forth in GATS Article XVII:3, the test for 
     less favorable treatment is whether the measure ``modifies 
     the conditions of competition in favor of services or service 
     suppliers of' China compared to like services or services 
     suppliers of the United States. Persuading a panel in this 
     regard would require the production of extensive data and 
     specific information demonstrating the competitive 
     disadvantage suffered by U.S. companies due to China's 
     measures. A comparison of blockages of websites, upload times 
     for content of websites, and other significant impediments to 
     Internet service providers would likely reveal significant 
     and swift loss of market share by U.S. providers.


                            2. Market Access

       Article XVI:2 of the GATS prohibits Members from 
     maintaining or adopting quantitative limitations on service 
     operations or service output. China's restrictions on certain 
     U.S. Internet companies' services constitutes a de facto 
     quantitative limitation on such services, therefore violating 
     this provision.


                         3. Domestic Regulation

       Under Article VI of the GATS, for services sectors in which 
     specific commitments have been undertaken, China must 
     administer its measures in a ``reasonable, objective and 
     impartial manner'' and, for all services sectors, must ensure 
     that tribunals or procedures are available for the prompt 
     review and remedy of administrative decisions. China's 
     restrictions on U.S. Internet companies are subjective and 
     non-transparent, and there are no tribunals or procedures for 
     the review of these administrative decisions. The 
     restrictions therefore violate China's obligations under 
     Articles VI:1 and VI:2(a) of the GATS.
       China's ``Great Firewall'' filtering and blocking practices 
     would also seem to violate the GATS Annex on 
     Telecommunications, which states in paragraphs 4 and 5 that 
     ``each Member shall ensure that relevant information on 
     conditions affecting access to and use of public 
     telecommunications transport networks and services is 
     publicly available'' and that ``{e}ach Member shall ensure 
     that any service supplier of any

[[Page E2266]]

     other Member is accorded access to and use of public 
     telecommunications transport networks and services on 
     reasonable and non-discriminatory terms and conditions.'' In 
     addition, paragraph 5(c) imposes an obligation on China to 
     ensure that U.S. services suppliers may use the public 
     telecommunications transport networks and services ``for the 
     movement of information within and across borders'' and ``for 
     access to information contained in databases or otherwise 
     stored in machine-readable form'' in the United States or in 
     the territory of another WTO Member. China's filtering and 
     blocking on Internet content clearly restricts the 
     availability of these telecommunications networks in a 
     discriminatory fashion.


                               Conclusion

       We appreciate the Commission holding this hearing and 
     inviting me to testify. We also appreciate the efforts of 
     USTR in submitting the GATS 111:4 questions. We urge the 
     Commission to take into account our views in its ongoing work 
     on this issue. We also urge the Commission to monitor China's 
     responses to these questions as well as USTR's continuing 
     efforts on this very important issue. An open and accessible 
     internet in China is a prerequisite to U.S. success in the 
     Chinese market, and a goal that we must continue to fight for 
     until it is achieved.

                          ____________________