“A Great Leap in Global Governance: Is China’s

ICT Sector Ready?”

Scott KennedyDirector

Research Center for Chinese Politics & Business

Indiana Universitykennedys@indiana.edu

http://www.iisg.nl/~landsberger/sheji/sj-swj.html

China and Global Governance:The Typical Questions

• Does China play by the rules?• Is China meeting its commitments?• Why isn’t it meeting its commitments?• What can be done to help China meet its

commitments?• Is China an anti-status quo power?

China and Global Governance:Different Questions

• “How is China learning the rules?”• “How well does China play by the rules?”• “How well do different Chinese groups, in and

out of government, play by the rules?”• “What does greater Chinese playing mean for

the rules and the entire game of global governance?”

• Are others ready for China to play a larger role?

Types of International Economic Regimes

Regimes Designed to Serve

Producers Consumers

Global Governance Norms and Rules

Exist and Have Teeth

Trade Remedies - Antidumping - Safeguards - Countervailing measuresTechnical StandardsIntellectual Property Rights

Food SafetyProduct SafetyEnvironmentLabor Rights

Weak or Non-Existent

Foreign Exchange ValuationForeign Investment - direct - sovereign wealth funds - hedge funds

Competition PolicyCredit Risk Management

China’s Own Antidumping Regime (product-cases)

YearCasesInitiated

Chinese Applicants Win

Both Sides Win

Foreign Respondents Win

1997 1 1 0 0

1998 0 - - -

1999 4 1 3 0

2000 1 0 1 0

2001 6 4 0 2

2002 9 6 2 1

2003 6 1 4 1

2004 8 3 3 2

2005 7 1 4 2

2006 5 4 1 0

2007 1 0 1 0

Total 48 21 (44%) 19 (40%) 8 (16%)

Recent Chinese Information Technology Standards Efforts

Non-ChineseChinese standardAlternativesProduct AreaabbreviationDVDVideo players, 3rd generationVCD, CVD, SVCD1Blue-ray, HD DVDVideo players, 4th generationEVD, HVD, HDV2MPEG4, VC1Multiple audio-visual productsAVS3WCDMA, CDMA2000mobile phonesTD-SCDMA4DLNA, UOPFHome appliance networkingIGRS, ITopHome5Wi-FiWireless local area networksWAPI6EPCRadio frequency identificationRFID7IPv4Internet architectureIPv68

A Country’s Standards PyramidLicense others to make products

based on your standard

Cross-license standards access with others

Produce and sell products with IP-based standards

All standards with intellectual property

All of a country’s standards: international, national, company, local

Governance Challenges: Is the market king?

Governance Challenges:Standards and Intellectual Property Rights

Governance Challenges:The National Security Exception

China and Global Governance:Different Questions

• “How is China learning the rules?”• “How well does China play by the rules?”• “How well do different Chinese groups, in and

out of government, play by the rules?”• “What does greater Chinese playing mean for

the rules and the entire game of global governance?”

• Are others ready for China to play a larger role?

China’s WTO Cases: As RespondentDate

InitiatedApplicants

(case #)Issue Outcome

Mar 2004 USA (309)

Value-added tax rebate on semiconductors China voluntarily withdrew rebate

Mar 2006 EU, USA, Canada (339, 340, 342)

Auto parts tariffs July 08: Panel ruled in favor of US and other applicants. China appealing ruling.

Feb 2007 USA, Mexico (358, 359)

Unfair tax breaks and subsidies Dec 07: Two sides sign MOU.

Apr 2007 USA (362) Criminal penalties for IPR violations pending

Apr 2007 USA (363) Distribution of publications in China pending

Mar 2008 USA, EU, Canada (372, 373, 378)

Financial information services. Require foreign info companies to disclose proprietary info , use an agent to sell their services.

Nov 08: China signs MOU, voluntarily withdraws regulation, establishes new licensing system.

“Global Views 2006,” Chicago Council on Global Affairs, 2006.

China’s WTO Cases: As ApplicantCase

#Date

Initiated Respondent Issue Outcome

252 Mar 02 USA Safeguard measures to stem surge in imports of foreign steel

WTO rules in favor of China and other applicants; US removed the safeguards.

368 Sept 07 USA Preliminary antidumping and counterveiling duty determinations on coated free sheet paper.

US ITC determined no injury in the relevant case. US-China consultations discontinued.

379 Sept 08 USA Definitive antidumping and counterveiling duties against circular welded steel pipes, off-road tires, and laminated woven sacks. Application of CVD to a “non-market economy.”

Consultations pending

Involvement in WTO Dispute Resolution Cases, Selected Members(January 1995 - September 2008)

Member Complainant Respondent Third Party

Brazil 23 14 49

China 3 11 62

European Union 79 62 82

Hong Kong 0 0 0

India 17 20 51

Japan 13 15 90

South Korea 13 13 43

South Africa 0 3 0

Chinese-Taipei 3 0 39

United States 90 100 73