Sunday, May 25, 2014
According to the Financial Times, "China has ordered state-owned enterprises to cut ties with US consulting companies such as McKinsey and Boston Consulting Group because of fears they are spying on behalf of the US government." This comes on the heels of a report just a few days earlier that "Beijing has banned central government departments from installing Windows 8." (I will assume for the sake of this discussion that "installing" includes "purchasing.")
Questions have been raised as to whether these moves are WTO-compliant. Fortunately, the Windows 8 case is easy, and we don't even have to figure out whether software is a good covered by the GATT or a service covered by the GATS. This is because the ban applies to "central government departments," and so is clearly a case of government procurement. As China has not yet joined the Government Procurement Agreement (GPA), it can do what it likes in that area.
The management consulting case is harder. The first thing to do is to check China's schedule of commitments under the GATS to see if it made any commitments in the area of management consulting. Yup, there it is:
The next step is to figure out if there's any reason why that commitment should not apply in this case. How about government procurement? After all, the government didn't order everyone to stop using US consulting services; only state-owned enterprises (SOEs).
But making this argument puts China in an awkward position. At this very moment it is negotiating the terms of its accession to the GPA and resisting demands from other members that SOEs be included as subject to GPA commitments, presumably by arguing that SOEs are just regular market-oriented folks who seek the best product at the cheapest price and don’t take orders from government. This is in fact what it stated in the WTO accession negotiations in response to Working Party concerns. Here are the relevant parts of the Working Party Report:
6. State-Owned and State-Invested Enterprises
43. The representative of China stated that the state-owned enterprises of China basically operated in accordance with rules of market economy. The government would no longer directly administer the human, finance and material resources, and operational activities such as production, supply and marketing. The prices of commodities produced by state-owned enterprises were decided by the market and resources in operational areas were fundamentally allocated by the market. The state-owned banks had been commercialized and lending to state-owned enterprises took place exclusively under market conditions. China was furthering its reform of state-owned enterprises and establishing a modern enterprise system.
44. In light of the role that state-owned and state-invested enterprises played in China's economy, some members of the Working Party expressed concerns about the continuing governmental influence and guidance of the decisions and activities of such enterprises relating to the purchase and sale of goods and services. Such purchases and sales should be based solely on commercial considerations, without any governmental influence or application of discriminatory measures. In addition, those members indicated the need for China to clarify its understanding of the types of activities that would not come within the scope of Article III:8(a) of GATT 1994. For example, any measure relating to state-owned and state-invested enterprises importing materials and machinery used in the assembly of goods, which were then exported or otherwise made available for commercial sale or use or for non-governmental purposes, would not be considered to be a measure relating to government procurement.
45. The representative of China emphasized the evolving nature of China's economy and the significant role of FIEs and the private sector in the economy. Given the increasing need and desirability of competing with private enterprises in the market, decisions by state-owned and state-invested enterprises had to be based on commercial considerations as provided in the WTO Agreement.
46. The representative of China further confirmed that China would ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions. In addition, the Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement. The Working Party took note of these commitments.
47. The representative of China confirmed that, without prejudice to China's rights in future negotiations in the Government Procurement Agreement, all laws, regulations and measures relating to the procurement by state-owned and state-invested enterprises of goods and services for commercial sale, production of goods or supply of services for commercial sale, or for non-governmental purposes would not be considered to be laws, regulations and measures relating to government procurement. Thus, such purchases or sales would be subject to the provisions of Articles II [regarding most favored nation treatment], XVI [regarding market access] and XVII [regarding national treatment] of the GATS and Article III [regarding national treatment] of the GATT 1994. The Working Party took note of this commitment.
The commitments mentioned in Paras. 46 and 47 are more than just idle promises; they are incorporated by reference into China’s WTO Protocol of Accession and therefore form part of its WTO obligations. Thus, it seems that were China to call this a case of government procurement, it would not only be undermining its current position in the GPA negotiations, but would also be violating its specific commitments in its WTO Protocol of Accession.
Well, wait a minute, you might say. Isn't there some kind of broad national security exception countries can always invoke? It turns out that the national security exception, at least as written, is pretty narrow. Here's what the GATS says about it in Article XIV bis:
1. Nothing in this Agreement shall be construed:
(a) to require any Member to furnish any information, the disclosure of which it considers contrary to its essential security interests; or
(b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests:
(i) relating to the supply of services as carried out directly or indirectly for the purpose of provisioning a military establishment;
(ii) relating to fissionable and fusionable materials or the materials from which they are derived;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent any Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
That's it. Surprisingly enough, it doesn't look like "fear of state secrets leaking into the hands of a foreign power," no matter how legitimate that fear might be, counts. Needless to say, there is absolutely zero chance that any government would put WTO rules above its own conception of its security needs.
My conclusion, then, is that the anti-Windows 8 measure passes muster but the anti-management consulting measure does not. Let me add that I'm not a WTO expert and don't even play one on television, so there may be some aspect of the issue that I've overlooked. Check this space for a red-faced update.
Thursday, May 15, 2014
Wednesday, May 7, 2014
Wednesday, April 30, 2014
Tuesday, April 29, 2014
I have received the following announcement of job openings, including one in governance and law, from my friend David Kelly at China Policy. Note that only Chinese nationals can be considered.
China Policy is seeking lead analysts in our key sectors: Economy; Energy, Resources and Environment, Governance and Law, Social Policy and Agriculture Food and Water Security. These positions are well-suited to recent PhDs returning to China for employment. Visa restrictions mean only PRC passport holders can be considered. See our website for job descriptions.
A little bit about CP
China Policy is an evidence-based, knowledge-intensive information and advisory company registered in Beijing and operating worldwide. CP has in a few short years gained a growing client base among government, corporations and international organisations.
Our operations cluster around cp.context, an online research and learning tool. This supports regular publications: cp.leads, which is widely distributed, and cp.briefsand cp.records that are client-only publications The comprehensive policy records appear monthly, with one record for each of our major policy sectors (Governance and Law; Economy; Social Policy; Energy, Resources and Environment and Agriculture Food and Water Security) appearing in sequence weekly.
Staff producing these cutting-edge services all meet professional requirements in relevant disciplines as well as in Chinese and English. Junior staff are for the most part at grad student level, and lead analysts at PhD level or with equivalent work experience in one of the sectors.
Sunday, April 27, 2014
Wednesday, April 16, 2014
Noted political commentator and former (until fired) Southern Weekend columnist Chen Min, who writes under the pen name Xiao Shu (笑蜀), will speak at George Washington University Law School at 6 p.m. on April 22, 2014. Details are in this flyer. The talk will be webcast here: http://bit.ly/1tbgW5l.
Wednesday, April 9, 2014
On February 14th I posted what was definitely not a valentine to Confucius Institutes written by University of Chicago anthropologist Marshall Sahlins, as well as a response written by my colleague Ed McCord. Sahlins has now written a rejoinder, and McCord in turn a surrejoinder (I think that's what it's called - if the debate goes on any longer I will run out of vocabulary).
This is an important debate to have. I think Sahlins is right to be concerned, even seriously concerned. If Confucius Institutes did not exist, would anyone not in the Chinese government have proposed them as a model for promoting China studies around the world? At the same time, I know Ed McCord to be a scholar of integrity and sound judgment, who has not hesitated to offend the PRC government in the past when his principles called for it. Both perspectives need to be heard.
Saturday, April 5, 2014
"Minor property rights" (小产权) is the term used to describe the rights you get (or think you get) when you "buy" rural, collectively-owned land. I use quotation marks because you can't actually buy collectively-owned land. You can't even buy a long-term use right to it, the way you can buy a 70-year use right to land for residential use in urban China. But villages purport to sell these rights and urbanites purport to buy them, because they're cheaper than the fully lawful and relatively robust rights you get when you buy urban land. And the developments on minor property rights land can be pretty substantial (see the photo below); we're not talking about tarpaper shacks here.
Now the media is reporting that minor property rights land is being occupied not just by the living, but by the dead - and for the same reasons. It's getting too expensive to die in China, so people have to find cheaper options. Here are some reports:
Wednesday, April 2, 2014
I have received the following announcement:
Law Fellow, ABA ROLI China
ABA ROLI is a non-profit program that implements legal reform initiatives in roughly 60 countries around the world, with nearly 700 professional staff working abroad and in its Washington, D.C. office. ABA ROLI has been working with local partners in China to implement legal reform projects since 1998. The ABA ROLI China program has provided training, supported practical research, supplied technical comparative expertise and facilitated professional exchange relationships between Chinese legal reformers and their counterparts abroad. Local partnership and collaboration lies at the heart of ABA ROLI’s programs, whose partners include China’s judiciary, bar associations, universities, civil society organizations and legal scholars.
The ABA ROLI China Law Fellowship is a one-year, unpaid fellowship that provides recent law school graduates with the opportunity to work with our Beijing-based team to support legal reform initiatives in collaboration with Chinese partners. Law Fellows provide assistance with research, implementation and evaluation of programs, and outreach efforts. Our programs cover a broad range of substantive areas including women’s rights, the rights of the disabled, criminal justice reform, environmental protection, and civil society capacity building. Competitive candidates will have a background in China, experience living and/ or working in China, and will be proficient in Mandarin.
• Assist with legal research;
• Assist with the design, implementation and evaluation of programs; and
• Assist with the development of outreach materials.
• Must have a JD or equivalent degree
• Excellent analytical, writing, oral communication, and interpersonal skills
• Knowledge of China, including the legal system and the current political and cultural context
• Fluency in English required and proficiency in Chinese (Mandarin) preferred
Interested individuals should send a brief (1-2 pages maximum) cover letter, CV, and 2 references in English by email to Ms. Winona Qi at: email@example.com.
Candidates will be considered on a rolling basis until the position is filled. ABA-ROLI will contact only those candidates whom it selects for interviews.
I have received the following announcement:
ABA Rule of Law Initiative
Summer and Fall 2014
The American Bar Association Rule of Law Initiative seeks candidates to work as legal interns on a variety of legal assistance projects being implemented from the Beijing program office of the ABA Rule of Law Initiative.
The ABA Rule of Law Initiative China Program is a public service project that provides technical assistance in support of justice reforms and capacity building. ABA’s program office in Beijing, with support from Washington, D.C.-based staff, supports a variety of legal reforms and legal training projects in China, in partnership with Chinese civil society organizations, universities, and law professionals. Interns will have the opportunity to meet and support the work of Chinese civil society advocates and public interest lawyers.
Legal interns will report to Program Managers and assist with program implementation in one or more program areas, including environmental protection, criminal justice, civil society development and intellectual property rights. Work duties of the legal interns will include:
• Monitoring program progress and assisting Program Managers in implementing and reporting on programs;
• Monitoring new developments and current events related to issues in the media, social networks, and other information outlets;
• Researching and writing on legal issues and current events;
• Reviewing and organizing relevant resource materials in ABA program library;
• Translating program documents and news articles between Chinese and English;
• Accompanying foreign visitor experts in China and assisting with communications through informal interpretation; and
• General administrative assistance including: assisting with event preparations and implementation, and other administrative assistance to ABA staff as needed.
• Candidate for B.A. or Masters/ JD in Law or related field;
• Fluency in both spoken and written Mandarin and English;
• Strong sense of responsibility and ability to work independently;
• Excellent communication skills;
• Professional demeanor; and
• Experience in a bilingual work environment or an international NGO is a plus
Internships will be part-time with a minimum commitment for the summer holiday break or the fall academic semester. Flexible working hours are anticipated. Interns will receive a small stipend.
Interested candidates should send a brief (1-2 pages maximum) cover letter indicating their experience and interest in legal development activities in China, their available dates, and their resume in English by email to Ms. Winona Qi at: firstname.lastname@example.org.
Only candidates selected for an interview will be contacted.
Tuesday, April 1, 2014
The post will remain open until filled, so interested persons should apply as soon as possible. The job announcement is attached here. According to the job announcement, the location is "ideally" Washington, DC.
Sunday, March 30, 2014
Prof. SHEN Wei of Shanghai Jiaotong University Law School will give a talk at GW Law School this Thursday evening. The topic is "Understanding China's Local Government Debt Crisis: Causes and Solutions (or No Way Out?)". Click here for a flyer and a bio of Prof. Shen. The talk will be recorded and webcast live; here's the link for the webcast.
Date: April 3
Time: 6 p.m.
Place: Room 402, Lerner Hall, 2000 H St. NW, Washington, DC (Lerner Hall is where you are when you enter the law school at the 2000 H St. entrance).
Wednesday, March 19, 2014
Monday, March 10, 2014
You have to be impressed with Pershing Square's PR operation. Those who don't read the business section might still have heard of William Ackman and his hedge fund Pershing Square's campaign against Herbalife, as it was the top story on the front page of today's New York Times. Ackman has a huge short position in Herbalife and is trying to talk down its stock by saying it's a pyramid operation. (I report this simply as a fact and express no opinion on whether Ackman's allegations are true.)
Today I received an email from someone at the Global Strategy Group, a PR firm, alerting me to a webcast Pershing Square is putting on tomorrow. The webcast will charge that Herbalife's operations in China violate Chinese law, presumably because of their alleged pyramidal nature. (My recollection is that China passed a law prohibiting pyramid sales structures after some early bad experiences in the 1980s or 90s, but I don't have the details at my fingertips.) I don't plan on watching the webcast and (since I don't have an opinion on the merits) it's not really my job to provide publicity for one side in this dispute, so I'm not going to provide the link here. But at a time when China is cracking down disproportionately on foreign firms, it will be interesting to see if Pershing Square manages to stir up some official action in China against Herbalife.
Here's the full text of the report on the China Law Translate site, where it's in the process of being translated. Click on the "Select Language" button on the right of the screen to ensure you're getting the version you want (i.e., Chinese or in-process English translation).
Friday, February 14, 2014
Confucius Institutes, which are part of the Chinese government's soft power efforts, have been in the news recently (at least in the academic community) following this blast last fall by the noted University of Chicago anthropologist Marshall Sahlins. I recommend it.
At the same time, I also recommend this recent and very cogent response by my GWU colleague Ed McCord, which he has kindly consented to have me post here. It's must reading for anyone who wants to have a fully informed view.
[Feb. 16: Replaced earlier version of McCord piece with a later, slightly modified version.]