THE TTALK QUOTES


On Global Trade & Investment
Published Three Times a Week (with occasional bonus quotes) by
The Global Business Dialogue, Inc.
Washington, DC  20006
No.51 of 2020
THURSDAY, JULY 9, 2020

Click HERE for last Thursday's quote from Prime Minister Trudeau on China's Canadian hostages.
IN THE MOVIES

"Clearly, you're not going to have Chinese villains anymore."

Richard Gere
June 30, 2020
CONTEXT
Say the name Richard Gere and movies come to mind: Pretty Woman, Chicago, The Second Best Exotic Marigold Hotel, and, oh yes, Red Corner, a 1997 MGM film about an American attorney on trial for murder in Beijing. Today’s featured quote, however isn’t a bit of dialogue from any of those films. It is from Mr. Gere’s testimony at a Senate hearing. The hearing was held by the Senate Finance Committee’s Subcommittee on International Trade, Customs, and Global Competitiveness on June 30. The subject was “Censorship as a Non-Tariff Barrier to Trade.”

As the subcommittee chairman, Senator John Cornyn (R TX) explained in his opening statement:

The Subcommittee continues its work in exploring the unfair trade practices of foreign governments and especially China and Russia.

[And]

The topic of censorship in China is commonplace in the news because of its growing effect on American business and culture. 

He continued with what for many is Exhibit A, noting that: 

In the fall of last year, the National Basketball Association (NBA) had its market access blocked in China because a single, American citizen (using a media platform not allowed in China) expressed their political opinion.  

It is worth recalling some of the particulars of that episode. The pivotal date was October 4, 2019. On that day, Daryl Morey, the general manager of the Houston Rockets, published a tweet that read: “Fight for freedom. Stand with Hong Kong.” (The Rockets, it might be recalled, recruited China’s great basketball player Yao Ming back in 2002. He retired in 2011.) 

Mr. Morey was responding to the Hong Kong protests at the time. Essentially, these had been protests against what had been a proposed Hong Kong law. That law, if enacted, would have allowed Hong Kong residents accused of certain offenses to have been extradited to mainland China. The situation had shifted somewhat by October 4, and has shifted even more dramatically since, but the issues were clear enough: the rights of the people of the Hong Kong and the status of China’s commitment to “one country, two systems.”  

To say the least, China was not happy. Because the Chinese market is exceptionally important to the NBA and to the Houston Rockets, the government of China had leverage over those entities, and they used it. Interfering with the broadcasting of games was only part of it. There were limits on sales of merchandize and, according to one Reuters report, “Sportswear band Li-Ning and sponsor Shanghai Pudong Development Bank (SPD) Credit Card Center suspended work with the Rockets, while the team’s games were dropped by Chinese state broadcaster CCTV’s sports channel.”

We shall pass over both Mr. Morey’s and the NBA’s efforts to walk back the tweet as well as the outrage that exploded on this side of the Pacific. Last week’s hearing was on a much broader subject, namely, Censorship as a Non-Tariff Barrier. Again, Senator Cornyn: 

Today, we will focus on how the use of censorship has become a barrier to global trade. When the World Trade Organization was founded, two exceptions to the principles of national treatment and most favored nation were created. These are for Public Morals and National Security.  Notably, there is no exception for a country to restrict trade because it deems something “politically unacceptable.

The role of censorship in trade, that is, in cross-border economic activity, goes well beyond basketball. Each of the four witnesses at last week’s hearing implicitly underscored that point. Because Richard Gere is well known for his strong support for Tibet as well as for his many films, his presence alone was a statement.  

Today’s featured quote arose in an exchange with Senator Menendez (D NJ), one in which the senator expressed concern about China’s demands for changes in American films. For his part, Mr. Gere elaborated on comments he had made earlier about how the system of film making and film distribution works in China and in the United States.  In that short exchange, Mr. Gere flagged a long-term concern and the above, near-term observation about villains. First, he said: 

If all of our films become primarily financed by Chinese money, then clearly, you’re going to see films that are there to glorify the Chinese party in some way. That’s a ways down the rabbit hole.  

And then he said:

Now clearly, you’re not going to have Chinese villains anymore.  That's not going to happen. That's done. It's going to be North Korean. They’re all [all the villains] going to be North Korean from now on.  
COMMENT
Each of the four witnesses at the June 30 hearing made a significant contribution to a subject which is a) important and b) not going away.  Beth Baltzan of the Open Markets Institute provided a fresh look at the Havana Charter, in a sense the founding document of the GATT and so of the multilateral trading system. Others provided perspective on just how high the cost of Chinese censorship has been for some American firms and offered the suggestion that the International Trade Commission should be asked to do a study of Censorship as a Non-tariff Barrier. 

We have no idea whether the ITC will be get a formal request to undertake such a study. If they do, they may find it useful to consider different categories of censorship. In the case of films, the censorship at issue is applied to the product itself. The same might be said of on-line censorship.  

In other cases, what is at stake is retaliation against exports for actions or statements that are displeasing to Beijing but which may be far removed from any targeted products. Punishing the NBA for Mr. Morley’s tweet is an example of the latter. That was stark, but it was hardly novel. Ask the Norwegians. In 2010, the Norwegian Nobel Committee awarded the Peace Prize to Liu Xioabo (1955 – 2017) “for his long and non-violent struggle for fundamental human rights in China.” China is an important export market for Norway, including for salmon, and Norwegian exporters felt the cold wind of China’s anger over the prize.

***

As Senator Cornyn’s opening statement – and Ms. Baltzan’s testimony – suggested, the intersection of censorship and trade is a candidate for a prominent place on the World Trade Organization’s agenda. One has to wonder if it will play any part in the selection of the next Director-General.  
SOURCES AND LINKS
Censorship and Trade is a link to the video of the June 30 hearing by the Trade Subcommittee of Senate Finance. This was the source for today’s featured quote.  

Opening Statement is a link to the opening statement of Chairman John Cornyn at the June 30 hearing on Censorship as a Non-tariff Barrier. 

China-Norway Relation s. This Wikipedia entry refers, among other things, to the problems encountered by Norwegian salmons exporters in the wake of the 2010 Nobel Peace Prize going to Liu Xioabo.
  
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