The Big Idea

Breaking China

Here’s how to solve Google’s Beijing problem.

In a recent interview with the Financial Times, Bill Gates dropped an interesting idea about how the U.S. government might help businesses avoid becoming accessories to political repression in China: “I think something like the Foreign Corrupt Practices Act has been a resounding success in terms of very clearly outlining what companies can’t do,” the Microsoft chairman said, referring to the law that bars American corporations from paying bribes overseas.

When Congress held hearings on the China issue last week, Yahoo!’s top lawyer more or less begged for some sort of legislative intervention. Of course, technology executives are trying to duck responsibility for their own decisions to cooperate with Chinese censorship. Yahoo!, which provided evidence that helped imprison Shi Tao, a leading Chinese journalist, presents the most egregious example. But corporate leaders asking for government regulation—especially in the libertarian-minded technology sector—is a rare enough spectacle to command attention.

Tech companies turn to Washington in genuine frustration. They plausibly argue that their continued presence in China is beneficial not just to their shareholders, but to the development of democracy there. Internet censorship is porous, freedom contagious. New economic sanctions against China would only retard the liberalization we seek to accelerate. Even if a company such as Google sincerely wants to spurn evil, it would be hard-pressed to adhere to “voluntary” restraints when struggling to enter and dominate the hypercompetitive Chinese market. If declines to filter “freedom,” its site will be blocked, and Chinese competitor Baidu will capture the market. Businesses don’t want to be grappling constantly with questions of social responsibility. They rightly prefer to pursue the profit motive within clear rules.

China has provided one set of rules. The U.S. government can provide another. As Gates notes, there is an excellent precedent in the Foreign Corrupt Practices Act, which was born in 1977 out of a similar sort of moral scandal. American companies were paying bribes to win contracts in the developing world, which was bad for our image abroad, antithetical to integrity, and a problem of what we would now call transparency. The FCPA, which imposes fines of up to $2 million and prison terms for offending executives, is both a statement about American business values and, more important, a tool for honest businesspeople who use it as an excuse to say no.

The human rights equivalent of this—call it the Foreign Oppressive Practices Act—could work in a similar manner to advance American values of liberty and democracy. Such a law would enjoin U.S. corporations from assisting in the violation of human rights in China and elsewhere. The idea would not be to prevent American companies from selling equipment and services in unfree countries, but rather to stop them from tailoring their products to work as tools of tyranny.

A well-drawn set of restrictions could ease the predicament of American companies by, as Gates says, making clear what they cannot do. An anti-repression law would give Yahoo! a ready answer the next time Chinese officials demand evidence against cyber-dissidents. We must obey your laws, the American representatives would be able to respond. But we must obey our laws as well.

Rep. Chris Smith, a Republican congressman from New Jersey, last week introduced the discussion draft of a bill to “prohibit any United States businesses from cooperating with officials of Internet-restricting countries in effecting the political censorship of online content.” This is the right idea, sort of. The focus on Internet freedom as opposed to human rights generally reflects an unfortunate tendency to think of the Web as an end rather than a means. Another, more practical, flaw is giving foreign nationals standing to sue in U.S. courts as an enforcement mechanism. A more sensible approach would be for the Department of State, which already issues annual human rights reports by country, to provide advisory opinions about whether specific transactions constitute cooperation in repression, and for the Justice Department to prosecute violators.

If some version of the Smith bill progresses in the House, corporations can be expected to raise two other objections. One is that violations of human rights, unlike bribes, are hard to define. In fact, both issues quickly move into a gray zone. Under the FCPA, so-called grease payments are deemed an acceptable way to motivate sclerotic clerks in their duties, as opposed to paying bribes to obtain business in the first place. Though slippery, this distinction recognizes that American businesses operate in many countries that are not Switzerland. Likewise, any statute applying to Internet companies should cut a wide berth for varying standards of hate speech and pornography, as well as allow the sale of basic technology. Cisco routers can serve both good and evil and in China will almost certainly serve both.

A second objection is that such restrictions single out American companies. They do so intentionally because our technology companies, which are the envy of the world, have unique leverage. If U.S. law requires them to take a joint stand on the issue of Internet freedom, China would face a choice between throwing out the lot of them or easing up on anti-democratic enforcement. China does not want to forgo the economic advantages of their presence, even at the risk of undermining its political order. This is the dilemma of economic liberalization as a whole, and we are in a position to make it more urgent. And where America leads on this issue, others will follow. The FCPA influenced the adoption of a 1997 Organisation for Economic Co-operation and Development anti-bribery convention. As a result, advanced democracies no longer compete on the basis of their receptivity to foreign corruption. Perhaps one day they won’t compete to make Chinese censors happy, either.