LGJ: Is game censorship the new trade barrier?

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:

Thinking about the recent rash of international game censorship issues, I noticed a pattern: Games banned abroad are almost exclusively American (having, at least, significant ties to US companies). Games don't tend to be banned in the countries where their respective developers and publishers are located. So, does this speak to the attitudes of the country and free speech? Or, is it a ruse for creating a trade barrier? More importantly, could an entire trade war arise from video game content restrictions?

There's a fair amount of groundwork that goes into understanding this discussion, unfortunately, but it's a topic that needs to be discussed.First, there are two major areas of the law that need to be understood: international free speech regulations and international trade regulations. I know regulatory discussion is less than fascinating, so allow me to present you with the short and sweet version.
Let's start with the freedom of speech issue. As I've discussed before, the idea of freedom of speech in the US primarily deals with government action against speech.

China's ban is about as close to creating a trade barrier as any country.

That is approximately the same in most other modern nations, however, the main difference is that the US grants a much broader blanket of freedom than other nations do. (If you want to read about the specifics of a particular nation, there are many resources out there to give you more specific guidance.) Suffice to say that in most other countries, it is within the power of the government to ban video games based on content, and it's something we see happen on a regular basis in the gaming world.

This brings us to trade barriers and protectionism. Given the current economic climate, there has been a lot of talk of trade protectionism in the media. The last wave involved various "Buy American" clauses in certain versions of the automobile bailout bill. But what is trade protectionism? Ultimately, it is an activity that disadvantages foreign goods in favor of domestically produced goods. The most common example is a tariff. By imposing a tariff -- more simply put: a tax -- on imported goods, you are artificially raising the price of foreign goods, in turn, giving domestic goods a market advantage.

To put the idea numerically, let's say Microsoft actually made Xbox 360s in the United States, and the government imposed a tariff on the Playstation 3, which was made abroad. In simple terms, let's say it costs $300 to manufacture an Xbox 360 in the US, and it costs $250 to make a Playstation 3 in China. Based on those numbers, it would be easier to sell a Playstation 3 because the cost is lower. The US government decided it wants to support American business, so it imposes a 50 percent tariff on Playstation 3 imports. That means the Playstation 3 now essentially costs $375 in the US, giving Microsoft the numerical advantage.

Trade barriers don't have to be numeric, though. They can be waiting periods or, as we're concerned with here, outright bans of goods. Obviously, if a good is banned, it gives other competing goods a huge leg up on the market. So, is banning games already at this level?

Governments may seize an easy opportunity to implement protectionism.

Well, sort of. China's near unilateral ban on so many games is about as close to creating a trade barrier as any country. In fact it has been argued that China's blocking of the Wrath of the Lich King release may have been to help Chinese MMORPGs compete with the World of Warcraft juggernaut.

As calls for content based bans become louder, it's entirely possible that an element of trade protectionism could be rolled in, or even the primary driver in certain cases. Depending on the exact internal workings of the company, there could even be instances where, for example, games developed in the UK (but published by a US parent company) could be blocked in the UK. Instances like this could be a double benefit, as the in-country development team is still being paid and the the protectionist element helps other developers and publishers in the country secure an advantage. The practical mechanics are much more complex, of course -- but it could be done.

Content restrictions only seem to be increasing globally. Presuming that economic conditions continue as they are, it would not be surprising to see those restrictions used to justify protectionist policies that would otherwise be condemned globally. Unfortunately, with entertainment media being such a huge industry and the only one really, potentially being subjected to these content restrictions, governments may seize an easy opportunity to implement protectionism. I sincerely hope it doesn't come to that, but then, the writing is already on the wall.

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Mark Methenitis is the Editor in Chief of the Law of the Game blog, which discusses legal issues in video games. Mr. Methenitis is also a licensed attorney in the state of Texas with The Vernon Law Group, PLLC and a member of the Texas Bar Assoc., American Bar Assoc., and the International Game Developers Assoc., where he is a board member of the Dallas chapter. Opinions expressed in this column are his own. Reach him at: lawofthegame [AAT] gmail [DAWT] com.

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