TOWARDS A WORKABLE RULE OF LAW†
Jeffrey S. Lehman
July 19, 2006
I am honored to be here with Michael and Claude to help launch this conversation about Rule of Law Capacity Building in China and India. I am here today in my role as the President of the Joint Center for China-US Law & Policy Studies at Peking University and Beijing Foreign Studies University.
I’d like to take a few minutes up front to describe how I have come to these issues, which is through the Joint Center. The Joint Center is the product of several years of conversation between our own Justice Kennedy and several members of China’s legal elite. It is structured as a joint venture between the two universities, but it is designed to be open-textured, engaging other Chinese universities as well. It is backed by an advisory board of American law school deans, as well as a U.S. charitable organization.
In the fall of 2004, the presidents of Beida and Beiwai expressed an interest in having me help get the Joint Center off the ground. And I think that is, in and of itself, an interesting commentary on China’s current position with respect to Rule of Law issues. You see, I am not a China hand. I do not speak or read Chinese. I have only been to China a total of eight times, all since 1998. My connections to China were not scholarly but administrative, in my roles as Dean of the University of Michigan Law School and President of Cornell University.
While the Joint Center is, at its core, an academic enterprise, motivated by a desire to understand, for understanding’s own sake, it also has a very pragmatic edge. It reflects the pragmatism that, it appears to me, is motivating China’s elites today to move the process of legal modernization forward.
Permit me now to set forth my own interpretation of that pragmatism. My opinion derives from a series of conversations with a relatively small group of political, academic, and business leaders. And I am very interested in knowing if you believe that what I have heard from these leaders is representative, or if it is out of synch with your own understanding of China’s current Rule of Law agenda.
I have drawn from my conversations the sense that Chinese interest in continued legal system capacity building is grounded in three beliefs.
First is a belief that continued political stability requires continued economic growth. Maybe not 10% year-on-year, but at least 7% a year. That growth in turn requires continued success in the global market economy. That success in turn requires the kind of legal system capacity that can sustain ever-greater integration with the transnational business community. And it also requires the kind of legal system capacity that will provide indigenous Chinese enterprises with a stable platform on which they will be able to compete globally.
Second is a belief that continued political stability requires continued public trust in the government’s technocratic ability to address public policy challenges. They feel good about the past 30 years in that regard, but they are still haunted by the catastrophes of the preceding 20 years. Looking ahead, they recognize the need to address challenges in the areas of the environment, energy, income security, and workforce demographics, among others. Once again, they believe that will require more, not less, transnational collaboration.
Third is a belief that continued political stability will require a trajectory of increasing public trust in the capacity of government to deliver what it promises, with integrity and even-handedness. Here the belief seems to be that this kind of trust will be self-reinforcing; the more confidence citizens have that local government officials and their private citizen neighbors will all be expected to follow the rules, the more they will be willing to follow the rules of their own accord.
Let me offer one brief example. I met with the chair and CEO of one of China’s largest transnational businesses and asked him how he saw the current state of China’s legal system. He pointed out his window at the streets of Beijing and said the following:
“Look, Jeff, at those cars. Thirty years ago, Beijing didn’t have cars, and it didn’t have any traffic laws.
Today, we have a lot of cars, and I honestly believe that Beijing has world-class, state-of-the-art traffic laws. But look at those drivers. Driving on the wrong side of the road. Cutting each other off. Parking in the middle of the street. Our world-class traffic laws aren’t being enforced, they’re not shaping people’s behavior the way they do in the U.S. That’s a metaphor for our overall legal system. We’ve got the laws; but we need to learn how to enforce them well enough that individuals begin following them of their own accord.”
So our new Chinese entity is intended to be responsive to those motivations. And it will do so by focusing on two questions, which I will tell you about in a minute.
But before I state those questions, I first need to describe a question that we are not focusing on, the very important question of what it means to truly have the rule of law. I want to say, this is an important question. And there is a very impressive literature exploring what it is we mean by the rule of law. And among other things that literature reminds us that there is a large gulf between what we actually do in the United States and many abstract, pure conceptions of the rule of law such as “universal rules, uniformly applied.”
So let me use the term “Idealized Rule of Law” to denote that abstract vision of a society with more perfect than our own.
The key point is that, somewhere short of that Idealized Rule of Law, there is a lesser version of the Rule of Law that, although imperfect, still makes a significant practical difference to people who want to live their lives and do their business within a society. It may not be perfectly predictable, perfectly stable, perfectly fair, perfectly transparent, not perfectly free of corruption. But it is far enough along each of those paths to be a relatively attractive place to live and do business. I want to use the term, “Workable Rule of Law,” to describe such a system.
The Joint Center aims to support efforts within China to develop a Workable Rule of Law by deepening our understanding of two questions:
(a) How does a Workable Rule of Law really operate in the United States and elsewhere in the world? And
(b) What features of a Workable Rule of Law have the greatest practical significance for business leaders trying to make decisions about where to do business?
The goal is to complement, not compete with, the many existing US-China Legal Cooperation programs. It is to broaden and deepen the network of relationships among Chinese academic, business, and government leaders on the one hand, and their American counterparts who have real insight into those two fundamental questions, so that China can make genuine progress towards a Workable Rule of Law in areas that matter, in a reasonable time frame.
We are literally just getting off the ground. So far we’ve been involved in just a few projects.
One was a conference about transfer pricing – the economic value that is assigned for purposes of income taxation, customs tariffs, and sales taxes when a parent company buys goods from its wholly-owned subsidiary (and is therefore able to set whatever nominal price it chooses). This conference brought together academics, government officials, judges, and business leaders to talk both about the issues from a one-country perspective and from the perspective of businesses trying to avoid being whipsawed by inconsistent national decisions.
Second, a couple of weeks ago I participated in a series of meetings at Georgetown’s Law School with a group of government and academic leaders who are working on China’s State Compensation Law. They understood that it is not the case in the US that government defendants are in the same way as private entities under the law. But they wanted to know how things really work in the US when someone is harmed by a government act or omission. When is sovereign immunity waived? How is the Court of Federal Claims structured? How does the Federal Tort Claims Act work? When do we allow injured citizens to sue, and when do we rely on insurance markets? They wanted to know what the current legal and policy debates are, and they wanted to think together about what relevance those debates might have for China.
Going forward, there are several areas I know that we will be working on. This October we will be putting on a high-level seminar as part of the Beijing Forum, in honor of the fifth anniversary of China’s accession to WTO membership. That seminar will focus on the different responsibilities of the WTO, national governments, and the private sector in continuing to build out the infrastructure for healthy globalization, what might be described as a Workable Rule of Law on a global scale.
We will also be exploring my own belief that a critical element of America’s Workable Rule of Law is the way in which we train our lawyers to be pragmatic problem solvers who are skeptical about facts and skillful at articulating both sides of a problem. We will be working with Chinese law schools on how to develop a pedagogy that will permit such lawyers to be trained within China, without the need for them to come get an LLM degree here in the US.
And I am also confident that we will be working on two issues that have come up in almost every discussion I have had with business leaders, both here and in China: the enforcement of intellectual property law and the enforcement of worker rights. In each case, the Beijing traffic problem prevails. The gap between the laws on the books and the behavior of citizens is too great. And the gap is wide enough that it makes a difference to individuals and businesses who are thinking about the costs and benefits of being there. I am confident that we will be developing projects to work in each of those areas.
So I hope that in the discussion you will help me to adjust my focus, to get a sense of where you think we might be misperceiving the situation, and to get a sense of what other areas might be other areas where the distance between where China is today and what counts as a Workable Rule of Law has practical significance for business.
† Presentation at Conference on “Rule of Law Capacity Building in China and India,” jointly sponsored by the Joint Center for China-US Law & Policy Studies, the Business Coalition for Capacity Building, and the Woodrow Wilson International Center for Scholars.
