PERSPECTIVE ON INFORMATION : The Spider in the 'Web': Censorship : American openness runs up against foreign governments' ability to block or abuse material moving globally on-line.

Stewart A. Baker, former general counsel of the National Security Agency, has an international and technology law practice at Steptoe & Johnson in Washington

The wisdom of the day is that global information networks will be a force for freedom, breaking down barriers to the flow of information even in closed societies. More and more, though, the conventional wisdom is looking like wishful thinking. True enough, China wasn't able to cut off international faxes during the Tian An Men massacre. But more recently, China forced the United States to accept Chinese "censorship concerns" as the price for allowing U.S. record companies continued access to China's market.

That trade deal tells us more about the future than the faxes of Tien An Men Square. As foreign governments learn how to restrict the flow of information over the global network, they also could end up limiting the amount of information available to Americans.

How can foreign governments regulate the flow of data over the net? Well, one way is to just do it. In fact, Europe's Council of Ministers agreed on a directive that strictly limits transmission of information about individuals. This is to be done in the name of a good cause--protecting privacy. But to enforce the measure, the European Union plans to block the exportation of personal data to countries that don't have what the Europeans deem to be adequate privacy protection.

This is a potent threat. American multinationals could be trapped by their own investment in productivity-enhancing networks. If General Motors shares customer data with the wrong company or without proper notice to its customers or to European governments, GM executives in Detroit could find themselves cut off from the company's own data about, say, its German customers' purchasing habits.

It's hard to believe that European governments won't use this massive leverage from time to time to influence the kinds of information that American multinationals put on their networks. Even unused, the leverage itself shows that the data highway runs both ways--and that foreign governments can use our dependence on information networks to restrict what travels on that highway.

Less friendly governments may take other tacks. Singapore, for one, has discovered that defamation lawsuits can turn even the lions of the American media into lambs.

In 1994, Singapore sued the International Herald Tribune for saying in an article that some Asian governments use lawsuits and "a compliant judiciary" to punish dissent. The newspaper (owned by the New York Times and Washington Post) nearly tripped over itself to disavow what it had printed. It lost the case anyway.

Now, since the Tribune doesn't publish a separate Singapore edition, people throughout Asia read a paper edited with at least one eye toward Singapore censors.

In 1993, Rupert Murdoch talked the conventional talk: Technology, like his direct-broadcast satellites, would soon be "galloping over the old regulatory machinery," he bragged, allowing "information-hungry residents of many closed societies to bypass state-controlled television."

Then the Chinese government began complaining that the BBC, which was carried by Murdoch's satellite, had aired a program portraying Mao Tse-tung as a womanizer.

In the contest between new information technology and closed societies, score one for closed societies. "They say it's a cowardly way," Murdoch admitted, "but we said, in order to get in there and get accepted, we'll cut the BBC out."

In fact, score two for closed societies. Murdoch didn't just cut the BBC out of China. He cut it out of his satellite's entire East Asia footprint, leaving Taiwan and Hong Kong viewers limited to programming that's acceptable to Beijing.

Why are so many net enthusiasts persuaded more by Murdoch's talk than by his deeds? Probably because the most comprehensive network in place today, the Internet, is boisterously anarchic and proud of it. But can this independence really last?

The private companies that invest in the Internet will have no more immunity from commercial and legal pressure than Rupert Murdoch or the International Herald Tribune. On-line service providers such as Prodigy and Compuserve have already been sued in this country for allegedly libelous statements distributed on their networks.

One may hope that American courts and policy-makers will see the folly of requiring on-line services to censor their subscribers. But as these services expand abroad, what will stop foreign governments from regulating content, both directly and indirectly? And, since the net is a seamless whole, what will prevent such censorship from limiting our own access to information?

It's uncomfortable not to have the answers. What's worse is that no one in the U.S. government, business or civil-liberties groups has even begun to ask the questions.

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