According to a recent report by the Commission on the Theft of American Intellectual Property, intellectual property theft cost the US around 300 billion dollars per year, a staggering figure equal to America’s total exports to Asia. Somewhere between half and 80 percent of that theft is believed to have come from China. The commission was led by Former Chinese Ambassador Jon Huntsman along with Dennis Blair, Barack Obama’s first director of national intelligence.
The commission made a whole list of recommendations designed to “stem the tide of IP theft” including the following notable moves:
- Designating the national security advisor and secretary of commerce as principal managers of IP protection
- Strengthen the International Trade Commission’s 337 process to sequester goods containing stolen IP
- Deny the use of the US banking systems to companies that benefit from IP theft
- Amend the Economic Espionage Act (EEA) to provide a federal private right of action for trade-secret theft
- Instruct the Federal Trade Commission (FTC) to obtain meaningful sanctions against foreign companies using stolen IP
- Give more funding to private security companies, the FBI, and assorted government agencies to thwart IP theft
- Impose a tariff on all Chinese-origin imports, designed to raise 150 percent of all US losses from Chinese IP theft in the previous year (if IP theft continues)
The one that caught everybody’s eye though was a casual note in the end of the report about “future measures” to be considered if IP theft continues recommending “that Congress and the administration authorize aggressive cyber actions against cyber IP thieves.” It goes onto note that they decided not to include it in the current recommendations because doing so would be super illegal under both US and international law.
It may be cathartic for commission members to call for America to strike back against IP theft, but ultimately the proposition of launching cyber-attacks against the PLA and private Chinese companies is intensely aggressive and could lead to a cyber-war with profound real world consequences. If a PLA unit is hacked by US forces, they aren’t just going to give up. Such a response would lead to more escalation, and the lines between cyber war and real war would become thinner and thinner.
Don’t forget that the US already has one of the world’s sophisticated cyber-spying apparatuses, which it uses liberally around the world. The difference is in the focus — it concentrates on narrow state-determined objectives instead of broad theft for corporate interest.
Ultimately, the US should focus on taking robust measures to create incentives that foster local Chinese innovation, eliminate the corporate stigma around IP theft, and work to punish offenders through multilateral institutions instead of through unilateral actions. That may sound super-unsatisfying, but it’s these steps and not US swashbuckling that are needed to end China’s bandit economy.
By Patrick Lozada // Image credit: Gage Skidmore