Senate Bill Targets Chinese Economic Espionage

New measure would give U.S. prosecutors power to indict hackers working abroad.
BY ELIAS GROLL

Sen. Dianne Feinstein (D-Calif.) walks with Sens. Kamala Harris (D-Calif.) and Mark Warner (D-Va.) to a Senate Select Committee on Intelligence closed-door meeting at the U.S. Capitol in Washington on April 27, 2017. 

A new Senate bill would expand the ability of American prosecutors to go after hackers abroad who attempt to steal trade secrets from U.S. firms, in the latest effort in Washington to crack down on Chinese economic espionage.
Under current law, the U.S. Justice Department is limited in its ability to bring charges of economic espionage against offenders abroad, and may only do so if the suspects are American citizens or permanent residents—or if an act to further the theft was committed in the United States.
A bill authored by Sen. Kamala Harris, a California Democrat, and set to be introduced Wednesday would loosen those requirements by amending the Economic Espionage Act. 

Harris’s bill would allow American prosecutors to bring charges of economic espionage against individuals operating abroad if the act of theft has a “substantial economic effect” in the United States.
That reform would expand the jurisdiction of American prosecutors to bring economic espionage charges against hackers and operatives who operate with scant respect for national borders.
“It is absolutely vital that our approach to combating economic espionage is grounded in a modern-day understanding of the tactics employed by foreign actors and that our laws provide a strong deterrent to committing these acts in the first place,” Harris said in a statement to Foreign Policy.
The bill would also increase the damages companies are able to seek from individuals or groups that break into their computer systems to carry out economic espionage. 

And it would extend the statute of limitations for such crimes and allow victims to bring civil suit against operatives working abroad.
Peter Harrell, a former State Department official and a fellow at the Center for a New American Security think tank, described the measure as a “useful step” in responding to Chinese economic espionage against the United States.
Deterring such espionage usually falls to the government, “but the U.S. also needs to make it easier for individual American companies that are victims of Chinese economic espionage to fight back,” Harrell said. 

“The threat of expanded damages could make the act more of a deterrent to Chinese hacking.”
American prosecutors have brought a series of indictments in recent months against Chinese operatives and intelligence officials alleged to have stolen U.S. intellectual property. 

But in those cases, authorities have typically relied on anti-hacking laws—as opposed to economic espionage statutes—to bring charges.
The bill comes amid escalating tensions between the United States and China over a wide-ranging campaign by Beijing’s operatives to steal U.S. trade secrets.
Speaking at an event in New York on Tuesday, Rob Joyce, a senior National Security Agency official, said Chinese hacking operations have grown more audacious in recent years. 

Xi Jinping's empty promises

In 2015, Barack Obama and Chinese dictator Xi Jinping pledged to halt hacking operations in support of economic espionage, but Beijing reneged on that agreement during the first two years of Donald Trump’s presidency.

U.S. prosecutors are expected to unveil a wide-ranging indictment this week targeting a well-known Chinese hacking group said to have targeted U.S. firms. 

American officials are also expected to levy sanctions against Chinese operatives involved in the scheme.
Multiple media outlets reported this week that Chinese intelligence was responsible for a breach of hotel giant Marriott International that affected some 500 million guests.
While American officials describe China as the most prolific user of economic espionage, other U.S. adversaries, including Russia and Iran, are thought to employ the tactic as well. 

“China is a player, but it’s not the only player in the game,” said a Senate aide familiar with the matter.
The bill could also have political benefits for Harris as Democratic politicians begin to position themselves for the 2020 presidential election. 

A former California attorney general, Harris is likely to seek her party’s nomination but would enter the race with relatively little foreign-policy experience.
By positioning herself as a champion of U.S. companies contending with Chinese economic espionage, Harris joins Sen. Elizabeth Warren, a Massachusetts Democrat, in signaling a hawkish approach toward Beijing. 

Warren, in a speech last month, argued that China is “using its economic might to bludgeon its way onto the world stage and offering a model in which economic gains legitimize oppression.”

China’s Cyber And Trade War: Its Threat To National Security

China has an army of hackers – numbering in the thousands – high tech soldiers that work to identify and steal intellectual property from various industrial, tech and defense related companies. 

By Ken Blackwell

As we witness the home stretch of the presidential election with candidate debates, campaign stops, and political ads, both parties have an opportunity to talk substantively about a serious trade issue – ongoing efforts by China to hack and steal intellectual property from U.S. companies and using stolen U.S. trade secrets to manufacture their own cut rate products.

One assistant attorney for U.S. National Security describes the Chinese hacking campaign against the United States a true, “national security emergency.”
China has created what some describe as an army of hackers – numbering in the thousands – high tech soldiers that work to identify and steal intellectual property from various industrial, tech or defense related companies. 

China then uses the stolen intellectual property to produce nearly identical products with the information it hacks. 

Even worse, China then dumps these products into the United States or floods other countries’ markets with products at prices no nation can compete against.
In September of 2015, Xi Jinping and President Obama pledged they would no longer condone hacking to steal commercial secrets. 

But these diplomatic platitudes were shallow at best and subsequent efforts to resolve numerous hacking incidents and trade violations through good faith negotiations have largely been ignored.
The recent U.S. Steel case is a classic example of what the Chinese are up to these days and how they must be stopped. 

U.S. Steel Corporation invested millions into the research and development of innovative, lighter and stronger steel products. 

China hacked into the company and stole the research. 

They are now manufacturing their own light grade, super strong steel. 

It’s also important to understand that Chinese steel companies are overwhelmingly supported by their government, meaning they can’t go broke so they don’t worry about making a profit. 

China can and is selling steel worldwide at prices so low, no one can compete with them.
Even more egregious is how China is engaged in steel laundering – much the same as money laundering. 

While the steel is in China, it i labeled as manufactured in another country. The steel products are then shipped through that country before they are dumped in the U.S. 

This is done to dodge international trade laws regulating how much foreign steel can enter our country.
In a correct response, U.S. Steel brought a strong case before the U.S. government to ban the imports of Chinese steel and set a precedent for other companies facing the same threat.
It’s not just the steel industry that is fending off a massive Chinese cyber war and flagrant trade violations. 

CNN recently reported how the Chinese hacked into the heart of our banking industry, the FDIC. Westinghouse Electric, Allegheny Technologies and SolarWorld have been hacked and pilfered. Companies in engineering, manufacturing, chip design, telecommunication and pharmaceuticals are also dealing with cyber-attack and theft.
The US Justice Department describes China’s hacking campaign as the “Great Brain Robbery” and a recent USITC report citied potential losses to US companies at more than $300 billion. 

That figure doesn’t take into account millions more many companies have lost in terms of brand value and increased costs for IP security.
American technology is especially crucial to our national defense, but Chinese intellectual property theft may one day force our own military to rely on Chinese technology or even worse, one day see our own technology used against us. 

A 2012 report from the House Intelligence Committee warned U.S. companies to be suspicious of electronic components manufactured by two of China’s leading technology firms due to a heightened risk of embedded software and hardware in their products that could be used by China for surveillance or counter intelligence capabilities.
If China can steal from one company and flood US markets with their cut rate goods, then thousands of US businesses, along with potentially millions of jobs, are at risk.
President Obama, during the the final days of his administration, and candidates running for office can call for an immediate end to these blatantly illegal and unfair practices. 

It’s time to tell world leaders that this administration, the next president of the United States, and the next Congress, will work aggressively to secure and protect American business interests.