- The Washington Times - Wednesday, February 20, 2013

Obama administration officials seemed to go out of their way to downplay the notion that the policy is aimed at troublesome China while unveiling a strategy Wednesday to respond to the theft of U.S. trade secrets.

Officials, including Attorney General Eric H. Holder Jr., described for industry executives and others at the White House a plan to beef up enforcement of international agreements to protect U.S. firms from the theft of intellectual property, often via cyberattack. The framework includes more diplomatic confrontations with nations stealing trade secrets and better coordination with American industry.

But in spite of a report this week, the latest of many to single out the Chinese military as being behind cyberthefts against more than 100 U.S. companies, administration officials walked gingerly on the subject of China.

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China “is a country that does pose serious problems, but there are other countries as well,” said Undersecretary of State Robert D. Hormats. “We’ve had similar conversations with Russia and other countries,” including India.

Mr. Holder said the threat is growing because of rising American prosperity — and advances in technology are making it easier for thieves to steal.

“A hacker in China can acquire source code from a software company in Virginia without leaving his or her desk,” Mr. Holder said. “With a few keystrokes, a terminated or a simply unhappy employee of a defense contractor can misappropriate designs, processes and formulas worth billions of dollars.”

President Obama signed an executive order Feb. 12 calling on federal agencies to develop voluntary cybersecurity standards for sensitive parts of the private sector and to share more intelligence with them about cyberthreats. The House and Senate have tried to pass cybersecurity legislation in the past year but have failed to resolve privacy fears and concerns from business about excessive regulation.

There is a great deal of uncertainty surrounding the exact scale of trade secrets theft, according to scholars.

Estimates of the scale of the problem vary widely, and many are produced by security companies with a vested interest in making the problem look as bad as they can.

Enforcement risks

“Here’s the problem,” said Martin C. Libicki, a cyberwarfare researcher at the Rand Corp., a think tank with historic links to the U.S. military. “Is this a billion-dollar-a-year issue or a trillion-dollar-a-year issue, or something in between?”

“You have to balance the benefit you might derive from addressing the problem aggressively against the risks that approach entails,” said Mr. Libicki. The principal risk in this case, he said, was that tit-for-tat economic measures might spiral into a trade war.

Mr. Libicki also cast doubt on what he said was a “zero-sum model” of global trade and intellectual property transfers.

“There are a lot of legitimate, legal ways that we are transferring technology to China,” he said, noting as examples that there were 150,000 Chinese students in the United States, and that most big U.S. companies had manufacturing operations there, often owned by or with local partners.

“Legal and moral issues aside, from an economic point of view, there is no difference between licit and illicit technology transfer,” he said.

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