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Lewis: U.S. should go to WTO over Chinese espionage

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Chinese intellectual property cyber espionage has grown too pervasive for the United States not to react to it through policy measures, says James Andrew Lewis, director of the Center for Strategic and International Studies' technology and public policy program.

Espionage and crime through network penetration fall below the thresholds of justifiable force in self-defense, making a policy of military deterrence largely irrelevant, Lewis says in a paper (.pdf) published this month.

Deterrence in any case had declining value in cyberspace, since a threat of retaliatory attack is less likely to affect the behavior of religiously or some politically motivated opponents, and could in some cases actually increase the chance of conflict with opponents that already perceive the United States as hostile.

Countries such as China and Russia are more responsive to deterrence, but while the threat of military retaliation might prevent a cyber attack, it "clearly does not deter espionage and crime," Lewis notes.

"The United States has inadvertently created a world where cyber espionage and cybercrime are largely risk free," he writes.

But while China's "overly exuberant collection programs" require a vigorous response, it must still be proportional, Lewis notes. For example, Chinese officials would take leaks of, or even threats to leak, evidence of senior leaders' corruption as a challenge to the stability of their government, "a very disproportional response that could increase risk for the United States and destabilize the larger bilateral relationship."

Instead, Lewis proposes the United States consider notifying the World Trade Organization that it would exercise force majeure to impose some kind of punitive response on the grounds that other signatories--China--have failed to honor them. China and other countries might react by threatening to withdraw from the WTO, but Lewis says they're unlikely to do so since "they benefit most from the agreement."

Critics of such a response might say exercising force majeure would risk collapse of the WTO, Lewis acknowledges, but he says a carefully managed diplomatic effort would mitigate that risk. Companies with significant interests in China would also oppose such a step since they would fear retaliation, but Lewis says the United States could again manage this by informing the Chinese government that it would "take appropriate countermeasures against Chinese firms." Mutual economic dependency, he asserts, would prevent either country from going too far in disrupting trade.

"The WTO itself is not the right forum for dealing with national security issues, but compliance has led to a situation where the United States, which adheres more closely to the rules than its opponents, is at a disadvantage in responding to cyber espionage," he says.

Clarification: In email correspondence, Lewis said the WTO action he's calling for would involve using trade agreement rights to impose a punitive response, perhaps by invoking the national security exemption, which allows WTO countries to restrict trade in goods when necessary to protect essential national security interests.

"The goal is to get the kind of pressure that came from proliferation related sanctions, which made the Chinese government reign it its firms. In fact, the first step would not be to take action in the WTO, but to announce that the US will take action if we do not see changes in behavior. It's better to give people warning (something we have never done) and to find other nations that would cooperate.

Some in the trade community have said we cannot use the WTO in response to cyber espionage because the process is lengthy and the evidentiary standards are high. So I'd look for a political process to short circuit the quondam 'court' approach.   Taking the WTO off the table as a possible response weakens any effort to manage this problem. We want to change the terms of the negotiations to be more favorable to our national interests. 

In general , trade policy has been supine and we need to be a bit more creative and energetic in pushing open markets and common rules," Lewis wrote.

For more:
- download Lewis' paper, "Conflict and Negotiation in Cyberspace" (.pdf)

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