Cyber Wars. China and the US lead the pack.

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White House promises trade war on countries behind cybercrime

China the apparent target as Obama administration says it put trade pressure on governments and prosecute offenders

Staff and agencies 

guardian.co.uk, Thursday 21 February 2013 00.16 EST

The White House has said it will step up diplomatic pressure over cybercrime and intellectual property theft from US businesses and security interests, in an announcement that indirectly cast China as one of the biggest perpetrators.

The US attorney general, Eric Holder, said the plan included working with like-minded governments to tackle offenders using trade restrictions and criminal prosecutions. There would be a 120-day review to see whether new US legislation is needed.

"A hacker in China can acquire source code from a software company in Virginia without leaving his or her desk," Holder said.

The report stops short of blaming the Chinese government itself but a study released this week by a private security firm accused the Chinese military of orchestrating numerous cyber attacks against US businesses, a charge Beijing has denied.

The White House report listed 17 cases of trade secret theft by Chinese companies or individuals since 2010, far more than any other country mentioned in the report.

The Obama administration has said its strategy aims to counter what Holder called "a significant and steadily increasing threat to America's economy and national security interests".

President Barack Obama introduced a cybersecurity executive order in his state of the union address that offered a broad outline of how the government plans to deal with cyber threats.

"As new technology has torn down traditional barriers to international business and global commerce, they also make it easier for criminals to steal secrets and to do so from anywhere, anywhere in the world," Holder said.

Dutch Ruppersberger, the top Democrat on the House of Representatives intelligence committee, has said US companies suffered estimated losses in 2012 of more than $300bn via theft of trade secrets, a large share due to Chinese online espionage.

US corporate victims of trade secret theft have included General Motors, Ford, DuPont, Dow Chemical, Motorola, Boeing and Cargill. A target company can see the payoff from research investment evaporate as a result of corporate espionage and lose market position, competitive advantage and efficiencies.

"We have repeatedly raised our concerns about trade secret theft by any means at the highest levels with senior Chinese officials and we will continue to do so," said Robert Hormats, an under-secretary of state.

Those cases cited mostly involved employees stealing trade secrets on the job rather than cyber attacks.

Victoria Espinel, the White House intellectual property rights enforcement co-ordinator, said the effort aimed to protect the innovation driving the US economy and job creation.

Cybersecurity and intelligence experts welcomed the White House plan as a first step but some said much more needed to be done. "You've got a nation-state taking on private corporations," said former CIA director Michael Hayden. "That's kind of unprecedented ... We have not approached resolution with this at all."

The US Chamber of Commerce, America's largest business lobby, offered a lukewarm statement of support, while other industry groups expressed more enthusiasm for the effort.

"We strongly endorse and applaud the administration's focus on curbing theft of trade secrets, which poses a serious and growing threat to the software industry around the world," said Business Software Alliance president and chief executive Robert Holleyman.

The report that laid out the strategy repeated a 2011 White House recommendation that the maximum sentence for economic espionage be increased to at least 20 years, from 15.

Another part of the solution was promoting a set of "best practices" that companies would use to protect themselves against cyber attacks and other espionage, Espinel said.

The report said the FBI was "expanding its efforts to fight computer intrusions that involve the theft of trade secrets by individual, corporate and nation-state cyber hackers".

US trade representative Ron Kirk said the problem of trade secret theft in China was a factor in the decisions of some US companies to move operations back to the United States. The companies have "had very frank conversations with the Chinese, [saying] 'You know it's one thing to accept a certain level of copyright knock-offs but if you're going to take our core technology then we're better off being in our home country'".