US Report Urges Action on ‘Unprecedented’ IP Theft

WASHINGTON – A high-powered commission said Wednesday that intellectual property theft was costing the United States the equivalent of all its exports to Asia and urged a tougher approach to China.

The 11-month study led by high-ranking former US officials said that theft of software and other US-developed products was costing the US economy more than $300 billion each year — as much as the United States sells to Asia.

“The scale of international theft of American intellectual property today, we believe, is unprecedented,” commission co-chair Jon Huntsman, the former US ambassador to China and presidential candidate, told reporters.

He said that the United States would have the equivalent of 2.1 million more jobs if foreign intellectual property standards were enforced to their fullest.

The commission said China accounted for between 50 and 80 percent of the stealing and alleged that the problem lay with policy decisions by Beijing — which has long made exports the key to its economic growth strategy.

The report said that US efforts have proven inadequate, with trade agreements failing to address intellectual property theft and China moving too slowly on pledges to the United States and other trade partners to take action.

The commission called for tougher measures by the United States including scrutinizing foreign companies’ treatment of intellectual property when they seek approval for investments in the world’s largest economy.

“You’ve got to have leverage in the game,” Huntsman said. “IP theft needs to have consequences and with costs sufficiently high that state and corporate behavior and attitudes that support such theft are fundamentally changed.”

The commission also recommended structural changes, including assigning the president’s national security adviser to coordinate the US response to intellectual property theft.

Commission co-chair Dennis Blair, the ex-director of national intelligence, said governments should also toughen laws to prevent a “cyber war going on well outside the control of governments, the consequences of which no country wants.”

The damning report comes ahead of talks between Presidents Barack Obama and Xi Jinping at a California resort on June 7-8, their first meeting since the Chinese leader took office.

Cyber issues are expected to be high on the agenda amid growing US accusations that China has waged a campaign of online espionage against US companies and the government.

China in the past has defended its record and in turn accused the United States of unfair trading practices, such as denial of sensitive technologies and several high-profile rejections of Chinese investment bids.

Speaking earlier Wednesday at the Center for Strategic and International Studies, Chinese Ambassador to Washington Cui Tiankai said: “We should never politicize the economic issues because they will only make things more difficult to resolve.”

Huntsman said he expected that Chinese officials would reject the report but voiced hope that it could provide ammunition for Chinese who support reform.

“They know that in order to reach out to the world, as many of the state-owned enterprises want to do, they are going to have to look and feel more like companies with global standards,” Huntsman said.

Representative Mike Rogers, a Republican who heads the House committee on intelligence, welcomed the report and said it showed the need for Congress to approve a law to let the government and companies share Internet information.

President Barack Obama’s administration and civil liberties advocates oppose the law due to privacy concerns.

While the report listed China as by far the largest culprit in intellectual property theft, commission member Slade Gorton, a former US senator, said that Russia, India and Venezuela were the next largest violators.