Take Chinese Hacking to the WTO

Taking Beijing to court might be the only way to get cooperation on cybersecurity.

Fresh reports of Chinese hacking and piracy surprised no one familiar with the issue. The real surprise has been the failure to take action that sends a persuasive message that the cost of their piracy is too high.

Over a decade ago, the President’s Commission on Critical Infrastructure Protection described the gravity of the threat to U.S. competitiveness and the loss of up to hundreds of millions of dollars companies have invested in developing new technologies. Richard Clarke and Robert Knake have rightly conjured up images of a foreign vacuum cleaning every interesting lab, company and research facility in the United States. The threat to our military defenses is evident.

International law does not ban military espionage. It does prohibit theft or infringement of intellectual property. Piracy, not “cyberexploitation” (the term many academics employ) is the proper way to describe the phenomenon—and points to another avenue for thwarting theft of valuable U.S. research.

Rather than resorting to political grandstanding that can complicate relations with China, the law offers powerful tools that can combat cyber piracy. Legal processes are cumbersome and deliberate. They offer no quick fixes or overnight solutions. Some would ignite firestorms of political and diplomatic controversy. Yet they can produce positive results. Rooted in international law, the tools are girded with the legitimacy that only the law can confer.

The strategic goal in cyberspace should be to achieve an equilibrium between nations that encourages respect for the intellectual-property rights of others and deters piracy. China is vulnerable to this pressure. Its prosperity requires the ability to operate with trust in a global marketplace. An internationally-recognized ruling, handed down in legal proceedings that found China guilty of intellectual-property theft or infringement, could render it liable for billions of dollars in compensation, expose it to multinational economic sanctions and cause it to be branded a “pirate state.” As a nation whose strategic thinking focuses on playing for psychological advantage, China would find that result uncomfortable.

The United States should seriously pursue the option of initiating a proceeding in the World Trade Organization (WTO), whose Trade Related-Aspects of Intellectual Property Rights (TRIPS) agreement constitutes a recognition that intellectual-property theft or infringement may undermine stable, competitive global trade. We already have held China accountable in the WTO for copyright infringement under Chinese laws. This merely takes that a step further to enforce the TRIPS agreement itself. Some WTO decisions have indicated that once a prima facie case is made, the burden shifts to the party against whom the claim is made. One can argue about that point, but the evidence seems to be there, and at a minimum, political considerations mandate making a full case supported by a preponderance of the evidence. A finding by a WTO panel, comprised of internationally recognized legal experts, carries great weight.

A WTO ruling against China would provide a strong basis for the United and other aggrieved nations to lawfully impose tough economic sanctions that China would find highly undesirable. Diplomatic measures through which a coalition of states brand China a “pirate state” would knock China off its moral pedestal. Surely this is a situation China would prefer to avoid. A strategic communication campaign that denounces China for piracy, flooding the world market with counterfeit goods and its significant role in illegal fishing would put China on the defensive—and perhaps force a reckoning.

China’s legal system renders it uniquely vulnerable to sanctions. This system, in order to make state control absolute, operates the most extensive system of Internet filtering in the world. The Ministry of Industry and Information Technology (MIIT) has jurisdiction over all communications that enter or leave China through its international gateways. As a result, even if China argues that illegal hacking was done privately, its legal regime arrogates to the state full control over Internet activity—and thus legal responsibility—for the hacking.

A piracy-sanctions proceeding should be carefully integrated into a broader political and diplomatic strategy that fully engages the international community. Any strategy must define the stakes for trade and other nations. It must show why the outcome matters to all of us.

On cybersecurity, U.S. policymakers have two choices: allow the problem to persist, surrender global competitiveness and weaken national defenses; or mobilize the international community and employ legal measures that could prove costly enough—both economically and diplomatically—that China recognizes that its own interests lie in stopping piracy. The choice seems clear.

James Farwell has advised the U.S. Department of Defense, is the author of PERSUASION & POWER, just published by Georgetown University Press, and has written widely on cyber issues. The opinions expressed are his own and do not represent those of the U.S. Government, its departments, agencies or COCOM.