Obama Urged to Act on China’s Alleged Cyber Theft

President Barack Obama’s administration should take action to curb China’s alleged cyber theft, two House Democrats said, after a top U.S. official accused the Asian nation of spying on American companies.

The U.S. Trade Representative’s office needs to designate China as a top violator of intellectual property rights, which can lead to further trade restrictions, Representatives Sander Levin of Michigan and Charles Rangel of New York said today in a letter to Acting USTR Demetrios Marantis.

“In the case of China, the government itself appears to be actively stealing the intellectual property of American businesses,” the lawmakers, ranking Democrats on the House Ways and Means Committee, which deals with trade issues, wrote.

China’s cyber espionage against U.S. businesses is adding tension between the governments of the world’s two largest economies, Obama’s National Security Adviser Thomas Donilon said in a March 11 speech in New York. In their letter, Levin and Rangel cited a February report by Mandiant Corp., an Arlington, Virginia-based information security firm, that concluded the Chinese government is probably the source of recent hacking attacks.

The lawmakers asked the USTR to list China in the annual assessment of intellectual property rights protection and enforcement in in other nations, to be released about April 30.

Rampant Theft

“We have received the letter and are reviewing it,” Carol Guthrie, a USTR spokeswoman, said in an e-mail.

The USTR will seek to toughen trade-secret protection through the annual assessment, the Obama administration said its strategy to mitigate violations, released in February.

“IP theft continues to be rampant across China, particularly online,” Jasper MacSlarrow, a U.S. Chamber of Commerce official dealing with intellectual property policies, said in a statement. “Promoting greater improvement to China’s IP environment will benefit both foreign and Chinese rights holders.”

Intellectual-property protection is among the issues being negotiated as the U.S. seeks trade deals with 10 Pacific-region governments and the 27-nation European Union. Companies including New York-based Pfizer Inc. (PFE) and Dow Chemical Co. (DOW) of Midland, Michigan, rely on enforcement of trade laws to protect their patents.

Protection ‘Essential’

“Intellectual property is the lifeblood of the U.S. economy, and the protection of intellectual property is essential to U.S. jobs and competitiveness,” Senators Max Baucus, a Montana Democrat, and Orrin Hatch, a Utah Republican, wrote in a March 22 letter to Marantis. The lawmakers are members of the Senate Finance Committee, which has jurisdiction over trade issues.

Hatch also has proposed legislation to create a position at USTR to oversee intellectual-property during trade negotiations.

Intellectual-property provisions shouldn’t be in a proposed U.S.-EU trade deal because they could raise health-care costs, limit free speech and restrict access to education materials, Washington-based consumer group Public Citizen said in a March 18 statement joined by other organizations.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.