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U.S., China Take Stand Against Cybertheft of Trade Secrets

Monday, September 28, 2015
Sandler, Travis & Rosenberg Trade Report

Addressing an increasingly contentious issue, President Obama and Chinese President Xi Jinping announced following a Sept. 25 meeting in Washington, D.C., a series of joint actions to improve cybersecurity. These measures will likely forestall, at least for the short term, the U.S. imposition of sanctions against China over allegations of government-backed hacking of U.S. corporate computer systems.

Both the U.S. and China said that their governments would not conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors. They also agreed to timely respond to requests for information and assistance concerning malicious cyber activities; cooperate with requests to investigate cybercrimes, collect electronic evidence and mitigate malicious cyber activity emanating from their territory; and provide updates on the status and results of those investigations to the other side.

More broadly, the two countries plan to work together, including through a new senior experts group, to further identify and promote within the international community appropriate norms of state behavior in cyberspace. They also agreed to establish a high-level joint dialogue mechanism on fighting cybercrime and related issues that will be used to review the timeliness and quality of responses to requests for information and assistance with respect to malicious cyber activity. The first meeting of this dialogue will be held by the end of 2015 and will occur twice per year thereafter.

In April President Obama issued an executive order that allows the U.S. to impose economic sanctions against foreign individuals or entities using cyber-enabled activities in an effort to harm critical U.S. infrastructure, damage U.S. computer systems and steal U.S. trade secrets or sensitive information. The sanctions available include freezing the assets of designated persons that are in the U.S., come within the U.S. or come within the possession or control of any U.S. person and prohibiting U.S. persons from dealing with designated persons, including exports or transfers of blocked property.

Prior to Xi’s arrival, Obama threatened to impose such sanctions against China “to get their attention.” China’s cyber policies have also been met with “serious concerns” by House and Senate trade leaders, who told Obama in a Sept. 21 letter that “Chinese government-sanctioned cyber-attacks have deeply eroded trust … particularly given that they have often been economically-motivated and have targeted the proprietary and sensitive assets of U.S. private industry.”

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