Trade War With China at Issue in Chinese Industrial Espionage Hearing

IP theft is why this administration levied tariffs on nearly $250 billion in Chinese goods, Assistant Attorney General John Demers told the Senate Judiciary Committee Wednesday. “China’s strategy is the same: rob, replicate, and replace. Rob the American company of its intellectual property, replicate the technology, and replace the American company.” Chairman Chuck Grassley, R-Iowa, noted Huawei Chief Financial Officer Meng Wanzhou was arrested on suspicion of breaking Iranian sanctions (see 1812060042), and that a Chinese firm allegedly tried to avoid export controls for Boeing satellite technology. With the two nations in a 90-day negotiating period, President Donald Trump this week told Reuters he would intervene in the case if its prosecution would prevent a U.S.-China deal. The suggestion “is extremely disturbing,” said Sen. Richard Blumenthal, D-Conn., asking Demers if it disturbed him as well. There is precedence for such action, as the president told the Commerce Department to roll back its “death penalty” for ZTE after it lied about punishing officials who had violated North Korea sanctions (see 1805240064). Demers declined to comment on Wanzhou’s case. “What we do at the Justice Department is law enforcement. We don’t do trade,” he said. Sen. Kamala Harris, D-Calif., told Demers she introduced a bill that would extend the extraterritorial authority of U.S. prosecutors for cyber espionage. Demers said that could be helpful. Peter Harrell, a Center for a New American Security senior fellow, suggested the government should expand bans on imports that use stolen IP; give more funding to the International Trade Commission so it can identify those cases; and create a better private right of action for companies whose property was stolen.