Two congressmen urge USTR designate China for trade secret theft

By Doug Palmer

WASHINGTON (Reuters) - Two senior Democrats in the House of Representatives on Thursday urged the Obama administration to formally target China for the theft of U.S. trade secrets, a move they said could lead to duties on Chinese goods if U.S. concerns are not addressed.

"As evidence mounts that the Government of China actively engages in the cyber theft of the trade secrets of American businesses, we write to request that you consider designating China as a Priority Foreign Country under Section 182 of the Trade Act of 1974," the lawmakers said.

The letter from Representatives Sander Levin and Charles Rangel urged the Trade Representative's office to take the action when it issues the annual report on intellectual property protection on April 30.

Their recommendation is the latest sign of congressional frustration with alleged widespread theft of U.S. company trade secrets by competitors in China through both cyber attacks and more conventional means of economic espionage.

"It looks very much as though the Chinese government is stealing our companies' trade secrets and passing them along to their SOEs (state-owned enterprises), and possibly other Chinese companies," Levin and Rangel, the top two Democrats on the House Ways and Means Committee, said in a letter to acting Trade Representative Demetrios Marantis.

"It is difficult enough for our companies to compete with the endless massive subsidies and other industrial policies of the Chinese government, but add trade secret theft into the mix and it is miraculous that our companies are able to compete at all," they added.

The White House last month rolled out a new strategy to tackle to trade-secret theft included greater use of existing U.S. trade tools, like the U.S. Trade Representative's annual report on countries with the worst records of protecting U.S. intellectual property rights.

USTR rarely designates any "priority foreign country" in that report. The category is reserved for those nations with the most onerous and egregious acts, policies or practices that threaten U.S. intellectual property and which have the greatest adverse impact on the United States.

Under the statute, USTR generally must initiate what is known as a "Special 301" investigation within 30 days of designating a priority foreign country, which could lead to the White House imposing import duties if U.S. concerns are not satisfactorily addressed, the lawmakers said.

"We have received the letter and are reviewing it," USTR spokeswoman Carol Guthrie said.

USTR also could file a case at the World Trade Organization if it determines that the priority foreign country is violating international trade rules.

(Reporting by Doug Palmer; Editing by Vicki Allen)

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