What is economic espionage?
Economic espionage is the unlawful targeting and theft of important economic intelligence, such as trade secrets and intellectual property.
- Economic espionage is the unlawful targeting and theft of important economic intelligence, such as trade secrets and intellectual property.
- It is likely to be state-sponsored, and has purposes other than profit or profit – such as closing the technology gap.
- The Economic Espionage Act was signed into law in October 1996, which criminalizes the misuse of trade secrets and empowers the government to pursue such cases in the courts.
- Economic espionage is estimated to cost the US between $225-$600 billion annually.
- China has been accused of being the world’s “most active and persistent” criminal of economic espionage.
understanding economic espionage
Economic espionage refers to the covert acquisition or outright theft of invaluable proprietary information in many fields, including technology, finance, and government policy. Criminals get cheap access to vital information, causing huge economic losses to the victims.
Economic espionage differs from corporate or industrial espionage in several ways. It is likely to be state-sponsored, has purposes other than profit or profit (such as closing the technology gap), and must be enormous in scale and scope.
The US recognizes the threat from such activity and in October 1996 signed the Economic Espionage Act into law, criminalizing the misuse of trade secrets and empowering the government to pursue such cases in the courts.
Many cases of economic espionage go unreported, as companies that are victims of it can lose stock value if they report such violations.
The Federal Bureau of Investigation (FBI) defines economic espionage as “Foreign power-sponsored or coordinated intelligence activity directed at the US government or US corporations, establishments, or individuals, designed to unlawfully or covertly influence sensitive economic policy Obtaining sensitive financial, business, or economic policy information or making illegal decisions; proprietary economic information; or important technologies. This theft can, through open and covert methods, provide foreign entities with significant proprietary economic information at a fraction of the actual cost of their research and development, causing significant economic loss.“
The Intellectual Property Commission report estimates economic espionage caused between $225 billion and $600 billion in damages. However, 80% of all economic espionage charges brought by the US Department of Justice are linked to China by 2021.
In November 2011, the US accused China of being the world’s “most active and persistent” perpetrator of economic espionage. A report by the US International Trade Commission claimed that intellectual property-intensive firms in the US lost $48 billion in 2009 due to Chinese breaches. Russia was also recognized as one of the most aggressive collectors of American economic information and technology.
economic espionage methods
According to the FBI, foreign competitors conduct economic espionage in three main ways:
- By recruiting insiders who work for US companies and research institutions who generally share similar national backgrounds.
- Using methods such as bribery, cyberattacks, “dumpster diving” and wiretapping.
- Establishing impeccable relationships with US companies to gather economic intelligence, including trade secrets.
To counter this threat, the FBI advises companies to be vigilant. Some steps are recommended, including implementing a proactive plan to protect trade secrets, securing physical and electronic versions of intellectual property, and training employees.
critique of economic espionage
In recent years, the number of accused under the US Economic Espionage Act has increased, and many of those charged are Chinese. From 2000 to 2020, 160 cases of Chinese economic espionage were reported. Of those cases, 42% were government or military personnel, 26% were non-Chinese (largely US citizens) recruited by Chinese citizens, and 32% were private citizens.
According to the Cardozo Law Review study, 21% of Chinese defendants are never proven guilty. For the guilty, their sentence is twice as long as the defendants in Western society. The study also found that about 48% of defendants with Western names receive probation, while only 22% of Chinese or Asian defendants receive probation. These findings have fueled allegations that federal agents and prosecutors are falsely profiling ethnic Chinese people as spies and issuing harsh punishments.
frequently Asked question
In which industry is economic espionage most likely to occur?
Economic espionage most often occurs in the private sector. The most vulnerable industry is the technology sector, followed by industries that rely heavily on technology: computers, biotechnology, energy and chemicals.
Why is China considered the most active perpetrator of economic espionage?
The US Justice Department reports that China is involved in more than 80% of economic espionage cases prosecuted by the Justice Department by 2021. Over the years, the Chinese government has upgraded its economy with Western technology and resources. It is believed that China’s economic espionage is driven by China’s desire to become the world’s economic and technological leader while displacing the United States.
Why should educational institutions be concerned about economic espionage?
The FBI claims there is an attempt to steal research findings and other intellectual property from American colleges and universities. They urge these institutions to keep an eye on what they share, including their research findings, and to work with the FBI to address the threats. FBI Director Christopher Wray believes China uses graduate students and researchers to steal innovation from universities.
What is the punishment for economic espionage?
Punishment for economic espionage varies but is severe. For example, stealing trade secrets for the benefit of a foreign government can cost the offender up to $500,000 and up to 15 years in federal prison. Companies found guilty of economic espionage could face monetary penalties of up to $10 million.