How Trade Laws Can Protect Businesses from Chinese Hackers

Recent news headlines have highlighted the hackers that are breaking into our systems and stealing our information.  Target got hacked a few months ago, and just recently, Home Depot had a security breach where thousands of people had their credit card and debit card numbers stolen.

What can be done about these types of situations?

It is frightening to think about how many people internationally, from China to Russia to Ukraine to Africa and domestically, are trying to find their way into personal and business computers to gain access to valuable information.  However, just recently, SolarWorld Americas came up with a simple yet ingenious solution that might stop Chinese hackers: trade sanctions.

SolarWorld’s Sanctions Request

SolarWorld Americas, a major U.S. producer of solar panels, has asked the Department of Commerce to impose trade sanctions against China as retaliation for cyber-attacks that they have suffered at the hand of Chinese government officials.

Trade sanctions are trade penalties that are imposed on one nation by another nation.  Examples of different types of trade sanctions range from import tariffs or duties to the imposition of licensing or other administrative regulations on imports or exports. Though this may, at first glance, seem like an incredibly simplistic response to the problem of Chinese hackers, trade sanctions are an extremely messy web of politics, especially between the US and China.

How Trade Sanctions Could Deter Hackers

How would these trade sanctions actually work?  Would they work?  Let’s start with some legal background. International trade law is governed by a variety of treaties created by the World Trade Organization(WTO).

The WTO is an organization that “intends to supervise and liberalize international trade.” The organization deals with the regulation of trade between participating countries by “providing a framework for negotiating and formalizing trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments.”  As of right now, the WTO has 160 members. The People’s Republic of China joined the WTO in 2001 and the United States joined in 1995.

SolarWorld America’s idea stems from the idea that when a Chinese government or its affiliates hacks into American companies’ records, these attacks are the equivalent of an unfair trade advantage over U.S. competitors.

By stealing information from the U.S. corporations and then illegally giving it to Chinese businesses, the Chinese government has “distorted the principle of free trade.”  Thus, under the WTO, there could be actionable consequences against the Chinese government, and the Chinese government should be held responsible for these acts of cyber-espionage by being subject to trade sanctions.

Will it Work?

It’s new and unchartered waters, but experts believe it might. The Department of Commerce is continuing to mull it over and has declined to comment on whether it will carry out SolarWorld’s request.  Right now, if a private corporation’s employee in China hacked into a private company in the U.S., there are no expressly related trade laws that are violated and this approach could get around that issue.

However, there are downsides and even some concerns that the imposition of sanctions by the U.S. could itself be a violation of international trade law. This is an important issue to watch as it will impact U.S.-China relations, as well as the price of solar panels.

International Business & Trade Attorneys

If you would like more information regarding the WTO, international trade laws, and how they may impact your international business, contact the attorneys at Whitcomb Law, P.C. today.

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