US sees Brazil as a possible spying route for China – 06/10/2023 – Market

Brazil can be a scenario for the theft of industrial secrets, assess members of the US government. The country has operations of many US companies that use cutting-edge technologies, as well as companies from China, a country that is the main US competitor in several technology races.

At the same time, Brazil has few coordinated actions between the country’s security forces and companies. A representative of the US government told Sheetunder condition of anonymity, consider that Brazil has rules to prevent the problem, but the measures are not applied in practice.

Brazil is a member of the 1995 Trips agreement, signed within the scope of the WTO (World Trade Organization), which provides for ways to protect copyright, such as industrial designs, patents and sensitive company information.

Another point raised by the representative is that the laws that punish the theft of trade secrets in Brazil are considered lenient: the penalty for the crime is up to one year in prison.

In the US, punishments are heavier. In 2022, chemist Shannon You was sentenced to 14 years in prison and fined $200,000 for stealing information on how to produce soda packaging without BPA, an additive to plastic suspected of causing disease.

You worked at the headquarters of Coca-Cola in Atlanta and tried to create a company in China that used the technology, with the support of the Chinese government, according to the American Justice process.

“As the evidence showed, the defendant stole valuable trade secrets and intended to use them to benefit not just a foreign company, but the government of China,” Justice Department Attorney Matthew Olsen said when the sentence was announced.

In January of this year, engineer Xiaoqing Zheng, 59, was sentenced to two years in prison for stealing turbine production secrets from a GE factory.

Xiaoqing was detained after an alert from the FBI, which works in cooperation with GE. The American federal police detected a trip to China that was considered suspicious and discovered that he had taken files that contained protected information.

US officials said they could not comment on cases of spying that are under investigation. In Brazil, their assessment is that the sectors at greatest risk are aircraft manufacturing, agriculture and information technology. And China is seen as the main threat.

For the US, the Made in China 2025 and 2030 programs, through which the country seeks to nationalize the production of cutting-edge technology, indicate the most sensitive areas for data theft. When contacted, the Chinese embassy in Brazil did not respond to the report’s contact.

In March, the US Consulate in São Paulo organized an event on the subject, bringing together security agents and businessmen to discuss forms of protection and study solutions. Representatives from Argentina, Chile, Colombia and Mexico were also invited.

At the meeting, company managers were instructed to get closer to the security forces and have a closer relationship, to help prevent cases and investigate suspicions, before the thefts are concluded.

“If you steal US$ 1 million from a company, it is only US$ 1 million. If you steal intellectual property, it can generate a loss of US$ 1 billion, and it can also be a matter of national security”, compares Erik Gordon, professor from the University of Michigan.

Often, the same company operates in the sale to the public and in the creation of military technologies. In one of the hypothetical cases presented at the event in São Paulo, the story of a company that creates 3D scenarios for games, which can also be used for training soldiers, was reported. Artificial intelligence and drones, expanding technologies, are also increasingly used in military actions, as in the Ukrainian War.

Gordon assesses that the issue is especially sensitive for the US also because intellectual properties are the country’s main export item, in areas such as digital technology, medicine patents or even entertainment, such as series and films.

The secrets kept by companies are varied. An aircraft parts factory can take years and spend a lot of money to develop a new type of engine part that is lighter and helps save fuel. If a competitor learns how to do the same thing in an instant, it can launch a similar product quickly.

At the same time, programming codes and algorithms used in cutting-edge technologies such as generative artificial intelligence can also be copied.

Estimates by the US government point out that almost 60% of cases of information theft occur through virtual actions, such as hacking. Another 40% involve more analogical techniques, such as co-opting employees.

One of the tactics is to look for a worker who is dissatisfied, who is ambitious and feels unappreciated or who is experiencing financial difficulties.

The initial approach may come in the form of an invitation to an event in another country. From there, a relationship begins to build, and then a proposal comes. Promises may include, in addition to cash payments, support for him to start his own company or a prestigious job in the future.

Despite international cooperation efforts, combating the practice is difficult for several reasons.

“You can steal a lot of information in Brazil without having a person in Brazil. China will not extradite a Chinese industrial spy. And even if there is a Chinese spy in Brazil and he is arrested, then probably China would arrest two or three Brazilians in China, accuse them of espionage and propose an exchange”, analyzes Gordon.

The teacher makes the comparison based on a real case. In 2018, Canada arrested Meng Wanzhou, director of Huawei, at the request of the US, where she was accused of stealing technology secrets. Days later, two Canadians were arrested in China on charges of endangering national security. After three years, Wanzhou was liberated, as were the Canadians.

Another front of action, the imposition of sanctions, can be innocuous if the target companies do not have financial relations with the US and are dedicated only to other countries.

For Fernanda Magnotta, coordinator of the Faap International Relations course, the cases of industrial espionage are part of a broader process, in which China seeks to surpass the US as a global leader.

In this scenario, she evaluates, Brazil needs to act carefully so as not to become dependent on one of the sides. “For Brazil, what matters is navigating through this rivalry in a cooperative way, maintaining dialogue with all sides, without necessarily having to make choices that imply conflict with one of the sides”, she analyzes.

“China is very united in its purpose to be a world leader in things like electric vehicles and artificial intelligence. For the next 10 or 20 years, China will probably not be interested in enforcing intellectual property theft. But if China becomes a leader in AI or in the new generation of health treatments, for example, may change its mind to protect its technologies”, considers Gordon.

The professor recalls that the US also used industrial espionage techniques in the past, such as when it was developing its textile industry in the 19th century.

“They obtained industrial secrets by hiring young English apprentices, who earned little, and offered them a lot of money to immigrate to the US”, he says. “Historically, when it served national interests, the US stole valuable secrets from England.”