The smoke and mirrors of the wizards of Washington

This piece was first posted on Asia Times.

A recent CBS 60 Minutes installment called their segment the ‘Great Brain Robbery of America.’ Their website reads:

“The Justice Department says that the scale of China’s corporate espionage is so vast it constitutes a national security emergency, with China targeting virtually every sector of the U.S. economy, and costing American companies hundreds of billions of dollars in losses — and more than two million jobs.”

According to John Carlin, who is the assistant attorney general for National Security with responsibility for counter-terrorism, cyber attacks and increasingly economic espionage, “Thousands of companies are being victimized.”

Hmm. Hundreds of billions of dollars, millions of American jobs and thousands of companies victimized by theft of trade secrets. Really? If 60 Minutes had hard evidence to back up the extravagant claims by the government, they weren’t sharing with the public.

Thus it’s appropriate to take a tour behind the curtains and see what these wizards of Washington are using as smoke and mirrors to conjure up the unimaginable destruction being wreaked on America. Or maybe it’s not smoke and mirrors but all real.

Congress enacted the Economic Espionage Act (EEA) in 1996 to prosecute two kinds of related criminal offenses18 U.S.C. § 1831 applies to economic espionage with knowledge or intent to benefit a foreign power

• 18 U.S.C. § 1832 applies to theft of trade secrets with knowledge or intent that will injure the owner of trade secret

The trade secrets and economic espionage statutes were further toughened in 2012. There were other federal statutes that regulate export and arms sales. Many of these statutes were in the books long before the EEA.

Altogether there are 17 federal agencies, among them FBI and Homeland Security, with jurisdiction over these statutes and making sure exports don’t end up in wrong countries and trade secrets are not illegally sold to unsavory bidders. How many criminals have they caught in the interim 19+ years since 1996?

Official government compilation of criminal activity is difficult to come by, especially any with some modicum of precision. Infractions on export regulations are especially challenging because the regulations kept changing depending where the export destination sit on the Cold War hostility meter. Export regulations also contains a “dual” use provision, whereby a product being shipped to a civilian destination is approved but becomes a violation if it was going to a military destination next door. One go-to source for a compendium of criminal export activity could not be found.

The Department of Justice (DOJ) with its vigorous public relations efforts would have us believe that this country is suffering from rampant economic crimes committed especially by agents from China. Fortunately, I did find compilations of EEA-related violations committed since the enactment of the statutes in 1996, and therefore it was possible to see if data on actual criminal activity match the intensity as suggested on the 60 Minutes webpage.

According to Thomas J. Nolan, Palo Alto-based defendant’s attorney, who wrote a review on ‘Trends in Trade Secret Prosecution[1],’ there were, up to July 1, 2015, a total of 137 EEA-related cases involving 197 individuals since 1997 after EEA were enacted. Of the total, 39 cases involved China in some way, by far the most among the foreign countries, but nonetheless amounted to less than 30% of the total recorded cases and well under 3 cases per year.

Nolan noted that the average length of jail sentence for those with Chinese surnames average more than twice as long as those with non-Chinese surnames (32 months vs. 15 months). And, they were much less likely to be given probation without any jail time than the general group. You can say we have prima facie evidence that the government has a bias against Chinese Americans.

Nolan pointed out that in 2012, the United States Department of Defense released a report asserting, “Chinese actors are the world’s most active and persistent perpetrators of economic espionage.” In February 2013, the White House issued a memorandum entitled “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets” which, although a broad description of the Administration’s strategy, repeatedly refers to cases involving allegations of theft by the Chinese government and Chinese companies. These government documents contributed to the demonizing bias against defendants with Chinese surnames.

According to his survey, the government dismissed charges against about 10% of the defendants before their cases came to trial. This estimate was likely on the low side since retroactive tracking of government cases will find convictions but may miss cases that were dismissed. The federal agencies not wanting their mistakes exposed publicly for too long were more likely to remove these from their website. Of course certain cases of wrongful arrests may have never reached the stage of being reported on the website and were not included in such tabulations.

My colleague and fellow member of the Committee of 100, Jeremy Wu, has been consolidating and maintaining an independent compilation of economic espionage cases[2].  He found other cases relate to China and Chinese nationals and Chinese Americans that were missed in Nolan’s compilation or having taken place since Nolan stopped monitoring.

By Wu’s count, there have been a total of 50 cases involving China or Chinese surnames, about three quarter of the cases involved trade secret charges (i.e., 18 U.S.C. § 1832) and did not rise to the level of actual economic espionage on behalf of China (18 U.S.C. § 1831).

What are we to take away from this?

Of the 50 cases in Wu’s tabulation, 35 are closed. Contrary to DOJ’s jubilant claims of over 90% conviction rate, 9 of the cases were dismissed or found not guilty and 3 other cases were settled with pleas to lesser misdemeanor charges. The latter resolution was most likely so that the government can claim victory and the defendant can go on with their lives. Altogether, more than one third of the cases did not lead to conviction by the government.

Even with Wu’s higher total, it’s still well under 3 cases of EEA violations every year with more than 25% chance that the charges were groundless. Even if the guilty spend twice as long in jail as the non-Chinese, the sentence of thirty some months does not seem consistent with the gravity of the government charges that these crimes are costing us “billions of dollars and millions of jobs.”

In short, the findings cannot support the hyperbole from DOJ aimed at demonizing the bilateral relations between the U.S. and China.

As we know from recent cases related to Sherry Chen and Professor Xi Xiaoxing, it’s relatively easy for an innocent Chinese American to become a victim of prosecutorial overreach. The predisposed bias against individuals with Chinese surnames is built in by our government’s attitude and method of operation[3].

The government magnified the seriousness of their charges while dispensing any need for due process by failing to conduct any investigation that would establish the findings beyond reasonable doubt. Having identified someone with a Chinese surname seems sufficient evidence to go ahead with prosecution.

Even if the government can successfully convict 3 cases of EEA violation every year, surely such a record cannot justify the human cost of the case where a mistake was made. Unfortunately there is no way to systematically compile cases of prosecution abuse so that we cannot measure the magnitude of damage being done to the Chinese Americans.

In the case of Sherry Chen, her legal defense bills amounted to hundreds of thousand dollars. Her reputation will take years to recover and she is still expected to battle to get her old job back. Let’s not forget that before her misfortune, she was a contributing American citizen punching above her weight for society.

Congress must quickly enact a new legislation to allow victims of wrongful prosecution to fully recover their legal fees and return to their original employment. Can an alleged world leading democracy do any less?

[1] This document not known to be published were shared by the author with Jeremy Wu and is posted in Wu’s website.

[2] I could not have written this commentary without Jeremy’s insight drawn for his careful and tireless collection of the data found in http://bit.ly/FedCasesLI.

[3] A national petition drive led by eminent scientists and Nobel Prize winners are demanding an open investigation on whether racial profiling was applied to Chen and Xi.

The end of North Korean conundrum not in sight

This was first posted in China U.S. Focus in English and also in translated Chinese.

North Korea celebrated the New Year with a bang. How big a bang has become a matter of dispute. Pyongyang insisted that they have detonated their first hydrogen bomb, just two days before celebrating young dear leader Kim Jong-un’s birthday. Other observers weren’t so sure that the seismic disturbance monitored from the explosion was big enough to pass as a nuclear fusion and not just another nuclear blast from fission.

The technical authenticity of the nuclear explosion was not really the issue. The consequent reaction from the international community was, to quote the well-known baseball philosopher, the late Yogi Berra, “it’s like deja vu all over again.” The UN Security Council met to impose more sanctions on North Korea. Washington, Tokyo and Seoul made a show of solidarity by voicing the same vigorous objection to the latest nuclear test by Pyongyang.

So how did North Korea react in the face of heavy censure and condemnation? Other than expressing displeasure at the PA, which was assaulting their eardrums with K-Pop from the other side of the DMZ, nothing much. North Korea had set off three previous atomic explosions and had by now gotten used to the international condemnation and sanctions.

Aside from turning the PA system back on, the only other outside response that could be considered “new” was for the USAF to fly a B-52 over the Korean peninsula, as if that sort of intimidation would bring the North Korean regime to their senses.

Even the final act of exasperation by Secretary of State Kerry was no different from past practices by his predecessors. He called China’s Foreign Affairs ministry to tell them that China’s approach on North Korea was not working and that North Korea’s behavior was a problem that Beijing needs to fix. Historically, whenever Washington gets frustrated with Pyongyang, North Korea becomes China’s problem to fix.

Invariably, every provocation by North Korea begot reaction by the Americans and allies leading to standoff and stalemate. Nothing changed yet tension has heightened. Is there a real way out?

According to his just released book, My Journey at the Nuclear Brink, former Secretary of Defense William J. Perry recounted how the U.S. and North Korea nearly concluded a deal in 2000. He led the effort as the Defense Secretary and continued in that role even after he left the Clinton administration. Unfortunately, the Clinton term of office expired before a treaty could be concluded.

Then George W. Bush entered the White House and he refused to continue the dialogue with North Korea. No doubt under the influence of the axis of neoconservatives, namely Cheney-Rumsfeld-Wolfowitz, no self respecting president of a hegemon needed to talk to a member of the Axis of Evil—my conclusion, not Perry’s. For two years there were no meetings and no conversation between the two countries.

Even when the Bush administration resumed contact with the Pyongyang regime, the Bush team insisted that North Korea commit to halting any uranium enrichment as a pre-condition to any negotiation. The result was that both sides withdrew from the “Agreed Framework” hammered in place in late 1994 that had kept Pyongyang’s nuclear weapon development on hold.

According to Perry’s book, under the Agreed Framework, “North Korea agreed to stop all construction activity on two larger reactors and suspend their reprocessing to produce plutonium from the smaller, already operational reactor. South Korea and Japan agreed to build for North Korea two light water reactors (LWRs) for producing electricity; and until the LWRs were operational, the United States agreed to supply fuel oil to compensate North Korea for the electricity it would forfeit by shutting down its reactor.” 

Perry went on to say, “I considered this a good deal for the US: war was averted, plutonium production suspended, and North Korea gave up (permanently, it appears) their program for building the larger reactors that were under construction.” 

The consequence of tearing up the agreement was that North Korea resumed the production of weapon grade plutonium culminating in the first nuclear bomb test on October 9, 2006. As Perry ruefully observed to a group of admirers at a recent dinner party in Silicon Valley, getting North Korea to give up their possession of the bomb now was going to be much more challenging compared to an earlier time when it was possible to strike a deal before they had developed a bomb. Thus an opportunity for a nuclear free Korean peninsula was tragically lost.

In trying to remediate the increasingly poisoned relation between the U.S. and North Korea, China organized the six party talks in 2003 by inviting Japan, Russia and South Korea to the mix. But the mutual distrust between Pyongyang and Washington ran deep and the talks got nowhere. The only tangible outcome from the exercise was that the Americans could now hand North Korea over to China as their problem.

When President Obama entered the White House, his administration continued the Bush practice in their approach to North Korea, i.e., preferring confrontation to negotiation and blaming China to assuage their own frustration from lack of progress with North Korea.

Based on the history Perry recounted, it should be increasingly apparent to Obama that only a security treaty with the U.S. will mollify Pyongyang and convince them to behave more in accordance with acceptable global norms. Pyongyang sees that the U.S. can strike a deal with the other surviving member of the axis of evil, namely Iran. Why then won’t the U.S. negotiate a deal with North Korea? Setting off the most recent nuclear test could be Pyongyang’s way to get Washington’s attention.

With his remaining days in office, Obama needs to decide whether it’s more important to maintain the hegemonic pride and arrogant disdain or to revert to the basis began in the Clinton administration and pave a way forward to find a breakthrough with Pyongyang. If he decides on the latter, it will be a long process and no doubt become a legacy for his successor to finish the job—or not.

For Obama to have any chance of success, he would need help from China’s Xi Jinping. As I suggested previously, only a collaboration including China and South Korea could persuade Pyongyang to come to the negotiating table. On the other hand, the alignment of the U.S. and South Korea with Japan—good for raising the decibels of disapproval—would have no influence and leverage that would convince North Korea to cooperate.

- See more at: http://www.chinausfocus.com/peace-security/no-end-to-north-korean-conundrum-in-sight/#sthash.yJO9htbS.dpuf

Celebrating the closure of the comfort women issue is premature

This blog was first posted in Asia Times.

Japan’s Prime Minister Abe got a belated Christmas present from South Korea—some might say the exceptional deal of seven decades since the end of WWII—when the Korean government agreed to formally end any further reference to the sexual slavery Japan enforced on the Korean women during WWII.  Thus, the book on the suffering of the Korean people in the hands of Japan’s imperial troops during the War and 30 years of brutal occupation before the War can be closed and the two countries can look ahead.

South Korea’s president Park accepted a verbal apology from Abe by telephone with the specific proviso that there would be no formal documentation of the apology in print that would benefit the posterity. The apology was accompanied by one billion yen compensation taken from Japan’s government budget, which because it did not come from private donations, was to pass as an official and formal apology. The disposition of the one billion yen was vague and not specifically designated as compensation to the surviving victims of Japan’s sexual slavery.

Japan did require that the statue commemorating the suffering of Korean comfort women be removed from its present location in front of the Japanese embassy in Seoul. So, I suppose part of the billion yen could be used to relocate the statue so that Japan need not face daily reminders of their shameful past.

Some quarters in Japan praised Abe for his courage in “breaking” with the past. Other supporters belonging to the right wing of the LDP were incensed that Abe made any sort of concession at all and suggested that only seppuku can expiate Abe’s disgrace.

Promptly the day after the agreement with South Korea was announced, Abe’s wife went to the controversial Yasukuni Shrine to pay her respects to the tablets memorializing the war criminals. She even posted selfies of her visit to make sure her appeasement to the right on behalf of her husband did not go unnoticed.

So much for the supposed sincerity of Japan’s apology.

According to various polls, the people of South Korea like Abe even less than they like the North Korea leader, Kim Jong-un. The puzzle then is why President Park so quickly came to terms with Abe. As recently as last November she was not willing to meet Abe much less discuss the conditions that would lead to the agreement. The only logical answer is that she felt heavy pressure from Washington.

Getting South Korea to forgive and forget about the sexual slavery issue might be a diplomatic win for Abe but is an even more important development for Obama. According to his worldview, Obama needed a solid alliance in northeast Asia as part of his pivot to Asia.  However, whether the tie between South Korea and Japan can withstand facing China remains to be seen.

Not that China is likely to challenge the link up based on military force. But as Asia Times reported on “China hits India where it hurts,” China builds its international ties with economic inducements. The piece was referring to China’s development with Nepal, “…so as to achieve mutual benefits, win-win results and common development, and elevate the long-lasting and friendly China-Nepal comprehensive cooperative partnership to new levels”.

China’s approach with Nepal is typical of China’s diplomacy with any country—namely, butter in the form of mutually beneficial economic advantages rather than guns. This approach as applied to South Korea has meant bilateral relations of ever-closer economic ties and increasing frequency of cultural and people exchanges.

Two years before South Korea concluded the Free Trade Agreement with China (in 2015), the bilateral trade with China already exceeded the total trade South Korea had with the U.S. and Japan, their No. 2 and 3 partners in trade. With the large volume of trade, it made sense for the two countries to enter into currency swap agreements so that the trade transactions can be settled in their respective local currency and by-pass the need to pay in dollars. In Korea today, the renminbi has become the only currency other than the dollar that is freely convertible into the won.

About 40% of all the foreign students studying in China come from South Korea, more than from any other country. Second only to the “American Dream,” the “China Dream” has become an appealing career option for many young aspiring Koreans that did not go to America to study.

In light of S. Korea’s “lopsided” (according to Foreign Affairs) economic dependence with China, the Obama administration should consider whether South Korea would act against its own self-interest and side with Japan on any dispute between Japan and China.

Since Obama “won” the Nobel Peace Prize even before he was sworn into his first term, his foreign policy decisions were on many occasions mistaken because he chose the inferior fork on the road. Deciding to rely on Japan, as an ally to counter China, is one of these.

While most Americans are willing to forgive and forget Japan for its WWII atrocities—in truth, many are unaware of Japan’s dark past—people of Asia are unwilling to let Japan off the hook. Abe’s latest apology was a case in point. When Park announced the settlement, the people in Korea rose up on behalf of the surviving “comfort women” and strenuously objected on the grounds that Abe’s apology lacked sincerity, was deliberately vague and did not treat the victims with respect and dignity.

Japan’s response has been to complain that repeated apology has never been enough. After each apology, the critics find fault and demand another. Japanese officials would ask why Japan couldn’t be treated like Germany and not be subjected constant badgering for another apology. But the critics’ response has been that unlike Japan, the German’s apology was official and formal and they have always been ready to admit their collective guilt and never attempted to deny, recant or revise their history with the Jews.

After the Abe/Park agreement, the Korean American Forum of California (KAFC) also vigorously objected. One important objection raised by KAFC was that Abe’s apology needed to apply to victims of 11 nations and not just to the women of Korea. Thus, far from putting the history of WWII to bed, the people of Asia and anybody of conscience will not let Japan forget.

For Obama to pick Japan as an ally is to stand on the wrong side of history. It’s an undeniable fact that America has not always taken the principled high road. But to let Japan erase its past in the interest of expediency and perceived geopolitical advantage is to let the world know that the U.S. supports and condones heinous acts against humanity and could care less about the feelings of the people in Asia.

Obama has encouraged Abe to re-interpret Japan’s constitution and take on a more militarily aggressive stance. But surely a nation that will deny its past can’t be trusted to behave with honor in the future. Let’s hope Obama and the American people won’t have to rue the day Japan was encouraged to take up their sword again.