Sino-US cyberhacking skirmish offers an opportunity for cooperation

Samuel Palmisano calls on China and the US to rise above their tit-for-tat cybersecurity disputes and work together to ensure opportunities for all in the digital global economy

PUBLISHED : Monday, 09 June, 2014, 5:18pm
UPDATED : Tuesday, 10 June, 2014, 4:16am

The United States and China are enveloped in a thorny dispute involving charges of cyberhacking, economic espionage and intellectual property violations. The US government has indicted five Chinese military officials for allegedly hacking into the computers of US companies, and media reports indicate China may respond with measures that could ban state-owned enterprises from buying products from selected US technology companies.

This kind of tit-for-tat battle makes for good headlines, but it does nothing to help foster a healthy, prosperous and progressive global economy. A better approach would be for leaders in both countries to step back and look at their dispute in a broader context. Taking such a step offers the opportunity to move past the current crisis and instead take a pragmatic step forward.

The dust-up should be understood for what it is: a skirmish in the evolution of globalisation. This struggle sees the world's leading emerging market trying to catch up in using the tools and skills of innovation, while the world's leading developed market is seeking to protect its legacy position in innovation, as it works to overcome its structural problems, from ageing infrastructure to troubling debt trajectories. This description characterises what is referred to as Globalisation 2.0.

There are precedents for the current struggle, and history has taught us important - and sometimes overlooked - lessons about the consequences of misguided actions. In 1930, the US enacted a set of tariffs that turned out to be disastrous for its economy and for the global economy. There were no winners from that scrum.

Similarly, there won't be any winners if the US and China get bogged down in economic, political or cyber warfare. It is in the rational self-interest of both countries - and in the long-term interests of all nations and their people - to work together to shape rules of the road that help ensure that the digital global economy continues to be the source of opportunity and growth that it has been over the past two decades.

In order for that to happen, the internet must remain open, secure and global. And that brings me back to why the current dispute between the US and China is an opportunity in disguise. Both can pivot away from bilateral differences if private- and public-sector leaders help to build coalitions focused on common global standards for cybersecurity and related digital issues, with a focus on keeping the playing field open and level for all innovators. This commitment to equal treatment contributed to the first wave of gains from global integration. It is just as important in the innovation- and knowledge-driven era of Globalisation 2.0.

I know that some will be sceptical that the US and China can cooperate on economic cybersecurity. But there is a precedent for cooperation. In the mid-1980s, there was an outbreak of cross-border economic tensions over allegations of intellectual property violations. In response, private-sector leaders from throughout the world (including my own company, IBM) initiated a common-sense proposal among the leading economies of the world to elevate the importance of intellectual property protection in global trade rules.

That cooperation helped pave the way for a 1994 agreement - known today as "Trips" - that established robust intellectual property regulations for members of the World Trade Organisation.

It in the self-interest of the US and China to achieve a similar outcome, focused on the protection of commercial enterprises, in order to realise continued benefit from global integration. As a start, a commercial enterprise cybersecurity agreement should be focused on developing the policy and legal principles for protecting the proprietary operations of commercial entities in the global economy. The agreement should begin in the G20 and then be handed off to the WTO, the Organisation for Economic Cooperation and Development or the UN for multilateral coordination and administration. It could build on a recent multi-national effort, disclosed by the FBI a week ago, that focused on disrupting a global cybertheft scheme. The effort, said a senior FBI official, was "the largest fusion of law enforcement and industry partner co-operation ever undertaken in support of an FBI cyber operation".

As the two largest economies in the world, now is the time for the US and China to rise above their short-term differences and focus on their shared long-term interests. Primary among those interests is ensuring that the digital-driven global economy can continue to be a source of opportunity and growth for people in the US, China, and throughout the world.

Samuel J. Palmisano is the former chairman, president, and chief executive officer of IBM. He is currently chairman of The Centre for Global Enterprise, a private, nonprofit, nonpartisan research institution. He served as co-chairman of a Council on Foreign Relations task force focused on the rules and laws that should govern the internet