ACCESSION NUMBER:00000
FILE ID:96013001.ECO
DATE:01/30/96
TITLE:30-01-96  PANEL OPPOSES AGGRESSIVE ECONOMIC ESPIONAGE BY U.S. (xxx)

TEXT:
(Limited defensive role favored by experts)  (880)
By Jon Schaffer
USIA Staff Writer

Washington -- A panel of the nation's top experts on intelligence
gathering says that the U.S. government should not be participating in
spying for the purposes of winning business contracts.

"There was agreement that economic intelligence should not be used
offensively to help a U.S. firm win a contract against foreign
competition, but should be used defensively to alert policymakers when
bribes or other unfair practices are being used against an American
firm," Richard Haass, director of national security programs at the
Council on Foreign Relations, said in co-authoring the panel's
conclusions which will be released February 12.

The panel, a group of 25 former top officials from the departments of
State and Commerce, National Security Council, Central Intelligence
Agency, Air Force and Army, as well as leading academic experts, heads
of corporations and independent research groups, was brought together
as an independent task force sponsored by the Council on Foreign
Relations, a nonprofit, nonpartisan organization.

A pre-publication version was made available to USIA January 30.

The report comes at a time when both the Clinton administration and
the Congress are reviewing what role the federal government should
have in spying on its economic allies.

Republican Senator Bill Cohen introduced legislation January 25 that
would curb economic espionage and establish stiff penalties for
perpetrators. The Cohen bill calls for fining individuals and
corporations convicted of espionage, including a five-year ban on
taking part in import-export activity in the United States.

"It is imperative that the United States send a clear message to both
our friends and our foes that this country does not accept
international state-sponsored economic espionage as legitimate
business practice," said Cohen, a member of the Senate Intelligence
Committee.

The Council on Foreign Relations panel concluded that while there
remains a strong need for a continued military and political
intelligence gathering, the risks involved in active economic
espionage may be too high. The panel raised questions about the
accuracy of information gathered by the U.S. intelligence community
and whether the risk of ®MDNM¯damaging relations with U.S. allies was
too great to chance.

Economic intelligence involves such sensitive issues as trade policy,
foreign exchange reserves, the availability of natural resources and
agricultural commodities, money laundering, and other key issues of
another country's economic policies and practices and those of its
major corporations.

The panel agreed that it was not proper for a market-oriented country
such as the United States to use public resources to help a particular
firm with a narrow commercial purpose.

"Such activity could seriously strain relations with our principal
trading partners, and it would be difficult, if not impossible, to
implement if more than one U.S. firm were involved," the panel said.
"There is another consideration, namely, the question of what
constitutes an American firm nowadays."

It further agreed that while analysis can be used to support specific
economic negotiations, there is no need for the intelligence community
to replicate what is already done by the private sector or other
government agencies in accumulation of statistics and other forms of
basic information.

The departments of Commerce and Treasury can better carry out most
information gathering, it said.

The panel generally agreed, with some dissent, that it is appropriate
for intelligence to be used defensively so that policymakers can act
if bribes or other unfair practices are being used against an American
firm.

"Leveling the playing field is acceptable; tilting it is not," the
report said. "Counterintelligence assets should also be used to help
protect U.S. firms from the espionage efforts of foreign firms and
governments."

There was less consensus over the amount of resources that should be
expended for economic intelligence and the risk involved in pursuing
such intelligence.

"Several members believed that collection of intelligence for economic
purposes can easily cause more problems with our major trading
partners (including Canada, Mexico, Japan, and Germany) than it
purports to solve," the report said. "Many members of the Task Force,
however, believed that such collection is accepted practice among
states and the political costs of being discovered are worth bearing
given the importance of economic issues and the potential value of the
information for policymakers."

There was also some disagreement as to whether the intelligence
community should focus on long-term or strategic economic issues. Many
members of the Task Force argued that a long-term approach should take
priority, citing the example of the financial consequences and
emigration effects of an economic failure of a country such as Mexico
on the United States. Other areas of concern cited by the panel were
the economic situation in Russia and China, and the long-term economic
direction of Japan, Korea, India and the European Union.

Other members, however, said that the U.S. government would do better
to rely mostly on open sources in the academic world and the private
sector.

"In their view, the intelligence community has little or no
comparative advantage in undertaking such assessments and should focus
its collection and analysis on making unique and needed
contributions," the report said.
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