Lockheed Martin [LMT] Chief Marillyn Hewson on Thursday praised President Trump’s new executive actions aimed at punishing China for unfair trade practices, in particular the theft of intellectual property.
“I will just say that this is a very important moment for our country in that we are addressing what is a very critical area for the aerospace and defense industry, and that is protecting our intellectual property,” Hewson said in brief remarks at the White House where Trump signed a memorandum announcing trade actions against China. “As has been expressed, that is a threat to us if we have that stolen from our companies, because that is the lifeblood of our companies.”
Trump, sharing the dais with Hewson and others, called her “the leading woman business executive in this country, according to many,” adding that the U.S. buys “billions and billions of dollars of that beautiful F-35. It’s stealth. You cannot see it.” Then he asked Hewson if that is correct and she said yes.
Lockheed Martin builds the F-35. China is believed to have used cyber espionage to steal data about the program, which is America’s latest generation fighter.
The presidential memorandum signed by Trump directs the U.S. Trade Representative (USTR) to address all actions by China that “are unreasonable or discriminatory and that burden or restrict U.S. commerce,” adding the available tools for the U.S. to consider include tariffs. While the memo calls on the USTR to create a list of targeted Chinese products and tariff increases, a White House press release says the sectors that are subject to the proposed tariffs include aerospace, information communications technology, and machinery.
In a hearing Thursday held by the Senate Finance Committee, USTR Robert Lighthizer also mentioned aeronautics, maritime technologies, modern rail, new energy, power and agricultural equipment, as well as new materials, biopharma and advanced medical products, as sectors where U.S. actions will be targeted, according to client note published by Byron Callan of the advisory firm Capital Alpha Partners.
Trump’s pending trade actions against China follow an investigation by Lighthizer of China based on Section 301 of Trade Act of 1974. Lighthizer’s office on Thursday issued a 215-page report on the findings, including accusing China of continuing to use cyber espionage to target U.S. companies and their intellectual property and trade secrets.
Former U.S. President Obama and his Chinese counterpart President Xi Jinping in September 2015 reached an agreement prohibiting both countries from using cyber means to steal intellectual property from each other, but the USTR says China isn’t abiding by the deal.
“The United States has been closely monitoring China’s cyber activities and the evidence indicates China continues its policy and practice, spanning more than a decade, of using cyber intrusions to target U.S. firms to access their sensitive commercial information and trade secrets,” the report says.
Other unfair practices by China outlined in the report include discriminatory technology licensing, which Trump directed Lighthizer to confront the country through the World Trade Organization, technology transfer regime for U.S. companies, among others.
The report also highlights Chinese investments, backed by the government through a “pervasive” role, in the U.S. to gain access to technologies and trade secrets.
“USTR determines that the Chinese government directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies, to obtain cutting-edge technologies and intellectual property and generate large-scale technology transfer in industries deemed important by state industrial plans,” the report says.
Trump’s memorandum also calls on the U.S. Treasury Department to propose restrictions on Chinese investments in sensitive U.S. technology.
The Trump administration will publish for public comment plans for adding 25 percent additional tariffs on Chinese products that the White House says “are supported by China’s unfair industrial policy.”
Trump’s pending actions against China follow tariffs he announced earlier this month on imports of aluminum and steel into the U.S. Those tariffs also targeted U.S. allies but the administration this week appeared to be backing off of these actions against certain countries, at least for the time being.
Regarding Trump’s actions announced against China, the Aerospace Industries Association, which has been critical of the aluminum and steel tariffs, released a statement on Thursday in response to a query saying, “Ongoing cyber threats and IP theft undertaken by state sponsors are critical national security issues. We look forward to working with the Administration to determine strategic and effective deterrents and countermeasures.”