China Cuts Off McKinsey, Other U.S. Consultants To Retaliate Against Cyber Indictments

Gordan Chang, a Forbes Contributor has a post about the fall out from the U.S. indictments of Chinese officials allegedly involved in cyber attacks against the U.S.  An excerpt:

“Today, the Financial Times, citing ‘people close to senior Chinese leaders,’ reported that Beijing has ordered state enterprises to cut dealings with U.S. consulting firms, accusing them of spying for Washington.  The ‘instruction,’ as the paper called it, was handed down after U.S. Attorney General Eric Holder announced indictments against five Chinese military officers for ‘serious cybersecurity breaches.’

‘The top leadership has proposed setting up a team of Chinese domestic consultants who are particularly focused on information systems in order to seize back this power from the foreign companies,’ the paper quoted a ‘senior policy adviser to the Chinese leadership.’  ‘Right now the foreigners use their consulting companies to find out everything they want about our state companies.’

Beijing has not signed the World Trade Organization Agreement on Government Procurement, so the Chinese government is free to discriminate against foreign companies when it obtains goods or services.  Nonetheless, if the FT’s reporting is accurate, the instruction looks like a violation of the WTO General Agreement on Trade in Services, especially when state enterprises act in a commercial as opposed to a government capacity.  In Part A of Annex 5 of that agreement, China undertook not to limit market access to ‘Management Consulting services’ and agreed that foreign parties are entitled to ‘national treatment’ with regard to such services.”

Read the rest at: China Cuts Off McKinsey, Other U.S. Consultants To Retaliate Against Cyber Indictments