Genetically modified maize

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Genetically_modified_maize 

 

Transgenic maize containing a gene from the bacteria Bacillus thuringiensis

Genetically modified maize (corn) is a genetically modified crop. Specific maize strains have been genetically engineered to express agriculturally-desirable traits, including resistance to pests and to herbicides. Maize strains with both traits are now in use in multiple countries. GM maize has also caused controversy with respect to possible health effects, impact on other insects and impact on other plants via gene flow. One strain, called Starlink, was approved only for animal feed in the US but was found in food, leading to a series of recalls starting in 2000.

Marketed products

Herbicide-resistant maize

Corn varieties resistant to glyphosate herbicides were first commercialized in 1996 by Monsanto, and are known as "Roundup Ready Corn". They tolerate the use of Roundup. Bayer CropScience developed "Liberty Link Corn" that is resistant to glufosinate. Pioneer Hi-Bred has developed and markets corn hybrids with tolerance to imidazoline herbicides under the trademark "Clearfield" – though in these hybrids, the herbicide-tolerance trait was bred using tissue culture selection and the chemical mutagen ethyl methanesulfonate, not genetic engineering. Consequently, the regulatory framework governing the approval of transgenic crops does not apply for Clearfield.

As of 2011, herbicide-resistant GM corn was grown in 14 countries. By 2012, 26 varieties of herbicide-resistant GM maize were authorised for import into the European Union, but such imports remain controversial. Cultivation of herbicide-resistant corn in the EU provides substantial farm-level benefits.

Insect-resistant corn

The European corn borer, Ostrinia nubilalis, destroys corn crops by burrowing into the stem, causing the plant to fall over.

Bt maize/corn

Bt maize/Bt corn is a variant of maize that has been genetically altered to express one or more proteins from the bacterium Bacillus thuringiensis including Delta endotoxins. The protein is poisonous to certain insect pests. Spores of the bacillus are widely used in organic gardening, although GM corn is not considered organic. The European corn borer causes about a billion dollars in damage to corn crops each year.

In recent years, traits have been added to ward off corn ear worms and root worms, the latter of which annually causes about a billion dollars in damages.

The Bt protein is expressed throughout the plant. When a vulnerable insect eats the Bt-containing plant, the protein is activated in its gut, which is alkaline. In the alkaline environment, the protein partially unfolds and is cut by other proteins, forming a toxin that paralyzes the insect's digestive system and forms holes in the gut wall. The insect stops eating within a few hours and eventually starves.

In 1996, the first GM maize producing a Bt Cry protein was approved, which killed the European corn borer and related species; subsequent Bt genes were introduced that killed corn rootworm larvae.

The Philippine Government has promoted Bt corn, hoping for insect resistance and higher yields.

Approved Bt genes include single and stacked (event names bracketed) configurations of: Cry1A.105 (MON89034), CryIAb (MON810), CryIF (1507), Cry2Ab (MON89034), Cry3Bb1 (MON863 and MON88017), Cry34Ab1 (59122), Cry35Ab1 (59122), mCry3A (MIR604), and Vip3A (MIR162), in both corn and cotton. Corn genetically modified to produce VIP was first approved in the US in 2010.

A 2018 study found that Bt-corn protected nearby fields of non-Bt corn and nearby vegetable crops, reducing the use of pesticides on those crops. Data from 1976-1996 (before Bt corn was widespread) was compared to data after it was adopted (1996-2016). They examined levels of the European corn borer and corn earworm. Their larvae eat a variety of crops, including peppers and green beans. Between 1992 and 2016, the amount of insecticide applied to New Jersey pepper fields decreased by 85 percent. Another factor was the introduction of more effective pesticides that were applied less often.

Sweet Corn

GM sweet corn varieties include "Attribute", the brand name for insect-resistant sweet corn developed by Syngenta and Performance Series insect-resistant sweet corn developed by Monsanto.

Cuba

While Cuba's agriculture is largely focused on organic production, as of 2010, the country had developed a variety of genetically modified corn that is resistant to the palomilla moth.

Drought-resistant maize

In 2013 Monsanto launched the first transgenic drought tolerance trait in a line of corn hybrids called DroughtGard. The MON 87460 trait is provided by the insertion of the cspB gene from the soil microbe Bacillus subtilis; it was approved by the USDA in 2011 and by China in 2013.

Health Safety

In regular corn crops, insects promote fungal colonization by creating "wounds," or holes, in corn kernels. These wounds are favored by fungal spores for germination, which subsequently leads to mycotoxin accumulation in the crop that can be carcinogenic and toxic to humans and other animals. This can prove to be especially devastating in developing countries with drastic climate patterns such as high temperatures, which favor the development of toxic fungi. In addition, higher mycotoxin levels leads to market rejection or reduced market prices for the grain. GM corn crops encounter fewer insect attacks, and thus, have lower concentrations of mycotoxins. Fewer insect attacks also keep corn ears from being damaged, which increases overall yields.

Products in development

In 2007, South African researchers announced the production of transgenic maize resistant to maize streak virus (MSV), although it has not been released as a product. While breeding cultivars for resistance to MSV isn't done in the public, the private sector, international research centers, and national programmes have done all of the breeding. As of 2014, there have been a few MSV-tolerant cultivars released in Africa. A private company Seedco has released 5 MSV cultivars.

Research has been done on adding a single E. coli gene to maize to enable it to be grown with an essential amino acid (methionine).

Refuges

US Environmental Protection Agency (EPA) regulations require farmers who plant Bt corn to plant non-Bt corn nearby (called a refuge) to provide a location to harbor vulnerable pests. Typically, 20% of corn in a grower's fields must be refuge; refuge must be at least 0.5 miles from Bt corn for lepidopteran pests, and refuge for corn rootworm must at least be adjacent to a Bt field.

The theory behind these refuges is to slow the evolution of resistance to the pesticide. EPA regulations also require seed companies to train farmers how to maintain refuges, to collect data on the refuges and to report that data to the EPA. A study of these reports found that from 2003 to 2005 farmer compliance with keeping refuges was above 90%, but that by 2008 approximately 25% of Bt corn farmers did not keep refuges properly, raising concerns that resistance would develop.

Unmodified crops received most of the economic benefits of Bt corn in the US in 1996–2007, because of the overall reduction of pest populations. This reduction came because females laid eggs on modified and unmodified strains alike.

Seed bags containing both Bt and refuge seed have been approved by the EPA in the United States. These seed mixtures were marketed as "Refuge in a Bag" (RIB) to increase farmer compliance with refuge requirements and reduce additional work needed at planting from having separate Bt and refuge seed bags on hand. The EPA approved a lower percentage of refuge seed in these seed mixtures ranging from 5 to 10%. This strategy is likely to reduce the likelihood of Bt-resistance occurring for corn rootworm, but may increase the risk of resistance for lepidopteran pests, such as European corn borer. Increased concerns for resistance with seed mixtures include partially resistant larvae on a Bt plant being able to move to a susceptible plant to survive or cross pollination of refuge pollen on to Bt plants that can lower the amount of Bt expressed in kernels for ear feeding insects.

Resistance

Resistant strains of the European corn borer have developed in areas with defective or absent refuge management.

In November 2009, Monsanto scientists found the pink bollworm had become resistant to first-generation Bt cotton in parts of Gujarat, India – that generation expresses one Bt gene, Cry1Ac. This was the first instance of Bt resistance confirmed by Monsanto anywhere in the world. Bollworm resistance to first generation Bt cotton has been identified in Australia, China, Spain, and the United States. In 2012, a Florida field trial demonstrated that army worms were resistant to pesticide-containing GM corn produced by Dupont-Dow; armyworm resistance was first discovered in Puerto Rico in 2006, prompting Dow and DuPont to voluntarily stop selling the product on the island.

Regulation

Main article: Regulation of the release of genetic modified organisms

Regulation of GM crops varies between countries, with some of the most-marked differences occurring between the US and Europe. Regulation varies in a given country depending on intended uses.

Controversy

Main article: Genetically modified food controversies

There is a scientific consensus that currently available food derived from GM crops poses no greater risk to human health than conventional food, but that each GM food needs to be tested on a case-by-case basis before introduction. Nonetheless, members of the public are much less likely than scientists to perceive GM foods as safe. The legal and regulatory status of GM foods varies by country, with some nations banning or restricting them, and others permitting them with widely differing degrees of regulation.

The scientific rigor of the studies regarding human health has been disputed due to alleged lack of independence and due to conflicts of interest involving governing bodies and some of those who perform and evaluate the studies. However, no reports of ill effects from GM food have been documented in the human population.

GM crops provide a number of ecological benefits, but there are also concerns for their overuse, stalled research outside of the Bt seed industry, proper management and issues with Bt resistance arising from their misuse.

Critics have objected to GM crops on ecological, economic and health grounds. The economic issues derive from those organisms that are subject to intellectual property law, mostly patents. The first generation of GM crops lose patent protection beginning in 2015. Monsanto has claimed it will not pursue farmers who retain seeds of off-patent varieties. These controversies have led to litigation, international trade disputes, protests and to restrictive legislation in most countries.

Introduction of Bt maize led to significant reduction of mycotoxin-related poisoning and cancer rates, as they were significantly less prone to contain mycotoxins (29%), fumonisins (31%) and thricotecens (37%), all of which are toxic and carcinogenic.

Effects on nontarget insects

Critics claim that Bt proteins could target predatory and other beneficial or harmless insects as well as the targeted pest. These proteins have been used as organic sprays for insect control in France since 1938 and the USA since 1958 with no ill effects on the environment reported. While cyt proteins are toxic towards the insect order Diptera (flies), certain cry proteins selectively target lepidopterans (moths and butterflies), while other cyt selectively target Coleoptera. As a toxic mechanism, cry proteins bind to specific receptors on the membranes of mid-gut (epithelial) cells, resulting in rupture of those cells. Any organism that lacks the appropriate gut receptors cannot be affected by the cry protein, and therefore Bt. Regulatory agencies assess the potential for the transgenic plant to impact nontarget organisms before approving commercial release.

A 1999 study found that in a lab environment, pollen from Bt maize dusted onto milkweed could harm the monarch butterfly. Several groups later studied the phenomenon in both the field and the laboratory, resulting in a risk assessment that concluded that any risk posed by the corn to butterfly populations under real-world conditions was negligible. A 2002 review of the scientific literature concluded that "the commercial large-scale cultivation of current Bt–maize hybrids did not pose a significant risk to the monarch population". A 2007 review found that "nontarget invertebrates are generally more abundant in Bt cotton and Bt maize fields than in nontransgenic fields managed with insecticides. However, in comparison with insecticide-free control fields, certain nontarget taxa are less abundant in Bt fields."

Gene flow

Gene flow is the transfer of genes and/or alleles from one species to another. Concerns focus on the interaction between GM and other maize varieties in Mexico, and of gene flow into refuges.

In 2009 the government of Mexico created a regulatory pathway for genetically modified maize, but because Mexico is the center of diversity for maize, gene flow could affect a large fraction of the world's maize strains. A 2001 report in Nature presented evidence that Bt maize was cross-breeding with unmodified maize in Mexico. The data in this paper was later described as originating from an artifact. Nature later stated, "the evidence available is not sufficient to justify the publication of the original paper". A 2005 large-scale study failed to find any evidence of contamination in Oaxaca. However, other authors also found evidence of cross-breeding between natural maize and transgenic maize.

A 2004 study found Bt protein in kernels of refuge corn.

In 2017, a large-scale study found "pervasive presence of transgenes and glyphosate in maize-derived food in Mexico"

Food

The French High Council of Biotechnologies Scientific Committee reviewed the 2009 Vendômois et al. study and concluded that it "presents no admissible scientific element likely to ascribe any haematological, hepatic or renal toxicity to the three re-analysed GMOs." However, the French government applies the precautionary principle with respect to GMOs.

A review by Food Standards Australia New Zealand and others of the same study concluded that the results were due to chance alone.

A 2011 Canadian study looked at the presence of CryAb1 protein (BT toxin) in non-pregnant women, pregnant women and fetal blood. All groups had detectable levels of the protein, including 93% of pregnant women and 80% of fetuses at concentrations of 0.19 ± 0.30 and 0.04 ± 0.04 mean ± SD ng/ml, respectively. The paper did not discuss safety implications or find any health problems. FSANZ agency published a comment pointing out a number of inconsistencies in the paper, most notably that it "does not provide any evidence that GM foods are the source of the protein".

In January 2013, the European Food Safety Authority released all data submitted by Monsanto in relation to the 2003 authorisation of maize genetically modified for glyphosate tolerance.

Starlink corn recalls

Main article: Starlink corn recall

StarLink contains Cry9C, which had not previously been used in a GM crop. Starlink's creator, Plant Genetic Systems, had applied to the US Environmental Protection Agency (EPA) to market Starlink for use in animal feed and in human food. However, because the Cry9C protein lasts longer in the digestive system than other Bt proteins, the EPA had concerns about its allergenicity, and PGS did not provide sufficient data to prove that Cry9C was not allergenic. As a result, PGS split its application into separate permits for use in food and use in animal feed. Starlink was approved by the EPA for use in animal feed only in May 1998.

StarLink corn was subsequently found in food destined for consumption by humans in the US, Japan, and South Korea. This corn became the subject of the widely publicized Starlink corn recall, which started when Taco Bell-branded taco shells sold in supermarkets were found to contain the corn. Sales of StarLink seed were discontinued. The registration for Starlink varieties was voluntarily withdrawn by Aventis in October 2000. Pioneer had been bought by AgrEvo which then became Aventis CropScience at the time of the incident, which was later bought by Bayer.

Fifty-one people reported adverse effects to the FDA; US Centers for Disease Control (CDC), which determined that 28 of them were possibly related to Starlink. However, the CDC studied the blood of these 28 individuals and concluded there was no evidence of hypersensitivity to the Starlink Bt protein.

A subsequent review of these tests by the Federal Insecticide, Fungicide, and Rodenticide Act Scientific Advisory Panel points out that while "the negative results decrease the probability that the Cry9C protein is the cause of allergic symptoms in the individuals examined ... in the absence of a positive control and questions regarding the sensitivity and specificity of the assay, it is not possible to assign a negative predictive value to this."

The US corn supply has been monitored for the presence of the Starlink Bt proteins since 2001.

In 2005, aid sent by the UN and the US to Central American nations also contained some StarLink corn. The nations involved, Nicaragua, Honduras, El Salvador and Guatemala refused to accept the aid.

Corporate espionage

On 19 December 2013 six Chinese citizens were indicted in Iowa on charges of plotting to steal genetically modified seeds worth tens of millions of dollars from Monsanto and DuPont. Mo Hailong, director of international business at the Beijing Dabeinong Technology Group Co., part of the Beijing-based DBN Group, was accused of stealing trade secrets after he was found digging in an Iowa cornfield.

Industrial espionage

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Industrial_espionage 

Teapot with Actresses, Vezzi porcelain factory, Venice, c. 1725. The Vezzi brothers were involved in a series of incidents of industrial espionage. It was these actions that led to the secret of manufacturing Meissen porcelain becoming widely known.

Industrial espionage, economic espionage, corporate spying, or corporate espionage is a form of espionage conducted for commercial purposes instead of purely national security.

While political espionage is conducted or orchestrated by governments and is international in scope, industrial or corporate espionage is more often national and occurs between companies or corporations.

Forms of economic and industrial espionage

Economic or industrial espionage takes place in two main forms. In short, the purpose of espionage is to gather knowledge about one or more organizations. It may include the acquisition of intellectual property, such as information on industrial manufacture, ideas, techniques and processes, recipes and formulas. Or it could include sequestration of proprietary or operational information, such as that on customer datasets, pricing, sales, marketing, research and development, policies, prospective bids, planning or marketing strategies or the changing compositions and locations of production. It may describe activities such as theft of trade secrets, bribery, blackmail and technological surveillance. As well as orchestrating espionage on commercial organizations, governments can also be targets – for example, to determine the terms of a tender for a government contract.

Target industries

During testing, automakers commonly disguise upcoming car models with camouflage paint patterns designed to obfuscate the vehicle's lines. Padded covers or deceptive decals are also often used. This is also to prevent motoring media outlets from spoiling the model before its planned reveal.

Economic and industrial espionage is most commonly associated with technology-heavy industries, including computer software and hardware, biotechnology, aerospace, telecommunications, transportation and engine technology, automobiles, machine tools, energy, materials and coatings and so on. Silicon Valley is known to be one of the world's most targeted areas for espionage, though any industry with information of use to competitors may be a target.

Information theft and sabotage

Information can make the difference between success and failure; if a trade secret is stolen, the competitive playing field is leveled or even tipped in favor of a competitor. Although a lot of information-gathering is accomplished legally through competitive intelligence, at times corporations feel the best way to get information is to take it. Economic or industrial espionage is a threat to any business whose livelihood depends on information.

In recent years, economic or industrial espionage has taken on an expanded definition. For instance, attempts to sabotage a corporation may be considered industrial espionage; in this sense, the term takes on the wider connotations of its parent word. That espionage and sabotage (corporate or otherwise) have become more clearly associated with each other is also demonstrated by a number of profiling studies, some government, some corporate. The United States government currently has a polygraph examination entitled the "Test of Espionage and Sabotage" (TES), contributing to the notion of the interrelationship between espionage and sabotage countermeasures. In practice, particularly by "trusted insiders", they are generally considered functionally identical for the purpose of informing countermeasures.

Agents and the process of collection

Economic or industrial espionage commonly occurs in one of two ways. Firstly, a dissatisfied employee appropriates information to advance interests or to damage the company. Secondly, a competitor or foreign government seeks information to advance its own technological or financial interest. "Moles", or trusted insiders, are generally considered the best sources for economic or industrial espionage. Historically known as a "patsy", an insider can be induced, willingly or under duress, to provide information. A patsy may be initially asked to hand over inconsequential information and, once compromised by committing a crime, blackmailed into handing over more sensitive material. Individuals may leave one company to take up employment with another and take sensitive information with them. Such apparent behavior has been the focus of numerous industrial espionage cases that have resulted in legal battles. Some countries hire individuals to do spying rather than the use of their own intelligence agencies. Academics, business delegates, and students are often thought to be used by governments in gathering information. Some countries, such as Japan, have been reported to expect students to be debriefed on returning home. A spy may follow a guided tour of a factory and then get "lost". A spy could be an engineer, a maintenance man, a cleaner, an insurance salesman, or an inspector: anyone who has legitimate access to the premises.

A spy may break into the premises to steal data and may search through waste paper and refuse, known as "dumpster diving". Information may be compromised via unsolicited requests for information, marketing surveys, or use of technical support or research or software facilities. Outsourced industrial producers may ask for information outside the agreed-upon contract.

Computers have facilitated the process of collecting information because of the ease of access to large amounts of information through physical contact or the Internet.

History

Origins

The work of a European priest, Father Francois Xavier d'Entrecolles to reveal to Europe the manufacturing methods of Chinese porcelain in 1712, is sometimes considered an early case of industrial espionage.

Economic and industrial espionage has a long history. Father Francois Xavier d'Entrecolles, who visited Jingdezhen, China in 1712 and later used this visit to reveal the manufacturing methods of Chinese porcelain to Europe, is sometimes considered to have conducted an early case of industrial espionage.

Historical accounts have been written of industrial espionage between Britain and France. Attributed to Britain's emergence as an "industrial creditor", the second decade of the 18th century saw the emergence of a large-scale state-sponsored effort to surreptitiously take British industrial technology to France. Witnesses confirmed both the inveigling of tradespersons abroad and the placing of apprentices in England. Protests by those such as ironworkers in Sheffield and steelworkers in Newcastle, about skilled industrial workers being enticed abroad, led to the first English legislation aimed at preventing this method of economic and industrial espionage. This did not prevent Samuel Slater from bringing British textile technology to the United States in 1789. In order to catch up with technological advances of European powers, the US government in the eighteenth and nineteenth centuries actively encouraged intellectual piracy.

American founding father and first U.S. Treasury Secretary Alexander Hamilton advocated rewarding those bringing "improvements and secrets of extraordinary value" into the United States. This was instrumental in making the United States a haven for industrial spies.

20th century

East-West commercial development opportunities after World War I saw a rise in Soviet interest in American and European manufacturing know-how, exploited by Amtorg Corporation. Later, with Western restrictions on the export of items thought likely to increase military capabilities to the USSR, Soviet industrial espionage was a well known adjunct to other spying activities up until the 1980s. BYTE reported in April 1984, for example, that although the Soviets sought to develop their own microelectronics, their technology appeared to be several years behind the West's. Soviet CPUs required multiple chips and appeared to be close or exact copies of American products such as the Intel 3000 and DEC LSI-11/2.

"Operation Brunnhilde"

Some of these activities were directed via the East German Stasi (Ministry for State Security). One such operation, "Operation Brunnhilde," operated from the mid-1950s until early 1966 and made use of spies from many Communist Bloc countries. Through at least 20 forays, many western European industrial secrets were compromised. One member of the "Brunnhilde" ring was a Swiss chemical engineer, Dr. Jean Paul Soupert (also known as "Air Bubble"), living in Brussels. He was described by Peter Wright in Spycatcher as having been "doubled" by the Belgian Sûreté de l'État. He revealed information about industrial espionage conducted by the ring, including the fact that Russian agents had obtained details of Concorde's advanced electronics system. He testified against two Kodak employees, living and working in Britain, during a trial in which they were accused of passing information on industrial processes to him, though they were eventually acquitted.

According to a 2020 American Economic Review study, East German industrial espionage in West Germany significantly reduced the gap in total factor productivity between the two countries.

Soviet spetsinformatsiya system

A secret report from the Military-Industrial Commission of the USSR (VPK), from 1979–80, detailed how spetsinformatsiya (Russian: специнформация, "special records") could be utilised in twelve different military industrial areas. Writing in the Bulletin of the Atomic Scientists, Philip Hanson detailed a spetsinformatsiya system in which 12 industrial branch ministries formulated requests for information to aid technological development in their military programs. Acquisition plans were described as operating on 2-year and 5-year cycles with about 3000 tasks underway each year. Efforts were aimed at civilian and military industrial targets, such as in the petrochemical industries. Some information was gathered to compare Soviet technological advancement with that of their competitors. Much unclassified information was also gathered, blurring the boundary with "competitive intelligence".

The Soviet military was recognised as making much better use of acquired information than civilian industries, where their record in replicating and developing industrial technology was poor.

Legacy of Cold War espionage

Following the demise of the Soviet Union and the end of the Cold War, commentators, including the US Congressional Intelligence Committee, noted a redirection amongst the espionage community from military to industrial targets, with Western and former communist countries making use of "underemployed" spies and expanding programs directed at stealing such information.

The legacy of Cold War spying included not just the redirection of personnel but the use of spying apparatus such as computer databases, scanners for eavesdropping, spy satellites, bugs and wires.

Industrial espionage as part of US foreign policy

According to an article from news website theintercept.com, "potentially sabotaging another country's hi-tech industries and their top companies has long been a sanctioned American strategy." The article was based on a leaked report issued from former U.S. Director of National Intelligence James R. Clapper's office that evaluated a theoretical scenario on how intelligence could be used to overcome a loss of the United States' technological and innovative edge. The report did not show any actual occurrence of U.S. conducted industrial espionage, and when contacted the Director of National Intelligence office responded with, "the United States—unlike our adversaries—does not steal proprietary corporate information to further private American companies' bottom lines", and that "the Intelligence Community regularly engages in analytic exercises to identify potential future global environments, and how the IC could help the United States Government respond". The report, he said, "is not intended to be, and is not, a reflection of current policy or operations".

Former CIA Director Stansfield Turner stated in 1991 "Nevertheless, as we increase emphasis on securing economic intelligence, we will have to spy on the more developed countries-our allies and friends with whom we compete economically-but to whom we turn first for political and military assistance in a crisis. This means that rather than instinctively reaching for human, on-site spying, the United States will want to look to those impersonal technical systems, primarily satellite photography and intercepts".

Former CIA Director James Woolsey acknowledged in 2000 that the United States steals economic secrets from foreign firms and their governments "with espionage, with communications, with reconnaissance satellites". He also stated it is "not to provide secrets, technological secrets to American industry." He listed the three reasons as understanding whether sanctions are functioning for countries under sanction, monitoring dual-use technology that could be used to produce or develop weapons of mass destruction, and to spy on bribery to uphold the Foreign Corrupt Practices Act.

In 2013 The United States was accused of spying on Brazilian oil company Petrobras. Brazil's President Dilma Rousseff stated that it was tantamount to industrial espionage and had no security justification.

In 2014 former US intelligence officer Edward Snowden stated that America's National Security Agency was engaged in industrial espionage and that they spied on German companies that compete with US firms. He also highlighted the fact the NSA uses mobile phone apps such as Angry Birds to gather personal data.

In September 2019, security firm Qi An Xin published report linking the CIA to a series of attacks targeting Chinese aviation agencies between 2012 and 2017.

Israel's economic espionage in the United States

Israel has an active program to gather proprietary information within the United States. These collection activities are primarily directed at obtaining information on military systems and advanced computing applications that can be used in Israel's sizable armaments industry.

Israel was accused by the US government of selling US military technology and secrets to China.

In 2014 American counter-intelligence officials told members of the House Judiciary and Foreign Affairs committees that Israel's current espionage activities in America are "unrivaled".

Use of computers and the Internet

Personal computers

Computers have become key in exercising industrial espionage due to the enormous amount of information they contain and the ease at which it can be copied and transmitted. The use of computers for espionage increased rapidly in the 1990s. Information has commonly been stolen by individuals posing as subsidiary workers, such as cleaners or repairmen, gaining access to unattended computers and copying information from them. Laptops were, and still are, a prime target, with those traveling abroad on business being warned not to leave them for any period of time. Perpetrators of espionage have been known to find many ways of conning unsuspecting individuals into parting, often only temporarily, from their possessions, enabling others to access and steal information. A "bag-op" refers to the use of hotel staff to access data, such as through laptops, in hotel rooms. Information may be stolen in transit, in taxis, at airport baggage counters, baggage carousels, on trains and so on.

The Internet

The rise of the Internet and computer networks has expanded the range and detail of information available and the ease of access for the purpose of industrial espionage. This type of operation is generally identified as state backed or sponsored, because the "access to personal, financial or analytic resources" identified exceed that which could be accessed by cybercriminals or individual hackers. Sensitive military or defense engineering or other industrial information may not have immediate monetary value to criminals, compared with, say, bank details. Analysis of cyberattacks suggests deep knowledge of networks, with targeted attacks, obtained by numerous individuals operating in a sustained organized way.

Opportunities for sabotage

The rising use of the internet has also extended opportunities for industrial espionage with the aim of sabotage. In the early 2000s, it was noticed that energy companies were increasingly coming under attack from hackers. Energy power systems, doing jobs like monitoring power grids or water flow, once isolated from the other computer networks, were now being connected to the internet, leaving them more vulnerable, having historically few built-in security features. The use of these methods of industrial espionage have increasingly become a concern for governments, due to potential attacks by terrorist groups or hostile foreign governments.

Malware

One of the means of perpetrators conducting industrial espionage is by exploiting vulnerabilities in computer software. Malware and spyware are "tool[s] for industrial espionage", in "transmitting digital copies of trade secrets, customer plans, future plans and contacts". Newer forms of malware include devices which surreptitiously switch on mobile phones camera and recording devices. In attempts to tackle such attacks on their intellectual property, companies are increasingly keeping important information off network, leaving an "air gap", with some companies building Faraday cages to shield from electromagnetic or cellphone transmissions.

Distributed denial of service (DDoS) attack

The distributed denial of service (DDoS) attack uses compromised computer systems to orchestrate a flood of requests on the target system, causing it to shut down and deny service to other users. It could potentially be used for economic or industrial espionage with the purpose of sabotage. This method was allegedly utilized by Russian secret services, over a period of two weeks on a cyberattack on Estonia in May 2007, in response to the removal of a Soviet era war memorial.

Notable cases

British East India Company

In 1848, the British East India Company broke Qing China's global near-monopoly on tea production by smuggling Chinese tea out of the nation and copying Chinese tea-making processes. The British Empire had previously run a considerable trade deficit with China by importing the nation's tea and other goods. The British attempted to rectify the deficit by trading opium to the Chinese, but encountered difficulties after the Daoguang Emperor banned the opium trade and the First Opium War broke out. To avoid further issues in trading tea with China, the East India Company hired Scottish botanist Robert Fortune to travel to China under the guise of a Chinese nobleman and obtain Chinese trade secrets and tea plants for replanting. Infiltrating Chinese tea-making facilities, Fortune recorded the Chinese process for creating tea and smuggled tea leaves and seeds back to the East India Company. These tea plants were later introduced into India, helping it surpass China as the world's largest tea producer.

France and the United States

Between 1987 and 1989, IBM and Texas Instruments were thought to have been targeted by French DGSE with the intention of helping France's Groupe Bull. In 1993, U.S. aerospace companies were also thought to have been targeted by French interests. During the early 1990s, France was described as one of the most aggressive pursuers of espionage to garner foreign industrial and technological secrets. France accused the U.S. of attempting to sabotage its high tech industrial base. The government of France has been alleged to have conducted ongoing industrial espionage against American aerodynamics and satellite companies.

Volkswagen

In 1993, car manufacturer Opel, the German division of General Motors, accused Volkswagen of industrial espionage after Opel's chief of production, Jose Ignacio Lopez, and seven other executives moved to Volkswagen. Volkswagen subsequently threatened to sue for defamation, resulting in a four-year legal battle. The case, which was finally settled in 1997, resulted in one of the largest settlements in the history of industrial espionage, with Volkswagen agreeing to pay General Motors $100 million and to buy at least $1 billion of car parts from the company over 7 years, although it did not explicitly apologize for Lopez's behavior.

Hilton and Starwood

In April 2009, Starwood accused its rival Hilton Worldwide of a "massive" case of industrial espionage. After being acquired by The Blackstone Group, Hilton employed 10 managers and executives from Starwood. Starwood accused Hilton of stealing corporate information relating to its luxury brand concepts, used in setting up its Denizen hotels. Specifically, former head of its luxury brands group, Ron Klein, was accused of downloading "truckloads of documents" from a laptop to his personal email account.

Google and Operation Aurora

On 13 January 2010, Google announced that operators, from within China, had hacked into their Google China operation, stealing intellectual property and, in particular, accessing the email accounts of human rights activists. The attack was thought to have been part of a more widespread cyber attack on companies within China which has become known as Operation Aurora. Intruders were thought to have launched a zero-day attack, exploiting a weakness in the Microsoft Internet Explorer browser, the malware used being a modification of the trojan "Hydraq". Concerned about the possibility of hackers taking advantage of this previously unknown weakness in Internet Explorer, the governments of Germany and, subsequently France, issued warnings not to use the browser.

There was speculation that "insiders" had been involved in the attack, with some Google China employees being denied access to the company's internal networks after the company's announcement. In February 2010, computer experts from the U.S. National Security Agency claimed that the attacks on Google probably originated from two Chinese universities associated with expertise in computer science, Shanghai Jiao Tong University and the Shandong Lanxiang Vocational School, the latter having close links to the Chinese military.

Google claimed at least 20 other companies had also been targeted in the cyber attack, said by the London Times, to have been part of an "ambitious and sophisticated attempt to steal secrets from unwitting corporate victims" including "defence contractors, finance and technology companies". Rather than being the work of individuals or organised criminals, the level of sophistication of the attack was thought to have been "more typical of a nation state". Some commentators speculated as to whether the attack was part of what is thought to be a concerted Chinese industrial espionage operation aimed at getting "high-tech information to jump-start China's economy". Critics pointed to what was alleged to be a lax attitude to the intellectual property of foreign businesses in China, letting them operate but then seeking to copy or reverse engineer their technology for the benefit of Chinese "national champions". In Google's case, they may have (also) been concerned about the possible misappropriation of source code or other technology for the benefit of Chinese rival Baidu. In March 2010 Google subsequently decided to cease offering censored results in China, leading to the closing of its Chinese operation.

USA v. Lan Lee, et al.

The United States charged two former NetLogic Inc. engineers, Lan Lee and Yuefei Ge, of committing economic espionage against TSMC and NetLogic, Inc. A jury acquitted the defendants of the charges with regard to TSMC and deadlocked on the charges with regard to NetLogic. In May 2010, a federal judge dismissed all the espionage charges against the two defendants. The judge ruled that the U.S. government presented no evidence of espionage.

Dongxiao Yue and Chordiant Software, Inc.

In May 2010, the federal jury convicted Chordiant Software, Inc., a U.S. corporation, of stealing Dongxiao Yue's JRPC technologies and used them in a product called Chordiant Marketing Director. Yue previously filed lawsuits against Symantec Corporation for a similar theft.

Concerns of national governments

Brazil

Revelations from the Snowden documents have provided information to the effect that the United States, notably vis-à-vis the NSA, has been conducting aggressive economic espionage against Brazil. Canadian intelligence has apparently supported U.S. economic espionage efforts.

China

The Chinese cybersecurity company Qihoo 360 accused Central Intelligence Agency of the United States of an 11-year-long hacking campaign that targeted several industries including aviation organizations, scientific research institutions, petroleum firms, internet companies, and government agencies.

United States

A 2009 report to the US government, by aerospace and defense company Northrop Grumman, describes Chinese economic espionage as comprising "the single greatest threat to U.S. technology". Blogging on the 2009 cyber attack on Google, Joe Stewart of SecureWorks referred to a "persistent campaign of 'espionage-by-malware' emanating from the People's Republic of China (PRC)" with both corporate and state secrets being "Shanghaied" over the past 5 or 6 years. The Northrop Grumman report states that the collection of US defense engineering data through cyberattack is regarded as having "saved the recipient of the information years of R&D and significant amounts of funding". Concerns about the extent of cyberattacks on the US emanating from China has led to the situation being described as the dawn of a "new cold cyberwar".

According to Edward Snowden, the National Security Agency spies on foreign companies. In June 2015 Wikileaks published documents about the National Security Agency spying on French companies.

United Kingdom

During December of 2007, this was suddenly revealed that Jonathan Evans, head of the United Kingdom's MI5, had sent out confidential letters to 300 chief executives and security chiefs at the country's banks, accountants and legal firms warning of attacks from Chinese 'state organisations'. A summary was also posted on the secure website of the Centre for the Protection of the National Infrastructure, accessed by some of the nation's 'critical infrastructure' companies, including 'telecoms firms, banks and water and electricity companies'. One security expert warned about the use of 'custom trojans,' software specifically designed to hack into a particular firm and feed back data. Whilst China was identified as the country most active in the use of internet spying, up to 120 other countries were said to be using similar techniques. The Chinese government responded to UK accusations of economic espionage by saying that the report of such activities was 'slanderous' and that the government opposed hacking which is prohibited by law.

Germany

German counter-intelligence experts have maintained the German economy is losing around €53 billion or the equivalent of 30,000 jobs to economic espionage yearly.

In Operation Eikonal, German BND agents received "selector lists" from the NSA – search terms for their dragnet surveillance. They contain IP addresses, mobile phone numbers and email accounts with the BND surveillance system containing hundreds of thousands and possibly more than a million such targets. These lists have been subject of controversy as in 2008 it was revealed that they contained some terms targeting the European Aeronautic Defence and Space Company (EADS), the Eurocopter project as well as French administration, which were first noticed by BND employees in 2005. After the revelations made by whistleblower Edward Snowden, the BND decided to investigate the issue whose October 2013 conclusion was that at least 2,000 of these selectors were aimed at Western European or even German interests which has been a violation of the Memorandum of Agreement that the US and Germany signed in 2002 in the wake of the 9/11 terror attacks. After reports emerged in 2014 that EADS and Eurocopter had been surveillance targets the Left Party and the Greens filed an official request to obtain evidence of the violations.

The BND's project group charged with supporting the NSA investigative committee in German parliament set up in spring 2014, reviewed the selectors and discovered 40,000 suspicious search parameters, including espionage targets in Western European governments and numerous companies. The group also confirmed suspicions that the NSA had systematically violated German interests and concluded that the Americans could have perpetrated economic espionage directly under the Germans' noses. The investigative parliamentary committee was not granted access to the NSA's selectors list as an appeal led by opposition politicians failed at Germany's top court. Instead the ruling coalition appointed an administrative judge, Kurt Graulich [de], as a "person of trust" who was granted access to the list and briefed the investigative commission on its contents after analyzing the 40,000 parameters. In his almost 300-paged report Graulich concluded that European government agencies were targeted massively and that Americans hence broke contractual agreements. He also found that German targets which received special protection from surveillance of domestic intelligence agencies by Germany's Basic Law (Grundgesetz) − including numerous enterprises based in Germany – were featured in the NSA's wishlist in a surprising plenitude.

Competitive intelligence and economic or industrial espionage

"Competitive intelligence" involves the legal and ethical activity of systematically gathering, analyzing and managing information on industrial competitors. It may include activities such as examining newspaper articles, corporate publications, websites, patent filings, specialised databases, information at trade shows and the like to determine information on a corporation. The compilation of these crucial elements is sometimes termed CIS or CRS, a Competitive Intelligence Solution or Competitive Response Solution, with its roots in market research. Douglas Bernhardt has characterised "competitive intelligence" as involving "the application of principles and practices from military and national intelligence to the domain of global business"; it is the commercial equivalent of open-source intelligence.

The difference between competitive intelligence and economic or industrial espionage is not clear; one needs to understand the legal basics to recognize how to draw the line between the two.

Collusion

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Collusion 

Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to attain objectives forbidden by law; for example, by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve "unions, wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties". In legal terms, all acts effected by collusion are considered void.

Definition

In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Conspiracy usually involves an agreement between two or more sellers to take action to suppress competition between sellers in the market. Because competition among sellers can provide consumers with low prices, conspiracy agreements increase the price consumers pay for the goods. Because of this harm to consumers, it is against antitrust laws to fix prices by agreement between producers, so participants must keep it a secret. Collusion often takes place within an oligopoly market structure, where there are few firms and agreements that have significant impacts on the entire market or industry. To differentiate from a cartel, collusive agreements between parties may not be explicit; however, the implications of cartels and collusion are the same.

Under competition law, there is an important distinction between direct and covert collusion. Direct collusion generally refers to a group of companies communicating directly with each other, usually to coordinate and/or monitor their actions, to cooperate through pricing, market allocation, sales quotas, etc. By contrast, tacit collusion is where companies coordinate and monitor their behavior without this direct communication. This is generally not considered illegal, so companies guilty of tacit conspiracy should face no penalties, even though their actions would have a similar economic impact as explicit conspiracy. Collusion is the result of less competition through mutual understanding, where competitors can independently set prices and market share. A core principle of antitrust policy is that companies must not communicate with each other. Even if conversations between multiple companies are illegal but not enforceable, the incentives to comply with collusive agreements are the same with and without communication. It is against competition law for companies to have explicit conversations in private. If evidence of conversations is accidentally left behind, it will become the most critical and conclusive evidence in antitrust litigation. Even without communication, businesses can coordinate prices by observation, but from a legal standpoint, this tacit handling leaves no evidence. Most companies cooperate through invisible collusion, so whether companies communicate is absolutely at the core of antitrust policy.

Collusion which is covert is known as tacit collusion, and is considered legal. Adam Smith in the Wealth of Nations explains that since the masters (business owners) are fewer in numbers, it is easier to collude to serve common interests among those involved, such as maintaining low wages, whilst it is difficult for the labor to coordinate to protect their own interests due to their vast numbers. Hence, business owners have a bigger advantage over the working class. Nevertheless, according to Adam Smith, the public rarely hear about coordination and collaborations that occur between business owners as it takes place in informal settings. Some forms of explicit collusion are not considered impactful enough on an individual basis to be considered illegal, such as that which occurred by the social media group WallStreetBets in the GameStop short squeeze.

Base model of (Price) Collusion

For a cartel to work successfully, it must:

• coordinate on the conspiracy agreement.

(Bargaining, explicit or implicit communication)

• Monitor compliance.
• Punish non-compliance.
• Control the expansion of non-cartel supply.
• Avoid inspection by customers and competition authorities.

Regarding stability within the cartel:

• Collusion on high prices means that members have an incentive to deviate.
• In a one-off situation, high prices are not sustainable.
• Requires long-term vision and repeated interactions.
• Companies need to choose between two approaches：

1. Insist on collusion agreements (now) and promote cooperation (future).
2. Turn away from the alliance (now) and face punishment (future).

• Two factors influence this choice: (1) deviations must be detectable (2) penalties for deviations must have a significant effect.
• Collusion is illegal, contracts between cartels establishing collusion are not protected by law, cannot be enforced by courts, and must have other forms of punishment.

Variations

• π（Pc）/n(1-ẟ) ≥ π（Pc） →1/n(1-ẟ)≥ 1
• 1 ≥ n(1-ẟ)
• 1 ≥ n-nẟ
• nẟ≥n-1
• ẟ ≥n-1/n

Suppose there are n firms in this market. At the collusive price, the firms are symmetric, so they divide the profits equally between the whole industry, represented as π(Pc)/n.If and only if the profit of choosing deviate is greater than that of sticking to collude, i.e

• π（Pc）/n(1-ẟ) ≥ π（Pc）(Companies have no incentive to deviate unilaterally)
• Therefore, when 𝛿 ≥ 𝑛−1/𝑛 is the case, i.e. the firm has no incentive to deviate unilaterally, the cartel alliance will be stable. So as the number of firms increases, the more difficult it is for The Cartel to maintain stability.

As the number of firms in the market increases, so does the factor of the minimum discount required for collusion to succeed.

According to neoclassical price-determination theory and game theory, the independence of suppliers forces prices to their minimum, increasing efficiency and decreasing the price-determining ability of each individual firm. However if all firms collude to increase prices, loss of sales will be minimized, as consumers lack alternative choices at lower prices and must decide between what is available. This benefits the colluding firms, as they generate more sales, at the cost of efficiency to society. However, depending on the assumptions made in the theoretical model on the information available to all firms, there are some outcomes, based on Cooperative Game Theory, where collusion may have higher efficiency than if firms did not collude.

One variation of this traditional theory is the theory of kinked demand. Firms face a kinked demand curve if, when one firm decreases its price, other firms are expected to follow suit in order to maintain sales. When one firm increases its price, its rivals are unlikely to follow, as they would lose the sales gains that they would otherwise receive by holding prices at the previous level. Kinked demand potentially fosters supra-competitive prices because any one firm would receive a reduced benefit from cutting price, as opposed to the benefits accruing under neoclassical theory and certain game-theoretic models such as Bertrand competition.

Collusion may also occur in auction markets, where independent firms coordinate their bids (bid rigging).

Deviation

Future collusive profits

Actions that generate sufficient returns in the future are important to every company, and the probability of continued interaction and the company discount factor must be high enough. The sustainability of cooperation between companies also depends on the threat of punishment, which is also a matter of credibility. Firms that deviate from cooperative pricing will use MMC in each market. MMC increases the loss of deviation, and incremental loss is more important than incremental gain when the firm's objective function is concave. Therefore, the purpose of MMC is to strengthen corporate compliance or inhibit deviant collusion.

The principle of collusion: firms give up deviation gains in the short term in exchange for continued collusion in the future.

• Collusion occurs when companies place more emphasis on future profits
• Collusion is easier to sustain when the choice deviates from the maximum profit to be gained is lower (i.e. the penalty profit is lower) and the penalty is greater.
• Future collusive profits − future punishment profits ≥ current deviation profits − current collusive profits-collusion can sustain.

Scholars in economics and management have tried to identify factors explaining why some firms are more or less likely to be involved in collusion. Some have noted the role of the regulatory environment and the existence of leniency programs.

Indicators

Practices that suggest possible collusion may include one or more actions such as:

• Uniform prices and setting of an unjustified high or an unjustified low price
• Kickbacks and blanket referral agreements between competing businesses
• Dividing territories and market allocation
• Tying agreements and anticompetitive Product bundling (although, not all product bundling is anticompetitive)
• Refusal to deal and Exclusive dealing
• Dumping (pricing policy)
• Vertical restraints
• Horizontal territorial allocation
• Bid rigging

Examples

Set higher prices

• In the example in the picture, the dots in Pc and Q represent competitive industry prices. If firms collude, they can limit production to Q2 and raise the price to P2. Collusion usually involves some form of agreement to seek a higher price.
• When companies discriminate, price collusion is less likely, so the discount factor needed to ensure stability must be increased. In such price competition, competitors use delivered pricing to discriminate in space, but this does not mean that firms using delivered pricing to discriminate cannot collude.

Collusion is illegal in the United States, Canada and most of the EU due to antitrust laws, but implicit collusion in the form of price leadership and tacit understandings still takes place. Several examples of collusion in the United States include:

• Market division and price-fixing among manufacturers of heavy electrical equipment in the 1960s, including General Electric.
• An attempt by Major League Baseball owners to restrict players' salaries in the mid-1980s.
• The sharing of potential contract terms by NBA free agents in an effort to help a targeted franchise circumvent the salary cap.
• Price fixing within food manufacturers providing cafeteria food to schools and the military in 1993.
• Market division and output determination of livestock feed additive, called lysine, by companies in the US, Japan and South Korea in 1996, Archer Daniels Midland being the most notable of these.
• Chip dumping in poker or any other card game played for money.
• Ben and Jerry's and Häagen-Dazs collusion of products in 2013: Ben and Jerry's makes chunkier flavors with more treats in them, while Häagen-Dazs sticks to smoother flavors.
• Google and Apple against employee poaching, a collusion case in 2015 wherein it was revealed that both companies agreed not to hire employees from one another in order to halt the rise in wages.

In the EU:

• The illegal collusion between the giant German automakers BMW, Daimler and Volkswagen, discovered by the European Commission in 2019, to hinder technological progress in improving the quality of vehicle emissions in order to reduce the cost of production and maximize profits.

There are many ways that implicit collusion tends to develop:

• The practice of stock analyst conference calls and meetings of industry participants almost necessarily results in tremendous amounts of strategic and price transparency. This allows each firm to see how and why every other firm is pricing their products.
• If the practice of the industry causes more complicated pricing, which is hard for the consumer to understand (such as risk-based pricing, hidden taxes and fees in the wireless industry, negotiable pricing), this can cause competition based on price to be meaningless (because it would be too complicated to explain to the customer in a short advertisement). This causes industries to have essentially the same prices and compete on advertising and image, something theoretically as damaging to consumers as normal price fixing.

See also: Disney litigation

Barriers

There can be significant barriers to collusion. In any given industry, these may include:

• The number of firms: As the number of firms in an industry increases, it is more difficult to successfully organize, collude and communicate.
• Cost and demand differences between firms: If costs vary significantly between firms, it may be impossible to establish a price at which to fix output. Firms generally prefer to produce at a level where marginal cost meets marginal revenue, if one firm can produce at a lower cost, it will prefer to produce more units, and would receive a larger share of profits than its partner in the agreement.
• Asymmetry of information: Colluding firms may not have all the correct information about all other firms, from a quantitative perspective (firms may not know all other firms' cost and demand conditions) or a qualitative perspective (moral hazard). In either situation, firms may not know each others' preferences or actions, and any discrepancy would incentive at least one actor to renege.
• Cheating: There is considerable incentive to cheat on collusion agreements; although lowering prices might trigger price wars, in the short term the defecting firm may gain considerably. This phenomenon is frequently referred to as "chiseling".
• Potential entry: New firms may enter the industry, establishing a new baseline price and eliminating collusion (though anti-dumping laws and tariffs can prevent foreign companies from entering the market).
• Economic recession: An increase in average total cost or a decrease in revenue provides the incentive to compete with rival firms in order to secure a larger market share and increased demand.
• Anti-collusion legal framework and collusive lawsuit. Many countries with anti-collusion laws outlaw side-payments, which are an indication of collusion as firms pay each other to incentivize the continuation of the collusive relationship, may see less collusion as firms will likely prefer situations where profits are distributed towards themselves rather than the combined venture.

Government policies to reduce collusion

Collusion is when multiple companies reach an agreement to increase prices and profitability, at the expense of consumers. So the government is trying to prevent this from happening, such as the following policies:

• Fines for companies convicted of collusion.
• Fines and imprisonment for company executives who are personally liable.
• Detect collusion by screening markets for suspicious pricing activity and high profitability.
• Provide immunity to the first company to confess and provide the government with information about the collusion.