Specifically, the committee recommended that the State Department evaluate whether distillation attacks violate laws such as the Economic Espionage Act and the Computer Fraud and Abuse Act. They also want “adverse distillation” to be clearly defined and officially categorized as a controlled technology transfer, which would make it easier to restrict fraudulent Chinese access to the models.
If such measures were taken, the United States could prosecute bad actors and impose strong financial sanctions that could deter Chinese companies from treating “serious violations as a tolerable cost of doing business,” according to the committee report.
China calls accusations “pure slander”
Kratsios’ memo, which threatens crackdown, comes ahead of Donald Trump’s highly anticipated meeting with Chinese President Xi Jinping next month.
Trump has stated that the meeting will be “special” and “many things will be accomplished.” However, at least one analyst told the South China Morning Post that the war in Iran means Trump has “lost almost all of his negotiating cards” at a time when the United States and China are seeking to stabilize a trade relationship that has been strained since Trump took office.
It seems unlikely that China will tolerate Kratsios’ accusations. Liu Pengyu, a spokesman for the Chinese embassy in Washington, DC, told the Financial Times that the White House accusations were “pure slander.”
“China has always been committed to promoting scientific and technological progress through cooperation and healthy competition,” Pengyu said. “China attaches great importance to the protection of intellectual property rights.”
It remains to be seen whether Trump will side with AI companies that want to see China isolated from their models and sanctioned for distillation attacks. Trump has been, in the past, accused of making major concessions to China over export control issues that experts say threaten national security and the U.S. economy, just as U.S. companies say attacks on distilleries do.
Some of Trump’s concessions may need to be reversed to fight alleged “industrial espionage.”
Chris McGuire, a technology security expert at the Council on Foreign Relations, told the Financial Times that “Chinese AI companies rely on distillation attacks to make up for shortfalls in AI computing power and illicitly reproduce the core capabilities of US models.” To stop them, the United States may need to tighten export controls that Trump loosened, such as allowing Nvidia chip sales to China as long as US gets 25 percent cut. That strange agreement “didn’t make sense” to experts, who warned that Trump’s strange move could have opened the door for China to demand access to the United States’ most advanced artificial intelligence chips.
