Their analysis looks to me to be directed at a different issue: the question of whether TPP outlaws free and open source software, period. I agree with them that it doesn't; but that's not what the EFF is worried about. They're worried about the fact that, under TPP, the US government will have no way to force vendors of components like routers to reveal their source code to anyone--even government regulators. The SFLC analysis does not appear to me to address that issue.

I think the clause is there because China start to ask Tech company to open their source code if they want to do business there[0].

Which make me wonder, how do you distinguish between legitimate use of source code audit and the one that try to blatantly copy the source code?

[0] http://spectrum.ieee.org/tech-talk/telecom/security/chinas-n...

Do you seriously think that TPP going to stop China from stealing tech if they decide to actually use it stolen source code like that?

Come on. Source code audit is pretty standard procedure in case of any government usage around the globe and there also plenty of people have access to proprietary software source directly or not. Even big companies getting hacked by enthusiast with nearly zero budget and country have almost unlimited resources.

What's more important so far China was doing great just replacing exist products using hardware available on market and without copying anyone source code.

The idea is that source code audit will not be the barrier of import. If the government request foreign company for source code audit they need to ask nicely, not with threat of banning import and sales of said product.

I wonder if a trusted third party auditor agreed upon by both parties could work.

It might work, but it will be another barrier of entry.