U.S. Govt to Ease Encryption Export Limits

September 17, 1999

NEWS BRIEFS

Washington, DC — As Reuters reported, President Clinton has decided to loosen U.S. controls on the export of data encryption technology, a step long sought by the U.S. computer industry and resisted by federal law enforcement officials.

White House spokeswoman Nanda Chitre said the move, which will be announced later Thursday, affects both software and hardware and was intended to benefit the economy, preserve privacy, serve the national security interest and protect law enforcement capabilities.

Once the realm of spies and generals, encryption has become an increasingly critical tool for securing electronic commerce and global communications over the Internet.

Until now, the White House had tilted its export policy toward the needs of law enforcement and national security agencies, which feared that strong encryption would be used by rogue nations and criminals to thwart U.S. surveillance.

But the high-tech industry, Internet users and privacy groups appear finally to have won the debate, arguing that the export rules were simply handing a vast, international market to non-U.S. companies.

People who have been briefed on the White House policy change said the new rules would largely abandon the case-by-case licensing approach that has until now applied to all but the weakest encryption products.

The slow and cumbersome licensing process has made it extremely difficult for U.S. companies like Network Associates and RSA Security to sell their popular computer security products overseas. And for makers of mass-market software, like Microsoft Corp. (Nasdaq:MSFT – news) and IBM Corp., the rules have forced companies to weaken the security in Web browsers, e-mail programs and other products.

Under the new rules, such products with strong encryption features would undergo only a one-time review and then could be sold anywhere in the world except for handful of nations such as Libya and Iraq.

Exporters would have to report who bought the products, such as an overseas distributor, but not who the ultimate end-user was — an impossible requirement for programs sold in retail stores to millions of customers.

The administration’s plan is also expected to ask for $500 million to beef up government computer security and additional funds to help law enforcement agencies deal with encrypted criminal communications.

And the administration plans to ask Congress to pass a law establishing legal standards for when law enforcement agencies can force encryption users to crack open their encrypted data.

There have been moves in Congress to relax the controls, but in July, Attorney General Janet Reno and FBI director Louis Freeh warned that the measures being proposed in Congress would jeopardize the ability of the FBI and police to catch criminals, by making it easier to scramble their communications and make it unreadable to outsiders.

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