Clinton does dramatic about-face on encryption exports

Over the strong opposition of his own Attorney General,

President Bill Clinton has proposed sweeping reforms in the area of

restrictions on the exportability of computer data encryption products and

technology. After stubbornly resisting any effort at relaxing encryption

export laws for seven years, Clinton proposed to do away with virtually

all export restrictions, even on the strongest forms of data encryption.

The move is generally seen as a huge concession to the high-tech

industry and a boost to the election campaign of vice president Al Gore

who is facing an uphill battle against popular Texas governor George Bush.

But Attorney General Janet Reno blasted the move, saying the new policy

"will result in greater availability of encryption to criminals and

terrorists." Industry officials, however, couldn’t be happier.

"This is a great day. It is the beginning of the global Internet

economy," said Cisco Systems senior vice president Don Scheinman.

Added Network Associates’ government affairs director Kelly Blough,

"This is tremendous news that will allow us for the first time to

export all of our encryption products to virtually all of our

customers." Under Clinton’s proposal, companies will no longer need

to obtain an export license for every encryption-based product they sell

to a non-U.S. customer. All they need to do it submit the product for

review to the U.S.

Commerce Department. The policy will apply to all encryption products,

including state-of-the-art 128-bit strong encryption technology. However,

the new guidelines only apply to products classified as "retail"products.

But the Clinton plan didn’t detail what it defines as a retail product.

Clinton’s new plan includes compensation for U.S. security agencies

and the FBI for the greater task they face in working against terrorists,

drug traffickers, and organized crime groups that use data encryption.

Clinton will ask the U.S. Congress to make $500 million in new funds

available to the National Security Agency and $80 million to the FBI for

new computers that will help them crack encryption codes.

Industry supporters said that with the new regulations, the industry

can work towards establishing new encryption industry standards that can

be incorporated into hardware and software products from manufacturers

from around the world. The new regulations are also expected to touch off

a boom in encryption product sales, which could reach $20 billion by 2002.

Just one year ago, Gore promised to rework the government’s encryption

policies. This week’s announcement reflects almost word-for-word the

report Gore delivered.

Industry and political observers say Clinton and Gore clearly tried to

move just ahead of events that would have doomed existing export

regulations anyway. In May, a federal court ruled that export restrictions

violated U.S. constitutional law. The U.S. Congress has also been moving

quickly on several bills to drastically alter encryption export

restrictions. And the mounting pressure from industry lobbying groups was

starting to hinder the efforts by the Democratic party to win back the

Congress and retain the White House in the 2000 election.

Perhaps, most ironic in the dramatic about-face in the Clinton

Administration’s policy was the endorsement for the new program by the

Pentagon, arguing that it will be among the biggest beneficiaries of

widely available data encryption. "The national security

establishment, the Department of Defense, and the intelligence community

strongly support this strategy. We are the single largest entity that

operates in Cyberspace. We are just as vulnerable in Cyberspace as anyone

and we need the kind of protection that comes with strong

encryption," said Deputy Secretary of Defense John Hamre.