September 17, 1999

White House Eases Export Controls on Encryption

By JERI CLAUSING

ucking pressure from the Justice Department, the F.B.I. and intelligence agencies, the White House Thursday essentially eliminated its complex controls on the export of data-scrambling hardware and software, handing a surprise victory to Congressional, high-technology and privacy groups that have spent years fighting for the change.

House leaders, who had been planning to vote later this month on a bill to overturn the Clinton Administration's policy, said they were elated by the change and would pull their bill back until the Administration could draft final regulations.

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The technology is used to scramble data and computer communications in general, and especially to keep them private on the Internet.

"This is huge," said Representative Bob Goodlatte, a Virginia Republican who, along with Representative Zoe Lofgren, a Democrat who represents the Silicon Valley in California, has been championing legislation to eliminate the encryption export controls.

In a telephone interview, Goodlatte called the Administration's new position "very close" to the intentions of his bill.

"This is a tremendous victory for everybody who has been proposing that the Administration change its export policy on encryption so that we can make it more widely available and U.S. companies can compete overseas," he said.

The change would significantly simplify the Commerce Department's complex and inconsistent licensing requirements for the export of strong data-scrambling technology, and essentially allow United States companies to sell their products abroad after a one-time review. The exceptions would be for products being sold to foreign governments or military establishments. And a prohibition would remain on the export of computer security technology to nations the Unites States labels as terrorist: Iran, Iraq, Libya, Syria, Sudan, North Korea and Cuba.

Despite increasing pressure over the last few years from industry, Congress and privacy groups to lift the controls, the Administration, at the urging of the F.B.I. and intelligence officials, has resisted calls for change. Law enforcement officials have insisted that the widespread availability of strong encryption products would make it harder for them to fight terrorists and drug cartels in the digital age.

Louis J. Freeh, the F.B.I. Director, had been pushing to tie any easing of the export controls to requirements that software and equipment manufacturers develop technology that would give police agencies a back-door key to unscramble encrypted communications when they suspect a crime has been committed.

Law enforcement officials finally lost that argument to the industry and privacy groups, which noted that strong encryption products made in other countries were already widely available. High-technology companies said that export controls were simply giving their competitors overseas an unfair advantage in the global marketplace.

Simplifying the Commerce Department's complex licensing requirements for the export of strong data-scrambling technology.

Privacy advocates also said that the export rules deprived Internet users of the most advanced technologies for keeping their data and communications safe.

As a concession to police agencies, the Administration said it would push for additional money to help law enforcement and national security experts develop new ways to detect and fight crimes in electronic settings.

The Administration also said it would propose legislation to set the standards under which investigators would be able to seek "spare keys" held by third parties.

Alan Davidson, a lawyer for the Center of Democracy and Technology, an online civil liberties group based in Washington, said that proposal would "open a whole new, complex debate -- under what circumstances the Government should have access to our most private data."

The changes were proposed as the House was preparing to vote this month on the so-called Safety and Freedom through Encryption Act proposed by Goodlatte and Ms. Lofgren. They also followed a report from a Presidential advisory panel in June recommending that the Administration eliminate most of the export controls.

"I am surprised that they moved this much this quickly," Goodlatte said. "But we are very pleased that they have done so and that they have come this close. There is no doubt that this announcement is a direct result of the fact that we had 258 co-sponsors."

Representative David Dreier of California, chairman of the House Rules Committee, asserted that the Clinton Administration had been "dilatory in coming to this, but better late than never." He attributed the change in good part to campaign politics, saying, "I think the Administration has finally moved in this instance because of the pressure from we in Congress and Gov. George W. Bush, who is getting overwhelming support in Silicon Valley."

Dreier said that he did not think the F.B.I. and national security officials were wrong in saying encryption controls were necessary, but that he saw little point in applying such controls to mass-market software.

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Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.

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