White House reverses course; allows overseas encryption sales

White House reverses course; allows overseas encryption sales

By TED BRIDIS

WASHINGTON (September 16, 1999 4:15 p.m. EDT http://www.nandotimes.com) - The White House agreed Thursday to allow U.S. companies to sell the most powerful data-scrambling technology overseas with virtually no restrictions, a concession to America's high-tech industry over law-enforcement and national-security objections.

The policy reversal was a defeat for the Justice Department, which had forcefully argued that criminals and terrorists might use the technology to scramble messages about crimes or deadly plots. On the other hand, the decision should help U.S. companies in overseas competition - and help consumers worldwide guarantee the privacy of their e-mail and online credit-card purchases.

Critics of restrictions on export sales said criminals and terrorists already could buy or download powerful encryption technology made in other countries.

"Those who are going to misuse encryption for criminal purchases aren't going to limit themselves to U.S.-made encryption products," said Ed Gillespie, executive director of Americans for Computer Privacy.

The administration will allow high-tech companies to sell even the most powerful encryption technology overseas to private and commercial customers after a one-time technical review of their products. Companies will still be required to seek permission to sell the scrambling technology to a foreign government or military, and bans will remain on selling to seven terrorist nations: Iran, Iraq, Libya, Syria, Sudan, North Korea and Cuba.

Previously, the administration allowed companies to sell the most powerful scrambling technology only to specific industries overseas; other foreign customers were generally limited to so-called 56-bit encryption products, meaning those with 72-quadrillion unlocking combinations.

"This is a sweeping reform," said Dan Scheinman, senior vice president of legal and government affairs at Cisco Systems Inc. "Imagine you're banking online - you want to make sure those things are safe from a hacker. You buy things, you want to make sure your credit card is secure."

The export limits never directly affected Americans, who are legally free to use encryption technology of any strength. But U.S. companies have been reluctant to develop one version of their technology for domestic use and a weaker overseas version, so they typically sell only the most powerful type that's legal for export, even to Americans.

"Forcing U.S. companies to do business under tight export controls was like asking them to use a black rotary telephone in a cellular, call-waiting world," said Harris Miller, president of the Information Technology Association of America, a trade group.

Critics cited more than 800 products available worldwide with stronger scrambling technology than the United States allowed its companies to sell overseas.

"You can pull it down over the Internet in less than 20 minutes," said Gillespie. "Having Japanese and German and Irish companies be at the forefront of this technology is not in our best interests."

A nonprofit group of researchers demonstrated last summer it can unscramble a 56-bit coded message in just days using a custom-built computer worth less than $250,000.

The White House announcement follows its decision exactly one year ago to relax export restrictions. At the time, Vice President Al Gore promised the administration would reconsider its limits within the year.