White House, High-Tech Industry Align On Encryption

The White House agreed Thursday, September 16, 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 move 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. ""This is going to be a severe blow to national security interests, and it is going to hurt law enforcement,"" said Stewart Baker, former general counsel to the National Security Agency.Once the realm of spies and generals, encryption has become an increasingly critical tool for securing e-commerce and global communications over the Internet. Until now, the White House has tilted its export policy toward the needs of law enforcement and national security agencies, which fear strong encryption could be used by rogue nations and criminals to thwart U.S. surveillance. But the high-technology industry, Internet users, and privacy groups appear finally to have won the debate, arguing that the export rules are simply handing a vast, international market to non-U.S. companies.Industry officials welcome the change, which has been a major lobbying priority for years. ""It speaks very highly to their ability to see the writing on the wall and do exactly what they needed to do,"" said Lauren Hall, chief technology officer for the Software and Information Industry Association.The slow and cumbersome licensing process has made it extremely difficult for U.S. companies such as Network Associates and RSA Security to sell their popular computer security products overseas. And for makers of mass-market software, such as Microsoft and IBM, the rules have forced companies to weaken the security in Web browsers, email programs, and other products. Under the new rules, such products with strong encryption features will undergo only a one-time review and then can be sold anywhere in the world--except to a handful of nations such as Libya and Iraq. Exporters will have to report who bought the products, such as an overseas distributor, but not who the ultimate end-user is- an impossible requirement for programs sold in retail stores to millions of customers. Even as the new policy was announced, Attorney General Janet Reno said at the White House, ""In stopping a terrorist attack or seeking to recover a kidnapped child, encountering encryption might mean the difference between success and catastrophic failure."" She said the policy ""will mean that more terrorists and criminals will use encryption."" To help law enforcement, the White House will urge Congress to give the FBI $80 million over four years to develop techniques to break messages scrambled by terrorists. 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. (AP)Source: Hollywood Reporter and Reuters