The Encryption Alert

To learn more, please visit our web site at w w w. c o m p u t e r p r i v a c y. o rg A vote in support of the SAFE Act is a vote to protect America’s strategic information dominance and national security . As we move into the new millennium, information technology will play an increasingly important role in the way we operate and protect our national infrastructure and safeguard the public. The United States needs a clear and realistic encryption policy—as proposed in the SAFE Act—to provide American companies with a level playing field in the global marketplace and assure that industry is able to develop the products needed to meet our national objectives. Current encryption export restrictions are a dangerous exercise in futility. Congress must act now and pass the SAFE Act! Sue Richard or Kristin Litterst call: 202-625-1256 “Protegrity, a Swedish firm invading the U.S. market by setting up its headquarters in Stamford, Connecticut, is making this market its own. One reason it can beat out U.S. competition in landing business from firms that span the globe: It can run around U.S. export restrictions on encryption software. Since it’s a foreign-born business, it can sell abroad without running afoul of U.S. export laws. It ships software from Sweden.” –Nikhil Hutheesing, Forbes Magazine, August 23, 1999 (article entitled Data Lock, An encryption firm finds the key to success: not being born in the U.S.A.) contact info : issue two, 1999 ENCRYPTIONARY: “Wassenaar Arrangement” The Wassenaar Arrangement is an agreement between the United States and 32 other nations to impose certain export controls on encryption. With only 33 signatories—which do not include such encryptionproducing nations as Israel, South Africa and India– it does little to curb the international availability of strong encryption. While hightechnology firms in non-Wassenaar countries have an unfair advantage over U.S.-manufacturers, the Wassenaar Arrangement is only as effective as the implementing regulations adopted by signatory countries. A number of those nations are now liberalizing encryption regulations to make themselves more attractive to high-tech investors. The bottom line: The Wassenaar Arrangement is a toothless tiger—unenforceable and unfair to U.S. high-tech companies. The Encryption Alert BACKGROUND FOR THE PENDING HOUSE VOTE ON H.R. 850, THE SAFE ACT As U.S. high-tech manufacturers are hamstrung by short-sighted encryption export policies, the international marketplace thrives. America’s leadership position in this critical high-tech sector gradually erodes as other countries adapt to the realities of the Information Age. On September 1, Germany (a Wassenaar signatory) dramatically reduced encryption export restrictions, making the export of robust mass-market products possible after a one-time review. According to Economics Minister Siegmar Mosdorf, there will be no restriction on key lengths. The new regulation generally applies world-wide, with the exception of a few countries, if goods are not intended for a “sensitive use”–for example military uses or for weapons of mass destruction. Last September, the President’s Export Council Subcommittee on Encryption (PECSENC) Working Group on International Issues issued a report concluding that “the adverse impact of U.S. controls is palpable.” The report went on to discuss Brokat, a German company, stating: “Brokat’s specialty is Internet banking and electronic commerce, but it broke into that business on the strength of being able to offer stronger encryption than German banks could obtain in Netscape or Microsoft browsers. It’s now a major player in this niche… Indeed it foreshadows a weakening of the U.S. as a leader in electronic commerce generally.” SEPTEMBER 14 AMERICA’S HIGH-TECH COMPETITORS POSE SERIOUS THREAT TO OUR NATION’S LEADERSHIP POSITION IN GLOBAL MARKETPLACE “Proliferation of American encryption products is essential if we are to preserve the integrity of our national security infrastructure in the Information Age. If U.S. encryption continues to be restricted, however, foreign products will soon dominate the worldwide market, hindering our ability to gather intelligence against terrorists and criminals.” –July 19, 1999 bi-partisan “Dear Colleague” letter from ten former prosecutors now serving in the House Americans for Computer Privacy (ACP) is a broad-based coalition that brings together more than 100 companies and 40 associations representing financial services, manufacturing, telecommunications, high-tech and transportation, as well as law enforcement, civil-liberty, pro-family and taxpayer groups. ACP supports policies that advance the rights of American citizens to encode information without fear of government intrusion, and advocates the lifting of current export restrictions on U.S.-made encryption.