From: tcmay@got.net (Timothy C. May)
Date: Mon, 11 Mar 1996 13:59:43 +0800
To: cypherpunks@toad.com
Subject: Leahy Bill a Move to Slow Crypto Exports as Much as Possible
Message-ID: <ad68e730150210046ef9@[205.199.118.202]>
MIME-Version: 1.0
Content-Type: text/plain


At 1:42 AM 3/11/96, E. ALLEN SMITH wrote:
>From:   IN%"PADGETT@hobbes.orl.mmc.com"  "A. Padgett Peterson P.E.
>Information Security" 10-MAR-1996 01:15:57.84
>
>>Thought the gotcha was down in the part about the Secretary of Commerce.
>>My reading is that the secretary will still be required to grant
>>approval for commercial export. Is past the part about no regulation
>>inside the US (which is true now - still would be nice to see a "Congress
>>shall make no law..."). The puzzler is the requirement that a comperable
>>foreign product must exist before permission to export will be granted.
>
>>Will this be like "comparable product" price matching in discount houses ?
>>Somehow there never is one...
>
>        Quite. A better format would be "as hard or harder for the NSA to
>decrypt," given the publically stated purpose for ITAR.

I think this is showing that one of the intended purposes of the Leahy bill
is to slow down exports of crypto for as long as possible, and then only to
grant export licenses when competition from abroad threatens to undo the
effects of the stalling process anyway.

The clause reads to me as: "We'll delay approval for export of your
software for as long as possible, and only grant approval when you face
serious competition from abroad, by which time we'll have accomplished our
goals anyway."

It seems that the SPA estimates of $60B are being responded to, that the
Leahy bill addresses the potential competitive losses to other products
only. (And of course the $60B, though probably inflated, includes more than
just lost sales because a vendor can't ship with strong encryption.)

The effect of the clause is to make truly novel new applications--including
many of the things that interest us--stallable for an indefinite period.
Then, when the Italian or Taiwanese version appears, if ever, the export
license will have to be granted.

If this is a correct reading of the indended use, then this is another
reason not to cheer about the Leahy bill. It would _not_ make crypto freely
exportable. But by claiming it has loosened up crypto exports (which it
will for certain corporate products), it will have taken the wind out of
the sails of those who wanted relaxed exports. Those who can buy lobbyists
and who are competing in fairly "standardized" niches, where competitors
exist, will probably be able to get export licenses. Those in
quasi-underground niches, trying to sell things that have not been built
before, will likely face a stone wall.

--Tim May

Boycott "Big Brother Inside" software!
We got computers, we're tapping phone lines, we know that that ain't allowed.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
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"National borders aren't even speed bumps on the information superhighway."