From: Declan McCullagh <declan@well.com>
Date: Mon, 30 Dec 1996 19:28:23 -0800 (PST)
To: cypherpunks@toad.com
Subject: Re: Crypto reg clarification from Commerce Department
Message-ID: <Pine.sos5.3.91.961230222036.23067H-100000@cp.pathfinder.com>
MIME-Version: 1.0
Content-Type: text/plain


I believe that Kutz is speaking the truth. Keep in mind the paragraph with
which you're concerned is not the meat of what's being amended. That lies
in the next line, Section 736.2(b)(7)(ii), which reads: 

  You may not, without a license from BXA, provide
  certain technical assistance to foreign persons with
  respect to encryption items, as described in
  Sec. 744.9 of the EAR.

"Technical assistance" is still troubling, but not as much as investment
would be. Assistance is aimed at training, and the regulations somewhat
exempt classroom discussions. Of course, the uncertainty and the potential
chilling effects are good reasons to continue with the court challenges. 

-Declan

---

> I just got of the phone with Bruce Kutz, Export Policy Analyst, Office of
> Strategic Trade and Foreign Policy Controls. (202) 482-0092. He seems to be
> the contact person for the new regs.
> 
> I pointed Mr. Kutz to the section that alarmed me:
> 
> Sec. 736.2  General prohibitions and determination of applicability.
>       
>      * * * * *
>       
>          (7) General Prohibition Seven--Support of Certain Activities by
>      U.S. persons--(i) Support of Proliferation Activities (U.S. Person
>      Proliferation Activity). If you are a U.S. Person as that term is
>      defined in Sec. 744.6(c) of the EAR, you may not engage in any
>      activities prohibited by Sec. 744.6 (a) or (b) of the EAR which
>      prohibits the performance, without a license from BXA, of certain
>      financing, contracting, service, support, transportation, freight
>      forwarding, or employment that you know will assist in certain
>      proliferation activities described further in part 744 of the EAR.
>      There are no License Exceptions to this General Prohibition Seven in
>      part 740 of the EAR unless specifically authorized in that part.
> 
> Mr. Kutz seemed surprised. Apparently he had not been aware that this
> section was included in the new crypto regs. He then assured me that
> 
> 1. Proliferation in the context of this paragraph applies only to
> proliferation of
> a) nuclear (bomb) technology
> b) missile technology
> 
> He read to me EAR Sec. 744.6 (a) or (b), which are referred to in the
> paragraph in question. Sec. 744.6 (a) or (b) seems to support this view.
> However, he did not explain to me why the paragraph was included in the
> crypto export regulations when it only applies to nukes and missiles.
> 
> 2. The Department of Commerce has no intention of banning the financing and
> contracting of non-US crypto development.
> 
> 3. Technical assistance to non-US parties requires a license.
> 
> Mr. Kutz encouraged me to make use of the public comment period and ask
> Commerce to clarify the section. Public comments will be accepted until
> February 13, 1997. [Public comment is requested only after the new regs
> took effect...]
> 
> I received the impression that Mr. Kutz genuinely believes that the section
> in question does not apply to crypto. If I was concerned about potentially
> violating the regulations, I would try to get a written statement from
> Commerce that Mr. Kutz's view is indeed correct. As always, IANAL.
> 
> 
> 
> -- Lucky Green <mailto:shamrock@netcom.com> PGP encrypted mail preferred
>    Make your mark in the history of mathematics. Use the spare cycles of
>    your PC/PPC/UNIX box to help find a new prime.
>    http://www.mersenne.org/prime.htm
> 
> 
>