From: kalliste@aci.net (J. Orlin Grabbe)
Date: Fri, 27 Dec 1996 18:04:12 -0800 (PST)
To: cypherpunks@toad.com
Subject: New Crypto Export Rules Monday
Message-ID: <32C47DE7.6AD8@aci.net>
MIME-Version: 1.0
Content-Type: text/plain



27-DEC-1996 18:59
U.S. export encryption rules to be published Monday 
 
    By Aaron Pressman 

    WASHINGTON, Dec 27 (Reuter) - The Commerce 
Department will issue final rules on Dec. 30 to implement 
its new policy on export of computer encoding products, 
but the proposal is unlikely to mollify the software 
industry and privacy advocates who objected to a draft 
version. 
 
    Some changes were made in the final rules, available 
Friday at a government printing office, from the earlier 
draft. But the bulk of the proposal remains the same, 
including portions strongly criticized by the software 
industry that applied to real-time communications. 

    Commerce undersecretary William Reinsch had said 
two weeks ago that the draft rules would be modestly 
revised, but warned that some objections could not 
be addressed. 

    Under the previous rules dating from the Cold war, the 
administration severely limited the export of products 
containing encryption, programs that use mathematical 
formulas to scramble information and render it unreadable 
without a password or software "key." 

    In the past, products could be exported using "keys" as 
long as 40 digital bits, a string of forty ones and zeros. 
But as the speed of computers has grown, 40-bit keys 
have become easy to crack and longer keys have come 
into general use. 

    At the same time, with the growth of the Internet and 
online commerce, demand for encryption-capable 
products is growing worldwide. Coded messages can 
keep a business' e-mail confidential or protect a 
consumer's credit card number sent on the Internet. 

    The Commerce Department rules were intended as a 
compromise, allowing U.S. companies to compete in the 
encryption market while protecting the interests of 
law enforcement officials. 

    The policy relies on so-called key recovery features 
which allow government officials to decode encrypted 
messages when acting under proper legal authority. 
 
    Under the policy to be issued Monday, products 
containing key recovery features will be eligible for 
export after a one-time review. 

    Software firms had hoped the key recovery exception 
would only apply to stored data, like a document on a 
hard drive. But the final rules, like the draft rules, also 
require key recovery for real-time data transamission such 
as coded phone calls. 

    Non-key recovery software with keys of up to 56 bits 
will be exportable under six-month, renewable licenses 
until the end of 1998, but only if the manufacturer 
commits to producing software with key recovery by then. 

    Some companies had complained that the government 
was asking for too much information about their future 
plans, but the final rules still require submission of 
detailed plans and committments. 

    All other encryption products, such as state-of-the art 
128-bit software without key recovery features, would 
continue to be treated as munitions. Such products include 
ordinary e-mail programs and even the recently 
introduced set-top box for surfing the Internet with a 
television. 

    The rules deleted a draft provision allowing keys to be 
stored with a recovery agent located outside of the United 
States. 

    The final rules also made clear that an applicant's 
public support of the administration's policy would not be 
a factor in export license decisions. Rather, helping build 
the necessary infrastructure would be a factor, the final 
rules said. 

    A criteria listed as "public support for a key 
management infrastructure," was changed to "or other 
support for the key management infrastructure."

http://www.aci.net/kalliste/