Governments Relax Encryption Regulations

The worldwide growth of electronic commerce and the attendant need for privacy and Internet security have convinced governments to step out of the way of encryption development, EPIC said today in a report entitled "Cryptography and Liberty 2000: An International Survey of Encryption Policy."

"The rise of electronic commerce and the recognition of the need to protect privacy and increase the security of the Internet has resulted in the development of policies that favor the spread of strong encryption worldwide," the report says. "Governments attempting to develop e-commerce are recognizing that encryption is an essential tool for transactions and are reversing decades-old restrictions based on national security concerns."

One of the most important factors promoting the free flow of encryption technology was the Clinton Administration's loosening of export controls on mass-market encryption software in January.

Before the new regulations, companies were forced to obtain a license from the U.S. government to export encryption products higher than 56 bits in key length.

"Export controls remain the most powerful obstacle to the development and free flow of encryption, but they are steadily being relaxed because of the Internet and demands for secure electronic commerce," the report says. "The decision by the United States to liberalize its own encryption export regulations in January 2000 has had the effect of weakening the position of those who favor strict controls on cryptography."

Troublesome Proposals

The study also cautions that there are proposals pending to restrict free flow of encryption technology. "We remain concerned about proposals pending in several countries that would give public agencies greater power to demand access to encrypted keys or plain text," says David Sobel, EPIC general counsel. The countries include the U.K., India, Belgium, and the Netherlands.

Several less developed countries maintain more widespread restrictions on encryption, including Belarus, Burma, China, Kazakhstan, Pakistan, Russia, Tunisia, and Vietnam, the report says.

Many of these countries also restrict use of the Internet, although often the policy is not enforced, according to the report. For example, the Chinese government requires companies to disclose their security systems, but few companies are complying. Such government policies will hold back economic and technological development, the report warns.

"The rapid growth of worldwide electronic commerce and the lack of international consensus on restrictions will further isolate these countries and make it difficult for them to continue these policies," the report says. "The wide availability of encryption on the Internet will make it impossible for them to enforce the laws in any meaningful way without imposing massive surveillance and censorship."

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