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For Immediate Release
(09 June 1999)
Kristin Litterst



New German encryption policy calls Wassenaar Arrangement into doubt

Washington, DC-- In written testimony submitted by Jeff Smith, ACP counsel and former counsel of the CIA, to the House Intelligence Committee, Smith urged members of the committee to support the SAFE Act and cited a new German encryption policy as evidence that the Administration will have difficulty developing an enforceable international regime to control strong encryption.

"ACP strongly endorses enactment of the SAFE Act and the lifting of export restrictions on U.S. made encryption," Smith said. "At the same time, we have a responsibility to assure that our law enforcement and intelligence agencies have the ability to continue to protect our nation. Industry is willing to work with the Administration and Congress to meet the challenges of the next century. However, those challenges will be far greater if they must face a world in which the majority of communications pass over systems that are foreign designed, foreign built, foreign installed and incorporate foreign encryption."

Smith pointed out that the Administration’s efforts to develop a global approach to this issue through the Wassenaar Arrangement will not succeed.

"Wassenaar only has 33 members and does not include encryption-producing countries such as India, South Africa or Israel," Smith said. "The Administration also should recognize that Wassenaar is only as effective as the implementing regulations adopted by the signatory states. Some of those states will promulgate regulations that are less restrictive than those of the United States, thereby providing those nations with a competitive advantage over domestic encryption manufacturers."

As an example, Smith cited the German Cabinet’s announcement on June 2 about a new German policy on encryption.

"They proclaimed an important goal of the new policy is to strengthen the performance of German encryption product manufacturers and enhance their ability to compete internationally," Smith said. "As a consequence, those manufacturers will double their efforts to satisfy the increasing demand for encryption products. The statement also announced the intention to ‘simplify’ the German export control procedure following a review by the Federal Export Office. This highlights the great difficulty that will be faced by the Administration as it tries to develop an enforceable international regime to control strong encryption. We remain deeply troubled by the long-term consequences of the Administration’s policy."

"ACP believes that our current export policy puts at jeopardy our continued global leadership information technology," Smith said. "Strong, high quality encryption products already are widely available from foreign makers. Foreign producers of IT systems are finding that their ability to provide end-to-end systems incorporating stronger encryption than U.S. companies are permitted to export gives them a decided market advantage. We worry that as a result America will lose not only the critical encryption market to foreign companies but also begin to see dramatic reduction in our leadership in the entire IT industry. If that happens, it will be too late to change U.S. policy and too late to preserve U.S. leadership in this vital arena."

For a copy of the German announcement, call Kristin Litterst at 202-625-1329.


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.

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