September 16, 1999

STATEMENT BY THE PRESS SECRETARY

                              THE WHITE HOUSE

                       Office of the Press Secretary
___________________________________________________________________________
                             ________________
For Immediate Release
September 16, 1999


                     STATEMENT BY THE PRESS SECRETARY

            Administration Announces New Approach to Encryption

     One year ago today, Vice President Gore announced updates to the
Administration?s encryption policy to serve the full range of national
interests: promoting electronic commerce, supporting law enforcement and
national security, and protecting privacy.  The announcement permitted the
export of strong encryption to protect sensitive information in the
financial, health, medical, and electronic commerce sectors.  It also
included support for the continued ability of the nation?s law enforcement
community to access, under strictly defined legal procedures, the plain
text of criminally related communications and stored information.  At that
time the Administration committed to reviewing its policy in one year.
Today, the Administration announces the results of that review, conducted
in consultation with industry and privacy groups and the Congress.

     The strategy announced today continues to maintain the balance among
privacy, commercial interests, public safety and national security.  This
approach is comprised of three elements ? information security and privacy,
a new framework for export controls, and updated tools for law enforcement.
First, the strategy recognizes that sensitive electronic information ?
government, commercial, and privacy information -- requires strong
protection from unauthorized and unlawful access if the great promise of
the electronic age is to be realized.  Second, it protects vital national
security interests through an updated framework for encryption export
controls that also recognizes growing demands in the global marketplace for
strong encryption products.   Finally, it is designed to assure that, as
strong encryption proliferates, law enforcement remains able to protect
America and Americans in the physical world and in cyberspace.

     With respect to encryption export controls, the strategy announced
today rests on three principles: a one-time technical review of encryption
products in advance of sale, a streamlined post-export reporting system,
and a process that permits the government to review the exports of strong
encryption to foreign government and military organizations and to nations
of concern.  Consistent with these principles, the government will
significantly update and simplify export controls on encryption.

     The updated guidelines will allow U.S. companies new opportunities to
sell their products to most end users in global markets.  Under this
policy:

?    Any encryption commodity or software of any key length may be exported
     under license exception (i.e., without a license), after a technical
     review, to individuals, commercial firms, and other non-government end
     users in any country except for the seven state supporters of
     terrorism.

?    Any retail encryption commodities and software of any key length may
     be exported under license exception, after a technical review, to any
     end user in any country, except for the seven state supporters of
     terrorism.

?    Streamlined post-export reporting will provide government with an
     understanding of where strong encryption is being exported, while also
     reflecting industry business models and distribution channels.

?    Sector definitions and country lists are eliminated.

     The Administration intends to codify this new policy in export
regulations by
December 15, 1999, following consultations on the details with affected
stakeholders.

   In support of public safety, the President is today transmitting to the
Congress legislation that seeks to assure that law enforcement has the
legal tools, personnel, and equipment necessary to investigate crime in an
encrypted world.  Specifically, the Cyberspace Electronic Security Act of
1999 would:

?  Ensure that law enforcement maintains its ability to access decryption
   information stored with third parties, while protecting such information
   from inappropriate release.

?  Authorize $80 million over four years for the FBI?s Technical Support
   Center, which will serve as a centralized technical resource for
   Federal, State, and local law enforcement in responding to the
   increasing use of encryption by criminals.

?  Protect sensitive investigative techniques and industry trade secrets
   from unnecessary disclosure in litigation or criminal trials involving
   encryption, consistent with fully protecting defendants? rights to a
   fair trial.

     In contrast to an early draft version of the bill, the
Administration?s legislation does not provide new authorities for search
warrants for encryption keys without contemporaneous notice to the subject.
The bill does not regulate the domestic development, use and sale of
encryption.  Americans will remain free to use any encryption system
domestically.

     The Administration looks forward to continuing to work with the
Congress, industry, and privacy and law enforcement communities to ensure a
balanced approach to this issue.


                                   # # #