Congress Relaxes Export Rules For Data Encryption Systems Technology Critical To Security, Digital Economy ‘

Code makers and code breakers both got a lift from the White House on Thursday as the Clinton administration announced a complete overhaul of export rules for hardware and software that encodes computer data.

Congressional leaders and manufacturers of encryption products hailed what they regarded as a sweeping relaxation of the administration’s export controls, but some law enforcement officials remained wary. National security experts have long worried that criminals, terrorists and spies could escape detection with unbreakable codes.

By the end of the year, the government will scrap the current controls that limit exports to certain countries, Commerce Secretary William Daley said.

Instead, code makers will be able to ship the best available encryption as long as they first provide detailed technical descriptions to the government and then report how and where it was installed.

The only exception would be a continuing ban on encryption exports to seven nations sanctioned as supporters of international terrorism, such as Libya and Iraq.

The new export controls will be coupled with “substantial investments” to protect the Pentagon’s massive presence in cyberspace, Deputy Secretary of Defense John Hamre said at a White House news conference announcing the changes.

He also said more money was needed for research into code breaking by the intelligence community - an effort now led by the National Security Agency in Fort Meade, Md.

Hamre called the changes “a different approach … not a relaxation.”

As part of the package, President Clinton on Thursday sent Congress draft legislation that would create a Technical Support Center at the FBI. The legislation would prohibit court disclosure of the center’s methods for breaking codes used by suspected criminals and terrorists.

Encryption technology is now standard in programs for electronic mail and Internet browsers, and many believe that security is critical to the emerging digital economy because consumers worry about putting personal information online.

“Security has been one of the major obstacles to the widespread use of e-commerce,” said Kelly Blough, director of government relations for Network Associates Inc., a Santa Clara, Calif.-based software maker. “This will go a long way toward solving that problem.”