SPA Cites Flaws in Clinton Administration Crypto Policy

Expresses Continued Disappointment with Key Escrow Scheme

February 4, 1994 (Washington, DC)--The Software Publishers Association
(SPA) reacted with disappointment to the Clinton Administration's
announcement today that it will go ahead with the cryptography proposal
that it announced last April.

In its announcement, the Administration said that it would proceed with the
Escrowed Encryption Standard, which offers what the administration claims
is strong encryption in the Skipjack algorithm embedded on the so-called
Clipper and Capstone chips. The keys to unlock the codes on the chips will
be held in escrow by the Department of the Treasury and the National
Institute of Standards and Technology. The announcement also detailed the
long-awaited procedures for law enforcement to follow to obtain the keys
from the escrow agents to execute wiretaps.

"We are very disappointed that the administration is going ahead with this
scheme," said SPA Executive Director Ken Wasch. "We have said from the
outset that the key escrow system is inherently and tragically flawed, it
won't work, and it creates more problems than it hopes to solve."

SPA has argued that use of the key escrow devices must be voluntary, as the
Administration has stated they would be. The tragic flaw of the key escrow
scheme is that if use is voluntary, no thinking criminal will use a system
to which the U.S. government holds the keys. Despite the worthy goal of
reconciling the needs of law enforcement with the privacy rights of
corporations and businesses, it is hard to see how the system could even
minimally meet law enforcement's needs.

The administration also announced that the Clipper Chip would be exportable
with a license. SPA has argued all along that users prefer software
encryption because it is cheaper and easier to use, and has advocated
liberalization of export controls on mass market software with encryption
capabilities. Moreover, the scheme is unworkable because it is unlikely
that any foreign entity would use encryption to which the U.S. government
holds the keys.

The administration announced streamlined procedures for some encryption
products, but made no change to the policy of restricting exports of
products employing the Data Encryption Standard (DES) algorithm.

"Now, more than ever, we need to relax the export controls on software with
encryption capabilities," said SPA Government Affairs Representative
Douglas Miller. "Our research has shown that foreign competitors are
racing to meet the growing demand for encryption with strong DES-based
products, and are seizing markets that U.S. firms can't get into because
of export controls. Allowing the exportability of the Clipper and Capstone
chips will not help. The Key Escrow chips will fall flat in foreign
markets."

Miller said that the SPA will continue to support legislation introduced by
Rep. Maria Cantwell (D-WA) that would make exports of software with
encryption capabilities controlled by the Secretary of Commerce as
commercial items and thus exportable.

SPA is the principal trade association for the PC software industry. Since
1984 it has grown to over 1,000 members representing the leading
developers in the business, consumer, and education markets.

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756

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