Statement of State Department's New Export Regulations

United States Department of State
Washington, D.C. 20520

EMBARGOED FOR RELEASE, 3:00 PM EST, FEB. 4, 1994

Statement of
Dr. Martha Harris
Deputy Assistant Secretary of State
for Political-Military Affairs
February 4, 1994

Encryption -- Export Control Reform

The Secretary of State is announcing today measures arising from the Administration's decision to reform export control procedures applicable to products incorporating encryption technology. These reforms are part of the Administration's effort to eliminate unnecessary controls and ensure efficient implementation. The reforms will simplify encryption product export licensing and speed the review of encryption product exports, thus helping U.S. manufacturers to compete more effectively in the global market. While there will be no changes in the types of equipment controlled by the Munitions List, we are announcing measures to expedite licensing.

Last year the President announced an initiative to encourage U.S. manufacturers and users of encryption to take advantage of a government technology (the key-escrow chip) that provides excellent security while ensuring that the Government has a means to decode the encryption when lawfully authorized, such as when executing a court-authorized warrant in connection with a criminal investigation. At the time he announced this initiative, the President directed a comprehensive review of U.S. policy regarding domestic use and export of encryption technology. The reforms we are announcing today result from that review.

The President has determined that vital U.S. national security and law enforcement interests compel maintaining appropriate control of encryption. Still, there is much that can be done to reform existing controls to ensure that they are efficiently implemented and to maintain U.S. leadership in the world market for encryption technology. Accordingly, the President has asked the Secretary of State to take immediate action to implement a number of procedural reforms. The reforms are:

• License Reform: Under new licensing arrangements, encryption manufacturers will be able to ship their products from the United States directly to customers within approved regions without obtaining individual licenses for each end user. This will improve the ability of our manufacturers to provide expedited delivery of products, and to reduce shipping and tracking costs. It should also reduce the number of individual license requests, especially for small businesses that cannot afford international distributors.
• Rapid review of export license applications: A significant number of encryption export license applications can be reviewed more quickly. For such exports, we have set a license turnaround goal of two working days.
• Personal use exemption: We will no longer require that U.S. citizens obtain an export license prior to taking encryption products out of the U.S. temporarily for their own personal use. In the past, this requirement caused delays and inconvenience for business travellers.
• Allow exports of key-escrow encryption: After initial review, key-escrow encryption products may now be exported to most end users. Additionally, key-escrow products will qualify for special licensing arrangements.

These reforms should have the effect of minimizing the impact of export controls on U.S. industry. The Department of State will take all appropriate actions to ensure that these reforms are implemented as quickly as possible. The Secretary of State asks that encryption product manufacturers evaluate the impact of these reforms over the next year and provide feedback both on how the reforms have worked out and on recommendations for additional procedural reforms.

The contact point for further information on these reforms is Rose Biancaniello, Office of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State, (703) 875-6644.

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