(c) 1995 Copyright Nando.net
(c) 1995 Bloomberg
NEW YORK (Nov 1, 1995 - 01:42 EST) -- A group of 13 large U.S.
technology companies will publish a study next month that urges the
government to change computer-coding export laws which the firms say
hinder overseas sales.
The group, known as the Computer Systems Policy Project, includes
International Business Machines Corp., the world's largest computer
maker; Digital Equipment Corp. and Hewlett-Packard Co.
The study says that laws restricting exports of hard-to-break codes
for software and computers prevent U.S. companies from selling more of
their products in Europe and Asia, where more complicated encryption
is standard, group officials said.
More than 200 computer security programs, made by companies such as
Fujitsu Ltd and Siemens AG, are available in 21 countries. Security
products are helping overseas technology companies gain ground in the
worldwide $30 billion software market, U.S. corporate officials said.
"The tables are shifting dramatically in favor of European and
Japanese companies," said Bill Haggerty, whose Washington, D.C.-based
consulting firm, The Management Advisory Group, conducted the study.
"We hope this study will be the missing link that will shift the
debate to economic security from national security."
The U.S. government says it restricts export of complicated codes
because law enforcement agencies would be unable to stop terrorists or
spies from using encryption to send information worldwide. Encryption
scrambles data, such as credit card numbers or files, into code that
makes the information hard to decipher when it is sent across networks
or the Internet, the global computer network.
Officials at the U.S. Bureau of Export Administration, a part of the
Commerce Department, weren't available for comment.
U.S. software and computer companies, which do more than half of their
business overseas, are rushing to connect computer users to networks
and the Internet. The move has increased demand for security, which
puts U.S. companies at a competitive disadvantage.
"The restrictions are counter-intuitive to what is good for business,"
said Bob Gargus, chief executive at Tandem Computers Inc.'s Atalla
unit, which makes security products. "We can't export things that we
know our competition is offering."
The study shows that European and Japanese competitors are developing
easy-to-use products that contain strong security codes, eliminating
the need for additional products that add coding, Haggerty said.
The study surveyed more than 100 officials from 70 technology
companies, about 35 percent of which were based overseas. The
officials were asked why they needed security, whether demand for
security would increase, whether they buy products from the U.S. and
what effect coding export restrictions have on their business.
The study includes statistics that, for the first time, quantify the
effect the restrictions have on U.S. sales, Haggerty said. He declined
to give more-specific information before the study is released.
The report will recommend that greater action be taken on exporting of
codes than was proposed by the Clinton administration last month.
After more than a year of review, the administration proposed easing
laws to allow software companies to export codes with as much as 64
bits of information as long as the "keys" to the code were made
available on demand to law-enforcement agencies. Companies can now
export 40-bit code, without the provision about access to keys.
The proposals, which government and corporate officials are still
reviewing, are unacceptable to the Computer Systems Policy Project and
other groups that represent the computer security industry.
The 64-bit limit on a code's length will quickly become outmoded as
computers become stronger and better able to break the codes, Haggerty
said.
In addition, the government hasn't said under what circumstances
law-enforcement agencies would be given access to the codes' keys or
how escrow agents who hold the code keys would be chosen.
Other governments don't mandate that key codes be kept in escrow, U.S.
technology experts said. Overseas customers of U.S. technology
companies are concerned that the Clinton proposal will allow the
American government to look at their data.
"You can't just dictate policy for other countries," said Jeff
Rulifson, director of technology development at Sun Microsystems Inc.,
which does 52 percent of its sales overseas. "Foreign companies are
worried about back-door espionage."
The Computer Systems Policy Project wants the government to allow
companies to retain control of the coding keys, said Executive
Director Ken Kay.
Overseas companies can apply for exemptions to receive stronger
encryption in U.S. products, though the process is long and many
applicants are rejected, security experts said. The number of export
licenses issued by the Commerce Department fell to 10,000 last year
from 25,000 in 1993 and is expected be little changed this year.
Atalla said the restrictions already have cut its potential overseas
revenue by 25 percent.
"There is a tremendous amount of potential overseas," Atalla's Gargus
said. "These rules are holding us back from major projects that other
companies are getting by default."