President Clinton's compromise agreement with the IT industry on exporting encryption products is on the point of collapse. IT suppliers are accusing the US government of reneging on its promises regarding relaxation of export controls.
According to an agreement at the start of October, US companies would be permitted to sell previously banned powerful encryption software for a two-year period, and would then have to ship modified versions that would allow government authorities to obtain the 'keys' needed to descramble encrypted documents.
US IT companies had lobbied hard for a relaxation of existing export legislation, which they claimed left the industry at a competitive disadvantage by forbidding the sale of the most powerful types of encryption products. For its part, the government demanded that law enforcement bodies needed to be able to access encrypted documents which might be used by terrorists and criminals.
The October agreement appeared to break the stalemate between the two sides. But this week the Business Software Alliance, a body representing software companies, wrote to vice president Al Gore arguing that draft regulations based on the agreement suggest that the government is not complying with the compromise terms and will actually make things more difficult for computer companies.
The letter warns Gore: "It appears that significant backtracking has occured since the 1 October announcement and therefore we seriously doubt that the regulations will work."
The Alliance, whose members include IBM, Microsoft and Sun Microsystems, accuses the administration of demanding sensitive commercial information, such as how much money a supplier is spending on developing encrypted software, how it will be marketed and how many people are working on the development, sales or marketing of the product.
It is also concerned that the government has not clarified confusion about whether companies can ship software upgrades to customers who buy during the two year free-for-all period.
An adminstration spokesman said that discussions with the computer industry were still in progress and added that it was hoped that a revised agreement might be arrived at by the end of the year.
A previous plan by the administration to force suppliers to embed a clipper chip in exported technology collapsed in the face of industry objections. The chip would have allowed law enforcement and security agencies to unscramble encrypted information.
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