US vice president Al Gore and other top government officials announced a new encryption policy on Thursday to ease restrictions on the overseas sale of high level encryption products.
The decision, which should help US companies to compete overseas, was a defeat for the US Department of Justice, which had argued that criminals and terrorists might use the technology to scramble messages about crimes or deadly plots.
But the Information Association of America (ITAA) dubbed the announcement on export control liberalisation as "a significant victory for the IT industry. The new policy frees 56bit products from export controls following a one time review, and it permits companies to use encryption programs of unlimited strength for communications between most countries."
The legislation, which is due to go into effect this autumn, stated: "Once the products are ready for market they can be exported, with any bit length, without a license, worldwide (except to socalled "terrorist" nations) after a one time review."
The new rules will also extend to electronic commerce businesses in 45 administration approved countries, which will be permitted to use US encryption products of any key length to protect their online transactions.
But the White House will still require companies to seek permission to sell the scrambling technology to a foreign government or army, and will maintain a ban on selling to the seven "terrorist" nations of Iran, Iraq, Libya, Syria, Sudan, North Korea and Cuba.
The administration will also propose legislation to Congress to set up a system whereby law enforcement officials can go to court to get "keys" from third parties to open encrypted messages. And it plans to set aside $80 million over the next four years to help the FBI improve its ability to crack codes.
Dan Scheinman, Cisco Systems' senior vice president of legal and government affairs, said: "This is a sweeping reform. Based on our current understanding, the industry can now compete on an equal footing with our foreign competitors."
The move is also expected to provide a financial boost to high tech encryption companies such as Network Associates and RSA Securities.
Kelly Huebner Blough, Network Associates' government relations director, said: "This is tremendous news that will allow us for the first time to export all of our security products to virtually all our customers around the world."
Officials from the FBI, the National Security Agency and the CIA joined Gore to support the policy.
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