White House revives Clipper chip idea

Congressional leaders trying to push through legislation that would loosen the regulation of encryption technology are wrangling with the Clinton administration over an unreleased White House proposal to revive the Clipper chip.

The proposal, which has circulated privately among members of Congress, represents the administration's third attempt to implement a "key escrow" system that would enable the government to unlock encrypted software for intelligence purposes. As it stands, high-powered software encryption is classified as munitions and is illegal to export, but bills in both the House and Senate aim to overturn such limitations.

According to a draft obtained by CNET, the White House is proposing to go ahead and relax export restrictions before the bills are passed, but only under these conditions:
--that the government be allowed to set up a "key escrow" system that will hold decryption keys in escrow by third-party clearinghouses. The clearinghouses could only be set up in countries, however, with which the U.S. has established government-to-government agreements to monitor the use of encryption technology, meaning that technology legal to export to Germany, for example, may not be legal to export to Uganda.
--that the government be allowed to conduct reviews of all proposals to export hardware or software that requires the use of such third-party clearinghouses.
--that the government be allowed to determine case by case if exports are "consistent with U.S. interests."

Washington observers caution that the proposal is a work in progress. "We don't have a reaction yet. It's still in the discussion phase," said a spokesman for Senator Patrick Leahy (D-Vermont), a leading congressional authority on Internet technology.

But some members of Congress believe that the vaguely worded proposal does not offer a compromise on export controls at all.

"We understand that the administration has developed a key escrow encryption proposal and is not at this time willing to ease export restrictions on encryption programs and products which are widely available from domestic and foreign companies and the Internet," reads a letter addressed to the President from a bipartisan group of representatives, including Bob Goodlatte (R-Virginia), the main sponsor of the Security and Freedom Through Encryption Act (SAFE).

Others feel that the language proposing the easing of export controls is too vague and that it would sacrifice too much control to the Clinton White House for a technology critical to the future growth of electronic commerce. "This is an administrative 'solution' and as such it can change as capriciously as it was enacted," said Matt Raymond, spokesman for Senator Conrad Burns (R-Montana), sponsor of the Pro-CODE bill currently in the Senate. "It makes sense that [the Administration] wouldn't want to nail itself down on easing the export restrictions, since the restrictions are the last weapon they have in the battle over encryption."

The key escrow system proposed by the White House, which would give the government access to the decryption keys only with court permission in cases of suspected organized crime and terrorism, has been strongly denounced by privacy advocates as well.

"This proposal puts the government right in the middle" of setting up encryption verification, said a representative of one such advocacy group who requested anonymity. "The price is giving them the private key."

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