THE WHITE HOUSE CONTACT: 202 156-7035 OFFlCE OF THE PRESS SECRETARY EMBARGOED UNTIL 3 PM (EST) FRIDAY, February 4, 1994 STATEMENT OF THE PRESS SECRETARY Last April, the Administration announced a comprehensive interagency review of encryption technology, to be overseen by the National Security Council. Today, the Administration is taking a number of steps to implement the recommendations resulting from that review. Advanced encryption technology offers individuals and businesses an inexpensive and easy way to encode data and telephone conversations. Unfortunately, the same encryption technology that can help Americans protect business secrets and personal privacy can also be used by terrorists, drug dealers, and other criminals. In the past, Federal policies on encryption have reflected primarily the needs of law enforcement and national security. The Clinton Administration has sought to balance these needs with the needs of businesses and individuals for security and privacy. That is why, today the National Institute of Standards ant Technology (NIST) is committing to ensure a royalty-free, public-domain Digital Signature Standard. Over many years, NIST has been developing digital signature technology that would provide a way to verify the author and sender of an electronic message. Such technology will be critical for a wide range of business applications for the National Information Infrastructure. A digital signature standard will enable individuals to transact business electronically rather than having to exchange signed paper contracts. The Administration has determined that such technology should not be subject to private royalty payments, and it will be taking steps to ensure that royalties are not required for use of a digital signature. Had digital signatures been in widespread use, the recent security problems with the Intemet would have been avoided. Last April, the Administration released the Key Escrow chip (also known as the "Clipper Chip") that would provide Americans with secure telecommunications without compromising the ability of law enforcement agencies to carry out legally authorized wiretaps. Today, the Department of Commerce and the Department of Justice are taking steps to enable the use of such technology both in the U.S. and overseas. At the same time, the Administration is announcing its intent to work with industry to develop other key escrow products that might better meet the needs of individuals and industry, particularly the American computer and telecommunications industry. Specific steps being announced today include: - Approval by the Commerce Secretary of the Escrowed Encryption Standard (EES) as a voluntary Federal Informahon Processing Standard, which will enable govemment gencies to purchase the Key Escrow chip for use with telephones nd modems. The department's National Institute of Standards and Technology (NIST) will publish the standard. - Publication by the Department of Justice of procedurs for the release of escrowed keys and the announcement of NIST and the Automated Services Division of the Treasury Department as the escrow agents that will store the keys needed for decryption of communications using the Key Escrow chip. Nothing in these procedures will diminish tne existing legal and procedural requirements that protect Americans from unauthorized wiretaps. - New procedures to allow export of products containing the Key Escrow chip to most countries. In addition, the Department of State will streamline export licensing procedures for encryption products that can be exported under current export regulations in order to help American companies sell their products overseas. In the past, it could take weeks for a company to obtain an export license for encryption products, and each shipment might require a separate license. The new procedures announced today will substantially reduce administrative delays and paperwork for encryption exports. To implement the Administration's encryption policy, an interagency Working Group on Encryption and Telecommunications has been established. It will be chaired by the White House Office of Science and Technology Policy and the National Security Council and will include representatives of the Departments of Commerce, Justice, State, and Treasury as well as the FBI, the National Security Agency, the Office of Management and Budget, and the National Economic Council. This group will work with industry and public-interest groups to develop new encryption technologies and to review and refine Administration policies regarding encryption, as needed. The Administration is expanding its efforts to work with industry to improve on the Key Escrow chip, to develop key-escrow software, and to examine alternatives to the Key Escrow chip. NIST will lead these efforts and will request additional staff and resources for this purpose. We understand that many in industry would like to see all encryption products exportable. However, if encryption technology is made freely available worldwide, it would no doubt be usod extensively by terrorists, drug dealers, and other criminals to harm Americans both in the U.S. and abroad. For this reason, the Administration will continue to restrict export of the most sophisticated encryption devices, both to preserve our own foreign intelligence gathering capability and because of the concerns of our allies who fear that strong encryption technology would inhibit their law enforcement capabilities. At the same time, the Administration understands the benefits that encryption and related technologies can provide to users of computers and telecommunications networks. Indeed, many of the applications of the evolving National Information Infrastructure will require some form of encryption. That is why the Administration plans to work more closely with the private sector to develop new forms of encryption that can protect privacy and corporate secrets without undermining the ability of law-enforcement agencies to conduct legally authorized wiretaps. That is also why the Administration is committed to make available free of charge a Digital Signature Standard. The Administration believes that the steps being announced today will help provide Americans with the telecommunications security they need without compromising the capability of law enforcement agencies and national intelligence agencies. Today, any American can purchase and use any type of encryption product. The Administration does not intend to change that policy. Nor do we have any intention of restrictiog domestic encryption or mandating the use of a particular technology.