Europe caves in on U.S. crypto demands (NYT coverage)
Design of Europe's E-Commerce Plan Takes Shape
By BRUNO GIUSSANI Bio
B ONN -- After sharply criticizing the current United States policy
restricting exports of encryption technology, government ministers
from about 30 European nations on Tuesday largely caved in to
lobbying by the Clinton Administration and ended up recommending a
policy amicable to the United States government.
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[INLINE] Countries that ask the users of electronic networks too
much . . . will hurt their own companies. [INLINE]
Martin Bangemann,
European Commission member
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The ministers had convened here with business leaders on Monday to
define a common strategy for fostering electronic commerce in
Europe. The two-day meeting, the Bonn Conference on Global
Information Networks, convened one week after the release of the
Clinton Administration's Framework for Global Electronic Commerce,
which basically called for a market-driven approach to the issue.
But that document ignored encryption issues, while the ministers
gathered here asserted that it was key to any long-term electronic
commerce policy.
Germany's Economy Minister, Guenther Rexrodt, called on governments
to give users easy access to strong encryption procedures, which he
described as "the only means to make sure personal and business
data are not stolen, manipulated or destroyed."
Martin Bangemann, the European commissioner in charge of Industrial
policy and Telecommunications, asserted, "Countries that ask the
users of electronic networks too much -- like leaving a key back
when using crypto schemes -- will hurt their own companies."
Bangemann's remarks were directed not only at the United States but
also at France, whose encryption policy is even tighter.
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Related Article
Encryption Bill Would Restrain Next Generation of the Internet
(June 25, 1997)
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Under current rules, encryption software can be exported by United
States companies only if law enforcement agencies are guaranteed
access to the decrypted message -- much like wiretapping telephone
lines. Although this policy has been widely attacked by business
interests -- and even by some law enforcement officials, the
Judiciary Committee of the United States Senate is scheduled to
open hearings on Wednesday on a bill that would require encryption
keys to be shared with the government.
Among those scheduled to testify on Wednesday is Louis B. Freeh,
the director of the Federal Bureau of Investigation, who is
expected to ask for even tighter restrictions on encryption than
are contemplated in the current Senate bill.
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As is the case in the United States, business interests represented
at this meeting led the battle for unrestricted rights to encrypt
in Europe.
Ron Sommer, chairman of Deutsche Telekom, Germany's national
telephone utility, stated flatly that "businesses will only
participate in electronic commerce if it is absolutely impossible
for third parties to access confidential data."
And Bernard Vergnes, the head of Microsoft Europe, said that the
Framework for Global Electronic Commerce is "fundamentally flawed
and self-defeating" since it fails to address the question of
encryption regulation. Nor was that an oversight: The current
Senate bill, written by Senator John Kerrey, Democrat of Nebraska,
basically codifies the Administration's philosophy on encryption.
"The single biggest trade obstacle is not tariffs but restrictions
on encryption," Vergnes said. "This is a market that need to be
liberalized, quickly."
Yet all these strong positions voiced over the two-day conference
resulted in only a mild final statement that encryption products
must be made available but be "subject to applicable law."
The statement, known as the Bonn Declaration, adds, "If countries
take measures in order to protect legitimate needs of lawful
access, they should be proportionate and effective and respect
applicable provisions relating to privacy." The language reflects a
massive lobbying effort by the American delegation led by Commerce
Secretary William Daley and President Clinton's special adviser on
Internet matters, Ira Magaziner. The United States envoys booked an
entire floor of the hotel where the conference took place and have
spent the last three days lobbying representatives of European
nations to derail a final statement that contradicted Washington's
stance.
Daley recognized that encryption policy is the main gap to be
bridged between the United States and Europe in matters of
electronic commerce, but he confirmed the Clinton Administration's
view that "there must be a balance between the need to protect data
and the necessity to safeguard national security concerns, so that
sophisticated criminals cannot hide behind encryption technology."
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Related Article
U.S. and German Internet Plans Compete for Dominance in Europe
(July 7, 1997)
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The U.S. delegation has been less successful in trying to persuade
the European ministers to endorse the Framework for Global
Electronic Commerce.
Although they agreed that the expansion of electronic commerce must
essentially be "market-led and left to the private initiative" with
a minimal level of intrusion by governments, the European ministers
resisted Clinton's proposal to declare the Internet a global
free-trade zone where, as Daley put it, "commerce and ideas flow
between nations without interruption, interference or
interception."
Another key provision of the 69-point Bonn Declaration, which
outlines the European position on electronic commerce, describes
the liability for unlawful content on the Internet, declaring
access providers not responsible.
Intermediaries like network operators and access providers "should
not be expected to exercise prior control on content" and "should
in general not be responsible for content," except "when they had
knowledge of it and the technical ability to restrict the access"
to the offending data, Rexrodt said in describing this provision.
This wording, directly inspired by Germany's recently adopted
Information and Communication Services law, has been widely
attacked here. Industry sources fear that the vagueness of the
wording will open up a wide field of uncertainty.
A third point, repeatedly stressed by several speakers during the
conference, was that there is no reason for new taxes on the
Internet.
"Electronic commerce needs tax neutrality," said Mario Monti,
European commissioner for Internal Markets, "so that there is no
extra burden on these new activities as compared to more
traditional trade."
Monti dismissed proposals by a European expert committee to
introduce a "bit tax" based on the amount of data transmitted over
the wires.
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Bruno Giussani at eurobytes@nytimes.com covers Europe for CyberTimes
and is the author of our weekly EUROBYTES column.
Copyright 1997 The New York Times Company