CommerceNet Urges Government to Ease Export Restrictions on Encryption Products; Consortium's New White Paper Articulates Position on the Export of Cryptography-Based Products.

MENLO PARK, Calif.--(BUSINESS WIRE)--June 26, 1995--CommerceNet today called for the U.S. Government to ease the export restrictions that currently inhibit the deployment of a safe, worldwide network infrastructure for electronic commerce, and to rethink its Escrow Encryption Standard (EES), also known as the Clipper initiative.

CommerceNet's position was contained in a white paper released today entitled "Toward Enabling Secure Electronic Commerce: The Need for a Revised U.S. Cryptographic Policy." The white paper provides an overview of security and encryption, and current government policy. It outlines the requirements for secure electronic commerce, and defines what is necessary to speed adoption of the various security mechanisms in use today.

"CommerceNet wants to raise awareness of some of the political barriers that might be inhibiting the wide-spread acceptance and use of electronic commerce, so that individuals and companies will be empowered to help enact change," said Cathy Medich, executive director of the organization. "CommerceNet's position on these issues reflects the general opinion of its member companies and organizations, ranging in size from multi-billion dollar corporations, to small, innovative technology start-ups."

In the U.S., the export of products that use cryptography is regulated by the Department of State and the Department of Commerce. The regulations enforced by these two agencies, CommerceNet believes, have hampered U.S. software and hardware developers from being able to establish the sales volumes necessary for cost-effective manufacture and distribution of products internationally. This opens up the U.S. market to foreign manufacturers who do not have to adhere to the same encryption regulations.

"Government policy makers need to recognize the nature of international electronic commerce and the effect that current laws have on U.S. producers of encryption systems," said Medich. "CommerceNet encourages a cooperative effort between commercial institutions and government entities to solve trade policy issues, and to implement security mechanisms that would make buyers and sellers of products and services comfortable using the Internet and other networks to transact business electronically."

CommerceNet favors legislation along the lines of the bill proposed by former U.S. Representative Maria Cantwell (D-WA), which had called for the Department of Commerce to take responsibility for all encryption products other than those that are clearly for military or defense applications. Although the Department of Commerce could restrict export to certain countries, Cantwell's bill did not require specific export licenses for commercial or public hardware and software encryption that is already widely available.

CommerceNet also joins other industry groups in opposing the Government's Escrow Encryption Standard -- the Clipper initiative -- that would permit the U.S. to enforce use of a chip that allows encryption keys to be split and escrowed to two separate government agencies, permitting them to conduct electronic surveillance under court order.

CommerceNet opposes Clipper because of the potential for abuse and invasions of personal and professional privacy; the lack of independent testing that can be done on Clipper because the algorithm is classified; and the expense and rigidity of a hardware-based security solution versus that of a flexible, software-based solution.

"The electronic marketplace is still new, and CommerceNet seeks to foster experimentation and testing of protocols for establishing the way users and client/server applications interact," said Gail Grant, chair of CommerceNet's Network Services Working Group, and vice president of business development for Open Market, Inc. "The government needs to look closely at the impact of its export restrictions on the competiveness of U.S. business in this new age of the international electronic marketplace."

The CommerceNet consortium's study of security and cryptographic policy was spearheaded by the Network Services Working Group, one of nine active working groups evaluating issues and technologies related to electronic commerce. CommerceNet believes that the need for secure transactions is one of the chief barriers to Internet electronic commerce and The Network Services Working Group has focused on both educating its members and seeking solutions to the problem.

"Commerce over the Internet is in its infancy," states Grant, "and the ability to protect transactions from 'prying eyes' and be able to have confidence that the buyers and sellers are who they say they are is critical to growth and adoption."

CommerceNet's white paper, "Toward Enabling Secure Electronic Commerce: The Need for a Revised U.S. Cryptographic Policy," can be downloaded from CommerceNet's World Wide Web server. The URL is http://www.commerce.net. It is also available by calling CommerceNet's fax-on-demand number, [phone].

About CommerceNet

CommerceNet is a consortium of more than 100 companies and organizations whose charter is to facilitate the development and use of an open Internet-based marketplace for electronic commerce applications. Consortium members include leading companies in the electronics, computer, financial service and information service industries, and other companies and organizations committed to electronic commerce.

By encouraging and enabling the spread of electronic commerce, the consortium seeks to revolutionize numerous industries (such as electronics, software and information services) by making interactions between customers, suppliers and development partners as efficient as interactions among internal departments.

CommerceNet's efforts will benefit participants in many ways -- for, example, by shortening procurement cycles through online catalogs, ordering and payment; cutting costs on both stock and manufactured parts through competitive bidding; and identifying new distribution and marketing channels through the opportunities enabled by the Internet.

Information on CommerceNet can be obtained by calling 415/617-8790, or by sending e-mail to [e-mail]. CommerceNet's URL is http://www.commerce.net.

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