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Europe and United States Still at Odds Over Encryption

European companies say the U. S. government%squots continued opposition to strong encryption will harm Internet commerce.

By Margret Johnston, PCWorld   

Top European officials at Deutsche Telekom AG and Microsoft made direct appeals to the United States to change its encryption policy, which limits export of high-bit codes on grounds of national security.

%dquotThere%squots one thing I want to make clear on our view of electronic commerce,%dquot said Ron Sommer, chief executive officer of Deutsche Telekom, speaking at a European Union ministerial meeting on realizing the Internet%squots potential. %dquotElectronic commerce will become a reality only if the users have absolute security when they send off data,%dquot he said, adding that Europe %dquotshould not in any way make concessions%dquot on encryption.

The U.S. strategy for promoting electronic commerce, as presented by President Clinton last week, is %dquotfundamentally flawed,%dquot said Bernard Vergnes, chairman of Microsoft Europe.

Lifting the U.S. ban on strong encryption technology and permitting the free movement of 56-bit and 128-bit encryption should be Europe%squots first priority, Vergnes said, and he urged the United States to %dquotlift encryption restrictions now so that market-driven key recovery systems can succeed.%dquot

Europeans have been consistently critical of the fact that U.S. companies need approval from the U.S. Commerce Department to export anything stronger than 40-bit encryption. Current regulations let companies export encryption technology with up to 56-bit keys, but only if they develop a key recovery system under which trusted third parties hold copies of keys.

Clinton%squots initiative, which was outlined for the delegates by U.S. Secretary of Commerce William Daley, says governments must guarantee security by allowing %dquotsophisticated encryption%dquot to protect data such as credit card numbers or detailed contracts.

Daley defended the U.S. policy, saying governments %dquotmust also make sure national security is safeguarded by applying those rules sensibly, so that potential terrorists or other sophisticated criminals cannot hide their work behind encryption technology.%dquot

Daley also said that while the United States and Europe have different ideas on some details of electronic commerce, he is confident the two sides will bridge the gaps.

Daley said encryption presents an %dquotuncomfortable%dquot conflict for the United States because American companies are missing business opportunities. %dquotAt the same time we acknowledge that there must be consideration given to legitimate--and I underline that--legitimate law enforcement concerns.%dquot

Daley said every minister he met with acknowledged that there are law enforcement concerns. But he called it %dquota burden of leadership%dquot that the United States must %dquotstep out in sometimes an unpopular way.%dquot