July 20, 1992 (Washington, DC) -- The word processing program you bought
for your home computer may actually have been treated as munitions under
the Arms Export Control Act if it contained even a simple data encryption
feature to keep your personal correspondence private.

At the urging of the Software Publishers Association (SPA), the Bush
administration recently relaxed export controls which had impeded the
American software industry. The SPA estimates that the streamlined new
export review procedures will help prevent US losses to foreign
suppliers.

"The US Government has taken a significant first step in addressing the
global commercial needs of US software publishers," says SPA Executive
Director Ken Wasch. "Allowing companies to include significantly stronger
encryption capabilities in mass-market programs will help ensure the
continued vitality of one of the nation's star export industries."

Under the old regulations, any commercial software with even basic data
encryption capabilities had to be reviewed and approved by the US State
Department's Office of Defense Trade Controls before it could be exported.
The category included word processing, spreadsheet and other programs
widely available at discount stores and through mail order catalogues and
toll-free telephone lines. Each software program was reviewed by the super
secret National Security Agency. The laborious review and export licensing
process often cost US publishers valuable time in lucrative overseas
markets. Software developers also could not be certain that their programs
would be granted the necessary export approvals.

Publishers continued to face growing market demand both at home and abroad
for software with built-in protection against unauthorized access,
alteration or appropriation of data and were prevented from filling that
demand. Indeed, the SPA predicts that within 5 years a substantial
majority of all mass-market software will include text, data and file
encryption capabilities, as well as simpler password and access control
features.

The new rules, as set forth in a letter to key members of Congress from
National Security Advisor General Brent Scowcroft, substantially
streamline the export review process. Under the new system the government
will grant export approval within 7 days of request for software using two
of RSA Data Security Inc.'s algorithms, RC2 and RC4. Most major US
software firms already have already licensed these algorithms. The
company's new fee schedule puts RC2 and RC4 within the reach of all
companies. .

Other proprietary algorithms now will be reviewed on a streamlined
case-by-case basis. However, despite SPA efforts, the Administration
refused to change the current restrictions on the export of programs using
the Data Encryption Standard (DES).

"This victory for the software industry is due in large part to the efforts
of several members of Congress," stated Karen Casser, SPA Director of
Public Policy & Legal Affairs. "In particular, Congressman Mel Levine
(D-CA) as well as Representatives Sam Gejdenson (D-CT), John Miller
(R-WA), Bill Orton (D-UT), and Wayne Owens (D-UT) were instrumental in
passing the House bill. Also, Senator Jake Garn (R-UT) was able to gain
the attention of General Scowcroft. These efforts acted as a catalyst to
focus Administration attention on the issue."

The Administration also has agreed to hold semi-annual meetings with the
industry, the first of which will be hosted by General Scowcroft in early
September, 1992. These meetings will address the continued suitability of
the technical criteria, and advances in computing power and speed. The
meetings will also address whether or not foreign availability of
mass-market software with encryption places US companies at a competitive
disadvantage.

The Software Publishers Association is the principal trade association of
the personal computer software industry. Its over 900 members represent
the leading publishers in the business, consumer, and education software
markets. The SPA has offices in Washington, DC, and Paris, France.

Software Publishers Association
1730 M St Northwest, Suite 700, Washington, D.C. 20036
202-452-1600

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