Commerce Chief to Seek New Rules on Encryption

The Commerce Department will recommend easing export controls on encryption software after a study by the department and the National Security Agency found that American firms are being hurt, Commerce Secretary Ronald H. Brown said Friday.

But such a move may pit Brown’s department against U.S. defense and spy agencies.

“I’m interested in promoting American exports,” Brown said in an interview. “If your foreign competitors are exporting products with encryption capability and you are not, that puts you at a tremendous competitive disadvantage.”

The government bans U.S. companies from exporting software for encryption--hard-to-break computer codes that turn information, such as files and credit card numbers, into indecipherable material that can be sent across computer networks without fear of tampering.

The United States justifies the export restrictions by saying law enforcement agencies would be hamstrung in efforts to stop terrorists or spies from using encryption to send information worldwide.

The government study comes a week after 13 U.S. technology companies released their own study showing that American companies will lose as much as 30% of the $200 billion in U.S. computer system sales expected by 2000 because of federal laws limiting exports of encryption products.

The group, the Computer Systems Policy Project, includes International Business Machines Corp., the world’s largest computer maker, and AT&T; Corp., the nation’s biggest phone company.

Brown said his department will prepare recommendations for easing the controls and that they will probably be forwarded to President Clinton within a few months.