November 15, 1996
TEXT OF A LETTER FROM THE PRESIDENT TO THE SPEAKER OF THE
HOUSE OF REPRESENTATIVES AND THE PRESIDENT OF THE SENATE
THE WHITE HOUSE
Office of the Press Secretary
_______________________________________________________________
For Immediate Release November 15, 1996
TEXT OF A LETTER FROM
THE PRESIDENT TO THE SPEAKER OF
THE HOUSE OF REPRESENTATIVES AND
THE PRESIDENT OF THE SENATE
November 15, 1996
Dear Mr. Speaker: (Dear Mr. President:)
In order to take additional steps with respect to the
national emergency described and declared in Executive
Order 12924 of August 19, 1994, and continued on August 15,
1995, and August 14, 1996, necessitated by the expiration of
the Export Administration Act (EAA) on August 20, 1994, I hereby
report to the Congress that pursuant to section 204(b) of the
International Emergency Economic Powers Act, 50 U.S.C. 1703(b)
(the "Act"), I have today exercised the authority granted by the
Act to issue an Executive order (a copy of which is attached) to
revise the provisions that apply to the administration of the
export control system maintained by Department of Commerce in
the Export Administration Regulations, 15 CFR Part 730 et seq.
The new Executive order relates to my decision to transfer
certain encryption products from the United States Munitions
List administered by the Department of State to the Commerce
Control List administered by the Department of Commerce.
When I made that decision I also decided to amend Executive
Order 12981 of December 5, 1995, which sets forth procedures
for the interagency review and disposition of dual-use export
license applications, to include the Department of Justice
among the agencies that have the opportunity to review such
applications with respect to encryption products transferred
to Department of Commerce control.
Also, in issuing the new order, I provided for appropriate
controls on the export and foreign dissemination of encryption
products transferred to the Department of Commerce. Among
other provisions, I determined that the export of encryption
products transferred to Department of Commerce control could
harm national security and foreign policy interests of the
United States even where comparable products are or appear to
be available from foreign sources. Accordingly, the new order
makes clear that any EAA provision dealing with issuance of
licenses or removal of controls based on foreign availability
considerations shall not apply with respect to export controls
on such encryption products. Notwithstanding this, the
Secretary of Commerce retains the discretion to consider the
foreign availability of comparable encryption products in any
particular case.
Sincerely,
WILLIAM J. CLINTON
# # #
THE WHITE HOUSE
Office of the Press Secretary
_______________________________________________________________
For Immediate Release November 15, 1996
November 15, 1996
MEMORANDUM FOR THE VICE PRESIDENT
THE SECRETARY OF STATE
THE SECRETARY OF THE TREASURY
THE SECRETARY OF DEFENSE
THE ATTORNEY GENERAL
THE SECRETARY OF COMMERCE
UNITED STATES TRADE REPRESENTATIVE
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
CHIEF OF STAFF TO THE PRESIDENT
DIRECTOR OF CENTRAL INTELLIGENCE
DIRECTOR, FEDERAL BUREAU OF INVESTIGATION
DIRECTOR, NATIONAL SECURITY AGENCY
ASSISTANT TO THE PRESIDENT FOR NATIONAL
SECURITY AFFAIRS
ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY
ASSISTANT TO THE PRESIDENT FOR SCIENCE AND
TECHNOLOGY POLICY
SUBJECT: Encryption Export Policy
Encryption products, when used outside the United States, can
jeopardize our foreign policy and national security interests.
Moreover, such products, when used by international criminal
organizations, can threaten the safety of U.S. citizens here
and abroad, as well as the safety of the citizens of other
countries. The exportation of encryption products accordingly
must be controlled to further U.S. foreign policy objectives,
and promote our national security, including the protection of
the safety of U.S. citizens abroad. Nonetheless, because of
the increasingly widespread use of encryption products for the
legitimate protection of the privacy of data and communications
in nonmilitary contexts; because of the importance to U.S.
economic interests of the market for encryption products;
and because, pursuant to the terms set forth in the Executive
order entitled Administration of Export Controls on Encryption
Products (the "new Executive order") of November 15, 1996,
Commerce Department controls of the export of such dual-use
encryption products can be accomplished without compromising
U.S. foreign policy objectives and national security interests,
I have determined at this time not to continue to designate such
encryption products as defense articles on the United States
Munitions List.
Accordingly, under the powers vested in me by the Constitution
and the laws of the United States, I direct that:
1. Encryption products that presently are or would be
designated in Category XIII of the United States Munitions
List and regulated by the Department of State pursuant to
the Arms Export Control Act (22 U.S.C. 2778 et seq.) shall
be transferred to the Commerce Control List, and regulated
by the Department of Commerce under the authority conferred
in Executive Order 12924 of August 19, 1994 (as continued on
August 15, 1995, and August 14, 1996), Executive Order 12981
of December 5, 1995, and the new Executive order except
that encryption products specifically designed, developed,
configured, adapted, or modified for military applications
(including command, control, and intelligence applications),
shall continue to be designated as defense articles, shall
remain on the United States Munitions List, and shall continue
to be controlled under the Arms Export Control Act. The
transfer described in this paragraph shall be effective upon
the issuance of final regulations (the "Final Regulations")
implementing the safeguards specified in this directive and
in the new Executive order.
2. The Final Regulations shall specify that the encryption
products specified in section 1 of this memorandum shall be
placed on the Commerce Control List administered by the
Department of Commerce. The Department of Commerce shall,
to the extent permitted by law, administer the export of such
encryption products, including encryption software, pursuant
to the requirements of sections 5 and 6 of the former Export
Administration Act (50 U.S.C. App. 2405 and 2406), and the
regulations thereunder, as continued in effect by Executive
Order 12924 of August 19, 1994 (continued on August 15, 1995,
and on August 14, 1996), except as otherwise indicated in or
modified by the new Executive order, Executive Order 12981 of
December 5, 1995, and any Executive orders and laws cited
therein.
3. The Final Regulations shall provide that encryption
products described in section 1 of this memorandum can be
licensed for export only if the requirements of the controls
of both sections 5 and 6 of the former Export Administration
Act (50 U.S.C. App. 2405 and 2406), and the regulations
thereunder, as modified by the new Executive order, Executive
Order 12981 of December 5, 1995, and any Executive orders
and laws cited therein, are satisfied. Consistent with
section 742.1(f) of the current Export Administration
Regulations, the Final Regulations shall ensure that a license
for such a product will be issued only if an application can
be and is approved under both section 5 and section 6. The
controls on such products will apply to all destinations.
Except for those products transferred to the Commerce Control
List prior to the effective date of the Final Regulations,
exports and reexports of encryption products shall initially be
subject to case-by-case review to ensure that export thereof
would be consistent with U.S. foreign policy objectives and
national security interests, including the safety of U.S.
citizens. Consideration shall be given to more liberalized
licensing treatment of each such individual product after
interagency review is completed. The Final Regulations shall
also effectuate all other specific objectives and directives set
forth in this directive.
4. Because encryption source code can easily and mechanically
be transformed into object code, and because export of such
source code is controlled because of the code's functional
capacity, rather than because of any "information" such code
might convey, the Final Regulations shall specify that
encryption source code shall be treated as an encryption
product, and not as technical data or technology, for export
licensing purposes.
5. All provisions in the Final Regulations regarding
"de minimis" domestic content of items shall not apply with
respect to the encryption products described in paragraph 1
of this memorandum.
6. The Final Regulations shall, in a manner consistent with
section 16(5)(C) of the EAA, 50 U.S.C. App. 2415(5)(C), provide
that it will constitute an export of encryption source code
or object code software for a person to make such software
available for transfer outside the United States, over radio,
electromagnetic, photooptical, or photoelectric communications
facilities accessible to persons outside the United States,
including transfer from electronic bulletin boards and Internet
file transfer protocol sites, unless the party making the
software available takes precautions adequate to prevent the
unauthorized transfer of such code outside the United States.
7. Until the Final Regulations are issued, the Department of
State shall continue to have authority to administer the export
of encryption products described in section 1 of this memorandum
as defense articles designated in Category XIII of the United
States Munitions List, pursuant to the Arms Export Control Act.
8. Upon enactment of any legislation reauthorizing the
administration of export controls, the Secretary of Defense,
the Secretary of State, and the Attorney General shall reexamine
whether adequate controls on encryption products can be
maintained under the provisions of the new statute and advise
the Secretary of Commerce of their conclusions as well as any
recommendations for action. If adequate controls on encryption
products cannot be maintained under a new statute, then such
products shall, where consistent with law, be designated or
redesignated as defense articles under 22 U.S.C. 2778(a)(1),
to be placed on the United States Munitions List and controlled
pursuant to the terms of the Arms Export Control Act and the
International Traffic in Arms Regulations. Any disputes
regarding the decision to designate or redesignate shall be
resolved by the President.
WILLIAM J. CLINTON
# # #
THE WHITE HOUSE
Office of the Press Secretary
_______________________________________________________________
For Immediate Release November 15, 1996
EXECUTIVE ORDER
- - - - - - -
ADMINISTRATION OF EXPORT CONTROLS ON ENCRYPTION PRODUCTS
By the authority vested in me as President by the
Constitution and the laws of the United States of America,
including but not limited to the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.), and in order to
take additional steps with respect to the national emergency
described and declared in Executive Order 12924 of August 19,
1994, and continued on August 15, 1995, and on August 14, 1996,
I, WILLIAM J. CLINTON, President of the United States of
America, have decided that the provisions set forth below shall
apply to administration of the export control system maintained
by the Export Administration Regulations, 15 CFR Part 730
et seq. ("the EAR"). Accordingly, it is hereby ordered as
follows:
Section 1. Treatment of Encryption Products. In order
to provide for appropriate controls on the export and foreign
dissemination of encryption products, export controls of
encryption products that are or would be, on this date,
designated as defense articles in Category XIII of the
United States Munitions List and regulated by the United States
Department of State pursuant to the Arms Export Control Act,
22 U.S.C. 2778 et seq. ("the AECA"), but that subsequently are
placed on the Commerce Control List in the EAR, shall be subject
to the following conditions: (a) I have determined that the
export of encryption products described in this section could
harm national security and foreign policy interests even where
comparable products are or appear to be available from sources
outside the United States, and that facts and questions
concerning the foreign availability of such encryption products
cannot be made subject to public disclosure or judicial review
without revealing or implicating classified information that
could harm United States national security and foreign policy
interests. Accordingly, sections 4(c) and 6(h)(2)-(4) of
the Export Administration Act of 1979 ("the EAA"), 50 U.S.C.
App. 2403(c) and 2405(h)(2)-(4), as amended and as continued
in effect by Executive Order 12924 of August 19, 1994, and
by notices of August 15, 1995, and August 14, 1996, all
other analogous provisions of the EAA relating to foreign
availability, and the regulations in the EAR relating to such
EAA provisions, shall not be applicable with respect to export
controls on such encryption products. Notwithstanding this,
the Secretary of Commerce ("Secretary") may, in his discretion,
consider the foreign availability of comparable encryption
products in determining whether to issue a license in a
particular case or to remove controls on particular products,
but is not required to issue licenses in particular cases or
to remove controls on particular products based on such
consideration;
(b) Executive Order 12981, as amended by Executive
Order 13020 of October 12, 1996, is further amended as follows:
(1) A new section 6 is added to read as follows:
"Sec. 6. Encryption Products. In conducting the license
review described in section 1 above, with respect to export
controls of encryption products that are or would be, on
November 15, 1996, designated as defense articles in Category
XIII of the United States Munitions List and regulated by the
United States Department of State pursuant to the Arms Export
Control Act, 22 U.S.C. 2778 et seq., but that subsequently are
placed on the Commerce Control List in the Export Administration
Regulations, the Departments of State, Defense, Energy, and
Justice and the Arms Control and Disarmament Agency shall have
the opportunity to review any export license application
submitted to the Department of Commerce. The Department of
Justice shall, with respect to such encryption products, be a
voting member of the Export Administration Review Board
described in section 5(a)(1) of this order and of the Advisory
Committee on Export Policy described in section 5(a)(2) of this
order. The Department of Justice shall be a full member of the
Operating Committee of the ACEP described in section 5(a)(3) of
this order, and of any other committees and consultation groups
reviewing export controls with respect to such encryption
products."
(2) Sections 6 and 7 of Executive Order 12981 of
December 5, 1995, are renumbered as new sections 7 and 8,
respectively.
(c) Because the export of encryption software, like the
export of other encryption products described in this section,
must be controlled because of such software's functional
capacity, rather than because of any possible informational
value of such software, such software shall not be considered
or treated as "technology," as that term is defined in
section 16 of the EAA (50 U.S.C. App. 2415) and in the EAR
(61 Fed. Reg. 12714, March 25, 1996);
(d) With respect to encryption products described in this
section, the Secretary shall take such actions, including the
promulgation of rules, regulations, and amendments thereto, as
may be necessary to control the export of assistance (including
training) to foreign persons in the same manner and to the same
extent as the export of such assistance is controlled under the
AECA, as amended by section 151 of Public Law 104-164;
(e) Appropriate controls on the export and foreign
dissemination of encryption products described in this section
may include, but are not limited to, measures that promote the
use of strong encryption products and the development of a key
recovery management infrastructure; and
(f) Regulation of encryption products described in this
section shall be subject to such further conditions as the
President may direct.
Sec. 2. Effective Date. The provisions described in
section 1 shall take effect as soon as any encryption products
described in section 1 are placed on the Commerce Control List
in the EAR.
Sec. 3. Judicial Review. This order is intended only to
improve the internal management of the executive branch and to
ensure the implementation of appropriate controls on the export
and foreign dissemination of encryption products. It is not
intended to, and does not, create any rights to administrative
or judicial review, or any other right or benefit or trust
responsibility, substantive or procedural, enforceable
by a party against the United States, its agencies or
instrumentalities, its officers or employees, or any other
person.
WILLIAM J. CLINTON
THE WHITE HOUSE,
November 15, 1996.
