* Even if some industry participants fall for it, the majority will not. The "deal" is simply not any good for anyone but the Administration. Expect the same opposition to Clipper III as we saw with Clipper I and II.
The difference is that some weak companies will decide to fall for it. These companies may think that two years of 56-bit un-escrowed products (with promises of key escrow in future releases) will be competitive against 40-bit un-escrowed products. They're right, but that's not the competition they will be facing. The right competitive strategy is to build strong crypto using 168-bit Triple-DES, in a country that has a sane government and a respect for privacy. Such products would sell well against 56-bit products or key-escrowed products produced by the weak companies that tried to lean on the government for a competitive edge. If the US government ends up ever imposing import restrictions on crypto, it will be completely clear to everyone that their goal all along has been to restrict the availability of privacy to AMERICANS. The export laws, their continual announcements that "Americans are free to use any crypto they want", and all their preaching about impacts on foreign intelligence would be known as an obvious sham all along. Import restrictions would not be any more Constitutional than export restrictions. The Constitutional right to receive information (in the form of source code) from outside the US will enable companies to bypass any import restrictions that survive Constitutional scrutiny. They can do their crypto development in a free country, ship binaries to most of the world from there, ship source code to the United States, and compile that source code to binaries for local US distribution. None of these actions will violate any US export or import controls that can be Constitutionally imposed. Such development can be done in dozens of countries. Some countries who aren't afraid of their citizens having privacy will find it economically advantageous to remain free, despite US pressure to suppress privacy. A small industry of good cryptographers will grow into a large industry there, as the US pressures the rest of the world to become less free. John