[House Document 105-12]
[From the U.S. Government Publishing Office]




105th Congress, 1st Session - - - - - - - - - -  House Document 105-12


 
       ADMINISTRATION OF EXPORT CONTROLS ON ENCRYPTION PRODUCTS

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

REVISIONS TO THE PROVISIONS THAT APPLY TO THE DEPARTMENT OF COMMERCE IN 
    THE EXPORT ADMINISTRATION REGULATIONS, 15 CFR PART 730 ET SEQ.--
  RECEIVED IN THE UNITED STATES HOUSE OF REPRESENTATIVES NOVEMBER 15, 
                  1996, PURSUANT TO 50 U.S.C. 1703(b)




January 7, 1997.--Referred to the Committee on International Relations 
                       and ordered to be printed


                                           The White House,
                                     Washington, November 15, 1996.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: 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 to comparable encryption products in any 
particular case.
            Sincerely,
                                                William J. Clinton.


                            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.

                                
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