    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book II)]
    [November 15, 1996]
    [Pages 2124-2125]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Memorandum on Encryption Export Policy
    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

    [[Page 2125]]

    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

    Note: The Executive order is listed in Appendix D at the end of this
    volume.