Crypto crackdown could hurt exporters

By Dan Tebbutt

In a move that could hamper Australia's fledgling IT export industry, Department of Defence officials are leading an international push to crackdown on strong encryption. Defence representatives want tighter export controls to stop Internet distribution of security software such as Cryptozilla, the Australian-made secure Web browser.

Attempts to further restrict full-strength cryptography fly in the face of official Liberal Party policy and recent Federal Government initiatives designed to stimulate confidence in Net security. At the 1996 election the Coalition acknowledged that cryptography is essential to confident electronic commerce, and "heavy-handed attempts to ban strong encryption techniques É would result in a substantial economic loss to the country."

But two weeks ago Australian bureaucrats advanced a proposal to regulate 'intangible' technologies under the Wassenaar Arrangement, a treaty restraining global trade in military goods. Historically encryption was reserved for military communications and subject to strict government controls. Even though today cryptography is used to safeguard routine Internet transactions like online shopping and email, security features in Web browsers are still classified as a munition under legal relics of the Cold War.

However, untested loopholes in current law allow cryptography to be freely exported from Australia in electronic form. Only software distributed in printed, floppy disc or CD-ROM format is controlled under the Customs Act and the Defence and Strategic Goods List (DSGL), a detailed catalogue of sensitive products subject to Defence authority.

The Defence Department denies the loophole exists -- but it is quickly moving to plug the gap, just in case. "This issue is currently being considered by government lawyers," said Allan Owen, manager of the cryptography export section of the Defence Signals Directorate (DSD), which oversees export approvals. "To the best of my current knowledge no cases have been brought to the Australian courts on this matter."

But Patrick Gunning, a senior associate with Mallesons Stephen Jaques in Sydney, is confident that cryptographers who post software on the Internet are acting within the law. "Based on the present state of the Customs Act, there are strong grounds to suggest that Australian cryptographers would prevail in a test case if they were to make software containing strong encryption available for download from an Australian server," he claimed in a recent paper. Restricting Internet export would require changes in legislation.

Removing uncertainty could give innovative local developers a clear shot at lucrative security markets overseas -- particularly since US export restrictions keep dominant multinationals like IBM, Microsoft and Sun out of the game. Yet the Defence position at Wassenaar indicates further restriction rather than liberalisation.

Canberra's Wassenaar delegate, Robbie Costmeyer, recently threatened to prosecute the Brisbane-based developers of Cryptozilla, a project that's welding full-strength security onto the public source code for Netscape's Navigator 5.0 browser. Subsequently he backed away from this warning, because current law "may not be apt in this case".

But Costmeyer branded as "irresponsible" exporters who use the Net to distribute products without permission. "They have a moral obligation to comply with the law," he said. "We do have the national security at stake here."

"How could anyone seriously consider Cryptozilla a threat to Australia's national security when full-strength encryption packages are widely available on the Net?" said Tim Hudson, founder of the Cryptozilla group. "Strong cryptography has been available from Australian Internet sites for almost a decade with full knowledge of the DSD," he claimed.

Meanwhile, online civil liberties group Electronic Frontiers Australia (EFA) this week launched a campaign against cryptography restrictions. EFA wrote to federal politicians to highlight how current rules impede exports in an area where Australia has world-leading talent. The group is lobbying ALP and Democrat senators to oppose any amendments to the Customs Act that would prohibit Internet distribution of cryptography.

NOTE: This version is as submitted and differs slightly from the published text. The edited version as it appeared in The Australian is here.

This article was published in The Australian, 30 June 1998, page 33.
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