State’s cryptography stance could stifle NZ e-commerce

Electronic commerce could be worth up to $US200 billion a year by the turn of the century, yet the Ministry of Foreign Affairs and Trade (MFAT) is restricting New Zealand's participation in a vital area of this market - cryptography. Without secure lines of communication, electronic commerce won't be trusted and that could limit business on the Net.

Electronic commerce could be worth up to $US200 billion a year by the turn of the century, yet the Ministry of Foreign Affairs and Trade (MFAT) is restricting New Zealand’s participation in a vital area of this market — cryptography.

Without secure lines of communication, electronic commerce won’t be trusted and that could limit business on the Net.

Cryptography allows messages to be scrambled to render them illegible to anyone but the intended recipient. The US government wants to restrict the use of cryptography because it fears terrorists, drug dealers, pornographers and the like will use high levels of encryption to hide their records from law enforcement officials.

New Zealand has apparently agreed with this stance, and signed the Wassenaar Arrangement, a protocol which designates all encryption software above a certain level as a munition and restricts its use as such.

To software developers such as Peter Gutmann, such an agreement severely limits the development and sale of encryption software overseas.

Other nations which are also signatories to the -arrangement do not take such a strong line as MFAT. Finland exports encryption software to New Zealand, but New Zealand developers are not allowed to export similar products to Finland.

The ministry that is supposed to promote New Zealand products overseas is in fact restricting their use, and Peter Gutmann finds that stance unacceptable.

“The arrangement restricts the exportation of so-called dual-use technology, but the definition of what is and what isn’t dual use is so broad as to be worthless,” says Gutmann.

“Devices ranging from a laptop computer down to a Sega video game are all restricted because their components exceed limits set under the arrangement.”

MFAT sets its policy in this area with the help of the Government Communications Security Bureau, the agency responsible for electronic intelligence gathering. The GCSB vets applications for licences to export encryption technology on a case-by-case basis, often taking up to eight to nine months before approving or declining an application. For companies like CES Communications of Christchurch this can be frustrating, but for at least one US company it has proven nearly fatal.

In this area New Zealand follows the lead set by the US. Bill Clinton’s plan for encryption includes a key-recovery scheme, whereby users give the government keys to their encrypted files in case the FBI wants to have a look at them. This would include a user’s email, personal files, business transactions, even medical records if they are stored electronically.

For Jenny Shearer, chair of the Internet Society’s public policy committee, this is a fundamentally important issue. The right to freedom of speech is enshrined in democracies around the world, and to remove that right because the “speech” is electronic is an anathema to her.

“New Zealand should be taking a stand in favour of privacy of communications as a right,” she says.

Bill Clinton is slowly softening his stand on encryption, especially since one of his strongest supporters, Dorothy Denning, professor of computer science at Georgetown University, has publicly distanced herself from his plan to hold keys in escrow.

Doubts about the policy have been aired in congress and a number of bills have been launched hoping to derail Clinton’s plan. Neither the GCSB nor MFAT were available for comment on the New Zealand situation.

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