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### White House Press Release

Text Of A Letter From The President To The Speaker Of The House Of Representatives And The President Of The Senate

                               The White House

                        Office of the Press Secretary

      _______________________________________________________________

      For Immediate Release                         November 15, 1996

                            Text Of A Letter From
                       The President To The Speaker Of
                       The House Of Representatives And
                         The President Of The Senate

                              November 15, 1996

      Dear Mr. Speaker:     (Dear Mr. President:)

      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 of comparable encryption products in any
      particular case.

                                    Sincerely,

                                    William J. Clinton

                                   #  #  #

                               The White House

                        Office of the Press Secretary

      _______________________________________________________________

      For Immediate Release                         November 15, 1996

                              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

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      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 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.

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      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

                                    # # #

                               The White House

                        Office of the Press Secretary

      _______________________________________________________________

      For Immediate Release                         November 15, 1996

                               Executive Order
                           [Executive Order 13026]

                                - - - - - - -

           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

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      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.

                                    # # #

See draft of regulations, December 9, 1996.