Document: opening statement of Sen. Kerry re S 798, PROTECT Act, 6/10/99.


Opening Statement of Sen. John Kerry (D-MA). Re: Senate Commerce Committee hearing on S 798, PROTECT Act. Date: June 10, 1999. Source: Office of Sen. John Kerry. This document document contains both the statement as prepared for delivery, and the statement as read. The former was created by scanning a fax copy, and converting to HTML. The latter was created by transcribing from an audio recording.

Opening Statement of Sen. John Kerry

Statement as Prepared for Delivery	Statement as Read
Thank you Mr. Chairman for calling this hearing on this very important yet complex issue. Under your leadership last session, the Commerce Committee became the first Senate Committee to forge a consensus on this question and report out comprehensive legislation. I am very heartened that you are now continuing your tireless effort, and I hope that we can make real progress this year to develop a reasonable encryption export framework for the 21st century.	Mr. Chairman, thank you very much for your efforts in this field. I once said, I need to go from here to the Export Regime hearing of the Banking Committee where we have ____, so I apoligize for not being able to stay throughout this, but my staff will. Let me begin by saying that, last session, the Commerce Committee became the first Senate Committee to forge a consensus on this question on some kind of basis, and report out comprehensive legislation. I am glad we are back here now it is my hope that we can make real progress this year to develop a sensible encryption framework for the 21st century.
	We have been part of this debate for some time now. I serve on the Intelligence Committee, the Foreign Relations Committee, and this Committee, and the Banking Committee, all of which touch it one way or the other. And, I am a former prosecutor, so I have been particular sensitive to some of the foreign issues, eavesdropping issues, intelligence gathering issues, and so forth.
For the past several years we have received terribly conflicting information from the various interests in this debate, and, to my great frustration, we have been debating primarily the current state of export markets. We have debated whether there is a mature market abroad for export products and whether we can use regulatory controls to shape that market. As my colleagues are aware, I have for some time been in favor of a cautious approach. I am sensitive, of course, to our national security needs, and I have always been hopeful that we could retard the spread of encryption and, in doing so, actually shape market demand abroad.	For the past several years, frankly, we have received relatively conflicting information from the various interests in the debate, and, I think to our frustration, at least to my frustration, Mr. Chairman, we have been primarily debating the current state of export markets. We have debated whether there is a mature market abroad for export products and whether we can use regulatory controls to shape that market. I have adopted a relatively a cautious approach, for a lot of very obvious reasons. I am sensitive to our national security needs, and I have always been very vocal, that long, and many discussions with the White House, and various entities on this would retard the spread of encryption actually shape market demand abroad.
However, I am now am beginning to think that it is time to reframe the debate on encryption. As time goes on and availability abroad of strong encryption products continues to grow, it becomes more and more difficult to accept that we can control the development of this marketplace. And if we can't shape the development of this marketplace, then we must examine, in a responsible fashion, how to adjust our regulatory regime.	I have a change of mind at this point, and I want to express that. I think that it is time to reframe the debate on encryption. As time goes on and availability abroad of strong encryption products continues to grow, it becomes more and more difficult to accept that we alone can control the development of this marketplace. And if we can't shape the development of this marketplace -- it has not been able to reach an adequate consensus in this country to do so in the last few years -- then we are forced to appoint a time -- which I think we are at now -- where we have to examine in a responsible way, how do we adjust our regulatory regime.
For a long time, we have been debating whether to relax export controls to permit the export of stronger encryption products. In my view, that question must change. It is now time to discuss *how* we go about creating a new regulatory scheme that recognizes the realities of the international marketplace.	For a long time, Mr. Chairman, we have been debating whether to relax export controls to permit the export of stronger encryption products. I think, that question has to change. It is now time to discuss *how* we go about creating that new scheme that recognizes the realities of the new marketplace.
	And I ask unanimous consent that an article from today's New York Times, Encryption Products Found to Grow in Foreign Markets, by John Markoff, be made a part of the record. Let me share it just very quickly. The new data indicate that 805 encryption products are now available in 35 countries outside the United States, a 22 percent increase since December 1997. Moreover, 167 products are based on encryption algorithms considered too strong to be cracked by even the most powerful computers. In addition to the absolute increase in the number of products, we've also found that six new countries have companies that are now selling encryption technology. One of them, Cybernetica in Estonia that use the United States export restrictions as a marketing tool. Quote: Cybernetica advertises: Strong crypto. Long keys. No export restrictions. And the article goes on, Mr. Chairman. [Editor's Note: this article was based on a study by Prof. Lance Hoffman, who testified as a witness at this hearing.]
I am pleased to join my Chairman as an original cosponsor of the PROTECT Act of 1999. This bill is an important first step that recognizes that as the Internet becomes more of a presence in global commerce, there must be guarantees and assurances that business and personal information remains confidential.	I am pleased to join my Chairman as an original cosponsor of the PROTECT Act of 1999. This bill is an important first step that recognizes that as the Internet becomes more of a presence in global commerce, there have to be guarantees and assurances that business and personal information remains confidential.
We must continue to recognize that US companies are leaders in creating encryption technology and that these companies are integral to our economy.	We have to also continue to recognize that US companies are leaders in creating encryption technology, and that these companies are integral to our economy.
	We are debating a great deal now about the impact of China's stealing secrets, and we are in a long term relationship ______. Mr. Chairman, I am persuaded, as I have been for several years, but I think that some time we have held out hope about ability to control and shape the market. I am persuaded that the national security interest of the country is not only affected by the, sort of, law enforcement slash security side of this. But it is also affected by the long term economic side of it. And, it seems to me that it is important for United States technology to be out there, for people to be using it, and that there are certain security factors inherent in that happening, rather than other countries doing it, instead of us.
United States information technology companies have been frustrated by what they perceive as too-stringent controls on the export of their encryption products. These controls have served a vital purpose in protecting national security interests, The realities of the marketplace and the technology sector, however, suggest that it may be time to loosen our grip somewhat on the export controls we impose.	United States information technology companies have been frustrated by what they perceive as too stringent controls on the export of their encryption products.
Although the US is the leader in producing high quality, strong encryption products, other countries also have the ability to produce comparable products. We must recognize this reality and understand that export controls cannot stop the spread of encrypted products. Importantly, controls that do not recognize this reality put our software industry at a disadvantage as it tries to compete in the global market.	Although the US is the leader in producing high quality strong encryption products, other countries are increasingly doing so. We have recognize thats reality and understand that export controls cannot stop the spread of encrypted products. And importantly, controls that do not recognize this reality, put our software industry at a disadvantage as it tries to compete in the global marketplace. And, I might add, increasingly, I think will put our security at risk.
Encryption is essential to hundreds of billions of dollars of e-commerce. It's also crucial to electronically transfer funds, and overall use of the Internet) including email.	Encryption is essential to hundreds of billions of dollars of e-commerce. It is crucial to electronically transfer funds, and to overall use of the Internet including email, and the United States must have a powerful presence in that future development.
As this process moves forward, I am open to arguments regarding whether we should expand encryption exports even further. I believe the PROTECT Act may only be a first step, and I am hopeful that we can find a responsible reasonable approach on this issue that permits US companies to compete and thrive in the global marketplace.	So, I am open to arguments regarding whether we should expand them even further than the PROTECT Act. But, I believe that is an important first step, and I am hopeful that we can find a responsible reasonable approach that will allow a balance of the other interests. I would simply ask witness, to perhaps, I am sure they will be asked this in addressing, what happens with respect to foreign companies filing the gap, and what the relationship of that is to our national security. Foreign encryption is produced worldwide, and we are outside of that loop. And, also, whether it makes sense for our policy to work in a way that is increasingly putting the United States interests within the Hill and Congress at a disadvantage. Also, there are other articles regarding other types, the quantum code, and other approaches to encryption, which raise a whole lot of issues about where we may be heading in the long run here, and what we can control in a _____ market. So, Mr. Chairman, I think we are at a very important juncture and I thank you for having this hearing today.