Defence in encryption crackdown

Dan Tebbut

The Australian Defence Department is leading an international push to restrict encryption software in a move that could hamper local IT exports. Defence staff want tighter exports 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 recent government initiatives to stimulate confidence in Net security.

At the 1996 election, the Coalition acknowledged cryptography was essential for e-commerce, and "heavy-handed attempts to ban strong encryption techniques would result in substantial economic loss to the country".

But bureaucrats want to regulate "intangible" technologies using the Wassenaar Arrangement -- a treaty restraining global trade in military goods. Historically, encryption was reserved for military communications and subject to strict controls.

Even though cryptography is now used to safeguard routine Internet transactions such as online shopping and e-mail, security features in Web browsers are still classified as munitions under legal relics of the Cold War. 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 catalogue of sensitive products.

The Defence Department denies the loophole exists, but it is heavily lobbying government to change the rules.

"This issue is being considered by government lawyers," Defence Signals Directorate (DSD) manager of cryptography exports Allan Owen said. The DSD overseas export approvals. "No cases have been brought to the Australian courts on this matter."

Patrick Gunning, a senior associate with Mallesons Stephen Jaques in Sydney, is confident cryptographers who post software on the Internet are within the law. "Based on the Customs Act, there are strong grounds to suggest that cryptographers would prevail in a test case if they were to make software containing strong encryption available for download from an Australian server," he said.

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.

Online civil liberties group Electronic Frontiers Australia (EFA) has launched a campaign against cryptography restrictions, writing to politicians to highlight how current rules impede exports in an area where Australia has world-leading talent.