STATEMENT OF SENATOR LARRY PRESSLER
ON INTRODUCTION OF THE "PRO-CODE" ENCRYPTION LEGISLATION
THURSDAY, MAY 2, 1996
I am proud to join with my colleagues today to introduce the "Promotion
of On-Line Commerce in the Digital Era Act"(PRO-CODE). This bill will
eliminate outdated, useless rules and regulations so that American companies
can compete effectively thoughtout the world in the global information technology
industry. It will strengthen our economy, create jobs and maintain the United
States' lead in telecommunications and information technology into the twenty-first
century.
The high-tech industry is the crown jewel of the American economy-- growing
exponentially each year and constantly creating new jobs. This is the future
of our country's economic security.
We are the world leaders in the technology revolution. Whether in hardware,
software, browsers, semiconductors, cryptography or other segments of the
industry, we have the talent and capability to retain this lead indefinitely.
The private sector is doing everything possible to expand this industry.
Unfortunately, they frequently are held back by unnecessary or antiquated
government rules and regulations. Government should help, or at the very
least, get out of the way
Outdated government policy must change and it must change immediately.
The future of this industry, its employees and our country's economy depends
on this change.
This is why I am an original sponsor of the "Promotion of Commerce
On-line in the Digital Era" (PRO-CODE) which we are introducing today.
The Senate Commerce Committee will have jurisdiction over this bill, that
basically, would allow unlimited export of commercially available encrypted
software. I believe that it is important to bring this issue before the
committee I chair-- the Senate Committee on Commerce, Science, and Transportation--as
I am committed to moving this legislation forward immediately and I am joined
by others on the Committee who feel the same way.
The health of our national economy, and my home state of South Dakota's
economy in particular, is heavily dependent upon exports. We must focus
on expanding our present foreign markets and opening new ones in order to
strengthen our businesses and maintain our economic hegemony. It is undisputed
that American businesses can compete evenly with their foreign counterparts
when operating on a level playing field. However, they are not always given
fair treatment.
When U.S. companies are treated unfairly vis-a-vis their foreign competitors,
they lose contracts and their market share suffers. This leads to lower
profits and less repatriation of those profits to the United States. we
must do all we can to eliminate foreign trade barriers that restrict U.S.
companies operating aboard. At the same time, we also must eliminate our
own government's discrimination against our American multinationals. To
this end, I am working to assist U.S. multinationals companies, and high-tech
companies in particular, by eliminating unnecessary restrictions on their
operations.
The PRO-CODE bill enjoys widespread bi-partisan support. I believe this
change in policy is vital if the United States is to maintain its world
wide lead in the development and sale of software technology. This is an
industry key to the continued strength of our economy, however, export controls
-- true relics of the Cold War -- are hurting American companies' ability
to sell their products overseas. We eon the Cold War. We must now disarm
the weapons used to win that war before they are used against us.
It is simply logical to allow U.S. companies to sell overseas some of the
technology they currently are allowed only to sell within the U.S. As you
know, certain software readily available around the world and on the Internet
is not allowed to be exported from the U.S. Rules that once made sense
are obsolete and harmful -- only to us -- in today's rapidly changing world.
This encrypted software, which serves to secure communications is the future
of the industry.
If we fail to loosen our export laws, American companies face two unpleasant
choices. First, they can simply stand by and watch their products be replaced
by foreign competitors. This means losing this industry the way we lost
consumer electronics, steel and the auto industry in the past. In the more
likely alternative, these companies will be forced to move their production
and research facilities offshore.If this happens not only will our economy
suffer, but we will lose high-paying, high-tech jobs. We cannot afford
to allow either alternative to happen. That is why I am fighting to correct
this problem. We must do so -- before it is to late.
When I led the effort to enact the sweeping Telecommunication Reform Act
my goal was to open up all aspects of the telecommunication industry to
widespread competition. Without changes in the other laws this goal cannot
be fully achieved. Indeed without such changes we risk the loss of markets
such as software to foreign competitors because our own government restricts
the U.S. companies.
The issue is a simple one -- with the globalization of our information systems
we must have secured transmissions. Those transactions should be protected
by the best encrypted software available. That means American products.
As the Federal Communications Commission proceeds with implementation of
the Telecommunication Act it is important for Congress to keep a watchful
eye on their deliberations. For example, some at the FCC support a mandated
High Definition Television (HDTV) standard. Not me. I will fight any
FCC attempt to set mandated equipment standards. To establish such mandates
would set a dangerous precedent which could chill competitive gains the
U.S. has made thoughout the world. The computer industry has grown and
flourished because the government did not set standards or impose mandates.
The government should not get into mandating standards.
I also am working to bolster our competitiveness through the enactment of
the "International Tax Simplification for American Competitiveness"
bill. The purpose of this legislation is to make technical corrections
and simplification changes to the U.S. tax code -- eliminating some of the
discriminatory and redundant application of rules to our companies. This
bill likely will include a provision eliminating the discrimination against
software under the Foreign Sales Corporation rules. This too will help
U.S. software exporters. This bill contains common sense changes to the
tax code designed to put U.S. companies on more equal footing with their
key competitors in Japan and Germany. I intend to introduce this bill in
the next few weeks. Here too, I expect widespread bi-partisan support.
I want to use my role as Chairman of the Commerce Committee -- with its
jurisdiction over international trade and the Commerce Department -- in
combination with my membership on the Finance Committee -- which has jurisdiction
over trade and tax policy -- to help strengthen American competitiveness
overseas. Our economic future depends upon diligent
efforts to ensure our companies are treated equitably not only by foreign
countries, but by our own as well. We can compete with anyone given a
fair chance. It is my goal to put American first.
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