Barrett points to France in Encryption lesson

US IT megalomaniacs are forever reminding their European rivals about the technology lag that divides them and earlier this week it was Craig Barrett's, chief executive of chip behemoth Intel, turn.

Speaking at a London conference, he warned delegates that government inertia could damage the chances of building a strong European digital economy. More specifically, he urged governments across Europe not to restrict the use and export of encryption technologies that are vital for e-commerce, earmarking France as a perpetrator.

"French restrictions will deter companies from outside in engaging in e-commerce activities with France, and potentially damage the competitiveness of the country, as well as the rest of Europe" said Barrett. He also urged governments and academia to nurture a IT-savvy workforce that will be able develop e-commerce applications.

The majority of the IT industry would agree with Barrett on the subject of governmental encryption rules. France, a country notorious for thwarting innovation with red-tape, is living in the past according to Steve Gold, news editor of a specialist UK-based magazine Secure Computing: "The French government has been thinking and talking about US-type restrictions that just do not reflect the real world today. We're living in the global village today," said Gold. Barrett's warning could just as easily apply to the UK, according to Gold who claimed that both the UK and the French government have been looking at whether they should implement rigid encryption restrictions.

"But," Gold added: "In the end they [governments] will yield to market pressures. It will not work."

Like the US, European governments are worried that powerful encryption technology could be used by terrorists and criminals to shield their activities and intercept confidential information. But, said Gold, with no Cold War the political stance could be due to "government paranoia". IT experts agree that criminals can get easy access to encryption anyway: "I can easily get 56 Bit DES code from a London-based company. If Joe public can side step the regulations, so can criminals and terrorists," warned Gold.

But if e-commerce is to flourish, businesses do need a legal framework for secure online trading. Peter Bishop, who heads up the electronic commerce unit at the UK Chamber of Commerce, said that it was vital to establish a global framework. "The key to cyber-trade is a secure environment in which information can be safely sent. Anybody wanting to trade will want to know that the data is secure and that it will not be tampered with. The technology, including encryption, to do that is there. What we need is a world wide protocol that all countries conform to."

The Chamber is backing a draft EU directive which seeks to harmonise digital signature and trusted third party protocols across Europe. In the wider global village, the International Chamber of Commerce is attempting to set up worldwide protocol, according to Bishop. "As a continent, Europe may not be as geared up as the US. But we are head of the game in some aspects of e-commerce," he added.

Bishop cited the example of a government pilot for transatlantic electronic trade: "The UK is transmitting trade documents for exporting goods between Europe and the US. Our system as sophisticated as theirs."

Looking at the global economic picture, 1998 has so far been a pretty black year. The financial turmoil in Asia followed by a meltdown in Russia, has seen global economic growth linger under 2 per cent. Transatlantic and pan-European differences aside, what neither the US nor European commerce needs is any impediment to the growth of a new digital economy.