"Export controls remain the most powerful obstacle to the development and free flow of encryption, but they are steadily being relaxed because of the Internet and demands for secure electronic commerce, " the report said.

CNN: Survey finds encryption rules loosening worldwide

In fact, just the opposite occurred, it spawned the development of foreign firms in the encryption space and the launch of competing products.

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In addition, the Organisation for Economic Co-operation and Development and an expert panel preparing a report for the European Commission have condemned the encryption regulations.

BBC: UK Government dithers on encryption regulation