The Clinton administration on Wednesday proposed further easing of encryption exports and expanding of the regions where US companies can ship powerful computers without restrictions. In a move that could be its final action regarding encryption, the Clinton administration acknowledged that it can't control security using hardware-based measures, because even the most innocuous home PCs can be strung together to form a powerful computing system. The US Department of Defence, which has been working with the White House on the issue, agreed. "Computer hardware controls are no longer effective," Deputy Secretary of Defence Rudy DeLeon said during a conference call with reporters also attended by administration officials. In effect, the proposals, if approved by Congress, would mean that companies could ship systems containing the equivalent of 32 linked Pentium IIIs to all but the most renegade countries without restrictions. Clinton officials said they hoped the Bush administration would study the proposals and encourage their adoption. The Clinton administration also wants to move several countries into the so-called Tier 1 category for computer exports, a category that currently encompasses the United States' closest allies, including Western Europe, Japan, Canada and Mexico. The regions and countries that would be moved from Tier 2 to Tier 1 would include South and Central America, South Korea, most of Africa, and many Asian nations including Malaysia, Laos, and Singapore. Undersecretary of Commerce Bill Reinsch said easing restrictions on foreign shipments would be a boon to the computer industry, which has long complained that strict encryption controls have damaged overseas business. The tier changes would "give our companies a substantial opportunity to market computers", Reinsch said. The Clinton administration eventually wants to see the removal of hardware controls on computer exports to countries including China and India. Restrictions on countries considered terrorist threats -- including Iraq, Iran, Libya, Cuba and North Korea -- would remain intact. However, Iraq already has figured out how to get around the restrictions. Followers of Iraqi leader Saddam Hussein reportedly bought 1,400 PlayStation 2 units last year with the intent of developing a military system with the chips they contain. The gaming machines aren't subject to the same export rules as computers. For years, the Clinton administration was at odds with the tech industry because of the administration's support of strong encryption restrictions. White House officials, along with the FBI, feared that allowing the export of powerful computers would enable terrorists to conduct business unchecked. However, after much lobbying from industry leaders concerned with their bottom lines and members of Congress worried about personal privacy, the administration began the process of easing the restrictions in 1999. Wednesday's announcement marks the sixth time the White House has tinkered with encryption rules during Clinton's terms in office. However, the latest proposals do not affect controls on software exports or individual chips, which are still more restrictive than the computer industry would like. They can see you... Find out how and why in Surveillance, a ZDNet News Special. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read other letters.