The Chemical Weapons Convention: Effectson the U.S. Chemical Industry

August 1993

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Recommended Citation:U.S. Congress, Office of Technology Assessment, The Chemical Weapons Convention:Effects on the U.S. Chemical Industry, OTA-BP-ISC-1O6 (Washington, DC: U.S.Government Printing Office, August 1993).

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ForewordH istorically, arms control treaties have had little direct impact on private industry.With a few rare exceptions--such as the onsite inspections of missile-productionplants mandated by the Intermediate-range Nuclear Forces (INF) Treaty—suchagreements have not covered manufacturing facilities but have sought to limit thenumbers of deployed weapon systems. For this reason, the impending implementation ofthe Chemical Weapons Convention (CWC) will bring about a fundamental change in thepractice of arms control.

The Convention, which is expected to enter into force in early 1995, bans thedevelopment, production, and use of chemical weapons. Since these activities are hard todetect with national technical means of verification such as reconnaissance satellites, theCWC is unprecedented in its requirement for intrusive onsite inspections of commercialproduction facilities, particularly those manufacturing “dual-use” chemicals that havelegitimate commercial applications but can also be converted into chemical-warfare agents.Indeed, the ability to conduct onsite inspections at any one of tens of thousands of chemicalplants worldwide will be essential to maintain confidence that all parties to the treaty arecomplying with its provisions,

This background paper explores the multifaceted challenge of integrating a private,primarily civil industry into the global arms-control regime established by the CWC. Theinteraction between industry and arms control raises new and challenging issues, such asreconciling the intrusive verification provisions of the treaty with the privacy protectionsof the U.S. Constitution, and addressing the concern that CWC-mandated declarations andinspections of chemical plants could provide opportunities for industrial espionage.Implementation of the Convention will entail an unavoidable tradeoff between the need togather enough information to verify treaty compliance and the risk that intrusive inspectionscould jeopardize valuable trade secrets. The background paper concludes, however, thatadvance preparation by industry can mitigate such concerns.

The Senate Select Committee on Intelligence and the House Permanent SelectCommittee on Intelligence requested this background paper. It is one product of a largerOTA assessment, requested by several congressional committees, of the proliferation ofweapons of mass destruction.

Roger C. Herdman, Director

. . .Ill

James E. Goodby, chairl

Distinguished Service ProfessorCarnegie-Mellon University

James F. Leonard, chair2

Executive DirtxtorWashington Council on

Non-Proliferation

George AnzelonAssociate Division LeaderLawrence Livermore National

Laboratory

Will D. CarpenterChemical Industry Consultant

Lewis A. DunnAssistant Vice PresidentScience Applications

International Corp.

Randall ForsbergExecutive DirectorInstitute for Defense and

Disarmament Studies

Thomas R. FoxDirectorOffice of National Security

TechnologyPacific Northwest Laboratories

Alan R. GoldhammerDirector of Technical AffairsIndustrial Biotechnology

Association

John M. GooginSenior Staff ConsultantMartin Marietta Energy

Systems, Inc.

Robert G. GoughSenior Member, Technical StaffSandia National Laboratories

Elisa D. Harris3

Senior Research AnalystThe Brookings Institution

Geoffrey KempSenior AssociateCarnegie Endowment for

International Peace

Joshua Lederberg4

Rockefeller University

John W. LewisCenter for International

Security and Arms ControlStanford University

Lee W. MercerCorporate Export ManagerDigital Equipment Corp.

Matthew S. MeselsonDepartment of Biochemistry

and Molecular BiologyHarvard University

Stephen M. MeyerCenter for International StudiesMassachusetts Institute of

Technology

Gary MilhollinDirectorWisconsin Project on Nuclear

Arms Control

Marvin M. MillerSenior Research ScientistDepartment of Nuclear EngineeringMassachusetts Institute of Technology

Janne E. NolanSenior Fellow in Foreign PolicyThe Brookings Institution

William C. PotterDirectorCenter for Russian and Soviet StudiesMonterey Institute of

International Studies

Barbara Hatch RosenbergDivision of Natural SciencesState University of

New York at Purchase

Lawrence ScheinmanAssociate DirectorPeace Studies ProgramCornell University

Leonard S. SpectorSenior AssociateCarnegie Endowment for

International Peace

Sergio C. TrindadePresidentSE

2T Interrnational, Ltd.

1 Resigned Mar. 22, 1993.2 Panel member until June 1, 1993;

Panel chair after June 1, 1993.3 Resigned Jan. 29, 1993.4 Ex-officio; Member of Technology

Assessment Advisory Council.

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panelmembers. The panel does not, however, necessarily approve, disapprove, or endorse this background paper. OTA assumesfull responsibility for the background paper and the accuracy of its contents.

iv

Peter BlairAssistant Director, OTAEnergy, Materials, and International

Security Division

Alan ShawProgram ManagerInternational Security and

Commerce Program

Preject StaffPROJECT STAFF ADMINISTRATIVE STAFF

JONATHAN B. TUCKER Jacqueline Robinson BoykinOffice Administrator

Thomas KarasLouise StaleyAdministrative Secretary

CONTRACTOR

Dan Fenstermacher Madeline GrossContractor

Gerald L. EpsteinProject Director

v

Expert ReviewersCalissa W. BrownCounsel, Legal DepartmentE.I. Du Pent de Nemours & Co.Wilmington, DE

Gordon M. BurckSenior Policy AnalystEAI Corp.Alexandria, VA

Sigmund R. EckhausConsultant, Bureau of Multilateral

AffairsU.S. Arms Control &

Disarmament AgencyWashington, DC

Barry KellmanProfessor of LawDePaul University College of LawChicago, IL

Kyle B. OlsonDirector, Industry and Arms Controlchemical and Biological Arms

Control InstituteAlexandria, VA

Richard M. PattersonGovernment Relations ManagerDow Chemical Co.Washington, DC

Susan D. LeibbrandtSpecial AssistantAssistant to the Secretary of

Defense for Atomic Energy(Chemical Matters)

Pentagon

Raymond R. McGuireTreaty Verification OfficeLawrence Livermore National

LaboratoryLivermore, CA

Michael H. McMillanChief, Security OfficeOn-Site Inspection AgencyWashington, DC

Dominic PastoreAttorney-AdvisorOffice of Intelligence Policy

& ReviewU.S. Department of JusticeWashington, DC

Brad RobertsSenior Research FellowCenter for Strategic and

International StudiesWashington, DC

Dawn ShileyAssistant Manager, Government

AffairsSynthetic Organic Chemical

Manufacturers AssociationWashington, DC

Jessica SternSpecial Projects ProgramLawrence Livermore National

LaboratoryLiver-more. CA

Edward A. TanzmanManager, Economics and

Law SectionArgonne National LaboratoryArgome, IL

Michael P. WallsSenior Assistant General CounselChemical Manufacturers

AssociationWashington, DC

Leo ZeftelChemical Industry ConsultantWilmington, DE

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by outside reviewers. Theseindividuals do not, however, necessarily approve, disapprove, or endorse this background paper. OTA assumes full responsibility forthe background paper and the accuracy of its contents.

vi

contents1 Overview and Findings 1

Findings 2

2 The Chemical Weapons Convention 5Verification Challenges 6Steps Toward Implementation 9Changing Industry Attitudes 10

Companies Affected by the CWC 12

3 Treaty Obligations for Industry 19Reporting Obligations 19Inspection Obligations 24Costs of Inspections 28

4 Constitutional and Other Legal Issues 33Routine Inspections 34Challenge Inspections 37Penal Sanctions 38Compliance with Environmental and Safety Laws 39Liability Issues 40Export Controls 40

5 Protection of Proprietary Information 43Patent and Trade-Secret Law 46Proprietary Data and Reporting 47Proprietary Data and Inspections 48Preparing for Inspections 50Inspector Reliability 53Safeguarding Reported Data 54Compensation for Loss of Proprietary Information 57

6 Verification Technologies and Industry 61Nonintrusive Verification Technologies 62Unattended Monitoring Equipment 63

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Index 6 7

vii

Overviewand

Findings 1

T he Chemical Weapons Convention (CWC), which isexpected to enter into force in early 1995, differs fromprevious arms-control treaties in the magnitude of itseffects on private industry, including extensive report-ing requirements and onsite inspections of commercial chemicalplants. While the CWC will have a direct impact on chemicalmanufacturers, it will also affect a wide variety of firms thatprocess or consume chemical products, Treaty implementationwill involve a delicate balance between the need for intrusiveverification to ensure that the participating states are complyingwith the regime and the desire to minimize any negativeconsequences for legitimate industrial activities.

Major U.S. chemical companies support the CWC and believethe goal of eliminating chemical weapons warrants acceptingadditional regulatory burdens. They are concerned, however, thatcompliance costs may be significantly higher than governmentofficials assume and that the treaty’s reporting and inspectionrequirements could open the door to industrial espionage,harming the international competitiveness of one of the strongestU.S. industrial sectors. Other treaty proponents respond thatimplementation will not pose undue burdens and that theobjective of a chemical weapons-free world is worth someinvestment and sacrifice on the part of industry.

Congress will need to address these issues in the CWCimplementing legislation, which will convert the CWC’s provi-sions into domestic law and codify the procedural and substan-tive rights and obligations of commercial industry in complyingwith the treaty. This background paper examines the implicationsof the CWC for U.S. industry, focusing on industrial compliancewith the treaty’s declaration and reporting requirements and theprotection of trade secrets. These issues are examined withrespect to the extent to which they are covered in the treaty textitself or must be included in the implementing legislation.

44 I i

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2 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

The paper also examines some ways to ensure thatCWC verification is both effective and consistentwith the basic protections in the U.S. Constitu-tion.

FINDINGS1. Many U.S. chemical manufacturers, proc-

essors, and consumers will have at leastsome declaration and/or inspection obli-gations under the treaty. The U.S. Gov-ernment is ultimately responsible for thetreaty compliance of all the companies lo-cated on its territory, including foreign-owned branches and subsidiaries. Because ofthe difficulty of identifying and notifyingsmaller firms that may have treaty obliga-tions, effective implementation of the CWCwill require an extensive program of industryeducation and outreach.

2.

3.

Data needed for CWC verification willdiffer, both quantitatively and qualita-tively, from that collected for managementand regulatory purposes, and hence willrequire some augmentation of existingcorporate reporting systems. Although theprecise reporting obligations are still beingworked out, the need to report productiondata within a shorter timeframe than is typicalof domestic reporting may require the devel-opment of new accounting subroutines thatimprove the speed of data collection andanalysis. While CWC reporting requirementswill only marginally increase the paperworkburden on larger firms, they will be propor-tionately more onerous for smaller companies.Because the first reporting deadlines arefast approaching, industry will need toproceed rapidly to establish appropriate

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United Nations Special Commission inspector in Iraq tests a 500 kilogram botifilled with mustard agent.

Chapter l–Overview and Findings I 3

mechanisms for tracking the production,processing, and use of treaty-controlledchemicals. Each State Party to the CWC mustprovide an initial declaration only 30 daysafter the treaty enters into force, which couldbe as early as January 1995. After the initialdeclaration, annual reports on production oftreaty-controlled chemicals will be due 90days after the end of each calendar year.

4. Routine onsite inspections of commercialchemical plants should largely precludethe need for challenge inspections at suchfacilities, since governments will be un-likely to “waste’ a challenge inspection ona declared site. Challenge inspections atchemical plants may still occur, however, ifpersistent suspicions of noncompliance can-not be resolved through routine inspections.U.S. defense contractors will need to balancethe fairly low probability of a challengeinspection at any given plant against the costlypreparation needed to minimize the loss ofproprietary or national-security information.

5. The chemical industry’s primary concernabout onsite inspections is the potential forcompromise of trade secrets, which areoften vital to a firm’s competitive edge.CWC inspections will be carried out bymultinational teams including inspectors fromU.S. political adversaries and economic com-petitors, who may be tempted to collectcollateral information. The extent to whichonsite inspections result in a significant lossof proprietary data will depend on a numberof factors, including how frequently a site isinspected; the inspectors’ prior knowledge,experience, and intent to engage in industrialespionage; and the existence of a partywilling to pay handsomely for the stoleninformation. Given the many other means ofconducting industrial espionage, however,CWC inspections may only marginally in-crease the threat.

6. Although the threat of industrial espio-nage may arise during CWC inspections,

it can be managed with effective planningand preparation. Chemical companies havea number of effective means at theirdisposal to protect trade secrets, such asshrouding sensitive equipment. The CWCalso provides for advance notice of inspec-tions and limits on their duration, and allowsStates Parties to negotiate facility agreementsspecifying the terms and scope of the inspec-tions. Nevertheless, effective preparation willrequire careful planning and action on thepart of inspected facilities. The U.S. Gover-nment could help chemical companies preparefor treaty implementation by assisting themin their assessment of which sensitive technolo-gies need to be protected, proposing cost-effective solutions, and testing out procedureswith mock inspections of commercial plants.

7. Legal challenges to the CWC could resultin significant delays in treaty implemen-tation that could seriously embarrass theU.S. Government. Unless questions over theconstitutionality of onsite inspections areclearly resolved, chemical companies mayseek judicial relief in an attempt to keepforeign inspectors out of their facilities.Solutions to these constitutional problemswill have to be laid out in the implementinglegislation.

8. The implementing legislation will need toinclude a mechanism to protect propri-etary business information. Under such aprovision, information that companies des-ignate as confidential would be shielded fromunauthorized disclosure. The chemical in-dustry also wants to clarify the currenttrade-secret exemption to the Freedom ofInformation Act so that sensitive data sub-mitted to the U.S. Government under theCWC are not released to competing compa-nies or the public.

9. The chemical industry seeks a nonbur-densome administrative process for thearbitration and payment of just claimsarising from CWC implementation. Indus-

4 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

try may wish to hold the U.S. Governmentliable for compensating economic darnage toAmerican companies resulting from abusescommitted by international inspectors, butthe government would have to accept thisliability voluntarily.

10. In-process monitoring and sampling sys-tems installed in chemical plants for pur-poses of CWC verification might be vul-nerable to tampering and deception. Nev-ertheless, the limited use of such systems inconjunction with onsite inspections couldhelp reduce the intrusiveness needed to verifythe nonproduction of chemical-warfare agents.

11. Harmonization of U.S. export controlswith those mandated by the CWC could

eventually result in some liberalization oftrade with States Parties that are currentlysubject to strict export controls. This re-form, although unlikely to be fully imple-mented for several years, would give the U.S.chemical industry a strong incentive to sup-port the treaty.

12. Overall, OTA’s analysis suggests that ex-tensive preparation on the part of U.S.industry will be needed to minimize theburdens of CWC compliance. Close coop-eration between the executive branch and thechemical industry will be essential for thesmooth implementation of the treaty provi-sions.

The

T

ChemicalWeapons

Convention 2he Chemical Weapons Convention (CWC) was openedfor signature in mid-January 1993 after two decades ofarduous negotiations and is expected to enter into forcein early 1995.1 A true disarmament treaty, the CWC bans

the development, production, possession, stockpiling, transfer,and use of chemical weapons, with the long-term goal ofeliminating this particularly cruel and abhorrent form of warfare(see box 2-A).

After the treaty enters into force, the participating states willhave 10 years to destroy their existing stockpiles of chemicalweapons and associated production facilities.2 To prevent statesfrom secretly reacquiring chemical weapons, the treaty imposescontrols on ‘‘dual-use’ chemicils that have both legitimate usesand can be illegally diverted to the production of warfare agents.Companies must file detailed annual reports about the nature oftheir production, processing, and consumption of these chemi- Ccals and, in many cases, host intrusive onsite visits by intema- @-1. — ~ Dtional inspectors: The purpose of this global monitoring regimeis to verify the nonproduction of chemical weapons withoutunduly constraining the chemical industry’s legitimate commer-cial activities.

Implementation of the CWC will be administered by theOrganization for the Prohibition of Chemical Weapons (OPCW),a new international agency to be established in The Hague,

1 Entry into force of the CWC will occur 6 months after the 65th country ratifies thetreaty, but not earlier than 2 years after the treaty is opened for signature. Thus, the earliestdate of ermv-into-force is JanuaIY 13, 1995. Since more than 145 countries have alreadysigned the &eaty, it appeam likely that the 65 ratifications will be obtained by July 1994so as to meet the targeted January 1995 deadline. A key unresolved questiou however,is whether the United States would ratify the treaty if the Russian Federation does not.

2 There are provisiom in the CWC for (1) a 5-year extension of the chemical-weapons destruction deadline if absolutely necessary, and (2) the conversion of chemicalweapons production facilities to civilian commercial use, Assuming Russia ratifies thetreaty, it is likely to avail itself of both these options.

5

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6 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

Box 2-A—Banning Chemical Warfare

Chemical warfare has been a scourge of the 20th century. The first chemical-warfare agent--chlorinegas-was introduced on the battlefield by Germany in 1915 during World War 1. Over the next 3 years, both sidesengaged in chemical warfare with a total of 17 different toxic agents, including phosgene, hydrogen cyanide, andsulfur mustard, which causes severe damage tot he skin, eyes, and lungs. The physical and psychological effectsof gas warfare were so horrifying that during the interwar period, countries negotiated the 1925 Geneva Protocolbanning the use of chemical weapons in war.

Despite the ban on use, however, the major powers continued to develop, produce, and stockpile newpoisonous agents; these activities were not prohibited by the Geneva Protocol. Before and during World War II,Germany developed and stockpiled potent nerve agents (e.g., tabun, sarin) capable of causing convulsions andrapid death, and the Allied powers followed suit. Although thousands of tons of mustard and nerve agents werestockpiled by both sides, they were not used in combat. During t he Cold War, t he United States, the Soviet Union,and their allies continued to accumulate vast quantities of chemical weapons, raising the spectre of chemicalwarfare in a NATO-Warsaw Pact conflict in Central Europe.

This threat, combined with the growing proliferation of chemical weapons in the developing world-particularly in the Middle East-prompted the Committee (later Conference) on Disarmament, a multilateral forumin Geneva affiliated with t he United Nations, to begin work in the early 1970s on a treat y banning t he production,stockpiling, and use of chemical weapons. Some 40 countries participated directly in the negotiations, and manyothers sent observers. Although the talks moved at a glacial pace for more than two decades, the waning of theCold War created an opportunity for rapid progress, and Iraq’s large-scale use of chemical weapons during its warwith Iran gave renewed political impetus for a global ban.

During the 1991 Persian Gulf War, Saddam Hussein’s threat to initiate chemical warfare against U.S. andother coalition forces also brought home the dangers of chemical-weapons proliferation for the United States andits allies. The negotiators in Geneva realized that they had a limited window of opportunity to bring the treaty tocompletion before international interest and consensus were lost. After a final push to resolve the most contentiousissues (e.g., the conduct of challenge inspections), the negotiations were brought to a successful conclusion inearly September 1992 and the treaty was opened for signature in mid-January 1993.

Netherlands. The OPCW will be an analogue at responsibilities include serving as a liaison be-the international level of U.S. domestic environ-mental and safety regulatory agencies such as theEnvironmental Protection Agency. It will includea Technical Secretariat made up of internationalcivil servants who will compile data on chemicalplants and conduct onsite inspections. Further-more, since the States Parties to the CWC areultimately responsible for the treaty complianceof the relevant industrial facilities operating ontheir territories, each participating governmentmust establish a “National Authority’ whose

tween its domestic industry and the OPCW,collecting data from industry, and ensuring thatinspections are carried out.3

VERIFICATION CHALLENGESClose monitoring of the global chemical indus-

try will be essential to ensure that commercialplants are not diverted to illicit production ofchemical weapons. Unlike nuclear weapons, whichrequire a large, specialized, and costly industrialbase, chemical-warfare (CW) agents can be made

3 The structure of the U.S. National Authority is still being developed. It will probably be based on the current responsibilities of U.S.Gov ermnent agencies involved in CWC implementation (the Departments of Commerce, Defense, Energy, Justice, and State, and the ArmsControl and Disarrnament Agency).

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Chapter 2–The Chemical Weapons Convention 17

Signing ceremony for the Chemical Weapons Convention, Paris, January 1993.

U.S. Secretary of State Lawrence Eagleburgerexpresses strong support for the treaty at the signingceremony.

with commercial equipment generally availableto any country. Moreover, nearly all of thechemicals used to make CW agents have legiti-mate commercial uses in the manufacture of

products such as pesticides, pharmaceuticals,plastics, and paints. For example, thiodiglycol, asulfur-containing solvent used in ballpoint penink and other legitimate products, is easilyconverted to mustard agent in a one-step process.

The effectiveness of the CWC will depend onthe signatories’ faith in the verification regime,which is designed to assure all participating statesthat dual-use chemicals are not being illegallydiverted to make chemical weapons. As then-Vice President George Bush told CWC negotia-tors in 1984:

For a chemical weapons ban to work, eachparty must have confidence that the other partiesare abiding by it . . . . No sensible governmententers into those international contracts known astreaties unless it can ascertain-or verify—-that itis getting what it contracted for.4

Some analysts consider it likely that somecurrent and future signatories of the CWC mayeventually attempt to violate the treaty; it is also

4 Vice ~esident George Bush, address before the Conference on Dis armament in Geneva on Apr. 18, 1984, Department oj.!irate Brdlerin,vol. 84, June 1984, pp. #43.

8 The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

possible that a rogue chemical company moti-vated by greed could produce CW agents undercontract to a foreign power without the knowl-edge or approval of its national government.5

Given these potential threats, the CWC verifica-tion regime will serve five primary functions:

1.

2.

3.

4.

5.

assure the destruction of existing chemical-weapons stocks and production facilities,detect violations through rigorous account-ing and monitoring,deter noncompliance by increasing the eco-nomic and political costs of cheating,build confidence in the regime by de-monstrating that States Parties are abidingby their treaty obligations, andprovide strategic warning of a country’sintent to violate the treaty so that the otherParties can take defensive measures.6

The intrusive monitoring needed to detect—and thereby deter—treaty violations will makeunprecedented demands on private industry, andwill entail some unavoidable costs.7 Unlike theNuclear Non-Proliferation Treaty, which distin-guishes between nuclear-weapon states and non-weapon states, the CWC is nondiscriminatory inthat it imposes a uniform set of rights andobligations on all participants. Each State Party,whether or not it possesses chemical weapons,

will be subject to the same reporting and inspec-tion requirements.

Because of the large size and economic impor-tance of the U.S. chemical industry and alliedsectors, the CWC has important implications notonly for national security but also for the health ofthe American economy. The United States ishome to roughly 20,000 chemical manufacturingplants, or about a third of the world’s totalchemical production capacity. Chemical manu-facturers of varying size and capability aredistributed throughout the country, with no statehaving fewer than 25 facilities. In 1991, U.S.chemical manufacturers sold more than 101billion metric tons of raw materials and specialtyorganic chemicals valued at $85.5 billions Thatsame year, the total value of shipments ofprimary, intermediate, and formulated chemicalproducts was $292.3 billion, and the U.S. chemi-cal industry employed 846,400 people with apayroll of $31 billion.9 The chemical industry isalso important to U.S. competitiveness because ofits positive trade balance. In 1992, net exports ofU.S. chemical products were worth about $16billion, compared to the overall U.S. merchandisetrade balance of -$96.3 billion.10

Given the large size and importance of thechemical industry to the U.S. economy and to

— —5 Kathleen C. Bailey, ‘‘Problems With a Chemical Weapons Ban" Orbis, vol. 36, No. 2, spring 1992, pp. 239-251.6 J. Aroesty, K. A. Wolf, and E. C. River, Domestic Implementation of a Chemical Weapons Treaty, report No. R-3745-ACQ (Santa Monica,

CA: RAND Corp., October 1989), p. 45.7 Previous arms control accords have affected U.S. industry only tangentially. The safeguards associated with the Nuclear Non-Proliferation

Treaty (NPT) call for materials-accounting and inspection of a relatively small number of civilian nuclear facilities to ensure there is nodiversion of plutonium or enriched uranium to illicit nuclear-weapons production. Since the United States is considered a nuclear-weapon stateunder the NPT, it is not required to adopt these standards; it has, however, voluntarily offered to place civilian nuclear facilities undersafeguards, The 1987 Intermediate-range Nuclear Forces (INF) Treaty also entitles Soviet—now Russian-teams to inspect twocontractor-operated U.S. aerospace facilities: Martin-Marietta’s missile-launcher production plant in Middle River, MD, and Hercules Corp. ’smissile production plant in Magna, UT.

8 U.S. International Trade Commission Synthetic Organic Chemicals: United States Production and Sales, 1991, USITC Publication 2607(Washington DC: International Trade Commission February 1993), p. 3.

9. U.S. Bureau of the Census, Annual Survey of Manufacrurers 1991, report No. M91(AS)- 1 (Suitland, MD: Bureau of the Census, December1992), p. 1-16.

10. Net chemical trade figure calculated from 1992 total export and import figures in U.S. Bureau of the Census, Economics and StatisticsAdministration U.S. Merchandise Trade: Exports, Imports (C.I.F. Value), December 1992 (Suitland, MD: Bureau of the Census, Feb. 18,1993), exhibit 4, p. 6. The merchandise trade balance in 1992 was obtained from U.S. Department of Commerce, Bureau of Economic Analysis,Survey of Current Business, vol. 73, No. 3, March 1993, p. 73.

world trade, the implementation of the CWC mustbe perceived as fair and as not imposing heavierburdens on some nations than on others. To thisend, the negotiators of the CWC sought todevelop a verification system that would effec-tively negate the military potential of the industrywithout unduly constraining its legitimate com-mercial activities. This task proved to be a majorchallenge, and it took negotiators several years tohammer out an inspection regime that achieves adelicate balance between the intrusiveness neededfor effective verification and the protection oflegitimate national-security and trade secrets.ll

STEPS TOWARD IMPLEMENTATIONBefore the CWC can enter into force and be

implemented, two additional steps must takeplace. First, at least 65 countries must ratify thetreaty six months before it can enter into force.Second, for implementation to occur, a Prepara-tory Commission (PrepCom), made up of repre-sentatives of the initial signatory states, mustnegotiate the details of treaty implementation(including reporting formats and procedures forconducting onsite inspections) and establish outof whole cloth the international organization thatwill administer the treaty regime. The PrepCom,in which the U.S. Government participates, hasbegun meeting in The Hague and is aiming tocomplete its work on verification procedures bythe end of 1993.12

Since the CWC is binding on governmentsrather than private individuals and corporations,States Parties must pass enabling legislation that

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Chapter 2–The Chemical Weapons Convention |9

translates the treaty obligations into domestic lawand thus obligates companies to comply .13 TheUs.need

1.

2.

3.

4.

5.

6.

7.

implementing legislation for the CWC willto include provisions that, inter alia:

establish the organizational structure, pow-ers, and responsibilities of the U.S. NationalAuthority;lay out the rights and obligations of the U.S.chemical and related industries with respectto declarations, reporting, and inspections;impose penal sanctions on firms and indi-viduals that violate the treaty;protect classified information at gover-nment facilities and proprietary data at com-mercial plants;satisfy the constitutional concerns of privatecompanies with respect to protection fromunreasonable searches and seizures, dueprocess, and fair compensation for dama-ges, while preventing companies fromobtaining court injunctions to block in-spections;comply with Federal and State environ-mental regulations that cover the destructionof CW agents and inspections of chemicalplants; andmodify U.S. export control regulations toharmonize them with treaty require-ments. 14

The Clinton administration is expected toinclude a draft of the U.S. implementing legisla-tion along with the CWC when it submits thetreaty to the Senate for its advice and consent toratification, The first draft of the implementing

I I see ~ ‘The SPY in tie oin~ent fOr Negotiators, ‘‘ New’ Scientist, No, 1647, Jan. 14, 1989, p. 27. Although U.S. negotiators often stressedindustry concerns about protecting proprietary information, a much greater problem in the CWC negotiations was the need to shield sensitivenational-security information from foreign spying, particularly during challenge inspections of military and intelligence facilities.

12 For ~ ~ven,lcw of tie ~cpcom process, see bis R. Embert “Chemical Arms Treaty Makes Unprecedented Demands of Industry, ”Chemical and .Eng/necring New)s, vol. 71, No. 23, June 7, 1993, pp. 7-18. The Henry L. Stimon Center, a policy research institute based inWashington, DC, also publishes The CWC Chronicle, a periodic newsletter devoted to CWC implementation.

13 1n the jmgon of intemtlom] ]aw, somep~s of [he CWC Me not ‘ ‘se~-exmuting” because ~~eproyisiorlscanrlot eIlkX ktO fOrCe Wi~OUtadditionat domestic legislation.

IX For exmplc, Cumcnt U,S, ~xpofl control laws require me us, Government to issue an export license before certain fOXEign IMtiOXldS (XIIlinspect any U.S. chemic,al plant. Obtaining such a license now lakes as long as 6 months. As a result, the implementing legislation will haveto create exceptions for OPCW inspectors with regard to export-control regulations that apply to inspections by non-U.S. nationals.

10 I The Chemical Weapons Convention: Effects on the US. Chemical Industry

legislation will be prepared as a collaborativeeffort by lawyers from the Departments of Com-merce, Defense, Justice, State, the Arms Controland Disarmament Agency, and others; this draftwill then be introduced in Congress and consid-ered by the congressional committees with juris-diction. Unlike the treaty itself, which must beratified by a two-thirds majority of the Senate, theimplementing legislation must be approved by asimple majority of both the House and the Senate.To meet the planned entry-into-force deadline ofJanuary 1995, Congress will need to complete thetreaty ratification process (including passage ofthe implementing legislation) by July 1994.

CHANGING INDUSTRY ATTITUDESThe attitude of the U.S. chemical industry

toward a ban on chemical weapons has changedmarkedly over the past 70 years. During WorldWar I, a segment of the industry was heavilyinvolved in the production of chemical weaponsand lobbied successfully against Senate ratifica-tion of the 1925 Geneva Protocol banning theiruse.

15 During the Vietnam War, however, tiepublic outcry over the employment of napalm andthe herbicide Agent Orange convinced U.S.chemical manufacturers that military productioncould seriously damage their public image. Sincethen, mainstream U.S. corporations have soughtto avoid any association with chemical warfareand have taken a much more supportive attitudetoward chemical arms control.

The Chemical Manufacturers Association (CMA),the U.S. industry’s leading trade association,represents 180 chemical companies that ownmore than 90 percent of the nation’s chemicalproduction capacity. In 1978, the CMA begansupporting the negotiation of a global ban onchemical weapons, for three reasons:

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●

The U.S. chemical industry was no longerinvolved in manufacturing chemical weap-ons and hence did not have an economicstake in military production.The association recognized that it would bebetter off participating in the negotiationsand shaping the treaty proactively ratherthan being faced with an unsatisfactory faitaccompli. 16

Industry representatives noted the positivepublic-relations benefits to be gained bystrongly supporting a ban on chemical weap-ons, and the seriously adverse effects on theindustry’s image of opposing a ban.

As a result, the CMA actively supported themultilateral chemical weapons negotiations inGeneva, while seeking verification measures thatwould reasonably deter illicit military productionwithout unduly burdening legitimate commercialactivities. In October 1987, the CMA’s Board ofDirectors formally adopted a policy committingthe chemical industry to work on behalf of thetreaty .17 The Association also established a Chem-ical Weapons Work Group made up of seniorexecutives from 10 major chemical companies.This body has since met on a regular basis withU.S. Government officials to discuss outstandingissues in the negotiations.

The Government-Industry Conference AgainstChemical Weapons, held in September 1989 inCanberra, Australia, was another watershed event.Attended by some 400 delegates from more than60 countries, this conference brought diplomatsengaged in the Geneva talks together with repre-sentatives of about 95 percent of the world’schemical production capacity. During the confer-ence, trade associations from the United States,Australia, Canada, Japan, and Western Europejointly issued a formal statement pledging “to

IS me ufit~ states finally ratified the Geneva Protocol in 1975.16 Kyle B+ 01s04 “Dis~~ent and the Chetical ~dusq, ‘‘ in Brad Roberts, cd., Chemical Disarmament and U.S. Security (Boulder,

CO: Westview Press, 1992), p. 99.

‘7 Kyle B. Olson, “The Proposed Chemical Weapons Convention: An Industry Perspective, ” Chemical Weapons Convention Bulletin, No.3, autumn 1988, p. 2.

work actively with governments to achieve aglobal ban on chemical weapons, and . . . tocontribute additional momentum to the Genevanegotiating process. ’

The Canberra Conference also spawned a newinternational industry forum that subsequentlymet regularly in Geneva to provide practical inputto the CWC negotiating process. 19 Participationby this industry forum resulted in a number oftreaty provisions designed to limit the intrusive-ness of inspections and to safeguard proprietaryinformation. In particular, chemical industry ex-perts helped shape the procedures for inspectionsof commercial plants. According to Will Carpen-ter, chairman of the CMA’s Chemical WeaponsWork Group: ‘‘We were able, through very good,effective communications, to bring the diplomatsto reality as to what needed to be involved in thetreaty for it to be technically sound. ’ ’20

For example, in June 1991 the CMA and itsforeign counterparts urged the negotiators toexpand the verification regime beyond plantsproducing dual-use chemicals—which are lo-cated primarily in Western countries-to cover awide variety of chemical plants throughout theworld. According to this proposal, all chemicalplants with the capability to produce CW agentsor their precursors would be subject to random-ized inspections.

21 Industry was prepared toaccept such a broad verification regime if theCWC negotiators developed inspection proce-

—

Chapter 2–The Chemical Weapons Convention |11

dures that would allow companies to safeguardtheir legitimate business interests.22 Although theprobability would be low that any given plantwould be inspected, the expanded coverage woulddistribute the burden of inspections more equita-bly among the States Parties and help deterproliferants from using ordinary chemical plantsfor illicit CW agent production. In response to thisproposal, the CWC negotiators expanded thescope of the inspection regime considerably,although not as much as industry had suggested.23

Now that the treaty has been concluded, theCMA plans to support the treaty through theratification process. The chemical industry’s en-dorsement of the CWC is not unconditional,however. As one analyst has observed: “Thechemical industry believes that the conventionwill not be unduly injurious to its interests, butonly if the inspection procedures are carefullydeveloped and scrupulously honored. ’24 If chem-ical companies perceive the treaty’s verificationprovisions as too onerous, they could trigger apolitical backlash that would make it moredifficult for the United States and other countriesto implement the treaty regime.

Because of strong public support for banningchemical weapons, U.S. chemical producers areunlikely to go on record opposing Senate ratifica-tion of the CWC. Instead, they will try to ensurethat their interests are protected in the implement-ing legislation and during the deliberations of the

IS Cited in Julian Perry Robinson, “TheCanbemaConference,” Chemical Weapons Convention Bulletin, No. 6, November 1989, pp. 18-19.1!J me p~cipat~g indus~ associations were the CMA, the Council of European Chemical IndusV Federations. tie Jwan ChemiC~

Industry Association, the Canadian Chemical Producers Association, the Chemical Confederation of Australia, and the Chemical IndustriesAssociation (UK).

Zo “chemical Indus~ Rallies Behind Chemical Weapons Bin, ’ Chemeco/ogy, vol. 21, December 1992/January 1993, p. 4.

2] Will Carpenter, ‘‘Completing the Chemical Weapons Convention: An Industry View, ’ Chemical Weapons Convention Bulletin, No. 15,March 1992, p. 3.

22 Olson, ‘‘Disarmament and the ChemicaJ Industry, ’ op. cit., p. 10’2.23 me U,S, Gove rnme nt, titer initlally favoring tie indus~ proposal, ~carne concerned about a n~~r of highly sensitive milit~

facilities that produce or store treaty-controlled chemicals, In order to avoid exposing such sensitive sites to routine international inspections,U.S. negotiators narrowed the definition of the facilities covered by the routine-inspection regime. Some developing counrnes also sought tonarrow the definition to minimize what they perceived to be the negative impact of the inspection regime on their nascent chemical industries.

~ Brad Roberts, ‘ ‘Framing the Ratification Debate, ‘‘ in B, Roberts, cd., Chemical Disarmament and [J.S. Security (Boulder, CO: WestviewPress, 1992), p. 145.

—— .

12 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

Table 2-l—Chemical Schedules and Associated Treat y Obligations

Schedule 1 Schedule 2 Schedule 3 Other relevant

Agents

Commercial uses

Annuai productionthreshold forreporting

Activities to bereported annuaily

Deadline for initialdeclaration

Deadilne forannual reports

Productionthreshold forinspections

CW agents, key final-stage precursors.

Low or none

100 g

Production, processing,consumption, acquisi-tion, import, and ex-port data for the previ-ous calendar year, andantiapated forthe nextyear.

30 days after entry intoforce.

90 days after end ofprevious calendar year.

10 kg

Potentiai CW agents,other key precursors.

imw to moderate

1 kg (for BZ), 100 kg (forother potential CWagents), 1 metric ton (forprecursors).

Production, processing,consumption, import andexport data for the pre-viouscaiendar year, andanticipated for the nextyear.

30 days after entry intoforce.

90 days after end ofprevious caiendar year.

10 kg, 1 metric ton, or 10metric tons, dependingon subciass

Oid CW agents, otherprecursors.

High

30 metric tons

Production, import, andexport data for the pre-vious caiendar year, andanticipated for the nextyear.

30 days after entry intoforce.

90 days after end ofprevious calendar year.

200 metric tons

Discrete organic chemi-cals and organic chemi-cafscontaining phospho-rus, suifur, or fiourine(PSF chemicals).

High

200 metric tons for non-PSF chemicals; 30 met-ric tons for PSF chemi-cais.

Production data for theprevious caiendar year.

30 days after entry intoforce.

90 days after end ofprevious caiendar year.

200 metric tons

PrepCorn. The upcoming debate over the imple-mentating legislation in both houses of Congressis likely to attract extensive participation bycorporate general counsels and industry lobby-ists, including chemical trade associations such asthe CMA, the Synthetic Organic chemical Manu-facturers Association (SOCMA), the NationalAgricultural chemicals Association (NACA),and the Pharmaceutical Manufacturers Associa-tion (PMA). Another possible channel for indus-try dialogue with U.S. Government policymakerson CWC implementation may be the IndustrySector Advisory Committee for Chemicals and

Allied Products (ISAC-3), a private-sector panelreporting to the U.S. Trade RepresentativeOffice o

25

COMPANIESThe CWC

regardless of

AFFECTED BY THE CWCbans any toxic chemical agent,origin, that interferes with life

processes and does not have legitimate civilapplications in the quantities in which it isproduced. This so-called “general-purpose crite-rion’ allows the treaty to apply to all conceivableCW agents, including production of novel chm_ni-cals that might be developed in the future, even if

25 me Trade&t of 1974 e~tablished a private-sector advisory system for tie Office of tie U.S. Trade Representative (uSTR). The primary

forum is the Advisory Committee on Trade Policy and Negotiations, which reports directly to USTR. Subordinate to the Advisory Committeeare 17 industry sector advisory committees (ISACS) and 3 functional committees (on standards, customs, and intellectual property rights). ‘Thereis some question, however, about whether ISAC-3 has the legal authority to advise the U.S. Government on CWC matters.

-- ———...——

Chapter 2–The Chemical Weapons Convention I 13

Table 2-l—Cent inued

Schedule 1 Schedule 2 Schedule 3 Other relevant

Initial inspection &facility agreement

Mandatory Mandatory (unless StateParty and OPCW agreeto waive it)

Optional Optional

48 hours 120 hours 120 hoursNotice of routineInspections

24 hours

As specified in facilit y 24 hoursDuration of routineinspections

96 hours 24 hoursagreement.

Automatic accessdectared plants.

Access duringrout IneInspections

Automatic access to plantsite and specified areaswithin declared plants;agreed access to otherareas and plants at plantsite.

Automatic aczess to plantsite and specified areaswithin declared plants;agreed access to otherareas and plants at sitefor clarification of ambi-guities.

Automatic access to plantsite; managed accesstodedared plants; agreedaccess to other plants atsite for clarification ofambiguities.

to

2 per year per plant site,plus limit on the com-bined number of inspec-tions of Schedule 3 and“other relevant” sites.l

2 per year per plant site;plus limit on the com-bined number of inspec-tions of Schedule 3 and“other relevant” sites.

Maximum numberof routineinspections

Determined based oncharacteristics of facil-ity.

2 per year per plant site.

Exports only to StatesParties and non-Partiesthat file certifications ofnon-prohibited use; pos-sibility of stricter con-trols after 5 years.

No restrictions.Restrictions onexports

Exports to StatesParties only

For first 3 years, exportsonly to States Partiesand to non-Parties thatfile certifications of non-prohibited use; after 3years, to States Partiesonly.

SOURCE: Arms Control and Disarmament Agency, Office of Technology Assessment, 1993.~ The ~ombined number of annual insp~tions ~hall not exceed 3 plus s percent of the total num~r of plant sites declared by a StatO Party, or 20

inspections, whichever is less.

they are not now listed in the treaty itself. Further,the CWC bans or controls certain intermediatecompounds, or ‘‘precursors, ’ that can be con-verted to known CW agents in one or a fewreaction steps. The treaty also bans the militaryuse of biological toxins, which can be purifiedfrom living matter, produced by microbial fer-mentation, or synthesized chemically.

Known treaty-relevant chemicals that are ex-plicitly covered by the verification provisions ofthe CWC range from actual chemical-warfareagents to key final-stage precursors and moredistant precursors. Depending on their utility forproducing chemical weapons and the extent to

which they have legitimate commercial andindustrial uses, these compounds (or families ofcompounds) are listed in three ‘‘schedules’ in anannex to the treaty. Each schedule is associatedwith a different set of reporting requirements andinspections, which are structured so that the mosthazardous compounds are subject to the moststringent controls (see table 2-l).

. Schedule 1 covers 12 toxic chemicals orgroups of chemicals that have no or lowcommercial use. These compounds includestandard CW agents (e.g., sulfur and nitro-gen mustards, lewisite, and the nerve agentstabun, sarin, soman, and VX), and key

14 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

Plant that produces the ‘ ‘dual-use” chemicalthiodiglycol, which is both a key ingredient ofballpoint pen ink and an immediate precursor ofmustard agent.

final-stage precursors used in “binary”26 Two biological toxinschemical weapons.

are also included on the list: ricin (extractedfrom castor beans) and saxitoxin (purifiedfrom contaminated shellfish). Although large-scale production of Schedule 1 chemicals isbanned and existing stockpiles must bedestroyed, States Parties may maintain atotal of 1 metric ton (about 2,200 pounds) ofSchedule 1 chemicals for the development ofdefenses and for medical, pharmaceutical, orresearch purposes .27

. Schedule 2 covers toxic chemicals and pre-cursors that have low to moderate commer-

●

●

cial use. The list includes three chemicalswith warfare potential that have never beenused in combat (the pesticide Amiton, thehallucinogen BZ, and the toxic gas per-fluoroisobutene), and several precursor chem-icals or groups of chemicals that are one ormore steps removed from CW agents but areproduced cornmercialy volumes forlegitimate industrial applications. An exam-ple of a Schedule 2 precursor is thiodiglycol,the immediate precursor of sulfur mustard.Producers of Schedule 2 chemicals above anannual threshold quantity must declare therelevant plants and production volumes, andall such facilities will be subject to an initial(baseline) inspection and no more than tworoutine inspections per year.Schedule 3 covers “dual-use” chemicalsproduced in high commercial volume. Itincludes precursor chemicals that are severalreaction steps removed from CW agents,such as phosphorus trichloride. This cate-gory also covers some highly toxic gases(e.g., phosgene, hydrogen cyanide, cyano-gen chloride) that were used as warfareagents in World War I but are currentlyproduced in the millions of tons annually forindustrial purposes, Facilities producing 30metric tons per year of any Schedule 3chemical must be declared; those producing200 metric tons or more are subject torandomized inspection.Reporting obligations also apply to “otherrelevant’ facilities that produce more than200 metric tons per year of any discreteorganic chemical, with the exception of purehydrocarbons (to exclude oil refineries) and

26 “Binary” chemical weapons contain two separate cannisters filled with relatively nontoxic precursor chemicals that must react to producea lethal agen4 such as sarin or VX. The two components are either mixed together manually immediately before use or are brought togetherautomatically while the bimwy bomb or shell is in flight to the target.

27 ~corfig to the CWC, production of Schedule 1 chemicals for protective purposes may take place only at a single small-scale Facilityand atone other designated facility, both of which are subject to systematic inspections. Synthesis of Schedule 1 chemicals for research medical,or pharmaceutical purposes, but not for protective purposes, maybe carried out at laboratories in aggregated quantities of less than 10 kilogramsper year per facility. Laboratories that produce more than 100 grams of agent per year will be subject to reporting and inspectionobligations.

Chapter 2–The Chemical Weapons Convention 115

explosives (which are covered by otherregulations). 28 A lower production threshold

for reporting (30 metric tons) applies tofacilities that produce so-called "PSF" chemi-cals, that is, organic chemicals containingphosphor-us (P), sulfur (S), or fluorine (F),the basic building blocks of CW agents.

The CWC covers all companies and otherrelevant facilities on the territory of a State Partythat manufacture, process, or consume Schedule2 chemicals or that manufacture Schedule 3 andother treaty-controlled chemicals beyond thespecified threshold quantities, For this reason,various ‘‘downstream’ users of Schedule 2chemicals may have to file declarations andaccept routine inspections, including firms insuch diverse sectors as plastics, automobiles,aerospace, electronics, pharmaceuticals, paper,mining, and photographic materials.

Only a few pharmaceutical companies thatproduce toxic anticancer drugs are covered underSchedule 1. According to preliminary estimates,however, between 200 and 300 U.S. plantsproduce, process, or consume more than thethreshold quantity of Schedule 2 chemicals, androughly 1,000 produce more than the thresholdquantity of Schedule 3 chemicals. Finally, at least10,000 plants are believed to produce more thanthe threshold quantity of discrete organic chemi-cals.29 These rough estimates suggest that be-cause of the broad scope and relatively lowproduction thresholds of the CWC, a majorityof U.S. chemical manufacturers and someprocessors and consumers will face declarationand/or inspection obligations under the treaty.

Many smaller, privately owned producers,formulators, processors, and downstream users ofscheduled chemicals are not yet aware that theyare covered by the CWC. Although the ChemicalManufacturers Association has kept its memberswell informed about the treaty, it represents onlya portion of the U.S. chemical industry. The greatmajority of smaller firms and their respectivetrade associations have not had the time orresources to track the negotiations in Geneva or toassess the full implications of the concludedtreaty. Small chemical companies may not evensubscribe to the Federal Register, and informingthem of regulatory changes has been a seriousproblem in the past,

Since the U.S. Government will be held legallyaccountable for industry compliance with theCWC, it will be necessary to prepare a nationalregister containing a complete inventory of allcompanies and facilities on U.S. territory that aresubject to treaty obligations. Developing such aregister is a challenging task that still remains tobe accomplished, despite preliminary attempts.30

Given the widespread ignorance of the CWCamong smaller chemical companies, effectiveimplementation of the treaty will require anextensive program of industry education andoutreach.

As a first step in this outreach process, inFebruary and March 1993 the U.S. Arms Controland Disarmament Agency (ACDA) sponsoredone-day seminars in five cities across the UnitedStates to inform chemical manufacturers, phar-maceutical companies, and other downstreamprocessors about their treaty obligations.31 Al-though ACDA sent invitations to 2,400 compa-

2S The treaty defines a discrete organic chemical as a compound of carbon other than an oxide, sulfide, or metal carbomte. The extent towhich this definition covers polymers is not yet clear.

‘g Interview with Sigmund R. Eckhaus, consultant to the U.S. Arms Control and Disarmament Agency, Dec. 23, 1992.

30 C)~er p~cipat~g cou~es face a similar challenge, although on a smaller scale. The Japanese Trade Ministry has conducted m initialsurvey of Japanese factories that will be subject to CWC reporting and inspection obligations. Rough estirnatti are that about 100 chemicalmanufacturing facilities in Japan will be liable to inspection, while between 2,000 to 3,000 plants-about half of all chemical factories inJap~will have to file annual reports on their operatiom to the government. See ‘‘Chemical Plants Face Inspection Under CW Convention+KYODO (Tokyo) in English, Mar. 27, 1993, reprinted in JPRS-TAC-93-O07, Apr. 13, 1993, p. 1.

31 The semju were held in Washington, DC, New Brunswick, NJ, Houston, TX, LOS Angeles, CA, and Chicago, ~.

—- . . - -

16 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

Table 2-2—Selected List of U.S. ChemicalTrade Associations

Number ofName of Assoclatlon Active Members

Adhesive and Sealant Councii. . . . . . . . . . . . . .Adhesives Manufacturers Association. . . . . . . .American Coke and Coai Chemicais

Institute, . . . . . . . . . . , . . . . . . . . . . . . . . . . . .American Wood Preservers institute. . . . . . . . .Chemicai Manufacturers Association. . . . . . . . .Chemicai Specialities Manufacturers

Association. . . . . . . . . . . . . . . . . . . . . . . . . . .Chiorine institute. . . . . . . . . . . . . . . . . . . . . . . . . .Compressed Gas Association. . . . . . . . . . . . . . .Cosmetic, Toiietry and Fragrance

Association. . . . . . . . . . . . . . . . . . . . . . . . . . .Drug, Chemicai and Aiiied Trades

Association. . . . . . . . . . . . . . . . . . . . . . . . . . .Dry Coior Manufacturers Association. . . . . . . . .Formaldehyde institute. . . . . . . . . . . . . . . . . . . .Metai Finishing Suppiiers Association. . . . . . . .Nationai Agricuiturai Chemicals Association. . .Nationai Association of Printing ink

Manufacturers. . . . . . . . . . . . . . . . . . . . . . . . . .Nationai Paint and Coatings Association. . . . . .Pharmaceutical Manufacturers Association. . . .Powder Coating institute. . . . . . . . . . . . . . . . . . .Roof Coatings Manufacturers Association. . . . .Soap and Detergent Association. . . . . . . . . . . . .Society of the Piastics Industry. . . . . . . . . . . . . .Synthetic Organic Chemicai Manufacturers

Association. . . . . . . . . . . . . . . . . . . . . . . . . . .

18022

75150180

440190221

230

600505722585

15050010097431402000

225

NOTE: Companies may belong to more than one association.SOURCE: Council of Chemical Association Executives, 1993 Staff andksues Directory (Washington, DC).

nies that deal in chemicals listed in the treaty,attendance at the seminars was disappointing,with a total of only 110 companies participating.Many chemical manufacturers appear to be wait-ing for the domestic implementing legislation tolearn about their treaty obligations. Another wayof reaching smaller firms might be throughspecialized trade associations, which often alerttheir membership to new regulations (see table2-2). The U.S. Government also plans to launcha major public-affairs campaign both before and

after the CWC enters into force to explain thepurpose and modalities of the treaty.

I Industrial SectorsThe CWC will affect the various segments of

the chemical industry in different ways. Althoughthe industry is often viewed as a coherent sector,in fact it is a highly heterogeneous group ofmanufacturing companies whose operations dif-fer both qualitatively and quantitatively. Somechemical firms produce feedstock and intermedi-ate compounds, while others chemically convertor mechanically process and formulate thesebasic chemicals into products such as plastics,pesticides, detergents, pharmaceuticals, dyes, inks,flavors and fragrances, and gasoline additives.32

In general, chemical products are divided intotwo broad classes: commodity chemicals, or basicchemicals that are produced in vast quantities andwhere fims compete mainly on the basis of price;and specialty chemicals, more complex mol-ecules with unique properties that allow them tocommand higher prices and require a majorinvestment in research and development. Whereascommodity chemicals are manufactured continu-ously by feeding raw materials into a processreactor and simultaneously removing the reactionproduct, specialty chemicals are usually producedthrough a batch process in which raw materialsare introduced intermittently into a reactor underchanging process conditions and the productremoved at the end.

Batch production ranges in sophistication from“tolling’ (in which the customer provides a rawmaterial and receives a product, often after asingle reaction step) to ‘‘custom’ syntheses ofcomplex intermediates or end-products made toorder for large manufacturers of drugs, pesticides,and other specialty chemicals.33 The roughly 230custom chemical companies in the United States

32 ML. BUst~l, “me Indus~~ Context of Chemical Warfare,’ in Julian Perry Robinsoq cd., The Chemical Industry and the Projected

Chemical Weapons Convention: Proceedings of a SIPRIIPugwash Conference, SIPRI Chemical & Biological Wa@are Studies No. 4 (NewYork NY: Oxford University Press, 1986), p. 36.

33 sw~etic Orgaic ~emical Manufacturers Association “The Batch Chemical Industry: Fact Sheet, ” April 1993.

Chapter 2–The Chemical Weapons Convention I 17

generally have fewer than 100 employees (manyof whom perform several different jobs) andannual sales of less than $40 million each.34 Asdiscussed below, small to medium-sized batchproducers may have more difficulty in complyingwith CWC reporting requirements because theyhave smaller staffs and must change their produc-tion processes more frequently.

I Foreign OwnershipAnother characteristic of the U.S. chemical

industry that is relevant to CWC implementationis the fact that foreign-owned companies accountfor roughly a third of U.S. chemical production .35Numerous U.S.-based chemical manufacturersalso have overseas branches and subsidiaries,some of which operate plants in developingcountries. The CWC holds the U.S. Governmentresponsible for the treaty compliance of all thecompanies on its territory (including foreign-owned branches and subsidiaries) but not fortreaty violations committed by a U.S.-ownedcompany located on foreign soil. Nevertheless,the treaty does make the United States responsi-ble for violations committed by U.S. citizensliving abroad and requires the government to takeaction against them.

Although it is widely agreed that a state hasbroad powers to enforce rules on the persons andproperty within its borders, international law isnot settled with regard to "‘extraterritoriality, ’ ora government’s claim of authority to controlcompanies outside its national borders. Foreign

courts have rejected attempts by the United Statesto apply export controls to overseas companiesthat are owned or controlled by U.S. nationals orthat process goods of U.S. origin.36 The CWCclearly states that its obligations apply extraterri-torially with respect to individuals but is silentwith respect to companies. Some legal scholarscontend, however, that the U.S. Governmentshould prosecute all U.S.-owned entities thatengage in treaty-prohibited activities, regardlessof their location.

The issue of extraterritoriality is importantbecause a State Party might seek to circumventthe treaty by colluding with a foreign subsidiaryof one of its domestic companies to manufacturechemical weapons on the territory of a non-Partyto the treaty .37 (If the weapons were subsequentlygiven to the host state, however, the State Partywould violate the treaty’s ban on assisting anotherstate to acquire chemical weapons; if they wereshipped to the State Party’s own territory, thatwould violate the ban on possession.) In order toclose such potential loopholes, some analystsargue that States Parties should be encouraged toextend their extraterritorial jurisdiction as far aspossible in an effort to induce overseas subsidiar-ies to comply with the treaty .38

A potential source of leverage may derive fromthe fact that the CWC will ban exports ofSchedule 2 chemicals to non-Parties 3 years afterthe treaty comes into force; until then, exportersmust obtain end-use certificates ensuring thatrecipients employ the chemicals only for legiti-

34 stephenc, stinso~ ‘‘ Custom Chemicals,’ Chemical andEngineering News, vol. 71, No. 6, Feb. 8, 1993, p. 35. Of the 230 batch producersin the United States, 95 produce specialty fine chemicals and the other 135 are divers~lcd companies that perform some batch production ofintermediates or fme chemicals for sale or internal use. Because most large chemical manufacturers also engage in some batch processing,however, the total number of batch-processing facilities in the United States is more than 2,000.

35 ~c~el p. Walkj, Cknkal Manufacturers Association pCrSOllid CO mmmunication. In 1987, the book value of EuropearI chemicalcompanies’ assets in the United States reached $26.5 billion, the largest investment of foreign-owned assets in any one industry. “WorldChemicals: The Challenge of Asia, ” The Economist, vol. 326, No. 7802, Mar. 13, 1993, p. 28.

36 Charles Doyle, ‘‘Extratcrritorial Application of American Criminal Law, ’ CRS Report for Congress (U.S. Congress, CongressiomlResearch Service, Report No. 92-713A, Sept. 11, 1992).

37 David A. Koplow, ‘‘Imng Arms and Chemical Arms: Extratcrritoriality and the Draft Chemical Weapons Convention, ” YaZe .Journa/ ofZnfernafional Luw, vol. 15, No. 1, winter 1990, p. 68.

38 Ibid, p. 70.

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18 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

mate commercial purposes. Export of Schedule 3 country that refines to sign or comply with thechemicals to non-Parties may also be banned 5 CWC could eventually lose its ability to importyears after the treaty enters into force, although a key precursor chemicals from treaty adherentsfinal decision on this proposal has yet to be made. and might have to cease operations.39

Thus, a U.S.-owned subsidiary located in a

39 Gordon BI,uc& ~n.ior policy analyst, EAI Corp., personal CO-UIliCatiOn.Burck, senior EAI communication.

TreatyObligations

for Industry 3

T he CWC empowers an international authority to collectunprecedented quantities of information from privatenondefense companies and to conduct intrusive inspec-tions of their manufacturing facilities. Those treatyobligations affecting U.S. industry are discussed in the followingsections.

REPORTING OBLIGATIONSThe CWC will require producers and some processors and

consumers to create a paper trail for all the treaty-controlledcompounds they work with, so that inspectors can monitor theirmanufacture and ultimate use. To this end, the companies willhave to file initial declarations and annual reports on theiractivities. Although the reports will allow a margin of error of afew percentage points, they will provide a general picture of eachrelevant plant’s activities and a baseline for inspection. The U.S.National Authority will collect the required data from industryand transmit reports on a yearly basis to the OPCW’s TechnicalSecretariat. l

I Overlap With Other Reporting RequirementsU.S. chemical companies must already report on a regular

basis to several regulatory authorities, including the Environ-mental Protection Agency (EPA), the Occupational Safety andHealth Administration (OSHA), the International Trade Com-mission, the Bureau of the Census, and hundreds of State andlocal agencies. These statutory reporting requirements cover all

] The data may be collected by one or more U.S. Government agencies with currentregulatory responsibilities, such as the Department of Commerce, EPA, or OSHA, so asto build on existing channels with industry.

19

20 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

aspects of commercial chemical production, in-cluding quantities of feedstock materials, proc-essed materials, and end-products; characteristicsand toxicity of materials; statistical and chemicaldata on gaseous, liquid, and solid wastes; andreports on the transportation of hazardous materi-als and on worker health and safety.2 For exam-ple, each chemical manufacturing facility mustfile on a yearly basis a Toxic Release Inventorycovering the use of317 toxic chemicals and theirrelease into air, water, and solid waste.

According to the Chemical ManufacturersAssociation, compliance with U.S. environmentalregulations cost the industry about $4,9 billion in1992. 3 Collection and tabulation of regulatorydata require a major effort on the part of largechemical companies, which may have more than150 separate production sites. For example, atonemajor chemical manufacturer with some 50,000employees, about 1,700 people spend most oftheir time satisfying the requirements of Federaland State regulatory agencies for environmentaland statistical data.4 The U.S. chemical industry’slong experience with such domestic regulationswill be helpful in preparing the additional reportsmandated by the CWC. Indeed, many firms mayview the treaty as a form of ‘‘supranationalregulat ion.

Nevertheless, the information currently en-visioned as necessary for CWC verification

differs both quantitatively and qualitativelyfrom that collected for internal managementor for domestic regulatory purposes.6 T h emajor discrepancies between the reporting re-quirements mandated by the CWC and by U.S.domestic environmental regulations are listed intable 3-1, and can be surnmarized as follows:

●

●

●

●

●

Environmental regulations do not cover allof the chemicals relevant to the CWC.Of the chemicals that are covered, some ofthe annual production thresholds at whichcompanies must file reports are higher thanthose specified by the CWC.Some environmental regulations apply tochemical manufacturers but not to proces-sors or consumers, which are covered underthe CWC.Some environmental regulations requireprospective rather than retrospective re-porting.The reporting deadlines for the CWC areshorter than those required by EPA, andestimates of futrue production must beupdated more frequently.

There is also a difference in certain keydefinitions between the Toxic Substances ControlAct (TSCA) and the CWC. In TSCA, the “proc-essing’ of a chemical may result in a ‘‘different

2 Relevant regulations are derived from several laws that control toxic chemicals in the workplace, transportation% and the environment,including the Tbxic Substances Control Act (TSCA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the ResourceConservation and Recovery Act (RCRA), the Superfund Amendments and Reauthorization Act (SARA), and the Occupational Safety andHealth Act (OSHA). See Kyle B. OISOU “Domestic Regulation of the U.S. chemical Industry and Its Application to a chemical WeaponsBan,’ in Thomas Stock and Ronald Sutherland, eds., National Implementation of the Future Chemical Weapons Convention, SIPRI Chem”cal& Biological Wa~are Studies No. 11 (New York NY: Oxford University Press, 1990), p. 102.

3 Michael P. Walls, Senior Assistant General Counsel, CMA, letter in response to OTA questionnaire, Feb. 26, 1993.4 Julian P. Perry Robinson and Ralf Trapp, ‘‘S ummary Report of the Proceedings, “ in J. P. Robinso& cd., The Chemical Industry and the

Projected Chemical Weapons Convention: Volume II, SIPRI Chem’cal and Biological Waglare Studies No. 5 (New Yorlq NY: OxfordUniversity Press, 1986), p. 6.

5 Will D. Carpenter, “Implementing Global Chemical Weapons Disamnament: Chemical Indus~ Perspective, ” in Eric H. Arnett, cd.,Implementing a Global Chemical Weapons Convention: Proceedingsfiom a 1989 Annual Meeting Symposium (Washington DC: AAASProgram on Science, Arms Control, and National Security, 1989), p. 23.

6 Mark Mulle~ Verification of a Chemical Weapons Convention: Summary of Lessons Learnedfiom the Verification Experience oj” theInternational Atomic Energy Agency, Briefing, vol. 2, No. 6, Dec. 20, 1991 (UM Alamos National Laboratory, Center for National SecurityStudies), p. 22.

.. . -—. — — —

form or physical state from that in which it wasr e c e i v e d . The CWC, in contrast, draws a clearline between processing (defined as “a physicalprocess, such as formulation, extraction andpurification, in which a chemical is not convertedinto another chemical’ and consumption (’‘con-version into another chemical via a chemicalreaction ").8

In addition to these discrepancies, U.S. regula-tory laws do not permit releasing industry datasubmitted to the government to an internationalorganization such as the OPCW. Employing EPAand OSHA data for CWC compliance wouldtherefore require amending the various regulatorylaws, which would be a long and drawn-outprocess. For these reasons, the U.S. Governmentcannot simply ‘‘piggyback’ on existing reportingrequirements to meet its CWC declaration obliga-tions. Nevertheless, U.S. officials hope to mini-mize the added burden to industry by building asmuch as possible on existing reporting channels.

| Direct Costs of ReportingThe major U.S. chemical companies currently

track production activities with computerizedaccounting systems, which integrate plant manu-facturing data with inventory and import-exportaccounts. To satisfy CWC requirements, compa-nies will need to modify these systems to collectadditional information and to meet shorter report-ing deadlines. Within 30 days after the treatyenters into force, each State Party must submit tothe OPCW an initial declaration that providesdata for the previous 3 calendar years on thequantities of each Schedule 2 chemical produced,processed, consumed, imported, or exported, and

Chapter 3–Treat y Obligations for Industry | 21

less extensive information on other treaty-controlled chemicals. In subsequent years, com-panies will have to file annual reports updatingthe initial declarations 90 days after the end of thecalendar year; these reports will contain data onprior-year activities and plans for the upcomingyear.

If the United States is to meet its CWCobligations, U.S. chemical companies will needto generate production statistics more quickly, ingreater detail, and on more compounds than in thepast.9 These tasks may require the development ofnew accounting software and subroutines thatimprove the speed and timeliness of data collec-tion and analysis. Since U.S. manufacturers willhave to submit initial declarations—includingdata on the previous calendar year’s activities—within 30 days after the CWC enters into force(most likely in January 1995), companies muststart preparing to collect such data by the begin-ning of 1994.

Although the CWC will increase the cumula-tive reporting burden on firms that produce,process, or consume scheduled chemicals, thelargest chemical companies anticipate no signifl-cant increase in employees or compliance costs asa result of the treaty. 10 For large chemical

companies, the time and effort to comply withCWC reporting requirements will be smallrelative to total sales and other regulatorycosts. According to Will Carpenter, a retiredMonsanto executive and consultant to the Chemic-al Manufacturers Association, the costs of CWCimplementation will be ‘‘incremental’ and ulti-mately ‘‘acceptable. ’ 1 Nevertheless, the size of

7 Seetion 3, Toxic Substances Control Act, P.L. 94-469.8 $ CDeffitiom arid Criteria, ’ ‘ article II, paragraph 12, in Conference on Disarmament Drafi Convention on the Prohibition of the

Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction, extmcted from CD/1 173, Sept. 3, 1993(henceforth “Draft Chemicxd Weapons Convention”), p. 12.

9 ~temlew ~~ Kyle B ()~son, Dke~tor, ~dus~ and & con~ol, Chemical and Bio]ogic~ Arms control Institute, Wexandria, VA,

Dec. 22, 1992.

10 ~c~el p. Walls, CMA, letter in response to OTA questionnaire, Feb. 26, 1993.

1 I “Indus~ urges Quick Implementation of U.N. Chemical Weapons Agreement, “ International Trade Reporter, vol. 10, Jan. 20, 1993,p. 79.

Table 3-l-Comparison of Reporting Requirements for the CWC and Selected U.S. Environmental Laws

TSCA FIFRA TRI CWC

Types of chemicals

Companles covered

Productionthreshold forreporting

Type of data reported

All chemical substances manu-factured or imported into the UnitedStates except for R&D substances,pesticides, tobacco products, nu-clear materials, firearms and ammunition, food, food additives,drugs, and cosmetic devices.

Manufacturers and importers.(Under some sections of TSCA,processors and distributors.)

No threshold quantity.

Before beginning production of anew chemical, firms must submita Pre-Manufacture Notice (PMN)stating quantity of new chemicalto be produced during first yearand maximum quantity duringanyone of the first 3 years. PMNsubmissions also require all avail-able data on chemical toxicity,byproducts, use, environmentalreleases, disposal practoces humanexposure, and effects on healthand the environment. Firms mustsubmit a Significant New UseNotice (SNUN) for new uses ofexisting chemicals that have beendesignated in a Significant NewUse Rule (SNUR).

Active ingredients in pesticides(rodenticides, insecticides, herbi-cides, fungicides, and antimicrobi-a l ) .

Manufacturers of active ingredi-ents, formulators, and registrants.

No threshold quantity.

Each active ingredient and formu-lation must be registered with theEPA, along with voluminous test-ing data on health and environ-mental effects. No quantity infor-mation required for registration.Companies must also submit an-nual reports on quantities of activeingredients and formulated prod-ucts made at each production fa-cility.

317toxic chemicals and 20 chemi-cal categories.

Manufacturers, processors, users.

A facility must file a form if itmanufactures or processes 25,000pounds or more of a listed toxicchemical or uses 10,000 poundsof a listed toxic chemical.

Releases of each listed chemicalto the environment, transfers ofthe chemical to off-site locations,source reduction, and recyclingactivities.

CWC agentsand precursors large-volume toxic chemicals used aswarfare agents in the past, andother discrete organic chemi-cals.

Threshold ranges from 100 g to200 metric tons per year de-pending on the type of chemicaland its utility for production ofCW agents.

Production, processing, or con-sumption of schedule 2 chem-icals and production of Sched-ule 3 and “other relevant” chem-icals.

. .ms0G

Table 3-1-(Continued)

TSCA FIFRA TRI CWC

Aggregation ofproduction data

Protection ofproprietary data

Varies according to section ofTSCA.

Reported for each chemical ateach facility, aggregated over thereporting year.

Reported for each chemical ateach facility, aggregated over thereporting year.

Reported for each chemical ateach plant or plant site, aggre-gated over the reporting year.

Firms may protect certain limiteddata from release.

Reported data are made availableto the general public in variousformats, including a publically ac-cessible on-line database.

Firms may designate proprietarydata as confidential and pro-tect them from release.

Firms may designate proprietarydata as confidential and protectthem from release. Health andsafety data cannot be claimedconfidential under most circum-stances.

Reports must be fried on or beforeJuly 1 for the previous calendaryear.

U.S. National Authority mustissue an annual report on pre-vious year’s activities 90 daysafter end of the calendar year,so data maybe required earlierfrom industry.

Firms must file a PMN on aone-time basis at least 90 daysbefore prodution begins. ASNUNmust be fried 90 days beforeproduction begins. There are cer-tain exemptions for abbreviatedreview periods.

Firms are required to report onproduction of controlled chemicalsduring the previous calendar yearby March 1, and must also reportestimated production for the com-ing year.

Timellne

Civil penalties of up to $25,000per violation per day, and/or crim-inal penalties of fine plus up to 1year in prison.

Civil penalties (up to $5,000) andcriminal penalties (up to $25,000,1 year in prison) maybe assessedfor serious violations of the Act.

Civil and administrative penaltiesof up to $25,000 per chemical perday.

Civil and/or criminal penaltiesmay be specified in the U.S.implementing legislation.

Penalties for latefillng or fallure tofile

Reviseddeclarations

Companies must file a revisedFirms must keep EPA informedof new data on substantial risk ofchemicals, including test data.

Registrants must keep EPA in-formed of new testing data on theadverse health and environmental

Not required by law.report if new orders result inunexpected production of sched-uled chemicals, in some cases5 days before productionstarts.

effects of pesticides.

TSCA - Toxic Substances Control Act, P.L. 94-469FIFRA - Federal Insectiade, Fungicide, and Rodenticide Act, 7 U.S.C. 136-136y.

TRI - Toxic Release Inventory, Sec. 313, Emergency Planning and Community Right-to-Know Act, 40 CFR 370

SOURCE: U.S. Environmental Protection Agency, Office of Technology Assessment, 1993.

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24 I The Chemical Weapons Convention: Effects on the U.S. Chemical Industry

the additional burden will depend to a large extenton the design of the reporting formats to be issuedby the OPCW Technical Secretariat; these for-mats are still being negotiated by the PrepCom.To keep paperwork within reasonable bounds, itwould be desirable to develop simple, standard-ized data declaration forms so that companies cansimply check off boxes and fill in blanks. U.S.industry representatives also want to ensure thatthe PrepCom and the implementing legislationrequire industry to submit no more informationthan is truly essential to verify treaty compliance.Obviously, the more information that is re-quested, the greater the risk that trade secrets maybe disclosed---either deliberately or unintention-ally.

The reporting burden will be proportion-ately more onerous for small and medium-sized companies, which have a smaller base ofmanagement and operating personnel and lessexperience in providing information to regula-tory agencies. Since the reporting thresholds inthe CWC are relatively low, some smaller compa-nies may be required to fill detailed productionreports for the first time. In addition, the treatyrequires that a chemical plant report to theNational Authority any significant change in itsdeclaration of anticipated activities for the nextyear; each such change must be reported 5 daysbefore it occurs. This requirement will impose agreater burden on custom manufacturers, whomake small batches of chemicals on order to meetshort-term or seasonal demand. Since these filmsare often unable to predict their production overthe coming year, they will have to amend theirannual reports fairly often. 12 Many small compa-nies could benefit from specialized data-collection packages designed to their require-ments.

INSPECTION OBLIGATIONSTo confirm that the activities of commercial

plants that produce, process, or consume sched-uled chemicals are consistent with their declaredpurpose, the CWC verification regime calls fortwo types of onsite inspections. Declared com-mercial facilities that produce, process, or con-sume Schedule 2 chemicals, which could beconverted fairly easily to military use, will besubject to routine inspections. The number,intrusiveness, and duration of these inspectionswill vary according to the chemicals used at agiven facility, its process equipment, and itsproduction activities. Schedule 3 and “otherrelevant’ facilities will also be subject to routineinspection on a less stringent basis. Supplement-ing the routine-inspection regime will be the rightof a State Party to request a challenge inspectionof any declared or undeclared facility on theterritory of another State Party that is suspected ofclandestine activities such as CW agent produc-tion or storage.

Unlike onsite inspections by domestic regula-tory agencies, which are performed by U.S.Government officials, inspections under the CWCwill be carried out by international civil servantsemployed by the OPCW Technical Secretariatand drawn from the countries participating in t-hetreaty regime. Depending on the size and com-plexity of a site, the typical inspection team willprobably consist of 6 to 10 people, including ateam leader, a chemical engineer, a processengineer, an analytical chemist, and techniciansand interpreters. This team may break up intosubteams during the inspection.13 The inspectorsmay be equipped with portable analytical instru-ments, computers, and safety equipment, al-though the technical parameters of these devicesremain to be determined by the PrepCom. Inspec-tors visiting U.S. facilities will be accompaniedby escorts from the inspected facility who are

12 Dan Charles, “Chemical Weapons Ban: Now for the Hard Work, ” New Scientist, vol. 137, No. 1857, Jan. 23, 1993, p. 7.

13 ~, ho ~ftel, ‘Plant Inspections, ’ presentation at a Seminar on the Chemical Weapons Convention and Its Impact on the U.S. ChemicalIndustry, sponsored by the U.S. Arms Control and Disarmam ent Ageney, Washington DC, Feb. 11, 1993.

.

Chapter 3-Treaty Obligations for Industry 125

well-versed in its layout and activities; in somecases, they may also be escorted by one or moreU.S. Government officials who are familiar withthe provisions of the treaty.

| Routine InspectionsRoutine inspections of commercial chemical

plants are designed to detect—and thereby deter—the use of declared facilities for CW agentproduction. In particular, routine inspections willverify that:

●

●

●

the plant is not being used to manufactureCW agents;the quantities of dual-use precursor chemi-cals produced, processed, or consumed areconsistent with legitimate declared needs;andcontrolled chemicals are not diverted to asecret onsite or offsite location for illicitpurposes. 14

Commercial facilities subject to routine in-spection are those involved in the production,processing, or consumption of Schedule 1 and 2chemicals or the production of Schedule 3 chemi-cals. For example, a few U.S. defense contractorswill be subject to routine inspection because theyconsume more than the threshold quantity ofSchedule 2 chemicals (e.g., for the production ofcomposite materials) or use Schedule 1 chemicalsfor the development of chemical defenses (e.g.,detectors and protective gear). Inspections ofSchedule 2 and 3 facilities will begin as soon aspossible after the treaty enters into force, whileinspections of ‘ ‘other relevant’ facilities willlikely be phased in later.

Before routine inspections begin at Schedule 2facilities, the OPCW Technical Secretariat willconduct an initial (baseline) inspection of eachplant to assess the risk it poses to