CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP CABLE -

UNCLAS SECTION 01 OF 05 THE HAGUE 000733

SIPDIS

STATE FOR AC/CB, NP/CBM, VC/CCB, L/ACV, IO/S
SECDEF FOR OSD/ISP
JOINT STAFF FOR DD PMA-A FOR WTC
COMMERCE FOR BIS (GOLDMAN)
NSC FOR CHUPA
WINPAC FOR LIEPMAN

E.O. 12958: N/A
TAGS: PARM PREL EIND CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP CABLE -
INDUSTRY INTERSESSIONALS, MARCH 2004

This is CWC-37-04.

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Summary
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1. (U) As a result of the March industry cluster meetings,
the March Executive Council will have several industry issues
for States Parties to consider. Two decisions, one on
Captive Use and the other on Clarification Requests, appear
ripe for adoption by the Executive Council. In addition,
three sets of EC report language have been circulated which
contain 'actionable' instructions to the Technical
Secretariat by States Parties to improve operations in the

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areas of transfer discrepancy clarification requests,
Schedule 2 facility agreements, and streamlining of the
Declaration Handbook.

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Captive Use
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2. (U) Discussions on Captive Use focused on whether States
Parties consider it necessary to clarify Schedule 1 captive
use production as declarable. However, as an introductory
comment, the facilitator (Rudduck, UK) noted that consensus
on Schedule 2/3 Captive Use has yet to be joined by the
Indian delegation. In response, the Indian delegation
acknowledged it still lacks guidance, but indicated it
expects to have guidance in time for the 36th Executive
Council Session, scheduled for March 23-26. Regarding
Schedule 1 captive use production, although States Parties
appear to agree that Schedule 1 captive use production is
declarable, some States Parties argued that a decision is
unnecessary because no such production has been demonstrated
to be taking place.


3. (U) States Parties, including Canada, India, Denmark and
Italy voiced concern with establishing 'rules for the sake of
rules,' despite the examples (especially of the synthetic
pain-killer, Meperidine or Pethidine) provided in the German
paper circulated in January 2004. In defense of the need to
clarify that Schedule 1 captive use production is declarable,
Germany argued that even if companies altered the pathways or
found substitutes to the examples provided, the case remains
that the Schedule 1 intermediate pathway is in the
open-source and its use cannot be ruled out.


4. (U) Del indicated that, under U.S. regulations,
production of a Schedule 1 chemical in excess of applicable
thresholds must be declared, regardless of its status as an
intermediate or final product. Del indicated further that
the examples provided by the German delegation, especially
those involving published pathways using Schedule 1 as
intermediates, indicate past production and consumption of
Schedule 1 in 'captive use' situations. Noting that,
although the U.S. is not aware of any such current production
using these pathways, further consideration of this issue by
States Parties appears warranted to ensure that States
Parties understand "all" subject production is declared, per
the Convention. The discussion concluded with an appeal by
the facilitator for experts to further consider the German
paper and examples.

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Schedule 2A/2A* Low Concentrations
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5 (U) To assist in deliberations, the facilitator (Wade, UK)
circulated both a revised decision text and a UK paper
regarding proliferation risk of PFIB to States Parties.
During the consultations, States Parties primarily focused on
proliferation risk and associated low concentration of PFIB.


6. (U) In a break from the norm, Japan was most outspoken,
indicating it does not view information provided by the UK as
sufficient to justify a low concentration for PFIB. Japan
noted their legislation currently adopts a 30% concentration
for Schedule 2A/2A* and that significant information would be
necessary to justify altering their legislation to such a low
concentration. Technically speaking, Japan noted that a .1
percent concentration for PFIB is impractical, given that any
plant engaged in the pyrolysis of fluoropolymers is producing
PFIB as a by-product, which would be extremely difficult to
regulate or identify. Japan also noted that the difference
between Schedule 2 chemicals and Schedule 3 is industrial
use, not the manufacturing process (note: this argument
appears to be intended to counter the UK assertion that
adopting the same concentration for Schedule 2 and 3
eliminates the intent of the Schedules to assign hierarchy of
risk, based on the chemicals).


7. (U) In response to the UK paper distributed during the
meeting on proliferation risk, the Japanese suggested the
proliferation risk by theft of PFIB is minimal, given that
PFIB is gaseous at room temperature, making any theft
difficult due to the need for proliferators to have both
direct access to in-process infrastructure and gas cylinders.
Japan noted further that PFIB and phosgene are both choking
agents, and that phosgene is more readily available in
industry. Therefore, Japan argued, phosgene would be a
preferred alternative to PFIB for would-be proliferators.


8. (U) Germany seconded the Japanese intervention, noting
their legislation is also set at 30 percent, and called for
States Parties gathered to identify their applied thresholds
to get a clear picture of the situation. (Note: The table
was unable to complete its circle of identifying current
thresholds because delegates in attendance either did not
know or "did not have guidance" to address what thresholds
they currently apply in their implementation measures).
Germany followed that the UK presentation lacks justification
sufficient to make such a dramatic change from 30 percent to
below 1 percent. India agreed, adding that .1 percent or .5
percent for PFIB is not acceptable and indicated it also has
reservations about the ability to measure or calculate low
concentrations. France, too, indicated it is concerned about
the amount of information available to justify changing their
concentrations from 30 percent to such a low concentration
and supported Indian concern regarding the ability to measure
and verify such low concentrations.


9. (U) During discussions, Del advised States Parties that
the issue remains under consideration as to what the U.S.
believes is the appropriate concentration threshold for
2A/2A* chemicals. Del noted that the U.S. Implementation Act
currently sets the concentration threshold for such chemicals
at 30 percent and indicated that, for obvious reasons,
information regarding proliferation risk is essential for
evaluation and, should it become necessary, to persuade
legislators to reduce the current 30 percent to a
significantly lower concentration. The work of the UK
facilitator and experts would assist in our deliberations and
Del expressed appreciation for their efforts. Del also
added, in response to the Indian and French concerns on
calculations as the basis for declarations, that paragraph 4
of the "Boundaries of Production" decision text already
indicates that "indirect measurements" derived from "chemical
process, a material balance, or other available plant data"
clearly include calculations as a sufficient basis for
declarations and the issue would not need to be addressed in
any draft decision text.


10. (U) Italy and Switzerland were the only delegations to
indicate their concentration levels were currently below 30
percent. Italy's threshold is .5 percent and Switzerland's
is 1 percent.


11. (U) COMMENT: The UK was caught off-guard by the
indications that the information presented appeared, to some
States Parties, insufficient to justify moving off 30 percent
to such low concentrations. It was clear from the
discussions that many States Parties (namely, Germany, Japan,
France, India) are yet, not persuaded. The UK called Del
shortly after consultations, indicating that the UK paper on
proliferation risk was generated in anticipation of U.S.
internal deliberations and that he hoped we would find it
useful.

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Facility Agreements
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12. (U) Discussions regarding facility agreements proceeded
quite well. Essentially, the discussion was a table vote in
support of the Facilitators' (Abe, Japan and Heizner,
Switzerland) proposed way forward to provide EC report
language encouraging the TS to assume more flexibility in
deciding whether to negotiate facility agreements for
Schedule 2 facilities. The TS indicated their guidelines
would take into consideration the complexity of the plant
(e.g., consumption and processing versus production),level
of production, frequency of inspection, likelihood of plant
alterations, interests of States Parties and any additional
health and safety or plant site-specific issues. In support
of the facilitators way forward were: Denmark, Italy, China,
U.S., U.K., Netherlands, Germany, France, Canada, Korea,
Switzerland, and the Czech Republic.


13. (U) India voiced hesitation in that "flexibility"
remained undefined and questioned the 'next steps' of the
facilitators. In response, the facilitators indicated an
intent to continue discussions to streamline the facility
agreements and seek efficiencies in the process, but that as
an initial step in reducing the number of facility
agreements, they would like to recommend to the EC that
States Parties support the TS implementation of guidelines
that would expand the criteria currently used (which is
limited to: does the site exceed thresholds and is the site
expected to remain declarable) to include elements of
frequency of inspection, plant site complexity and
characteristics.


14. (U) Iran remained the only delegation not to voice
support for the proposed effort, citing that it was unlikely
to have a position on the facilitator's proposal due to
holidays leading up to and during the March EC Session.
Substantively, the Iranians noted that they continue to
disagree that there is 'flexibility' in the treaty not to
negotiate facility agreements, noting that for Schedule 3
agreements there exists an option not to conclude but that
the default position for Schedule 2 facilities appears to be
to conclude an agreement unless there is evidence to suggest
one is not necessary. (NOTE: Del understands Iran does not
have any schedule 2 facilities so their 'purist' stance on
this issue is unclear.)

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Clarification Requests
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15. (U) Apart from some minor edits to the proposed decision
text distributed to States Parties in January, the discussion
on Clarification Requests achieved 'ad ref' consensus for
consideration of the document at the 36th EC. The only
significant addition to the text was proposed by the Cubans,
who suggested that in order to facilitate responses to plant
site inspectability clarification requests, the TS could
issue a reminder, 60 days after the issuance of the
clarification request, of the need to respond to the request.
The facilitator (Williams, U.S.) also distributed draft EC
report language for State Party consideration that attempts
to capture the instructions of States Parties to the
Technical Secretariat regarding reconciliation of transfer
discrepancies.


16. (U) During preparatory discussions on addressing the
issue of plant site inspectability, discussions with the TS
indicated some interesting facts. Out of the 82
clarification requests issued that the TS considered
associated with plant site inspectability, 216 plant sites
were affected. The reason this number is not 82 is that the
TS only reports clarification requests, of any sort, by

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individual letter to a State Party - not by individual
question or line item. For example, a clarification request
to a State Party regarding 150 transfer discrepancies or 9
plant sites for which the TS cannot determine the
inspectability will only be reported to the EC as a single
clarification request.


17. (U) Of the 216 plant sites involved, 128 were Schedule
2, 69 were Schedule 3 and 19 were OCPFs. For Schedule 2
facilities, 119 sites can be attributed to missing
submissions (e.g., incomplete declarations for 3 previous
calendar years) or no declaration or nil declaration
submitted, 2 sites can be attributed to missing forms 2.3
(e.g., declared as plant sites, but no plant declaration),1
site failed to declare a quantity threshold and 6 other sites
were missing "other" information (e.g., address, unscheduled
chemicals, incorrect CAS numbers or chemical name). For
Schedule 3 facilities, 59 sites can be attributed to missing
submissions or no declaration or nil declaration submitted, 6
sites can be attributed to missing forms 3.2 and/or 3.3
and/or 3.4 (e.g., declared as plant sites, but no plant
declaration),and 4 sites failed to declare a range code.
For OCPF facilities, 1 site can be attributed to missing
submissions or no declaration or nil declaration submitted,
11 sites failed to declare a PSF pl
ant number or an aggregate quantity for production, and 7
other sites were missing "other" information (e.g., address,
range codes, etc.).


18. (U) Based on the information above, at least 37 (less
the missing submissions) declared plant sites avoided
inspection in 2003 due to the TS clarification request
process of withholding inspections pending a response when
plant site inspectability is in question. (NOTE: 'Missing
submissions' are left out of this total because, although
extremely disconcerting, they are not necessarily germane to
the clarification requests and inspectability of plant sites,
which are triggered by a declaration submission. Rather,
'missing submissions' are consequence of non-submission by a
State Party.)

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Handbook on Chemicals
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19. (U) The facilitator (Ruck, Germany) invited Greg Linden,
Chief of the TS/Information Services Branch, to brief
participants on the status of activities regarding electronic
submission, manipulation, and retrieval of data. During his
briefing, Linden reviewed the TS desire to facilitate
electronic submissions by SPs, the benefits electronic
submissions will have on its ability to implement, monitor,
and report to SPs on verification activities, and the
timetable in which the TS hopes to accomplish this task.


20. (U) Specifically, Linden reported that the full
Verification Information System (VIS) is expected to come
on-line in March 2005, the TS has completed the initial phase
(delineation of system and security requirements and
determination of TS end-user requirements),and is in the
second phase (documenting system modules and verification of
system design and implementation). Linden emphasized that
the TS system is intended to be compatible with electronic
data formats used by State Parties electronic industry
declarations, but the TS system is not being designed as an
end-user tool for States Parties. The TS system that bases
its read/write capability on the common transmission file
structure (CTFS) is intended to be flexible enough to handle
files generated by multiple systems.


21. (U) Delegations welcomed the briefing, although most did
not bring technical experts. The majority of the questions
were oriented towards State Party data submissions and
compatibility between the TS and SPs' industry databases.
Italy, Slovak Republic, and India each emphasized that a
'tool' should be provided by the TS to enable States Parties
to submit data electronically. Switzerland briefly reviewed
its software 'tool' for distribution to States Parties which
uses the CTFS structure and is based on Microsoft Access,
which it hopes will facilitate States Parties' ability to
submit and archive data electronically. Japan and Germany
indicated they generally support the move to electronic data
declarations but noted reservations regarding the security of
such a system. Linden acknowledged that the security
concerns are paramount in the development of the VIS and he
reviewed the role played by the Security Audit Team (SAT) to
assure SPs that the VIS will protect confidential data. Both
the Del and the UK voiced support for the move to an
electronic database system and reviewed their own efforts to
develop domestic electronic submission and archival systems.
Both reported their decision to move towards web-enabled
systems to minimize the burden of semi-annual data
declarations on industry.

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Transfers to Non-States Parties
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22. (U) Discussion on transfers of Schedule 3 chemicals to
non-States Parties went nowhere. States Parties continue to
hesitate on discussing end-use certificates, current transfer
control procedures or specific, "minimum standards" or "best
practices" which could be approved. Only the U.K.,
Australia, and the United States ventured out to provide a
brief overview of current practice under end-user
certificates. Following the consultations, the facilitator
(Rae, NZ) asked the new Vice-Chair of the Industry Cluster
(Amb. Vogelaar, Neth),UK and US representatives to discuss
how to move forward on this issue. The facilitator is
leaving summer 2004 and does not sense a commitment by States
Parties to justify seeking a replacement to continue
discussions.


23. (U) After discussing various options, it was suggested
that the issue may be best left to the work on implementation
of Art. VII, due to the fact that certain countries are not
meeting their obligations and that discussing other measures
in the absence of basic compliance is preliminary, at best.
Therefore, Art. VII work on implementation, which includes
transfer-related issues, may be the most appropriate forum on
which to focus on implementation first and then consider
"other measures" as necessary down the road. Vogelaar
indicated this option may be the most efficient and expedient
manner in which to "euthanize" the issue. Del anticipates
that the facilitator's report to the March EC will simply
note that the issue will continue to be discussed within the
ongoing implementation activities under Article VII. In
follow-up conversations with the facilitator, it appears that
he wants to give one more shot at finding a replacement
facilitator, as opposed to simply shifting the issue to
another facilitation.

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OCPF Site Selection
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24. (U) Theo Juurlink/TS presented an overview of the
current TS selection methodology (the "A14") and provided an
initial assessment of the impact of a change to the proposed
Swiss-U.S. methodology during the March consultations. The
U.S.-Swiss paper was provided to States Parties to facilitate
their understanding of the concepts of the proposed selection
mechanism. Both were well-received by States Parties with
ensuing discussion focused on how to implement the system,
with many delegations expressing concern that TS' and SPs'
allocation of points might politicize the OCPF inspection
regime.


25. (U) States Parties considered whether the TS might
retain the A14 method to distribute its points, whether TS
points should be on an equal footing with those submitted by
SPs, and if TS estimates of the additional administrative
burden required to receive, analyze and publish lists of
inspectable sites for SP consideration were realistic. The
TS, Del and Swiss representatives fielded these questions,

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and in the end, States Parties appeared to focus on how best
to balance the provisions of the Convention for accommodating
SP nominations in a manner that does not rely upon States
Parties to 'politically' identify specific SPs. States
Parties considered how to make their nominations by choosing
sites or activities of concern rather than nominating
regional groups or specific countries. SPs seemed to think
that further examination of the allocation nomination points
via 'rule(s)' could prevent overt politicization.


26. (U) Javits sends.
SOBEL