C.W.C. Watch #3: U.S. Underestimating The Costs of One Ineffective Ban; Will It Repeat Them In Another?

(Washington, D.C.): On the last day of 1997, President Clinton submitted a misleading, one-paragraph certification to Congress in connection with the Chemical Weapons Convention
(CWC), dismissing the costs associated with that treaty to American industry. If unchanged, such
a skewed perspective seems likely to produce changes to another hopelessly ineffectual arms
control agreement — the 1972 Biological Warfare Convention — with perhaps far greater costs to
U.S. corporate equities and national interests.

‘See No Evil’

The Clinton certification read in its entirety:

“In connection with Condition (9), Protection of Advanced Biotechnology, the
legitimate commercial activities and interests of chemical, biotechnology, and
pharmaceutical firms in the United States are not being significantly harmed by the
limitations of the Convention on access to, and production of, those chemicals and
toxins listed in Schedule 1 of the Annex on Chemicals.”

This superficial response is especially troubling since it focuses exclusively upon the
“limitations of the Convention on access to, and production of, those chemicals and toxins listed
in Schedule 1 of the Annex on Chemicals.” Since no American company is engaged in the
production of Schedule 1 chemicals — i.e., chemicals specifically tailored for weapons purposes —
it would be surprising, indeed, if the CWC’s ban on such production were to cause “significant
harm” to the “chemical, biotechnology and pharmaceutical firms in the United States.”

What About Inspection-facilitated Espionage?

Unfortunately, this certification ignores altogether the real — and far more serious — concern: the
adverse impact being caused to “the legitimate commercial activities and interests of
chemical, biotechnology, and pharmaceutical firms in the United States” as a result of other
aspects of the CWC.

Of particular concern, are the intrusive on-site inspections of American businesses mandated by
the Convention. As opponents of the CWC repeatedly warned in the course of the Senate debate
over this treaty,⁽¹⁾ such inspections are proving to be licenses to conduct industrial espionage
against the world’s most advanced chemical, biotech and pharmaceutical concerns — namely,
those in the United States.

In a review of the first six-months of the CWC, the Center for Security Policy observed on 1
November that such espionage was a serious problem for the American economy even before it
was subjected to the Chemical Weapons Convention. According to the Clinton CIA’s Annual
Report to Congress on Foreign Economic Collection and Industrial Espionage, America loses
an estimated $2 billion dollars per year as a consequence of economic espionage.⁽²⁾

As it happens, U.S. chemical companies are an especially lucrative target for commercial
intelligence collection since they are world leaders in their industry. On 13 May 1997, Dr. Bruce
Merrifield — a professor at the Wharton School of Business and former Under Secretary of
Commerce with long experience in the chemical industry and other high technology fields —
reiterated concerns he expressed prior to the CWC’s ratification in testimony delivered to the
Senate Judiciary Committee then considering the Treaty’s implementing legislation. Dr.
Merrifield warned that the U.S. chemical industry is a primary focus for foreign industrial
espionage. He also advised Senators that access provided to foreign nationals under the CWC
would permit a trained engineer or chemist to identify, and therefore to steal, a company’s
trade secrets, sometimes without having actually to enter a production or research facility.

So Now You Tell Us!

Interestingly, similar concerns are now being voiced by one of the most outspoken advocates
of the CWC: the Chemical Manufacturers Association (CMA). In the course of the CWC
debate, the CMA incessantly made representations to the effect that the CWC’s intrusive
verification provisions would pose no threat to the U.S. chemical manufacturing business.⁽³⁾ For
example, in one of its “fact sheets” CMA noted, “Routine inspection of chemical facilities can
quickly and efficiently verify compliance with the Convention, with little or no disruption in
production activities….Sensitive commercial information is not jeopardized by the CWC.”⁽⁴⁾

In a recently released 38-page report, however, the Chemical Manufacturers Association seems to
have adopted a much more realistic, and dire, view of the threat. Judging by Economic
Espionage: The Looting of America’s Economic Security In The Information Age,⁽⁵⁾ the CMA
now seems seized with the very problem it was assiduously down-playing just a few months ago.
For example, this report observes:

“America, its businesses, their ability to be competitive, innovative and to expand
and create new jobs and technologies — in short, the Nation’s economic security
— are under assault from foreign spies who are stealing vast amounts of
America’s most sensitive and valuable business data at an unprecedented and
alarming rate….Economic espionage is a direct threat to the economic security of the
United States.” (Emphasis added.)

Specifically, the CMA analysis cites evidence of the ease with which foreign operatives
can obtain coveted Confidential Business Information if given even limited access to
American competitors’ facilities. “The techniques used by spies range from ‘dumpster diving’
or ‘trash trawling’ (that is, searching through companies’ office trash), to elaborate multi-faceted
efforts including high-surveillance and other information-collection methods designed to assemble
important segments of what the experts call a ‘corporate puzzle.'”

Two examples quoted by the CMA are worthy of note: First, “In 1983, a delegation of Soviet
scientists invited to tour a Grumman aircraft plant on Long Island were told they could carry no
cameras and take no notes. Still, by putting adhesive tape on their shoes, the scientists were able
to collect slivers of metal alloys being used for new U.S. fighter planes.”⁽⁶⁾ And second, “Plant
managers became suspicious when, during [a] tour, three visiting South Koreans were caught
dipping their ties into a lab sample of the product.”⁽⁷⁾

Fears that the Chemical Weapons Convention will be exploited for the purpose of
conducting economic espionage have only been further reinforced by the nature of the
appointments to key posts by the Organization for the Prohibition of Chemical Weapons
(OPCW). The job of Director of Verification has gone to Major General Jean-Louis Roland who
previously served as the chief of the Arms Control Division of France’s Defense Staff. And the
Director of the OPCW’s Inspectorate is a former senior official in Japan’s Self-Defense Force,
Ichiro Akiyama. The French and Japanese intelligence organizations are among the world’s
most aggressive in pursuing competitive advantages for their companies through official
conduct of industrial espionage. It would be extraordinary indeed if these countries were
not to seek to use the placement of their nationals into such sensitive positions for the
purpose of advancing their priority agendas.

Meanwhile Back at the B.W.C.

These insights are all the more important insofar as some of the Clinton Administration’s most
zealous proponents of the CWC are seeking to clone its verification provisions, and affix them to
the completely unverifiable 1972 Biological Weapons Convention (BWC). They are being
resisted, however, by other officials who recognize the folly that would occur if the CWC’s errors
were to be compounded by, in effect, expanding its scope explicitly to cover America’s cutting
edge biotech and pharmaceutical firms.

One of those officials eloquently expressed his concerns in a Letter to the Editor of the
Washington Post. Alan P. Zelicoff is a scientist at Sandia National Laboratory who has been
serving as a technical advisor to the U.S. delegation to the Biological and Toxin Weapons
Convention. Dr. Zelicoff felt moved to dissent from a fatuous op.ed. article published on 21
December by Marie Isabelle Chevrier. As he put it, Ms. Chevrier was off-base in urging that “the
United States should be seeking, via international negotiations, a regime focused on the routine
inspection of facilities that could be capable of producing weapons.” Dr. Zelicoff declared that
idea to be one that ” is unworkable and, ironically, might increase the likelihood of
proliferation.” (Emphasis added.)

Dr. Zelicoff’s goes on to observe:

“Contrary to Ms. Chevrier’s assertions, the United States has taken the lead among
signatories to the convention in developing and assessing measures to strengthen this
important treaty. Over the past four years, there have been a half-dozen
extraordinarily detailed exercises to evaluate the utility of inspections at declared
biological defense sites and at industrial, research and even academic sites, which
are quite capable of producing huge quantities of biological materials that are
easily adaptable as weapons.

“The lessons from these exercises are clear: Facilities engaged in legitimate
activities can be incorrectly assessed to be in violation of the convention.
Conversely, sites that are demonstrably in compliance with the convention
easily can convert to illicit activity within hours after the departure of
inspectors.

“The reasons for this quandary: Equipment for pharmaceutical production is
identical to that used for bio-weapons processing, and even the most toxic of
biological materials are used in medical therapeutics and research.

“Article I of the Biological Weapons Convention enjoins parties not to produce
biological materials in types or quantities that are not justified for protective,
prophylactic or other peaceful purposes. Unlike the Chemical Weapons
Convention, which outlaws production of certain classes of poisonous chemicals
(none naturally occurring or possessing therapeutic utility), the [BWC] permits
production of any biologically derived material if the end use is peaceful.

“Further, the experience of the U.N. Special Commission on Iraq (UNSCOM)
provides additional lessons on the difficulties of convincing the international
community that a country is engaging in biological weapons proliferation.
Despite the provisions of the most intrusive inspection regime in history,
UNSCOM cannot yet characterize the full extent of the Iraqi program and
probably never will. In just a few days or weeks, biological weapons can be
manufactured in militarily significant quantities in a site no larger than a
small house.” (Emphasis added throughout.)

These realities have prompted Dr. Zelicoff and all but a few of his interagency colleagues to
eschew the CWC model that its partisans (like the National Security Council’s Elisa Harris) have
been trying to foist upon them. As he put it in the Post:

“…Instead of focusing on costly and probably self-deceptive inspections, the United
States has advocated two useful measures for the [BWC]: investigations if there are
unusual outbreaks of disease (such as occurred in the [USSR’s] Sverdlovsk
anthrax outbreak of 1979) and similar on-site inspections if a party to the
convention alleges that biological weapons have been used.

“The United States believes that the first of these measures would have the highly
desirable side effect of promoting exchange of information about all sorts of
disease outbreaks, including naturally occurring emerging diseases that respect no
borders and generally have no cure but whose spread can be prevented. The
second measure is the strongest new measure available to deter the actual use of
biological weapons.”

Dr. Zelicoff concludes with words that could apply equally to the danger posed by
proliferating chemical weapons, a danger certain to continue to grow despite — and indeed, in
some ways, thanks to the Chemical Weapons Convention.⁽⁸⁾ “While biological weapons
proliferation is a serious security threat to all nations, it is all too easy to make this terrible
problem even worse with feckless measures.” (Emphasis added.)

The Bottom Line

The record of the Clinton Administration with respect to the threat of proliferation of chemical
and biological weapons — which President Clinton has declared in successive Executive Orders to
be “an unusual and extraordinary threat to the national security, foreign policy and economy of
the United States” — is nothing less than a recklessly irresponsible one. As the majority of the
Governmental Affairs Subcommittee on International Security, Proliferation and Federal
Services, chaired by Senator Thad Cochran (R-MS), documented in a major report issued
today, the Administration is not only ignoring the full magnitude of this problem, it is contributing
to it in numerous ways.⁽⁹⁾

While the American people as a whole may be obliged to bear the ultimate costs of such short-sighted U.S. policies, in the short-run, U.S. companies will probably have to pay dearly for them
in terms of their proprietary information and processes and market share. The Clinton
Administration owes it to the Congress and to all those likely to be affected near-term to come
clean about the Chemical Weapons Convention’s true impact on such enterprises — and to refrain
from compounding the damage by recklessly amending the Biological Weapons Convention.

– 30 –

1. See the Center’s Decision Briefs entitled Truth or Consequences #12: The CWC’s
Technology Transfer Provisions Will Exacerbate the Chemical Weapons Threat (No. 97-D 56,
22 April 1997) and Truth or Consequences #5: The CWC Will Not Be Good for Business — To
Say Nothing of the National Interest (No. 97-D 27, 17 February 1997).

2. Annual Report to Congress on Foreign Economic Collection and Industrial Espionage,
National Counterintelligence Center, June 1997.

3. Any concerns the CMA may have had about commercial espionage were clearly subordinated
to the conviction that the 192 large chemical manufacturing concerns that constitute its
membership could gain access to new markets pursuant to the CWC. Unfortunately, as was
observed by the treaty’s critics at the time, such new markets are almost certainly going to be in
nations with whom such trade was not previously possible for fear that chemical materials and
technology would be diverted to weapons production. See the Center’s Decision Brief entitled A
Place to Start on Campaign Finance Reform: C.M.A. Should Refrain From Putting Senators
in Compromising Positions on the Chemical Weapons Convention (No. 97-D 34, 26 February
1997).

4. “Chemical Weapons Convention Fact Sheet,” Chemical Manufacturers Association. This
assessment ignores the significant distinction between “routine” inspections (the relatively
unintrusive monitoring regime to which CMA member companies’ “declared” chemical
manufacturing facilities would be subjected) and the much more invasive on-site “challenge”
inspections to which a great many non-CMA companies — in fact, any facility in the United States
not “declared” pursuant to the CWC — could be exposed.

5. Economic Espionage: The Looting of America’s Economic Security In the Information Age,
Chemical Manufacturers Association, Autumn 1997.

6. From Wall Street Journal reporter John Fialka’s 1997 book, War by Other Means: Economic
Espionage in America.

7. R. Capps, “The Spy Who Came to Work,” Society for Industrial Security Management,
February 1997, No. 2, Vol. 41, p.46.

8. See the Center’s Decision Brief entitled Truth or Consequences #8: The C.W.C. Will
Exacerbate The Proliferation Of Chemical Warfare Capabilities (No. 97-D 38, 6 March 1997).

9. See the Center’s Decision Brief entitled A Policy Indictment: Sen. Cochran’s Subcommittee
Documents Clinton Incompetence/Malfeasance on Proliferation (No. 98-D 4, 12 January
1998).