Implementation of Article XI: An Industrial Viewpoint

By Sandra R. Shroff

The Chemical Weapons Convention, derived from consensus amongst negotiating parties, is designed to be pragmatic, non-discriminatory, verifiable, and universally acceptable.The treaty opens a window through which we can examine and identify the risks associated with proliferation, while also creating new potential for cooperation and disarmament.

During the three-and-a-half years of its existence, the Secretariat has emerged as an effective instrument of chemical disarmament; it has done this by pursuing its mandate, and by building confidence amongst States Parties through the results achieved via its verification process. The Secretariat will, however, achieve broader recognition when it is viewed as encompassing all of the various informal arrangements designed to achieve chemical disarmament, and to establish the universality of its well-negotiated verification mechanism. Compliance with the Convention is assessed through the implementation of all provisions of its verification regime, which encompasses not only information gathering, but also includes information processing, analysis, and evaluation in a political and technical context.

One of the challenges awaiting the OPCW's Secretariat is to focus on the existence of two parallel regimes-one which monitors those chemicals scheduled in the Convention, and another regime known as the 'Australia Group', which continues to monitor an additional list of chemicals, equipment, and technology transfers. The controversy centres on the interpretation and implementation of Article XI of the Convention. It goes almost without saying that the drafters of the Convention, a treaty so painstakingly discussed, would not have dreamt of incorporating Article XI simply to lend support to National Authorities in their implementation of the provisions of the Convention. While the Secretariat has successfully forged ahead in its activities related to verification, much remains to be achieved as far as the unresolved issues arising from Article XI are concerned. Now that three years have elapsed since the entry in force of the Convention, the time is ripe to address these issues.

Industrial Change

I now wish to shed some light on the rapid strides that industry has taken over the last few years towards integrating the operational aspects of business with a multilateral environment, and the impact of globalisation.

The globalisation in chemical industries has readily provided access to competitive technologies, expertise, and raw materials, and has also been instrumental in the application of dual-use technologies for legitimate purposes. Their availability has ceased to be the prerogative of a few economies, and their diffusion into the routine working environment has propelled industries towards rapid growth and constant change.

Concepts of profit centres, joint ventures and mergers, to gain a wider market share within a particular segment of industry, global technology transfers to reduce production costs and retain a competitive edge, and buy-back arrangements sought through contract synthesis, are all strategies which have been undertaken to minimise internal competition and to increase sales and profits.

It is equally true that, with technology advancing at such a tremendous pace, the chemical industry has also had to absorb a variety of regulatory control mechanisms. Over the last few years, common understandings, such as Prior Informed Consent, aimed at monitoring the movement of restricted chemicals, have been negotiated to keep pace with quick technological changes, and to anticipate problems arising either from the use of obsolete technologies, or from the advent of globalisation.

The world is not standing still. It is important for all of us to take stock and to reconsider whether the ad hoc, partial, and selectively-targeted control lists and export control regulations formulated several years ago, for implementation in a different work environment, were as effective as they were meant to be, and whether their continuation is relevant in a constantly changing industrial world.

Process technology and the tools of engineering are contributing greatly to the creation of novel structures in both chemistry and the chemical industry. This will be facilitated by taking note of several developments, including:

• the advent of new reaction mediums;
• the change in reaction kinetics arising from novel catalytic systems in areas of chemical production;
• the availability of more compatible materials;
• increasing independence in equipment fabrication technology and design;
• the refinement of precision process instrumentation to control hazardous process conditions;
• the erection of multipurpose plants catering to the production of a variety of chemicals; and
• the micromanagement of projects.

A revolution in bio-engineering has raised concerns about the emergence of alternative technologies, about the ease with which biological precursors can be produced, and about the new threats posed by identifying and developing highly virulent agents. In addition, the use of several kinds of process equipment fabricated from routinely available construction materials (to reduce capital costs in a project), will bring forward several challenges (e.g. the development of process technologies using stainless steel reactors for hydrogenation reactions to produce vital industrial building blocks, or to carry out anhydrous chlorination reactions for the manufacture of chlorinated compounds). Restrictions placed on specific types of stainless steel or glass lined reactors-without which many of the pharmaceutical raw materials/drugs cannot be produced-do not appear to be a workable solution in the mind of industry.

Article XI and the Australia Group: Unresolved Issues

In the chemical and biological domain, export controls on sensitive materials and technologies are coordinated under the aegis of the informal Australia Group.This export control regime was first introduced to avoid the potential for diversion in the absence of CWC enforcement. It is evident that several developed countries chose to adhere to the view that the CWC addresses only those security issues more relevant to the proliferation of chemical weapons. This is evidenced by the fact that their non-proliferation efforts remain focused on expanding export controls established by members of this informal group, who have thus created supplier cartels.

The 'Schedules of Chemicals' established in the CWC lists 43 chemicals as verifiable in accordance with the agreed provisions of the Verification Annex. On the other hand, industries in developing countries are currently confronted with a watch list of 54 'open-ended' non-verifiable chemicals, together with a variety of restrictions on access to product technology and conventional equipment, promulgated and enforced by the Australia Group.

Ironically, the group of countries imposing such ad hoc restrictions also includes States Parties to the CWC. In the debate that has ensued between advocates of both regimes, a question arises in the minds of industry-if the list of chemicals contained in the Convention was considered to be an adequate basis for monitoring non-proliferation and the application of controls, why are we making efforts to enforce further monitoring of trade in non-verifiable chemicals? The consequences of such inconsistency will not only hinder the efficient operation of the industrial infrastructure, but could also seriously weaken the revenue of specific industries. This brings to the surface the fundamental
difference in approaches to, and interpretations of, specific provisions contained in Article XI of the Convention.

There are two schools of thought associated with the interpretation of subparagraph 2(e) of Article XI of the Convention, which focuses on the review of existing national regulations on trade in chemicals in order to render them consistent with the object and purpose of the Convention. One interpretation seeks to limit any amendments of the national regulations to the Schedules of Chemicals stipulated in the Convention, while the other implicitly prescribes the extension of the scope of the Convention to include other toxic chemicals and their precursors, an argument which would support the continuing existence and functioning of the Australia Group. This interpretation is considered to be contrary, in the mind of industry, to the object and purpose of the Convention. In our view, the review of national regulations should be limited solely to scheduled chemicals identified and specified in the Convention. For a State Par ty to the Convention, no other international agreement should supersede their adherence to the provisions of the Convention.

In addition, subparagraph 2(c) of Article XI expressly forbids States Parties to maintain amongst themselves any restrictions, including those in international agreements, which are incompatible with the obligations undertaken under the Convention, and which would restrict or impede trade. This implies that no additional restrictions on the trade and transfer of chemicals can be justified, given that the Convention has adequate built-in measures to assure States Parties of their compliance, if they have rendered their internal regulations consistent with the requirements of the Convention. The effectiveness and imposition of any additional trade restrictions with regard to non-proliferation is redundant, because of the existence and effective implementation of the verification regime provided for by the Convention.

Accordingly, any assessment of compliance should result from this verification mechanism, and not from the judgement of ancillary informal groups. Subparagraph 1(a) of Article I of the Convention amply specifies that the States Parties are obliged to comply with the transfer requirements for toxic chemicals and their precursors, specified in the Schedules of Chemicals. Declarations submitted by the States Parties initiate the process of monitoring through the inspections that constitute the CWC's verification procedures.

We may recall that, during the early stages of negotiations in Geneva, it was realised that all existing discriminatory restrictions would be withdrawn at the entry into force of the Convention. Unfortunately, this has yet to happen. I quote from CD/1116 page 43, Appendix 1, the earlier draft of subparagraph 2(d) of Article XI, which specified that States Par ties shall:

'Undertake to withdraw all existing discriminatory restrictions in the chemical field applied to States Parties as soon as the Convention enters into force.'

This formulation did not, however, find consensus agreement amongst those States that wished to maintain additional control measures. This signalled that the ad hoc export controls imposed by informal arrangement were not expected to be lifted at the entry into force of the Convention, but that it would be prudent for such export controls to lose their legitimacy once the verification provisions of the Convention were enforced. In this context, let us recall subparagraphs 2(c) and 2(d) of Article XI.

I am a proponent of developing the implementation procedures for all provisions of the Convention on the basis of consensus. Multilateral negotiations are as much about agreeing on the allocation of rights and responsibilities, as about acknowledging ever-widening technological developments. The dynamics of proliferation generate many new incentives for States to cooperate in stemming the tide of proliferation, and in minimising the consequences of non-proliferation. Well-conceived policies will capitalise on these incentives, so that a more stable and secure international environment can be crafted.

Countries have, all too often, rigidly continued to maintain existing policies, despite clear evidence of the need to move in a new direction. There appears to be an unwillingness to question old assumptions, as well as a degree of complacency in terms of the durability of international political arrangements. There is a need to start working from a clean slate to establish the required degree of confidence so necessary for the effective implementation of the provisions of this verifiable, multilaterally-negotiated treaty.

The European Initiative

The previous trend towards over-regulation and increasing complication was illustrated by the European Parliament, when it passed its legislation creating a control regime for dual-use goods, which was to be applied by the EU States from July 1995.This regime establishes the free movement of goods, including dual-use goods, within the internal market, while applying common controls on the export of such goods outside the community. This is in the belief that the internal elimination of such controls will improve the international competitiveness of European industry. The relevant Council Regulation (EC) No. 3381/94 of December 1994 reads as follows:

'Whereas in establishing the internal market, the free movement of goods, including dual-use goods must be in accordance with the relevant provisions of the Treaty; whereas intra-community trade in certain dual-use goods is currently subject to controls by the member states; whereas a condition for the elimination of such controls on intra-community trade is application by the member states of the most effective controls possible, based on common standards, on the export of the aforesaid goods in the framework of the Community regime of export controls for dual-use goods; whereas the elimination of such controls will improve the international competitiveness of the European industry…'.

'Whereas it is also the aim of this Regulation that dual-use goods should be subject to effective control when they are exported from the Community…'.

The EU system appears to have been influenced by precedents other than those of the Convention. The official Journal of the European Communities, Legislation No L-367, vol. 37, dated 31 December, 1994 in Annex 1 reads as follows:

'This list implements internationally agreed dual-use controls including the community strategic controls, MTCR, NSG, Australia Group. No account has been taken of any items that Member States wish to place on the exclusion list. No account has been taken of any national controls (non-regime origin controls) that may be maintained by the Member States.'

An 'agreed' or 'open-ended' list of chemicals, not covered by the Schedules of Chemicals, and subjected to various controls and restrictions, creates a de facto additional list of scheduled chemicals not subject to the amendment mechanism specified in the Convention.

A pertinent question therefore arises-who determines the compliance or non-compliance of the States engaged in trading in those additional chemicals when they are not subject to any internationally-valued verification mechanism in accordance with paragraph 2 of Article VI of CWC? The continuation, after the entry into force of the Convention, of various alternate systems of control through informal regimes, facilitates neither the creation of a level playing field, nor the resolution of Article XI issues.

Conclusion

The CWC is built on the strong foundation of verification, and the fulfilment of its object and purpose does not require the coexistence or support of other informal parallel regimes or arrangements with a less universal character. I urge, through the Secretariat, those Member States that continue to advocate ad hoc export controls to reconsider their positions on the basis of conviction, and not on the basis of convenience. Prolonged continuation of the current situation will fall short of our achieving absolute confidence in how the provisions of the Convention are implemented, and in the existence of transparency. Given that we are collectively striving towards global disarmament, peace and stability, and that we share the common goal of eliminating weapons of mass destruction, our approach needs to be focused on cooperation, and not on confrontation.