CHEMICAL WEAPONS CONVENTION

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TUESDAY, APRIL 15, 1997

U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 2:03 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Jesse Helms
(chairman of the committee) presiding.
Present: Senators Helms, Hagel, Brownback, Biden, and
Kerry.
The Chairman. The Committee will come to order, but we will
stand relaxed until the staff gets its act together. Both
parties are represented at another hearing, and it should not
be very long. [Pause.]
There is no Senate rule against a chairman doing what they
do on television when they have got more time left than they
expected. So they stretch it out.
Our first witness this afternoon will be a long time friend
of so many of us in the Senate. We have worked with him in
various capacities, including broadcasting to foreign
countries. Malcolm S. Forbes, Jr., or Steve as he is known, is
one of the most remarkable friends I have ever known; and I am
going to give you one vignette for the record.
Some years ago I happened to be on the same campus with him
where he had spoken to the students, and following all of the
formal doings there was a reception, and the reception went on
and on and on, and he was shaking hands and answering of the
students, and along about 10 or maybe a little bit earlier I
sent word to Mr. Forbes that I would rescue him and he could go
out a certain door, get on his airplane, and go back to New
York. He said oh, no. He said, I have got some more friends I
wish to talk with.
Now, he was not a candidate for anything except the Kingdom
of Heaven, I think, at that time. But I want to say to you,
sir, that you won the hearts of those young people at that
university. I still hear about your staying there until 11
talking with them and answering questions. Maybe another fellow
would have gotten up and left, but you did not.
Mr. Biden, the ranking member of the committee, will be
here momentarily, and we will just bide our time.
We will have two panels, by the way. Steve Forbes, or
Malcolm S. Forbes, Jr., will be the first witness and only
witness on panel one. Panel two will have businessmen: Mr.
Wayne Spears, President of the Spears Manufacturing Company and
so forth; Mr. Ralph V. Johnson, Vice President of Environmental
Affairs at Dixie Chemical Company; Mr. Kevin L. Kearns,
President of the United States Business and Industrial Council;
the Honorable Kathleen C. Bailey, Senior Fellow of the Lawrence
Livermore National Laboratory, Livermore, California.
This hearing is the third in the final round of Senate
Foreign Relations Committee hearings on the dangerously flawed
Chemical Weapons Convention. Last week the committee heard from
seven distinguished foreign and defense policy leaders about
the national security implications of this treaty. This
afternoon, our purpose is to discuss the destructive effects of
this treaty, and what those effects will have on the American
business community, the new regulations will be imposed, the
intrusive and clearly unconstitutional inspections it will
authorize, and the potential of abuse of the treaty by our
foreign business competitors by industrial espionage.
I can think of no one--no one--who can better speak to
these issues than our lead witness today, Mr. Forbes. He is
chairman and CEO of Forbes Magazine. He is a leading voice of
American business, and in particular a champion of the small
and medium-sized enterprises that will be disproportionately
affected by this treaty.
Last week we heard eloquent testimony from four former
secretaries of defense of this country urging the Senate to
reject this flawed treaty, and I want to quote something one of
those witnesses said that day, because I think it will help us
frame the discussion this afternoon.
Let me preface what I am going to read by saying that there
have been repeated suggestions by the proponents of the treaty
implying that all businesses support this treaty. Well, this
simply is not accurate. Don Rumsfeld eloquently reminded us
last week that many big businesses, and he stressed the word
big, do support the treaty, but it is not the security of big
business that we need to worry about in this country, it is the
smaller businesses.
Here is what Don Rumsfeld said: Big companies seem to get
along fine with big government. They get along with American
government, they get along with foreign governments, they get
along with international organizations, and they have the
ability, with all their Washington representatives, to deal
effectively with bureaucracies. Indeed, Mr. Rumsfeld said, and
I am quoting him still, indeed, that capability on the part of
the big companies actually serves as a sort of barrier to entry
to small and medium-sized companies that lack that capability.
So I do not suggest, he said, for 1 minute that large American
companies are not going to be able to cope with the
regulations. They will do it a whale of a lot better than small
and medium sized companies, end of quote.
Mr. Rumsfeld made a vitally important point. It is small
and medium-sized businesses, the entrepreneurs who are creating
all of the jobs in our economy today, who will be hurt worse by
this treaty. It is they who will have trouble coping with all
of the new regulations and all of the red tape and all of the
intrusive and unconstitutional inspections and all of the legal
fees and potential losses of proprietary information.
The small businesses are the ones whose constitutional
rights will be trampled because this administration refuses to
require a criminal search warrant from involuntary challenge
inspections granted to foreign inspectors. These inspections
will be granted greater power of search and seizure than those
granted to U.S. Law enforcement officers. These inspectors are
the ones who may well confront officials from Iran and China,
knocking on their doors, demanding the right to rifle their
records and so forth and so on.
Speaking of the law enforcement officers, they will
interrogate the employees and remove chemical samples from
their facilities, all because this administration has refused
to ban inspectors from rogue regimes.
Now, we hear over and over again that the Chemical
Manufacturer's Association, which has been very active in
promoting the treaty, we heard that they support the treaty,
and we have had, certainly, the strong inferences, if not
declarations. But let me tell you something about this
association. And I speak as a guy who ran a pretty sizable
association some years ago. The CMA operates and represents
just 191 companies--1-9-1--but this treaty, at the
administration's most conservative estimate, will affect at
least 3,000 businesses, and may affect as many as 8,000.
So I hope we can put an end to the notion that the CMA
represents the interests of the thousands of small- and medium-
sized companies that will be hurt by this treaty. And as one of
our witnesses will tell us today, I believe, even within the
ranks of the CMA companies there is concern about the impact of
this treaty, including the cost of regulations and the
potential loss of confidential business information.
The fact is there are literally thousands of companies
across this country who do not know about this treaty, who do
not understand it in any detail, who do not realize that it
will affect them, who do not understand that they will be
subjected to inspections, and are not aware what kind of
unfunded mandates will be imposed on them should this treaty be
ratified as is.
Now, I have no doubt that the businessmen affected by the
CWC are patriotic Americans who love their country and are
willing to make sacrifices for our national security. And if
this treaty could actually reduce the danger of chemical
weapons, I am sure they would be willing to make necessary
sacrifices to get rid of those terrible weapons. But as we have
heard from so many experts, it just will not work.
This treaty will not work. It will do nothing to reduce the
danger of chemical weapons. If anything, we have learned that
it will make the problem worse by giving rogue nations even
greater access to dangerous chemical agents and technology and
defensive gear. Even the treaty's proponents admit that it will
not work, but they say we should ratify it anyhow; because it
is better than nothing; because, they say, it will establish
``norms.''
Well, I do not believe that ratifying the treaty that
cannot work just to make a statement is good policy; and when
you take into consideration the fact that it will also create
massive new burdens on businesses that are struggling to create
jobs, that it will cost them money, time, and energy while
trampling on their constitutional rights just to make a
statement and establish norms, I say that this treaty is worse
than nothing. The price of that kind of feel-good statement is
just too high.
So, Mr. Forbes, if you will take the seat in the middle, we
thank you for being here, and look forward to your testimony.
And I note that not only is Steve Forbes testifying today, he
announced this Sunday on Face the Nation that he will be
leading a public information campaign to bring the facts about
the treaty to light. So on behalf of the silent majority of
American businesses who do not realize what Washington has
cooked up for them with this dangerous and destructive treaty,
I thank you, sir, for all that you are doing.
I have just been handed a note saying that we should wait
for Senator Biden to come and make his statement. He said he
would try to be here by 2:15, so I suppose, Mr. Forbes, we can
just stand at rest and wait for Senator Biden. [Pause.]
The Senator from Delaware is recognized.
Senator Biden. Mr. Chairman, thank you very, very much, and
I thank the witnesses. We have, as the Chairman well knows,
these things every Tuesday called caucuses where every Member
of each of our parties gets together and we discuss our
respective agendas. Ironically, I was to make a presentation in
my caucus today on the Chemical Weapons Convention, and I
appreciate the Chair doing this.
Mr. Chairman, I am happy you have called this hearing today
on the effect that the CWC would have on American business;
because, as we all know, there has been a great deal of
discussion pro and con on that very point. The charge, in my
view, that the CWC will harm American business, I think is dead
wrong when one considers the fact that the convention was
negotiated with an unprecedented input from the U.S. chemical
industry. Thanks to the industry's help, in my view, the
convention contains thresholds and exemptions that protect
businesses small and large from bearing an undue burden.
The American chemical industry has helped develop the
ground rules under which the inspections that will occur under
this treaty will happen, including provisions for protecting
the confidentiality of business information. Chemical
companies' representatives have also helped in the decision on
how to design the form, the written form, that represents the
only reporting obligation for 90 percent of approximately 2,000
companies that will have an obligation under this convention.
The U.S. chemical companies recognize that while they
produce goods intended for peaceful uses, their products and
inputs could be misused for nefarious purposes. That is why
they so actively have supported this convention. Their
involvement in the CWC has been a model, in my view, of good
corporate citizenship. Unfortunately, we will reward this
responsible behavior with a slap in the face, in my view, if we
fail to ratify this convention and subject the U.S. Chemical
industry to international sanctions, the same sanctions, I
might add, that we ourselves insisted be placed in this
convention under both President Reagan and President Bush.
The CWC was designed with high thresholds for common
industrial chemicals that ensure that only large producers of
those chemicals will be subject to reporting and inspection
requirements. Instead of throwing around old numbers and scare
tactics, I would like to take a look very quickly at the outset
here at the real requirements of this treaty.
Chemicals that are used to make chemical weapons have been
placed in three schedules. Schedule I chemicals are those that
are chemical weapons and direct precursors with little or no
commercial use. Schedule II chemicals are direct precursors
with limited commercial uses. And Schedule III chemicals are
indirect precursors with wide commercial use.
Now, both producers and consumers of chemicals on Schedule
I and two are subject to CWC reporting and inspection
requirements. For most Schedule II chemicals, though, there is
a one-ton threshold. As a result, only 11 American facilities--
11, 11 American facilities--will be subject to Schedule I
requirements, and less than 35 will be covered by Schedule II
requirements.
Turning to Schedule III chemicals, the rules change a
little. Only those facilities that produce, import, or export
more than 30 tons of Schedule III chemicals are covered by
those requirements--30 tons. That is not a vial of chemicals,
that is not a barrel, that is a lot of chemicals, and these
rules apply only to producers. Consumers of these chemicals are
not covered. As a result, only about 100 facilities face these
requirements. An even higher threshold applies to producers of
discrete organic chemicals. Everybody has an acronym in this
bill, so I will just continue to call them discrete organic
chemicals, or DOC's.
Facilities that produce more than 200 tons of discrete
organic chemicals are subject to reporting requirements, as are
those that produce 30 tons of chemicals containing phosphorus,
sulfur, or fluorine. But again, we are talking about producers,
and only producers of hundreds of tons of these chemicals--no
soap manufacturers, no cosmetic firms, all the things we keep
hearing about. You know: ``They are going to go in and find a
cosmetic firm is doing this or a soap manufacturer.'' We are
not talking about those companies. They are not producers of
these chemicals. They are consumers of these chemicals, these
discrete organic chemicals.
While reporting requirements for discrete organic chemicals
will apply to as many as 1,800 U.S. companies, I do not know of
too many Mom and Pop businesses that produce 200 tons of
chemicals a year. In addition, several industries have been
completely exempted from all CWC requirements. These include
explosives makers, hydrocarbon producers, oil refineries,
polymer makers, and facilities that make discrete organic
chemicals through biological processes. What does this mean? It
means that plastic companies, textile makers, and breweries
face zero--zero--obligation under the CWC.
The Commerce Department instructions for the brief data
declaration says that in black and white. And the Conference of
State Parties is also set to ratify these exemptions on May the
6th. So anyone who tells you differently, I would respectfully
suggest, is dead wrong.
There is more to say, and I had planned on saying more, but
I ask unanimous consent that the remainder of my statement be
placed in my record, Mr. Chairman, and I would conclude with
one sentence: We are going to hear from four very distinguished
witnesses, one who believes that--well, I was going to read the
quote. I will not. Anyway, let me just put my whole statement
in the record since you were so kind to hold up for me, and I
will get on with hearing from the witnesses.
The Chairman. Without objection, it is so ordered.
[The prepared statement of Senator Biden follows:]

Prepared Statement of Senator Biden

Thank you, Mr. Chairman. I am happy that we are holding this
hearing today on the effect the CWC would have on American business,
because perhaps no single aspect of this debate has seen more
misinformation.
The charge that the CWC will harm American business appears
preposterous when one considers the fact that the convention was
negotiated with the unprecedented input of the U.S. chemical industry.
Thanks to the industry's help, the convention contains thresholds
and exemptions that protect businesses, small and large alike, from
bearing an undue burden. The American chemical industry helped develop
the ground rules under which inspections will occur, including
provisions for protecting confidential business information.
Chemical company representatives also helped design the brief form
that represents the only reporting obligation for ninety percent of the
approximately two thousand companies that will have obligations under
the CWC.
U.S. chemical companies recognize that while they produce goods
intended for peaceful uses, their products and inputs could be misused
for nefarious purposes. That is why they so actively have supported
this convention. Their involvement in the CWC has been a model of good
corporate citizenship.
Unfortunately, we will reward this responsible behavior with a slap
in the face if we fail to ratify the CWC and subject the U.S. chemical
industry to international sanctions--the same international sanctions
that we ourselves insisted be placed in this treaty to punish countries
that do not ratify it.
The CWC was designed with high thresholds for common industrial
chemicals that ensure that only large producers of these chemicals will
be subject to reporting and inspection requirements. Instead of
throwing around old numbers and scare tactics, let's look at what the
real requirements of this treaty are.
Chemicals that can be used to make chemical weapons have been
placed on three schedules. Schedule I chemicals are chemical weapons
and direct precursors with little or no commercial use. Schedule II
chemicals are direct precursors with limited commercial uses. Schedule
III chemicals are indirect precursors with wide commercial use.
Now, both producers and consumers of chemicals on schedules one and
two are subject to CWC reporting and inspection requirements. For most
Schedule II chemicals, though, there is a one ton threshold.
As a result, only eleven American facilities will be subject to
Schedule I requirements, and less than thirty-five will be covered by
Schedule II requirements.
Turning to Schedule III chemicals, the rules change a little.
Only those facilities that produce, import or export more than
thirty tons of Schedule III chemicals are covered by those
requirements. Thirty tons. That's not a vial, that's not a barrel,
that's a lot of chemicals. And these rules apply only to producers.
Consumers of these chemicals will not be covered. As a result, only
about one hundred facilities face this requirement.
An even higher threshold applies to producers of discrete organic
chemicals, or ``docs.''
Facilities that produce more than two hundred tons of these
chemicals are subject to reporting requirements, as are those that
produce thirty tons of a chemical containing phosphorus, sulfur or
fluorine. But again, we're talking only about producers, and only
producers of hundreds of tons of these chemicals.
While the reporting requirements for discrete organic chemicals
will apply to as many as eighteen hundred U.S. companies, I don't know
of too many mom-and-pop businesses that produce two hundred tons of
chemicals every year.
In addition, several industries have been completely exempted from
all CWC requirements. These include explosives makers, hydrocarbon
producers, oil refineries, oligomer and polymer makers, and facilities
that make discrete organic chemicals through biological processes.
What does this mean? It means that plastics companies and textile-
makers and breweries face zero obligation under CWC. The Commerce
Department instructions for the brief data declaration says that in
black and white. Some of these exemptions are already in the treaty,
and the Conference of States Parties is all set to ratify the rest on
May 6.
So anyone who tells you that these industries will be hurt by CWC
is just dead wrong.
In addition, there will be an exemption for facilities that
manufacture a product that contains a low concentration of a scheduled
chemical. The treaty explicitly directs the Conference of States
Parties to adopt such a rule.
For Schedule III chemicals, the ones with wide commercial
applications, the proposed threshold is thirty percent.
So a plant that makes soap or cosmetics or one that processes food
would not be subject to CWC requirements.
I also want to address the charge that the CWC will lead to
international inspectors rummaging at will through American businesses.
This too is entirely untrue.
Only a limited number of facilities will be subject to routine CWC
inspections, and these are mostly the large chemical manufacturers that
are supporting the treaty.
These routine inspections will be conducted on the basis of
facility agreements negotiated with the full input of the plant
involved in order to protect trade secrets.
And there will be no warrantless searches. If a firm does not
consent to an inspection, an administrative or criminal search warrant
will have to be obtained before the inspection goes forward.
Moreover, all challenge inspections will take place under the
principle of ``managed access,'' where our government negotiates with
the inspectors over the places, records, and data that may be searched.
So, all inspections will take place under the supervision of U.S.
government officials.
Our exposure to loss of trade secrets due to the CWC is also
greatly overstated.
The CWC contains an unprecedented level of protections for
confidential business information, all of which were negotiated and
supported by industry.
The combination of close supervision of confidential business
information, plus the deterrence of our domestic criminal laws, should
keep losses of trade secrets to a bare minimum.
The facts are that American industry and the executive branch have
worked cooperatively--both in drafting the treaty and in drafting the
proposed implementing legislation--to minimize the burden on U.S.
industry.
The chemical industry is to be commended for the role that it
played in helping to negotiate this treaty, and I look forward to
hearing the testimony of our witnesses today.

The Chairman. Mr. Forbes.

STATEMENT OF MALCOLM S. FORBES, JR., PRESIDENT AND CEO, FORBES,
INC., NEW YORK, NY

Mr. Forbes. Thank you very much, Mr. Chairman, for allowing
me today to testify before your distinguished committee.
Senator Biden. Excuse me 1 second, Mr. Chairman. I would
like to point out one thing: Mr. Forbes won my State. I would
just like to point out that Delaware in the Republican primary,
voted for Forbes. So I want the record to note I smiled at him,
I have been very nice to him, I like him very much. We have
agreed very heartily. We are together on the radios, right, Mr.
Forbes? Tell them that, will you please?
Mr. Forbes. We are together on the radios, but I am keeping
on my Kevlar for protection.
There are many compelling reasons, I believe, to oppose
ratification of the Chemical Weapons Convention. The fact is
that the Chemical Weapons Convention significantly threatens
the freedoms we Americans cherish. It significantly diminishes
America's sovereignty and significantly increases America's
vulnerability to chemical warfare. It is as though we are being
asked to endorse a drug that worsens the disease it purports to
cure, and in addition has some highly dangerous side effects.
To explain just how dangerous the CWC side effects are,
just let me ask the distinguished members of this committee a
very simple question: What is the basis of America's greatness?
Why is it that although the international arena contains many
powers today, we are the world's sole superpower? Any adequate
answer to this ques-
tion would have to include such factors as the competitive
nature of our free market system, the unparalleled
technological sophistication of America's enterprises, but most
important, our basic freedoms. These are the sinews of our
power, the basis of our national greatness. It is precisely
these quintessentially American strengths that the convention
would undermine.
Let me begin by talking about America's competitiveness. As
I have strenuously argued on other occasions, maintaining
America's competitive edge requires a lessening of the tax and
regulatory burdens on the American people and on our Nation's
enterprises. Unfortunately, the CWC will have precisely the
opposite effect. It will burden up to 8,000 companies across
the United States. Remember, these are in the hands of an
international bureaucracy, not what we would like them to be,
with major new reporting regulatory and inspection requirements
entailing large and uncompensated compliance costs. These added
costs constitute an unfunded Federal mandate. Like so many
unfunded mandates, they are bound to retard our economic growth
and make our companies less competitive.
Is it not ironic, Mr. Chairman, meeting here as we are on
tax day and concerned as we all are with reducing the tax
burden on the American people, that we should even consider
ratifying a convention that amounts to a new tax on some of our
most innovative and productive companies? But it gets worse.
For in addition to the costs arising from heavy duty reporting,
the CWC subjects our chemical companies to snap inspections
that will allow other nations access to our latest chemical
equipment and information. No longer will violators of
intellectual property rights in China, Iran, and elsewhere,
have to go to the trouble of pirating our secrets. Incredibly,
we ourselves will effectively hand them the stuff on a silver
platter. No wonder former CIA Director and Defense Secretary
Jim Schlesinger has called the convention a godsend for foreign
intelligence services.
But it gets worse. The CWC also threatens the
constitutional rights guaranteed Americans under the Fourth
Amendment. As former Secretaries of Defense Dick Cheney, Don
Rumsfeld, and Cap Weinberger noted last September in a joint
letter to Majority Leader Trent Lott, quote: The CWC will
jeopardize U.S. citizens constitutional rights by requiring the
U.S. Government to permit searches without either warrants or
probable cause, end of quote. That is a serious statement from
these former defense chiefs, jeopardize U.S. citizens
constitutional rights.
Think about that, Mr. Chairman. And think about all the
criminal cases that our courts have summarily dismissed,
because in their view the defendant's constitutional rights had
been violated by police searches conducted without probable
cause. Are American businesses to receive less justice than
suspected felons? Of course not. The idea is preposterous. And
yet that is what compliance with the CWC would entail.
As Department of Justice officials publicly acknowledge in
testimony before the Senate Judiciary Committee on September 9,
1996, in cases where private facilities do not voluntarily
permit access to inspection a criminal warrant would be
required. Obtaining such a warrant from a court, however, would
require demonstration of probable cause. This will be
impossible in many cases, be-
cause under the Chemical Weapons Convention the nation
requesting an inspection need not cite its reasons for making
such a request.
Hence, the treaty poses an insoluble dilemma. Should the
U.S. Government choose to respect its citizens Fourth Amendment
rights not to be subjected involuntarily to searches in absence
of judicial warrants? It will be creating a precedent that
other countries will assuredly cite to refuse onsite
inspections in their territories. If we do not do it, do not
expect them to do it. On the other hand, should the Government
choose not to respect the Fourth Amendment rights it will be
acting unconstitutionally.
But it gets worse, Mr. Chairman, for in addition to
threatening our Fourth Amendment rights, the convention also
undercuts our Fifth Amendment rights against having our
property taken by the Government without just compensation. You
are familiar with Judge Robert Bork, who noted in a letter to
Senator Hatch last August, quote, Fifth Amendment problems
arise from the authority of inspectors to collect data and
analyze samples. This may constitute an illegal search and an
illegal seizure, and perhaps constitute the taking of private
property by the Government without compensation. The foreign
inspectors will not be subject to punishment for any theft of
proprietary information.
Mr. Chairman, these are very grave constitutional issues
that need to be resolved before the CWC is ratified. To wait
until after the convention is ratified and its provisions
become the supreme law of the land would be an act of supreme
folly.
Yet there is another pernicious aspect of this convention
that I would like to touch on, the very different impact it
would have on large and small companies. As former Secretary of
Defense Don Rumsfeld noted in testimony before this committee
last week, big companies are generally better able than small
companies to withstand additional reporting, regulatory, and/or
government inspection requirements. Some might even regard such
burdens as a barrier to entry that can enhance their market
share at the expense of their smaller competitors.
Now, large chemical manufacturers are among the most
pervasively regulated industries in the world. These companies
can reasonably conclude that the burdens of this convention are
manageable. The same certainly cannot be said of smaller, less
regulated companies, many of whom still seem to be unaware that
this treaty could adversely affect them and their bottom lines.
The array of American companies that fall into this category is
simply mind-boggling. They include those in such diverse fields
as electronics, plastics, automotive, biotech, food processing,
brewers, distillers, textiles, nonnuclear utility operators,
detergents and soaps, cosmetics and fragrances, paints, and
even the manufacture of ball point pen ink. The Senate will be
ill-advised to ratify a convention that could do harm,
unintended harm, to so many American enterprises without truly
compelling reasons to do so.
But finally, Mr. Chairman, in discussing the harmful side
effects of the CWC, I would like to draw your committee's
attention, as many other witnesses have done, to Articles X and
XI. These provisions, which obligate the signatories to
facilitate the fullest possible exchange of technology directly
relevant to chemical war fighting will be cited by other
governments, and maybe even by some American companies, as
pretexts for doing business with Iran and Cuba with adverse
consequences for U.S. National interests.
These then, Mr. Chairman, are just some of the costs
associated with ratifying the Chemical Weapons Convention. They
are unacceptably high. Are there any offsetting benefits?
Unfortunately, the answer is no, there are not. In fact, and
this is critical, far from protecting us against an outbreak of
chemical warfare, the convention would increase the likelihood
of these awful weapons being used.
As former Defense Secretaries Jim Schlesinger, Cap
Weinberger, and Don Rumsfeld wrote in last month's Washington
Post, it was March 5th, quote, the CWC would likely have the
effect of leaving the United States and its allies more, not
less, vulnerable to chemical attack. How would the CWC increase
our vulnerability to chemical attack? By giving rise, and this
has happened before in our history, to a false sense of
security and a diminished program for defending our troops and
our people against the danger of chemical attack by leading the
American people to believe that with this convention we have
somehow rid the world of chemical weapons when in fact even the
CWC's defenders acknowledge that it will be unverifiable,
unenforceable, and ineffective in globally banning chemical
weapons.
Historically, Mr. Chairman, phony arms control treaties
have invariably translated into reduced efforts by the
democracies to defend themselves against the predatory
dictatorships. Sadly, there is no reason to suppose that the
CWC will prove an exception to this general rule.
Mr. Chairman, if some of our best defense experts warn us
that this treaty will harm our vital security interests, if it
will lead to the creation of a massive intrusive U.N.-style
bureaucracy costing taxpayers as much as $200 million annually,
and if on top of all that it will diminish our competitiveness,
render us more vulnerable to economic espionage, endanger some
of or constitutional rights, and impose unfunded Federal
mandates on thousands of American companies, many of whom do
not even make chemical weapons, why on Earth should the
convention be ratified? To demonstrate leadership? But surely,
real leadership requires a willingness to stand alone if
necessary to defend our vital interests and ultimately the
interests of freedom-loving people around the world, not to
sacrifice those interests on the alter of a misguided
bureaucratic global consensus.
Unfortunately, that apparently is not the way President
Clinton understands U.S. leadership. He would have us be a
leader in implementing a global agenda consisting of
multinational accords that a majority of the American people
simply do not support. Like the CWC, these multinational
accords, whether they relate to the environment, patents,
property rights, the way we educate our kids, defraying the
costs of U.N. operations, or protecting our homes, are
unwelcome intrusions on American sovereignty. The best way to
resist all of this is simply to stop the present treaty.
And finally, Mr. Chairman, it speaks volumes about what is
wrong with the present CWC that its proponents declare that the
United States might become a pariah nation like Libya, Iraq,
and North Korea, if we do not ratify it. Surely only hardened
anti-American propagandists, deluded one worlders, can ever
entertain the idea that the United States is akin to North
Korea, Libya, and other pariah states. After all, these pariah
nations are developing and manufacturing chemical weapons at
the same time that America is destroying its stockpile of such
weapons. It is a sign of desperation, as well as an insult to
all Americans that President Clinton and some of his allies are
advancing this argument in order to defend a convention that is
truly indefensible.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Forbes follows:]

Prepared Statement of Malcolm S. Forbes, Jr.

Thank you, Mr. Chairman, for allowing me to testify before this
distinguished committee today.
There are many compelling reasons to oppose ratification of the
Chemical Weapons Convention. The fact is that the Chemical Weapons
Convention significantly threatens the freedoms we Americans cherish,
significantly diminishes America's sovereignty, and, significantly
increases America's vulnerability to chemical warfare. It's as though
we were being asked to endorse a drug that worsens the disease it
purports to cure and, in addition, has some highly dangerous side
effects.
To explain just how dangerous the CWC's side effects are, let me
ask the distinguished members of this committee a simple question. What
is the basis of America's greatness? Why is it that although the
international arena contains many powers, we are the world's sole
superpower? Any adequate answer to this question would have to include
such factors as the competitive nature of our free market system, the
unparalleled technological sophistication of American enterprises, and,
most important, our basic freedom. These are the sinews of our power,
the basis of our national greatness. Yet it is precisely these
quintessentially American strengths that the Convention would
undermine.
Let me begin by talking about American competitiveness. As I have
strenuously argued on other occasions, maintaining America's
competitive edge requires a lessening of the tax and regulatory burdens
on the American people and our Nation's enterprises. Unfortunately, the
CWC will have precisely the opposite effect. It will burden up to 8,000
companies across the United States with major new reporting, regulatory
and inspection requirements entailing large and uncompensated
compliance costs. These added costs constitute an added federal
mandate. Like so many unfunded mandates, they are bound to retard our
economic growth and make our companies less competitive.
Isn't it ironic, Mr. Chairman, meeting here on Tax Day and
concerned as we all are with reducing America's tax burden, that we
should even consider ratifying a Convention that amounts to a new tax
on some of our most innovative and productive companies?
But it gets worse. For in addition to the costs arising from heavy-
duty reporting, the Chemical Weapons Convention subjects our chemical
companies to snap inspections that will allow other nations access to
our latest chemical equipment and information. No longer will violators
of intellectual property rights in China, Iran and elsewhere have to go
to the trouble of pirating our secrets; incredibly, we ourselves will
hand them the stuff on a silver platter. No wonder former CIA Director
and Secretary of Defense James Schlesinger, has called the Convention a
``godsend'' for foreign intelligence services.
But it gets worse. The CWC threatens the constitutional rights
guaranteed Americans under the Fourth Amendment. As former Defense
Secretaries Dick Cheney, Donald Rumsfeld and Caspar Weinberger noted
last September in a joint letter to Majority Leader Trent Lott, ``the
CWC will jeopardize U.S. citizens' constitutional rights by requiring
the U.S. government to permit searches without either warrants or
probable cause.''
``Jeopardize U.S. citizens' constitutional rights''--think about
that, Mr. Chairman. And think about all the criminal cases that our
courts have summarily dismissed because, in their view, the defendants'
constitutional rights had been violated by police searches conducted
without ``probable cause.'' Are America's businesses to receive less
justice than suspected felons? Of course not--the very idea is
preposterous! And yet, that is precisely what compliance with the CWC
would entail.
As Department of Justice officials publicly acknowledged in
testimony before the Senate Judiciary Committee on Sept. 9, 1996, in
cases where private facilities do not voluntarily permit access to
inspection, a criminal warrant would be required. Obtaining a warrant
from a court, however, would require demonstration of probable cause.
This will be impossible in most cases, because under the Chemical
Weapons Convention, the nation requesting an inspection need not cite
its reasons for making such a request.
Hence, the treaty would post an insoluble dilemma. Should the U.S.
government choose to respect its citizens' Fourth Amendment rights not
to be subjected involuntarily to searches in the absence of judicial
warrants, it will be creating a precedent that other countries will
assuredly cite to refuse on-site inspections in their territories. On
the other hand, should the government choose not to respect those
Fourth Amendment rights, it will be acting unconstitutionally.
But it gets worse. For in addition to threatening our Fourth
Amendment rights, the Convention also undercuts our Fifth Amendment
rights against having our property taken by the government without just
compensation. As Judge Robert Bork noted in a letter to Sen. Orrin
Hatch last August:

* * * Fifth Amendment problems arise from the authority of
inspectors to collect data and analyze samples. This may
constitute an illegal seizure and, perhaps, constitute the
taking of private property by the government without
compensation. The foreign inspectors will not be subject to
punishment for any theft of proprietary information.

Mr. Chairman, these are very grave constitutional issues that need
to be resolved before the CWC is ratified. To wait until after the
Convention is ratified and its provisions become the ``supreme law of
the land'' would be an act of supreme folly.
There is yet another pernicious aspect of this Convention that I
would like to touch on--the very different impact it would have on
large and small companies. As former Secretary of Defense Donald
Rumsfeld noted in testimony before this Committee last week, big
companies are generally better able than small companies to withstand
additional reporting, regulatory and/or government inspection
requirements. Some might even regard such burdens as a barrier to entry
that can enhance their market-share at the expense of their smaller
competitors.
Large chemical manufacturers are among the most pervasively
regulated industries in the world. These companies can reasonably
conclude that the burdens of this Convention are manageable.
The same certainly cannot be said of smaller, less regulated
companies--many of whom still seem to be unaware that this treaty could
adversely affect them and their bottom lines. The array of American
companies that fall into this category is simply mindboggling. They
include those in such diverse fields as electronics, plastics,
automotive, biotech, food processing, brewers, distillers, textiles,
non-nuclear electric utility operators, detergents and soaps, cosmetics
and fragrances, paints, and even manufacturers of ballpoint pen ink.
The Senate would be ill-advised to ratify a Convention that could harm
so many American enterprises without having truly compelling reasons to
do so.
Finally, Mr. Chairman, in discussing the harmful side effects of
the Chemical Weapons Convention, I would like to draw your Committee's
attention to Articles X and XI. These provisions, which obligate the
signatories to ``facilitate the fullest possible exchange'' of
technology directly relevant to chemical war-fighting, will be cited by
other governments--and, probably, by some American companies--as
pretexts for doing business with Iran and Cuba, with adverse
consequences for U.S. national security interests.
These, then, are some of the costs associated with ratification of
the Chemical Weapons Convention. They are unacceptably high. Are there
any offsetting benefits? Unfortunately, the answer is no, there aren't.
In fact, far from protecting us against an outbreak of chemical
warfare, the Convention would increase the likelihood of these awful
weapons being used. As former Defense Secretaries James Schlesinger,
Caspar Weinberger and Donald Rumsfeld wrote in last month's Washington
Post (March 5), ``The CWC would likely have the effect of leaving the
United States and its allies more, not less, vulnerable to chemical
attack.''
How would the CWC increase our vulnerability to chemical attack? By
giving rise to a false sense of security and a diminished program for
defending our troops and people against the danger of chemical attack.
By leading the American people to believe that with this Convention we
have somehow rid the world of chemical weapons when, in fact, even the
CWC's defenders acknowledge that it will be unverifiable, unenforceable
and ineffective in globally banning chemical weapons. Historically,
phony arms control treaties have invariably translated into reduced
efforts by the democracies to defend themselves against the predatory
dictatorships. Sadly, there is no reason to suppose that the Chemical
Weapons Convention will prove an exception to this general rule.
Mr. Chairman, if some of our best defense experts warn us that this
treaty will harm our vital security interests? If it will lead to the
creation of a massive, intrusive, U.N.-style bureaucracy costing
American taxpayers as much as $200 million annually? And if, on top of
all that, it will diminish our competitiveness, render us vulnerable to
economic espionage, endanger our constitutional rights, and impose
unfunded federal mandates on thousands of American companies, none of
whom even make chemical weapons, why on earth should the Convention be
ratified? To demonstrate ``leadership''? But surely, real leadership
requires a willingness to stand alone, if necessary, to defend our
vital interests and ultimately the interests of freedom-loving peoples
around the world--not to sacrifice those interests on the altar of a
misguided, bureaucratic global consensus.
Unfortunately, that apparently is not the way President Clinton
understands U.S. leadership. He would have us to be a ``leader'' in
implementing a global agenda consisting of multinational accords that a
majority of the American people simply do not support. Like the
Chemical Weapons Convention, these multinational accords--whether they
relate to the environment, patents or other property rights, or to the
ways in which we educate our children, defray the costs of the U.N.
operations or protect our homes--are unwelcome intrusions on American
sovereignty. The best way to resist them is to stop the present treaty.
Finally, Mr. Chairman, it speaks volumes about what is wrong with
the present Chemical Weapons Convention that its proponents declare
that the United States will become a pariah nation like Libya, Iraq and
North Korea if we do not ratify it. Surely, only hardened anti-American
propagandists and deluded One-Worlders could ever entertain the idea
that the United States is akin to North Korea, Libya, etc. After all,
these pariahs are developing and manufacturing chemical weapons at the
same time we are destroying ours. It is a sign of desperation, as well
as an insult to every American, that President Clinton and his friends
are advancing this argument in order to defend a Convention that is
truly indefensible.
Thank you, Mr. Chairman, for your gracious attention.

The Chairman. I suggest, anticipating that additional
Senators will appear, there are afternoon committee meetings
going on, as well, in other areas of the Capitol. I suggest
that we embark on about a 7.5 minute round of questions.
First of all, I am going to use a few minutes of my time to
say that my dear friend, the Senator from Delaware, never
disappoints me. Somehow he always comes up with statistics that
I do not know where they came from, and I do not know that he
can explain them, either. But here he did it again today. But I
am concerned, I must say to my friend, that the administration
has becoming expert in low-balling the number of businesses
that will be affected by the chemical weapons treaty, in order,
I think obviously, to avert concern in the Senate.
Now, back in 1993 the Congressional Office of Technology
Assessment reported that the administration believed that over
11,200 facilities would be subject to this treaty. During the
past 4 years, that number has gone down like the Titanic. It
dropped to 6,300 in October 1994, and then to 3,000 in May
1996. Now, continuing the trend of the CWC's seemingly ever-
shrinking impact upon business, ACDA is now declaring that only
2,000 companies will be affected. Lord knows what it is going
to be tomorrow morning at 10.
Yet when I review the response codes on ACDA's industry
data base, it seems to me that the administration has simply
developed now new information about 5,583 of these facilities
to confirm or deny--confirm or deny--that they would be
affected by the CWC. In fact, as of last year only 668
facilities in the entire country had responded to ACDA in
recognition of the fact that they would have new regulatory
obligations under the CWC. This means that even CMA-owned
facilities have not responded to ACDA's industry survey
questionnaire.
Accordingly, I do not think it is appropriate for the
administration to reduce their estimates when the companies
themselves have not responded one way or the other, or to
confirm or deny that they use or produce the chemicals that are
subject to the treaty. Accordingly, I think there are serious
problems with the statistics that may have already been
presented today by my friend, or subsequent to that.
Now, Mr. Forbes, the CWC will require the Lord knows how
many American companies to fill out detailed data declarations.
Some companies have conducted comprehensive internal cost
reviews of their own, based on the instruction manual and draft
regulations compiled by the Commerce Department. The cost
estimates associated with the reporting burden range from
$1,500 to $2,000 for two small companies producing discrete
organic chemicals, up to $250,000 estimated by a large
diversified company.
Now, my question to you, sir, is do you think the
advantages of this treaty, if any, are sufficient to warrant
subjecting American companies to this new regulatory burden?
Mr. Forbes. Absolutely not. Even putting aside the fact
that other nations can easily circumvent this treaty, just as
other nations violated the 1925 accord banning the use of
poison gases, even if that is true it will impose a burden on
American companies, and to concentrate on trying to assess what
that burden is, trying to assess how we might reduce it, it
lies in the interpretation of a body over which we will have
little effective control.
And so I do not see what the advantages are to argue,
whether it is going to be 100 facilities or 10,000 facilities,
Mr. Chairman, when you were reciting those numbers I thought
for a moment you were talking maybe about the stock market
going down to 2,000.
But we do not know. It is uncharted territory. We do not
know what kind of inspections it will go to.
When the Iranians put in the request that they have spotted
a challenge inspection somewhere, we do not know. And if we do
not know, what are we doing it for? And given the history of
these agreements and given how easy it is to produce deadly
weapons, I mean, look at Iraq. The most trod on nation in the
world in terms of inspections. Yet Saddam stays one step ahead
of those inspectors. If it cannot work in Iraq, why are we
subjecting ourselves to this in the first place.
The Chairman. According to the Congressional Office of
Technology Assessment, to which I referred a minute or so ago,
the U.S. Chemical industry is one of the top five industries
targeted by foreign governments, and the problem of industrial
espionage is growing. Do you agree with that statement?
Mr. Forbes. Yes, and we have seen an example of it last
year.
The Chairman. And because proprietary information is often
the basis for a chemical company's competitive edge, both
nationally and internationally, the theft of trade secrets can
result in major loss of revenue and investment. In fact, the
theft of trade secrets can cripple even a giant company,
according to this report, and can be fatal to a small
enterprise. I suppose that you agree with that assessment by
this government agency.
Mr. Forbes. [Nods affirmatively.]
The Chairman. But in any case, former Secretary of Defense
and Director of Central Intelligence Jim Schlesinger testified
last week, sitting almost where you are sitting right now, that
the CWC would be a godsend, and that is his word, a godsend to
foreign companies and governments engaged in industrial
espionage. My question, sir, is do you agree with Jim's
assessment of that?
Mr. Forbes. I am afraid so, yes.
The Chairman. The Chemical Manufacturer's Association,
which represents the largest--the largest--U.S. Chemical
companies, supports ratification of this treaty. This past
week, as you know, former Secretary of Defense Rumsfeld
suggested that the reason for CMA's support may be due to the
fact that the large companies can cope with the new regulatory
burden and so forth, but these are not surmises, they are the
result of studies by a number of us. My question is how badly
do you think this treaty will harm U.S. industry, and why do
you think the association supports it?
Mr. Forbes. Well, large companies can cope with regulation.
In fact, historians of regulation in America point out that
larger companies often like regulation, often like government
intruding, because that makes it more difficult for competitors
to enter the business and compete. When airlines were
deregulated we got a whole host of new companies coming in.
When telephones were deregulated a whole host of new companies
came in. When railroads were deregulated, short lines
proliferated. So I think he is onto something.
It seems to be in human nature. They are obviously
supporting it with the most honorable of motives. They think it
will be good. But that begs the question. Here we are getting
into almost how many angels dance on a pin arguments about how
many facilities, what kind of chemicals, Schedule III, Schedule
II, which begs the question will this reduce the possibility of
production of poisonous chemicals around the world by nations
that wish to do it. The answer is no.
The Chairman. I thank you.
Senator Biden.
Senator Biden. Thank you very much.
Mr. Forbes and Senator Helms, let me tell you where I got
my numbers. I got my numbers from an analysis done by the
Commerce Department, and the way it explains its previously
higher number--I am reading from a letter signed by former
Secretary of Commerce Mickey Kantor and Philip Lader,
Administrator of the Small Business Administration. And I
quote:

Previously, the administration had estimated that more
companies would be required to submit a data declaration.
However, additional analysis indicated that many did not cross
the CWC production threshold for reporting. Further,
administrative exemptions at the Organization for the
Prohibition of Chemical Weapons (OPCW) will be crafted to
exclude entire industries from reporting--biomediated processes
(such as certain beverages), polymers (such as certain plastics
used in football helmets),* * *. In addition, plant sites that
exclusively produce hydrocarbons (e.g., propane and ethylene)
are completely excluded from reporting requirements.

That is why the number is different. Number 1.
Number 2, I might point out that these onerous reporting
requirements are a total of, for Schedule I, I believe, six
pages long, for Schedule II I think it is seven, and Schedule
III it is five. And of Schedule III and the so-called DOC's,
which total roughly 1,900 of the 2,000 companies we are talking
about, the total number of inspections under the treaty
allowed, period, in any 1 year is 20. Let us put this in
perspective--20.
Now, it does not go to the sovereignty argument Mr. Forbes
raised. I understand that. But it goes to the facts--20--t-w-e-
n-t-y--20. And if there are 1,800 of those 1,900 companies, as
I am saying, that are in Schedule III and the so-called DOC's,
if I am right about that, it is 20 out of 1,900. If it is
10,000 or whatever number my friend uses, or 6,000, it is 20.
That is Number 1.
Number 2, on this issue of search warrants, there is a
section in the treaty now, put in at the insistence, I am told,
of President Bush, and it deals with covering the Fourth
Amendment. It is good to see Mr. Gaffney here. Mr. Gaffney, you
staff more people than I have ever seen. You are a very, very
ubiquitous fellow. Every witness we have had against, you have
been staffing, and they are fortunate to have your expertise.
``In meeting the requirement to provide access as specified
in paragraph''--I am reading from the Verification Annex of
Challenge Inspections. ``In meeting the requirement to provide
access as specified in paragraph 38, the inspected State Party
shall be under the obligation to allow the greatest degree of
access, taking into account any constitutional obligation it
may have with regard to proprietary rights or searches and
seizures.'' But assuming that was not sufficient, which it
clearly is legally, assuming that was not sufficient, we are
prepared to accept a condition to the treaty requiring search
warrants for challenge inspections and the establishment of
probable cause.
Now, I might also point out there is--this is black letter
law, what I am referring to now. We are not talking about any
hyperbole on my part about how search warrants work and do not
work. The Supreme Court, in Marshal v. Barlow's, Incorporated,
a decision argued June 9th, 1978, decided May 23rd, 1978, which
is the prevailing law, talks about administrative warrants,
criminal warrants, and those inspections where no warrant is
required. And I might add, Federal law authorizing warrantless
searches, which I am sure, I suspect Mr. Forbes, you would
disagree with all these, but in fact I am citing what the law
is. I am not implying that you agree what the law should be. I
would imagine you do not think there should be the Federal
Insecticide, Fungicide, and Rodenticide Act; or the Nursery
Stock Guarantee Act; or Immigration and Naturalization Act; or
Toxic Substance Control Act; Consumer Product Safety Act;
National Forest System Drug Control Act; Bald Eagle Protection
Act; Migratory Bird Treaty; Skies Act; Fisher and Wildlife Act
of 1956; Northern Pacific Halibut Act of 1982; Whaling
Convention of 1949; Tuna Convention of 1950; Eastern Pacific
Tuna Licensing Act of 1934, Endangered Species Amendments of
1982, Antarctic Conservation Act of 1978, Antarctic Marine
Living Resources Convention of 1984, Lacy Act Amendments of
1981; Food and Drug and Cosmetic Act; Federal Meat Inspection
Act; Fisherman's Protective Act; Distillery Spirits Act;
Occupational Health and Safeties Act; Migrant Season
Agricultural Workers Act; Mine Safety and Health Act; Safe
Drinking Water Act; Surface Mining Control Act; Clean Water
Act; Resource Conservation Recovery Act; Clean Air Act;
Comprehensive Environmental Response Compensation Liability
Act; and Federal Land Policy Management Act. I may have made
the case why the Government is over-reaching. But I also would
argue this makes the case that what is suggested in this treaty
is nothing--nothing--nothing--different than the way in which
the law has worked so far. None of these requires an act.
To walk on your estate to find out whether you are shooting
bald eagles, which I am sure you are not, Mr. Forbes, they are
allowed to do that without a warrant, old buddy. They are
allowed to do that. So there are a lot of things you are
allowed to do without a warrant. But there is a second category
here. Nothing in here can be done without that kind of warrant
if, in fact, any business objects.
There is a second category in the Supreme Court law, and it
is called an administrative warrant. And it says for purposes
of administrative search such as this, and I am reading from
the case and there was an OSHA inspector who wanted to come on,
probable cause justifying the issuance of a warrant may be
based not only on specific evidence of existing violations, but
also on showing that reasonable legislative, administrative
standards for conducting an inspection are satisfied with
respect to a particular establishment. That is an
administrative warrant.
And third, there is a third kind of warrant, and that is a
criminal warrant.
So we are willing to add a condition to this treaty
requiring a criminal warrant in addition to an administrative
warrant, where I might add under our Constitution and our
Supreme Court now in similar circumstances--because the Court
uses all this test on all Fourth Amendment cases--they use this
notion of whether or not there is reason to believe the party
involved thought they were protected from this kind of
intrusion, whatever it is. And they argue that pervasively
regulated industries start off without the benefit of the
presumption that they would not be inspected without a warrant.
That is the basis on which the Supreme Court could uphold all
of these warrantless inspections or searches.
We are not talking about that. We are talking about
criminal warrants in areas where there are challenge
inspections. And so I hope when you see the condition, which I
would be happy to show you Mr. Forbes, your concern on at least
that one issue will be mildly allayed.
Mr. Forbes. By the way, Senator, I do not shoot bald
eagles, and I do not shoot Democrats, either.
Senator Biden. Well, I will tell you what, if anybody could
shoot Democrats and do it effectively, you are very good at it;
and I mean that in a complimentary way. The way I saw you take
my State by storm, I am glad I was not a Republican standing in
the way of your shots.
Mr. Forbes. Some of my best friends are Democrats.
Senator Biden. And mine Republican.
The Chairman. I have just got one question. Did you
understand the question?
Senator Biden. Well, I did not hear the answer, Mr.
Chairman.
Mr. Forbes. I am trying to be diplomatic, Mr. Chairman.
The Chairman. Senator Hagel.
Senator Hagel. Mr. Chairman, thank you.
Welcome, Mr. Forbes. Good to have you with us.
Mr. Forbes. Thank you, Senator.
Senator Hagel. As you know, every time I have an
opportunity to be a part of this committee, it is a rather
didactic experience, listening to my colleagues.
I never knew, Senator, that we had that many acts. And the
way you went right through them was magnificent.
Let me, before I ask you a question, Mr. Forbes, make this
observation. I think all my colleagues on this panel and in the
U.S. Senate are coming at this issue based, first, not on what
is good for business, what is bad for business, but what is
good for America, what is in our best security interest.
Mr. Forbes. Right.
Senator Hagel. That is the way I am looking at it.
Obviously we have other elements and dynamics that are involved
in this discussion. We should debate them. We should hear your
views, as the next panel's views will be, I suspect, somewhat
different. But I think it is important that we not lose sight
here of what we are about. And that is dealing with the reality
of a very unstable, very dangerous world. And everybody's
opinion must be heard, but, in the end, it seems to me, and I
think I can speak generally for my colleagues, that we must do
what is right for the security interests of this country.
In particular, the young men and women of our armed forces,
who may some day be called upon to fight in a theater against a
nation that is using chemical weapons. And I think the defining
question for all of us is, does this treaty help them or hurt
them?
Now, with that said, I would like for you to delve in a
little more into Articles X and XI, the transfer of technology,
the obligations of what we share with our treaty friends and
allies. That has gotten an awful lot of attention during the
course of this debate, which I think it should have and is
appropriate. And I noted you mentioned it in your testimony.
And I would like for you to define more of that, if you would.
Mr. Forbes. Well, under Articles X and XI, there is the
very real possibility that if we, one of our companies, we come
up with a way of defending against chemical weapons, that that
technology may end up in the hands of countries around the
world. Countries who sign on to this convention have the right
to request that technology. And we may be obliged to provide
that technology.
And I think that that is a very real danger. The fact that
four defense chiefs believe that we may have to give up
information and technology that could be used for defensive
purposes and would therefore allow a rogue nation to reverse
engineer, to figure out how to possibly get around these
defenses is, I think, a good reason to pause and say, is this
the best way to protect our people in the future?
And if you look at the history of treaties, especially in
the twenties, simply saying you are against poison gases,
against war, as we did in the Kellogg-Briand Pact of 1928, or
against armaments, as we did in the Naval Disarmament Treaty of
1922, guarantees, ultimately, nothing. In the 1980's, for
example, Iraq used poison gases against Iran. Iraq used poison
gases against the Kurds. The international community did
nothing, despite that 1925 Geneva agreement.
So the possibility that they could get that kind of
technology and put it to uses to which we do not want it to be
put to use is something that, as I say, should give us real
pause.
Senator Hagel. In your opinion, can this treaty be fixed?
Mr. Forbes. I think you have to ask a very basic question.
Given the nature of chemicals, given the fact that you can take
compounds--what they call precursors or ingredients--that in
and of themselves are harmless, put them together in a basement
laboratory and come up with something that is deadly, should
make us think, is this the best way to protect our people,
where we are subject to interpretations on inspections, but
those who want to do it can do it?
Take Iraq again. They have inspectors on their soil. They
were humiliated in a war. Yet the head of the agency that is in
charge of those inspections said recently that the Iraqis have
more than a handful of missiles, and it looks like they are
playing games again with biological and chemical weapons. If
they can do that under that kind of supposedly severe regime,
who knows what Iran is doing.
We know what Libya is doing in the areas of biology, thanks
in no small part to the Germans. So does this treaty make us
more secure or does it end up being one of those situations
where, despite its good intentions, it does more harm than
good?
I, so far, based on the evidence I have seen as a citizen,
I think it does more harm than good, especially when you look
at the treaties of the twenties. What good did they do when
violators were there?
Senator Hagel. Should we have a chemical weapons treaty?
Can, in your opinion, we produce one?
Mr. Forbes. Well, there is a bill, I understand, Senator
Kyl and others have been putting together that might do
something in terms of something substantive. I have not seen
the bill. So maybe there is a better way to do it. But,
clearly, this convention is not the way to do it, given the
flaws that those defense chiefs and others have pointed out.
Senator Hagel. If I could also refer back to your
testimony, your point about it giving rise to a false sense of
security. Which, I think, by the way, has been overlooked in
some of our deliberations here, and has been easily dismissed,
because it is one of those intangibles that is easy to dismiss.
Would you like to elaborate a little bit on your comment about
a false sense of security?
Mr. Forbes. Well, the classic case are the three treaties
of the twenties, the Naval Disarmament Treaty of the early
twenties, the prohibition against poison gas in the mid-
twenties, and the Kellogg-Briand Pact in the late-twenties,
that led the British and the democracies--not so much the
French, but certainly the British--to believe that they did not
have to take adequate measures for defense. And once you start
on that slope, it is very hard to reverse it. Because there are
always pressing domestic priorities. We see it today.
We are now downsizing to where our defense spending as a
proportion of our GDP is getting down to below Pearl Harbor
levels. But it is very hard to reverse, given the pressures
that we face each day.
So, also, too, given some of the treaties we had in the
sixties and seventies--look at SALT I--that did not prevent the
Russians from a massive armaments program, which necessitated
our building up in the 1980's. So it goes right up to modern
times.
And also, too, in the early nineties, we did sign an
agreement with the Russians on chemical weapons. And the
evidence indicates that they are going ahead and developing and
producing deadly chemical weapons. They are ignoring what we
signed 6 or 7 years ago.
Senator Hagel. Is there a particular way you get at the
Russian chemical weapons program, in your opinion?
Mr. Forbes. Well, you publicize it. You make it very clear
that this is going to affect our bilateral relations. In other
words--I will give you an example outside of the defense area.
A little over a year ago we were ready to sign an agreement, a
worldwide agreement, on telecommunications. To its credit, this
administration said this is pretty weak stuff, we can do better
to open up those markets. Everyone said, oh, no, this is going
to--our international allies will be upset at us. But, to its
credit, Kantor and others said no, we are going to go for a
better deal.
A few months ago they got a better deal. Because we took
leadership. We had a clear idea on what we wanted. And here are
two signatories, supposedly, of this convention. And here is
the headline: China helps Iran--it was just in the paper on
Sunday--develop chemical arms. The treaty is not worth the
paper it is written on the way it is now.
Senator Hagel. Thank you.
Thank you, Mr. Chairman.
Mr. Forbes. Thank you.
The Chairman. What do you think, about 2 or 3 minutes a
piece for the next round? You name it.
Senator Biden. Three. If you give me the choice, I will
take the higher.
The Chairman. You go first.
Senator Biden. Well, thank you, Mr. Chairman.
Mr. Forbes, it is interesting, you cited these treaties and
agreements in the twenties as being useless, yet no chemical
weapons were used in World War II.
Mr. Forbes. They were not used in World War II, because
both sides felt it would be counterproductive to their own
interests.
Senator Biden. Right.
Mr. Forbes. Not because of a treaty.
Senator Biden. Right.
Mr. Forbes. In the 1980's, when Iraq thought it was in its
interests to use it, it did. And the international community
did nothing.
Senator Biden. Right. Now, you acknowledge that does not
have anything to do with whether there is a treaty or is not a
treaty, right?
Mr. Forbes. I am saying it takes U.S. leadership, in terms
of national security, to make things happen. Signing a piece of
paper will not, in and of itself, do it. As you know,
enforcement is key. But, unfortunately, the history of these
treaties suggests that in a democracy, where we would rather be
doing other things, like bettering our lives, than having to
worry about defense, these treaties do have a lulling effect,
where we do not take the necessary steps.
Senator Biden. Well, we did all these arms control treaties
and the cold war is over. Not because of that, but not in spite
of that. I mean it is over. You know, all this stuff, these
horrible treaties we signed and these arms control treaties, it
is amazing, the Soviet Union is gone, in spite of the fact that
we lulled ourself to sleep with all those things. It just
amazes me how that happened.
Mr. Forbes. No. What happened, as you know, in the late-
seventies, we were in serious trouble. We were in serious
trouble here at home. The Soviet Union was on a major arms
buildup. It gratuitously, because it did not respect our
leadership, invaded Afghanistan. And that led, as it does in a
democracy, in the American democracy, to a sense of alarm, a
sense of renewal. And that is how we got the buildup of the
eighties. Ronald Reagan stood strong, and we won the cold war.
If we continued the policies of the seventies, we would
still have the cold war today.
Senator Biden. Well, what you are saying is, if we continue
the policy of being strong and staying vigilant and have arms
control treaties, they work in tandem. That is what Reagan did,
did he not? He is the guy that gave us START. He is the guy
that had this buildup and also got rid of the nuclear weapons,
right?
Mr. Forbes. Because he did it--he had credibility to make
the agreements work.
Senator Biden. I see. I see.
Mr. Forbes. And this agreement, even if you have Ronald
Reagan--he said--Ronald Reagan said ``Trust, but verify.''
Senator Biden. Right.
Mr. Forbes. The villains here are not trustworthy.
Senator Biden. And he drafted the treaty.
Mr. Forbes. The villains here are not trustworthy, and you
cannot verify what the North Koreans are doing or even what
signatories like the Iranians or the Chinese may be doing. So
this is a treaty, unlike some of the earlier arms agreements,
this is one where the U.S. leadership is going to be for
naught. You cannot do it.
Senator Biden. Have you seen an arms control agreement you
like?
Mr. Forbes. The test ban of 1963 was good, sure.
Senator Biden. How about the one now? How about the Nuclear
Test Ban Treaty now?
Mr. Forbes. Fine. Fine. That is where judgment----
Senator Biden. Mr. Gaffney just blanched. He is going to
work on you on the way out.
I expect, by next campaign, you will have a different view.
Thank you, Mr. Chairman.
The Chairman. Why do not you go ahead. I will go last.
Senator Hagel. Thank you, Mr. Chairman.
Mr. Forbes, would you go back and talk a little bit about
your earlier statements, the effect on smaller, less regulated
companies, in your opinion, this treaty would have.
Mr. Forbes. Well, this is, as you can see by the numbers
that are being bandied about and how you interpret what is in
the convention and what we promise we might add to the
convention, makes it a whole murky area. We are on uncharted
waters. And to say gee, it is going to be simple, the initial
requirements, given the nature of bureaucracies--we know they
do not say give us less paper--usually one thing leads to
another.
Senator Hagel. Well, I was interested very much in Mr.
Rumsfeld's comments when he was here last week. What he was
going beyond getting to was it would have, in his opinion, this
treaty, a very inhibiting factor on young, small companies. And
Senator Biden has, I think, addressed some of that. And I guess
where we all have to come down to is where is the truth here.
And I had an opportunity to be with Senator Biden last week on
some of this. But that is a factor that I think is very
important here. Because these young companies that are the
engines of our economy should not have to carry a
disproportionate burden here if we would go forward with this
treaty or some form of this treaty.
And if you would like to, especially from your perspective,
come at this in some way, I would be grateful for any other
comments you want to make on this.
Mr. Forbes. Well, as you know, it is conceptual, because we
do not know how the new body in The Hague is going to--how
vigorous it is going to be in terms of these intrusive
inspections. We also do not know about the so-called challenge
inspections, whether they are going to be used against a
smaller company, which could put it out of business. This is
uncharted territory. But history shows that when you have
regulations, when you have to keep track of things not for a
business purpose but for a potential inspection or actual
filings, it does have a cost and an inhibiting effect.
And you can see the nature of bureaucracies. Look what
happened to telecommunications. We passed a bill a little over
a year ago that said it was supposed to remove some of the
shackles. The way it has been interpreted by the courts and the
FCC, it is just as regulated as before--almost as regulated as
before.
Senator Hagel. Thank you, Mr. Chairman.
The Chairman. Mr. Forbes, what do you think of the drop
dead date of April 29th? They say that the whole thing will
collapse and we will be at the mercy of all these rogue nations
if we do not ratify this treaty by the 29th, but we will have
to pay one-fourth of the cost nonetheless. Does that make any
difference to you?
Mr. Forbes. Yes. And unfortunately, when you urge other
nations to ratify something in order to trigger a date like
April 29th, I think that shows a lack of good faith. And this,
again, gets to leadership. If we were truly interested in
looking at this in a timely but reasoned way, without an
artificial deadline, maybe we could strengthen the treaty. I do
not think so. But to put an arbitrary date and say the world
will come to an end, when we help engineer that date, I think
we should say----
The Chairman. Well, it was clearly put there, do you not
think, to stampede the Congress, or the Senate, to say that
boy, we got to do this by the 29th of April or the whole world
collapses? I have heard it over and over and over again, and it
does not hold any water at all.
But let me tell you what has happened. I think that the
effort by some in the media, the Washington Post and the New
York Times and some like that, that have advocated this treaty
to the point of absurdity--there have been other newspapers--
the Wall Street Journal has done a good job, your magazine has
done a good job, and some others--but for the most part, the
American people were not paying any attention to this treaty
actually. So the result was that they could say 73 or 83
percent of the people approved the treaty.
Well, all of a sudden, the worm turned and the contents of
this treaty were being analyzed in the media, particularly on
the radio and in television. And I have a poll here that shows
a total sample, total support as of April the 5th was 31
percent for the treaty--31 percent of the people support the
treaty; 60 percent oppose it.
Now, in my own office they keep track of the calls,
particularly when I am involved in an issue. And even in my
home State a lot of people, even though they support me, they
kept reading in the liberal media that this was such a great
and grand thing and only idiots would oppose. And so that had
some effect. It was about 50/50 in my State. Now it is about
80/20. And in our telephone calls, we had 83 calls yesterday
relating to this treaty.
How many do you think supported it?
Three. Eighty now oppose it. So I think they have
overplayed their hands.
I see Senator Kerry is here. And we had agreed on 3 and a
half minutes. Is that what we said? We are glad to have you,
sir.
Senator Kerry. Well, that is time for a good dialog, Mr.
Chairman. Thank you very much.
Mr. Forbes, I have been interested to see that the Chemical
Manufacturers' Association, the Synthetic Organic
Manufacturers' Association, the Pharmaceutical Research and
Manufacturers' Association of America, the Biotechnology
Industry Organization, the American Chemical Society, the
American Physical Society, the American Institute of Chemical
Engineers, the Council for Chemical Research, and several other
chemical trade organizations all strongly support the CWC. And
they urge us to vote to ratify it. And they all insist that it
will not pose an undue burden on business.
The National Federation of Independent Businesses responded
to treaty opponents' claims that they were opposed by saying
that those claims were 100 percent incorrect, according to the
Wall Street Journal, which also quotes an NFIB official as
predicting its members are not going to be impacted, contrary
to your statement about small business.
So I really need your help in understanding what is the
documentation here. On what do you base this notion? If the
chemical industry, which is the industry that subjects itself
to inspections, is for it, and they are threatened by the loss
of some $600 billion worth of business, why are you so
convinced they are wrong? And what evidence do you have to
support that they are wrong and cannot look out for their own
interests?
Mr. Forbes. Well, first of all, as a general matter, there
is no way that--the CWC is unverifiable and unenforceable with
states like Iran, China, not to mention those that are not
going to even sign the thing. The question now comes, how
intrusive will it be on the United States?
Don Rumsfeld, who had testified here last week, who has
been in a large business, made the point that historians have
made. And that is big businesses can cope with regulations
better than small businesses. As a matter of fact, when you
have a regulatory regime, it makes it harder for small
businesses to get in and compete. And they figure that since
they are heavily regulated anyway, they can put up with this
kind of regime.
But the fact of it really is not whether it is good for the
Chemical Manufacturers' Association, the question is, is it
enforceable, is it verifiable, is it good for the interests of
the United States? Because if it is not good for America, then
we should not do it just because a trade association says it
might benefit our members. So big companies, as a rule, can
cope with regulations, but small businesses can less cope with
regulations. And the real problem is not just routine
inspections--we can cope with those--but so-called challenge
inspections. And that is unchartered territory.
Senator Kerry. Well, the challenge inspections, according
to every observer, are going to take place primarily at
military facilities. Nobody anticipates a series of major
challenges at the commercial facilities.
Mr. Forbes. Well, given the nature, as you know, of----
Senator Kerry. And we are not looking at small
manufacturers here. I mean you are aware, are you not----
Mr. Forbes [continuing]. Given, Senator, the nature of the
manufacture of chemical weapons, since it can be done in a
basement or a bathtub----
Senator Kerry. Correct.
Mr. Forbes [continuing]. It may need to be--experts say it
should not need to go beyond military bases. But with chemical
weaponry, since you can manufacture it almost anywhere, you may
need a challenge inspection.
Senator Kerry. Well, let us follow that through. It can be
manufactured anywhere, correct? It can be manufactured
anywhere, even as we sit here today, correct?
Mr. Forbes. Well, you look at Iraq----
Senator Kerry. Just follow me through. Just follow the
thinking.
Mr. Forbes. Yes, OK.
Senator Kerry. It can be manufactured anywhere, as we sit
here today, can it not?
Mr. Forbes. Yes.
Senator Kerry. And this regime, this CWC, you are aware, is
going to take effect no matter what we do; you are aware of
that?
Mr. Forbes. Yes.
Senator Kerry. So as of April 29th, a date that you want to
discard, something is going to happen, is it not? Correct?
Mr. Forbes. Not if we take leadership.
Senator Kerry. No, no matter what we do, something happens.
You are absolutely incorrect.
Mr. Forbes. No, Senator----
Senator Kerry. On April 29th, the group that organizes the
process of inspections takes its work without the United States
of America, because we have not ratified it. Only those who
have ratified are part of that; is that not correct?
Mr. Forbes. OK.
Senator Kerry. So, no matter what we do, on April 29th, I
think it is 70 nations are going to sit down at a table and
say, OK, how do we go about the business of doing what the
United States asked us to do, but now does not want to do,
correct?
Mr. Forbes. That is one way to put it. There is another way
to put it.
Senator Kerry. Is that not accurate?
Mr. Forbes. What is your question? Because I believe----
Senator Kerry. My question was very simple. Is not that
fact going to happen? Are they not going to sit at a table,
without the United States, if we do not ratify it?
Mr. Forbes. They may sit at a table, but if the United
States takes the lead, that treaty can be rewritten. We helped
trigger that April 29th date by asking other nations to ratify
that convention, so that trigger date came in. It was a cynical
ploy by this administration to put the Senate in a box and say,
if you do not ratify this, you are harming the future by
allowing chemicals out there. They are using symbol over
substance. And I think it is a shame that we have been put in
that box. And we should say no.
As I pointed out earlier, in a whole other area, in
telecommunications, for once this administration took a proper
lead, over a year ago. There was a bad agreement on the table.
Kantor said we can do better. Our allies said we cannot do
better. He said we can. We went back to the table. We got a
better agreement. And it was put on the table again this year
and everyone praised it as being better than it was for
American interests a year ago.
So we put ourselves in the box, and a great nation should
say, if we put ourselves in a box and it is not good for
America and not good for the world, we can take ourselves out
of the box.
Senator Kerry. Well, let me address that. You are a
promoter and have been--and I admire what you and your family
have done to promote capitalism and the notion of
entrepreneurship. As an entrepreneur, having signed on to this
treaty--72 nations is the number that have ratified it--they
will now be in a position where they can engage in a formal
trade, under Schedule II, chemicals. But any nation that is not
a participant is not going to be able to engage in that,
correct?
Now, as an entrepreneur, if you were part of a nation that
has signed on to it, you are going to be greatly advantaged.
Because the United States of America's chemical companies are
not going to be allowed to engage in the transfer of these
chemicals under this treaty. So all of the entrepreneurs in
these other countries are going to be sitting there licking
their chops and saying, wow, we sure have a great capitalist
opportunity here to make money at the expense of the United
States of America.
That is what all our chemical companies think today.
Mr. Forbes. Senator, if a treaty is not good for America,
then we should not ratify it.
Senator Kerry. Well, what do you think about what I just
said?
Mr. Forbes. And if that is blood money, selling chemicals
to nations that should not have that stuff in the first place,
like Iran and China and some others, we should not be making
those sales in the first place. We denied ourselves sales
during the cold war, hurt our commercial interests, because we
felt it was in our national interest. We should not hesitate to
do so again.
Senator Kerry. But we do not sell to any of those
countries, because they are all embargoed under trade
restrictions.
Mr. Forbes. Yes, but under the----
Senator Kerry. It is not blood money to us. We do not sell
to them.
Mr. Forbes [continuing]. But you just said before we are
going to lose sales opportunities.
Senator Kerry. We are going to lose sales opportunities,
because we are not allowed to trade among the ratified
countries.
Mr. Forbes. Iran and China are signing on to this thing
apparently.
Senator Kerry. But then they are subject to challenge
inspection.
Mr. Forbes. Big deal. Iraq is the most regulated nation in
the world in terms of inspections and the U.N.--and the chief
inspector has just told us that Saddam still stays one step
ahead. He is still making the missiles. He is still making and
doing biological and chemical research.
Senator Kerry. We are not talking about Iraq.
Mr. Forbes. He is even still fooling around with nukes. If
it can happen in Iraq, it can happen anywhere. I do not care
how many inspections you have.
Senator Kerry. We are not talking about Iraq. We are
talking about Iran.
Mr. Forbes. No. We are talking about Iraq is the most
inspected nation on Earth today. And my point is that we have
more inspections----
Senator Kerry. And we know exactly what they are doing
pretty much.
Mr. Forbes. Yes, right. Exactly.
Seriously, the head of the agency, Senator, who did the
inspection, just told us the other day that Saddam is still
doing stuff he should not be doing.
Senator Kerry. Correct.
Mr. Forbes. And they have a hard time keeping up with him.
If they have a hard time keeping up in Iraq, what of North
Korea, Iran, Libya?
Senator Kerry. But, you see, what you seem to--and I think
many of the critics of the treaty--seem to ignore is the fact
that we are not going to produce these weapons anyway, Number
1. We do not sell to these people anyway, Number 2. And we do
not have a regime today for any kind of inspection of
accountability on the transfer of the precursor chemicals.
Therefore, what you gain with this, while not perfection--none
of us have alleged that any treaty--well, I will not say any
treaty--that almost any treaty provides you with a foolproof--
certainly as to chemical weapons and biowarfare weapons, I do
not think there is any such thing as a verifiable, foolproof
treaty, because of where you can produce this.
The question is, are you better off with a structure that
affords you some mechanism of tracing precursor chemicals, some
responsibility of companies for reporting, some system of
accountability through challenge and regular inspection, or
none at all, as well as being outside of the sales? Now, that
is really the issue.
The Chairman. We will let Mr. Forbes answer that without
interruption, and then we will go to the next panel.
Mr. Forbes. OK. The ease with which you can make chemical
weapons today--you can do it in a basement, you can do it in a
bathtub--the ease with which you can do it makes this treaty
unverifiable and unenforceable. The danger from doing this
treaty, especially in a democracy, as we saw in the twenties
and thirties, it will give us a false sense of security that,
by golly, we have dealt with it.
Now, you have said, and I admire your candor, it is not
perfect. But, yet, the administration goes out there--he did it
with the newspaper editors and he has done it in speeches,
making it sound like this is a foolproof protection for our
kids, we have got to do it or they are all going to be blasted
away. So a bill of goods is being sold.
At best, this is a flawed treaty that is going to do little
or no good. And so, therefore, why lull ourselves with a false
sense of security? I think we saw in the twenties and thirties
where that led. We saw it in the seventies, where that led. Why
repeat history?
The Chairman. Very well.
Mr. Forbes. Thank you.
The Chairman. I thank you so much, Mr. Forbes, for being
here with us today and for coming. I know it is some
inconvenience to yourself on short notice.
Mr. Forbes. Thank you very much, Mr. Chairman. I appreciate
it.
The Chairman. Thank you, sir.
Senator Biden. See you in Delaware, Mr. Forbes.
Mr. Forbes. Thank you, Senator.
The Chairman. Now we will have panel Number 2, consisting
of seven distinguished ladies and gentlemen. [Pause.]
Senator Biden. If you all can agree on your seating, I am
sure then that we can work this treaty out.
The Chairman. Our second panel consists of friends of all
of us. Sometimes you have to agree to disagree agreeably, and
that is the way we will do it. But in Joe's case, in one or two
instances, he will say huzzah, hooray and so forth.
The panel, from my left to my right, is Mr. Wayne Spears,
who is president of the Spears Manufacturing Company at Sylmar,
California; and Mr. Ralph B. Johnson, vice president of
Environmental Affairs, Dixie Chemical Company, of Houston; Mr.
Kevin L. Kearns, president of the United States Business and
Industrial Council.
Senator Biden. It is good to see you.
The Chairman. The Hon. Kathleen C. Bailey--and how you do
add to the looks of this crowd, I tell you that--senior fellow
at the Lawrence Livermore National Laboratory in Livermore,
California; the Hon. Bruce Merrifield, former Assistant
Secretary of Commerce; Fred Webber, whom we have all known,
president of the Chemical Manufacturers' Association; and the
Hon. William A. Reinsch, Under Secretary of Commerce for Export
Administration.
And Mr. Spears, you may lead off, because that is the order
they said that I was supposed to follow.
Senator Biden. Perhaps Mr. Kearns could go first.
The Chairman. Oh, you want Mr. Kearns. All right. Mr.
Kearns, we will hear from you. Go right ahead.

STATEMENT OF KEVIN L. KEARNS, PRESIDENT, UNITED STATES BUSINESS
AND INDUSTRIAL COUNCIL

Mr. Kearns. Thank you, Mr. Chairman. It is a pleasure to be
back testifying before this committee, where I served as a
State Department Pierson Fellow on Senator Helms' staff from
1988 to 1989. When I went back to the State Department, I
headed an office called the Office of Strategic Trade, and we
dealt with many of the issues that are before this committee
today.
Since I left the State Department, I have been president of
the U.S. Business and Industrial Council. We represent mainly
family owned, closely held businesses--what I would call
medium-sized business. There is not a good definition, really,
of size below large business. But our employers have between
100 and 800 employees. They are involved in various fields.
Some of them are specialty chemical manufacturers, autos, food
processing, brewing, you name it, USBIC members are in these
industries. And we have been around since 1933. We do not lobby
for a specific industry or a company; we are here to give a
voice to small- and mid-sized businesses in public policy
debates.
We take strong exception to the Chemical Weapons
Convention. We do not believe it is in the best interest of the
United States or American business. Many of the reasons have
been discussed by Mr. Forbes and were brought up by the three
secretaries last week.
We believe that, first of all, the CWC represents an
unjustifiable erosion of American sovereignty. It seems, time
after time, treaty after treaty, decade after decade, the U.S.
gives up a bit of its sovereignty to one international body or
another. And the results, generally, I think, are not good for
the United States. When I look at the world today, it is not a
hospitable place. And I do not feel comfortable that
international bureaucrats, drawn from so many of these
countries where there is strife or repression or many other
problems, are the best guarantors of American interests.
At the Business and Industrial Council, we believe that the
single best guarantor of American interests is American
strength and power. We have wielded that, for the most part,
over the centuries well. And we do not place our hopes for the
future and the future of our kids on supranational
organizations.
USBIC members are little guys, compared to perhaps some of
the members of the Chemical Manufacturers Association or
others. We have trouble with red tape now, with OSHA, with EPA,
with the IRS, with State regulatory agencies, in the sense that
they add a tremendous burden to the costs of our doing
business, without adding another burden, or other burdens,
under this treaty.
The large-sized companies, these large-scale companies, can
afford big lobbying organizations in Washington. They can
afford representation before international bodies. They all
have offices, or many of them do, in Brussels, before the EC,
et cetera. They have offices in various Asian capitals. They
have the staff, they have the resources to cope with regulatory
burdens. Smaller businesses are already drowning in a sea of
red tape.
And I might add that the Fortune 500 have not created a
single net new job in this country in 20 years. It is small
business and mid-sized business that are creating jobs in this
country, not these large multinationals, which feel free to
move their factories around the world, seeking less regulation,
seeking less bureaucratic red tape, seeking the cheapest labor
available.
One element that I would like to address is the National
Federation of Independent Business, which has come up several
times in this discussion. To say that NFIB members will not be
affected by this treaty is a tautology. That is, the vast
majority of NFIB members are microbusinesses. They are small
businesses, run out of the home. They are luncheonettes. They
are insurance agencies, et cetera.
So I think the fact that people are citing NFIB as a voice
of American business that says American business is not going
to be harmed is wrong. No, that segment of very small
businesses are not going to get challenge inspections--at a
luncheonette, for example. And, believe me, I am not putting
down NFIB members. They are the heart and soul of so many of
our communities, if not all of them. It is just simply
irrelevant to the discussion of this treaty. They are not
people that are involved, by and large, in manufacturing. They
do not handle chemicals. So it is simply irrelevant.
When we look at these various inspections that may be
required under this treaty, I think the fact that Senator Biden
led off with the statistics and how many companies may be
subject to it and what the effect would be on those companies
indicates, really, that the average American business, that is,
a manufacturing business, that is potentially subject to this
treaty really does not know what is going on. I commend the
Chairman and this committee for the efforts made previously and
for these hearings. These businesses really do not understand
the scope of what is happening.
We believe that Fourth and Fifth Amendment rights are in
danger. I do not agree with you, Senator Biden, that the forms
that the Department of Commerce has put out--yes, actually,
filling out the form may take only 2.5 hours. It is the hours--
the hundreds of hours, perhaps, in gathering the information,
seeing if you are using these chemicals, if somehow they are
involved in your manufacturing process, either as something
that you incorporate or that has been incorporated at an
earlier stage. It is very difficult.
The fact that a company may be subject to a fine up to
$50,000 would put many of my members out of business or put
them in a very difficult situation. So you can be sure they are
not going to take 2 hours and simply fill out the form as
quickly as possible. They are going to do their homework. They
know what it is when there is an unannounced OSHA inspection or
an EPA inspection, for instance, coming into their plant or
factory.
So, to conclude--the time goes very fast, I know--the U.S.
Business and Industrial Council opposes this treaty. We do not
think it is in the best interest of the United States, first
and foremost, before we get to the business issues. And we
think it places unnecessary and very heavy burdens on small-
and medium-size business potentially.
Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Kearns. And if you wish to add
to your statement for the printed record, please do.
Mr. Kearns. Yes, I will submit the rest for the record.
Thank you.
[The prepared statement of Mr. Kearns follows:]

Prepared Statement of Kevin L. Kearns

Mr. Chairman, Members of the Committee: My name is Kevin L. Kearns
and I serve as President of two organizations: the United States
Business and Industrial Council and the Council For Government Reform.
The first is a business league and the second is a grassroots lobbying
group. While both groups oppose the Chemical Weapons Convention for the
same reasons, I would like to highlight the business concerns in my
testimony.
First though I would like to thank the Committee for allowing me
the opportunity to testify against what I believe is an ill-advised
treaty. I realize that there are many patriotic Americans on both sides
of this issue, including many distinguished former Cabinet officials
and high-ranking military officers. And that there are difficult issues
involved. However, I believe that on balance the treaty will harm U.S.
interests far more than advance them.
The US Business and Industrial Council was established in 1933 to
give a voice in public policy debates to the thoughts of mid-sized,
family-owned and run American companies. We are an advocacy
organization that takes a national interest approach to public issues.
USBIC is not a trade association and we don't have a PAC. We don't
lobby for an individual company or an industry. We are funded through
memberships from individuals and American firms representing more than
1,000 member companies with over 250,000 employees nation wide.
I believe that USBIC differs from other business organizations
because of the size and composition of our members. They are primarily
family-owned or closely-held companies that maintain close ties to
their community. USBIC members live and work along side their employees
in the city or town where their company is located and believe that
there is more to running a company than just the bottom line on a
balance sheet.
Mr. Chairman, The United States Business and Industrial Council
opposes the Chemical Weapons Convention (CWC) because we believe that
it is an irreparably flawed treaty. Although we understand that Sen.
Helms is laboring mightily with Sen. Biden to correct both the excesses
and deficiencies, we do not believe that process can correct all the
treaty's problems. First, the CWC represents an unjustifiable erosion
of American sovereignty. Second, the CWC presents a clear threat to
national security of the United States since it increases rather than
decreases the likelihood that chemical weapons will be used effectively
against Americans. Third, the Chemical Weapons Treaty is unverifiable
and will not stop outlaw states or others that wish to do so from
hiding the manufacture and stockpiling of chemical weapons. Fourth, the
CWC presents a grave challenge to the U.S. Constitution. The CWC's
inspections will strip American businesses of their Fourth Amendment
Rights. Fifth, the CWC represents another unfunded mandate from
Washington placed squarely on the back of those businesses that can
least afford it. CWC will add to the costs of manufacturing companies
through new compliance costs. Finally, CWC will allow unparalleled
opportunities for industrial espionage.
At the Business and Industrial Council we believe that the only
certain guarantor of American interests is American wealth and power.
We do not place our hopes and the future of our children on
supranational organizations. Thus each new treaty or agreement that
comes along--whether in the field of disarmament, trade, the
environment, law of the sea, etc.--whittles away at American
sovereignty. One wonders why we bother to have a federal government at
all if international bureaucracies are better suited to represent the
aspirations of the American people.
During the Cold War many believed that the only way to achieve
peace was to lay down our sword. But that notion proved as illusory as
the CWC is today. The U.S. won the Cold War by relying on our military
strength and relying on our deterrent capability. Just as arms control
was not the answer, we believe that the Chemical Weapons Convention is
not the solution. Our best defense and deterrence to chemical weapons
are having military capabilities that will allow a swift and sure
response.
President Clinton has concluded that this treaty will end the
threat of chemical weapons worldwide. That is, I am sure, a sincere
hope but a false one. There is simply no way to eliminate chemical
weapons in the world. The chemical terrorist incident that recently
occurred in Japan shows the difficulties in finding covert chemical
manufacturing operations. Manufacturing facilities are easily concealed
due to the small area needed for production.
USBIC believes that the Chemical Weapons Convention represents a
major infringement of U.S. sovereignty and the proprietary rights of
manufacturers. The Chemical Weapons Convention clearly strips away our
members' Fourth Amendment rights by authorizing and enforcing illegal
search and seizure. CWC empowers a U.N.-style agency that may conduct
detailed inspections of facilities on both regular and surprise basis.
They can carry out these inspections without justification of suspected
illegal activity or even a search warrant.
America's large multinational chemical companies have endorsed CWC.
But, if the Senate ratifies CWC, the CWC will create many problems for
small and medium-sized chemical manufacturers and other non-related
industries that process chemicals as part of their manufacturing
operations. Included may be autos, auto parts, brewers and distillers,
electronics, food processing, pharmaceuticals, paint and tire
producers, and a host of other manufacturing industries.
Mr. Chairman, large, multinational companies do not care about the
CWC's massive regulatory burdens because they have the legal, financial
and bureaucratic resources to absorb compliance costs. But, small
companies have neither the resources nor staffs to absorb these costs.
The Chemical Weapons Convention will force businesses to hire more
lawyers plus add additional compliance personnel that must specialize
in new regulation that CWC will present.
Clearly, the CWC will place these small companies at a competitive
disadvantage with their larger competitors. This is a key reason large
companies are for the CWC and the small companies are against it. These
inspections could cost individual companies anywhere from $10,000 to
$500,000--a substantial unfunded mandate. CWC inspections could require
up to eighty-four hours to complete and involve $50,000 fines even if
inadvertent errors are made.
There will never be an arrangement in CWC to stop it from
effectively authorizing industrial espionage. The CWC offers no
protections for company formulas and other trade secrets that
inspectors may steal. Moreover, nothing would prevent unscrupulous
countries from placing intelligence officers on the inspection team.
The CWC will cost the American government millions simply to join
up. Companies and the American taxpayers will pay $50 to $200 million
for the privilege of handing over industrial secrets to competitors
while not preventing chemical warfare or terrorism. An agreement to
complete all inspections of chemical samples in the United States is
not the answer. Corrupt countries will find covert ways to obtain
chemical samples. Why should American businesses allow international
inspectors the opportunity to obtain these chemical samples?
Finally, abroad CWC inspections will not substantially reduce the
proliferation of chemical weapons around the globe. Russia, with its
huge stockpile of chemical weapons and massive production capability,
has not ratified the CWC and will only ratify if American taxpayers
will pay for it. Also the world's most notorious terrorist nations,
Syria, North Korea, and Libya, refuse to ratify. China, a proliferator
of nuclear and missile technologies, has not ratified.
I think all Americans would support a treaty that ended the threat
of chemical weapons. That is why we signed the Geneva Convention. USBIC
believes an effective addition to the Geneva Convention would be the
Chemical and Biological Weapons Threat Reduction Act of 1997, S. 495,
sponsored by Senator Kyl (R-AZ). This bill would provide criminal and
civil penalties for the unlawful acquisition, transfer, or use of any
chemical or biological weapon.
Our companies are constantly fighting against overregulation. Mid-
sized and small American businesses are fed up with the government
policies that favor multinational corporations. Too often government
overregulates and makes it harder for smaller companies to survive. For
example, we have an estate tax so high that too often our members are
unable to pass their business on to the next generation. The Chemical
Weapons Convention is a bad treaty that will only add to the heavy
burden our companies face today.
On behalf of the 1,000 member companies of the United States
Business and Industrial Council (USBIC), I strongly urge you to oppose
ratification of the Chemical Weapons Convention (CWC).

The Chairman. Now, Mr. Wayne Spears is the kind of American
I admire. He has started at the bottom, as I understand it, and
heads a substantial company now. How many people do you employ?
Mr. Spears. One thousand one hundred.
The Chairman. One thousand one hundred. Well, we are so
glad you came. And you may proceed.
Mr. Spears. I will give it a shot.
The Chairman. I know you will do well.
Mr. Spears. It was a last-minute deal.
The Chairman. You just relax and let us hear from you.
Mr. Spears. I am not a real good spokesman. It is not my
thing, but I am going to give it a shot.
The Chairman. Very good. You will do well.

STATEMENT OF WAYNE SPEARS, OWNER AND CEO, SPEARS MANUFACTURING,
INC., SYLMAR, CALIFORNIA

Mr. Spears. Mr. Chairman, I would like to submit a
statement.
The Chairman. Without objection, so ordered.
Mr. Spears. Mr. Chairman, I want to compliment the
committee for having this hearing on the many ways in which the
Chemical Convention threatens to affect American business. I
especially appreciate the opportunity you have given me to
describe how it looks from the perspective of one of the
companies that may be harmed by this treaty.
My wife and I started Spears Manufacturing in 1969, in a
2,000-square-foot little building in Burbank, California. Today
we employ over 1,000 people--1,100. We have over a million
square feet of manufacturing space, 400,000 square feet of
warehouse space in 10 States, Washington, Utah, California,
Colorado, Texas, Georgia, Florida, Kansas, Illinois, Idaho, and
Pennsylvania. And we started out in California. We are moving
out of California as quickly as we can because of the
regulations. The State is so tough. I mean, just to get a sewer
permit takes forever.
In regulations, what all of us are afraid of is what the
gentleman just brought up. We manufacture plastic pipe fittings
and valves for use in everything from agriculture--we even make
plastic pipe fittings that are suitable for fire sprinkler
fittings, for silicon chips and for industrial. And we
manufacture in size from one-eighth-of-an-inch fitting up to a
32-inch-diameter fitting--huge things.
We do use some chemicals. We use acetones, and we use some
vinyl ester resins. We do not know what we will have to report
or what is going to be reported. And, to add to that, we plan
on putting in another half-million square feet of manufacturing
space. And we have been sort of kicking it around, to try to
get it done this year, to employ a couple of hundred more
people. Not with the uncertainties of this treaty--we will not
do that. That would be foolish on my part to do that.
I solely own the company. I do not know what is going to
happen. I do not trust what has happened. I do not trust this
administration and what burdens they are apt to put on me. And
I think that there is a lot of small business and medium-sized
businesses like myself that just never gets around--we are so
busy trying to run our business, we do not have time to pay
attention to these things. And this thing was brought to my
attention by one of my Senators from Idaho, who says that you
better look into this; this may affect you. That is how I got
involved.
I did everything in the world to keep from coming here.
Although I feel very honored. I feel very honored by all of
you. I really do.
Senator Biden. As Lincoln said, but for the honor----
Mr. Spears. I am just a poor, old Okie boy. In all honesty,
I hitch-hiked from Oklahoma to California. I did not have
anything. I did well. I want to try to give some of that back
to the American people. And I am going to. I have wrote over
10,000 letters against this--over 1,000 to my employees. I have
over 8,000 customers worldwide. And we do do business
worldwide. We actually compete with the Taiwanese and all those
kind of people. And, might I add, we do a very good job.
We do some very unique things, because I love mechanical
things. And we have been able to be very competitive. We
actually sell--trademark things and put it on for other
manufacturers. You may see our fittings around that have other
people's names on them. We do such a good job that they cannot
compete with us in Europe. We do it.
And there is no way I want some guy coming into my plant,
seeing what we do--one of these surprise inspections. I just do
not want it. I do not even want to take a chance on it. Why
would we, the American people, ever allow that to happen or
even take a chance on it happening? We are the strongest
country in the world. Let us not tear it down.
As Mr. Forbes said, let us do it for America.
That is about all I have got to say. Thank you.
The Chairman. Well, you said it very eloquently, too, sir.
[The prepared statement of Mr. Spears follows:]

Prepared Statement of Wayne Spears

Mr. Chairman, I want to commend the Committee for having this
hearing into the many ways in which the Chemical Weapons Convention
threatens to affect American businesses. I especially appreciate the
opportunity you have given me to describe how it looks from the
perspective of one of the companies that may be harmed by this treaty.
My wife and I started Spears Manufacturing in 1969 in a 2,000
square foot space in Burbank, California. Today, we have over 1 million
square feet of manufacturing space and about 400,000 square feet of
warehouses in 10 states--Washington, Utah, California, Colorado, Texas,
Georgia, Florida, Kansas, Illinois, Idaho and Pennsylvania. We employ
more than 1,000 people.
Our principal products are plastic pipe fittings and valves used
for everything from agriculture to fire sprinklers to silicon chip-
manufacturing to industrial applications. The sizes range from one-
eighth-of-an-inch to 32-inches in diameter.
We have established a unique niche in the world market with high
quality, low-cost products that simply cannot be matched by any of our
competitors, foreign or domestic. Naturally, we want to keep it that
way, but others don't.
We take very seriously the dangers posed by commercial espionage
and other means of jeopardizing our proprietary technological edge. And
because of our advanced technology and competitive position we have
reason to believe we are at real risk of being targeted for these
purposes.
Let me say right up front that, as a businessman, I want less
regulation, less red tape and less interference in my company's affairs
from government bureaucrats. The way many of these folks are doing
their jobs has the effect of making it a lot harder for me--and
countless other American entrepreneurs--to bring good products to
market at competitive prices and as efficiently as possible.
For what it is worth, I believe the commitment the Republican Party
has made to these principles has been a key ingredient in its success
in achieving--and maintaining--control of the Congress.
Therefore, I have been amazed to discover that a Republican Senate
might actually consider approving a treaty that would add to the
burdens imposed on thousands of American businesses by our own
government. This Chemical Weapons Convention would also give foreign
bureaucrats new powers that will add to the costs for companies like
mine.
There are others on this panel far better equipped to discuss all
the fine points of this Convention. I look forward to learning more
from them about this treaty and exactly how it will affect companies
like mine--a subject that is creating great uncertainty at the moment.
This is particularly important to me since I currently have plans
to expand my operations by another half-a-million square feet,
employing another 200-300 people in good-paying manufacturing jobs
across the nation. It would be irresponsible for me to proceed with
those plans without knowing if the CWC will jeopardize my company's
competitive edge.
Especially worrisome is the prospect that foreign inspectors could
demand entry into my plants, gaining access to my records, procedures,
inventory and customers data. These involve proprietary information
that could, if stolen, cause my company real harm. And, from what I
understand, there is every reason to believe that this could happen.
The challenge inspections authorized by the CWC would be very
different from the sorts of site-visits conducted periodically by U.S.
government agencies assigned to monitor our compliance with
environmental and health and safety regulations. Those American
inspectors do not concern themselves with our sensitive manufacturing
technology, just our employees' safety and our emissions.
The CWC will put us in a position of having to open our doors to
people well versed in our manufacturing techniques, who want our
advanced technology and who are trained to collect this sort of
information. We are so concerned about this problem that we do not even
permit the suppliers of our manufacturing equipment to come into our
plants.
Even if my company's facilities are not challenge-inspected, the
burdensome reports we might have to provide could be enough to tell
foreign competitors a lot about how we do what we do.
Mr. Chairman, I am sure I speak for many of my colleagues in
American industry when I say that if this Chemical Weapons Convention
really did get rid of chemical weapons, it would be worth it to us to
accept some additional costs and risks associated with implementing
such a treaty. As long as this Convention's defects make it unlikely to
reduce the chemical warfare problem in any significant way, I find it
unacceptable to impose these very high costs and risks on our
businesses.
I hope that instead of forcing this treaty on the American people
and--on thousands of companies that have little knowledge about the
implications of this deal--the Congress will approve S. 495, a bill
cosponsored by you, Mr. Chairman, Senator Jon Kyl and most of the
Republican leadership. This legislation seems to me to offer a valuable
alternative to the CWC. It does practical things, like making it a
crime for private U.S. citizens to make poison gas, while avoiding
totally impractical actions like the Convention's verification regime
which will hurt our business interests--but be ineffective in catching
nations that cheat on their international commitments.
Mr. Chairman, thank you for your brave leadership on this treaty. I
very much hope that my testimony--and that of others who are critical
of the CWC--will be useful to you in preventing this defective
Convention from binding the United States at the expense of so many
American businesses, their stockholders and their employees.

The Chairman. Mr. Johnson.

STATEMENT OF RALPH V. JOHNSON, VICE PRESIDENT, ENVIRONMENTAL
AFFAIRS, DIXIE CHEMICAL COMPANY, INC., HOUSTON, TEXAS

Mr. Johnson. Good afternoon.
The Chairman. Good afternoon.
Senator Biden. Good afternoon.
Mr. Johnson. My name is Ralph Johnson. I am vice president
of Environmental Affairs for Dixie Chemical Company. Dixie
Chemical is a small, privately held chemical company, with its
general offices in Houston, Texas, and its manufacturing plant
is located in Pasadena, Texas. Dixie Chemical engages primarily
in the manufacture of specialty organic chemicals, and we
employ about 200 people.
Dixie Chemical fully supports the intent of the Chemical
Weapons Convention treaty. It is difficult to imagine how
anyone would not support the removal of chemical weapons as a
threat to mankind. At Dixie, we have expertise in the
manufacture of specialty organic chemicals and the regulations
associated with this manufacture. We have no expertise in
foreign policy. Whether this treaty is a viable vehicle to
eliminate chemical weapons is a question for this committee and
for the Senate of the United States.
As you Senators on this committee weigh the effectiveness
of this treaty, you will need to be aware that this treaty
presents some potentially serious problems to Dixie Chemical.
At Dixie Chemical, we produce no chemical weapon chemicals, nor
any precursor chemicals. We do not produce any Schedule I, II,
or III chemicals. However, at Dixie, we would be required to
submit a declaration that we produce discrete organic
chemicals.
Discrete organic chemicals is a category of lower-concern
chemicals, and it encompasses virtually the entire universe of
organic chemicals. This declaration would require some
additional time on our part, but is not unduly burdensome.
However, once we are declared as a discrete manufacturing
chemical organic site, we then become subject to foreign
inspections. If we use EPA inspections as an example, these
foreign Chemical Weapon Convention inspections could cost up to
maybe $50,000 per site. That is not a perfect number, but that
is not a total guess either. These inspections would be very
costly and burdensome.
The biggest problem with these inspections, however, is not
their cost but rather our highly probable loss of confidential
business information. An inspector observing one of our
reactors would know, for the product being observed, our
operating pressures, temperatures, catalysts, reaction time,
ingredients, purification methods, pollution abatement methods.
We would no longer have any confidential technology,
methodology, or know-how relative to this product. It would be
gone forever.
Specialty chemical manufacture is vastly different from
that of large volume commodity chemicals, which are produced in
continuous dedicated single product units operated by major
chemical companies. Operating conditions and know-how for these
commodity chemicals such as ethylene, propylene, high density
polyethylene, can be licensed and/or purchased from
manufacturers and engineering companies, both domestic and
foreign.
These operating conditions can also be found in the
literature. Since the technology for commodity chemicals is
widely available, competitive success usually depends on world-
scale plants, percent of volume utilization, location to
markets, and cost to feed stocks. Therefore, inspections would
not necessarily result in any probable loss of confidential
information, nor change the commodity producer's competitive
position.
On the other hand, specialty organic chemicals are made in
low volume batch operations where the expertise and process
know-how lies solely within the realm of the individual
producer. Production volumes typically range from a few
thousand pounds a year to a few million pounds. Several
specialty organic products are usually made intermittently on a
campaign basis in nondedicated multipurpose operating units.
The process technology for these products has been
internally developed by the individual producer, and it is the
core of his competitive position. His technology is not
licensable or purchasable unless he plans to go out of business
on that specific chemical.
Therefore, maintaining the confidentiality of this
expertise is of paramount importance, and is the heart of the
continuing existence of specialty organic chemical manufacture.
Thank you for this opportunity to comment on this vital and
perplexing problem.
The Chairman. We thank you very much, sir. All right. I am
advised a little bit belatedly that the Hon. Kathleen C. Bailey
is going to read a couple of letters before she begins her
testimony, so hold the light.

STATEMENT OF HON. KATHLEEN C. BAILEY, SENIOR FELLOW, LAWRENCE
LIVERMORE NATIONAL LABORATORY

Ms. Bailey. Yes, sir.
This is the testimony of Paul L. Eisman, senior vice
president for refining of Ultramar Diamond Shamrock
Corporation, hereinafter called UDS Corporation.

Mr. Chairman: UDS is pleased to offer the following comments on the
proposed Chemical Weapons Convention, or CWC treaty, which is being
considered for ratification by this committee.
Although UDS agrees that the production of chemical weapons should
be halted, we think that this treaty as presently crafted provides
little, if any, protection from the devastating impacts of chemical
warfare.
We find it ironic that this proposed treaty places a significantly
greater regulatory burden on legitimate business operations that are in
no way related to the production of chemical weapons, while not
imposing similar requirements on countries such as Libya, Iraq, Syria,
and North Korea, some of the very countries about which we should be
most concerned.
Our concerns relate to two specific issues, the increased paperwork
and compliance costs created by the reporting requirement, and the
significant risk of industrial espionage resulting from the presence of
international inspection teams in our facilities.
Increased paperwork is an enormous concern for UDS. In just the
manufacturing portion of our business, over which I have direct
responsibility, our production costs have increased significantly over
the past few years to satisfy the recordkeeping and reporting
requirements of new regulatory programs. This cost ultimately is passed
on to our customers.
A petroleum refinery uses many different chemicals in the
production of gasoline and diesel. Based just on a cursory review of
the treaty requirements, UDS would have to report the following
chemicals at a minimum: chlorine, sulfur, hydrogen, hydrogen chloride,
sulfuric acid, ammonia, and sodium hydroxide. Many of these chemicals
are crucial for making gasoline and diesel to comply with existing U.S.
and California reformulated fuel requirements.
UDS cannot comply with the proposed reporting requirements with our
current staff. We estimate it could cost as much as $500,000 per year
to comply at all three of our U.S. refineries. We expect that these
costs will be reflected in the higher prices at the pump.
In addition, the reporting requirements will greatly reduce our
operating flexibility because of the 5-day advance notification
requirement for changing processes in which reportable chemical
processes are used. Many factors often outside our control influence
how our refinery operates from day to day.
The advance notice requirement means that a change in our crude
slate or in the availability of feed stocks, or even an equipment
malfunction, could put our operations in violation of the reporting
requirements and subject us to a $5,000 fine. Such a burden on business
is untenable, particularly given the ubiquitous nature of the chemicals
included on the reportable list.
UDS is not prepared nor do we want to receive an international
inspection team in our facilities. We understand that the Congressional
Office of Technology Assessment estimates that these inspections could
cost $10,000 to $50,000 per visit. It should be noted that these costs
are in addition to the estimated yearly costs of compliance. Given the
complexity of a modern refinery, we think that those costs are
extremely optimistic.
Moreover, there are no safeguards to ensure that the inspection
teams will not gain access to unrelated or propriety information, nor
are there any sanctions provided for inappropriate use of information
thus gathered. All of the trade protections that we now receive under
U.S. Law would thus be placed in jeopardy. This is an unacceptable
security risk to place on U.S. Industry, especially when the most
egregious users of chemical weapons will likely not even be covered by
the treaty.
UDS does not have a thorough understanding of the provisions of the
CWC. However, what we do understand causes us grave concern. For the
reasons cited above, enforcement and verification will be a nearly
impossible task even in those countries with a strong compliance
commitment, but if such countries as Libya, Iraq, Syria, and North
Korea are refusing to be a party to this treaty, the likelihood of
eliminating chemical warfare are slim indeed.
The unacceptably high cost of business, coupled with the extremely
low probability of success, leads us to conclude that this proposed
treaty is bad for U.S. Economic and security interests. We urge you to
reject this treaty unless and until the serious costs, security and
enforcement problems it creates can be resolved.
Sincerely,
Paul L. Eisman,
Senior Vice President for Refining,
Ultramar Diamond Shamrock Corporation.

Ms. Bailey. the next letter I have is from Sterling
Chemicals, to the Hon. Jesse Helms, Chairman, Senate Foreign
Relations Committee. It is dated April 15.

Dear Mr. Chairman: Sterling Chemicals, Incorporated strongly supports a
worldwide ban on the production, possession, and use of chemical
weapons, but we are concerned about the mechanics and cost impacts
associated with the proposed CWC. We had made our concerns known to the
Hon. Senator Kay Bailey Hutchison last August. Highlights of our
concerns are:
1. We have serious misgivings about the ability to protect
confidential business information. Having a foreign inspection team
inside our facility with almost unlimited access to process knowledge
and data is not acceptable to Sterling.
2. Cost impact will be significant. We project costs just to
prepare for managing and completing an inspection to be at least
$200,000 to $300,000. This does not include performing duplicate
sampling and analysis as well as calibration and verification of
process instrumentation.
3. We cannot comply with the threat provisions within our current
annual budget and head count. Sterling has reduced head count to
maintain our competitiveness. We are doing more with less. We believe
the additional datakeeping, recordkeeping and paperwork burden
associated with this treaty cannot be managed with existing resources.
4. The EPA and OSHA, while participating as part of the inspection
team, may become overzealous with their enforcement philosophy and
begin citing violations as part of their own agenda while they are
supposed to be monitoring the inspection team.
Sterling Chemicals is not a foreign policy expert, yet we have
serious misgivings about the foreign policy implications of the
proposed CWC. For example, how will chemical weapon control be enforced
in other countries such as Mexico, Colombia, North Korea, Iran, Iraq,
Jordan, Libya, Croatia, et cetera? Since they probably will not
cooperate, how does this treaty produce a worldwide ban?
How will international security and foreign policy issues related
to protection of trade secrets be handled?
Will the cost and implementation of the treaty put American
industry at a competitive disadvantage with foreign industry, whose
compliance is less regulated?
Sterling emphasizes its desire to see a worldwide ban on chemical
weapons. We hope this submittal provides the information you seek for
an informed decision which is best for America.
Sincerely,
Robert W. Roten,
President and CEO of Sterling Chemicals.

Ms. Bailey. And now, Mr. Chairman, may I proceed with my
own testimony?
The Chairman. Yes, ma'am.
Ms. Bailey. I am Kathleen Bailey from Lawrence Livermore
National Laboratory. Mr. Chairman, members of the committee, I
am pleased to appear before you today to address the
ratification of the Chemical Weapons Convention, CWC. I have
studied this treaty for some years, first as Assistant Director
of the Arms Control Agency and then as principal author of a
major technical study sponsored by the U.S. Defense Nuclear
Agency on the issue of how nations might cheat under the CWC.
I am currently a senior fellow at my laboratory, but the
views I express today are my own and not necessarily those of
the University of California, my laboratory, or any other
institution.
Today, I will focus my remarks briefly on the impact of CWC
challenge inspections on U.S. companies and on U.S. national
security facilities. My bottom line is that the use of treaty
inspections for espionage is easy, effective, and all but
impossible to detect.
The U.S. intelligence community officials have advocated
ratification of the CWC, arguing that it would be ``another
tool in the tool box'' for intelligence collection. Rarely, if
ever, is it mentioned that the tool is every bit as effective
in the hands of foreign intelligence services.
One could argue that, indeed, the advantage is to foreign
nations and to foreign companies, because it is the United
States that has the most to lose in terms of classified
national security information and confidential business
information.
Challenge inspections will rely on collection and analysis
of samples to determine the presence or absence of key chemical
compounds. A principal tool for analysis is the gas
chromatograph mass spectrometer, or GC/MS for short, an
instrument which can identify chemical compounds.
This information can be used to determine not only what
chemicals are in use at a particular site but also what
processes are being employed. Such data is useful for
determining whether a facility might be making chemical
weapons, but it is also useful for gleaning confidential
business information as well as classified national security
data.
I would like to quote now from a paper prepared by Dr. Ray
McGuire, a chemist at Lawrence Livermore National Laboratory,
on the results of mock inspections conducted by the U.S.
Government. In my written testimony I quote from this at
length, and would like to submit it for the record.
But briefly let me say that a mock inspection was held at a
propellant production facility. Samples were taken outside of
that facility and later analyzed using a variety of means, and
the results did reveal classified data not only about the
composition of the pro-
pellant, such as oxidizers, binders, and burn rate modifiers,
but also process information.
Furthermore, a mock inspection was conducted at two
industrial chemical plants using GC/MS technology. Batch
production of a certain chemical could be detected at least 3
weeks after the production ended. Furthermore, other
confidential business information was revealed. While this
information may not be considered to be of much commercial
value, it could be in cases where a foreign national is
attempting to analyze and obtain confidential business
information.
I will submit my written statement for the record. It
contains additional information on the Fourth Amendment issue,
but I will close now given my time is short.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Bailey follows:]

Prepared Statement of Kathleen C. Bailey

Introduction
Mr. Chairman, Members of the Committee, I am very pleased to appear
before you today to address the issue of ratifying the Chemical Weapons
Convention (CWC). I have studied this treaty for some years, first as
Assistant Director of the Arms Control and Disarmament Agency, and then
as principal author of a major technical study sponsored by the U.S.
Defense Nuclear Agency on the means by which nations might cheat under
the CWC. I am currently a Senior Fellow at Lawrence Livermore National
Laboratory, but the views I express today are my own and not
necessarily those of the University of California or any other
institution.
Today, I will focus my remarks on the impact of CWC challenge
inspections on U.S. companies and on U.S. national security facilities.
My bottom line is that use of treaty inspections for espionage is easy,
effective, and all-but-impossible to detect.
The Threat of Espionage
US intelligence community officials have advocated ratification of
the CWC, arguing that it will be ``another tool in the tool box'' for
intelligence collection. Rarely, if ever, is it mentioned that the tool
is every bit as effective in the hands of foreign intelligence
services. One could argue that indeed the advantage is to foreign
nations and companies, because it is the United States that has the
most to lose in terms of classified national security information and
confidential business information.
CWC challenge inspections will rely on collection and analysis of
samples to determine the presence or absence of key chemical compounds.
A principal tool for analysis is the gas chromatograph/mass
spectrometer (GC/MS) an instrument which can identify chemical
compounds. This information can be used to determine not only what
chemicals are in use at a particular site, but also what processes are
employed. Such data is useful for determining whether a facility might
be making chemical weapons agents, but it is also useful for gleaning
confidential business information as well as classified national
security information. I would like to quote from a paper prepared by
Dr. Ray McGuire of Lawrence Livermore National Laboratory on the
results of mock inspections conducted by the U.S. Government:

In one of the early experiments, soil and water samples were
collected in the near vicinity (a few feet to a few meters) of
rocket propellant production buildings. No samples were
collected from the inside of the buildings. These samples were
analyzed at Lawrence Livermore National Laboratory for both
organic and inorganic constituents.
* * * While it was not possible to reproduce exact
formulations from the results of this work, a significant and,
in some cases, alarming amount of information could be
extracted. The nature of the facilities--rocket propellant
production--was easily determined. The general type of
propellant being produced, strategic vs. tactical, could be
defined in most instances. Certain key ingredients of some
classified formulations, such as oxidizers, energetic binders
and burn rate modifiers, were determinable.
In three additional collections (involving wipe samples from
building interiors and machinery in one case, and soil and
waste water samples from just outside buildings in the others),
the analytical techniques cited above were used with the
addition of gamma ray spectroscopy for determining radioactive
materials. In both these instances, it was possible to
determine the materials being processed in the facilities
examined and some, but not all, details of the processes
themselves. In all of these cases, major portions of the
information are classified for security reasons.
In all of the cases cited above, classified data were
disclosed. It was necessary in all cases to combine a series of
analytical methods in order to obtain the sensitive results.
Many of the techniques used would not be germane to CWC
inspections.
However, it was not necessary to employ a variety of
sophisticated analytical tools to acquire sensitive information
in exercises carried out at two industrial chemical plants. In
one case, the batch production of a certain chemical could be
detected at least three weeks after the production ended.
While this information might not be considered to be of much
commercial value, the results of the second ``inspection''
were. In this instance, not only was the product of the
operation determined, but certain process details such as
intermediates, reducing agents, were also detectable. This
information was gathered from soil and water samples collected
exterior to the buildings and used on GC/MS for analysis.
[emphases added]

CWC negotiators were aware that sample analysis could reveal
sensitive information and sought to limit the potential for abuse by
limiting the ``library'' of compounds for which inspections could look,
and by assuring that samples would not be taken off-site unless it were
necessary to resolve questions that on-site analysis could not answer.
Despite these precautions, it is quite easy to acquire samples for
later analysis. One means is analysis of residue remaining in the GC/MS
equipment. Research conducted at Lawrence Livermore Laboratory proved
that even thorough decontamination does not remove all residue. To
prevent subsequent analysis off-site of that residue, the company or
facility concerned would have to purchase and retain all of the GC/MS
components that were exposed to the sample. This would cost
approximately $15,000 per inspection.
A more likely scenario for espionage would be clandestine sampling.
Sample collection could be as simple as taking swipes with a
``handkerchief'' or collecting air in a vial disguised, for example, as
a ballpoint pen. It would be all-but-impossible to detect, let alone
halt, such secret sampling.
Although I have emphasized sampling and analysis, it is also
possible to use inspections for espionage in other ways. A
knowledgeable inspector can learn much by observing the way a facility
is configured, how operations are performed, temperatures, and other
features. Equally important may be the opportunity to ask questions of
facility employees and to review records and data. The fact that
inspectors will have the opportunity to take pictures adds to the risk
that secrets will be compromised.
It is worth noting that some treaty proponents dismiss these
concerns, saying that if there were a genuine risk, companies and
facilities with something to lose would have objected. There are ready
answers why they have not. First, there is ample evidence that most
companies which will be directly affected have either not heard of the
treaty, or not focused on it. Second, there is a pervasive belief that
inspections--even challenge inspections--will apply only to companies
that manufacture chemicals. When I told a Bay Area biotechnology firm
that it could be challenge inspected, the attorney for the firm
replied, ``No one would want to inspect us. We don't manufacture
chemicals.'' When I explained that challenge inspection could be of any
site, regardless of its activity, the attorney replied, ``The
Constitution protects us against things like that.''
The Fourth Amendment Issue
The company representative whom I quote is probably right. The
fourth amendment guarantees against warrantless searches and seizures
and requires that probable cause be demonstrated prior to issuance of a
criminal warrant. A private citizen or U.S. company may chose to
decline a request for a CWC challenge inspection, thus requiring a
criminal warrant for the inspection to proceed. Probable cause must be
demonstrated before proper authorities can issue a criminal warrant. In
the case of CWC inspections, this raises a problem because the country
making a challenge inspection request is not required to provide
evidence that would fit the requirements for probable cause--it may
simply assert wrongdoing without providing substantiation. The
requesting country does not have to identify the name or exact location
of the company to be inspected until 12 hours before international
inspectors are due to arrive at the port of entry. Thus, without the
proper information to demonstrate probable cause to a U.S. judicial
official, it will be extraordinarily difficult, if not impossible, to
gain a timely criminal warrant for a challenge inspection.
A related question is that it is unclear whether a criminal warrant
may be administered in effect by foreign nationals. Can OPCW officials
substitute for U.S. officials in a search?
If indeed challenge inspections can be rejected under the U.S.
Constitution, there will be negative repercussions not only for the
CWC, but for the future of arms control. The CWC verification regime,
which will cost the taxpayers greatly, will not be implemented in any
meaningful way. More importantly, such a scenario would surely cloud
the future of arms control. Other nations would follow the example of
the United States in rejecting challenge inspections as well as any
treaties which are based on the CWC model.
The Issue of Preparing National Security Facilities
In closing, I would like to raise an issue to the Committee which I
feel is important, but which has not been considered as yet--the need
to assess the costs of preparing U.S. national security facilities for
CWC challenge inspections. This preparation must take place well before
any potential inspections, and requires a substantial budget.
Last year, preparation of Savannah River Plant for a Russian visit
cost approximately $400,000. Estimates of cost requirements to prepare
a facility within Lawrence Livermore National Laboratory for a CWC
inspection are $250,000. The Department of Defense facilities are
expected to require between $200,000-$500,000 each. Of course, some of
these costs are non-recurring, but some will arise any time an
inspection is to occur.
Mr. Chairman, if there is confidential or classified data that can
be lost through use of GC/MS equipment, from observation, or from
interviews, preparation may be futile in the event that a determined
spy poses as an inspector. However, to minimize losses and to protect
the data that is protectable, U.S. national security facilities must be
prepared. Preparation will require substantial effort and resources.
Thank you.

The Chairman. Thank you, ma'am. I know the answer to the
question, but I want it for the record. Have you served in any
administration under any President?
Ms. Bailey. Yes, sir. I served as Assistant Director for
the Arms Control and Disarmament Agency under President Reagan.
The Chairman. Do you know whether President Reagan ever
endorsed a treaty of this sort?
Ms. Bailey. Not to my knowledge and, sir, I would add that
this treaty as it ultimately ended up is not at all as Reagan
officials, at least as far as I knew, envisioned it.
The Chairman. Well, I have had several people prominent in
the Reagan administration say that they never saw it in this
form. They never approved it, and they are confident that
Ronald Reagan himself never approved a treaty like this. Mr.
Merrifield.

STATEMENT OF HON. BRUCE MERRIFIELD, FORMER ASSISTANT SECRETARY
OF COMMERCE

Dr. Merrifield. Thank you, Mr. Chairman. My doctorate is in
physical organic chemistry, and I have been in the chemical
industry most of my life, starting with Monsanto and ending up
as vice president of Continental Group, the Continental Can
Company.
I came to the Commerce Department to head up the technology
function there during the Reagan administration, and I was also
Under Secretary of Economic Affairs for a time. Since then I
have had an endowed chair at the Wharton Business School, as
professor of entrepreneurial management; but I have also
started a company, a high tech company, which is a major
breakthrough in electrical energy storage, and it has a lot of
process technology which is highly proprietary.
But my mission at Commerce, of course, was to try to renew
the industrial competitiveness of the United States, since we
were not competitive at that time. The Japanese were putting
together vertically integrated consortia, and we could not even
talk to each other. They were capturing all of the consumer
electronics and mass memory business in semiconductors and so
forth.
So a critical problem then was, first, to get the antitrust
laws changed, those 100-year-old laws. President Reagan, when I
first met him said, Bruce, why don't you change the antitrust
laws.
Well, it took about 4 years. Subsequently, I started
hundreds of consortia while I was at Commerce, including
SEMATECH and a lot of others. My office also put through the
tech transfer acts of 1984 and 1986, which cut the Government
out of owning its technology and made billions of dollars
available of R&D to the private sector.
The Baldrige Award, the technology medal, the process
patent technology which strengthens our process patents were
enacted. Process technology was very critical at that time,
because anybody operating outside this country could operate
under our process patents and then export to the United States.
We got that changed. The patent extension act was another
success. We did a lot of good things, increasing at least the
environment for industrial competitiveness here; and as a
result we are now the most competitive country in the world,
and that is very important.
This law would mitigate that capability, that competency,
very significantly. Through industrial espionage somewhere
between $25 billion and $100 billion is lost each year. It is
important now, in that this CWC law would open the floodgates
of espionage to our proprietary technology, which is the heart
of our competitiveness.
Technology is the engine of competitiveness, and it is
important that we maintain it. We have an incredible thing
going here in this country. We currently spend about $25
billion a year in basic research, much more than any other
country in the world can spend or has the capability to spend
or match in any reasonable time. As a result, we get most of
the Nobel prizes. We make most of the seminal discoveries.
It is that basic technology that is the heart of our
competitive advantage in this country, and it is terribly
important that we protect that. It is awfully important that we
not allow it to slip away with these challenge investigations
that give you 12 hours' notice, with people showing up at your
door without you even knowing they are going to be there.
Basically this all started with Vanover Bush back in 1945.
We made thousands of liberty ships and advanced aircraft and
the Norton bomb site and radar, and we detonated the atomic
bomb, which absolutely stunned the scientific community. As a
result, Vanover Bush captured the euphoria of the moment in a
report to the President calling research the endless frontier.
As a result of that, we started the National Science
Foundation. Since then, we have pumped about $1 trillion into
our academic community, our universities and our government
labs. That is the capability that is unique in this country. It
is our competitive advantage. We need to protect it. Those are
our crown jewels, and it is awfully important that we not let
that slip away.
Competitive advantage, industrial competitiveness, is the
primary concern of America, and this convention certainly is
not going to help that at all. It is going to mitigate that
capability.
Let us not forget for a minute that we have this incredible
capability. We have 15 million companies in this country that
can translate new discoveries into useful things. No other
nation has that. We have this entrepreneurial culture which has
permission to try and fail and try again until we succeed
without fear of personal loss or penalty.
We have the most flexible capital development capability.
We have the world's largest market. We have one common
language. We have everything in spades. We need to protect and
nurture it, and it is important that we not allow it to be
mitigated by some naive, well-intentioned law such as this one.
Thank you.
The Chairman. Mr. Secretary, thank you very much. Has
anybody called you that lately?
Dr. Merrifield. I'm sorry?
The Chairman. I said, ``Mr. Secretary, thank you very
much.'' Has anybody called you ``Mr. Secretary'' lately?
Dr. Merrifield. Not lately.
The Chairman. Sir, please pronounce your name for me
correctly.
Mr. Reinsch. It's ``Reinsch.''
The Chairman. Thank you. You are recognized, sir. Thank you
for coming.

STATEMENT OF HON. WILLIAM A. REINSCH, UNDER SECRETARY OF
COMMERCE FOR EXPORT ADMINISTRATION

Mr. Reinsch. Thank you, Mr. Chairman. It is a pleasure to
be here to talk a little bit about the Commerce Department's
prospective role in the implementation of this convention if it
is ratified.
We expect to have a key role for industry liaison, and I
want to assure you from the beginning that, taking into account
the need for full and effective implementation of the
convention's verification regime, we are committed to
minimizing costs to the industry and to maximizing the
protections of company confidential information in the two
major areas which will affect the U.S. commercial sector, which
are data declarations and inspections. I would like to speak
briefly about each of those, if I may.
Commerce has developed user friendly draft data declaration
forms and instructions to complete them. No information is
requested that is not specifically required by the CWC.
These materials have been field tested and refined based on
comments from industry, including the Chemical Manufacturers
Association. We have also provided copies of these forms to the
committee's staff. I am pleased to note that we have
consistently received positive feedback from those who have
reviewed them.
The administration estimates that about 2,000 plant sites
will be required to file data declarations. Of those 2,000, we
estimate that over 90 percent belong to a category called
unscheduled discreet organic chemicals, or DOC's, as the
gentleman from Dixie Chemical referred to them.
The DOC data declaration is a very simple form that asks
the company to specify the location of the plant site and its
general range of production--e.g., this plant site produced
over 10,000 metric tons of DOC's last year, or whatever it was.
Mr. Chairman, I brought one along to demonstrate for you
how simple I think it is. It consists of three pages. Page one
is essentially name, address, type of declaration, with a
couple of boxes to check. Page two is location of the facility
and point of contact there, with a box or two to check. Page
three, which is about a half page, consists essentially of
checking the box as to what your level of production is. This
is not a complicated form. It is not a complicated process, and
it is not a complicated set of instructions.
Now, to ensure that the treaty remains focused on the most
relevant industries, certain other industries have been
exempted from the CWC data declaration process. For example,
these exemptions apply to plant sites that produce explosives
exclusively, produce hydrocarbons exclusively, refine sulfur
containing crude oil, produce oligimers and polymers, such as
plastics and synthetic fibers, and produce unscheduled
chemicals via a biological or a biomediated process, such as
beer and wine, which I know will be of great comfort to many
people.
About 10 percent of the data declarations focus on the
CWC's scheduled chemicals. These declarations are more
involved, but still do not constitute a heavy and complicated
reporting burden for the 140 or so firms that will be asked to
comply. Most of these are larger companies and members of CMA,
who are likely to have accumulated much of the needed
information for other purposes.
In any event, I want to assure you that Commerce will
provide substantial assistance to industry in the data
declaration process if it turns out to be needed. We will help
firms determine if they have a reporting requirement. We will
develop a commodity classification program similar to the one
we have for export licensing.
If a company does not know if its chemicals are covered, it
can ask us for a determination. If firms do have a reporting
requirement, our technical staff will assist them in filing
their declarations.
We will also seek to put in place a system that enables
firms to complete and file these forms electronically. This is
a system that we already have in place for our export licenses.
Firms also want this data to be fully protected from
unauthorized disclosure. We fully understand that concern and
have substantial experience through our export licensing system
in protecting company confidential information as part of our
current responsibilities. Our CWC information management system
will be in a secure location and will be only accessible to and
operated by staff with appropriate clearances.
Now with respect to inspections, we will be charged with
managing the CWC process inspections for U.S. commercial
facilities. That applies to both routine and challenge
inspections. We will identify firms that are likely to be
subject to routine inspection and work with them to develop
draft facility agreements that will protect company
confidential information.
These agreements will set forth the site specific ground
rules for the conduct of inspections. We estimate that about 40
U.S. com-
mercial plant sites each year will be subject to routine
inspections. Our objective is to develop draft facility
agreements before these inspections take place in order to give
firms an opportunity to identify their confidential information
and processes.
In this regard, we will work with firms to determine what
constitutes company confidential information and will protect
U.S. firms against any unwarranted request by international
inspectors.
We anticipate very few challenge inspections. In the event
there is one of a non-defense commercial facility, we would
have the lead role managing access to ensure that the
international inspectors obtain, by the least intrusive means
possible, only the information and data that are relevant to
specified noncompliance concerns. Firms would be under no
obligations to answer questions unrelated to a possible
violation of the CWC.
As with routine inspections, we will work closely with
firms to determine what constitutes company confidential
information, and we will protect firms against unwarranted
requests that may be made by international inspectors.
Mr. Chairman, I can stop now or I can keep going for about
1\1/2\ more minutes, whatever you prefer.
Senator Biden. I'm not the chairman but I would hope he
would let you go for 1\1/2\ minutes since Ms. Bailey got to
read 2 letters.
Senator Hagel (presiding): I guess I am the only Republican
here. It's great the way it works around here.
Senator Biden. Let's vote.
Senator Hagel. I'm the Chairman. Do you want to get it over
with, Joe?
Senator Biden. Yes.
Senator Hagel. Please continue.
Mr. Reinsch. I will talk fast, Senator. Thank you.
Senator Hagel. Take your time.
Mr. Reinsch. Let me make a brief comment about the
Australia Group and about export controls, since that is part
of my responsibility.
Some critics have expressed concern that the treaty will
undermine the existing chemical nonproliferation export
controls that have been developed by the Australia Group. I
want to assure you that that is not the case.
Article I of the CWC commits States Parties to refrain from
assisting any chemical weapon program in any way. The Australia
Group's regime of export controls is end user/end use driven
and is fully consistent with our obligations under Article I.
It is not a regime of trade restrictions aimed at impeding any
country's economic development. Rather, the Australia Group's
controls focus exclusively on restricting transfers to end
users of concern.
Accordingly, we will continue to strongly support the
Australia Group after the CWC enters into force. We will not be
required by the CWC to liberalize nonproliferation export
controls to rogue nations, such as Iran and Libya, even if they
ratify the CWC.
However, when considering export controls, it is important
to note that the CWC mandates trade restrictions that affect
countries who do not ratify. Senator Kerry made this point in
his dialog with Mr. Forbes.
The real concern regarding export controls is that our
allies and friends who have ratified the CWC will be required
to impose controls on us that will have an adverse impact on
U.S. industry if we do not ratify. Further, if we fail to join
the CWC as part of the responsible family of nations, our
overall leadership role within the nonproliferation community
will be severely eroded and our ability to maintain a strong
presence within the Australia Group will be lost.
Thank you, Mr. Chairman. I think I will stop now and ask
you to put the full statement in the record.
Senator Hagel. Without objection, yes.
[The prepared statement of Mr. Reinsch follows:]

Prepared Statement of William A. Reinsch

Good Morning Mr. Chairman and Members of the Committee: I am
pleased to be here today to discuss the Commerce Department's
prospective role in the implementation of the Chemical Weapons
Convention (CWC). The Bureau of Export Administration (BXA) is expected
to have a key role for industry liaison, and I am here to assure you,
that taking into account the need for full and effective implementation
of the convention's verification regime, we are committed to minimizing
costs to industry and to maximizing protections of company confidential
information in the two major areas that will affect the U.S. commercial
sector--data declarations and inspections.
Data Declarations
Commerce has developed user-friendly draft data declaration forms
and instructions to complete them. No information is requested that is
not specifically required by the CWC. These materials have been field
tested and refined based on comments from industry, including the
Chemical Manufacturers Association (CMA). Copies of these forms have
also been provided to the committee's staff. I am pleased to note that
we have consistently received positive feedback from those who have
reviewed the forms and their instructions.
The administration estimates that about 2,000 plant sites will be
required to file data declarations. Of these 2,000, we estimate that
over 90% belong to a category called ``Unscheduled Discrete Organic
Chemicals'' (DOCs). The DOC data declaration is a very simple form that
asks the company to specify the location of the plant site and its
general range of production (e.g., this plant site produced over 10,000
metric tons of DOCs last year). No specific chemical identification,
product mix or other substantive information is requested, and the
declaration can therefore be completed quickly and without revealing
sensitive data. I want to stress that the DOC declaration does not ask
for any information on acquisition, processing, imports, or exports.
To ensure that the treaty remains focused on the most relevant
industries, certain other industries have been exempted from the CWC
data declaration process. For example, these exemptions apply to plant
sites that produce explosives exclusively, produce hydrocarbons
exclusively, refine sulphur-containing crude oil, produce oligimers (o
lig i mers) and polymers (such as plastics and synthetic fibers) and
produce unscheduled chemicals via a biological or bio-mediated process
(such as beer and wine).
About 10% of the data declarations focus on the CWC's scheduled
chemicals. These declarations are more involved but still do not
constitute a heavy and complicated reporting burden for the 140 or so
firms that will be asked to comply. Most of these are larger companies
and members of CMA who are likely to have accumulated much of the
needed information for other purposes.
In any event, I want to assure you that Commerce will provide
substantial assistance to industry in the data declaration process if
it turns out to be needed. We will help firms determine if they have a
reporting requirement. We will develop a commodity classification
program similar to the one we have for export licensing. If a company
doesn't know if its chemicals are covered by the CWC, it can ask
Commerce for a determination. If firms do have a reporting requirement,
Commerce technical staff will assist them in filing their declarations.
In short, we do not believe that firms will be required to hire outside
consultants to complete the CWC forms. We will also seek to put in
place a system that enables firms to complete and file data
declarations electronically.
Firms also want this data to be fully protected from unauthorized
disclosure. We fully understand that concern and have substantial
experience in protecting company confidential information as part of
our current export licensing responsibilities. I want to assure you
that our CWC Information Management System will be in a secure location
and will be only accessible to and operated by staff with appropriate
clearances. I also want to stress that the administration's draft CWC
implementing legislation provides strong protections for company
confidential information, and I hope this legislation will be taken up
as soon as possible after the Senate's vote on ratification.
Inspections
The Commerce Department will be charged with managing the CWC
inspection process of U.S. commercial facilities. There will be two
types of inspections--routine and challenge.
Routine inspections are conducted to confirm the validity of data
declarations and the absence of Schedule I chemicals. They are not
based on any suspicion or allegation of non-compliance with the CWC.
Inspectors will not be permitted unrestricted access to U.S. facilities
under this regime, because the inspection may not exceed the limited
purpose for which it is authorized. I can assure you that no ``fishing
expeditions'' will be permitted as part of the CWC inspection process,
because the Commerce Department will not permit it to happen.
Commerce will identify firms that are likely to be subject to
routine inspection and work with them to develop draft ``Facility
Agreements'' that will protect company confidential information. These
Facility Agreements, which must be concluded between the U.S. and the
Organization for the Prohibition of Chemical Weapons, will set forth
the site-specific ground rules for the conduct of inspections. We
estimate that about 40 U.S. commercial plant sites each year will be
subject to routine inspections. Commerce's objective is to develop
draft Facility Agreements before inspections take place in order to
give firms an opportunity to identify their confidential information
and processes. In this regard, we will work with firms to determine
what constitutes company confidential information and will protect U.S.
firms against any unwarranted requests by international inspectors.
Under the implementing legislation, firms will participate in the
preparations for the negotiation of Facility Agreements and the right
to be present when the negotiations take place. This is yet another
reason why Congress should take up the implementing legislation as soon
as possible after passage of the Resolution of Ratification.
Challenge inspections are conducted based on an allegation of
noncompliance. These inspections may only be requested by a State Party
to the CWC and can be directed at declared and undeclared facilities.
We anticipate few challenge inspections. In the event that there is a
challenge inspection of a non-defense U.S. commercial facility,
Commerce would have the lead role ``managing access'' to ensure that
the international inspectors obtain by the least intrusive means
possible only the information and data that are relevant to the
specified noncompliance concerns. Firms would be under no obligation to
answer questions unrelated to a possible violation of the Chemical
Weapons Convention.
As with routine inspections, Commerce will work closely with firms
to determine what constitutes company confidential information and will
protect U.S. firms against any unwarranted requests that may be made by
international inspectors. Since Commerce will be responsible for
``managing access,'' we will abide no administrative harassment of U.S.
companies or ask them to reply to any questions not directly related to
CWC compliance.
Mr. Chairman, I also want to stress that the CWC gives us the right
to screen the list of inspectors before any foreign national is
permitted to conduct verification activities on our soil. We certainly
intend to exercise our right to screen that list and to disapprove any
individuals we find unsuitable.
With regard to the overall CWC inspection process, I understand
there have been concerns raised about Constitutional protections
regarding unreasonable search and seizure. No treaty that is
inconsistent with the U.S. Constitution has U.S. legal effect, and the
CWC involves no such inconsistency. We anticipate that most firms will
permit CWC inspections on a voluntary basis, but in cases where access
is not granted voluntarily, the U.S. Government would always obtain a
search warrant before proceeding.
Australia Group and Export Controls
Mr. Chairman, some critics have expressed concern that the treaty
will undermine the existing chemical non-proliferation export controls
that have been developed by the ``Australia Group.'' As head of the
agency that administers dual-use export controls, I want to assure you
that this is not the case. Article I of the CWC commits States Parties
to refrain from assisting any chemical weapon program in any way. The
Australia Group's regime of export controls is end-user/end-use driven
and is fully consistent with our obligations under Article I of the
CWC. It is not a regime of trade restrictions aimed at impeding any
country's economic development. Rather, the Australia Group's controls
focus exclusively on restricting transfers to end-users of concern.
Accordingly, we will continue to strongly support the Australia Group
after the CWC enters into force, and we will not be required by the CWC
to liberalize non-proliferation export controls to rogue nations such
as Iran and Libya--even if they ratify the CWC.
However, when considering export controls, it is important to note
that the CWC mandates trade restrictions that affect countries who do
not ratify. Therefore, the real concern regarding export controls is
that our allies and friends who have ratified the CWC will be required
to impose controls on us that will have an adverse impact on U.S.
industry if we do not ratify. Further, if we fail to join the CWC as
part of the responsible family of nations, our overall leadership role
within the nonproliferation community will be severely eroded and our
ability to maintain a strong presence within the Australia Group will
be lost.
Conclusion
Mr. Chairman, the time has come for us to join the growing
consensus to ratify the treaty that we have promoted for so many years
under both Republican and Democratic administrations. I believe that we
are far better off with the CWC than without it. The United States has
always been the world leader in fighting the proliferation of weapons
of mass destruction and we must not shrink from that challenge at this
critical juncture. Further, we must not abandon the American chemical
industry who worked with us for so many years to develop this treaty
and who would be disadvantaged in world markets if we fail to act
responsibly. In short, the CWC will not impose unreasonable burdens on
U.S. industry, but failure to ratify the CWC will certainly damage our
overall international economic and non-proliferation interests.

Senator Hagel. Mr. Webber, you are no stranger around here.
It is good to have you.

STATEMENT OF FREDERICK WEBBER, PRESIDENT, CHEMICAL
MANUFACTURERS ASSOCIATION, WASHINGTON, D.C.

Mr. Webber. Thank you, Senator. First of all, I want to
reassure you that you are not the only Republican in the room.
Second, being an old Marine, I am used to being
outnumbered, and I see that we are very much outnumbered here
today. But I sort of like those odds.
My name is Fred Webber, and I am president of the Chemical
Manufacturers Association. I would like to enter into the
record a letter that my board signed yesterday. We had our
spring board meeting. It is a letter endorsing the Chemical
Weapons Convention. There are 50 men on my board representing
America's chemical companies of all sizes. And, by the way, a
third of our membership, which is almost 200 chemical
companies, is made up of companies with sales less of less than
$100 million. So, indeed, we consider those to be small
businesses.
Senator Hagel. Without objection.
[The information referred to follows:]

April 15, 1997.
Hon. Trent Lott,
Senate Majority Leader,
United States Senate, Washington, DC 20510.
Dear Senator Lott: We, the undersigned members of the Chemical
Manufacturers Association's Board of Directors, are writing to ask you
to support the Chemical Weapons Convention (CWC).
We believe the Convention is a fair and effective international
response to the international threat of chemical weapons proliferation.
Ratifying the CWC is in the national interest.
The CWC is a natural extension of existing U.S. policy. In 1985,
Congress voted to end production of chemical weapons by the military
and to begin destroying existing stockpiles.
For years, the United States has imposed the world's strongest
controls on exports of weapons-making ingredients. Our nation is the
standard bearer in preventing the spread of chemical weapons.
The CWC requires other nations to do what the United States is
already doing. That's why President Reagan proposed the treaty to the
United Nations in 1984. It's why President Bush signed the treaty in
Paris in 1993. And it's why President Clinton is asking the Senate to
ratify it.
The chemical industry has thoroughly examined the CWC. We have
tested the treaty's record-keeping and inspection provisions. And we
have concluded that the benefits of the CWC far outweigh the costs.
Ratifying the CWC is the right thing to do. We urge you to vote for
the Convention.
Sincerely,
Frederick L. Webber, President & CEO, Chemical Manufacturers
Association
J. Lawrence Wilson, Chairman & CEO, Rohm and Haas Company; Chairman,
Board of Directors, Chemical Manufacturers Association
John E. Akitt, Executive Vice President, Exxon Chemical Company
Phillip D. Ashkettle, President and CEO, Reichhold Chemicals, Inc.
Bernard Azoulay, President and CEO, Elf Atochem North America
William G. Bares, Chairman and CEO, The Lubrizol Corporation
Jerald A. Blumberg, Executive Vice President, DuPont; Chairman, DuPont
Europe
Michael R. Boyce, CEO & President, Harris Chemical Group
Vincent A. Calarco, Chairman, President & CEO, Crompton & Knowles
Corporation
William R. Cook, Chairman, President and CEO, BetzDearborn Inc.
Albert J. Costello, Chairman, President & CEO, W.R. Grace & Co.
Davis J. D'Antoni, President, Ashland Chemical Company
John R. Danzeisen, Chairman, ICI Americas Inc.
Earnest W. Deavenport, Jr., Chairman of the Board and CEO, Eastman
Chemical Company
R. Keith Elliott, Chairman, President & CEO, Hercules Incorporated
Darryl D. Fry, Chairman, President and CEO, Cytec Industries Inc
Michael C. Harnetty, Division Vice President, 3M
Richard A. Hazleton, Chairman & CEO, Dow Corning Corporation
Alan R. Hirsig, President & CEO, ARCO Chemical Company
Gerald L. Hoerig, President, Syntex Chemicals, Inc.
Jack L. Howe, Jr., President, Phillips Chemical Company
Jon M. Huntsman, Jr., Vice Chairman, Huntsman Corporation
Donald M. James, President & CEO, Vulcan Materials Company
Dale R. Laurance, President and Sr. Operating Officer, Occidental
Petroleum Corporation
Raymond W. LeBoeuf, President & CEO, PPG Industries, Inc.
James A. Mack, President & CEO, Cambrex Corporation
Hans C. Noetzli, President & CEO, Lonza, Inc.
Robert G. Potter, Executive Vice President Monsanto Company
Arthur R. Sigel, President & CEO, Velsicol Chemical Corporation
Enrique J. Sosa, Executive Vice President, Chemicals Sector, Amoco
Corporation
William Stavropoulos, President & CEO, The Dow Chemical Corporation
F. Quinn Stepan, Chairman & President, Stepan Company
S. Jay Stewart, Chairman and CEO, Morton International, Inc.
Robert O. Swanson, Executive Vice President, Mobil Corporation
Rudy van der Meer, Member, Board of Management, Akzo Nobel nv
Jeroen van der Veer, President & CEO, Shell Chemical Company
George A. Vincent, Chairman, President & CEO, The C.P. Hall Company
J. Virgil Waggoner, President & CEO, Sterling Chemicals, Inc.
H.A. Wagner, Chairman & CEO, Air Products & Chemicals, Inc.
Helge H. Wehmeier, President & CEO, Bayer Corporation
Ronald H. Yocum, President & CEO, Millennium Petrochemical Company

Mr. Webber. I might also add, Mr. Chairman, that Virgil
Wagner, Vice Chairman of Sterling Chemical Company and a member
of our board signed that letter yesterday afternoon at 11:00--
excuse me, yesterday morning--and that, second, Mr. Robert
Potter, Chairman and President of the new Monsanto Company--
your old company, sir--firmly endorsed that letter. Monsanto
has always been on record supporting the Chemical Weapons
Convention. So I was rather surprised today to hear about that
letter and the concern.
The industry I represent is America's largest export
industry. We sell over $365 billion worth of chemicals. We
export over $60 billion of those. We employ about 1.1 million
people in what I would call well-paying jobs.
As you know, we have been a firm and frequent advocate of
this convention. We have appeared before this committee on four
separate occasions. We have the major voice of the regulated
business community on the convention. We have 20 years of
experience working closely with Republican and Democratic
administrations. We know how this treaty indeed affects our
commercial interests.
Our long-standing support for the convention is rooted in
the belief that the treaty is the right thing to do, and it is
the right way to control the spread of chemical weapons.
The chemical industry does not produce chemical weapons. We
do, however, make products used in medicine, crop protection,
and fire prevention, which can be converted into weapons
agents. The industry has a special responsibility to prevent
illegal diversions of our products. We take that responsibility
very, very seriously.
That is why, frankly, I am outraged by the remarks made
before this committee about the U.S. Chemical industry, remarks
that strongly suggest that our support for the Chemical Weapons
Convention is motivated by a desire to supply dangerous
chemicals for rogue nations. I am very disappointed in Mr.
Forbes' comments about blood money. I thought they were very,
very unfortunate.
Remarks that also suggest that we are trying to gut the
U.S. export control regime and dismantle multilateral control
organizations, like the Australia Group, frankly, again, deeply
offend us. The chemical industry is proud of its record of
support for U.S. antiproliferation efforts. We have long
supported this Nation's tough export control laws, the toughest
export control laws in the world; as they are necessary
measures to assure that commercial interests do not contribute
to the spread of chemical weapons.
No one has done more than the U.S. chemical industry to
make the Export Administration Act an effective control system.
No one has done more to build and support multilateral control
organizations like the Australia Group. The charges made here
last week against our industry are shameful and, frankly, they
bring dishonor and discredit to those who make them.
We support the convention because it is a logical extension
of U.S. policy. It will make our Nation's antiproliferation
objectives more reachable by applying our high standards to
other nations.
The treaty simply forces other nations to do what we are
already doing--destroying our chemical weapons stocks. We have
been committed to the success of the CWC for over 20 years.
Indeed, one of the great leaders was a man by the name of Will
Carpenter, again of Monsanto Corporation. We have been a true
partner of the U.S. Government in negotiating this treaty.
We began with many of the same concerns about the treaty
that have been voiced here. We have worked hard to protect U.S.
industrial interests, especially proprietary information. We
helped to de-
velop the protocols guiding the treaty's inspection and
recordkeeping requirements, and we put those protocols to live
fire tests over and over again.
Protecting confidential business information was our
industry's top priority. We think we achieved our goal in the
treaty text and the inspection procedures developed to
implement the treaty. In addition, we field tested the
declaration formats and concluded that the requirements are
reasonable and manageable.
Some claim that the CWC will impose a massive regulatory
burden on companies. That is not true.
I have about 1 minute to go, sir, if I may.
Senator Hagel. Mr. Webber, go right ahead. Take your time.
Mr. Webber. Thank you.
The treaty was specifically drawn to focus attention on a
relatively narrow segment of the chemical industry. Only some
200 facilities have both reporting and inspection obligations
under the treaty. Most of these are member companies of CMA.
Our involvement in preparing this treaty has made it a
measurably better product than it would have been otherwise.
As I said, our board yesterday reaffirmed its strong
support for the convention. In summary, we believe the treaty
is not a threat to U.S. business. This treaty passes muster.
The chemical industry supports it.
Again, we think the treaty is the right thing to do and we
thank you very much.
[The prepared statement of Mr. Webber follows:]

Prepared Statement of Frederick L. Webber

Good afternoon. My name is Fred Webber, and I am President and
Chief Executive Officer of the Chemical Manufacturers Association.
The industry I represent is America's largest export industry, with
over 1 million American jobs.
As you well know, CMA has been a frequent and vocal advocate for
the Chemical Weapons Convention. We have appeared before this Committee
on four separate occasions to testify on why the U.S. chemical industry
believes this treaty is in the national interest.
We are the major voice of the regulated business community on the
Convention. We have 20 years of experience working closely with
Republican and Democratic Administrations. We know how this treaty
affects our commercial interests.
Our long-standing support for the CWC is rooted in the belief that
the treaty is the right thing to do. It is the right way to control the
spread of chemical weapons.
The chemical industry does not produce chemical weapons. We do,
however, make products used in medicine, crop protection, and fire
prevention, which can be converted into weapons agents.
The chemical industry has a special responsibility to prevent
illegal diversions of our products. We take that responsibility very,
very seriously.
That is why I am outraged by remarks made before this committee
about the U.S. chemical industry--remarks that strongly suggest that
our support for CWC is motivated by a desire to supply ``dangerous
chemicals'' to rogue nations.
Remarks that also suggest that we are trying to gut the U.S. export
control regime and dismantle multilateral control organizations like
the Australia Group deeply offend us.
The chemical industry is proud of its record of support for U.S.
anti-proliferation efforts.
We have long supported this Nation's tough export control laws--the
toughest export control laws in the world--as necessary measures to
assure that commercial interests do not contribute to the spread of
chemical weapons.
No one has done more than the U.S. chemical industry to make the
Export Administration Act an effective control system. No one has done
more to build and support multilateral control organizations like the
Australia Group.
The charges made here last week against my industry are shameful
and bring dishonor and discredit to those who make them.
We support the CWC because it is a logical extension of U.S.
policy. It will make our Nation's anti-proliferation objectives more
reachable by applying our high standards to other nations.
The treaty simply forces other nations to do what we are already
doing, destroying our chemical weapons stocks.
CMA has been committed to the success of the CWC for close to 20
years. We have been a true partner of the U.S. Government in
negotiating this treaty.
We began with many of the same concerns about the treaty that have
been voiced here. We worked hard to protect U.S. industrial interests,
especially proprietary information. We helped to develop the protocols
guiding the treaty's inspection and recordkeeping requirements, and we
put those protocols to live-fire tests over and over again.
Protecting confidential business information was our industry's top
priority. We achieved our goal in the treaty text and the inspection
procedures developed to implement it. In addition, we field tested the
declaration formats, and concluded that the requirements are reasonable
and manageable.
Some claim that the CWC will impose a massive regulatory burden on
companies. That's not true. The treaty was specifically drawn to focus
attention on a relatively narrow segment of the chemical industry. Only
some 200 facilities have both reporting and inspection obligations
under the CWC. Most of these are members of CMA.
Our involvement in preparing this treaty has made it a measurably
better product than it would otherwise have been.
CMA's Board of Directors yesterday reaffirmed their strong support
for the Chemical Weapons Convention. A copy of the CMA Board letter
will be submitted for the Committee's record.
In summary, we believe the treaty is not a threat to U.S.
businesses. This treaty passes muster. The chemical industry supports
it. The CWC is the right thing to do.

Senator Hagel. Mr. Webber, thank you. Thank you all for
your time and your contributions.
Senator Biden, I think Senator Helms wanted to stay with
the 7.5 minute questioning, if that is agreeable to you. Why
don't you start and I will follow up.
Senator Biden. Thank you very much.
Mr. Webber, thank you. You would expect me to thank you and
others would expect me to thank you. But thank you for such a
clear, absolutely precise statement. I began to wonder. I say
this again. You know, chemicals in my state are not a small
operation. They are 51 percent of the manufacturing base of my
state.
I have not heard anybody in my state out there who
manufactures chemicals coming to me and saying this is a bad
idea, and I think almost all of them belong to your
organization. I may be mistaken. Maybe somebody does not, but I
think they all do.
Mr. Webber. I believe they do.
Senator Biden. Ms. Bailey, I don't expect you to answer
this, but the Diamond Shamrock example, Ultramar, the letter
read, if they produce any of the chemicals mentioned in the
letter--and I don't know if they produce them or use them--but
if they produce them, they will, in fact, come under an
inspection regime--if they produce at least 30 tons for some or
200 tons for others, which are still not subject to routine
inspections. Still, out of the whole mess there are only 20 a
year that can occur. That's Number 1.
Number 2, I am going to write the president of the company,
too, to assure him he need not be as concerned as you are. And
if they do not produce those chemicals, they don't have any
requirement. If they use them or if they purchase them, there's
no requirement--no requirement.
So I would have to find out, and it is hard to tell from
the testimony, whether they produce the chemicals listed or
whether they only consume them and do not produce them.
I would like to ask a question of Mr. Reinsch. I assume in
your testimony, when you were talking about you, the Commerce
Department, being required, being involved under the regime of
how these inspections will take place, any inspection, when it
takes place, is as a consequence of the language in the
convention. The Confidentiality Annex, subsection (c) says:
Measures to protect sensitive installations to prevent
disclosure of confidential data--et cetera. It talks in there
about how inspection teams will be guided and the requirement
that there be facility agreements, that there be arrangements.
Translated into every day English, that means there has to
be a deal that you sign off on, on how an inspection team is
able to, under what circumstances, what part of the facility
they can go into, when they can go in, how many people they can
go in with, what they can look at, whether the system has to be
turned on or off--all of those things. Right?
Mr. Reinsch. That's correct.
Senator Biden. I think that is a very important thing,
because part of the problem I find here is this. Just as
somebody said, I believe it was Mr. Kearns--and, by the way,
you did a heck of a job when you were on this committee. You
did a really fine job. You and I were on the same side then on
the fighter. We are on a different side now.
But as he points out, a lot of people, including individual
companies, do not know a lot about this treaty, any more than I
suspect any of your members would know about the treaty if we
sent them a poll. This is complicated stuff.
But what I find is the more we talk about it, the more we
explain the mechanics of it, the lot less onerous it appears,
even to people who are opposed to it. That is the reason I
bother to mention that section of the treaty.
Now, one of the things that I am concerned about is this.
And by the way, Mr. Johnson, I like witnesses like you. I mean
this sincerely. You are the kind of person I like testifying.
You don't mince any words. You go to the heart of what you
think is wrong with whatever is being discussed and what you
think is OK.
Your concern, I think were I you, is a legitimate one, and
that is whether or not the processes your particular company
uses would be able, in effect, to be pirated just by the mere
fact someone can see how you line up the line, or what
temperatures you run at, and so on and so forth.
Mr. Johnson. That is correct.
Senator Biden. I think were I you, I would be concerned
about that, too. But I also appreciate your putting to rest, at
least to some degree, how onerous the paperwork is and how
onerous the inspections are--all the stuff we are hearing from
the opponents. You do not say that. But you are worried, and
with good reason, I think, if I were you sitting there.
That is where the Commerce Department comes in. Now, how
would you take care of a fellow like Mr. Johnson who, in all
likelihood, will have about as much chance of being inspected
as win-
ning the lottery, because we are talking about how there are
only going to be 20 inspections in the whole year that could
take place. There are a couple of thousand outfits it could
take place in--well, maybe he has a little better chance than
winning the lottery, but it's not likely.
Mr. Johnson. I will buy my lottery ticket, Senator.
Senator Biden. You will buy your lottery ticket. Good
point. Touche.
How would you deal with this. Let's say the treaty passes,
as I hope, and I would hope, Mr. Johnson, that the first thing
he would do is come to you and say OK, guys, if we get an
inspection, how are we going to do this. Can we for the hour it
takes place, or 20 minutes, or 5 hours, shut down a particular
process so that they can't see what temperature we are doing
this at?
Will you actually facilitate that kind of thing? Will it be
that specific?
Mr. Reinsch. Well, if it came to that, Senator Biden. In
the first instance, this is Dixie.
Senator Biden. Yes.
Mr. Reinsch. These are discreet organic chemicals. In the
first instance, he is not going to have any inspections, at
least for the first 3 years.
Senator Biden. I didn't want to mention that. Yes.
Mr. Reinsch. Beyond that, it would be up to the
international body to ultimately decide if there were going to
be any inspections.
Senator Biden. And if it had any inspections, it would only
be 1 of 20.
Mr. Reinsch. Correct. So this is way down the road. But
let's assume the worst case for the moment and that in the
fourth or fifth year he is going to have an inspection.
What we would do in that case, as part of trying to create
a facility agreement with him, is to come in, meet with him,
talk to him about his confidential business information, his
proprietary information, and try to set up a structure in which
he would tell us what he does not want anybody to see, what
parts of the plant he does not want them to go into, what kind
of procedures he does not want them to observe, and we would
construct an agreement that precludes the inspection of those.
Senator Biden. The bottom line in the treaty, all that it
requires is that you supply sufficient proof that you are not
supplying, or producing----
Mr. Reinsch. You are not producing a Schedule I chemical.
Senator Biden.--Schedule I stuff.
Mr. Reinsch. That's correct.
Senator Biden. So it is not something that is an automatic
thing. I just want to establish--and my time is about to be
up--I just want to establish that, even if an inspection took
place in such a circumstance, it is not willy nilly unlock the
doors, open the books, here they come, and the Iranian team is
coming in to figure out how to transport all of this stuff to
Iran. Right?
Isn't that a fair statement?
Mr. Reinsch. That's correct, Senator. That is exactly
correct.
Senator Biden. Last point--and Mr. Spears is gone. I've got
good news for him. He will not be inspected at all. He is not
even in the game. So someone ought to write him a letter--I
will write him a letter--based on what he told us. He is not
even subject to any inspection at all. That is really good news
to him.
Maybe I should give it to Mr. Gaffney and he can give it to
him. There is no need. He is not even in the game.
That does not mean that he shouldn't be opposed to the
treaty. He made other, larger, objections to it, which I
respect. But he does not have to worry about his pipe company.
The Chairman [presiding]. Thank you.
Senator Hagel.
Senator Hagel. Mr. Chairman, thank you. Again, thanks to
all of you for coming today.
I apologize that we all had to jump out and vote. But I
would like to get back, Ms. Bailey, to your testimony, and I
left right at the beginning.
I would like, if you would, for you to expand a little bit
on one of your subheadings in your testimony, the threat of
espionage. Would you talk a little bit about where you see this
treaty? And maybe you do not. I have not read what you said.
But that has been brought up by former Secretary Schlesinger
and others, that this is a treaty that is on some pretty thin
ice when it comes to opening up our facilities to foreign
espionage.
Ms. Bailey. Yes, sir. The greatest threat in terms of
espionage to U.S. companies and U.S. national facilities, such
as my own laboratory, comes from challenge inspections which
might be used specifically for the purposes of espionage.
Hypothetically, an inspector could either be an
intelligence official assigned to be an inspector or could
later sell information to a company or country abroad that
reveals either classified or CBI, confidential business
information, that they might have gleaned through the process
of gathering samples and analyzing them.
I described in my testimony the GC/MS, the gas
chromatograph/mass spectrometer, which can reveal not only what
chemicals are being used at a site but also the processes being
used. And in the case of the propellant production facility
that was the subject of a mock inspection, we were able to
analyze samples taken from that facility and determine not only
what kind of chemicals, which chemicals were in the rocket
propellant, but also a lot of process information. All of this
was classified data.
This mock inspection, sponsored by the U.S. Government,
proved the point that somebody can come in and use the very
tools that will be used by inspectors in the challenge
inspection regimes to look at classified information.
The counter argument to this is that they are only going to
be looking for a specific library of types of information, such
as the scheduled chemicals. The problem is you cannot limit it
to that.
Our laboratory did a project last year for the Department
of the Army which determined that samples an be acquired even
from the GC/MS after it has been decontaminated and can reveal
the same classified information.
We have also done research that indicates that an inspector
could come in with a ball point pen that is really a sampling
device, suck some air up in it, or water, or whatever, and take
it away, analyze it, and get the same type of information.
Mr. Reinsch. May I comment on that, Senator?
Senator Hagel. Yes.
Mr. Reinsch. I have two quick points, if I may.
With respect to the GC/MS, I am advised by the Defense
Department's Onsite Inspection Authority that they have studied
this kind of equipment and have developed procedures for its
use by escorts during the inspections to ensure that only
appropriate information is provided to the inspector.
Now beyond that, I will leave it to the engineers and the
chemists to argue about that. But that is what I am advised.
The only other point I would make is Ms. Bailey has not
mentioned the issue of managed access. What we would do in a
challenge inspection is go in and consult with the company
about where their intellectual property is, what it is that
they are trying to protect from the very thing she is concerned
about, and devise a plan for the inspectors' access that would
prevent them from seeing those items.
Senator Hagel. Is that now part of the convention, that
wording?
Senator Biden. That's what I was talking about. Yes.
Ms. Bailey. Neither of those points are relevant, however.
The first one, the idea that they are only going to look for
specific kind of chemicals is this ``library of chemicals''
argument I was using.
Mr. Reinsch. That is not the point I made.
Ms. Bailey. It doesn't matter, because you can
clandestinely take samples and get the same data offsite. It
just doesn't matter.
Mr. Reinsch. We would manage access to protect intellectual
property.
Senator Hagel. I think she is kind of over that point.
Ms. Bailey. In the mock inspection which I cited, the
samples were taken outside of the propellant facility building.
So you didn't even have to go into the building to get it.
So the whole idea that managed access is somehow going to
prevent the acquisition of classified or confidential
information is not legitimate.
Senator Hagel. Thank you.
Mr. Secretary, I am on a timeframe, and if one of the other
Senators wants to come back, or I can come back to this again.
But I want first to get to Mr. Webber on this point.
Mr. Webber, what is your understanding of the inspection
process? Are you concerned at all for your companies that the
Iranians might come in or somebody would come in and what Ms.
Bailey is talking about gets underneath some of the corporate
issues, the national security issues? I mean, do you think you
and your companies, Mr. Webber, have a good understanding of
the process?
Mr. Webber. Certainly we were concerned early on. That is
why we got deeply involved in the deliberations and, frankly,
in the drafting sessions of this treaty, hoping that we could
clear up some of these problems.
Under the procedures we helped negotiate on the CWC, our
companies, frankly, have significant protections today against
an inspection team knowingly or inadvertently disclosing
proprietary information. First, the convention gives our
companies, subject to routine onsite inspections, the right, as
was mentioned earlier, to negotiate a facility agreement. That
agreement will govern the in-
spection process and provide a means of assuring that trade
secrets will not be routinely made available to the inspectors.
Second, the inspectors will be subject to personal
liability and sanctions for wrongful disclosure of information.
Again, we were concerned about the possibility. We think
the treaty tackles that problem head-on. We helped draft the
verification procedures; and, again, we just think the benefits
far outweigh the costs.
Senator Hagel. So that is no longer a concern of you, your
people, or your companies?
Mr. Webber. We think the language in that convention gives
us the protections we need.
Senator Hagel. Thank you.
Does anybody else want to respond?
Ms. Bailey. Mr. Webber is referring essentially to routine
inspections, whereas the inspections I was talking about are
challenge inspections. Those are the ones that are likely to
target, for example, a biotechnology firm, a pharmaceutical
company, any company that might have confidential business
information to lose or facilities such as my laboratory, where
there are national security data.
We won't be subject to routine inspections. We would be
subject to challenge inspections.
Senator Hagel. I think that is part of the issue that we
are trying to get at here; at least that is most important in
my mind. I am not diminishing the importance of commerce here.
But, again, I go back to my opening statement. I will vote on
this treaty based on the national interests of this country.
Everything else is important, but not nearly as important in my
mind as what is most important in the national security
interests of this country.
I suppose I am about out of time, Mr. Chairman, so I will
defer to whoever is up next. Thank you.
The Chairman. I am not going to call you ``Mr. Webber.'' I
am going to call you ``Fred,'' because we have been on the same
side many times.
Mr. Webber. For a long time, sir.
The Chairman. I welcome you as I do all of our
distinguished witnesses today.
I want to know if you or any other CMA representative has
stated in the past that no companies which manufacture what
they call ``discreet organic chemicals'' will be subject to
foreign inspections.
Mr. Webber. First of all, as was pointed out just a few
minutes ago, not within the first 3 years. They will not be
inspected within the first 3 years.
As you know, again----
The Chairman. I'm sorry. Please repeat that. You're a
little far away from the microphone.
Mr. Webber [continuing]. I'm sorry. Not within the first 3
years. They are not going to be inspected. And, indeed, if they
are to be challenge inspected later on, I think the odds,
again, are what--20 out of--what is the rule? It is going to be
a very low percentage if there is, indeed, to be a challenge
inspection. A challenge inspection relies on an allegation. So
we feel fairly comfortable that the protections that I just
described earlier will indeed apply to manufacturers of
discreet organic chemicals.
The Chairman. Have you read the committee, part 2 of the
Verification Annex, paragraphs 9-21 lately? Are you familiar
with it?
Mr. Webber. If I read it, sir, it was a long time ago, and
I can't quote it now.
The Chairman. It says nothing about any 3 years. And yes,
they will be inspected.
Now I just want to be sure here.
You are talking about challenge inspections and we are
talking about challenge inspections. What is your answer to my
question based on that?
Mr. Webber. Well, sir, I think the International Inspecting
Authority, if I read the convention correctly, has to make the
decision early on as to what the time schedule will be to
indeed, first of all, inspect those 200 facilities that will
naturally come out of the convention mandate and then decide
what to do with those discreet organic chemical manufacturers.
And if, indeed, they decide to allow challenges early on, sure
they will be subject to the treaty if there is a challenge to a
company like Dixie.
The Chairman. Well, this has not changed, and your
predecessor, a distinguished gentleman named Dr. Will
Carpenter, supplied for the record a copy of his remarks before
the American Association for the Advancement of Science on
January 16, admitted in 1989, in which he noted, ``Those of us
who manufacture chemicals that are only a step or two away from
chemical weapons, and that means a large number of us in the
CMA, have already accepted the reality that a good treaty means
significant losses of information that we consider
confidential.''
Is that still your position?
Mr. Webber. It is not our position today. Again, that
statement, indeed, was made by Dr. Carpenter of Monsanto in
1989. But he has been a forceful presence and a strong
supporter of the convention.
The Chairman. Did he speak in error when he said that? Was
he wrong when he said that?
Mr. Webber. Today he would tell you, sir, that the industry
has pressure tested the treaty and he feels very comfortable
now that the needed protections are there.
So I think he would testify right along those lines. That
is an 8 year old statement, when we were still working on the
treaty, working with the government to make sure that those
problems would be corrected.
The Chairman. But what was true in 1989, unless it has been
changed, would be true today. So you are saying he was wrong in
1989?
Mr. Webber. Sir, we were in the midst of negotiating on
that treaty. There were a lot of open-ended issues. A lot of
progress has been made since then.
I have met personally with Dr. Carpenter in the last 6
months. He is a strong advocate of the treaty who feels today,
as it is presently written, that it provides us with the
protection we need.
The Chairman. So you are saying here that it is a good
treaty?
Mr. Webber. Oh, yes, sir. We strongly support the treaty.
The Chairman. Are you mystified by the number of your
members who are rejecting your appraisal of this treaty?
Mr. Webber. There are always, in any organization, say of
200 companies, you will find a few.
The Chairman. But you had said in the past that you were
representing all of the chemical companies.
Mr. Webber. We represent 192--92--today to be exact. We
have one at the table that has concerns. They have not said
that the treaty ought to be defeated. They are concerned about
confidential business information and the cost of inspections.
The Chairman. We have heard some say definitely that it
ought to be defeated.
Mr. Webber. Well, I just heard a letter read into the
record from Sterling Chemical expressing concerns. And yet,
their vice chairman yesterday, along with the CMA board, signed
that letter endorsing the treaty, and that letter is going to
Senator Trent Lott today. And, by the way, Mr. Chairman, we
enter that for the record.
[The letter from Sterling Chemical was read into the record
by Kathleen Bailey and appears on page 183; the letter to
Senator Lott appears on page 194.]
The Chairman. Well, not so long ago, less than a year ago,
on November 26 of 1996, you made the claim that the U.S.
Chemical manufacturers will ``lose''--and these are indicated
as your words--``as much as $600 million a year in export
sales'' if the CWC is not ratified.
Then, on March 10 of this year, you revised your estimate
to say that the upper bound of lost sales would be $227
million. So you have come down. And also I have a list provided
to the committee and the Majority Leader's Office by CMA which
makes clear that the amount of sales of Schedule II chemicals
will total less than half of what you have previously claimed.
Now that ball is bouncing crazily around the lot. What do
you do, just reach out, get a figure, and say whatever is
likely to excite the people?
Mr. Webber. Oh, Mr. Chairman, you know I wouldn't do that.
We have known each other for too long.
The Chairman. Oh, I'm not sure. A lot of things are being
said about this treaty that are simply not so, and the people
who are saying them know that they are not so.
Now I want to know whether you are revising your figures
and where are the figures now?
Mr. Webber. I appreciate the opportunity to correct the
record and, indeed, it needs correction.
In September 1996, we estimated that the potential impact
of the ban on trade in Schedule II chemicals would, if applied
against the United States, impact some $600 million in
exports--in exports. Since that time, CMA carefully reviewed
the data available from the government and industry sources.
Our conservative estimates today are that $500 million to $600
million in two-way trade--and here we stand corrected, but it
is two-way trade, both exports and imports--will be affected by
the Schedule II ban.
These numbers are the best estimates that we have been able
to get throughout the debate.
By the way, Mr. Chairman, we feel that this is the tip of
the iceberg. But these numbers we are prepared to stand behind.
But it is two-way trade, not one-way trade, not just exports.
The Chairman. Well, let's see how well they will stand,
Fred, and I say this as a friend.
Mr. Webber. Yes, sir.
The Chairman. Exports of Amiton, a pesticide--is that the
way you pronounce that--A-M-I-T-O-N?
Mr. Webber. Yes. Yes, sir.
The Chairman. That is a pesticide. I am advised, quite
reliably, that the U.S. exports of Amiton total more than half
of your new figure. And yet, the United States sells this
pesticide largely to countries that have not ratified the
treaty and are not going to participate in it.
Am I wrong about that?
Mr. Webber. I'm not sure, Senator. I would have to look at
the numbers. But the fact of the matter is all of our major
trading partners, all of the major trading partners in the U.S.
chemical industry, are signatories already to this convention.
I don't know how else to approach the answer.
We could dig into the numbers, but I am trying to question
the relevancy of it and the sale of it. It goes to our trading
partners, and those trading partners have signed the
convention.
The Chairman. Well, half of what you say that they will
lose involves one chemical, Amiton--and I hope I am pronouncing
that right.
Mr. Webber. Yes, you are, sir.
The Chairman. And yet, the United States sells this
pesticide almost entirely to countries that have not ratified
the treaty.
I have just been handed, as your man is handing you
information I am being handed information, too, and what the
hell would we do without our staff. Western companies cannot
use this chemical, can they? You tell him.
Mr. Webber. If we understand correctly, U.S. law does not
prohibit production of this chemical, this pesticide, for
export purposes.
The Chairman. I understand that. But that is not what I
asked you, though.
I asked you if you didn't send it to companies that are not
participating. It is not a U.S. law. It is a European law that
you are talking about in the first place. But environmental
regulations are prohibiting the use of Amiton in Europe and
elsewhere. Is that not correct?
Mr. Webber. I am at a disadvantage. I don't have the
information or the numbers on that specific chemical. I would
be delighted to work with your staff to dig into that to really
see not only what is happening but what the significance of it
is.
The Chairman. Well, let me tell you what bothers me about
the proponents of this treaty.
I have caught them in so many misstatements of fact, and
for a while, you know, I said we all make mistakes. But I have
almost reached the conclusion that most--not all, but most--of
the loud advocates of the treaty--and I am including the
editorial writers--they don't know what they're talking about
and they don't care. They just get a statement out of thin air,
throw it out there, and then the rest of us have to chase it
down to see whether it is accurate. And nine times out of ten
we find out it is not accurate.
That is the reason I have made the conclusion that we ought
to defeat this treaty unless it is substantially modified and
we go ahead and do it right. I am just exactly like Steve
Forbes on this treaty. I thought he made good sense, as he does
always.
Well, my time is up.
What shall we do about another round? Would you like
another round?
Senator Biden. Well, since we have so many witnesses here--
we really have two panels in one--I would like to have another
round, if that is OK with you, Mr. Chairman.
The Chairman. OK. How many minutes per Senator?
Senator Biden. Do you mind if we have, if we could have one
more round of 7.5 minutes, I think that will end it. At least I
have about that much to ask.
Do you mind?
The Chairman. Not at all. I think it is a good idea.
Senator Biden. OK.
You know, I understand the Chairman's frustration. I am
going to ask Mr. Webber to comment. I want to pursue that again
in a moment.
But, you know, it is so easy. This is such a complicated
issue. It is so easy to scare the living daylights out of
proponents and opponents of this treaty by taking things,
taking the worst case scenarios that have probabilities that
are incredibly low.
For example, what Ms. Bailey was talking about is these
challenge inspections, these challenge inspections of outfits
that are the small outfits, the biochemical firms, the biotech
firms, the pharmaceutical firms, who, I might add, signed on to
these treaties, both their organizations.
Let's review what the treaty calls for if there is a
challenge inspection.
If there is a challenge inspection, first of all a country
has to, say Iran--we're all talking about Iran. We assume the
French are not going to do this bad thing to us, or the
Germans, the Brits, or whatever. We usually use Iran as the
worst case.
Say an Iranian says I want to find out what that biotech
firm is doing. I want to find out what that pharmaceutical firm
has out there, because I want to steal their secrets, or I want
to steal weapons-grade capability from someone.
So they say, ``we think Company X, Diamond Shamrock''--
assuming they were in the deal, and I'm not sure they are--``We
want a challenge inspection.'' What happens mechanically?
Mechanically, that request goes to the Director General of this
outfit. The Director General then takes a look at it after
looking at the evidence presented by the country asking for the
challenge inspection. They just can't say, you know, I kind of
think they make a lot of money over there at Diamond Shamrock,
and I would kind of like to find out how they do it. I want to
challenge. You know, like a kid in a pick-up game, ``I
challenge.''
You can't do that. You have to supply a rationale. You have
to say why you think they are violating this treaty.
Then the Director General takes it. He looks at it. Then he
has to take it to the Executive Council. And if the Executive
Council believes that the allegations offered, allegations of
cheating under the treaty, have no merit, they have to have a
super majority to say no inspection. They have to have, say,
three-quarters. It's three-quarters.
And, by the way, if it turns out it is an abusive request,
like abusing the courts with frivolous lawsuits, that kind of
thing, they also then have to pay a penalty, ``they'' the
country making these frivolous requests.
But even after that, let's assume it goes through the
sieve, Iran says I want to know what's happening up at duPont-
Merck. I think they have a deal there, and I would like to
figure out how it works. No inspector from that country is
allowed on the team. So the Iranians have to have somebody
else. They have to go to Country Y and say here is a deal we
will make together. You send your inspector in with this little
thing he is going to put in his pocket to find out all this
information and then, when you get it, you give it to us. This
is because you can't send an inspector in.
OK. Assume they go through all of that. Then they get to
the end of the day, they come to the United States, they go to
duPont-Merck or some small outfit. Guess what? In a challenge
inspection, they need a search warrant under the Fourth
Amendment, and they must establish before a court of law
probable cause to determine that the company is violating the
Chemical Weapons Convention--in a Federal court. It's just like
you have to have probable cause now for a search warrant.
Now, Mr. Johnson, if your company is worried about that
part of the process, or anybody else who actually runs a
company, you either don't have very good lawyers who work for
you now to be able to explain this to you or you are one of
those people who assumes you are going to get struck by
lightning on those days when there is lightning out there.
It could happen. I acknowledge it could happen. Iran could
make a deal with China--and, by the way, neither one is in the
treaty yet, and if they are not in the treaty, they don't get
to have an inspector; they don't get to be involved. They'd
have to make a deal. There has to be collusion. They have to
agree to share the information. They then have to go in with
another inspector not from their team, but they have to get by
the Director General, and the Director General then has to get
by the Executive Council. And the Executive Council is probably
not real crazy about Iran, either.
Then, even if they do that, they have to get by a Federal
judge.
Now it can happen. It can happen. A good friend of mine,
Billy Haggerty, got struck by lightning the other day in a
park. It happens. Now I walk in the same park, in the same
lightning storm--and I'm not joking, he really did get struck
by lightening. But that's about what we are talking about here.
With regard to this issue, Mr. Webber, I assume the point
of the question was--though I may be mistaken about this
particular chemical--is that you really are not going to suffer
a penalty, the industry, if you already trade it to a country
not covered by the treaty. This is because the only penalties
would be import sanctions that would be imposed upon us, or
exports, which are imports to that country. A country could say
you can't sell your chemical in our country. We're a member of
the treaty and you are violating the treaty or you are not in
the treaty. You're not in.
I assume the Senator's point was this stuff is sold to
countries that are not in the treaty, therefore you would
suffer no loss if we were not part of the treaty.
Mr. Webber. If they are otherwise not controlled by the
Export Control Act.
Senator Biden. Right.
Mr. Webber. That's correct.
Senator Biden. Otherwise not controlled by the Export
Control Act, which is a separate piece of legislation.
Mr. Webber. Correct.
Senator Biden. Can you supply for the committee an analysis
of this particular matter?
Mr. Webber. Yes.
Senator Biden. I see my train just left.
You know I care about this treaty, Jesse, if I miss the 5
train and there are no votes.
The Chairman. I wish you had gone home.
Senator Biden. Did you hear what he said, he wished I'd
gone home.
I don't blame him.
Can you supply for the record a more detailed response
based on your analysis to the Senator's question about 50
percent of the loss is attributed to one chemical and a
significant portion of that chemical sale goes to countries not
covered?
Mr. Webber. Yes. Your clarification is very helpful.
I'm sorry, Mr. Chairman, I didn't clearly understand the
question. We would be delighted to supply for the record that
analysis.
[The information referred to was unavailable at the time of
printing.]
Senator Biden. Well, I'll stop. I have so many more
questions that I don't want to get started.
I appreciate it, Mr. Chairman.
The Chairman. I can have somebody drive you to the station.
Senator Biden. The train has already gone. I am here for
another hour, unless you can call Amtrak. After 24 years, I
have never been able to hold an Amtrak train, so you know I
don't have a whole lot of power.
Ms. Bailey. Senator Biden, you made so many statements that
I think can be challenged.
Senator Biden. Well, please do challenge them. I'd love to
hear it.
Ms. Bailey. I know your time is out.
Senator Biden. Oh, no. I have another minute. Then I can
respond to you.
Ms. Bailey. Starting with the frivolity question, in other
words, if an inspection request comes in from a country----
Senator Biden. A challenge inspection.
Ms. Bailey [continuing]. A challenge inspection request
comes in from a country, and they want to go to a
pharmaceutical firm in the U.S.; they don't have to specify the
name of the company. They don't have to say the exact site.
They don't have to give information which would qualify as
being substantial for demonstrating probable cause.
Senator Biden. No. I didn't say they have to establish
probable cause. They have to give a reason.
Ms. Bailey. I'm just saying the information they give is
not sufficient to establish probable cause.
Senator Biden. I agree with that.
Ms. Bailey. They don't even have to say the name of the
site that they are going to until 12 hours before the
inspectors arrive at the port of entry.
Senator Biden. But then they have to say it.
Ms. Bailey. So this whole charade about frivolity being
questioned by the Executive Council is----
Senator Biden. Are they allowed to have an inspector?
Ms. Bailey. Sorry?
Senator Biden. Is the country asking for the challenge
allowed to have an inspector on the team?
Ms. Bailey. No. That's not the issue. The issue is you
cannot determine frivolity in advance, because you may not even
know what site they are asking to go to. That is the first
point.
Senator Biden. I don't think it is frivolity. I thought it
was a trick and a device to find out how to get information. I
thought that was your point.
Ms. Bailey. It is my point. I am just trying to argue that
your case that there is this Executive Council that is going to
sit there and look at a challenge inspection request and render
a judgment as to whether it is frivolous or abusive is not
going to save U.S. companies. It is not going to save them,
because there will be insufficient data for that Executive
Council to reach a reasonable decision until 12 hours before
they enter.
Now I would like to agree with you--it's so rare--I would
like to agree with you that it is quite possible that a company
that does not want to have a challenge inspection request can
say, ``no way; you get a criminal warrant.'' All right.
Senator Biden. Correct.
Ms. Bailey. Fine. Let's imagine a hypothetical situation in
which there were credible evidence presented that substantiates
the criminal warrant. The company, meanwhile, suffers
tremendously because of the negative press it will get.
Senator Biden. The same way criminals do. The same way
people accused wrongly of crimes do. You've got it. If there is
probable cause, under our Constitution, if there is probable
cause a crime has been committed, and then it turns out you are
innocent, you suffer.
Ms. Bailey. There was a real case I would like to tell you
about.
Senator Biden. Sure.
Ms. Bailey. The United States and Russia exchanged
reciprocal visits to pharmaceutical facilities. We went over
there and said, ``you know, there are real problems here. It
looks to us like you are producing biological weapons, or
either have been, are going to, or just were yesterday.'' Then
the Russians came over to the United States and went to a
pharmaceutical firm here. The Russians walked out the front
door and, in Russian, thankfully, gave a press briefing in
which they said this pharmaceutical company is involved in
biological weapons production.
It was not picked up by the press here.
Senator Biden. That's why it can't be bilateral. That's why
this treaty cannot be bilateral. That's why it's multilateral.
Ms. Bailey. The point I am trying to make is that U.S.
firms can be accused of nefarious actions by these foreign
inspectors with no basis.
Senator Biden. Can I stop you there for just a second and
take that example?
The inspection team is going to be made up of a number of
people. Unless you assume the whole world conspires against us,
the team is not going to walk out and say, tit for tat. Now if
you assume that, and I can understand that you might, if you
assume that the entire inspection team is going to do exactly
that--we know how the Russians work. Whenever you expose them
of something, accuse them of something, or prove something,
they come back and say double on you, your mother wears combat
boots, so do you. We know how they deal.
But you have to assume the entire regime, all these members
of this treaty, whatever group of inspectors--they are not just
going to be Russians or one or two people; they are going to be
a group. You're going to have to assume that all of them are
going to be as venal as the Russian example you gave me. That's
a heck of an assumption.
Ms. Bailey. No, I don't think so.
Senator Biden. No?
Ms. Bailey. You see, my argument is that the company that
is being challenge inspected will be so worried about negative
press that there will be pressure on them to succumb and not
stand up for their constitutional rights under the Fourth
Amendment to say no foreigners are going to come in here and
look at my process data or look at the way I have my company
set up.
Senator Biden. No, that's not what they're going to say.
That's not what they are allowed to say. They may want to say
that and they won't. You're right. What they'll say is there is
no evidence, credible evidence, to suggest that we, in fact,
are doing anything wrong. Therefore, you cannot come in. That's
what they're going to say.
Ms. Bailey. And then the President will have a----
Senator Biden. You see, I practiced law, you practice
inspections. I represented people like this where, in fact, the
government came and said we want to do something. We want to
search your home, your business, or you. I know how it works. I
represented them. I know how they think--not all of them. But I
have as much experience as you do in that regard.
I see no reason to believe your scenario. But the bottom
line is this, and I will stop, Mr. Chairman.
You have to assume in your scenario that the entire
inspection team is going to be venal.
Ms. Bailey. That's not true.
Senator Biden. Sure it is. Look, the Russian walks out and
says you know, they are making chemical weapons in there.
Ms. Bailey. It only takes one person to make that
accusation.
Senator Biden. No, it doesn't, because then what happens is
you've got the other five people there, or three people, or
seven people.
Ms. Bailey. This is all prior to an inspection taking place
at this facility.
The Chairman. Joe, you are out-shouting the lady. Give her
a chance to answer you.
Senator Biden. I'm sorry. You're right and I beg your
pardon.
The Chairman. You rest your tonsils just a little bit.
Not one iota of evidence is required by the CWC to start a
challenge inspection. Is that correct--not one iota?
Ms. Bailey. That's correct. No data.
The Chairman. And it's impossible to stop----
Senator Biden. No ``data.'' There's a distinction.
Ms. Bailey. The Senator is correct--no data, no evidence.
The Chairman. What's the difference?
Senator Biden. Well, there's a difference between ``data''
and an ``assertion.''
Ms. Bailey. No data or evidence.
The Chairman. Anything else?
Senator Biden. No.
The Chairman. OK.
It's impossible to stop an inspection once it's started, is
that correct?
Ms. Bailey. Yes.
The Chairman. You have to get 31 of 41 diplomats to vote
against the inspection within 12 hours to stop it.
Ms. Bailey. Three-quarters of 41. Yes.
The Chairman. Yes. Now all you have to do to start an
inspection is to say where you want to go. You don't have to
have any evidence, is that correct?
Ms. Bailey. You do not have to have any evidence.
The Chairman. Nowhere in the treaty, nowhere in the treaty
does it say you have to say why you want an inspection. Is that
correct?
Ms. Bailey. All that is required is that a country say that
they suspect that there is a violation of the Chemical Weapons
Convention.
The Chairman. All right.
Now you already addressed this earlier on, so I won't get
into that.
I think we have gone about as far as we can go, Senator.
Senator Biden. I have one last question, and I won't even
comment. I'll just ask the last question.
The Chairman. Ask it, then.
Senator Biden. OK.
Madam, at the end of the day, if the facility for which a
challenge inspection is sought, 1 second before they cross the
threshold says you cannot come in, you do not have a search
warrant, is it not true that they will be required to go to a
Federal judge and establish probable cause? You and I should
not guess their motivation. If they do, if they say you cannot
cross the threshold, is it not true that you have to go to a
Federal judge and establish probable cause as to why there is a
violation? Is that correct?
Ms. Bailey. Do you want to limit me to a yes/no? Could I
say ``yes'' and then comment?
It is true. But I have two comments. The first one is why
would we want to sign an arms control treaty which we know we
are not going to apply ourselves in terms of challenge
inspections in the future? In other words, any company that
says no, or private individual that says no, can say no----
Senator Biden. Can I answer your question?
Ms. Bailey [continuing]. That's the first part. Do you want
both parts now?
Senator Biden. Do you want me to answer your question?
Ms. Bailey. Yes, but both parts first?
Senator Biden. OK. I'll do it either way you want.
The Chairman. Let her make her case.
Ms. Bailey. That's the first one. The second one is that if
it is a U.S. national security facility, meaning a place like
my laboratory, they will not be able to say no and foreigners
can come in and use these GC/MS and other techniques to gather,
to glean national security data. And that is something that is
not covered by what we talked about so far.
But I think it is a terribly important issue worthy of your
attention.
Senator Biden. Can I answer your question?
Ms. Bailey. Sure.
Senator Biden. The answer to your question as to why we
would be part of such a regime that would allow our Fourth
Amendment to work is because the underlying philosophy of the
treaty is challenge inspections are not intended to be
frivolous. That is the underlying assumption.
Therefore, we are totally consistent with the spirit of the
treaty when we say if you want to challenge us, you have to
give us some good reason under our Constitution why you are
saying that. That's why we should want to be a part of a treaty
and want to enforce our Constitution. That's why.
Ms. Bailey. Do you think Iran will want to amend its
constitution----
The Chairman. Exactly.
Ms. Bailey [continuing]. To add Fourth Amendment rights----
The Chairman. Or Russia, for that matter.
Ms. Bailey [continuing]. Once they see us using them as a
means of avoiding inspections?
Senator Biden. The answer is that may very well be. But it
is kind of interesting how those of you who oppose the treaty,
there is a weakness you see in the treaty and any correction of
that weakness makes another part of your criticism worse. For
example, if we did not have the Fourth Amendment guarantees
built in here, you'd be saying it is a violation of the
American Constitution, therefore we should not be part of the
treaty. Right?
Ms. Bailey. Right.
Senator Biden. Now that we have Fourth Amendment
guarantees, then you say we don't want to do that, because it
renders the treaty less likely to be efficacious against other
countries. Right?
Ms. Bailey. They're both true.
Senator Biden. Right. And you have used them skillfully. I
think you are a lawyer.
The Chairman. Anything else to come before the committee?
Mr. Johnson. I would like to bring up one point.
The Chairman. Sure.
Mr. Johnson. Senator Biden, in part 9----
Senator Biden. Pardon me?
Mr. Johnson [continuing]. In part 9 of the treaty, they get
into a discussion of the number of discreet organic chemical
inspections that can happen in a year. In the third year, as I
read it, in the third year they are limited to 5 percent of the
facilities available, plus 3, or 20 whichever is the smallest
number.
Senator Biden. Right.
Mr. Johnson. In our case, in the United States, that
undoubtedly will be 20.
Now in that third year or fourth year, I am not sure which,
this issue of number of inspections on discreet organic
chemicals will again be addressed. You know, that could cut
either way. We could maintain the number of 20, or it could
become less, or it could become more. That is a little bit of a
concern.
Senator Biden. If I may respond, sir, that is a good point
that you make. My understanding is--I will withhold my
understanding until I have staff check to see if I am right
about whether or not the 20 could be changed--if it is a
fundamental change, if it is a change in the treaty, to go from
20, say, to 30, 50, 100, 1,000 or whatever it is, it is an
amendment to the treaty. Under a condition that we are going to
add to this ratification--and there's no way you'd know this--
we are going to add to this that it would have to come back to
the Senate for ratification if they were going to change that.
So that would change the whole ballgame and it would change
the requirement. They could not do that, could not bind us
unless we ratify it as an amendment to the treaty.
But the second point is this. My understanding--and I would
stand to be corrected, because I am not certain--hold on for
just 1 second.
My understanding is--and I will check this for the record
because I had not approached this before and it is a good point
you raise, separate and apart from the requirement that we
would have to get the Senate to sign off on it with a super
majority vote again--my understanding of Section 9, relating to
the companies you are talking about, which would fall into the
category of being 1 of the 20 inspections, is that the 3-year
period does not go to whether or not that can be upped from 20
to any other number. It goes to whether or not there will be
any inspections--any inspections. There are no inspections now.
So it will go to whether or not there will be any inspections.
Now because you have been so straight with me, with us, I
promise you I will for the record--and I am sure the Senator
and the staff will remind me--I will go back and give you a
written analysis of my view. I may be wrong, but I will send
you a copy of that. But my understanding is the 3 year period
means for now there can be no inspections for the next 3 years
and at the end of 3 years they are going to decide whether
there will be any for the covered category--not that there can
be 20 of the covered category now and it may be amended to be
30, 40, or 50.
But even if that is true, such an amendment would have to
come back to the United States Congress--the Senate, to be
precise, not the Congress--and be ratified by the Senate before
it would be binding on the United States of America, before it
could be binding on the United States of America. But you raise
a good point. I will check it out.
I always learn something at these hearings, and I now have
to go back and find out whether my analysis, which I just told
you, is absolutely accurate. I think it is. But I am not
positive.
I am positive about the treaty part. I am not positive
about the 20.
[The information referred to follows:]

May 21, 1997.
Mr. Ralph Johnson,
Vice President, Dixie Chemical Company, Inc.,
Houston, TX 77219.
Dear Mr. Johnson: Thank you for taking time on April 15 to testify
before the Senate Foreign Relations Committee on the Chemical Weapons
Convention. I appreciate your concern about how our country is
governed. As you know, the Senate ratified the Chemical Weapons
Convention on April 24 by a 74-26 vote, and the treaty entered into
force on April 29.
During last month's hearing, you inquired as to whether the
treaty's limitation on inspections in the United States could be
revised upward after the treaty enters into force. As you are aware, no
more than twenty American producers of Schedule III and unscheduled
discrete organic chemicals can be subjected to routine inspection in
any one year.
The Arms Control and Disarmament Agency (ACDA) has informed me that
while this limit, in theory, could be revised upward with the support
of the countries that have ratified the treaty, such a change is highly
unlikely and would be strongly opposed by the United States Government.
The Secretary General of the Organization for the Prohibition of
Chemical Weapons could seek approval from the Executive Council to
revise this limit. While the mechanism by which the Executive Council
would rule on such a request has yet to be determined (whether by
consensus or super majority), the United States will have a seat on the
Council and would be in a strong position to oppose such a proposal.
More important, ACDA assures me that it is highly unlikely that
such a proposal would ever be made. Because the purpose of routine
inspections is to verify the declarations made by each country that has
signed the treaty, the Organization is unlikely to focus as many as
twenty inspections on any one country. Because the number of inspectors
is limited, it is more likely that inspections will be conducted in as
many countries as possible to determine the compliance of different
nations.
I hope that this information answers any concerns you had about how
the Chemical Weapons Convention might affect your business. If you have
any further questions about the Chemical Weapons Convention and its
effect on industry, please contact me or John Lis of my staff at (202)
224-5042.
Sincerely,
Joseph R. Biden, Jr.,
Ranking Minority Member.

Mr. Johnson. OK. Thank you.
The Chairman. Whoever has something he wants to say, please
do. I have one more question and then we will sing the doxology
and depart.
Mr. Webber. Thank you, sir.
I want to elaborate on the $600 million figure.
Mr. Chairman, I said earlier that this could be the tip of
the iceberg. As you know, Germany, the U.K., Japan, and other
major trading countries have already signed the convention. Our
greatest fear is that if we are a non-party, a non-signatory,
we are going to see some trade barriers being erected that will
impact a good part of our $61 billion in exports that we
produce annually.
For example, Germany has already announced that it is going
to impose new restrictions on trade with nonmember nations
commencing 29 April. That, in part, is what drives us. We want
to be reliable trading partners. We have been up to this point.
Today, as we sit across the table, they are looking at us
with a jaundiced eye wondering why this treaty has not been
ratified and wondering what actions they ought to take
commencing 29 April. And we have already seen, and it has been
in the newspapers, the action that Germany plans to take. They
are going to take a look at all of our chemical trade, and we
have no idea what kind of nontariff barriers are going to be
erected. But we know it is going to be very, very difficult
down the road to continue to trade in chemicals with this very
large trading country.
The Chairman. How many of your member companies are owned
by Europeans? Glaxo is one of them.
Mr. Webber. I think a little under 30 percent of our entire
membership is represented by foreign owners.
The Chairman. Do you mean the Europeans are going to put up
trade barriers against their own companies in the United
States?
Mr. Webber. Sir, we are unbelievably competitive on a
global basis, and that signal that we got from Germany is very,
very serious, indeed. We feel we have legitimate concerns here.
The Chairman. My last question, and I will let anybody
answer this, though perhaps it is best directed to you, Fred,
or Mr. Webber, is this. During these hearings, the committee
has heard testimony from a number of foreign policy experts who
are very concerned that Article XI of the treaty will be used
by nations to pressure the United States to lower its export
controls and to eliminate the Australia Group. Have you heard
that?
Mr. Webber. Yes, sir, I have. In your absence, I tried to
respond to that in my testimony.
The Chairman. OK. Let me get through this.
Now the administration has promoted the CWC as an arms
control treaty, but some clearly view the CWC as a treaty
designed to facilitate trade in chemicals and in technology.
Mr. Carpenter, in testimony before this committee, stated
that one of the reasons for the Chemical Manufacturers
Association's support of the CWC was the anticipation that, and
I'm quoting him, ``An effective CWC could have the positive
effect of liberalizing the existing system of export controls
applicable to our industry's products, technologies, and
processes.''
Now my question to you is did your association write a
letter of support for H.R. 361, which allowed for the licensing
of free trade in chemicals among the CWC members, and does CMA
continue to favor the reduction of U.S. export controls on the
dual use chemicals controlled by the CWC?
Mr. Webber. Let me take a stab at what I think Mr.
Carpenter meant when he said we want to see trade liberalized,
if you will.
As I said in my formal testimony, we have a long history of
support for U.S. export control law, and the Australia Group,
and limited multilateral control regimes like the Australia
Group.
We think the CWC is a logical extension of those control
systems. It broadens the scope, makes more nations live up to
the high standards set by our own country, the U.S.
So we don't think CWC will replace existing U.S. export
controls or the Australia Group. Both will be around, as you
know, sir, for a long time.
As confidence in the treaty grows, we think it will
eventually be possible to create a single, integrated export
control regime under the banner of CWC. But, of course, that is
down the road. But that's what we mean when we say
``liberalizing trade,'' and I think that is what Dr. Carpenter
meant.
The Chairman. Well, did you or did your association not, or
did it, write in support of H.R. 361?
Mr. Webber. I have been advised that we were part of a
coalition that indeed supported that bill. But we did not
specifically focus on any particular provision of the bill. But
we gave general endorsement.
The Chairman. So you didn't write a letter? You were just
among those present?
Mr. Webber. No, we wrote a letter in support, as part of
the coalition in support.
The Chairman. What I needed there was just a yes or no.
Mr. Webber. Yes.
The Chairman. Now you understand that that bill proposed to
reduce U.S. export controls. Is that not correct?
Mr. Webber. Yes.
The Chairman. And, too, it offered to license free trade,
did it not?
Mr. Webber. Yes.
The Chairman. And you still favored it?
Mr. Webber. We have not supported any elimination of export
controls over precursor chemicals, and I think that is the key
statement that we would stand by.
The Chairman. Please repeat that?
Mr. Webber. We would not advocate the elimination of any
export controls having to do with precursor chemicals.
The Chairman. Well, didn't you do that when you advocated
this bill?
Mr. Webber. We don't think so, sir.
The Chairman. You don't?
Mr. Webber. No.
The Chairman. I might want to put that letter into the
testimony here.
Senator Biden. Mr. Chairman, before you strike the gavel,
I'm not going to ask a question. I just want to make an
admission.
Mr. Johnson may be right, because Part 10 is part of the
Annex, Mr. Johnson, and the Annex means that it may not be
covered by a requirement to have the U.S. Senate ratify any
change. But I will still get you the full answer. I just wanted
to make sure that I tell you my staff points out it is the
Annex, not the body of the treaty. So you may be right. Let me
check it out.
Mr. Johnson. Thank you, Senator.
The Chairman. The skies are going to fall.
No, he has admitted he has made a mistake--in 1987.
Senator Biden. No, in 1972, when I ran.
The Chairman. We enjoy each other; and I respect Joe, and
he knows that.
Senator Biden. As I do you, Mr. Chairman.
The Chairman. Lady and gentlemen, thank you very much for
spending this afternoon with us. I did not intend for it to go
so long. But you have made a substantial record, and I
appreciate your going through the trouble of being here and
testifying as you have.
If there be no further business to come before the
committee, we stand in recess.
Senator Biden. Thanks, Jesse.
The Chairman. Yes, sir.
[Whereupon, at 5:25 p.m. the committee adjourned, to
reconvene at 10:07 a.m., Tuesday, April 17, 1997.]