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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

       THE BIOLOGICAL WEAPON CONVENTION: STATUS AND IMPLICATIONS

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                  VETERANS AFFAIRS, AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 13, 2000

                               __________

                           Serial No. 106-262

                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                   U.S. GOVERNMENT PRINTING OFFICE
74-704                     WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                        Robert A. Briggs, Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

Subcommittee on National Security, Veterans Affairs, and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
ILEANA ROS-LEHTINEN, Florida         TOM LANTOS, California
JOHN M. McHUGH, New York             ROBERT E. WISE, Jr., West Virginia
JOHN L. MICA, Florida                JOHN F. TIERNEY, Massachusetts
DAVID M. McINTOSH, Indiana           THOMAS H. ALLEN, Maine
MARSHALL ``MARK'' SANFORD, South     EDOLPHUS TOWNS, New York
    Carolina                         BERNARD SANDERS, Vermont 
LEE TERRY, Nebraska                      (Independent)
JUDY BIGGERT, Illinois               JANICE D. SCHAKOWSKY, Illinois
HELEN CHENOWETH-HAGE, Idaho

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
                           Jason Chung, Clerk
                    David Rapallo, Minority Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 13, 2000...............................     1
Statement of:
    Mahley, Donald A., Ambassador, Special Negotiator for 
      Chemical and Biological Arms Control, Department of State; 
      Susan Koch, Deputy Assistant Secretary of Defense for 
      Threat Reduction, U.S. Department of Defense; R. Roger 
      Majak, Assistant Secretary of Commerce for Export 
      Administration, U.S. Department of Commerce; and Jack L. 
      Brock, Jr., Managing Director, Acquisition and Sourcing 
      Management, U.S. General Accounting Office.................     6
Letters, statements, etc., submitted for the record by:
    Brock, Jack L., Jr., Managing Director, Acquisition and 
      Sourcing Management, U.S. General Accounting Office, 
      prepared statement of......................................    42
    Koch, Susan, Deputy Assistant Secretary of Defense for Threat 
      Reduction, U.S. Department of Defense, prepared statement 
      of.........................................................    20
    Mahley, Donald A., Ambassador, Special Negotiator for 
      Chemical and Biological Arms Control, Department of State, 
      prepared statement of......................................     8
    Majak, R. Roger, Assistant Secretary of Commerce for Export 
      Administration, U.S. Department of Commerce, prepared 
      statement of...............................................    29
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     4

 
       THE BIOLOGICAL WEAPON CONVENTION: STATUS AND IMPLICATIONS

                              ----------                              

                     WEDNESDAY, SEPTEMBER 13, 2000

                  House of Representatives,
       Subcommittee on National Security, Veterans 
              Affairs, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays and Souder.
    Staff present: Lawrence J. Halloran, staff director and 
counsel; David Rapallo, minority counsel; and Earley Green, 
minority assistant clerk.
    Mr. Shays. The hearing will come to order.
    Prohibitions against the use of toxic and biologic weapons 
have been found in 2000 year old Sanskrit tracts. From the 
Middle Ages to the 1925 Geneva Protocol, biological warfare has 
been justly condemned by the general opinion of the civilized 
world. The 1972 Biological Weapons Convention [BWC], declares 
germ warfare ``repugnant to the conscience of mankind.''
    But persistent moral and political proscriptions have not 
prevented intermittent outbreaks of man-made biological horror.
    Each of the 159 nations endorsing the BWC pledged ``never 
in any circumstance to develop, produce, stockpile or otherwise 
acquire or retain'' microbial or biological agents or the means 
to use them in war. Yet the convention contained no 
verification or enforcement provisions because biological 
weapons were not considered a significant military threat in 
the cold war world.
    How the world has changed. Iraq's unchecked use of 
prohibited weapons of mass destruction against Iran in the 
1980's emboldened nations and terrorist organizations who saw 
lethal rewards and little risk in the proliferation and use of 
chemical and biological arms. The demise of the Soviet Union 
revealed a bio-weapons program in direct violation of the BWC 
on an almost unimaginable scale.
    According to yesterday's Washington Post, surplus Soviet 
biological weapons, technology and expertise may yet be made 
available to the highest bidder despite U.S. threat reduction 
efforts.
    Acknowledging the need for a stronger regime to deter and 
detect BWC violations, representatives of signatory nations in 
1995 began negotiating the terms of a compliance protocol 
including declaration, verification and inspection provisions 
similar to those contained in the Chemical Weapons Convention 
[CWC]. The draft protocol under discussion in Geneva raises, 
but does not yet answer, fundamental questions about curbing 
the spread of biological weapons.
    To what extent is the BWC verifiable? When the same microbe 
and the same equipment can be used to make a life saving 
vaccine 1 day and a deadly weapon the next, will any protocol 
prove more than a temporary nuisance to a determined violator? 
Will the uncertain benefits of a traditional arms control 
verification system outweigh the certain and substantive 
burdens on governments and private enterprises conducting 
legitimate medical research and pharmaceutical production 
activities?
    How can classified material and proprietary business 
information be protected from an intrusive inspection regime 
some would use to conduct state-sanctioned spying and 
industrial espionage?
    Recent history offers only partial answers. Efforts by the 
United Nations Special Commission, UNSCOM, to inspect Iraqi 
bio-weapons facilities demonstrated how easily a focused 
enforcement program can be frustrated. Experience to date under 
the Chemical Weapons Convention provides some comfort that 
procedural and substantive safeguards can work to protect the 
rights and the intellectual property of the inspected. But it 
remains uncertain whether the same safeguards will work in a 
very different setting in which a single microscopic organism 
contains the blueprint for a product or process worth hundreds 
of millions of dollars.
    As the subcommittee begins our consideration of these 
important issues today, we are fortunate to be joined by the 
lead U.S. negotiator on the BWC protocol, Ambassador Donald 
Mahley, and four other wonderful witnesses, three others, 
excuse me, who bring a great deal of experience and expertise 
to this discussion. We look forward to their testimony.
    Regrettably, we are not joined this morning by a 
representative from the Pharmaceutical Research and 
Manufacturers of America, PhRMA, who declined our invitation to 
participate. In working with the administration on these 
issues, PhRMA has not been shy about expressing a position in 
favor of a more workable, cost-effective process to control 
biological weapons.
    As world leaders in conquering disease, American 
pharmaceutical companies have an unassailably positive role to 
play, and an undeniable responsibility to participate, fully an 
undeniable responsibility to participate in this discussion. We 
trust their timidity will be overcome at a future hearing.
    At this time I would like to welcome our four witnesses. 
Ambassador Donald Mahley, Special Negotiator for Chemical and 
Biological Arms Control, Department of State. Dr. Susan Koch, 
Deputy Assistant Secretary, Threat Reduction Policy, Department 
of Defense. Mr. Roger Majak, Assistant Secretary, Bureau of 
Export Administration, Department of Commerce. Mr. Jack L. 
Brock, Jr., Managing Director, Acquisition and Sourcing 
Management, General Accounting Office.
    We'll go in the order that I announced you. If you would, 
I'll invite you to stand. As you know, we swear in all our 
witnesses. All the time I've done this there was only one 
witness who didn't get sworn in, and that was Senator Byrd, and 
I was just plain cowardly. [Laughter.]
    [Witnesses sworn.]
    Mr. Shays. Note for the record that all have responded in 
the affirmative, and I appreciate the other two standing up in 
case we need to call on you. So thank you.
    Ambassador Mahley, what we do is we put 5 minutes on, and 
then we roll over for another 5 minutes. Given that we only 
have one panel, I'm sure 10 minutes is enough.
    [The prepared statement of Hon. Christopher Shays follows:]

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STATEMENTS OF DONALD A. MAHLEY, AMBASSADOR, SPECIAL NEGOTIATOR 
FOR CHEMICAL AND BIOLOGICAL ARMS CONTROL, DEPARTMENT OF STATE; 
 SUSAN KOCH, DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR THREAT 
    REDUCTION, U.S. DEPARTMENT OF DEFENSE; R. ROGER MAJAK, 
ASSISTANT SECRETARY OF COMMERCE FOR EXPORT ADMINISTRATION, U.S. 
   DEPARTMENT OF COMMERCE; AND JACK L. BROCK, JR., MANAGING 
  DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, U.S. GENERAL 
                       ACCOUNTING OFFICE

    Ambassador Mahley. Thank you, Mr. Chairman.
    I appreciate the opportunity to testify today on behalf of 
the negotiations for a protocol to the Biological Weapons 
Convention. I would like for a few minutes to address the 
overall objectives of the United States in these negotiations 
and current developments in Geneva.
    I have also prepared a written statement, which I would 
submit for the record if that is acceptable.
    The current negotiations have a long history. The issue of 
confidence and compliance with the Biological Weapons 
Convention has recurred in review conferences and international 
fora since the convention entered into force in 1975. The very 
fact that there already is a Biological Weapons Convention 
shapes the negotiations we are now undertaking. All the 
participants in these negotiations have already pledged to 
forego offensive biological warfare activities as part of the 
basic provisions of the convention.
    The current effort is to negotiate a legally binding 
document that will be additional to, but not amend or interfere 
with, the basic convention. We have drawn heavily on both the 
confidence building measures instituted in 1986 and the 
multilateral negotiations for a Chemical Weapons Convention 
that were completed in 1992. Some of the lessons we have 
learned from that experience are very good, some are very 
dubious, some apply not at all.
    Biology is different from chemistry or from nuclear 
physics. The instruments developed in other negotiations, and 
even the confidence building measures information from 1986 
must be adapted to a rapidly changing environment. We are 
attempting to do that in Geneva.
    The United States' objective for these negotiations has 
been constant. We seek to strengthen confidence and compliance 
with the convention by creating a regime that will gather and 
process information about activities relevant to the objectives 
of the convention. More fundamentally, we seek a regime that 
will provide for onsite activities, the most important of which 
would be investigations of an alleged violation of the 
convention, to deter potential proliferators and complicate 
their ability to develop offensive biological weapons programs.
    Unfortunately, some other countries in the negotiations 
have different priorities. Radical non-aligned states, 
particularly, see this as an opportunity to institutionalize 
guaranteed access to dual-use technology and material. This 
would, of course, undermine current U.S. nonproliferation 
programs and policies, as well as those of other like-minded 
states. For the United States, that is not an acceptable 
element of a protocol.
    There are other issues that still defy resolution. We are 
fighting very hard to make onsite activities ones that will 
provide information but not disproportionately burden the 
United States or put at risk either proprietary or national 
security information. We have not yet settled on an unambiguous 
universe of activities or facilities to be declared.
    The United States continues to be actively engaged in the 
negotiations in Geneva. We do not believe, however, that an end 
game is in the near future. The 1996 Review Conference to the 
Biological Weapons Convention set as a target for completion of 
the ad hoc group negotiations the next Biological Weapons 
Convention Review Conference, which will occur in 2001. The 
United States intends to do all it can to accomplish that 
target. However, as Secretary Albright informed her allied 
counterparts in July, ``The United States will not accept a 
protocol that undermines rather than strengthens national and 
international efforts to address the biological weapons 
threat.''
    The United States delegation in Geneva will indeed continue 
to exert every effort to shape the emerging document to support 
these objectives. We can afford to accept no less.
    Thank you, Mr. Chairman.
    [The prepared statement of Ambassador Mahley follows:]

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    Mr. Shays. Thank you, Ambassador.
    Dr. Koch.
    Dr. Koch. Thank you, Mr. Chairman.
    I, too, appreciate the opportunity to appear before you 
today to provide Department of Defense perspectives on the 
negotiations for an enforcement protocol for the Biological 
Weapons Convention. I have provided a written statement which I 
would ask to be submitted for the record.
    The Department of Defense fully supports the effort to 
achieve a BWC protocol that would assist in our larger effort 
to prevent and respond to the proliferation of weapons of mass 
destruction. As Ambassador Mahley has described, biological 
weapons by their very nature pose a much more difficult arms 
control challenge than other technologies, leading to limited 
utility for traditional arms control verification tools.
    But a BWC protocol can definitely strengthen confidence in 
BWC compliance, by enhancing international transparency, and 
thus making an important and useful contribution to our 
nonproliferation efforts.
    In that regard, a protocol must complement the 
nonproliferation and counter-proliferation tools that we 
already have, and which we are striving to buttress. 
Specifically, a protocol must not undermine our own bio-defense 
programs or those of our friends or allies, nor must it in any 
way weaken the existing system of nationally based export 
controls. And finally, we must protect sensitive national 
security activities that are not relevant to biological weapons 
technology. The Defense Department is confident that current 
U.S. negotiating positions in the protocol negotiations 
adequately protect these vital national security equities.
    If I could briefly discuss the three critical areas of 
export controls, bio-defense and related declarations and 
onsite activities. First on export controls. Our position on 
this aspect of the BWC protocol is unambiguous. Given the 
national security importance of effective biological weapons-
related export controls, we would not support a protocol that 
proscribes, curtail or otherwise undercuts national export 
controls or multilateral political arrangements, such as the 
Australia Group.
    Second, on biodefense. Despite our best efforts, 
nonproliferation and arms control measures will not for the 
foreseeable future eradicate the threat of biological weapons 
proliferation. Therefore, the Defense Department is focusing an 
unprecedented amount of resources on improving U.S. biodefense 
capabilities.
    Planned DOD expenditures for defense against chemical and 
biological weapons will total well over $5 billion for fiscal 
years 2002 through 2007 for research, developing, testing, 
evaluation and procurement. Our biodefense program focuses on 
multiple areas, including collective and individual protection, 
detection, treatment and decontamination, and involves numerous 
government, contractor and academic facilities of various 
sizes.
    We have designed our approach to the treatment of 
biodefense and associated declarations in a BWC protocol to 
meet three basic objectives, in keeping with the size, 
importance and purpose of our biodefense programs. First, to 
allow consistent accurate implementation; second, to maximize 
the likelihood that activities and countries of concern would 
be captured; and third, not to reveal gaps and vulnerabilities 
in U.S. biodefense efforts and those of our allies.
    Closely related to declarations is the issue of onsite 
activities, such as visits and investigations. Such onsite 
activities are key measures for enhancing transparency. At the 
same time, we must protect sensitive national security 
activities that may be located in visited facilities or within 
investigation areas, but which are not relevant to the BWC. 
Here, too, we are confident the current U.S. negotiating 
positions will allow us to do this.
    DOD has long and extensive experience in implementing 
onsite provisions of modern arms control treaties, including 
implementation at DOD facilities and protection of national 
security assets. Although that experience is not completely 
directly transferable to the BWC protocol, some lessons can be 
learned, particularly from our experience with the Chemical 
Weapons Convention [CWC].
    Since the CWC entered into force in 1997, the Organization 
for the Prohibition of Chemical Weapons' inspectors have 
participated in the United States in 56 inspections at 12 
former chemical weapons production facilities, 47 inspections 
at 13 chemical weapons storage facilities, 7 inspections at 2 
schedule one production facilities, and 1 transparency visit at 
a destructionsite. Each of those typically averages 3 to 6 
days.
    Additionally, there have been 160 rotations of continuous 
monitors at chemical weapons destruction facilities, with 
monitors typically onsite for 3 to 6 weeks. The sum total of 
the monitor rotations and the visits and inspections have been 
270 separate onsite activities at DOD facilities from Chemical 
Weapons Convention entry into force through the end of August 
2000.
    There have been no CWC challenge inspections to date, but 
the military services have held exercises to test their 
preparedness for this possibility. And DOD is organizing a mock 
challenge inspection for next year, with actual inspectors from 
the Organization for the Prohibition of Chemical Weapons.
    To the best of our knowledge, none of these extensive CWC 
activities has resulted in any disclosure of sensitive 
information, whether inadvertent or otherwise. At the same 
time, the costs involved, while hardly insignificant, have 
proved less than might have been expected. Between entry into 
force in April 1997 and June 1999, which are the most recent 
figures available, DOD spent approximately $26 million directly 
related to supporting Chemical Weapons Conventions inspections. 
All told, total DOD costs for preparation and execution of the 
CWC from fiscal year 1992 through fiscal year 2001 amount to 
slightly over $518 million.
    Under the current U.S. negotiating position, a BWC protocol 
would afford to us the same or greater ability to protect 
sensitive national security information at lower cost.
    Compared to CWC, the onsite activities that the United 
States supports for a BWC protocol would be less intrusive, 
much fewer in number, smaller in scale, shorter, and spread 
among a much larger universe of facilities. While CWC offers a 
very interesting basis for comparison with the planned BWC 
protocol and gives us many lessons that we can apply to good 
use, it's also important to work to understand the differences 
between the two, both to assist in developing our negotiating 
positions and to prepare for eventual implementation.
    Early in the negotiations, in October 1995, DOD conducted a 
trial visit of a vaccine facility in the United States. This 
trial underscored for us the unique challenges posed in dealing 
with dual-use cutting edge biological technologies. Currently, 
DOD is preparing to participate in national trial visits and 
inspections as mandated by H.R. 3427.
    We're well along in our planning, including identifying 
funding, appropriate facilities both onsite and analytic 
personnel. We hope to conduct an initial transparency visit 
exercise later this year or early next year at a DOD facility.
    We've also worked to ensure that facilities that are likely 
to be affected are fully apprised of negotiating developments. 
For example, over the past 2 years, my staff has provided 
classified quarterly briefings to representatives from 
concerned Defense Department and defense industry 
representatives, soliciting their reactions to various 
proposals under consideration at the protocol negotiations. 
This feedback has helped to shape U.S. Government positions on 
issues such as visits and declaration triggers and formats.
    In sum, the BWC protocol negotiations are exceptionally 
complex. The problem they deal with is unprecedented in its 
difficulty. But our prior experience and continual consultation 
with concerned U.S. Government and defense industry elements 
reinforces our conviction that under the provisions envisioned 
in the current U.S. negotiating position, we will effectively 
protect our national security interests.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Koch follows:]

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    Mr. Shays. Thank you, Dr. Koch.
    What I'd like to do, I'd like to get some business out of 
the way while we have a member present, so that your statement 
can be in the record. I ask unanimous consent that all members 
of the subcommittee be permitted to place an opening statement 
in the record and that the record remain open for 3 days for 
that purpose.
    And without objection, so ordered.
    And I ask further unanimous consent that all witnesses be 
permitted to include their written statement in the record. And 
without objection, so ordered.
    Mr. Majak, let me just interrupt you as well to welcome Mr. 
Souder. Do you have any statement you'd like to make?
    Mr. Souder. No, thank you.
    Mr. Shays. I think what we will do is we will vote, come 
back right away, and that way we can continue with some flow. 
I'm sorry, it will probably take us 10 minutes to go vote and 
come back.
    [Recess.]
    Mr. Shays. OK, Mr. Majak, why don't you begin your 
testimony.
    Mr. Majak. Mr. Chairman, I too thank the subcommittee for 
this opportunity to testify on the negotiations relating to a 
protocol on the Biological Weapons Convention, and particularly 
the potential impact of such a protocol on U.S. industry.
    Better international monitoring of activities at biological 
facilities throughout the world is of as much potential benefit 
to private industry as it is to governments and the public. The 
U.S. pharmaceutical and biological industry is devoted to 
sustaining and enhancing human and animal life, not threatening 
it. An international protocol that would help confirm that U.S. 
commercial facilities have no involvement whatsoever with 
biological weapons would be an asset for U.S. industry, 
especially if there should be an outbreak of disease or some 
other indication of biological weapons development or use.
    Consequently, we at the Commerce Department and we in the 
administration have had a considerable degree of cooperation 
from industry regarding both their recommendations and their 
concerns about a biological weapons protocol. As has been 
noted, the Chemical Weapons Convention is the first such 
convention to include inspections in the private industrial 
sector.
    Although we have learned a good deal about onsite 
monitoring and inspection under the CWC, there are significant 
differences between chemical and biological agents and their 
industrial uses, making the CWC a less than perfect model for a 
BWC industrial monitoring protocol. Let me give a few 
comparisons that are based upon the 10 chemical industry 
inspections we at the Commerce Department have hosted and 
managed so far in the United States.
    First, confidential business information, the intellectual 
property and other information that make U.S. companies 
competitive is more pervasive at biological sites than in the 
more mature chemical industry. Much information we've found on 
chemical production has been published and is already in the 
public domain. In chemical plants, CBI is often concentrated in 
a particular catalyst or production technique which can be 
withheld from inspectors relatively easily.
    By contrast, far less biological production information has 
been published, and a biological company's confidential 
information can be contained, for example, in the very genetic 
material of a living organism. Because microorganisms grow and 
reproduce and change, simply observing what goes into the plant 
and what goes out, which is known in the chemical weapons 
inspection business as a mass balance inspection, simply 
doesn't work for biological facilities.
    So it will be tempting to use more intrusive inspection 
techniques, such as sampling. But with a biological sample, 
inspectors could have access to intellectual property that a 
company and its stockholders have invested huge resources to 
develop, and could even reproduce it in large quantities. So 
sampling as an inspection technique in biological facilities is 
out of the question.
    To further complicate matters, biological agents are 
naturally occurring. And the equipment capable of developing 
and cultivating them is the same as is widely used in such 
common industry facilities as breweries, bakeries, waste 
management plants and the like. Modern biological facilities 
are capable of complete sterilization in a matter of hours, 
making discovery of weapons activities extremely difficult.
    In short, there are no reliable, tell-tale signs of 
biological weapons activities. This makes it difficult to 
define and limit the range of facilities that would be covered 
by a protocol. In addition, the chances of a false positive 
finding is much higher in the biological area. And that's a 
great concern, of course, to companies whose good reputations, 
which is their most valuable asset, could be falsely tarnished.
    These and other obstacles to effective biological weapons 
inspections, however, do not mean that a worthwhile BWC 
protocol is impossible. There are potential solutions for these 
problems, which are mentioned in my full statement. Our 
experience with the CWC confirms that it is possible to meet 
the requirements of a relatively rigorous international 
inspection regime, namely the CWC, without revealing 
confidential business information or national security 
information.
    In the inspections that we have hosted so far, while 
inspection issues have arisen, all inspections have been 
completed and there have been no findings of non-compliance. 
And we have not had to force any company to disclose 
information it did not wish to disclose.
    But the solution to a biological protocol does not reside 
in simply duplicating the CWC. And that is not our goal. Each 
regime must be carefully tailored to the realities of the 
proliferation threat and the industry to which it is addressed. 
The U.S. negotiating position reflects the need to find 
solutions to the special problems posed by biological agents 
and their production, and Ambassador Mahley has described some 
of those. That involves, as he noted, sometimes resisting the 
demands of other nations who would seek to impose CWC-like 
solutions.
    For its part, if authorized and funded by the Congress to 
do so, the Commerce Department is prepared to undertake the 
same efforts to assist the biological industry that we have 
provided and are providing to the chemical industry. And those 
are described in further detail in my written statement. The 
Commerce Department's mission is to minimize the cost burden 
and risk of inspections for the industrial sites being 
inspected, to help industrial sites that are subject to 
visitors or inspection to protect their confidential business 
information while also fully satisfying U.S. treaty obligations 
to provide access to those commercial activities.
    Mr. Chairman, the stakes in these negotiations are high for 
U.S. industry, which is the world's pharmaceutical and 
biotechnology leader. We can best assure necessary industry 
support for a BWC protocol by building upon the cooperation we 
have received and are receiving from industry in the CWC area 
and by taking commercial realities fully into account in the 
BWC protocol negotiations as we are presently doing.
    Thank you.
    [The prepared statement of Mr. Majak follows:]

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    Mr. Shays. Thank you, Mr. Majak.
    Mr. Brock.
    Mr. Brock. Thank you very much, Chairman Shays. Good 
morning, Mr. Souder.
    It's a pleasure to be here. You asked us some time ago to 
take a look at the actual experience of the companies that have 
gone through an inspection under the Chemical Weapons 
Convention. I think the first three witnesses have done a 
terrific job of laying out some of the differences between the 
industry and those that would participate in the Biological 
Weapons Convention and those that participate under the 
Chemical Weapons Convention. So I won't elaborate on that as we 
did in the statement.
    Nevertheless, there are some key similarities. Any 
inspection is a burden. It's a burden on the company. The 
company is concerned about the release of proprietary 
information, the company is concerned about adverse publicity, 
and the company is concerned about how much the inspection is 
going to cost us.
    The inspection process is a burden on the Government. The 
Government wants to protect the national interest, protect 
national security. So the Government participants at these 
inspections also have that burden. And finally, the inspection 
organization itself is under a burden, because it's obligated 
to see that the terms of the convention are being carried out.
    So you have that mutual tension, you have those mutual 
concerns. And I think those are shared under both the 
Biological Weapons Convention and the Chemical Weapons 
Convention. Therefore, I think the experiences of the companies 
that have undergone the inspections to date do have some 
relevance. There are certainly critical differences, but there 
is some relevance and I'd like to briefly discuss that.
    The first item you asked us to look at was the release of 
proprietary information. The Organization for the Prohibition 
of Chemical Weapons has a clearly set-out protocol for what 
it's doing to protect the information. The seven companies we 
went to all undertook various measures to protect proprietary 
information and proprietary processes. They screened 
information that was being sent forward to eliminate the 
possibility of proprietary information being inadvertently 
released, they shrouded equipment that would allow access to 
proprietary processes, they took any number of actions. And all 
seven were satisfied that they were able to adequately protect 
proprietary information, proprietary processes. This appeared 
not to be an issue. It was a cost, it was difficult to do, but 
nevertheless, it was achievable.
    Second, in regard to that, all companies were very, very 
satisfied with the assistance that was provided by the 
Department of Commerce, and in a couple of instances with the 
Department of Defense, in working with them to make sure the 
proprietary information was protected. And that was a useful 
process in itself.
    So to sum up proprietary information, it was the major 
concern of the seven companies we went to. And in all seven 
instances, they were satisfied that they were able to protect 
that information. And let me emphasize, this is the first 
seven. It's a very, very small subset of what the ultimate 
universe will be.
    The second area was that of adverse publicity. No company 
wanted their neighbors and their stockholders or other involved 
parties to think that they were in fact producing weapons of 
mass destruction, that they were endangering the environment or 
they were in violation of an international treaty. They all had 
varying concerns. Most of the companies we went to wanted to 
limit public knowledge that an inspection was taking place. One 
company wanted to publicize that the inspection was taking 
place. No company thought that adverse publicity resulted from 
the inspection process.
    And some of them did undertake some steps to limit the 
exposure of the inspectors to the community, things like that, 
that would limit the ability of outsiders to finding out the 
inspection process was taking place. Others didn't do that. It 
varied from company to company. But again, bottom line, not one 
company felt that any adverse publicity resulted from this. And 
that became less of a concern.
    The last issue was on cost. The Department of Commerce, in 
developing an estimate of the cost burden, estimated that for a 
typical inspection, the cost would be about $54,000. We found 
that in the ones that reported the cost ranged from about 
$6,000 to $107,000.
    I gave Mr. Majak a little boost a minute ago talking about 
their assistance during the inspection. This was an area that 
the companies all had concerns. The guidance on providing cost 
information was not very precise. The companies all undertook 
different methods and methodologies of reporting cost. These 
numbers are not auditable. And we have no certainty that they 
represent a true comparison.
    Nevertheless, just eyeballing things, they don't seem out 
of line with what expected cost would be. But that's something 
that Commerce might want to consider in future operations as 
being a little bit more specific on the guidance of how costs 
should be provided.
    The other observations I would like to make is that of the 
seven companies that we visited is that it's clear that the 
U.S. Government plays a key role in making these inspections 
work. As I pointed out a couple of times in my oral statement, 
the Department of Commerce and the Defense Department were 
instrumental in working with the companies to make sure that 
they didn't inadvertently release proprietary information, that 
they in fact provided material that was sufficient to ensure 
compliance with the convention, but did not go too far.
    The Department of Commerce, in addition, held practice 
visits, numerous seminars where they were working with people, 
and in general, did a very responsible job of assuring that the 
inspections went very well. I think one of the things that we 
could look forward to in the future in terms of lessons 
learned, and particularly in terms of developing the inspection 
protocol under the Biological Weapons Convention is that 
hopefully the Department of Commerce and the Department of 
Defense are getting a lot of lessons learned out of this in 
terms of what can be done to alleviate the legitimate concerns 
of the pharmaceutical companies that would be subject to 
inspection.
    That completes my oral summary, Mr. Chairman.
    [The prepared statement of Mr. Brock follows:]

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    Mr. Shays. Thank you very much.
    Mr. Souder has to go back to another two hearings, and will 
start off the questions.
    Mr. Souder. One of them is a markup on my bill at 11. So I 
didn't make an opening statement, I'd like to make a couple of 
comments, just a couple of questions. One is, I thank you for 
your efforts. I think this is a lot, in my case, like many 
Americans, you just kind of hope this stuff gets done. When you 
start to learn the details, it's a lot like watching the 
sausage being made. Because as you've raised different 
questions, you realize the complicated nature, for example, in 
biological, I hadn't thought out the differences.
    When I was over in the Middle East with this subcommittee a 
number of years ago, and the inspectors had just been kicked 
out of Iraq and were looking at going back in the next morning, 
we had the opportunity to talk to a number of them that night 
on looking predominantly at chemical weapons. And it was 
incredibly difficult, as they talked about multiple different 
places where the precursors may come in. They claimed they were 
doing animal research and all this kind of thing, trying to 
determine even in something easier to track in a country that's 
highly suspected, to say the least. And yet it was very 
difficult.
    The things you've raised with biological are even more 
complex. A couple of general comments, one is that I think 
there's an increasing discouragement in America, particularly 
after the nuclear secrets question that didn't build trust in 
industry that we know how to protect things, if we get that 
confidence.
    Because if there wasn't espionage and it was incompetence, 
that isn't encouraging on proprietary information, whether 
disks are left alone and people walk away, we all know how hard 
it is, in employees, we all know, to get people who are very 
focused and Government pay isn't the highest place right now. 
It is something that we have to constantly work at. And I'm 
pleased to hear you say that that's a stress. But it must be a 
stress. Because right now, if there's a moment when industry is 
going to be distrustful, it's right now, in these areas. 
Because we haven't been this shaken about our capacity to 
protect our utmost secrets, as I would argue we are at this 
point, maybe other than during the early development and early 
results off the early nuclear arms race.
    A second thing is that as somebody who comes from a small 
business perspective and has been very defensive of trying to 
come up with not under 25 employees, not under 50 employees, 
not under 100 employees, certain sales limits, I realize that 
one impact is that as Government has proliferated regulations, 
has been this whole concept of breaking into subdivisions or 
getting in what you call the other categories.
    Clearly your example here potentially in breweries is 
interesting, because we've seen the whole microbrewery 
phenomena and we don't want to inadvertently trigger that which 
could cause tremendous complications as we try to address other 
pharmaceutical related questions, for example, in Medicare and 
in health care, and try to get generic drugs under question, 
try to push research in AIDS, and then find out that in the 
chemical-biological area, we've put additional costs on.
    And one brief comment on the costs, you know, if it's 
$6,120, one variation there is, did they assign an intern to 
walk with you or the president of the company? How do you 
factor in what the different levels of the corporation, their 
managers and the time they're spending thinking about what 
they're going to do. If we actually put a time value of money 
on the corporate executive investments, these costs would soar. 
There's direct and indirect.
    I'm pleased you're working with industry. It's encouraging 
to me that you're trying to address the question.
    And one last thing is, do you have any reason to believe 
that in chemical and biological proliferation that anywhere in 
the world it would actually be facilitated by somebody who was 
above-board enough that you could actually do an investigation, 
even within a country like the United States? Or is this in 
effect more like what I think was in Dr. Koch's testimony, 
almost like a good housekeeping seal that in fact assures the 
world potentially on liability concerns that these companies 
are part of it?
    In other words, is there really a reason to believe that in 
any country, the people you're investigating and who you can 
actually test these things on would be somebody who would be 
providing it? Or even if it was that company, that it wouldn't 
be a rump sector in it who the corporation wouldn't even know? 
Ambassador, would you like to take that?
    Ambassador Mahley. Thank you, Mr. Souder. I'll take that 
last question, as a matter of fact.
    I think the answer is also very complex. But let me try to 
sort through it very quickly. First of all, no. Given that all 
the people who would be in this protocol are also people that 
are parties to the convention, there would be no one who would 
be overtly or openly conducting biological weapons activity, 
which they would then announce as part of that inspection.
    No. 2, they would even necessarily be doing it at some 
place that would be a declared facility, that is, some place 
that was doing something as a legitimate activity which made 
them part of a declaration. That's why we are trying very hard, 
in the protocol that we're trying to negotiate, at least, to 
make sure investigations are available. Because those are 
challenges. If we have indications that some facility is doing 
something illicit, that we can go investigate that, even if it 
is not a declared facility. But it has to be on the basis that 
we have some suspicion there's something illicit going on 
there.
    Second, in the question of clarification, there are such 
things--clarification visits that are a part of one of the 
technical aspects, to clarify declarations. One of the 
clarifications that we demand be incorporated is the 
clarification that says if there was an activity that should 
have been declared going on at an installation or facility that 
has not been declared, we get to go ask that question, or 
rather we get to have the international staff go ask that 
question.
    So that if they've tried to conduct that kind of activity 
and not declare it internationally, we still have the right to 
go in and say, what's going on here. Now, that takes care of, I 
think, as best you can, the question where somebody's trying to 
outright hide it and not say anything about it.
    The other question is whether or not there's somebody doing 
something that is covert and illicit underneath the cover of 
other activities that are going on. Certainly we would not 
expect them to come out and tell us that as we went into an 
inspection, or as the international staff went into an 
inspection. But one of the things that we're trying to do in 
terms of the experience we're building up, and in terms, 
frankly, of some of the experience that we have from both the 
United Nations Special Commission and some of the experience we 
have in terms of asking questions, for example, in the former 
Soviet Union as a part of a process that we undertook several 
years ago, is to find out what kind of things might happen if 
someone isn't telling the truth.
    There is no guarantee of this. I'm not trying to say that 
this is a guarantee, we'll catch them every time. But I can 
tell you from personal experience of having been on some of 
these kinds of inspections, that when you have people trying to 
put up cover stories, having folks onsite asking questions 
increases the likelihood that somebody's going to make an 
inadvertent statement; increases the likelihood that they're 
going to say something which is not logically consistent; 
increase the opportunity to make your own observations about 
whether or not the conditions you see are consistent with the 
story you're being told.
    All of those, we believe, are valuable assets in terms of 
trying to make a determination about whether or not there is an 
illicit activity going on. Again, I want to emphasize, it's not 
foolproof. We're not trying to tell you that we can catch it 
all. But certainly it is the case that we do not expect people 
to come out openly and tell us that they're doing biological 
weapons.
    Mr. Souder. What seems to be the case, and I'm trying to 
sort through, this is a pattern we have in all sorts of 
investigations, all sorts of programs in the Government, I've 
worked very directly with the illegal narcotics, for example, 
ephedrine producers in Mexico, if you see this huge surge, it 
leads you to ask certain questions, even if it's a legitimate 
use coming in. You wouldn't have apparent that legitimate a use 
for that much, because it was a change.
    But one of the struggles we have is how much, for example, 
in the anti-drug program in schools, how much is spent reaching 
kids who aren't as highly at risk versus how much is spent at 
risk. And in your comments there, it's difficult for me to sort 
out how much of our investigation time is being spent on making 
sure our major companies are clean when we don't necessarily 
suspect anything versus how much is spent on looking for these 
unusual activities that would be a trigger, to look at that. 
And as part of that, because we need to show that if we just 
look at triggers, that would add additional suspicion and marks 
on those companies, and we need to have kind of like 
everybody's doing this.
    But in the prioritization of, and limited funding, how much 
of this is being targeted at least at some element of 
questioning versus kind of routine inspections of places that 
have too many dollars at risk, really, to necessarily mess with 
this right now?
    Ambassador Mahley. That's a very good question. And again, 
the answer is going to be a little indirect, but I'll try to 
make it as brief as I can. First of all, remember that this is 
not a case of what we're going to be inspecting. This is a case 
of what an international organization is going to be 
inspecting.
    Second, in terms of what are you going to be doing in terms 
of routine activities, one of the things the United States has 
made a very strong point about in these negotiations is that we 
will not permit this to have a disproportionate burden on the 
United States. We are not going to accept a provision, for 
example, in which the quantity of declared facilities is going 
to be the determinant of how frequently a routine, onsite 
activity takes place.
    Because we're going to have more facilities to do whatever 
kind of activities it is that we describe as being declarable 
activities under any protocol that anybody else is going to 
have. So therefore, if you did a straight proportion, most of 
the inspection time would be spent in the United States. As I 
have said in Geneva many times, we're not the problem.
    Therefore, that's one in which we have set up ways in which 
we spread, by the code word of equitable geographic 
distribution, which means you try to make sure this routinized 
activity, goes to places where we might have some concerns as 
well as to coming to places in the United States.
    The second part, though, is that there are two kinds of 
activities. There's the routinized activity, clarification 
visit or a transparency visit or a familiarization visit, 
whatever it may be. Then there's also the investigation. The 
investigation, which is the most rigorous of the onsite 
activities visualized, is very carefully focused. It does not 
occur on a routine basis. It only occurs in response to an 
allegation that there may be a concern at a particular 
location.
    And so therefore, it does not happen at some place except 
where a country has made an allegation of some kind of a 
violation.
    Mr. Souder. I thank you. In looking at something like IRS, 
one's an audit, one is a suspect audit, and one is a kind of a 
random audit that you come through. But random audits put a lot 
of pressure on, too. I appreciate your response and we'll try 
to do some followup on bills up in committee.
    Mr. Shays. I thank all of you. I would like to just begin 
my questioning by, Ambassador, you describing, and Dr. Koch, if 
you would like to, what the problem is in terms of just the 
threat of biological agents to the world. You didn't speak to 
it in your testimony. I'd just like the committee to have a 
record of it.
    Ambassador Mahley. Thank you. I would like to start out and 
then I'll turn it over to Dr. Koch to supplement. The problem 
of threat, of biological agents in the world, is in my view, 
and I think I can say pretty much the Government's view, 
because I think it's consistent with what other agencies, even 
intelligence agencies, believe. It is something that could be 
done as a covert threat on a very small scale, and still be 
very significant. It is something that could be done, frankly, 
relatively cheaply.
    It is something which could be done inherently within the 
infrastructure that any country has available to it for very 
legitimate purposes. As I think all of us have said in our 
opening testimony, these are truly dual purpose capabilities. 
You can make a vaccine 1 day and a weapon the next in the very 
same fermenter with the very same building blocks of material. 
Anthrax is a classic example of that.
    So the threat is ubiquitous in the sense that it goes every 
place you can go. It is, we fear, in our assessment, 
increasingly in some states of concern a means of trying to 
achieve a weapons of mass destruction capability which may be 
more covertly available, easier to obtain. And the number of 
countries that seem to be interested in this seems to be 
growing. So it becomes increasingly attractive.
    The other part of it is that there's also a real threat out 
there, we believe, from non-government actors, and that is the 
terrorist activity. And frankly, we do also believe that the 
protocol could be useful in terms of counter-terrorism, in the 
sense that one of the requirements we're going to put in it is 
the requirement for domestic legislation outlawing such things, 
which may actually have the value, at least in countries that 
are not countries of concern, of their creating an 
infrastructure domestically which will make it more difficult 
for a terrorist operation to use them as a base of operations.
    So I don't know if that's answered your question or not, 
but that's sort of the question about the threat as we kind of 
see it out there in the world. And I'll ask Susan if she'd like 
to supplement that.
    Dr. Koch. I would just endorse what Ambassador Mahley has 
said, that the threat is real, the threat is growing, the 
threat is very difficult to detect for all the reasons that 
Ambassador Mahley described. The concern with the potential 
impact of any use of biological weapons, on whatever scale, 
against our forces and our population is very real.
    Mr. Shays. Well, just to respond, I think both of you have, 
in a very concise way, described a gigantic threat. I wouldn't 
say this as something to be sensational, but how would we know 
or not know the West Nile virus was introduced by accident or 
introduced by a terrorist? How would we know that?
    Ambassador Mahley. Mr. Chairman, I think to get the best 
answer on that, you probably ought to have a more technical 
briefing from people who do this for a living, that do 
epidemiology, like people from the CDC. But we have had a 
number of discussions with those people about this question, so 
I'll try to do the best I can as a layman to try to convey some 
of their answers.
    Mr. Shays. Your answer will probably be more 
understandable.
    Ambassador Mahley. I won't guarantee that. I never 
guarantee my answers are understandable.
    There are a number of things that you can look at from an 
epidemiological standpoint that would stand out as to whether 
or not an incident was something that looked like it was 
natural or looked like it was abnormal. We're wrestling with 
some of those in the negotiation, for example, because one of 
the things that we want to have is an investigation of unusual 
or suspicious outbreak of disease. To do that, you have to have 
some idea of what would constitute a suspicious outbreak of 
disease.
    For example, if you have a single source in terms of 
tracing back the outbreak, that's one real clue about whether 
or not you may have a suspicious outbreak. Because if you've 
got multiple source startup at the same time, then that 
probably means that there was more than an infected mosquito 
that got off an airplane. That would mean that somebody was 
spreading for example West Nile virus around in several 
locations or by several vectors simultaneously.
    The second thing is that you have to look at whether or not 
there are some indications that would indicate the distribution 
of the outbreak, as in a pattern which might occur as a natural 
function, or whether it is a pattern that might occur as an 
artificially induced function. Again, the interesting part of 
the Sverdlovsk investigation, for example, of the anthrax 
outbreak in 1979 in Sverdlovsk, now Yekatrinberg, really got 
down to the point of being able to detect that it all had to 
have occurred on a single afternoon, and that the afternoon 
that it occurred was an afternoon in which the wind direction 
was different than it had been for other days. And lo and 
behold, that happened to fit the pattern of outbreak.
    And as a matter of fact, insofar as you could look at 
outbreak that was over a long range, in this case a couple of 
hundred kilometers, you would get this outbreak which looked 
like it would have had a day or two for the wind to begin to 
carry it for the total of 200 kilometers downrange. So there 
again, those are the kinds of things that you can look at.
    CDC looks at things very carefully with respect to such 
elements, I think that you'll find that they've done a very 
good job. I'll point to one example, we think there was an 
example in the United States of a cult attempting to use 
biological weapons in the United States, or trying to test them 
up in Oregon in the 1980's, with salmonella. And CDC came up 
with a conclusion on that that said it appeared that you had 
two simultaneous outbreaks on the same day which were in 
different locations and which had different sources. So 
therefore it would not have been a single infection source, and 
that was what put them onto the thesis it was probably an 
artificially introduced disease.
    I can't really give you a technical explanation of all the 
ways to do that. But there certainly are a lot of ways which we 
spent a lot of energy already today on trying to make sure we 
have that kind of assessment the best we can.
    Can we do it uniquely to say, absolutely, the West Nile 
outbreak was not a mistake or an accident some place, but it 
was a natural occurrence? I don't think any of my colleagues in 
the scientific community would come up and try to give you a 
guarantee of that. We'd give you our best scientific evidence.
    Mr. Shays. Would anyone else like to respond?
    Let me just explain, in a circumstance like this, which I 
frankly don't mind one bit, with one questioner, we have the 
flexibility to have some interaction. So if I direct a question 
to any one of you, I'm happy to have any of you respond.
    But I still am going to kind of go in the areas that 
Ambassador Mahley and Dr. Koch are more involved in. I think 
you both gave me a pretty tremendous answer on what the threat 
is. The irony is, not an irony, but the fact is that if the 
West Nile virus was in fact a terrorist induced or induced by a 
country, this hearing would have 50 cameras and there would be 
a line a mile long.
    And yet what we're talking about is very real. And the 
likelihood that some day we'll be faced with that is very real. 
So I consider this an extraordinarily important hearing.
    The bottom line to your answer, Ambassador, is that while I 
don't suspect, for instance, that it was terrorist induced, we 
don't know. But we have indicators that would suggest that it 
wasn't. And you're trying to develop, others are trying to 
develop as well, and you're trying to make sure we recognize 
the need to step in in places around the world where you see 
this kind of episode.
    This committee, or let me put it this way. I used to chair 
the Committee on Human Resources that oversaw all of HHS, CDC, 
and National Institutes of Health. Basically my staff came from 
that committee. So this is an area that just astounded me, 
because I thought, here we're trying to protect from nuclear 
and threats by armies, and yet the biggest threat can be by a 
virus, the biggest threat can be a health threat. And I realize 
more than I ever have the importance of the World Health 
Organization and the effort that the U.N. clearly has in 
protecting world health.
    So we know it's a gigantic threat, we know it can be done 
on a small scale, we know it can be done cheaply. We know a 
vaccine 1 day can become a weapon the next. We know that the 
number of countries are growing, we know that they're becoming 
involved in biological weaponry, we know that terrorists are 
flirting with this as well. So we know the threat is real, we 
know it's growing and we know it's difficult to detect.
    Which gets me to the issue of how do we deal with it. 
Obviously that's the issue we have. In my statement, I said to 
what extent is the BWC verifiable. And I made the same point 
that you were making. I guess my problem is, in my heart of 
hearts, I don't think it's verifiable. And I almost think, 
Ambassador, I'm tempted to think that you are a Don Quixote.
    So tell me why this is a worthwhile effort. Let me just 
make a point. In your statement, you said, on page 8, and I'm 
reading, let me read the whole statement. I don't think that 
you read this part of your statement. First of all, this is not 
an issue of verification. As you know, the United States has 
substantive requirements for attributing effective 
verifiability to a treaty. It involves being able to make a 
judgment of high confidence in detecting a violation before it 
can become a militarily significant threat.
    I have already noted that a small program can become a 
threat. Likewise, the inherent ``cover'' for an illicit program 
in legitimate activity makes differentiation much more 
imprecise. And this is the quote: The United States has never, 
therefore, judged that the protocol would produce what is to us 
an effectively verifiable BWC.
    Can you explain that?
    Ambassador Mahley. Yes. In order to have an effectively 
verifiable convention, we would have to be able to testify with 
honesty that we were able to meet those kind of standards about 
early detection of any program before it could become a 
militarily significant threat. Now, the obstacles to that are 
enormous. First of all, very small programs could be militarily 
significant. Second of all, they are enormously flexible in 
terms of their appearance and disappearance.
    Third, as I think the Soviet Union even learned after its 
program in the 1960's, a priori stockpiling of biological 
weapons is not something that's necessary, because you don't 
need that many of them to proceed with implementation. So 
therefore, having large stockpiles of weapons sitting around 
for a long period of time to detect before you're ready to use 
them is not necessarily one of the things that will happen in a 
program.
    For all these reasons, we simply, and again, I'm basing 
this on my colleagues in the intelligence community's 
capabilities as well, the United States simply does not assess 
that we can gain that kind of confidence and that kind of 
information. And we have therefore resisted calling this a 
verification protocol or an attempt to make the Biological 
Weapons Convention verifiable, because we think that would 
indeed be an impossible goal, and it's certainly not something 
we're prepared to try to argue in terms of the U.S. Congress 
for advice and consent for ratification would be something 
we've achieved.
    Now, that, however, all is preliminary to the question that 
you've actually asked, and that is, therefore, why are we going 
about this negotiation and what is the value that we can get 
from it. I think the answer to that has got to be again one of 
comparative costs and benefits. Certainly if there's a real 
risk to U.S. national security or a real risk to serious U.S. 
propriety information, then those would be very difficulty 
obstacles to overcome.
    As I think Dr. Koch and Mr. Majak have testified today, and 
certainly as I believe on the basis of the work we've done, the 
U.S. negotiating position and what we're after in this protocol 
will not put those kinds of national security or proprietary 
information values at risk in any extensive forum, and the cost 
and burden for the United States will not be excessive.
    If one can achieve that, and at the same time increase the 
flow of information in some of these areas, then the question 
you have to ask yourself is, is that a net benefit to the 
United States. Is it of some value in our global effort to try 
to prevent biological weapons proliferation. On balance, the 
net assessment is yes.
    Now, why is that the case? It is the case because again, as 
I said to Mr. Souder, we don't expect that people are going to 
declare that they're doing biological weapons programs. We do 
expect to be able to set down some definable and clear 
categories of activity which we hope are going to be the most 
relevant to the biological weapons convention objectives. 
That's what we're after.
    There is another complex problem as a side light, because 
what is relevant changes as biotechnology changes. How large a 
fermenter, for example, is relevant? A country would declare 
every place that's got a fermenter of such a size or larger. 
The criterion becomes enormously fungible, as you can do more 
and more things in smaller and smaller fermenters.
    Nonetheless, if you set down some clear and distinct 
activities to declare that means you declare some activities 
and some facilities in your country. Those facilities, if 
somebody were stupid, could be the places where they could take 
advantage of the infrastructure to use the dual capability to 
run a covert offensive program.
    If they're going to do it that way, then there is always, I 
think, the chance that if you go routinely onsite to those 
kinds of activities there will be discrepancy which is 
observable which will, while it isn't a smoking gun, provide 
you with an opportunity to focus your own national assets the 
attention of the world on that installation and that activity. 
And therefore, that's not a path which the proliferator would 
find to be more profitable or easier to follow.
    Second, by having categories of things which should be 
declared, then you can raise your eyebrows with great interest 
if you discover by other means that those same activities are 
going on at different locations which have not been declared. 
You have to ask yourself the question, why did the owning state 
not declare those activities at those locations. So you ask for 
clarification.
    It's always possible there was a pure oversight, in which 
case you will probably find there installation in question 
suddenly appears on the declared list. Then you can then either 
pay more attention to it in succeeding years or not.
    However, you always have the challenge capability to go to 
any place that you think some kind of activity which might be 
of dubious nature is going on. I don't want to try to leave you 
with the impression that we believe we're going to find a 
smoking gun, or we're going to walk in or somebody's going to 
say, oops, let me get rid of these bombs right quick before we 
go on with the inspection.
    But challenge is a deterrent threat. Now, is it a deterrent 
threat that we believe is capable of precluding someone from 
undertaking covert activity? No. But it is a deterrent threat 
which makes it more complicated and more expensive for them to 
do so.
    And in trying to create that kind of a complication, then 
it appears to us that we do have the chance of downgrading the 
seemingly growing attractiveness of a biological weapons 
program as a means of creating a weapons of mass destruction 
capability. If you make it more complicatedc and expensive to 
go underground because a proliferator must make sure that a 
program does not look obvious and therefore might cause 
somebody to ask questions, then there is suddenly a greater 
complication to any national security equation for creating a 
weapons of mass destruction capability for a country.
    And that is something which we believe will add to our 
other national efforts in terms of trying to counter 
proliferation. Now, when I say will ``add to our national 
efforts,'' that also becomes then one very important element. 
And that is that we cannot allow getting this very modest 
international capability in place to detract from, to deflect 
or interfere with our own very vigorous national program to try 
to reach those same objectives. That's one of the reasons why, 
for example, we will not tolerate any interference with our 
ability to make our own national decisions about proliferation 
questions.
    Mr. Shays. In one word, can you summarize what you said, or 
in one sentence? [Laughter.]
    Ambassador Mahley. I'll try very much, sir.
    Mr. Shays. I'm not trying to be cute. I think I want to 
tell you what I'd summarize, but I want you to go first.
    Ambassador Mahley. The protocol should provide a supplement 
to the efforts internationally to stem biological weapons 
proliferation by complicating the life of a potential 
proliferator. Thank you.
    Mr. Shays. My summation would be, from hearing you say it, 
it won't do much, but it's better than nothing. And you 
explained why it's better than nothing.
    Will the record note that his head went up and down, which 
means that he concurs with my statement? [Laughter.]
    I seem to be focused mostly with you, Ambassador. But let 
me just tell you the next question I'd like you to answer, and 
then I'm going to ask you, Mr. Brock, to respond. You said in 
your spoken statement that CWC lessons, some are good, some are 
dubious and some are not at all. I don't know what not at all 
means. Good, dubious and no lessons at all. You did say that. 
And if you would give me examples of each, and then I'd like 
you, Mr. Brock, to respond to it.
    Because Mr. Brock, let me be clear. We asked you basically 
to look at CWC and see if we could draw some parallels in terms 
of costs to business.
    And Mr. Majak, I'm basically going to be coming to you to 
just understand one, why the pharmaceutical industry may have 
chosen not to be here, and then to have you explain to me how 
you sort this whole issue out, again, in briefer terms, of 
inspection.
    And Dr. Koch, you're looking at inspection from the 
standpoint of--you're looking at it, Mr. Majak, from 
proprietary interests, I think, you're looking at it from a 
national interest. I'd love you to be able to, I'm going to be 
coming to you to have you explain to me, we don't make 
biological agents. So explain to me what we're protecting.
    So Ambassador, I'm going to go to you, and then I'm going 
to have you, Mr. Brock. I'm just trying to make sure that all 
four of you feel engaged here, so you don't fall asleep on me. 
I'm engaged.
    Examples of good, dubious and there's no comparison. Not 
relevant.
    Ambassador Mahley. One of the good things I think we got 
out of the Chemical Weapons Convention that we're trying to 
apply is the principle of managed access. We devised managed 
access as a part of the Chemical Weapons Convention 
negotiations. Managed access must have a case by case, onsite 
negotiated approach to being able to protect sensitive 
information not relevant to the object of the inspection. But 
nonetheless, you can satisfy the purpose of the investigation 
itself.
    We have to protect information on a case by case basis. You 
can't write in the treaty text that you shall be able to do the 
following things for protection. You can give an exemplar list, 
which we do. Nonetheless, the answer to that is no, you don't 
want to try to make that all the things you can do. So you have 
to be able to look at protectioin on a case by case basis.
    The principle, I think, very cogently applies in the 
biological area as well as the chemical area. And certainly we 
are enshrining that very same principle in the negotiations in 
the biological convention.
    What is dubious? In the Chemical Weapons Convention, you 
have a schedule 1 and schedule 2 chemical list. Now, the 
schedule 1 and schedule 2 chemical list are pretty much in the 
schedule 1, all the chemicals that are known to be chemical 
weapons. There may be some speculation about generations of 
agents, but nonetheless, these are ones which are either 
chemical weapons or immediate precursors and have no commercial 
value. So therefore, you subject all their manufacturers to 
certain constraints.
    Then you have schedule 2 chemicals, and that's a definite 
list of chemicals, and that's what all the people who do those, 
in terms of production and consumption, are subject to category 
2 restrictions.
    To try to make a list of biological entities which would 
have the same relevance to biological weapons would be 
problematic at best and damaging at worst. Because given the 
state of biotechnology, given the question about what kind of 
objective you have for a biological weapons program, for 
example, if you want a military application of biological 
weapons, one of the things that we learned when we did our 
offensive biological weapons program is that you wanted to make 
sure that anything you had as an agent was not contagious. 
Because you wanted to make sure that it was applied only to a 
specific area for military operations and did not then run 
rampant throughout the country in terms of that kind of a 
purpose.
    If you're a terrorist, you may not care about that. So 
therefore, a completely different list of pathogens would be 
things that you would look at as high priority agents. So 
therefore, trying to make a list such as you did with the 
Chemical Weapons Convention is very dubious.
    What doesn't apply at all? Again, once you had category 1 
and category 2 chemicals in the Chemical Weapons Convention, 
you were therefore able to try to categorize all of those 
facilities that dealt with those two categories of chemicals 
and subject them to routine onsite activity. And that would 
pretty much take you through the entire list of capabilities in 
a country, commercial or otherwise, in which you had the kind 
of high corrosion resistant, high containment chemical reaction 
capability which would be most reasonably diverted into a 
chemical weapons program if you wanted to do so.
    There simply is no such equivalent category of equipment or 
of capability in terms of biological weapons. Some, for 
example, argue that the most dangerous pathogens have to be 
dealt with with maximum biological containment, what we call 
BL4. Well, when the United States, again, had an offensive 
biological program back in the 1960's. We worked anthrax on the 
bench by simply having air containment around the entire 
facility and good inoculations of all the people who were 
actually working on the program.
    So therefore we didn't use maximum biological containment 
in that operation. We had no accidents and we had no casualties 
from it. And so one could do that, and certainly one could do 
that in a covert program if you were prepared to take a little 
bit of a risk with your work force, even if you didn't have 
vaccinations.
    So the idea of having some sort of a categorization such as 
that is an example from the Chemical Weapons Convention that 
would be very dangerous to apply in the biological weapons 
area.
    Mr. Shays. Mr. Brock.
    Mr. Brock. A couple of points, Mr. Chairman. I think the 
inspections at the chemical companies demonstrated that in fact 
you can protect the interests of the companies during an 
inspection. And the available material that I've read and that 
has been provided to us indicates that the industry is 
segmented in such a fact that these inspections do give you a 
level of assurance that may not be present in a pharmaceutical 
interest.
    And I was really intrigued by your line of questioning you 
just went through when you were talking about what level of 
assurance do we have that we if we do the biological 
inspections that in fact we're comfortable with our ability to 
protect ourselves. And I think there's a real parallel between 
that and some of the things that we're looking at in GAO right 
now. We're looking at cyberwarfare and cyberterrorism, where 
the National Security Agency estimates that over 100 countries 
now have the ability to engage in or are developing the 
capability to engage in cyberwarfare. Many terrorist groups are 
apparently developing capability of committing cyber acts of 
terrorism.
    The recent I Love You virus which I testified on earlier in 
the spring disabled the Centers for Disease Control to the 
extent that they said if they had had a major viral outbreak, 
they would have had a difficult time dealing with it. In a 
situation like that, where it's impossible to do inspections, 
the inspections aren't at all feasible, you'll have to do other 
things.
    You'll have to have intelligence gathering activities that 
let you begin to assess what the threat might be and where the 
capabilities might lie. You need to think in a very proactive 
way about what your reaction might be to that threat if in fact 
it was realized, and what your recovery mechanisms would be. 
You also have to think about what you might do to investigate 
the cause of the action.
    And some of the things that people are beginning to do in 
cyberterrorism might in fact be relevant to other aspects of 
weapons of mass destruction where inspections may not be the 
only way you want to have as a way of mitigating risk.
    Mr. Shays. Very interesting. In your inspections, Mr. 
Brock, you gave a figure of $7,000, I think, to almost 
$100,000?
    Mr. Brock. Yes.
    Mr. Shays. I can't visualize $100,000. I mean, I can 
visualize it, but I can't visualize why any inspection would 
cost that much.
    Mr. Brock. First of all, the company that did it had a very 
complete cost accounting system. And only two of the companies 
we visited had a cost accounting system that would allow them 
to more fully develop the costs that were associated with the 
inspection.
    Mr. Shays. So you're suggesting that those that were less 
didn't maybe capture that full cost. So tell me about $100,000. 
What is done? Do people come into a plant and look at the 
plant? Why is it $100,000 to welcome them?
    Mr. Brock. First of all, some of the plants are more 
complex than other plants. The inspection itself is more 
complex and lasts longer. So there's a factor of time, how much 
time did the inspectors spend there. That's one of the things.
    Mr. Shays. This is manhours. So in some cases, are we 
looking at an inspection that could take literally weeks?
    Mr. Brock. No. There's a limit on the inspection. In this 
case, 96 hours. Some companies captured the cost, if they had 
to shut down a production line, they would capture that cost. 
Some companies engaged outside counsel, because they were 
concerned about some of the legal ramifications. Some companies 
did more to capture the cost of the pre-inspection visits than 
other companies. They were just more complete.
    I would suspect, I don't have direct evidence, I would 
suspect that if anything, the costs are underreported.
    Mr. Shays. It's clear that if you have to shut down 
production, then you make the added mistake of hiring lawyers--
[laughter.]
    Mr. Majak. Mr. Chairman, since you invited comment from 
others, I might comment on that point.
    Mr. Shays. The lawyers point? [Laughter.]
    Mr. Majak. No, the Commerce Department's point. I'm not a 
lawyer and would not presume to make the lawyers comments.
    But it was the Commerce Department that issued the 
regulations requiring the companies to report their costs, and 
we will be submitting to you later in the year under section 
309 of the implementing act our data on the costs. And I take 
seriously Mr. Brock's recommendation that we look at the 
standardization of the accounting methods.
    But I should explain that the reason we did not elaborate 
on those in the regulations is that we didn't want to force 
companies to create an accounting system that they didn't 
already have in place, and thereby incur even more costs. So we 
tried to leave it flexible for the companies. As a result, some 
have very precise cost accounting and others do not.
    Certainly if it's the view of the committee and the view of 
GAO or others that we ought to standardize those requirements 
further, we'd be glad to work with the committee and others to 
do that. But I thought I should explain why we didn't spell it 
out more precisely.
    Mr. Shays. Thank you. It's just that I had an advantage of 
going to Geneva and our committee look at what the Ambassador 
was doing and to talk to various people who were considering 
this issue. So I've had over a year to think about what you all 
are trying to do. And it boggles my mind.
    And the more I know, the more I'm convinced that while the 
cold war is over, the world is a more dangerous place. And it's 
more dangerous because small, a small number of individuals can 
cause catastrophic harm to people around the world. And it 
makes me realize, ironically, why diplomacy is even more 
important. And why the ability to do extraordinarily fine 
intelligence work is more important.
    As it relates to chemical, it's my understanding that if 
you inspect a chemical plant, you can't see a quick conversion 
to chemical weapon. There are chemical weapons that on the face 
can be used by terrorists. When the Colombians lost their 
version of their FBI, literally a nine story building was blown 
apart, 700 people injured, early part of the last decade, 70 
people killed, because a terrorist had a chemical, an 
agricultural chemical, that they put in the back inside a bus, 
and blew up the bus and it blew the entire building up.
    And that's a weapon. It's a chemical weapon, though, that 
frankly is just used as an explosive. And so an inspection 
would teach you nothing about that.
    But let me just get a quick answer to this, and then I'd 
like to go to you, Dr. Koch. Can this committee make the 
assumption that a biological facility can be converted in the 
next day where a chemical plant, if it's trying to weaponize a 
chemical, would have to have more time to go back and forth? Is 
anyone here capable of answering that?
    Mr. Majak. Speaking from the commercial perspective, the 
activities that normally take place in commercial plants, I 
think you could make that conclusion, that certainly the first 
proposition is the case, that many of these plants are designed 
in such a way that they can change their production in a very 
short period of time, removing all traces of their earlier 
production. They do that obviously for legitimate commercial 
reasons, because they need to sanitize their facilities before 
they start producing something else. But they do have that 
capability.
    Mr. Shays. I'd like to go to you, Dr. Koch, and if you 
would just explain to me, since we don't make biological 
weapons, what intelligence are we trying to protect?
    Dr. Koch. There are two basic categories of information, 
national security information, that we would want to protect 
under the measures foreseen in the protocol. The first for 
facility visits or investigations, there may within the same 
site be one laboratory engaged in activities directly relevant 
to the convention and another part of the facility engaged in 
something completely unrelated, but potentially quite 
sensitive.
    This is an issue that we have faced, I think, with most 
arms control agreements with which I'm familiar with onsite 
inspections where parts of facilities that are engaged in 
sensitive activities that have nothing to do with that 
particular arms control agreement are protected.
    Mr. Shays. Will you state for the record, we don't make 
biological weapons?
    Dr. Koch. No, we do not.
    Mr. Shays. It's clear that a biological plant can be used 
to make a weaponized biological agent. What type of facilities 
that you can state for the record would our world partners be 
interested in inspecting, that is, of an intelligence nature?
    Dr. Koch. Well, the first category, as I said, would be 
just a universe of facilities where defense work is going on 
that has nothing to do with biological issues. The second----
    Mr. Shays. Could you be more specific?
    Dr. Koch. Anything in the strategic area.
    Mr. Shays. Well, they're not going to go to an airplane 
plant. What would they rightly say they have the ability to go 
to look at a biological agent? I'm looking at the confused 
faces and I'm confused too. It seems like a simple question.
    Dr. Koch. I would think one example may be, I'm not 
certain, for example, at our national laboratories. Some of our 
national laboratories are engaged in work related to 
biotechnology. They also are obviously engaged in much other 
national security work that has nothing to do with it.
    Mr. Shays. Ambassador, do you want to add to that? You 
answered the question, Dr. Koch, I appreciate that. What would 
be another example?
    Ambassador Mahley. Let me give you a couple of other 
examples. One of them is the fact that with outsourcing, you 
frequently have contractors who are using high technology 
facilities for a number of different things. If for example one 
of the things that we're working on in the biological area is a 
very sensitive detection capability, you don't want to have the 
knowledge of how far you've gotten with that detection 
capability revealed to the international community.
    Mr. Shays. That answers my question.
    Dr. Koch. That is the second category of areas in 
biodefense that might reveal vulnerabilities and gaps.
    Mr. Shays. Sorry to interrupt you, Doctor, in your answer, 
but that helps some. So those two categories. You're saying 
Fort Dietrick would be an example? OK.
    I'm inviting the counsels on minority and majority staff to 
ask some questions. I'm going to come back. Mr. Halloran will 
ask questions.
    Mr. Halloran. Thank you.
    Ambassador Mahley, if you would describe the kind of 
negotiating dynamics in Geneva at this point. There are, in the 
course of the 5-years various kinds of blocs of nations have 
emerged and various positions have been put on the table. Could 
you describe where the current posture of various international 
blocs might position themselves as you look toward the eventual 
conclusion, whether the United States is getting sort of 
isolated in its position at risk of looking like the bad guy 
here.
    Ambassador Mahley. Well, thank you. I would prefer not to 
go into a great amount of speculation about where other 
countries are trying to go. But I think the answer I could give 
you to that is that the United States, first of all, is in a 
unique position in the world with respect to biology, both 
commercially and as a matter of defense. I think it's safe to 
say that the U.S. biodefense program, for example, probably 
constitutes more than half the expenditures in the world for 
biodefense.
    So therefore, the number of things that we're doing and the 
number of places that we're trying to make progress, a lot of 
the results of which, as a matter of fact, would eventually be 
available to allies as part of defense sharing agreements, 
makes us pretty unique. Therefore, we have a range of things 
which we are concerned about in that area which some other 
countries, even countries from the western group, simply do not 
comprehend or do not contemplate. So that makes us, I think, 
more isolated than we might otherwise be with respect to the 
things that we need to try to defend.
    Second, I think that there has been a dynamic in this 
negotiation, as I indicated in my statement, and as I indicated 
even more, I think, completely in my statement for the record, 
of competing objectives, and that is that there are countries 
who believe that national security gains from this protocol are 
relatively ephemeral and not particularly significant to them 
in their own context. In some cases, the United States 
disagrees with that, but nonetheless, this is what some of 
them, particularly the non-aligned, feel. And that instead, 
they see these negotiations as an opportunity to 
institutionalize access to technology and access to material 
and access to things that they believe are rightfully theirs as 
a result of the biotechnology explosion in the world, most of 
which is located in western countries.
    In the process of that, some of them who have very 
legitimate objectives in terms of trying to simply get access 
to things they think will be helpful would of course by 
institutionalizing it open it up to where countries of concern 
would also have guaranteed access to the same kind of dual 
capability material. And again, I explained to the chairman 
earlier that the whole object from our standpoint is simply to 
complicate the life of a proliferator.
    Well, one of the other ways you complicate the life of a 
proliferator is you complicate that by making it more difficult 
for them to get dual capable equipment. That's why we have 
export controls and that's why, as a matter of fact, we have 
the Australia Group, which does those sorts of things.
    Those constitute, bluntly, national decisions, national 
decisions reinforced by the decisions of other like-minded 
states, which complicate the life of those proliferators. 
People view that, particularly among those who are potential 
recipients of those kinds of transfers, as being 
discriminatory. In some ways, they are discriminatory and 
hopefully they're discriminatory against those who have bad 
purposes.
    At the same time, however, as I say, they don't like the 
idea that we make those on a national basis. That objective is 
one which we have fought from the beginning of the 
negotiations, that we will continue to fight and that we will 
not accept an adverse outcome on. And that insofar as we are 
prepared to be vocal about that, while others are prepared to 
hide behind our skirts, is something which leaves us more 
isolated, but it is not something in which we are alone. It is 
something in which we have a number of other like-minded 
countries who feel equally strongly about the same point, and 
that's just a question of what is the nature of the negotiating 
dynamic.
    Finally, there are, I think, as this hearing has brought 
out, an enormous technical complication in terms of how you try 
to get things done in biology. And so therefore, there are 
still issues in which trying to find clear-cut ways to handle 
the concepts that are part of any kind of an arms control 
agreement, such as the universe of declared facilities in the 
biological field, to make that universe relevant, to make that 
universe limited, to make that universe clearly discrete. Those 
are issues which are still subject to some technical 
description, and in which we have fairly demanding standards.
    But again, while I wouldn't say we were pushing the 
majority position, I wouldn't say that we were isolated. All of 
that is a negotiating dynamic exercised against a statement 
made in the 1996 review conference of the states parties to the 
Biological Weapons Convention, in which that review conference 
encouraged the ad hoc group to complete its work prior to the 
next review conference in 2001.
    And there are a number of people who believe that is an 
absolute deadline, and that therefore, we absolutely have to 
try to finish this, and therefore go on, even if it's an 
imperfect product, into a conclusion that will occur before 
November 2001 when we will have the review conference. The 
United States does not agree with that. We certainly think 
that's an objective, we certainly think we're prepared to work 
very hard toward it.
    But we are not prepared to accept an unacceptable protocol, 
simply to have something on paper that will be done by that 
time. That again is a position which is not universally shared. 
So that's the dynamic as best I can describe it. Thank you.
    Mr. Halloran. Thank you.
    Dr. Koch, in your description of the threat, I don't recall 
your mentioning potential leakage of former Soviet technology 
or technology from other established countries into states of 
concern. Could you elaborate on that in terms of the element of 
the threat that you see?
    Dr. Koch. That is certainly part of the threat, and we're 
engaged very actively with the most directly concerned states 
of the former Soviet Union, Russia, Uzbekistan and Kazakhstan, 
at the very least to prevent proliferation of such technology.
    Mr. Halloran. Reading yesterday's Washington Post story, a 
question occurred to me, and I don't want to stray into 
classified information, but what is the more near term concern, 
the transfer of completed stocks, say, anthrax, for example, or 
of technology or expertise?
    Dr. Koch. I actually don't think we need to establish that 
priority. Because we're trying to work on both. Several 
cooperative projects funded by DOD, by State Department, 
Agriculture, increasingly HHS, with scientists in the former 
Soviet Union to engage them in peaceful work and give them 
alternate employment to any proliferation activities, or 
offensive, legal offensive activities at home.
    And second, security efforts to safeguard the pathogens, 
plant, and animal and human pathogens that do exist in former 
biological weapons laboratories and that do have legitimate 
peaceful purposes. Again, as part of the dual use issue that 
we've been talking about for the overall convention, a facility 
in Russia can do legitimate work on smallpox. So they need the 
physical protection as well.
    Mr. Halloran. Thank you. Finally, for Mr. Majak and Mr. 
Brock, in terms of CWC inspections you've seen, Mr. Majak, in 
your testimony, you said that while the inspection team has 
occasionally attempted to probe for information beyond the 
bounds of their mandate, most teams so far have had little 
difficulty keeping inspections on track. Would you elaborate on 
that in terms of what motivated straying from the assigned path 
and how it was made right?
    Mr. Majak. Yes. The international inspectors have two 
purposes. One is to verify what the company has declared it is 
doing. The other is to as best they can determine that there 
are no schedule 1 materials on the site. Those are basically 
their two main goals.
    And they probe rather vigorously. They're already well 
experienced. Although we've only done 10 inspections in the 
United States, these inspectors have done more than 200 
inspections in other countries. So they've had a lot of 
practice, and they are aggressive in seeking the information 
they feel they need to satisfy those two purposes.
    The Commerce Department, as the representative of the 
national authority, the representative of the U.S. Government 
on the site, we have helped the company prepare for those 
questions, we have helped them identify what information they 
are obligated to provide under the treaty and what information 
they are not obligated to provide.
    So there have been occurrences already in the first 
inspections where the inspectors have, in essence, tested the 
company by asking for things that are beyond the requirements 
of the treaty, and we have helped the company to fend off those 
kinds of inquiries. And the way they are fended off, we try to 
find alternative means of satisfying the inspectors. That is, 
what is the inspector trying to establish, is there another way 
we can do that.
    Typically that would be, instead of looking at pipe or 
effluent X, we'll give you access to the records of what is 
going through that pipe. So we try to find alternative means of 
satisfying the inspector without revealing the company's 
confidential business information. But it does occur that the 
inspectors will ask for information which in our opinion goes 
beyond the scope of the treaty. And that's why the Commerce 
Department, a representative of the U.S. Government, is 
present, to help the company understand that they don't have to 
provide that information.
    Mr. Brock. Our experience in our actual visits supports 
that. The companies themselves are not particularly 
sophisticated in what these inspections entail. This is their 
first time to do it, and the inspectors are relatively 
sophisticated. The companies identified in a couple of examples 
where they were preparing to respond to an inspector's inquiry 
and representatives from either the Department of Commerce or 
the Department of Defense intervened and said that's not 
necessary to go to this level of detail, are there alternative 
ways of providing that information, because you're in danger of 
revealing proprietary information or processes. Which points 
out the importance of having absolute assurance that the teams, 
the Government teams, continue to be well trained and capable 
of providing support to the companies that do not have the 
experience to effectively deal with situations like that.
    Mr. Halloran. Mr. Majak, are you involved in the 
administration preparations for the trial inspections that were 
put in the statute last year?
    Mr. Majak. Yes, we are. We have been in contact with a 
number of private companies and industry associations to try to 
line up a facility that is both willing and suitable for a 
trial inspection. We were in fact a few weeks ago we thought 
relatively close to having such a facility identified. 
Unfortunately, in the meantime, the facility was sold to a new 
owner and the new owners were less willing to subject 
themselves to this than the previous owners.
    But we will continue those efforts aggressively in order to 
fulfill the mandate of Congress and identify a private facility 
where we can conduct a trial investigation or a trial 
inspection.
    Mr. Halloran. But it doesn't sound like you would have any 
results in time to do Ambassador Mahley any good in terms of 
the schedule he's on.
    Mr. Majak. In terms of the negotiating schedule, you mean?
    Mr. Halloran. Yes.
    Mr. Majak. Probably not by the November negotiating round, 
no, we probably would not meet that. Although we'll make every 
effort to hold those trial inspections as soon as possible.
    Mr. Halloran. And finally, if I might, Mr. Chairman, as you 
described it, Ambassador Mahley, it strikes me that given the 
modest goals of such a protocol, that is, to catch stupid 
violators and to catch poor, unsophisticated violators with an 
inspection regime, that there ought to be a mechanism to avoid 
spurious or pernicious accusations of violative conduct.
    Where stands the draft protocol at this point on a 
threshold mechanism for an investigation?
    Ambassador Mahley. I would just add to the idea of catching 
the stupid proliferator the idea that it's also hopefully going 
to deter and complicate things for the more sophisticated 
proliferators, as I said earlier.
    Mr. Shays. You didn't make that case very well. [Laughter.]
    Ambassador Mahley. But the other thing I would say is that 
where we stand on the threshold activity at the moment is that 
the draft, as it now stands, says that in order, you know, the 
state party to the protocol is one who would have to bring 
forth a request for a challenge activity. That challenge 
activity would then be reviewed by the executive council.
    Now, what the executive council review amounts to is of 
course yet undecided. The U.S. position on that in this 
negotiation has been since 1998 that one would require that the 
executive council, which would be composed of some number of 
states parties, would have to by an affirmative vote of 51 
percent of those present and voting, approve the request in 
order for the investigation to go forward.
    That would allow us, we believe, an opportunity, for 
example, if there were a spurious request for an investigation, 
which is a more intrusive kind of onsite activity than any of 
the others contemplated, to be able to present rebuttal 
evidence and to be able to determine and make the case if it 
were spurious about why this was something that was not 
relevant to a biological weapons specification.
    Mr. Shays. We're almost done here. Mr. Majak, I'd like you 
to tell me what the main points of contention or dispute 
affecting a working relationship between industry and the 
administration concerning BWC protocol. And I will just give an 
editorial comment and I'm sorry I can't ask the industry 
itself.
    Mr. Majak. Well, first let me say we are in close touch 
with the industry, all the agencies at the table. We have an 
industry advisor group at the Commerce Department which 
includes a number of companies that could be affected by a 
protocol, so we're in close touch with them. Using as my guide 
the public position that PhRMA has specifically taken on the 
protocol, I note that PhRMA supports only at this point a 
challenge inspection procedure. It supports declarations that 
would not include any confidential business information. It 
does not support routine or random visits to facilities. I 
think those are the major elements.
    It is willing to support purely voluntary educational 
visits to facilities. So I think those are the major points 
that the industry has publicly endorsed. While I would add one 
more, it favors a green light filter, so the necessity for 
multi-nation approval of any challenge inspection, I would 
defer to Ambassador Mahley to pinpoint where we are exactly in 
the negotiations on these points. We are in negotiation on all 
of these points, and they change from time to time.
    But my understanding is we are consistent with their 
position on challenge inspections, and green light filter for 
those. I think the negotiations have not yet determined the 
scope of the declarations. So it's difficult at this point to 
say whether there would be confidential business information 
included in the declarations or not. Our position does not 
include the use of routine or random visits.
    And so I think we are responding in all of these areas to 
at least the industry's posture as it's been outlined by PhRMA. 
Ambassador Mahley may want to elaborate on that.
    Mr. Shays. I'm struck by the fact that the Ambassador has 
to negotiate with more than one side.
    Ambassador Mahley. Sir, it's a multi-lateral operation. 
That's not to be unusual.
    Let me simply say to supplement what Roger said, and he's 
given you a pretty good summary at the moment, with respect to 
the information included in declarations, at the moment, the 
position that we have put on the floor is that confidential 
business information should not be, repeat, should not be 
included in any declaration. And that has fairly wide support 
in the ad hoc group. So I think that the idea of deliberately 
including confidential business information in the declaration 
is probably one that will not be pressed in the end.
    Now, there are provisions in the protocol for a regime to 
make sure that if confidential business information is given to 
the organization, that it will be properly handled, such as in 
the Chemical Weapons Convention, there are provisions of 
confidentiality for highly sensitive information to be 
carefully controlled. At the same time, I think it is the 
position of the industry and certainly our position that the 
better thing to do with that is not let it out in the first 
place.
    Mr. Shays. How many facilities, Mr. Majak, are we actually 
talking about, or Mr. Brock? How many facilities ultimately 
would need to be potentially inspected, or Dr. Koch, if you 
want to answer that, who's got the answer?
    Mr. Majak. On the commercial side, the industrial side, we 
have 81 sites that are subject to inspection, because they are 
involved in either schedule 1, schedule 2 or schedule 3. And we 
would expect all of those to be inspected over the next couple 
of years, initially inspected and in some cases, followup 
inspections.
    In addition to that, there are something over 600 declared 
facilities that declare so-called unscheduled organic 
chemicals. And in the long run, because it will take the OPCW, 
I think, some time to cover that territory, some or all of 
those could be inspected. But we expect the concentration of 
the inspections to be on the 81 facilities that are involved in 
schedule 1, 2 or 3.
    Mr. Shays. Dr. Koch, from the Government side?
    Dr. Koch. For Defense Department, for the Chemical Weapons 
Convention, there are a total of 32 declared sites.
    Mr. Shays. That's chemical?
    Dr. Koch. That's chemical. I believe Mr. Majak was speaking 
of chemical as well.
    Mr. Shays. Were you speaking of chemical?
    Mr. Majak. I was speaking of chemical. If I misunderstood 
your question--I was speaking of chemical facilities. We don't 
have such detailed information on the number of inspectable 
facilities in the biological area, because we don't know the 
scope of the protocol as well.
    Mr. Shays. Ambassador, I must have been enjoying myself too 
much in Geneva, but I thought we had talked in the thousands. 
What am I mixing up here?
    Mr. Majak. Again, speaking on the commercial side, there 
was a study done 10 years ago, at the outset of this process, 
which tried to estimate how many facilities would have to 
declare certain activities. Not all the declared facilities are 
inspectable, it depends on the volume of their production and 
other considerations.
    The number of companies that actually did declare came in 
considerably below that, we think because there's been quite a 
bit of consolidation in the industry since that study was done. 
Some of them who were producing some of these controlled 
chemicals that they didn't really need commercially have taken 
steps to redesign their process to get out of that production. 
So we ended up with somewhat fewer declared companies that we 
had predicted 8 or 9 years ago.
    Dr. Koch. On the Defense side at this stage, it is quite 
difficult to estimate. So much will depend on the basic rules 
for declaring facilities. And it is one of many reasons that we 
place a high priority on a combination of the kind of activity 
going on and the level of effort to make a facility declarable. 
Because otherwise, for example, on the level of effort, an 
individual university researcher may be doing some relevant 
work. And in our view, and under the U.S. position, would not 
be declarable. But at this stage, it really is very difficult 
to estimate.
    Ambassador Mahley. To clarify where we were a year ago in 
Geneva and where we are, we have not made a definition yet, or 
we have not made a determination yet of what is going to be the 
universe of declared facilities. And therefore, we can't make a 
prediction about how many of those there will be.
    As of a year ago in Geneva, when you were there and we were 
talking about that, it was the case that a number of the 
declaration criteria which were then being put down on the 
floor and being advocated by various countries would have 
included thousands, literally, of U.S. installations. You'll 
recall earlier that I talked about the idea that there was a 
real difference between chemistry and biology here, in the 
sense that by getting schedule 1 and schedule 2, all of the 
firms that are involved in that, you've pretty much got the 
entire universe of those most relevant facilities to chemical 
weapons.
    In biology, there is no such getting the entire universe. 
Because if you try to take all the places that have 50 liter or 
more fermenters, then you would indeed have thousands of 
facilities in the United States. In Iraq, they had a big 
biological weapons program that used principally 50 liter 
fermenters. So the issue is there.
    So you're going to have to get some subset of that. What 
that subset will be and therefore the number of facilities that 
would end up being declared in the United States is unknown.
    And I would add just one more point. In the currently 
envisioned regime, we would not have, even under the most 
aggressive proposals, routine inspections of all declared 
facilities. There would be some sort of a sampling of declared 
facilities. So the inspection liability from the United States 
under the worst possible case would be considerably lower than 
those that we have in the Chemical Weapons Convention.
    Mr. Shays. A deterrent from robbing a bank is that if 
you're caught, you might end up going to jail. What's the 
deterrent if you make a chemical or biological agent?
    Ambassador Mahley. First of all, in terms of the deterrents 
of making a chemical or biological agent, I would point out 
that we have domestic legislation which is fairly stiff in 
terms of doing those sorts of things. Internationally, if you 
as a country got caught either in the Chemical Weapons 
Convention, or as now proposed in the Biological Weapons 
Convention, making an illicit weapon, you could be subject to 
some trade restrictions or sanctions.
    You could be refereed to the United Nations Security 
Council for whatever action the United Nations Security Council 
wishes to take against it, and you certainly would lose your 
privileges of voting or participation in the executive council 
in the organization.
    Mr. Shays. You all have been wonderful witnesses. I have 
about 7 minutes to get to vote, but I always like to ask the 
question, what was the question you were prepared to answer 
that you wish I had asked? Any question or final comment? Is 
there a question I should have asked? Maybe you weren't even 
prepared, that needs to be on the record. Is there any? Any 
closing comments?
    [No response.]
    Mr. Shays. Well, then, we will adjourn this hearing. Thank 
you all for participating.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional information submitted for the hearing record 
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