U.S. GOVERNMENT PRINTING OFFICE

74–704 DTP WASHINGTON : 2001

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

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

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

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

DAVID M. MCINTOSH, Indiana

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

HELEN CHENOWETH-HAGE, Idaho

ROD R. BLAGOJEVICH, Illinois

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

JOHN F. TIERNEY, Massachusetts

THOMAS H. ALLEN, Maine

EDOLPHUS TOWNS, New York

BERNARD SANDERS, Vermont

(Independent)

JANICE D. SCHAKOWSKY, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

JASON CHUNG, Clerk

DAVID RAPALLO, Minority Counsel

(III)

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

(1)

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 conVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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tained 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

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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.

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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 counVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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tries 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

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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 dualuse 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.

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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 furVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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ther 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.

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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.

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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.

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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

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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.

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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

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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.

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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 stockVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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piles 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 instalVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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lation 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.

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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.

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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.

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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 capVerDate 11-MAY-2000 10:50 Sep 24, 2001 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6633 C:\DOCS\74704.TXT HGOVREF1 PsN: HGOVREF1
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ture 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

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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

67

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.

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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 likeminded 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.

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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

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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.

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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

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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?

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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.

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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 follows:]

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