VZCZCXYZ0001
OO RUEHWEB

DE RUEHTC #0549/01 2541759
ZNR UUUUU ZZH
O 111759Z SEP 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3240
INFO RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHMFIUU/DTRA ALEX WASHINGTON DC//OSAC PRIORITY

UNCLAS THE HAGUE 000549 
 
SENSITIVE 
SIPDIS 
 
STATE FOR ISN/CB, VCI/CCA, L/NPV, IO/MPR 
SECDEF FOR OSD/GSA/CN,CP> 
JOINT STAFF FOR DD PMA-A FOR WTC 
COMMERCE FOR BIS (BROWN, DENYER AND CRISTOFARO) 
NSC FOR LUTES 
WINPAC FOR WALTER 
 
E.O. 12958: N/A 
TAGS: PARM PREL EIND CWC
SUBJECT: CWC: INDUSTRY CLUSTER MEETINGS, SEPTEMBER  8, 2009 
 
REF: A. FERGUSON-ISN/CWC-DEL EMAIL (09/04/09) 
     ¶B. STATE 89818 
     ¶C. THE HAGUE 436 
     ¶D. THE HAGUE 244 
     ¶E. 2A/2A* FACILITATOR'S DRAFT DECISION (07/08/09) 
 
This is CWC-51-09 
 
¶1. (U) SUMMARY:  There were meetings on September 8 
of the two ongoing Industry Cluster consultations. 
The consultation on enhancements to declarations 
for other chemical production facilities (OCPFs), 
facilitated by South African Delegate Marthinus van 
Schalkwyk, was uneventful and made no progress on 
reaching agreement on the issue.  The consultation 
on low concentrations for Schedule 2A/2A* 
chemicals, facilitated by Italian Delegate Giuseppe 
Cornacchia, also ran as expected until the Canadian 
Delegation made a surprising last-minute proposal 
that could mean future progress.  Cornacchia 
scheduled his next consultation for October 6 to 
give delegations sufficient time to react to the 
Canadian proposal.  END SUMMARY. 
 
------------------------- 
2A/2A* LOW CONCENTRATIONS 
------------------------- 
 
¶2. (SBU) Prior to the consultation, Delreps met 
with the Japanese and UK delegations, per refs A 
and B.  Kanji Iwata, Deputy Director of the CW 
Control Policy Office in the Japanese Ministry of 
Economy, Trade and Industry (METI), reiterated the 
reasoning behind his "Road Map" proposal, which is 
to have a clear explanation of the process in the 
end to facilitate discussions with their industry. 
Delrep assured Iwata that many States Parties would 
need to have such a discussion with their industry 
and that this could be done through the 
facilitator's current process.  The Japanese 
Delegation seemed willing to step back from their 
proposal if the response in the consultation 
indicated preference for a different direction. 
The UK Delegation confirmed their preference for no 
decision on the issue rather than one that may 
weaken the Convention.  UK Delegate Karen 
Wolstenholme said that a decision had been made at 
the ministerial level not to accept a decision 
which would create an unlevel playing field and 
disadvantage UK industry.  The UK Delegation raised 
the former facilitator's 2006 proposal (combination 
of quantity and concentration thresholds) and asked 
if something similar might now be acceptable to the 
United States.  Delreps reviewed the general areas 
of concern in light of our legislative constraints 
but noted that, considering the information 
recently gathered about U.S. industry, we would be 
willing to review the 2006 approach again.  When 
asked, the UK Delegation said they were not yet 
ready to make such a proposal to the wider 
consultation audience. 
 
¶3. (SBU) As an introduction to the consultation, 
Facilitator Giuseppe Cornacchia (Italy) reminded 
delegations of the "Road Map" the Japanese 
Delegation had offered at an earlier meeting (refs 
C and D) and asked the Japanese Delegation to 
explain it further.  Iwata acknowledged that he had 
not made a good explanation previously; however, 
his attempt to improve upon that during this 
consultation was only marginally better.  Iwata 
questioned some of the generally-held assumptions 
about the risk of Schedule 2A/2A* sites and the 
Qabout the risk of Schedule 2A/2A* sites and the 
need for "visibility"; he discussed various 
scenarios and the relative risk associated with 
them; he stated that there must be some "optimal 
point" at which these concerns can be addressed; 
and, he spoke to the decision process and its 
schedule.  In the end, no delegation responded in 
favor of the Japanese proposal, and the facilitator 
took this as a sign to put it aside and move on 
with his process. 
 
¶4. (U) Cornacchia next addressed the recent Russian 
proposal to consider the three Schedule 2A/2A* 
chemicals separately (ref C), and he again put the 
Russian Delegation on the spot to explain more 
fully their proposal.  The Russian Delegation 
explained that they had only proposed this as a 
potential time-saving measure, as they felt that 
delegations were ready to support previously 
discussed levels for BZ and Amiton and could later 
spend the required time to reach consensus on PFIB. 
Those delegations who responded to this Russian 
proposal were in favor of a unified approach to the 
three chemicals, particularly in light of the 
current effort being a regulatory or political 
solution, rather than technical.  In response to a 
question, the Technical Secretariat (TS) stated 
that, to their knowledge, all States Parties who 
have a Schedule 2A/2A* threshold in their 
legislation/regulations currently have a unified 
threshold for all three chemicals. 
 
¶5. (SBU) South African Delegate Marthinus van 
Schalkwyk made several interventions in which he 
insinuated a linkage between this solution and 
inspection numbers for other chemical production 
facilities (OCPFs) in the upcoming budget 
consultations.  Van Schalkwyk questioned why a 
"section of the room" that is vocal about non- 
proliferation and "safety and security" cannot come 
to a solution to this problem.  He asked what these 
countries were afraid of, if the number of 
additional declarations and inspections represented 
a trivially minor increase.  Delrep was the only 
voice to challenge van Schalkwyk's comments, 
stating that the United States has no fear of 
verification of U.S. industry generating PFIB, 
although the numbers are very small.  (Del Comment: 
During his intervention, van Schalkwyk stated South 
Africa's current regulatory threshold is 10%. 
After the consultation, he told Delrep that they 
could make a change to their regulations but do not 
feel that a lower threshold is absolutely 
necessary.  End Comment.) 
 
¶6. (U) Near the end of the consultation, after the 
TS had addressed a number of delegations' 
questions, the Canadian Delegation made a surprise 
last-minute proposal.  Working from the 
facilitator's draft decision (ref E), the Canadian 
Delegate proposed the following text as the first 
operative paragraph: 
 
"Declarations are not required under Part VII of 
the Verification Annex for mixtures of chemicals 
containing 10% or less of a Schedule 2A or Schedule 
2A* chemical provided the annual amount produced, 
processed or consumed is less than the relevant 
verification thresholds in Part VII of the 
Verification Annex." 
 
¶7. (U) While most delegations thanked the Canadian 
Delegation for offering a constructive proposal, 
all said that they would need to seek guidance from 
their capitals.  Some delegations said this would 
be a "quantum leap" for them (e.g., India and 
Ireland), noting the shift from 1% to 10%.  France 
spoke to the potential difficulty to reflect the 
Qspoke to the potential difficulty to reflect the 
proposal's provisions is their regulations.  In the 
end, Cornacchia announced his intention to meet 
again on October 6, and he insisted that 
delegations provide him with their reactions as far 
in advance of the next meeting as possible. 
¶8. (SBU) Following the consultations, Delreps met 
with Cornacchia to discuss initial reactions to the 
Canadian proposal.  Cornacchia told Delreps that he 
has spoken to a range of delegations (including 
Iran, Germany, France and Japan) and is optimistic 
that key players will accept the Canadian proposal. 
He intends to contact delegations within two weeks 
to gauge reactions with a view to moving toward a 
decision by EC-58 (October 13-16).  Cornacchia said 
that, if agreement is not reached by EC-58, he will 
continue intensive consultations between then and 
the Conference in early December. 
 
¶9. (SBU) COMMENT:  In light of the next meeting on 
October 6, as well as expected discussions during 
the upcoming meetings in Berlin (ref B), the need 
for a quick analysis of the Canadian proposal and 
its implications is needed.  To that end, the 
following brief analysis is offered.  As a result 
of the recent industry survey, we now know that, in 
addition to the U.S. plant site (PFIB) that is 
currently declared, another U.S. plant site (also 
PFIB) would be required to declare at a 
concentration threshold as high as 10%.  We know of 
no plant sites that are producing Amiton or BZ nor 
of any other PFIB-producing plant sites would be 
captured at any lower concentration threshold. 
With that in mind, the current Canadian proposal is 
effective in requiring declarations for the two 
known PFIB plant sites at the concentration level 
that has been reflected in U.S. guidance for some 
time now: 10%.  The regulatory change to address 
these declarations at the 10%-level also would be 
fairly simple.  However, there is a theoretical 
danger in accepting this proposal and making this 
simple regulatory change without a broader 
legislative change.  If a new plant site were to 
appear in the future that produced PFIB at some low 
concentration level (i.e., below 10%) and at 
quantities above the verification threshold, they 
could avoid declaration consistent with our 
regulatory change but inconsistent with the letter 
of the draft decision.  This eventuality seems 
extremely unlikely, given the continual shrinking 
of the U.S. fluoropolymer industry and the 
likelihood that Asia will continue to be the focus 
of future growth of this industry.  However, the 
legal and regulatory ramifications need to be 
examined and potentially addressed with close 
allies before moving forward.  END COMMENT. 
 
--------------------------- 
ENHANCING OCPF DECLARATIONS 
--------------------------- 
 
¶10. (SBU) After Facilitator Marthinus van Schalkwyk 
(South Africa) gave a brief introduction to open 
the meeting, TS Senior Industry Officer Peter 
Boehme made a presentation giving an overview of 
the R-factor and the A-14 algorithm, followed by a 
presentation on a simulation of the possible global 
effect of applying the R-factor to the TS's current 
site selection methodology for other chemical 
production facilities (OCPFs).  The presentation 
was very thorough but tediously technical and too 
detailed for the audience.  There were very few 
clarifying questions, which only served to 
demonstrate the lack of understanding of many of 
Qdemonstrate the lack of understanding of many of 
the delegates regarding declaration and inspection 
procedures.  Industry Verification Branch Head Bill 
Kane pointed out that these potential declaration 
modifications would allow for better short-term use 
of inspection resources, giving shorter-term 
priority to sites of greater relevance but not 
eliminating any sites from consideration and not 
shortening the number of years it will take to 
visit all OCPF sites.  All of this information 
seemed to play well into the hands of India and 
others who oppose additional declaration 
requirements. 
 
¶11. (U) Van Schalkwyk remains pessimistic about 
progress and did not commit to a next meeting.  He 
pointed to the fact that some States Parties intend 
to provide additional information voluntarily and 
that the TS is free to use it if they like.  India 
reacted strongly to van Schalkwyk's comments, 
referring to them as a "threat", and China noted 
that its position remains unchanged and stated that 
the facilitator is trying to move to a decision too 
quickly.  In closing, van Schalkwyk announced his 
intention to meet with interested delegations 
individually over the next month or two with the 
intention of preparing a proposal paper to include 
a draft decision. 
 
¶12. (U) BEIK SENDS. 
 
GALLAGHER