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U.S. DEPARTMENT OF STATE
INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT
MARCH 1996

United States Department of State

Bureau for International Narcotics and Law Enforcement Affairs


CHEMICAL CONTROLS

Introduction

Perhaps no element of a comprehensive counternarcotics strategy has more potential than chemical control. At the same time, perhaps none is more difficult to implement. The concept is simple. Synthetic drugs, heroin and cocaine all require chemicals for their manufacture or refining. The chemicals used for these purposes are manufactured in legitimate commerce and then diverted to the illicit production of drugs. A system of controls, implemented by national laws and regulations, to prevent the crossover of chemicals from legitimate commerce to clandestine drug manufacture would deny traffickers raw materials indispensable for drug production.

Chemical control has been internationally accepted. Article 12 of the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988 UN Convention) establishes the obligation for parties to the treaty to control their chemical commerce to prevent diversion to illicit drug manufacture. The annexes to the Convention list 22 chemicals as those most necessary to drug manufacture and, therefore, subject to control.

The Chemical Action Task Force (CATF), mandated by the Group of Seven Industrialized Nations and chaired by the U.S., developed practical recommendations for governments to consider in enacting national laws and regulations to comply with the chemical control obligations of Article 12. The CATF noted that international cooperation between enforcement and regulatory agencies is essential to the effective implementation of the national laws and regulation. Information exchange to verify the legitimate end-use of proposed transactions in regulated chemicals is the key element of this cooperation.

Chemical control is complicated by the nature of the chemicals involved and, in many cases, their availability from many sources. Precursor chemicals are those used in the manufacture of synthetic drugs. The become part of the final product, such as amphetamines for which ephedrine is major ingredient.

Ephedrine and ten other precursors listed in Annex 1 of the 1988 UN Convention are targetted for international control under the convention. Many of these precursors are traded in relatively small, pharmaceutical- size consignments, and are controlled by many governments as pharmaceuticals. However, the quantities needed to manufacture significant volumes of illicit synthetic drugs are only a small percentage of this limited legitimate commerce, complicating the regulatory process.

Essential chemicals are used in the refining of coca leaf into cocaine and crack and opium into morphine and heroin. They are generally widely used industrial chemicals, such as sulfuric acid and acetic anhydride, traded internationally in large quantities. They are manufactured and traded by many countries. The 11 essential chemicals most important to illicit drug manufacture are listed in Annex 2 of the 1988 UN Convention and targetted for international control. Although coca and opium refining requires significant quantities of essential chemicals, as with precursor chemicals, this is a small percentage of the vast international commerce in essential chemicals.

Transactions in chemicals liable to diversion represent a relatively small market for major chemical manufacturers and traders. The U.S. experience in the administration of the U.S. chemical control law, the Chemical Diversion and Trafficking Act, demonstrates that they will cooperate with a well-administered regulatory and licensing regime that imposes a limited administrative burden and does not compromise commercial confidentiality. They also can assist enforcement authorities by flagging suspicious transactions such as those involving cash payments, new and unknown customers, unusual delivery requests, etc.

The size and complexity of international commerce in chemicals, however, facilitates the evasion of control by illicit, or less conscientious, operators, frequently brokers.

Diversion Methods

The four most common diversion methods are:

1. Chemicals are diverted to illicit drug manufacture from domestic chemical production. This requires the capacity to manufacture the needed chemicals coupled with poor domestic controls on them. It is more common in synthetic drug manufacture which requires only chemicals. Cocaine and heroin type drugs also require coca and opium as essential raw materials.

2. Chemicals are imported legally into the drug-producing country with a valid import license and subsequently diverted. In this case, the importing country does not adequately investigate the legitimate end-use of the chemicals before issuing the import license, and the exporting country makes no independent effort to ensure legitimate end-use, accepting the import license at face value.

3. Chemicals are imported into a neighboring country, diverted, and smuggled into the drug-producing country. This occurs because the conduit countries do not adequately investigate legitimate end-use before authorizing imports, nor do chemical source countries ensure the legitimate end-use of regulated chemicals before authorizing shipment.

4. Chemicals are manufactured in one country, diverted from domestic commerce, and smuggled into neighboring drug-producing countries. Inadequate internal controls and weak border security make this type of diversion possible.

All these methods are embellished by the use of front companies, false invoicing, mis-labelling, use of free trade areas, multiple trans- shipments, bribery, and any other device that will conceal the ultimate recipient. Also, as authorities implement measures to prevent diversion by one method or from one source, traffickers react by shifting among diversion methods and source countries. Smuggling is now increasing as international cooperation among enforcement authorities enhances the effectiveness of controls over import and export transactions.

Recycling of solvents, particularly by cocaine traffickers, is another tactic used by traffickers to overcome chemical controls. The process involves distilling (boiling) the solvents away from the waste byproducts in them resulting from their use in cocaine production. According to DEA tests, by using fractionization towers or distillers, traffickers can separate and recover up to 80 percent of the solvents used in the production process. Solvents can be recycled five to seven times by relatively simple distillation techniques. The extent of recycling is unknown, but it cannot be utilized until the chemicals to be recycled have been diverted using one of the methods noted above.

1995 Chemical Control Developments

By 1995, most major chemical and drug producing countries had chemical control laws and regulations on the books adequate to meet the chemical control obligations of the 1988 UN Convention. In some cases not all 22 chemical listed in the convention were regulated, but the chemicals most pertinent for each country were covered. Since many of these laws and regulations were based on the recommendations of the CATF, they were compatible, thereby facilitating international cooperation, a key CATF objective.

The need for international cooperation, most importantly information exchange, became more apparent in 1995 as individual control regimes became more efficient and traffickers were forced to seek alternative sources of supply. To preclude this, information on proposed transactions needs to be shared among enforcement authorities so "shoppers" can be identified and thwarted. However, there is a reluctance on the part of many governments to share information on proposed transactions except with the importing government which would be aware of the transactions through its import control procedures.

In pursuing an export, no crime has been committed by the exporter; the purpose of sharing information on proposed transactions with other governments is to tap the experience of others to assist the exporting or importing government in determining the legitimacy of the transaction. The vast majority of transactions are innocent, and in highly competitive international chemical commerce, exporters do not want the confidentiality of their transactions compromised by sharing with third parties. Some governments have laws precluded sharing information received as part of a regulatory process.

During 1995, at the policy level, we continued to urge adoption of chemical control regimes by governments that do not have them, and wider and more effective international cooperation in their implementation by those that do. Concurrently, at the enforcement level, we continued to strengthen cooperation and communication among enforcement agencies. These efforts are mutually supportive: policy level direction to enforcement agencies improves cooperation among them, and improved cooperation among enforcement agencies, whether directed or self- initiated, demonstrates that cooperation is possible without compromising legitimate commercial interests.

In September 1995, DEA, with financial and administrative support from the European Commission and with the cooperation of the Turkish Government, held a major chemical control conference in Istanbul. Delegations from 22 Middle Eastern, Balkan, European, Central and South Asian countries attended. The purpose was twofold: to impress upon the new governments of Central Asia to need to adopt chemical control regimes in conformity with international standards, and to improve cooperation among all the participating enforcement agencies. It is too early to assess the long-term results of the conference, but shortly thereafter a DEA team visited Tajikistan, one of the participating governments, to find a government receptive and eager for effective law enforcement cooperation.

In December 1995, the European Union on behalf of its member states, signed chemical control agreements with Bolivia, Colombia, Ecuador, Peru, and Venezuela, to improve cooperation and communication between governments to ensure the legitimate end-use of proposed transactions in regulated chemicals. Engaging major European chemical producing and trading countries in chemical control directly with their Latin American trading partners was an objective spelled out in the interagency U.S. Strategy To Control the Diversion of Drug-Essential Chemicals approved in 1994.

International cooperation among enforcement agencies also improved, particularly when it was directed at specific, identifiable cases of diversion. For example, Indian authorities moved quickly to effectively control commerce in Indian-manufactured ephedrine and pseudoehedrine when it was demonstrated that it was being routed through Guatemala and Mexico to methamphetamine labs in California. The Indian Government now notifies DEA of every export of ephedrine and pseudoephedrine, and DEA is able to research its data banks and advise the Indian authorities of possible risks of diversion regardless of the recipient country.

Cooperation between US and German enforcement authorities is also good. In 1995, it resulted in the suspension of several large shipments of ephedrine and essential chemicals intended for Central and South America. Czech and Swiss authorities have also been quick to react when presented with evidence of diversion from shipments originating or transshipping these countries.

Our goal is to continue and expand the ad hoc cooperation until sharing of information on proposed transactions in regulated chemicals is routine. We need to demonstrate that all sources of information need to be queried, not only those in the exporting and importing countries, and that information sharing can occur without jeopardizing commercial confidentiality.

With this objective, we proposed to the Dublin Group in October 1995 a meeting of chemical control experts from interested governments to consider practical measures to improve cooperation, particularly, information sharing. The meeting will seek to identify the most important items of information that need to be shared, the means of protecting and transmitting the information, and the procedures and extent to which governments can participate in such as system while respecting their national information protection laws.

Is chemical control worth the effort? Drug trafficking is a clandestine enterprise, and hard facts on the impact of chemical control are difficult to obtain. However, there have been some reports. In the summer of 1995, before India's stricter controls were fully in place, a ton of ephedrine could be purchased on the black market for approximately $54,000; in December 1995, the same amount was demanding a price of approximately $80,000. Acetic anhydride prices in Pakistan are reportedly going up because of improved Indian controls over diversion and smmuggling from its domestic production. Our Embassy in Lima, Peru reports that diminished availability and increased prices of essential chemicals due to enforcement efforts appears to have contributed to a severe reduction in the earnings of coca farmers (who as the primary coca leaf processors are the main consumers chemicals essential to cocaine base processing).

These results, which indicate greater difficulty and expense for traffickers in manufacturing drugs, were obtained largely through regulatory measures involving fewer personnel and much less risk to them than more traditional law measures directed at stopping the drugs after they are manufactured. Despite the difficulties of implementation, chemical control is contributing now to our comprehensive drug control strategy, and has the potential to make a greater, cost-effective contribution as the national control regimes of other governments become more effective and international cooperation evolves and improves.

COUNTRY REPORTS

Country reports have been prepared on the major source countries for chemicals used in the manufacture of illicit narcotics. The countries in this section are those with large chemical manufacturing and trading industries that have significant chemical trade with drug-producing regions, and those considered to be sources of chemicals diverted from domestic commerce for local illicit drug manufacture or smuggling into neighboring drug-manufacturing countries. Many other countries manufacture and trade in precursor and essential chemicals, some of which are diverted to illicit drug manufacture, but they are not now considered major source countries. These designations are reviewed annually.

Because of the important role drug-manufacturing countries have in narcotics chemical control, a separate section summarizes the status in countries relying on chemical diversion for the significant manufacture of cocaine and heroin.

The 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988 UN Convention) is the major agreement for international cooperation in chemical diversion control. It includes provisions for maintaining records of transactions in the 22 precursor and essential chemicals listed Annexes 1 and 2 of the Convention.

Major Chemical Source Countries

Major Cocaine and Heroin Producing Countries with Significant Chemical Diversion

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