Editor’s Note: Two external authors are from the two developers contracted to develop the MATCH 2.0 platform. Steve Lipnick, VP of Business Development, at DataTrails, the DLT developer of MATCH 2.0 and Bill Pugh, CEO of True North, which developed MATCH 2.0’s user interface.
By Cindy Vestergaard, Senior Fellow and Director, Converging Technologies and Global Security
MATCH 2.0 reached ‘feature complete’ in August 2024 and is currently being demonstrated to, and live tested by, National Authorities (NAs) to the Chemical Weapons Convention (CWC), industry, the Organisation for the Prohibition of Chemical Weapons (OPCW), and other interested parties. To facilitate demonstrations, the Stimson team has developed an animated video that guides the viewer through several discrepancy-causing “scenarios.” The video above shows the MATCH 2.0 interface and demonstrates how the platform generates reports and declarations at the touch of a button by aggregating user-entered data. The video also shows how MATCH 2.0 generates discrepancy reports from declarations submitted within the system to reduce manual matching and identification of discrepancies.
To explore how MATCH’s capabilities work, testers are encouraged to use both the team’s pre-developed discrepancy-causing “scenarios” and other typical scenarios that they may encounter. The team is collecting feedback on the user experience, functionality, and how the system potentially could be further adapted to different real-world national ecosystems and tested with live data to assist entities and NAs to identify and reconcile transfer discrepancies.
Background
A small subset of the global annual trade in chemicals is covered by the CWC, specifically those substances that pose the highest risk of being used for chemical weapons, known as “Scheduled Chemicals.” Every year, all 193 States Parties to the CWC must declare the aggregate quantities of scheduled chemicals traded above prescribed thresholds. And every year the occurrence of discrepancies in annual declarations remains high. According to the OPCW, 75% of transfers of Schedule 2 and 3 chemicals in 2023 showed discrepancies. Annual declarations for 2019, 2018 and 2017 similarly showed discrepancies in 71%, 69%, and 66% of transfers, respectively.1See: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2020,” p. 13: https://www.opcw.org/sites/default/files/documents/2021/12/c2603%28e%29.pdf. Note: 2018 figures from: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2019,” p. 16: https://www.opcw.org/sites/default/files/documents/2021/04/c2504%28e%29.pdf. 2017 figures from: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2018,” p. 8: https://www.opcw.org/sites/default/files/documents/2019/12/c2404%28e%29.pdf.
Since 2021, The Stimson Center’s Monitoring and Tracking Chemicals (MATCH) project has been developing and testing distributed ledger technology (DLT) as a tool for recording transfers of Scheduled chemicals as they are exported and imported. The project has explored DLT’s ability to streamline reporting and assist in the reconciliation of transfer discrepancies through participants’ sharing of a single, authoritative, digital ledger, even as it ensures industry and NA data confidentiality. MATCH 1.0 was a small-scale demonstration with development and testing phases completed in spring 2023. MATCH 2.0 has been underway since August 2023. In January 2024, Stimson partnered with DataTrails, a next-generation distributed ledger technology company, and True North, a software services company, and in August 2024, MATCH 2.0 reached ‘feature complete,’ with the project transitioning to the demonstration and live testing stage.
Both MATCH 1.0 and 2.0 are based on real-world data flows but involve a fictional ecosystem of chemical industry “entities”, NAs, and a ‘World Authority.’ The fictional nature of the ecosystem allows a neutral space for testing by National Authorities and industry. MATCH 2.0 features a scaled up fictional world with a larger number of chemicals than MATCH 1.0 (49 versus 4), a larger number and broader variety of system participants, and a wider range of scenarios for testing. MATCH is developed with financial contribution by Global Affairs Canada’s Weapons Threat Reduction Program.
How We Built It
Stimson worked closely with DataTrails and True North to design and build the enhanced MATCH 2.0 platform for monitoring and tracking the international chemical trade regulated by the CWC. DataTrails supplied the backbone technology providing fast and efficient data provenance, transparency, and security that enables MATCH’s entities to create and exchange tamper-proof transaction records in a frictionless manner. This solution creates detailed audit trails that allow for discrepancy identification and verification at the transaction level, resulting in a more scalable and accurate monitoring process.
Forestrie is DataTrails’ patented high performance, scalable DLT built to meet the needs of sophisticated supply chains requiring increased transparency and security. Faster, more scalable, and more cost-effective than traditional blockchain solutions, Forestrie uses Merkle trees to create a more energy efficient, tamper-evident ledger, enhancing supply chain resiliency by providing a verifiable, chronological sequence of activities. Merkle trees are essentially the coupling of digital fingerprints (known as hashes) that are attached to each piece of data to create new fingerprints for those pairs, linking up the tree until one final fingerprint is left at the top, called the root hash. In Forestrie, every event gets its own entry as a ‘leaf’ of the tree and is individually, and independently verifiable and provable. Along with cybersecurity technologies, Forestrie makes it impossible to forge, back-date, or shred data.
TrueNorth’s development team worked with Stimson and DataTrails on a series of use cases that mapped to a workflow expected in a real-world operation. From that base, the team built in services to make MATCH intuitive and reduce the friction of manual processes, automating as much as possible to create an experience that is clean and operator friendly. The TrueNorth development team ensured the following features were built into the MATCH interface:
- A rules engine that ensures no errant reporting.
- Creation and delivery of reports that are traceable and in line with the ledger.
- Access controls that only allow entities to see their own actions and reports.
The result is a product that, behind the scenes, delivers on the provenance, governance and immutability that Forestrie brings to bear.
What We’ve Learned So far
Responses to questionnaires and interviews with NAs during MATCH 2.0 documented many of the same causes for transfer discrepancies noted during the research for MATCH 1.0, as well as some new ones. Simple typos, such as misplaced decimal points, and incorrect units of measurement or errors in identifying the country of origin can easily result in mismatches of quantities reported by trade partners in different countries to their National Authorities. Small discrepancies are then magnified when aggregated by NAs, potentially leading to more significant discrepancies in each country’s annual declaration to the Organisation for the Prohibition of Chemical Weapons (OPCW). NAs are often unaware of discrepancies until they are notified by the OPCW Technical Secretariat that the aggregated quantities declared do not match those recorded in the annual declarations of other States Parties.
Along with common clerical and other errors, the high occurrence of transfer discrepancies is largely the result of a lack of harmonization in CWC implementing legislation and regulation of chemical transfers across States Parties. Inconsistent implementation of the CWC across different States Parties manifests in a variety of ways, from the application of different concentration or quantity thresholds for reporting a transfer to the use of different rounding rules. National Authorities interviewed for MATCH 2.0 additionally identified “back-to-back transfers,” which can involve multiple countries, as a significant cause of transfer discrepancies when some companies report imports and exports based on the location of parties to the relevant contracts, financial flows, or transit countries, and others report imports and exports based on the physical start and end points of imports and exports (as the OPCW Declarations Handbook requires). For other NAs that base declarations to the OPCW on permits issued, shipments cancelled after permits are granted present reporting headaches as cancellations are not always recorded in the system and are therefore difficult to track.
Customs unions present a unique set of issues. Transfers of chemicals within a customs union do not need to be declared to customs, resulting in some commercial entities mistakenly treating them as domestic transfers and not reporting them. However, the CWC requires reporting of transfers across national borders, regardless of customs unions. MATCH 2.0 includes a scenario of chemicals transferred through a fictional customs union where some entities are not aware that transfers through a customs union are subject to CWC reporting requirements and therefore may contribute to a national aggregate that the NA must declare.
The research team learned that NAs vary in their relationships with customs and licensing authorities and their access to relevant data which could help resolve discrepancies. For example, NAs in some countries are responsible for the licensing process for trading scheduled chemicals and can therefore compare permits with industry reports. In some cases, the CWC National Authority is the Customs Authority and can use import and export declarations to crosscheck industry-reported country of origin, country of destination, and other relevant data. In other cases, NAs have data-sharing agreements to access customs data while still other NAs report that customs is a “black box.” Given the wide variations in the real-world role of customs with NAs, the project team decided that the fictional customs participant in MATCH 2.0 should function as a pass-through only, clearing trade transactions in every test scenario. Although the process of handling a denial could not be made generic or simple enough to demonstrate in MATCH’s fictional world, a follow-on MATCH prototype built specifically for the “real world” can be tailored to actual data flows across industry and government stakeholders in each country using access policies baked into the DLT platform.
Retroactively uncovering discrepancies in industry declarations is currently a difficult and time-consuming process for national CWC authorities. The diplomatic routing from one NA to other NAs can be tedious and slow, and in some cases no response is ever received. NAs that have established direct connections with their counterparts have a smoother, more timely process. When there is a transfer discrepancy with a country that is a new relationship, there can be difficulties in even identifying the NA counterpart, and their correct contact information. MATCH 2.0 will not remove the need for NAs to communicate, but it will help their communication by providing an audit trail that enable NAs and entities to locate specific transactions and their trade details. It will help mitigate (but not entirely alleviate) some of the common typos made by humans. It can help reconcile transfers across countries that have different concentration or quantity thresholds, and different rounding rules that are also known to create discrepancies.
Regardless of the cause, discrepancies in States Parties’ annual declarations ultimately represent the risk that quantities of dual-use chemicals are unaccounted for and could potentially have been diverted for use as chemical weapons, making reconciliation of the discrepancies an important task. A multiparty, authoritative distributed ledger such as MATCH to provide traceable audit trails for more efficient and effective reconciliation would likely benefit countries where back-to-back transfers and patchy industry understanding of reporting requirements lead to transfer discrepancies, while the case of permit-based reporting and cancelled shipments could be addressed by enhancing legislation to include broader data-sharing arrangements between customs, permitting, and CWC National Authorities. MATCH 2.0 offers the testing ground for these scenarios, providing insight on how DLT can make reconciliation faster, as well as how it could enable entities to share information at the transaction level, flagging discrepancies before aggregated and reported to NAs.
Notes
- 1See: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2020,” p. 13: https://www.opcw.org/sites/default/files/documents/2021/12/c2603%28e%29.pdf. Note: 2018 figures from: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2019,” p. 16: https://www.opcw.org/sites/default/files/documents/2021/04/c2504%28e%29.pdf. 2017 figures from: OPCW, “Report of the OPCW on the Implementation of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction in 2018,” p. 8: https://www.opcw.org/sites/default/files/documents/2019/12/c2404%28e%29.pdf.
