mcgoldrick_nucleartrade

7/29/2019 McGoldrick_NuclearTrade

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Fred McGoldrick

AuthorJanuary 2013

a report of the

csis proliferation

prevention program

Nuclear Trade Controlsminding the gaps

CHARTING

our future


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Fred McGoldrick

AuthorJanuary 2013

a report of the

csis proliferation

prevention program

Nuclear Trade Controlsminding the gaps

CHARTING

our future


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2

About CSIS50th Anniversary Year

For 50 years, the Center or Strategic and International Studies (CSIS) has developed solutionsto the worlds greatest policy challenges. As we celebrate this milestone, CSIS scholars are develop-ing strategic insights and bipartisan policy solutions to help decisionmakers chart a course towarda better world.

CSIS is a nonprot organization headquartered in Washington, D.C. Te Centers 220 ull-time sta and large network o aliated scholars conduct research and analysis and develop policyinitiatives that look into the uture and anticipate change.

Founded at the height o the Cold War by David M. Abshire and Admiral Arleigh Burke, CSISwas dedicated to nding ways to sustain American prominence and prosperity as a orce or goodin the world. Since 1962, CSIS has become one o the worlds preeminent international institutionsocused on deense and security; regional stability; and transnational challenges ranging rom en-ergy and climate to global health and economic integration.

Former U.S. senator Sam Nunn has chaired the CSIS Board o rustees since 1999. Formerdeputy secretary o deense John J. Hamre became the Centers president and chie executive o-cer in April 2000.

CSIS does not take specic policy positions; accordingly, all views expressed herein should beunderstood to be solely those o the author(s).

Cover photo: aken rom Fairport Harbor o the nuclear power plants in the distance in Perry,Ohio. Credit: Scott Smithson, 2010. www.fickr.com/photos/dtwpuck/sets/72157622671484328/

2013 by the Center or Strategic and International Studies. All rights reserved.

ISBN 978-0-89206-762-6

Center or Strategic and International Studies

1800 K Street, NW, Washington, DC 20006

el: (202) 887-0200

Fax: (202) 775-3199

Web: www.csis.org


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contents

Acknwegments iv

Eecutie Summar v

1 Intructin 1

2 Nnpriferatin Cntrs an Guarantees: A Cmparisn 7

Peaceful, Nonexplosive Use Guarantees 10

Safeguards 13

Physical Protection 23

Transfers of Sensitive Nuclear Technology 26

Exports of Weapons-Usable Materials 30

Prior Consent Rights 32

Retroactivity of Nonproliferation Conditions 42

Perpetuity of Nonproliferation Controls 43

Dual-Use Export Controls 44

Catch-All Controls 46

Termination of Nuclear Cooperation 47

Right of Return 50

3 Agena fr te Future 52

4 Te Re f te Unite States 59

Appeni 63

Aut te Autr 65


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acknowledgments

Te author would like to acknowledge Sharon Squassoni, director o the Prolieration PreventionProgram, or commissioning this report and providing many helpul comments on the text, andLeah Fae Cochran or her help putting the nal product together. Tis report was made possibleby the generous support o the John D. and Catherine . MacArthur Foundation.


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he merits o nuclear trade controls or helping stem prolieration have been strenuously de-bated or decades. Some have maintained that the policy o secrecy and denial that the UnitedStates pursued in the aermath o Hiroshima and Nagasaki was a ailure and that, instead, sharingthe peaceul benets o nuclear energy under nonprolieration controls and conditions has helpedbuild key elements o the global regime to prevent the spread o nuclear weapons. Others arguethat international nuclear trade increases the risk o nuclear-weapons prolieration. Te rst viewhighlights a countrys motives or acquiring nuclear weapons such as national security concerns,

domestic politics, or national prestige and emphasizes providing security assurances and buildingnorms, rules, and institutions to discourage the spread o these weapons. Te second view stressestechnological capabilities and the likelihood that the diusion o nuclear technology makes pro-lieration more likely. Tis view targets denying countries know-how and equipment. Both view-points have merit, and both need to be taken seriously.

Most o the nine countries that possess nuclear weapons today acquired their nuclear arse-nals primarily through dedicated military programs, clandestine and illegal procurements, anddeliberate assistance rom nuclear-weapon states and not through the diversion o imported civilnuclear materials and equipment subject to nonprolieration controls. Most civil nuclear programsare peaceul in nature, and the vast majority o states with such programs are abiding by theirnonprolieration commitments. Suppliers have employed their nuclear trade policies as a means

o establishing the widely accepted principle that states wishing to take advantage o the peaceulapplications o nuclear energy must make eective commitments not to misuse that technologyor nuclear explosive purposes and to accept adequate verication o those obligations.

Nevertheless, international peaceul nuclear commerce and assistance carry with them realrisks o diversion to nuclear weapons. Among other things, reactor-grade plutonium producedin nuclear power plants is usable in nuclear weapons; enrichment and reprocessing acilities canproduce weapons-usable nuclear materials that are vulnerable to diversion by both states andsubnational actors to build nuclear explosives; and reprocessing plants are dicult and expensiveto saeguard. In addition, states can tryand have triedto use peaceul nuclear cooperation asa means o acquiring skills or developing nuclear weapons. Nuclear-weapon aspirants have also

justied imports or their peaceul nuclear programs as a cover or developing a nuclear-weaponscapability. Some nuclear suppliers, particularly in the early decades o the nuclear era, exportedsensitive technology with little consideration o its security consequences or provided nuclear as-sistance without adequate controls and assurances.

Wherever one stands on the relative risks and benets o civil nuclear trade, nuclear powerand civil nuclear trade are unlikely to disappear. In act, several recent reports have projected theircontinued growth and expansion to additional countries. One o the key challenges acing theUnited States and other major nuclear suppliers is to ensure that this projected growth in com-

executive summary


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mercial nuclear power, i actually realized, will not lead to the prolieration o nuclear weapons.Strengthening nonprolieration controls and conditions on peaceul nuclear trade are indispens-able to meeting this challenge.

Tis report has our main elements. First, it explains the nature and importance o the nonpro-lieration conditions that the United States requires or its exports o nuclear materials, equipment,

and technology as well as dual-use items and technology that have both nuclear and nonnuclearapplications. Second, it compares these with the nuclear export controls o other exporting statesas refected in the guidelines o such multilateral arrangements as the Zangger Committee (ZC,the Nuclear Suppliers Group (NSG, and other international agreements and understandings suchas the reaty on the Non-Prolieration o Nuclear Weapons (NP and, where known, the specicexport policies o other individual nuclear-supplier states. Tird, it assesses the limits, weaknesses,successes, and ailures o nuclear export controls o nuclear suppliers to date. Finally, it identiesthe challenges or the uture and the role that the United States should play in meeting them.

Nnpriferatin Cntrs n Peacefu Nucear

CperatinTe United States and other major nuclear suppliers generally require non-nuclear-weapon statesto give assurances and guarantees as a condition o nuclear cooperation. Over time, suppliers havelearned lessonssometimes painullythat they need to insist on unambiguous and comprehen-sive nonprolieration assurances, close loopholes, exercise special restraint and caution in export-ing sensitive materials and technologies, control even some nonnuclear items and technology, anddemand robust and comprehensive inspections as a condition o nuclear supply.

PEACEFUl, NoNExPloSIvE USE ASSURANCES.An essential condition or civil nucleartrade is an assurance by recipient states o peaceul, nonexplosive use. It is also airly uncontro-

versial, because 184 non-nuclear-weapon states (plus aiwan that have ratied the NP havealready undertaken this commitment.Te U.S. Atomic Energy Act (AEA, as amended by theNuclear Non-Prolieration Act o 1978 (NNPA, bans the use o any peaceul nuclear export by theUnited States or any nuclear explosive device, or or research on or development o any nuclearexplosive device, or or any other military purpose. Te prohibition on military uses o exports isnot ound in the NP, the ZC, or the NSG guidelines, but the statute o the International AtomicEnergy Agency (IAEA bans the use o agency assistance rom urthering any military purpose.Te U.S. ban on nuclear explosive use is more specic and comprehensive than the prohibitionsound in the NP (the manuacture or acquisition o nuclear explosives, the ZC (the diversionto nuclear weapons or other nuclear explosives, or the NSG (uses which would result in anynuclear explosive device. However, the dierences in these ormulations do not appear to havehad any practical implications to date.

SAFEGUARdS. Another essential requirement or international nuclear commerce is the appli-cation o saeguards to all nuclear material in a non-nuclear-weapon state, known as comprehen-sive or ull-scope saeguards. (Te NP requires non-nuclear-weapon states to accept such sae-guards on all their peaceul nuclear activities. But other saeguards requirements are also criticallyimportant, including the extension o saeguards beyond the term o a peaceul nuclear coopera-tion agreement or a treaty (known as perpetuity o saeguards; the expansion o the authorityo the IAEA in applying saeguards as set orth in the Additional Protocol to IAEA saeguards


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agreements; a back-up system or IAEA saeguards, or all-back saeguards; and saeguards innuclear-weapon states (which are not required by the NP, are voluntary in nature, and cover onlytheir civil nuclear acilities.

Comprehensive Safeguards. Te NP does not obligate suppliers to impose compre-hensive saeguards as a condition o nuclear supply. Rather, the treaty requires suppliers

to place saeguards only on their exports o nuclear materials and nuclear equipment tononparties to the treaty. A ew suppliers, including the United States and Canada, adoptedcomprehensive saeguards as condition o supply in the late 1970s, but most nuclear ex-porters imposed only the NP requirement until the early 1990s, thus allowing states suchas Argentina, Brazil, and India to obtain nuclear supplies while resisting saeguards on alltheir nuclear activities.

Te NSG adoption in 1993 o comprehensive saeguards as a condition o nuclear supplyto non-nuclear-weapon states harmonized supplier policies and made the requirement orcomprehensive saeguards on exports a general international norm. However, that normhas been seriously undercut by the actions o China, Russia, and the United States. Tenew NSG guideline required comprehensive saeguards only on new nuclear commit-mentsthe so-called grandather clause. It also allowed a saety exception, which permit-ted nuclear exports without the comprehensive saeguards requirement when they weredeemed essential or the sae operation o existing saeguarded acilities. Both Russia andChina cited one or the other or both as justication or their nuclear cooperation withIndia and Pakistan. In addition, the United States concluded an agreement with India thatdid not require comprehensive saeguards and persuaded the NSG to carve out an excep-tion or India rom its comprehensive saeguards guideline.

Perpetuity of Safeguards.Perpetuity o saeguards on nuclear materials ensures that sae-guards continue to apply to nuclear materials even i an agreement expires, is terminated,or is suspended. U.S. law requires that saeguards continue to apply to items subject to a

U.S. agreement even i that agreement terminates or expires or i the cooperating partnerwithdraws rom the NP. Te NSG guidelines call or perpetuity o saeguards, but theydo not apply to supply contracts concluded beore April 3, 1992. Te principle o perpetu-ity o saeguards is now widely accepted international practice among suppliers. However,the NP contains a signicant loophole. I a non-nuclear-weapon state validly withdrawsrom the NP, its saeguards agreement would no longer be in orce. Nevertheless, par-ties to most nuclear-weapon-zone treaties and members o the European Atomic EnergyCommunity (EURAOM) made saeguards commitments that would endure regardlesso their NP membership.

Additional Protocol.Te Additional Protocol (AP expands the IAEAs authority andpractices to gain increased inormation about, and access to, a states nuclear activitiesand greatly enhances its ability to detect illegal, clandestine activities. Te United Stateshas included the AP in some recent agreements. With the entry into orce o the AP inthe U.S. voluntary saeguards agreement with the IAEA in 2009, the United States is nowin a more credible position to insist on the AP in new agreements. Neither the NSG northe 2010 NP Review Conerence has been able to agree on requiring the AP as a condi-


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tion o supply or nuclear items or to declare the AP the IAEA saeguards standard. TeNon-Aligned Movement insists on the voluntary nature o the AP, a stance that is unlikelyto change in the next three years under Irans chairmanship o the group. Nevertheless, aso October 2012, 119 states plus EURAOM and aiwan have an AP in orce. Te AP isgaining acceptance as an international norm, but some important holdouts such as Argen-

tina, Brazil, and Egypt remain.Fall-Back Safeguards.I the IAEA is not applying or cannot apply saeguards in a coun-try or i a state withdraws rom the NP and renounces its NP saeguards agreement,all-back saeguards give the supplier government the right to insist that some other ormo saeguards be applied to the nuclear materials covered by its agreement. U.S. policyrequires all-back saeguards provisions in post-NNPA agreements or peaceul nuclearcooperation. Te NSG has also adopted a guideline on all-back saeguards, but it does notapply to agreements or contracts beore April 3, 1992.o date, no state has implementedany kind o all-back saeguards, but they remain an important instrument in ensuring theperpetuity o verication i the IAEA cannot apply saeguards or i a state renounces itsNP saeguards agreement.

Safeguards in Nuclear-Weapon States.Saeguards on nuclear exports to nuclear-weaponstates are not required by U.S. law, the NP, the ZC, or the NSG. Te United States re-quires some orm o verication in its agreements with nuclear-weapon states, and all theNP nuclear-weapon states have entered into voluntary saeguards agreements with theIAEA that designate acilities as eligible or IAEA saeguards but allow or the withdrawalo such acilities rom saeguards.

PhySICAl PRoTECTIoN. U.S. agreements typically require the application o the criteria setout in the Convention on the Physical Protection o Nuclear Material (CPPNM and the NSGguidelines (which are identical. More recent agreements require the implementation o the IAEA

recommendations contained in INFCIRC/225. Te CPPNM prescribes only very general levelso physical protection and leaves much to the discretion o each government in applying specicmeasures. INFCIRC/225 sets out ar more detailed measures or the security o nuclear materi-als and acilities. While the NSG guidelines take note o the IAEA recommendations, they do notrequire them as a condition o supply. Physical protection is universally regarded as the sovereignresponsibility o a state, and many countries strongly resist a standardized set o measures or anyinternational review o their security systems.

TRANSFERS oF SENSITIvE NUClEAR TEChNoloGy. Suppliers exercise special re-straint in the transer o enrichment and reprocessing because such technologies can producematerials that can be directly used in a nuclear weapon. Virtually all U.S. agreements or peace-ul nuclear cooperation prohibit the transer o these sensitive nuclear technologies under thoseagreements. As a matter o policy, the United States does not export sensitive nuclear technology.U.S. laws also provide or the cuto o economic and military assistance or nuclear exports tocountries that transer or receive enrichment or reprocessing technology.

Te original NSG guidelines called or the exercise o restraint in the export o sensitive nucleartechnology. In June 2011, the NSG adopted a revised guideline that, among other things, limitsthe transer o enrichment and reprocessing only to a state that is in compliance with its nonpro-lieration objectives, is an NP party, and meets agreed standards o saeguards, physical protec-


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tion, and saety. U.S. and NSG policies on such exports go beyond the requirement o the NP,which does not control technology transers. Most other major nuclear-supplier states have notollowed the United States in adopting a declared policy reraining rom transers o sensitivenuclear technology. However,the ew transers o enrichment and reprocessing technology andequipment by major nuclear suppliers have been made to states that already possess such capabili-

ties, and most recent transers involved enrichment technology to the United States. (Clandestineand illicit transers o such technologies by non-NSG membersPakistan and North Koreahavethreatened to undermine the nonprolieration regime. Requiring special controls on transers oenrichment and reprocessing technology and equipment has become standard practice amongmajor nuclear suppliers but has been the subject o heated debate within the NSG, the IAEA Boardo Governors, and the NP Review Conerence. Many non-nuclear-weapon states insist that theyhave rights under the NP to possess such acilities.

ExPoRTS oF WEAPoNS-USAblE MATERIAlS. Te United States does not export plu-tonium or peaceul purposes and has had a long-standing objective o eliminating civil uses ohighly enriched uranium (HEU. In addition, U.S. law imposes special restrictions on HEU ex-ports. Te NSG imposes no explicit ban on exports o plutonium or HEU or civilian purposes butcalls or restraint in the export o weapons-usable materials. Te Declaration o Common Policy othe European Union places requirements on the transer o plutonium and HEU among memberstates. Te Guidelines on the Management o Plutonium (INFCIRC/549 adopted by the majorplutonium holders also contain conditions on the transer and retranser o plutonium.

PRIoR CoNSENT RIGhTS. U.S. agreements or peaceul nuclear cooperation contain aguarantee by the cooperating country that it will not enrich, reprocess, or otherwise alter in ormor content U.S.-obligated nuclear material; store weapons-usable material; or retranser any U.S.-obligated nuclear materials or equipmentwithout the prior approval o the United States.

Te United States gives consent in some agreements to enrich up to 20 percent U-235, while

other agreements require consent or any enrichment. Te NSG guidelines have no provision orconsent to the enrichment o supplied materials, but some suppliers require consent or all en-richment or enrichment above 20 percent. Te United States has exercised its consent rights onreprocessing in dierent ways depending on the political and security relationship it has withits cooperating partners, the status o their civil nuclear programs, their nonprolieration cre-dentials, and the prolieration concerns in the regions in which they are located. For example,during the 1970s, the United States granted consent on a shipment-by-shipment basis to certainstates to transer their spent uel into EURAOM or reprocessing while retaining approvalrights on the urther disposition o the recovered plutonium. In 1977, the United States gavelimited approval to Japan to reprocess a specied amount o spent uel at its okai-Mura repro-cessing plant or two years.

Te U.S. agreements with Norway and the United Arab Emirates (UAE grant advance con-sent on a one-time basis to transer U.S.-obligated spent uel rom these countries to EURAOMor reprocessing but retain consent rights over any subsequent disposition o the recovered pluto-nium and uranium. Te United States grants so-called programmatic consent to reprocessing andthe subsequent disposition o recovered plutonium in its agreements with Japan and EURAOM,i.e., consent covering the entire civil nuclear program o these states. U.S. agreements with Japanand Switzerland provide consent to transer U.S.-obligated spent uel to EURAOM or repro-cessing and the return o the recovered plutonium and uranium or use in the Japanese and Swiss


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civil nuclear programs. Te United States has also given advance consent to the reprocessing oU.S.-obligated spent uel in saeguarded Indian reprocessing acilities (yet to be constructed andthe use o the recovered plutonium and uranium in saeguarded Indian reactors. Te United Stateshas retained a right to suspend its consent in these agreements i required by nonprolieration ornational security concerns.

Te United States has also imposed special restrictions in regions o political instabilityand prolieration concern. Te U.S.-Egypt agreement or peaceul nuclear cooperation requiresany reprocessing o U.S.-obligated nuclear material and any storage or abrication o plutoniumrecovered as a result o such reprocessing to take place in acilities outside Egypt. Te U.S.-UAEagreement or peaceul nuclear cooperation bans the UAE rom possessing enrichment andreprocessing acilities.

Te consents described above are not the norm. For most o its cooperating partners, theUnited States discourages reprocessing and plutonium use, and most U.S. cooperating partnershave neither requested nor been granted prior U.S. consent to the reprocessing or alteration inorm or content o spent uel. In a ew cases, the United States has rebued inormal requests orreprocessing.

Te NSG guidelines call or consent rights whenever appropriate and practicable, leav-ing it to the individual supplier how to interpret such a phrase. Policies and practices are notuniorm among suppliers. Both Australia and Canada routinely include these consent rights intheir bilateral agreements and gave programmatic consent to reprocessing to EURAOM andJapan. Russia has been taking back spent uel rom its customers. France and the United King-dom provide reprocessing services to other states but require their customers to take back therecovered plutonium, uranium, and nuclear waste. However, plutonium returns have been madeonly to Japan and to states in Western Europe such as Germany and Switzerland. Australia, Cana-da, and the United States have actually granted consent to the reprocessing o spent uel to only aew countriesFrance and the United Kingdom (in the U.S.-EURAOM agreement, Japan, and

India. France has given consent to India to reprocess.

RETRoACTIvITy ANd PERPETUITy oF NoNPRolIFERATIoN CoNdITIoNS.

Post-NNPA, U.S. agreements or peaceul nuclear cooperation apply retroactively to the previousagreements that they replaced; or example, nuclear material and equipment that had been subjectto a pre-NNPA agreement become subject to the ull panoply o assurances and controls o thenew post-NNPA agreement. Nuclear material that was ree o certain U.S. consent rights underan old agreement becomes subject retroactively to those consent rights under the post-NNPAagreement. It is not known whether other nuclear suppliers have adopted a similar requirement.Inaddition, all the nonprolieration conditions and controls in U.S. agreements or peaceul nuclearcooperation will continue in eect even i a peaceul nuclear cooperation agreement terminates,

expires, or is suspended. Te NSG guidelines provide or the perpetuity o saeguards but not orthe other nonprolieration guarantees and assurances contained in the guidelines.

dUAl-USE ANd CATCh-All ExPoRT CoNTRolS. Te United States has long controlledthe exports o dual-use items and technologythat is, those that have both nuclear and nonnu-clear uses. It has also had catch-all controls to prevent the export o any items that are not on anexport control list i intended or nuclear explosive devices or unsaeguarded activities. Te NSGdid not adopt dual-use controls until 1992 and a catch-all control mechanism until 2004.


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TERMINATIoN oF NUClEAR CooPERATIoN ANd RIGhT oF RETURN. U.S. law spec-ies a number o actions by a non-nuclear-weapon state that would require the suspension o U.S.nuclear exports but allows the president to waive such suspension i he determines that it wouldbe seriously prejudicial to the achievement o U.S. nonprolieration objectives or would other-wise jeopardize the common deense and security. Te NSG calls or consultations i one or more

members believe that a recipient has violated a supply agreement or IAEA saeguards or engages innuclear explosive activities. Te NSG guidelines provide or suspension o nuclear items to states thatviolate their nonprolieration obligations but allow or a saety exception i saeguards are appliedto the relevant acilities. U.S. law contains no such explicit exception. In addition, the grounds orterminating U.S. nuclear cooperation are ar more extensive than those contained in the NSG guide-lines. Cases o actual termination or suspension o nuclear exports have been ew in number.

U.S. agreements or peaceul nuclear cooperation contain a right to require the return o U.S.-obligated nuclear material and equipment, i the cooperating partner violates certain nonproliera-tion norms. Te NSG also provides or a right o return, but this guideline doesnot apply to agree-ments or contracts drawn up on or beore April 3, 1992, and its grounds or exercising a right oreturn are less extensive than those o the United States. No supplier has ever exercised a right o

return. Such a right is largely symbolic, since suppliers would likely ace ormidable legal, political,and practical hurdles to taking back spent nuclear uel or other irradiated materials or equipment.

Agena fr te FutureSome supplier states have in the past acted irresponsibly by placing commercial or strategicconsiderations above nonprolieration interests. A ew continue to do so today. Russia and Chinahave exploited the so-called grandather and saety clauses o the NSG guidelines to supply nuclearreactors and uel to India and Pakistan. Te United States concluded a peaceul nuclear coopera-tion agreement with India without insisting on comprehensive saeguards and then persuaded the

NSG to approve an exemption rom its comprehensive saeguards requirement or India. Te se-lective interpretation o NSG guidelines or the exemption o a recipient state rom them does notbode well or the eectiveness o the export control regimes o the major nuclear suppliers. Teseactions can only lead to charges o hypocrisy and undermine the NSGs legitimacy in the eyes ononmembers.

Te absence o dual-use and catch-all control systems by most major suppliers until the early1990s also made it possible or several nuclear-weapon aspirants to acquire numerous items ortheir nuclear-weapons programs.

Policies or controlling nuclear exports cannot solve or even address all prolieration challeng-es. Even the most eective nuclear export policies o the NSG cannot prevent nonmembers such as

Pakistan or North Korea rom deliberately undermining the eectiveness o international nuclearexport controls and o the nonprolieration regime itsel. Such behavior has to be addressedthrough other means such as vigorous diplomatic pressure, sanctions, interdiction measures likethe Prolieration Security Initiative, or, in the extreme, preemptive military action.

Despite their limitations and gaps, the nuclear export policies o the major nuclear suppliershave had some success in increasing the costs and risks o the procurement eorts o such states asPakistan, Iran, and Iraq and in delaying their acquisition o sensitive nuclear acilities or nuclearweapons. Moreover, i the major suppliers had not orged an agreement on common rules o the


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game, supplier states would have been tempted to improve their competitive position in theinternational market by minimizing the nonprolieration conditions on their nuclear exports.

Te export policies o the United States and other major suppliers must remain an essentialcomponent o the nonprolieration regime or a number o reasons:

Tey provide an essential complement to the NP without violating the rights o the partiesto the treaty. Te NP is the indispensable, albeit imperect, oundation o the internationalnonprolieration regime. By requiring comprehensive and all-back saeguards, physical protec-tion, rules or technology transers, controls on dual-use items, and sanctions or violations ononprolieration norms, nuclear export controls o suppliers have bolstered the eectiveness o

the nonprolieration regime in essential ways that the NP by itsel does not cover.

Tey serve as legal and normative barriers to the misuse o civil nuclear programs or nuclearexplosive or military uses.

Tey provide a basis or terminating nuclear cooperation and the imposition o internationalsanctions i a recipient violates nonprolieration norms and commitments.

Tey increase the costs and risks o the procurement eorts o nuclear-weapon aspirants anddelay the acquisition o sensitive nuclear acilities or nuclear weapons.

Tey uphold the basic principles o the nonprolieration regime, namely, (1 that states shouldbe eligible to reap the benets o the peaceul uses o nuclear energy only i they make eec-tive commitments against nuclear explosive or military purposes and accept adequate veri-cation o those commitments and (2 that international peaceul nuclear cooperation cannottake place unless the public and national governments have condence that it is rmly basedon nonprolieration assurances designed to prevent the diversion o civil nuclear programs to

explosive purposes.

Nuclear export controls have evolved over time to keep pace with technical innovations andpolitical developments and in response to various challenges to the nonprolieration regime. Temajor suppliers are much better positioned today than in the past to block the international pro-curement eorts o aspiring nuclear-weapon states and to prevent the diversion o global nuclearcommerce to nuclear explosive uses.

Still more needs to be done. Supplier states have a special responsibility or and interest insupporting an eective international nuclear nonprolieration regime. Such a regime is necessaryto assure the public and national governments that international commerce in civil nuclear energyis being eectively controlled and that prolieration risks associated with the atom are manageable.In the absence o such condence, governments will not license nuclear exports and imports, thepublic will oppose the development o nuclear power, and the nuclear industry will not accept therisk o investment in nuclear technology.

Te major nuclear suppliers need to adopt new and strengthened export controls to keep pacewith the emerging nonprolieration challenges ahead:

ENSURING ThE INTEGRITy ANd CoMMoNAlITy oF ExPoRT CoNTRolS. Ingeneral, the United States has a more stringent and more encompassing set o nonprolierationconditions than other suppliers. In the past, this disparity had a signicant impact particularly


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when many other suppliers did not require comprehensive saeguards or dual-use export controls.It is hard to measure the impact o the remaining disparities in laws, policies, and regulationsand in the resources devoted to implementing them. However, when a state such as Chinaseeks to exploit loopholes in or adopt loose interpretations o the NSG guidelines, it threatensto undermine the global nuclear export control regime. Tus, one o the main objectives o the

members o the NSG should be to hold China accountable or its exports to Pakistan.STRENGThENING SAFEGUARdS. Nuclear-supplier states should ensure that the IAEA hasthe nancial, political, and technical support it needs to implement an eective saeguards system.Te NSG could help improve the IAEA saeguards system signicantly by requiring the AP as acondition o supply.

PREvENTING ThE SPREAd oF ENRIChMENT ANd REPRoCESSING. Controls ontransers o enrichment and reprocessing should be reinorced with ecient enrichment services,back-up uel supply assurances, and spent uel management services.

lIMITING ANd ElIMINATING ThE USE oF hIGhly ENRIChEd URANIUM. Suppliers

should develop technologies that do not rely on HEU or research or medical isotope production.In the meantime, they should adopt export policies that tie the export o HEU to a commitmentby the recipient to convert rom HEU to low-enriched uranium (LEU uel or research reactorsand to commit to eliminating HEUrom international commerce.

PRoMoTING ThE UNIvERSAlITy oF NUClEAR TRAdE RUlES. Te United Statesand other NSG members should persuade all states to abide by the ZC or NSG guidelines and toassist them in implementing adequate export control systems called or by UN Security CouncilResolution 1540.

REqUIRING CoNSENT RIGhTS ovER ENRIChMENT. Te NSG does not now call ora consent right on enrichment. Tis is an important gap that needs to be lled. NSG members

should adopt new language requiring consent rights over enrichment.

REqUIRING PERPETUITy oF All NoNPRolIFERATIoN CoNTRolS. Te NSGshould extend its guideline on the perpetuity o international saeguards to all o the nonproliera-tion controls and guarantees contained in the guidelines.

STRENGThENING PhySICAl PRoTECTIoN. Te NSG should require recipient states toinvite the IAEA to conduct a peer review o their physical protection laws, regulations, and measures.

PREvENTING ClANdESTINE PRoCUREMENT. Suppliers must establish adequate exportcontrol systems and devote the needed resources to implementing them eectively and share in-ormation with each other to prevent clandestine procurements.

UPdATING CoNTRol lISTS. Te NSG is currently reviewing itscontrol lists, but it needs toupdate these more requently to keep up with the rapid pace o technological change.

PRoMoTING ThE lEGITIMACy oF ExPoRT CoNTRolS. Suppliers need to convincethe international community, particularly developing states, o the necessity o adequate exportcontrols to prevent the spread o nuclear weapons and to enable peaceul nuclear commerce. Tey


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should avoid taking initiatives that non-nuclear-weapon states regard as discriminatory such aspressuring them to orswear nuclear capabilities that they regard as a sovereign right and onerecognized in the NP. Instead, they should oer positive incentives to orgo sensitive nuclearuel-cycle technologies.

None o these steps by themselves will eliminate the prolieration risk o international civil

nuclear commerce, but, taken together, they could go a long way toward strengthening the barriersto the misuse o civil nuclear commerce or nuclear explosive purposes.

Te Re f te Unite StatesTe United States needs to take a leadership role in promoting the initiatives outlined above. Teeectiveness o Washington in promoting the international and multilateral nuclear trade controlsdescribed in this report was possible in no small part because o the technological and exportdominance that the United States enjoyed rom the 1950s through at least the 1970s. Over time,the number o suppliers has expanded while the U.S. role in the international nuclear market hasdeclined signicantly. oday, the United States is only one among many nuclear suppliers.

o play a leadership role, the United States will need to compete in the international market.Some argue that the strict nonprolieration conditions and unnecessarily burdensome exportapproval requirements harm U.S. exports. Tese arguments may have some merit but are not themain reason or the decline in the U.S. share o the international market. Other actors are armore important:

Te inevitable emergence o other suppliers long ago undermined the monopoly o supply thatthe United States enjoyed in the early days o nuclear energy. Te uture is likely to see the ar-rival o even more suppliers.

Te nuclear export industries o other major suppliers have strong governmental and nancial

support that the U.S. nuclear export industry does not enjoy. Te United States has not built new domestic nuclear power plants in over 30 years. Countries

seeking to develop nuclear power are likely to turn or assistance to those states that have grow-ing domestic nuclear power programs, oer competitive uel-cycle services, and are supportingthe development o advanced technologies.

Overcoming these developments and obstacles will not be easy. Subsidies or U.S. nuclearexports have long been controversial and are likely to become more so in the uture, particularlyin light o severe constraints on the U.S. budget. Forging alliances with oreign rms as Westing-house and GE have done with oshiba and Hitachi may be one avenue or promoting U.S. nuclearexports.

Revitalizing the domestic nuclear industry also aces signicant challenges. Te low price onatural gas plants and the absence o a national nuclear waste policy will signicantly slow thenuclear renaissance, and post-Fukushima public concerns and new saety regulations may cre-ate additional brakes on nuclear power plant construction. However, the development o smallmodular reactors, i they prove economically competitive and meet saety standards, could notonly rejuvenate the U.S. domestic nuclear industry but also boost the competiveness o the United


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fred mcgoldrick | xv

States in the international market, particularly in developing countries. I the General Electric-Hitachi Global Laser Enrichment Uranium Enrichment Facility can satisy prolieration concernsand meet the economic expectations o its supporters, it could give the United States a strong costadvantage in the global enrichment market. One step the United States could take to strengthen itsrole in the international market and promote its nonprolieration would be to establish a national

nuclear waste program that would allow or taking back at least limited quantities o spent uelproduced rom U.S. nuclear exports.

Finally, the U.S. has to avoid overreach in instituting new nuclear export controls such asrecent eorts by some in the U.S. Government to press new cooperating partners to orswear whatthey regard as their rights to enrichment and reprocessing technology.

Te controls and infuence that come with nuclear trade are only one tool in the U.S. arsenal toprevent the spread o nuclear weapons, but one that Washington can ill aord to let shrink urtheror wither away.


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| 1

Does peaceul nuclear commerce increase the risk o the prolieration o nuclear weapons?Or can nuclear suppliers use peaceul nuclear cooperation to establish legal, political, andnormative barriers to the spread o nuclear weapons? Scholars and policymakers have attempted

to answer these questions since the beginning o the nuclear age. Te export o nuclear technol-

ogy by the United States and other suppliers has long been the subject o controversy.1 One aspect

o this issue has been the relative importance o so-called demand side versus supply-side actors

in explaining nuclear prolieration. Demand-siders highlight considerations inuencing a coun-

trys motives or acquiring nuclear weapons such as national security concerns, domestic politics,or national prestige,2 whereas supply-siders stress technological capabilities and the likelihood

that the diusion o technology makes prolieration more likely. One recent supply-side study

concluded that sensitive nuclear assistanceor example, the design and construction o nuclear

weapons, the supply o weapons-grade ssile material, or assistance in support or building ura-

nium enrichment or plutonium reprocessing acilitieshas been important in aiding countries in

acquiring a nuclear-weapons capability.3 Another supply-side study went urther, concluding that

all types o civilian nuclear assistance raise the risk o prolieration because the dual-use nature o

civil nuclear cooperation provides the know-how and materials necessary or a nuclear-weapons

program and helps establish expertise relevant to building a nuclear weapon. It concludes that all

orms o atomic assistancewhether it involves training scientists, supplying reactors, or building

uel abrication acilitiesraise the likelihood that nuclear weapons will spread.4

Some argue thatthese concerns call or restraining the worldwide development o nuclear power.5

Another view is that the policy o secrecy and denial that the United States pursued in the

aermath o Hiroshima and Nagasaki was a ailure and that eorts by the United States and even-

1. See or example,Atoms for Peace: An Analysis after Thirty Years, Joseph F. Pilat, Robert E. Pendley,and Charles K. Ebinger, eds. (Boulder, CO: Westview Press, 1985); andNuclear Power and the Spread of

Nuclear Weapons, Can We Have One without the Other? (Herndon, VA: Potomac Books, 2002).2. See or example, Scott D. Sagan, Why Do States Build Nuclear Weapons? Tree Models in Search

o a Bomb, International Security21, no.3 (Winter 1996/97): 5486; George Quester, Te Politics o NuclearProlieration (Baltimore: Johns Hopkins University Press, 1973).

3. Matthew Kroenig, Importing the Bomb: Sensitive Nuclear Assistance and Nuclear Prolieration,Journal o Conict Resolution (2009): 53,http://jcr.sagepub.com/cgi/content/abstract/53/2/161.

4. Matthew Fuhrmann, Spreading emptation:Prolieration and Peaceul Nuclear Cooperation Agree-ments, International Security34, no. 1 (Summer 2009), http://belercenter.ksg.harvard.edu/les/IS3401_pp007-041_Fuhrmann.pd.

5. Victor Gilinsky and Henry Sokolski, Serious Rules or Nuclear Power without Proliera-tion, Nonprolieration Education Policy Education Center, May 2012, http://www.npolicy.org/article.php?aid=1177&rt=&key=Serious Rules or Nuclear Power without Prolieration&sec=article&author.

introduction1


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2 | nuclear trade controls: minding the gaps

tually others to share the peaceul benets o nuclear energy under nonprolieration controls and

conditions have been instrumental in helping build key elements o the global regime to prevent

the spread o nuclear weapons.6

Nuclear-weapons prolieration is both a supply-side and a demand-side problem and needs

to be viewed both in historical context and against todays international landscape. First, most o

the nine countries that possess nuclear weapons today acquired their nuclear arsenals primarilythrough dedicated military programs, clandestine and illegal procurements, and deliberate assis-

tance rom nuclear-weapon states and not through the diversion o imported civil nuclear materi-

als and equipment subject to nonprolieration controlsIndia being a major exception.7 Second,

sharing the benets o peaceul nuclear trade provided the leverage to help establish the rules and

norms o the nonprolieration regime. Tird, much o the prolieration occurred beore all the ele-

ments o the present global nonprolieration regime were put in place.8 Fourth, o the 30 countries9

with nuclear power reactors and the 56 countries10 with operational research reactors today, only

nine statesChina, France, India, Israel, North Korea, Pakistan, Russia, the United Kingdom,

and the United Stateshave nuclear weapons, while Iran is widely believed to be developing that

capability. Te rest are non-nuclear-weapon states that are compliant parties to the NP. Tus,

while international assistance can increase the risks o nuclear prolieration, peaceul nuclearcooperation does not lead inevitably to a spread o nuclear weapons. Most civil nuclear programs

are peaceul in nature, and the vast majority o states with such programs are abiding by their

nonprolieration commitments. Suppliers have employed their nuclear trade policies as a means o

establishing the widely accepted principle that states wishing to take advantage o the peaceul ap-

plications o nuclear energy must make eective commitments not to misuse that technology or

nonpeaceul or explosive purposes and to accept adequate verication o those commitments.

Nevertheless, there is no question that international nuclear trade has assisted some countries

in acquiring a nuclear-weapons capability, particularly in the early days o the nuclear era and

especially in the training o scientists and engineers in nuclear-related disciplines. International

peaceul nuclear commerce and civil nuclear programs carry with them real risks o diversion to

6. See Pilat, Pendley, and Ebinger,Atoms or Peace, particularly essays by Bertrand Goldschmidt, Ber-tram Wole, and Lawrence Scheinman.

7. Te United States had a dedicated nuclear weapons program as did the Soviet Union, which alsobeneted rom espionage. Te United Kingdom and, less so, France beneted rom participation in theManhattan Project. Te Soviet Union deliberately provided assistance to the Chinese nuclear weapons pro-gram, and China provided Pakistan with highly enriched uranium and a nuclear-weapon design. Stealinguranium enrichment technology rom the Netherlands was also critical to the success o the Pakistani nucle-ar-weapons program. France deliberately aided the Israeli nuclear-weapons program. Iran obtained its en-richment capability though clandestine procurement eorts. Iran, Iraq, and Syria sought a nuclear-weaponscapability largely through clandestine procurement.

8. Te United States, Russia, the United Kingdom, France, China, Israel, and India obtained nuclear

weapons beore the NP, the ZC, the NSG, and other main elements o the nonprolieration regime wereput in place. Only Pakistan and North Korea have acquired such weapons since these institutions were es-tablished. Several countries that had nuclear-weapon development programs or nuclear weapons in the pasthave abandoned them, including Brazil, South Korea, South Arica, and aiwan. Belarus, Kazakhstan, andUkraine gave up their nuclear weapons ollowing the dissolution o the Soviet Union. Iraq and Syria hadtheir nascent programs eliminated or them.

9. IAEA, Nuclear Power Reactors in the World, 2012 Edition, Reerence Data Series No.2, IAEA-RDS-2/32 http://www-pub.iaea.org/MCD/Publications/PDF/RDS2-32_web.pd.

10. http://www.iaea.org/About/Policy/GC/GC48/Documents/gc48in-4_n1.pd.


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fred mcgoldrick | 3

nuclear weapons. Among other things, reactor-grade plutonium produced in nuclear power plants

is usable in nuclear weapons; enrichment and reprocessing acilities can produce weapons-usable

nuclear materials that are vulnerable to diversion by both states and subnational actors or purpos-

es o building nuclear explosives; and reprocessing plants are difcult and expensive to saeguard.

In addition, states can try to use peaceul nuclear cooperation as a means o acquiring skills or

developing nuclear weapons. Nuclear-weapon aspirants have also justied their purchases on the

international market or their peaceul nuclear programs as a cover or developing a nuclear-weap-

ons capability. Iraq sought to exploit a peaceul nuclear research program to realize its nuclear-

weapons ambitions by purchasing a research reactor rom France and sensitive research acilities

rom Italy in the 1970s. Brazil, Iran, Iraq, Pakistan, South Korea, North Korea, and aiwan have at

one time or another cited their peaceul nuclear programs as justication, however implausible,

or acquiring sensitive nuclear technologies. States with civil nuclear power programs could also

divert material or equipment received rom suppliers to nuclear explosives. India violated the non-

prolieration commitments it made to Canada and the United States in order to use the acilities

and materials it imported rom those countries in its nuclear explosives program. Over the past

two decades, the IAEA has ound Iran, Iraq, Libya, North Korea, Romania, and Syria in noncom-

pliance with their saeguards agreements with the IAEA.In addition, suppliers have not always acted responsibly. In the 1960s, Canada exported large

research reactors, which were ideal or producing weapons-grade plutonium, to both India and ai-

wan (then the Republic o China), while France and Germany sought to export reprocessing plants

to South Korea, aiwan, and Pakistan in the 1970s. Even though these exports were under some

nonprolieration controls or were intended to be, the exports o these technologies were imprudent.

Wherever one stands on the relative risks and benets o civil nuclear trade, nuclear power

and civil nuclear trade are unlikely to disappear. Tese risks must be taken into account as we

look to the uture o nuclear energy. Nuclear power continues to help meet the electricity needs o

many countries around the globe, and it is likely to grow as countries adopt more stringent carbon

dioxide emission policies. Despite the Fukushima accident in Japan and the resulting concernsabout the saety o nuclear energy, a recent report by the World Energy Council stated that at

least 50 countries are building, operating, or considering nuclear power as part o their energy

mix.11 Te IAEA has projected that, by the year 2035,the worlds capacity or generating electricity

through nuclear power will grow rom 375 GWe net (at the end o 2010) to between 540 GWe net

in the low-demand case and 746 GWe net in the high-demand case, increases o 44 percent and 99

percent, respectively.12 At the 2012 IAEA General Conerence, the agency released its updated high

and low projections or the worlds nuclear power generating capacity. According to the report,

In the 2012 updated low projection, the worlds installed nuclear power capacity grows rom 370

gigawatts today to 456 GW(e) in 2030, diminishing by 9 percent rom the level projected last year.

In the updated high projection, it grows to 740 GW(e) in 2030, which is an increase that is about 1

percent less than estimated in 2011.13

Tese numbers show a decrease in the agencys 2011 projec-tions but underline the act that nuclear power will remain an important option or many coun-

tries, with developing countries continuing to show a strong interest in nuclear power.

11. World Energy Perspective: Nuclear Energy One Year aer Fukushima, World Energy Council, 2011,http://www.worldenergy.org/documents/world_energy_perspective__nuclear_energy_one_year_aer_u-kushima_world_energy_council_march_2012_1.pd.

12. IAEA, Global Uranium Supply Ensured or Long erm, news release 2012/19, New Report Shows,July 16, 2012, http://www.iaea.org/newscenter/pressreleases/2012/prn201219.html.

13. Te IAEA Updates Its Projections or Nuclear Power in 2030, September 25, 2012, http://www.iaea.org/newscenter/news/2012/np2030.html.


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In addition, the International Energy Agency (IEA) has estimated that the worlds nuclear

power capacity needs to nearly double by 2025 to help meet climate targets.14 oday, only a ew

states are known to be seeking nuclear weapons. However, this may change as more countries de-

velop nuclear power, seek sensitive nuclear capabilities, and ace security threats they believe can

be addressed through acquisition o nuclear weapons. In particular, Irans acquisition o nuclear

weapons could demonstrate a prolieration pathway or other states within the NP. Tereore,

one o the key challenges that the nonprolieration regime aces is to ensure that the projected

growth in, and spread o, commercial nuclear power, i actually realized, will take place under

conditions that provide the maximum protection against the misuse o civil nuclear technology

or military or nuclear explosives purposes. Tus, requiring strict nonprolieration conditions on

peaceul nuclear trade must remain an indispensable part o any nonprolieration strategy. Te

United States has an important role to play in ensuring that the rules o international nuclear trade

keep pace with the prolieration challenges in the years ahead.

Such trade began with the Atoms or Peace Program in the 1950s when the United States

concluded civil nuclear cooperation agreements with a number o states interested in exploiting

the peaceul benets o nuclear energy. In these agreements, the United States required recipients

to give peaceul-use assurances and accept inspections on imported nuclear items as well as othernonprolieration controls as conditions o supply on nuclear materials, reactors, and uel-cycle

services.

Until the early 1970s, the United States was the dominant supplier in the international com-

mercial nuclear market. As other advanced nuclear states entered the global marketplace, they too

entered into bilateral nuclear supply agreements with the growing number o countries that were

then interested in applications o civil nuclear power. Te export control policies o these suppliers

varied in scope and nature. Te bilateral controls o individual supplier states were eventually sup-

plemented by two internationally coordinated nuclear export control regimes. Te rstknown

as the Zangger Committeewas established in 1974 to implement article III.2 o the reaty on the

Non-Prolieration o Nuclear Weapons, which obliges states that are party to the treaty to requireIAEA saeguards on their export o nuclear materials and equipment. Te members o the ZC,

which now number 38, dened the specic nuclear materials and equipment that were only gener-

ally identied in article III.2 o the treaty and placed these items on a rigger List, so called be-

cause the export o listed items triggered certain conditions o supply, including the acceptance

o saeguards by the IAEA on nuclear exports as well as peaceul, nonexplosive-use assurances by

recipient states that were not party to the NP (see IAEA document INFCIRC/209).

Te second multilateral arrangement is the 46-member Nuclear Suppliers Group. Te NSG

adopted nuclear export guidelines15 in response to several nonprolieration crises in the 1970s: the

detonation o a nuclear explosive device by India and the eorts by some supplier states to export

reprocessing technology to Brazil, Pakistan, South Korea, and aiwan and, in the case o Brazil,

both enrichment and reprocessing technology. All o these countries lacked any credible peaceuljustication or the acquisition o such sensitive nuclear technologies and had nuclear-weapons

14. International Energy Agency, racking Clean Energy Progress: Energy echnology Perspectives2012, excerpt as IEA input to the Clean Energy Ministerial, 2012, http://www.iea.org/media/etp/rack-ing_Clean_Energy_Progress.pd.

15. IAEA Inormation Circular (INFCIRC/254), Communication Received rom Certain MemberStates Regarding Guidelines or the Export o Nuclear Material, Equipment or echnology, February 1978,Part 2, http://www.iaea.org/Publications/Documents/Incircs/Others/incirc254.shtml.


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fred mcgoldrick | 5

ambitions or actual programs. Te NSG adopted the ZC rigger List o nuclear items but also

agreed to apply conditions to nuclear exports that went beyond the requirements o the NP and

the ZC and included assurances o adequate physical protection and special restraints on the export

o sensitive nuclear technology. Tese guidelines have evolved over time to include, among other

things, additional nonprolieration conditions and controls on the export o dual-use items.16

In addition to these multilateral arrangements, the members o the European Atomic En-ergy Community17 as well as the major holders o plutonium have adopted guidelines on certain

nuclear transers. In 1984, the European Community adopted its Declaration o Common Policy,

published as INFCIRC/322,18 that set orth guidelines or the transer and retranser o plutonium,

highly enriched uranium, and sensitive nuclear technology, acilities, and equipment among

member states. In 1997, Belgium, China, Germany, Japan, the Russian Federation, Switzerland, the

United Kingdom, and the United States published Guidelines on the Management o Plutonium

(INFCIRC/549), which, among other things, specied certain conditions that would govern their

international transers o separated plutonium.19

In 2004, the UN Security Council adopted Resolution 1540, which calls on states to put in

place appropriate eective measures to account or and secure items related to the produc-

tion, use, storage, or transport o weapons o mass destruction and their means o delivery and to

maintain appropriate eective physical protection measures o said items. Te primary purpose

was to deny such items to nonstate actors, but it also obliges states to establish eective export

controls.20

Tis report examines the role o nuclear export controls in reducing the risk that international

nuclear commerce will be misused or nuclear explosive purposes. Te report has several aims:

o describe the specic nonprolieration assurances and conditions that the United States

requires in its nuclear export policies

o explain the importance o each o these controls in minimizing the risks that nuclear

exports will be used or explosive or military purposes o compare the nature and scope o U.S. nonprolieration controls with those o the

nuclear export policies o other exporting states as reected in the guidelines o such

multilateral arrangements as the ZC, the NSG, and other international agreements and

understandings, and, where known, the specic export policies o other individual nucle-

ar-supplier states

16. Ibid.17. Te treaty establishing the European Atomic Energy Community coordinates research, saety

standards, and investment to promote peaceul uses o atomic energy in the European Union. It includes acommon market or specialized material and equipment and ensures its members supply o nuclear uel and

ores, unctionally creating a centralized system or supply and unding o European nuclear energy activi-ties. See reaty Establishing the European Atomic Energy Community, March 25, 1957, 298 U.N..S., 167,available at eur-lex.europa.eu.

18. IAEA Inormation Circular (INFCIRC/322), Communication Received rom the Resident Rep-resentative o Italy on Behal o the European Community, April 1985,http://www.iaea.org/Publications/Documents/Incircs/Others/in322.shtml.

19. IAEA Inormation Circular (INFCIRC/549/Add, 8), Communication Received rom Certain Mem-ber States Concerning their Policies Regarding the Management o Plutonium, March 31, 1998, http://www.iaea.org/Publications/Documents/Incircs/1998/incirc549a8.pd.

20. United Nations Resolution 1540 (April 28, 2004).


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o assess the limits, weaknesses, and strengths as well as the successes and ailures o U.S.

nuclear export controls and those o other nuclear suppliers to date

o identiy the challenges or the uture and the role that the United States should play in

meeting these challenges.


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| 7

he United States and other major nuclear suppliers generally require non-nuclear-weaponstates to provide a number o assurances as a condition o nuclear cooperation. Tey also re-quire certain assurances rom nuclear-weapon states, but these are less comprehensive than those

rom non-nuclear-weapon states. Assurances include government-to-government guarantees o

nonexplosive use, acceptance o IAEA saeguards, guarantees o establishing eective physical pro-

tection on nuclear materials, controls on the transer o sensitive nuclear technologies (enrichment

and reprocessing), and requirements that recipient governments obtain the prior consent o the

supplier state beore retranserring nuclear materials and equipment to third states, reprocessing,alteration in orm or content or enrichment o nuclear materials, and the storage o weapons-us-

able materials. Suppliers also provide or the termination o nuclear cooperation i a recipient state

violates its nonprolieration commitments. In addition, the major suppliers institute controls on

the export o specied dual-use items, or example, those that have both nuclear and nonnuclear

uses, as well as catch-all controls on items even i they are not on any export control list but are

intended or use in a nuclear explosive device.

Te ollowing sections compare the various nonprolieration assurances, controls, and condi-

tions the United States requires or its nuclear exports with those o key international or multina-

tional nonprolieration arrangements, treaties, and conventions and, where known, those required

by other individual nuclear suppliers.

In this comparison, several important acts are noteworthy:

Te U.S. Atomic Energy Act (AEA)21 requires that special nuclear material and nuclear

acilities and their major nuclear components may be exported only pursuant to an

agreement or cooperation.22 Other nuclear components and substances can be exported

21. U.S. Atomic Energy Act o 1954 (as amended though P.L. 105-394, November 13, 1998), http//: us-code.house.gov/.

22. Special nuclear materialis dened as plutonium, uranium enriched in the isotope 233 or in the iso-tope 235, or any other material that the Nuclear Regulatory Commission determines to be special nuclearmaterial. Tese are materials deemed most directly relevant or use in nuclear weapons. In addition, sincethe enactment o the NNPA, the U.S. government has consistently required that an agreement or coopera-tion be in place or any commercial exports o source material. Tis practice is supported by section 402 othe Nuclear Non-Prolieration Act, which prohibits the export o source material or purposes o enrich-ment except pursuant to an agreement or cooperation. (Source material includes uranium, thorium, or anyother material that the NRC determines by regulation to be source material or ores containing one or moreo the oregoing materials in such concentration as the NRC may determine rom time to time.) Nuclearequipment includes (1) utilization acilities, including power and research reactors and the our majorcomponents o these reactors (pressure vessels, the primary coolant pumps, the complete control rod sys-tem, and, in the case o heavy water reactors, the uel charging and discharging machines); and (2) produc-

nonproliferation controlsand guarantees: a comparison2


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without such an agreement. Section 109 (b) o the AEA requires that recipients o these

components and substances agree to accept the application o saeguards to such items,

provide an assurance o peaceul, nonexplosive use, and agree not to retranser such items to

other countries without U.S. prior consent. In addition to the requirements o section 104,

the export o such components and substances must also satisy the guidelines o the NSG.

Te description o the nonprolieration controls contained in U.S. peaceul nuclear coop-eration agreements applies to agreements that have entered into eect aer the enactment

o the Nuclear Non-Prolieration Act o 1978, which amended the Atomic Energy Act to

include a range o new nonprolieration assurances and controls.23

Not all U.S. agreements or peaceul nuclear cooperation are the same. Although almost

all contain the nonprolieration controls required by U.S. law, they vary in the way these

are implemented, depending on the nature o the relationship o the United States with

a cooperating partner, the state o its civil nuclear program, and the prolieration risks

involved in peaceul nuclear trade with the particular country or region where it is located.

U.S. agreements or peaceul nuclear cooperation are not commitments to supply nuclear

materials, equipment, components, or technology. Tey provide only the legal rameworkor such nuclear exports, and U.S. nuclear exports require a license rom the U.S. Nuclear

Regulatory Commission (NRC) and must satisy the U.S. nuclear export criteria set orth

in sections 127 and 128 o the AEA. (Tese criteria generally track the conditions and

controls required or agreements o cooperation by section 123 o the AEA.) Te Depart-

ment o Energy authorizes the export o nuclear technology. Te Department o Com-

merce licenses the export o all items other than those licensed by the NRC, which, i used

or purposes other than those or which the export is intended, could be o signicance or

nuclear explosive purposes, such as dual-use exports.

tion acilities, including reactors or producing nuclear material through irradiation, as well as enrichmentand reprocessing plants and important component parts especially designed or such acilities.

23. wo agreementswith South Korea and aiwan predate the NNPA, have not yet been amendedto meet the requirements o the NNPA, and do not include all the controls required by the NNPA. TeUnited States has had to obtain separate assurances rom aiwan and South Korea in order to license nu-clear exports rom the United States. For example, both agreements prohibit the use o items subject to theagreement or atomic weapons, but not nuclear explosive devices. In the case o aiwan, the United Statesobtained a separate assurance on nuclear explosive devices. Te United States also obtained separate assur-ances rom South Korea and aiwan or physical protection. Neither South Korea nor aiwan has been will-ing to renegotiate their agreements with the U.S. to bring them into conormity with the NNPA. However,the U.S. agreements with South Korea and aiwan will expire in the year 2014, and their replacements willhave to conorm to the requirements o the NNPA. Pursuant to section 6 o the aiwan Relations Act, P.L. 96-8, 93 Stat. 14, and Executive Order 12143, 44 F.R. 37191, all agreements concluded with the aiwan authoritiesprior to January 1, 1979 are administered on a nongovernmental basis by the American Institute in aiwan, a

nonprot District o Columbia corporation, and constitute neither recognition o aiwan authorities nor thecontinuation o any ofcial relationship with aiwan.


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fred mcgoldrick | 9

Not all nonprolieration conditions contained in U.S. agreements or peaceul nuclear

cooperation are required by law. 24 Some are conditions o U.S. policy. Examples include

all-back saeguards and the Additional Protocol.

Te materials, equipment, and technology subject to U.S. export controls are the same as

those specied in the rigger Lists o nuclear materials and items and the dual-use lists o

the ZC and the NSG. While the major nonprolieration treaties and conventions such as the NP and the

Convention on the Physical Protection o Nuclear Materials impose legal obligations on

their parties, the understandings o the ZC and the NSG are not legally binding commit-

ments but voluntary guidelines. Nevertheless, the states adhering to these guidelines have

indicated that they would act in accordance with the guidelines.

Te ZC and the NSG neither deny nor approve exports. Each adhering state approves or

denies license applications in accordance with its own national export laws, regulations,

and policies, but these are based on common conditions o supply and principles volun-

tarily agreed to in multilateral arrangements.

While most U.S. nonprolieration requirements are set out in U.S. law and export regula-tions and the texts o U.S. agreements or peaceul nuclear cooperation are published,

many suppliers are not as open in disclosing the details o their peaceul nuclear coopera-

tion agreements, the specic nonprolieration undertakings they require, or the precise

way in which they implement them. Although the major suppliers adhere to the same

guidelines o the ZC and the NSG, some variation exists among individual supplier poli-

cies, practices, and interpretation o the international guidelines.

24. U.S. peaceul nuclear cooperation agreements are oen reerred to as 123 agreements because the

main legal requirements or such agreements are ound in section 123 o the Atomic Energy Act. However,this is an inapt and too narrow a label or such agreements since they contain nonprolieration controls andconditions that are specied in other sections o the Atomic Energy Act and the Nuclear Non-ProlierationAct as well as U.S. policy and practices that go beyond the strict requirements o U.S. law.


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fred mcgoldrick | 11

UNited StateS. Te Atomic Energy Act 123(a) (3) requires a guarantee by the cooperating

party that no nuclear materials and equipment or sensitive nuclear technology tobe transerred

pursuant to such agreement, and no special nuclearmaterial produced through the use o any

nuclear materials andequipment or sensitive nuclear technology transerred pursuant to such

agreement will be used or any nuclear explosive device, or or research on or development o any

nuclear explosive device, or or any other military purpose.26

Note that the nuclear material iden-tied above will hereaer be reerred to as U.S.-obligated or material subject to the agreement.

Tese terms cover not only the nuclear material and equipment that the United States supplies

directly to another country but also the material used in or produced through the use o U.S.-

supplied nuclear materials and equipment. For example, i non-U.S.-supplied material is irradiated

in a U.S.-supplied reactor, that material will be subject to all the terms and conditions o the U.S.

agreement. Te United States also views this prohibition as applying to any subsequent genera-

tions o plutonium.

treatieS aNd iNterNatioNal aGreemeNtS

Treaty on the Non-Proliferation of Nuclear Weapons. Article II o the treaty provides

that each non-nuclear-weapon state that is party to the treaty undertakes not to receivethe transer rom any transeror whatsoever o nuclear weapons or other nuclear explosive

devices or o control over such weapons or explosive devices directly, or indirectly; not

to manuacture or otherwise acquire nuclear weapons or other nuclear explosive devices;

and not to seek or receive any assistance in the manuacture o nuclear weapons or other

nuclear explosive devices.

Te NP does not ban nonexplosive military uses and allows or the withdrawal o nuclear

material rom saeguards, or example, or naval propulsion. According to the model NP

saeguards agreement (INFCIRC/153), a state withdrawing material or nonexplosive

military use must inorm the agency that the use o the material in a nonproscribed military

activity will not conict with any peaceul-use pledge the state may have given; and whenmaterial has been withdrawn rom saeguards, that state must not use it or nuclear weapons

or other nuclear explosive devices. Tis withdrawal provision has never been used.

Article II o the IAEA Statute bans the use o any Agency assistance rom urthering any

military purpose. In addition, the IAEAs non-NP saeguards agreements, so-called IN-

FIRC/66 Rev. 2 saeguards agreement establish a system o controls to enable the Agency

to comply with this statutory obligation.

Nuclear-Weapon-Free-Zone Treaties. Te reaty o latelolco (Latin America), the reaty o

Rarotonga (South Pacic), the Bangkok reaty (Southeast Asia), and the Pelindaba reaty all

contain nonexplosive use assurances but do not ban nonexplosive military uses.

Zangger Committee and NSG. Te ZC guidelines provide that exports to a non-nuclear-

weapon state not party to the treaty should require a guarantee by the recipient govern-

ment that source or special ssionable material transerred, or produced, processed, or

26. Te AEA exempts agreements specically or the military applications o atomic energy (Sec 91 c).


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used in the acility or which the transerred item is intended, shall not be diverted to

nuclear weapons or other nuclear explosive devices. Te Zangger Committee does not ban

the use o rigger-List items or military purposes. Te NSG guidelines require ormal

governmental assurances rom recipients explicitly excluding uses which would result in

any nuclear explosive device.

U.S. law bans any country from using materials, equipment, and technology that it

imports from the United States for any military purpose. Internaonal treaes and

agreements (the NPT, ZC, and NSG) do not, but the IAEA statute bans the use of

agency assistance from furthering any military purpose. The NSG guidelines apply to

nuclear transfers for peaceful purposes to any non-nuclear-weapon state. They do

not apply to civil transfers to nuclear-weapon states. However, other suppliers as a

maer of policy oen include a no-military-use pledge in their bilateral agreements.

The U.S. ban on the research on or development of as well as use of nuclear ex-

plosives and any military use of any item subject to a U.S. agreement for peaceful

nuclear cooperaon is more detailed, specic, and comprehensive than that found in

the NPT (the manufacture or acquision of nuclear explosives), the ZC (the di-

version to nuclear weapons or other nuclear explosives), or the NSG (uses which

would result in any nuclear explosive device.) However, the dierences in these

formulaons do not appear to have had any praccal implicaons to date.


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Sfgus

Te objective o international saeguards, which are administered by the IAEA,27 is the timely

detection o diversion o signicant quantities o nuclear material rom peaceul nuclear activities

to the manuacture o nuclear weapons or o other nuclear explosive devices or or purposes un-known, and the deterrence o such diversion by the threat o early detection.28 Requiring accep-

tance o IAEA saeguards on peaceul nuclear activities as a condition o nuclear supply is essential

to veriying the basic nonprolieration commitment that importing states make to abstain rom us-

ing their civil nuclear program or nuclear weapons or nuclear explosives. Tere are several aspects

to the requirement or saeguards as a condition o nuclear supply that merit attention: saeguards

on exported nuclear materials and equipment (an NP obligation required o nuclear suppliers or

their nuclear exports to non-NP parties); comprehensive saeguards on all the peaceul nuclear

activities o non-nuclear-weapon states; perpetuity o saeguards; all-back saeguards; the Addi-

tional Protocol to a states saeguards agreement; and saeguards in nuclear-weapon states.

27. EURAOM administers its own saeguards systems in member states o the EU. EURAOM andthe IAEA have entered into an agreement that provides or a division o labor in the administration osaeguards between the two organizations. In addition, a Common System o Accounting and Control oNuclear Material (SCCC) was established by Argentina and Brazil in July 1992. It is a ull scope saeguardssystem in both countries. Te Brazilian-Argentine Agency or Accounting and Control o Nuclear Materials(ABACC) was created to apply the SCCC.

28. IAEA Inormation Circular (INFCIRC/153[Corrected]), Te Struggle and Content o Agree-ments between the Agency and States Required in Connection with the reaty on the Nonprolieration oNuclear Weapons, June 1972, paragraph 28, http://www.iaea.org/Publications/Documents/Incircs/Others/incirc153.pd .

Scenes rom a verication training exercise. IAEA saeguards inspector using HM-5 devices to check the pres-ence o uel assembly in a transport container located in the resh uel storage o the Mochovce Nuclear PowerPlant. Credit: Dean Calma/IAEA 2005. http://www.iaea.org/NewsCenter/Multimedia/Imagebank/index.jsp.


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Second, the NSG guideline contained a saety exception, which specied that transers

o rigger-List items without the comprehensive saeguards requirement should only be

authorized in exceptional cases when they are deemed essential or the sae operation o

existing acilities and i saeguards are applied to those acilities.

UN Security Council Resolution 1887. Resolution 1887, which the UN Security Council

adopted in 2009,30 calledon all non-nuclear-weapon states party to the NP that have yetto bring into orce a comprehensive saeguards agreement to do so immediately.

Other States. Te United States was not the rst supplier to adopt a requirement or com-

prehensive saeguards. A ew suppliers preceded the United States in imposing this condi-

tion o supply: Canada in 1976, Australia and Sweden in 1977, and Poland and Czechoslo-

vakia in 1978. Japan and Germany ollowed in 1989 and 1990, respectively.

The disparies that existed unl 1993 in the policies of major suppliers on compre-

hensive safeguards had important implicaons. The failure of all members of the

NSG to adopt comprehensive safeguards meant that countries such as Argenna,

Brazil, and India were able to obtain nuclear supplies from states such as West

Germany, Switzerland, and France, while carrying on parallel nuclear-weapons pro-

grams or resisng safeguards on all their nuclear acvies.

The grandfather and safety excepons of the NSG guidelines have undermined

the comprehensive safeguards norm. Russia used both excepons as juscaon for

its nuclear exports to India. China has cited the grandfather clause as an excuse for

its nuclear cooperaon with Pakistan. India and Pakistan are two non-NPT pares

that do not accept IAEA safeguards on all their nuclear acvies. Also damaging to

the comprehensive safeguards norm was the U.S. iniave to carve out an exceponfor India from this NSG condion of supply.

The NSG adopon of comprehensive safeguards in 1993 as a condion of nuclear sup-

ply to non-nuclear-weapon states removed the disparity in supplier policies and made

the comprehensive safeguards export requirement a general internaonal norm. How-

ever, that norm has been seriously undercut by the acons of such suppliers as China,

Russia, and the United States.

30. On September 24, 2009, U.S. President Barack Obama chaired a meeting o the UN Security Coun-cil (UNSC) that unanimously adopted Resolution 1887 (2009) on nonprolieration and disarmament. Teresolution, which was draed at an initiative o the Obama Administration and which was the result omonths o negotiations, sets orth a series o goals to eliminate nuclear weapons, ban production o the s-sile material or nuclear weapons, and prohibit all nuclear weapons tests and protect stockpiles o weapons-usable nuclear materials.


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Ppu f Sfgus

Te objective o perpetuity o saeguards on nuclear materials is to ensure that saeguards continue

to apply to nuclear materials even i a cooperation agreement or a treaty expires or is terminated

or suspended. Te principle o perpetuity o saeguards is based on IAEA saeguards standards and

practice. Paragraph 11 o IAEA document INFCIRC/153 (the IAEA model NP saeguards agree-

ment) states that an NP saeguards agreement should provide that saeguards on nuclear materialsubject to saeguards shall terminate upon determination by the Agency that[such material]

has been consumed, or has been diluted in such a way that it is no longer usable or any nuclear

activity relevant rom the point o view o saeguards, or has become practicably irrecoverable. In

other words, saeguards must continue to be applied until the nuclear material is no longer usable

or cannot be recovered, or example, when minute quantities are embedded in nuclear waste. In

addition, Gov. 1621 adopted by the IAEA Board o Governors in 1973 statesthat the provisions orterminating a non-NP saeguards agreement (INFCIRC/66/Rev.2) should be ormulated in such

a way that the rights and obligations o the parties continue to apply in connection with supplied

nuclear material and with special ssionable material produced, processed or used in or in con-

nection with supplied nuclear material, equipment, acilities or non-nuclear material, until such

time as the Agency has terminated the application o saeguards thereto, in accordance with theprovisions o paragraph 26 or 27 o the Agencys Saeguarded System.

UNited StateS. Te AEA, section 123 (a) (1), requires a guarantee by the cooperating party

that saeguards as set orth in the agreement or cooperation will be maintained with respect to all

U.S.-obligated nuclear materials and equipment, so long as they remain under the jurisdiction or

control o the cooperating party, irrespective o the duration o other provisions in the agreement

or whether the agreement is terminated or suspended or any reason. Tus, even i a U.S. agree-

ment with a cooperating partner is terminated or expires or i the cooperating partner withdraws

rom the NP, saeguards must continue to apply to items subject to the agreement.

treatieS aNd iNterNatioNal aGreemeNtSTreaty on the Non-Proliferation of Nuclear Weapons. Article X, paragraph 1, o the treaty

provides that a state party to the treaty has the right to withdraw rom it i it decides that

extraordinary events, related to the subject matter o the treaty, have jeopardized its supreme

interests. Te model NP saeguards agreement (INFCIRC/153) provides that such an

agreement is to remain in orce as long as the State is party to the [NP]. 31 Tus, i a non-

nuclear-weapon state validly withdraws rom the NP, its saeguards agreement would no

longer be in orce. Tis provision contrasts with saeguards agreements by non-NP parties

(INFCIRC/66) that require saeguards in perpetuity. However, while not removing this dis-

tinction between parties and nonparties to the NP, the decision in 1995 to extend the NP

indenitely has helped promote the principle o perpetuity o saeguards.

Nuclear Suppliers Group. Te guidelines also contain a requirement or perpetuity o

saeguards, but it does not apply to supply contracts with non-nuclear-weapon states con-

cluded beore April 3, 1992.

Nuclear-Weapon-Free-Zone Treaties and Regional Arrangements. Te reaty o late-

lolco (Latin America), the Raratonga reaty (South Pacic), the Bangkok reaty (South-

31. IAEA Inormation Circular (INFCIRC/153[Corrected]), paragraph 26, http://www.iaea.org/Publi-cations/Documents/Incircs/Others/incirc153.pd .


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east Asia), and the Pelindaba reaty all contain peaceul-use and saeguards provisions

that are independent o NP membership.32 However, the most recent such treaty, the

Central Asian Nuclear-Weapon-Free-Zone reaty, reers specically to application o sae-

guards pursuant to the NP. Te EURAOM reaty, which predates the NP, establishes

a regional saeguards system. Tus, a sizable number o states have already undertaken

peaceul-use and saeguards commitments that would endure regardless o their adher-

ence to the NP. However, a state withdrawing rom the NP may also seek to withdraw

rom other relevant treaties.

UN Security Council Resolution 1887. Resolution 1887 urges all states to require, as a

condition o export, that recipients allow or continuation o saeguards on any received

nuclear material and equipment, even i they have terminated their IAEA saeguards

agreement. Tis would also apply to any special nuclear material produced through the

use o such material or equipment.

A requirement for perpetuity of safeguards is now widely accepted internaonal prac-ce among suppliers. However, the ability of a state to withdraw from the NPT and ter-

minate its comprehensive safeguards agreement with the IAEA remains an important

loophole as illustrated by the acons of North Korea when it expelled agency inspec-

tors in 2002 and withdrew from the NPT in 2003.

an Pc

As a result o the ailure o the IAEA to detect Iraqs massive nuclear-weapons program be-ore 1991, the IAEA Board o Governors in 1997 approved the Model Additional Protocol

(INFCIRC/540)33 to its saeguards agreements to improve its authority to detect clandestine nu-

clear activities. Under the NP saeguard agreements (INFCIRC/153), inspectors rights o access

are limited. For routine inspections, they are limited to key measuring points in declared acilities.

Te IAEA had the right to conduct so-called special inspections, i it considered that inormation

provided by a state was not adequate or it to ulll its saeguards responsibilities, and it had the

right to gain access to inormation and locations beyond those specied in the saeguards agree-

ment. However, in practice the agency inspectors had largely conned themselves to inspecting

only declared acilities up to 1991. Te weaknesses in this approach became readily apparent as the

extent o Iraqs nuclear-weapons program and activities at undeclared acilities was revealed.

Te AP expands the agencys authority and practices to gain increased inormation about and

access to a states nuclear activities and thereby greatly enhances its ability to detect illegal, clan-