Nuclear Cooperation with China

The Iran nuclear agreement has all but overshadowed another nuclear deal pending in the Congress – a renewal of peaceful nuclear energy trade with China. The United States first signed a nuclear cooperation agreement with China in 1985 but the agreement was controversial because of China’s proliferation behavior. It was not until 1998 that the necessary waivers for export licenses were issued.

Since then, Westinghouse has sold four AP-1000 reactors to China and dozens more are planned. The economic benefits of cooperation seem to be clear, but there are still significant export control concerns. Unless Congress passes a resolution of disapproval, or conditions this agreement like the last one, the new peaceful nuclear cooperation agreement could enter into force as early as the end of July.

Q1: Why sign a new 123 agreement with China now?

A1: The existing agreement will expire at the end of 2015. Contracts underway now to build U.S. designed nuclear power reactors in China require a framework agreement in place for significant nuclear exports. Of all countries across the globe, China has plans to build the most nuclear power reactors, and after the accident at Fukushima, settled on the AP-1000 for its inland sites. These sales are likely to dwarf the number of AP-1000s that may be built in the United States. China has also entered into an agreement with Westinghouse to develop a Chinese version of the AP-1000 called the CAP-1400, which will be available for export. Although much of China’s nuclear industry will be busy building nuclear power reactors at home (there are 24 under construction now, with plans to double that number in the next 15 years), China now sells power reactors to Pakistan and is discussing other sales with Argentina and Romania.

Q2: What are the most important features of the agreement?

A2: Although China is a nuclear weapon state, the nonproliferation requirements in the agreement are virtually the same as those the United States signs with non-nuclear weapon states. The requirements under Section 123 of the Atomic Energy Act help ensure that material, equipment, and technology is safe, secure and not diverted to military uses. A few provisions stand out: the agreement grants China advance consent to reprocess U.S. origin spent fuel and does not contain an ironclad provision that the material will be under International Atomic Energy Agency (IAEA) safeguards. Second, the agreement has a unique provision that brings technology transfers under the framework agreement, which reportedly was designed to make the Chinese more responsive to demands for better export control implementation. The United States continues to sanction Chinese entities and indict Chinese individuals and companies for illicit transfers.

Q3: What are the concerns of renewing a 123 agreement with China?

A3 : China has made great strides in its nonproliferation policies in the last twenty years but there’s further to go. It is a member of the Nuclear Suppliers Group, but has not joined the other export control arrangements for missiles, chemical- and biological-related exports or conventional arms exports. It has not provided enough focus, resources, or trained personnel to fully implement controls. Another issue is the porous nature of the boundary between military and civilian nuclear activities. Many of its fuel cycle facilities started out producing material for nuclear weapons and there is no real separation, physical or administrative, between the facilities and personnel. Because China is a nuclear weapon state, it is not obligated to have international monitoring on its nuclear sites, although it does make certain facilities eligible for the application of IAEA safeguards. Some critics have alleged that Chinese nuclear naval submarines have benefitted from reverse engineering of U.S. pump technology provided under the AP-1000 program, a serious allegation if it is true.

Q4. What can the U.S. do to mitigate risks of continued nuclear cooperation with China?

A4: Overall, Congress should consider requiring, under the terms of the agreement, reporting on steps the Chinese government has taken to create firewalls between civilian nuclear and military nuclear sites, facilities and personnel; an annual report on steps the U.S. government has taken to consult with China on restraints regarding civil nuclear cooperation with Pakistan; certifications every five years that China has taken appropriate and effective steps to halt transfers of WMD-related material, equipment and technology to North Korea and Iran and other states of concern; and annual reporting on the new “fast track” technology transfer provisions. Congress could also authorized expanded export control cooperation between the United States and China with an eye towards shoring up what is an obvious weakness in Chinese nonproliferation capabilities.

Sharon Squassoni is director and senior fellow with the Proliferation Prevention Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Christopher Coughlin is an intern with the Proliferation Prevention Program at CSIS.
 

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2015 by the Center for Strategic and International Studies. All rights reserved.

Chris Coughlin

Sharon Squassoni