Fact Sheet
Bureau of International Security and Nonproliferation
July 15, 2011

If adopted, legislation in the U.S. House of Representatives, H.R. 1280, would amend the requirements of the Atomic Energy Act for the provisions to be included in U.S. nuclear cooperation agreement with our trading partners in such a way that it would impede U.S. ability to achieve key nonproliferation goals. The Department of State is the lead agency for negotiating these agreements. They are an important element of our nonproliferation policy and their effectiveness as a nonproliferation tool would be damaged by H.R. 1280.

The Administration is strongly committed to and shares many of the policy objectives reflected in H.R. 1280, but is deeply concerned by many of the bill’s provisions.

Certain of the bill’s objectives, including limiting the spread of enrichment and reprocessing technology, creating a global liability regime that is conducive to the participation of U.S. industry in international commerce, and attaining the broadest possible adherence to the various components of the international nonproliferation regime, are laudable.

The Administration has worked long and hard to achieve these objectives, through strengthening the Nuclear Suppliers Group Guidelines, through establishment of low enriched uranium fuel banks and reserves to promote reliable supply of nuclear fuel, through pressing for all States to sign, ratify and implement an additional protocol as an essential element of the IAEA safeguards system, through pursuing universal application of the Convention on Supplementary Compensation for Nuclear Damage, through achieving passage of UNSCR 1887 and through many other successful efforts in diplomacy.

However, the Administration believes that the approach taken in the bill to unilaterally mandate certain changes in nonproliferation practice as a condition for future U.S. nuclear cooperation would ultimately impede the achievement of those objectives, and for this reason, the Administration opposes H.R. 1280.

Nuclear Cooperation Agreements

U.S. Nuclear Cooperation Agreements with our trading partners, so-called 123 Agreements, establish the conditions for nuclear trade with the United States and are the vehicle for several existing and powerful nonproliferation commitments, such as permanent U.S. consent rights on enrichment, reprocessing, and retransfer of U.S.-obligated nuclear material. Maximizing the number of 123 Agreements so as to enlarge the number of countries and amount of material covered by these commitments promotes U.S. nonproliferation goals.

Unfortunately, it is the view of the Administration that the bill's requirements would reduce the likelihood that the United States would be able to conclude 123 Agreements successfully with other countries, thereby limiting our influence over others’ nuclear programs.

Specific Provisions of Concern

H.R. 1280 would impose roughly a dozen significant new constraints on U.S. nuclear exports and on the negotiation and conclusion of 123 Agreements, including provisions that would be required in all new and renewal agreements.

Many of these provisions would be difficult for our nuclear cooperation partners to accept; the United States would not be able to accept some of these conditions on a reciprocal basis, as would be required by virtually all of our partners.

These provisions would likely cause them to consider nuclear cooperation with other countries instead of the United States, thus preventing the achievement of the bill’s nonproliferation objectives.

For example, the bill would impose a requirement to expand the scope of some of the obligations in a 123 Agreement to cover material, components, and facilities from non-U.S. suppliers. Such an obligation would almost certainly be rejected by most supplier and recipient countries.

The bill’s prohibition on permitting third-party nationals access to U.S.-supplied reactors, equipment, or sensitive materials without prior U.S. consent is impractical as it would interfere with the application of International Atomic Energy Agency (IAEA) safeguards by asserting a right to “approve” Agency inspectors in other countries.

The prohibition would also severely constrain the development of many countries’ nuclear power programs, due to the global nature of the industry. This would likely compel potential foreign partners to seek cooperation with other countries with less onerous conditions.

While the Department lauds H.R. 1280’s goal of providing adequate legal liability protection for U.S. industry, the bill’s provisions would create a legal obligation to meet a vague standard, to be judged by others, that few states would be willing to accept.

Furthermore, decisions about what constitutes adequate liability protection are commercial determinations that are best made by U.S. suppliers in the context of a particular transaction.

Impact on trade

In practice, both current and potential future partners in peaceful nuclear cooperation would view the changes to the legal underpinning of nuclear commerce as unduly burdensome, with the result that future nuclear commerce, and the jobs it produces, would be adversely affected.

The bill’s restrictions could cause the United States to be seen as an unreliable trading partner. Because the United States is no longer the sole supplier of many nuclear commodities, other countries would minimize their cooperation with the United States in favor of other suppliers whose nuclear requirements are less onerous.

Furthermore, as H.R. 1280 would also require that every “subsequent arrangement” under a 123 Agreement be approved by affirmative action by Congress, it would severely restrict the movement of nuclear material between countries, as well as the conduct of other routine nuclear commerce, under existing 123 Agreements.

While the Administration has worked successfully in the Nuclear Suppliers Group to strengthen the nonproliferation conditions required by other nuclear suppliers, the United States would have, in all likelihood, no success in persuading them to adopt the legal requirements proposed in H.R. 1280.

In sum

If H.R. 1280 were enacted, the Administration expects that the United States would see a significant drop in the number of states willing to conduct nuclear cooperation with our country. The United States’ ability to use 123 Agreements to strengthen nonproliferation conditions in global nuclear commerce would therefore be significantly diminished, while at the same time the U.S. nuclear industry’s ability to be a major player in global civil nuclear cooperation in the future would be crippled, resulting in the loss of potential American jobs.

The Department has made these views known to House Foreign Affairs Committee Leadership.