[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]








        THE FUTURE OF INTERNATIONAL CIVILIAN NUCLEAR COOPERATION

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 10, 2014

                               __________

                           Serial No. 113-188

                               __________

        Printed for the use of the Committee on Foreign Affairs








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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
DOUG COLLINS, Georgia                GRACE MENG, New York
MARK MEADOWS, North Carolina         LOIS FRANKEL, Florida
TED S. YOHO, Florida                 TULSI GABBARD, Hawaii
SEAN DUFFY, Wisconsin                JOAQUIN CASTRO, Texas
CURT CLAWSON, Florida

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director





























                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Henry D. Sokolski, executive director, Nonproliferation 
  Policy Education Center........................................     5
Mr. Daniel S. Lipman, executive director, Supplier Programs, 
  Nuclear Energy Institute.......................................    12
Mr. Leonard S. Spector, executive director, Washington, DC, 
  Office, James Martin Center for Nonproliferation Studies.......    21

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Henry D. Sokolski: Prepared statement........................     7
Mr. Daniel S. Lipman: Prepared statement.........................    14
Mr. Leonard S. Spector: Prepared statement.......................    23

                                APPENDIX

Hearing notice...................................................    54
Hearing minutes..................................................    55
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    57
Mr. Henry D. Sokolski: Material submitted for the record.........    59

 
        THE FUTURE OF INTERNATIONAL CIVILIAN NUCLEAR COOPERATION

                              ----------                              


                        THURSDAY, JULY 10, 2014

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 9:43 a.m., in 
room 2172 Rayburn House Office Building, Hon. Ed Royce 
(chairman of the subcommittee) presiding.
    Mr. Royce. This committee will come to order. Today we 
assess the role of civilian nuclear cooperation agreements, 
known as ``123 agreements,'' 123 agreements as known by Mr. 
Sokolski, especially their role in U.S. nonproliferation policy 
and in promoting our nuclear industry abroad. Of note, the 
administration has recently submitted a proposed 123 agreement 
with Vietnam that is now under congressional review.
    Nuclear cooperation agreements have the dual goals of 
advancing U.S. nonproliferation policy and also enhancing 
opportunities for the U.S. nuclear industry in foreign markets. 
Both are of great importance, but there is an unavoidable 
tension between the two. Those who stress nonproliferation 
argue that 123 agreements are a valuable tool in preventing the 
spread of uranium enrichment or the production of plutonium, 
also known as E&R technology which can be used to create a 
nuclear weapon. Others argue that unilateral efforts to bind 
other countries will not work because they can turn to other 
nuclear suppliers, such as France or Russia which impose few or 
no restrictions and that, of course, they are undermining the 
competitiveness of U.S. companies.
    Last December, the Obama administration ended its 3-year 
review of U.S. policy on this subject, which pitted the State 
Department's argument for nonproliferation against the 
Department of Energy's advocacy for U.S. industry. The final 
decision was to continue to push for a ``no E&R'' commitment in 
nuclear cooperation agreements, but not to make that a 
requirement. For an administration that has held out 
nonproliferation as a signature issue, this is a dramatic 
retreat from the so-called ``gold standard'' policy under which 
countries were pressed to forego acquiring these potentially 
dangerous technologies begun under the previous administration.
    The debate over these and other issues is reflected in the 
proposed 123 agreement with Vietnam. It has generated both 
praise and criticism, the latter focused on the absence of a 
binding restriction regarding E&R its automatic renewal after 
30 years, which would eliminate the congressional review that 
has been the norm; and Vietnam's abysmal human rights record 
which we examined in committee hearing yesterday.
    This discussion is not confined to Vietnam, but to those 
that follow as well. We are currently in negotiations to renew 
our 123 agreement with our ally, South Korea, which have been 
slowed by significant differences over E&R. Our agreement with 
China expires next year, and its renewal is certain to generate 
significant controversy. And the U.S. may begin discussions 
with Saudi Arabia over the massive nuclear energy program it is 
planning. That one is guaranteed to bring these critical issues 
into focus.
    Of course, the Obama administration has made the goal of 
limiting the spread of enrichment technology all the more 
difficult by its ongoing negotiations with Iran. In November, 
the administration conceded that Iran will be allowed to retain 
a uranium enrichment capacity, a bomb making capacity, in any 
final deal. That is the effective melting of the ``gold 
standard.'' The administration has conceded this dangerous 
technology to a state sponsor of terrorism that is under U.N. 
Security Council sanctions for egregious violations of its IAEA 
safeguards agreement.
    Although today's topic may sound technical, it should be 
clear to all that it concerns fundamental U.S. interests, not 
only in the present but far into the future as well.
    I now turn to the ranking member, Mr. Brad Sherman, for any 
remarks he may wish to make.
    Mr. Sherman. Thank you, Mr. Chairman, and thank you for 
holding this hearing. You and I worked for so many years as 
chairman and ranking member of the Terrorism, Nonproliferation, 
and Trade Subcommittee. We had a hearing 6 years ago, entitled 
``Saving the NPT in an Era of Nuclear Renaissance,'' and we 
have had various other hearings, as you know, on the issues we 
now confront today at the full committee level, and they are 
certainly worthy of discussion at the full committee level.
    In addition to the focus we had 6 years ago, we have seen 
Fukushima, but that disaster has not prevented many countries 
from looking at expanding or initiating a nuclear power 
program. Civil programs can provide countries with the know 
how, of course, to move toward a nuclear weapon. They can also 
provide electricity without the generation of greenhouse gases. 
And a number of countries will be attracted to this not only in 
a cost per kilowatt basis, but also as part of any economic--
where there are economic incentives to reduce their carbon 
footprint, nuclear power will be particularly attractive.
    Civil and nuclear programs can also provide cover for 
countries to pursue military programs. That is obvious. The 
means and the excuse to conduct activities related to a 
military program will be present in civil nuclear programs 
allowing countries to pursue weapons under the guise of a 
civilian program. It is a particularly weak excuse to say that 
a country wants to generate electricity if that country has or 
is contiguous with other countries which have natural gas which 
cannot be easily exported. The cost of liquification, 
transportation, and regassification of natural gas means that 
it is perhaps one third the cost in the area in which it is 
created, in which it is obtained, than it is shipped to distant 
continents. Countries that have virtually free natural gas that 
have no other way to exploit it, like Iran, who say they need 
nuclear power for electricity should come under special 
scrutiny.
    It is not a theoretical concern to say that a civilian 
program can cover for a military program. This is exactly what 
Iran is doing. India, which I want to point out did not sign 
the NPT and therefore was not bound by any treaty not to 
develop nuclear weapons, but in the case of India derived the 
fuel used from a civilian reactor for the fissile material used 
in its first weapons. That is why the so-called 123 agreements, 
including the Vietnam agreement which is now sitting before 
Congress, need to be deliberated more than is the current 
practice.
    The current law puts Congress not in the driver seat, not 
as a coequal branch of government, not in the back seat, but in 
the trunk when it comes to deciding what our policy will be on 
nuclear cooperation agreements. These agreements come to 
Congress for a 90-day review. In order to stop them, both 
houses of Congress have to act within 90 days, something that 
in this Congress is unlikely to occur on a motherhood 
resolution. But even if both houses of Congress vote to stop 
such an agreement, it goes before the President for a possible 
veto and if the President vetos the resolution, both houses 
have to override with a two thirds vote. I think that is an 
affront to the doctrines that underlie the first article of the 
U.S. Constitution. It is not meaningful review.
    I am not saying that Congress needs to have an affirmative 
vote on every agreement. Congresswoman Ros-Lehtinen and I have 
introduced legislation, H.R. 3766, which would provide that 
Congress would have to affirmatively vote on an agreement 
unless that agreement met what I call the gold standard plus. 
That is to say it would have to have gold standard provisions 
dealing with a commitment by the country not to deploy 
enrichment and reprocessing, the two most proliferation and 
dangerous technologies needed to produce a bomb-grade material, 
and also agree to enhance inspections and verifications 
regimes, known as the additional protocol.
    In addition, they would have to allow the American 
companies to compete by having liability provisions. No company 
will build a nuclear reactor without some liability protection, 
but Russia and France, their companies are state owned and so 
they claim sovereign immunity as their liability protection. 
Any 123 agreement that does not insist on liability protection 
for American companies basically is an agreement designed to 
cede the jobs which would have the effect, if not the design, 
of ceding the jobs to Russia and France. I believe that a 
reasonable compromise with the Executive Branch and industry 
might be available. And I thank the chair for his time and I 
especially thank the gentlelady from Florida for her work on 
the bill that I have just cited and I yield back.
    Mr. Royce. We go now to Judge Poe, chair of the 
Subcommittee on Terrorism, Nonproliferation, and Trade, for 2 
minutes.
    Mr. Poe. Thank you, Mr. Chairman. The Taiwan 123 Agreement 
seems on the surface to be an easy decision. Taiwan is a strong 
ally of the United States. Taiwan has a great democracy that 
shares the values of the United States as well. And the 
agreement has legally-binding language that Taiwan will not 
acquire enrichment or reprocessing technology. This is 
important because such technology can very easily lead to the 
development of a nuclear bomb.
    The proposed Vietnam 123 Agreement is the one I have 
concern with. First, there is no legally binding language like 
the Taiwan agreement that states that Vietnam will not acquire 
enrichment and reprocessing technology. Vietnam is not the ally 
that Taiwan is and it is ironic that we have stricter language 
in our deal with a close democratic ally than we do in a deal 
with a Communist country that has really proven not to be 
trustworthy.
    However, it is also correct that the United States does not 
control the nuclear energy market like it did in the past and 
that each of these deals is important to the United States' 
industry and American jobs. We are not in the 1950s any more. 
Russia, China, France, South Korea, and Japan would all be 
happy to take our business in Vietnam if we just walk away from 
some kind of an agreement because Vietnam does not agree to 
forego enrichment and the preprocessing technology. The deals 
they strike will probably lead to greater proliferation risk 
than the current situation on the table before us. I do want to 
hear from the witnesses what they think about this situation.
    Second, the proliferation risk is not the only problem we 
have with Vietnam. Over the last few years, human rights abuses 
by the Government of Vietnam have gotten worse. Pastor Quang 
has been detained and arrested by the Vietnam police 13 times. 
His crime? He is a Christian pastor who organizes prayer 
meetings. Such abuses continue in Vietnam. There are 100 
stories like Pastor Quang and Congress should think twice 
before it rewards Vietnam's nuclear energy situation when it 
abuses and tortures and kills its own people. Human rights 
really do matter and I will yield back.
    Mr. Royce. Thank you, Mr. Poe. We are joined this morning 
by a distinguished group of experts. Mr. Henry Sokolski is the 
executive director of the Nonproliferation Policy Education 
Center. He previously served as the Deputy for Nonproliferation 
Policy in the Department of Defense from 1989 to 1993. 
``Hammering Hank,'' as we know him in the office, also worked 
in the Office of the Secretary of Defense's Office of Net 
Assessment. It is his birthday, so congratulations, Henry, and 
I am going to assume it is your wife, Amanda, who is keeping 
you young.
    Mr. Daniel Lipman is the executive director for Supplier 
Programs at the Nuclear Energy Institute. Formerly, he was 
senior vice president of Operation Support for Westinghouse 
Electric Company.
    Mr. Leonard Spector, Sandy Spector as he is known, is 
deputy director of the James Martin Center for Nonproliferation 
Studies at the Monterey Institute of International Studies. 
Previously, he served as Assistant Deputy Administrator for 
Arms Control and Nonproliferation at the U.S. Nuclear Security 
Administration where his portfolio included overseeing nuclear 
export control activities.
    Without objection, the witnesses' full prepared statements 
will be made part of the record. Members are going to have 5 
calendar days to submit any statements or questions or 
extraneous material for the record.
    Mr. Sokolski, if you would please summarize your remarks to 
5 minutes, for each of the members of the panel here and then 
we will go to questions.

    STATEMENT OF MR. HENRY D. SOKOLSKI, EXECUTIVE DIRECTOR, 
            NONPROLIFERATION POLICY EDUCATION CENTER

    Mr. Sokolski. Mr. Royce, Mr. Engel, members of the 
committee, I want to thank you for this important hearing. 
Before I begin, I would ask permission that not only my full 
testimony, but several brief items be placed in the record.
    Mr. Chairman, when I last appeared before this committee it 
was considering legislation that would have significantly 
strengthened the role of Congress in approving U.S. nuclear 
cooperative agreements. The committee unanimously approved this 
legislation, but after industry objected, it never went to the 
floor. That was 3 years ago.
    Congress now, as we have just heard, really does not have 
much of a hand in shaping nuclear cooperative agreements. It 
can continue to let the executive send up more agreements and 
allow them to come into course, but if Congress does, it will 
leave itself powerless to deal with three issues.
    First, possible unilateral executive authorization of 
Chinese reprocessing of hundreds, I repeat, hundreds of bombs 
worth of plutonium each year from spent fuel processed in U.S.-
designed reactors. China recently announced it will buy a so-
called ``peaceful'' reprocessing plant from France and locate 
it at China's original weapons plutonium production site. This 
will obviously have military significance. Under the current 
U.S.-China nuclear agreement, the executive can authorize China 
to reprocess materials from eight or more U.S.-designed 
reactors that will be operating in China. Congress has no say. 
This understanding expires December 2015 and must be 
renegotiated. Does Congress not want to have any say in this?
    Under the committee's stalled 2011 legislation, each 
Chinese reprocessing request would require congressional 
approval. I would urge the committee to reconsider that 2011 
bill by marking up identical Ros-Lehtinen/Brad Sherman 
legislation, H.R. 3766.
    Second, the elimination of periodic required reviews of 
nuclear agreements. Most U.S. nuclear agreements are for a 
fixed term and must be renegotiated. The Vietnam nuclear deal, 
however, stays in force in perpetuity unless one of the parties 
asks and succeeds in getting it renegotiated. The executive is 
sure to push this approach for future deals until all U.S. 123 
agreements automatically renew without presentment to Congress. 
Again, this will occur unless Congress acts to limit the 
practice. Given the Vietnam deal is hardly urgent, it would be 
best to have the executive withdraw it until this is fixed.
    Third, the executive is creating a precedent with the 
Vietnam deal that will make it virtually impossible to resist 
Saudi, Turkish, and South Korean calls to reprocess or enrich. 
The executive is negotiating with Iran and South Korea over 
enrichment and reprocessing. The Vietnam deal is a kind of mini 
Indian nuclear deal. But it undermines the gold standard on 
proliferation conditions contained in the UAE and Taiwanese 
agreements sets a poor precedent on both fronts. Unless 
Congress overrules industry's current veto on legislating on 
these matters, expect more hand wringing, nail biting, and 
Iran-like crises to emerge.
    Two additional notes, industry and the State Department 
argue that if Congress votes on agreements that don't meet 
tough nonproliferation conditions, the agreements are dead on 
arrival with a loss of U.S. business and jobs. But in pushing 
for lowest common denominator agreements, State has its 
priorities backwards, I would argue. Our Government should be 
trying to convince other suppliers to raise their 
nonproliferation standards which I might add are all too 
similar to our own, but like our own, too low. The U.S. can do 
this, but it needs to take the initiative.
    Finally, although it is hardly sound to give up important 
security positions because of promised jobs, it is ridiculous 
to do so when such promises are hugely exaggerated. India, we 
were told, was a $100-billion nuclear market for the U.S. Nine 
years after that deal was announced though no U.S. reactors 
have been sold. Yet, by exempting India from restrictive NPT 
rules, we did great harm to that treaty and to our 
nonproliferation efforts globally.
    The GAO recently noted that the U.S. doesn't track 
America's actual nuclear exports. The committee should look 
into this and demand real numbers on exports of 123 controlled 
goods. On these matters, Congress should not be sold a bill of 
goods. Thank you.
    [The prepared statement of Mr. Sokolski follows:]


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                              ----------                              

    Mr. Royce. Thank you, Mr. Sokolski.

STATEMENT OF MR. DANIEL S. LIPMAN, EXECUTIVE DIRECTOR, SUPPLIER 
               PROGRAMS, NUCLEAR ENERGY INSTITUTE

    Mr. Lipman. Thank you, Mr. Chairman, Ranking Member 
Sherman, distinguished members. Happy birthday, Henry.
    I have been in this business now for four decades and never 
before, never before in four decades have I seen our industry 
so heavily dependent and engaged in the global nuclear market. 
I know you may know that we are building new plants here in the 
United States in Tennessee, in South Carolina, and in Georgia, 
but that is five plants, but there are more than 67 plants 
currently under construction, all of which are outside the 
United States. So this is a heavily global market. 
Participation in this market can have a significant impact in 
advancing a number of U.S. interests.
    As Henry mentioned, there certainly is job creation. We 
know from exports to China that close to 20,000 jobs have been 
created in about 15 states simply from that export. But for me 
as a nuclear professional, the thing I worry about and I wake 
up worrying about in the morning is nuclear safety. In the 
post-Fukushima world, I think Mr. Sherman referenced, nuclear 
safety certainly is a national security issue. And it is my 
view that American technology, particularly the latest reactor 
designs currently on offer in the market, offer significant 
nuclear safety benefits, along with the operating processes and 
procedures that come with it.
    Our technology--and by the way, our regulator with whom the 
industry does not always have a friendly relationship, is 
certainly the envy of the world.
    A third area of U.S. interest which has been touched upon 
and will be a theme today is that U.S. participation in markets 
outside the United States advances our nonproliferation 
objectives. We have the strongest, nonproliferation controls in 
our civil nuclear cooperation agreements than any other 
country.
    One question here then is where this market is outside the 
United States? Are we better off with America engaged in it or 
not? Do we make the world's nuclear operating fleets safer and 
more proliferation resistant if we participate or if we don't 
participate? And by the way, as was indicated earlier, this 
market is not ripe for the taking by U.S. companies.
    There is a lot of international competition out there. And 
that was referenced earlier. If we aren't going to be in these 
markets, I assure you our competitors will and they are. So 
what do we need? What are the issues here as far as the 
industry is concerned? First, I think you would look at this as 
a handful of policy tools and issues of importance to us. One-
twenty-three agreements, of course, and we will talk about that 
today, but we also need an efficient, predictable, and reliable 
export control process that is currently managed out of the 
Department of Energy.
    Other countries have to agree to, and this was mentioned 
earlier, nuclear liability regimes that protect companies from 
undo harm.
    And next, this is somewhat politically sensitive, these 
exports require trade finance, and reauthorization of the 
Export Import Bank is something our industry strongly supports. 
We also need better Federal coordination within the Federal 
bureaucracy and significant progress in the last couple of 
years has made that better, in our opinion, with the 
appointment of someone in the White House. But she is only one 
person. And finally, these deals are big, and they need 
advocacy at the highest levels of government. The China deal 
would not have happened had the previous administration not 
been personally engaged.
    And finally, we know that the geostrategic situation where 
Russia, who is engaged in the Ukraine and in Crimea, underlines 
the importance of energy in this competitive world. Nuclear 
energy has its part. Nuclear energy plays an important role not 
only in electrification, but as part of U.S. policy, U.S. 
foreign policy just as our digital industries, aerospace, oil 
and gas and other industries. So with that, I thank you for the 
opportunity to testify, chairman, and I look forward to 
responding to your questions.
    [The prepared statement of Mr. Lipman follows:]


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    Mr. Royce. Thank you, Mr. Lipman.
    Mr. Connolly. Mr. Chairman? Mr. Chairman, before the 
speaker speaks, I just wanted to say especially to my colleague 
from Florida, Sandy Spector and I go way back. We worked in the 
Senate together, you may not know, for the Senate Foreign 
Relations. So I welcome you, Sandy, back to Congress.
    Mr. Royce. And Gerry gave him the nickname. But it is good. 
Mr. Spector, we will go to you.

   STATEMENT OF MR. LEONARD S. SPECTOR, EXECUTIVE DIRECTOR, 
        WASHINGTON, DC, OFFICE, JAMES MARTIN CENTER FOR 
                    NONPROLIFERATION STUDIES

    Mr. Spector. Thank you, Mr. Chairman and other members of 
the committee and Ranking Member Sherman.
    I want to concentrate on the Vietnam Agreement looking at 
several of the issues that have already been mentioned. As a 
matter of policy, I have strongly supported U.S. efforts for 
many years to discourage the development of foreign enrichment 
and reprocessing capabilities. Given the desire of many states 
to sign a nuclear cooperation agreement with us for the part of 
approval, the seal of approval that it gives, these agreements 
provide the opportunity to negotiate restrictions on the 
development of enrichment and reprocessing with partner 
countries.
    The 2009 agreement with the UAE, of course, is considered 
ideal in its terms because it gave a blanket renunciation of 
any reprocessing or enrichment on its territory in perpetuity, 
certainly for the duration of our agreement. But we have a 
lesser kind of undertaking with Vietnam at this point. The 
language in the agreement is really in the opening section, the 
preamble, which is not a binding part of the agreement. It is 
just hortatory and descriptive. It refers back to a Memorandum 
of Understanding between the United States and Vietnam in which 
Vietnam agreed that it was not its intention to reprocess or 
enrich and that it was its intention to use international fuel 
cycle services to support its program which are very good 
statements, but these are nonbinding and, of course, they are 
reflective of an intention only; so we are long way away from 
the gold standard of the UAE agreement or the Taiwan agreement.
    On the other hand, we have something. We do have a 
Memorandum of Understanding. We do have the reference to it in 
the agreement, and when you compare that to where we were to 
start with of all of our other agreements, this is a real step 
forward. Other agreements only covered the enrichment or 
reprocessing of American provided material or material created 
with American exports, i.e., reactors or fuel. The Vietnam 
agreement speaks to a much broader limitation, which would 
cover all fuel irrespective of what country it might have come 
from, all reactors, and so forth. So in that sense, it is a 
very positive step forward. But to reiterate, also a very big 
step short of what we may have hoped for.
    Nonetheless, when you take together the partial standard 
here, what might be called the silver standard as a colleague 
of mine, Miles Pomper, has characterized it, and you couple 
that with a pretty decent record by the Vietnamese on the 
nonproliferation front in terms of the agreements that it has 
signed, the treaties that it has signed, and in terms of its 
absence, as far as I can tell, of involvement in the Iranian 
program, it is not usually linked, I have not seen it linked 
with any of the illicit trade that is supporting the Iranian 
program. And, in general terms, the program in Vietnam is so 
early in its development that there are many, many years ahead 
before they could possibly advance to a stage that we might be 
concerned about.
    And so I would say the silver standard is a satisfactory 
and acceptable approach in this context on this particular 
matter in the agreement. It is not ideal, but it does give us 
something to work with, and I think it is a reflection that the 
Vietnamese recognize that to enrich and reprocess really at any 
time in the future would be a politically-charged development 
that would raise national security concerns in many quarters. I 
think that shadow is very positive.
    Regarding the Additional Protocol, they have one, so that 
is not an issue. What we need to look at, however, is the 5-
year automatic extensions. When you couple that automatic 
extension with the lack of the gold standard on enrichment and 
reprocessing, it basically means that if their attentions 
change over the course of the next 30 years, we really have no 
way to come back to them and demand sort of a renegotiation or 
to demand changes in their behavior. The automatic extension 
deprives the Congress and the United States, more generally, of 
a ready approach to deal with some of these questions. Rather, 
we would have to take the extraordinary step of declaring an 
agreement to be terminated, which I think we would always be 
very reluctant to do because of the negative implication it 
would cast on our partner country.
    At the conclusion of my remarks, I note a number of 
regulatory issues; questions about the independence and 
effectiveness of safety regulation in Vietnam; questions about 
the independence of regulators because of the nature of the 
Vietnamese Government as a dictatorship; and also the question 
of the lack of strategic trade controls, which basically means 
Vietnam does not have the ability to comply with crucial U.N. 
Security Council resolutions. Thank you very much for the 
opportunity to testify.
    [The prepared statement of Mr. Spector follows:]


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                              ----------                              

    Mr. Royce. Thank you, Mr. Spector. We have been joined by 
the ranking member. He was at a briefing on Iran this morning. 
But at this time I think it would be perfectly appropriate if 
he would like to make his opening statement. Mr. Eliot Engel of 
New York.
    Mr. Engel. Thank you, Mr. Chairman. Thank you for holding 
this very timely hearing. I want to thank the witnesses for 
their testimony and I look forward to their answering our 
questions. This is interplay, obviously, between two crucial 
issues: The fight against the proliferation of nuclear weapons 
and the increasing global cooperation of civilian nuclear 
energy. We face a challenge today and a challenging question: 
How can we achieve our nonproliferation goals while commercial 
industry energy technology is now readily available in the 
global marketplace?
    In recent years, the U.S. has selectively pursued the so-
called gold standard, the legally binding pledge by countries 
receiving U.S. civilian nuclear technology that they will not 
pursue domestic enrichment or reprocessing capability. This 
provision was included in the nuclear cooperation agreement 
with the UAE, but France and Russia, our main competitors in 
the global market for civilian nuclear technology do not 
require no enrichment stipulation from their customers. 
Countries that purchase technology from these nations are free 
to operate enrichment facilities that might be used to produce 
low or medium enriched uranium for power plants or research 
reactors. This technology obviously could also produce weapons 
grade material.
    The U.S. now faces some difficult choices. We want to 
prevent the further spread of sensitive enrichment and 
reprocessing technologies, but if we continue to insist on no 
enrichment requirements, other governments are more likely to 
look to France or Russia to supply essentially the same nuclear 
technology, so it is a lose-lose scenario. American companies 
won't get the projects and the U.S. Government will have far 
less visibility into the nuclear programs of other nations.
    The stakes are enormous. Today, 434 civilian nuclear power 
reactors are operating in 29 countries; 73 are under 
construction; 172 reactors are on order or planned; and 309 
have been proposed and these figures don't include the hundreds 
of reactors for research, medical isotope production, or other 
civilian applications. The U.S. cannot be left on the sidelines 
as more countries enter the nuclear marketplace.
    In a perfect world, I would want all of our nuclear 
cooperation agreements to include the gold standard, but in 
practice, such a policy would isolate the U.S. and give a clear 
advantage to our competitors. We have been given a paradox to 
continue fighting nuclear proliferation. We need to be flexible 
in negotiating our civilian nuclear cooperation agreements. 
This approach is reflective of the nuclear cooperation 
agreement with Vietnam, which I support. That agreement 
stipulates that Vietnam will purchase nuclear fuel from the 
commercial market, but it does not include a formal commitment 
to forego enrichment or reprocessing in the future. So I hope 
in our questions to our distinguished panel, they can help us 
work through the policy dilemmas of nuclear cooperation. And I 
thank you, Mr. Chairman, for holding this hearing.
    Mr. Royce. Thank you, Mr. Engel. I will go now to my 
questions. I start with my first for Mr. Sokolski. The Obama 
administration recently concluded the 3-year review of its 
policy regarding nuclear cooperation agreements. The decision 
was to not require other countries to forego aquiring E&R 
capability as a condition, as you know we have been discussing 
for nuclear cooperation. This standard, which was included in 
the 123 agreement with the UAE and with Taiwan, is known as the 
gold standard. So is the gold standard dead?
    And the administration agreed up front in its negotiations 
with Iran that Iran would be able to continue to enrich 
uranium. How can this dangerous technology be conceded to a 
state-sponsor of terrorism?
    Mr. Sokolski. I guess the short answer is the fat lady is 
not yet on stage. We have not finished negotiating with Iran. 
It could come up as a cropper. We could be holding hearings for 
another year talking about a deal, which may not be finished.
    Mr. Royce. As Eliot shared with me this morning. We could 
be passing the Royce-Engel bill.
    Mr. Sokolski. So that is point one. Point two is saying you 
want to go case-by-case is a very expensive, long, drawn out 
way of saying we don't know what to do. Now you should demand 
more of our Government than that. That is no policy at all.
    Finally, a very important point, the hard yards are ahead 
of us. Vietnam, heck, they are not even building their first 
Russian reactor. They won't even start for another 6 years. So 
it is easy to kind of avert your gaze for the short-term. Saudi 
Arabia and South Korea, does Japan start reprocessing? What 
does that have to do with China? Those things are going to keep 
you up at night and I don't see any way around pushing the 
button for a standard because the suppliers currently pretty 
much have the same standards, it is just they are very loose. 
They are like ours. If we don't up the ante and push on the 
other suppliers to raise theirs, we will know where we are 
headed.
    Mr. Royce. Let me get to that question then and for you and 
other members of the panel, this will be my final question. 
Russia constructed and is supplying fuel for the Bashir 
reactor. That is concerning, but so is the fact that they are 
talking about building eight more, right? Eight more facilities 
even though Iran almost certainly has a clandestine nuclear 
weapons program. So why don't other supplying countries, such 
as Russia or France, impose similar conditions in their nuclear 
cooperation agreements? Don't they think that preventing the 
spread of E&R is important? Let us discuss that.
    Has the U.S. attempted to persuade other countries to adopt 
these restrictions? I mean what have we done in that dialogue? 
And if not, why haven't we? Has it succeeded at all where we 
have tried? What leverage do we have on those countries? And 
then lastly, how significant is the negative impact on the 
competitiveness of the U.S. companies that imposing this 
requirement of 123 agreements may cause? Are there specific 
examples that you can point to? So if I could hear from the 
panel on my questions there.
    Mr. Sokolski. I think the leverage point right now is 
ironically the safety point that was raised by the witness from 
NEI. The French are very upset with the shabby construction of 
their reactors in China and are afraid it is going to ruin 
their brand. By the way, this should be a concern for 
Westinghouse as well. They have not spoken up. They need to. If 
you do, this is a lever you go with into renewing the agreement 
because they do need help on more safety work and we need to be 
doubling down.
    If there is going to be a future for nuclear power design 
in America, they better not blow up. We can work with the 
French on this. The same thing can be done with the Russians. 
Why? We have suspended nuclear cooperation with them. We don't 
talk candidly enough about the Russian safety problem. This 
committee, other committees ought to press to get our agencies 
to start talking about that process.
    Mr. Royce. You mean restart the----
    Mr. Sokolski. Well, not restart. Get our agencies to be as 
candid as the French are about how poor the safety standards of 
places like China and Russia are. I think if we had more 
publicity on that, their product line would not be doing as 
well. You are not going to compete against those countries on 
price point or financing even with that said. So you are going 
to have to push to be more candid about what their safety 
problems are. Then you have leverage.
    Mr. Royce. And how can we get that into the record of this 
committee hearing now that we have surfaced that information?
    Mr. Sokolski. Hold a hearing. It is the old way. It works.
    Mr. Royce. Mr. Lipman,
    Mr. Lipman. Thank you, Mr. Chairman. Let me address the 
latter part of your question first. It is really the area of my 
competence. I do not think there is a lot of leverage. I think 
insofar as governments and particularly their state-owned 
enterprises, to go out into the marketplace and pursue 
opportunities, there are widely differing standards. In the 
case of the French, in particular, they have a commercial fuel 
reprocessing business, an enrichment business and they push 
that. We don't do that in the United States. Our American 
companies are not involved in fuel cycle activities.
    And I think the impact and to be very, very clear, the 
industry is not against the gold standard. The industry is 
against universal application of one size fits all policy. That 
is what our problem is. And when there is universal application 
of a standard, when countries operate in different regions, 
they have varying areas of expertise, as Henry noted in their 
nuclear power programs domestically. A one size fits all policy 
is just not workable and it excludes American companies from 
providing the technology that I think Henry was referring to 
that would better serve U.S. interests.
    Mr. Royce. I am out of time. Let me just defer to the 
ranking member. Go ahead.
    Mr. Engel. Mr. Spector, let me ask you. In my opening 
statement, I laid out what I see as a central dilemma for the 
United States. If we insist on a no enrichment requirement, 
there are two consequences: We don't have good visibility into 
a country's nuclear program and our nuclear companies lose 
market share and become less viable commercially. Do you agree 
this is a problem, the main problem?
    Mr. Spector. It is certainly a drawback to trying to 
pursue----
    Mr. Engel. Can you push the microphone down a little closer 
to you?
    Mr. Spector. It is certainly a drawback as we try to 
advance the gold standard which we must do. This set of 
arguments has a familiar ring. If one goes back to the current 
law, which I guess I was involved in drafting, the same 
argument was made that it would be dangerous, especially for 
American commercial interests, to insist that every state have 
full-scope safeguards, that is, that it had placed all of its 
nuclear facilities and equipment under International Atomic 
Energy Agency inspection. Nobody had that rule at the time. By 
1992, all suppliers had adopted the rule, and along the way we 
had many other states that supported it, Canada, Sweden, and 
others.
    We are in the same mode now. We know what we want to do. We 
would like to suppress enrichment and reprocessing to the 
maximum extent. We have a mechanism for doing that and we have 
to confront the commercial negativity in some respects, but it 
is worth appreciating that there are only six or so principal 
reactor vendors around the world that are really competing with 
each other.
    We have controls over our own and probably over the 
Japanese since they are in partnership. The French and the 
Russians stand to benefit from this rule, because it would 
drive partner states into using fuel cycle services, where they 
are very prominent. And so they have a self interest that may 
be supporting a rule like this if we can really press for it.
    Canada, I would say is in a different status--it is a 
friend of the United States and I think would go along. And I 
think we could actually make some progress if we did a head to 
head set of negotiations to try to make this the rule. So I do 
appreciate the points that have been made about the challenges 
that we might have, but I think the goal is worthwhile. And I 
think we can probably make progress if we really press the 
point forward.
    Mr. Engel. So as a practical matter, do any of you see 
countries accepting the no enrichment requirement in order to 
obtain civilian nuclear technology and for countries that 
refuse to agree to no enrichment are likely to build civilian 
reactors? Are there any countries that you see as proliferation 
risks? Mr. Sokolski?
    Mr. Sokolski. Look, part of our problem is we try to 
predict what is going to happen 30 years in advance. And we get 
it wrong over and over again. So let's just be democratic here 
and say almost any country that is not a mutual security pact 
ally of the United States could possibly cause problems. I will 
go further. You know, if South Korea gets nuclear weapons, it 
is a problem even though it is an ally. It is very, very hard 
to know which country is going to be a problem. Vietnam 30 
years from now could very well be a problem. Certainly, we 
didn't think Iran was going to have nuclear weapons 30 years 
ago. So I think the first point is they are all problems. That 
is the reason why you need a single rule.
    Second of all, I think voting on agreements is a little 
different than demanding that all agreements be exactly the 
same. I think if we are unwilling to use this deliberative body 
to debate and analyze what is correct, then we have given up on 
self-government on this issue set and you should just send it 
back to the executive and say it is their fault if anything 
goes wrong.
    Mr. Engel. Mr. Lipman, let me ask you this. There are 172 
reactors that are planned to be built. Can you tell us the 
competitive position of our U.S. companies which are mainly 
Westinghouse and GE? And I want to also ask you about China and 
their nuclear market. They have 57 reactors planned and another 
118 in the proposed stages. So if you could tell us what the 
state of play is in that market, where the U.S. companies stand 
in that?
    Mr. Lipman. Yes, ranking member. Let me start with the 
first part of your question on competition. Sandy's count was 
six. There are about ten nuclear reactor vendors out there 
because in the last few years, we have seen the rise of Korean 
competition and more Russian competition. There are three 
Japanese vendors as well as AREVA. And by the way, the Chinese 
are not far behind, to answer part of the second question. They 
will be in the export markets. So the bottom line is it is a 
very competitive market out there and each of these competitors 
brings different tools, different levels of state sponsorship 
and different ancillary deals, be it the military or other 
sorts of commercial concessions to the party. So it is very 
competitive. There is not U.S. dominance.
    GE and Westinghouse, however, have indicated that they can 
win against these competitors. The win in China in 2007, and I 
will segue my answer to the second part of your question, 
ranking member, was a win against the Russians and the French. 
So we can win. We can compete and we can win, but only if there 
is a level playing field. We are Americans. We like to compete, 
but we want a level playing field.
    As to the Chinese program, sir, I lived in China for 4 
years and I can tell you that the environmental situation in 
China is such, it has only gotten worse since I have lived 
there. Like the United States, the population is largely in the 
east and coal is in the north and in the west. A lot of the 
rail stock is used to transport coal. So they are going very 
heavily into nuclear technology. The first tranche of units 
that they bought were a little bit from here, a little bit from 
there, and then they settled on Westinghouse AP 1000 technology 
as a basis, but not the sole basis for their program going 
forward.
    It is my understanding that the second set of reactors is 
currently up for bid and that will be negotiated sole source 
with Westinghouse. So it gets to the point, frankly, that my 
colleague Henry made which is yes, you have to look forward 30 
years. That is exactly why you want American technology in 
there, because when you are in, and especially when you are in 
in the beginning, you get follow-on work. You have 
participation in the nuclear program and you have a view of 
what is going on in the country.
    My view at the time when I was negotiating the China 
contract, sir, was if we don't win, we are on in the outside 
looking in for decades. Thank you, sir.
    Mr. Engel. Thank you.
    Mr. Royce. We better go to Ileana Ros-Lehtinen, chairwoman 
of the Middle East subcommittee.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman. Thank 
you for this hearing and thank you to our witnesses.
    Throughout the past 6 months, there has been much 
discussion here in Congress about the role of this legislative 
body regarding nuclear agreements. The Obama administration's 
misguided policy toward Iran is a game changer and could 
potentially spark an arms race in the countries in the world's 
most unstable and dangerous region already.
    I disagree with the administration's insistence on taking 
our 123 agreements on a case-by-case approach, rather than 
holding each country equally to the gold standard. Why are we 
holding countries in the Middle East to different standards 
than in Europe or in Asia? We should be holding each country to 
the very strictest of standards to ensure that maximum 
safeguards are in place.
    If Congress has the ability to vote up or down on a free 
trade agreement why not on a nuclear agreement? That is why 
earlier this year I reintroduced alongside with my colleague, 
Brad Sherman, H.R. 3766, which reforms the Atomic Energy Act of 
1954 to provide greater congressional oversight of nuclear 
agreements with foreign countries and protect against the 
threat of nuclear proliferation. Let us not forget about the 
U.S.-Russia nuclear cooperation agreement which was previously 
withdrawn by the Bush administration in 2008. Why? Because the 
President could not certify under the Iran, North Korea, and 
Syria Nonproliferation Act that Russia was not providing 
nuclear missile in advance conventional weapons to Iran. This 
is important to know because we cannot examine these agreements 
in a vacuum.
    When these 123 agreements are proposed, we must take into 
account our foreign policy and national security interests, as 
well as a country's human rights record. And we must hold each 
and every country to those same standards that we set, which 
brings us to the 123 proposed agreement with Vietnam. I 
strongly oppose the agreement. Allowing Vietnam to enrich 
undermines our objectives in other areas and in the Middle East 
where allies such as the UAE and Jordan are held to the gold 
standard. Vietnam has an abysmal human rights record and the 
practice of human trafficking is rampant and there are severe 
restrictions against religious freedom.
    Congress must be empowered in its oversight responsibility 
and must ensure that such agreements not only protect our 
interests, but help guard against the rising threat of nuclear 
proliferation. When Brad and I introduced the bill, NEI 
immediately opposed it, stating that the bill risked national 
security and that it will cost U.S. jobs. Some of these same 
claims were made about the Colombian Free Trade Agreement, 
which was initially signed in 2006, that if we didn't sign 
immediately we would lose U.S. jobs. But after 5 years of 
congressional input and enhancement to approve the agreement, 
the idea of costing jobs did not prevent Congress from making 
the bill better because in the end expediency is not the 
objective. The objective is to create an agreement in which the 
U.S. benefits. And in the case of a nuclear agreement, U.S. 
national security should be the first priority.
    Then there is the claim that the bill would undermine U.S. 
national security because it would lack a commercial presence 
on the ground, but that did not do us any good in Russia. We 
have a 123 agreement with Russia which I opposed, but that 
hasn't stopped the Russians from supporting and providing 
sensitive materials and technology to the Iranian and Syrian 
regimes.
    And finally, there is the narrative that the U.S. would 
lose commercial business, that these countries will go to turn 
to other nations to fulfill their nuclear needs. Well, let us 
take a look at our foreign military sales program. It might 
take some time to get through the process, that is true, but 
our military technology and equipment is the best. And these 
countries that follow the process that we have in place because 
they know that they are getting the best quality when they buy 
from us. The same could be said about our nuclear know-how.
    Nuclear technology is not something you want to cut corners 
on. You want the best. I believe that these countries will stay 
with American companies because they know what they can get for 
us. Congress should already have oversight responsibility over 
these sensitive agreements. Congress must have a final say in 
any agreement that includes enrichment and it must be able to 
have an up and down vote.
    Mr. Chairman, when Congress will finally have a say over 
these nuclear agreements, we will ask why haven't we always 
done so? It makes common sense. It makes perfect sense. Thank 
you, Mr. Chairman.
    Mr. Royce. We thank you very much, Ileana. We will go now 
to Mr. Brad Sherman, who is the ranking member on the Terrorism 
and Nonproliferation Subcommittee.
    Mr. Sherman. Further support of our bill, Ms. Ros-Lehtinen, 
I will point out that Congress has demonstrated the ability to 
vote on and pass cooperation agreements with both India and the 
renewal of the Korea 123 agreement and I point out that our 
bill, I think, is probably in industry's interest though they 
may not focus on this because it says if you don't want to 
vote, have to have an up or down vote in Congress, you need a 
standard that has adequate liability protection for our 
companies. And I have been very disappointed with the Indian 
deal for a number of factors, but especially the fact that 
India has not given us adequate liability protection. We 
haven't built a single reactor there or even started one.
    Now Mr. Sokolski, we have got a proposal for a French-built 
plant for the production of weapons-grade uranium derived from 
spent fuel from U.S.-origin reactors. How many bombs does China 
have now? And how many more could they create in the next 10 
years just from this reprocessing plant, plutonium, excuse me?
    Mr. Sokolski. The problem is we don't know how many weapons 
they have. The respected opinions of most analysts and I think 
our Government is that they have no more than perhaps 200, 
maybe 300 weapons.
    Mr. Sherman. And if this French plant were built, it would 
take years, it would provide plutonium sufficient for----
    Mr. Sokolski. Well, if you have eight reactors of the AP 
size which is about 1100 megawatts, it will produce 1600 
kilograms of weapons of useable plutonium. That plutonium, you 
divide by four, that is the DOE number. So that is 400 bombs 
per year.
    Mr. Sherman. 400 bombs per year?
    Mr. Sokolski. Now that is assuming you use crude bomb 
design.
    Mr. Sherman. So we are talking about them deriving enough 
plutonium every year to create as many bombs as they currently 
have in stock?
    Mr. Sokolski. Here is the good news. The Chinese are pretty 
savvy. They don't like wasting money unnecessarily. They are 
haggling over price. They are looking at the Japanese and the 
South Koreans and what others are doing. If they don't see them 
reprocess, watch this program slip. We should be leaning on 
everyone in that region to not recycle, including the Chinese 
and avoid this uncertainty.
    Now many people will say oh, well, it is not weapons-grade 
and this and that. In private, I can lay out sort of the design 
things that we have learned from the labs that make it very 
clear this stuff is very usable, very usable for weapons. And 
so it is something you do not want to encourage.
    Mr. Sherman. What does China think of us having a nuclear 
cooperation agreement with Vietnam? And can we cooperate with 
China on nonproliferation policy or nuclear policy both with an 
eye toward the fact that their own 123 agreement needs to be 
renewed in 2015 and they may want to have some input into 
whether we enter into the Vietnam agreement?
    Mr. Sokolski. I am holding a series of seminars with 
Chinese nuclear experts. I am actually flying some in at the 
end of this month. That topic has not come up. We will make 
sure it does. But that said, I think the Chinese are sensitive 
to what is going on in the region. And I think that they assume 
for the moment that Vietnam isn't a problem. But in the long 
run, they are at odds. They are at odds. And they would be 
concerned.
    I think most important, the Chinese have come on record 
saying they are very concerned about what Japan might do when 
reprocessing. By the way, that is an agreement that is in 
perpetuity that should have been renegotiated for 2018. No one 
is pushing for that. I think you should. And the reason why is 
the force of debate in Japan, not so much here about what Japan 
ought to be doing. Because if they open up that plant, that is 
going to be a hornet's nest in the Far East, in China, South 
Korea, God knows where else. And so we have a stake in seeing 
them at least have a public debate about that. We have shut 
that down by having an agreement.
    Ms. Ros-Lehtinen [presiding]. Thank you, Mr. Sherman.
    Mr. Sherman. One final comment. I noticed that the Vietnam 
agreement says that they intend to provide international 
suppliers with fuels. Every year I issue a statement indicating 
that I intend to lose weight. I yield back.
    Ms. Ros-Lehtinen. Thank you. Judge Poe from Texas is 
recognized.
    Mr. Poe. Well, don't issue that statement each year. Thank 
you, Madam Chair. There is the issue of human rights. I want to 
hear from each one of you. Do you think the issue of human 
rights is something we should even be talking about in this 123 
agreement or is that a separate issue that the United States 
needs to deal with, not just Vietnam, but other countries?
    Mr. Sokolski, we will start with you and Mr. Lipman.
    Mr. Sokolski. My nonprofit stuck its neck out to really 
raise fundamental questions about the North Korean Nuclear 
Cooperative Agreement that we entered into. It is called the 
Agreed Framework. It wasn't a 123. It was technically and from 
a security standpoint very, very risky. All through that effort 
I took as many opportunities as I could to raise the question 
of human rights because ultimately contracts, and you want 
iron-clad contracts with this kind of technology, have to do 
with trust. So the idea that you would separate the way the 
government abuses or treats its own citizens because it has a 
trust with its own citizenry that you would separate that from 
something so important as an agreement on this kind of 
sensitive technology did not make sense to me. And so I think 
we are seeing this clearly in the case of Iran. And we are 
seeing it at various levels with our dealings even on the 
chemical issue with Syria. It has got to be part of the deal.
    Mr. Poe. Mr. Lipman.
    Mr. Lipman. Judge, certainly Congress should raise this 
issue if it is of concern as it should be to all Americans who 
share the values of this country. However, it has no part in a 
123 agreement in our opinion. What we push for is engagement. 
Engagement across industries generally, and of course, the 
nuclear industry in particular as a way of promulgating 
American values with countries in which we interact. But they 
should not be linked. One should not be conditioned on the 
other, Judge.
    Mr. Poe. Mr. Spector?
    Mr. Spector. I think I would take into account a fairly 
wide range of issues. Certainly, in a cover memorandum that is 
accompanying a document like that and you know that there must 
have been one like it that circulated in the administration. 
All of the major elements of our relationship with Vietnam need 
to be taken into account, not in the text of the agreement, but 
in the context of whether we want to go forward with this.
    And I would say there are certain elements that cross over. 
One is rule of law. Another is independence of enforcement 
personnel and regulators. That is not quite as vivid or 
visceral as the human rights problem, but I think if you want 
to look at the full spectrum, and of course, we didn't look at 
our relationship with Vietnam vis-a-vis China which is another 
underlying national security concern. So I think you don't want 
to limit this too precisely. A lot of these issues need to be 
weighed in the balance.
    Mr. Poe. Thank you. Let me talk about term limits. I didn't 
mean to startle my colleagues here. Not term limits for Members 
of Congress, but for contracts. Do you think, gentlemen, there 
should be a term limit for these contracts? Should there be no 
end in sight? Should we make it 30 years, 50 years? Should we 
solidify the deal for a time certain? It is kind of a yes or no 
and how long.
    Mr. Sokolski. This goes to your human rights question. If 
you distrust, you need to do more verification, therefore you 
want more frequent renegotiation. If you trust, you need less.
    Mr. Poe. All right. Mr. Lipman?
    Mr. Lipman. Judge, the industry has no quarrel with a 30-
year limitation. What we do want though is predictability. We 
want these agreements, the negotiation of these agreements to 
begin early and not to be in a situation where we are up 
against the gun, either in competitive space or because an 
agreement is ready to run out. The term to us is to some degree 
immaterial.
    Mr. Poe. Mr. Spector?
    Mr. Spector. I would stick with the 30-year limit as well. 
I think you do want things so that the agreements do come back 
before Congress. You do want the automatic opportunity to 
upgrade the agreements. And at the same time you need to give 
some certainty over a fairly long period to the industry 
because these plants take 10 years to build and will operate 
for 30 to 50 years. You have to find a balance there, so I 
think these automatic extensions are not the way to go.
    Mr. Poe. All right, thank you, Madam Chair.
    Ms. Ros-Lehtinen. Thank you. Thank you, Judge Poe. Dr. Bera 
is recognized.
    Mr. Bera. Thank you, Madam Chair. I want to revisit an 
issue that my colleague from California, Mr. Sherman, brought 
up, the Indian civil nuclear deal that was negotiated and 
signed in 2008. Obviously, it hasn't transpired the way we 
certainly would have liked to for a variety of issues, but 
particularly with liability issues, which seems to be unique to 
India. And it is not just our companies that are somewhat 
reluctant, GE and Westinghouse, but certainly the French and 
Russian companies that have much better protections. Our 
industries are private and certainly have got exposed.
    With a new administration coming into India with Prime 
Minister Modi certainly making overtures to want to increase 
trade, one; wanting to build India's infrastructure and expand 
its economy, and I think within the past month there has been 
some movement in terms of signing agreements with the IAEA. I 
would be curious on a couple of things. Maybe, Mr. Lipman, you 
can answer this. How large is the Indian market? And what next 
steps with the prime minister visiting Washington, DC, in 
September, would you like to see for us to really open up the 
market?
    Mr. Lipman. Thank you, Dr. Bera. First of all, I can say 
categorically that to U.S. reactor vendors and EPC 
organizations like Bechtel and Fluor and so forth, India is a 
top market prospect. I mean this is a country that has 
significant technical talent with very outstanding backgrounds 
in structural engineering and heavy manufacturing that 
complement the U.S. industry very, very well.
    I will say in terms of positive developments, and I know 
there has been some, I guess, in earlier remarks 
disappointment, I might say, that somehow the Indian market 
hasn't materialized after the very important political hoops 
that this country has had to--and this branch has had to jump 
through in order to make it a reality. These are long-term 
deals. They take a long time to negotiate, okay? But both 
reactor vendors either have now or in the last stages of 
negotiating early works agreement. So what does that mean? That 
is the engineering and technical work that goes on before 
reactor sales consummate.
    However, to your point, Dr. Bera, there will not be nuclear 
deals in India unless and until this civil nuclear liability 
issue is resolved, and I think like you, Dr. Bera, am heartened 
that the Modi administration is beginning to come to terms with 
reform of liability. That would truly open up that market to 
U.S. reactor vendors in a big way. Thank you, sir.
    Mr. Bera. Mr. Sokolski, are there any concerns that India 
will not sign the nonproliferation treaty as we move forward 
with the marketplace?
    Mr. Sokolski. The Iranians love that deal. They bring it up 
when they negotiate. The South Koreans carp about it. It is a 
thorn in the side of anyone trying to prevent proliferation. 
You better get something for it. We have it.
    Now we were talking about reactors back in 2005. I think 
the liability problems given Bhopal and the history and the 
emerging public cry for both less corruption with the contracts 
and concern about public safety, it is a long bet. I don't know 
that it is a bet against the house, but I would be looking for 
other ways to promote trade and engagement with India and the 
new government. I would not lean heavily on this and that has 
always been the case. And there are many areas that make more 
sense to focus on.
    Mr. Bera. Bringing it back to Mr. Lipman, how large is the 
Indian market?
    Mr. Lipman. Their plans are to put out up to 50 nuclear 
reactors over the coming 30 years. That is a plan. But there 
are currently agreements in place and reactor deals that have 
been consummated with the Russians. At Kudankulam, there are 
operating reactors of Russian design and there is a new set of 
units that have just been consummated with the Russians, plus 
as was mentioned earlier, the French are in there. We need this 
civil nuclear liability protection. I am certain that American 
companies just will not put their companies at risk.
    And what is interesting, it is not just American companies 
that get hurt. My view is so do Indian companies get hurt. Now 
why is that? I think there are many American companies that 
would like to leverage. The fact is that they are English 
speaking, highly technically trained, very capable engineers 
and manufacturers in the country of India. But they are not 
going to partner with them until this liability issue is put 
behind us. So to me, India represents in some ways and I 
disagree with Henry on this, that India represents a phenomenal 
partnership opportunity for American nuclear companies.
    Ms. Ros-Lehtinen. Thank you so much. Thank you, Dr. Bera. 
And now we turn to one of our subcommittee chairs, Mr. 
Rohrabacher of California.
    Mr. Rohrabacher. Thank you very much, Madam Chairman, and I 
appreciate the leadership that you and Chairman Royce have 
exemplified especially by this hearing. I have some deep 
concerns about what I have heard today. And it doesn't 
necessarily come from you, but it comes from the fact that I am 
also vice chairman of the Science Committee. I have spent a lot 
of time dealing with nuclear reactors and the technological 
aspect of this discussion.
    Mr. Lipman, the Russians are at 172 reactors you say are 
perhaps on the way to being built. Are any of them non-
lightwater reactors? Lightwater reactors are 50- and 60-year-
old technology. And they are dangerous as we have seen in 
Japan. Do we not now have the capability to build safe reactors 
whether they are Thorium based, maybe a small module nuclear 
reactor, pebble-bed reactors, high temperature gas reactors, 
all of which do not have this same potential of creating a 
disaster? Am I wrong with this other information I am getting 
on the Science Committee that we are being fed that we are 
capable of building a better reactor that is not such a danger?
    Mr. Lipman. Chairman, I certainly don't share your view on 
that. First, almost all the plants that are planned for 
construction indeed are lightwater reactors.
    Mr. Rohrabacher. Right.
    Mr. Lipman. The other technologies that you accurately 
represented are technologies that simply aren't commercially 
available today.
    Mr. Rohrabacher. They aren't available today because your 
industry has not invested in it. We have had a disaster in 
Japan and how much more has your industry then decided to put 
into development some of these alternatives that we have that 
had Japan had those technologies, they wouldn't be facing this 
radioactive crisis that they are in.
    Mr. Lipman. So with respect, chairman, it is our industry 
that is investing in these new technologies, B&W and NuScale 
and Westinghouse are developing small modular reactors. 
TerraPower in Seattle is investing in the traveling wave 
reactor which I think you are referring to. But those 
technologies, sir, are in the offing.
    And with respect to the Fukushima accident which you 
appropriately represent, one need only look at the reactors for 
sale on the international market from American vendors right 
now, GE and Westinghouse. They are designed for exactly that 
type of accident.
    Mr. Rohrabacher. Let me just note that for less than $2 
billion investment, we could have one of those other type of 
reactors on the market. We could have invested in it. Had we 
invested in that 20 years ago or 15 years ago when these 
reactors were possible. And had we had a pebble base reactor 
system in Japan, there wouldn't be a nuclear crisis there right 
now. I mean I realize what people think of our industry and 
what our industry has done. I am not anti-nuclear, as you can 
see. I want us to build nuclear reactors, but we have not kept 
up. The industry has basically been willing to sell old 
technology rather than invest in what is necessary to build 
these things. For example, we have high temperature gas cool 
reactors that it would be impossible then for there to be the 
type of leak that we have in Japan under the same 
circumstances.
    This is very disturbing. And also let me ask this, Mr. 
Lipman, and again, I am pro-nuclear reactor. I think nuclear 
energy offers a great alternative, but aren't we also talking 
about these new reactors had we invested in them? This idea of 
reprocessing wouldn't be on the table. It is my understanding 
that there is not plutonium left over from these new reactors. 
We have to invest in something that would be safer and would 
not lead a plutonium threat of having nuclear weapons being 
made from the by-product.
    I will just have to say that as much as I respect the 
development of the technology in your industry, I think that 
your industry has been, along with our Government, been 
irresponsible in not putting the money into the development of 
safer reactors that would leave the world safer from nuclear 
weapons as well as nuclear leaks.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Rohrabacher. And I 
am pleased to recognize Mr. Connolly. Thanks for sharing that 
personal biographical fact with me. I did not know that.
    Mr. Connolly. I knew you would want to know. Thank you, 
Madam Chairman.
    By the way, Mr. Sokolski, my colleague from California, his 
point about the need to invest in new technologies and the fact 
that by not having done so in a timely manner perhaps 
unwittingly we are actually expanding the proliferation threat. 
Would you agree with that?
    Mr. Sokolski. There is a firm actually in your district, I 
think, or near, Linden Blue is someone I regularly meet with. 
On paper, they have some wonderful things. By the way, that is 
General Atomics and they actually don't need Price Anderson 
they say if they can ever get going.
    I think the problem oddly is that the firms we keep talking 
about as American--Westinghouse, by the way, do you know who 
owns Westinghouse Nuclear mostly, 87 percent? Foreign 
countries, mostly Japan. These are not your average American 
companies. They don't manufacture. That manufacturing is done 
overseas for the key nuclear qualified components. This is to a 
lesser extent, but still significantly true of General 
Electric.
    So the innovation you are talking about is for a multi-
national corporate entity that is largely Korean, Japanese, 
American, but American last. So you know, you are going to have 
to work this by talking with these other countries, not just 
American firms because they own the companies.
    Mr. Connolly. Okay, but the point is if Mr. Rohrabacher is 
correct, that there are constantly new technologies that 
actually eliminate the problem of what to do with plutonium or 
what you can do with plutonium.
    Mr. Sokolski. Reduce it.
    Mr. Connolly. Well----
    Mr. Sokolski. Not eliminate it, reduce it.
    Mr. Connolly. But surely if such technology were 
commercially available wouldn't the United States want to 
promote it? The witness is shaking his head for the record.
    Mr. Sokolski. How shall I put it. Everyone wants to promote 
different forms of energy. They just don't want to pay for it.
    Mr. Connolly. Okay.
    Mr. Sokolski. My favorite is power from moon beams but it 
is very expensive. And so the point here is you want to 
leverage R&D to find out if something works and let the people 
go to banks and figure out if they can make a buck using the 
technology. And the market has spoken. On a lot of these 
reactors, the reason they are sticking with the light water 
reactor is that they don't want to take any additional risk and 
they would rather stick with the risks they know than the risks 
they don't know.
    Mr. Connolly. Fair point. All right, Mr. Spector, the 
chairman, my friend from Florida, Ileana Ros-Lehtinen said she 
is sponsoring a bill with Brad Sherman and the premise of that 
bill is we shouldn't differentiate. We need one uniform gold 
standard and we should be strict about it and enforce it in all 
123 agreements, everybody. If I heard your testimony correctly 
that is not exactly your point of view?
    Mr. Spector. I would say my testimony has to deal with an 
actual agreement that is in front of us. And I would say when 
you take all the factors into account, you would say this 
agreement is what we have to live with. But what do we want to 
do going forward? And there, I think, it is time to adopt a 
tougher standard. And as I said earlier, I think----
    Mr. Connolly. Excuse me, but the point here isn't just a 
tough standard. It is one standard that is tough, but one for 
all.
    Mr. Spector. I think I was supporting that going forward.
    Mr. Connolly. Okay.
    Mr. Spector. But we have to deal with this particular 
agreement, which is in front of us and which will come into 
effect in another 90 days or whatever it may be. And I would 
say there you don't want to reject to the agreement, start from 
scratch, and go through a very traumatic situation. I think we 
can tolerate this one.
    Mr. Connolly. Two more questions real quickly because my 
time is running out. Mr. Sokolski was calling down moonbeam 
power. Again, the chairman pointed out, Vietnam is under this 
agreement is allowed to enrich. Why? And second question, 
doesn't that undermine policies elsewhere especially in the 
Middle East where we don't want them doing that?
    Mr. Spector. Well, I think you are correct that the 
possibility was reserved by the Vietnamese, but they did step 
forward and attempted containment, and spoke about their plan 
not to do so, and their plan to rely exclusively on outside 
sources of fuel and services.
    I agree that is not an iron-clad guarantee. And it is made 
worse in this agreement because of the fact that the agreement 
won't automatically terminate and have to be renewed. It is 
going to be renewed automatically. So I would not speak with 
enthusiasm about this agreement. I would speak as tolerable, 
barely getting over the----
    Mr. Connolly. The second question, though Mr. Spector, was 
doesn't it, not intentionally, couldn't it contribute to 
undermining policy elsewhere? That was the chairman's point.
    Mr. Spector. Absolutely. I completely agree.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Connolly, but we 
are out of time. And we will turn to one of our subcommittee 
chairs, Mr. Chabot of Ohio.
    Mr. Chabot. Thank you, Madam Chair. And the so-called 123 
agreements are an important tool for advancing U.S. 
nonproliferation policy and for impeding the spread of uranium 
enrichment capabilities and fuel reprocessing around the world. 
Last year, the Asian Subcommittee that I chair held a joint 
hearing to examine the extension of the 123 agreement with 
South Korea and I strongly support the extension of the on-
going agreement and support its renewal because it not only 
provides a regional ally in South Korea with a domestic supply 
of energy, but also creates American jobs in those sectors that 
supply South Korea with the components it needs to maintain the 
power supply for its economy.
    A couple of questions. First, how much importance does the 
Government of the Republic of Korea assign to the successful 
renewal of the 123 agreement. And then second, what are the 
risks, if the U.S. and South Korea are unable to reach an 
acceptable outcome regarding agreement or disagreement and the 
other sense of the impact that there could be if we were unable 
to reach an agreement on the U.S. nuclear industry? Mr. Lipman?
    Mr. Lipman. Thank you, Mr. Chabot. I will limit my answer 
to sort of the industrial impacts of what you discussed. You 
talked about the job creation associated with nuclear power 
generally, but very specifically with the Republic of Korea, 
American companies partner with the Koreans in other markets. 
There are deals where American companies are in the lead and 
the Koreans are subcontractors, but there are deals such as the 
one in the United Arab Emirates where the Koreans are in the 
lead and there is significant job creation. And these 123 
agreements are critical. That is why American unions, in 
particular, are very supportive of 123 agreements because their 
membership receives significant benefit from the export.
    The Koreans utilize American technology, older American 
technology. And so having the export controls survive and be 
applied into markets into which Koreans wish to operate is 
something that is very important. So the 123 agreement is 
important to us in the industry, not just for industrial 
cooperation and job creation, but also for the continued 
exercise and control over U.S. technologies as Koreans go into 
other markets. So we support the timely completion during this 
2-year extension period. Thank you.
    Mr. Chabot. Thank you. Mr. Lipman, let me follow up on a 
different country here. Regarding the U.S.-China 123 agreement 
which expires next year, I believe, you briefly discussed the 
importance of renewing this agreement, both for the U.S. 
exports and American jobs. I was wondering if you or any of the 
other fellow panelists could discuss the risks associated with 
the U.S.-China cooperation agreement with regard to the theft 
of foreign technology and China's relationship with, for 
example, Pakistan, North Korea, and Iran. I will start with 
you, Mr. Lipman. I have got 1 minute and 20 seconds for all 
three of you.
    Mr. Lipman. If you have that little time, I would say the 
risk is in not renewing the agreement because you want this 
agreement. You want those proliferation controls in place. You 
want those industrial relationships in place and you want the 
continued ability to have eyes on the Chinese nuclear program 
and also to reap any economic benefits that come from it. Thank 
you.
    Mr. Sokolski. We are leveraged there because they are 
having trouble getting these machines built properly according 
to the French and I suspect in the U.S. case, too. But more 
important, the know-how is something they bought. They own 
enough of the design now that they are working with 
Westinghouse and our Department of Energy to build these things 
not only there, but to export them. So the business model is a 
little bit more than the U.S. in the case of Westinghouse. They 
are playing both ends of the game. So I would sort of be 
worried about corruption and what could be sold to other 
countries. They are under investigation in China, the leaders 
of the nuclear industry are indicted for corruption. We don't 
know what they might sell.
    Mr. Chabot. I note my time has expired, Madam Chair.
    Ms. Ros-Lehtinen. Thank you so much. We will allow him to 
respond. Mr. Spector.
    Mr. Spector. I would say if you go back to the history of 
the U.S.-China agreement it turned on exports from China that 
we were not happy with. These are missiles to Pakistan and a 
lot of other undesirable exports. They are continuing. Not 
precisely the same ones, but Iran has been a beneficiary of 
much technology that has come through China for its missile 
program and also its nuclear program. There is a $5-million 
bounty on a Chinese businessman, Karl Lee, because of these 
activities. I believe this is going to be a major issue when 
their agreement comes up for renewal.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Chabot. Mr. 
Lowenthal.
    Mr. Lowenthal. Thank you, Madam Chair, and I want to follow 
up on an issue that you originally raised and I think 
Congressman Poe touched on. And I would really like if anybody 
on the panel can kind of allay my concerns at this moment. They 
are more concerns than they are questions.
    I have heard and I think what is in the agreement that it 
is not the ideal. It is not the standard potentially that many 
members would want and I understand that and hearing in general 
from the panel. It still makes sense though to move forward 
even though it may not be the gold standard or at least the 
consensus I am hearing.
    But I am also concerned as what I said before what is not 
in the agreement, what is outside of the agreement and that is 
you know, Vietnam has one of the worst records of human rights 
violations in all of Southeast Asia and possibly in the world. 
And you know, here and even yesterday we had a hearing, I have 
spoken out against Vietnam's inclusion in the Trans-Pacific 
Partnership until they improve their human rights record, until 
they demonstrate that they are a country that values the 
ability of people to engage in activities, to come together, to 
worship as they so choose, not to be imprisoned. And yet, is 
this not the same issue? What can we do? We already have this 
agreement. We know that Vietnam is a terrible violator of human 
rights. We are now asked to support or not to support the 
agreement that has been negotiated. And yet, I have these real 
concerns that we are now rewarding again bad behavior.
    Mr. Sokolski. I think you have a bit more of a choice. You 
know, ultimately the barriers to blocking a deal are just 
almost insurmountable. You need two-thirds vote in both houses. 
But if you should demand that this thing be delayed until 
certain things were taken care of, I have every confidence that 
they would delay it. And the reason why is there is no reason 
to rush. The talks industry needs to have are not going to be 
held up because they don't have a 123 in place. They will talk 
if they think it is coming. And they have plenty of time to 
talk because they are not even building their first reactor for 
another 6 years.
    We have done this in the case of the UAE deal, the Russian 
deal. We did it actually just recently with the South Korean 
deal. I certainly share your puzzlement as to why you wouldn't 
ask for this. You might be told forget it, but not to ask? It 
seems odd. By the way, I am one of the people that thinks you 
shouldn't go ahead with this deal. Maybe the others are okay 
with it. I am not okay. I side with Ms. Ros-Lehtinen.
    Mr. Lowenthal. Is there any way? You know, once we go 
forward, we have no leverage. Is there any leverage we have 
here? I am not saying put it in the deal. You are saying as a 
precondition. What leverage do we have?
    Mr. Spector. The one tool that is available and takes 
legislation is to put a freeze on licensing so that the 
agreement sits in place, but nothing can travel under it and it 
can't be implemented. This was done with China, and I think 
they were on hold for quite a number of years because of the 
exports I mentioned earlier. It is not elegant and it is not 
easy to do, but it is a tool that is available. And there are 
vehicles that have been used by the Congress to advance certain 
goals in the nonproliferation area. This is a related area such 
as various, must-have legislation where riders are put on or 
amendments, or what have you. So there are some tools available 
if the depth of concern is widespread.
    Mr. Lowenthal. Thank you. And I yield back.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Lowenthal. And we 
will turn to Mr. Kinzinger.
    Mr. Kinzinger. Thank you, Madam Chair, and I appreciate the 
committee holding this hearing and for all of you being here.
    Mr. Sokolski, I want to remind you at the very beginning 
here, you have taken a shots at Westinghouse. I am not going to 
give you an opportunity to respond, but I would like to remind 
you that that is an American company and they have a lot of 
employees in Pennsylvania and in my district there is a lot of 
companies that supply Westinghouse. So whatever the beef you 
have seems to be with them, you can expound at a later time, 
but I just wanted to remind you that that is an American 
company.
    In terms of--I am speaking still, so in terms of a couple 
of opening points, let me just say we need to go forward with 
the U.S.-Vietnam 123 agreement. Ranking Member Engel and I have 
signaled our support for that. And I would also like to express 
my support for the U.S.-South Korea 123 agreement. For 60 
years, this has been one of our greatest allies in a very 
important part of the world and the Republic of Korea, in fact, 
has brought a lot of stability to the world, security, and 
prosperity.
    I am going to have the opportunity to visit Korea in a few 
months and talk about these issues and I am looking forward to 
it, but I would like to say that that is something that is very 
important to move forward on. And it is also interesting to me 
that the sticking point, the issue of enriching and 
reprocessing and things along that line, we are basically 
giving that to Iran, by the way. I have had discussions with 
folks in the administration, none of whom have said that there 
is going to be no right to enrichment of uranium up to a 
certain level. So it is almost a given now that our greatest 
enemy in the Middle East, of which we actually have engaged 
directly and indirectly with through Iraq and everywhere else, 
is going to have this right that we are denying to our allies. 
So that, to me, is something that is going to be very shocking 
and something telling and something I think we need to have a 
real grown-up adult discussion on.
    Mr. Lipman, I am going to shift gears a little bit here and 
ask you a couple of questions. Is the U.S. still the dominant 
player in the nuclear export market? If so, why? And if not, 
why?
    Mr. Lipman. Thank you, Congressman. And thank you also for 
straightening out the facts that Westinghouse is an American 
company. And I can assure you that in these nuclear exports the 
overwhelming majority, the vast amount of value in these 
nuclear exports is made right here in the U.S.A. in states like 
South Carolina, Pennsylvania, New Hampshire, and so forth. So 
thank you for clearing that up.
    I mentioned earlier we are certainly not the dominant 
player. There are, I mentioned earlier, about ten nuclear 
reactor vendors globally. That is a situation that has 
transpired in the last, just the last few years. And it is 
extremely competitive out there. Where we do not have these 
agreements in place, competitors will fill that void. Of that 
there is no question.
    Now why is that? Your question is well, why is that? Well, 
some of them are state-owned enterprises, so the Government of 
Russia owns Rosatom which in turn owns Atomstroyexport which is 
the main competitor American companies face from Russia. AREVA 
is wholly owned by the French Government. Korea Electric Power 
Company is similarly owned by the Korean Government and so 
forth and so on. Even CANDU is a Crown Corporation. U.S. 
industry is private, largely, and somewhat fragmented.
    Also, the level of commercial diplomacy is quite different, 
Congressman. It is very typical that when heads of state of 
these other countries travel in their entourage are the nuclear 
guys and the radar guys and the defense guys and so forth and 
so on. We don't do business that way. And that is okay. That is 
not our way. And I don't think anybody in the industry would 
change that. But we are finding now a very tough competitive 
environment and one in which the Russians, for example, offer 
to take your spent fuel back. We don't do that. They offer 
extremely concessionary finance. We may not get our Ex-Im Bank 
renewed.
    Thirdly, there is significant trade advocacy that we don't 
receive. So it is a tough environment out there. We are not 
asking to have our hands held, but we are asking for a 
competitive level playing field so we can do business.
    Mr. Kinzinger. I think you made a great point about Ex-Im. 
It is very important for multiple reasons and I think that is 
something that is very important. I have four nuclear power 
plants in my district and I would frankly hate to get to a 
point where we have Russians and French coming in and servicing 
them because we lost our own industry.
    And just lastly, well, 8 seconds, how important are foreign 
markets to the U.S. nuclear industry?
    Mr. Lipman. They are more important than ever before and 
they are in markets that are nontraditional. They are in places 
like, and we better get comfortable with places like Southeast 
Asia, South Asia, Eastern Europe. We haven't talked about 
Eastern Europe, but Eastern Europeans are keen to get away from 
the Russians and their grip on gas, and in places in the Middle 
East. So we are in a situation in which we compete in 
nontraditional markets against state-owned enterprises and the 
need for trade finance and advocacy and a level playing field 
is greater than ever before. Thank you.
    Mr. Kinzinger. And I yield back.
    Mr. Chabot [presiding]. Thank the gentleman, his time has 
expired. The gentleman from Texas, Mr. Weber, is recognized for 
5 minutes.
    Mr. Weber. Thank you, Mr. Chairman. Mr. Lipman, I think you 
said that there are ten global companies that supply reactors, 
build and supply reactors? What would you say is the overall 
world marketplace for the amount of volume of sales? Is it $200 
billion? What is it?
    Mr. Lipman. I want to say the number that sticks in my mind 
is about $750 billion.
    Mr. Weber. $750 billion. Do you know what percent mostly 
U.S. manufacturers, I guess including Westinghouse, what 
percent of that market share U.S. manufacturers own?
    Mr. Lipman. So let us break it down a little bit. So there 
are new reactor sales, but there is also plenty of sales in 
nuclear fuel and services and spare parts and things like that.
    Mr. Weber. I am talking total. Thank you for making that 
distinction.
    Mr. Lipman. Yes, sir. And so I would say that in the fuel 
market, maybe we have 10 to 15 percent of that market. And I 
think in the new reactor market it is looking a lot better and 
it will look better if we get these 123s and other policy tools 
that I mentioned earlier in place. We have a much better chance 
that major reactor sales I think than the competitive situation 
would warrant. But I will get those details and submit to the 
record the accurate figures, sir.
    Mr. Weber. Any idea how many jobs that represents in this 
country?
    Mr. Lipman. By the way, NEI is undertaking an effort to 
count them down to the district level if we can, down to the 
ZIP Code, if we can. But we know from the----
    Mr. Weber. Send me the numbers for my district, please?
    Mr. Lipman. Yes, sir. We know from the China export that 
somewhere between 15,000 and 18,000 jobs were created or 
maintained from just that one export of four units, sir.
    Mr. Weber. Okay. And I am not a nuclear expert. When I was 
a state rep I had a nuclear plant, South Texas nuclear plant in 
Bay City in my district and got to tour it and watch it first 
hand, look at it first hand. Why is reprocessing of spent fuel 
such a bad thing? Is it just because it leaves material laying 
around for weapons? Is that your only concern?
    Mr. Lipman. I will answer and I will certainly defer to the 
experts here. And by the way, I lived in Brazoria County for 5 
years.
    Mr. Weber. We are still taking applications if you want to 
come back.
    Mr. Lipman. Thank you, sir. It was a great place to live. 
Look, you said it, reprocessing makes available plutonium, 
separation can make available, depending on the process, 
separated plutonium which can be diverted for inappropriate 
uses and that is a major concern.
    Mr. Weber. Okay, thank you. That is what I thought. Mr. 
Spector, you talked about an export agreement or an agreement 
delaying licensing which wasn't elegant, there was a way to do 
it. And I think you mentioned that China it was discovered that 
was going to export missiles, so we held up an agreement. Can 
you go back to that?
    Mr. Spector. I have to get my dates right. My recollection 
was that an agreement was inked and we were ready to go forward 
with it, as they gradually accepted more and more export 
control rules such as agreeing to the export control rules of 
the missile technology control regime in particular, but other 
ones as well. And because they didn't stop the actual exports, 
the agreement was intact, but nothing happened under it.
    Mr. Weber. Let me play the devil's advocate. Why was it a 
problem for China to export missiles, missile technology?
    Mr. Spector. Well, I think in the particular case we were 
very concerned that these missiles would be armed with nuclear 
weapons. This was going to Pakistan, especially. Since that 
time the missiles have gone to Iran and a lot of missile 
equipment, so this is a continuing problem.
    Mr. Weber. So we are concerned that those missiles would be 
used to destroy civilians, its cities and used in a very 
aggressive military fashion.
    Mr. Spector. Conceivably, it is contrary to our efforts to 
suppress this kind of capability around the world.
    Mr. Weber. But you said that you didn't think that human 
rights violations needed to be part of the agreement, so we are 
concerned that missiles would kill hundreds or thousands of 
people, but we are not concerned that they are killing 
individuals?
    Mr. Spector. I think I actually said something a little 
different which was in the four corners of the agreement, the 
actual wording, probably not, missiles or human rights.
    Mr. Weber. Maybe a preclusion leading up to that.
    Mr. Spector. That is correct or a freezing of the 
negotiation. This is what happened with the United Arab 
Emirates agreement when concerns about leakage of technology 
through Dubai into Iran surfaced. And Congress actually was 
responsible for sort of changing the terms of that agreement.
    Mr. Chabot. The gentleman's time has expired.
    Mr. Weber. Thank you, Chairman.
    Mr. Chabot. Thank you. The gentleman from Florida, Mr. Yoho 
is recognized for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate you 
gentlemen being here and I look forward to your answers on this 
and the information you have already given has been great.
    Mr. Sokolski, you were saying that by not going forward, 
you would not go forward with the 123 agreement with Vietnam. 
What would you recommend in replacement of that?
    Mr. Sokolski. I would be in no rush to get it wrong. Take 
your time if you are going to get it wrong. You should pressure 
the administration to at least give you the procedural 
authority to look at this thing in 30 years.
    Mr. Yoho. I agree.
    Mr. Sokolski. I would ask for that much at least. I think 
you are going to have some fancy footwork here to persuade the 
South Koreans if you go ahead with this thing, but maybe this 
committee can do it, an able chairman of a subcommittee and 
that is going to require doubling down on that and perhaps 
delaying the Iran deal.
    Mr. Yoho. Well, for a superpower, we need to act like one 
and I think we need to negotiate harder. The 123 agreement I 
see they seem messy and for a country like South Korea, that is 
an ally, in the beginning of the agreement it looks like it 
worked well. But now they are giving us pushback because they 
have an excess amount of plutonium that they say we need the 
capability of reprocessing this. You guys aren't helping us, so 
there is resistance and we have to do the 2-year extension 
because we couldn't come into an agreement.
    And then we look at what is going on with China. We had the 
agreement, but however, since China's proliferation record is 
very poor including building nuclear reactors in Pakistan, 
refusing to curb illegal sales, as you brought up, and 
smuggling Chinese companies by Chinese companies of banned 
nuclear-related material to Iran and other countries, we get 
involved in these complicated agreements. And what I have seen 
is there is just no checks and balances to monitor them, but it 
makes us feel good because we can say we have a 123 agreement, 
we are great. But in the meantime, slight of hand, they are 
doing this.
    And I guess what I would like in the two, almost 3 minutes 
I have left, how can we make--well, first of all, should we 
enter into these kind of agreements especially if we are not 
the major player? We are competing against government entities, 
state owned and operated and what I understand about China is 
when they come in, it is not a Chinese company. It is the 
Chinese Government. It is their military, it is their secret 
service, it is all that as a package. You get the package. And 
so that concerns me because we are having companies like 
Westinghouse dealing as a company with forcing governments. You 
just can't compete that way.
    So how can we move forward, number one? Should we move 
forward with this kind of agreement? And if we do, how do we 
make a 123 type of agreement more workable to accomplish the 
goal of eliminating the amount of spent fuel that is 
reprocessed in nuclear proliferation?
    We will start with you, Mr. Sokolski.
    Mr. Sokolski. I think the simple thing is they demand more 
of our diplomats and they lean more heavily on the handful of 
suppliers. There may be lots of companies, but there are only a 
few countries. We know who they are. They are France, Korea, 
Japan, and Russia; China coming up. There are leverage points. 
I talked with people who in the government say well, we haven't 
asked or we asked, but we didn't make any linkage to anything 
that they might be concerned about. We have got to change that.
    Mr. Yoho. Mr. Lipman, because I have one more question.
    Mr. Lipman. You did an accurate job characterizing, I 
think, the environment in which we face. But you are being very 
future oriented here and I would say one of the biggest tools, 
you talked about eliminating the amount or reducing the amount 
of fuel that could be diverted or reprocessed and the material 
diverted, one thing we don't do which we could do is take spent 
fuel back into this country.
    Mr. Yoho. We have got the technology to reuse that. It has 
just not been approved or we haven't allowed that, right?
    Mr. Lipman. Well, right now we do not allow by law to take 
back spent fuel for fuel we sell to other countries.
    Mr. Yoho. It could be reprocessed as energy, right?
    Mr. Lipman. We don't have commercial reprocessing in this 
country, but we have the technology that could do it.
    Mr. Yoho. I am running out of time. Mr. Spector, I want you 
to get your weigh in on that.
    Mr. Spector. I think Henry made a point that we have other 
leverage with these various countries. That is what you would 
use during the course of these agreements. It could be economic 
sanctions or export controls, licenses that are held back and 
so forth. The agreement carries on, but you can apply leverage 
in a lot of different ways to try to make sure it is properly 
adhered to.
    Mr. Yoho. And what I see is with the debacle with what we 
do with Iran, a future country to negotiate with us on a 123 
agreement after they saw us do with Iran, they are going to say 
we want the same deal you gave Iran. And I think it has 
crippled us tremendously. I yield back. Thank you.
    Mr. Chabot. I thank the gentleman, his time has expired. 
The gentleman from Pennsylvania, Mr. Perry is recognized for 5 
minutes.
    Mr. Perry. Thank you, Mr. Chairman. Mr. Lipman, we will 
start with you. Regarding China's nuclear industry, we expect 
it to expand a reasonable amount over the next few decades. I 
am just wondering about the opportunities it will create for 
the U.S. nuclear industry because we want to build as much and 
do as much as we can in our districts and in the United States. 
It is a business that is important to us. But are we creating a 
competitor by undercutting ourselves by providing it with 
nuclear? What are we looking for and what is the middle ground 
there?
    Mr. Lipman. Right, and that is a very critical, competitive 
issue that any company that wants to do business in China needs 
to face. When I had to face that decision at the time I ran 
that new reactors business for Westinghouse, the solution to 
that is you sell the technology, but you have to continue to 
innovate. If you do not innovate, you will create another 
competitor. You are creating another competitor, but the key to 
maintaining leadership is to continue to out innovate your 
partners, number one.
    Number two, with respect to having a relationship with the 
Chinese nuclear industry, they are smart folks. They have got 
technology that is of interest to us, too, in civilian space, 
okay, in the civilian area. So we learn from each other. 
Reactors under construction today in America are benefitting 
from lessons learned from reactor construction in China. It is 
happening right now in Georgia and South Carolina. So these are 
relationships that are important. They are job creating. They 
support all kinds of political objectives and working together 
is the solution in my opinion, Congressman.
    Mr. Perry. All right, so moving on then and I want to get 
some of the other gentlemen into the discussion with the 123 
agreement expiring in 2015 other than spent fuel situation 
which apparently needs to be addressed, at least allowing us 
the opportunity to do something, not making a prohibition. I am 
not saying we have to do something, but what else needs to be 
changed to increase our opportunities and our security in that 
regard from your standpoint? And then Mr. Spector and Mr. 
Sokolski, it would be great to hear from you on that as well.
    Mr. Lipman. So I am clear, Congressman, increase 
opportunities for U.S. companies.
    Mr. Perry. Westinghouse, there is a company in the district 
I represent which builds casks, those kind of folks.
    Mr. Lipman. Yes, okay, listen, I mentioned in my opening 
statement a number of policy solutions. I think having 123 
agreements in place, I think having an export control process 
that works, I think liability protection is important, Export 
Import finance is important and generally, a pro-nuclear trade 
policy. Those will create opportunities where American 
companies can thrive against this very tough international 
competition in this basically international market now.
    Mr. Spector. I would say at the moment the closest related 
area of concern has to do with exports from China and their 
inability to suppress certain individuals from engaging in 
these activities. This is going to North Korea and to Iran. 
That has to be on the table as we discuss this renewal of an 
agreement, because it is a very closely-related area. But there 
are other issues. Human rights issues in China, for example. 
There is plenty on the table and the question I think is to 
decide how much of that we want to bring into the conversation 
and which ones we hold for another occasion.
    Mr. Perry. So without reaching too far, I would agree with 
you to a certain extent, but if we can't get to human rights 
issues with China, but we can get to ranking them in with some 
of the proliferation around the other rogue nations, so to the 
speak, maybe that is more important if that is what we can get 
out of the deal. It is my opinion that maybe that is what we 
should focus on.
    Mr. Spector. There might be other higher-level discussions 
where you want to bring the human rights issue up.
    Mr. Sokolski. I think you have got to focus on safety 
because what you have done is just as we had seen Westinghouse 
sell all of its designs to France and created a French 
competitor, that you are doing it now with regard to China. I 
really urge the committee to get more knowledgeable and hold 
some hearings on exactly what the difference between technology 
transfers and how important that is to the industry and if you 
go to their Web site they talk about technology transfers. That 
is not controlled by 123 agreements.
    The amount of things that we sell, manufacture here of 
these projects is not very great. But the leverage has to do 
with the know-how. And I think that if you want to have the 
maximum amount of engagement in their industry, you better 
press hard on being more candid about the safety problems in 
China.
    Mr. Chabot. The gentleman's time has expired.
    Mr. Perry. Thank you.
    Mr. Chabot. Gentleman yields back. On behalf of the 
chairman of the committee, we would like to thank the panel for 
their very helpful testimony here this morning. Members will 
have 5 days to revise statements or submit written questions 
and if there is no further business to come before the 
committee, we are adjourned. Thank you.
    [Whereupon, at 11:47 a.m., the committee was adjourned.]
                                     

                                     

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