[Federal Register Volume 63, Number 27 (Tuesday, February 10, 1998)]
[Notices]
[Pages 6733-6736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3308]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY


Proposed Subsequent Arrangement Concerning Reciprocal 
Arrangements for Exchanges of Information and Visits Under the 
Agreement for Cooperation for the Peaceful Uses of Nuclear Energy 
Between the Government of the United States and the Government of the 
People's Republic of China

AGENCY: Office of Arms Control and Nonproliferation, Department of 
Energy.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: Notice is hereby given of the intent of the Government of the 
United States and the Government of the Peoples Republic of China to 
establish mutually acceptable reciprocal arrangements for exchanges of 
information and visits to material, facilities, and components subject 
to the Agreement for Cooperation Between the Government of the United 
States and the Government of the People's Republic of China concerning 
the Peaceful Uses of Nuclear Energy, signed July 23, 1985 (``the 
Agreement'').
    The framework for executing the proposed exchanges is established 
in a Memorandum of Understanding (MOU) dated June 23, 1987, which has 
been initialed by the two Governments and is reproduced at the end of 
this Notice. The Department of Energy will issue a second Notice of 
Proposed Subsequent Arrangement, which may contain additional pertinent 
information, after the Memorandum of Understanding is signed by the two 
Governments.

SUPPLEMENTARY INFORMATION:

Procedural Background

    In order to carry out the 1985 U.S.-China Agreement for Cooperation 
in the Peaceful Uses of Nuclear Energy, the President is required under 
P.L. 99-183 to make a certification to Congress on three matters and to 
submit to Congress a detailed report on China's nonproliferation 
policies and practices. The President must certify that (A) the 
reciprocal arrangements made pursuant to Article 8 of the Agreement 
have been designed to be effective in ensuring that any nuclear 
materials, facilities or components provided under the Agreement shall 
be utilized solely for intended peaceful purposes as set forth in the 
Agreement; (B) the Government of the People's Republic of China has 
provided additional information concerning its nuclear nonproliferation 
policies and that, based on this and all other information available to 
the United States Government, the People's Republic of China is not in 
violation of paragraph (2) of section 129 of the Atomic Energy Act; and 
(C) the obligation to consider favorably a request to carry out 
activities described in Article 5 (2) of the Agreement shall not 
prejudice the decision of the United States to approve or disapprove 
such a request.
    The President made these certifications on January 12, 1998, and 
forwarded them to the Congress on January 13, 1998.
    House Report 99-382 (November 20, 1985), concerning Public Law 99-
183, specified that it was the expectation of the House Committee on 
Foreign Affairs that at the time the President made these 
certifications, details concerning the reciprocal arrangements under 
Article 8 of the Agreement would ``be submitted to the Congress for 
review as a `subsequent arrangement' under section 131a of the Atomic 
Energy Act of 1954.'' That section of the Atomic Energy Act mandates, 
inter alia, that subsequent arrangements are to be issued by the 
Secretary of Energy or his designee, after obtaining the concurrence of 
the Department of State and after consultation with the Arms

[[Page 6734]]

Control and Disarmament Agency, the Nuclear Regulatory Commission, and 
the Department of Defense. Notice of any proposed subsequent 
arrangement must be published in the Federal Register, together with a 
determination by the Secretary of Energy that such arrangement will not 
be inimical to the common defense and security. A proposed subsequent 
arrangement may not take effect before fifteen days after publication. 
(The responsibilities of the Secretary of Energy have been delegated to 
the Director of the Department's Office of Arms Control and 
Nonproliferation.)
    This Notice announces the intent of the United States Government to 
enter into reciprocal arrangements for exchanges of information and 
visits under Article 8 of the Agreement, as specified below. It 
concludes that the reciprocal arrangements, as provided for in the 
Agreement and, upon its entry into force, in the U.S.-China Memorandum 
of Understanding of June 23, 1987, are not inimical to the common 
defense and security.

Proposed Reciprocal Arrangements

    The President has certified that the reciprocal arrangements made 
pursuant to Article 8 of the Agreement have been designed to be 
effective in ensuring that any nuclear material, facilities, or 
components provided under the Agreement shall be utilized solely for 
the intended peaceful purposes as set forth in the Agreement. The 
arrangements agreed to by the United States and the People's Republic 
of China are set forth in the MOU initialed by the two Governments on 
June 23, 1987.
    In assessing the arrangements established under Article 8 of the 
Agreement, it is important to bear in mind the three main factors 
considered in their negotiation. These are:
     The fact that China is a nuclear weapon state;
     The nature and scope of cooperation contemplated in the 
Agreement; and
     The range and extent of activities included under the 
reciprocal arrangements for exchanges of information and visits 
mutually agreed between the parties.

China's Status as a Nuclear-Weapon State

    China is a nuclear weapon state and possesses dedicated facilities 
to produce fissile material for its nuclear weapons program. There is, 
therefore, little if any reason for it to contemplate using its civil 
nuclear program to support a nuclear weapons purpose. Moreover, the 
potential costs of diverting U.S.-supplied civil nuclear material or 
facilities would be disproportionately high relative to any benefit 
that could possibly accrue to China. Without doubt such an action would 
terminate nuclear cooperation by the United States and more generally 
would do far-reaching damage to U.S.-Chinese relations.
    China's nonproliferation credentials would be severely damaged and 
its credibility and standing in the international community as a whole 
would be undermined. There has been no evidence to suggest that China 
has in any way employed its existing nuclear power stations at Quinshan 
and Daya Bay to support its nuclear weapons program, even though China 
has modernized and somewhat expanded its nuclear forces since these 
facilities began operating in 1993 and 1994, respectively.
    The Agreement does not require the application of IAEA safeguards 
on U.S. nuclear exports to China. Neither the Nuclear Non-Proliferation 
Treaty (NPT) nor U.S. law requires the application of such safeguards 
on nuclear transfers between nuclear weapon states. NPT safeguards 
applied by the IAEA are intended to help prevent nuclear proliferation, 
that is, the spread of nuclear weapons beyond the five acknowledged 
nuclear weapon states at the time the Treaty was negotiated, a group 
that include both the United States and China. NPT safeguards are 
required only on certain equipment and material exported to non-nuclear 
weapon states. Nor does U.S. law require the application of bilateral 
safeguards on U.S. exports to a nuclear weapon state. As in the case of 
the NPT, this reflects the reduced proliferation concerns that apply to 
transactions with states that already ``legally'' possess nuclear 
weapons.
    However, the United States as a matter of law requires additional 
controls and assurances with respect to its nuclear exports. 
Consequently, the United States requires of all recipients additional 
bilateral assurances concerning U.S. nuclear transfers. These controls 
and assurances cover the peaceful use, reprocessing, enrichment, 
retransfer, physical security, alteration in form or content, and 
storage of U.S. nuclear exports. These assurances are generally given 
with reference to specific transactions that are being proposed under 
Nuclear Regulatory Commission authorization.
    Chinese compliance through the Agreement will be confirmed with the 
reciprocal visits, exchanges, and general information about nuclear 
fuel cycle activities. In addition, the fact that violation of the 
Agreement would cause termination of the U.S. nuclear cooperation with 
China, is a strong deterrent to misuse of U.S. exports.

Scope of Cooperation

    The second factor relevant to assessing the reciprocal arrangements 
under Article 8 of the Agreement relates to the nature and scope of the 
cooperation contemplated in that document. The Agreement establishes 
the basis for cooperation on nuclear nonproliferation and on current 
and advanced light water nuclear power reactor technologies, including, 
in part, safety, fuels, and materials; nuclear steam supply systems; 
irradiation technology; and other areas to which the parties may later 
agree. The Agreement is thus focused on cooperation in which the most 
likely transfers are related to nuclear power reactors and nuclear 
fuel. The only special nuclear material that may be transferred in 
significant quantities under the Agreement is low-enriched uranium, 
which is not directly usable for nuclear explosives or other military 
purposes. Reprocessing of spent fuel subject to the Agreement could 
occur only with prior U.S. consent. Were the United States ever to 
consider granting such consent, it would give careful consideration to 
what additional verification arrangements would be required. The 
Agreement does not contemplate the transfer of sensitive nuclear 
technology, facilities, or components. Any such transfer would require 
amendment to the Agreement and, as in the case of reprocessing spent 
fuel, would be subject to U.S. approval, which would only be given, if 
at all, subject to satisfactory provisions for verification of use and 
disposition.
    Furthermore, the Nuclear Regulatory Commission must review any 
specific export of material or equipment subject to its export approval 
authority. This will provide added assurance that transfers under the 
Agreement will be carefully scrutinized to ensure the effectiveness of 
arrangements to verify that they are used for exclusively peaceful 
purposes.

Activities Under Article 8

    The third factor relevant to assessing the reciprocal arrangements 
under Article 8 is an evaluation of the extent to which these 
arrangements can achieve the objectives identified for them under the 
Agreement. In the case of the NPT, IAEA safeguards are applied in non-
nuclear weapon states party to the NPT with the objective of deterring 
the diversion of a significant quantity of nuclear material by 
achieving a high probability of detection of such

[[Page 6735]]

diversion. For this purpose, quantitative material accountancy, 
accompanied by containment and surveillance measures, are applied. In 
the case of the U.S.-China Agreement, the objective is to enable the 
United States to ensure that the materials and facilities transferred 
from the United States under the Agreement are used exclusively for 
peaceful purposes in China.
    The arrangements mutually agreed by the parties pursuant to Article 
8 of the Agreement are based on well accepted and widely applied 
principles of verification. They are also consistent with the measures 
applied by the United States to verify bilateral assurances under other 
agreements for cooperation. The keys to effective verification are 
information and access--access to all information deemed relevant to 
the establishment of a complete inventory of items subject to 
verification; the ability to secure any additional necessary 
information; the right to obtain such additional information on site to 
ensure that the inventory of items is complete; and the right 
periodically to visit the locations of such material and equipment to 
ascertain not only the accuracy of the inventory, but that all items on 
the inventory are being used for agreed peaceful purposes. As noted, 
the nature of the particular measures employed is a function of the 
objective to be achieved and will differ from agreement to agreement.
    The provisions agreed in the MOU of June 23, 1987, satisfy these 
criteria. To meet the objective of ensuring that any transferred 
facilities, materials, or components are not used for any nuclear 
explosive device, for research on or the development of such devices, 
or for any military purpose (Article 5(3)), and to provide for 
exchanges of information and visits to material, facilities and 
components subject to the agreement (Article 8(2)), the MOU establishes 
arrangements with adequate scope to provide the United States with full 
knowledge of items that are subject to the Agreement, where they are 
located, and how they are being used by the recipient.
    Information is provided under the MOU in several ways. When 
transfers of material, facilities, or components take place, the 
recipient is required to confirm receipt through diplomatic channels in 
a specified period of time. Information is also to be provided at the 
request of either party for the subject material, facilities, and 
components. To provide a technical basis for evaluating compliance, the 
information includes isotopic composition, physical form, and quantity 
of material; locations where materials, facilities, or components are 
used or stored; and information on the operation of facilities 
including, for reactors, loading, and thermal energy generated. 
Together these stipulations on information access and exchange provide 
the basis for establishing a comprehensive inventory of items covered 
by the Agreement and for periodically checking and updating the 
inventory not only of items transferred, but of material produced 
through the use of such items.
    Access in the form of on-site presence is also provided for and the 
opportunity during such visits ``to observe . . . the utilization and 
operation'' of transferred items will help to confirm information that 
has been provided regarding inventory and use. The frequency of visits 
is specified as annually for reactors, and not more than two years 
between visits for other items. In the case of reactors on the U.S. 
inventory, visits can be scheduled to coincide with reactor fueling, 
thus offering an opportunity to learn the most about reactor operation. 
Since transfers of facilities other than reactors are not contemplated 
by the Agreement, this approach provides the basis for an effective 
verification arrangement.
    Finally, the MOU includes agreement that, ``When either party 
identifies special circumstances, the parties shall consult . . . for 
the purpose of making mutually acceptable arrangements for the addition 
or reduction of visits . . . to ensure that the objectives of Article 
8(2) are fulfilled.'' It further provides that, ``Either party may 
request a revision of these arrangements including the frequency, 
occasion, or content of visits at any time. . . .'' The arrangements 
call for access in the form of visits, rather than the inspections that 
form a part of IAEA safeguards. In addition, the routine frequency of 
access to reactors is less than under IAEA safeguards practice. 
However, it must be recalled that as a nuclear weapon state, China is 
not required by law to place U.S. nuclear exports under IAEA safeguards 
and, because China's incentive to misuse U.S. supplies for nuclear 
explosive purposes is extremely low, the need for visits more often 
than annually is absent. Moreover, the wording in the MOU concerning 
special circumstances, or the revision of arrangements regarding 
visits, leaves the door open to gaining additional access when 
uncertainties exist for which early resolution is important to 
continued confidence in the cooperation Agreement.
    A summary assessment of the peaceful use assurances was previously 
provided by the Executive Branch to the Congress in 1985. That summary 
includes the following paragraph:

    The proposed agreement with China contains provisions that 
assure that nuclear material, facilities and components supplied by 
the United States will not be misused. In addition to articles 8(2) 
and 5(2), which are discussed in this memorandum, there are 
commitments that these items will not be used for any military or 
explosive purpose, will not be retransferred without U.S. consent, 
and will be subject to agreed levels of physical security. All these 
provisions will continue in effect as long as the item in question 
remains in China, even if the agreement itself expires. Moreover, 
the agreement expressly excludes cooperation in sensitive 
technologies, nor does it in any way require that technology of 
military or strategic significance be transferred. While it provides 
a framework for potential U.S. nuclear exports, it does not commit 
the United States to export any item. Taken together, these 
provisions establish a regime for nuclear cooperation that is 
suitably stringent and appropriate for reciprocal dealing with a 
nuclear-weapons state.

    In his letter of January 12, 1998, transmitting the certifications 
required by P.L. 99-183 to the Speaker of the House of Representatives, 
the President of the Senate, and the Chairmen of the Senate Committee 
on Foreign Relations, and the House Committee on International 
Relations, the President declared, with respect to the reciprocal 
arrangements under Article 8 of the Agreement:

    * * * These arrangements will provide the United States with the 
right to obtain all the information necessary to maintain an 
inventory of the items subject to the Agreement. This will include 
information on the operation of facilities subject to the Agreement, 
the isotopic composition, physical form and quantity of material 
subject to the Agreement and the places where items subject to the 
Agreement are used or kept. The arrangements also provide the United 
States with the right to confirm through on-site visits the use of 
all items subject to the Agreement. Finally, the arrangements apply 
as long as the provisions of Article 8(2) of the Agreement continue 
in effect, that is, as long as items subject to the Agreement remain 
in China's territory or under its jurisdiction or control. My 
determination that these arrangements have been designed to be 
effective in ensuring that items provided under the Agreement are 
utilized for intended peaceful purposes is based on consideration of 
a range of factors, including the limited scope of nuclear 
cooperation permitted under the Agreement, U.S. export-control 
procedures that will apply to any transfers to China under the 
Agreement, the fact that the People's Republic of China is a 
nuclear-weapon state and that the safeguards of the IAEA or their 
equivalent are not required by the Atomic Energy Act for agreements 
for cooperation with nuclear weapon states.


[[Page 6736]]


    In light of these considerations, I have determined that the 
reciprocal arrangements, as provided in the Agreement and, upon its 
entry into force, in the U.S.-China Memorandum of Understanding of June 
23, 1997, are not inimical to the common defense and security.
    The text of the U.S.-China Memorandum of Understanding of June 23, 
1987, follows.

Memorandum of Understanding

    The Government of the United States of America and the Government 
of the People's Republic of China (the ``parties'').
    Desiring to implement the Agreement for Cooperation between the 
Government of the United States of America and the Government of the 
People's Republic of China Concerning Peaceful Uses of Nuclear Energy, 
signed July 23, 1985, and entered into force December 30, 1985 (the 
``Agreement''), on the basis of mutual respect for sovereignty, non-
interference in each other's internal affairs, equality and mutual 
benefit, and Desiring to exchange experience, strengthen technical 
cooperation between the parties, ensure that the provisions of the 
Agreement are effectively carried out, and enhance a stable, reliable, 
and predictable nuclear cooperation relationship,
    Have established the following arrangements:
    1. Each party shall invite personnel designated by the other party 
to visit the material, facilities and components subject to the 
Agreement, affording them the opportunity to observe and exchange views 
on, and share technical experience in, the utilization or operation of 
such items. Opportunities to visit shall be accorded annually to 
reactors including their auxiliary storage pools for the fuel. Such 
annual visits shall be arranged at the time of reactor fueling if it 
occurs. Opportunities to visit all other items shall not be less often 
than every two years. When either party identifies special 
circumstances, the parties shall consult, at the request of either 
party, for the purpose of making mutually acceptable arrangements for 
the addition or reduction of visits under such circumstances in order 
to ensure that the objectives of Article 8(2) are fulfilled.
    2. When material, facilities or components are transferred pursuant 
to the Agreement, the recipient party shall confirm receipt to the 
supplier party through diplomatic channels within 30 days after the 
arrival of the material, facilities or components in the territory of 
the recipient party. At the request of either party, the parties shall 
exchange information on the material, facilities and components subject 
to the Agreement. Such information shall include the isotopic 
composition, physical form, and quantity of the material, and places 
where the material, facilities or components are used or kept. It shall 
also include information on the operation of the facilities subject to 
the Agreement which in the case of a reactor shall cover thermal energy 
generated and loading. The parties shall seek to resolve any 
discrepancies through diplomatic channels. The information shall be 
treated as confidential.
    The above arrangements fulfill the requirements of Article 8(2) of 
the Agreement for the types of peaceful nuclear activities pursuant to 
the Agreement that each party had planned as of the date of entry into 
force of the Agreement. These arrangements shall enter into force upon 
signature and shall remain in force so long as the provisions of 
Article 8(2) continue in effect. Either party may request a revision of 
these arrangements, including the frequency, occasion or content of 
visits, at any time; any revision shall be made by mutual agreement.

    Done at                  this          day of                 , 
1987 in the English and Chinese languages, both equally authentic.

FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA:

FOR THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA:

    Dated: February 3, 1998.

    For the Department of Energy.
Leonard S. Spector,
Director, Office of Arms Control and Nonproliferation.
[FR Doc. 98-3308 Filed 2-9-98; 8:45 am]
BILLING CODE 6450-01-P