Australian Safeguards and Non-Proliferation Office

The role of bilateral nuclear safeguards agreements

Published, with minor editorial changes, in VERTIC’s journal “Trust and Verify”, October 2005-February 2006, Issue no. 122, pages 1-4.

John Carlson, Director General, Australian Safeguards and Non-Proliferation Office

The concept of bilateral safeguards agreements originated in the 1950s. Generally these agreements can serve two purposes: to establish verification mechanisms, commonly known as ‘nuclear safeguards’; and to create conditions for nuclear exports. Usually these purposes are linked—that is, the verification mechanism applies to nuclear items supplied under the agreement—but this is not always the case. Bilateral safeguards agreements can be used to set up verification arrangements of general application, rather than relating solely to supplied items—an example is the 1991 Agreement between Brazil and Argentina for the exclusively peaceful use of nuclear energy (the Guadalajara Agreement).

Today the need for bilateral nuclear verification arrangements has been largely superseded by International Atomic Energy Agency (IAEA) safeguards, although bilateral verification agreements could potentially have an important confidence-building role in specific regions, such as the Korean Peninsula or South Asia. Most current bilateral safeguards agreements assign the verification function to the IAEA, and deal primarily with conditions pertaining to nuclear supply. These are the focus of discussion here.

The requirement by nuclear suppliers for bilateral safeguards agreements is partly based on national policy, but also reflects the terms of Article III.2 of the 1968 Nuclear Non-Proliferation Treaty (NPT), which commits parties not to supply nuclear material or items to non-nuclear-weapon states except under IAEA safeguards. Bilateral safeguards agreements also reflect the practices agreed by the international suppliers’ groups (the Zangger Committee and the Nuclear Suppliers Group).

Bilateral safeguards agreements cover two broad areas:

In the first case, most, if not all, technology suppliers require bilateral agreements. Consequently, there are many agreementsof this kind. In the second case, which covers the supply of nuclear materials, the major bilateral agreement networks are operated by Australia, Canada and the United States. Australia and Canada together are responsible for some 65 per cent of current world uranium production. The US is no longer a major uranium producer, but attaches consent rights to nuclear material that it upgrades (particularly by enrichment). More than 80 per cent of uranium in the global civil nuclear industry is estimated to have US consent rights attached. One result is what is known as ‘multi-labelling’, under which Australian or Canadian obligated nuclear material upgraded in the US also attracts a US obligation. Although this appears to add a layer of complexity to certain uranium transfers, ‘multi-labelling’ is not a problem in practice.

Bilateral safeguards as the genesis of the current safeguards system

Prior to the development of IAEA safeguards, nuclear exporters could only gain assurance that the recipient was using the nuclear materials and items they supplied for exclusively peaceful purposes through bilateral agreements. As the principal leader in the nuclear technology field, the US led the way in the development of agreements of this kind. In the 1950s, following the launch of the Atoms for Peace programme, US legislation was changed to allow transfers, previously prohibited, of nuclear information, technology and materials. To ensure that transferred materials were used peacefully, the US proceeded to negotiate a series of bilateral nuclear cooperation agreements to provide a framework for supplying research reactors, fuel and other items.

These agreements included monitoring arrangements—the forerunner of current safeguards—under which reports were required on, for instance, supplied reactors. US inspectors could thereafter visit these facilities to confirm that they were used peacefully. By the time the IAEA was established, in 1957, the US had concluded more than 20 such agreements. Most of the US agreements anticipated that the safeguards function would be transferred to the IAEA in due course.

For completeness, mention should also be made of Euratom safeguards. Although regional rather than bilateral, they could be thought of as extended bilateral arrangements. Euratom safeguards pre-date the IAEA safeguards system, being based on the 1957 Euratom Treaty. The Euratom Safeguards Office applies inspection and other safeguards procedures, in recent years in collaboration with the IAEA. Other regional nuclear agreements—the Treaties of Tlatelolco (Latin America, 1967), Rarotonga (South Pacific, 1985), Bangkok (Southeast Asia, 1995), and Pelindaba (Africa, 1996)—all contain verification-related provisions, but in practice all have handed this function over to the IAEA.

The first IAEA safeguards procedures were initiated in 1959, to cover the transfer of a research reactor and its fuel to Japan. Subsequently, the IAEA’s item-specific (or facility-specific) safeguards system developed successively, starting with research reactors. In developing the safeguards system, the IAEA built on the approach of the bilateral agreements, requiring declarations from the state that would then be verified through inspections. The safeguards function under the various bilateral agreements was gradually transferred to the IAEA, as anticipated. The current form of item-specific safeguards, set out in IAEA document INFCIRC/66/Rev.2., was established in 1968. This is still employed today in the case of the non-NPT states, India, Israel and Pakistan, and is applied to specified facilities and materials in these countries.

From item-specific to comprehensive safeguards

What characterised these bilateral agreements and the first IAEA safeguards is that they were item-specific, that is, safeguards applied only to designated facilities and material. However, states were free to develop indigenous nuclear facilities entirely outside of the safeguards system and free of any peaceful use commitment. This was recognised as a limitation in the evolving non-proliferation regime. A key objective in the negotiation of the NPT was to bring all nuclear material and activities in a (non-nuclear-weapon) state under safeguards—what came to be termed ‘full scope safeguards’, or now ‘comprehensive safeguards’. The NPT entered into force in 1970, and the IAEA’s comprehensive safeguards system—set out in document INFCIRC/153—was agreed in 1972.

With the introduction of comprehensive safeguards in the 1970s, it might be thought that there were limited reasons for maintaining bilateral safeguards agreements. Yet, as will be discussed below, the IAEA’s comprehensive safeguards do not cover all issues of interest or concern to supplier states. Consequently, in the 1970s, as adherence to the NPT was slow to spread, some nuclear suppliers looked to develop the bilateral mechanism further. In fact, it was not until 1995, in the lead-up to the NPT Review and Extension Conference, that the NPT became almost universal. Even so, some states with significant nuclear activities did not ratify the NPT until the late 1990s, and, as pointed out above, India, Israel and Pakistan remain outside it.

The continuance or introduction of bilateral safeguards agreements by certain states was also motivated, at least in part, by India’s detonation of a ‘peaceful nuclear explosive’ in 1974. This was a major shock to the international community, especially to Canada, since the plutonium for this device had been produced using the Cirus research reactor that it had supplied in the 1950s. This led to a policy review by Canada and the development of detailed bilateral safeguards agreements to apply to future nuclear supply. Australia was not far behind: when the Australian government announced in 1977 that the country was prepared to enter the world market as a major uranium supplier, a detailed framework for bilateral safeguards agreements was unveiled, which was very similar to that of Canada.

Contemporary bilateral safeguards agreements: the Australian way

Since the Australian and Canadian approaches are very similar, and given that these in turn have been influenced by US practice, there is a large degree of commonality among the agreements of the three states. However, as the Australian agreements are most familiar to this author, they will serve to illustrate the general modus operandi of current bilateral safeguards agreements.

The objectives of Australia’s safeguards agreements are to ensure:

In furtherance of these goals, Australia’s agreements are designed to establish:

With a specific exception (known as ‘fallback safeguards’), the agreements do not provide for verification activities by the supplier state (in this case Australia). Instead, they operate on the understandingthat IAEA safeguards apply. IAEA safeguards provide the technical verification in the state concerned and the bilateral agreement applies certain conditions to that part of the material in the state that is subject to bilateral obligations. In a nuclear-weapon state (NWS), the basic requirement is for ‘obligated’ material or items to be subject to the state’s voluntary offer safeguards agreement (VOA) with the IAEA.

As regards nuclear material, the agreements’ provisions apply to uranium imported from Australia and to subsequent generations of nuclear material produced from that uranium.

The principal provisions of Australia’s bilateral agreements are as follows:

Currently Australia has 19 bilateral agreements, covering 36 countries plus Taiwan, China. The larger number of nations than agreements is due to the 1981 Australia/Euratom agreement, which covers all members of the European Union (EU). In addition, Australia has separate agreements with variousEU states.

In the case of non-nuclear-weapon states, Australia will conclude an agreement only with a state in good standing under the NPT. Although the IAEA does not distinguish AONM from other nuclear material, the fact that comprehensive safeguards apply to all nuclear material in the country provides the basic assurance that the peaceful use commitment under the bilateral agreement is being met.

Australia has bilateral agreements with four of the nuclear-weapon states: France, Russia, the United Kingdom and the US. The agreement with Russia covers processing on behalf of third nations, but not use in Russia. Australia is presently discussing a possible agreement with China. As comprehensive safeguards do not apply to NWS, confidence that the agreement will be honoured is based on judgment, taking into account a number of considerations, including:

Is there still a place for bilateral safeguards agreements today?

With the overwhelming majority of states now party to the NPT, and with all non-nuclear-weapon states that are party to the NPT and have significant nuclear activities covered by comprehensive safeguards, it could be argued that bilateral agreements are no longer necessary. However, bilateral safeguards constitute an important complement to comprehensive safeguards, and cover some issues that comprehensive safeguards do not. For a start, the NWS are not subject to comprehensive IAEA safeguards, so bilateral agreements are the only way of applying peaceful use conditions to the supply of nuclear material and items to them.

Supplier states naturally reserve the right to be selective in who they will furnish. Not only will Australia not conclude an agreement with a nation in poor non-proliferation standing, but it is also determinedto ensure there are no secondary transfers of AONM to such a country. Hence, the requirement in Australia’s agreements for prior consent for retransfers is very important. Bilateral agreements are the only way to control retransfers, since there is no comparable mechanism under IAEA safeguards.

Australia is also keen to limit the spread of proliferation-sensitive technologies (such as uranium enrichment and reprocessing technology), and to make certain that sensitive materials—high enriched uranium (HEU) and separated plutonium—are held appropriately. Australia takes into account both the security (physical protection) standards that will apply to sensitive materials and whether there are any policy concerns about having such materials in the particular state. Accordingly, the requirement for prior consent for high enrichment and reprocessing is also very important—and again there is no comparable mechanism under IAEA safeguards.

Conclusion

Contemporary bilateral safeguards agreements relate more to conditions of nuclear supply than to verification, taking advantage of IAEA safeguards as an essential foundation. Bilateral agreements, though, make a major contribution to establishing the international confidence and stability that are essential for nuclear cooperation and supply. Historically bilateral safeguards agreements have fulfilled an important needin international nuclear relations, and they can be expected to continue to do so.

John Carlson is Director-General of the Australian Safeguards and Non-Proliferation Office, and is the current Chairman of the IAEA’s Standing Advisory Group on Safeguards Implementation. He is the author of ‘Nuclear safeguards: developments and challenges’, Verification Yearbook 2001, VERTIC, London, pp. 61–78, and has written extensively on safeguards issues, most recently Safeguards in a broader policy perspective, a paper presented to the Institute of Nuclear Materials Management/European Safeguards Research and Development Association (INMM/ESARDA) workshop on ‘Changing the Safeguards Culture’, 2 November 2005.