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

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arrangements has been largely superseded by International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:

• the supply of specific items, such as facilities,
  equipment and technology; and
• the supply of nuclear material.

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:

• that Australian Obligated Nuclear Material (AONM) (that
  is, Australian uranium and nuclear material derived from it)
  is used for exclusively peaceful purposes and does not
  contribute to any military aim; and
• that AONM is appropriately accounted for as it moves
  through the nuclear fuel cycle.

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

• legally binding peaceful use commitments for supplied
  material and items;
• consent rights on retransfers and certain activities;
  and
• a mechanism for identifying the material and items
  subject to the agreement.

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:

• AONM will be used only for peaceful purposes, and will
  not be used for any explosive or military purpose–the
  latter includes the creation of nuclear weapons, nuclear
  explosives, military propulsion systems and depleted uranium
  munitions, and the production of tritium for nuclear
  weapons;
• AONM is to be subject to the state's safeguards
  agreement with the IAEA;
• the following actions require Australia's written
  consent:
  • transfers to third parties;
  • high enrichment (20 per cent or more U-235);
    and
  • reprocessing;
  • fallback safeguards are to be utilisedif IAEA safeguards cease
    to apply in the state concerned. If necessary this could
    involve safeguards procedures implemented by Australia;
  • internationally agreed standards of physical security are to
    apply to nuclear material in the state concerned;
  • detailed administrative arrangements are to be concluded
    between the implementing authority, the Australian Safeguards
    and Non-Proliferation Office (ASNO), and its counterpart,
    setting out the procedures to apply in accounting for, and
    reporting on, AONM; and
  • there must be provisionfor the cessation of supply and the
    removal of AONM in the event of a breach of the agreement.

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:

• the willingness of the state to makea legal commitment at
  treaty-level that AONM will be used for exclusively peaceful
  purposes;
• the safeguards arrangements that would
  apply–monitoring of AONM in a NWS is based on
  safeguards procedures applied at facilities where it is
  handled, in accordance with the state's safeguards
  agreement with the IAEA and administrative arrangements
  concluded with Australia. ASNO cross-checks reports on AONM
  provided by the state for consistency with information from
  the IAEA and other sources; and
• the factual circumstances underpinning the agreement,
  that is:
  • Australian uranium is not supplied for
    unspecified uses–rather, it is bought by power utilities
    for electricity generation, and the facilities in which AONM is
    processed and utilised would be consistent with this;
  • the degree of separation of military and civil
    fuel cycles; and
  • whether production of fissile material for
    nuclear weapons has ceased. In this regard, four of the five
    NWS have announced a moratorium on fissile production for
    weapons, and such production ceased in the 1980s or 1990s.
    China has not made any formal announcement, but there are
    indications that it concluded fissile production for weapons in
    the early 1990s.

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.