[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE FUTURE OF INTERNATIONAL CIVILIAN NUCLEAR COOPERATION
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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
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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
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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.]
A P P E N D I X
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