America's Nuclear Deal with China: A Congressional Brief

NPEC's Executive Director prepared a brief on proliferation concerns regarding the nuclear cooperative (123) agreement with China for senior staffers from embassies, the Hill, and the Executive branch.  To read Mr. Sokolski's complete brief, click here (updated July 7).  It was originally presented at NPEC's dinner seminar "America's Nuclear Deal with China: A Congressional Brief" on March 26, 2015.  A PDF of the presentation slides is available here (updated June 29).

Jul 07, 2015
AUTHOR: Henry D. Sokolski

US-China Civilian Nuclear Cooperative (123) Agreement: 
What’s at Issue; What Might Congress Do?

(updated July 7)

Executive Summary

The proposed US-China nuclear cooperative agreement presents a clear challenge to Congress. Not only has China violated its pledge not to divert US nuclear technology to its military sector (in this case to its naval submarine reactor program see p. 2 of the attached brief below), but it continues to proliferate nuclear weapons related technology through “private” entities and directly to Pakistan in violation of its obligations as a Nuclear Supplier Group member (see p. 4). Recently, the Justice Department indicted several overseas Chinese for hacking into Westinghouse computer servers and stealing nuclear design information (see p. 5). Also, the proposed agreement, unlike that the US cut for Russia in 2008, gives China advanced consent to chemically strip out nuclear weapons usable plutonium from spent fuel produced by US-designed reactors (see pp. 5 ff). This could allow China to produce and stockpile tens of thousands of bombs worth of plutonium over the next three decades without having to ask US permission in each instance it reprocesses.

The nuclear industry and Administration officials downplay these concerns. We are talking to China about nuclear proliferation in other forms. They are likely to proliferate anyway. We should not cut ourselves off from the business and possible influence it might afford. The French and other nuclear vendors will only take up the business the US would otherwise ply. The Chinese, moreover, will never want or need more than the 450 additional nuclear weapons they could fashion out of the military surplus they already have. In any case, nuclear weapons-grade material is best made in dedicated military reactors (see pp. 8 and 9).

Although handy, much of this argumentation is misleading. Only a few members of Congress are considering voting to disapprove the nuclear deal. Most, instead, are focused on how to condition its approval, as Congress did with the original PRC nuclear agreement back in 1985 (see p. 13).

Nor is losing manufacturing jobs to other nuclear exporters all that likely. In fact, the only major US-based nuclear reactor exporter, Westinghouse, is entirely owned by Japan (Toshiba 87% and IHI 3%) and Kazakhstan (Kazakatom 10%). All of the proceeds from any Westinghouse export to China go entirely to these overseas stockholders (see p. 9). In addition, almost no US manufactured nuclear good that requires a Nuclear Regulatory Commission export license is any longer being made in the US. US firms are making canned coolant pumps (Curtiss-Wright and Enertech) and special valves (SPX Corporation) for the AP 1000 but because China would like to make these components domestically, it is unlikely that these US manufacturing efforts will grow (see pp. 9-10).

Also, the only French reactor exporter, AREVA, is so bedeviled by financial and technical setbacks it is expected to get out of the reactor export business. As for the Japanese and Koreans, their nuclear efforts are technically tied to continued technology transfers from the US (see pp. 11-12). Finally, in the long run, the Chinese have a multitude of reasons to avoid relying on the Russians, who they are more likely to have to compete with in the next three decades diplomatically, economically and militarily. For all these reasons, most industry experts see the Chinese relying most on the AP 1000 and cloning their own version the CAP 1400 (see p. 12).

This, then, brings us to the worry about China’s nuclear weapons future. China may well keep its nuclear weapons arsenal small. However, there is good reason to worry that they might not especially if China’s relations with its neighbors – India, Russia, Japan, Korea, and the US – continue to worsen. If they do, it actually is easy to imagine Russia deploying more tactical nuclear weapons systems in Central Asia and Siberia; India deploying more sea and land based nuclear missiles; the US and its allies deploying more missile defenses and forward-based military assets. All or any of this could prompt China to build up. Over the next three decades, it is not inconceivable that Beijing might want at least to be able to threaten to ramp up its nuclear weapons arsenal not by hundreds but by several thousands of warheads (see pp. 5-8). In this regard, being able to exploit their civilian nuclear infrastructure as a possible military nuclear mobilization base cannot be discounted. China, after all, has already done this with US civilian nuclear technology in support of its naval reactor program.

More generally, if no effort is made to qualify the green light this deal gives China to separate as much nuclear weapons usable plutonium from US-origin spent reactor fuel as it would like, Japan will be attracted to do likewise. South Korea, in turn, will have no choice but to follow suit to hedge against both China and Japan. Within the lifetime of the PRC 123, this could result in the stockpiling of tens of thousands of bombs worth of nuclear weapons usable plutonium in the region. This will only make management of security there that much harder.

All of this matters as Congress considers what, if any, conditions they would like to place on the implementation of the proposed US-PRC nuclear deal. Among the most important of these would not block proceeding with the agreement but would prevent the reprocessing of spent fuel generated in US-designed reactors until and unless the President could certify that he had secured Chinese agreement to grant America case-by-case consent rights, like those it secured with Russia (see pp. 13-14).

Beyond this, Congress must consider the wisdom of fast tracking US nuclear technology and component transfers as envisioned under the deal. After the PRC 123 comes into force, the deal calls for the creation of lists of nuclear technologies, components and end uses for which licensing and authorization approvals will be expedited. Given the likelihood that China has or is now attempting to divert US civilian nuclear technology to its submarine reactor program, though, pushing such streamlining hardly makes sense. Making the President certify that this listing making will not interfere or supersede the existing licensing and authorization review processes would be useful. It also would be appropriate to ask that Congress and the intelligence community be able to participate in these reviews.

In support of each of these conditions, Congress also will want to get the Executive Branch to define what “US-designed” means regarding reactors and other controlled nuclear components. Currently, this task is largely left to industry to decide. Given that US nuclear exporters sometimes include the transfer of US technology to help seal their deals, though, this is hardly prudent.

Finally, it would be wise for Congress to require the intelligence community to routinely assess what the drivers of future Chinese nuclear military requirements might be and how the Chinese might exploit US civilian nuclear technology and China’s own civilian nuclear infrastructure to meet these requirements. Had this been done when the original nuclear cooperation agreement was struck, there is a good chance greater protections would have been in place to prevent China from trying to divert the nuclear technology they now are suspected of having diverted to upgrade their submarine reactors.

These, of course, are only suggestions. What, if anything, Congress ultimately does remains to be seen. The nuclear deal automatically will come into force either this summer or fall, depending upon how many days Congress remains in continuous session. There is no legislative deadline, however, on Congress conditioning nuclear cooperative agreements. On this Congress can act any time.


To continue reading this brief, click here (updated July 7).
A PDF of the presentation slides is available here (updated June 29).