JAEA Nuclear Non-proliferation Policy Letter   No.0002  2012.11.28

<< Status of nuclear cooperation with India >>

Tsukasa Yamamura1

1 Ph.D, General Manager of Planning and Program Office, Department of Science and Technology for Nuclear Material Management, Japan Atomic Energy Agency (JAEA)
This article does not represent the view of JAEA and the author alone is responsible for the facts and opinions expressed in this article.

Since the Nuclear Suppliers Group (NSG) granted the exemption from the full-scope safeguards requirement of its guidelines in 2008 for cooperation in peaceful use of nuclear energy with India, India has signed bilateral nuclear cooperation agreements with the United States, France, Russia, Canada, Kazakhstan, Republic of Korea, and other states2. The agreement with Japan is under negotiation. Australia was the only major nuclear supplier state that had not begun the negotiation of bilateral nuclear cooperation agreement with India.

Recently, there were two new developments which might have implication for nuclear cooperation with India in the future.

Although legal frameworks that enable nuclear cooperation with India are being established, the nuclear liability issue still lingers as an impediment to the participation of foreign suppliers in the project to construct nuclear power plants in India.

It might be useful at this time, four years after the NSG exemption, to review the status of the nuclear cooperation with India in terms of forecasting future cooperation with India including the outcomes of the negotiations of agreements with Australia and Japan.

2Argentina, Kazakhstan, Mongolia and Namibia also signed the agreements with India.
3 Joint Statement - Prime Minister of Australia and Prime Minister of India
4 Canada-India Nuclear Cooperation Agreement, 6 November, 2012

1.Status and comparison of the terms of bilateral nuclear cooperation agreements with India

Below is a list of bilateral cooperation agreements major supplier states signed with India after the NSG exemption in 2008.

Major supplier states Signature Entry into force
United States October 10, 2008 December 6, 2008
France September 30, 2008 January 14, 2010
Russia March 12, 2010 Presumably entered into force5
Canada June 28, 2010 Not entered into force
Kazakhstan April 15, 2011 Presumably entered into force
Republic of Korea July 25, 2011 Presumably entered into force

The appendix shows the comparison of the provisions of the agreements, the texts of which are open to the public, from the perspective of nuclear non-proliferation.

The following can be pointed out as a result of the comparison.

While it is not clear to what extent the three states other than the U.S. paid attention to the nuclear non-proliferation aspect of the agreements during the negotiation, the U.S. agreement is the strictest in terms of nuclear non-proliferation.

5I presume that the agreement with Russia, Kazakhstan and ROK have already entered into force because the text of the agreements can be seen on the website of India's Department of Atomic Energy

2.Australia's change in its uranium export policy

Australia as a producer of uranium has been keen in ensuring that its export of natural uranium does not contribute to the nuclear weapon program in recipient states. As one of the measures to ensure nuclear non-proliferation, Australia has conditioned uranium exports to non-nuclear weapon states on their acceptance of full-scope safeguards since 19776. It is noteworthy taking into account that it was only in 1978 that the United States adopted the same condition through the passage of the Nuclear Non-proliferation Act (NNPA). The Australian Government has further tightened its export control policy by making the Additional Protocol a pre-condition for the supply of Australian obligated uranium to all states.

Although Australia joined the consensus of the decision of NSG to approve the nuclear trade with India in 2008, it maintained its long-standing policy of the full-scope safeguards requirement even after 2008.

In December 2011, however, Australia's governing Labor Party adopted a new platform including language which allows the export of uranium to India7. Although it seems that the formal decision by the Government itself to lift the ban has not been made, it is obvious from the developments which follow the Labor Party's decision that Australia has changed its long-standing policy.

For Australia to sell uranium to other states, conclusion of a bilateral nuclear cooperation agreement is necessary as a legal framework to ensure nuclear non-proliferation. On October 17, 2012, India and Australia announced their decision to begin the negotiation of such a bilateral agreement.

3.Canada's conclusion of the Administrative Arrangement with India

After India conducted a nuclear test explosion using plutonium produced at Canadian supplied CIRUS reactor in 1974, Canada terminated its nuclear cooperation with India in 1976. After the NSG exemption in 2008; however, it changed its policy and signed a nuclear cooperation agreement with India on June 28, 2010. However, it has not yet entered into force because the negotiation of the Administrative Arrangement implementing the Agreement took time. It was reported that the obstacle that prevented them from reaching an agreement was Canada's insistence that it should have the right to verify India's handling of any Canadian nuclear material. India reportedly argued that reporting its activities to the IAEA suffice.

On November 6, both governments announced the conclusion of the negotiation of the Administrative Arrangement.

How the Canadian concern about the bilateral verification was accommodated in the Administrative Arrangement is not entirely clear. The Canadian Nuclear Safety Commission President only stated that the arrangement will ensure that appropriate oversight is exercised with respect to the information required by Canada and through this arrangement Canada will receive the necessary assurances of the peaceful use of Canadian exports to India of nuclear material, equipment and technology, equivalent to arrangements with other countries8. The Administrative Arrangement is expected to be signed soon by Canadian Nuclear Safety Commission and India's Department of Atomic Energy.

4.The nuclear liability issue and the delay of the implementation of the agreements

Almost all the states operating nuclear power plants adopt national legislation that governs the liability and compensation in case of accidents at nuclear power plants. In such national legislation as well as in all international conventions in this area, the principle of exclusive liability has been incorporated. Namely, the operators of nuclear facilities alone are liable for the compensation for the damage caused by nuclear incidents and the right of recourse to suppliers is limited to such cases as nuclear incidents caused by a willful act of suppliers. This principle has served the purpose of promoting the international supply of nuclear plants and equipment by insulating suppliers from the risk in case of an accident.

India however had lacked such legislation until recently. The pre-2008 nuclear deal with the United States, Canada and Russia was made possible on the basis that India indemnified overseas suppliers from the liability for damage caused by nuclear incidents in the contract with such suppliers9.

The Indian legislation on civil nuclear liability -The Civil Liability for Nuclear Damage Act10, 2010, was finally adopted by the Houses of Parliament in August 2010. This legislation basically follows the principle incorporated in other states' national legislation as well as international conventions in this area. However, it deviates from them in a very important aspect. Article 17 of this Act grants nuclear operators a right of recourse to suppliers when supply of equipment or material with patent or latent defects or sub-standard services causes an accident. This provision was incorporated because of the objection of the Indian opposition party to the indemnification of foreign suppliers from liability. Behind the objection is the sensitivity of the Indian public to the risk of the accident at industrial plants, a legacy of the accident at Union Carbide India Limited (UCIL) pesticide plant in Bhopal in 1984.

Because of the uneasiness of overseas nuclear suppliers about this provision, there has been no contract for the import of the nuclear reactors signed since 200811.

After the passage of this legislation, India and supplier states have discussed how to resolve this issue with no viable solution emerging.

5.Implication on the negotiation of the agreements with Australia and Japan

To realize nuclear cooperation with India, supplier states must overcome two hurdles: for nuclear non-proliferation, India's non-NPT status, and for the nuclear liability issue, India's domestic nuclear legislation which deviates from the globally accepted standard. While the first hurdle poses the question of how to reconcile strategic considerations of forging a better relationship with rising India and commercial interests for gain in the lucrative market while satisfying international norms of nuclear non-proliferation, the second hurdle simply relates to the risk-benefit consideration on the supplier side. The financial burden incurred by the overseas suppliers is so huge if recourse is sought from the operators that they hesitate to enter into the Indian market without any indemnification arrangement.

Major supplier states except for Australia and Japan overcame the first hurdle by concluding bilateral nuclear cooperation agreements. It is understandable that Australia and Japan are the only major nuclear supplier states which have not concluded the agreements with India because of their sensitivity to nuclear non-proliferation although the delay of the negotiation of the agreement with Japan might be attributable to the policy review following the Accident at TEPCO's Fukushima Daiichi Nuclear Power Station in March 2011. Taking into account the comparison of the bilateral nuclear cooperation agreements and the delay of the implementation of the Canada-India Agreement, Japan and Australia are likely to face an uphill battle if they demand strict provisions in terms of nuclear non-proliferation. Whatever compromise Canada has reached with India on bilateral verification measures might set a precedent for the agreements with Australia and Japan.

With regard to the nuclear liability issue, none of the states have yet to come up with any solution. It might buy some time for Japan to negotiate the agreement in the meantime.