The Export reorganization act, 1975 : hearings before the Committee on Government Operations, United States Senate, Ninety-fourth Congress, first session, April 24, 30, and May 1, 1975 online

to recognize that some of the materials involved in the use of this technology
can be applied to nuclear weapons development.

The two-edged character of the atom was recognized by President Eisenhower
when he spoke before the UN General Assembly on December 8, 1953. He
proposed the establishment of an Atoms for Peace Program and the International
Atomic Energy Agency in order to use nuclear technology for the peaceful
purposes of mankind. At the same time, his proposal recognized that
effective controls had to be placed on peaceful nuclear activities in order
to ensure against their use for military purposes.

The Congress strongly endorsed President Eisenhower's proposal with the
passage of the Atomic Energy Act of 1954. Since then the United States has



165

Thank you for the opportunity to express my views on U.S. nuclear export
programs and policies. I would like to begin with a brief review of our
international nuclear policy, but I will also outline our views on a few
key aspects of the proposed Export Reorganization Act of 1975.

A realistic approach to U.S. policy must begin with the recognition that
nuclear energy is a two-edged sword. The atom has proven to be a viable
source of low cost electrical energy which is assuming an increasingly
important role in meeting the world's energy needs. However, we cannot fail
to recognize that some of the materials involved in the use of this technology
can be applied to nuclear weapons development.

The two-edged character of the atom was recognized by President Eisenhower
when he spoke before the UN General Assembly on December 8, 1953. He
proposed the establishment of an Atoms for Peace Program and the International
Atomic Energy Agency in order to use nuclear technology for the peaceful
purposes of mankind. At the same time, his proposal recognized that
effective controls had to be placed on peaceful nuclear activities in order
to ensure against their use for military purposes.

The Congress strongly endorsed President Eisenhower's proposal with the
passage of the Atomic Energy Act of 1954. Since then the United States has



166

promoted international cooperation in a wide variety of peaceful applications
of nuclear energy. Our agreements for cooperation with other nations
contain a guarantee by the governments involved that U. S. -supplied nuclear
equipment, materials, and their products will be used only for peaceful
purposes, and that they will be subject to safeguards acceptable to the
United States.

The basic philosophy expressed by President Eisenhower has been and
continues to be a realistic and responsible approach to our international
nuclear policy.

I realize that there are some who would disagree with this statement.
In their opinion, the Atoms for Peace Program has been a misguided and
dangerous policy because it has provided many nations with the basic
technological know-how to produce materials which can be used to build
nuclear weapons.

This argument, however, does not take account of the nature of scientific
and technological growth. Even before President Eisenhower's speech,
several nations had already uncovered the secrets of the atom, and it
was only a question of time and cost before others acquired a capability for
nuclear weapons development.

Thus, we have to examine what the consequences would have been in the absence

of an Atoms for Peace Program. The most important consequence is, in my

2



167

view, readily apparent. Countries would have gone on to establish their
own independent, nationalistic nuclear programs without any external
assistance. As a result, manv nations would have had little incentive to
commit their programs to outside restraints or controls.

In contrast, the Atoms for Peace Program has enabled the United States
to exercise its considerable influence in establishing a workable structure
of international safeguards and controls which has received the political
support and endorsement of most nations of the world.

U.S. contributions to this structure have been many and varied. It was the
initiative of the United States which led to the establishment of the IAEA
and its safeguards system. We have provided the IAEA with the results of
our safeguards programs and research and development efforts. The United
States had done more in this area than any other nation. No safeguards
system can be perfect, but we are constantly striving to improve the IAEA's
effectiveness through our financial, technical and political support.
Last September, Secretary Kissinger assured the UN General Assembly that
the United States will intensify its efforts to strengthen the IAEA safeguards
system.

TheU.S.has also been instrumental in establishing the Non-Prol if era tion Treaty

which provides a sound political basis for discouraging the spread of nuclear

3



168

weapons. Under the terms of this treaty, non-nuclear-weapon states
party to the treaty forswear the right to manufacture or acquire nuclear
weapons or other nuclear explosives and undertake to accept IAEA safeguards on
all peaceful nuclear activities within their territories. All parties to
the treaty are also obliged to require IAEA safeguards on exports of source or
special nuclear material to any non-nuclear-weapon state. The political
and legal commitments made under the NPT are a crucial factor in preventing
the proliferation of nuclear weapons.

U.S. export controls provide tight restrictions on the export of nuclear
materials, facilities, and key elements of nuclear fuel cycle technology.
In addition, theU.S.has been active in working with other supplier nations
to develop common guidelines for defining critical nuclear exports on
which IAEA safeguards would be imposed, and has consistently pressed for
strong controls on the export of critical technology.

TheU.S.has also been in the forefront in working toward adequate physical
security measures on an international basis. Physical security is, of
course, a national responsibility. However, theU.S.is encouraging effective
measures in other countries by bilateral exchanges of, information, by its
support of an international convention on physical security and by its own
physical protection policies and development efforts. We have also made
major contributions toward the IAEA efforts to develop physical securi
recommendations. These have been made available to member states for
guidance in establishing national physical security programs.

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169

Recently we adopted policies requiring that no future license or
authorization be granted on the export and/or the retransfer of strategic
quantities of highly enriched uranium and plutonium unless the recipient
government has established physical security measures acceptable to the
United States.

ERDA staff is preparing background materials on the contributions which the

U.S. has made over the years in supporting the development and strengthening
of both international safeguards and physical security measures. I expect

these materials to be completed shortly and I would like to submit them for

the record so that it may be of use to the members of the committee during

their deliberations.

I will be the first to admit that the fabric of international controls which
we have been instrumental in creating - non-proliferation policies,
safeguards and physical security systems - does not provide us with an
ideal solution in the best of all possible worlds. What has emerged, however,
is a realistic approach to the real world.

The United States does not have a monopoly on the supply of nuclear
materials, equipment or technology. Most of the industrial nations of the
world have the financial and technological resources to expand their own
nuclear industries independent of the United States. Many others have
either launched major nuclear programs or have plans under way. I have
asked ERDA staff to prepare some materials for the record which should give



See Enclosure 1



170

some idea of the scope of international nuclear trade as well as the

extent of other nation's capabilities in all stages of the fuel cycle,

2

including uranium enrichment, power reactors and chemical reprocessing.

Unilateral U.S. actions cannot alter this situation. Ill-conceived U.S.
policies, no matter how well intentioned, could cripple U.S.nuclear exports
and bring about disastrous consequences. Our major concern here is not
the loss of world markets or balance of payments problems. As important
as these are, they are secondary to the major concern, namely, a dangerous
erosion of our influence in international nuclear affairs.

Other countries are pursuing vigorous and energetic nuclear export
policies. The U.S. must be in a position, through its active involvement

in the world market, to establish cooperative mechanisms with other
suppliers to avoid a competition based on minimizing safeguards and other
controls. We must continue to persuade these countries to impose proper
safeguards and physical security measures on their nuclear exports. We
would have little chance of achieving this objective if we chose to retire
from the world market.

In addition, one of the principal reasons non-nuclear weapon states agreed
to the establishment of the NPT and its safeguards provisions was the
assurance given under Article IV by the nuclear weapon states (but
particularly by theU.S.) that they would continue to assist in the further



2

See Enclosure 2



171

development of their peaceful nuclear programs. These nations might
undertake a serious reappraisal of the whole NPT structure if we were
to fail in our commitments.

In order to maintain a major voice in shaping future international
nuclear policies, theU.S.also must have an efficient and flexible policy
mechanism. In essence, this means a highly coordinated effort by all
appropriate members of the Executive Branch in close cooperation with
the Congress.

Under the current system, the National Security Council (NSC), sets
overall policy within which agencies coordinate their policy and technical
roles. The NSC structure, together with the close working relationships
among all appropriate elements of the Executive Branch, has thus far ensured
a high level of interagency coordination. Because this entire process is
under the effective control and direction of the President, we are able to
conduct a well integrated and flexible policy which can be adjusted to the
rapidly changing world of nuclear technology and nuclear diplomacy.

Under our unique system of export controls, the Congress is a partner in the
development of policy through its role in approving or disapproving of
proposed agreements for cooperation. The strong and continued interest of
Congress in all these issues is vital to a sound international nuclear



172

policy. The present system fulfills the two-fold objective of providing
an effective and efficient decision-making process while assuring a healthy
and productive system of checks and balances.

The proposed Export Reorganization Act of 1975 would, from our perspective,
impair the effectiveness of that Congressional-Executive partnership in
several respects.

The Congressional-Executive partnership should be the principal mechanism
for setting our basic policies. In contrast the proposed bill seems to
place excessive weight on the export licensing process as the means for
determining questions of international nuclear policy.

In particular, we are concerned that in requiring NRC certification of
foreign safeguards, the proposed legislation places a responsibility on
the NRC which would be extremely difficult for it to execute. The
determination of the adequacy of foreign safeguards is a complex matter,
not simply involving a review of regulations, facilities, and practices.
It also involves a detailed and confidential exchange of information,
an assessment of intelligence data, and an analysis of pertinent
political factors. Obviously, an organization independent from the
Executive Branch would not be in a position to make these judgments.
It is inadvisable, in our view, to require of the NRC an important action
which it does not possess the capability to discharge.

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We fully recognize that the NRC has a valuable contribution to make
through regulatory establishment of the criteria for the domestic
"safeguards" program. Certainly this program, which is concerned
mainly with the protection of materials against theft or seizure by
individuals or small groups, is an important aspect of our total range
of protective measures.

The international scene, however, presents additional considerations
beyond those in the domestic safeguards programs. These additional
considerations involve how to deter foreign governments from diverting
nuclear materials to non-peaceful uses. Clearly, dealing with these
considerations should be the business of Executive Branch agencies and
not an independent regulatory agency.

We also have a problem with the requirement that safeguards in foreign
countries be comparable to those in the United States. ERDA believes
that "comparability" would be an unworkable standard for international
safeguards. Systems vary widely from country to country, and too many
special circumstances have to be considered.

We are likewise concerned with the requirement in the bill that NRC specify

the safeguards criteria for the international agreements. Since the final

decision on these agreements rests with the President, regulatory agencies

should play an advisory not a decision-making role.

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The current method for licensing exports of nuclear materials was created by
the split of functions berween ERDA and the NRC by the Energy Reorganization
Act of 1974. ERDA is responsible for authorizing distribution of nuclear
materials under government to government agreements. NRC is responsible for
issuing licenses for commercial export of nuclear materials and reactors.
The test which must be applied in either case is whether the proposed action
would be inimical to the common defense and security or to the health or
safety of the public. Clearly a uniform application of these statutory
criteria is called for.

We recognize that in its role as an independent regulatory agency, the
NRC needs to receive an analysis of these areas from the Executive Branch
before it can apply the statutory tests in each case. Along with other
agencies of the Executive Branch, we have been developing with the NRC
effective procedures for accomplishing this task.

I would like to say a few final words on one aspect of the decision-making

process with which I am most familiar - the programs and activities of

the Energy Research and Development Administration. As an heir of AEC,

ERDA has a lengthy history in the national security and technical aspects

of nuclear energy. The strong scientific and technical foundation which

ERDA has developed over the years as well as its extensive experience in all

aspects of our international nuclear policies is an invaluable national asset.

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This asset constitutes a whole which is far greater than the sum of its
parts. Its expertise would not be fully and effectively utilized if
staff members were dispersed among several other agencies. There is a
close, interlocking, and mutually supportive relationship among all ERDA
elements - safeguards and physical security, export control, weapons
development, classification and intelligence programs as well as the
extensive programs in the national laboratories and the whole spectrum
of ERDA's international activities in the energy field. These cannot be
separated without losing the benefits of the close and effective cooperation
that has prevailed in the past. For example, the U.S. export control
system covers thousands of items ranging from common articles such as
ferrous pipes to highly sophisticated new technologies such as laser
isotope separation. The policy-making process must include people who
are actively working in these technologies in order to help determine what
should be controlled and what conditions should be attached to any
authorization.

ERDA's unique resources must continue to play a substantive role if the
US is to have an international policy which is capable of adjusting to
the rapidly changing and worldwide developments in nuclear energy.

To conclude my remarks, I believe that we must continue to press for
strict and effective international controls. An efficient and flexible
policy mechanism is essential for this task. Rearrangement of licensing

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procedures would not in itself enhance the common defense and security.
Achievement of that goal requires the close cooperation of all agencies
and departments, which are under the direction and guidance of the
President, and which are in a position to make substantive contributions
to the decision-making process.

I fully support the efforts of the Congress to assure effective international
controls and to minimize the spread of nuclear weapons, and I will be pleased
to offer all the assistance I can in achieving these important objectives.

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177

(Enclosure 1)



CONTRIBUTIONS MADE BY THE U.S. IN SUPPORT OF DEVELOP-
MENT AND STRENGTHENING OF INTERNATIONAL SAFEGUARDS
AND PHYSICAL SECURITY MEASURES



Early U.S. Efforts

After the failure of the initial U.S. efforts for international control
of nuclear energy for peaceful purposes (i.e. , the Baruch plan of the
mid- 1940s), the idea of international control achieved its first foothold
as a result of the U.S. proposal for an International Atomic Energy
Agency (IAEA). The U.S. proposals for this Agency, in 1954, specified
that "... in order to assure that allocated fissionable material is
being used for the purpose for which it was allocated, the Agency would
have the continuing authority to prescribe certain design and operating
conditions, require accountability and operating records, specify
disposition of by-product fissionable materials and wastes, retain the
rights of monitoring and require progress reports. The Agency would
also have authority to verify the status of allocated material inventories
and to verify compliance with the terms of issuance. "

In July of 1955, the USSR agreed to a U.S. proposal for a joint study
of the issues and decl^r^- its readiness to participate in negotiations
on the creation of the IAEA. The agreement culminated in unanimous
approval of the Agency Statute. This Statute directs the Agency tc
"ensure so far as it is able that assistance provided by it or at its
request or under its supervision or control is not used in such a way
as to further any military purpose. " To this end the Agency is authorized
"to establish and administer safeguards designed to ensure that special
fissionable and other materials, services, equipment, facilities and
information made available by the Agency . . . will not be used in such
a way as to further any military purpose. " In Article 12 of the Statute
the Agency is authorized to send into the territory of States subject
to IAEA safeguards inspectors who shall have access at all times
to all places and data and to any person who by reason of his occupation
deals with materials, equipment or facilities which are required by
this Statute to be safeguarded, as necessary to account for source
and special fissionable materials.

The U.S. negotiators at the conference which developed this Statute
pressed for the strongest acceptable international controls to be
specified in the Statute. The controls acceptable to the other nations
were of the nature of detecting diversions of nuclear material. The
sanctions provided for in the Statute stem from the reporting of any
discovered diversion to the Agency s Board of Governors and the UN
Security Council and General Assembly. There were no provisions



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made for the IAEA to physically protect the safeguarded material
inasmuch as this would imply the right of the Agency inspectors to
apply force within the jurisdiction of a member State. Therefore,
physical protection activities have never been a part of IAEA
safeguards implementation.

IAEA Systems

When the U.S. ratified the IAEA Statute, Agency safeguards were looked
upon as the eventual, desirable avenue for the application of the safe-
guards contained in the U.S. bilateral Agreements for Cooperation
developed in connection with the Atoms for Peace program. As the
IAEA safeguards system was developed, provisions were included in
the U.S. Agreements for Cooperation contemplating transfer of safe-
guards responsibilities to the Agency. (The safeguards provisions
developed for the U.S. bilateral agreements had the same basic
purpose as IAEA safeguards, i.e., to detect and deter a national
government's diversion of nuclear material contrary to its international
commitment. )

In the early years of IAEA development (i. e. , 1958 through i960) the
United States provided key leadership in developing the first Agency
safeguards system which was finally adopted by the Agency in 1961.
This system only covered the small research reactors which were
subject to Agency safeguards at that time. In the subsequent years
as further demands were put on the Agency safeguards program,
additional systems were developed through technical working groups and
committees in which the U.S. was a key participant providing major
technical input. The list of these systems is as follows:

System Set Forth

Nature Name In Document

The first system The Agency's Safeguards INFCIRC/26

System (1961)

The 1961 system as The Agency's Safeguards INFCIRC/26

extended to cover System (1961, as extended and Add. 1

large reactor facilities in 1964)

The revised system The Agency's Safeguards INFCIRC/66

System (1965)



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-3-



System (Continued)
Nature

The revised system
with additional
provisions for
reprocessing plants

The revised system
with further additional
provisions for safe-
guarded nuclear
material in conver-
sion plants and
fabrication plants

The system to be
applied under NPT
agreements



Name

The Agency's Safeguards
System (1965 as Provi-
sionally Extended in 1966]



The Agency's Safeguards
System (1965, as Provi-
sionally Extended in 1966
and 1968)



Set Forth
In Document

INFCIRC/66/Rev. 1



INFCIRC/66/Rev. 2



INFCIRC/153



The Structure and Content
of Agreements Between the
Agency & States Required
in Connection with the Treaty
on the Non- Proliferation of
Nuclear Weapons (1971)

The U.S. involvement in these efforts included (a) developing a U.S.
position, (b) participation in the series of meetings during which each
draft document was developed, and (c) obtaining expert U.S. technical
advice at all stages of development of the system.

EURATOM



At the same time that IAEA safeguards were being developed, the
United States in recognition of the importance of the objective of a
united Europe, fostered and gave technical support to the development of
a multinational safeguards system covering the EURATOM countries.
This safeguards program is conducted by the EURATOM organization.
During this period of development, a Joint US/EURATOM Technical
Working Group was formed and there were exchanges of technical visits
between U.S. and EURATOM safeguards experts.

Safeguards Exercises

In addition to the early system development work, another category of
assistance has been the U.S. unilateral offers to have IAEA safeguards
applied or specific procedures developed and tested at operating U.S.
nuclear facilities. The major exercise was the 1962 "Four Reactor



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Agreement, " which was in effect for almost 8 years. It included
the application of safeguards during the processing of 2 batches of
spent fuel elements from the U.S. Yankee power reactor by 15 -man
resident teams of IAEA inspectors at the Nuclear Fuel Services Co.
chemical reprocessing plant at West Valley, New York, in 1967 and
1969. The Yankee Atomic Electric Company and the NFS Company
cooperated fully in this exercise as did the AEC's national laboratories
at Argonne and Brookhaven.

Another exercise was made possible through the cooperation of
Westinghouse and involved IAEA safeguards staff studying in detail the
nuclear material control system at the Westinghouse Fuel Fabrication
Plant in Columbia, South Carolina, in 1971, as part of a program to
develop its inspection procedures for such facilities.

Past R&D Projects

Major AEC (ERDA) projects for R&cD to assist international safeguards
are listed as follows:



Date


Contractor