On September 6, 2008, the 45-nation Nuclear Suppliers Group decided by consensus to allow nuclear trade with India.[1] Such trade had been prohibited since 1992, when the NSG adopted a requirement for full-scope safeguards for trade with non-nuclear weapon states. This effectively cut off cooperation for India, Pakistan and Israel.

The United States has sought an NSG exemption because it has been a prerequisite for its own nuclear cooperation deal with India, which the U.S. has pursued since July 2005. In December 2006, Congress passed the Hyde Act (PL 109-401), which allowed the U.S. to waive certain restrictions in its laws. But the Hyde Act required, among other things, that the NSG decide first to allow trade with India.

The major question has been whether the NSG would condition its approval. Some of the conditions reportedly included whether it would ask India to sign the CTBT or stop producing fissile materials for nuclear weapons, or whether it would require all supply to terminate if India tested another nuclear weapon, or whether it would prohibit transfers to India of sensitive nuclear technology – uranium enrichment and spent fuel reprocessing. The decision, on its face, is a clean exemption, but countries’ understandings may be more nuanced.

Below are some frequently asked questions about the NSG decision and next steps.

Why was the recent NSG decision to allow civil nuclear cooperation with India so important?

The United States has been seeking to establish civil nuclear cooperation with India for several years. A prerequisite for U.S.-Indian cooperation has been a decision by the NSG that NSG member states could undertake such cooperation. The NSG has not allowed nuclear trade with non-NPT states since 1992.

Can U.S. firms begin exporting nuclear material, equipment or technology to India now?

Not yet. U.S. trade depends on the approval by the U.S. Congress of the draft nuclear cooperation agreement. NSG approval was one of seven requirements established by the Hyde Act in 2006 that would allow the President to waive certain requirements under the 1954 Atomic Energy Act.

Will other suppliers begin exporting nuclear material, equipment or technology now to India?

India has recently concluded agreements with France, Russia and possibly others for supply of nuclear items, but these countries have been waiting for an NSG decision. Although supply could start immediately, Indian Minister of External Affairs Pranab Mukherjee told reporters in early September that India would wait until the U.S. nuclear cooperation agreement (“123 Agreement”) was approved by Congress before going ahead with contracts with other suppliers.

It should be noted that although the NSG has allowed cooperation, some countries may decide to continue their embargos. For example, Australia, which sells uranium, has a policy that requires non-nuclear weapon state recipients to full-scope safeguards. Australian officials have indicated they will not be supplying India with uranium. Japan has a similar nuclear export policy regarding full-scope safeguards.

Is the NSG decision a “clean” exemption?

The NSG did not place conditions on its approval of nuclear trade with India or specify that trade would halt if India tested another nuclear weapon. However, the decision referenced India’s nonproliferation commitments in paragraph 2, which include its decision to separate civil and military nuclear facilities; its IAEA safeguards agreement; commitment to sign and adhere to an Additional Protocol (under negotiation); refraining from transferring enrichment and reprocessing technologies; instituting an export control system and adhering to NSG guidelines; and continuing its unilateral nuclear test moratorium, as well as working with others toward a multilateral fissile material cutoff treaty.

The structure of the decision indicates that the adoption and implementation of the NSG policy is based on those commitments. Paragraph 3 of the decision specifically refers to paragraphs 6 and 7 of the NSG guidelines, which cover the transfer of enrichment and reprocessing technology, and which are under discussion at the NSG for amendment. One amendment under consideration is that enrichment and reprocessing-related transfers would be conducted only with NPT member states. India has not joined the NPT.

Will the NSG review India’s compliance with its commitments?

One of the conditions rumored to have been under consideration was a periodic review of India’s nonproliferation compliance. The decision does not reflect this, but specifies that at each plenary meeting (held annually), states cooperating with India will notify each other of approved transfers. They are “invited” to exchange information, including about their bilateral agreements with India. The decision (paragraph 3.e) also specifies that participating governments will consult regularly “for the purpose of considering matters connected with the implementation of all aspects of this Statement taking into account relevant international commitments or bilateral agreements with India.”

Does the NSG decision reflect the same kinds of conditions on trade that the Hyde Act and other U.S. law contain?

No. U.S. firms will experience at least two disadvantages because of the lack of conditions in the NSG waiver. First, Section 129 of the Atomic Energy Act requires a cutoff in exports if a non-nuclear weapon state recipient tests a nuclear device. A presidential waiver is possible, but would not take effect for at least 60 days, and Congress could vote against the waiver. So if India tests another nuclear weapon, U.S. exports would be cut off, while those of other countries could continue.

Second, any U.S. exports of enrichment or reprocessing-related transfers to India are allowed only if the end-user is a multinational facility participating in an IAEA-approved program or a facility participating in a bilateral or multinational program to develop a proliferation-resistant fuel cycle. The NSG guidelines contain no such conditions. The decision refers to paragraph 6 of the guidelines, which states that “If enrichment or reprocessing facilities, equipment or technology are to be transferred, suppliers should encourage recipients to accept, as an alternative to national plants, supplier involvement and/or other appropriate multinational participation in resulting facilities. Suppliers should also promote international (including IAEA) activities concerned with multinational regional fuel cycle centers.”

Is the difference between the Hyde Act and the NSG decision important?

Chairman of the House Foreign Affairs Committee Howard Berman wrote in a letter to Secretary of State Rice in August 2008 that an NSG exemption with few or none of the conditions contained in the Hyde Act “would be inconsistent with U.S. law, place American firms at a severe competitive disadvantage, and undermine critical U.S. nonproliferation objectives. It would also jeopardize congressional support for nuclear cooperation with India, this year and in the future.”

What happens next?

The administration will submit the draft U.S.-India nuclear cooperation agreement to Congress soon, with the hope that Congress can approve the agreement before the end of this year. Per the Hyde Act, the President must determine (and provide the basis for his determination in writing) that the following seven actions have occurred:

1. India has provided the U.S. and the IAEA with a credible plan to separate civil and military nuclear facilities, materials and programs, and has filed a declaration regarding its civil facilities and materials with the IAEA;

2. India and the IAEA have concluded all legal steps required prior to signature by the parties of an agreement requiring the application of IAEA safeguards in perpetuity in accordance with IAEA standards, principles, and practices to India’s civil nuclear facilities, materials and programs;

3. India and the IAEA are making substantial progress toward concluding an Additional Protocol consistent with IAEA principles, practices and policies that would apply to India’s civil nuclear program;

4. India is working actively with the U.S. for the early conclusion of a multilateral treaty banning fissile material production for nuclear weapons;

5. India is working with and supporting U.S. and international efforts to prevent the spread of enrichment and reprocessing technology to any state that does not already possess full-scale, functioning enrichment or reprocessing plants;

6. India is enacting and enforcing comprehensive export control legislation and regulations, harmonizing its export control laws with the Missile Technology Control Regime (MTCR) and NSG and adhering to MTCR and NSG guidelines; and

7. The NSG has decided by consensus to permit supply to India of nuclear items covered by the NSG guidelines.

What are the potential hurdles in rapid approval?

There are two potential sets of hurdles to rapid approval of the U.S.-India draft nuclear cooperation agreement. The first has to do with the completion of the seven actions specified in the Hyde Act. The second is the congressional calendar.

India has not filed a formal declaration regarding its civil nuclear facilities and materials with the IAEA. Its safeguards agreement, approved by the Board of Governors on August 1st, did not contain a list of facilities or materials to be placed under IAEA safeguards. Although it circulated its March 2006 separation plan to IAEA member states, it is under no legal obligation to apply safeguards until those facilities and/or materials are listed in an inventory. Such an action is not likely to occur until the safeguards agreement is formally approved in India, which Indian officials have previously stated would come after the approval of the U.S.-India nuclear cooperation agreement.

Also, it is unclear whether India has yet made “substantial progress” toward concluding an Additional Protocol with the IAEA. Such progress has not been defined by Congress or the IAEA, but relatively few meetings have so far been held regarding an Additional Protocol.

Other issues could crop up as well, including whether the 123 Agreement itself contains adequate language regarding the effect of an Indian nuclear test on U.S. supply, including fuel assurances, and whether the new Indian safeguards agreement contains adequate assurances regarding the perpetuity of safeguards. The issue of India’s insistence on “corrective measures” in response to a cut-off in fuel supplies could be a sticking point, since those measures have never been clarified.

The congressional calendar could also be problematic for rapid approval. Under existing procedures for approval (the Hyde Act and Atomic Energy Act), the agreement for cooperation would need to lie before congressional committees for no less than 30 days of consultation, after which a joint resolution of approval could be introduced. Current estimates of the number of legislative days left in the session fall short of the required 30 days.

“Creative” circumventions of the Hyde Act and Atomic Energy Act requirements are possible, but these approaches entail some risks because they would not enjoy the privileged status of procedures under existing law. Moreover, they would severely curtail Congress’ ability to thoroughly assess the 123 Agreement, including the required Nuclear Proliferation Assessment Statement on India’s nonproliferation record.


Sharon Squassoni is senior associate in the Nonproliferation Program at the Carnegie Endowment for International Peace.


Notes

1. Final Version of NSG Statement on India, September 6, 2008.