After the first Indian nuclear explosive test in 1974, seven nuclear supplier governments were convinced that the Nuclear Non-Proliferation Treaty (NPT) alone would not halt the spread of nuclear weapons—a view that developments in Iran, Iraq, North Korea, and elsewhere would later underscore. The seven governments formed the Nuclear Suppliers Group (NSG), and over the course of more than three decades, it has become the world’s leading multilateral nuclear export control arrangement, establishing guidelines that govern transfers of nuclear-related materials, equipment, and technology. Yet, as a voluntary and consensus-based organization of 46 participating governments, the NSG today faces a host of challenges ranging from questions about its credibility and future membership to its relationship to the NPT and other multilateral arrangements.

In light of major recent developments in globalized nuclear trade—complex proliferation transactions and networks that circumvent multilateral trade controls, the increasing role for nonstate actors in procurement and proliferation, opportunistic exporting policies of supplier states, and the rise of international equity issues in global nuclear governance and trade diplomacy—member states must address these pressing issues and reach out to non-NSG states. The group cannot function in isolation.

To encourage the NSG to consider issues that have a significant impact on its future credibility and effectiveness, the Carnegie Endowment held a workshop in Brussels, “The Nuclear Suppliers Group and the Future of Nuclear Trade,” from May 9 to 10, 2011. The workshop, supported by the Ministry of Foreign Affairs of the Netherlands, which assumed the NSG chair in June, was attended by 75 experts, including officials from 30 NSG-participating governments.

Participants made it clear that the NSG must decide how to manage its future relationship with states outside the group and how to define itself with respect to the NPT, whose 190 parties are committed to preventing the spread of nuclear weapons, and promoting disarmament and the peaceful use of nuclear technology. International nuclear commerce is rapidly evolving into a system of complex transactions involving destinations and actors that until now have been disconnected from the world of nuclear trade controls, be they governments that are members of budding regional customs unions or independent brokers, traders, and financiers such as those who have been affiliated with Pakistani scientist Abdul Qadeer Khan. As the world’s nuclear industry expands, engaging those countries outside the NSG framework will be far more critical than at any time in the NSG’s history.

India is one such country. As a state with undeclared nuclear activities outside the NPT, India was barred by the NSG and the NPT from most international nuclear commerce, but the group lifted nuclear trade sanctions against India in 2008 at the request of the United States, supported by other major nuclear exporting governments, including France and Russia. Workshop participants addressed the question of whether the India decision was a “singular exception” to principles set by the NPT parties and adopted by the NSG, as its main advocates claimed, or whether it marked a significant course correction by the NSG toward the goal of obtaining the adherence and participation of all nuclear supplier states, including those outside the NPT that enrich uranium, reprocess irradiated nuclear fuel, and have nuclear weapons. Attendees presented arguments for both cases but came to no consensus.

Now, three years after the India exception, China intends to export more power reactors to Pakistan, which is, like India, a state outside the NPT with nuclear arms. According to NSG guidelines, Pakistan would have to commit to full-scope International Atomic Energy Agency (IAEA) safeguards as a condition for the transaction. That will not happen, and workshop participants discussed whether China can be persuaded not to export the reactors or instead to seek a formal exception to NSG guidelines. China claims the exports are “grandfathered” by a long-standing agreement with Pakistan. Presently the NSG has not formulated a response to China’s challenge, but if Beijing does not come to some agreement with the NSG, the group’s credibility will be damaged, workshop attendees warned.

The NSG must be prepared to include new exporters, many of them developing countries previously outside the fabric of nuclear trade rule making. It will also have to address concerns that the organization is an exclusive club that undercuts states’ rights to nuclear commerce. The NSG incorporated China into the group in 2004 and should consider this experience in any future expansion. The United States has forced the pace of this discussion by advocating full NSG membership for India. Though workshop participants from India, Israel, and Pakistan presented arguments as to why these countries should be included in the arrangement, there was no consensus among the attendees that that should happen in the near future.

All of this will affect the rules by which the NSG operates. The NSG needs to consider how its voluntary participation and consensus-based decisionmaking will fare as more states join the group. Even at the NSG’s current size, some workshop participants said that the amount of complex negotiation that would be required to reach a consensus on criteria for an exception for Pakistan would not be worth the comparatively limited benefit of halting a small amount of Sino-Pakistani nuclear trade that is in violation of the guidelines. Voluntary commitments are difficult to enforce. But many workshop participants saw little upside to turning the NSG into a more formal organization.

The increasing volume of nuclear trade and the evolution of exporting states’ proliferation threat assessments have prompted a review by the NSG of its control lists—containing those items that members agree could be used to produce nuclear weapons and thus whose export should be restricted. Decisions made by the group in this area will profoundly impact the NSG’s future effectiveness. The ongoing list review should be carried out with the cooperation of national governments’ enforcement agencies to assure that practitioners responsible for controlling trade understand and can implement the group’s decisions.

To further promote transparency and participation, the NSG should systematically investigate the possibilities for future collaboration with other multilateral export control arrangements, especially in the areas of good practices, efficiency, information management, threat assessments, guideline implementation, consensus formation, enforcement, and outreach. In particular, workshop participants urged, the NSG should intensify cooperation with the UN Security Council’s Resolution 1540 Committee to establish and universalize a global standard for nuclear export controls, and to build capacity in national governments to have that standard applied and enforced.

In a globalized environment in which nuclear goods may be produced or transacted anywhere in the world, the NSG must remain an essential instrument for preventing nuclear material, equipment, and technology from getting into the hands of those who seek to develop nuclear arms. But it must reach out to industry, governments, and other nonproliferation stakeholders and adapt to new conditions.