Six years after talks began, the 46 countries that set rules for global nuclear trade have not been able to reach an agreement on proposed new guidelines governing the export of items used for sensitive nuclear fuel cycle activities—uranium enrichment and spent fuel reprocessing.

At its annual plenary meeting in late June, the Nuclear Suppliers Group (NSG) failed once again. This failure has led some senior officials in NSG states to reconsider the current guidelines, in part because a more ambitious project lies ahead. Countries want all members to agree that the Additional Protocol—a voluntary agreement giving the International Atomic Energy Agency (IAEA) the right to inspect undeclared locations—should be a requirement for future trade of all nuclear materials, equipment, and technology. The NSG, however, sidelined talks on requiring the Additional Protocol for all nuclear trade until after completing negotiations on the enrichment and reprocessing guidelines.

Without universal application of the Additional Protocol, the effectiveness of both the IAEA and the NSG in combating clandestine nuclear activities will be compromised.

The lack of consensus on new enrichment and reprocessing guidelines is regrettable. But more problematic is a compromise reached during negotiations on these guidelines that, by exempting Argentina and Brazil, undermines the separate but important goal of establishing the Additional Protocol as the global standard on nonproliferation verification.

So far, the proposed guidelines on enrichment and reprocessing—including the exception for the two Latin American states—are not legally binding and are not in force. G8 states, however, began adhering to the proposed guidelines last year—a step designed to generate momentum inside the NSG to break the deadlock. But primarily due to opposition by Turkey at the June meeting, consensus remains blocked and NSG member governments and nuclear vendor firms are soliciting advice on what to do next.

Given today's challenges, new guidelines are needed because the NSG lacks a mechanism to resolve differences about what constitutes "restraint."

Enrichment and Reprocessing Guidelines

Troubled by revelations of clandestine procurement networks spreading technology and with exports of nuclear technology and equipment expected to surge worldwide, concerned NSG states began working toward consensus on new rules for exporting technology and equipment that can be used to produce nuclear fuel for weapons. The United States took a leading role in drafting new guidelines in 2008 after President George W. Bush abandoned the position that enrichment and reprocessing transfers should be banned altogether to newcomer states.

The current guidelines, which were written in 1978, specify that supplier states exercise “restraint” in exporting enrichment and reprocessing items. Given today’s challenges, new guidelines are needed because the NSG lacks a mechanism to resolve differences about what constitutes “restraint.”

Argentina and Brazil’s Exception

The current proposed guidelines, essentially unchanged since they were introduced in late 2008, contain language that was included to satisfy two states—Argentina and Brazil—which are the only NSG states that have refused to sign an Additional Protocol.

The current draft states that suppliers should not authorize the transfer of enrichment and reprocessing facilities, equipment, and technology, if the recipient does not meet certain criteria. One requirement is that an eligible recipient has “signed, ratified, and is implementing a comprehensive safeguards agreement with the IAEA, and has in force an Additional Protocol or has signed, ratified, or is implementing a regional arrangement approved by the IAEA which operates to achieve the same objective by providing confidence in the peaceful nature of civilian nuclear programs.”

The “regional arrangement approved by the IAEA” is shorthand for the Brazilian-Argentine Agency for Accounting and Control of Nuclear Materials (Abacc), a bilateral safeguards agency established in 1991. The language of the proposed guidelines would allow Argentina and Brazil to receive enrichment and reprocessing items without having concluded an Additional Protocol on the grounds that they participate in Abacc.

Since the outset of negotiations on new guidelines, Argentina, Brazil, and South Africa—which has signed the Additional Protocol—have objected to the proposed condition that the Additional Protocol be a requirement in a recipient state for transfer of sensitive items.

The impasse created by Turkey’s objections at the June meeting gives the NSG an opportunity to reflect on whether it wants to proceed with the proposed enrichment and reprocessing guidelines.

Debate Over Enrichment and Reprocessing Guidelines

At the end of the June meeting, the NSG released a public statement that referred to the failure to successfully conclude negotiations. According to the statement, member states “agreed to continue considering ways to further strengthen guidelines dealing with transfer of enrichment and reprocessing technologies.”

The exception provided for Argentina and Brazil in the draft guidelines had effectively isolated South Africa, the sole NSG member state that continues to object to the Additional Protocol as a condition for supplying enrichment and reprocessing items.

In a surprise move, however, Turkey expressed fundamental misgivings to efforts by the members to impose further restrictions on access to nuclear material, equipment, and technology beyond restrictions expressed in the Nuclear Nonproliferation Treaty (NPT). During the NSG’s meeting one year earlier in Budapest, Turkey had made more limited objections, concerning “subjective” criteria in the guidelines which would permit technology holders to deny exports on the basis of “general conditions of stability and security” including the “stability and security of the recipient state.” Turkish officials informed counterparts in Budapest that Ankara feared it would be deprived access to enrichment and reprocessing items because it would be considered a state in the Middle East and thus subject to concerns about “stability and security.”

During the June meeting, some members tried to save the agreement, despite Turkey’s surprise objection, by offering to drop the “stability and security” criterion to satisfy Ankara. There was no consensus among members to abandon this criterion, however, and in any event Turkey made known it would not have been satisfied even had the offensive criterion been eliminated.

The recent emergence of Turkey as an opponent to new restrictions on nuclear trade has shelved prospects that the gambit to neutralize Argentina and Brazil will soon result in collective agreement on the criteria for enrichment and reprocessing trade and appears to have indefinitely delayed conclusion of the negotiations.

According to Brazilian officials, should the United States fail to ratify the New START agreement the prospects that Brazil would agree to the Additional Protocol would diminish.

The IAEA Additional Protocol Debate

Adopted by the IAEA Board of Governors in 1997, the Additional Protocol was born out of the IAEA’s failure to detect Iraq’s massive clandestine effort to develop nuclear weapons before 1990. More impetus was provided by Pyongyang’s 1993 refusal to cooperate with the IAEA to resolve accounting discrepancies in North Korea’s plutonium separation activities.

If agreed to voluntarily by a member state, the Additional Protocol gives the IAEA broader access to that state’s nuclear activities than specified in its NPT safeguards agreement with the IAEA. While NPT safeguards agreements permit the IAEA to make determinations based on data recovered from designated control and measuring points at declared facilities, the Additional Protocol gives the IAEA complementary access rights, including rights to inspect undeclared locations and locations where no nuclear material is located.

Today, six states with significant nuclear activities—Argentina, Brazil, Egypt, North Korea, Syria, and Venezuela—have no Additional Protocol. Iran has signed an Additional Protocol but is not implementing it. Fifteen countries, which in recent years have announced that they are interested in deploying nuclear power reactors in the future, also do not have a protocol in force. In total, 101 states have an Additional Protocol and many governments and experts now want the protocol to become the NPT’s verification standard as an essential component of a comprehensive safeguards agreement and as a requisite for engaging in nuclear trade.

In 2004, Bush pushed for the Additional Protocol to be required for all states importing items for their civilian nuclear programs. Led by Ernesto Zedillo, former president of Mexico, IAEA consultants looking at the future of the agency recommended in 2008 that “supplier states should make the Additional Protocol a condition of supply for granting export licenses of nuclear materials, services, and technologies.” In the run-up to the 2010 NPT Review Conference,  the Vienna Group of Ten—a group of countries on nuclear trade and security that includes Australia, Austria, Canada, Denmark, Finland, Hungary, the Netherlands, New Zealand, Norway, and Sweden—embraced this view.

Inside the NSG, initial proposals for new guidelines for enrichment and reprocessing included requiring the Additional Protocol as a condition of supply. In a statement issued in July 2009, all G8 states said exports of sensitive items should require an Additional Protocol in the recipient state. But the current text of the proposed guidelines from late 2008 contains the exemption for Argentina and Brazil.

To date, however, Argentina, Brazil, and South Africa have not budged from their objection to the NSG imposing the Additional Protocol as a requirement for nuclear trade.

Argentina has provided little to explain why it has not concluded an Additional Protocol. That cannot be said for Brazil. In official and unofficial statements, Brazilian government agencies, officials, and observers have offered numerous reasons why Brazil will not sign the Additional Protocol.

At the 2010 NPT Review Conference, Brazil argued that without greater progress in nuclear disarmament, including the setting of a disarmament timetable, it would not sign. In June, Samuel Pinheiro Guimaraes, Brazil’s federal minister of strategic affairs, assailed the Additional Protocol as a tool of industrial espionage by advanced nuclear states. Other Brazilian accounts have asserted that the Additional Protocol is superfluous because Brazil’s constitution already commits the country not to develop nuclear weapons and because Brazil is a member of the Treaty of Tlatelolco, establishing a nuclear weapons-free zone in Latin America.

Brazil is reluctant to provide the IAEA additional access to information concerning the past history of its nuclear program; were Brazil to agree to and implement the Additional Protocol, it would be obliged to disclose to the IAEA any high-level radioactive waste inventories, which would testify to historical production of undeclared nuclear material processing in the country.

More fundamentally, Brazil spelled out that it has no intention of implementing the Additional Protocol without significant steps in global nuclear disarmament. This was underlined by a December 2008 official defense strategy paper, and again in early 2009 by Brazilian representatives during a meeting of the NSG. U.S. behavior will be crucial in this regard. According to Brazilian officials, should the United States fail to ratify the New START agreement the prospects that Brazil would agree to the Additional Protocol would diminish.

The NSG Conundrum: Guidelines versus the Additional Protocol

The impasse created by Turkey’s objections at the June meeting gives the NSG an opportunity to reflect on whether it wants to proceed with the proposed enrichment and reprocessing guidelines.

The exception for Argentina and Brazil represents a political compromise on behalf of states that apparently believe that the downside of winking at the two counties would be more than compensated for by the benefit of requiring the Additional Protocol for all other countries.

But the logic behind the exception is highly problematic.

The proposed new rule implies that there is congruence between the Additional Protocol and the “regional arrangement”—in this case an organization based on bilateral safeguards and verification agreements made by Argentina and Brazil. Both the Additional Protocol and Abacc in the most general sense are intended to build confidence that nuclear activities are peaceful, but they are not the same. The former is a legal document setting forth inspection rights and the latter is an institution.

The Additional Protocol provides the IAEA specific rights to access a wealth of information that is outside the purview of standard NPT safeguards agreements, especially concerning undeclared activities. The agreement between the IAEA and Abacc, on the other hand, is similar to standard NPT safeguards agreements and does not give the IAEA rights specified by the Additional Protocol.

Abacc is aware that it is challenged by the Additional Protocol and that neither its agreement with the IAEA nor the Common System of Accounting and Control of Nuclear Materials, which underlies Abacc, excludes the possibility that Abacc might incorporate features set forth in the Additional Protocol in the future. But Abacc cannot move forward on this unless the governments of Argentina and Brazil expressly agree to adopt and put into practice the specific provisions of the protocol.

The NSG should correct the troubling exception or else put the guidelines aside and instead focus on securing consensus within the group that the Additional Protocol be a nuclear trade requirement.

Next Steps

Gregory Schulte, who served under Bush as U.S. ambassador to the IAEA, said that getting critical remaining states to agree to the Additional Protocol “will take high-level diplomatic engagement.” For the NSG separately to imply that an unfounded exception can be made for a few states is counterproductive to this end. The concerns voiced by individual NSG states about the Additional Protocol should not be fudged in export control guidelines but should be dealt with directly by members—especially the United States and the other nuclear weapons states—at the highest level of government.

The NSG will need that high-level commitment to move to the next stage and negotiate a watertight agreement by all 46 member states that the Additional Protocol should be a condition for all nuclear trade. Doing this would put the NSG fully in step with efforts—which the United States supports—to universalize application of the protocol.

The NSG’s member states should therefore correct the troubling exception in its draft enrichment and reprocessing guidelines, or else put the guidelines aside and instead focus on securing consensus within the group that the Additional Protocol be a nuclear trade requirement.

The IAEA needs the Additional Protocol for its ongoing verification work and therefore universalizing the protocol should be a top priority. An agreement on new guidelines for enrichment and reprocessing is less urgent as NSG states are, in effect, currently following the guidelines and have been for quite some time. While trade controls are needed to ensure future nuclear expansion won’t spread sensitive technologies unjustifiably, more worrying now is the prospect that working group-level compromises would result in a net nonproliferation loss.

President Obama has an additional incentive to ensure congressional ratification of the New START Treaty. Unless it is ratified, no progress in universalizing the Additional Protocol will be possible. And without universal application of the protocol, the effectiveness of both the IAEA and the NSG in combating clandestine nuclear activities will be compromised.