Voluntary offer, formulation of terms under IAEA safeguards

By Wang Jihong and Xu Yibai, Zhong Lun Law Firm
0
216

Since President Xi Jinping in September 2020 proposed the “two carbon” objectives of peak carbon by 2030 and carbon neutrality by 2060, a broad and profound systemic change in economy and society has quietly been taking place. As a high-quality energy source with near-zero carbon emission baseload, nuclear energy has the potential to play a backbone role as a non-fossil fuel power supply in the carbon reduction efforts of all nations.

But given its dual-use nature, preventing unsafe nuclear proliferation has become of deep concern to the international nuclear energy community, hence the creation of the International Atomic Energy Agency’s (IAEA) safeguards regime.

In 1988, Beijing executed the Agreement Between the People’s Republic of China and the International Atomic Energy Agency for the Application of Safeguards in China, voluntarily placing relevant nuclear facilities under the IAEA’s oversight. Ten years later, it executed the Additional Protocol to the Agreement with the IAEA and, at the beginning of 2002, officially completed the domestic legal procedures to bring the additional protocol into force, becoming the first nuclear-armed state to do so.

So, how can Chinese nuclear power-related enterprises meet the requirements of the IAEA safeguards system in their daily operations?

IAEA safeguards

Voluntary offer, formulation of terms under IAEA safeguards Wang Jihong
Wang Jihong
Partner
Zhong Lun Law Firm

The IAEA safeguards system refers to a set of mechanisms including the establishment of an accounting and control system for nuclear materials, the provision to the IAEA and review of information on nuclear facilities, the placement of instrumentation at nuclear facilities to isolate or monitor certain areas and the dispatch of inspectors to sites to verify the quantity and flow of nuclear materials and the purpose of their production or use. Safeguard agreements authorise the IAEA to monitor the use of nuclear energy in a country to achieve peaceful use of nuclear energy or non-proliferation of nuclear weapons.

The safeguards implemented by the IAEA are mainly based on three types of agreements:

(1) Comprehensive safeguards agreement. The vast majority of safeguards are implemented through the conclusion of comprehensive safeguards agreements between the IAEA and non-nuclear-armed states, the IAEA having concluded such agreements with 178 countries to date. The IAEA has the right and obligation to ensure that safeguards are applied to all nuclear materials within the territory, jurisdiction or control of a state to verify that such materials are not diverted to nuclear weapons or other nuclear explosive devices.

(2) Voluntary offer safeguards agreement. The five so-called nuclear-weapons states, i.e. China, the US, Russia, the UK and France, have concluded voluntary offer safeguards agreements with the IAEA. The IAEA applies safeguards to nuclear materials in facilities voluntarily offered by the state in question and selected by the IAEA for the application of safeguards. The IAEA applies safeguards pursuant to the voluntary offer safeguards agreements to verify that nuclear materials are used for peaceful activities.

(3) Item-specific safeguards agreement. Three other nuclear-armed countries, namely India, Pakistan and Israel – which has never confirmed the widely held belief that it has nuclear weapons – have concluded item-specific safeguards agreements with the IAEA. The IAEA applies safeguards to specific nuclear materials, facilities and other items specified in the safeguards agreements to ensure that they are not used to manufacture any nuclear weapons or to further any military ends.

Voluntary offer

Voluntary offer, formulation of terms under IAEA safeguards Xu Yibai
Xu Yibai
Associate
Zhong Lun Law Firm

For Chinese nuclear-related enterprises, the need for “making a voluntary offer to the IAEA” usually arises for nuclear import projects. In such projects, where the foreign supplier makes a safeguard request, with consent of the end user and its competent authority, and the approval of the State Administration for Science, Technology and Industry for National Defence, a commitment may be given to place the nuclear facilities using such items or related technologies on the IAEA safeguards list. This is what is usually referred to as “making a voluntary offer to the IAEA”.

The circumstances under which making a voluntary offer to the IAEA is required depend largely on the co-operation agreement on the peaceful uses of nuclear energy and other bilateral arrangements between the government of the country of the foreign supplier in the nuclear import project and the Chinese government. Generally speaking, given that China is a nuclear-weapons state, supplier countries typically do not require safeguards-related commitments from China, except for more sensitive items and technologies.

With a view to successfully carrying out a nuclear import project, where the foreign supplier makes a safeguard request, the importing enterprise is required to carry out the relevant procedures in accordance with the Regulations for the Oversight of Nuclear Imports and Exports and Foreign Nuclear Co-operation Safeguards: Securing the consent of the end user and the competent authority at the next higher level; securing the approval of the State Administration for Science, Technology and Industry for National Defence; and having the China Atomic Energy Agency issue a written security document undertaking to place the nuclear facilities using the imported items or related technologies on the IAEA safeguards list.

Import agreement provisions

Generally, safeguard provisions in a nuclear import agreement consist of the following three parts: (1) a list of co-operation agreements on the peaceful uses of nuclear energy and other relevant bilateral documents executed by the governments of China and the supplier country that serve as the legal basis for China’s commitment to “making a voluntary offer to the IAEA”; (2) an express statement that the nuclear items and related technologies under the import contract can only be used for nuclear facilities in respect of which “a voluntary offer to the IAEA has been made” and that are subject to IAEA safeguards; and (3) a reaffirmation of the principle that the nuclear items and related technologies under the import contract are to be used solely for peaceful purposes and may not be illegally proliferated, i.e. they may not be resold in violation of laws and regulations on nuclear export controls, or without the consent of the supplier.

When designing and reviewing the safeguard provisions, attention should be paid to verifying the specific provisions of the co-operation agreement on the peaceful uses of nuclear energy and other related bilateral documents executed by the governments of China and the supplier country, and particularly whether a provision on “making a voluntary offer to the IAEA” is included and, on this basis, comparing and assessing whether the requirements in the safeguard provisions are overly exacting or exceed the conventional operating criteria for nuclear-related transfers between the two countries.

Wang Jihong is a partner and Xu Yibai is an associate at Zhong Lun Law Firm

Zhong Lun Law Firm

26/F, South Tower of CP Center

20 Jin He East Avenue

Beijing 100020, China

Tel: +86 10 5957 2288

Fax: +86 10 6568 1022

E-mail:

wangjihong@zhonglun.com

xuyibai@zhonglun.com

www.zhonglun.com