B. Government intervention

The main concerns with respect to assurance of supply have arisen not from commercial defaults or market failure but as a result of government interven-tion in pursuit of nainterven-tional policies and objectives. These have usually been associated with non-proliferation goals, but sometimes with other defined national policies as well. Government action may take the form of export controls on nuclear materials or facilities (as by right of prior consent) or import controls. However, to date few actual interruptions of supply have occurred, and where they have, they have caused delay and expense rather than damage to power production. On the other hand, if uncertainties about the possibility of supply interruptions were to continue, it would affect the orderly development of nuclear power programmes, and this has caused great concern.

If suppliers are better assured that nuclear power programmes in consumer countries will proceed in accordance with plans, they will find it easier to gear their production to meet demands. By the same token, consumers will be better able to carry out their nuclear power programmes with greater confi-dence if they can expect supply capacity to continue to be maintained.

Foreign governmental economic or non-proliferation policies or market inter-ventions have not been the only, or in some countries even the major, factor creating difficulties for the development of the nuclear power of nuclear supplying industries. Public concern in both producer and consumer countries over the environmental, health and safety aspects of the nuclear industry have also had an impact on its development. It is therefore clearly desirable that continuing steps be taken to respond to these concerns.

It was recognized that governments are not likely to give up the possibility of intervening in supply arrangements when they perceive it to be necessary from the point of view of their national or international interests. Neverthe-less, consumer countries have been acutely concerned by these interventions, especially when, as has sometimes been the case, they reflect unilateral changes in agreed conditions of supply, and even more so when the action has had a retrospective aspect. Supplier governments, however, generally place great importance on the achievement of non-proliferation objectives and are not willing to supply, or continue to supply, nuclear materials in cir-cumstances that do not adequately respect those objectives.

It was generally accepted that more uniform, consistent and predictable application of national export and import controls by each supplier and consumer country, in accordance with more concrete criteria, would go a long way to mitigate uncertainties and thus strengthen assurances of supply. It was considered desirable that governments develop mechanisms for the management of changes in non-proliferation policy designed to reduce to a minimum the risk that such changes, when they give rise to disagreement between supplier and consumer countries, would lead to interference with supplies.

Another important problem relates to the right of prior consent, which certain supplier countries wish to retain in respect of the retransfer to third countries and/or reprocessing of fuel supplied by them to consumer countries, and which may, if exercised arbitrarily, have a negative impact upon assurance of fuel supply and a consequent adverse effect upon their nuclear programmes.

The potential for such arbitrary exercise of prior consent causes concern to consumer countries. Where a supplier country has a right of prior consent to

retransfer or reprocessing, the criteria for its exercise should be established, to the extent possible, before long-term fuel supply contracts are concluded or, for short-term contracts, before fuel is committed to nuclear reactors. It is generally agreed that pending the development of common approaches to the exercise of the right of prior consent — as a first step towards broader interna-tional consensus — supplier countries should exercise that right in a manner that takes account of the national policies and particular circumstances of consumer countries, with the objective of avoiding, wherever possible, problems in the planning of nuclear power programmes. Subject to relevant circumstances not having changed, the right of prior consent should be exercised in a manner that is predictable and that conforms to any under-standing that may have been reached between the parties when the right of prior consent was established.

A number of possible mechanisms have been suggested for updating non-proliferation undertakings and conditions when necessary:

(a) Provision in intergovernmental agreements for, or a joint declaration of intent to conduct informal consultations among the parties to determine if changes are necessary, on the basis of which specific amendments might be contemplated.

(b) Provision in intergovernmental agreements for periodic review by the parties involved, possibly followed, if necessary, by amendment of non-proliferation undertakings and conditions in such agreements.

(c) Provision in intergovernmental agreements for the adoption of non-proliferation undertakings and conditions agreed on by multilateral review, to the extent that all governments party to the agreements have subscribed to them.

(d) The inclusion in intergovernmental agreements of contingency provi-sions under which further non-proliferation requirements would be introduced or existing requirements modified in response to particular developments.

Assurances of supply could be enhanced if the adoption of such mechanisms were to be complemented by guarantees regarding continuity of supply during the re-negotiation process. Suggestions that were discussed included:

(a) Undertakings by the parties to an agreement not to refuse export or import licences under the terms of established contracts if the other party guarantees to accept amendments to non-proliferation conditions identified from time to time, in accordance with the mechanism agreed

by the parties either bilaterally or within a broader international framework.

(b) Undertakings by the parties that any proposal for the extension or the amendment of non-proliferation requirements would not affect the issue of export and import approvals before the amendment mechanism has led to a consensus of the parties to the agreement.

(c) Undertakings that the parties will not interfere with deliveries under existing contracts for some reasonable period following a proposal for the extension or amendment of non-proliferation conditions, for example until it was clear that negotiations had reached an impasse.

It was also agreed that, to meet the concerns of some consumer countries about differences in some of the non-proliferation conditions of bilateral agreements, common approaches would have to be sought against the back-ground of the need to make nuclear power available to all nations which wish to use it for peaceful purposes and the need to achieve this in a way that avoids proliferation while respecting the sovereignty of nations and the national needs of technological development.

The following are illustrations of fundamental matters the relevance, impor-tance and acceptability of which should be considered in such common approaches, it being noted that some of these matters are the subject of divergent attitudes among exporting as well as importing states:

(a) Undertakings on the peaceful uses of nuclear materials, equipment and technology and verification of these.

(b) Undertakings not to develop or acquire nuclear weapons or nuclear explosive devices.

(c) Undertakings not to acquire, manufacture or store nuclear weapons or to help any country to do so.

(d) Undertakings with respect to the application of IAEA safeguards, including the requirements for nuclear materials accountancy and control and the implementation of any eventual IAEA system for storage of excess plutonium.

(e) Adequate levels of physical protection.

(f) Conditions governing the establishment and operation of certain stages of the nuclear fuel cycle and the management of their associated materi-als, including those stages based on international or multinational institutions or on national enterprises that fulfil a set of internationally or multilaterally agreed obligations.

(g) Duration of non-proliferation undertakings and controls.

(h) Sanctions and other measures to be applied in the case of a breach of non-proliferation arrangements.

(i) Undertakings regarding transfer and retransfer of supplied materials, equipment and technology, and their multilabelling and safeguards contamination implications.

These common approaches, which could be expressed initially through practices of states and bilateral agreements, might eventually take the form of joint declarations, codes of practice or other multilateral or international instruments that might eventually result in more formal measures, directed to ensuring secure access to nuclear materials, services and related equipment and technology, and especially to certain services and technologies, under internationally accepted, effective non-proliferation conditions. Such an evo-lutionary process — building on existing instruments, institutions, standards and practice — might be both practicable and conducive to measured progress towards a more certain regime in which national export and import policies related to non-proliferation might be implemented in a manner acceptable to both supplier and consumer countries.