ML20004C463
| ML20004C463 | |
| Person / Time | |
|---|---|
| Issue date: | 05/20/1981 |
| From: | Dircks W NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | |
| Shared Package | |
| ML20004C464 | List: |
| References | |
| TASK-PINV, TASK-SE SECY-81-320, NUDOCS 8106040094 | |
| Download: ML20004C463 (23) | |
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. i,l 17.?"" s p.y;g 37 May 20,1981
-- SECY-81 -320 POLICY ISSUE
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2 JUN 011981am- {g For:
The Commission
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Executive Director for Operations N
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Subject:
~ PROPOSED LICENSE TO EXPORT HIGH-ENRICHED URANIUM iT>
MEXICO-(XSNM01259,SECY-81-226)
Purpose:
.Comission review of proposed issuance of subject license to General' Atomic Company.
Review Dates:
60-day period expires on June 20, 1981.
120-day period expires on August 19, 1981.
Background:
On January 13, 1978, General Atomic applied for.a license (Appendix A) to export 10.404 kilograms of 70% enriched uranium (7.272 kgs. U-235) to' Mexico. The material, in' the form of 54 TRIGA fuel elements, is intended for use as reload fuel for the one MWt TRIGA Mark III research reactor in Salazar, Mexico. The Salazar reactor is operated by the Instituto Nacional De Energia Nuclear (INEN) and.is utilized in civil nuclear reseatch and training programs and in the production of radioisotopes.
CONTACT:
Marvin Peterson, IP (49-28155) l 81060400W
The Comission 2
Background:
It had been anticipated that this fuel would be supplied to (Continued)
Mexico under the terms of a Third Supply Agreement to be negotiated by the U.S., Mexico and the IAEA. Frm a U.S.
perspective, this Third Supply Agreement would. of course,.
have been subject to the Second Amendment to the US-IAEA Agreement for Cooperation (which entered into force on 5/6/80 and contained the new non-proliferation provisions recuired by section 401 of the NNPA.). However, Mexico has refused to negotiate any new agreements for the Salazar fuel which contain the, to them, unacceptable unilateral export control requirements mandated by the NNPA.
In essence, Mexico believes that, as an NPT party, all of its nuclear activities are subject to appropriate safeguards and that, accordingly, there should be no further need for bilateral non-prolifera-tion assurances (such as the reprocessing and retransfer assurances required by the U.S. under the NNPA).
To avoid an indefinite impasse with respect to the Salazar reactor, for which additional fuel is urgently needed, Mexican officials suggested in December 1980 that the pending fuel export be shipped pursuant to the Second Salazar Supply
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Agreement (INFCIRC/52/ Add. 1). Although the supply obliga-tions under the Second Supply Agreement ended in October 1977, only 3.425 kgs of the total of 10.8 kgs, of 70% fuel originally authorized by the agreement were shipped. The balance of 7.375 kgs. was not shipped before the expiration date, according to Mexican officials, because of the lack of storage space at Salazar. They further stated their belief that,' since the pending fuel supply for Salazar represents a previous commitment on the part of the U.S., entering into a new supply agreement would apply new conditions retro-actively and this was unacceptable to them. Mexico would, however, be willing to accept new conditions on new supply (ref: State 011710, January 16,1981).
As a result of the above considerations, the Executive Branch, after making appropriate arrangements with Mexico and the IAEA,
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agreed to recommend the approval of the export of up to 7.375 kgs. of 70% enriched uranium under the terms of the Second Supply Agreement. Thi: amount would equal the balance of material that was not saipped, as originally planned.
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The Commission 3
' Discussion:
Favorable Executive Branch views on this proposed export werereceivedonMarch25(seeSECY-81-226). As indicated in the background discussion, the Executive Branch confined its recommendation to 7.375 kgs, of 70% enriched uranium.
The remaining quantity of material applied for by General _-
Atomic must be shipped under. a new supply agreement yet to j
be negotiated.
As indicated in the Executive Branch views, the export of the 7.375 kgs of material will be made pursuant to the (old) U.S.-IAEA Agreement for Cooperation, the IAEA-Mexico Project Agreement for Salazar (!NFCIRC/52), and the US-IAEA-Mexico Second Supply Agreement (INFCIRC/52/ Add. 1).
In addition, the export will be subject to the terms of a February 20 Note from the Government of Mexico to the IAEA and a March 4 letter from the IAEA, both confirming the aoplicability gf the Second Supply Agreement.(see SECY M6). Finally, in view of the lack of appropriate retransfer.
and reprocessing provisions in the above agreement and official comunications, the February 20 Note from the Government of Mexico also confirms that the Salazar fuel export will be subject to the understandings contained in the November 17, 1978 comunication from the Government of Mexico to the IAEA concerning the provision of nuclear fuel for the Laguna Verde Nuclear Power Plant in Mexico (Copy enclosed at Appendix B). This November 17, 1978 comunication provides the reprocessing and retransfer assurances required by the NNPA.
In view of the unusual circumstances of this proposed export with respect to its being made subject to the Second Supply Agreement, the-staff requested a legal analysis of the matter by the Executive Branch. This analysis was received on April 20 and-is attached at Appendix C.
The staff notes that State's analysis is more conclusory than analytical. ELD has prepared a reparate analysis of the matter which is enclosed at Appendix D.
ELD has concluded that the proposed i
arrangements are acceptable from a legal standpoint.
From a policy perspective, the Executive Branch attaches great importance to this export in terms of maintaining good relations with Mexico, particularly in light of the up-coming (June 7-8) meeting of President Reagan and the President of Mexico. As the Comission may recall, delays in approving exports to Mexico have in the past been a source of sensitive political concerns on the part 0: Mexican officials, since these delays are seized upon publicly by anti-American elements as evidence of the U.S. insensitivity toward Mexico.
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Discussion:
The staff has also examined the question of the precedent ~
(Continued) which might result from the extension of delivery time under:
- the Second Supply Agreement with Mexico and concludes that the likelihood of a similar occurrence is very remote. We do not have records of all the supply arrangements that have been negotiated between the United States and other-parties, but copies of two agree:nents with Pakistan and one with Romania are available for comparison to the First and Second Supply Agreements with Mexico, Of these, only the Second Agreement with Mexico contains language establishing atimeperiodddiniwhichdeliveryistooccur.
For those'.
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'~ greements where no time limit'is prescribed a similar problem a
woD1a ~n'ot aris6'.
Fdrthermore, of the~several supply agreements of which the staff is aware, except for Romania, material deliveries essentially have been completed.
Seetion-127-and 128 criteria analysis..
The staff's analysis of the proposed export in terms of the.
specific export licensing criteria in Sections 127 and 128 of the AEA is as follows:
Safeguards; The export will be subject to IAEA safeguards. As a party to the Nonproliferation Treaty (NPT), Mexico has undertaken an obligation to accept IAEA safeguards on all source or special fissionable material in all peaceful nuclear activities within the territory of Mexico, under its jurisdiction, or carried out under its control anywhere. A safeguards agree-ment between Mexico and the IAEA pursuant to the NPT entered into force on September 14, 1973 a: f under that agreement safeguards are being applied.
In a letter dated April 21, 1981 (Appendix E), the Executive Branch has confirmed that a facility attachment for Salazar is in force.
No Nuclear Explosive Use.
As a party to the NPT, Mexico has pledged not to manufacture or otherwise acquire any nuclear weapon or other nuclear explosive devices.
Further, under its Safeguards Agreement wit.h the IAEA, Mexico is precluded from engaging in any research and development on any nuclear explosive device involving any nuclear materials or facilities subject to the agreement, or any special nuclear material derived therefrom.
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-The Comission 5
Physical Security.
Mexico has established physical security measures which, as a minimum, meet the requirements in the IAEA's INFCIRC/
225/Rev. 1.
Mexico has further advised in its note of November 17, 1978, that the Government of Mexico, in carrying out its nuclear program, will ensure that means of physical protection providing a level of protection comparable to that laid down in IAEA document INFCIRC/225/Rev. 1 will be maintained for all nuclear materials and installations under its jurisdic-tion. Mexico's note of February 20, 1981 confirms the.
appl'cability of the provisions of the November 17 note to the proposed Salazar export.
Despite the above assurances, the staff noted that the proposed export would, by a slight margin, fall into category I and that confirmation had not been received that planned category I improvements at Salazar had been accom-plished. To resolve this matter, the staff obtained confinn-ation from General Atomic on May 7 that, since the fuel will ;
be transported in multiple shipments and loaaed into the reactor promptly, there will not at any time be a category I quantity of material at the reactor site.
Retransfers and Reprocessing.
Under the terms and conditions of the old US-IAEA Agreement for Cooperation, which are applicable to the proposed export, the United States does not have the right to prior approval for retransfers or reprocessing. However, such rights have been granted to the United States by Mexico's note of February 20, 1981, which confirms the applicability to this proposed export of the
' provisions of the November 17, 1978 note from Mexico to the IAEA which states:
"The Government of Mexico wishes to inform you that it does not for the moment contemplate the transfer to another country of any of the equipment or materials supplied under the 'said agreements.
If in the national interests, the Government of Mexico w!shes to make a transfer in accordance with these Agreements, such transfer will be made on the basis of agreements subscribed to by the parties concerned (the Government of Mexico, the IAEA, and the United StatesofAmerica)."
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The November 17 note also advised that with regard to any nuclear fuel provided under the Supply Agreement and irrad.iated in the Laguna Verde Rractor Units I and II, plans would be made to enlarge its temporary installations for irradiated fuel storage so that Mexico may temporarily store the fuel for an adequate period for possible sub-sequent use. After this temporary storage, the irradiated-fuel would be disposed of in one of the following possible ways:
"(A) Storage in Mexico
"(B) Storage in another country concerned; under agreements subscribed to by the parties.
"(C) Processing or other utilization under agreements subscribed to by the parties concerned."
While these commitments were originally intended to apply only to the Laguna Verde power reactor fuel, the February 20, 1981 note from Mexico to tne IAEA confirms that the Salazar reactor fuel will be subject to the "same understandings as contained in the communication from the GOM to the IAEA dated November 17, 1978, concerri.ig the provision of nuclear fuel for the Laguna Verde Necleir Power Plant in Mexico." The staff notes that the Commission, in its review of the Laguna Verde export, accepted the commitments contained in the November 17, 1978 note as meeting criteria 4 and 5.
Sensitive Technology.
The proposed export does not involve sensitive technology.
Section 128 As party to the NPT, Mexico has accepted safeguards on all its nuclear activities.
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Conclusion:==
Based on the above analysis, the staff has concluded that the proposed export meets the requirements of the Atomic Energy Act of 1954, as amended, and that issuance of the proposed license would not be inimical to the common defense and security of the United States.
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The Comission 7
Urgency:
The applicant has advised that the Salazar reacter is already overdue for recoreing in accordance with standard research reactor _ operating practices.
In addition, General Atomic is anxious to remove the Salazar fuel from its current storage location in California in order to minimize complications arising from domestic physical security protection require-ments as mandated by the recent physical security upgrade
. rule. The NSC. staff has also called to urge approval prior to the meeting of the Presidents.
Recommendation:
That the Commission authorize issuance of the proposed license to General Atomic Company.
am r
Executive Director for Operations
Enclosures:
Appendix A - Application dtd 1/13/78 Appendix B - Note from Gov't, of Mexico dtd 11/17/78 Appendix C - State Dept. Legal Analysis Appendix D - ELD Legal Analysis Appendix E - St' ate Dept. letter dtd 4/21/81 Comissioners' comments should be provided directly to the Office of the Secretary by c.o.b. Friday, May 29, 1981.
Comission Staff Office coments, if any, should be submitted to the Comissioners NLT May 26, 1981, with an information copy to the Office of the Secretary.
If the paper is of'such a nature that it requires additional time for analytical review and coment, the Comissioners and the Secretariat should be apprised of when coments may be expected.
DISTRIBUTION Comissioners Comission Staff Offices Exec Dir for Operations Secretariat f
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CECE!VED U.S. li? C.
INSTITUTO NACIONAL DE ENERGIA NUCLEAR 973 J/,N l7 pl Q 33 AV. INSUfbGENTES SUR 1879 AP00. POSTAL see. 2719e MEXICO 14. D. F.
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TELEFONO 5-43-71 00 5
... -... er a.ws November 14, 1977 Mr. William Mowry, Manager Licensing Administration General Atomic Company P. O. Box 81608 San Diego, California 92138 U. S. A.
Dear Mr. Mowry:
End-Use Statement of Consignee We request that this statement be considered a part of the application filed by General Atomic Company for its license to export nuclear material.
We desire to receive the following material in the quantities indicated below:
Material Type Form g ntity Uranium, 70% enriched in UZrErH in 54 10,404 grams of U-235 TRIGA fuel which 7,272 grams elements are U-235 We will use the special nuclear material listed above to replace burned-up fuel elements in the TRIGA Mark III reactor at INEN's Nuclear Center in Salazar, Estado d~ Mexico, Mexico, in order to continue with research and training programs and the production of radioisotopes.
We certify that all of the facts contained in this statement are true and correct to the best of our knowledge and belief and we do not know of any additional facts which are inconsistent with tha above statement.
J INSTITUTOPACI0hDEENERGIANUCLEAR
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Translated from Soanish.
[ COPY]-
-FERNANgNT MISSION OF MEXICO Vienna N6. 2065-17 November 1978 433. 5 '138:391. 8 (CNM)/8"78"
- Sir,
-In connection with the agreement on the supply of enriched uranium
-for.the Laguna Verde nuclear power plant, I am instructed by my Covernment to forward to you the ~ following communication:
"The Government of Mexico re-affirms its. acceptance of the International Atomic Energy Agency's international safeguards system, established -(sic) in the Treaty on the Non-Proliferation of Nuclear' Weapons (NPT) and the Treaty for the Prohibition of Nuclear Weapons in Latin America,(Tlatelolco Zreaty). Moreover, the Government of Mexico has decided to ensure, in carrying out its nuclear programme, that means of physical protection providing,-as a minimum, a level of protection comparable to that laid down in IAEA document INFCIRC/225/Rav.1 are maintained for all nuclear matorials and installations under its jurisdiction.
In connection with the Agreement dated 12 February 1974 between the Agency, the Government of Mexico and the Government of the United States of America relating to the provision of uranium enrichment services for a nuclear power station in Mexico (Supply Agreement), the Agreement dated, 12 February 1974 between the Agency and the Government of the
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United Mexican States under which the Agency will provide assistance.
Dr. Sigvard Eklund Director General IAEA, Vienna (COPY]
for establishing a nuclear power facility (Project Agreement), and the Agreement dated 14 June 1974 between the Agency and the United Mexcian States relating to the provision of uranium enrichment services for a second generator unit of a nuclear power station in Mexico (Second Supply Agreement), the Government of Mexico wishes to inform you that it does not for the moment contemplate the transfer to another country-of any of the equipment or materials supplied under the said' Agreements.
If, in the national interest, the Government of Mexico wishes to make a transfer in accordance with these Agreement, such transfer will be made on the basis of agreements subscribed to by the parties concerned (the Government of Mexico, the IAEA and the United States of America).
"With regard to the nuclear fuel provided under the Supply Agreements and irradiated in the Laguna Verde Reactor, Unity 1 and 2, the Government of Mexico intends to store this irradiated fuel for an adequate period with a view to possible subsequent use, an'd in this connection plans to enlarge its temproary irradiated-fuel storage facilities. After this temporary storage, the Government of Mexico will dispose of the irradiated fuel in one of the following possible ways:
1 (a)
Storage in Mexico; l
(b)
-Storage in another country under agreements subscribed to by the parties concerned; (c)
Processing or other utilization under agreements subscribed to by the parties concerned.
i "The Government of Mexico likewise wishes to stress once again its.
determination to continue an~1nterchange of views with the other parties-on metters relating to the use of any other nuclear fuels whi.:h may be irradiated in the Laguna Verde Reactor, Units l'and 2."
Accept, Sir,~ etc.,
(signed)
Lic. Agustin Garcia-Lopez'Santaolalla Ambassador of Mexico Resident Representative l
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APPENDIX D.
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Appendix D OELD Analysis:
Export of High Enriched Uranium to Mexico Pursuant to the U.S.-IAEA-Mexico Second Supply Agreement
Background:
On-January 13, 1978, General Atomic applied for a license (Appendix A) to export 10.404 kilograms of 70% enriched uranium (';.272 kgs. U 235) to Mexico.
The material, in the form of 54 TRIGA fuel elements, is intended for use as reload fuel for the one MWt'TRIGA Mark III research reactor in Salazar, Mexico.
The Salazar reactor is o.nerated by the Instituto Nacional De Energia Nuclear (INEN) and is utilized in civil nuclear research and training programs and in the production of radioisotopes.
It had been anticipated that this fuel would be supplied to Mexico under the terms of a Third Supply Agreement to be negotiated by the U.S., Mexico tad the IAEA, which would be subject to the Second Amendment to the U.S.-IAEA Agreement i
for Cooperation,thus containing~ new non-proliferation pro-visions pursuant to section 123 of the Act as amended by the NNPA.
Since there has been no progress to date in negotiating the l
Third Supply Agreement, to avoid an indefinite impasse with respect to the Salazar reactor, for which additional fuel is urgently needed, Mexican officials suggested in December 1980 that the pending fuel export be shipped pursuant to the Second i
l Salazar Supply Agreement (INFCIRC/52/ Add.1). Although the U.S.
9 obligation under that Agreement ended in October 1977, only 3.425. kgs. of the total of 10.8 kgs. of 70% fuel originally authorized by the agreement have been' shipped.
The balance
-of 7.375 kgs, has not been shipped, according to Mexican officials, because of the lack of storage space at Salazar. Mexican officials further stated their belief that, since the pending fuel supply for Salazar represents a previous commitment of the' part of the U.S., entering into a new supply agreement would apply new conditions retroactively, which was unacceptable to the:n.
Mexico would, however, be willing to accept new conditions on new supply (ref: State 011710, January 16, 1981).
As a result of the above considerations, the Executive Branch, with the concurrence of Mexico and the IAEA, agreed to permit the export of up to 7.375 kgs, of 70% enriched uranium under i
the Second Supply Agreement, subject to the same limitations on retransfer and reprocessing provided in -the export of fuel for Laguna Verde. The amount would equal the balance of material j
that has not been shipped, as originally planr.ed, under the
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Second Supply Agreement.
As indicated in the Execut1ve Branch views, the export of the 7.375 kgs. of material will be made pursuant to the (old) U.S.-IAEA Agreement for Cooperation, the IAEA-Mexico project Agreement for Salazar (INFCIRC/52), and the U.S.-
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IAEA-Mexiso Second Supply Agreement--and as noted, subject to the terms of a February 20, 1981 Note from the Government of Mexico to the IAEA and a March 4,1978 letter from the IAEA, both confirming the " applicability" of the Second Supply Agreement and the understanding contained in the November 17, 1978 communication from the Government of Mexico to the IAEA
.concerning the provision of nuclear fuel for the Laguna Verde Nuclear Power Plant.
t The question has arisen as to whether the proposed export can be made under the Second Supply Agreement.
In view of the unusual circumstances of this proposed export, thestaff
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requested an explanation of the legal basis on the matter by r
the Executive Branch.
In response, the State Department responded, in a letter dated April 17, 1978, as follows:
j It is the view of the Executive Branch that the export of 7,375 grams of 70 percent enriched uranium may be made to Mexico pursuant to the 1972 Second Supply Agreement on the basis of the
. t agreement by the Parties - the U.S., the IAEA l
and Mexico - that the Second Supply Agreement
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has not terminated, but rather merely specified a time period during which supply was contem-plated. The Parties have agreed by the exchange of notes cited in my letter of March 24 that the remainder of the special nuclear material originally contemplated for supply to Mexico i
under the Second Supply Agreement, can still be trar,sferred pursuant to that Agreement.
The Parties, in effect, have agreed to extension l
of the specifiad time period, which can be con-sidered an administrative modification of a provision in an agreement that is still in force.
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4 Analysis:
The Second Supply Agreement entered into force on October 4, W 2.
Section 1. of Article I of that' Agreement provided that:
"[0]uring a period of five (5) years from the entry into force of this Contract, the Commission, subject to the-provisions of the Co-operation Agraement, snall transfer to the Agency, and the Agency shall accept from the Commission, an of Mexico's requirements for uranium enriched to approximately 20 per cent and 70 per cent by weight in the isotope uranium
-235 (hereinafter called the " enriched uranium")
up to approximately 3860 grams of uranium enriched to approximately 20 per cent and approximately.
10 800 grams of uranturt enriched to approxir;. ate!y 70 per cent, the exact quantities and enrichments to be determined pursuant to Section 3, contained in fuel elements for use in the reactor.
Section 2. of Article I of the Second Supply Agreement provides that the Agency shall transfer to Mexico, and Mexico shall accept from the Agency, the enriched uranium received by the Agency pursuant to Section 1.
The proposed export to Mexico through the IAEA would, as described in the staff paper and in the Executive Branch judgment dated March 24,1981, meet the criteria for issuance of an export license in sections 127 and 128 of the Atomic Energy Act of 1954, as amended.
However, if it is determined that the Second Supply Agreement has expired, the export would have tn be made under a
'iew supply. agreement, to be negotiated.
A new supply agreement
- would have to be in accord with the terms of the Second Amendment to the U.S.-IAEA Agreement for Cooperation, which entered into l
.5 force fiay 6,1980, and which references the additional require-ments of amended section 123 of the Act in amended Articles IV and V and in an Annex. While Mexic~o, as a non-nuclear weapon State that has ratified the NPT, would meet amended Articles IV and V and Section A of the Annex, the Second Supply Agreement and the incorporated Lmna Verde understandings do not include other pertinent provisions in the Annex for supply agreements as follows: Section B, paragraph (2) pertaining to transmittal by the Agency, in the case of an NPT party, of infor-mation as to the status of inventories of source or special nuclear mater'tals subject to the provisions of the supply agr ee-ment; Section C, storage of uranium er.riched to 20% or mort only in facilities agreed to in advance by the United Staw; and possibly Section D, alteration of plutonium, U-233, high enriched uranium, or irradiated material in fonn or content only with the agreement of the United States.
The Second Supply Agreement does not reference the date "five (5) years from the entry into force" as an " expiration date;" it specifies that period as the period wherein the Commission shall transfer to the Agency, and the Agency shall accept from the Commission, subject to the provisions of the Cooperation Agreement, all of Mexico's requirements for enriched uranium up to the specified amounts.
Thus, technically speaking, it can be argued, as the Executive Branch has done, that the Second Supply Agreement has not " expired", that the five years referred to in t
l Article I, section 1, was the time period within which supply was.
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contemplated, and that that period could be extended by an " administrative modification" of a provision in an agreement still in force.
Another factor to be taken into account in determining the question presented is the role of the State Department in interpreting international agreements.
It can be said, in general, that the Secretary of State has the primary responsibility and authority to bind the United States in this regard.
See, e.g., i 149 of the Restatement (Second) of the Foreign Relations Law of the United States.
On the other hand, it appears that the United States has in I
the past taken the position that the Supply Agreement expired on October 4,1977 (see, e.g. State 314331, December 13, 1978).
The few supply agreements in NRC files show no standard language, if any, of expiration dates of supply agreements. Although Paul Szasz in his book The Law and Practices of the International i
Atomic Energy Agency, IAEA Legal Series No. 7, does not address l
the rather narrow legal question of termination of supply agree-ments,in his discussion of supply agreements in connection with project agreements, he states (p. 418):
After the Project and Supply Agreements have entered into fo ce, the Agency's task in arrang-ing for the provision of the assistance that is e
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the' subject of these Agreements is usually soon accomplished, and generally this is done before the start of or during the early days of the operation of a project. While the Supply Agree-ment, if it provides for the sale and permanent transfer of title to the nuclear material (rather than for its mere lease), is thereby fully executed and practically no longer in force, the Project Agreement is not exhausted as easily.
i The extensions of supply discussed by Szasz appear to have been accomplished by new supply agreements, but also appear to have involved supply of additional. material (supra"il 17.2.1.3, 17.2.2.2, 17.2.2.4, 17.2.2.5, 17.2.2.8).
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Conclusion:==
An acceptable legal view appears to be, because of the agree-ment by the U.S. (Secretery of State), IAEA and Mexico (the parties to the Second Supply Agreement), that the Second Supply Agreement is still in force and.that the export would not be subject to the terms of the Second Amendment to the U.S.-IAEA Agreement for tooperation.
Further, policy considerations, such as the desir-a >ility of confirming the reliability of the U.S. as a nuclear supplier to Mexico (a strong supporter of the Nuclear Non-Proliferation Treaty and IAEA safeguards), may be taken into account in resolving the question of the applicability of the Second Supply Agreement to the proposed export.
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