ML20140D914

Recommends That Commission Approve Attached Ltr to President Supporting Proposed New Us Switzerland Agreement for Cooperation

ML20140D914
Person / Time
Issue date:	04/21/1997
From:	Stoiber C NRC OFFICE OF INTERNATIONAL PROGRAMS (OIP)
To:
References
SECY-97-085, SECY-97-085-R, SECY-97-85, SECY-97-85-R, NUDOCS 9704240199
Download: ML20140D914 (84)

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a POLICY ISSUE (Notation Vote)

April 21, 1997 SECY-97-085 FQ&

The Commissioners FROM:

Carlton R. Stoioer, Director Office of Intemational Programs

SUBJECT:

PROPOSED AGREEMENT FOR COOPERATION BETWEEN THE U.S. AND SWITZERLAND PURPOSE:

To recommend that the Commission approve the attached letter to the President supporting the proposed new U.S.-Switzerland Agreement for Cooperation.

DISCUSSION:

The Department of State has requested agency views on a recently negotiated agreement for cooperation between the U.S. and Switzerland (Attachment 1) to replace the 1965 agreement, which expired by its terms August 7,1996. A draft Department of State summary of its provisions (Attachment 2), a draft memorandum of law by the Office of the State Department's Legal Advisor (Attachment 3), and a draft Nuclear Proliferation Assessment Statement (Attachment 4) by the Arms Control and Disarmament Agency (ACDA) are attached to this paper. A draft analysis by the Department of Energy (DOE) is available in the Office of intemational Programs and will be provided upon request.

The proposed agreement is modeled after the new U.S.-EURATOM (European Atomic h /

Energy Community) agreement, which the Commission reviewed in 1995 (SECY-95-210).

Switzerland's major nuclear trading partners are the EURATOM member states and the Swiss plan to rely on them for certain fuel cycle services. Like the new EURATOM agreement, the agreement is for an initial term of 30 years, and will continue in force indefinitely in five-year intervals until either party elects to terminate the agreement. Most other agreements expire in thirty years.

The agreement gives Switzerland advance, long-term consent to send U.S.-obligated spent power reactor fuel to France and the United Kingdom for reprocessing, after which the recovered plutonium could be fabricated into mixed oxide (MOX) fuel and retumed to Switzerland for use in Swiss power reactors. Most Swiss reactor operators have switched to

Contact:

Elaine Hemby, OlP NOTE: TO BE MADE PUBLICLY AVAILABLE WHEN 415-2341 l THE FIML SRM IS MADE AVAILABLE 8

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j. o The Commissioners l MOX fuel, and this feature will eliminate the delays experienced by Switzerland under the old agreement in obtaining case-by-case retransfer approvals from the U.S. This provision is similar to the provisions in the Japan agreement and the EURATOM agreement. The l

facilities within EURATOM to which the U.S.-obligated nuclear material may be transferred for reprocessing and alteration in form and content are specified in Attachment 2 to the Agreed Minute. Additional facilities may be added to this list only with U.S. agreement. Switzerland does not plan to develop its own reprocessing and fuel fabrication capabilities.

During reprocessing and alteration into MOX fuel, U.S.-obligated nuclear material from i

Switzerland will be in EURATOM territory and will be subject to the new U.S.- EURATOM Agreement. The U.S.-EURATOM Agreement permits the retransfer of U.S.-obligated plutonium outside of EURATOM to countries designated by the U.S. During conclusion of the U.S.-EURATOM Agreement, the U.S. presented a side letter to the European Commission confirming that the U.S. was then negotiating a new agreement with Switzerland. The letter contained the following commitment:

The U.S. is also prepared, in connection with a new peaceful nuclear cooperation agreement with the Swiss Federation, to offer long-term l

prior consent to EURATOM to the retransfer of Swiss plutonium, including such plutonium contained in MOX fuel elements, subject to the U.S.-EURATOM Agreement, to Switzerland for use in that country's peaceful nuclear program.

l Moreover, the Agreed Minute to the proposed U.S.-Swiss agreement contains the following obligatory language:

In the case of irradiated nuclear material, subject to the Agreement, retransferred by Switzerland, the U.S. hereby agrees to give its consent, under the applicable agreement for cooperation, to the retum to Switzerland of nuclear material recovered from that nuclear material so retransferred.

Simultaneous with entry into force of the new U.S.-Swiss Agreement, the U.S. will give EURATOM its consent to retransfer to Switzerland U.S.-obligated plutonium recevered from Swiss spent fuel by providing a list consisting of one country, Switzerland. This associated statutory determination constitutes the subsequent arrangement required for the U.S. to i

inform EURATOM, pursuant to the Agreed Minute to the U.S.-EURATOM Agreement, of U.S.

consent to retransfer to Switzerland.

Another provision of the agreement allows Switzerland to retransfer, without further U.S.

approval, U.S. origin low-enriched uranium, moderator material, equipment, and source l

material to any country or group of countries identified by the U.S. on a specific list. Only the i

new EURATOM agreement contains a similar provision.

As required by Section 123 of the Atomic Energy Act (AEA), the Department of State, ACDA, and the Department of Energy must provide their views on the proposed agreement. The State Department Office of Legal Advisor's draft analysis of the proposed agreement l

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l The Commissioners ;

concludes that it meets all pertinent statutory requirements of the AEA and the Nuclear Non-Proliferation Act of 1978. The Department of Energy's draft analysis of the advance,

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long-term approvals in the proposed agreement concludes that the consents and approvals i

meet all requirements of the AEA and concurs in its approval. ACDA's draft Nuclear Proliferation Assessment Statement analyzes the consistency of the agreement's text with all the requirements of the AEA, with specific attention to whether it is consistent with each of the Section 123 criteria, including maintenance of safeguards and peaceful use assurances to ensure that any assistance fumished will not be used to further any military or nuclear i

explosive purpose. ACDA concludes that the proposed agreement is consistent with the AEA i

and recommends that the President approve and authorize its execution. ACDA will provide the final Nuclear Proliferation Assessment Statement to the President separately.

NRC staff (including the Office of the General Counsel) agrees with these findings and believes the agreement provides a satisfactory basis for cooperation with Switzerland over the next thirty or more years. The staff notes that Switzerland is a party to the Treaty on the j

Non-Proliferation of Nuclear Weapons (NPT) and maintains full-scope Intemational Atomic i

Energy Agency (IAEA) safeguards with respect to all nuclear materials in all peaceful nuclear j

activities within its territory. Also, the Swiss are members of the NPT Exporters (Zangger) t Committee and the Nuclear Suppliers Group. Accordingly, the staff recommends that the l_

Commission approve dispatch of the proposed letter to the Department of State from the Chairman to the President setting forth the Commission's views on the agreement, as required by Section 123 of the AEA. NRC staff concludes that the agreement involves little j

resource cost to the NRC or U.S. industry.

i COORDINATION:

i The Office of the General Counsel has no legal objection and the Office of the Executive l

Director for Operations concurs in this paper.

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RECOMMENDATION:

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That the Commission approve the attached letter to the President, indicating NRC i

j concurrence in the subject agreement (Attachment 5).

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j-M riton R. Stoiber, Director Office of Intemational Programs l

Attachments:

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1. Text of the Proposed U.S.-Swiss Agreement j

2. Draft DOS Summary of Provisions

3. DOS draft Legal Analysis

4. ACDA's draft Nuclear Proliferation Assessment Statement j

5. Draft of Proposed Letter to the President i

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r Commissioners' comments or consent should be provided directly to the Office l

of the Secretary by COB Tuesday May 6, 1997.

Commission Staff Office comments, if any, should be submitted to the Commissioners NLT April 29, 1997, with an information copy to the Office of the Secretary.

If the paper is of such a nature that it requires additional review and comment, the Commissioners and the Secretariat should be apprised of when comments may be expected.

DISTRIBUTION:

Commissioners OGC OCAA DIG OPA OIP OCA EDO SECY i

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d United Stetes Deptrtment cf St:te hhington, D.C.

20520 l

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January 8,1997 i

l UNCLASSIFIED l

MEMORANDUM TO:

PM/NE - Dick Stratford PM - Bob Einhorn IJPM - Orde Kittrie I/r-Jon Zylman EUR/AGS - Mark Fry H - Terri Lodge M/P - Bill Moffitt DOE /NN - Jim Busse DOE /GC - Jo Ann Williams ACDA/NP - Dean Rust ACDA/GC - Charles Oleszycki

/ NRC/IP - Ron Hauber FROM:

PM/NE - John Dooley

SUBJECT:

Agreement for Peaceful Nuclear Cooperation with Switzerland Attached is a draft of the PM/NE portion of the package of supporting documents for the U.S.-Swiss Agreement, together with a copy of the ad ref text of the Agreement for ease of reference. Your clearance / comments are requested by COB Monday, January 20. Thank you.

Attachment:

As stated.

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DRAFT Unit d Stttts Depatment of State hhington, D. C. 20520 ACTION MEMORANDUM S'S UNCLASSIFIED t

TO:

The Secretary I

THROUGH:

T - Dr. Davis FROM:

PM - Thomas E. McNamara

SUBJECT:

Circular 175:

Proposed Agreement for Cooperation Between the United States of America and Switzerland Concerning Peaceful Uses of Nuclear Energy ISSUE FOR DECISION This memorandum requests that you approve a proposed agreement for peaceful nuclear cooperation with Switzerland, and that you sign, jointly with Secretary of Energy Pena (who has already signed), the Memorandum for the President at Tab 1.

The Memorandum for the President recommends that he make certain statutory determinations regarding the proposed agreement, that he approve it, and that he authorize its execution and transmittal to the Congress.

(A draft Determination, Approval and Authorization and a proposed transmittal letter are at Attachments 1 and 2 of Tab 1.)

ESSENTIAL FACTORS The Atomic Energy Act of 1954, as amended, gives you and the Secretary of Energy a statutory role in advising the President on whether to authorize entry into agreements for peaceful nuclear cooperation.

A copy of the proposed U.S.-

Switzerland agreement and a summary of its basic provisions are at Attachments 3 and 4, respectively, of the Memorandum l

for the President at Tab 1.

The Nuclear Non-Proliferation Act of 1978 (NNPA) establishes specific requirements for new agreements for cooperation in the peaceful uses of nuclear energy.

In our judgment, the proposed U.S.-Switzerland agreement meets all DRAFT

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requirements for new agreements established by the Act.

(A memorandum of law is at Tab 2 of this memorandum.)

Provisions of the Agreement Upon entry into force the agreement will replace an earlier agreement with Switzerland signed December 30, 1966, which expired by its terms August 7, 1996.

The proposed new agreement provides an updated comprehensive framework for peaceful nuclear cooperation between the United States and Switzerland, seeks to facilitate such cooperation, and provides for strengthened controls reflecting our shared strong commitment to nuclear non-proliferation.

The new agreement provides for the transfer of moderator. material,

. nuclear material, and equipment for both nuclear research and nuclear power purposes.'

It does not provide for transfers under the agreement of any sensitive nuclear technology (SNT).

(U.S. law permits SNT to be transferred outside the coverage of an agreement for cooperation provided that certain other conditions are natisfied.

However, we have no plans ta transfer SNT to Switzerland outside the agreement.)

The proposed agreement has an initial term of 30 years, and will continue in force indefinitely thereafter in increments of five years each until terminated in accordance with its provisions.

In the event of termination, key non-proliferation conditions and controls, including guarantees of safeguards, peaceful use and adequate physical protection, and the right to approve retransfers to third parties, will remain effective with respect to transferred moderator material, nuclear material, and equipment, as well as nuclear material produced through their use.

The Agreement also establishes procedures for determining the continuation of additional controls.

Article 12 of the agreement and the agreed minute (which constitutes an integral part of the' agreement) provide to Switzerland advance, long-term approval for retransfers to specified facilities in the European Atomic Energy Community (Euratom) of nuclear material subject to the agreement for reprocessing, alteration in form or content, and storage, and for the return to Switzerland of recovered nuclear materials, including plutonium, for use or storage at specified Swiss facilities.

Article 12 and the agreed minute also provide advance, long-term approval for retransfers from Switzerland of source material, uranium (other than high enriched uranium), moderator material and equipment to a list of countries and groups of countries acceptable to the United States.

Pursuant to Article 13, any advance, long-term approval may be suspended or terminated if it ceases to meet the criteria set out in U.S. law, including criteria relating to safeguards and physical protection.

3 The advance, long-term approvals reflect Administration policies, set forth in the President's policy statement of September 27, 1993, aimed at improving the climate of U.S.

cooperation with countries with good nuclear non-

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. proliferation credentials and providing them with greater certainty in the planning of their civil nuclear programs.

Switzerland is a party to the Non-Proliferation Treaty (NPT) and a strong supporter of nuclear non-proliferation efforts worldwide.

The extended preamble of the proposed agreement sets forth in detail the shared non-proliferation commitments and views of the two parties.

An analysis of the approvals contained in Article 12 of the agreement and the agreed minute is at Attachment 7 of the Memorandum for the President at Tab 1.

The analysis concludes that the approvals meet all requirements of the Atomic Energy Act.

Benefits for the United States The proposed agreement will serve U.S. non-proliferation and other foreign policy interests.

Among the benefits that we expect to accrue to the United States from entry into the agreement are the following:

It will strengthen the international nuclear non-proliferation regime, support of which is a fundamental objective of U.S. national security and foreign policy, by setting a high standard for rigorous non-proliferation conditions and controls.

The agreement contains all the consent rights and guarantees required by U.S.

law, representing a substantial advance over the controls contained in the previous U.S.

agreement for cooperation with Switzerland.

The agreement confirms the U.S. intention to be a reliable nuclear trading partner, thus establishing a basir, for the continuation and possible grv,.'th of U.S. civil nuclear exports to Switzerland.

Commitment of Resources The Department of State commits no new resources or personnel to the implementation of this agreement.

Environmental Considerations The proposed agreement establishes a legal framework for cooperation without committing either party to engage in any l

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specific activity.

No environmental documentation under Executive Order'12114 dated January 4, 1979, is required.

Submission to the President and Congressional Review Under the Atomic Energy Act, be transmitted to Congress only after the President hasthe proposed agreeme authorized its execution and determined in writing that the agreement will promote, and will not constitute an unreasonable risk to, the common defense and security.

The joint memorandum from you and the Secretary of Energy at' Tab l will' forward the agreement and other required documents for the President's consideration.

After Presidential approval, the-agreement, together with the President's determination, must be transmitted to the Congress for its review.

The agreement may be brought into force after 90 days of continuous session unless a joint resolution of disapproval is enacted.

It is possible that the agreement may be opposed by a few members of Congress

' because of the advance consent provisions, especially concerning reprocessing, storage and use of plutonium.

We i

are confident, however, that Congress as a whole will i

consider the agreement favorably, as it has done in the case of recent U.S. agreements with Japan and the European Atomic Energy Community (Euratom), which contain similar provisions.

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Other Agency Views i

t DOE Secretary Pena has approved the agreement and has already signed the joint Memorandum for the President at Tab i

1.

ACDA concurs in the proposed agreement.

The ACDA I

Director's views and recommendations are at Attachment 5 of the Memorandum for-the President at Tab 1.

As required by the Atomic Energy Act, ACDA will also submit a Nuclear Proliferation Assessment Statement separately to the President.

The Nuclear Regulatory Commission recommends approval of the agreement.

Its views are at Attachment 6 of the Memorandum for the President at Tab 1.

RECOMMENDATION That you approve the attached proposed agreement for peaceful nuclear cooperation with Switzerland, and sign the joint memorandum at Tab 1 transmitting it to the President.

APPROVE:

DISAPPROVE:

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l Attachments:

Tab 1 - Memorandum for the President, with l

' Attachments 1-7.

l Tab 2 - Memorandum of Law.

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Drafted:

PM/NE:JADooley 1/3/97 x-74812 i

swissmem. doc Cleared:

PM/NE:FMcGoldrick PM/NE:RStratford PM:REinhorn L/PM:OKittrie L/TiJZylman EUR/AGS:MFry H:TLodge M/P:WMoffit DOE /NN:JBusse DOE /GC:JWilliams ACDA/NP/INA:DRust ACDA/GC:COleszycki NRC/IP:RHauber I

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a MEMORANDUM FOR:

THE PRESIDENT i-FROM:

Madeleine K. Albright Frederico Pena

SUBJECT:

Proposed Agreement for Cooperation Between the Government of the United States of America and the Swiss Federal Council i

Concerning Peaceful Uses of Nuclear Energy 1

This memorandum recommends that you make certain statutory determinations regarding a proposed new' agreement j

for peaceful nuclear cooperation between the United States

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and Switzerland, that you approve the proposed agreement, and that you authorize its signature and transmittal to the Congress.

A key feature of the proposed agreement is a long-term framework for Swiss nuclear fuel cycle activities, including retransfers of nuclear material subject to the i

agreement for reprocessing in the European Atomic Energy Community (Euratom), and the return of the recovered plutonium to Switzerland for use in Swiss facilities under stringent conditions and controls.

In respect to its advance, long-term U.S. approvals regarding plutonium, the proposed U.S.-Switzerland agreement is similar to the U.S.-

Euratom agreement that you approved in November 1995.

The text of the proposed agreement is at Attachment 3.

A summary of its basic provisions is at Attachment 4.

Upon entry into force the agreement will replace an l

earlier U.S. agreement with Switzerland signed December 30, 1965, which expired by its terms August 7, 1996.

In accordance with the provisions of section 123 of the Atomic Energy Act, the proposed agreement was negotiated by th9 Department of State, with the technical assistance and concurrence of the Department of Energy and in consultation with the Arms Control and Disarmament Agency (ACDA), whose views and recommendations are at Attachment 5."

A Nuclear Proliferation Assessment Statement concerning the agreement is being submitted to you separately by the Director of ACDA.

The views and recommendations of the members of the Nuclear Regulatory Commission are at Attachment 6.-

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i Under the Atomic Energy Act the agreement may not be transmitted for Congressional review until you have determined that it will promote, and not constitute an unreasonable risk to, the common defense and security, and until you have appro"ed it and authorized its eaecution.

If you approve our rectemendation that you take these actions, the agreement will be submitted for review to both houses of Congress, in accordance with sections 123(b) and (d) of the Act, where it must lie for 90 days of continuous session before it may be brought into force.

The Nuclear Nc7-Proliferation Act (NNPA) of 1978 contains specific requirements for new agreements for peaceful nuclear cooperation.

In our judgment, the proposed agreement meets all the requirements set forth in the NNPA.

The purpose of the agreement is to provide an updated comprehensive framework for peaceful nuclear cooperation between the United States and Switzerland, to facilitate such cooperation, and to provide for strengthened controls reflecting our shared strong commitment to nuclear non-proliferation.

The new agreement provides for the transfer of moderator material, nuclear material, and equipment for both nuclear research and nuclear power purposes.

It does not provide for transfers under the agreement of any sensitive nuclear technology (SNT).

(U.S. law permits SNT to be transferred outside the coverage of an agreement for i

cooperation provided that certain other conditions are satisfied.

However, we have no plans to transfer SNT to Switzerland outside the agreement.)

The proposed agreement has an initial term of 30 years, and will continue in force indefinitely thereafter in i

increments of five years each until terminated in accordance l

with its provisions.

In the event of termination, key non-proliferation conditions and controls, including guarantees i

of safeguards, peaceful use ano adequate physical protection, and the right to approve retrr.nsfers to third parties, will l

remain effective with respect to transferred moderator l

material, nuclear material, and equipment, as well as nuclear l

material produced through their use.

The agreement also establishes procedures for determining the continuation of additional controls.

l Article 12 of the agreement and the agreed minute (which constitutes an integral part of the agreement) provide to Switzerland advance, long-term approval for retransfers to l

l specified facilities in Euratom of nuclear material subject to the agreement for reprocessing, alteration in form or content, and storage, and for the return to Switzerland of recovered nuclear materials, including plutonium, for use or storage at specified Swiss facilities.

Article 12 and the i

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l agreed minute also provide advance, long-term approval for retransfers from Switzerland of source material, uranium (other than high enriched uranium), moderator material and equipment to a list of countries and groups of countries acceptable to the United States.

Pursuant to Article 13, any advance, long-term approval may be suspended or terminated if it ceases to meet the criteria set out in U.S. law, including criteria relating to safeguards and physical protection.

Advance, long-term approval is a central feature of several.other U.S. agreements for peaceful nuclear cooperation, including the 1988 U.S.-Japan agreement and the 1996.U.S.-Euratom agreement.

In the case of these earlier agreements, the Executive Branch argued successfully that-advance, long-term approvals are legally permissible and may be given as part of the agreement itself.

In each case, Congress permitted the agreement to be brought into force following a careful review.

The advance, long-term approvals have been given pursuant to your policy directive of September 27, 1993..They reflect Administration policies aimed at improving the c31 mate of U.S. cooperation with countries with good nuclear non-proliferation credentials and providing them with greater ce*tainty in the planning of their civil nuclear programs.

Switzerland is a party to the Non-Proliferation Treaty (NPT) and a strong supporter of nuclear non-proliferation efforts worldwide.

The extended preamble of the proposed agreement sets forth in detail the shared non-proliferation commitments and views of the two parties.

The ACDA Nuclear Proliferation Assessment Statement addresses this issue in greater detail.

The provisions of Article 12 of the agreement and the provisions of the agreed minute do not constitute a subsequent arrangement under the Atomic Energy Act.

In view, however, of the important commitments they entail, and in view of the fact that they would constitute a subsequent arrangement under the Act if agreed separately from the agreement for cooperation, we have ensured that these provisions meet all requirements for subsequent arrangements under the Act.

(An analysis of the approvals contained in Article 12 of the agreement and the agreed minute is at.)

Specifically, we have considered whether the retransfers for reprocessing and the related activities to which consent has been given on an advance, long-term basis will result in a significant increase of the risk of proliferation beyond that which exists at the time the approval is requested.

We have concluded that these approvals will not result in a j

significant increase of such risk.

In making this judgment we have, in accordance with the standards embodied in section e

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131 (b) of the Act, given "foremest consideration to whether or not the reprocessing will take place under conditions that will ensure timely warning to the United States of any diversion well in advance of the t1me at which (a) non-nuclear weapon state could transform the diverted material into a nuclear explosive device."

In our opinion the proposed agreement meets all statutory requirements and will also serve United States non-proliferation, commercial and other foreign policy interests.

Therefore, we recommend that'you determine, pursuant to section 123 (b) of the Atomic Energy Act of 1954, as amended, that performance of the agreement will promote, and will not constitute an unreasonable risk to, the common defense and security, and that you approve the agreement and authorize its execution.

RECOMMENDATION That you sign the determination, approval and authorization at Attachment 1 and the transmittal to Congress at Attachment 2.

ATTACHMENTS 1.

Draft Determination, Approval and Authorization 2.

Draft Transmittal to the Congress 3.

Proposed Agreement for Cooperation Between the Government of the United States of America and the Swiss Federal Council Concerning Peaceful Uses of Nuclear Energy 4.

Summary of Basic Provisions of the Agreement 5.

Views and Recommendations of the Director of the Arms Control and Disarmament Agency 6.

Views of the Nuclear Regulatory Commission 7.

Analysis of Consents and Approvals, and Determination by the Secretary of Energy

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MEMORANDUM FOR:

THE SECRETARY OF STATE THE SECRETARY OF ENERGY

SUBJECT:

Presidential Determination on the Proposed Agreement for Cooperation Between the i

Government of the United States of America and the Swiss Federal Council Concerning Peaceful Uses of Nuclear Energy I have considered the proposed Agreement for Cooperation Between the Government of the United States of America and the Swiss Federal Council Concerning Peaceful Uses of Nuclear Energy, along with the views, recommendations, and statements of the interested agencies.

I have determined that the performance of the agreement will promote, and will not constitute an unreasonable risk to, the common defense and security.

Pursuant to section 123

b. of the Atomic Energy Act of 1954, as amended (42 U.S.C.

2153 (b)), I hereby approve the proposed agreement and authorize you to arrange for its execution.

William J. Clinton l

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j Draft Agreetnent for Co operation Between the Swiss Federal Council 8 a58 the Government of the United States of Americal f Concerning PeacefW Uses of Nuclear Energy l Ad referendum text (corrected) 8 January 1997 he Swiss Pederal Councili and the Government of the United States of Amencal (hereinafter refened to as the Parries);

Considering ;their close co-operation in the development, use and control of nuclear energy for penteful purposes pursuant to the Agreement for Cooperation Between the Government of Switzerlandt and the Government of the Unied Staes of Americal Concoming Civil Uses of Atomic Energy, signed on 30 December IM5, as amended; Desiring to ebntire and expand their co-operation in this field; Reaffirming their support for strengthening nuclear non proliferation and disarmament measures on a jorld wide basis:

Recognizing the indispensable role of the safeguards system of the International Atomic Energy Agency {(hereinafter refened to as the Agency) in the maintenance of an effective non proliferatiopregime; Confirming their commitment to the strengthening of Agency safeguards, including their nadiness to take such steps as are necessary to allow the Agency to apply safeguards effectively and efficiently and to attain its inspection goal at nuclear facilities in their respectivejurisdictions:

Mindful that.both Switzerland 1 and the United States 3 are parties to the Treaty on the Non Proliferation of Nuclear Weapons of 1 July 1963 (hereinafter referred to as the Non-Prol(eration Treary) and have concluded agreements with the Agency for the application of safeguards in connection with the Non Prol(eration Treary; Confirming that the Non Prol(eration Treary is the cornerstone of the global nuclear non proliferation regime, and that the United States is determined to pursue systematic and progressive efforts to reduce nuclear weapons globally, with the ultirnate goal of eliminating those weapons; ;

Reaffirming their intention to work closely together and with other states to urge universal adherence to the Non Prol(crarfon Treary and full realization of the purposes of the preamble and of all the provisions of that treaty Bearing in rrind that nothing in the Non-Prol(eration Treary shall be interpreted as affecting the inalienable right of all the Parties to the Treaty to develop research, prodaction and use of nuclear energy for peamful purposes without discrimination and in conformity with Articles I add II of the Treaty, and that all the Pardes to the Treaty undertake to facili-tate, and have the right to participate in, the fuDest possible exchange of equipment, materials and scientific and technological information for the peaceful uses of nuclear energy; i

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• Swiss Federal Council" (or "Switredand") aart " Government or dw United States of A (Jnhed States of Amedca") to be inverted in the U.S. duplicates of the Agrement, reumvewsawwennoc

Ad rererenden tegueerressed) s.l.97 Recalling that Switzerlandt and the United staus of Americal have ratified the i -

Convendon on the physical Protection of Nuclear Material of 3 March 1980 (publish i

docenent INFdlRC/27WRev.) of the Agency);

Recognizing'that Switzerland' and the United Statsst have decided that they will a accesdance with the principles contained in the Ouidelines for Nuclear '!hnsfers of the

• Nuclear Suppliers Oroup"(published as Annexes to documents INFCIRC/25#Rev.2/

1 and 2 of the Agency and subsequent revisions and modificadoes of these documen Stressing the O.Wcs of Nuclear Suppliers Group principles on foII-scope Atency j

safeguards u a condition of transfer to non-nuclear weapon states: on the control of nucle nlated dual use items; and on the exercise of restraint in the export of sensitive items:

i Acknowledging that the separation, storage, transportation and use of plutonium call for j

continued measures to enswe the avoidance of riak of proliferation; i

L Desiring to favour commercial arrangements in the peaceful uses of nuclear energ j

predictable and reliable basis which take into account the long-arm requirements of their nuclear energy' programmes, and reaffirming their opposition to measures that un j

l burden legitimate nuclear commerce; 1

j Have agreed p follows:

l Article 1: Definitions Por the purpose of this Agreement:

(a) alteradon inform or content rneans conversion of plutonium, high enriched uranium or uranium 233 or fabrication of fuel containing plutonium, high enriched uranium or uraniurn 233;it does notinclude i

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- post irradiation examination involving chemical dissolution or separation,

- disassembly or reassembly of fuel assemblies,

-irradiation.

1 reprocessing or

- enrichment:

(b) appropriate authority means, in the case of Switzerland, the Federal Office of Ener and,in the case of the United States of America, the Department of Energy or such other authority as the forty concemed may notify the other party; (c) equipmentrneans

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- any reactor as a complete unit other than one designed or used primarDy for the formation of plutonium or uranium 233:

- reactor pressure vessels, as complete units or as major shop fabricated parts thenfor, i

which are especially designed or prepared to contain the core of a reactor and are capablej withstanding the operating pressure of the pimary coola st:

- reactor feel charging and discharging machines as complete ' units; manipulative

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equipment designed or prepared for laserting oc removing fuel in a reactor capable of on-load operation:

- complete reactor control rod systems, including the control rod drive mechanism 1

i especially designed or prepared fur the control of the reaction rate in a reactor:

I newmm mmmme I

Ad ndo.ad.n usu ome.o a.m reactor primary coolant pumps especially designed or prepared for circulating the primary coolant of a reactor,

- any other item so designatedjointly by the ParWest (d) Guidelines.means the Guidelines for Nuclear Transfers (published as Appendix to document INPCIRC/25%Rev.2/Part 1 of the Agency and subsequent revisions and modifi.

cations as agreed by the Parder);

j (e) Alga earkhed wanIwa means uranium enriched to twenty percent or more in the isotope U*t i

(f) moderatormaterial means deuterium, heavy water and nuclear grade graphite for reac-tors as denned in paragraph 2 of Annex B to the Guideliner;

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(3) nuclear material means any source material or special Sssionable material as defined j

below:

- source material means depleted uranium, natural uranium, thorium or any other I

material so designated by agreement of the Parties.

- ajpecialftssionable materialmeans plutonium, urai.un 233 or uranium enriched in the isotope 233 or 235, or any other material so designated by agreement of the Partiest 1

(h) nuclear s%pply means nuclear material, moderator material and equipment tansferred pursuant to the Agreement and nuclear material used in or produced through the use of such items;

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(i) Recommendations means the recommendations published in document INFCIRC/225/Rev. 3 of the Agency entitled "the Physical Protection of Nuclear Material" and subsequent revisions as agreed by the Parties.

Ar11cle 2: Coverage

1. Nuclear material, moderatormaterialand equipment transferred from the tenitory of one Party to the territory of the other Parry, whether directly or through a third country, will be regarded as having been transferred pursuant to the Agreement only upon confirmation by the pppropriate authority of the socipient Party to the appropriate authority of the supplier Eatty, that such nuclear material, moderatormatedaland egulpment will be subject to this Agreement and that the proposed recipient of such nuclear material, moderator material and egulpment, other than the Parry, is an authorised person. Such transfers of nuclear material. moderator material and equipment may be undertaken between the Parnes or by authorized persons.

2. With respect to specialJtssionable materialproduced through the use of nuclear material and/or moderator material transferred pursuant to this Agreement and used in or produced through the use of egulpment not so transferred, the provisions of Articles 7, 8. 9,10 and 11 shall in practice be applied to that proportion of Jpecialffssionable material produced which represents the ratio of transferred nuclear material and/or moderator material used in the production of the specialfissionable material to the total amount of nuclear material and/or moderator materialso used.

3. Nuclear material transferred pursuant to this Agreement and nuclear material used in or produced through the use of nuclear material, moderator material or equipment transferred pursuant to this Agreement shall remain subject to the provisions of this Agreement until ream

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Ad referendom rat (corressed) s.1.97 a) the Pardes determine that it is no longer usable or practicably irncoverable for processing into a form in which it is usable for any nuclear acdvity relevant from the point of view of safeguards; or b) it has been transferred beyond the jurisdiction of either Parry in accordance with the provisions of Article 7 of this Agreement; or c) h is otherwise agreed between the Pardes.

4. Moderatormaterialand egulpment transfernd pursuant to this Agreernant shall remain subject to the provisions of this Agreement undl

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a) the Pardse agree that it is no longer usable for any nuclear acdvity nlevant from the point of view of safeguards; or b) h has been transferred beyond the jurisdiction of either Party in accordance with die provisions of Article 7 of this Agreement; or c) it is otherwise agreed between the Pardes.

5. For the purpose of implementing paragraph 3 a) of this Article, the Pardes shall accept determination made by the Agency in accordance with the provisions for the termination of the appheation of safeguards of the relevant safeguards agreement between a Party and the Agency.

6. Transfers of nuclear materials specified in subparagraph i below, and transfers of sorce material or specialfissionable material en either Parry, by each individual supplier within the jurisdicion of the other Parry that are consistent with the limits specified in subparagraph li below, need not be made subject to the Agreement:

i. Plutonium with an isotopic composition of plutonium 238 exceeding 30%; and source materfat which is used only in non nuclear activities.

ii. Up to 3 grams of enriched uranium. 0.1 grams of plutonium, or 0.1 grams of uranium 233 as a sensing component in an instrument; Up to 0.001 effective kilograms (as defined in paragraph 104 of document INPCIRC/153 of the Agency) of enriched uranium, plutonium or uranium 233 in a single shipment; Up to 0.1 effective kilograms (as defined in paragraph 104 of document INPCIRC/153 of the Agency) of enriched uranium, plutonium or uranium 233 in any period of 12 months; Source material:

• up to 10 kilograms of non-enriched uranium or thorium as a single shipment; and

• up to 1000 kilograms of non-erviched uranium or thorium in any period of 12 months.

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.I Ad esterendom coat (corrected) 3. l.97 Artide 3: Peacehal uses No nuclear material, unoderator matedal and equipment transfened pursuant to this Agreement and no nuclear material used in or produced through the use of any such nuclear marerial, moderator material er egulpment shall be used for any nuclear caplosive device, for research on any nuclear explosive device or development of any nuclear explosive device, or for any military purpose.

Article 4: Physical Protection Each party shall take such measures as are necessary to ensuit, within its jurisdiction, adequate physical protection of nuclearmaterial transferred pursuant to this Apeement and any nuclear material used in or produced through the use at nuclear material, moderaer material or equipment transferred pursuant to this Agreement and apply criteria in accor-dance with levels of ph'sical protection at least equivalent to those set out in the y

Recommendations.

Artide 5: Safeguards

1. Nuclear. material transferred to Switzerland pursuant to this Apeement and any nuclear marerial used in or produad through the use of any nuclear material, moderator material or equipment so. transferred shall be subject to safeguards in accordance with the provisions of the agreement between Switzerland and the Agency for the application of safeguards in connecticn with the Non-prol(feration Treaty signed on 6 September 1978 (published as document INPCIRC/264 of the Agency) under which Atency safeguards are applied with respect to all nuclear materialin all nuclear activities within the tenitory of Switzerland, under its jurisdiction or carried out under its control anywhere.

2. Nuclearmaterial transferred to the United States of Arnerica pursuant to this Agreement and any nuclear material used in or produced through the use of any nuclear material.

moderator material or equipment so transferred shall be subject to the provisions of the agreement between the United States of America and the Agency for the Application of Safeguards in the United States, signed on December 9,1980 (published as document INFC1RC/288 of the Agency).

3. If the United States of America or Switzerland becomes aware of circumstances which demonstrate that the Agency is not or will not be applying safeguards in accordance with the appropriate apeement refened to in parapaph 1 or 2, the Partier shall immediately enter into arrangements which conform with Agency safeguards principles and procedures and to the coverage required pursuant to those paragraphs, and which provide assurance equivalent to that intended to be secured by the system they replace. "Ihese arrangements shall be effected by agreement, other than the appropriate agreement referred to in paragraph 1 or 2, providing for application by the Agency. If either Party considers the Agency unable to apply such safeguards, however, safeguards shall be applied under bilateral arrangements.

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Antide 6: Transfers

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1. Cooperation pursuant to this Agreement between the United States of America and Switzerland in the peaceful uses of nuclear energy shall be in accordance with the provi-l sions of this AgreemenL i

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3 Ad referendum est (corressee) 8.1.97 i

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j 2 Nuclear material, moderator material and equipment may be transformd for sppli consistent with this Agreement.

1 Article 7: Retransfers No nuclear material, moderator matenal or equipment transfersed persuant to this Agre ment and no peciclfissio:$able material produced through the use of any nuclear material, i

moderator marerial or equipment so transferred shall be retransferred, unless the Panies j

agree, beyond the territarlaljurisdiction of the Party.

Asticle 8: Enrichment of Uranium 1

Uranium transferred pursuant to this Agreement or used in or produced through the use of equipment so transferred shall not be enriched by a Parry to twenty percent or more in the isotope Um unless the Parties agree.

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Artide 9: Reprocessing Nuclear material transferred pursuant to this Agreement or used in or produced through i

use of nuclear material, moderator material or equipment so transferred shall not be reprocessed unless the Pardes agree.

1 Article 10: Alteration inform or content j

No plutonium, uranium 233, high enriched uranium or irradiated nuclear material trans-i fened pursuant to this Agreement or used in or produced through the use of any nuclear 1

1 j

material, moderator material or equipment so transferred shall be altered in form nr. content unless the Parties agree.

4 f

Attide 11: Storage i

The following shall be stored only in a facility to which the Parn*cs agree:

1 j

1. plutonium, uranium 233 and high enriched uranium (except as contained in irradiated fuel elements) transferred punuant to this Agreement:

l

11. plutonium, uranium 233 and Algh enriched uranium recovered from nuclear material l

transferred pursuant to this Agreement:

tii. plutonium, uranium 233 and Al h cariched uranium recovered from nuclear material t

used in agulpment transferred pursuant to this Agreement.

1 i

Article 12: Advance, Leng Term Consent

1. Consistent with the objective of preventing nuclear proliferation and with their respective i

national security interests, the Parties shall satisfy the requirements for agreernent set forth in Articles 7,9,10 and 11 of this Agreement on a long-term, piedictable and reliable basis i

that will further facilitate peaceful uses of nuclear energy in their respective countries.

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4 Ad referendwo test (seerestad) s.t.97 1

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2. Agreement to implement this undertaking is contained in an Agreed Minute, which shall a

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. constitute anintegralpart of this Agreemsat.

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3. 'ne Parties may also agree on a case by-case basis to activities covered by Articles 7,9, i

10 and 11 of this Agreement.

1 1

Article 13: Suspension and Termination of Advance, IAng.Terin Consent

1. Either Parry may spaad or terminate in whole or in part any advance, long term consent given pursuant to Anicle 12 on the basis of objective evidence that its continuadon l

would entail a serious threat to the security of either Party, or a significant increase in the rist of nuclear proliferation, resulting from a situation of the same or greater degree of l

sericusness as the following:

a) ;iwitzerland detonates a nuclear weapon or any other nuclear explosive device; a

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b) the United States detonates a nuclear weapon or any other nuclear emplosive device using any item subject to this Agreement:

1 j

c) either Parry materially violates, terminates, or declares itself not to be bound by the Non Prol(feration Treaty, or the relevant safeguards agreement referred to in Article 5.1. and 5.2., or the Guldeh'ne::

d) either Party retransfers an item subject to this Agreement to a no~ nuclear-weapon state which has not concluded a INFCIRC/153 rype safeguards aipeement with the Agency; e) a Party is subjected to rneasures taken by the Board of Governors of the Attacy pursuant to article 19 of the safeguards agreement refened to in Article 5.1, or article 18 of the safeguards agreement referred to in Article 5.2, respectively; f) acts of war or serious internal disturbances preventing the maintenance of law and order, or serious intemational tension constituting a threat of war, that threaten severely and duectly the safeguarding or physical protection of activities covered by the advance, long term consent pursuant to Article 12 of this Agreement on the territory of either Pany.

2. The Party considering that such objective evidence may exist shall consult with the other Party, at Federal Council level far Switzerland and at, Cabinet level for the United States, before reaching any decision.

3. Any such decision that such objective r,vidence does exist and that activities referred to in Articles 7,9,10 and 11 of this Agreement should therefore be suspended, shall be taken only by the Swiss Federal Council or by the President of the United States, as the case may be, and shall be notified in writing to the other Party.

4. '!he Parries confum that, as of the time of entry into force of this Agreement, there exists no objective evidence of any of the threats refened to in paragraph I of this Article and that they do not foresce any such threats developing in the future.

1 1

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Ad referendem tat (sorresens) s.l.97

5. Actions of governments of third contries or events beyond the territorialjurisdiction o either Party shall not be used as a basis for invoking the provisions of paragraph ! of t Article with respect to activities or facility operations within the Party'r territorial jurisdiction unless, due to such actions or events, those activities or facility operation would clearly result in a *Iname*at increase in the risk of nuclear proliferation or in a serious threat to the security of the Party invoking the ymvisions of paragraph 1 of this Article.

6. The Party invoking the provisions of paragraph 1 of this Article shall keep under constant review the development of the situation which prompsed the decision and shall withdraw its invocation as soon as wseranted.

7. De provisions of paragraph I of M Article shall not be invoked due to differences over the nature of a Parry's peaceful nuclear programmes or fuel cycle choices, or for the purpose of obtaining commercial advantage, or of delaying, hampering-or hindering the peaceful nuclear programmes or activities of the other Parry, or its peaceful nuclear co.

operation with third counties.

8. Any decision to invoke the provisions of parspaph I of this Article shall only be taken in the most extreme circumstances of exceptional concern frorn a.non proliferation or security point of view and shall be applied for the minimum period of time necessary to deal in a manner acceptable to the Parties with the exceptional case.

Article 14: Multiple Supplier Controls l

if an agreement between either Parry and another state or group of states provides such other state or poup of states rights equivalent to any or all of those set forth under Articles 7 to 11 of this Agreement with respect to any nuclear material. moderator material or equipment subject to this Apeement, the Parties rnay, upon the request of either of them, agree that the implementation of any such rights will be accomplished by such other state or group of states.

Article 15: Non discrimination 1

Should either Parry subsequently conclude a new or amended agreement for peaceful nuclear cooperation with another state or group of states which does not co stain one or more of the requirements presently set forth in & Agreement, or should either Party agree l

to implement those requirements in a manner which provides significantly greater practica!

l advantages to a state to which all snch requirements apply than this Apeement affords to the other Party, the Party which hr.s concluded such an agreement will stake tu best efforts to provide to the other Party sindlar treatment, including, as may be necessary, through amendment of this Agmement.

Article 16: Suspensioa and Termination of the Agreetnant j

1. If either Party at any time following the entry into force of this Agreement (a) does not comply with the provisions of Articles 3 to 11, or (b) terminases, abrogates or materially violates a safeguards agret.nent with the Agency.

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Ad referendum Isat (currestad) s.l.97 the other Party shall have the right to cease further co-operation under this Agreement or to suspend or terminam,in whole or in part, this Agreement.

2. If either Party at any time following entry into force of this Agreement terminates or abrogates a safeguards agreement with the Agency and the safeguards agreement so terminated or abrogated has not been replaced by an equivalent safeguards agreement when appropriate and relevant, de other Ferry shall have the dght to require the return in whole or in part of muelser material, moderator material or agrdpment transferred pursuant to this Agreement and special fissionable material produced through the ese of such items.

3. If Switzerland at any time following entry into force of this Agreement detonates a nuclear explosive device, the United States shall hs"e the same rights as specified in paragraph 2. If the Unhed Staes of America at any Law following entry into force of this Agreement detonates a nuclear explosive device with Jpecialffssionable material trans-ferred pursuant to this Agreement, Switzerland shall have the same rights as specified in Paragraph 2.

4. If either Party exercises its rights under this Article to. require the return of any nuclear material, moderator material or equipment, it shall, after removal from the territory of the other Party, reimburse the other Parry for the fair market value of such nuclear material, moderatormaterialand equipment.

Article 17: Consultations The Parries undertake to consult at the request of either Party regarding the implementation 3

of this Agreement.

I Artide13: Administrative Arrangement 4

i The appropriare authorities of the Parties shall establish an administrative arrangement in order to implement the provisions of this Agreement.

i Article 19: Settlernent of disputes

1. De Parties shall seek to resolve any dispute con =rning the interpretation and imple-mentation of this Agreement by negotiation.

2. If after genuine efforts of both Pardes such a dispute cannot be settled by negotiations, it shall be submitted, if both Parties agree, to an arbitral tribunal composed of three arbitrators appointed in accordance with the provisions of this Article.

3. Each Party shall designate one arbitrator who rnay be its national, and the two arbitrators so designated shall elect a third, a national of a third state, who shall Ie the chairman. If within sixty days of the request for arbitration either Party has not designated an arbitrator, either Party to the dispute may request the president of the International Coun of Justice to appoint an arbitrator. The same procedure shall apply if, within ainty days of the designa-tion or appointment of the second arbitrator, the third arbitrstor has not been elected.

4. A majodty of the members of the arbitral tribunal shall constitute a quorum. All deci-sions shall be made by majority vote of all the members of the arbitral tribunal. The arbitral procedure shall be fixed by the arbitral tribunal.

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b Ad termondes t'st (earrected) s.l.97 j

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5. '!)e decisient of the arbitral tribunal shall be binding on both Porrfes and sh

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implemented by them.

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Article 26: Coverage ofitens Subject to the Previous Agreeseent

1. The provisions of this Agrs.,sa; shall apply so mdear asarerial subject to the 4

Agreement for Cooperation Between the Government of Switzerland 2 and the of the United States of America 2 Conceming Civil Uses of Atomic Energy of 30 i

1965, as amended, and ta moderator material and equipment transferred purs j

agreement only to the extent to which they were covered by that agreement.

2. Should the advance, long-term consent given in Article 12 of this Agreemen i

sospended, as provided in Article 13, nuclear material subject to the previous agr j

shall, at the option of the Party against which the suspension is applied,j i

such suspension as subject to this Agreement, but only to the extent covered Agreement.

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Article 21: Amendment of the Agreement

1. This Agreement may be amencied at any time by agreement of the Partier.

2. Any such amendment shall enter into force in accordance with the proced in Article 22 of this Agreement.

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Article 22: Entry into Force and Duration j

1. This Agreement shall enter into force on the date on which the Parties en matic notes informing each other that they have complied with all applicable requ forits entry into force.

2. This Agreement shall remain in force for a period of thirty years and shall cont force thereafter for additional periods of five years each. Either Party may, months' written notice to the other Parry, terminate this Agreement at the end of the thirty years period or at the end of any subsequent five years period.

3. Notwithstanding the termination or suspension of this Agreement, the rights obligations pursuant to Articles 3,4,5,7,12,13,14, paragraphs 2 to 4 of Article 16

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i the provisions of the Agreed Minute relevant to the implementation of Article 7 sha continue in effect.

4. If a Party gives to the other Party the written notice provided for in paragraph Parry suspends or terminates this Agreement pursuant to Article.16 paragraph 1 th shaB hold consukations as soon as possible but not later than one month afterwards purpose of deciding jointly whether,in addition to those referred to in paragraph 3 of this Article, further rights and obligations arising out of this Agreement, and in particula Articles 8,9,10 and 11 shall continue lo effect.

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Ad referendam ient (earrected) s. t.97 s

5. If the Pardes are unable to reach ajoint decision pursuant to parapaph 4 j

a) the rights and obligations provided under Articles 8,9,10 and 11 shaU continue to apply to nuclear material, moderator material and equipment covered by this 1

Agreement pursuant to Article 20 parapaph 1, but only to the extent such rights and obligations also applied to such nuclear material. moderator material and equlpment j

under the previous agmement.

j b) The Pardes shall submit to an artdtral ribunal composed of three arbitrators j

appointed in accordance with Article 19 paragraph 3 the question whether, j

notwithstanding the expiradon or suspension of the Agreement, rights and obligadons i

in addition to those referred to in paragraph 3, in particular those arising under j.

Articles 8,9,10 and 11, shall condnue to apply to:

i 1

(1) nuclearmaterial, moderatormaterialand yt :=> transferred pursuant to this j

, Agreement;

.(2) nuclear material used in or produced through the use of nuclear marerurf, i

moderator material and egulpment transferred pursuant to this Agreement; and 1

j (3) nuclear material produced after the entry into force of this Agreement through the use of nuclear material that was transferred pursuant to the previous apeement.

The tribunal shan operate in accordance with Article 19 parapaphs 4 and 5 and make its decision on the basis of the application of the rules and principles of international j

law, and in particular the Vienna Convention on the Law of Treaties.

j c) If the arbitral tribunal decides that additional rights and obligations arising under Articles 8,9,10 and 11 with respect to nuclear material, moderator material and equipment referred to in subparagraph b) (1), (2) and (3) shall not continue to apply following the suspension or termination of the Agreement, either Parry shau have the l

right to require, subject to the procedures provided under Article 16, the retum of such nuclear material. moderator material and equipment located in the territory of 1

the other Parry on the day of termination of this Agreement.

i d) Until the Parties reach a joint deelslon or the arbitral tribunal renders iu decision, this

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Agreement will remain in force notwithstanding the written notice pursuant to i

parapaph 2.

6. 'the Pardes shall terminate this Apeement not last than the date upon which j

Switzerland accedes to the European Union. 'Ibe pghts and obligadons with respect to nuclear supply arising out of this Agreement shall in that event be replaced by those of the agreement between the United States of America and the European Atomic Energy j

Community.

7. 'Ibe rights and obugadons with respect to other areas of nuclear cooperadnn shall be the 4

j subject of negotiations between the European Atomic Energy Community, the United States of America, and Switzerland in accordance with the provisions of Article 106 of the i

Euratom Treaty.

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3 rem =wuw.moc 11 1

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Ad refwendum tar (correciad) s.l.97 i.

In witness whereof the undersigned, being duly authoriand thereto by the Swis Council' and the Government of the United States of America' respective 1

this Agreement.

Done at................ thii...... day of 1997 {and at.........

............. this..........

day of 1997], in duplicate, in the English and French languages, each bei authende.

1 Porthe Swiss PederalCouncil3:

For the Government of the United States of America':

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E 8 ' Swiss Federal Councu' and 'Govemment of the United States of Am duplicaen of the Agreement ened h the U.S.

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,e Ad rulersadum text (corrected) s.l.97 t

In witness whereof the undersigned, being duly authorized thereto by the Swiss s

Council' and the Government of the United States of America' respective this Agreement.

Done at................... this...... day of 1977 (and at......................... this.....

day of 1997], in duplicate, in the English and Prench languages, each bein authende.

l Por the Swiss FederalCouncil3.-

l For the Government of the United States of America *:

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N 3 " Swiss Pederal Council

• and 'Goventment of the United States of duplicases of the Agreement e n the U.S.

t NTM/E4JEAW191.DMC

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SUMMARY

OF BASIC PROVISIONS OF THE AGREEMENT FOR COOPERATION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE SWISS FEDERAL COUNCIL CONCERNING PEACEFUL USES OF NUCLEAR ENERGY Article 1 contains definitions. Article 2 establishes the conditions under which nuclear material, moderator material and equipment transferred from the territory of one Party to the territory of the other Party, either directly or through a third country, will be regarded as having been transferred pursuant to the Agreement. It provides, among other things, that the e recipient must be an authorized person. It establishes a rule of proportionality for use in determining how much special fissionable material is to be regarded as subject to the consent right articles of the Agreement when it is produced through the use of a reactor not subject to the Agreement and that reactor is using nuclear material or moderator material, some of which is subject to the Agreement and some of which is not. This Article also sets forth the conditions under which nuclear material, moderator material and equipment will cease to be subject to the Agreement, and makes provision for the transfer of small quantities of nuclear material outside the coverage of the Agreement.

2 I Article 3 provides a peaceful, no explosive use guarantee for items subject to the Agreement. Article 4 requires adequate physical protection for all nuclear material subject to the Agreement. Article 5 requires that nuclear material subject to the Agreement be subject to the Parties' respective safeguards agreements with the IAEA (which in the case of Switzerland entails full-scope IAEA safeguards), or to fall-back safeguards providing aasurance equivalent to that intended to l be secured by the system they replace. Article 6 provides that cooperation pursuant to the ) Agreement will be in accordance with the provisions of the Agreement, and that specified commodities may be transferred for applications consistent with the Agreement. Article 7 gives each Party a right of prior approval over retransfers by the other Party of items subject to the Agreement. Article 8 provides that uranium subject to the Agreement may not be enriched by a Party to 20 percent or more U-235 unless the other Party gives its prior approval.

. _ ~ 3 4 Article 9 provides that nuclear material subject to the Agreement may not be reprocessed by a Party unless the other Party gives its prior approval. l Article 10 provides that plutonium, uranium 233, high i enriched uranium, and irradiated nuclear material subject to 4 the Agreement may not be altered in form or content by a Party unless the other Party gives its prior approval. Article 11 requires the agreement of both Parties to any 4 l storage facility for plutonium, uranium 233 and high enriched i uranium subject to the Agreement. i l Article 12 states the undertaking of the Parties to exercise the approval rights set forth in Articles 7, 9, 10 and 11 on an advance, long-term basis, declares that the Parties' agreement to implement this undertaking is contained in an Agreed Minute constituting an integral part of the Agreement, and provides that the approvals covered by these articles may also be exercised on a case-by-case basis. Article 13 establishes the conditions under which the Agreement's advance, long-term consent provisions may be suspended or terminated by a Party in whole or in part.

4 i Articia 14 provides that if an agreement between either Party and another state or group of states provides such j state or group of states rights equivalent to any or all of those set forth in Articles 7 to 11 of the Agreement with respect to items subject to the Agreement, the Parties may i agree that the implementation of any such rights will be accomplished by such-other state or group of states. Article 15 states the undertaking of each Party to make its best efforts to afford the other Party treatment similar to that which it may accord another state or group of states, ) if the first Party concludes an agreement with such state or group of states that omits one or more of the requirements in the U.S.-Swiss Agreement, or if the first Party implements I such requirements in a way more favorable than the way in i which it implements the requirements of the U.S.-Swiss Agreement. j 1 I Article 16 specifies certain circumstances under which a Party may cease cooperation under the Agreement, or suspend or terminate it in whole or in part. It also establishec the right of a Party to require the return of items subject to the Agreement in certain egregious circumstances, and provides for the reimbursement of the Party against which the right of return has been invo'ted.

5 4 Article 17 provides for consultations on implementation of the Agreement at the request of either Party. Article 18 provides for establishment of an administrative arrangement to' implement the provisions of the Agreement. Article 19 contains provisions, including non-compulsory, binding arbitration, for the settlement of any dispute concerning the interpretation and implementation of the Agreement. Article 20 provides that nuclear material subject to the expired 1965 U.S.-Swiss Agreement will be subject to all provisions of the new Agreement, and that moderator material and equipment subject to the 1965 agreement will also be subject to the new Agreement, but only to the extent that they were covered by the 1965 agreement. This Article also-provides that if the advance, long-term consent given by Article 12 of the new Agreement is suspended, nuclear material that had been subject to the 1965 agreement will be j regarded as subject to the provisions of the new Agreement I only to the extent that such provisions were also contained l in the 1965 agreement. ) l l I t

6 Article 21 makes provision for the amendment of the Agreement. Article 22 provides that the Agreement will enter into ~ force on the date (n) which the Parties exchange diplomatic notes stating that they'have complied with their respective applicable requirements. It provides for the Agreement to have an initial term of 30 years, and to remain in force-indefinitely thereafter in increments of five years each 1 unless'a Party terminates it by giving six months written I notice. It further provides for the continued effectiveness I. of certain rights and obligations notwithstanding the termination or suspension of the Agreement, andestabbishesa mechanism for determining the continued effectiveness of certain other rights and obligations. Finally, the Agreement provides for the replacement of the Agreement's rights and obligations by those of the U.S.-Euratom Agreement in the event that Switzerland accedes to the European Union. The Agreed Minute (which constitutes an integral part of the Agreement), provides to Switzerland advance, long-term U.S. approval for retransfers to specified third-country facilities of nuclear material subject to the Agreement for reprocessing, alteration in form or content, and storage, and for the return to Switzerland of recovered nuclear materials,

-.~..--. ---... 7 8 including plutonium, for use or storage at specified Swiss facilities. The Agreed Minute also provides advance, long-term U.S. approval for retransfers from Switzerland of source material, uranium (other than high enriched uranium), moderator material and equipment to a list of countries and groups of countries acceptable to the United States. l i [ f I

Au-APR 14'97 9:36 No.003 P.02 DRAFT ^"*' ~' ' ' " 4 I MEMORANDUM OF LAW Introduction and Summarv The accompanying action memorandum to the Secretary recommends that she sign a momorandum to the Presidont recommending that he exercise his authority to authorize the conclusion of a proposed Agreement for cooperation between the United States and Switzerland, pursuant to Section 123 (b) of the Atomic Energy Act of 1954, as amended (P.L. 83-703) ("AEA"). Section 401 of the Nuclear Non-Proliferation.Act of 1978 (P.L. 95-242) ("NNPA") amended section 123 of the AEA to include nine requirements for Agreements for Cooperation concluded subsequent to enactment of the NNPA. The President may exempt a proposed Agreement from any of these requirements j if he determines that its inclusion in the Agreement would seriously prejudice achievement of U.S. nonproliferation objectives or otherwise jeopardize the common defense and security. No such exemption is proposed with respect to the draft agreement with Switzerland. Accordingly, this memorandum examinos conformity of the proposed agreement with a33 nine requirements, and concludes that all nine are satisfied. The. proposed Agreement contains provjsions in Article la and the Agreed Minuto under which the Parties grant advance, long-term consent nn a reciprocal basis.for the conduct of certain activities related to the civilian nuclear fuel cycle. Thus, the Agreement not only contains the requirement for U.S. in the event that Switzerland wishes to carry out consent certain activities involving nuclear materials or equipment covered by the Agreement (as required under section 123 of the AEA), but also includes advance, long-term consent for some of these activities, which have been evaluated in light of the requirements for a " subsequent arrangemont" set forth in Section 131 of the AEA. This memorsndum conclude.w that the proposed Agreement conforms with section 131 as well. Conformity with Section 123 of the AEA As noted, Section 123 provides that, absent a Presidential waiver, a proposed Agreement for Cooperation must satisfy nine requirements in order for the President to authorize its conclusion. A description of the nine requirements and an analysis of the Agreement's conformity with each follow. OA a~~~& 3 .....~_._

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• (1)

Switzerland must guarantee "that safeguards . will l be maintained with respect to all nuclear materials and l equipment transferred pursuant [to the Agreement) and with l respect to all nuc3 ear materjal used in or produced through the j l use of such (transferred) nuclear materials and equipment, so ) l long as the material or equipment remains under the j l jurisdiction or control of [ Switzerland), irrespective of tho l duration of other provisions of the agreement or whether the l agreement-is terminated or suspended for any reason." l This requirement to satisfied by Article 5 of the proposed Agreement. Article 5 (1) stipulates that nuclear material l transferred from the U.S. to switzerland and nuclear material l used in or produced through the use of material or equipment l transferred from the U.S. pursuant to the Agreement will be subject to safeguards under the agreement between Switzerland i and the IAEA for the application of safeguards in connection with the Nuclear Non-Proliferation Treaty ("NPT"). Artic3e 5 (3) provides for "back-up" safeguards in the event the IAEA i safeguards agreement is no longer being applied. In addition, Article 22 (3) provJdes LhmL Article 5 whall remmin in force despite the termination of the proposed Agreement, thereby satisfying the requirement for the application of safeguards in perpetuity. (2) Switzerland must agree to the requirement, "as a condition of continued United States nuclear supply under the .w... m... L Iv. w w.yo. L i v.., LimL IAcA. fevu

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l..L 1..md with respect to all nuclear materials in all peaceful nuclear activjtjes within the territory of (Switzerland), under its jurisdiction, or carrjed out under its control anywhere." Switzerland's NPT-type safeguards agreement with the IAEA provides for the kind of " full-scope" safeguards required by this paragraph. As discussed above, Switzerland has also agreed to fall-back safeguards of equivalent coverage, if necessary (Article 5). (3) Switzerland must guarantee that "no nuclear materials and equipment or sensitive nuclear technology to be trancferred l pursuant to [the) agreement, and no special nuclear material produced through the use of any nuclear materials and equipment l or sensitive nucicar technology transferred pursuant to [the] agreement, will be used for any nuclear explosive device, or for research on or development of any nuclear explosive device, or for any other military purpose." This requirement is satisfied by Article 3 of the proposed Agreement. (This article does not mention " sensitive nuclear technology" because the Agreement does not provide for the transfer of such technology.) $ }- l w' '. i C Lv o l

iba RPR 14'97 9diiSo.0UU'P.Ui ' 1 l (4) The Agreement must stipulate "that the United States shall-have the right to require the return of any nuclear materials and equipment transferred [under the Agreement) and any special nuclear material produced through the use thereof if [ switzerland) detonates a nuclear explosive device or terminates or abrogates an agreement providing for IAEA safeguards.* Article 16 (2) -(3) provides for such a right of return. With respect to termination or abrogation of an IAEA nafeguards agreement, the right of return applies unless such agreement is " replaced by an equiva3ent safeguards agreement when appropriate and relevant.a (5) The Agreement must contain a guaranty that Switzerland will.obtain U.S. consent before retransferring to unauthorized persons or beyond its jurisdiction or control aany material or any Restricted Data [and) any production or utilization facility transferred pursuant to the agreement . or any special nuclear material produced through the use of any such facility or through the use of any material transferred purouant to the agreement." Article 7 of the Agreement satisfies this requirement. (The language of Article 7 takes into account that transfers of Restricted Data are not jncluded under the Agreement.) In paragraphs (B) - (D) of the Agreed Minute, the U.S. provides advance, long-term consent for Switzerland to retransfer specified material and equipment to listed destinations for specified purposes. This initial consent may be withdrawn at any time, following consultations, on the basia of " objective evidence that its contiruation would entail a serious threat to the security of [the U.S.) or a significant increase in the rjsk of nuclear proliferation." Changes in the terms of the advance, long-term consent would be treated as " subsequent arrangements" under Section 132. (6) The Agreement must contain a guaranty by switzerland that " adequate physical security will be maintained with respect to any nuclear material transferred pursuant to [the) Agreement and with respect to any special nuclear material used in or produced through the use of any material, production facility or utilization facility transferred pursuant to [the) Agreement." This requirement is satisfied by Article 4 of,the Agreement. (7) The Agreement must contain a guaranty by Switzerland that ano material transferred pursuant t: the agreement for cooperation and no material used in or produced through the uce DRAFT

-4 of any material, production facility, or utilization facility transferred pursuant to the agreement will be reprocessed, enriched or (in the case-of plutonium, uranium 233, or uranium enriched to greater than twenty percent in the isotope 235, or other nuclear material which have been irradiated) otherwise altered in form or content without the prior approval of the United States." This requirement is satisfied by Articles 8-10 of the Agreement. Articlo 8 requires agreement of the parties to enrich uranium transferred under the Agreement to 20% or more in the isotope U235. Article a requires consent to reprocess nuclear material (e.g., nuclear fuel) transferred under the agreement or used in or produced through the use of material or equipment so transferred. Article 10 requires consent for the alteration in form or content of plutonium, uranium 233, high-enriched uranium, or irradiated nuclear material transferred under the Agreement or used in or produced through the use of material or equipment so transferred. l The Agreement does not provide for advance, long-term consent for Switzerland to carry out reprocessing, enrichment to 20% or more, or alteration in form or content. However, as previously noted, Switzerland would be given advance, long-term consent to transfer nuclear material to specified destinations for specified purposes, including transfer to listed facilities in Belgium, France, and the United Kingdom for reprocessing or alteration in form or content. The Agreed Minute provides that the parties "may" agree to advance, long-term consent for Switzerland to carry out such activities within its own jurisdiction. This provision does not compel the U.S. to agree to such a consent arrangement, but it suggests that the U.S. would review a request with a view toward reaching such an agreement. (8) The Agreement must contain a guaranty by Switzerland that "no plutonium, no uranium 233 and no (high-enriched uranium) transferred pursuant to the agreement for cooperation, or recovered from any source or special nuclear material so transferred or from any source or special nuclear material used in any production facility or utilization facility transferred pursuant to the agreement for cooperation will be stored in any facility that has not been approved in advance by the United States." This requirement is satisfied by Article 11. In the Agreed Minute, the U.S. provides advance, long-term consent for the storage of such materials in four facilities listed in annexes 3 and 4. 4 i DRAFT a

'U' APR 14'97 9:39 No.003 P.06 . 1 4 (9)- Requiremont (9) pertains entirely to situations resulting from the transfer of sensitivo nuclcar technology transferred pursuant to a Section 123 Agreement-for cooperation. This Agreement does not provide for the transfer of sensitive nuclear technology. Accordingly, requiroment (9) is not relevant to the proposed Agreement. With respect to the consent rights specified in articles 7-11, article 2 (2) defines " produced" special nuclear material in terms of proportionality. Thus, if U.S. material is used in a.non-U.S. reactor, the special nuclear material produced will be attributed to the U.S. in the proportion of the U.S. material to the total amount of nuclear' material used. It has been our consistent view that sections 123 and 127 of the ARA allow this concept of proportionality to be used in determining the reasonable application U.S. consent rights. A proportionality provision has been standard in U.S. agreements for cooperation since the enactment of the NNPA in 1978. Conformity with section 131 of the AEA Section 131 establishes procedural requirements for the conclusion of " subsequent arrangemento" entered into pursuant to an agreement for cooperation. The proposed Agreement with Switzerland grants consent on a long-term basis for certain civilian nuclear fuel cycle activities. This advance consent arrangement would constitute a subsequent arrangement under section 131 if agreed to separately from the proposed Agreement. Similar advance consent arrangements have been used in previous U.S. nuclear cooperation agreements, including agreements with Japan, Finland, Norway, Sweden, and most recently Euratom. The Executive Branch has taken the position that this approach is legally sound, and Congress, after careful and detailed consideration of both the principle of including advance long-term consents in cooperation agreements and its implementation in specific agreements, has not blocked their use in any of these agreements. All documentation that would be required under section 131 has been prepared and is included in the submission to the President requesting his approval and authorization for the conclusion of the proposed Agreement with Switzerland. Racinrocal U.S. Oblications. Most provisions of the proposed Agreement are drafted in a reciprocal manner, including those relating to peaceful use of transferred material and equipment, physical security, right of return, and consent rights for storage, retransfer, enrichment, DRAFT

1 e -G-and reprocessing. If any transfers from Switzerland to the U.S. were to occur, the Executive branch would have the ability to meet these commitments in the agreement through its own authorities and those of the Nuclear Regulatory Commission (NRC). If any. imported nuclear matcrial, equipmont, or components are to be held by the Department of Energy, the Executive branch will be able to implement the proposed undertakings directly. If any imported nuclear material, equipment, or components are to be held in the private sector, the NRC will have the regulatory authority to ensure that such items and,'.where relevant, the special nuclear material produced or used therein, are not used in a manner inconsistent with the agreement. In addition, under the authority of. section 161(c) of the AEA, the Uso has established a detailed tracking system applicable to foreign-origin nuclear material (10 CFR 70.54). If necessary, this tracking system could be supplemented to require reporting for tracking purposes of nuclear material used in or produced through the use of components transferred,from switzerland under this agreement. Domestic Procedures In accordance with section 123(a) of the AEA, the Department of State negotiated this Agreement with the technical assistance and concurrence of the Department of Energy and in concultation with ACDA, and circulated it to the NRC for its views. In addition, the agreement has been circulated to the Departments of Commerce and Defense because of the importance of the agreement and because of their statutory roles in reviewing subsequent. arrangements. The proposed agreement is an executive agreement subject to statutory procedures for congreccional review prior to its entry into force. These procedures are set forth in section 123 of the AEA, as amended. If the agreement is authorized by the President, it will be signed and submitted to the Congress for review for 90 continuous session days (sections 123 (b) and (d)). This period includes the 30-day peried required for consultation with the House Foreign Affairs and Senate Foreign Relations committees concerning the Agreement's consistency with the substantive requirements of section 123. The relevant legislative history expressly be signed before the initiatio, recognizes that an agreement may n of this consultation period. H. Conf. Rep. No. 99-180 at 52-53, reprinted in 1985 U.S. Code Cong. & Admin. News 213. That procedure has been followed in all post-1985 agreements. Unless Congress enacts a joint resolution of disapproval within the statutory review period (section 123 (d) ), the agreement will be brought into force through an exchange of notes. 0 $* d ww

ID: APR 14'97 9:40 No.003 P.08 ~ 7-i l Authority to Concludg. Authority to conclude the proposed Agreement is derived from the President's constitutional responsibility to conduct the foreign relations of the United states (Article II, section

1) and Section 123 (b) of the ARA.

Authority to implement the proposed agreement is contained in the ARA, as amended, and the Energy Reorganization Act of 19'/4 (P.L. 93-438). No fulther action pursuant to the'Mational Environmental Policy Act or E.O. 12114 is required prior to signing this agreement, its submission to Congress, or its entry into force. The agreement authorizes nuclear cooperation under certain safeguards and controle, but does not actually provide for the carrying out of any such cooperation or any export or import action. Moreover, existing generic studies have adequately addressed the environmental impact from the kinds of activities authorized under the proposed agreement. For the foregoing reasons, it is my opinion that there is no legal obstacle to the proposed agreement being approved by the President, signed, and submitted to the Congress. l Todd Buchwald Assistant 14 gal' Adviser for Political-Military Affairs I 1 l I 4 .... gy beU n% e %. 'd l f s i

l DRAFT

1. 24209 NUCLEAR PROLIFERATION ASSESSMENT STATEMENT Pursuant to Section 123a of the Atomic Energy Act of 1954, as amended, with Respect to the Proposed Agreement for Cooperation Between the Swiss Federal Council and the Government of the United States of America Concerning Peaceful Uses of Nuclear Energy This Nuclear Proliferation Assessment Statement relates to the proposed Agreement for Cooperation Between the Swiss Federal Council and the Government of the United States of America Concerning Peaceful Uses of Nuclear Energy. This agreement for cooperation (which, together with its accompanying Agreed Minut'e,is hereinafter called the " proposed Agreement")

is concurrently being submitted to the President for his authorization for execution. Section 123a of the Atomic Energy Act of 1954, as amended (" Atomic Energy Act"), provides that a Nuclear Proliferation Assessment Statement shall analyze the " consistency of the text of the proposed agreement for cooperation with all the requirements of this Act...and.. the adequacy of the safeguards and other control mechanisms and the peaceful use assurances contained in the agreement for cooperation to ensure that any assistance furnished thereunder will not be used to further any military or nuclear explosive purpose." With this statutory mandate in mind, this assessment statement begins with background on the nuclear programs and policies of Switzerland (Part 1); describes the nature and scope of cooperation contemplated in the proposed Agreement (Part II A), and reviews the applicable substantive requirements of the Nuclear Non-Proliferation Act and the Atomic Energy Act and how they are met by the proposed Agreement (Part II B); discusses other nonproliferation policy issues pertinent to this case (Part j III); and then sets forth the net assessment, conclusions, views and recommendations of the United States Arms Control and Disarmament Agency, as contemplated by Section 123a of the' Atomic Energy Act (Part IV). DRAFT ona~~* f

i a I-1: I. NUCLEAR PROGRAMS AND POLICIES OF SWITZERLAND A. . Switzerland's Civil Nuclear Program Switzerland, along with many other nations, began to explore the peaceful applications of nuclear energy in the aftermath of World War II. In the 1950s, it acquired its first research reactor. Today, Switzerland has four research reactors and/or critical assemblies that are used for training and research purposes. Switzerland also decided in the 1960s to acquire power reactors for the purpose of generating electricity. At present, Switzerland has five such reactors which produce 40% ofits electricity. These reactors were phased in over a 15 year period from 1969 to 1984. A sixth reactor in the planning stages for many years has never been built. In the aftermath of the 1986 accident at the Chernobyl nuclear power station in the former Soviet Union, there was increased debate in Switzerland over the future of nuclear power and in 1990 a referendum was passed that - placed a ten year moratorium on the construction ofnew nuclear power reactors. Switzerland acquired its power reactors from the United States and the Federal Republic of Germany. The reactors use low enriched uranium fuel supplied from the United States and from (Eurodif or Urenco).......... , a European enrichment consortium. The Swiss decided early in their nuclear power program to manage their spent power reactor fuel by transferring it to the - United Kingdom or France for reprocessing. Moreover, some of the plutonium separated from this spent fuel is then transferred to plutonium conversion and fuel fabrication facilities elsewhere in Europe (e.g. Belgium), and ultimately returned to Switzerland for use in its power reactors. Switzerland has no facilities for reprocessing, enrichment, or for the conversion or fabrication of fuel, and thus is totally dependent on foreign fuel cycle services. B. U.S.- Switzerland Civil Nuclear Cooperation i The first U.S.- Switzerland civil nuclear cooperation agreement was concluded in 1956. Over the years, the United States has provided significant amounts of assistance to ' Switzerland's nuclear energy program including fuel, reactors, and reactor components. Three of Switzerland's power reactors are of U.S.-origin, and these reactors continue to use U.S.-fuel to . varying degrees. U.S.-origin fuel is also used in some of Switzerland's research reactors. An important ongoing aspect of U.S.-Swiss nuclear cooperation concerns the transfer of U.S.- origin spent power reactor fuel from Switzerland to the United Kingdom and France for reprocessing and return of separated plutonium for use in Swiss reactors. Under U.S. civii nuclear cooperation agreements with Switzerland and the European Atomic Energy Community (Euratom), U.S. consent is required for these activities. 3 , +,,,

s I-2 The previous agreement with Switzerland expired in August 1996, and the proposed Agreement would permit a continuation of this 40-year bilateral nuclear relationship. The maintenance of a U.S.-Switzerland agreement for cooperation is important to the commercial interests of both parties. While the U.S. share of Switzerland's nuclear fuel market has decreased, the export revenues are substantial. Moreover, there is a possibility that this trade could expand given the competitiveness of U.S. fuel fabrication services and the acquisition by the United States oflarge quantities oflow enriched uranium derived from highly enriched uranium taken from dismantled Russian nuclear weapons. The U.S.-Swiss nuclear relationship has experienced occasional difficulties over the past l 20 years. These problems stem from laws and policies enacted by the United States in 1977-78 that expanded controls on nuclear cooperation with all U.S. trading partners -- particularly in regard to reprocessing and the use of plutonium. The implementation of these laws and policies have led to many delays in approvals for the retransfer of Swiss spent fuel to Euratom for reprocessing and for the subsequent return of the plutonium for use in Swiss reactors. U.S. policy toward foreign reprocessing and civil plutonium use over that period has ranged from agnostic to opposition. The combination of these factors created the perception that the United l States was seeking to use its national policies to intrude on sovereign Swiss decisions on domestic energy matters and to hinder implementation of ccmmercial nuclear commerce between Switzerland and Euratom. Moreover, these developments caused concem over reliability of supply from the United States and further contributed to problems in the nuclear trading relationship. These concerns continue to this day and were the principal reason behind the difficult negotiations on the proposed Agreement. In 1993, the Clinton Administration announced that it would not encourage reprocessing and the civil use of plutonium, but that it would honor existing l commitments to our nuclear trading partners in Western Europe and Japan. Moreover, the l Administration reaffirmed U.S. policy to offer long-term consent arrangements for such l countries in exchange for new agreements for cooperation with upgraded controls. This policy led to the successful conclusion of a new agreement for cooperation with Euratom that entered-into-force last year, and to the proposed Agreement with Switzerland. The 1978 Nuclear Non-Proliferation Act (NNPA) requires the Executive Branch to seek j to upgrade all existing agreements for cooperation to include the more stringent controls established in that Act. Following passage of the NNPA, Switzerland was not interested in a i new agreement since the current agreement did not expire until 1996 and it was suspicious over accepting expanded U.S. controls (delays in U.S. approvals for the shipment of Swiss spent fuel to Euratom began in the late 1970s.) Nonetheless, consultations on the terms of a new agreement began soon after enactment of the NNPA and continued throughout the 1980s. Draft texts were provided and views exchanged on U.S. legal requirements. In 1993, formal negotiations began and culminated in the negotiating teams reaching an agreed text in January 1997. In many respects, the proposed Agreement mirrors the prov'isions of the recently concluded U.S.-Euratom agreement -- although it is tailored to the Swiss nuclear fuel cycle and l l

t I-3 thus the advance long-term consent set forth in the Agreed Minute is not as extensive as for Euratom. The successful conclusion of the negotiations avoided a serious rupture in the U.S.- Swiss nuclear trading partnership while placing this cooperation on a secure, long-term basis and promoting U.S.-Swiss cooperation on nuclear nonproliferation matters. C. Swiss Nuclear Nonproliferation Policies Switzerland is a strong proponent ofinternational efforts designed to prevent the further proliferation of nuclear weapons. The preamble of the proposed Agreement reaffirms the importance which the United States and Switzerland place on key elements of the regime including the NPT, IAEA safeguards, the Physical Protection Convention, the Nuclear Suppliers Group, and measures to avoid the risk of proliferation related to the use of plutonium in civil applications. 1.NPT Switzerland signed the NPT in 1969, noting at the time that it would not submit the Treaty to its Parliament for approval until Switzerland " considers that a sufficient degree of universality has been achieved." In 1977, Switzerland took that step by depositing its instrument of ratification; and then concluded an NPT safeguards agreement with the IAEA covering all Swiss nuclear activities in 1978. Switzerland has regularly emphasized the importance of Article IV of the NPT which encourages civil nuclear cooperation among Treaty parties, and has stated that the NPT in no way should lead to discrimination against Switzerland's nuclear industry. The United States has also stressed the importance of Anicle IV and has fulfilled its obligations pursuant to that Anicle through an extensive network of bilateral and multilateral cooperative activities. The proposed Agreement is a further demonstration of the U.S. commitment to its Article IV obligations and will ensure a beneficial and stable U.S.-Swiss civil nuclear relationship for the foreseeable future. While the United States and Switzerland have generally been in agreement with regard tas NPT issues, there was a difference of view on the question of NPT extension leading up to the 1995 NPT Review and Extension Conference. The U.S. objective was to gradually build support for indefinite NPT extension and go into the Conference with as large a majority as possible in favor of this position. Several attempts were made by U.S. officials in the year leading to the Conference to persuade Switzerland to support the U.S. position. The Swiss demurred, however, apparently because oflong-standing concems that the NPT discriminates in favor of the nuclear weapon states. The Swiss finally decided about a week before the Conference to support indefimite extension -- the last European state to do so. While privately disappointed thet the decision had not come earlier, the United States welcomed the Swiss announcement as it added further momentum to what, by that time, was already a majori y of NPT parties in favor of t

9 I-4 indefinite extension. Recently, the Swiss Government commissioned a military historian to prepare a report on the debate and planning within Switzerland related to the acquisition of nuclear weapons. This report was published in April 1996, and provides insight into how a country with Switzerland's history can arrive at a decision that its security is better enhanced through adherence to the NPT than through the acquisition of nuclear weapons. In the 1950s, Switzerland -- a neutral nation without the protection of an alliance -- decided to study the utility of acquiring nuclear weapons in the face of possible future threats to its security. While the issue was debated publicly within Switzerland, the Government conducted studies in the 1950s and 1960s of what resources and force sizes would be necessary in the event a decision were made to acquire nuclear weapons. The fears prompting these studies were, according to this report, the chance that the Federal Republic of Germany would acquire nuclear weapons and concerns about Soviet-supported aggression. Meanwhile, intemational diplomatic efforts in favor of a treaty prohibiting further nuclear proliferation were gaining momentum in the 1960s, and by the opening for signature of the NPT in 1968 it appeared that most in Switzerland did not favor the nuclear option -- believing that it would be too great a burden and not offer enough protection. Nonetheless, Swiss acceptance of the NPT was not a foregone conclusion even after Switzerland signed the Treaty in 1969. Any future Swiss decision to ratify the NPT was clearly dependent on whether other key nations joined the Treaty Even after NPT signature theoretical studies on nuclear weapons acquisition continued in Switzerland under a Working Committee for Nuclear Mattm. Switzerland finally ratified in 1977 after Italy, Belgium, the Federal Republic Germany, and the Netherlands had taken this step in 1975. The Working Committee was not disbanded, however, until 1988, and l apparently continued to study nuclear weapons related questions from a purely theoretical i perspective.

2. IAEA Safeguards l

Switzerland was a founding member of the IAEA in 1957, and has played a key role over the years in strengthening this important international institution. The United States considers i the IAEA safeguards system as an essential tool in promoting U.S. national security interests, and is working closely with Switzerland and other countries in the IAEA's ongoing effort to strengthen its safeguards system. The first phase of this safeguards upgrade was agreed by the IAEA Board of Govemors in..., and the second phase -- which involves the negotiation of a model Protocol for NPT safeguards agreements -- is nearing completion. l During these negotiations, Swiss officials have emphasized the utility of measures like no-notice inspections and environmental monitoring in detecting undeclared activities, while encouraging more efficiencies in the application of safeguards on certain declared facilities like light water power reactors. Like several other NPT non-nuclear-weapon states with major civil 1 1

I-5 nuclear programs, Swiss authorities are sensitive to the impact of these measures on their nuclear industry; and they frequently questioned the value of certain expanded reporting requirements. Nonetheless, Switzerland understands the importance of a credible IAEA safeguard system and joined in supporting the text of the model Protocol which was agreed ad refin Vienna on January 31. <;,A. g +w 'le io e pu r =5* W p,a,R p, n h.s. a..,g a A. L u eMc *4 i

3. Nuclear Export Controls So l

,,,,a y 4 " m., A. w. o r. 5,r.A e.u-.it " e l.,a ke d 6 Switzerland has a large nuclear ' dustry capable of manufacturing specially designed "/ '" nuclear equipment and dual-use items uch as precision machine tools. Swiss firms, along with ' '* g those in Germany, the United King m, and the United States, have been the prime target for nations seeking equipment for a n lear weapons program. Switzerland was one of the first suppliers to emphasize the impo ce of multilateral cooperation in combating the efforts of proliferants, and Swiss official consult routinely and in good faith with U.S. officials in dealing with individual exports of co cem. New Swiss ordinances tightening nuclear export controls have been enacted twice si/c 1990, and further ch=;;= r.= wir in b=. Swiss officials e W M akwprepared to use infopnal approaches (e.g.ja ' boning) to halt exports of concem when legal means are unavailable.f cA p t e g etv+l-d $88jf 9

c. Q wo m.b.wA p M Switzerland helped to create the Zangger (NPT Exporters) Committee in 1971 when it p u b4 +

became clear that some interpretation of Article III.2 of the NPT would be necessary in order to ww ensure fair commercial competition among nuclear suppliers and to avoid proliferant states

g playing supplier states off against each other. This Committee was chaired by a senior Swiss official (Claude Zangger) from its inception until 1990, and is officially known as the Zangger Committee. The Committee published its first understandings in 1974, and has updated its j

control lists many times over the years. Concern over Pakistani procurement of centrifuge enrichment equipment from the United States, Switzerland, and other suppliers in the late 1970s, led to the Zangger Committee's first comprehensive trigger list upgrade exercise which was published in 1984. This exercise i resulted in part from intensive U.S.-Swiss consultations in 1980 regarding Pakistani procurement efforts directed at Swiss firms. U.S.-Swiss cooperation in the Committee is generally good, although we differ occasionally on the interpretation of Article III.2 with the Swiss adopting a l more rigid approach. Switzerland was not one of the original seven members of the Nuclear Suppliers Group (NSG), but was among the second tranche of countries that joined prior to the publishing of the NSG Guidelines in 1978. Switzerland has remained one of the most active members of the NSG, which has now grown to 34 members. Swiss Federal energy official Professor Alec Baer was chairman of the NSG in 1993. U.S.-Swiss cooperation on NSG issues has been very good, although Switzerland -- along with the United Kingdom and France -- was one of the last supplier states to adopt a national policy requiring full scope safeguards as a condition of nuclear supply (October 1991). Switzerland and the United States share the same view with regard to the

I-6 NSG provisions that encourage restraint in the transfer of enrichment and reprocessing equipment and technology, and in the transfer of all NSG-controlled items to states with unsafeguarded nuclear activities such as India and Pakistan. While Switzerland does not have in place a comprehensive trade embargo against Iran, it has exercised caution on nuclear related exports and is not assisting Iran's nuclear program. Iraq's successful effort to acquire the infrastructure for nuclear weapons was not revealed until after the Gulf War when the IAEA was able to obtain information under enhanced inspection powers granted by the U.N. Security Council. It became clear that some of this infrastructure had been acquired from foreign firms, including from the United States, Switzerland, and the Federal Republic of Germany. This discovery led the NSG to adopt in 1992 a control regime over nuclear-related dual use equipment, material and technology. Switzerland and the United States worked closely in the 1991-92 time frame to help create this new regime.

4. Other Issues The 1980 Convention on the Physical Protection of Nuclear Material establishes important standards for the protection of nuclear material in international transport, and in domestic use and storage. Switzerland adhered to that Convention in 1987 which demonstrates l

its commitment to effective measures in this area. Support for such international cooperation is particularly important for nuclear supplier states like Switzerland which are involved in the l transport and use of plutonium for civil purposes. With regard to the use of weapons-usable material in civil applications, Swiss officials have worked with their counterparts from the United States, United Kingdom, and other key - states to develop guidelines and principles for the management of civil plutonium. Also, Switzerland shut down its only research reactor using HEU fuel and is prepared to return this material to the United States under the Department of Energy's take back program for such spent fuel. As a member of the Conference on Disarmament, Switzerland supported the negotiation of the Comprehensive Test Ban Treaty and signed the Treaty in New York on September 24,1996 -- the date it was opened for signature. Switzerland also supports the beginning of negotiations at the CD on a Fissile Material Cutoff Treaty. Switzerland is a party to the Biological Weapons Convention, the Chemical Weapons Convention, the Missle Technology Control Regime, and the Australia Group (which regulates CBW-related exports).

s j II - 1 II. COMPLIANCE WITH STATUTORY REQUIREMENTS As will be shown below, the proposed Agreement between the Swiss Federal Council and the Government of the United States of America meets the applicable requirements of the law, j specifically the Atomic Energy Act,(hereinafter the Act) and the Nuclear Non Proliferation Act (hereinafter the NNPA). Section 123 a. of the Act, as amended by Section 401 of the NNPA, requires new or amended agreements for cooperation to include the terms, conditions, duration, nature and scope of the cooperation. The nature and scope of the cooperation authorized by the proposed Agreement is described in Section A below. The most pertinent terms and conditions of the cooperation authorized by the proposed Agreement are discussed in Sections B, C, D, E, and F below. The duration of the proposed Agreement is thirty (30) years from the date ofits entry into force, and the proposed Agreement shall continue in force thereafter for additional periods of five years each. Either Party may terminate the proposed Agreement at the end of the initial thirty year period or at the end of any subsequent five year period by giving six months' written notice to the other Party. A. Nature and Scope of Cooperation Article 2 of the proposed Agreement establishes the procedure by which nuclear material, moderator material and equipment transferred between the Parties will become subject, or cease to be subject, to the Agreement. Anicle 2 (1) provides that such transfers become subject to the. Agreement upon confirmation by the recipient Party to the supplier Party. Article 2, paragraphs (3) and (4) provide that such items shall remain subject to the Agreement until they have been retransferred beyond the jurisdiction of the receiving Party, or until the Panies otherwise agree - such as by determining that the nuclear material is no longer usable for any nuclear activity relevant to safeguards or has become practically irrecoverable, or that equipment is no longer usable for nuclear purposes. Article 2 (6) establishes certain ds mimmis quantities of nuclear material that may be transferred outside the proposed Agreement. Article 3 of the proposed Agreement requires that nuclear material, moderator material and equipment transferred pursuant to the proposed Agreement, as well as special nuclear material used in or produced through the use of such items, shall not be used for any nuclear explosive device, for research on or development of any nuclear explosive device or for any military purpose.

II - 2 I The proposed Agreement does not provide for the transfer of Restricted Data, sensitive nuclear technology, sensitive nuclear facilities, or major critical components of such facilities. Sensitive nuclear technology / facilities refer to plants for reprocessing, enrichment or heavy water production. B. Specific Requirements for Agreements for Cooperation Section 123 a. of the Atomic Energy Act sets forth nine specific requirements that must be met in an agreement for cooperation. These are set forth below, with a description and explanation of the provisions of the proposed Agreement that address each requirement. (1) Duration of Safeguards Subparagraph (1) of Section 123 a. of the Act requires: a guaranty by the cooperating party that safeguards as set forth in the agreement for cooperation will be maintained with respect to all nuclear materials and equipment transferred pursuant thereto, and with respect to all special nuclear material used in or produced through the use of such nuclear materials and equipment, so long as the material or equipment remains under the jurisdiction or control of the cooperating party, irrespective of the duration of other provisions in the agreement or whether the agreement is terminated or suspended for any reason. This provision is designed to require the application of safeguards to items subject to the i proposed Agreement and to provide protection against any termination of such safeguards. Article 5 of the proposed Agreement satisfies the requirements of the Act for the application of safeguards. Article 22 (3) of the proposed Agreement satisfies the requirement of the Act that the safeguards be applied in perpetuity. Anicle 5 (1) of the proposed Agreement provides that nuclear material transferred to Switzerland pursuant to the Agreement and nuclear material used in or produced through the use of any nuclear material, moderator material or equipment, so transferred, shall be subject to the safeguards agreement between Switzerland and the IAEA as required pursuant to Swiss adherence to the Non-Proliferation Treaty (NPT). Similarly, Article 5 (2) requires that items transferred to the United States shall be subject to the U.S.-IAEA safeguards agreement. Article 5 (3) of the proposed Agreement provides further assurance of the continued applicability of safeguards by requiring that in the event that either of these IAEA safeguards agreements are not being applied, the Partic; shall enter into arrangements with the IAEA for the application of safeguards which provide (i) for effectiveness equivalent to that provided by the safeguards agreement not being applied and (ii) for coverage required by Articles 5 (1) or 5 (2),

11 - 3 e as the case may be. If either Party considers the IAEA unable to apply such safeguards, safeguards shall be applied under U.S.-Swiss bilateral arrangements. As required by the Act, the safeguards rights contained in the proposed Agreement continue in effect even if the Agreement is terminated or suspended for any reason and irrespective of the duration of the other provisions of the Agreement. Article 22 (3) provides: Notwithstanding the termination or suspension of this Agreement, the rights and obligations pursuant to Articles 3,4,5,7,12,13,14, paragraphs 2 to 4 of Article 16, and the provisions of the Agreed Minute relevant to implementation of Article 7 shall continue in effect. I 1 (2) Full-Scope Safeguards Subparagraph (2) of Section 123 a. of the Act requires: in the case of non-nuclear-weapon states, a requirement, as a condition of continued United States nuclear supply under the agreement for cooperation, that IAEA safeguards be maintained with respect to all nuclear materials in all peaceful nuclear activities within the territory of such state, under its jurisdiction, or carried out under its control anywhere. Article 5 (1) satisfies this requirement by providing that safeguards required under the proposed Agreement for Switzerland are those applied pursuant to the NPT safeguards agreement between Switzerland and the IAEA. The NPT requires IAEA safeguards on all source and special fissionable material in all peaceful nuclear activities in a non-nuclear weapon state (i.e. full-scope safeguards). Thus the NPT safeguards agreement between Switzerland and the IAEA satisfies the requirement of the Act that full-scope IAEA safeguards be maintained. i (3) No Military or Exolosive Use Subparagraph (3) of Section 123 a. of the Act requires: ...a guaranty by the cooperating party that no nuclear materials and equipment or sensitive nuclear technology to be transferred pursuant to such agreement, and no special nuclear material produced through the use of any nuclear materials and equipment or sensitive nuclear technology transferred pursuant to such agreement, will be used for any nuclear explosive device, or for research on or development of any nuclear explosive device, or for any other military purpose.

II - 4 l Article 3 of the proposed Agreement satisfies this requirement by requiring that: No nuclear material, moderator material and equipment transferred pursuant to this Agreement and no nuclear material used in or produced through the use of any such nuclear material, moderator material or equipment shall be used for any nuclear explosive device, t' r research on o any nuclear explosive device or development of any nuclear explosive device, or for any military purpose. Article 22 (3) provides that the peaceful use requirement of Article 3 continues in effect even in the event of termination or suspension of the Agreement. Further, as the transfer of l sensitive nuclear technology is not provided for by the proposed Agreement, there is no provision relating to the use of sensitive nuclear technology for peaceful purposes only. (4) Richt of Return Subparagraph (4) of Section 123 a. of'the Act requires: ...a stipulation that the United States shall have the right to require the return of any nuclear materials and equipment transferred pursuant thereto and any special nuclear material produced through the use thereofif the cooperating party detonates a nuclear explosive device or terminates or abrogates an agreement providing for IAEA safeguards. Paragraphs (2) and (3) of Article 16 of the proposed Agreement meet this requirement by providing:

2. If either Party at any time following entry into force of thb Agreement terminates or abrogates a safeguards agreement with the Agency and the safeguards agreement so terminated or abrogated has nct been replaced by an equivalent safeguards agreement when appropdate and relevant, the other Party shall have the right to require the retum in whole or in part of nuclear material, moderator material or equipm.it transferred pursuant to this Agreement and special fissionable material produced through the use of such items.

3. If Switzerland at any time following entry into force of this Agreement detonates a nuclear explosive device, the United States shall have the same rights as specified in paragraph 2. If the United States of America at any time following entry into force of this Agreement detonates a nuclear explosive device with special fissionable material transferred pursuant to this Agreement, Switzerland shall have the same rights as specified in

l II - 5 l . paragraph 2. As this proposed Agreement is reciprocal, these paragraphs also provide Switzerland with a right of return if the United States engages in certain actions. l As is the case with other agreements for cooperation that contain the right of retum as required by the Act, Article 16 (4) provides that should the right of return be exercised by a Party, the other Party shall be compensated promptly for the fair market value of the itene retumed and for the costs incuned as a consequence of such removal. -(5) Retransfer l L Subparagraph (5) of Section 123 a. of the Act requires: a guaranty by the cooperating party that any material or any Restricted Data transferred pursuant to the agreement for cooperation and...any l production or utilization facility transferred pursuant to the agreement for l cooperation or any special nuclear material produced through the use of any_ such facility or through the use of any material transferred pursuant to l the agreement, will not be transferred to unauthorized persons or beyond l the jurisdiction or control of the cooperating party without the consent of - the United States. Retransfers to third countries may be accomplished in accordance with the provisions of Article 7 of the Agreement and of the Agreed Minute, including paragraphs (B) and (C). ' These provisions satisfy the requirements of sections 123 a. and 109 of the Act as discussed below. Article 7 states: No nuclear material, moderator material or equipment transferred pursuant to this Agreement and no special fissionable material produced through the use of any l nuclear material, moderator material or equipment so transferred shall be retransferred, unless the Parties agree, beyond the tenitorialjurisdiction of the Party. Nuclear material and moderator material may be retransferred only if the Parties agree. This satisfies the requirement of the Act that matenal transferred pursuant to the Agreement not be retransferred without U.S. consent. i l Article 7 provides that equipment transferred pursuant to the Agreement can be l retransferred only if the Parties agree. The definition of" equipment" in Article 1 (c) includes any 1 l

s II - 6 reactor (i.e., a production or utilization facility) that can be supplied under the Agreement, and includes any other item if designated jointly by the appropriate authorities of the Parties A production facility that is not a reactor would have to be designated as equipment before it could be supplied under the Agreement. Therefore, this provision satisfies the requirement of the Act that any production or utilization facility transferred pursuant to the Agreement not be retransferred without U.S. consent. Similarly, even though the proposed Agreement uses the term " equipment" rather than " production or utilization facility", taking into account the definitions of the terms used, these provisions of Article 7 satisfy the requirement of the Act that any special nuclear material produced by a production or utilization facility transferred pursuant to the proposed Agreement, or through use of material transferred pursuant to the proposed Agreement, not be retransferred without U.S. consent. Article 7 does not refer to the retransfer of Restricted Data because, as noted above, the Agreement does not allow the transfer of Restricted Data to the Community. The exercise of this particular U.S. control with respect to special fissionable material produced through the use of nuclear material and/or non-nuclear material transferred pursuant to the Agreement, when such nuclear material and/or non-nuclear material is used in equipment not so transferred, is limited by the rule of proportionality set out in Article 2 (2). Article 2 (2) provides that under this rule the requirements pertaining to retransfer shall be applied to that proportion of special fissionable material produced that represents the ratio of transferred nuclear material and/or non-nuclear material used in the production of the special fissionable material to the total amount of nuclear material and/or non-nuclear material so used. This rule of proportionality, in effect, serves to define the term " produced through the use of" -- a term that is not defined in the Act or the NNPA -- in a reasor.aMe way that corresponds to accepted practice of nuclear facility operators. This ro!c of proportionality has been embodied in all U.S. agreements for cooperation concluded since enactment of the NNPA. As noted above, Article 7 contains the U.S. approval for the atransfer of nuclear material and equipment required by the Act. For all retransfers pursuant to Article 7. tne nuclear material or equipment would remain subject to a U.S. agreement for cooperation which, inter aba, means j that there could be no further retransfer without U.S. approval. Paragraphs (B) and (C) of the Agreed Minute set out the procedures that must be followed for certain retransfers that will have been approved in advance by the United States when the proposed Agreement enters into force. Article 12 of the proposed Agreement specifies that the requirements for inter alia Article 7 shall be satisfied "on a long-term predictable and reliable basis"; and that implementation of this undertaking is contained in the Agreed Minute. The issue of granting advance, long-term consent to certain fuel cycle activities under the proposed Agreement is discussed later in this section and in Part III of the NPAS.

i 3 II - 7 j-l Paragraph (B) authorizes the retransfer of source material, low enriched uranium, j moderator material and equipment from Switzerland to certain nuclear cooperating partners of the United States. These states and groups of states are listed in Annex 1 to the Agreed Minute, with the United States having the unilateral right to add or delete states from this list. Paragraph (C) authorizes the retransfer of nuclear material from Switzerland to states or groups of states for reprocessing or alteration in form or content in facilities located in such third states and listed in Annex 2. This provision is similar to that found in agreements for cooperation with Japan and Sweden; it permits Swiss utilities to transfer spent fuel to the United l -Kingdom or France for reprocessing and subsequent conversion and fabrication of the plutonium l into fuel. 'Ihe facilities listed in Annex 2 of the Agreed Minute correspond to those Euratom j ' facilities for which the United States granted long-term consent to reprocessing and alteration in t' form or content in the new U.S.- Euratom agreement for cooperation which entered into force in April 1996. The addition of facilities to Annex 2, whether such facilities were located in i Euratom or another state having an agreement for cooperation with the United States, would L require further agreement of the Parties and be subject to U.S. approval under Section 131 of the Act, which includes Congressional review. l Paragraph (D) of the Agreed Minute stipulates that the United States shall give its consent, under the appropriate agree:nent for cooperation with a. third country, to the retum to l Switzerland of any nuclear material recovered from irradiated nuclear material that may have l been transferred from Switzerland to the third country (e.g. pursuant to the procedures in l paragraph (C)). The United States is prepared to offer a long-term consent under the U.S. - Euratom agreement for cooperation for the return of plutonium to Switzerland recovered from U.S. - obligated spent fuel transferred from Switzerland to Euratom for reprocessing. In that regard, Switzerland must provide to the United States, no later than 60 days prior to each such L shipment of plutonium, a written notification advising that the measures for the intemational l transport are in accordance with intemational standards on the protection of nuclear material. Under U.S. law, approvals for retransfers may be processed in accordance with the i subsequent arrangement procedures set forth in section 131 of the Act. In addition, the law allows such approvals to be given in the agreement for cooperation itself(see discussion later in this section), and more recent U.S. agreements, including those with Euratom, Japan, Norway and Sweden have contained such approvals. The procedural requirements and substantive i findings applicable to an agreement for cooperation are more stringent than those applicable to j-subsequent arrangements and, as explained in greater detail below, this will ensure that including a long-term approval for retransfers in the Agreement vill be under conditions that will satisfy all pertinent provisions of the Act. Paragraph (G) of the Agreed Minute also provides that retransfers to third countries not l included in paragraphs (B) or (C) may be considered on a case-by-case basis. This provision l ensures that other retransfers to third countries that might not be appropriate for inclusion on any l y-m- v e-e

II - 8 of the lists would be permissible if agreed by the Parties after case-by-case consideration. The subsequent arrangement procedures of section 131 of the Act would be used to consider any such retransfer requests. The requirement that Switzerland not retransfer material or equipment to unauthorized persons is satisfied under Article 2 (1), which authorizes cooperation to take place only between the Parties and authorized persons in the respective territories of the Parties. Each Party would identify those persons in its territory authorized to engage in designated areas of nuclear cooperation under the agreement. Cooperation under the agreement may not'take place ifit involves a " person" not so authorized. The retransfer consent in Article 7 is snbject to the proportionality provision in Article 2 (2). (6) Physical Security Subparagraph (6) of Section 123 a. of the Act requires: a guaranty by the cooperating party that adequate physical security will be maintained with respect to any nuclear material transferred pursuant to such agreement and with respect to any special nuclear material used in or produced through the use of any material, production facility, or utilization facility transferred pursuant to such agreement. Article 4 of the proposed Agreement satisfies this requirement by requiring that: Each Party shall take such measures as are necessary to ensure, within its jurisdiction, adequate physical protection of nuclear material transferred pursuant to this Agreement and any nuclear material used in or produced through the use of nuclear material, moderator material or equipment transferred pursuant to this Agreement and apply criteria in accordance with levels of physical protection at least equivalent to those set out in the Recommendations. Article 1 (i) states: Recommendations means the recommendations published in document INFCIRC/225/Rev. 3 of the [Intemational Atomic Energy] Agency entitled "the Physical Protection of Nuclear Material" and subsequent revisions as agreed by the Parties. With respect to the meaning of" adequate," Section 127 (3) of the Act provides that physical security measures shall be deemed adequate if they provide a level of protection

? i l-II - 9 i l 4 { equivalent to that required by regulations promulgated by the NRC establishing levels of l physical protection. (See NNPA Section 304 (d); 10 CFR 110.43.) j Article 4 and Article 1 (i) provide that physical security measures shall be applied so as to satisfy the standards accepted by the United States and the international community as set out l in IAEA Information Circular 225, Revision 3, that concern physical protection measures for . nuclear transfers and for the application of physical protection measures at all other times in the nuclear fuel cycle. Therefore, the standards of physical security that must be met under this i-Agreement are those that are accepted and implemented world-wide as adequate. These j standards are also equivalent to those required by U.S. Nuclear Regulatory Commission (NRC) regulation. The Agreement also is clear that continued compliance with the most current l international standards shall be required under this Agreement as reference is made in Article 1 (i) to any subsequent revision ofIAEA Information Circular 225 as agreed by the Parties. So the e i latest version ofinternationally accepted standards will continue to be applied during the life of [ the Agreement. Further, Article 22 (3) provides that even if the Agreement is terminated or i suspended the obligations of Anicle 4 shall continue in effect. In light of the discussion above, the physical security provisions of this Agreement satisfy the requirements of section 123 a.(6) of the Act. (7) Reorocessine. Enrichment or Other Alteration Subparagraph (7) of Section 123 a. of the Act requires: ...a guaranty by the cooperating party that no material transferred pursuant to the agreement for cooperation and no' material used in or produced through the use of any material, production facility, or utilization facility transferred pursuant to the agreement for cooperation will be reprocessed, enriched or (in the case of plutonium, uranium 233, or uranium enriched to greater than twenty percent in the isotope 235, or other nuclear materials which have been irradiated) otherwise altered in form or content without the prior approval of the United States. The requirement for prior approval of the United States for reprocessing is met by Article 9 which states: Nuclear material transferred pursuant to this Agreement or used in produced through the use of nuclear material, moderator material or equipment so transferred shall not be reprocessed unless the Parties agree. The requirement for prior approval of the United States for enrichment is met by Article 8 which states: e

II - 10 Uranium transferred pursuant to this Agreement or used in or produced through the use of equipment so transferred shall not be enriched by a Party to twenty percent or more in the isotope U-235 unless the Parties agree. This provision provides advance U.S. consent for enrichment or uranium up to 20 percent in the isotope 235, but requires that enrichment to twenty percent or greater must be subject to mutual agreement of the Panies. Such a future agreement would be subject to the subsequent arrangement procedures of section 131 of the Act. The approval for enrichment up to twenty percent without further U.S. action is authorized in section 402 (a) of the NNPA (see below). The requirement for prior approval of the United States for alteration in form or content is met by Article 10 which states: F plutonium, uranium 233, high enriched uranium or irradiated nuclear material transfened pursuant to this Agreement or used in or produced through the use of any nuclear material, moderator material or equipment so transferred shall be altered in form or content unless the Parties agreement. For the pugose of this Agreement, alteration in form or content is defined in Article 1(a) as the conversion or fabrication of fuel containing plutonium, high enriched uranium, or uranium 233; and does not include post irradiation examination of fuel elements involving chemical separation, disassembly or reassembly of fuel elements, irradiation, reprocessing or enrichment. Consent to reprocessing and enrichment are handled separately, as noted above. And the United States has always excluded irradiation of fuel containing plutonium, U-233, or high enriched uranium as requiring a separate U.S. consent under Section 123 (7), as the consent for the use of such U.S. obligated nuclear material in a reactor is already provided for either through the approval of an export license or of a subsequent arrangement irc/olving consent over storage and use at a reactor site. The disassembly or reassembly of fuel elements and the post-irradiation examination of such fuel elements is covered under the alteration in form or content activities described in Section 123 (7). By excluding such activities from the alteration in form or content definition in this Agreement, the United States in granting advance consent for these operations. Such advance consent was also provided in the 1996 U.S.-Euratom agreement for cooperation and is a reasonable accommodation for states with good nonproliferation policies and which have advanced nuclear programs which include routine testing and evaluation ofirradiated fuel elements. Article 12 of the proposed Agreement states that the " Parties shall satisfy" the requirements of Article 8 (enrichment), Article 9 (reprocessing), and Article 10 (alteration in form or content), on a long-term predictable and reliable basis and that any such undertaking is l set fonh in the Agreed Mmute. However, the Agreed Minute does not include any such long-i term arrangements related to Articles 8,9, or 10 as Switerland's nuclear fuel cycle presently does not mvolve reprocessing or the conversion or fabrication of fuel containing plutonium, high l l l l l

q 1 i 11 - 1 1 i enriched uranium, or uranium 233. Article 12 does not prejudice the scope or terms of any long-term consent should Switzerland seek such an approval in the future. Any such request would be subject to a future decision under the procedures of Section 131 of the Act which includes a - Congressional review period. As with the long-term approval for retransfers set forth above, any such future approval would be subject to the provisions of Article 13 which accord the United States the unilateral right to suspend or terminate the consent on certain national security and/or nonproliferation grounds. The controls in Articles 8,9 and 10 are subject to the proportionality provision in Article 2 (2). (8) Storage Subparagraph (8) of Section 123 a. of the Act requires: ...a guaranty by the cooperating party that no plutonium, no uranium 233, and no uranium enriched to greater than twenty percent in the isotope 235, transferred pursuant to the agreement for cooperation, or recovered from any source or special nuclear material so transferred or from any source or special nuclear material used in any production facility or utilization facility transferred pursuant to the agreement for cooperation, will be stored in any facility that has not been approved in advance by the United States.... The requirement for prior approval by the United States over storage of plutonium, uranium-233 and high enriched uranium is met by Article 11 as follows: The following shall be stored only in a facility to which the Parties agree:

i. plutonium, uranium 233 and high enriched uranium (except as contained in irradiated fuel elements) transferred pursuant to this Agreement; ii. plutonium, uranium 233 and high enriched uranium recovered from nuclear material transferred pursuant to this Agreement; iii. plutonium, uranium 233 and high enriched uranium recovered from nuclear material used in equipment transferred pursuant to this Agreement.

The material covered by this provision of the proposed Agreement is as required by the Act. As noted earlier, " equipment" is defined in the proposed Agreement to effectively include any " production facility" or " utilization facility" subject to the Agreement. Therefore, the phrase - "used in equipment" in Article 11 iii., means essendally the same thing as "used in any 1

i II - 12 production or utilization facility" in section 123 a.(8) of the Act. Thus, Article 11 of the proposed Agreement satisfies the requirements of the Act in regard to storage. As with the consents over retransfer, reprocessing, enrichment, and alteration in form or content, Article 12 also permits the storage consent right to be satisfied on a long-term basis. Since Switzerland acquires fabricated fuel containing plutonium from foreign sources for use in Swiss reactors, the Agreed Minute sets forth procedures for implementing the storage consent right on a long-term predictable basis while meeting U.S. statutory requirements. i Such advance approval is permissible so long as the U.S. has sufficient information to make the statutoryjudgments required under sections 123 and 131 of the Act, and to ensure that the underlying basis for these judgments remains in effect while the approval continues. Moreover, as with the other activities eligible for advance, long-term consents, Article 13 ensures that the United States retains the right to suspend or terminate these activities consistent with the criteria set forth in the Act; Paragraphs (E) and (F) of the Agreed Minute implement the advance consent for storage. Paragraph (E) indicates that plutonium, uranium 233 and high enriched uranium may be stored in Switzerland in facilities listed in Annexes 3 and 4. Annex 3 lists two power reactors which use MOX fuel (MOX is mixed plutonium-LEU oxide); Annex 4 lists two research reactors where U.S.-origin HEU is stored. The U.S. has sufficient information about these facilities to ensure that these activities meet applicable statutory criteria, both for new agreements for cooperation and the subsequent arrangement procedure. In particular, the U.S. has extensive knowledge in regard to the safeguards procedures applicable at these facilities. Paragraph (F) ensures that the same degree of assurance is also provided for any addition of facilities to either Annex 3 or 4. The notification required for adding a facility shall contain, inter alia, a confirmation that relevant safeguards arrangements that will permit the IAEA to exercise fully its rights and rneet its objectives and inspection goal have been agreed upon with the IAEA; and that physical protection measures as required by Article 4 of the Agreement'will be applied. The confirmations required by the Agreed Minute, together with the safeguards requirements of Article 5 of the proposed Agreement, ensure that only those storage locations for which the U.S. is presently in a position to make the necessary judgments under the Act are approved under the proposed Agreement. In sum, the advance U.S. approval for storage of plutonium, uranium 233 and high enriched uranium has been carefully drawn to include only a known Switzerland program and future additional facilities that conform to the requirements of the proposed Agreement. The conditions of the proposed Agreement ensure that the United States will be at all times assured of the application of appropriate and effective safeguards and physical security measures. - The controls in Article 8 are subject to the proportionality provision in Article 2 (2).

II - 13 Advance Consent - General Discussion Prior to completing a review of the requirements of Section 123 of the Act, it would be useful to examine the legal basis for offering advance approvals in agreements for cooperation. Article 12 of the proposed Agreement permits such advance approvals for the consents over retransfer, enrichment, reprocessing, alteration in form or content, and storage. The Agreed Minute sets forth such advance consent procedures for retransfer and storage. The establishment 4 of other procedures in the future as authorized in Article 12 would require a separate approval under Section 131 of the Act including Congressional review. Advance approvals as at.Lorized in Article 12 are pennissible under the Act. Sections 123 and 127 of the Act require that the United States have certain approval rights, including reprocessing and retransfer approval rights. However, no provision of the Act or the NNPA ' precludes the United States from giving such approvals in advance when all the requirements of the Act can be properly met. In fact the Act clearly indicates that U.S. consent rights can be granted in advance. In that regard, section 131a (3) of the Act provides: The United States will give timely consideration to all requests for prior approval, when required by this Act, for the reprocessing of material proposed to be exported, previously exported and subject to the applicable agreement for cooperation, or special nuclear material produced through the use of such material ~or a production or utilization facility transferred pursuant to such agreement for cooperation, or to the altering ofirradiated fuel elements containing such material, and additionally, to the maximum extent feasible, will attempt to expedite such consideration when the terms and conditions for such actions are set forth in such agreement for cooperation.... The reference to " material proposed to be exported" makes clear that the consent for reprocessing or alteration ofirradiated fuel may be granted prior to the export of any nuclear material. In the course of normal reactor operations, the fuel to be exported and then used in a reactor would not be reprocessed for five or more years. Therefore the " prior approval" that this section of the Act would allow the U.S. to give, would be far in advance of the actual time that the material in question would be reprocessed or altered in form or content. Section 131a (3) of the Act provides that expedited consideration will be given to requests for consent for reprocessing "...when the terms and conditions for such actions are set forth in such agreement for cooperation...." This provision authorizes the U.S. to specify in the proposed Agreement the conditions that would have to be met for a subsequent approval of a request for reprocessing, alteration in form or content, storage or other fuel cycle activities. There is no substantive difference between that and the proposed Agreement which makes the i approvals granted by the proposed Agreement and Agreed Minute contingent on continued ~

II - 14 compliance with the provisions of the proposed Agreement. Article 13 of the proposed Agreement provides that either Party may suspend or terminate an advance, long term consent authorized by Article 12 "...on the basis of objective evidence that its continuation would entail a serious threat to the security of either Party.. or a significant increase in the risk of nuclear proliferation...." The " objective evidence" referred to is not further described, and there is na requirement that there be agreement that objective evidence either exists or is in fact persuasive. Therefore the United States has extremely wide discretion in deciding what evidence to consider and what weight to give to such evidence. Article 13 does require that the matter causing the consideration of suspension be of the same or greater degree of seriousness as a list of possibilities set out in subparagraphs (a) through (f). The items listed include: Switzerland detonating a nuclear explosive device; either Party violating the NPT, a relevant safeguards agreement, or the Nuclear Suppliers Guidelines; and, acts of war, serious intemal disturbances, or intemational threats of war which threaten safeguards or physical protection for the activities to be suspended. Additionally, consultations at the Cabinet level for the United States are required before a U.S. decision to suspend, and the decision must be taken by the President. However, there is no requirement that the consultations result in agreement or take any set amount of time. In the end, the United States, on the basis of evidence that the U.S. considers persuasive, and on a matter that the U.S. considers to be of sufficient seriousness, can suspend the any or all of the advance, l long-term consents which may be granted in the proposed Agreement. Thus the United States will be in a position to ensure that the substantive requirements in sections 123 and 131 of the Act are met, and continue to be met throughout the life of the proposed Agreement. l Also, under the approval provisions of section 123 b. of the Act the President approves and authorizes the proposed Agreement (including the advance consent arrangement) and makes a determination in writing that the performance of the proposed Agreement will promote, and will not constitute an unreasonable risk to, the common defense and security. In contrast, the subsequent arrangement procedures in section 131 of the Act only require the determination of the Secretary of Energy that the arrangement will not be inimical to the common defense and security. Obviously, a Presidential determination that an agreement will actually promote the common defense and security is far more comprehensive and substantive than a Secretarial determination that an arrangement will not be inimical. The final point in regard to advance consent concems Congressional review. l Congressional review is enhanced by providing advance consent for reprocessing, alteration, and i other activities in the proposed Agreement. This is because section 123 of the Act permits Congress to review a new agreement for cooperation for up to ninety days of continuous session, while section 131 provides that only subsequent arrangements involving reprocessing or the retransfer of plutonium in quantities greater than 500 grams must lie before Congress, and then only for fifteen days. q

J 11 - 1 5 I In conclusion, the advance consent granted by the United States in the proposed . Agreement has been analyzed in regard to all the criteria of section 123 and section 131 of the 'i Act, with foremost consideration given to timely warning (see the Department of Energy Analysis of Consents and Approvals), and it has been judged that such advance consents will not - be inimical to the common defense and security; will not significantly increase the risk of j proliferation; and will promote and will not constitute an unreasonable risk to the common i defense and security. i '(9) Sensitive Nuclear Technology Subparagraph (9) of Section 123 a. of the Act j regtures: ) a guaranty by the cooperating puty that any special nuclear material, l production facility, or utilization facility produced or constructed under the jurisdiction of the cooperating party by or through the use of any j l sensitive nuclear technology transferred pursuant to such agreement for ] l cooperation will be subject to all the requirements specified in this l subsection. i Inasmuch as transfers of sensitive nuclear technology are not provided for in the proposed } - Agreement this requirement of the Act does not pertain in this case. I C. h~NPA Section 402 -- Additional Reauirements i Section 402(a) of the NNPA requires that: Except as specitically provided in any agreement for cooperation, no 4-source or special nuclear material hereinafter exported from the United i; States may be erziched after export without the prior approval of the United States for such enrichment.... i j As discussed earlier in regard to section 123 a.(7) of the Act, Article 8 of the proposed { Agreement provides that enrichment of udam to twnty peccent or more in the isotope 235 j roay occur only if the Parties agree. Therefore, Switzeriand must get a specific U.S. approval for any such high enrichment, which would require compliance with the subsequent arrangement procedures of section 131 of the Act. Concurrently, the proposed Agreement provides U.S. advance approval for the enrichment of uranium subject to the Agreement up to twenty percent. l This advance approval for low enrichment is fully consistent with the authority contained in i { section 402 (a) that permits enrichment "as specifically provided" in the proposed Agreement. Section 402 (a) of the NNPA further requires that: 4 i i

II - 16 ... no ' source or special' nuclear material shall be exported for the purpose of enrichment or reactor fueling to any nation or group of nations which has, after the date of enactment of this Act, entered into a new or amended agreement for cooperation with the United States, except pursuant to such agreement. This requirement is met by Article 6 (2) which specifies that " nuclear material... may be transferred for applications consistent with this Agreement" and Article 6 (1) which states that cooperation pursuant to the proposed Agreement "... shall be in accordance with the provisions of this Agreement." No supply of nuclear material to the Community for enrichment or reactor fueling is permissible unless under the authority of the proposed Agreement. Section 402 (b) of the NNPA requires that: .t In addition to other requirements oflaw, no major critical component of any uranium enrichment, nuclear fuel reprocessing, or heavy water production facility shall be exported under any agreement for cooperationc..unless such agreement for cooperation specifically l designates such components as items to be exported pursuant to the agreement for cooperation. As with sensitive nuclear technology, the transfer of major critical components is not provided for in the proposed Agreement; therefore this requirement of the NNPA does not pertain in this case.- t D. NNPA Section 404 -- Relationship to Existing Agreement The proposed Agreement is the result of a negotiation to replace an agreement with Switzerland which expired in August of 1996. Negotiations for the purpose of replacing the previous agreement with a new agreement which would, inter alia, satisfy the requirements of the NNPA, were conducted frequently since 1978. However, Swiss officials did not have the authorny to negotiate a new agreement until 1993. Section 404(a) of the NNPA contains two provisions applicable to the relationship between a renef;otiated agreement and the earlier nyeamcat and any transactions carried out thereunder, as Collows: 1 To the extent that an agreement for cooperation in effect on the date of 3 enactment of (the NNPA] with a cooperating party contains provisions equivalent to any or all of the criteria set forth in section 127 of[the Act] with respect to materials and equipment transferred pursuant thereto or 6 2

. ~. - - - -. -. - - 4 II - 17 with respect to any special nuclear material used in or produced through

the use of any such material or equipmem, any renegotiated agre-ment with that cooperating party shall continue to contain an' equivalent

- provision with respect to such transferred materials and equipment and such special nuclear material. To the extent that an agreement for cooperation in effect on the date of enactment of [the NNPA) with a cooperating party does not contain provisions with respect to any nuclear materials and equipment which have previously been transferred under an agreement for cooperation with the United States and which are under the jurisdiction or control of the cooperating party and with respect to any special nuclear material which is us'ed in or produced through the use thereof and which is under the jurisdiction or control of the cooperating party, which are equivalent to j any or all of those required for new and amended agreements for cooperation under section 123 a. of [the Act], the President shall vigorously seek to obtain the application of such provisions with respect to such nuclear materials and equipment and such special nuclear material. With regard to the first paragraph, Article 20 (1) ensures that the controls to be applied under the proposed Agreement to nuclear material, equipment and moderator material subject to the previous Agreement will be at least as strict anhose contained in the previous Agreement. Thus, any provisions in the previous Agreement that are equivalent to section 127 of the Act will continue to apply to such items in the new agreement. With regard to the second paragraph, Article 20 (1) provides that the provisions of the proposed Agreement do not apply to moderator material and equipment covered under the previous Agreement. Therefore,in this respect, the proposed Agreement is not completely i retroactive. The chief effect of this difference is to maintain the status quo on non-U.S. nuclear material used in a reactor transferred under the previous Agreement, i.e. consent rights do not apply to the produced nuclear material. The controls common to the old and new Agreements .(e.g. safeguards, peaceful uses, retransfer consent) would apply to such moderator material and equipment, and any transfer of these items under the new Agreement would have all new - controls attached. l Because section 404 (a) of the NNI.i requires the President to " vigorously seek" the application of new contro!s 'o items subject to the renegotiated agreements, but does not require 4 it so long as existing section 127 controls are not relinquished, this compromise formulation, which does not relinquish existing controls and sctisfies the NNPA requirement, was accepted. i E. Section 129 of the Atomic Energy Act -- Conduct Resulting in Termination of Nuclear Exports

11 - 1 8 a Section 129 of the Act prohibits, in the absence of certain Presidential determinations, expons of nuclear materials and equipment or sensitive nuclear technology to countries which engage in proscribed activities subsequent to the enactment of the NNPA (March 10,1978). The activities in Section 129 include weapons-development activities in non-nuclear-weapons states, violation or termination of safeguards or an agreement for cooperation with the United States, or assistance to a non-nuclear weapon state relevant to acquisition of nuclear weapons. Based on all information available to ACDA, there is no basis for a finding that would require the imposition of sanctions on Switzerland set forth in Section 129. In arriving at that judgement, we have taken into account the history of Swiss efforts to keep open the option of acquiring nuclear weapons that was described in Part I of this NPAS. As noted in Part I, the Working Committee for Nuclear Matters established by the Swiss Government to examine nuclear weapons issues was not disbanded until 1988. However, the Committee does not appear to have engaged in any activities that constitute a violation of Switzerland's NPT obligations following its adherence to that Treaty in 1977. F. NNPA Section 309 -- Components, Items, and Substances Section 309 of the NNPA amended Section 109 of the Act to empower the Nuclear Regulatory Commission (NRC) to designate certain component parts, items and substances which, because of their significance for nuclear explosive purposes, should be subject to its licensing authority. Such licenses would be granted only upon a finding that (a) IAEA safeguards will be applied to such component, substance or item, (b) the component, substance or item will not be used for any nuclear explosive device or for research on or development of any nuclear explosive device, and (c) that no such component, substances or item will be retransferred without U.S. consent. The NRC in its regulations (10 CFR Pan 110) has identified certain reactor components and two substances -- heavy water and nuclear grade graphite -- as subject to these criteria. The Act does not require that components be exported under an agreement for cooperation. In the case of this proposed Agreement, the transfer of components is not covered, and therefore any such transfers would have to be undertaken by means of arrangements outside of the proposed Agreement. The Act also does not require that the " items and substances" subject to NRC licensing be exported under an agreement for cooperation. However," items and substances" as defined by the NRC include moderator material, which pursuant to Anicle 6 (2) of the proposed Agreement may be transferred subject to the Agreement. Any transfer of moderator material under the Agreement would be required to meet the terms of the Agreement, which are far more extensive than those of section 309 of the NNPA. The proposed Agreement does not provide for the

transfer of any other such " items", so to the extent the term " items" refers to other things, they would have to be transferred by means of arrangements outside of the proposed Agreement. Transfer of other " substances" covered under section 309 of the NNPA would also have to be outside of the proposed Agreement. O I

III - 1 III. OTHER NONPROLIFERATION POLICY ISSUES In addition to ensuring that required legal rights, guarantees, and safeguards are incorporated in the applicable agreement for cooperation, a decision by the United States to engage in nuclear cooperation with a given nation entails nonproliferation policy considerations. These considerations include the scope and terms of the cooperation envisaged under the agreement; the implications for other agreements (present and future); the degree to which nuclear cooperation supports U.S. nonproliferation objectives; and the overall role of the state or states concemed in maintaining sound international nonproliferation standards of conduct. These issues will vary from case to case; this section addresses them as they relate to the proposed Agreement witn Switzerland. The propu,ed Agreement expands U.S. consent rights over fuel cycle activities in Switzerland as they apply to nuclear material subject to the new agreement and to any equipment transferred following entry-into-force of the new agreement. This issue will be examined below along with the nature of the advance consent arrangements contained in the proposed Agreement. Safeguards considerations are also discussed, including the provisions for ensuring that effective IAEA safeguards will be applied to future facilities for storage of weapons-usable nuclea-material. NPT and nuclear export control issues are addressed, as are some features of the proposed Agreement that are unique to this agreement and to the 1996 U.S.-Euratom agreement. A. Expanded Consent Rights and Guarantees in the Agreement Section 404 of the Nuclear Non-Proliferation Act of 1978 (NNPA) calls on the President to seek to renegotiate pre-NNPA agreements for cooperation to obtain the added requirements for cooperation mandated for new agreements by the NNPA. The proposed Agreement meets that objective and contains all the requirements for agreements for cooperation mandated by the Atomic Energy Act of 1954, as amended by the NNPA. Taese provisions are especially important because they expand consent rights and guarantees beyond those in the existing U.S.-Switzerland agreement, particularly on weapons-usable material subject to the agreement. The Administration has stated that it is important to ensure that highly enriched uranium and plutonium are subject to the highest standards of safety, security, and international accountability. The entry-into-force of this agreement would promote such standards. Moreover, the new agreement will ensure a continuation of the long-standing U.S.- Swiss civil nuclear relationship, which has been temporarily suspended following expiration of the previous agreement in August of 1996. The specific provisions of the proposed Agreement which create expanded consent rights or guarantees are. I j

III - 2 (1) Storage of Soecial Nuclear Material Article 11 requires that plutonium, uranium-233, and highly enriched uranium subject to the proposed Agreement shall be stored only in mutually-agreed facilities. The expired agreement contains no such consent right. ^ (2) Reprocessing Article 9 expands the reprocessing consent right in the old agreement to include non-U.S.-origin nuclear material used in or produced through the use of any moderator material or equipment which may be transferred under the new agreement. The reprocessing consent right in the expired agreement applies-only to U.S.-supplied nuclear material. (3) Alteration in Form or Content Article 10 expands the alteration in form or content consent right in the old agreement to include (a) U.S.-origin plutonium, uranium 233, and high enriched uranium and (b) such non-U.S.-origin nuclear material used in or produced through the use of any moderator or equipment which may be transferred under the new agreement. The alteration in form or content consent right in the expired agreement applies only to U.S.-supplied nuclear material that has been irradiated. s

III - 3 (4) Enrichment - Article 8 specifies that uranium subject to the proposed Agreement may not be enriched to 20% or more in the isotope 235 unless the parties agree. The expired agreement contains no such consent right. (5) Retransfer Article 7 expands the retransfer consent right on produced special fissionable material in the old agreement to include special fissionable material produced through the use of moderator material and equipment which may be transferred under the new agreement. The retransfer consent right in the expired agreement on produced special fissionable material applies only to such material that is produced in transferred nuclear material. (6) Susoension of Cocoeration/Right of Return Article 16 specifies conditions under which either party may exercise its right to terminae or suspend cooperation under the proposed Agreement and/or to require the return ofitems subject to the agreement. The expired agreement contains no such rights. (7) Clarification of Existing Terms of Cooperation Finally, as required by Section 123, there are additional terms of cooperation specified in the agreement which represent an updating and clarification of standards which already apply to U.S.- Swiss nuclear cooperation. Among these provisions are full-scope IAEA safeguards as a condition of nuclear supply to Switzerland, a peaceful use assurance, and a requirement for adequate measures of physical protection for items subject to the agreement. In addition, Article 22.3 specifies that certain consent rights and guarantees continue in effect regardless of a termination or suspension of the agreement for any reason. B. Advance Long-Term Consent to Plutonium Use and Reprocessing In 1993, the United States announced that it would not encourage reprocessing l and the civil use of plutonium. However, it was faced with the fact that many ofits allies and friends (i.e. in Westem Europe and Japan) are of the view that reprocessing is needed to dispose effectively of spent fuel and/or to acquire plutonium for future use as reactor fuel. Moreover, to support such fuel cycle planning, private and governmental organizations in these countries had made substantial investments in facilities for reprocessing and for conversion, fabrication and use of plutonium in reactors. The Administration was also faced with the need to renegotiate agreements for cooperation with two of these partners -- the European Atomic Energy Community (Euratom) and Switzerland. 1 1 J

__m _. _ _ __ _ _ _ _._ _ _ _ _ _ - u ~ i III-4 Rather than engage in direct confrontation with these countries (none of whom posed any nuclear nonproliferation risk), the United States decided that it would maintain existing bilateral commitments to the use of plutonium in Western Europe and Japan, while nevertheless expressing doubt about the economics and proliferation risks of reprocessing. This decision resulted in no change in implementation of the 1988 agreement for cooperation with Japan, and a in reaffirmation of offers already on the table to provide Euratom and Switzerland with advance, long-term consent for certain fuel cycle activities in exchange for their acceptance in a new agreement for cooperation of all the strengthened controls required by the Atomic Energy Act. This approach helped to overcome opposition in these countries to accepting strengthened U.S. controls and created part of the incentive to undertake and conclude negotiations on a new agreement. At the same time, U.S. readiness to provide advance consent to reprocessing and other fuel cycle activities in this situation rested on an assessment that such an approach would best serve our nonproliferation interests. Over the next 10-20 years, more than 500 tons of plutonium are planned to be separated from spent power reactor fuel in Europe and Japan for use in civil nuclear energy programs. Of this amount, approximately half will be subject to U.S. controls. If the United States is to confront and minimize the potential risks of widespread plutonium use, we need to work cooperatively with these countries. In that way, we can seek to ensure that the strongest possible safeguards and physical protection measures would apply to reprocessing and subsequent plutonium use. The alternative of abandoning the advance consent approach and of using case-by-case consent right approvals as a means to discourage reprocessing and plutonium use would only lead to confrontation and to serious bilateral tensions and disputes, which would jeopardize cooperation not only in nonproliferation matters, but also in other areas of U.S. relations with these countries. Such an approach would have little effect on the domestic energy plans of European countries. The two previous Administrations had taken a similar approach and had concluded new U.S. agreements for cooperation with Finland. Norway, and Sweden which include long-term consent for the transfer of spent fuel to the U: ced Kingdom and France for reprocessing. In 1988, a new agreement with Japan entered into force which provided long-term consent to reprocessing and plutonium use in Japan of nuclear material subject to the agreement. All of these agreements were submitted to Congress for review and are in force. Implementation has proceeded smoothly, and there has been a strengthening of safeguards and physical protection measures on plutonium due in part to the operation of these agreements, particularly with Japan. A new agreement with Euratom containing long-term consents for certain fuel cycle activities was signed in November 1995 and entered-into force in April 1996, following the mandatory 90 day Congressional review period. J

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III - 5 While Article 12 of the proposed Agreement permits several consent rights to be exercised on a long-term, predictable basis, the Agreed Minute establishes procedures only for Article 7 (retransfers) and Article 11 (storage). It was unnecessary to address the other consent rights because Switzerland's indigenous nuclear fuel cycle program at present does not include reprocessing, conversion, or fabrication of plutonium fuel. Switzerland transfers its spent fuel to Euratom for reprocessing and for subsequent conversion and fabrication of plutonium fuel -- an action that triggers the consent right in Article '7. (Once the Swiss spent fuel is received in Euratom, the reprocessing, conversion, and fabrication of plutonium fuel are subject to U.S. consent rights in the U.S.-Euratom agreement for cooperation.) The fabricated fuel containing plutonium is then returned to Switzerland for use in Swiss power reactors -- an action that triggers Article 11. (The United States has made clear to Euratom and Switzerland that it is prepared to consent to the return of this plutonium to Switzerland on an advance, long-tenn bas'is pursuant to the U.S.-Euratom agreement for cooperation; this approval will be processed under section 131 of the Atomic Energy Act.) Should Switzerland decide in the future to engage in indigenous reprocessing activities or in the conversion or fabrication of plutonium that involves U.S.-obligated nuclear material, the United States would be required to consider satisfying such requirements on a long-term predictable basis. However, the United States would not be obligated to agree to such arrangements on a long-term basis. Paragraph (G) of the Agreed Minute makes clear that any long-term consents not granted in the Agreed Minute "may be granted by agreement of the Parties." And any such request from Switzerland would be subject to a new approval under Section 131 of the Atomic Encrgy Act, which includes a Congressional review period. Current U.S. policy does not encourage reprocessing and the civil use of plutonium. Under such circumstances, it would be very difficult for the United States through the exercise of consent rights to facilitate the establishment of reprocessing or other civil plutonium facilities in Switzerland or any other nuclear trading partner where such facilities do not currently exist. The advance consent arrangements set forth in the Agreed Minute are consistent with U.S. policy and statutory requirements including maintenance of effective ofIAEA safeguards and of adequate levels of physical protection. Section II of the NPAS outlined the legal basis for the exercise of consent rights on a advance, long-term basis. The advance consent may be suspended in whole or in part in the event of a serious threat to U.S. security including a significant increase in the risk of nuclear proliferation. Article 13 lists actions that could trigger such a suspension. However, the list is illustrative only; and ACDA believes the suspension right is clear and unequivocal with regard to any advance, long-term consents that may be granted under the proposed Agreement. If the long-term consent is suspended, the Party against whom the suspension is invoked has two altematives uni.ar Article 20 (2) with regard to "old" nuclear material (i.e., the nuclear material subject to the previous agreement, all of which will be folded into the new agreement when it enters into force). That party may decide to continue to apply all the provisions of the

4 III - 6 new agreement to this old material, or it may apply only those provisions of the new agreement that are comparable to the assurances that applied to this old nuclear material when it was subject to the existing agreement. (The U.S. agreements with Japan and Euratom have similar provisions.) However, this so-called " reversion" principle would little practical affect even in the case of a suspension of the advance consent arrangement where Switzerland opted for the second alternative. The previous agreement with Switzerland contains many of the same assurances found in the new agreement including peaceful use guarantees, safeguards, and a retransfer consent right. Moreover, any new transfers of plutonium separated from "old" material into Switzerland could be controlled through exercise of the retransfer consent right in the U.S.-Euratom agreement. The proposed Agreement should serve to further strengthen cooperation with Switzerland on ensuring maximum transparency and security of civil plutonium stockpiles. However, we must continue to pursue vigorously other U.S. initiatives such as the ongoing multilateral consultations aimed at establishing voluntary guidelines to intu alla limit and ultimately reduce these stockpiles. C. Safeguards Considerations All nuclear activities in Switzerland are safeguarded pursuant to the Swiss IAEA NPT safeguards agreement which entered into force in 1978. Switzerland has worked closely with the IAEA over the years toward ensuring the effective application of safeguards, and has supported recent IAEA initiatives to strengthen safeguards in NPT non-nuclear-weapon states as described in Part I. Article 12 and the Agreed Minute provide advance consent to the storage of weapons-usable material at facilities listed in Annexes 3 and 4 of the Agreed Minute. The facilities listed in these annexes are locations in Switzerland where U.S.-obligated plutonium and high enriched uranium are stored. The United States is able to make an informed judgment that the safeguards on these facilities are adequate. This judgment is based on technical information acquired through a general knowledge ofIAEA safeguards practices, procedures, and criteria at research and power reactors utilizing such nuclear material. ) For future reactors or other locations that may become subject to the advance long-term storage consent, the United States is able to make now a reasonable judgment that the safeguards to be applied at such facilities will be adequate. This judgment is based on the notification that Switzerland will provide to the United States at the time the facility is to be added to either of the annexes. The notification will state that safeguards arrangements agreed between IAEA and Switzerland will permit the IAEA to exercise fully its rights so as to enable the IAEA to meet its objectives and inspection goal for that facility. This notification will be supplemented with non-confidential information on the safeguards approach relevant to the facility in question. We

III - 7 would not expect any future storage sites added to annexes 3 or 4 to require any significant departure in safeguards approaches. This approach for adding facilities in Switzerland to the long-term consent arrangement is similar to that contained in the 1996 U.S.-Euratom agreement. The advance consent arrangements for fuel cycle activities in Switzerland in the proposed Agreement are limited to approval for the storage of weapons-usable material as required under Article 11. Should Switzerland request pursuant to Article 12 that the consent over other fuel cycle activities in Switzerland (e.g. reprocessing) be satisfied on a long-term basis, such a request would have to be considered pursuant to Section 131 of the Atomic Energy Act. Ajudgement with regard to the effectiveness of safeguards relevant to such arrangements would be made upon such a request. In addition to our information about safeguards on weapons usable nuclear material, we have considerable familiarity with the type ofIAEA safeguards applied to natural and low enriched uranium. That knowledge combined with the strong commitment of Switzerland to nonproliferation lead to a very high degree of confidence about the adequacy ofIAEA safeguards under the proposed Agreement to ensure that any assistance provided thereunder is not used for military or nuclear explosive purposes. D. Nuclear Nonproliferation Considerations When assessing nonproliferation factors in connection with a civil nuclear cooperation agreement, it is appropriate to consider the overall nuclear nonproliferation policies of the U.S. cooperating partner. These were reviewed in Pan I of this NPAS. Switzerland is a party to the NPT, to the Physical Protection Convention, and is a member of the IAEA, the Nuclear Suppliers Group and the Zangger (NPT Exporters) Committee. Switzerland is a strong supporter of the international nuclear nonproliferation regime. Moreover, while the United States and Switzerland occasionally differ on individual policies related to implementatior of the regime, there is no difference in our fundamental goals and we carry on a very constructive dialogue with Switzerland on nuclear nonproliferation issues. The historical context of Switzerland's security concerns and interest in acquiring nuclear weapons were described in Part I, and the Swiss Govemment is to be commended for commissioning the history that was published in 1996. While serious consideration was given to the acquisition of nuclear weapons, the majority sentiment within Switzerland was solidly behind the NPT by the time Switzerland signed the Treaty in 1969. However, the statement issued upon NPT signature made clear that Swiss ratification was not a foregone conclusion; and thus it is not surprising that secret planning continued within Switzerland (the Working Committee for Nuclear Matters) to ensure maintenance of the necessary knowhow should the unexpected occur (e.g. a breakdown of the NPT). The Working Committee continued to meet even after Swiss NPT adherence in 1977, but apparently very infrequently and only for the purpose of considering

III - 8 preparatory measures in the event that a changed international situation forced Switzerland to reconsider its adherence to the NPT. i Under current circumstances, there is no reason to question the commitment of Switzerland to its obligation under the NPT not to manufacture or acquire nuclear explosives. 4 Moreover, with the demise of the Soviet Union and continued strong role of NATO and of the ONCE in promoting European security, it is difficult to foresee circumstances that would result in Switzerland reconsidering its commitment to the NPT. Switzerland will continue to be a prime target for nuclear proliferators because ofits extensive nuclear related industry and reputation for export promotion. Moreover, it is likely that the Swiss Government will continue to be the recipient of U.S. demarches urging action on individual cases. However, Switzerland has demonstrated its support for nuclear export controls through constructive participation in multilateral regimes, and through regular consultations with the United States on cases of concern. The success ofinterdiction efforts by suppliers depends on the sharing ofinformation and multilateral cooperation, and Switzerland has shown itself to be a constructive participant in such activities. Switzerland's experience in thwarting nuclear procurement activities by proliferant nations is similar to those of many other countries with an advanced manufacturing sector which includes nuclear-related items. Any effort to tighten up domestic export controls will encounter opposition from entrenched commercial and bureaucratic interests, particularly in an economy like Switzerland that is heavily dependent on exports for its prosperity. This situation often results in the Swiss taking positions on nuclear export control issues that some would view as overly legalistic and technical. Nonetheless, Switzerland has taken major strides over the years in improving its export control system even'to the point where Switzerland implements a type of informal " catch-all" control, i.e. where the government can legally halt the export ofitems not contained on any control lists. With regard to minimizing the use of weapons-usable nuclear material in civil applications, the Swiss nuclear program is at odds with U.S. policy which does not encourage reprocessing and the use of plutonium for civil applications. However, Switzerland has supported upgraded measures in the area of safeguards and physical protection on plutonium, and increased transparency for civil plutonium use. And its nuclear export policy in no way encourages reprocessing or plutonium use in countries which pose a proliferation risk. Switzerland has also shut down its lone HEU-fueled research reactor and is cooperating with the U.S. program to take back U.S.-origin HEU spent fuel. E. Retroactivity / Perpetuity / Reliability of Supply The close relationship between Switzerland and Euratom's nuclear fact cycles, and their similar experiences in civil nuclear cooperation with the United States o' er the past 20 1

III - 9 years, resulted in a situation where the same issues came up in each negotiation -- and some of ' these were among the most difficult to resolve. Among these issues were retroactivity, perpetuity of controls (in the event the proposed Agreement is sus' pended or terminated), and reliability of supply. Not surprisingly, the solutions which resolved these issues in the 1996 U.S.-Euratom agreement were also adopted for the U.S.-Swiss agreement. The circumstances surrounding these U.S. agreements were unique'-- and ACDA does not believe the outcome on these issues should set a precedent for other agreements. (1) Retroactivity Section 404 (a) of the NNPA requires the President " vigorously" to seek the application of the provisions of any new agreement concluded pursuant to Section 123 of the Atomic Energy to equipment and nuclear material previously transferred under an agreement for cooperation. In all agreements for cooperation concluded since the NNPA except for the 1996 agreement with Euratom, the United States has achieved that objective, i.e., the new agreements were fully retroactive to previous exports of equipment and nuclear material. As with Euratom, Switzerland was prepared to accept retroactive application of controls on previously exported nuclear material, but not on U.S. equipment (i.e., reactors) that had been previously exported. The proposed Agreement covers old reactors only to the extent they have already been covered under the previous Agreement. Thus, non-U.S. fuel used in old U.S. reactors would not be subject to consent rights in the new Agreement (e.g. reprocessing, retransfer). Such fuel would, however, be subject to'IAEA safeguards and to peaceful use guarantees. The practical effect of this provision will be limited, however, as all three of Switzerland's U.S.- supplied power reactors are also still fueled in part by the United States. Thus, much of the nuclear material used in or produced through the use of these reactors will still' be subset to the full range of controls in the new agreement. (2) Perpetuity of Controls i In the unlikely event.that the agreement is suspended or terminated, the provisions of the agreement will apply as follows: (a) The peaceful use assurances, safeguards, physical protection assurances, and retransfer consent will continue in effect for all nuclear material and equipment. (b) The parties will consult about the continued application of the other provisions (i.e. consent for enrichment, reprocessing, alteration in form or content, storage). (c)' If the parties cannot reach agreement with regard to the continued application of these consent rights: i

t III - 10 (i) the "old" nuclear material and equipment that had been subject to the ~ previous agreement (i.e. at the time the new U.S.-Swiss agreement entered-into-force) remains subject to the new agreement to the extent of the controls that had existed in the old agreements (i.e. consent over reprocessing and alteration in form or content of U.S.-supplied nuclear material). ] (ii) the question about perpetuity'of these consent rights on the "new" nuclear material and equipment is put before an Arbitral Tribunal established pursuant to Article 19 (3). Until this Tribunal reaches a decision or the parties reach a mutually acceptable . arrangement, the agreement for cooperation is not terminated and thus this nuclear material and equipment would remain subject to all controls. If the Tribunal decides against perpetuity of any of the provisions in question, the United States would have the right to require the return to the United States of this nuclear material and equipment. We believe this compromise solution fully serves U.S. interests. There is no legal requirement for the United States to obtain perpetuity for consent rights such as reprocessing and alteration in form or content. The only legal requirement is for perpetuity of safeguards, which the proposed Agreement does provide for. Further, we believe there is only a very remote chance that this provision would ever be implemented -- at least not during the 30 years stipulated as the minimum duration of the proposed Agreement. If the worst case happened, e.g., the agreement is suspended or terminated by Switzerland, the decision of the Arbitral Tribunal goes against the United States, and the United States is not in a position to require the return of U.S.-obligated nuclear material -- Switzerland would then be free to reprocess, alter in fonn or content,,or store "new" nuclear material without U.S. consent. However, Switzerland does not have a reprocessing plant, nor does it have large facilities for alteration in form of content such as plutonium conversion of fabrication plants. Moreover, the nuclear material in question would remain subject to safeguards, peaceful use assurances, physical security measures, and retransfer consent rights -- provisions that would allow the United States more than adequate assurance that the continued operation of the agreement is not inimical to the common defense and security. A termination of the U.S.-Swiss agreement would also preclude any future exports or retransfers of U.S.-obligated nuclear material to Switzerland, including fabricated plutonium fuel from Euratom. I (3) Reliability of Supply The United States believes the proposed Agreement establishes an excellent framework for a long-term, stable nuclear supply relationship with Switzerland. Absent any significant change in circumstances, we would not anticipate the need for any changes that would adversely affect cooperation under the proposed Agreement. However, given the difficulties in U.S. Switzerland cooperation mentioned earlier in the NPAS, Swiss officials wanted the text of the proposed Agreement to avoid any references to subseq'uent changes in national laws or policies that could disrupt supply under the agreement or otherwise hamper the civil nuclear program of either party.

111 - 1 1 ' Thus, the propcaed Agreement does not contain the standard provision that all cooperation thereunder is subject to applicable treaties, laws, regulations, and license requirements in force in the respective parties. This provision was opposed by Switzerland as it highlighted the fact that the United States could unilaterally alter the terms of cooperation established in the proposed Agreement. Swiss officials understand that such changes could in i fact be made, but questioned why it was necessary to include this provision in the agreement in view of the still-lingering resentment in some Swiss quarters over the impact of the 1978 NNPA on US-Swiss nuclear cooperation. This outcome in no way alters the rights and obligations which either party already has under the proposed Agreement. The language of the agreement does not legally obligate either party to provide nuclear services or supply; the proposed Agreement sets forth a legal framework under which such cooperation may take place pursuant to regulatory and licensing requirements - established by each party. 9 t r I =.

IV - 1 IV. CONCLUSION ACDA believes that the proposed Agreement promotes U.S. nuclear nonproliferation interests and cites the following reasons:. First, the proposed Agreement (30 years duration) establishes a predictable and long-term framework for a continuation of civil nuclear commerce between the United States and Switzerland. We expect the success of the negotiations and entry-into-force of the proposed Agreement will contribute to a continuation of the close and mutually beneficial cooperation with Switzerland on critical nuclear nonproliferation goals. Second, the proposed Agreement meets all the requirements of the Atomic Energy Act, as amended, and thus includes the best possible safeguards and controls to ensure against any possible misuse of U.S. supply under the agreement. Third, while granting long-term consent in the proposed Agreement to the transfer of spent fuel to Euratom for reprocessing and to the storage and use of plutonium fuel in Switzerland, U.S. nuclear nonproliferation and other national security interests are protected through the provision for suspension of these consent rights. Moreover, expanding the scope of the long-term consent in the proposed Agreement to other fuel cycle activities such as reprocessing would require a future U.S. approval under section 131 of the Atomic Energy Act. Fourth, the proposed Agreement will expand U.S. controls over the storage and use of U.S.-obligated plutonium in Switzerland and will help to maintain the highest possible standards for the safety and security of highly enriched uranium and plutonium. Fifth, Switzerland's participation in and commitment to the nuclear nonproliferation regime demonstrates its strong support for preventing the further spread of nuclear weapons. While Swiss leaders considered the acquisition of nuclear weapons in the 1950s and 1960s, this approach was firmly rejected in favor of ensuring Switzerland's security through adherence to the NPT. Moreover, Switzerland has taken a responsible approach to the need for strengthened nuclear export controls, and has taken major strides in recent years to thwart procurement by countries seeking nuclear weapons. Sixth, Switzerland's strong commitment to the NPT, its acceptance of strengthened h![A IAEA safeguards and physical protection measures, and the bilateral guarantees and controls in the proposed Agreement, offer a very high degree of confidence in the reliability of the peaceful use assurances offered by Switzerland in the proposed Agreement. Moreover, the dissolution of

4 i !~ IV - 2 s i the Soviet Union and the advent of a strengthened NATO and ONCE make it highly unlikely that Switzerland would reconsider its commitment to the NPT in the foreseeable future. . Seventh, the proposed Agreement is compatible with the U.S. obligation under Anicle IV i of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) to engage in civil nuclear cooperation with other NPT parties in a manner that furthers the objectives of the Treaty. i j Eighth, in the context of successfully concluding negotiations the United States exercised maximum flexibility within its statutory requirements which led to compromises on a few issues that are found in but one other agreement for cooperation concluded since enactment of the 1978 Nuclear Non-Proliferation Act. We view this result as whollyjustifiable under the circumstances, but believe that the manner in which these issues were resolved should not be considered a precedent for negotiating any other new agreements for cooperation. 4 l The proposed Agreement should serve to strengthen cooperation with Switzerland on l-ensuring maximum transparency and security of civil plutoniurn stockpiles. Recognizing the proliferation and security risks associated with stockpiles of separated plutonium, it is important that the United States and Switzerland continue to pursue consultations aimed at establishing j voluntary guidelines to inter alla limit and ultimately reduce these stockpiles. 1 Thus, on the basis of the analysis in this assessment statement and all pertinent i information of which the Agency is aware, the United States Arms Control and Disarmament Agency has arrived at the following assessment, conclusions, views, and recommendations: 1. The safeguards and other control mechanisms and the peaceful use assurances contained in the proposed Agreement are adequate to ensure that any assistance fumished thereunder will not be used to further any military or nuclear explosive purpose. 2. The proposed Agreement meets all the legal requirements of the Atomic Energy Act and the NNPA. 3. Execution of the proposed Agreement would be compatible with the nonproliferation program, policy, and objectives of the United States. 4. It is recommended that the President determine that the performance of the l proposed Agreement will promote, and will not constitute an unreasonable risk to, the common defense and security; and that the President approve and authorize the execution of the proposed Agreement. e w ~ ~,

7: 9 DRAFT il The President The White House Washington, DC 20500

Dear Mr. President:

In accordance with the provisions of Section 123 of the Atomic Energy Act, as amended, the Nuclear Regulatory Commission has reviewed the proposed Agreement for Cooperation with Switzerland. It is the view of the Commission that the proposed Agreement includes all of the provisions required by Section 123 of the Atomic Energy Act, as amended. The Commission therefore recommends that you make the requisite statutory determination, approve the Agreement. and authorize its execution. Respectfully, j i Shirley Ann Jackson FILE NAME: G:\\ EXPORTS \\SWISSAGR.LTR DRAFT &&V i}}