Nuclear Commerce:

Governmentwide Strategy Could Help Increase Commercial Benefits from U.S. Nuclear Cooperation Agreements with Other Countries

GAO-11-36: Published: Nov 4, 2010. Publicly Released: Nov 4, 2010.

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The United States has 26 agreements in force for peaceful nuclear cooperation. Under the U.S. Atomic Energy Act of 1954, as amended, these agreements are a prerequisite to certain aspects of U.S. nuclear cooperation with other cooperating partners. GAO was asked to (1) quantify the amount and value of U.S. nuclear exports facilitated by these agreements, (2) assess U.S. efforts to support the U.S. nuclear industry's ability to compete for sales, and (3) examine U.S. nuclear industry challenges to exporting. To conduct this work, GAO reviewed and assessed data collection efforts by U.S. agencies from 1994 through 2008, analyzed available data, and interviewed U.S. industry representatives and U.S. and foreign government officials.

No single federal agency systematically tracks and reports the data necessary to determine the amount and value of U.S. nuclear exports facilitated by U.S. nuclear cooperation agreements. Data from the departments of Commerce, Energy (DOE), State, and the Nuclear Regulatory Commission (NRC) contain gaps and in some cases were not sufficiently detailed for GAO's reporting purposes. Using data from the United Nations Commodity Trade Statistics database, GAO found that the United States' share of global exports of nuclear material, reactors, and components has declined in the last 15 years. For example, the amount of U.S. exports of sensitive nuclear material such as natural and enriched uranium remained stable, while the U.S. share of global exports for these materials decreased significantly, from 29 percent to 10 percent, from 1994 through 2008. The United States also imports sensitive nuclear material, nuclear reactors, major components and equipment, and minor reactor parts from other countries. GAO found that in sum, the United States was a net importer of nuclear components and materials, which may indicate a lack of comparative advantage in this industry. Commerce has an initiative to coordinate interagency efforts and identify and respond to the U.S. nuclear industry's trade policy challenges, but the initiative has made limited progress and does not include a well-defined strategy to support and promote U.S. nuclear industry efforts to compete globally. DOE, NRC, and State officials told us they rely on Commerce to develop and lead U.S. nuclear industry export promotion activities. In October 2008, Commerce established the Civil Nuclear Trade Initiative to help promote the competitiveness of the U.S. nuclear industry. The initiative aims to, among other things, coordinate interagency efforts and identify and respond to trade policy challenges faced by the U.S. nuclear industry. However, the initiative has made limited progress. For example, the initiative's interagency trade promotion committee to coordinate interagency efforts on behalf of U.S. industry has received briefings from only three U.S. nuclear companies; though Commerce officials report many more companies would like to participate. In addition, the initiative's strategy document has some limitations, in that it does not establish goals, does not have an implementation plan, and does not contain metrics for measuring its progress, which are critical for agencies to achieve intended goals. Commerce, State, and DOE officials as well as U.S. industry representatives identified challenges facing the U.S. nuclear industry, including a decline in domestic manufacturing capabilities, increased international competition, and U.S. industry's liability concerns. In addition, U.S. industry representatives and U.S. foreign government officials GAO interviewed also identified challenges that, in their view, impede the U.S. nuclear industry's ability to compete globally for nuclear trade, including a DOE process for authorizing the transfer of U.S. nuclear technology and technical information overseas. In particular, industry representatives told us they believe that DOE's regulations are outdated and place U.S. companies at a competitive disadvantage. GAO recommends that Commerce (1) identify additional nuclear data that may better quantify the export benefits of nuclear cooperation agreements, (2) review its strategy document to identify markets and include benchmarks for evaluating progress, and (3) consider ways the interagency trade promotion committee may obtain a comprehensive range of U.S. industry views. Commerce agreed with our first two recommendations but disagreed with the third, stating that it already has mechanisms in place to obtain industry views. GAO is making this recommendation because Commerce needs to strengthen interagency coordination efforts to promote nuclear trade.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions have been taken, we will provide updated information.

    Recommendation: To help federal agencies gain a better understanding of how--and the extent to which--nuclear cooperation agreements impact exports to other countries, the Secretary of Commerce, working with the Secretaries of Energy and State and the Chairman of the Nuclear Regulatory Commission, should identify what additional nuclear export data and information may be necessary to better quantify the export benefits associated with these agreements.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: In November 2010, GAO found that the Department of Commerce's (Commerce) nuclear export promotion strategy document had some limitations, including that it had not identified key market opportunities and goals, or prioritized countries as targets for U.S. nuclear trade promotion efforts. GAO recommended that the Secretary of Commerce review, with an eye toward strengthening, the existing strategy document to, among other things, identify key market opportunities for U.S. nuclear industry. In February 2015, Commerce reported to us that it had addressed our recommendation by releasing a December 2014 civil nuclear energy top markets study. The study states that it is intended as a tool for prioritizing federal export promotion efforts to help target limited resources toward the civil nuclear markets and activities most likely to result in U.S. exports. This study ranked 50 countries in terms of their readiness for nuclear energy and openness to U.S. civil nuclear exports. Individual market ratings for exports related to new builds, existing reactors, and decommissioning were assessed on the basis of 19 variables encompassing qualitative and quantitative measures.

    Recommendation: To help federal agencies gain a better understanding of how--and the extent to which--nuclear cooperation agreements impact exports to other countries, the Secretary of Commerce, working with the Secretaries of Energy and State and the Chairman of the Nuclear Regulatory Commission, should review, with an eye toward strengthening, Commerce's existing nuclear export promotion strategy document to, among other things, identify key market opportunities for U.S. nuclear industry, and develop key goals and an implementation plan for achieving these goals.

    Agency Affected: Department of Commerce

  3. Status: Closed - Implemented

    Comments: We recommended that, to help federal agencies gain a better understanding of how and the extent to which nuclear cooperation agreements impact exports to other countries, the Secretary of Commerce consider ways for the Trade Promotion Coordinating Committee (TPCC) Civil Nuclear Trade Working Group to obtain a more comprehensive range of U.S. industry views. In 2008, Commerce formed the TPCC Civil Nuclear Trade Working Group to coordinate interagency efforts related to commercial nuclear trade. Our November 2010 report (GAO-11-36) found that as of June 2010, the TPCC Civil Nuclear Trade Working Group had received briefings from three companies that construct civilian nuclear power reactors and reactor components, and that five other smaller companies who supply nuclear materials and services had expressed an interest in briefing the TPCC Civil Nuclear Trade Working Group, but had not yet had the opportunity to do so. Commerce reported to GAO in December 2010 that it was taking steps to implement GAO's recommendation. In August 2014, Commerce reported to us that in order to obtain a more comprehensive range of U.S. industry views, in September 2012 it updated the charter of its Civil Nuclear Trade Advisory Committee (CINTAC), by expanding it to 36 members from across the U.S. nuclear supply chain, and noted that this effort had been absorbed into a new interagency effort to coordinate U.S. government civil nuclear engagement abroad known as "Atoms for Prosperity." In addition, since June 2011, the TPCC Civil Nuclear Trade Working Group has heard additional presentations from companies, and Commerce, in collaboration with the Department of Energy, has hosted several briefings to seek industry input in to activities.

    Recommendation: To help federal agencies gain a better understanding of how--and the extent to which--nuclear cooperation agreements impact exports to other countries, the Secretary of Commerce, working with the Secretaries of Energy and State and the Chairman of the Nuclear Regulatory Commission, should consider ways for the Trade Promotion Coordinating Committee (TPCC) Civil Nuclear Trade Working Group to obtain a more comprehensive range of U.S. industry views.

    Agency Affected: Department of Commerce

  4. Status: Closed - Implemented

    Comments: In our November 2010 report, "Governmentwide Strategy Could Help Increase Commercial Benefits from U.S. Nuclear Cooperation Agreements with Other Countries" (GAO-11-36), we recommend that, while considering the broader revisions to the Part 810 regulations as planned, the Secretary of Energy review the current Part 810 authorization process; develop guidelines to help clarify the types of technology, information, and technical assistance that require a Part 810 authorization; and consider whether some countries should be removed from the Part 810.8 list to facilitate U.S. exports to countries with which the United States has a nuclear cooperation agreement in force. Section 57(b) of the Atomic Energy Act (AEA) empowers the Secretary of Energy to authorize persons subject to the jurisdiction of the United States to directly or indirectly engage in the production of special nuclear material outside of the United States, upon a determination that the activity will not be inimical to the national interest. The Department of Energy implements Section 57(b) through 10 C.F.R. Part 810. Part 810 applies broadly to commercial nuclear technology, assistance, and services abroad because nuclear reactors fueled with uranium also produce plutonium. Exports with little or no nonproliferation or national security significance may be generally authorized under Part 810, with no application required, unless intended for any of 77 restricted countries, to which any export of civilian nuclear technology must be specifically authorized. DOE has acknowledged that the specific authorization process is unduly protracted and carries business risks for exporters. Our November 2010 report (GAO-11-36) found that Part 810 lacks clarity and that the regulations are vaguely defined. We also found, as DOE officials acknowledged, that the list of restricted countries (those requiring specific authorization) was out of date. Specifically, countries with which the United States currently has nuclear cooperation agreements such as Kazakhstan, Ukraine, and the UAE were still restricted. DOE reviewed the Part 810 process and, in September 2011, issued a Notice of Proposed Rulemaking. In August 2013, DOE issued a Supplemental Notice of Proposed Rulemaking (SNOPR), with the purpose of striking a balance to promote trade without increasing proliferation risk, by clarifying the scope of the regulation. The SNOPR also proposes to remove Kazakhstan, Ukraine, and the UAE from the list of restricted countries. DOE noted that in developing the SNOPR, DOE/NNSA reflected on the recommendations put forth in the 2010 GAO report. DOE officials also planned to develop guidelines to help clarify the scope of the regulations once the SNOPR is finalized (which was estimated to be in September 2014). On February 7, 2015 DOE issued its final rule revising Part 810, modernizing the regulation to articulate clearly the activities and technologies that are within the scope of Part 810, among other things. DOE officials also developed guidelines to help clarify the scope of the regulations.

    Recommendation: While considering the broader revisions to the Part 810 regulations as planned, the Secretary of Energy should review the current Part 810 authorization process; develop guidelines to help clarify the types of technology, information, and technical assistance that require a Part 810 authorization; and consider whether some countries should be removed from the Part 810.8 list to facilitate U.S. exports to countries with which the United States has a nuclear cooperation agreement in force.

    Agency Affected: Department of Energy

 

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