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Transcript: A New Strategic Approach to Civil Nuclear Cooperation: A Conversation with Christopher Ford

Transcript: A New Strategic Approach to Civil Nuclear Cooperation: A Conversation with Christopher Ford

Rebeccah L. Heinrichs & Christopher Ford

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Following is the full transcript from a February 26th, 2019 Hudson private event titled “A New Strategic Approach to Civil Nuclear Cooperation: A Conversation with Christopher Ford.”

CHRISTOPHER FORD: Good day, everyone, and thank you for the opportunity to speak to you.

In the nonproliferation business, we usually think more in terms of denying opportunities than of creating them. Specifically, it’s our job to deny would-be proliferators — whether state or non-state actors — the opportunity to develop or otherwise acquire weapons of mass destruction, delivery systems, or advanced conventional weapons. It’s also our job to deny the organizers and operators of proliferation-facilitating networks, as well as any who would evade U.N. Security Council sanctions, the opportunity to profit from trafficking in destabilizing technologies or from helping outlaw regimes evade accountability.

Denying bad guys dangerous tools, in other words, is our core mission, which is why the motto of my bureau at the State Department — the Bureau of International Security and Nonproliferation — is Ad Minas Arcendas, which is Latin for “to prevent threats.” For that is exactly what we do.

From time to time, however, this job of denying others opportunities for mischief coincides with the chance to create opportunities for American industries and workers. And that’s very much the case with civil nuclear cooperation agreements, which can be an important tool for strengthening strategic relationships with partners, enhancing energy security, raising international nonproliferation standards, and promoting U.S. civil nuclear exports. And that’s my topic for today.

I. The Opportunity and Challenge of Cooperation Agreements

Under United States’ law, U.S. suppliers can only sell nuclear power fuel or equipment abroad subject to a civil nuclear cooperation agreement, often referred to as a “123 agreement” after the relevant section of the Atomic Energy Act. For this reason, a 123 agreement — which my bureau is responsible for negotiating — is an important tool for enhancing the commercial prospects of the U.S. civil nuclear sector. Without a 123 agreement, U.S. suppliers cannot export nuclear material, equipment, or significant reactor components, U.S. industry cannot compete in foreign markets, and Americans forego job opportunities. So with these agreements, we lay the foundations for U.S. competitiveness in this critical, high-technology arena.

And here’s the best part: civil-nuclear cooperation agreements are also one of the strongest tools we have to promote nonproliferation as a government, because the Atomic Energy Act requires the highest standards in the world when it comes to the nonproliferation protections required with the United States’ civil nuclear cooperation partners. These statutory requirements are enormously important, for they ensure that all U.S. 123 agreements legally obligate our partners to observe specific standards in such areas as peaceful use, International Atomic Energy Agency (IAEA) safeguards, physical protection for nuclear materials, and prohibitions on enriching, reprocessing, or transferring U.S.-obligated material and equipment without our consent.

Even beyond these requirements “baked in” to all 123s by U.S. law, the State Department also works hard to negotiate as many additional nonproliferation assurances as we can, such as political commitments to rely upon commercial fuel markets rather than explore indigenous uranium enrichment and reprocessing services, consistent with U.S. policy that seeks to limit the further proliferation of these technologies. In two cases, in fact — albeit, alas, pretty unique ones, since they involved one partner that already had domestic legislation prohibiting the activity in question, and another that simply lacked any alternative source of supply at all, thus giving us unique leverage — U.S. negotiators managed to get agreement on a legally binding commitment not to engage in any enrichment or reprocessing. We have also in recent years been going beyond the requirements of the Atomic Energy Act in ensuring that our civil-nuclear cooperation partners adhere to the IAEA Additional Protocol, which we consider to be the de facto international safeguards standard, as a condition for nuclear exports under those agreements.

What ends up being possible necessarily varies, of course, but whatever the negotiated terms, 123 agreements signed by the United States represent the global standard for nonproliferation-related nuclear supply “best practices,” and always protect nonproliferation equities better than the conditions attached by any other nuclear supplier. There is no case, in other words, in which a U.S. 123 agreement with any given recipient will not promote nonproliferation values better than that same recipient cutting a deal with another, competing supplier state. That’s why we view 123s as such a win-win outcome: U.S. industry and American workers have the chance to spread their wings in the international marketplace, and global nonproliferation standards improve in direct proportion to our suppliers’ commercial success.

Civil nuclear cooperation under sound nonproliferation conditions is also a win for our overseas partners. Not only do they gain access to the benefits of peaceful uses of U.S. nuclear energy, science and technology; they also develop the capacity to do so sustainably and responsibly, building confidence that such cooperation will not be misused – whether deliberately or inadvertently – to contribute to the proliferation of nuclear weapons. Widespread sharing of the benefits of nuclear power simply would not be possible without a firm foundation of nuclear nonproliferation measures built upon the Nuclear Nonproliferation Treaty, the IAEA, and the Nuclear Suppliers Group (NSG).

On the other hand, that “virtuous circle” can also work the other way. If we are unable to get a 123 in place – such as if we chase the “perfect” answer so intently that we prevent getting any deal at all by asking unacceptable terms from our would-be cooperation partners – U.S. industry loses the chance to compete and nonproliferation loses too, since a partner that goes with the foreign competition is not subject to the obligations we place in our agreements.

Nonproliferation and a competitive U.S. civil nuclear export sector are thus mutually dependent and mutually reinforcing goals for the United States. Because the conditions contained in 123s apply to nuclear material, equipment, and significant reactor components transferred subject to the agreement, we will see neither economic nor nonproliferation benefits if U.S. suppliers fail to make the sale. This raises the specter of a “vicious circle” of problems, with the competitiveness of U.S. industry being highly dependent upon the opportunities created by 123 agreements, but with our 123s — especially given their conditionalities — proving less attractive to would-be partners as U.S. industry competitiveness wanes, and with fewer recipients actually adopting nonproliferation “best practices” as foreign competitors with deliberately lax proliferation standards gain market share at our expense. That is clearly a lose-lose situation, both for the United States and for the global nonproliferation regime.

And that is why civil nuclear cooperation agreements are so important.

II. Shifting Terrain

For a long time, we managed to stay on the win-win side of the ledger. In the first three or four decades of international nuclear trade, the United States was the undisputed leader. American companies had the overwhelming majority of global market share, and this dominance ensured that the U.S. government was well-positioned to achieve its nonproliferation policy objectives through 123 agreements with civil nuclear partners.

In the last quarter century, however, the situation has changed, and the U.S. nuclear industry now faces significant headwinds. A number of other countries – and their state-owned enterprises – have emerged as competitors in the global market, and U.S. market share has decreased dramatically. Some competitors are political allies, such as France and the Republic of Korea, while others are geostrategic competitors such as Russia and China.

Irrespective of country of origin, however, the key distinction between U.S. nuclear suppliers and those from almost everywhere else is that in the United States, the nuclear industry is privately owned and operated, and not part of the government. By contrast, in France, South Korea, Russia, and China, the state either fully or partially owns the nuclear industry players with whom private sector U.S. suppliers compete, and it provides massive financial support and exerts industrial policy controls that our system of government lacks. When the naked power of foreign governments is marshalled in support of policies designed to take market share from private U.S. firms, those American firms have indeed suffered — creating the risk that the whole process will tip over into lose-lose dynamics in which both the U.S. nuclear industry and the cause of global nonproliferation suffer.

Worse still, it’s not just about economic competitiveness and nonproliferation. Russia and China also use reactor sales by their heavily state-supported nuclear industries as a geopolitical tool to deepen political relationships with partner countries, to foster energy dependence by foreign partners, and sometimes even to use predatory financing to lure foreign political leaderships into “debt traps” that give Beijing or Moscow leverage that it can exploit later for geopolitical advantage. (They also market using a “build-own-operate” model that may purport to absolve the host country from any regulatory responsibilities, thereby increasing the difficulties of mitigating a nuclear accident.) In fact, the leverage resulting from such civil-nuclear relationships with China and Russia is designed – and often used – to advance the strategic goals of these adversaries to the detriment of U.S. interests and those of our allies.

Such debt traps are a worrisome new development. It was debt entanglement, for instance, that allowed China to take out a 99-year lease on the Sri Lankan port of Hambantota — essentially replicating, with remarkable irony, the very terms that Chinese leaders themselves spent generations decrying as exploitative imperialism in the form of the British Empire’s 99-year lease of the New Territories of Hong Kong. China uses various means to help build itself such “neo neoimperial” footholds, but civil-nuclear relationships are one of them. For their part, the Russians — who refuse to subscribe to the Organization for Economic Cooperation’s Nuclear Sector Financing Guidelines, and who have suppressed nonproliferation standards in the supply of nuclear reactors and material — are hardly better. Russia exerts influence in multilateral nonproliferation fora to stall progress on the evolution of safeguards and export controls, ensuring the global bar stays fixed, while the strategies and tools available to would-be proliferators continue to advance.

The fact that nuclear suppliers such as China and Russia support their objectives through deliberate laxity in the nonproliferation standards they ask of nuclear cooperation partners as a tool of competitive advantage against responsible suppliers such as the United States makes this all the more worrisome, even shameful. Both are members of the Nuclear Suppliers Group, which was established to raise export control standards and ensure that commercial incentives would not outweigh nonproliferation objectives and avoid a race to the bottom in which suppliers dilute those standards to gain a commercial advantage, but their actual support for these ideals is obviously not as strong as it should be.
III. Helping Meet the Challenge

A. Rejecting “Business as Usual”

So on the assumption that we cannot continue to accept “business as usual” on such contrived and manipulative terms — and informed by the clear commitment made in the U.S. National Security Strategy to push back against competitive strategies of the revisionist powers of China and Russia that seek to disadvantage and displace U.S. power in the world — what are we doing to help fight back?

Well, one way is to cut off U.S. sources of some technology that state-owned Chinese nuclear entities have been using in their efforts to compete against our companies. We’ve had a new 123 agreement with China in force since 2015, but we’ve also now learned a lot about how China has been using engagement with the U.S. nuclear power industry for technology that it intends to use to compete against us — crimes of technology theft, for instance, for which the state-owned company China General Nuclear Power Group currently stands under indictment in a U.S. court. We’ve also learned a lot about how the Chinese government is engaged in a systematic effort to divert civilian nuclear technology, including know-how from the United States, into projects supporting its military build-up and its territorial ambitions in the South China Sea. Accordingly, October 2018, the United States announced a new policy that dramatically cuts back civil nuclear technology transfers to China.

Another way we’re responding to these threats is to step up our diplomacy in urging other nuclear suppliers to insist upon the highest standards of safety, security, and nonproliferation in their own civil nuclear cooperation relationships — including by requiring, as we ourselves do, that recipient states have the IAEA Additional Protocol in force, to provide reassurances against the absence of undeclared nuclear activity. We also regularly urge suppliers to consider imposing limits on partners’ ability to enrich uranium and reprocess plutonium. And we are working to build “coalitions of caution” in the nuclear business by calling attention to the dangers of nuclear cooperation with Russia and China, both for would-be recipients and for industry partners, and by working with like-minded suppliers to develop joint approaches to counter those two countries’ destabilizing and predatory behaviors.
In fora such as the NSG and the NPT review cycle, we are also emphasizing the principle of “responsible supply” — urging others to come together with us to insist that all nuclear suppliers require nuclear safeguards, safety, and security “best practices” from the states with which they have cooperation agreements. No longer should suppliers be able to use proliferation irresponsibility as a marketing tool.

We will also continue to work with NSG partners to ensure that multilateral export control lists are properly updated to ensure that they address advanced nuclear technologies and emerging technologies with potential dual-use applications. And we are working in the NPT process to raise awareness about — and to find ways to advance — the peaceful sharing of nuclear technology, as well as to protect and advance the global nonproliferation regime that provides the foundation upon which the continued availability of such benefits depends.

B. New Nuclear Cooperation MOUs

With regard to U.S. nuclear cooperation, the State Department is stepping up efforts to approach our 123 agreement diplomacy in a genuinely strategic way — not only, as before, to strengthen nonproliferation protections in a specific country or region or to help U.S. firms take advantage of market opportunities, but also to help develop new opportunities to advance U.S. strategic competitiveness. A full-fledged nuclear cooperation partnership can lead to the establishment of political and economic ties lasting as long as 50 or 100 years, and can be the catalyst for additional cooperation between governments on many other national security and foreign policy issues. Our diplomatic outreach on civil nuclear issues can thus serve strategic interests as well as economic ones, helping us build and mature relationships that will strengthen mutual prosperity and help ensure the security and autonomy of partner governments around the world against the designs of predatory revisionists.

As I have described, 123 agreements are a critical part of this mix. But they need not be viewed as the only tool, for not all countries that wish to develop better civil nuclear relationships with the United States will necessarily need to start that relationship with a 123.

To help provide an additional way to catalyze and nurture cooperative relationships, we are working to expand the use of less formal, non-binding bilateral political arrangements more akin to a memorandum of understanding (MOU) than to a full 123. Such nuclear cooperation MOUs — or NCMOUs — would not suffice for actual power reactor projects, of course, which would still require a traditional 123 agreement. But a country weighing the possible development of a nuclear power program could use a less formal instrument to build strategic ties with the United States, its experts, industry, and cutting edge researchers about how best to tailor future opportunities to its specific needs. We would use these ties to help states build their own infrastructure for the responsible use of nuclear energy and technology and adopt best practices in nuclear safety, security, and nonproliferation, including independent regulatory oversight.

In such ways, these MOUs could establish the basis for a broader, strategic relationship between the United States and those countries considering civil nuclear energy. Working with our partners at the Departments of Energy and Commerce, the Nuclear Regulatory Commission, and other U.S. departments and agencies, such MOUs could open up new opportunities for all parties, laying the foundation for making partner countries fully prepared to take advantage of the emerging technologies and coming innovations in reactor design and other areas that are being pioneered in the United States, and to do so under the highest standards of safety, security, and nonproliferation. These foundations could provide valuable opportunities both for U.S. industry and for beneficiary states alike, for these are arenas in which the future of civil nuclear competitiveness is likely to be decided, and that are the pathfinders for how the benefits of peaceful uses of nuclear energy will be shared over the next century. We envision these NCMOUs as important tools to open doors and allow the U.S. government to build ties with foreign counterparts that will position all of us to take advantage of such opportunities together.

IV. Conclusion

These innovations, of course, are not panaceas, nor do we intend for them to take the place of the robust, binding 123 agreements that underpin our civil nuclear commerce. But we do think they can help, and we are committed to using all our diplomatic skills to help lay the foundations for future “win-win” answers – answers in which: (1) U.S. industry and government experts carve out critical roles at the cutting edge of the civil nuclear business; (2) these emerging technologies make cooperation with the United States attractive and even essential; (3) American jobs in this sector boom and U.S. industry competes successfully even against foreign “national champions” that benefit from massive state subsidies and state-sponsored technology theft; and (4) we work together with our international partners to share the benefits of nuclear technology ever more widely, and ever more responsibly, under state-of-the-art “best practices” in nuclear safeguards, safety, and security. Thank you.


REBECCAH HEINRICHS: Great.
(APPLAUSE)

HEINRICHS: I’m going to have a couple of follow-up questions just while you all are still trying to think about how you want to formulate your questions. I do want to have a hard stop here at 1 o’clock, so we’re not going to go over. So if you can keep this – we can have more questions if you keep your question very brief and say your name and your affiliation. That would be very helpful to us. So my first question is a very easy one. What about Saudi Arabia?

FORD: (Laughter) Someone’s been reading the papers. We have been in on-again-off-again negotiations with the kingdom of Saudi Arabia over a 123 Agreement since 2012. That did not stop with the new administration. And we are still – we have been in multiple discussions with them from the outset. I was involved in some of that at the NSC, and I’ve been involved in that very closely here at the State Department. As you will, of course, all also know, unfortunately one cannot comment about the state of ongoing negotiations. We – and I guess you can infer that we have not yet gotten to a point at which both sides are agreed because if we had, we’d have something that we’d be submitted to Congress. But we, you know, certainly would like to and hope to and are, you know, reasonably optimistic. But we’re not there yet, and I can’t say anything more about the content of those negotiations.

HEINRICHS: The last part, the part that you said that was the new part, the MOU, which is something different than the 123 Agreements, can you expound upon that a little bit more about how it’s different in terms of safeguards? Because I think it’s something that many in this room would be interested in hearing how you would explain that.

FORD: Well, I mean, the form that these take will, you know, presumably vary depending upon the countries in question. But on one level, they would not have to deal with safeguards in quite the same way because what 123s are structured to do is to actually provide the framework through which, you know, essentially the large – you know, actual major components are transferred, and materials and technology. This will be more of an antecedent piece where we would be working and opening the door for our interagency partners in the U.S. government and for U.S. industry to begin to build relationships with foreign partners that could lay the foundation for that kind of thing. But I would imagine that most of those relationships would not involve the transfer of things on which safeguards would be necessary. So it would be less of a challenge to negotiate that piece of it than it is of course always a challenge in the 123 world. On the other hand, part of this thing would be helping countries – you know, and we do a lot of capacity-building between the Department of Energy and the State Department and others at the NRC – there’s a lot of capacity-building assistance that we do around the world with partners to help them improve their ability to have appropriate regulatory oversight and safety oversight and – you know, and help them with their own safeguards, compliance issues and so forth. So you know, certainly those relationships are things that I would imagine MOUs might be very good at helping facilitate. But that’s not a safeguards issue, per se. We would not be requiring the same kind of things that we are obliged to do and try to do even beyond that under 123 law.

HEINRICHS: All right – first question here. Thank you. Do we have a mic? Do we – do we want to do microphones? Or I think…

FORD: You can try to repeat it back if…

HEINRICHS: That’s OK. We can just shout.

AUDIENCE MEMBER: Thank you for a very lucid presentation, very clear. But my question really is about U.S. industry. If you look at the record in this country, so what’s been going on in the nuclear regulation problem, everything costs multiples more than what it’s supposed to, the modular nuclear reactor. I’m just wondering, what do you think of the ability of American business to be competitive with the French or others, you know, in doing this kind of work?

FORD: I’m not myself enough of a technologist or an economist to be able to speak to larger issues of industrial policy. But it’s clear just from looking at where things have been going that the U.S. industry has been suffering relative to its foreign competition. A lot of that foreign competition – I mean, I don’t know the degree to which that is, you know, sort of a self-inflicted U.S. wound. They’re – one hears talk about overregulation or this or that. I can’t assess those questions very well. It’s also clear that part of this has to do with, frankly, unfair competition. I mentioned how, you know, certain major competitors out there in the world are fairly unscrupulous about not requiring a lot by way of nonproliferation requirements. So it comes with fewer conditionalities than we require in our agreements. And, you know, we’ve had some – there’s a lot of state subsidy going into some of these national champions, as I mentioned in my remarks. And there’s a fair amount of technology theft that goes into their competitiveness in some cases. You know, those are obviously problems that U.S. industry in the United States face that, you know, no one should have to face. And to the degree that we can fix any self-inflicted wounds that there may be, we’re trying to do our part in the State Department to fix that. Some of these moving pieces are bigger pieces than we have a handle on. But we’re certainly in a better place now in many respects than we were when I first started worrying about these things at the NSC in the middle of the Westinghouse bankruptcy and so forth. So, you know, certainly, at this point, Westinghouse has come out of its bankruptcy proceedings. They’ve shed. They had a go at – I think they divested themselves of CBI, which was a really ill-fated effort to get into the construction business. But they seem to be in a rather better position to be competitive than they used to be. And we hope that that will have good results and that potential partners and projects that have been stalled around the world will be able to be revitalized as a result of getting back on an even keel in that way. But, you know, we’ll have to see how this goes. But it’s not just about competing with the present generation of nuclear technology.

And I think that’s where one of the key points is here. One of the functions that we see these MOUs – these new MOUs playing is of helping build relationships that will help tee up cooperative ventures and projects together with our overseas partners in areas that represent not this generation of nuclear technology but the next generation. Building the framework for cooperation on things like – well, already, we’re – the U.S. is at the cutting edge of things like some of the small modular reactor concepts, including the ones that are likely to be ready relatively soon in the business using light-water technology and potentially using more advanced technological reforms in the future – reactor types that are, frankly, in many ways, better suited for many of our potential partners, especially in the developing world because they’re smaller; they’re cheaper; they’re safer. There are, you know – for many of those reasons, there are also nonproliferation benefits that are intrinsic to some degree with that type of technology. We think that is the area in which – whatever you think of our overall competitiveness with the current generation of giant, traditional, mode nuclear reactors, we have an opportunity to build a foundation upon which the next generation of competitiveness will happen. And even if, you know, we’re not as happy as we would like to be with where things are today, in the nuclear industry worldwide, we think we have a chance to help catalyze a much better and more competitive approach when it comes to the next wave of stuff in which U.S. scientists, technologists and engineers in laboratories are already at the cutting edge of developing these new and innovative approaches. We think that there’s a lot we can do to help that – those innovative ideas move out in the world and do good things.

HEINRICHS: And if I just may, I think that’s an excellent question because it really is at the heart of what this administration – that I’ve been able to deduce from – at the heart of great power of competition. In all of the national security documents, I had the same questions for undersecretary for policy at the Defense Department, John Rood, very recently here at Hudson. How do we compete? It’s not even just the technology – getting the technology right but the speed. Our competitors are able to – for all of the reasons, I think, that you eloquently laid out – that they’re able to do it faster. That presents a challenge.

FORD: We can also do a lot more to – I mean, they are taking – some of our competitors are taking unfair advantage of – those of you who read the late Air Force Colonel John Boyd know something about OODA loops – O-O-D-A; observe, orient, decide and act. It’s a concept that came out of – I think out of aerial dogfighting. But it’s a useful sort of general concept for how it is that you orient yourself in your environment. You decide what you’re going to do and act on it. And if you can do that cycle faster than your competitors, you’re going to succeed ‘cause your competitor will always be reacting to a situation that is no longer true ‘cause you’re a step ahead. Our competitors in the civil nuclear industry enjoy very fast OODA loops for reasons that we can help keep them from enjoying. Some of the things they do involve stealing technology from U.S. suppliers. Some of the things, they involve, you know, getting – lawfully getting technology that, frankly, we should not responsibly be providing to them. If we can slow those down, we will help lengthen their OODA loops, even while working to encourage and invest in the cutting-edge technologies that provide us with the advantages in the next generation of doing these things. And if we can do both of these things at the same time, we can press our competitive cycle and lengthen their competitive cycle. And, who knows; maybe good things happen.

HEINRICHS: Tom.

AUDIENCE MEMBER: Thanks. Thank you, Chris. Can you confirm that in talking about NCMOUs, this is not a substitute for a (unintelligible) in the case of Saudi Arabia? And then a slightly longer question – there have been some congressional initiatives to amend the Atomic Energy Act and to impose additional statutory requirements within a 123. Legislation was introduced on that last year. I don’t know if it’s been introduced yet this year. Did the State Department comment on it or provide a response to Congress on its view of that legislation or similar legislation?

FORD: On the first point, very clearly, I can absolutely, positively and unequivocally confirm that this is not intended as any kind of a substitute for 123s. If anything, it’s an opportunity to tee them up because it is through building those relationships as a kind of prefatory piece that we hope that there’ll be more partners with whom we can have 123s in the future. So hopefully, I can reassure you on that. Nor is this – by the way, just for the record – nor is this any kind of thing where, you know, we striped pants, diplomatic weenies are going to get in the way of the people who do the longstanding cooperative technological projects and economic engagements. We don’t need to be taking over that business, and we’re not. What we’re trying to do with open doors for them, so they can do their job better. So I want to make sure that’s also clear. On statutory requirements, I do not remember offhand commenting on any legislation that has been proposed there. And I probably shouldn’t, as a general rule, comment on – unless we get to the point of a statement of administration policy, I’m going to probably hold off on that. But I think I have made clear our general philosophy of 123s. And that is that, you know, we do think that they provide already – already in the statute, even without any augmentation, they provide the best possible standards. But it’s – compared to, you know, the highest standards, compared to any other supplier. And, you know, certainly in theory, there is – as I think I suggested, also – you know, you could imagine a tension at some point.

We already have to rely upon, you know, diplomatic efforts and the fact that U.S. technology is still pretty amazingly good in this arena to make up for some of the conditionalities that we require. It stands to reason that the more conditionalities require, the more likely you are to have to pick up on other factors like that to make up the difference. And you could imagine, especially as our industry is not shockingly competitive at the moment, that if one asks too much in terms of the requirements, that’s a backhanded way to have no deals at all. And I think that’s a way in which we all lose, both in terms of economic competitiveness and jobs and in terms of nonproliferation. Because if there’s no 123, there ain’t no proliferation assurances – nonproliferation assurances embedded within it. So, you know, there’s a tension there. I hope that whoever, if anyone does adjust the statutes, will do so with the need to balance those equities carefully in mind. But I don’t have any specific comments on legislation. And I’m not aware of anything having been introduced – at least, I haven’t heard of it having been introduced in this new context.

AUDIENCE MEMBER: Thanks, Chris. It’s really interesting. My question is, why not work through the NSG? If, you know, the U.S. standards of non-proliferation, we’ve led the way for so many years, and it’s been a struggle to get the NSG members to adopt full-scope safeguards and everything else, if you put a full-court press – and I guess the Obama administration was a little lax there in getting the NSG to accept the additional protocol as a condition of supply – maybe you wouldn’t be having all these problems with Saudi Arabia. Right? So, (laughter), why not work multilaterally instead of bilaterally? It seems to me you’re asking for a lot of work.

FORD: Well, I would actually dispute the premise that there’s a – this is an either-or choice. We do work with the NSG to promote principles, as I indicated, of responsible supply, which includes promoting the AP. And also, we also promote safety and security issues. I don’t want to separate the – you know, I like to think of nuclear safety and security and safeguards all as one sort of clump, provide a foundation, sort of an enabling set of conditions for sharing the benefits of nuclear technology ever more widely. We work very hard in those arenas, as well. And I don’t think it’s a choice between having to do it bilaterally or doing it multilaterally. We try to do both very hard.

AUDIENCE MEMBER: I know there’s a gap in the NSG criteria that needs to be addressed, or you’re saying Russia and China don’t follow NSG?

FORD: It’s safest, I think, for present purpose, to say that it is a consensus-based organization. And getting things done at those things moves at the speed of multilateral diplomacy. And it’s not always as fast as one would like to do. We certainly try to advance best practices, such as additional protocol adherence, in all these fora, AP adherence, both in terms of countries acceding to it and, of course, complying with it. And in terms of making the AP a condition of supply are things that we promote in at every opportunity, including in the industry.

AUDIENCE MEMBER: And unless it’s outside the scope of this thing, I actually wanted to ask about countries with which we already have 123 agreements. I’m focused, temporarily, on Northeast Asia. So Japan, of course, our good friend and ally. Are we doing anything to encourage the system to deal with their huge plutonium stockpiles? And Korea, with which I know we concluded our renewed – the 123 agreement. How – the issue of pyroprocessing – how was that dealt with? Thanks very much.

FORD: I was actually very heartened. We – of course, just for the record, it’s very – we should be very clear. We engage continually and warmly and deeply with our Japanese counterparts and colleagues. They’re good friends and good non-proliferation partners and have been for an extraordinarily long time. We’re very happy with where that relationship is. I was very heartened to see that – I think it was over the summer – they announced an additional articulation of their plutonium policy. They have said that they are not just capping their stocks. But they are committed to a downslope over time. And I think that was exactly the right choice. And we’re very pleased to hear them articulate that. And I certainly look forward to seeing that play out over time. It’s – they do face enormous challenges, to be sure. They have built an infrastructure that revolves around the assumption that they would be able to burn mock space fuel. And then they had this little problem called Fukushima in which all the – a large number of the reactors in which they anticipated doing that burning went down and are only very, very slowly coming back up. You know, that clearly gives them a lot of headaches and challenges. And I certainly feel for the challenges that they face. And we’re very supportive of them in trying to work through those problems. But they have – we’re very happy with their new plutonium policy. And we look forward to seeing it implemented over time. With respect to South Korea, the pyroprocessing issue hasn’t moved a lot since I’ve been in the Executive Branch. We have sort of a continuing relationship with them under the 123. And there are some, you know, ongoing discussions of engagements that are related to issues of supporting that technology. But that’s not the same thing as having a full, up-close (unintelligible) cycle, something that my (unintelligible) colleagues remind me frequently.

HEINRICHS: Yes, sir. Right here behind – the second row.

AUDIENCE MEMBER: Sort of flipping Sharon’s question a little bit – I mean, one of the bilateral partners – I mean, Japan already requires the AP as a condition of supplies, as far as I understand.

FORD: Commendably.

AUDIENCE MEMBER: South Korea does not…

FORD: Right.

AUDIENCE MEMBER: …And is a close ally. What are the possibilities of getting the South Koreans to agree to this? And is there an effort underway to do that? Also, in terms of this new initiative, I guess, I’m a little bit confused about what exactly is being done that can’t be done already or you aren’t doing. I would think a lot of these things we would have been doing already. And how does it relate to Title 5 of the Nuclear Non-Proliferation Act which calls for advocating non-nuclear technologies? When you go out there and promote these nuclear technologies, are you also telling countries, this may not be the best technology for you, in certain circumstances?

FORD: With respect to the South Korean – continuing South Korean disinterest in requiring additional protocol as a condition of supply, this is something that – I don’t know how to forecast the odds of them making that choice. But it’s – you know, it is certainly something that I have myself. And we, collectively, do frequently mention to them. You know, maybe they’ll make that choice in order to shut me up. I do mention it a lot when I talk to my South Korean counterparts. It’s an important policy point for us. And I think that we share – And I hope that they will come to see that we share an interest in – both in ensuring general, you know, rising tide of better nonproliferation practices around the world and also in coming together to cooperate better, I think, the – there are ways in which we can work together better that we are not. And I’m – you know, I’ve been disappointed that AP has not been a condition of supply here, too. But perhaps there’s more that can be done. It’s certainly something that we do raise. And I work mostly on – we work mostly on sort of 123s and that kind of thing. In these MOUs, it is – it’s not necessarily about promoting nuclear technology, per say, but helping build relationships which allow partners to evaluate what their own options are best likely to be.

To the degree that they find that their options include other things, some of these cooperations and engagements on energy, regulatory and infrastructure affairs may be very valuable no matter what the ultimate choice of technology. Our particular focus is – you know, it includes a heavy stress upon trying to find opportunities for – especially for cutting-edge nuclear technologies that are coming around the bend. And it is certainly possible to do that in ways that are, I think, more proliferation and energy and economically responsible than some of the – and more suitable for – as I said, for developing country markets in some respects and current approaches, and we think that also provides considerable benefit. But we think these are – and again, this is not a binary choice. We’re working with partners to do everything we can to help them make more smart energy choices, and I think the U.S. has a lot to offer, no matter what you have.

AUDIENCE MEMBER: So the nuclear cooperation MOUs – would they be intended to make it easier or more somehow improve the process for the recipient countries to get 810 authorizations, since that would seem to be crucial in any such cooperation?

FORD: They might. I mean, I think the general idea is that if we can use a diplomatic instrument to help, as I say, open the door to all sorts of regulatory and industrial and research and scientific engagements, that will make a lot of this easier. I think it is probably true that people approach – I mean, this is – 810 authority is something that the secretary of energy does, rather than we do, although, of course, we’re in these processes more generally. I would imagine that the closer the ties and the deeper and richer the relationships between, for example, regulatory infrastructures and the industries and partner countries and those in the United States. You know, that would certainly make the process of evaluating 810 policy choices easier, better and more reliable. So I have to think there’d probably be some useful spinoff effect there. They don’t necessarily have to approach – they don’t have to cover that as a – they may or may not cover that sort of thing as an explicit piece, but it certainly could, yeah. We only want to grease the skids for all sorts of cooperation across the field.

HEINRICHS: And a follow-up on the previous question that I thought was very good – can you talk about the possibility of – some countries, we might say, this might not be the best option for you. Then you also mentioned in your initial remarks – but we also understand another reality that we have competitors that are much more willing to supply this technology if we don’t. How has their approach been different than ours? So when you have our competitors who are – are they out there looking for – I mean, I feel like I know the answer. But I’d like to hear you explain their eagerness or how they are approaching this particular market and how that presents a real squeeze for the United States to get in there and provide options for these other potential customers in a way that is conducive to our nonproliferation concerns and also U.S. strategic interests, broadly.

FORD: Well, I mean, some of the ways in which foreign competitors do well in competition is the traditional, you know, too bad but fair play aspect of competition. If one can offer good technology at a, you know – reasonably good technology at a better price, that becomes a discussion space for the foreign partner state. What irks me the most, however, is when they engage in practices that don’t seem quite so, you know, Marquess of Queensbury Rules. It’s – you know, where there involves flagrantly uneconomic offers of – you know, I mentioned debt traps – flagrantly uneconomic offers of financing deals that, you know, particularly for countries that may be rather cash-strapped in these kinds of areas – it could be very tempting, notwithstanding a sort of – you know, perhaps it’s some level understanding of the potential consequences, but goodness, all that money upfront. It’s such an easy set of terms. Wow, that’s kind of tempting. That ends up being a trap later that is manipulated for strategic purposes. That irks me. Issues of, you know, it is probably not – I don’t want to be too specific here, but it’s probably not never happened that money has changed hands in unofficial ways in connection with certain deals under certain circumstances. I’m not going to point fingers, but I’m sure that has probably happened from time to time. That’s not kosher.

Where there are issues – and in general, the very fact that we have to have private sector entities – genuinely private sector entities contributing against massively state-subsidized and state-sponsored national champions who, frankly, have a completely different economic structure and, in fact, don’t make decisions on a purely economic basis at all, but in fact, are, you know, quasi – you know, quasi-official arms of state policy in ways that don’t really go to economics at all, but go to a lot more of strategic posturing. You know, doing what we can to sort of fight back against those unfair advantages – I mean, if all we had to do is compete on technology and price, that’s – you know, that’s traditional. We Americans are pretty good at that. We don’t always win, but we don’t always lose, and at least it’s a fair shot. I want to take advantages – take away as many of the sort of tilted playing field advantages that we can. And lacking in industrial policy, there’s only so much we can do, but there’s not nothing. And I think we can do better, and we’re determined to do so.

AUDIENCE MEMBER: I wanted to ask the – you – Chris about the jobs dimension that you mentioned. It’s easy to talk about jobs. My understanding, and maybe you can clarify for me a little bit, is that, you know, the U.S. – the U.S. truly – U.S. nuclear industry is only sort of a shadow of its former self, of what it used to be. And in numbers, what – do you – what number of jobs are we talking about, and what share of that would be in the United States versus overseas labor because, again, we’re not – our nuclear industry isn’t like it used to be. So do you have any numbers at all? I mean, it’s easy to talk about jobs. And we all want to help jobs in the U.S., of course, but there’s a tradeoff here.

FORD: I actually don’t have numbers on the tip of my tongue. My apologies for that. The – it is certainly true that it’s a shadow of what it used to be. I mean, our strengths are in the technology and in fuel supply and things like that. It is – we are obviously – I mentioned CBI earlier – Chicago Bridge and Iron. The great ambitions of bringing Westinghouse into the construction business didn’t turn out quite as well as people had hoped. So there are certainly aspects of the global industry – U.S. is not a big reactor builder at this point. It’d be great if we could be at some point. I think we may when the technology evolves to the point where we’re talking about SMRs and advanced concepts of various varieties. Necessarily at the moment, that is definitely not a strength of ours but – which means we may need to be partnering with other folks around the world to provide some of those construction opportunities. And I’m certainly not averse to that, but I do think that, you know, U.S. technology is clearly the best at this point. We’re fantastic on the – in the things that we are still – you know, still in the game on. And if we can encourage U.S. industry to, you know, partner with appropriate folks around the world who do play by appropriate rules and are good partners in ways that we can be proud of and that we can frankly defend to Congress when we have to go justify 123s, you know, that would be a fantastic step forward that is not currently happening and – both by doing that as aggressively as we can and by trying to use some of these new MOUs to tee up what will hopefully be a set of rich relationships for the next set of technology that comes down the way so that we can have open doors and opportunities for the American nuclear industry of 10, 15, 20, 50 years from now. We hope we can contribute to that. I don’t know the numbers. I wish they – but I’m sure – I’m confident that I wish they were better. And we’re trying to do what we can from our particular corner of the diplomacy world to make them better. It’s not going to happen quickly, but we do think it can happen.

HEINRICHS: I just wanted to thank you all so much for coming and for all the contributions that you have to this area for U.S. security. And thank you so much, Chris, for being here. And if you have any follow-on questions, I’m sure we’d be happy to take those.

FORD: Thank you very much.

HEINRICHS: Thank you so much.

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