Japan’s Proposal:
IAEA Standby Arrangements System for the Assuranceof Nuclear Fuel Supply1
September 1, 2006

1. Introduction
Japan supports the objective put forward in the “Concept for a Multilateral Mechanism for
Reliable Access to Nuclear Fuel” proposed by France, Germany, the Netherlands, the RussianFederation, the United Kingdom, and the United States in relation to international discussions on
assured access to nuclear fuels. However, bearing in mind the concerns and questions expressedby the Board Members of the IAEA at the IAEA Board of Governors Meeting in June 2006,
Japan feels it useful to make a proposal complementary to the above-mentioned six-nationproposal.
In this consideration, we deem it proper;•To take care of not only uranium enrichment service but also all important activities of thefront-end of nuclear fuel cycle, namely, uranium supply, uranium storage, conversion,enrichment, and fuel fabrication as market failure might occur at various junctures:•To focus not only on remedial responses to market failure for uranium fuel supply, but also
on the prevention of the occurrence of such failure by reporting to the IAEA up-to-date
information about the market, that is, each State’s capacity in various activities related to fuelsupply to nuclear power generation, so as to improve the transparency of the market and toalert the degradation of its adequacy if it is recognized.

2. Proposal
We propose to establish a system called as the “IAEA Standby Arrangements System for theAssurance of Nuclear Fuel Supply” under the auspices of the IAEA, which incorporates both aninformation system to contribute to the prevention of the occurrence of market failure and thebackup feature for supply assurance proposed in the six-nation proposal.
The working principles of the system are as follows;(1) Member States voluntarily notify the IAEA as the depository organization, of theirintentions to participate in the System by registering their nuclear fuel supply capacity in
To be circulated at the occasion of the 50th IAEA General Conference Special Event, “New Framework for
the Utilization of Nuclear Energy: Assurance of Supply and Nonproliferation”, 19-21 September 2006.

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terms of current stock and supply capacity in the following areas;•••••

uranium ore supply capacity
uranium reserve supply capacity, including recovered uranium
uranium conversion capacity
uranium enrichment capacity
fuel fabrication capacity.

Any member State is eligible to participate in the System, provided that the IAEA Board ofGovernors finds no non-compliance of the IAEA safeguards agreement by that State.
(2) A participating State periodically (annually) notifies the level of availability of suchcapacity at the following three levels:
Level 1: It has already started commercial activities and is providing products/services
domestically, but not providing products/services to foreign countries on acommercial basis. Therefore although it has the willingness to cooperate theemergency request to supply, the quantity may be limited and considerable timemight be required to start the supply.
Level 2: It has already started exporting products/services to foreign countries oncommercial basis. Therefore in case of receiving the emergency request to supply,
it has the willingness to do so as soon as possible within the range of available
capacities.
Level 3: It has reserves that can be exported at a short-term notice.
(3) The IAEA is expected to play the following roles:a) to conclude bilateral “standby arrangements” with respective participating States byreceiving Letters Of Intent and to administer the overall System;b) to administer, as the depository, the data-base utilizing information periodicallyprovided by participating States on their commitment areas as well as levels ofavailability and information routinely gathered by the Agency such as potential demands
for the System, e.g. programs of future nuclear power generation in member States andthe situation of the international uranium market. To prepare an annual report on thesituation (adequacy) of world nuclear fuel supply market based on the data-base will be
one of the ways to contribute to the improvement of the transparency of the market.
c) to play an intermediary function should actual disruption of fuel supply occur in a State.
A State is eligible for enjoying the function of the System if the State has satisfied aninternational nonproliferation norm, which the IAEA Board of Governors Meeting should2

adopt after careful consideration at the start of the System.
This System is a virtual arrangement: as participating States are supposed to continue to possessand control nuclear fuel supply capacity, the IAEA does not need to actually possess or store
them.

3.

Discussion(1) The proposed system covers not only uranium enrichment service but also all important
activities of the front-end of nuclear fuel cycle, namely, uranium supply, uranium storage,conversion, enrichment and fuel fabrication, taking into consideration the concern of somecountries that market failure might occur at various junctures. Furthermore the system isintended to prevent the occurrence of the market failure in the first place by asking theIAEA to gather data and information about each State’s supply capacity, analyze them andreport the market situation from the viewpoint of the susceptibility to the market failure.
Therefore it can be said that these functions are complementary to the six-nation proposal.
(2) Whereas the six-nation proposal is based upon a dichotomy between supplier States andrecipient States, a country like Japan, which is producing enriched uranium for domestic
uses but not exporting it currently, though planning to export it in the future, cannot becategorized under the dichotomy. As establishing a system for supply assurance is anexpression of the will of the international community to prevent the occurrence of isolationof a member state from the international nuclear fuel supply market, it is desirable to makeit possible for as many States as practicable to participate in and contribute to the system on
a voluntary basis based on their diverse state of the capacity and situation as proposed inthis.paper.
(3) It is clear that the success of the proposed system will depend on the cooperation of theindustries. Although it is known that the last thing the industries want to cooperate issomething that would interfere in the market, it is hoped that the industries will find awin-win situation in the cooperation to the system we propose as the establishment of it
should be useful for the sound expansion of the nuclear power production and nuclear fuelsupply business, in particular.
(4) The introduction of the proposed system will not pose any new international obligation tomember States other than the international norm of nuclear nonproliferation to be used as
the condition for eligibility. The norm, we expect, should be a universal one any members
should observe. What we do expect by the introduction of the system is the effectiveness ofsuch an arrangement in encouraging States to enjoy the benefit of economy in terms of fuelcost and the start-up costs as well as reliability provided by a diverse well-functioning
market for uranium and fuel supply services and thus reduce the incentive to develop
uncompetitive, small-scale enrichment and/or reprocessing capabilities within their nationalborders.

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