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THE FUTURE OF INTERNATIONAL CIVILIAN

NUCLEAR COOPERATION

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

SECOND SESSION

JULY 10, 2014

Serial No. 113–188

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

SEAN DUFFY, Wisconsin 

CURT CLAWSON, Florida 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Henry D. Sokolski, executive director, Nonproliferation Policy Education 

Center .................................................................................................................... 5

Mr. Daniel S. Lipman, executive director, Supplier Programs, Nuclear Energy 

Institute ................................................................................................................ 12

Mr. Leonard S. Spector, executive director, Washington, DC, Office, James 

Martin Center for Nonproliferation Studies ...................................................... 21

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Henry D. Sokolski: Prepared statement ......................................................... 7

Mr. Daniel S. Lipman: Prepared statement .......................................................... 14

Mr. Leonard S. Spector: Prepared statement ........................................................ 23

APPENDIX 

Hearing notice .......................................................................................................... 54

Hearing minutes ...................................................................................................... 55

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 57

Mr. Henry D. Sokolski: Material submitted for the record .................................. 59

(1)

THE FUTURE OF INTERNATIONAL CIVILIAN 

NUCLEAR COOPERATION 

THURSDAY, JULY 10, 2014

HOUSE OF REPRESENTATIVES,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 9:43 a.m., in room 

2172 Rayburn House Office Building, Hon. Ed Royce (chairman of 

the subcommittee) presiding. 

Mr. ROYCE. This committee will come to order. Today we assess 

the role of civilian nuclear cooperation agreements, known as ‘‘123 

agreements,’’ 123 agreements as known by Mr. Sokolski, especially 

their role in U.S. nonproliferation policy and in promoting our nuclear industry abroad. Of note, the administration has recently submitted a proposed 123 agreement with Vietnam that is now under 

congressional review. 

Nuclear cooperation agreements have the dual goals of advancing 

U.S. nonproliferation policy and also enhancing opportunities for 

the U.S. nuclear industry in foreign markets. Both are of great importance, but there is an unavoidable tension between the two. 

Those who stress nonproliferation argue that 123 agreements are 

a valuable tool in preventing the spread of uranium enrichment or 

the production of plutonium, also known as E&R technology which 

can be used to create a nuclear weapon. Others argue that unilateral efforts to bind other countries will not work because they can 

turn to other nuclear suppliers, such as France or Russia which impose few or no restrictions and that, of course, they are undermining the competitiveness of U.S. companies. 

Last December, the Obama administration ended its 3-year review of U.S. policy on this subject, which pitted the State Department’s argument for nonproliferation against the Department of 

Energy’s advocacy for U.S. industry. The final decision was to continue to push for a ‘‘no E&R’’ commitment in nuclear cooperation 

agreements, but not to make that a requirement. For an administration that has held out nonproliferation as a signature issue, this 

is a dramatic retreat from the so-called ‘‘gold standard’’ policy 

under which countries were pressed to forego acquiring these potentially dangerous technologies begun under the previous administration. 

The debate over these and other issues is reflected in the proposed 123 agreement with Vietnam. It has generated both praise 

and criticism, the latter focused on the absence of a binding restriction regarding E&R; its automatic renewal after 30 years, which 

2

would eliminate the congressional review that has been the norm; 

and Vietnam’s abysmal human rights record which we examined in 

committee hearing yesterday. 

This discussion is not confined to Vietnam, but to those that follow as well. We are currently in negotiations to renew our 123 

agreement with our ally, South Korea, which have been slowed by 

significant differences over E&R. Our agreement with China expires next year, and its renewal is certain to generate significant 

controversy. And the U.S. may begin discussions with Saudi Arabia 

over the massive nuclear energy program it is planning. That one 

is guaranteed to bring these critical issues into focus. 

Of course, the Obama administration has made the goal of limiting the spread of enrichment technology all the more difficult by 

its ongoing negotiations with Iran. In November, the administration conceded that Iran will be allowed to retain a uranium enrichment capacity, a bomb making capacity, in any final deal. That is 

the effective melting of the ‘‘gold standard.’’ The administration has 

conceded this dangerous technology to a state sponsor of terrorism 

that is under U.N. Security Council sanctions for egregious violations of its IAEA safeguards agreement. 

Although today’s topic may sound technical, it should be clear to 

all that it concerns fundamental U.S. interests, not only in the 

present but far into the future as well. 

I now turn to the ranking member, Mr. Brad Sherman, for any 

remarks he may wish to make. 

Mr. SHERMAN. Thank you, Mr. Chairman, and thank you for 

holding this hearing. You and I worked for so many years as chairman and ranking member of the Terrorism, Nonproliferation, and 

Trade Subcommittee. We had a hearing 6 years ago, entitled ‘‘Saving the NPT in an Era of Nuclear Renaissance,’’ and we have had 

various other hearings, as you know, on the issues we now confront 

today at the full committee level, and they are certainly worthy of 

discussion at the full committee level. 

In addition to the focus we had 6 years ago, we have seen 

Fukushima, but that disaster has not prevented many countries 

from looking at expanding or initiating a nuclear power program. 

Civil programs can provide countries with the know how, of course, 

to move toward a nuclear weapon. They can also provide electricity 

without the generation of greenhouse gases. And a number of countries will be attracted to this not only in a cost per kilowatt basis, 

but also as part of any economic—where there are economic incentives to reduce their carbon footprint, nuclear power will be particularly attractive. 

Civil and nuclear programs can also provide cover for countries 

to pursue military programs. That is obvious. The means and the 

excuse to conduct activities related to a military program will be 

present in civil nuclear programs allowing countries to pursue 

weapons under the guise of a civilian program. It is a particularly 

weak excuse to say that a country wants to generate electricity if 

that country has or is contiguous with other countries which have 

natural gas which cannot be easily exported. The cost of 

liquification, transportation, and regassification of natural gas 

means that it is perhaps one third the cost in the area in which 

it is created, in which it is obtained, than it is shipped to distant 

3

continents. Countries that have virtually free natural gas that have 

no other way to exploit it, like Iran, who say they need nuclear 

power for electricity should come under special scrutiny. 

It is not a theoretical concern to say that a civilian program can 

cover for a military program. This is exactly what Iran is doing. 

India, which I want to point out did not sign the NPT and therefore 

was not bound by any treaty not to develop nuclear weapons, but 

in the case of India derived the fuel used from a civilian reactor 

for the fissile material used in its first weapons. That is why the 

so-called 123 agreements, including the Vietnam agreement which 

is now sitting before Congress, need to be deliberated more than 

is the current practice. 

The current law puts Congress not in the driver seat, not as a 

coequal branch of government, not in the back seat, but in the 

trunk when it comes to deciding what our policy will be on nuclear 

cooperation agreements. These agreements come to Congress for a 

90-day review. In order to stop them, both houses of Congress have 

to act within 90 days, something that in this Congress is unlikely 

to occur on a motherhood resolution. But even if both houses of 

Congress vote to stop such an agreement, it goes before the President for a possible veto and if the President vetos the resolution, 

both houses have to override with a two thirds vote. I think that 

is an affront to the doctrines that underlie the first article of the 

U.S. Constitution. It is not meaningful review. 

I am not saying that Congress needs to have an affirmative vote 

on every agreement. Congresswoman Ros-Lehtinen and I have introduced legislation, H.R. 3766, which would provide that Congress 

would have to affirmatively vote on an agreement unless that 

agreement met what I call the gold standard plus. That is to say 

it would have to have gold standard provisions dealing with a commitment by the country not to deploy enrichment and reprocessing, 

the two most proliferation and dangerous technologies needed to 

produce a bomb-grade material, and also agree to enhance inspections and verifications regimes, known as the additional protocol. 

In addition, they would have to allow the American companies to 

compete by having liability provisions. No company will build a nuclear reactor without some liability protection, but Russia and 

France, their companies are state owned and so they claim sovereign immunity as their liability protection. Any 123 agreement 

that does not insist on liability protection for American companies 

basically is an agreement designed to cede the jobs which would 

have the effect, if not the design, of ceding the jobs to Russia and 

France. I believe that a reasonable compromise with the Executive 

Branch and industry might be available. And I thank the chair for 

his time and I especially thank the gentlelady from Florida for her 

work on the bill that I have just cited and I yield back. 

Mr. ROYCE. We go now to Judge Poe, chair of the Subcommittee 

on Terrorism, Nonproliferation, and Trade, for 2 minutes. 

Mr. POE. Thank you, Mr. Chairman. The Taiwan 123 Agreement 

seems on the surface to be an easy decision. Taiwan is a strong ally 

of the United States. Taiwan has a great democracy that shares 

the values of the United States as well. And the agreement has legally-binding language that Taiwan will not acquire enrichment or 

4

reprocessing technology. This is important because such technology 

can very easily lead to the development of a nuclear bomb. 

The proposed Vietnam 123 Agreement is the one I have concern 

with. First, there is no legally binding language like the Taiwan 

agreement that states that Vietnam will not acquire enrichment 

and reprocessing technology. Vietnam is not the ally that Taiwan 

is and it is ironic that we have stricter language in our deal with 

a close democratic ally than we do in a deal with a Communist 

country that has really proven not to be trustworthy. 

However, it is also correct that the United States does not control 

the nuclear energy market like it did in the past and that each of 

these deals is important to the United States’ industry and American jobs. We are not in the 1950s any more. Russia, China, 

France, South Korea, and Japan would all be happy to take our 

business in Vietnam if we just walk away from some kind of an 

agreement because Vietnam does not agree to forego enrichment 

and the preprocessing technology. The deals they strike will probably lead to greater proliferation risk than the current situation on 

the table before us. I do want to hear from the witnesses what they 

think about this situation. 

Second, the proliferation risk is not the only problem we have 

with Vietnam. Over the last few years, human rights abuses by the 

Government of Vietnam have gotten worse. Pastor Quang has been 

detained and arrested by the Vietnam police 13 times. His crime? 

He is a Christian pastor who organizes prayer meetings. Such 

abuses continue in Vietnam. There are 100 stories like Pastor 

Quang and Congress should think twice before it rewards Vietnam’s nuclear energy situation when it abuses and tortures and 

kills its own people. Human rights really do matter and I will yield 

back. 

Mr. ROYCE. Thank you, Mr. Poe. We are joined this morning by 

a distinguished group of experts. Mr. Henry Sokolski is the executive director of the Nonproliferation Policy Education Center. He 

previously served as the Deputy for Nonproliferation Policy in the 

Department of Defense from 1989 to 1993. ‘‘Hammering Hank,’’ as 

we know him in the office, also worked in the Office of the Secretary of Defense’s Office of Net Assessment. It is his birthday, so 

congratulations, Henry, and I am going to assume it is your wife, 

Amanda, who is keeping you young. 

Mr. Daniel Lipman is the executive director for Supplier Programs at the Nuclear Energy Institute. Formerly, he was senior 

vice president of Operation Support for Westinghouse Electric Company. 

Mr. Leonard Spector, Sandy Spector as he is known, is deputy 

director of the James Martin Center for Nonproliferation Studies at 

the Monterey Institute of International Studies. Previously, he 

served as Assistant Deputy Administrator for Arms Control and 

Nonproliferation at the U.S. Nuclear Security Administration 

where his portfolio included overseeing nuclear export control activities. 

Without objection, the witnesses’ full prepared statements will be 

made part of the record. Members are going to have 5 calendar 

days to submit any statements or questions or extraneous material 

for the record. 

5

Mr. Sokolski, if you would please summarize your remarks to 5 

minutes, for each of the members of the panel here and then we 

will go to questions. 

STATEMENT OF MR. HENRY D. SOKOLSKI, EXECUTIVE 

DIRECTOR, NONPROLIFERATION POLICY EDUCATION CENTER 

Mr. SOKOLSKI. Mr. Royce, Mr. Engel, members of the committee, 

I want to thank you for this important hearing. Before I begin, I 

would ask permission that not only my full testimony, but several 

brief items be placed in the record. 

Mr. Chairman, when I last appeared before this committee it was 

considering legislation that would have significantly strengthened 

the role of Congress in approving U.S. nuclear cooperative agreements. The committee unanimously approved this legislation, but 

after industry objected, it never went to the floor. That was 3 years 

ago. 

Congress now, as we have just heard, really does not have much 

of a hand in shaping nuclear cooperative agreements. It can continue to let the executive send up more agreements and allow them 

to come into course, but if Congress does, it will leave itself powerless to deal with three issues. 

First, possible unilateral executive authorization of Chinese reprocessing of hundreds, I repeat, hundreds of bombs worth of plutonium each year from spent fuel processed in U.S.-designed reactors. China recently announced it will buy a so-called ‘‘peaceful’’ reprocessing plant from France and locate it at China’s original 

weapons plutonium production site. This will obviously have military significance. Under the current U.S.-China nuclear agreement, 

the executive can authorize China to reprocess materials from eight 

or more U.S.-designed reactors that will be operating in China. 

Congress has no say. This understanding expires December 2015 

and must be renegotiated. Does Congress not want to have any say 

in this? 

Under the committee’s stalled 2011 legislation, each Chinese reprocessing request would require congressional approval. I would 

urge the committee to reconsider that 2011 bill by marking up 

identical Ros-Lehtinen/Brad Sherman legislation, H.R. 3766. 

Second, the elimination of periodic required reviews of nuclear 

agreements. Most U.S. nuclear agreements are for a fixed term and 

must be renegotiated. The Vietnam nuclear deal, however, stays in 

force in perpetuity unless one of the parties asks and succeeds in 

getting it renegotiated. The executive is sure to push this approach 

for future deals until all U.S. 123 agreements automatically renew 

without presentment to Congress. Again, this will occur unless 

Congress acts to limit the practice. Given the Vietnam deal is hardly urgent, it would be best to have the executive withdraw it until 

this is fixed. 

Third, the executive is creating a precedent with the Vietnam 

deal that will make it virtually impossible to resist Saudi, Turkish, 

and South Korean calls to reprocess or enrich. The executive is negotiating with Iran and South Korea over enrichment and reprocessing. The Vietnam deal is a kind of mini Indian nuclear deal. But 

it undermines the gold standard on proliferation conditions contained in the UAE and Taiwanese agreements sets a poor preceVerDate 0ct 09 2002 13:30 Sep 25, 2014 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\071014\88626 SHIRL
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dent on both fronts. Unless Congress overrules industry’s current 

veto on legislating on these matters, expect more hand wringing, 

nail biting, and Iran-like crises to emerge. 

Two additional notes, industry and the State Department argue 

that if Congress votes on agreements that don’t meet tough nonproliferation conditions, the agreements are dead on arrival with a 

loss of U.S. business and jobs. But in pushing for lowest common 

denominator agreements, State has its priorities backwards, I 

would argue. Our Government should be trying to convince other 

suppliers to raise their nonproliferation standards which I might 

add are all too similar to our own, but like our own, too low. The 

U.S. can do this, but it needs to take the initiative. 

Finally, although it is hardly sound to give up important security 

positions because of promised jobs, it is ridiculous to do so when 

such promises are hugely exaggerated. India, we were told, was a 

$100-billion nuclear market for the U.S. Nine years after that deal 

was announced though no U.S. reactors have been sold. Yet, by exempting India from restrictive NPT rules, we did great harm to 

that treaty and to our nonproliferation efforts globally. 

The GAO recently noted that the U.S. doesn’t track America’s actual nuclear exports. The committee should look into this and demand real numbers on exports of 123 controlled goods. On these 

matters, Congress should not be sold a bill of goods. Thank you. 

[The prepared statement of Mr. Sokolski follows:]

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Mr. ROYCE. Thank you, Mr. Sokolski. 

STATEMENT OF MR. DANIEL S. LIPMAN, EXECUTIVE DIRECTOR, SUPPLIER PROGRAMS, NUCLEAR ENERGY INSTITUTE 

Mr. LIPMAN. Thank you, Mr. Chairman, Ranking Member Sherman, distinguished members. Happy birthday, Henry. 

I have been in this business now for four decades and never before, never before in four decades have I seen our industry so heavily dependent and engaged in the global nuclear market. I know 

you may know that we are building new plants here in the United 

States in Tennessee, in South Carolina, and in Georgia, but that 

is five plants, but there are more than 67 plants currently under 

construction, all of which are outside the United States. So this is 

a heavily global market. Participation in this market can have a 

significant impact in advancing a number of U.S. interests. 

As Henry mentioned, there certainly is job creation. We know 

from exports to China that close to 20,000 jobs have been created 

in about 15 states simply from that export. But for me as a nuclear 

professional, the thing I worry about and I wake up worrying about 

in the morning is nuclear safety. In the post-Fukushima world, I 

think Mr. Sherman referenced, nuclear safety certainly is a national security issue. And it is my view that American technology, 

particularly the latest reactor designs currently on offer in the 

market, offer significant nuclear safety benefits, along with the operating processes and procedures that come with it. 

Our technology—and by the way, our regulator with whom the 

industry does not always have a friendly relationship, is certainly 

the envy of the world. 

A third area of U.S. interest which has been touched upon and 

will be a theme today is that U.S. participation in markets outside 

the United States advances our nonproliferation objectives. We 

have the strongest, nonproliferation controls in our civil nuclear cooperation agreements than any other country. 

One question here then is where this market is outside the 

United States? Are we better off with America engaged in it or not? 

Do we make the world’s nuclear operating fleets safer and more 

proliferation resistant if we participate or if we don’t participate? 

And by the way, as was indicated earlier, this market is not ripe 

for the taking by U.S. companies. 

There is a lot of international competition out there. And that 

was referenced earlier. If we aren’t going to be in these markets, 

I assure you our competitors will and they are. So what do we 

need? What are the issues here as far as the industry is concerned? 

First, I think you would look at this as a handful of policy tools 

and issues of importance to us. One-twenty-three agreements, of 

course, and we will talk about that today, but we also need an efficient, predictable, and reliable export control process that is currently managed out of the Department of Energy. 

Other countries have to agree to, and this was mentioned earlier, 

nuclear liability regimes that protect companies from undo harm. 

And next, this is somewhat politically sensitive, these exports require trade finance, and reauthorization of the Export Import Bank 

is something our industry strongly supports. We also need better 

Federal coordination within the Federal bureaucracy and signifiVerDate 0ct 09 2002 13:30 Sep 25, 2014 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\071014\88626 SHIRL
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cant progress in the last couple of years has made that better, in 

our opinion, with the appointment of someone in the White House. 

But she is only one person. And finally, these deals are big, and 

they need advocacy at the highest levels of government. The China 

deal would not have happened had the previous administration not 

been personally engaged. 

And finally, we know that the geostrategic situation where Russia, who is engaged in the Ukraine and in Crimea, underlines the 

importance of energy in this competitive world. Nuclear energy has 

its part. Nuclear energy plays an important role not only in electrification, but as part of U.S. policy, U.S. foreign policy just as our 

digital industries, aerospace, oil and gas and other industries. So 

with that, I thank you for the opportunity to testify, chairman, and 

I look forward to responding to your questions. 

[The prepared statement of Mr. Lipman follows:]

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Mr. ROYCE. Thank you, Mr. Lipman. 

Mr. CONNOLLY. Mr. Chairman? Mr. Chairman, before the speaker speaks, I just wanted to say especially to my colleague from 

Florida, Sandy Spector and I go way back. We worked in the Senate together, you may not know, for the Senate Foreign Relations. 

So I welcome you, Sandy, back to Congress. 

Mr. ROYCE. And Gerry gave him the nickname. But it is good. 

Mr. Spector, we will go to you. 

STATEMENT OF MR. LEONARD S. SPECTOR, EXECUTIVE DIRECTOR, WASHINGTON, DC, OFFICE, JAMES MARTIN CENTER FOR NONPROLIFERATION STUDIES 

Mr. SPECTOR. Thank you, Mr. Chairman and other members of 

the committee and Ranking Member Sherman. 

I want to concentrate on the Vietnam Agreement looking at several of the issues that have already been mentioned. As a matter 

of policy, I have strongly supported U.S. efforts for many years to 

discourage the development of foreign enrichment and reprocessing 

capabilities. Given the desire of many states to sign a nuclear cooperation agreement with us for the part of approval, the seal of 

approval that it gives, these agreements provide the opportunity to 

negotiate restrictions on the development of enrichment and reprocessing with partner countries. 

The 2009 agreement with the UAE, of course, is considered ideal 

in its terms because it gave a blanket renunciation of any reprocessing or enrichment on its territory in perpetuity, certainly for the 

duration of our agreement. But we have a lesser kind of undertaking with Vietnam at this point. The language in the agreement 

is really in the opening section, the preamble, which is not a binding part of the agreement. It is just hortatory and descriptive. It 

refers back to a Memorandum of Understanding between the 

United States and Vietnam in which Vietnam agreed that it was 

not its intention to reprocess or enrich and that it was its intention 

to use international fuel cycle services to support its program 

which are very good statements, but these are nonbinding and, of 

course, they are reflective of an intention only; so we are long way 

away from the gold standard of the UAE agreement or the Taiwan 

agreement. 

On the other hand, we have something. We do have a Memorandum of Understanding. We do have the reference to it in the 

agreement, and when you compare that to where we were to start 

with of all of our other agreements, this is a real step forward. 

Other agreements only covered the enrichment or reprocessing of 

American provided material or material created with American exports, i.e., reactors or fuel. The Vietnam agreement speaks to a 

much broader limitation, which would cover all fuel irrespective of 

what country it might have come from, all reactors, and so forth. 

So in that sense, it is a very positive step forward. But to reiterate, 

also a very big step short of what we may have hoped for. 

Nonetheless, when you take together the partial standard here, 

what might be called the silver standard as a colleague of mine, 

Miles Pomper, has characterized it, and you couple that with a 

pretty decent record by the Vietnamese on the nonproliferation 

front in terms of the agreements that it has signed, the treaties 

22

that it has signed, and in terms of its absence, as far as I can tell, 

of involvement in the Iranian program, it is not usually linked, I 

have not seen it linked with any of the illicit trade that is supporting the Iranian program. And, in general terms, the program 

in Vietnam is so early in its development that there are many, 

many years ahead before they could possibly advance to a stage 

that we might be concerned about. 

And so I would say the silver standard is a satisfactory and acceptable approach in this context on this particular matter in the 

agreement. It is not ideal, but it does give us something to work 

with, and I think it is a reflection that the Vietnamese recognize 

that to enrich and reprocess really at any time in the future would 

be a politically-charged development that would raise national security concerns in many quarters. I think that shadow is very positive. 

Regarding the Additional Protocol, they have one, so that is not 

an issue. What we need to look at, however, is the 5-year automatic 

extensions. When you couple that automatic extension with the 

lack of the gold standard on enrichment and reprocessing, it basically means that if their attentions change over the course of the 

next 30 years, we really have no way to come back to them and 

demand sort of a renegotiation or to demand changes in their behavior. The automatic extension deprives the Congress and the 

United States, more generally, of a ready approach to deal with 

some of these questions. Rather, we would have to take the extraordinary step of declaring an agreement to be terminated, which 

I think we would always be very reluctant to do because of the negative implication it would cast on our partner country. 

At the conclusion of my remarks, I note a number of regulatory 

issues; questions about the independence and effectiveness of safety regulation in Vietnam; questions about the independence of regulators because of the nature of the Vietnamese Government as a 

dictatorship; and also the question of the lack of strategic trade 

controls, which basically means Vietnam does not have the ability 

to comply with crucial U.N. Security Council resolutions. Thank 

you very much for the opportunity to testify. 

[The prepared statement of Mr. Spector follows:]

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Mr. ROYCE. Thank you, Mr. Spector. We have been joined by the 

ranking member. He was at a briefing on Iran this morning. But 

at this time I think it would be perfectly appropriate if he would 

like to make his opening statement. Mr. Eliot Engel of New York. 

Mr. ENGEL. Thank you, Mr. Chairman. Thank you for holding 

this very timely hearing. I want to thank the witnesses for their 

testimony and I look forward to their answering our questions. 

This is interplay, obviously, between two crucial issues: The fight 

against the proliferation of nuclear weapons and the increasing 

global cooperation of civilian nuclear energy. We face a challenge 

today and a challenging question: How can we achieve our nonproliferation goals while commercial industry energy technology is 

now readily available in the global marketplace? 

In recent years, the U.S. has selectively pursued the so-called 

gold standard, the legally binding pledge by countries receiving 

U.S. civilian nuclear technology that they will not pursue domestic 

enrichment or reprocessing capability. This provision was included 

in the nuclear cooperation agreement with the UAE, but France 

and Russia, our main competitors in the global market for civilian 

nuclear technology do not require no enrichment stipulation from 

their customers. Countries that purchase technology from these nations are free to operate enrichment facilities that might be used 

to produce low or medium enriched uranium for power plants or research reactors. This technology obviously could also produce weapons grade material. 

The U.S. now faces some difficult choices. We want to prevent 

the further spread of sensitive enrichment and reprocessing technologies, but if we continue to insist on no enrichment requirements, other governments are more likely to look to France or Russia to supply essentially the same nuclear technology, so it is a 

lose-lose scenario. American companies won’t get the projects and 

the U.S. Government will have far less visibility into the nuclear 

programs of other nations. 

The stakes are enormous. Today, 434 civilian nuclear power reactors are operating in 29 countries; 73 are under construction; 172 

reactors are on order or planned; and 309 have been proposed and 

these figures don’t include the hundreds of reactors for research, 

medical isotope production, or other civilian applications. The U.S. 

cannot be left on the sidelines as more countries enter the nuclear 

marketplace. 

In a perfect world, I would want all of our nuclear cooperation 

agreements to include the gold standard, but in practice, such a 

policy would isolate the U.S. and give a clear advantage to our 

competitors. We have been given a paradox to continue fighting nuclear proliferation. We need to be flexible in negotiating our civilian 

nuclear cooperation agreements. This approach is reflective of the 

nuclear cooperation agreement with Vietnam, which I support. 

That agreement stipulates that Vietnam will purchase nuclear fuel 

from the commercial market, but it does not include a formal commitment to forego enrichment or reprocessing in the future. So I 

hope in our questions to our distinguished panel, they can help us 

work through the policy dilemmas of nuclear cooperation. And I 

thank you, Mr. Chairman, for holding this hearing. 

29

Mr. ROYCE. Thank you, Mr. Engel. I will go now to my questions. 

I start with my first for Mr. Sokolski. The Obama administration 

recently concluded the 3-year review of its policy regarding nuclear 

cooperation agreements. The decision was to not require other 

countries to forego aquiring E&R capability as a condition, as you 

know we have been discussing for nuclear cooperation. This standard, which was included in the 123 agreement with the UAE and 

with Taiwan, is known as the gold standard. So is the gold standard dead? 

And the administration agreed up front in its negotiations with 

Iran that Iran would be able to continue to enrich uranium. How 

can this dangerous technology be conceded to a state-sponsor of terrorism? 

Mr. SOKOLSKI. I guess the short answer is the fat lady is not yet 

on stage. We have not finished negotiating with Iran. It could come 

up as a cropper. We could be holding hearings for another year 

talking about a deal, which may not be finished. 

Mr. ROYCE. As Eliot shared with me this morning. We could be 

passing the Royce-Engel bill. 

Mr. SOKOLSKI. So that is point one. Point two is saying you want 

to go case-by-case is a very expensive, long, drawn out way of saying we don’t know what to do. Now you should demand more of our 

Government than that. That is no policy at all. 

Finally, a very important point, the hard yards are ahead of us. 

Vietnam, heck, they are not even building their first Russian reactor. They won’t even start for another 6 years. So it is easy to kind 

of avert your gaze for the short-term. Saudi Arabia and South 

Korea, does Japan start reprocessing? What does that have to do 

with China? Those things are going to keep you up at night and 

I don’t see any way around pushing the button for a standard because the suppliers currently pretty much have the same standards, it is just they are very loose. They are like ours. If we don’t 

up the ante and push on the other suppliers to raise theirs, we will 

know where we are headed. 

Mr. ROYCE. Let me get to that question then and for you and 

other members of the panel, this will be my final question. Russia 

constructed and is supplying fuel for the Bashir reactor. That is 

concerning, but so is the fact that they are talking about building 

eight more, right? Eight more facilities even though Iran almost 

certainly has a clandestine nuclear weapons program. So why don’t 

other supplying countries, such as Russia or France, impose similar 

conditions in their nuclear cooperation agreements? Don’t they 

think that preventing the spread of E&R is important? Let us discuss that. 

Has the U.S. attempted to persuade other countries to adopt 

these restrictions? I mean what have we done in that dialogue? 

And if not, why haven’t we? Has it succeeded at all where we have 

tried? What leverage do we have on those countries? And then lastly, how significant is the negative impact on the competitiveness of 

the U.S. companies that imposing this requirement of 123 agreements may cause? Are there specific examples that you can point 

to? So if I could hear from the panel on my questions there. 

Mr. SOKOLSKI. I think the leverage point right now is ironically 

the safety point that was raised by the witness from NEI. The 

30

French are very upset with the shabby construction of their reactors in China and are afraid it is going to ruin their brand. By the 

way, this should be a concern for Westinghouse as well. They have 

not spoken up. They need to. If you do, this is a lever you go with 

into renewing the agreement because they do need help on more 

safety work and we need to be doubling down. 

If there is going to be a future for nuclear power design in America, they better not blow up. We can work with the French on this. 

The same thing can be done with the Russians. Why? We have suspended nuclear cooperation with them. We don’t talk candidly 

enough about the Russian safety problem. This committee, other 

committees ought to press to get our agencies to start talking about 

that process. 

Mr. ROYCE. You mean restart the——

Mr. SOKOLSKI. Well, not restart. Get our agencies to be as candid 

as the French are about how poor the safety standards of places 

like China and Russia are. I think if we had more publicity on that, 

their product line would not be doing as well. You are not going 

to compete against those countries on price point or financing even 

with that said. So you are going to have to push to be more candid 

about what their safety problems are. Then you have leverage. 

Mr. ROYCE. And how can we get that into the record of this committee hearing now that we have surfaced that information? 

Mr. SOKOLSKI. Hold a hearing. It is the old way. It works. 

Mr. ROYCE. Mr. Lipman, 

Mr. LIPMAN. Thank you, Mr. Chairman. Let me address the latter part of your question first. It is really the area of my competence. I do not think there is a lot of leverage. I think insofar 

as governments and particularly their state-owned enterprises, to 

go out into the marketplace and pursue opportunities, there are 

widely differing standards. In the case of the French, in particular, 

they have a commercial fuel reprocessing business, an enrichment 

business and they push that. We don’t do that in the United 

States. Our American companies are not involved in fuel cycle activities. 

And I think the impact and to be very, very clear, the industry 

is not against the gold standard. The industry is against universal 

application of one size fits all policy. That is what our problem is. 

And when there is universal application of a standard, when countries operate in different regions, they have varying areas of expertise, as Henry noted in their nuclear power programs domestically. 

A one size fits all policy is just not workable and it excludes American companies from providing the technology that I think Henry 

was referring to that would better serve U.S. interests. 

Mr. ROYCE. I am out of time. Let me just defer to the ranking 

member. Go ahead. 

Mr. ENGEL. Mr. Spector, let me ask you. In my opening statement, I laid out what I see as a central dilemma for the United 

States. If we insist on a no enrichment requirement, there are two 

consequences: We don’t have good visibility into a country’s nuclear 

program and our nuclear companies lose market share and become 

less viable commercially. Do you agree this is a problem, the main 

problem? 

Mr. SPECTOR. It is certainly a drawback to trying to pursue——

31

Mr. ENGEL. Can you push the microphone down a little closer to 

you? 

Mr. SPECTOR. It is certainly a drawback as we try to advance the 

gold standard which we must do. This set of arguments has a familiar ring. If one goes back to the current law, which I guess I 

was involved in drafting, the same argument was made that it 

would be dangerous, especially for American commercial interests, 

to insist that every state have full-scope safeguards, that is, that 

it had placed all of its nuclear facilities and equipment under International Atomic Energy Agency inspection. Nobody had that rule at 

the time. By 1992, all suppliers had adopted the rule, and along 

the way we had many other states that supported it, Canada, Sweden, and others. 

We are in the same mode now. We know what we want to do. 

We would like to suppress enrichment and reprocessing to the 

maximum extent. We have a mechanism for doing that and we 

have to confront the commercial negativity in some respects, but it 

is worth appreciating that there are only six or so principal reactor 

vendors around the world that are really competing with each 

other. 

We have controls over our own and probably over the Japanese 

since they are in partnership. The French and the Russians stand 

to benefit from this rule, because it would drive partner states into 

using fuel cycle services, where they are very prominent. And so 

they have a self interest that may be supporting a rule like this 

if we can really press for it. 

Canada, I would say is in a different status—it is a friend of the 

United States and I think would go along. And I think we could 

actually make some progress if we did a head to head set of negotiations to try to make this the rule. So I do appreciate the points 

that have been made about the challenges that we might have, but 

I think the goal is worthwhile. And I think we can probably make 

progress if we really press the point forward. 

Mr. ENGEL. So as a practical matter, do any of you see countries 

accepting the no enrichment requirement in order to obtain civilian 

nuclear technology and for countries that refuse to agree to no enrichment are likely to build civilian reactors? Are there any countries that you see as proliferation risks? Mr. Sokolski? 

Mr. SOKOLSKI. Look, part of our problem is we try to predict 

what is going to happen 30 years in advance. And we get it wrong 

over and over again. So let’s just be democratic here and say almost any country that is not a mutual security pact ally of the 

United States could possibly cause problems. I will go further. You 

know, if South Korea gets nuclear weapons, it is a problem even 

though it is an ally. It is very, very hard to know which country 

is going to be a problem. Vietnam 30 years from now could very 

well be a problem. Certainly, we didn’t think Iran was going to 

have nuclear weapons 30 years ago. So I think the first point is 

they are all problems. That is the reason why you need a single 

rule. 

Second of all, I think voting on agreements is a little different 

than demanding that all agreements be exactly the same. I think 

if we are unwilling to use this deliberative body to debate and analyze what is correct, then we have given up on self-government on 

32

this issue set and you should just send it back to the executive and 

say it is their fault if anything goes wrong. 

Mr. ENGEL. Mr. Lipman, let me ask you this. There are 172 reactors that are planned to be built. Can you tell us the competitive 

position of our U.S. companies which are mainly Westinghouse and 

GE? And I want to also ask you about China and their nuclear 

market. They have 57 reactors planned and another 118 in the proposed stages. So if you could tell us what the state of play is in 

that market, where the U.S. companies stand in that? 

Mr. LIPMAN. Yes, ranking member. Let me start with the first 

part of your question on competition. Sandy’s count was six. There 

are about ten nuclear reactor vendors out there because in the last 

few years, we have seen the rise of Korean competition and more 

Russian competition. There are three Japanese vendors as well as 

AREVA. And by the way, the Chinese are not far behind, to answer 

part of the second question. They will be in the export markets. So 

the bottom line is it is a very competitive market out there and 

each of these competitors brings different tools, different levels of 

state sponsorship and different ancillary deals, be it the military or 

other sorts of commercial concessions to the party. So it is very 

competitive. There is not U.S. dominance. 

GE and Westinghouse, however, have indicated that they can 

win against these competitors. The win in China in 2007, and I will 

segue my answer to the second part of your question, ranking 

member, was a win against the Russians and the French. So we 

can win. We can compete and we can win, but only if there is a 

level playing field. We are Americans. We like to compete, but we 

want a level playing field. 

As to the Chinese program, sir, I lived in China for 4 years and 

I can tell you that the environmental situation in China is such, 

it has only gotten worse since I have lived there. Like the United 

States, the population is largely in the east and coal is in the north 

and in the west. A lot of the rail stock is used to transport coal. 

So they are going very heavily into nuclear technology. The first 

tranche of units that they bought were a little bit from here, a little 

bit from there, and then they settled on Westinghouse AP 1000 

technology as a basis, but not the sole basis for their program going 

forward. 

It is my understanding that the second set of reactors is currently up for bid and that will be negotiated sole source with Westinghouse. So it gets to the point, frankly, that my colleague Henry 

made which is yes, you have to look forward 30 years. That is exactly why you want American technology in there, because when 

you are in, and especially when you are in in the beginning, you 

get follow-on work. You have participation in the nuclear program 

and you have a view of what is going on in the country. 

My view at the time when I was negotiating the China contract, 

sir, was if we don’t win, we are on in the outside looking in for decades. Thank you, sir. 

Mr. ENGEL. Thank you. 

Mr. ROYCE. We better go to Ileana Ros-Lehtinen, chairwoman of 

the Middle East subcommittee. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman. Thank 

you for this hearing and thank you to our witnesses. 

33

Throughout the past 6 months, there has been much discussion 

here in Congress about the role of this legislative body regarding 

nuclear agreements. The Obama administration’s misguided policy 

toward Iran is a game changer and could potentially spark an arms 

race in the countries in the world’s most unstable and dangerous 

region already. 

I disagree with the administration’s insistence on taking our 123 

agreements on a case-by-case approach, rather than holding each 

country equally to the gold standard. Why are we holding countries 

in the Middle East to different standards than in Europe or in 

Asia? We should be holding each country to the very strictest of 

standards to ensure that maximum safeguards are in place. 

If Congress has the ability to vote up or down on a free trade 

agreement why not on a nuclear agreement? That is why earlier 

this year I reintroduced alongside with my colleague, Brad Sherman, H.R. 3766, which reforms the Atomic Energy Act of 1954 to 

provide greater congressional oversight of nuclear agreements with 

foreign countries and protect against the threat of nuclear proliferation. Let us not forget about the U.S.-Russia nuclear cooperation agreement which was previously withdrawn by the Bush administration in 2008. Why? Because the President could not certify 

under the Iran, North Korea, and Syria Nonproliferation Act that 

Russia was not providing nuclear missile in advance conventional 

weapons to Iran. This is important to know because we cannot examine these agreements in a vacuum. 

When these 123 agreements are proposed, we must take into account our foreign policy and national security interests, as well as 

a country’s human rights record. And we must hold each and every 

country to those same standards that we set, which brings us to 

the 123 proposed agreement with Vietnam. I strongly oppose the 

agreement. Allowing Vietnam to enrich undermines our objectives 

in other areas and in the Middle East where allies such as the 

UAE and Jordan are held to the gold standard. Vietnam has an 

abysmal human rights record and the practice of human trafficking 

is rampant and there are severe restrictions against religious freedom. 

Congress must be empowered in its oversight responsibility and 

must ensure that such agreements not only protect our interests, 

but help guard against the rising threat of nuclear proliferation. 

When Brad and I introduced the bill, NEI immediately opposed it, 

stating that the bill risked national security and that it will cost 

U.S. jobs. Some of these same claims were made about the Colombian Free Trade Agreement, which was initially signed in 2006, 

that if we didn’t sign immediately we would lose U.S. jobs. But 

after 5 years of congressional input and enhancement to approve 

the agreement, the idea of costing jobs did not prevent Congress 

from making the bill better because in the end expediency is not 

the objective. The objective is to create an agreement in which the 

U.S. benefits. And in the case of a nuclear agreement, U.S. national 

security should be the first priority. 

Then there is the claim that the bill would undermine U.S. national security because it would lack a commercial presence on the 

ground, but that did not do us any good in Russia. We have a 123 

agreement with Russia which I opposed, but that hasn’t stopped 

34

the Russians from supporting and providing sensitive materials 

and technology to the Iranian and Syrian regimes. 

And finally, there is the narrative that the U.S. would lose commercial business, that these countries will go to turn to other nations to fulfill their nuclear needs. Well, let us take a look at our 

foreign military sales program. It might take some time to get 

through the process, that is true, but our military technology and 

equipment is the best. And these countries that follow the process 

that we have in place because they know that they are getting the 

best quality when they buy from us. The same could be said about 

our nuclear know-how. 

Nuclear technology is not something you want to cut corners on. 

You want the best. I believe that these countries will stay with 

American companies because they know what they can get for us. 

Congress should already have oversight responsibility over these 

sensitive agreements. Congress must have a final say in any agreement that includes enrichment and it must be able to have an up 

and down vote. 

Mr. Chairman, when Congress will finally have a say over these 

nuclear agreements, we will ask why haven’t we always done so? 

It makes common sense. It makes perfect sense. Thank you, Mr. 

Chairman. 

Mr. ROYCE. We thank you very much, Ileana. We will go now to 

Mr. Brad Sherman, who is the ranking member on the Terrorism 

and Nonproliferation Subcommittee. 

Mr. SHERMAN. Further support of our bill, Ms. Ros-Lehtinen, I 

will point out that Congress has demonstrated the ability to vote 

on and pass cooperation agreements with both India and the renewal of the Korea 123 agreement and I point out that our bill, I 

think, is probably in industry’s interest though they may not focus 

on this because it says if you don’t want to vote, have to have an 

up or down vote in Congress, you need a standard that has adequate liability protection for our companies. And I have been very 

disappointed with the Indian deal for a number of factors, but especially the fact that India has not given us adequate liability protection. We haven’t built a single reactor there or even started one. 

Now Mr. Sokolski, we have got a proposal for a French-built 

plant for the production of weapons-grade uranium derived from 

spent fuel from U.S.-origin reactors. How many bombs does China 

have now? And how many more could they create in the next 10 

years just from this reprocessing plant, plutonium, excuse me? 

Mr. SOKOLSKI. The problem is we don’t know how many weapons 

they have. The respected opinions of most analysts and I think our 

Government is that they have no more than perhaps 200, maybe 

300 weapons. 

Mr. SHERMAN. And if this French plant were built, it would take 

years, it would provide plutonium sufficient for——

Mr. SOKOLSKI. Well, if you have eight reactors of the AP size 

which is about 1100 megawatts, it will produce 1600 kilograms of 

weapons of useable plutonium. That plutonium, you divide by four, 

that is the DOE number. So that is 400 bombs per year. 

Mr. SHERMAN. 400 bombs per year? 

Mr. SOKOLSKI. Now that is assuming you use crude bomb design. 

35

Mr. SHERMAN. So we are talking about them deriving enough 

plutonium every year to create as many bombs as they currently 

have in stock? 

Mr. SOKOLSKI. Here is the good news. The Chinese are pretty 

savvy. They don’t like wasting money unnecessarily. They are haggling over price. They are looking at the Japanese and the South 

Koreans and what others are doing. If they don’t see them reprocess, watch this program slip. We should be leaning on everyone in 

that region to not recycle, including the Chinese and avoid this uncertainty. 

Now many people will say oh, well, it is not weapons-grade and 

this and that. In private, I can lay out sort of the design things 

that we have learned from the labs that make it very clear this 

stuff is very usable, very usable for weapons. And so it is something you do not want to encourage. 

Mr. SHERMAN. What does China think of us having a nuclear cooperation agreement with Vietnam? And can we cooperate with 

China on nonproliferation policy or nuclear policy both with an eye 

toward the fact that their own 123 agreement needs to be renewed 

in 2015 and they may want to have some input into whether we 

enter into the Vietnam agreement? 

Mr. SOKOLSKI. I am holding a series of seminars with Chinese 

nuclear experts. I am actually flying some in at the end of this 

month. That topic has not come up. We will make sure it does. But 

that said, I think the Chinese are sensitive to what is going on in 

the region. And I think that they assume for the moment that Vietnam isn’t a problem. But in the long run, they are at odds. They 

are at odds. And they would be concerned. 

I think most important, the Chinese have come on record saying 

they are very concerned about what Japan might do when reprocessing. By the way, that is an agreement that is in perpetuity that 

should have been renegotiated for 2018. No one is pushing for that. 

I think you should. And the reason why is the force of debate in 

Japan, not so much here about what Japan ought to be doing. Because if they open up that plant, that is going to be a hornet’s nest 

in the Far East, in China, South Korea, God knows where else. 

And so we have a stake in seeing them at least have a public debate about that. We have shut that down by having an agreement. 

Ms. ROS-LEHTINEN [presiding]. Thank you, Mr. Sherman. 

Mr. SHERMAN. One final comment. I noticed that the Vietnam 

agreement says that they intend to provide international suppliers 

with fuels. Every year I issue a statement indicating that I intend 

to lose weight. I yield back. 

Ms. ROS-LEHTINEN. Thank you. Judge Poe from Texas is recognized. 

Mr. POE. Well, don’t issue that statement each year. Thank you, 

Madam Chair. There is the issue of human rights. I want to hear 

from each one of you. Do you think the issue of human rights is 

something we should even be talking about in this 123 agreement 

or is that a separate issue that the United States needs to deal 

with, not just Vietnam, but other countries? 

Mr. Sokolski, we will start with you and Mr. Lipman. 

Mr. SOKOLSKI. My nonprofit stuck its neck out to really raise 

fundamental questions about the North Korean Nuclear CooperaVerDate 0ct 09 2002 13:30 Sep 25, 2014 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\071014\88626 SHIRL
36

tive Agreement that we entered into. It is called the Agreed Framework. It wasn’t a 123. It was technically and from a security standpoint very, very risky. All through that effort I took as many opportunities as I could to raise the question of human rights because 

ultimately contracts, and you want iron-clad contracts with this 

kind of technology, have to do with trust. So the idea that you 

would separate the way the government abuses or treats its own 

citizens because it has a trust with its own citizenry that you 

would separate that from something so important as an agreement 

on this kind of sensitive technology did not make sense to me. And 

so I think we are seeing this clearly in the case of Iran. And we 

are seeing it at various levels with our dealings even on the chemical issue with Syria. It has got to be part of the deal. 

Mr. POE. Mr. Lipman. 

Mr. LIPMAN. Judge, certainly Congress should raise this issue if 

it is of concern as it should be to all Americans who share the values of this country. However, it has no part in a 123 agreement in 

our opinion. What we push for is engagement. Engagement across 

industries generally, and of course, the nuclear industry in particular as a way of promulgating American values with countries 

in which we interact. But they should not be linked. One should 

not be conditioned on the other, Judge. 

Mr. POE. Mr. Spector? 

Mr. SPECTOR. I think I would take into account a fairly wide 

range of issues. Certainly, in a cover memorandum that is accompanying a document like that and you know that there must have 

been one like it that circulated in the administration. All of the 

major elements of our relationship with Vietnam need to be taken 

into account, not in the text of the agreement, but in the context 

of whether we want to go forward with this. 

And I would say there are certain elements that cross over. One 

is rule of law. Another is independence of enforcement personnel 

and regulators. That is not quite as vivid or visceral as the human 

rights problem, but I think if you want to look at the full spectrum, 

and of course, we didn’t look at our relationship with Vietnam visa`-vis China which is another underlying national security concern. 

So I think you don’t want to limit this too precisely. A lot of these 

issues need to be weighed in the balance. 

Mr. POE. Thank you. Let me talk about term limits. I didn’t 

mean to startle my colleagues here. Not term limits for Members 

of Congress, but for contracts. Do you think, gentlemen, there 

should be a term limit for these contracts? Should there be no end 

in sight? Should we make it 30 years, 50 years? Should we solidify 

the deal for a time certain? It is kind of a yes or no and how long. 

Mr. SOKOLSKI. This goes to your human rights question. If you 

distrust, you need to do more verification, therefore you want more 

frequent renegotiation. If you trust, you need less. 

Mr. POE. All right. Mr. Lipman? 

Mr. LIPMAN. Judge, the industry has no quarrel with a 30-year 

limitation. What we do want though is predictability. We want 

these agreements, the negotiation of these agreements to begin 

early and not to be in a situation where we are up against the gun, 

either in competitive space or because an agreement is ready to 

run out. The term to us is to some degree immaterial. 

37

Mr. POE. Mr. Spector? 

Mr. SPECTOR. I would stick with the 30-year limit as well. I think 

you do want things so that the agreements do come back before 

Congress. You do want the automatic opportunity to upgrade the 

agreements. And at the same time you need to give some certainty 

over a fairly long period to the industry because these plants take 

10 years to build and will operate for 30 to 50 years. You have to 

find a balance there, so I think these automatic extensions are not 

the way to go. 

Mr. POE. All right, thank you, Madam Chair. 

Ms. ROS-LEHTINEN. Thank you. Thank you, Judge Poe. Dr. Bera 

is recognized. 

Mr. BERA. Thank you, Madam Chair. I want to revisit an issue 

that my colleague from California, Mr. Sherman, brought up, the 

Indian civil nuclear deal that was negotiated and signed in 2008. 

Obviously, it hasn’t transpired the way we certainly would have 

liked to for a variety of issues, but particularly with liability issues, 

which seems to be unique to India. And it is not just our companies 

that are somewhat reluctant, GE and Westinghouse, but certainly 

the French and Russian companies that have much better protections. Our industries are private and certainly have got exposed. 

With a new administration coming into India with Prime Minister Modi certainly making overtures to want to increase trade, 

one; wanting to build India’s infrastructure and expand its economy, and I think within the past month there has been some movement in terms of signing agreements with the IAEA. I would be curious on a couple of things. Maybe, Mr. Lipman, you can answer 

this. How large is the Indian market? And what next steps with 

the prime minister visiting Washington, DC, in September, would 

you like to see for us to really open up the market? 

Mr. LIPMAN. Thank you, Dr. Bera. First of all, I can say categorically that to U.S. reactor vendors and EPC organizations like Bechtel and Fluor and so forth, India is a top market prospect. I mean 

this is a country that has significant technical talent with very outstanding backgrounds in structural engineering and heavy manufacturing that complement the U.S. industry very, very well. 

I will say in terms of positive developments, and I know there 

has been some, I guess, in earlier remarks disappointment, I might 

say, that somehow the Indian market hasn’t materialized after the 

very important political hoops that this country has had to—and 

this branch has had to jump through in order to make it a reality. 

These are long-term deals. They take a long time to negotiate, 

okay? But both reactor vendors either have now or in the last 

stages of negotiating early works agreement. So what does that 

mean? That is the engineering and technical work that goes on before reactor sales consummate. 

However, to your point, Dr. Bera, there will not be nuclear deals 

in India unless and until this civil nuclear liability issue is resolved, and I think like you, Dr. Bera, am heartened that the Modi 

administration is beginning to come to terms with reform of liability. That would truly open up that market to U.S. reactor vendors 

in a big way. Thank you, sir. 

38

Mr. BERA. Mr. Sokolski, are there any concerns that India will 

not sign the nonproliferation treaty as we move forward with the 

marketplace? 

Mr. SOKOLSKI. The Iranians love that deal. They bring it up 

when they negotiate. The South Koreans carp about it. It is a thorn 

in the side of anyone trying to prevent proliferation. You better get 

something for it. We have it. 

Now we were talking about reactors back in 2005. I think the liability problems given Bhopal and the history and the emerging 

public cry for both less corruption with the contracts and concern 

about public safety, it is a long bet. I don’t know that it is a bet 

against the house, but I would be looking for other ways to promote 

trade and engagement with India and the new government. I would 

not lean heavily on this and that has always been the case. And 

there are many areas that make more sense to focus on. 

Mr. BERA. Bringing it back to Mr. Lipman, how large is the Indian market? 

Mr. LIPMAN. Their plans are to put out up to 50 nuclear reactors 

over the coming 30 years. That is a plan. But there are currently 

agreements in place and reactor deals that have been consummated with the Russians. At Kudankulam, there are operating 

reactors of Russian design and there is a new set of units that have 

just been consummated with the Russians, plus as was mentioned 

earlier, the French are in there. We need this civil nuclear liability 

protection. I am certain that American companies just will not put 

their companies at risk. 

And what is interesting, it is not just American companies that 

get hurt. My view is so do Indian companies get hurt. Now why 

is that? I think there are many American companies that would 

like to leverage. The fact is that they are English speaking, highly 

technically trained, very capable engineers and manufacturers in 

the country of India. But they are not going to partner with them 

until this liability issue is put behind us. So to me, India represents in some ways and I disagree with Henry on this, that India 

represents a phenomenal partnership opportunity for American nuclear companies. 

Ms. ROS-LEHTINEN. Thank you so much. Thank you, Dr. Bera. 

And now we turn to one of our subcommittee chairs, Mr. Rohrabacher of California. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman, 

and I appreciate the leadership that you and Chairman Royce have 

exemplified especially by this hearing. I have some deep concerns 

about what I have heard today. And it doesn’t necessarily come 

from you, but it comes from the fact that I am also vice chairman 

of the Science Committee. I have spent a lot of time dealing with 

nuclear reactors and the technological aspect of this discussion. 

Mr. Lipman, the Russians are at 172 reactors you say are perhaps on the way to being built. Are any of them non-lightwater reactors? Lightwater reactors are 50- and 60-year-old technology. 

And they are dangerous as we have seen in Japan. Do we not now 

have the capability to build safe reactors whether they are Thorium based, maybe a small module nuclear reactor, pebble-bed reactors, high temperature gas reactors, all of which do not have this 

same potential of creating a disaster? Am I wrong with this other 

39

information I am getting on the Science Committee that we are 

being fed that we are capable of building a better reactor that is 

not such a danger? 

Mr. LIPMAN. Chairman, I certainly don’t share your view on that. 

First, almost all the plants that are planned for construction indeed are lightwater reactors. 

Mr. ROHRABACHER. Right. 

Mr. LIPMAN. The other technologies that you accurately represented are technologies that simply aren’t commercially available 

today. 

Mr. ROHRABACHER. They aren’t available today because your industry has not invested in it. We have had a disaster in Japan and 

how much more has your industry then decided to put into development some of these alternatives that we have that had Japan had 

those technologies, they wouldn’t be facing this radioactive crisis 

that they are in. 

Mr. LIPMAN. So with respect, chairman, it is our industry that 

is investing in these new technologies, B&W and NuScale and Westinghouse are developing small modular reactors. TerraPower in 

Seattle is investing in the traveling wave reactor which I think you 

are referring to. But those technologies, sir, are in the offing. 

And with respect to the Fukushima accident which you appropriately represent, one need only look at the reactors for sale on 

the international market from American vendors right now, GE 

and Westinghouse. They are designed for exactly that type of accident. 

Mr. ROHRABACHER. Let me just note that for less than $2 billion 

investment, we could have one of those other type of reactors on 

the market. We could have invested in it. Had we invested in that 

20 years ago or 15 years ago when these reactors were possible. 

And had we had a pebble base reactor system in Japan, there 

wouldn’t be a nuclear crisis there right now. I mean I realize what 

people think of our industry and what our industry has done. I am 

not anti-nuclear, as you can see. I want us to build nuclear reactors, but we have not kept up. The industry has basically been willing to sell old technology rather than invest in what is necessary 

to build these things. For example, we have high temperature gas 

cool reactors that it would be impossible then for there to be the 

type of leak that we have in Japan under the same circumstances. 

This is very disturbing. And also let me ask this, Mr. Lipman, 

and again, I am pro-nuclear reactor. I think nuclear energy offers 

a great alternative, but aren’t we also talking about these new reactors had we invested in them? This idea of reprocessing wouldn’t 

be on the table. It is my understanding that there is not plutonium 

left over from these new reactors. We have to invest in something 

that would be safer and would not lead a plutonium threat of having nuclear weapons being made from the by-product. 

I will just have to say that as much as I respect the development 

of the technology in your industry, I think that your industry has 

been, along with our Government, been irresponsible in not putting 

the money into the development of safer reactors that would leave 

the world safer from nuclear weapons as well as nuclear leaks. 

40

Ms. ROS-LEHTINEN. Thank you so much, Mr. Rohrabacher. And 

I am pleased to recognize Mr. Connolly. Thanks for sharing that 

personal biographical fact with me. I did not know that. 

Mr. CONNOLLY. I knew you would want to know. Thank you, 

Madam Chairman. 

By the way, Mr. Sokolski, my colleague from California, his point 

about the need to invest in new technologies and the fact that by 

not having done so in a timely manner perhaps unwittingly we are 

actually expanding the proliferation threat. Would you agree with 

that? 

Mr. SOKOLSKI. There is a firm actually in your district, I think, 

or near, Linden Blue is someone I regularly meet with. On paper, 

they have some wonderful things. By the way, that is General 

Atomics and they actually don’t need Price Anderson they say if 

they can ever get going. 

I think the problem oddly is that the firms we keep talking about 

as American—Westinghouse, by the way, do you know who owns 

Westinghouse Nuclear mostly, 87 percent? Foreign countries, mostly Japan. These are not your average American companies. They 

don’t manufacture. That manufacturing is done overseas for the 

key nuclear qualified components. This is to a lesser extent, but 

still significantly true of General Electric. 

So the innovation you are talking about is for a multi-national 

corporate entity that is largely Korean, Japanese, American, but 

American last. So you know, you are going to have to work this by 

talking with these other countries, not just American firms because 

they own the companies. 

Mr. CONNOLLY. Okay, but the point is if Mr. Rohrabacher is correct, that there are constantly new technologies that actually eliminate the problem of what to do with plutonium or what you can 

do with plutonium. 

Mr. SOKOLSKI. Reduce it. 

Mr. CONNOLLY. Well——

Mr. SOKOLSKI. Not eliminate it, reduce it. 

Mr. CONNOLLY. But surely if such technology were commercially 

available wouldn’t the United States want to promote it? The witness is shaking his head for the record. 

Mr. SOKOLSKI. How shall I put it. Everyone wants to promote different forms of energy. They just don’t want to pay for it. 

Mr. CONNOLLY. Okay. 

Mr. SOKOLSKI. My favorite is power from moon beams but it is 

very expensive. And so the point here is you want to leverage R&D 

to find out if something works and let the people go to banks and 

figure out if they can make a buck using the technology. And the 

market has spoken. On a lot of these reactors, the reason they are 

sticking with the light water reactor is that they don’t want to take 

any additional risk and they would rather stick with the risks they 

know than the risks they don’t know. 

Mr. CONNOLLY. Fair point. All right, Mr. Spector, the chairman, 

my friend from Florida, Ileana Ros-Lehtinen said she is sponsoring 

a bill with Brad Sherman and the premise of that bill is we 

shouldn’t differentiate. We need one uniform gold standard and we 

should be strict about it and enforce it in all 123 agreements, evVerDate 0ct 09 2002 13:30 Sep 25, 2014 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\071014\88626 SHIRL
41

erybody. If I heard your testimony correctly that is not exactly your 

point of view? 

Mr. SPECTOR. I would say my testimony has to deal with an actual agreement that is in front of us. And I would say when you 

take all the factors into account, you would say this agreement is 

what we have to live with. But what do we want to do going forward? And there, I think, it is time to adopt a tougher standard. 

And as I said earlier, I think——

Mr. CONNOLLY. Excuse me, but the point here isn’t just a tough 

standard. It is one standard that is tough, but one for all. 

Mr. SPECTOR. I think I was supporting that going forward. 

Mr. CONNOLLY. Okay. 

Mr. SPECTOR. But we have to deal with this particular agreement, which is in front of us and which will come into effect in another 90 days or whatever it may be. And I would say there you 

don’t want to reject to the agreement, start from scratch, and go 

through a very traumatic situation. I think we can tolerate this 

one. 

Mr. CONNOLLY. Two more questions real quickly because my 

time is running out. Mr. Sokolski was calling down moonbeam 

power. Again, the chairman pointed out, Vietnam is under this 

agreement is allowed to enrich. Why? And second question, doesn’t 

that undermine policies elsewhere especially in the Middle East 

where we don’t want them doing that? 

Mr. SPECTOR. Well, I think you are correct that the possibility 

was reserved by the Vietnamese, but they did step forward and attempted containment, and spoke about their plan not to do so, and 

their plan to rely exclusively on outside sources of fuel and services. 

I agree that is not an iron-clad guarantee. And it is made worse 

in this agreement because of the fact that the agreement won’t 

automatically terminate and have to be renewed. It is going to be 

renewed automatically. So I would not speak with enthusiasm 

about this agreement. I would speak as tolerable, barely getting 

over the——

Mr. CONNOLLY. The second question, though Mr. Spector, was 

doesn’t it, not intentionally, couldn’t it contribute to undermining 

policy elsewhere? That was the chairman’s point. 

Mr. SPECTOR. Absolutely. I completely agree. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Connolly, but we 

are out of time. And we will turn to one of our subcommittee 

chairs, Mr. Chabot of Ohio. 

Mr. CHABOT. Thank you, Madam Chair. And the so-called 123 

agreements are an important tool for advancing U.S. nonproliferation policy and for impeding the spread of uranium enrichment capabilities and fuel reprocessing around the world. Last year, the 

Asian Subcommittee that I chair held a joint hearing to examine 

the extension of the 123 agreement with South Korea and I strongly support the extension of the on-going agreement and support its 

renewal because it not only provides a regional ally in South Korea 

with a domestic supply of energy, but also creates American jobs 

in those sectors that supply South Korea with the components it 

needs to maintain the power supply for its economy. 

42

A couple of questions. First, how much importance does the Government of the Republic of Korea assign to the successful renewal 

of the 123 agreement. And then second, what are the risks, if the 

U.S. and South Korea are unable to reach an acceptable outcome 

regarding agreement or disagreement and the other sense of the 

impact that there could be if we were unable to reach an agreement on the U.S. nuclear industry? Mr. Lipman? 

Mr. LIPMAN. Thank you, Mr. Chabot. I will limit my answer to 

sort of the industrial impacts of what you discussed. You talked 

about the job creation associated with nuclear power generally, but 

very specifically with the Republic of Korea, American companies 

partner with the Koreans in other markets. There are deals where 

American companies are in the lead and the Koreans are subcontractors, but there are deals such as the one in the United Arab 

Emirates where the Koreans are in the lead and there is significant job creation. And these 123 agreements are critical. That is 

why American unions, in particular, are very supportive of 123 

agreements because their membership receives significant benefit 

from the export. 

The Koreans utilize American technology, older American technology. And so having the export controls survive and be applied 

into markets into which Koreans wish to operate is something that 

is very important. So the 123 agreement is important to us in the 

industry, not just for industrial cooperation and job creation, but 

also for the continued exercise and control over U.S. technologies 

as Koreans go into other markets. So we support the timely completion during this 2-year extension period. Thank you. 

Mr. CHABOT. Thank you. Mr. Lipman, let me follow up on a different country here. Regarding the U.S.-China 123 agreement 

which expires next year, I believe, you briefly discussed the importance of renewing this agreement, both for the U.S. exports and 

American jobs. I was wondering if you or any of the other fellow 

panelists could discuss the risks associated with the U.S.-China cooperation agreement with regard to the theft of foreign technology 

and China’s relationship with, for example, Pakistan, North Korea, 

and Iran. I will start with you, Mr. Lipman. I have got 1 minute 

and 20 seconds for all three of you. 

Mr. LIPMAN. If you have that little time, I would say the risk is 

in not renewing the agreement because you want this agreement. 

You want those proliferation controls in place. You want those industrial relationships in place and you want the continued ability 

to have eyes on the Chinese nuclear program and also to reap any 

economic benefits that come from it. Thank you. 

Mr. SOKOLSKI. We are leveraged there because they are having 

trouble getting these machines built properly according to the 

French and I suspect in the U.S. case, too. But more important, the 

know-how is something they bought. They own enough of the design now that they are working with Westinghouse and our Department of Energy to build these things not only there, but to export them. So the business model is a little bit more than the U.S. 

in the case of Westinghouse. They are playing both ends of the 

game. So I would sort of be worried about corruption and what 

could be sold to other countries. They are under investigation in 

43

China, the leaders of the nuclear industry are indicted for corruption. We don’t know what they might sell. 

Mr. CHABOT. I note my time has expired, Madam Chair. 

Ms. ROS-LEHTINEN. Thank you so much. We will allow him to respond. Mr. Spector. 

Mr. SPECTOR. I would say if you go back to the history of the 

U.S.-China agreement it turned on exports from China that we 

were not happy with. These are missiles to Pakistan and a lot of 

other undesirable exports. They are continuing. Not precisely the 

same ones, but Iran has been a beneficiary of much technology that 

has come through China for its missile program and also its nuclear program. There is a $5-million bounty on a Chinese businessman, Karl Lee, because of these activities. I believe this is going 

to be a major issue when their agreement comes up for renewal. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Chabot. Mr. 

Lowenthal. 

Mr. LOWENTHAL. Thank you, Madam Chair, and I want to follow 

up on an issue that you originally raised and I think Congressman 

Poe touched on. And I would really like if anybody on the panel can 

kind of allay my concerns at this moment. They are more concerns 

than they are questions. 

I have heard and I think what is in the agreement that it is not 

the ideal. It is not the standard potentially that many members 

would want and I understand that and hearing in general from the 

panel. It still makes sense though to move forward even though it 

may not be the gold standard or at least the consensus I am hearing. 

But I am also concerned as what I said before what is not in the 

agreement, what is outside of the agreement and that is you know, 

Vietnam has one of the worst records of human rights violations 

in all of Southeast Asia and possibly in the world. And you know, 

here and even yesterday we had a hearing, I have spoken out 

against Vietnam’s inclusion in the Trans-Pacific Partnership until 

they improve their human rights record, until they demonstrate 

that they are a country that values the ability of people to engage 

in activities, to come together, to worship as they so choose, not to 

be imprisoned. And yet, is this not the same issue? What can we 

do? We already have this agreement. We know that Vietnam is a 

terrible violator of human rights. We are now asked to support or 

not to support the agreement that has been negotiated. And yet, 

I have these real concerns that we are now rewarding again bad 

behavior. 

Mr. SOKOLSKI. I think you have a bit more of a choice. You know, 

ultimately the barriers to blocking a deal are just almost insurmountable. You need two-thirds vote in both houses. But if you 

should demand that this thing be delayed until certain things were 

taken care of, I have every confidence that they would delay it. And 

the reason why is there is no reason to rush. The talks industry 

needs to have are not going to be held up because they don’t have 

a 123 in place. They will talk if they think it is coming. And they 

have plenty of time to talk because they are not even building their 

first reactor for another 6 years. 

We have done this in the case of the UAE deal, the Russian deal. 

We did it actually just recently with the South Korean deal. I cerVerDate 0ct 09 2002 13:30 Sep 25, 2014 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\071014\88626 SHIRL
44

tainly share your puzzlement as to why you wouldn’t ask for this. 

You might be told forget it, but not to ask? It seems odd. By the 

way, I am one of the people that thinks you shouldn’t go ahead 

with this deal. Maybe the others are okay with it. I am not okay. 

I side with Ms. Ros-Lehtinen. 

Mr. LOWENTHAL. Is there any way? You know, once we go forward, we have no leverage. Is there any leverage we have here? I 

am not saying put it in the deal. You are saying as a precondition. 

What leverage do we have? 

Mr. SPECTOR. The one tool that is available and takes legislation 

is to put a freeze on licensing so that the agreement sits in place, 

but nothing can travel under it and it can’t be implemented. This 

was done with China, and I think they were on hold for quite a 

number of years because of the exports I mentioned earlier. It is 

not elegant and it is not easy to do, but it is a tool that is available. 

And there are vehicles that have been used by the Congress to advance certain goals in the nonproliferation area. This is a related 

area such as various, must-have legislation where riders are put on 

or amendments, or what have you. So there are some tools available if the depth of concern is widespread. 

Mr. LOWENTHAL. Thank you. And I yield back. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Lowenthal. And we 

will turn to Mr. Kinzinger. 

Mr. KINZINGER. Thank you, Madam Chair, and I appreciate the 

committee holding this hearing and for all of you being here. 

Mr. Sokolski, I want to remind you at the very beginning here, 

you have taken a shots at Westinghouse. I am not going to give you 

an opportunity to respond, but I would like to remind you that that 

is an American company and they have a lot of employees in Pennsylvania and in my district there is a lot of companies that supply 

Westinghouse. So whatever the beef you have seems to be with 

them, you can expound at a later time, but I just wanted to remind 

you that that is an American company. 

In terms of—I am speaking still, so in terms of a couple of opening points, let me just say we need to go forward with the U.S.-

Vietnam 123 agreement. Ranking Member Engel and I have signaled our support for that. And I would also like to express my 

support for the U.S.-South Korea 123 agreement. For 60 years, this 

has been one of our greatest allies in a very important part of the 

world and the Republic of Korea, in fact, has brought a lot of stability to the world, security, and prosperity. 

I am going to have the opportunity to visit Korea in a few 

months and talk about these issues and I am looking forward to 

it, but I would like to say that that is something that is very important to move forward on. And it is also interesting to me that the 

sticking point, the issue of enriching and reprocessing and things 

along that line, we are basically giving that to Iran, by the way. 

I have had discussions with folks in the administration, none of 

whom have said that there is going to be no right to enrichment 

of uranium up to a certain level. So it is almost a given now that 

our greatest enemy in the Middle East, of which we actually have 

engaged directly and indirectly with through Iraq and everywhere 

else, is going to have this right that we are denying to our allies. 

So that, to me, is something that is going to be very shocking and 

45

something telling and something I think we need to have a real 

grown-up adult discussion on. 

Mr. Lipman, I am going to shift gears a little bit here and ask 

you a couple of questions. Is the U.S. still the dominant player in 

the nuclear export market? If so, why? And if not, why? 

Mr. LIPMAN. Thank you, Congressman. And thank you also for 

straightening out the facts that Westinghouse is an American company. And I can assure you that in these nuclear exports the overwhelming majority, the vast amount of value in these nuclear exports is made right here in the U.S.A. in states like South Carolina, Pennsylvania, New Hampshire, and so forth. So thank you for 

clearing that up. 

I mentioned earlier we are certainly not the dominant player. 

There are, I mentioned earlier, about ten nuclear reactor vendors 

globally. That is a situation that has transpired in the last, just the 

last few years. And it is extremely competitive out there. Where we 

do not have these agreements in place, competitors will fill that 

void. Of that there is no question. 

Now why is that? Your question is well, why is that? Well, some 

of them are state-owned enterprises, so the Government of Russia 

owns Rosatom which in turn owns Atomstroyexport which is the 

main competitor American companies face from Russia. AREVA is 

wholly owned by the French Government. Korea Electric Power 

Company is similarly owned by the Korean Government and so 

forth and so on. Even CANDU is a Crown Corporation. U.S. industry is private, largely, and somewhat fragmented. 

Also, the level of commercial diplomacy is quite different, Congressman. It is very typical that when heads of state of these other 

countries travel in their entourage are the nuclear guys and the 

radar guys and the defense guys and so forth and so on. We don’t 

do business that way. And that is okay. That is not our way. And 

I don’t think anybody in the industry would change that. But we 

are finding now a very tough competitive environment and one in 

which the Russians, for example, offer to take your spent fuel back. 

We don’t do that. They offer extremely concessionary finance. We 

may not get our Ex-Im Bank renewed. 

Thirdly, there is significant trade advocacy that we don’t receive. 

So it is a tough environment out there. We are not asking to have 

our hands held, but we are asking for a competitive level playing 

field so we can do business. 

Mr. KINZINGER. I think you made a great point about Ex-Im. It 

is very important for multiple reasons and I think that is something that is very important. I have four nuclear power plants in 

my district and I would frankly hate to get to a point where we 

have Russians and French coming in and servicing them because 

we lost our own industry. 

And just lastly, well, 8 seconds, how important are foreign markets to the U.S. nuclear industry? 

Mr. LIPMAN. They are more important than ever before and they 

are in markets that are nontraditional. They are in places like, and 

we better get comfortable with places like Southeast Asia, South 

Asia, Eastern Europe. We haven’t talked about Eastern Europe, 

but Eastern Europeans are keen to get away from the Russians 

and their grip on gas, and in places in the Middle East. So we are 

46

in a situation in which we compete in nontraditional markets 

against state-owned enterprises and the need for trade finance and 

advocacy and a level playing field is greater than ever before. 

Thank you. 

Mr. KINZINGER. And I yield back. 

Mr. CHABOT [presiding]. Thank the gentleman, his time has expired. The gentleman from Texas, Mr. Weber, is recognized for 5 

minutes. 

Mr. WEBER. Thank you, Mr. Chairman. Mr. Lipman, I think you 

said that there are ten global companies that supply reactors, build 

and supply reactors? What would you say is the overall world marketplace for the amount of volume of sales? Is it $200 billion? What 

is it? 

Mr. LIPMAN. I want to say the number that sticks in my mind 

is about $750 billion. 

Mr. WEBER. $750 billion. Do you know what percent mostly U.S. 

manufacturers, I guess including Westinghouse, what percent of 

that market share U.S. manufacturers own? 

Mr. LIPMAN. So let us break it down a little bit. So there are new 

reactor sales, but there is also plenty of sales in nuclear fuel and 

services and spare parts and things like that. 

Mr. WEBER. I am talking total. Thank you for making that distinction. 

Mr. LIPMAN. Yes, sir. And so I would say that in the fuel market, 

maybe we have 10 to 15 percent of that market. And I think in the 

new reactor market it is looking a lot better and it will look better 

if we get these 123s and other policy tools that I mentioned earlier 

in place. We have a much better chance that major reactor sales 

I think than the competitive situation would warrant. But I will 

get those details and submit to the record the accurate figures, sir. 

Mr. WEBER. Any idea how many jobs that represents in this 

country? 

Mr. LIPMAN. By the way, NEI is undertaking an effort to count 

them down to the district level if we can, down to the ZIP Code, 

if we can. But we know from the——

Mr. WEBER. Send me the numbers for my district, please? 

Mr. LIPMAN. Yes, sir. We know from the China export that somewhere between 15,000 and 18,000 jobs were created or maintained 

from just that one export of four units, sir. 

Mr. WEBER. Okay. And I am not a nuclear expert. When I was 

a state rep I had a nuclear plant, South Texas nuclear plant in Bay 

City in my district and got to tour it and watch it first hand, look 

at it first hand. Why is reprocessing of spent fuel such a bad thing? 

Is it just because it leaves material laying around for weapons? Is 

that your only concern? 

Mr. LIPMAN. I will answer and I will certainly defer to the experts here. And by the way, I lived in Brazoria County for 5 years. 

Mr. WEBER. We are still taking applications if you want to come 

back. 

Mr. LIPMAN. Thank you, sir. It was a great place to live. Look, 

you said it, reprocessing makes available plutonium, separation can 

make available, depending on the process, separated plutonium 

which can be diverted for inappropriate uses and that is a major 

concern. 

47

Mr. WEBER. Okay, thank you. That is what I thought. Mr. 

Spector, you talked about an export agreement or an agreement delaying licensing which wasn’t elegant, there was a way to do it. 

And I think you mentioned that China it was discovered that was 

going to export missiles, so we held up an agreement. Can you go 

back to that? 

Mr. SPECTOR. I have to get my dates right. My recollection was 

that an agreement was inked and we were ready to go forward 

with it, as they gradually accepted more and more export control 

rules such as agreeing to the export control rules of the missile 

technology control regime in particular, but other ones as well. And 

because they didn’t stop the actual exports, the agreement was intact, but nothing happened under it. 

Mr. WEBER. Let me play the devil’s advocate. Why was it a problem for China to export missiles, missile technology? 

Mr. SPECTOR. Well, I think in the particular case we were very 

concerned that these missiles would be armed with nuclear weapons. This was going to Pakistan, especially. Since that time the 

missiles have gone to Iran and a lot of missile equipment, so this 

is a continuing problem. 

Mr. WEBER. So we are concerned that those missiles would be 

used to destroy civilians, its cities and used in a very aggressive 

military fashion. 

Mr. SPECTOR. Conceivably, it is contrary to our efforts to suppress this kind of capability around the world. 

Mr. WEBER. But you said that you didn’t think that human 

rights violations needed to be part of the agreement, so we are concerned that missiles would kill hundreds or thousands of people, 

but we are not concerned that they are killing individuals? 

Mr. SPECTOR. I think I actually said something a little different 

which was in the four corners of the agreement, the actual wording, probably not, missiles or human rights. 

Mr. WEBER. Maybe a preclusion leading up to that. 

Mr. SPECTOR. That is correct or a freezing of the negotiation. 

This is what happened with the United Arab Emirates agreement 

when concerns about leakage of technology through Dubai into Iran 

surfaced. And Congress actually was responsible for sort of changing the terms of that agreement. 

Mr. CHABOT. The gentleman’s time has expired. 

Mr. WEBER. Thank you, Chairman. 

Mr. CHABOT. Thank you. The gentleman from Florida, Mr. Yoho 

is recognized for 5 minutes. 

Mr. YOHO. Thank you, Mr. Chairman. I appreciate you gentlemen being here and I look forward to your answers on this and the 

information you have already given has been great. 

Mr. Sokolski, you were saying that by not going forward, you 

would not go forward with the 123 agreement with Vietnam. What 

would you recommend in replacement of that? 

Mr. SOKOLSKI. I would be in no rush to get it wrong. Take your 

time if you are going to get it wrong. You should pressure the administration to at least give you the procedural authority to look 

at this thing in 30 years. 

Mr. YOHO. I agree. 

48

Mr. SOKOLSKI. I would ask for that much at least. I think you 

are going to have some fancy footwork here to persuade the South 

Koreans if you go ahead with this thing, but maybe this committee 

can do it, an able chairman of a subcommittee and that is going 

to require doubling down on that and perhaps delaying the Iran 

deal. 

Mr. YOHO. Well, for a superpower, we need to act like one and 

I think we need to negotiate harder. The 123 agreement I see they 

seem messy and for a country like South Korea, that is an ally, in 

the beginning of the agreement it looks like it worked well. But 

now they are giving us pushback because they have an excess 

amount of plutonium that they say we need the capability of reprocessing this. You guys aren’t helping us, so there is resistance 

and we have to do the 2-year extension because we couldn’t come 

into an agreement. 

And then we look at what is going on with China. We had the 

agreement, but however, since China’s proliferation record is very 

poor including building nuclear reactors in Pakistan, refusing to 

curb illegal sales, as you brought up, and smuggling Chinese companies by Chinese companies of banned nuclear-related material to 

Iran and other countries, we get involved in these complicated 

agreements. And what I have seen is there is just no checks and 

balances to monitor them, but it makes us feel good because we can 

say we have a 123 agreement, we are great. But in the meantime, 

slight of hand, they are doing this. 

And I guess what I would like in the two, almost 3 minutes I 

have left, how can we make—well, first of all, should we enter into 

these kind of agreements especially if we are not the major player? 

We are competing against government entities, state owned and 

operated and what I understand about China is when they come 

in, it is not a Chinese company. It is the Chinese Government. It 

is their military, it is their secret service, it is all that as a package. You get the package. And so that concerns me because we are 

having companies like Westinghouse dealing as a company with 

forcing governments. You just can’t compete that way. 

So how can we move forward, number one? Should we move forward with this kind of agreement? And if we do, how do we make 

a 123 type of agreement more workable to accomplish the goal of 

eliminating the amount of spent fuel that is reprocessed in nuclear 

proliferation? 

We will start with you, Mr. Sokolski. 

Mr. SOKOLSKI. I think the simple thing is they demand more of 

our diplomats and they lean more heavily on the handful of suppliers. There may be lots of companies, but there are only a few 

countries. We know who they are. They are France, Korea, Japan, 

and Russia; China coming up. There are leverage points. I talked 

with people who in the government say well, we haven’t asked or 

we asked, but we didn’t make any linkage to anything that they 

might be concerned about. We have got to change that. 

Mr. YOHO. Mr. Lipman, because I have one more question. 

Mr. LIPMAN. You did an accurate job characterizing, I think, the 

environment in which we face. But you are being very future oriented here and I would say one of the biggest tools, you talked 

about eliminating the amount or reducing the amount of fuel that 

49

could be diverted or reprocessed and the material diverted, one 

thing we don’t do which we could do is take spent fuel back into 

this country. 

Mr. YOHO. We have got the technology to reuse that. It has just 

not been approved or we haven’t allowed that, right? 

Mr. LIPMAN. Well, right now we do not allow by law to take back 

spent fuel for fuel we sell to other countries. 

Mr. YOHO. It could be reprocessed as energy, right? 

Mr. LIPMAN. We don’t have commercial reprocessing in this country, but we have the technology that could do it. 

Mr. YOHO. I am running out of time. Mr. Spector, I want you to 

get your weigh in on that. 

Mr. SPECTOR. I think Henry made a point that we have other leverage with these various countries. That is what you would use 

during the course of these agreements. It could be economic sanctions or export controls, licenses that are held back and so forth. 

The agreement carries on, but you can apply leverage in a lot of 

different ways to try to make sure it is properly adhered to. 

Mr. YOHO. And what I see is with the debacle with what we do 

with Iran, a future country to negotiate with us on a 123 agreement after they saw us do with Iran, they are going to say we want 

the same deal you gave Iran. And I think it has crippled us tremendously. I yield back. Thank you. 

Mr. CHABOT. I thank the gentleman, his time has expired. The 

gentleman from Pennsylvania, Mr. Perry is recognized for 5 minutes. 

Mr. PERRY. Thank you, Mr. Chairman. Mr. Lipman, we will start 

with you. Regarding China’s nuclear industry, we expect it to expand a reasonable amount over the next few decades. I am just 

wondering about the opportunities it will create for the U.S. nuclear industry because we want to build as much and do as much 

as we can in our districts and in the United States. It is a business 

that is important to us. But are we creating a competitor by undercutting ourselves by providing it with nuclear? What are we looking for and what is the middle ground there? 

Mr. LIPMAN. Right, and that is a very critical, competitive issue 

that any company that wants to do business in China needs to face. 

When I had to face that decision at the time I ran that new reactors business for Westinghouse, the solution to that is you sell the 

technology, but you have to continue to innovate. If you do not innovate, you will create another competitor. You are creating another competitor, but the key to maintaining leadership is to continue to out innovate your partners, number one. 

Number two, with respect to having a relationship with the Chinese nuclear industry, they are smart folks. They have got technology that is of interest to us, too, in civilian space, okay, in the 

civilian area. So we learn from each other. Reactors under construction today in America are benefitting from lessons learned 

from reactor construction in China. It is happening right now in 

Georgia and South Carolina. So these are relationships that are 

important. They are job creating. They support all kinds of political 

objectives and working together is the solution in my opinion, Congressman. 

50

Mr. PERRY. All right, so moving on then and I want to get some 

of the other gentlemen into the discussion with the 123 agreement 

expiring in 2015 other than spent fuel situation which apparently 

needs to be addressed, at least allowing us the opportunity to do 

something, not making a prohibition. I am not saying we have to 

do something, but what else needs to be changed to increase our 

opportunities and our security in that regard from your standpoint? 

And then Mr. Spector and Mr. Sokolski, it would be great to hear 

from you on that as well. 

Mr. LIPMAN. So I am clear, Congressman, increase opportunities 

for U.S. companies. 

Mr. PERRY. Westinghouse, there is a company in the district I 

represent which builds casks, those kind of folks. 

Mr. LIPMAN. Yes, okay, listen, I mentioned in my opening statement a number of policy solutions. I think having 123 agreements 

in place, I think having an export control process that works, I 

think liability protection is important, Export Import finance is important and generally, a pro-nuclear trade policy. Those will create 

opportunities where American companies can thrive against this 

very tough international competition in this basically international 

market now. 

Mr. SPECTOR. I would say at the moment the closest related area 

of concern has to do with exports from China and their inability to 

suppress certain individuals from engaging in these activities. This 

is going to North Korea and to Iran. That has to be on the table 

as we discuss this renewal of an agreement, because it is a very 

closely-related area. But there are other issues. Human rights 

issues in China, for example. There is plenty on the table and the 

question I think is to decide how much of that we want to bring 

into the conversation and which ones we hold for another occasion. 

Mr. PERRY. So without reaching too far, I would agree with you 

to a certain extent, but if we can’t get to human rights issues with 

China, but we can get to ranking them in with some of the proliferation around the other rogue nations, so to the speak, maybe 

that is more important if that is what we can get out of the deal. 

It is my opinion that maybe that is what we should focus on. 

Mr. SPECTOR. There might be other higher-level discussions 

where you want to bring the human rights issue up. 

Mr. SOKOLSKI. I think you have got to focus on safety because 

what you have done is just as we had seen Westinghouse sell all 

of its designs to France and created a French competitor, that you 

are doing it now with regard to China. I really urge the committee 

to get more knowledgeable and hold some hearings on exactly what 

the difference between technology transfers and how important 

that is to the industry and if you go to their Web site they talk 

about technology transfers. That is not controlled by 123 agreements. 

The amount of things that we sell, manufacture here of these 

projects is not very great. But the leverage has to do with the 

know-how. And I think that if you want to have the maximum 

amount of engagement in their industry, you better press hard on 

being more candid about the safety problems in China. 

Mr. CHABOT. The gentleman’s time has expired. 

Mr. PERRY. Thank you. 

51

Mr. CHABOT. Gentleman yields back. On behalf of the chairman 

of the committee, we would like to thank the panel for their very 

helpful testimony here this morning. Members will have 5 days to 

revise statements or submit written questions and if there is no 

further business to come before the committee, we are adjourned. 

Thank you. 

[Whereupon, at 11:47 a.m., the committee was adjourned.] 

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