Amendment to the Agreement of 6 October 1959 (1), in the form of an exchange of letters, between the European Atomic Energy Community (Euratom) and the Government of Canada for cooperation in the peaceful uses of atomic energy

(78/217/Euratom)

(1) OJ No 60, 24. 11. 1959, p. 1165/59.

Brussels, 16 January 1978

Mr Chargé d'Affaires,

I have the honour to acknowledge receipt of your letter dated 16 January 1978, stating the following:

‘Mr Commissioner,

As the Commission has been informed, the Canadian Government has decided to require more stringent safeguards in respect of sales abroad of Canadian material, equipment and information.

This decision implies an updating of the existing Agreement between the Government of Canada and the European Atomic Energy Community (Euratom) for cooperation in the Peaceful Uses of Atomic-Energy of 6 October 1959 (hereinafter referred to as the Canada/Euratom Agreement of 1959) particularly in so far as it relates to safeguards.

The Canadian Government considers it necessary to come to an interim agreement through the present exchange of letters until the entire Canada/Euratom Agreement of 1959 has been updated, to provide for the requirement of the new Canadian safeguards policy by amending the relevant provisions of the Canada/Euratom Agreement of 1959.

Accordingly, I propose that the Canada/Euratom Agreement of 1959 be amended to include the following provisions relating to safeguards:

(a) For the purposes of the Canada/Euratom Agreement of 1959, the phrase “machinery and plant” in paragraph (d) of Article XIV of the Canada/Euratom Agreement of 1959 shall be deemed to include all items listed in Annex A to this letter.

(b) Equipment which a Member State has designed to the Commission as equipment designed, constructed or operated on the basis of or by the use of information obtained from Canada and which is within the jurisdiction of that Member State at the time of designation, shall be considered as equipment subject to the Canada/Euratom Agreement of 1959, as amended. Equipment which Canada has designated, as equipment designed, constructed or operated on the basis of or by the use of information obtained from that Member State shall be considered as equipment subject to the Canada/Euratom Agreement of 1959, as amended.

(c) Material which is subject to the terms of the Canada/Euratom Agreement of 1959 shall not be used for the manufacture of any nuclear weapon or for other military uses of nuclear energy or for the manufacture of any other nuclear explosive device. The foregoing undertaking shall be verified within Canada by the IAEA pursuant to an agreement between Canada and the IAEA and within the Community by the Community and by the IAEA pursuant to the Treaty establishing the European Atomic Energy Community and the agreements concluded between the Community, its Member States and the IAEA or if at any time such verification procedures are not in effect, there shall be agreement between the Contracting Parties for the application of a safeguards system which conforms with IAEA safeguards principles and procedures.

Mr P. D. Lee Chargé d'Affaires a.i. Mission of Canada to the European Communities Rue de Loxum, 6 (fifth floor) 1000 Brussels

(d) Equipment or material transferred between Canada and the Community after the coming into force of this Agreement, shall be subject to the Canada/Euratom Agreement of 1959 only if the supplying Contracting Party has so informed the other Contracting Party in writing prior to the transfer. In the case of transfer of equipment from the Community to Canada, notifications may also be given by a Member State.

(e) Material referred to in paragraph (c) shall be enriched beyond 20 % or reprocessed and plutonium or uranium enriched beyond 20 % shall be stored only according to conditions agreed upon in writing between the parties. (See Annex C — Interim Arrangement concerning enrichment, reprocessing and subsequent storage of nuclear material within the Community and Canada.)

(f) In no event shall a Contracting Party use the provisions of the present Agreement for the purpose of securing commercial advantages or for the purpose of interfering with the commercial relations of the other Contracting Party.

(g) The Community shall inform Member States of the levels of physical protection set out in Annex B to this letter which should be applied as minima to the material referred to in paragraph (c) above. Canada will apply such levels of physical protection as minima to material referred to in paragraph (c).

(h) Any dispute arising out of the interpretation or application of the present Agreement which is not settled by negotiation or as may otherwise be agreed by the Contracting Parties concerned shall, on the request of either Contracting Party, be submitted to an arbitral tribunal which shall be composed of three arbitrators. Each Contracting Party shall designate one arbitrator and the two arbitrators so designated shall elect a third, who shall be the chairman. If within 30 days of the request for arbitration either Contracting Party has not designated an arbitrator, either Contracting Party to the dispute may request the Secretary General of the OECD to appoint an arbitrator. The same procedure shall apply if, within 30 days of the designation or appointment of the second arbitrator, the third arbitrator has not been elected. A majority of the members of the arbitral tribunal shall constitute a quorum, and all decisions shall be made by majority vote of all members of the arbitral tribunal. The arbitral procedure shall be fixed by the tribunal. The decisions of the tribunal, including all rulings concerning its constitution, procedure, jurisdiction and the division of the expenses of arbitration between the Contracting Parties shall be binding on both Contracting Parties and shall be implemented by them, in accordance with their respective constitutional procedures. The remuneration of the arbitrators shall be determined on the same basis as that for ad hoc judges of the International Court of Justice.

(i) The provisions of paragraphs (a) to (h) above, inclusive, as well as Articles III, IX and XIV of the Canada/Euratom Agreement of 1959 (as those Articles are amended by the proposals in this letter) shall in all circumstances remain in force so long as any equipment or material referred to in this letter or in the Canada/Euratom Agreement of 1959 remains in existence or it is otherwise agreed.

If the foregoing is acceptable to the European Atomic Energy Community I have the honour to propose that this letter which is authentic in both English and French, together with Your Excellency's reply to that effect shall constitute an amendment to the Canada/Euratom Agreement of 1959 which shall enter into force on the date of Your Excellency's reply and which shall continue in force so long as any equipment, material or facilities referred to in this letter or in the Canada/Euratom Agreement of 1959 remain in existence or it is otherwise agreed.

Please accept, Mr Commissioner, the assurance of my highest consideration.

ANNEX A 1. Nuclear reactors capable of operation so as to maintain a controlled self-sustaining fission chain reaction, excluding zero energy reactors, the latter being defined as reactors with a designed maximum rate of production of plutonium not exceeding 100 grams per year. A nuclear reactor basically includes the items within or attached directly to the reactor vessel, the equipment which controls the level of power in the core, and the components which normally contain or come in direct contact with or control the primary coolant of the reactor core. It is not intended to exclude reactors which could reasonably be capable of modification to produce significantly more than 100 grams of plutonium per year. Reactors designed for sustained operation at significant power levels, regardless of their capacity for plutonium production, are not considered as ‘zero energy reactors’. 2. React or pressure vessels: metal vessels, as complete units or as major shop-fabricated parts therefor, which are especially designed or prepared to contain the core of a nuclear reactor as defined in paragraph 1 above and are capable of withstanding the operating pressure of the primary coolant. A top plate for a reactor pressure vessel is a major shop-fabricated part of a pressure vessel. 3. Reactor internals: (e.g. support columns and plates for the core and other vessel internals, control rod guide tubes, thermal shields, baffles, core grid plates, diffuser plates, etc.). 4. Reactor fuel charging and discharging machines: manipulative equipment especially designed or prepared for inserting or removing fuel in nuclear reactors as defined in paragraph 1 above capable of on-load operation or employing technically sophisticated positioning or alignment features to allow complex off-load fuelling operations such as those in which direct viewing of or access to the fuel is not normally available. 5. Reactor control rods: rods especially designed or prepared for the control of the reaction rate in a nuclear reactor as defined in paragraph 1 above. This item includes, in addition to the neutron absorbing part, the support or suspension structures therefor if supplied separately. 6. Reactor pressure tubes: tubes which are especially designed or prepared to contain fuel elements and the primary coolant in a reactor as defined in paragraph 1 above at an operating pressure in excess of 50 atmospheres. 7. Zirconium tubes: Zirconium metal and alloys in the form of tubes or assemblies of tubes, and in quantities exceeding 500 kg per year especially designed or prepared for use in a reactor as defined in paragraph 1 above, and in which the relationship of hafnium to zirconium is less than 1: 500 parts by weight. 8. Plants for the reprocessing of irradiated fuel elements, and equipment especially designed or prepared therefor. A plant for the reprocessing of irradiated fuel elements includes the equipment and components which normally come in direct contact with and directly control the irradiated fuel and the major nuclear material in fission product processing streams. In the present state of technology only two items of equipment are considered to fall within the meaning of the phrase ‘and equipment especially designed or prepared therefor’. These items are: (a) irradiated fuel element chopping machines: remotely operated equipment especially designed or prepared to use in a reprocessing plant as identified above and intended to cut, chop or shear irradiated nuclear fuel assemblies, bundles or rods; and (b) critically safe tanks (e.g. small diameter, annular or slab tanks) especially designed or prepared to use in a reprocessing plant as identified above, intended for dissolution of irradiated nuclear fuel and which are capable of withstanding hot, highly corrosive liquid, and which can be remotely loaded and maintained. 9. Plants for the fabrication of fuel elements: A plant for the fabrication of fuel elements includes the equipment: (a) which normally comes in direct contact with or directly processes or controls, the production flow of nuclear material; or (b) which seals the nuclear material within the cladding. The whole set of items for the foregoing operations, as well as individual items intended for any of the foregoing operations, and for other fuel fabrication operations, such as checking the integrity of the cladding or the seal, and the finish treatment to the sealed fuel. 10. Equipment, other than analytical instruments, especially designed or prepared for the separation of isotopes of uranium: Equipment, other than analytical instruments, especially designed or prepared for the separation of isotopes of uranium includes each of the major items of equipment especially designed or prepared for the separation process. Such items include: — gaseous diffusion barrier, — gaseous diffusion housings, — gas centrifuge assemblies, corrosion resistant to UF6, — large UF6 corrosion resistant axial or centrifugal compressors, — special compressor seals for such compressors. 11. Plants for the production of heavy water: A plant for the production of heavy water includes the plant and equipment specially designed for enrichment of deuterium or its compounds, as well as any significant fraction of the items essential to the operation of the plant.

ANNEX B LEVELS OF PHYSICAL PROTECTION The levels of physical protection to be ensured by the appropriate governmental authorities in the use, storage and transportation of the materials of the attached table shall as a minimum include protection characteristics as follows: Category III Use and storage within an area to which access is controlled. Transportation under special precautions including prior arrangements between sender, recipient and carrier, and prior agreement between States in cases of international transport specifying time, place and procedures for transferring transport responsibility. Category II Use and storage within a protected area to which access is controlled, i.e. an area under constant surveillance by guards or electronic devices, surrounded by a physical barrier with a limited number of points of entry under appropriate control, or any area with an equivalent level of physical protection. Transportation under special precautions including prior arrangement between sender, recipient and carrier, and prior agreement between States in cases of international transport specifying time, place and procedures for transferring transport responsibility. Category I Materials in this category shall be protected with highly reliable systems against unauthorized use as follows: Use and storage within a highly protected area, i.e. a protected area as defined for Category II above, to which, in addition, access is restricted to persons whose trustworthiness has been determined and under surveillance by guards who are in close communication with appropriate response forces. Specific measures taken in this context should have as their objective the detection and prevention of any assault, unauthorized access or unauthorized removal of material. Transportation under special precautions as identified above for transportation of Category II and III materials and, in addition, under constant surveillance of escorts and under conditions which assure close communication with appropriate response forces. Categorization of nuclear material Material Form Category I II III 1. Plutonium (1) Unirradiated (2) 2 kg or more Less than 2 kg but more than 500 g 500 g or less (3) 2. Uranium-235 Unirradiated (2) — uranium enriched to 20 % U-235 or more 5 kg or more Less than 5 kg but more than 1 kg 1 kg or less — uranium enriched to 10 % U-235 but less than 20 % — 10 kg or more Less than 10 kg (3) — uranium enriched above natural, but less than 10% U-235 (4) — 10 kg or more 3. Uranium-233 Unirradiated (2) 2 kg or more Less than 2 kg but more than 500 g 500 g or less 4. Irradiated fuel Depleted or natural uranium, thorium or low enriched fuel (less than 10% fissile content) (5) (6)

ANNEX C INTERIM ARRANGEMENT CONCERNING ENRICHMENT, REPROCESSING AND SUBSEQUENT STORAGE OF NUCLEAR MATERIAL WITHIN THE COMMUNITY AND CANADA 1. Both parties recognize that while increasing reliance is placed on nuclear energy for peaceful purposes to satisfy world energy requirements, its use requires that every precaution should be taken with respect to the generation and dissemination of material that can be used for nuclear weapons. The parties agree to cooperate both bilaterally and internationally to identify arrangements which will advance this objective. Both parties agree that their objective is to meet their energy needs while avoiding the danger of the spread of such material and respecting the choices and decisions of each party in the peaceful nuclear field. The parties note with satisfaction that the organizing Conference on International Fuel Cycle Evaluation (INFCE), in which Canada, the Commission of the European Communities and Member States of Euratom took part, agreed to carry out a study which is expected to extend over the next two years. INFCE will explore the best means of advancing the objectives of making nuclear energy for peaceful purposes widely available to meet the world's energy requirements while at the same time minimizing the danger of the proliferation of nuclear weapons. The participants in the study are pledged to cooperate constructively in the study which will examine all aspects of the nuclear cycle. Among the matters to be examined by working groups of INFCE are reprocessing and enrichment and storage of plutonium and uranium enriched beyond 20 %. Against this background, the parties agree on the following interim arrangement which shall apply to reprocessing and to enrichment beyond 20 % U-235; and the storage of plutonium and uranium enriched beyond 20 %. 2. With respect to material which has been transferred between 20 December 1974 and the end of the interim period, Euratom will notify the Government of Canada in advance of its intention to undertake any such reprocessing, enrichment or storage. This notification will include the quantities of material to be enriched, reprocessed or stored, the facility in which such operations will take place, and the intended disposition and use of the special fissionable material. The purpose of such advance notification is to permit joint consultation to take place between the parties concerning the adequacy of safeguards for the operation contemplated and avoidance of the risks of nuclear proliferation. Consultations shall enable each party to appreciate to the fullest extent possible the nature and purposes of the operation involved. These consultations shall be without prejudice to the commercial or industrial policy of either party. An early meeting will be held to work out appropriate modalities for notification and consultations. 3. It is understood between the parties that during the period of the interim arrangement supplies of Canadian uranium to be exported to Euratom would be broadly limited to the current needs of Euratom, the term ‘current needs’ to take account also of enrichment contract commitments entered into by the member countries of Euratom. The contracting parties shall consult at the request of either concerning the application of this part of this interim arrangement, in accordance with Article XIII of the 1959 Agreement. 4. Subject to the foregoing it is agreed that Canadian-origin uranium transferred to Euratom subsequent to 20 December 1974 or any Canadian-origin uranium being exported to Euratom during the period of the interim arrangement may be reprocessed or enriched beyond 20 % U-235, if the need arises in plants now operating or foreseen to be operating in Euratom. The same applies to plutonium and uranium enriched beyond 20 % U-235 stored in Euratom. In respect of Canadian-origin uranium transferred to Euratom prior to 20 December 1974, it is open to either Party to request consultation as provided in Articles IX (3) and XIII, of the 1959 Agreement. 5. As soon as possible after 31 December 1979 or the termination of the INFCE study, whichever is earlier, the parties will commence negotiations with a view to replacing this arrangement by other arrangements which will take into account inter alia any results of the INFCE studies in relation to the operations in question. If no such arrangements have been agreed upon by the end of 1980, the parties may jointly agree to extend the present interim arrangement.

I have the honour to confirm that these proposals are acceptable to the European Atomic Energy Community.

Please accept, Mr Chargé d'Affaires, the assurance of my highest consideration.

Brussels, 16 January 1978

Mr Chargé d'Affaires,

I refer to the exchange of letters between us of 16 January 1978 regarding nuclear safeguards, and have the honour to state further as follows, for the information of the Canadian authorities:

During the Council consideration of the abovementioned exchange, it was agreed that the following represented our understanding of the procedure provided for in (c).

1. Supply of Canadian material to persons in the territory of the seven non-nuclear weapon States parties to the Euratom/IAEA verification Agreement, and transfer of such material within these States: This event would raise no problem, the verification agreement having entered into force on 21 February 1977.

2. Supply of Canadian material to the United Kingdom or transfer of Canadian material into the United Kingdom: Although the trilateral UK/Euratom/IAEA Agreement has not yet entered into force, no interim agreements providing IAEA verification of such material in the United Kingdom will be required by Canada for a reasonable period of time, which should not exceed 18 months starting from 23 December 1976.

3. Supply of Canadian material to France or transfer of Canadian material into France: Canadian material for end-use in France shall be submitted to IAEA verification as from the entry into force of the trilateral France/Euratom/IAEA Agreement currently under negotiation. The Council took note of statement by the French representative that material subject to the Canada/Euratom Agreement of 1959, as amended, would not be employed for end use in France before the entry into force of this trilateral Agreement. The Council also took note that the Canadian Government, given the application of Euratom safeguards and their verification under the trilateral France/Euratom/IAEA Agreement currently under negotiation, agrees that Canadian material may be directly supplied from Canada to France or be transferred into France in order to be enriched or reprocessed in France provided that it would leave France after the normal period required for those operations.

Please accept, Mr Chargé d'Affaires, the assurance of my highest consideration.

Mr P. D. Lee Chargé d'Affaires a.i. Mission of Canada to the European Communities Rue de Loxum, 6 (fifth floor) 1000 Brussels

(1) As identified in the Statute of the IAEA.

(2) Material not irradiated in a reactor or material irradiated in a reactor but with a radiation level equal to or less than 100 rad/hour at one metre unshielded.

(3) Less than a radiologically significant quantity should be exempted.

(4) Natural uranium, depleted uranium and thorium and quantities of uranium enriched to less than 10 % not falling in Category III should be protected in accordance with prudent management practice.

(5) Although this level of protection is recommended, it would be open to States upon evaluation of the specific circumstances, to assign a different degree of physical protection.

(6) Other fuel which by virtue of its original fissile material content is classified as Category I or II before irradiation may be reduced one category level while the radiation level from the fuel exceeds 100 rad/hour at one metre unshielded.