Japan-India Nuclear Cooperation Agreement

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November 21, 2016

After years of negotiation, India and Japan signed an historic deal that would allow Japan to export nuclear technology, equipment, and material to India. This is the first time Japan has signed a nuclear cooperation agreement with a nuclear-armed nation that is not a member of the Nuclear Non-Proliferation Treaty (NPT). As a critical supplier of nuclear components, Japan’s agreement is vital for other suppliers like the United States to move ahead on nuclear contracts.

Q1: What is the Agreement for Cooperation in the Peaceful Uses of Nuclear Energy?

A1: Most countries strictly control their nuclear energy technology and equipment, as well as nuclear materials. Major cooperation (beyond research and small quantities of materials) generally requires a government-to-government agreement that sets out the terms and requirements. Japan has adopted the approach taken by the United States regarding these kinds of framework agreements. In general, they tend to require:

The use of nuclear materials only for peaceful purposes;

Application of International Atomic Energy Agency (IAEA) safeguards;

Nuclear safety and nuclear security–related measures;

Restrictions on the transfer of nuclear material, related equipment, and technology to third countries.

To date, Japan has signed nuclear energy cooperation agreements with 14 other countries and organizations. They allow Japan to export nuclear reactors, fuel, and technology in the peaceful uses of nuclear energy.

Q2: How important is this particular agreement to both India and to Japan?

A2: After being granted an exemption in 2008 from Nuclear Suppliers Group guidelines, which had prohibited nuclear trade with India for decades because of its nuclear weapons program, India has been poised to welcome foreign suppliers to build nuclear power plants in its country. India is the fourth-largest emitter of carbon dioxide in the world, and it has an ambitious program to build nuclear power plants. Presently, the government-owned Nuclear Power Corporation of India Limited (NPCIL) operates all 21 nuclear reactors at seven sites, with a total installed capacity of about 6 gigawatts (GW). Six more reactors are under construction (about 4 GW). There are a few uncertainties with respect to India’s nuclear construction: the protection afforded to vendors under its new liability law, public support for projects, and availability of financing.

Japan had significant plans to export its own nuclear power reactors before the 2011 accident at the Fukushima Daiichi power plant. In the aftermath, some of the international appetite for nuclear power has diminished (e.g., Vietnam has cancelled its program, and Germany, Belgium, and Switzerland are phasing out nuclear power), but Japan’s nuclear components and expertise are still very much in demand. In particular, many components (pressure vessel closure heads, three complex steam generator parts, and reactor containment vessels) of Westinghouse’s AP1000 reactor are made by Japanese companies, Japan Steel Works and IHI Corporation. GE Hitachi also plans to use equipment made by Japan Steel Works. In addition, about 90 percent of the world market for large forged components for nuclear plants is made by Japan Steel Works, which makes Japan’s ability to conduct nuclear-related activities with India important for Westinghouse. Japan has therefore been under pressure from the United States and France to sign a nuclear cooperation agreement with India.

Q3: Why did the agreement take so long to negotiate?

A3: Japan has been a leader in nuclear nonproliferation for many years and, even before the United States adopted such a policy, decided it would not conduct nuclear trade with states that were not parties to the NPT. The Basic Energy Plan 2014 states that “Japan will also actively contribute to strengthening nuclear nonproliferation through reinforcement of the IAEA safeguards and stringent export control and international nuclear security.” India, as a nonparty to the NPT, has several nuclear facilities outside of IAEA safeguards.

The key disagreement, however, reportedly was a provision that would terminate the agreement in case India tested a nuclear weapon. India promised, in order to receive the Nuclear Suppliers Group exemption for nuclear trade, that it would abide by a voluntary, unilateral nuclear test moratorium in a statement on September 5, 2008, by then-Foreign Minister Pranab Mukherjee. In December 2015, Prime Minister Shinzo Abe of Japan reportedly told Prime Minister Narendra Modi of India that Japan would require the termination of the agreement in the event of a nuclear test. Typically, U.S. and Japanese agreements have a clean, simple clause that specifies reasons for termination, including a nuclear test explosion (even for the United States). In the case of the U.S.-India agreement, that clause was revised significantly to introduce ambiguities, and the clause in the Japan-India agreement is similarly ambiguous. A separate document (“Note on views and understanding”) includes a provision to halt nuclear energy cooperation in the event of a nuclear test, but one Indian government official has indicated that this nullification clause is not legally binding.

Article 14 of the Japan-India agreement requires each country to give notice of one year prior to the agreement’s termination. As a result, even if India conducts a nuclear test, Japan cannot terminate this accord immediately. However, the parallel Views and Understanding document says that an “Indian action in violation…[aka a nuclear test] could be viewed as a serious departure from the prevailing situation,” enabling at least a suspension of reprocessing.

Q4: What are the next steps?

A4: The Japanese government will submit the agreement now to the Japanese Diet for approval. It is likely to be approved during the next Diet session in 2017. The United States and India will likely conclude negotiations for Westinghouse to build six AP1000 nuclear reactors in South India by June 2017.

Sharon Squassoni is a senior fellow and director of the Proliferation Prevention Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Yukari Sekiguchi is a research associate with the CSIS Proliferation Prevention Program.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).