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Before U.S. companies can obtain an export license for nuclear equipment or materials, the United States must conclude a bilateral agreement for civil nuclear trade, or Section 123 agreement. The purpose of these agreements is to prevent diversion of U.S. commercial nuclear materials, components and technology from their intended peaceful use.

The United States has Section 123 agreements in place with 21 countries, Euratom (which includes 27 member countries), the International Atomic Energy Agency and Taiwan. Seven of these agreements are scheduled to expire by 2015. These expiring agreements include not only the International Atomic Energy Agency, but also major nuclear trading partners like South Korea, Taiwan, and China. Timely renewal of these agreements is critical to continuation of nuclear trade between U.S. firms and firms in these nations.

Many nations that are developing new nuclear programs do not have a Section 123 agreement with the United States, which closes the market to American businesses. Meanwhile, foreign suppliers are actively pursuing nuclear project development in these countries. For example, Vietnam, Saudi Arabia, Jordan and Malaysia—all with interest in expanding nuclear energy—do not have 123 agreements with the United States and, consequently, these markets are not open to U.S. exporters.

U.S.-Vietnam Nuclear Cooperation Agreement

“The Administration and Congress Should Work Together to Quickly Approve the U.S.-Vietnam Nuclear Cooperation Agreement,” by Murray Hiebert, Center for Strategic and International Studies, May 1, 2014: The U.S.-Vietnam Section 123 agreement would “add another concrete plank to the U.S. rebalance to Asia,” “add new heft to the comprehensive partnership launched by Vietnam and the United States” last July, and “provide access for U.S. companies to the growing nuclear market in Asia.”

“A Realistic and Effective Policy on Sensitive Nuclear Activities,” by Mark Hibbs and Fred McGoldrick, Carnegie Endowment for International Peace, October 15, 2013: “Based on what is reported to be in that agreement, it would appear Washington and Hanoi have reached a joint political understanding that Vietnam has no intention of engaging in ENR [enrichment and reprocessing] activities. An agreement along these lines would strengthen the economic and energy ties between Washington and Hanoi, promote U.S. strategic objectives in East Asia, and reinforce the global nonproliferation regime.”

Nuclear Energy Institute Testimony before the U.S. Senate Foreign Relations Committee, January 30, 2014: “Vietnam is implementing an ambitious national plan to develop up to 10,000 megawatts of nuclear generating capacity by 2030 with the first reactors coming on line in 2020. Russia and Japan have already secured agreements to develop nuclear energy projects in Vietnam, while U.S. firms have been sidelined absent this important agreement. Conclusion of a Section 123 agreement with Vietnam has the potential to result in $10-20 billion in U.S. nuclear exports.”

“U.S.-Vietnam Nuclear Cooperation: Agreement: Issues for Congress,” by Mary Beth D. Nikitin et al., Congressional Research Service, March 24, 2014.

Resources on Nuclear Cooperation Agreements

A Realistic and Effective Policy on Sensitive Nuclear Activities, by Mark Hibbs and Fred McGoldrick, Carnegie Endowment for International Peace, October 15, 2013. The United States will best promote its national interests, including its interest in nuclear nonproliferation, though its longstanding engagement in peaceful nuclear energy cooperation. Policy proposals to condition U.S. nuclear energy cooperation on other countries renunciation of enrichment and reprocessing would harm U.S. interests. A nuclear cooperation agreement initialed in October by the United States and Vietnam would serve U.S. national interests.Nuclear Trade Controls: Minding the Gaps, A Report of the CSIS Proliferation Prevention Program, by Fred McGoldrick, Center for Strategic and International Studies, January 2013. Detailed analysis of national and global controls on nuclear energy trade shows that policies that would constrain U.S. nuclear energy supply to international markets would reduce U.S. influence on global nuclear nonproliferation and lower global standards for controlling nuclear energy technology.Joint Letter from Eight National Security Experts to President Barack Obama on nonproliferation, nuclear cooperation agreements and export controls, April 25, 2013. Former national security leaders caution against policy proposals to condition U.S. nuclear energy cooperation on other countries renunciation of enrichment and reprocessing. Such unilateral demands would reduce U.S. influence on nuclear proliferation without affecting access to nuclear energy.HR 3766: A Misguided Attempt to Control Enrichment and Reprocessing Technologies, a Nuclear Energy Institute white paper, December 2013. H.R. 3766 aims to stop the spread of nuclear enrichment and reprocessing (E&R) technologies. The U.S. nuclear energy industry recognizes the importance of limiting the spread of E&R technologies, and strongly supports the use of effective policy tools for achieving that goal. H.R. 3766 would impose this requirement as a condition for a U.S. civil nuclear cooperation agreement. This unilateral and inflexible approach would have unintended, adverse consequences for U.S. commercial and nonproliferation interests—significantly reducing the number of countries willing to engage in civil nuclear commerce with the United States.Nuclear Industry Position on Controls Over Enrichment and Reprocessing Technologies. This statement aligns the U.S. nuclear energy industry with the most effective approaches to prevent the spread of enrichment and reprocessing technologies.Joint letter from National Association of Manufacturers, the Nuclear Energy Institute, and the U.S. Chamber of Commerce to Secretary of State John Kerry and Secretary of Energy Ernest Moniz, July 12, 2013. Industry leaders join to encourage the Administration to adopt a pragmatic approach to enrichment and reprocessing (E&R) in new and renewal nuclear cooperation agreements. Only by ensuring that peaceful nuclear energy cooperation agreements are in place with all nations that are pursuing nuclear energy can the United States effectively promote its interests in nuclear safety, security and nonproliferation while enabling billions of dollars in U.S. exports and creating tens of thousands of American jobs.Issues in Focus: Nuclear Energy Exports and Nonproliferation. This is a set of Nuclear Energy Institute one-pagers on nonproliferation, nuclear exports, Section 123 agreements, myths and facts. The U.S. has a unique opportunity to meet several national imperatives at the same time: increasing U.S. influence over nuclear nonproliferation policy and practices around the world; ensuring the highest possible levels of nuclear power plant safety and reliability around the world, by exporting U.S. advanced reactor designs and America’s world-class operational expertise; maintaining U.S. leadership in nuclear energy technology, and creating tens of thousands of jobs and maintaining a healthy manufacturing base for nuclear energy technology and services. These imperatives are inextricably linked. To maintain U.S. influence over global nonproliferation policy and international nuclear safety, the U.S. commercial nuclear energy sector must participate in the rapidly expanding global market for nuclear energy technologies.Obama Administration Views on H.R. 1280, July 15, 2011. In the previous Congress, Rep. Ileana Ros-Lehtinen (R-Fla.) introduced legislation, H.R. 1280, whose aim was to stop the spread of nuclear enrichment and reprocessing technologies. These are the Obama Administration's views on that legislation - "If adopted, legislation in the U.S. House of Representatives, H.R. 1280, would amend the requirements of the Atomic Energy Act for the provision to be included in U.S. nuclear cooperation agreements with our trading partners in such a way that it would impede U.S. ability to achieve key nonproliferation goals. The Department of State is the lead agency for negotiating these agreements. They are an important element of our nonproliferation policy and their effectiveness as a nonproliferation tool would be damaged by H.R. 1280. The Administration is strongly committed to and shares many of the policy objectives reflected in H.R. 1280, but is deeply concerned by many of the bill’s provisions.Letter from U.S. Department of Commerce Secretary Gary Locke to the Civil Nuclear Trade Advisory Committee, July 11, 2011. In this letter, the Secretary of Commerce cites the Administration's opposition to pending legislation (H.R. 1280) that would, if enacted, "negatively impact U.S. civil nuclear competitiveness and diminish U.S. influence overseas that advances our national objectives."

Additional Background Material

NEI Issue Summary - NSG Imposes More Stringent Conditions for E&R TransfersTestimony of Daniel Lipman, Westinghouse Electric Company, at the House Foreign Affairs Committee’s Subcommittee on Asia and the Pacific hearing, “What’s Next for the U.S.-Korea Alliance,” June 6, 2012Nuclear Cooperation with Other Countries: A Primer, Congressional Research Service, February 23, 2011The U.S.-UAE Peaceful Nuclear Cooperation Agreement: A Gold Standard or Fool’s Gold?, by Fred McGoldrick, Center for Strategic and International Studies, November 30, 2010"Negotiating Nuclear Cooperation Agreements," by Mark Hibbs, Carnegie Endowment for International Peace, August 7, 2012