Agreement 123:

India got a Better Deal Than China

The Left parties have launched a stir to oppose the Indo-US nuclear deal and have, additionally, threatened to withdraw their support to the government if their concerns are not addressed. As the Left parties take their bearings from Beijing, they should compare the finer points and nuances of the deal that India has got with the 123 agreement that China signed with the US.

Though discussions on a US-China nuclear deal began in 1981, the "Agreement Between the United States and the People's Republic of China Concerning Peaceful Uses of Nuclear Energy" was signed on July 13, 1985. However, it was approved by the US Congress only on March 18, 1998, after almost 13 years of excruciating reviews and presidential waivers. On Feb 28, 2005, Westinghouse and Mitsubishi Heavy Industries jointly bid to sell four nuclear reactors to China. Earlier this year, China placed its first orders for nuclear reactors consequent to its civil nuclear cooperation agreement.  

Article-by-article comparison of the 123 agreements signed by China and India clearly indicates greater US trust and a softer approach towards India. Article 2.1 states that each party to the agreement shall implement it in accordance with its national laws. While Beijing is not particularly concerned, the Indian opposition parties have complained that the provisions of the Hyde Act will have overriding significance. They do not explain how US domestic laws can goad the Indian government into accepting constraints that are not in the national interest.

In terms of international law, the provisions of China's 123 agreement are rather intrusive. Article 2.1 states that China may not invoke the provisions of its internal laws to justify violation of the agreement and that Chinese exports pursuant to the agreement will be subject to the US laws that are prevalent at the time of such exports. There is no such provision in the case of the Indian 123 (Article 16.4). It simply states that the agreement will be implemented in good faith and in accordance with the principles of international law.

The 123 agreement that China signed has barred the export of nuclear material or technology to China unless the US president certified that China was not assisting a third country that had not signed the Nuclear Non-Proliferation Treaty (NPT) to acquire nuclear weapons technology. This ensured that no transfers would take place till the US administration and Congress were satisfied that China had begun to adhere to international non-proliferation norms. Then President Bill Clinton provided such a certificate to Congress on Jan 12, 1998, and the US Congress approved implementation of the 123 agreement with China shortly after that. In India's case, both the president and Congress are satisfied that India strictly observes all the operative provisions of the NPT though it is not a signatory to the NPT, and no such restrictive provision has been incorporated in the 123 agreement with India.

As regards the right to reprocess spent fuel, India's standpoint has been accepted and incorporated into the 123 agreement, with the proviso that India will establish a separate re-processing facility and that re-processing will be carried out under IAEA safeguards. However, a similar concession for China is tied up in so much red tape that it is unlikely to ever work out. The US has only "agreed to consider favorably" a Chinese request to be allowed to reprocess spent fuel. The agreement clearly states that the US retains the right to approve or disapprove such a request. Given the cumbersome procedures in the Department of State and the Department of Energy, the consideration of a Chinese request could take several years and the final decision may still not be favorable.

On fuel supply assurances as well there are glaring disparities between what has been agreed upon by the US with China and with India. In the case of China, the US has agreed to supply only as much fuel as is necessary "for the efficient and continuous operation of the reactors" (Article 4.3). In India's case, the US has gone far beyond such an arrangement and agreed to help India build a strategic fuel reserve to tide over the disruption, if any, of fuel supplies over the life cycle of the reactors (Article 2.2 e).

Further, in case of disruption despite these measures, the US will assist India to obtain nuclear fuel from friendly countries (Article 5.6 b). Apparently India insisted on this provision because of its bad experience with the disruption of supplies for the Tarapore reactor when the US imposed sanctions on India in accordance with its domestic laws after India conducted its nuclear tests at Pokhran in May 1998. This concession goes well beyond the Hyde Act that had stipulated that the supply of fuel should be consistent with the requirement.

Even on the issue of the right to terminate the agreement, the 123 accord with India stands out as an agreement between co-equals while the 123 with China smacks of US dominance. Though consultations are mentioned, in the case of China the agreement states that if either party violates its terms, the other party shall have the right to cease further cooperation (Article 7.1). Such termination could be immediate. In the case of the 123 with India, besides mandatory consultations about violations, termination requires one year's written notice and the reasons for seeking such termination are to be spelt out (Article 14.1). Also, either party will consider whether expedient factors, particularly national security concerns, led to violation of the terms of the agreement (Article 14.2).

It emerges quite clearly that the 123 agreement that India has negotiated with the US is far superior to what China has signed. While China is required to consistently prove its non-proliferation credentials for civil nuclear cooperation to continue, no such constraints have been imposed on India. The fact that India has sought and obtained a better deal despite not being a signatory to the NPT is indeed noteworthy. The Left parties and others opposed to this deal are not acting in national interest.

(Gurmeet Kanwal is Senior Fellow, Centre for Air Power Studies, New Delhi. He can be reached at )  


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