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127. Testimony, Robert J. Einhorn, Deputy Assistant Secretary of State for Nonproliferation, before the House Committee on International Relations, regarding U.S. nuclear policy toward China (February 4, 1998)


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04 February 1998


2/4 EINHORN STATEMENT ON NUCLEAR COOPERATION WITH CHINA

(Following is the text of Einhorn's statement:

(begin text)

Statement of Robert J. Einhorn
Deputy Assistant Secretary of State for Nonproliferation
Before the Committee on International Relations,
U.S. House of Representatives
February 4, 1998

Peaceful Nuclear Cooperation with China

Mr. Chairman,

Thank you for giving me the opportunity to testify before the
Committee on the President's decision to submit to Congress the
certifications and reports required by U.S. law to implement the 1985
U.S.-China Agreement for Peaceful Nuclear Cooperation.

China appears destined to be one of the 21st century's most powerful
and influential countries. The Security and prosperity of East Asia
and indeed of the world at large will be affected significantly by how
China defines and pursues its national interests. The United States,
therefore, has a major stake in China being a responsible member of
the international community, committed to stability in key regions of
the world and to a range of other critical international norms,
including the nonproliferation of weapons of mass destruction and
missile delivery systems.

Nonproliferation has been one of the highest priorities of the
Administration's engagement strategy with China, both because of the
central importance of nonproliferation to U.S. security and because
China -- as a nuclear weapon state, a Permanent Member of the U.N.
Security Council, and a producer of a wide range of arms and sensitive
technologies -- has become an increasingly indispensable player in
international efforts to curb proliferation.

Another reason that nonproliferation has been high on the U.S.-China
bilateral agenda is that China's past record in the area of
proliferation has been a source of serious concern. For decades, China
stood outside the international nonproliferation mainstream. In the
1960s, it even declared its support for the spread of nuclear weapons
as a means of "breaking the hegemony of the superpowers." In the
1980s, it provided critical assistance to Pakistan's nuclear weapons
program, assistance that clearly would have constituted a violation of
the Nonproliferation Treaty had China been a party to the NPT at the
time. Moreover, China or Chinese entities have sold missile equipment
and technology, dual-use chemicals and production equipment, and
advanced conventional arms to recipients in regions of tension and
instability, primarily Iran and Pakistan.

An acute deficiency in China's nonproliferation record has been the
absence of an effective, nationwide system of controls over sensitive
exports. Even when Beijing has been willing to exercise restraint, its
ability to do so has frequently been inadequate -- especially in the
case of dual-use goods and technologies, including in the nuclear
area.

Given these problems, the Administration has exerted a major effort to
encourage a positive evolution in China's policies and practices. We
saw a Potentially promising opportunity to do so in negotiations on
implementing the long-dormant U.S.-China Agreement for Peaceful
Nuclear Cooperation. China has sought implementation of the 1985
Agreement in order to gain access to U.S. nuclear equipment and
technology, which the Chinese apparently believe could make a
significant contribution to their ambitious nuclear energy plans.
Signed in 1985, the Agreement was approved by Congress on the
condition that it could not be implemented until the President
certified, in effect, that China was not assisting any non-nuclear
weapon state to acquire nuclear weapons. In early 1995, as Members are
aware, we entered into negotiations on steps that China could take in
the area of nuclear nonproliferation to meet the requirements under
U.S. law for activating the Peaceful Nuclear Cooperation Agreement.

The talks were carried out intensively for over two and a half years,
concluding on October 29, 1997, the day of the White House meetings
between President Clinton and President Jiang Zemin. We engaged at a
variety of levels. Interagency teams of experts met regularly, and the
President, Secretaries Christopher and Albright, and National Security
Advisors Lake and Berger made nonproliferation a central focus of
contacts with their Chinese counterparts. Throughout we consulted
closely with Congress, particularly with Members and staff of this
Committee.

We set high standards for meeting our legal requirements, and we
pressed very hard. We pointed out to the Chinese the far-reaching
benefits to both sides of reaching agreement, but we also reminded
them that failure to address our concerns about Chinese nuclear
cooperation with third countries would be a continuing impediment to
stronger bilateral relations. This message was underlined in early
1996 when the transfer of ring magnets by a Chinese entity to
Pakistan's unsafeguarded uranium enrichment program became a major and
high-level irritant between the two governments and a hold was placed
on all Export-Import Bank loans to China during the three-month period
needed to resolve the controversy.

U.S. goals in the nuclear nonproliferation talks were carefully chosen
to satisfy -- and in some cases exceed -- the requirements of U.S. law
to implement the 1985 Agreement. Our goals were: (1) to terminate
Chinese assistance to Pakistan's unsafeguarded nuclear facilities and
nuclear explosive program, (2) to curtail Chinese Cooperation with
Iran's safeguarded nuclear program, (3) to establish an effective
Chinese nuclear and nuclear-related dual-use export control system,
and (4) to obtain Chinese participation in multilateral nuclear export
control efforts. We achieved important results in each of these areas.

-- China made a commitment in May 1996 not to provide assistance to
unsafeguarded nuclear facilities, in Pakistan or anywhere else. The
Chinese appear to be taking this pledge very seriously. We are not
aware of any transfers of equipment or material by Chinese entities to
Pakistan's unsafeguarded nuclear program since the pledge was made.
From recent Chinese official directives and statements, we are
confident that the Chinese share our understanding that "assistance"
covers transfers of technology and information (not just hardware) and
that the pledge precludes assistance both to unsafeguarded fuel cycle
facilities and nuclear explosive programs in non-nuclear weapon
states. We have discussed with Chinese officials specific cases of
potential concern involving contacts between Chinese entities and
elements associated with Pakistan's nuclear weapons program, and will
continue to do so if the need arises. But our current information
indicates that China appears to be acting consistently with its May
1996 commitment.

-- China has agreed to phase out its nuclear cooperation with Iran.
Even though Chinese nuclear cooperation with Iran has been limited to
the peaceful uses of nuclear energy and has been under IAEA
safeguards, we urged China (as we have urged all other nuclear
suppliers) to refrain from any such cooperation because of our
concerns that Iran is seeking nuclear weapons and our belief that even
safeguarded cooperation could contribute to that effort. China has
suspended the sale of two nuclear power reactors to Iran, canceled the
transfer of a uranium conversion facility that could have provided an
essential element of Iran's nuclear weapons program, and turned down
Iranian requests for other sensitive equipment and technology. It has
also provided a clear assurance that it is not going to engage in new
nuclear cooperation with Iran and that it will complete its few
existing projects -- which are not of proliferation concern -- within
a relatively short period of time.

-- China is putting in place for the first time a comprehensive,
nationwide system of nuclear and nuclear-related dual-use export
controls. This system is reflected in several specific measures that
China has implemented. In May 1997, China's State Council issued a
directive to all government agencies and non-governmental entities on
the control of nuclear-related exports. It highlighted the policy of
not assisting unsafeguarded nuclear facilities and specifically
covered exchanges of technical personnel and information. In June
1997, the Chinese published an interim list of nuclear-related
dual-use items substantively identical to the Nuclear Suppliers
Group's dual-use list. In September 1997, the State Council
promulgated nuclear export control regulations, published a nuclear
control list substantively identical to the trigger list used by the
Nuclear Suppliers Group, and subsequently committed to promulgate
final dual-use regulations by mid-1998 which we expect to include a
final version of the nuclear-related dual-use control list.

-- China became a member of the NPT Exporters Committee (Zangger
Committee) in October 1997, the first time China has joined a
multilateral nonproliferation export control regime. Committee
membership will both enhance China's export control expertise and
strengthen its commitment to nonproliferation norms and practices. At
the October meeting, the Chinese representative issued a comprehensive
statement of China's nuclear export control policy that made explicit
Beijing's adherence to key nuclear export control principles,
including the need for supplier governments to have the authority to
deny the export of items not found on control lists if the export
could contribute to proliferation (i.e., catch-all controls)

The recent steps the Chinese have taken and the new assurances they
have provided meet our negotiating goals and, more importantly,
satisfy the standards set by the Congress for implementing the 1985
Agreement. The commitments China has undertaken -- including on not
assisting unsafeguarded nuclear facilities and on phasing out nuclear
cooperation with Iran -- are explicit and mutually understood and set
clear benchmarks to evaluate Chinese behavior. But the progress we
have seen involves more than words, more than commitments on paper. We
have already begun to see concrete actions -- in terms of sales to
third countries rejected or canceled, detailed regulations and control
lists adopted and publicized, and active participation in
international regimes initiated.

Moreover, the steps noted above should be viewed in the context of
other developments, primarily during the 1990s, that demonstrate
China's growing acceptance of nuclear nonproliferation norms --
including adherence to the NPT and support for its indefinite and
unconditional extension, termination of nuclear testing and signature
of the Comprehensive Test Ban Treaty, support for a Fissile Material
Cutoff Treaty, support for the strengthened safeguards system of the
lASA, and the helpful role played in achieving the Agreed Framework
with North Korea.

Taken together, these various steps and developments constitute a
marked, positive shift in China's nuclear nonproliferation policies
and practices. On the basis of this record, and taking carefully into
account the specific requirements of U.S. law, the President announced
on October 29, 1997 that he would submit to Congress the
certifications and report necessary to implement the 1985 Agreement.
He signed the certification package on January 12 of this year. It is
now sitting before the Congress for the 30 continuous legislative days
required before the Agreement can be implemented.

Implementation of the 1985 Agreement will bring important benefits for
the United States.

It will provide an effective means of encouraging China to live up to
the nuclear nonproliferation commitments it has recently made. It is
necessary to point out, in this connection, that the 1985 U.S.-PRC
Agreement will make China eligible to receive U.S. nuclear exports; it
does not guarantee that China will receive them. Under our nuclear
licensing procedures, individual transactions will have to be approved
on a case-by-case basis and each license is subject to a thorough
interagency review process. If the Chinese do not abide by their
assurances, we can withhold approval of new licenses and even revoke
previously-approved licenses.

Implementation will therefore give China continuing incentives to
fulfill its obligations. We will be monitoring Chinese behavior
closely. Given the close historical ties between China and Pakistan
and the challenge Beijing faces in implementing its new export control
system, it is certainly conceivable that cases will arise that raise
questions. If and when we encounter problems or uncertainties, we will
not hesitate to raise them with Beijing. With the 1985 Agreement in
effect -- and prospects for continued cooperation potentially at risk
-- the Chinese will have a strong stake in being responsive to our
inquiries and in taking prompt, corrective steps to prevent or stop
any activities inconsistent with China's policies and commitments.
Failure to proceed with implementation, on the other hand, would
deprive us of the best vehicle we have for promoting cooperative and
conscientious follow-up on China's undertakings.

Activating the Agreement will also give us the most promising basis
for making further progress in the nonproliferation area. The U.S.
will use the Agreement and its broad provisions for consultations,
specifically in Article 8, as a framework for continuing to engage
China on such matters as export controls and China's policies and
practices toward nuclear cooperation with other countries.

There are already indications of how the Agreement can pave the way
for further progress. During President Jiang's visit in October, the
Department of Energy and China's State Planning Commission concluded
an Agreement of Intent on cooperation concerning peaceful uses of
nuclear technology. It provides for government-to-government
cooperation in nuclear export controls, nuclear materials control and
accountancy, physical protection of nuclear materials and facilities,
international nuclear safeguards, nuclear reactor safety, and other
areas of mutual interest. These are matters of critical importance to
U.S. national security. Some limited cooperation has occurred in these
areas between U.S. and Chinese national laboratories, as an agreement
for nuclear cooperation is not required for minor cooperation of this
nature. However, Beijing has held that the Agreement for Peaceful
Nuclear Cooperation was needed first to provide an appropriate
foundation for official government-to-government cooperation. The
Agreement should also provide impetus to U.S.-Chinese cooperation in
reducing the enrichment level of research reactor fuel -- an
international effort of long standing which seeks to reduce the amount
of highly enriched uranium in international commerce.

Proceeding with the 1985 Agreement will also put us in a stronger
position to press for progress on non-nuclear nonproliferation issues
-- chemical, missile, and advanced conventional arms -- where serious
problems remain in China's policies and practices. Implementing the
Agreement will demonstrate to the Chinese that, if they make hard
choices and modify their behavior to bring it into line with
international norms, mutually beneficial areas of cooperation will
open up. It is important now that the Chinese make some similarly hard
choices in the area of China's non-nuclear cooperation with third
countries. But if -- after China has met our conditions for
implementing the 1985 Agreement -- we do not keep our end of the
bargain, they will be reluctant to accept our proposals in other
areas.

While improving China's policies and practices in nuclear
nonproliferation was the main objective of our dialogue with China on
conditions for implementing the 1985 Agreement, we have also been
aware of the commercial benefits likely to result from implementation.
China intends to make nuclear power one of its major energy sources in
the 21st century. Indeed, China provides the fastest growing nuclear
power market in the world today. A variety of foreign nuclear reactor
vendors are eager to sell their products to China, and in fact China
has already negotiated arrangements to purchase reactors from France,
Russia, and Canada. However, the Chinese clearly hold in high regard
the safety, design, and performance of U.S. nuclear equipment and
technology and have made plain their interest in cooperating with
American partners.

The sales of equipment and technology under the Agreement will be
commercial transactions between the Chinese Government and U.S.
private industry. It is therefore difficult at this stage to predict
or quantify the economic activity that would be generated by providing
U.S. firms access to China's market. But it is clear that the market
in China for nuclear reactors alone is a multi-billion dollar one, and
so we would expect the benefits in terms of balance of trade and
industrial job creation at home to be substantial.

Moreover, given the highly safe and environmentally sound character of
advanced U.S. nuclear reactor designs, American firms' access to the
China market can also be expected to serve U.S. international reactor
safety and environmental goals. U.S. reactor sales will help China
reduce its reliance on fossil-fuel electricity-generating plants and
therefore significantly limit the huge projected growth in China's
greenhouse gas emissions.

The Administration believes that the arguments for proceeding promptly
with implementation of the Agreement are powerful. At the same time,
we have listened carefully to the concerns voiced by Members of
Congress, including members of this Committee, in the floor debate on
this matter in early November. Members posed some serious questions
about moving ahead now with China on nuclear cooperation, and I would
like briefly to address three of the questions most frequently raised.

First, a number of Members ask whether the Chinese can be trusted to
live up to their new commitments in light of the unsatisfactory record
of past behavior.

The Administration is fully conscious of the history of this matter,
including most notably China's assistance to Pakistan's unsafeguarded
nuclear program even after signing the peaceful nuclear cooperation
agreement in 1985. But the issue before us is not the historical
record; it is whether China is now abiding by its commitments and will
do so in the future.

In addressing an issue of such importance, we must not rely simply on
assurances; we need deeds, not just words. And the deeds we have
observed so far by china -- its termination of certain activities with
third countries, its implementation of export controls, its
participation in international regimes -- are encouraging. They appear
to reflect a level of seriousness and commitment we did not see
before.

Notwithstanding these positive signs of change, we approach
implementation of the Agreement with the same healthy skepticism we
would bring to any such international undertaking. President Reagan's
advice to "trust but verify" is certainly appropriate. So we will
monitor very carefully China's activities with other countries and
take appropriate steps to address any problematic behavior. The
Chinese are aware that any actions inconsistent with their nuclear
nonproliferation assurances would jeopardize nuclear cooperation with
the United States.

Second, a number of Members point out China's problematic record in
missile, chemical, and conventional arms exports and suggest that we
make implementation of the nuclear cooperation agreement conditional
upon improvement in China's export policies and practices not just in
the nuclear area but in these non-nuclear areas as well.

It should be noted, in this connection, that we have made gains with
the Chinese in recent years in the non-nuclear area. For example, we
believe China is abiding by its October 1994 pledge not to sell
MTCR-class ground-to-ground missiles. China became an original party
to the Chemical Weapons Convention and put in place a system of
chemical export controls. And recently the Chinese confirmed to
Secretary Cohen what they had told Secretary Albright earlier -- that
they will stop transfers to Iran of anti-ship cruise missiles and
related production technology.

The Administration recognizes, however, that progress with the Chinese
in the non-nuclear areas has lagged behind progress on nuclear issues.
While no longer selling complete MTCR-class missiles, China continues
to transfer missile components and technology, especially to Pakistan
and Iran. Despite some recent steps to regulate the activities of
certain Chinese chemical companies more effectively, we are still
aware of cooperation between Chinese entities and questionable Iranian
buyers in dual-use chemicals and production equipment, and we still
believe that China's chemical export controls in this area are not
sufficiently comprehensive or effective.

A major focus of the Administration's engagement policy with China in
the period ahead will be to press for substantial improvements in
these non-nuclear areas. But we cannot support linking implementation
of the nuclear agreement to further progress on these other issues.
The prerequisites for proceeding to implement the 1985 Agreement -- as
drafted by Congress and embodied in law -- are clear. They require
performance in terms of China's nuclear nonproliferation policies and
practices. To insist now on additional steps in other areas would
amount to moving the goalposts and going beyond what our law requires.
Prospects for succeeding with this strategy are remote. In seeking to
change the terms of the deal, we would make it more difficult to
achieve further progress and could even put in jeopardy some of the
concrete gains achieved to date.

Third, some Members, while acknowledging positive signs in China's
recent behavior, recommend that we postpone implementation of the
Agreement for another year or so while we accumulate a better "track
record" to evaluate China's willingness and ability to abide by its
commitments.

The Administration understands the desire to see a track record. But
in a real sense, we have already acquired a substantial track record.
We have been focusing very heavily on China's nuclear export
activities in recent years, and since May 1996 have especially
scrutinized its pledge not to assist unsafeguarded nuclear facilities.
As I indicated earlier, the Chinese appear to be taking their
commitments very seriously. When questions have arisen, we have
pursued them vigorously in diplomatic channels. But there is no basis
so far to conclude that China has not abided by its commitments.

It would be futile to put off implementation until all questions and
uncertainties about Chinese behavior ceased to exist. Uncertainties
inevitably will continue to arise. It is in the nature of intelligence
gathering and in the often ambiguous nature of the activities we are
focusing on. Moreover, such uncertainties are not peculiar to China.
They would arise, to a greater or lesser extent, in monitoring the
activities of virtually any significant producing and exporting
country.

Still, it is essential to resolve such uncertainties and, especially
in the case of China, to assess whether it is meeting its obligations.
But the best way to resolve any concerns or uncertainties is not to
postpone implementation. Rather it is to proceed with implementation,
and to use the incentives and opportunities that the Agreement
provides -- namely, China's stake in nuclear cooperation with the U.S.
and the many bilateral interactions that the Agreement ensures -- to
press for answers to our questions and insist on scrupulous
compliance.

It is important to recognize that there is a substantial risk in
putting off implementation in the hope of gaining a more complete
track record. China is now in the process of making major decisions
about its future nuclear power program. As much as it may prefer to
cooperate with American partners, it clearly has other options -- and
it cannot wait for us much longer. If we were now to postpone
implementation, China might well write us out of its future nuclear
plans and opt to buy from others -- and those other suppliers would
certainly not drive as hard a nonproliferation bargain as we have. Not
only would we lose the commercial benefits, but we would risk losing
some of the nonproliferation gains we have already achieved --
especially on Iran -- and we would deprive ourselves of an important
continuing source of leverage to influence Chinese behavior.

Mr. Chairman, we know that Members of this Committee attach great
importance to Chinese compliance with international nonproliferation
norms. Therefore, we suggest that, in considering the question of
implementing the 1985 Agreement, Members ask themselves which approach
would be most effective in promoting such compliance -- proceeding now
with implementation or further postponing implementation until China
makes additional progress on non-nuclear issues and until we have a
more complete track record of improved Chinese behavior in the nuclear
field.

The Administration is confident that the first approach is the best
way to advance our nonproliferation goals with China -- both to
consolidate the progress already achieved in the nuclear area and to
persuade the Chinese to strengthen their uneven performance in the
missile, chemical, and conventional arms areas. The record of recent
years demonstrates clearly, in our view, that the most promising means
of dealing with the Chinese on these issues is through tough, frank,
persistent engagement, using a combination of carrots and sticks.
Implementing the 1985 Agreement now -- in full conformance with the
requirements of U.S. law -- will provide us an essential vehicle for
pursuing this effort. It will give the Chinese continuing incentives
to make further progress on our nonproliferation agenda and to deal
promptly and effectively with any questions that may arise in the
nuclear area.

The alternative course of further delay would weaken our ability to
press our case. Having moved the goalposts after the Chinese had taken
hard decisions to meet our conditions, we would have a difficult time
inducing them to do more. And having failed to lock in the gains
already made, we would risk some unraveling, especially in areas where
we have persuaded the Chinese to go beyond their international legal
obligations.

In 1985 and again in 1990, Congress passed laws making U.S. nuclear
cooperation with China conditional upon improvement in Chinese nuclear
nonproliferation policies and practices. This Administration,
recognizing the difficulty of encouraging Chinese movement in this
highly sensitive area, saw the opportunity to use those laws as tools
to promote an outcome that would not only advance important
nonproliferation objectives, but also would enable the U.S. and China
to reap the commercial and energy benefits of nuclear cooperation and
strengthen their growing bilateral ties. The tools have been
effective. We have witnessed a demonstrable improvement in China's
approach to nuclear nonproliferation -- an improvement measured in
concrete steps actually taken, not just promises about future
behavior. But it would be a mistake to expect those tools to do more
than they were originally designed to do. We could lose what they have
already helped us to achieve.

In the interest of advancing U.S. nonproliferation goals -- as well as
of promoting America's overall interest in building a mutually
advantageous relationship with China that is firmly based on a shared
respect for international norms such as nonproliferation -- we ask
that the Committee join us in supporting the prompt implementation of
the 1985 Agreement.

(end text)



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