AGREEMENT BETWEEN THE UNITED STATES OF AMERICA AND THE INTERNATIONAL ATOMIC ENERGY AGENCY FOR THE APPLICATION OF SAFEGUARDS IN THE UNITED STATES (AND PROTOCOL THERETO)

The Agreement between the United States and the International Atomic Energy Agency (IAEA) for the Application of Safeguards in the United States and its accompanying protocol stemmed from the Eighteen-Nation Disarmament

Committee's (ENDC's) negotiation of the Treaty on the Non

Proliferation of Nuclear Weapons (NPT). In 1967, during preliminary NPT negotiations, Japan and the non-nuclear weapons states of the European Community opposed the NPT provision that requires only non-nuclear weapons states party to the Treaty to accept IAEA safeguards in all of their peaceful nuclear activities.

The widespread concern was that the absence of any requirement for IAEA safeguards in nuclear-weapons states would place the nonnuclear weapons states at a commercial and industrial disadvantage in developing nuclear energy for peaceful uses, due to interference of these safeguards with efficient operation of their commercial activities and by compromise of their industrial and trade secrets through IAEA personnel's access to their facilities and records. Efforts to devise acceptable Treaty provisions for IAEA safeguards in nuclear-weapons states were unsuccessful, and by late 1967, the safeguards issue had become a serious obstacle to acceptance of the NPT by major industrialized non-nuclear weapon states.

In an effort to break that impasse and allay the concerns embodied in the impasse, President Johnson on December 2, 1967, stated that the United States was not asking any country to accept safeguards that the United States was unwilling to accept and that . . ." when such safeguards are applied under the Treaty, the United States will permit the International Atomic Energy Agency to apply its safeguards to all nuclear activities in the United States excluding only those with direct national security significance." The United Kingdom announced a similar offer on December 4, 1967. These two offers were instrumental in gaining acceptance of the NPT by key industrialized countries, and their importance was emphasized in public statements by the Federal Republic of Germany, Japan, and

others. The U.S. offer would be delineated in a separate, formal agreement to be concluded with the IAEA.

Soon after the NPT entered into force in March 1970, a Safeguards Committee established by the IAEA Board of Governors undertook to advise the Board concerning the form and content of the safeguards agreements to be concluded with the non-nuclear weapon states party to the NPT. Nearly 50 governments participated in the Committee's work, which continued until 1971. One of the most difficult matters that the Committee addressed was that of financing the increase in the IAEA's safeguards activities resulting from the entry into force of the NPT. It was recognized that the number of facilities in the United States and the United Kingdom that would be eligible for IAEA safeguards within the terms of these two countries' offers would equal the total number of facilities in all non-nuclear weapon states. Thus, if the IAEA were to apply its safeguards in all of the facilities under the offers, it would require a doubling of its budget for its safeguards activities. Subsequently, a number of non-nuclear weapon states, led by Australia, proposed that the objective of the two offers could be achieved at reasonable cost to the IAEA if the IAEA carried out full inspections of only those facilities in the United States and the United Kingdom that were of advanced design or were sensitive in terms of international competition. Under the proposal endorsed by Italy, Japan, and the Federal Republic of Germany, the IAEA could apply something less than the full regime of inspections to all other eligible facilities not of advanced design or sensitive in terms of international competition in the two offering countries. Australia's proposal to the Committee achieved a balance between the costs of implementing the offers and attainment of the offers' objectives.

By March 1971, the Safeguards Committee completed its formulation of detailed provisions for the individual safeguards agreements. The Board approved the document, and shortly thereafter Austria and Finland negotiated safeguards agreements with the IAEA which became the models for future such agreements. They were also used in the development of the voluntary offer agreements with the United States and the United Kingdom.

In order for the U.S. offer to achieve its