Reagan under pressure to OK reactor pact with China. US industry concerned Congress may not ratify nuclear partnership
Washington — German firms might get the order. Or French firms.
But unless the Reagan administration submits the US-China nuclear cooperation pact to Congress soon, US nuclear companies may be cut out of the action. West Europeans or the Japanese could pick up lucrative sales of atomic reactors and components to the People's Republic of China -- perhaps for the remainder of the century.
So say American vendors of nuclear equipment -- Westinghouse Electric Corporation, Combustion Engineering Inc., Burns & Roe Inc., General Electric Company, and others -- who are pressing the administration to move forward on the agreement. President Reagan initialed the pact in Peking in April 1984, billing it as the centerpiece of his visit. But the agreement hit a snag in Washington over the issue of nuclear nonproliferation and has been stalled ever since.
Administration officials are keenly aware of the industry's concern. But they say that unless they receive certain clarifications from Peking about its nonproliferation policy, they will not ask the President to sign the agreement and send it to Congress.
``We are interested in moving forward, and we are talking informally with the Chinese,'' a State Department official says. ``But our differences with the Chinese have not been resolved. The Chinese have given a bit more specificity in their public statements, but we are interested in a fuller understanding of how that translates into practice.''
The official says that ``there may be some possibilities for solving outstanding problems,'' indicating perhaps a slight give in the Chinese position.
All of the concerned parties -- the US government, American industry, and China -- now seem to be engaged in delicate maneuvering on the issue. Frustrated by the administration's stand, China in February went ahead with invitations to the French and Germans to submit bids on its third nuclear power plant, the Sunan project in Jiangsu Province. It conspicuously left out US companies.
According to US industry sources, however, the Chinese have quietly told American firms that if the administration were to send the agreement to Congress (which under present law has 60 days to disapprove it), China would still be willing to invite American participation in the bidding. Peking's schedule reportedly calls for bids to be submitted by summer and a contract to be signed by the end of the year or early in 1986.
``It looks as if American industry is behind the eight ball,'' one US company executive says. ``The Sunan order will be a big one because it will set the pattern for commerce in the next 15 years. Whoever wins will be China's future nuclear partner.''
US officials counter that the deadline schedule is not hard and fast. They say that China would prefer to buy US technology and would doubtless extend the bidding period if the prospects for approval of the agreement were to improve. ``They're playing a game,'' says the State Department official. ``They're playing off our industry against other nations and our industry against our administration.''
At the heart of the issue is concern about China's policy on preventing the spread of nuclear weapons -- concern aggravated by reports that Peking has provided Pakistan with nuclear aid that will enable it to build an atomic device. Since Mr. Reagan's trip to Peking, the Chinese have made several public statements giving assurances that their country will not abet the development of nuclear weapons by other nations.
On Jan. 18, in a speech clearly timed for Reagan's second inauguration, Chinese Deputy Prime Minister Li Peng declared that China has no intention ``at present or in the future'' of helping nonnuclear countries develop nuclear weapons. Peking officially takes the position that the US-Chinese agreement has been negotiated, and nothing remains but to sign it and submit it to Congress.
But aside from agencies in the administration, Congress, too, has misgivings about the Sino-American pact. Even if the President sent it to Capitol Hill, it would probably encounter stiff resistance.
Some lawmakers are concerned that the agreement does not require China to accept International Atomic Energy Agency (IAEA) safeguards; that China may still be helping Pakistan develop an atomic bomb; and that the US may not have sufficient controls over the reprocessing of fuel from American-supplied reactors. (The text of the agreement has not yet been released, and its contents are known only in general terms.)
Reflecting this concern, Congress last year passed an amendment to the Export Administration Act which, in effect, would have given Congress greater oversight over nuclear cooperation agreements. Under the amendment, sponsored by Sen. William Proxmire (D) of Wisconsin, any agreement signed by the President would have to be approved by both houses of Congress if it did not meet the nine criteria of the 1978 Nuclear Non-Proliferation Act.
The Export Administration Act, however, did not make it out of conference (because of a South African issue), so the matter of the amendment was not resolved. But the export act, including the Proxmire amendment, is again running the congressional gauntlet.
Senators Proxmire, Gary Hart, and others are sensitive in particular to the fact that China, since the Reagan visit, has signed a nuclear cooperation agreement with Brazil. That agreement provides for IAEA safeguards. Peking has reportedly reached a similar agreement with Japan.
``China is willing to accept inspectors in the case of other countries,'' says a congressional source. ``Obviously we didn't drive a good enough bargain with the Chinese. If I had to guess, [the administration] signed the thing too quickly. Now that it's looking at it, it has to go back to the Chinese.''
The Sunan project calls for two 900-megawatt nuclear reactors. If US companies were to win the order, industry officials say, it would provide about $1.5 billion worth of business in goods and engineering services. This would create about 15,000 jobs over a six-year period. Moreover, the project is expected to be the pilot program for China's long-term nuclear development, generating up to $7 billion worth of contracts and 24,000 jobs in 15 years.
Industry officials say they believe the agreement as it now stands would pass through Congress, but it would take a vigorous White House effort to see it through. They also suggest that Secretary of State George Shultz may be supercautious on the issue because of his former ties to the Bechtel Corporation, which does business with China. Because Mr. Shultz has largely left the issue to his aides, say industry sources, it has not been given top priority.
The Reagan administration is encouraged by the public statements of Chinese leaders since the pact was initialed. US officials say there has been considerable progress in China's policy on nonproliferation, including applying IAEA safeguards to its nuclear exports to nonnuclear-weapons states. But, they add, information made available since the initialing of the agreement has raised some questions.
``We're not sure that we have a complete understanding about whether certain actions fall within what they consider to be good nonproliferation behavior,'' says the State Department official. ``We thought we had an understanding. Now we're not so sure. . . . But we're getting there slowly but surely.'' Chart: China's first nuclear power projects. China's nuclear power program calls for 10,000 megawatts of capacity -- 10-12 reactors -- by the year 2000. Sunan plant Reactors: 2 Capacity: 900 megawatts each Status: bids being sought Qinshan plant Reactors: 1 Capacity: 300 megawatts Status: under construction Guandong plant Reactors: 2 Capacity: 900 megawatts each Status: site preparation under way -- 30 --