BAYER, Dr Stephan, Director, Nuclear Security Section, Australian Safeguards and Non-Proliferation Office, Department of Foreign Affairs and Trade

FLOYD, Dr Robert, Director-General, Australian Safeguards and Non-Proliferation Office, Department of Foreign Affairs and Trade

LEWIS, Ms Rebecca, Legal Specialist, International Law Section, International Legal Branch, Organisations and Legal Division, Department of Foreign Affairs and Trade

McINTOSH, Mr Steven, Senior Policy Adviser, Australian Nuclear Science and Technology Organisation

TOOHEY, Ms Elizabeth, Executive Officer, Treaties Secretariat, International Organisations and Legal Division, Department of Foreign Affairs and Trade

van der TOORN, Mr Damien John, Principal Legal Officer, International Security Section, International Law, Trade and Security Branch, International Law and Human Rights Division, Attorney-General's Department

Agreement between the Government of Australia and the European Atomic Ene rgy Community (Euratom) for Coo peration in the Peaceful Uses of Nuclear Energy

[09:27]

ACTING CHAIR: The committee will now take evidence on the proposed agreement between the Government of Australia and the European Atomic Energy Community (Euratom) for Cooperation in the Peaceful Uses of Nuclear Energy. This treaty was tabled in parliament on 23 August 2011 and I now welcome representatives from the Department of Foreign Affairs and Trade, the Attorney-General's Department and the Australian Nuclear Science and Technology Organisation. Misleading evidence is a serious matter and may be regarded as a contempt of parliament. If you nominate to take any questions on notice, could you please ensure that your written response to questions reaches the committee secretariat within seven working days of your receipt of the transcript of today's proceedings. Do you wish to make any introductory remarks before we proceed to questions?

Dr Floyd : I would like to take the opportunity for some introductory comments. As you are aware, this agreement that is proposed for Australia to enter into with Euratom is a replacement agreement. It is replacing a previous agreement that was established in 1982, concerning transfer of nuclear materials from Australia to the European Atomic Energy Community. The text of this agreement was signed by Prime Minister Gillard and the European Commissioner, President Barroso, on 5 September 2011. We propose that this is actually a central piece in the relationship between Australia and the Euratom states on nuclear cooperation. It will, as in the information we have provided to you, expand that agreement slightly but is broadly in the same spirit. We see the relationship with Euratom as important for a number of reasons. One is that, of Australia's total uranium exports, a little under one-third goes to Euratom nations. Secondly, of Australia's exports—that is, actually for use by Euratom nations—Euratom nations are critical for the processing for third party nations, and the EU is one of the top two, along with the US, of countries that we provide uranium to for processing which could go to third countries. In addition, Australia sources an amount of its molybdenum-99, which is used at ANSTO as targets for the production of radiopharmaceuticals. The trade in that molybdenum-99 is contingent on this agreement being in place. You can see that there are a number of reasons that this is a very important agreement and that we are committed to see it come into place by 15 January when the existing agreement would expire.

The agreement is consistent with Australia's bilateral nuclear policy and consistent with the other cooperative agreements that we have established. However, it is the first of our agreements where we are proposing to put more specific language around nuclear safety into the agreement and the way that we read that with Euratom is by reference to a number of conventions—and there are four of these different conventions that relate to nuclear safety and nuclear incidents and the notification thereof—and the parties agree to the application of those key international conventions in their practices both in Australia and in the EU. We see this as a prudent and very appropriate step in light of the Fukushima incident earlier this year.

The policy of Australia with regard to the sale of uranium is clear: that Australian obligated nuclear material is to be used for peaceful purposes only; that International Atomic Energy Agency safeguards and additional protocols should be in place to ensure that that material does not move into any military purpose; that Australia should give consent prior to there being any transfer to a third party, any enrichment to 20 per cent or more and any reprocessing; that the standards of the Convention on the Physical Protection of Nuclear Material, for the securing of nuclear material, should be in place; and that there should be a right to remove Australian obligated nuclear material under circumstances where significant breaches of this agreement have occurred. All elements of that policy statement are in place in this treaty that is before us today.

In summary, the cooperation between Australia and Euratom is of significant benefit both to Australia and to the Euratom nations. This is to enable the continuation of trade, which would be critical, and the continuation of the supply of material for Australia's radiopharmaceuticals, and makes some strong statements that Australia and Euratom nations support in terms of non-proliferation, safeguards and nuclear security. With that I conclude my opening comments.

ACTING CHAIR: Thank you, Dr Floyd. On that issue of safety, it is obviously of some interest to this committee. What European countries are covered under Euratom and does it include those nuclear weapons states of France and Britain?

Dr Floyd : There are 27 countries that are included under the Euratom agreement and it does include the United Kingdom and France, two of the nuclear weapon states as recognised in the Nuclear Non-Proliferation Treaty.

ACTING CHAIR: You highlight in the material that this is Australia's first such agreement to include specific provisions on nuclear safety. Firstly, that raises a question about our other bilateral agreements and those not having those specific provisions on nuclear safety. Are you able to elaborate on exactly what those types of specific provisions will be in relation to nuclear safety under this program?

Dr Floyd : I will take the first part of your question first. We have looked at the various agreements that we have in place and what other countries with these other international conventions around safety have in place. I do not have the information with me and I cannot recall exactly the answers to the coverage, but it is quite extensive as most countries have these arrangements in place. There are four specific arrangements that we are referring to. Firstly, the Convention on Nuclear Safety—a very broad ranging convention on nuclear safety practices; secondly, the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management; thirdly, the Convention on the Assistance in the case of Nuclear Accident or Radiological Emergency—a critical piece for support and responsibilities of member states in the case of an accident; and, allied to that one, the fourth one, is the Convention on the Early Notification of Nuclear Accident, an issue which is very critical in the case of such an event to occur. There are very broad-ranging commitments about safety practice, emergency response, notification and cooperation in those four agreements.

Mr FORREST: In regard to non-cooperation, how do you get around the problem of France and Britain—or any other nuclear armed nations—purchasing Australian uranium for peaceful purposes and whatever they do for their weapons grade stuff? How do you get around those difficulties?

Dr Floyd : Certainly that is at the core of this issue: it is our desire that Australian uranium should only be used for peaceful purposes, so if you are to trade with a nuclear weapons state how are we assured of that outcome? That happens in a couple of ways. Firstly, we have a treaty-level commitment by such nuclear weapons states that they will not use our material for weapons or for military purposes. There is no higher commitment a country could make than a treaty-level commitment as to what their behaviour would be. We have good reason to trust them in making that commitment. Secondly, we have in place a whole range of measures which allow us to account for and to control the movement of nuclear material. There is extensive reporting required from a country that we would deal with, back to us, as to where their material is. Thirdly, the International Atomic Energy Agency, in the case of nuclear weapons states, will voluntarily put certain facilities onto a list of eligible facilities that the International Atomic Energy Agency could inspect. So that inspection role of the International Atomic Energy Agency can also take place to assure those safeguards are in place.

Mr FORREST: In regard to the merging, I suppose, of the two pre-1982 agreements, are opportunities being taken to enhance those agreements? Are processes in there that are not already in there or are they simply merged?

Dr Floyd : The 1982 agreement has been enhanced in a couple of ways into the text that is proposed here. Part of it is about scope in that it did not have a full reciprocal responsibility in it and it was more about the responsibilities that Euratom nations had for reporting and accounting for Australian material. Now there are some equal responsibilities on us. It becomes more of a platform for potential nuclear cooperation in a full two-way manner between the countries. With regard to the specifics of accounting and control, that is covered in the administrative arrangements, which are MOU-level arrangements that sit under each of our treaty-level nuclear cooperation or nuclear safeguard agreements. The details of those are confidential between the parties, but we do have a document which outlines the nature of those kinds of undertakings so that interested parties can see what that is like. We cannot actually show the specific arrangements. But that is where the tight issues of safeguards start to emerge.

Dr STONE: Are all countries who are members of the European Union also automatically a member of the Euratom?

Dr Floyd : Yes, they are.

Dr STONE: If a new country was wanting to join—and Turkey was for a while—then they would automatically have to embrace the treaty requirements?

Dr Floyd : Yes.

Dr STONE: You were talking a minute ago about the extra requirements for us through this treaty in examining the performance of other Euratom countries and whether they are using nuclear material peaceably—that would be quite interesting for us in the case of France and UK. Is it an expectation that our inspectors are supposed to go across there and do some auditing directly of those countries? Is that part of this deal?

Dr Floyd : No. The arrangement is that we have this accounting obligation on those that receive Australian obligated nuclear material, that they are to provide us with quite detailed reporting, which is outlined in the administrative arrangements, and that we have the opportunity for reconciliation discussions and visits with those countries. In the case of Euratom—and our interaction is with that central body as a whole—is that the countries within the Euratom group have given over some of those responsibilities to Euratom to exercise that role on their behalf.

Dr STONE: So we trust Euratom as a centralised agency to do the auditing on our behalf. In particular, I am interest in the third party sales. Are we given information about who those third parties are?

Dr Floyd : There can be no transfer to any third party without prior consent from Australia. They have to provide that request to us as to who it is and only, if and only, we have a bilateral agreement with that third party would we consider such a transfer. So we are rock-solid sure on any transfers.

Dr STONE: How do we handle that issue now with the treaties that we have? How do we handle, say, the UK now producing potentially non-peaceful material?

Dr Floyd : That undertaking of prior consent for Australia, if any Australian obligated nuclear material is to be transferred to a third party, is in all of our bilateral agreements.

Dr STONE: It is already in our bilateral agreements?

Dr Floyd : Yes, it is in the existing Euratom agreement. It is in all of the others that we have. It is a part of that network to make sure that we never lose visibility and control.

Dr STONE: Does this new treaty add any value to what we currently do? Is it any different?

Dr Floyd : From a safeguards perspective there are no substantial differences. There are some minor differences and some technical differences et cetera. But with regard to how the Euratom nations handle Australian material, there are no substantial differences; it is maintaining our current practice and policy and standards.

Dr STONE: In terms of waste treatment and the countries we currently use for disposal and so on, does that make any difference in relation to Euratom countries who might be taking our waste material right now, or waste from other countries that we sell to?

Dr Floyd : I will just clarify a technical point on this one. The reason I am just checking with my colleagues is that there is a significant difference between spent fuel and waste. Waste per se does not come under the definition of nuclear material, but I will ask my colleague to elaborate a little more on this issue.

Dr Bayer : Your question alludes to France in the past having taken our spent fuel and processed it and—

Dr STONE: And the UK have also taken our materials?

Dr Bayer : Yes. The nuclear material is recycled and re-enters into the fuel cycle under the terms of our agreement and the whole network. The waste itself is not defined as nuclear material and therefore is not under strict provision of the agreement in terms of safeguards and tracking of nuclear material as such. But the new Euratom agreement talks about the spent fuel waste management convention and so it comes under that in that regard.

Dr STONE: So it will not make any difference to current practices or destinations of our unwanted product?

Dr Bayer : No, other than it is already contracted to come back to Australia, and the material that was sent to the USA stays there.

ACTING CHAIR: Would you see an increase in waste coming back to Australia then through this agreement?

Dr Bayer : No increase.

Dr Floyd : No change in the way that the waste is managed as a result of this agreement.

Senator LUDLAM: I understand article 5 of the treaty requires the written consent of both parties before enriching uranium of Australian origin to anything higher than 20 per cent uranium-235. Has that ever been requested? Has that consent ever been sought in the past?

Dr Bayer : No.

Senator LUDLAM: Certain? You sound very certain.

Dr Bayer : I do not recall it.

Senator LUDLAM: Okay. So that we not solely relying on your recall, could you just check the record and respond if there is anything in the records that contradict that?

Dr Bayer : Yes.

Senator LUDLAM: Does Euratom have its own inspectorates separate to the IAEA?

Dr Bayer : Yes, it does. It works in cooperation with the IAEA. I cannot recall whether every single inspection that the Euratom safeguard system do or if there is a subset it does on its own without the IAEA, but yes, they have they have their own inspectorate.

Senator LUDLAM: Okay. How well-resourced is it compared to the IAEA? I know the former director-general has been complaining for years that they are very under-resourced. How would you describe the resourcing in Europe?

Dr Bayer : As I understand it, it is an ongoing dialogue of how to maximally use the resources that both Euratom and the agency have. I cannot make a comment on the relative resourcing and the relative size of what the agency has to cover compared to what Euratom has to cover. But I have heard no ultimate problem.

Senator LUDLAM: There are a couple of nuclear weapon states obviously covered by this agreement. Do the inspections extend to facilities of those states?

Dr Bayer : Yes, France and UK are under the Euratom safeguards.

Senator LUDLAM: Okay. Can you tell us what Euratom's relationship with Iran's nuclear program? I understand there is or there was an agreement in the past for transfer of materials and technology. What is the current state of play?

Dr Floyd : With regard to Australian aggregated nuclear materials, as you would appreciate, no Australian obligated nuclear material could ever be passed to Iran without prior consent from Australia and we do not have a bilateral agreement. That would not happen.

Senator LUDLAM: But when the concentrate leaves Australia it just goes into a great big bucket and then equivalent amounts come out of enrichment plants at the end. The Australian uranium goes into the bucket and then that volume is tracked, but it is not actually the Australian uranium that is tracked; it is an equivalent amount. Is there anything stopping uranium from somewhere else being transferred across to Iran? Is there still an agreement between the European countries and Iran or has that lapsed?

Mr McIntosh : My recollection is that the shah's Iran had an arrangement with the European enrichment consortium, URENCO, but that after the revolution in 1979 that agreement was suspended and that, therefore, there are no current arrangements between the European Union and Iran.

Senator LUDLAM: Thank you. In the wake of the disaster in Japan, the world's reactor fleets are being stress tested. I know European countries are taking that very seriously. Can you tell us what, if anything, has fallen out of that? Has that process been completed and does that have any implications for our trade?

Dr Floyd : Our understanding is that process of stress testing is still ongoing. Notwithstanding the outcome of that, various countries have taken their own decisions about what they would do with their fleet et cetera, such as you are aware with Germany. The International Atomic Energy Agency also has made some strong statements encouraging nations to undertake such stress tests and to act on those as quickly as they can.

Senator LUDLAM: Okay. I apologise that I missed your opening statement. Can you take us through what safety aspects have been enhanced practically, or is the treaty more of an administrative nature?

Dr Floyd : The treaty commits the parties to the application of four key international nuclear safety and waste management conventions. Before you came in, Senator, I briefly went through as to which they were. But, quickly, for your benefit: the Convention on Nuclear Safety, which is the pinnacle overarching nuclear safety convention; the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management—so picking up the back-end of the fuel chain; the Convention on the Assistance in the case of Nuclear Accident and Radiological Emergency—picking up where an accident does occur what the assistance arrangements will be; and, allied to that, the Convention on Early Notification of Nuclear Accident. Those four cover the space of nuclear safety, emergency response and support notification et cetera. The Euratom agreement that we are considering today is stating that parties will apply the measures in all four of conventions in their jurisdiction.

Mr FORREST: I note that Australia's legislative changes are required as a result of measures that are in place, but what is the status of legislative change in other countries? What domestic legislation will have to be implemented in the other agreement states?

Dr Floyd : Are you specifically saying in response to Fukushima or in response to this agreement?

Mr FORREST: In response to the agreement. Firstly, could you confirm for the record that Australia's legislative implementation is all set in concrete and, secondly, what is the status of other countries?

Dr Floyd : From the Australian end, it is my understanding that there would be no change to our legislation as a result of this agreement. I would be surprised if change was required of a legislative nature in the other countries, but on that I could not be 100 per cent confidence.

Mr FORREST: Perhaps you could take it on notice.

Dr Floyd : I am happy to do that.

Ms BIRD: In light of Fukushima, does the convention you mentioned on notification include an ongoing post-notification relationship regarding the investigation of an accident, sharing information and that sort of thing? What is the extent of that particular convention?

Mr McIntosh : The notification convention covers notification of an accident where there is likely to be a transboundary impact—in other words, an impact on another country. Such an impact is possible. So the notification in the first weeks after Fukushima where there were widespread releases there was an obligation to notify under that convention. Given that releases have almost ceased now, there is no longer an obligation to keep on notifying, although the Japanese are providing continual updates to the International Atomic Energy Agency and to other countries.

Ms BIRD: There is no other mechanism that kicks in once there has been an incident that requires some level of ongoing conversation? Even if it is just to learn from the decisions made and the processes followed?

Mr McIntosh : The Convention on Nuclear Safety kicks in in that you are obliged to report periodically on the safety of your installations—which would obviously include Japan who, I suspect, will be reporting for the next 30 years under the Convention on Nuclear Safety on the state of safety of those facilities.

ACTING CHAIR: If there is no objection from the committee, I will have Senator Ludlam take over while I go to the chamber for a division? Thank you.

ACTING CHAIR ( Senator Ludlam ): In the wake of the disaster in Japan, it has been impossible for the public to discover whether Australian uranium was in the plants at Fukushima Daiichi. The Japanese government knows, the utility knows and we know that Australian uranium is obviously sold to Japan in quite high volumes, but not where it goes. We are told that these matters are commercial in confidence. As regulators, how often do you bump into commercial-in-confidence considerations in trying to do your job?

Dr Floyd : As you know, we have had discussions about this matter through Senate estimates and I did undertake to find out more information for you and I have done that. At last estimates, we did not have the chance to have that conversation. We can confirm that Australian obligated nuclear material was at the Fukushima Daiichi site and in each of the reactors—maybe five out of six, or it could have been all of them; almost all of them. As a percentage, we have the details of that amount that came through our reconciliation visit with Japan. As we had discussed previously, we were not going to ask Japan for that specific information short of our normal reconciliation visit because that was coming up in some months and they have provided that to us. The fact that the information is commercial in confidence does not preclude it from being shared with us. So we see that information and are across that, but it precludes us from being able to pass that information on in any detailed form to others. We are able to execute our responsibilities even in the context on commercial-in-confidence constraints.

ACTING CHAIR: Have you ever been put in a position where you were not able to extract information that you needed to because of commercial-in-confidence restraints?

Dr Floyd : No, I have not been in a position where commercial in confidence has constrained any decision or consideration.

ACTING CHAIR: Okay. There are no further questions, so thank you for attending to give evidence today. If the committee has any further questions, the committee secretariat may seek further comment from you at a later date.