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 IAEA, 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.