U.S.-Japan Negotiations over Reprocessing and Plutonium Use: Opening Moves, 1981-1982

An attorney with overseas nuclear clients (Japan, Taiwan, and West Germany) and a government official during the Nixon and Ford administration, mainly at the Arms Control and Disarmament Agency, James L. Malone prepared this report for the Reagan transition team. Adopting a positive approach to nuclear power, the report took industry views into account and the thinking of another Reagan task force on energy policy. According to Malone’s cover memorandum, key inputs for the report came from Bechtel Corporation executive Kenneth Davis, who was appointed deputy secretary of energy shortly afterwards.

The report was broadly critical of Carter administration nuclear policy because it “alienated” the “advanced industrial states…whose support is vital to combatting proliferation in regions where its potential is a serious threat.”  Moreover, “immediate and effective” steps were necessary to “redress this situation and to restore U.S. credibility and influence.” In addition, to curb proliferation, the report recommended reduced emphasis on “denial of nuclear supply and other sanctions” and to “give greater weight to reducing motivations to acquire weapons.”

Strongly interested in breeder reactors and related “advanced nuclear fuel cycles” in the United States, the Malone group favored authorization of reprocessing in Japan, a country of “no proliferation risk, when the “need for [it], such as for waste management, recycle, or advanced reactor use, is established.”  After “further review,” approval of reprocessing “on an agreed programmatic basis” would be possible in tandem with safeguards and physical protection programs for plutonium.  Reprocessing and plutonium use would be phased so “that accumulation of plutonium stocks will be consistent with near-term: needs, including what [Japan and other allies] judge to be adequate buffer stocks.” In other words, the point would be to produce adequate supplies of plutonium without generating surpluses.

To facilitate the spread of reprocessing and plutonium use among U.S. allies and to carry out a new approach to nonproliferation, the committee supported government reorganization “for centralized formulation and implementation.”  Some of the key recommendations were likely to be dead-in-the water (e.g. no export license authority for the Nuclear Regulatory Commission and the creation of a new bureau for “nuclear affairs” at the State Department).

Malone, who had the strong support of Senator Jesse Helms (R-NC), was nominated to become assistant secretary of state for international oceanic, environmental, and scientific affairs, but he did not receive the appointment without a struggle. His work for foreign nuclear clients raised conflict-of-interest charges and Senator John Glenn (D-OH) refused to let the nomination move through the Senate Foreign Relations Committee unless Malone recused himself from decisions involving Japan, Taiwan, and West Germany.  Apparently by 1982, Ambassador Richard T. Kennedy had taken over the nuclear portfolio at the State Department because of widespread unhappiness over Malone’s performance.[1]

The U.S. embassy in Tokyo sent Washington a translation of an article in Nihon Keizai Shimbun (Japan Times) discussing the government’s plans for long-term plutonium supply-demand projections for use in negotiations with the United States over the approval of a privately-operated reprocessing facility. Also to be negotiated was a “pressing” issue: whether Washington would approve continued operations at the Tokai-Mura reprocessing plant, unclear] which were  due to expire by the end of April unless the U.S. agreed to extend their term.  The Japanese believed that Washington would not readily approve another reprocessing plant because of the impact of the United States’ “traditional nuclear nonproliferation policy;” thus, it would be necessary for Japan to “clarify the uses of plutonium to be manufactured at the plant.”

According to the State Department, the Nuclear Regulatory Commission informed the Energy Department that it had no objection to extending the period of operation at Tokai Mura so that it could reprocess 50 tons of spent reactor fuel through 1 June 1981.  Final approval would depend upon consent from Congress and U.S. government agencies.

Days after President Reagan’s inauguration, Ambassador Mike Mansfield directed this “Nodis” message to Reagan and Secretary of State Alexander Haig. Covering the full range of diplomatic, economic, and security issues for what he characterized “as the most important bilateral relationship that we have in the world,” Mansfield turned toward “one thorn in the Japanese side which we should completely remove as soon as possible.”  Noting that Japan’s “perceived vulnerability to an oil cutoff” made it acutely sensitive to energy supply problems generally, Mansfield wrote that the Japanese government wanted to “operate without interference its Tokai Mura pilot plant for the processing of spent nuclear fuel and to construct a still larger plant for this purpose.” Taking into account Japan’s strong commitments to peaceful uses of nuclear energy and “its support of our nuclear non-proliferation efforts,” Mansfield “saw no reason why we should not respond more positively.”

Another article in Japan Times recounted earlier U.S.-Japan negotiations over reprocessing and the developing Japanese government position.  During the Carter administration, the U.S. government recommended that the Tokai Mura reprocessing plant produce mixed oxide fuel (MOX) combining plutonium and uranium on the grounds that there would be a lower proliferation risk. In the final Tokai Mura agreement, however, Washington assented to Japanese preference for using the “separate extraction method,” under which both uranium and plutonium would be extracted separately for a “certain period of time,” with the mixed process adopted after discussion and feasibility studies. The Japanese rejected the mixed process because varying the proportion of plutonium to uranium made it unsuitable for fueling breeder reactors.  The Embassy saw the report as significant because the Japanese wanted to have their position ready for negotiations over the “extension or modification” of the agreement on Tokai Mura operations. The separate telegram mentioned in this document is not yet available.

During a wide-ranging discussion with Secretary Haig on security and economic issues (including the production of more coal for Japanese industry), Foreign Minister Ito turned to reprocessing. Besides seeking an extension of the operating status of Tokai Mura beyond June 1981, Ito mentioned the need for U.S. concurrence on the second “larger, full-scale reprocessing plant” and the problem of getting “individual” U.S. approval for the shipment of spent fuel to France and the United Kingdom for reprocessing.  According to Itoh, Japan wanted to get rid of this “cumbersome process” and replace it with a system of “automatic approval.”  Haig assured Ito that “he could anticipate a more forthcoming U.S. position on the whole range of peaceful uses of nuclear energy.”

An in-depth interagency policy review (the full report is not yet available) produced recommendations for presidential decisions on a broad range of nonproliferation issues.  Several points on which President Reagan signed off related directly to Japanese interest in reprocessing. The State Department was to take the lead in reviewing approaches for “a predictable policy for the exercise of United States approval rights for reprocessing spent fuel, retransferring spent fuel for reprocessing, and plutonium use under agreements for peaceful nuclear cooperation, including new and amended agreements.”  Moreover, Reagan directed that “favorable consideration [be given to] requests for the retransfer of spent fuel for reprocessing in the United Kingdom and France if the necessary statutory requirements are met.”

With the 1977 agreement on Tokai Mura scheduled to expire on 31 October, Washington proposed an extension.  Meeting with U.S. Embassy officials, Atsuhiko Yatabe, director general of Scientific and Technological Affairs at the Ministry of Foreign Affairs, suggested that the Japanese public should see any “packaging” of the 1977 agreement as a “new instrument or document.”  Implicitly, a new agreement would avoid the restrictions of the 1977 document. Another official present, Kumao Kaneko, director of the Ministry’s nuclear energy division, noted that Japan Times had reported that during talks late in the month U.S. Secretary of Energy James Edwards would authorize the reprocessing of 200 additional tons of spent fuel at Tokai Mura.

A discussion a few days later with Kaneko clarified the importance that the Japanese attached to a “new instrument or agreement.” With the Israeli attack on Iraq’s nuclear reactor only a few weeks earlier, Kaneko acknowledged U.S. “sensitivities” about nuclear proliferation risks, but he observed that the Japanese government was “disappointed” in the U.S. proposal on Takeo Mura because it maintained “restrictions” on reprocessing and on the “duration” of operations at the plant.  Moreover, his government saw the proposal as “essentially retaining the `no major moves’ restriction on the construction of a second reprocessing plant.” Because of those problems, industry and public opinion would be “disappointed,” seeing the U.S. proposal as a “prolongation of the unpopular 1977 communique.”

Drawing on position papers that Tokyo had shared with the U.S. earlier in the year (but not yet publicly available), Kaneko observed that his government “will work toward the abolition of time and quantity restrictions on the operation of the Tokai Mura facility and the lifting of the ‘no major moves’ restrictions.”

In light of a news report that during meetings with Minister of International Trade and Industry Rokusuke Tanaka U.S. officials had accepted the principle of “simplification of restrictions” on spent fuel reprocessing, the Embassy asked the State Department to clarify.

During a trip to Japan, Senator John Glenn (D-OH) discussed energy issues with Ichiro Nakagawa, director general of the Science and Technology Agency. While Glenn was more interested in alternative energy sources (solar, geothermal), Nakagawa was more concerned about the Tokai Mura negotiations, a concern that Glenn did not share. Noting Japan’s strong nonproliferation credentials and continuing U.S.-Japan differences on Tokai Mura, Nakagawa opposed any time limits on reprocessing. Glenn assured him that “he had no concern about Japanese nuclear intentions,” but “argued that it would still be difficult to make an exception for Japan in view of the need for universally applicable standards” on reprocessing.  Glenn also pointed to estimates about uranium supplies and suggested that the rationale for reprocessing as a means to conserve uranium was “very much in question.”

Nakagawa’s objections to time limits notwithstanding, the agreement on Tokai Mura that Tokyo and Japan were reaching included that very feature. On the evening of 16 September, he met with Ambassador Mansfield who “confirmed… that the US was willing to negotiate a permanent solution on Tokai Mura well before the three-year deadline in the current draft is reached.” Despite the fear of some Japanese, Washington did not intend to close the plant at the end of the three years.  The Interagency Council accepted Nakagawa’s recommendation for approval of the draft agreement. Once the drafts cleared the U.S. interagency process, the documents would go Congress for review just in time to “avoid a plant shut-down on October 31 when the current agreement expires.”

Hearings on the Tokai Mura agreement scheduled by Representative Jonathan Bingham (D-NY) on 28 October, “the last day of the 15-day Congressional review period,” were unlikely to delay the signing of the agreement by Nakagawa and Under Secretary of State for Management Richard T. Kennedy. The hearings would, however, “highlight the limitations remaining in the agreement,” which will make the Japanese negotiators uncomfortable because “they already have had trouble selling the contents of the negotiated package at home.”

The final agreement, signed on 31 October 1981, included some of the concessions that Kaneko and others had been seeking, although perhaps not as far as they wanted to go. The agreement included the three-year time-limit mentioned in document 10, but it allowed Tokai Mura to operate at full capacity and acknowledged, without giving explicit approval to, Japanese interest in a large-scale commercial reprocessing plant.  The plant would continue to produce mixed oxide, but at the “highest practical uranium to plutonium ratio” meeting Japan’s research and development needs.

Months after the conclusion of the Tokai Mura negotiations, Ambassador Mansfield was worried about the long delay in getting a U.S. policy on Japanese reprocessing.  In a message directed to Secretary of State Haig, Mansfield wrote that the “tone and content” of recent U.S.-Japan talks have led the Japanese “to expect early action” and the delay is “beginning to reflect on our credibility.”  According to Mansfield, what made the lag “especially troubling” was that the U.S. is “at a critical turning point in our nuclear cooperation with Japan.”  For example, the Japanese were considering a U.S. firm for a “major role in the design and construction of the second … reprocessing plant” and there was “increasing interest in cooperative effort with the U.S. to develop jointly a demonstration breeder reactor.” To facilitate cooperation in those and other areas “we must act quickly to put our own policy in order.” How much impact Mansfield’s plea had is unclear but within a week the State Department had forwarded an interagency policy paper to the White House.

The Japanese may have gotten wind that Washington was finalizing its position on plutonium and future reprocessing (see Documents 15] and 15), because Hideyuki Ukawa, then serving as the IAEA’s chairman of the board, told U.S. mission officials that he would “welcome” talks on the “margins” of the board meeting scheduled for the next week.   For Ukawa, the key problem was “where do we go from here”? For him that meant deciding what type of agreement would be negotiated: he had heard that U.S. officials were thinking of a treaty, but for the Japanese an “administrative arrangement” was preferable because it would not involve the Diet [See Document 18].  Ukawa also wanted to know whether a paper on Japan’s approach that he had given to the U.S. delegation at an IAEA meeting earlier in the year could be considered in the discussions and whether a forthcoming visit by Nakagawa to Washington would fit into the talks.

An interagency study on reprocessing (still classified, but under request) sent by the State Department to the White House on 26 May 1982 produced recommendations that President Reagan approved as National Security Decision Directive 39.  A central theme in the NSDD was Japan and the key element was what the Tokyo had been seeking: support for an agreement that would include an “advance consent arrangement” for various reprocessing arrangements, including retransfer of spent fuel from Japan to France and the United Kingdom, and reprocessing at Tokai Mura “for its operative life.”  Moreover, advance consent could apply to the use of plutonium for Japan’s advanced reactor programs, including a breeder reactor, and the “return of separated plutonium from France and the United Kingdom for these programs.”

Advance consent would be subject to Japan’s compliance with “necessary non­ proliferation and statutory conditions such as those on safeguards and physical security, and to a continued strong commitment by Japan to non-proliferation efforts.” With regard to the latter, the U.S. approach was “premised on the expectation of improved non-proliferation cooperation, particularly on pressing proliferation problems in sensitive regions of the world, and of their implementing more effective controls on civil plutonium.”

The U.S. would propose advance consent and related arrangements by “seeking a new or amended agreement for peaceful nuclear cooperation in traditional form.” On the “form” of an agreement, however, Washington would be flexible as long as it “contains equivalent provisions in substance.”  The goal would be completion of negotiations “at an early date, if possible within one year.”

A CIA memorandum provided some of the backstory to interagency debates over NSDD 39, especially the recognition of domestic political constraints and limitations on U.S. diplomatic and intelligence capabilities. One problem pointed out by the State Department was “the [limited] capability of the U.S. to prevent theft and diversion of plutonium through technical manipulation of the fuel cycle.” That meant that it was necessary to “focus on the political and military aspects of the problem,” possibly a reference to action, whether unilateral or multilateral, to nip a weapons program in the bud.

A domestic constraint was that “Congressional critics” would object to advance consent to plutonium use as “a bad precedent and serious weakening of US nonproliferation efforts.” Another problem was the Nuclear Regulatory Commission’s concern about the need for greater attention to the "safeguardability" of plutonium and the problem of "`timely warning’ of any diversion from non-military to military uses.” One implication was that IAEA safeguards needed to be strengthened, but as the Acting Special Assistant for Nuclear Proliferation Intelligence observed, “timely and reliable detection” of any diversion was “extraordinarily difficult.”

In a long message to U.S. embassies disclosing the administration’s new approach to reprocessing and plutonium use, the State Department included the texts of two “non-papers” for delivery to the foreign ministries of Japan, the European Community governments, and the European Commission itself.  The purpose was to offer them a “more realistic, predictable, and secure basis upon which to plan those aspects of their nuclear power programs which involve the reprocessing of U.S.-supplied material and the subsequent use of the plutonium produced from such material.” The new approach would be “limited to those cooperating partners which have advanced nuclear programs and which possess outstanding nonproliferation credentials and where such activities do not constitute a proliferation risk, i.e., EURATOM and Japan.”  With respect to advance consent arrangements for Japan, Washington proposed an “amended agreement for peaceful nuclear cooperation with a lifetime of up to 30 years.”

With Minister for Science and Technology Nakagawa’s visit to Washington coming up, Kumao Kaneko, director of the Ministry’s nuclear energy division, discussed the U.S. position paper with the embassy’s science counselor. He emphasized the problem of the “mechanism” for an agreement: whether there would be an administrative arrangement or a “new or amended agreement for cooperation”—and noted the “strong” government opposition to the latter.  Kaneko saw “no hope of overcoming it until the Japanese have a clearer understanding of what the US is prepared to offer” on advance consent. The question was whether the “benefits provided by the new arrangement … exceed the problem they expect to come out of Diet review of a new agreement.” In any event, when Ichiro Nakagawa visited Washington, he advised against any “attempt to force [him] to take a position …on the way in which the U.S. policy would be implemented.” That would be “embarrassing” to him, presumably because his government had not yet taken a position.  The science counselor agreed and advised the Department to focus on “substance” and negotiating mechanisms.