(5) Implementing Appropriate Export Controls on Nuclear- Related Items and Technologies
A) Establishment and implementation of the national control systems
On establishing and implementing national control systems regarding export controls on nuclear-related items and technologies, there were few remarkable developments in 2019. As described in the Hiroshima Report 2017, the following countries surveyed in this report belong to the four international export control regimes,76 including the Nuclear Suppliers Group (NSG), have national implementation systems in place, and have implemented effective export controls regarding nuclear- (and other WMD-) related items and technologies through list and catch-all controls: Australia, Austria, Belgium, Canada, France, Germany, Japan, South Korea, the Netherlands, New Zealand, Norway, Poland, Sweden, Switzerland, the United Kingdom and the United States.77
These countries have also made proactive efforts to strengthen export controls. For example, Japan held the 27th Asian Export Control Seminar in February 2020, an annual seminar to “assist export control officers in Asian countries and regions.” Approximately 230 persons in charge of export control from 33 Asian and other regional major countries participated in the seminar. According to the Japan’s Ministry of Economy, Trade and Industry, “The 27th seminar focuses on the growing diversity and sophistication of procurement activities for accessing sensitive technologies applicable to developing and manufacturing WMDs or conventional weapons in Asian countries and regions, and against this backdrop, participants shared the current situations of activities by international organizations and efforts and best practices involving export control tackled by member countries and, through this information sharing, they enriched their common understanding of the need for enhancing the effectiveness of export control.”78
Among other countries surveyed in this project, Brazil, China, Kazakhstan, Mexico, Russia, South Africa and Turkey are members of the NSG. These countries have set up export control systems, including catch-all controls.
As for non-NSG members, the UAE and the Philippines have been developing their own national export control systems, whereas Egypt, Indonesia and Saudi Arabia have yet to establish sufficient export control legislations and systems.
India, Israel and Pakistan have also set up national export control systems, including catch-all controls.79 Again in 2020, the NSG could not achieve a consensus on India’s membership application. China, the main opponent, has argued that applicant countries must be parties to the NPT.80 It has also been reported that China will not accept India’s participation in the NSG unless Pakistan is also accepted as a member.81 Pakistan has argued that, as a state behaving responsibly regarding nuclear safety and security, it is qualified to be accepted as an NSG member. The NSG has considered a draft set of nine criteria to guide membership applications from states that are not party to the NPT. Items of condition written in a draft document in December 2016 included safeguards, moratorium on nuclear testing, and support of a multilateral nonproliferation and disarmament regime.82
At the time of writing, the status of export control implementation by North Korea, Iran and Syria is not clear. Rather, cooperation among these countries in ballistic missile development remains a concern, as mentioned below. In addition, North Korea was involved in the past in constructing a graphite-moderated reactor in Syria to produce plutonium.
B) Requiring the conclusion of the Additional Protocol for nuclear exports
Article III-2 of the NPT stipulates, “Each State Party to the Treaty undertakes not to provide: (a) source or special fissionable material, or (b) equipment or material especially designed or prepared for the processing, use or production of special fissionable material, to any non- nuclear-weapon State for peaceful purposes, unless the source or special fissionable material shall be subject to the safeguards required by this Article.” In the Final Document of the 2010 NPT RevCon, “[t]he Conference encourage[d] States parties to make use of multilaterally negotiated and agreed guidelines and understandings in developing their own national export controls” (Action 36).
Under the NSG Guidelines Part I, one of the conditions for supplying materials and technology designed specifically for nuclear use is to accept the IAEA comprehensive safeguards. In addition, NSG member states agreed on the following principle in June 2013:
[S]uppliers should authorize transfers, pursuant to this paragraph, only when the recipient has brought into force a Comprehensive Safeguards Agreement, and an Additional Protocol based on the Model Additional Protocol or, pending this, is implementing appropriate safeguards agreements in cooperation with the IAEA, including a regional accounting and control arrangement for nuclear materials, as approved by the IAEA Board of Governors.83
The Non-Proliferation and Disarmament Initiative (NPDI) and the Vienna Group of Ten have argued that conclusion and implementation of the CSA and the Additional Protocol should be a condition for new supply arrangements with NNWS.84 Some of the bilateral nuclear cooperation agreements that Japan and the United States concluded recently with other capitals make the conclusion of the Additional Protocol a prerequisite for their cooperation with respective partner states. On the other hand, the
NAM continues to argue that supplier countries should refrain from imposing or maintaining any restrictions or limitations on the transfer of nuclear equipment, material and technology to other states parties with comprehensive safeguards agreements.85
Issues on enrichment and reprocessing under the bilateral nuclear cooperation agreements
Enriching uranium and reprocessing spent fuel by NNWS is not prohibited under the NPT if the purpose is strictly peaceful and the activities are under IAEA safeguards. Still, these remain highly sensitive activities in light of nuclear proliferation, as the spread of enrichment and reprocessing technologies would mean that more countries would acquire the potential for manufacturing nuclear weapons. As previously mentioned, NSG guidelines make implementation of the Additional Protocol by the recipient state a condition for transfer of enrichment or reprocessing facilities, equipment or technology.
While the U.S.-UAE and U.S.-Taiwan Nuclear Cooperation Agreements stipulate a so-called “gold standard”— i.e. that the recipients are obliged to forgo enrichment and reprocessing activities— other bilateral agreements concluded and updated by the United States, such as that with Vietnam in 2014, do not stipulate similar obligations.86 In the meantime, the Nuclear Cooperation Agreements which Japan has respectively concluded with the UAE and Jordan stipulate the “Gold Standard.”
Whether a nuclear cooperation agreement being negotiated between Saudi Arabia and the United States will include the gold standard has been the subject of considerable public attention. The United States has asked Saudi Arabia to forgo enrichment and reprocessing activities, but Saudi Arabia has not accepted this. Also, as previously mentioned, Saudi Arabia has not yet concluded an amended SQP, CSA or an Additional Protocol. In the meantime, Saudi Arabia has reportedly constructed with Chinese help a facility for extracting uranium yellowcake from uranium ore, which Riyadh denied.87
C) Implementation of the UNSCRs concerning North Korean and Iranian nuclear issues
With regard to the North Korean nuclear issue, UN Member States are obliged to implement measures set out in the resolutions adopted by the UN Security Council, including embargos on nuclear-, other WMD-, and ballistic missile-related items, material, and technologies.
The Panel of Experts, established pursuant to UNSCR 1874 (2009), has published biannual reports on its findings and recommendations about the implementation of the resolutions. According to the report published in March 2020, the Panel pointed out North Korea’s activities in defiance of the UNSCRs, for instance:88
➢ Illicit imports of refined petroleum products have continued through ship-to-ship transfers and direct deliveries by foreign- flagged vessels. During January through October 2019, the annual cap for 2019 of the aggregate amount of 500,000 barrels of refined petroleum products was exceeded many times over.
➢ North Korea continued to flout Security Council resolutions through illicit maritime exports of commodities, notably coal and sand. Such sales provide a revenue stream that has historically contributed to the country’s nuclear and ballistic missile programs. It also continued to earn income from the illicit sale of fishing rights.
➢ North Korea continued to import luxury goods and other sanctioned items, including luxury vehicles, alcohol and robotic machinery. Its trade fairs may be used to expand networks for procurement and other prohibited trade related to weapons of mass destruction.
➢ North Korea continues to access international banking channels in violation of UN sanctions, mainly by using third-party intermediaries. It continued illegally to acquire virtual currencies and to conduct
cyberattacks against global banks to evade financial sanctions.
In the Panel’s Midterm Report published in August 2020, the following issues, inter alia, were pointed out:89
➢ North Korea has continued to violate the UNSCRs through the illicit import of refined petroleum products through ship-to-ship transfers and direct deliveries. The Member States estimated that deliveries of refined petroleum products to North Korea during January through May 2020 alone already far exceeded the aggregate amount of 500,000 barrels set by the Security Council as the annual ceiling for 2020.
➢ Multiple vessels of North Korea continued to conduct ship-to-ship transfers in waters of another UN Member State and made deliveries of coal. It has also continued to earn income from the illicit transfer of fishing rights.
➢ In addition to obtaining fiat currency and virtual assets in violation of sanctions, North Korea has evaded sanctions through targeted attacks against officials of Member States on the Security Council and the Panel.
➢ The Panel investigated reports of nationals of North Korea continuing to earn income overseas after the 22 December 2019 deadline for their repatriation, including as professional athletes, medical professionals, as well as factory, restaurant and construction workers. Only around 40 Member States have submitted final implementation reports on the repatriation requirement, for which the deadline was March 22, 2020.
➢ The Panel has updated its investigations of attempts by North Korea to earn income from the commercial use of its overseas diplomatic premises.
In 2020, the following cases were also reported:
➢ The U.S. Department of Justice charged 28 North Koreans and five Chinese citizens of using a web of more than 250 shell companies to launder over $2.5 billion in assets through the international banking system. It claimed that the money flowed back to North Korea’s primary, state-operated foreign exchange bank, the Foreign Trade Bank.90
➢ Forty-three countries, including Japan and the United States, submitted documents to the UN Sanctions Committee on North Korea, claiming that North Korea has smuggled refined petroleum products far larger than the annual cap set by the UNSCR through 56 ship-to-ship transfers between January and May 2020 alone.91
➢ According to the UN Panel’s reports published in August 2019 and February 2020, during February 2019 through February 2020, more than 250 alleged violations by North Korea were identified; China alone had over 60 alleged violations; Hong Kong followed with over 20 violations, and Sierra Leone, Russia and Indonesia each had a total of 10 or more alleged violations.92
➢ The U.S. government warned that North Korean hackers are tapping into banks around the globe to make fraudulent money transfers and cause ATMs to spit out cash93.
➢ The U.S. Department of the Treasury in December 2020 designated six entities, including a China-based company, and identified four vessels related to the transport of North Korean coal.94
The UN Iran Sanctions Committee and Panel of Experts ceased to exist after the conclusion of the JCPOA, at the insistence of Iran, and the UN Security Council now has the responsibility of overseeing the remaining limitations.
In accordance with the JCPOA, approval of the Procurement Working Group, established under the agreement, is required for Iranian procurement of nuclear-related items and material. The number of cases has been reported to the Security Council every six months.95 From December 5, 2019 to June 5, 2020, the Procurement Working Group reviewed four proposals from one state: three were recommended for approval and one remained.96 From June 6 through December 3, 2020, the Procurement Working Group reviewed three proposals from one state: one was recommended for approval, one was withdrawn by the proposing state, and one remained under review.97
Nuclear-related cooperation between concerned states
It has repeatedly been alleged that North Korea and Iran have engaged in nuclear and missile development cooperation. Bilateral cooperation has been well documented in the area of missiles. In 2016, the United States imposed sanctions regarding such cooperation.98 A report in September indicated that North Korea and Iran had resumed cooperation on a long-range missile project, including the transfer of critical parts.99 However, no concrete evidence has been revealed to support allegations of nuclear-related cooperation between concerned states.100
In June 2020, a news article said, “A German [intelligence agency’s] report … has pulled up Pakistan and North Korea for pursuing efforts to build nuclear weapons and other weapons of mass destruction and expressed concern that China and Turkey could be used as routes to transfer either raw material or technology.”101
D) Participation in the PSI
As of 2020, a total of 107 countries— including 21 member states of the Operational Expert Group (Australia, Canada, France, Germany, Japan, South Korea, the Netherlands, New Zealand, Norway, Poland, Russia, Turkey, the United Kingdom, the United States and others) as well as Belgium, Chile, Israel, Kazakhstan, the Philippines, Saudi Arabia, Switzerland, Sweden, the UAE and others—have expressed their support for the principles and objectives of the Proliferation Security Initiative (PSI). Many of them have also participated and cooperated in PSI-related activities.
The interdiction activities actually carried out within the framework of the PSI are often based on information provided by intelligence agencies; therefore, most of them are classified. Additionally, participating states have endorsed the PSI statement of interdiction principles and endeavored to reinforce their capabilities for interdicting WMD through exercises and outreach activities. In July 2019, South Korea hosted an interdiction exercise, entitled “Eastern Endeavor 19,” in which six countries (Australia, Japan, South Korea, New Zealand, Singapore and the United States) participated, together with some observer countries, including India, Indonesia, Pakistan and Russia.
In January 2018, several PSI-participating countries released a joint statement reiterating their commitment to impede and stop North Korea’s illicit activities, including smuggling, by taking measures such as: inspecting proliferation-related shipments on vessels with the consent of the flag State, on the high seas, if they have information that provides reasonable grounds to believe that the cargo of such vessels contains items prohibited under UNSCRs; and prohibiting their nationals, persons subject to their jurisdiction, entities incorporated in their territory or subject to their jurisdiction, and vessels flying their flag, from facilitating or engaging in ship-to-ship transfers to or from DPRK-flagged vessels of any goods or items that are being supplied, sold, or transferred to or from the DPRK.102
Regarding illicit maritime activities, including ship-to-ship transfers with North Korean-flagged vessels prohibited by UNSCRs, the Japan Maritime Self-Defense Force has engaged in monitoring and surveillance activities in the Sea of Japan and the Yellow Sea since December 2017. Japan’s Foreign Ministry made a post regarding North Korea’s illicit activities on its official website.103 Monitoring and surveillance activities regarding this matter have been conducted by Japan and the United States, together with Australia, Canada, France, New Zealand and the United Kingdom.
E) Civil nuclear cooperation with non-parties to the NPT
In September 2008, the NSG agreed to grant India a waiver, allowing nuclear trade with the member states under the conditions that India made commitments, including conclusion of the IAEA Additional Protocol and continuation of nuclear test moratorium. Since then, some countries have sought to engage in civil nuclear cooperation with India, and several countries, including Australia, Canada, France, Japan, Kazakhstan, South Korea, Russia and the United States, have concluded bilateral civil nuclear cooperation agreements with India.
Actual nuclear cooperation with India under these agreements has been sparce,104 with the exception of India’s importing uranium from Australia, Canada, France, Kazakhstan and Russia, and its conclusion of agreements to import uranium from Argentina, Mongolia, Namibia and Uzbekistan.105
Meanwhile, China has been criticized for its April 2010 agreement to export two nuclear power reactors to Pakistan, an act which may constitute a violation of the NSG guidelines. China has claimed an exemption for this transaction under the “grandfather clause” of the NSG guidelines (i.e. it was not applicable as China became an NSG participant after the start of negotiations on the supply of the reactors). China will also supply enriched uranium to Pakistan for running those reactors.106 Their construction started in 2015 in Karachi, and commercial operations are scheduled to begin in 2021 and 2022 respectively.107 Because all other Chinese reactors that were claimed to be excluded from NSG guidelines under the grandfather clause were built at Chashma, there remains a question as to whether or not the exemption can also apply to the Karachi plant.
In February 2020, Indian custom officers detained a Chinese ship bound for Karachi (in Pakistan), for misdeclaring an “autoclave” dual-use machine tool, which can be used to line solid-fuel ballistic missiles.108
In April 2020, the U.S. think tank C4ADS published a report which concluded that the Indian and Pakistani procurement networks for nuclear-related technologies are both larger than previously expected.109 The report states:
Pakistani nuclear procurement companies, who face strict international export control regulations and Nuclear Suppliers Group (NSG) trade restrictions, are more likely to procure through the use
of transshipment hubs. Customs and trade data demonstrate that the top 33 suppliers of Pakistan’s known procurement companies are located in mainland China (34%), Hong Kong (18%), the United Arab Emirates (UAE) (9%), the United States (9%), Germany (6%), Italy (6%) and Singapore (6%).”110
It also offered the following analysis: “Indian companies tend to purchase more directly from NSG countries. Of the 124,089 imports from 64 countries between January 2017 and July 2019 associated with the 87 Indian companies known to have procured for more than one unsafeguarded facility, 92% were from companies in NSG member states including Germany, China, [the] United States, South Korea and the [United Kingdom]. India does hold a waiver from the NSG exempting the country from certain nuclear trade restrictions. However, this exemption does not apply to facilities outside of IAEA safeguards.”111
The NAM has been critical of civil nuclear cooperation with non-NPT states, and continues to argue that exporting states should refrain from transferring nuclear material and technologies to those states which do not accept IAEA comprehensive safeguards.112
76 Aside from the NSG, Australia Group (AG), Missile Technology Control Regime (MTCR), and Wassenaar Arrangement (WA).
77 In July 2019, Japan pointed out the inadequacy of South Korea’s domestic export control system, and reviewed its operation of export controls with respect to South Korea.
78 Ministry of Economy, Trade and Industry, “The 27th Asian Export Control Seminar Held,” February 19, 2020, https://www.meti.go.jp/english/press/2020/0219_003.html.
79 Regarding the situation of Pakistani export controls, see Paul K. Kerr and Mary Beth Nikitin, “Pakistan’s Nuclear Weapons,” CRS Report, August 1, 2016, pp. 25-26.
80 Ministry of Foreign Affairs of China, “Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference,” January 31, 2019, https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/ t1634507.shtml.
81 “China and Pakistan Join Hands to Block India’s Entry into Nuclear Suppliers Group,” Times of India, May 12, 2016, http://timesofindia.indiatimes.com/india/China-and-Pakistan-join-hands -to-block-Indias-entry- into-Nuclear-Suppliers Group/articleshow/52243719.cms.
82 Kelsey Davenport, “Export Group Mulls Membership Terms,” Arms Control Today, Vol. 47, No. 1 (January/February 2017), p. 50.
83 INFCIRC/254/Rev.12/Part 1, November 13, 2013.
84 See, for instance, NPT/CONF.2020/PC.III/WP.5, March 15, 2019.
85 NPT/CONF.2020/PC.III/WP.18, March 21, 2019.
86 The U.S.-Mexico Nuclear Cooperation Agreement concluded in May 2018, and it is stated in the preamble that Mexico will not conduct sensitive nuclear activities, which is referred to as a “silver standard.”
87 Warren P. Strobel, Michael R. Gordon and Felicia Schwartz, “Saudi Arabia, With China’s Help, Expands Its Nuclear Program,” Wall Street Journal, August 4, 2020, https://www.wsj.com/articles/saudi-arabia with-chinas-help-expands-its-nuclear-program-11596575671. See also Mark Mazzetti, David E. Sanger and William J. Broad, “U.S. Examines Whether Saudi Nuclear Program Could Lead to Bomb Effort,” New York Times, August 5, 2020, https://www.nytimes.com/2020/08/05/us/politics/us- examines-saudi-nuclear-program.html.
88 S/2020/151, March 2, 2020.
89 S/2020/840, August 28, 2020.
90 Katie Benner, “North Koreans Accused of Laundering $2.5 Billion for Nuclear Program,” New York Times, May 28, 2020, https://www.nytimes.com/2020/05/28/us/politics/north-korea-money-laundering-nuclear-weapons.html.
91 “North Korea Accused of Breaching UN Oil Import Limits,” Kyodo News, July 25, 2020, https://asia.nikkei.com/Politics/International-relations/North-Korea-accused-of-breaching-UN-oil-import-limits.
92 David Albright, Sarah Burkhard, and Spencer Faragasso, “Alleged Sanctions Violations of UNSC Resolutions on North Korea for 2019/2020: The Number is Increasing,” Institute for Science and International Security, July 1, 2020, https://isis-online.org/isis-reports/detail/alleged- north-korea-sanctions-violations-2020/.
93 “North Korean hackers ramp up bank heists: U.S. government cyber alert,” Reuters, August 26, 2020,
94 U.S. Department of Treasury, “Treasury Sanctions Shipping Companies Transporting North Korean Coal,” December 8, 2020, https://home.treasury.gov/news/press-releases/sm1204.
95 From December 12, 2018 to June 15, 2019, the Procurement Working Group received two procurement proposals. Among these proposals, one was disapproved and another one was under review. In addition, and one proposal, which was noted as under consideration in the previous report, was subsequently approved (S/2019/514, June 21, 2019). From June 16 through December 16, 2019, no proposal was submitted (S/2019/952/Rev.1, December 18, 2019).
96 S/2020/508, June 15, 2020.
97 S/2020/1164, December 9, 2020.
98 U.S. Department of Treasury, “Treasury Sanctions Those Involved in Ballistic Missile Procurement for Iran,” January 17, 2016, https://www.treasury.gov/press-center/press-releases/Pages/jl0322.aspx.
99 Steve Holland and Arshad Mohammed, “U.S. to Slap Sanctions on Over Two Dozen Targets Tied to Iran Arms,” Reuters, September 21, 2020, https://ca.reuters.com/article/us-usa-iran-exclusive-idCAK CN26B0QE.
100 John Park and Jim Walsh, Stopping North Korea, Inc.: Sanctions Effectiveness and Unintended Consequences (Cambridge, MA: MIT Security Program, 2016), p. 33; Paul K. Kerr, Steven A. Hildreth and Mary Beth D. Nikitin, “Iran-North Korea-Syria Ballistic Missile and Nuclear Cooperation,” CRS Report, February 26, 2016, pp. 7-9; Kenneth Katzman, “Iran’s Foreign and Defense Policies,” CRS Report, October 8, 2019, pp. 56-57.
101 Dipanjan Roy Chaudhury, “Pakistan-North Korea Can Route Nuclear Weapons Tech Via China-Turkey: German Report,” Economic Times, June 25, 2020, https://economictimes.indiatimes.com/news/defence/pakistan-north-korea-can-route-nuclear-weapons-tech-via-china-turkey-german-report/articleshow/76628433.cms. See also Geeta Mohan, “Pakistan Continues Nuclear ‘Proliferation’, Arsenal Directed Against India: German Govt Report,” India Today, June 25, 2020, https://www.indiatoday.in/india/story/pakistan-continues-nuclear-proliferation-arsenal-directed-against-india-german-govt-report-1692506-2020-06-25.
102 “Joint Statement from Proliferation Security Initiative (PSI) Partners in Support of United Nations Security Council Resolutions 2375 and 2397 Enforcement,” January 12, 2018, https://www.psionline. info/psi-info- en/aktuelles/-/2075616. Originally, 17 countries signed the joint statement. By the end of 2018, 47 countries had become signatories, including Australia, Austria, Belgium, Canada, France, Germany, Japan, South Korea, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom and the United States.
103 Ministry of Foreign Affairs of Japan, “Suspicion of Illegal Ship-to-Ship Transfers of Goods by North Korea-Related Vessels,” October 29, 2020, https://www.mofa.go.jp/fp/nsp/page4e_000757.html.
104 “No New Power Projects from Indo-US Nuclear Deal,” The Pioneer, March 9, 2020, https://www.dailypioneer.com/2020/india/no-new-power-projects-from-indo-us-nuclear-deal.html.
105 Adrian Levy, “India Is Building a Top-Secret Nuclear City to Produce Thermonuclear Weapons, Experts Say,” Foreign Policy, December 16, 2015, http://foreignpolicy.com/2015/12/16/india_nuclear_city_top_secret_china_pakistan_barc/; James Bennett, “Australia Quietly Makes First Uranium Shipment to India Three Years after Supply Agreement,” ABC, July 19, 2017, https://www.abc.net.au/news/2017-07-19/australia-quietly-makes-first-uranium-shipment-to-india/8722108; Dipanjan Roy Chaudhury, “India Inks Deal to Get Uranium Supply from Uzbekistan,” Economic Times, January 19, 2019, https://economictimes.indiatimes.com/news/defence/india-inks-deal-to-get-uranium-supply-from-uzbekistan/articleshow/67596635.cms.
106 “Pakistan Starts Work on New Atomic Site, with Chinese Help,” Global Security Newswire, November
27, 2013, http://www.nti.org/gsn/article/pakistan-begins-work-new-atomic-site-being-built-chinese-help/.
107 “Karachi Nuclear Power Plant (KANUPP) Expansion,” Power Technology, May 22, 2020, https://www.power- technology.com/projects/karachi-nuclear-power-plant-expansion/.
108 Jack “Ole” Pitsu, “Part of Nuclear Missile Launcher Found from Chinese Ship Going to Pakistan,” OBN, February 18, 2020, https://ourbitcoinnews.com/part-of-nuclear-missile-launcher-found-fromchinese-ship-going-to-pakistan/; Shishir Gupta, “DRDO Confirms Chinese Ship India Stopped Was Carrying Nuclear-Capable Equipment to Pakistan,” The Print, March 4, 2020, https://theprint.in/india/drdo-confirms-chinese-ship-india-stopped-was-carrying-nuclear-capable-equipment-to-pakistan/375184/.
109 C4ADS, “Trick of Trade: South Asia’s Illicit Nuclear Supply Chains,” April 2020.
110 Ibid., p. 5.
112 NPT/CONF.2020/PC.III/WP.18, March 21, 2019.