Â») MINISTER FOR

FOREIGN AFFAIRS

NEWS RELEASE

20 July 1978  THE HON. ANDREW PEACOCK M.P.

AUSTRALIA/FINLAND NUCLEAR SAFEGUARDS  AGREEMENT

The following press statement by the Minister for  Foreign Affairs,  Mr Andrew Peacock,  is embargoed until 7.00 pÃ¢ÂÂm  (AEST) 20 July 1978.

EMBARGOED UNTIL 1900 HOURS AEST - 20 JULY 1978

PRESS STATEMENT ;

AUSTRALIA/FINLAND NUCLEAR SAFEGUARDS AGREEMENT

The Minister for Foreign Affairs,  Mr Andrew Peacock,

announced today that Australia has signed its first bilateral

nuclear safeguards agreement. Mr Peacock said that the

agreement,1  with Finland, was signed by the Deputy Prime

Minister an

20 July in Helsinki.

.  Mr Peacock said that the agreement incorporates all

the Government*s safeguards requirements as announced by the

Prime Minister on 24 May last year. Â·

Ã¢ÂÂ   '  The agreement is an important first step in the

establishment of a network of bilateral agreements between

Australia and other countries. The purpose of these agreements

is to ensure thar. when Australia supplies uranium "for peaceful

purposes it will not be diverted to non-peaceful or explosive Â·

uses.

"  Mr Peacock said it was a matter for satisfaction

that Australia^ first safeguards agreement was with Finland,

a country noted internationally for its strong support of

nuclear non-proliferation over the years. Uranium exports to

Finland would be an important new co-operative element in

Australia8s bilateral relations with Finland.

,  The agreement embodies the following conditions

which the Government has laid down for uranium exports:

2

an undertaking that nuclear material supplied by

Australia will not be diverted to military or Â§

Ã¢ÂÂ   '  f

explosive purposes; .  *

the application of International Atomic Energy Agency

(IAEA) safeguards, which provide an international check

against diversion of material; ;

fallback arrangements to ensure continued safeguarding

of nuclear material should IAEA safeguards for any

reason cease to apply; ;

a requirement for Australia's prior consent to any * -4

retransfers, to ensure that uranium supplied by

Australia cannot be re-exported unless we are

satisfied as to the ultimate destination and as to

the controls that would apply; ;

/

a requirement for Australia's prior consent for high

"enrichment or reprocessing of material supplied by

Australia. This ensures that these operations can only

take place if Australia is fully satisfied about the

arrangements and conditions. This effectively reserves

our position on reprocessing, as we have said we wish

to, pending the outcome of international studies,  Â·* '  ,

including.INFCE (International Nuclear Fuel Cycle

Evaluation);

provisions ensuring that adequate physical security

will be maintained, to guard against theft or other

illegal use of nuclear material by groups or individuals;

provisions for consultations to ensure the effective

implementation of the agreement; and .

all these safeguards and controls to cover nuclear

material derived from Australian uranium so long as

it remains in a form relevant from the point of view

of safeguards. .  .

..../3

3

Mr Peacock pointed out that the agreement also

contains:

- a sanctions Article acknowledging Australia’s right

'  to suspend supplies and to require return of material

in the event of detonation of a nuclear device,

failure to comply with IAEA safeguards or breach

of the agreement; and Ã¢ÂÂ

- arbitration procedures for the settlement of disputes.

Mr Peacock said that letters had been exchanged

between the leaders of the Australian and Finnish negotiating

teams on the practical application and implementation of the

agreement. The letters deal with various facets of the

treatment and management of Australian nuclear material supplied

to Finland, including the possibility of its undergoing processes

such as conversion, fuel fabrication etc. in othe'r countries.

Mr Peacock said that the understanding reached on these matters

is fully consistent with Australia's safeguards policy as well

as Finland's interest in the efficient management of its nuclear

industry.

Mr Peacock said that texts of the agreement and the

accompanying letter were being made public. They would also be

tabled in Parliament at an early date.

DEPARTMENT OF FOREIGN AFFAIRS

CANBERRA

Dear Ambassador Gustafsson,

In the negotiations between Finland and  Australia on an agreement concerning the transfer  of nuclear material between the two countries, the  object of the two delegations was to draw up an

agreement to provide conditions, consistent with  the commitment of the two countries to the nonÂ­ proliferation of nuclear weapons, in which nuclear  material may be transferred between them for Â·

peaceful purposes, '  *

In this context the Finnish delegation  sought clarification of Australian intentions as to  how the agreement would be implemented. It emphasised  the importance which Finland attached to the prior consent  provisions of the draft agreement being applied in such

a way as to allow the most practical possible operation  of various fuel, cycle activities. It also pointed out  that in the case of Finland several of these activities  might have to take place in other countries. It envisages  that these countries would be nuclear weapon states  parties to the Treaty on the Non-Proliferation of Nuclear

Weapons, member states of EURATOM, and/or Iceland, Norway  or Sweden.

The Australian authorities recognise the  interest of Finland in the practical and efficient  operation of its nuclear facilities. It is the  intention of the Australian Government that the  provisions of the agreement including the prior

consent requirements in Article VII should operate  to this effect and that they should be implemented  so as to avoid raising practical difficulties  unrelated to non-proliferation objectives.

2

Conversion enrichment and fuel fabrication

As to conversion, enrichment below 20 per cent,  and fuel fabrication, these proposals present the  Australian Government with no difficulty. When the time  comes to make arrangements for the supply of uranium from  Australia to Finland and for its transfer to one or more

of the countries mentioned, for processing into fuel  elements for use in Finnish power reactors the Australian  Government will, at the request of the Government of Finland  consider giving its consent in advance and for a period of  years to the transfers involved. The only condition will

be that the Australian Government will need to b e Â·satisfied  in terms of its non-proliferation policy as to the  applicable arrangements and controls. In this connection  it is relevant that the non-Nuclear Weapon states referred  to are parties to the Nuclear Non-Proliferation Treaty. By that time the Australian Government expects bilateral

safeguards agreements to be in force covering Australian  origin nuclear material in most of the countries mentioned  and that these arrangements will fully satisfy the  Australian Government as to the safeguards and controls

applicable to the preparation there of fuel for tise in  Finland. Tails, reject pellets and otherÂ·safeguardable  residues from these processes may be left in any of these  countries provided they will be covered there by a bilateral  safeguards agreement with Australia. .

In cases where such agreements are not by then  in force, the Australian Government expects that it will,  nevertheless, be possible to make satisfactory arrangements.  These arrangements will have to include the return to

Finland, or to another of the countries mentioned with  which Australia has at that time a bilateral safeguards  agreement, of quantities of nuclear material equivalent  to the supplied nuclear material.

Reprocessing and/or final disposal of spent fuel .  - Â·

The Finnish delegation also raised the question of  reprocessing and/or final disposal of spent fuel in the same  countries and the transfers for these purposes. Australian  policy does not preclude giving consent in advance subject

to specific arrangements and/or conditions.  Reprocessing,  however, is a matter on which the Australian Government has  reserved its position for the time being. The Australian  Government does not propose to decide on the detailed

arrangements and/or conditions under which it might agree  to reprocessing taking place until after the conclusion  of current international studies, notably INFCE.

../3.

3

,*

The Australian Government accordingly agrees  to hold further consultations with the Government of  Finland at a mutually convenient time after the conclusion  of the INFCE study,  on the detailed arrangements and/or

conditions under which it might agree to reprocessing  and on the possibility of giving its agreement in advance  and for a period of time under specific arrangements.

As to transfers of nuclear material of Australian  origin to any of the countries mentioned for final disposal,  it is a requirement that Australian origin nuclear material  in that country be covered by a bilateral safeguards  agreement with Australia. The Australian Government  would also want an opportunity to consider such aspects

as the quantities involved.

Yours sincerely,

(R. R. Fernandez)

Leader of the Australian Delegation

His Excellency Under Secretary  of State Paul Gustafsson, Leader of the Finnish Delegation,  Ministrv for Foreign Affairs,  HELSINKI. .

AGREEMENT

BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT

OF THE REPUBLIC OF FINLAND CONCERNING THE TRANSFER OF

NUCLEAR MATERIAL BETWEEN AUSTRALIA AND FINLAND.

The Government of Australia and the Government

of the Republic of Finland

Mindful that both Australia and Finland are nonÂ­

nuclear weapon States which are Parties to the Treaty on"

the Non-Proliferation of Nuclear Weapons;

Recognising that Australia and Finland have '

under that Treaty undertaken not to manufacture or otherwise

acquire nuclear weapons or other nuclear explosive devices

and that both Governments have concluded agreements with

the International Atomic Energy Agency for the application

of safeguards in their respective countries in connexion

with the Treaty on the Non-Proliferation of Nuclear Weapons;

Affirming their support for the objectives of -

the Treaty on the Non-Proliferation of Nuclear Weapons

and their desire to promote universal adherence to that :

Treaty; ‘

Pending international acceptance of new interÂ­

national arrangements and institutions to provide more

effective measures against the proliferation of nuclear

weapons;

Desiring to establish conditions under which

nuclear material can be transferred between their two

countries for peaceful purposes, consistent with their

commitment to non-proliferation;

Have agreed as follows:

Article I

1. This Agreement shall apply to:

(a) nuclear material transferred between the two Parties,

whether directly or through a third country,  in

accordance with paragraphs 2 and 3 of this Article;

(b) quantities of derived nuclear material directly

proportional to the transferred nuclear material

used for their production; and

(c) quantities of all subsequent generations of nuclear

material determined on the same proportional principle

referred to in sub paragraph (b) of paragraph 1 of this

Article.

2. Nuclear material shall be transferred between

the Parties only to a natural or legal person identified

by the appropriate governmental authority of the recipient

Party to the appropriate governmental authority of the

supplier Party as duly authorized to receive that material.

3. Prior to the transfer of nuclear material between

the Parties the appropriate governmental authorities of

both Parties shall agree in writing upon the point when

the material will become subject to the provisions of

this Agreement.

ARTICLE II

i .  Ã¢ÂÂ

Nuclear material referred to in Article I of

this Agreement shall remain subject to the provisions of

this Agreement until :

(a) it is no longer usable for any nuclear activity

relevant from the point of view of the safeguards

referred to in Article IV of this Agreement;  that

is,  until it shall be determined by the International

Atomic Energy Agency that the material is no longer

so usable as a result of its being

(i) practicably irrecoverable,

(ii) consumed,

Ã¢ÂÂ   (iii) diluted, or

(iv) converted to non-nuclear use, such as the

production of alloys or ceramics;

(b) it has been transferred beyond the jurisdiction

of the recipient Party in accordance with the

provisions of Article VII of this Agreement; or

(c) otherwise agreed between the Parties.

ARTICLE III

Nuclear material subject to this Agreement

shall not be diverted to nuclear weapons or other nuclear

explosive devices,  to research on or development of nuclear

weapons or other nuclear explosive devices,  or used for

any military purpose.

ARTICLE IV .

Nuclear material subject to this Agreement

shall be subject while within the territory or under

the jurisdiction or control of the recipient Party to

safeguards applied by the International Atomic Energy

Agency under a Non-Proliferation Treaty safeguards agreement

or, if the International Atomic Energy Agency is not adminÂ­

istering a Non-Proliferation Treaty safeguards agreement

in the territory of that Party, under an agreement or _

agreements to which that Party and the International Atomic

Energy Agency are parties which will provide safeguards

equivalent in scope and effect to those provided by a

Non-Proliferation Treaty safeguards agreement.

ARTICLE V

'  Notwithstanding the provisions of Article IV

of this Agreement,  if nuclear material subject to this

Agreement is present in the territory of a Party and tne

International Atomic Energy Agency is not administering

safeguards in the territory of that Party pursuant to a

safeguards agreement or agreements referred to in Article IV

of this Agreement, the other Party shall have the right to

administer in the territory of that Party safeguards based

on the procedures of the Agency's safeguards system for the

exclusive purpose of verifying that nuclear material subject

to this Agreement is not diverted to nuclear weapons or other

nuclear explosive devices or used for any military purpose.

The two Parties shall consult and assist each other to

establish and apply such safeguards.

ARTICLE VI ,

1. Each Party shall take such measures as are

necessary to ensure adequate physical protection of nuclear

material within its jurisdiction and to apply as a

minimum measures of physical protection which satisfy

the requirements of the recommendations of the InterÂ­

national Atomic Energy Agency. - .

2. The Parties shall consult at the request of either

Party concerning matters relating to physical protection. ,

ARTICLE VII

1. Nuclear material subject to this Agreement shall

be

:  (a) transferred beyond the jurisdiction of the

.  recipient Party, .

(b) enriched to more than 20 percent in the

isotope U235, or 'Â· /  . Â· Ã¢ÂÂ   Â· ,  ' Ã¢ÂÂ   '

(c) reprocessed,

only with the prior written consent of the supplier Party.

2. In considering a request for consent in relation

to the matters referred to in paragraph 1 of this Article,

the supplier Party will take into account non-proliferation

considerations, energy requirements and the needs of the

recipient Party for proper management of spent nuclear

fuel and for nuclear waste disposal. A Party shall not

withhold its consent' to a matter referred to in paragraph

1 of this Article for the purpose of securing commercial

advantage.

3. If a Party considers that it is unable to grant

consent to a matter referred to in paragraph 1 of this

Article, that Party shall provide the other Party with .

an immediate opportunity for full consultation on that

issue.

ARTICLE VIII

1. The appropriate governmental authorities of

both Parties shall consult annually, or at any other time

at the request of either Party, to ensure the effective

implementation of this Agreement. Either.Party may invite

the International Atomic Energy Agency to participate in

such consultations.

2. Each Party shall, upon request, inform the

other Party of the overall conclusions of the most recent

report by the International Atomic Energy Agency on its

verification activities in the territory of that Party,

relevant to the material subject to this Agreement.

3. The appropriate governmental authorities of

both Parties shall establish an administrative arrangement

to ensure the effective fulfilment of the obligations of

this Agreement. An administrative arrangement established

pursuant to this paragraph may be changed with the agreeÂ­

ment of the appropriate governmental authorities of both

Parties. '  .

4. The cost of reports and records which either

Party is required to provide pursuant to the administrative

arrangement referred to in paragraph 3 of this Article

shall be borne by the Party which is required to provide

the reports or records.

5. The Parties shall take all appropriate precautions

to preserve the confidentiality of commercial and industrial

secrets and other confidential information received as a

result of the operation of this Agreement.

'  ARTICLE IX

1 . A supplier Party shall have the right in the

event of

(a) detonation by the recipient Party of a

nuclear explosive device, or

(b) determination in accordance with paragraph

C of Article XII of the Statute of the

International Atomic Energy Agency,  that

there has been non-compliance with, or

repudiation of, a relevant safeguards

agreement concluded with the International

Atomic Energy Agency, by the recipient Party,

to suspend or cancel further transfers of nuclear material

and to require the return of nuclear material subject to

this Agreement, subject to payment therefor at prices then

current.

2. In the event of material non-compliance by the

recipient Party with the provisions of Articles III to VII

inclusive of this Agreement, the supplier Party shall have

the right to suspend or cancel further transfers of nuclear

material and to require the recipient Party to take ' ’

corrective steps. If, following consultation between the

Parties,  such corrective steps are not taken within a reason

able time, the supplier Party shall thereupon have the right

to require the return of nuclear material subject to this

Agreement subject to payment therefor at prices then current

ARTICLE X

Any dispute arising out of the interpretation or

application of this Agreement which is not .settled by .

negotiation shall, on request of either Party, be subÂ­

mitted to an arbitral tribunal which shall be composed

of three arbitrators. Each Party shall designate one

arbitrator and the two arbitrators so designated shall

elect a third, who shall be the Chairman. If within 30

days of the request for arbitration either Party has not

designated an arbitrator, either party to the dispute may

request the President of the International Court of Justice

to appoint an arbitrator. The same procedure shall apply

if, within 30 days of the designation or appointment of

the second arbitrator, the third arbitrator has not been

elected. A majority of the members ofÂ·the arbitral tribunal

shall, constitute a quorum and all decisions shall be made by

majority vote of all the members of the arbitral tribunal.

The arbitral procedure shall be fixed by the tribunal. The

decisions of the tribunal, including all rulings concerning

its constitution, procedure, jurisdiction and the division Ã¢ÂÂ

of the expenses of arbitration between the Parties shall

be binding on both Parties and shall be implemented by

them, in accordance with their respective constitutional .

procedures. The remuneration of the arbitrators shall be

determined on the same basis as that for ad hoc Judges of

the International Court of Justice.

ARTICLE XI

For the purposes of this Agreement:

(a) "appropriate governmental authority" means,

in the case of Australia,, the Australian

Safeguards Office, and in the case of Finland,

the Ministry of Trade and Industry or its

designated representative;

(b) "nuclear material" means any "source material"

or "special fissionable material" as those terms

are defined in Article XX of the Statute of the

International Atomic Energy Agency. Any deterÂ­

mination by the Board of Governors of the

International Atomic Energy Agency under Article

XX of the Agency’s Statute which amends the list

of materials considered to be "source material"

or "special fissionable material" shall only

have effect under this Agreement when both

Parties to this Agreement have informed each

other in writing that they accept that amendment;

(c) "Non-Proliferation Treaty safeguards agreement"

means an agreement concluded in accordance with

paragraph 1 of Article III of the Treaty on the

Non-Proliferation of Nuclear Weapons, done at

London,  Moscow and Washington on 1 July 1968;

(d) "the Agency's safeguards system" means the

safeguards system set out in International

Atomic Energy Agency document INFCIRC/66/Rev.2

as well as any subsequent amendments thereto

which are accepted by the Government of Finland

and by the Government of Australia.

ARTICLE XII

This Agreement shall enter into force 30 days

after the date the Parties by an exchange of diplomatic

notes have informed each other that they have complied with

all constitutional requirements for its entry into force,

and shall remain in force thereafter for a period of 30 years.

If neither Party has notified the other Party at least 180

days prior to the expiry of such period, the present Agreement

shall continue in force thereafter until 180 days after notice

of termination has been given by either Party to the other

Party; provided, however, that termination of the Agreement

shall not release the Parties from obligations under the

Agreement in respect of nuclear material referred to in

Article I of the Agreement which remains relevant from the

point of view of safeguards in accordance with Article II

of the Agreement.

In witness whereof, the undersigned, being duly

authorised by their respective Governments, have signed the

present Agreement.

on

languages,  both language versions

For the Government of For the Government of the

Australia: Republic of Finland:

Done at

in the English and Finnish

being equally authentic.

