VZCZCXRO0817
PP RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTRO
DE RUEHBJ #0325/01 0390624
ZNR UUUUU ZZH
P 080624Z FEB 10          ZDK
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 7999
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHAD/AMEMBASSY ABU DHABI 0005
RUEHBS/AMEMBASSY BRUSSELS 1890
RUEHBY/AMEMBASSY CANBERRA 9807
RUEHJA/AMEMBASSY JAKARTA 2048
RUEHKL/AMEMBASSY KUALA LUMPUR 2689
RUEHLO/AMEMBASSY LONDON 3674
RUEHMO/AMEMBASSY MOSCOW 9473
RUEHOT/AMEMBASSY OTTAWA 0045
RUEHFR/AMEMBASSY PARIS 4680
RUEHPG/AMEMBASSY PRAGUE 0902
RUEHSA/AMEMBASSY PRETORIA 0544
RUEHUL/AMEMBASSY SEOUL 1466
RUEHSM/AMEMBASSY STOCKHOLM 1690
RUEHTC/AMEMBASSY THE HAGUE 1440
RUEHKO/AMEMBASSY TOKYO 0196
RUEHUM/AMEMBASSY ULAANBAATAR 3666
RUEHUNV/USMISSION UNVIE VIENNA 1435
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 BEIJING 000325 
 
STATE FOR EAP/CM-BRAUNOHLER, EAP/CM 
STATE FOR ISN/NESS 
USDOC FOR ENERGY AND ENVIRONMENT/ LOPP 
USDOE FOR NUCLEAR ENERGY/ MCGINNIS/ 
USDOE FOR NNSA/ D'AGOSTINO/ AOKI/ KROL/ MCCLELLAND/ WHITNEY 
USDOE FOR INTERNATIONAL/YOSHIDA, BISCONTI, HUANGFU 
STATE PASS TO NUCLEAR REGULATORY COMMISSION (DOANE) 
NSC FOR HOLGATE 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON ETTC TRGY KNNP IAEA KTIA CVIS CH
 
SUBJECT: CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR 
DAMAGE: SAUNDERS DELEGATION VISITS BEIJING TO DISCUSS RATIFICATION 
WITH CHINESE GOVERNMENT 
 
BEIJING 00000325  001.2 OF 004 
 
 
Sensitive but unclassified - please protect accordingly. 
 
REF:  A. 08 STATE 54213 
      ¶B. 08 BEIJING 3625 
      ¶C. STATE 008775 
 
SUMMARY 
------- 
¶1.   (SBU) Acting Assistant Commerce Secretary Mary Saunders on 
January 14 led a delegation made up of USG officers from Commerce, 
Energy, and State, and U.S. nuclear industry representatives to 
discuss the Convention on Supplementary Compensation for Nuclear 
Damage (CSC) with China's National Energy Administration (NEA) and 
the China Atomic Energy Authority (CAEA).  NEA and CAEA officials 
acknowledged that joining the CSC would likely benefit China's 
nuclear industry and also noted that the CSC provides a good legal 
basis for Japan and Korea--both of which appear to be moving towards 
CSC ratification.  Chinese officials reacted positively to a Korean 
offer to host a tri-lateral conference designed to raise awareness 
of the CSC, but cautioned that they were not as far along in their 
evaluation of CSC and were not yet ready to commit to attending such 
a conference.  Chinese officials also noted that CSC ratification 
would likely require a lengthy interagency coordination period and 
some modifications to China's existing nuclear liability legal 
regimes.  END SUMMARY. 
 
¶2.  (SBU) BACKGROUND:  Per Ref. A, the CSC was drafted under the 
aegis of the International Atomic Energy Agency (IAEA) and intended 
to become the global nuclear liability regime.  The CSC was drafted 
to address shortcomings in the extant nuclear liability regimes and 
provide for prompt and fair compensation to victims of nuclear 
accidents.  The CSC was finalized in 1997, and the U.S. deposited 
its instrument of ratification with the IAEA in May, 2008.  At 
present, four nations have ratified the CSC.  It will enter into 
force when at least five nations with a minimum of 400,000 megawatts 
thermal generated from nuclear power plants have ratified the 
Convention. Establishing this regime is crucial to achieving the 
important and complementary U.S. objectives of (1) promoting the use 
of nuclear power in a safe and secure manner that minimizes 
proliferation risks and (2) eliminating concerns over liability that 
currently hampers the ability of U.S. nuclear suppliers to compete 
for nuclear projects.  The focus of USG efforts has now shifted to 
the international arena, and we are urging other nations to join the 
CSC. The liability protections offered by the CSC to U.S. nuclear 
suppliers with regard to a potential customer nation will not be 
available unless that nation is a member of the CSC.  END 
BACKGROUND. 
 
NEA PROGRESSING WITH CSC IMPLEMENTATION EFFORTS... 
--------------------------------------------- ----- 
¶3.  (SBU) CAO Shudong, the Deputy Director General (DDG) of NEA's 
Department of Electric Power (the entity responsible for oversight 
of China's nuclear power industry), led off the discussion by noting 
that cooperation with the U.S. on the Westinghouse AP1000 nuclear 
reactor program should stand as an example of how two countries can 
 
BEIJING 00000325  002 OF 004 
 
 
work together. Cao said that in comparison, the European Pressurized 
Reactor (EPR) project with France was not going smoothly. [NOTE: 
Cao did not elaborate on EPR-related problems, but may have been 
referring to recent press reports, which speculate that senior 
Chinese nuclear officials took bribes from French nuclear power 
giant and EPR-builder AREVA to win a contract for a project in 
China's southern Guangdong province.  END NOTE.] 
 
¶4.  (SBU) During meetings in 2008, NEA officials stated that China's 
accession to the CSC would need to follow implementation of a new 
Atomic Energy Law (AEL), which would not be addressed until after 
China's new Energy Law is passed (REF B).  DDG Cao said this is no 
longer the case, noting that CSC ratification efforts/studies could 
go forward in parallel with AEL formulation and that CSC could be 
adopted prior to AEL passage, which according to Cao may not be for 
another two years. Cao said China is interested in exporting nuclear 
technology (jointly with the United States) to developing countries; 
therefore, the CSC would be advantageous to China.  To that end, NEA 
already has formed a team to evaluate the impacts of CSC.  The team 
is expected to issue its report and recommendations to other 
government entities in the second half of 2010. Cao also noted that 
A/S Secretary Saunders' visit had given this effort a boost. 
 
...BUT PROGRESS IS SLOW 
----------------------- 
¶5.  (SBU) NEA officials agreed with U.S. nuclear industry experts 
that China's existing nuclear liability law as spelled out in Guo 
Han 64 is very similar to CSC, therefore only minor changes would be 
required. Nevertheless, this process will probably not occur as fast 
as the USG hopes, according to Cao.  In addition to China's nuclear 
bureaucracy, there are a number of other interests involved, and 
development of a domestic liability law consistent with CSC will 
require coordination with many organizations, including the Ministry 
of Finance and Chinese insurance companies.  Moreover, subsidiaries 
under NEA are still being created and responsibilities for the AEL 
have not been assigned yet, said Cao.  [NOTE: Guo Han 64, an 
official regulation from China's State Council, was drafted with 
input from Westinghouse and the State Nuclear Power Technology 
Corporation (SNPTC) prior to the signing of the Westinghouse AP1000 
contract in July 2007.  It includes some stipulations that coincide 
with the CSC, such as channeling liability to the operator and 
putting civil claims under the jurisdiction of a single court 
system.  Guo Han 64 also stipulates that the nuclear liability issue 
will be included in the new Atomic Energy Law when it is concluded. 
END NOTE.] 
 
¶6.  (SBU) NEA officials were anxious to know where Korea and Japan 
stood in the ratification process.  Following the U.S. briefing, NEA 
acknowledged that it was not as far along in analyzing the impacts 
of CSC ratification.  A/S Saunders highlighted Korea's offer to host 
a trilateral forum to raise awareness of the CSC, noting that this 
could help speed the interagency coordination process (REF C). 
Participants would include government and industry representatives 
from Korea, Japan, and China, while the U.S. would participate in an 
advisory role. DDG Cao said that although the idea was a good one, 
 
BEIJING 00000325  003 OF 004 
 
 
NEA would have to coordinate with leaders at the National 
Development and Reform Commission (NEA's parent organization) before 
committing. 
 
¶7.  (SBU) DDG Cao commented on a recent article in the New York 
Times that raised concerns about the safety of China's ambitious 
nuclear power program.   He said that the article had gotten the 
attention of China's senior leaders.  He added that the Government 
placed great importance on nuclear safety; safety is paramount over 
development.  Regarding the supervisory capacity of China's nuclear 
regulator, the Ministry of Environmental Protection's National 
Nuclear Safety Administration (MEP/NNSA), Cao said China has 
adequate oversight capabilities for the present, but not for future 
growth in the number of nuclear facilities.  However, that 
deficiency is currently being addressed through an enormous influx 
of personnel and additional training, according to Cao. 
 
CAEA DELIVERS NEARLY IDENTICAL MESSAGE ON CSC 
--------------------------------------------- 
¶8.  (SBU) In a separate meeting with the China Atomic Energy 
Authority (CAEA), Systems Engineering Director General (DG), TONG 
Baotong and Deputy Director of CAEA's International Cooperation 
Department, SONG Gongbao, delivered a similar message to that of 
NEA.  Tong said that although China participated in drafting the CSC 
and he himself is on the IAEA CSC working group, China has yet to 
join.  The major reason for this is the gap, albeit small, between 
existing domestic legislation and CSC and the significant 
interagency coordination required.  Tong said that Premier WEN 
Jiaobao had raised a number of difficult questions regarding nuclear 
liability during the discussion leading up to Guo Han 64 (see para 
5), and that explaining CSC to China's leaders will be even more 
challenging and will likely require the help of U.S. officials. 
Therefore, the Korean proposal to hold an information forum on CSC 
is very positive, according to Tong.  He also noted that such a 
meeting would benefit the bulk of China's nuclear power plant 
operators and national insurance companies, which also are not 
familiar with CSC. 
 
¶9.  (SBU) DG Tong said that no timetable exists for joining the CSC 
but he concurred with NEA that waiting for domestic legislation such 
as the AEL would take far too long and CSC accession should be 
promoted first and new domestic legislation can then be formulated 
around the CSC.  This year two tasks are critical to moving CSC 
forward, according to Tong.  The first is to hold the trilateral 
forum as proposed by Korea and the second is for CAEA to inspect 
China's operational nuclear power plants to deduce their compliance 
with Guo Han 64 and CSC, respectively. Finally, Tong asked about 
lessons learned during the eleven-year period it took the U.S. to 
ratify CSC. Beyond issues that were unique to the U.S. system of 
government, A/S Saunders said that getting insurance companies and 
plant operators involved as early as possible is crucial to an 
efficient and speedy evaluation process. 
 
¶10.  (U) This cable was cleared by DOC Acting Assistant Secretary 
Saunder's delegation. 
 
BEIJING 00000325  004 OF 004 
 
 
 
HUNTSMAN