Description of Sector

The UK has been a member of the European Atomic Energy Community (Euratom) since joining the European Common Market in 1973. On 29 March 2017 the Prime Minister notified the European Commission that the UK would be leaving the European Union and consequently the Euratom Community. The Euratom Treaty, which covers civil nuclear only, has a number of elements which include nuclear research and training, the provision of nuclear safeguards inspection and assurance, the Euratom Supply Agency, free movement of nuclear goods and nuclear workers, nuclear health and safety, and nuclear agreements with third countries.

The Euratom regulatory regime exists inside a wider international framework under the International Atomic Energy Agency (IAEA), a UN body. In common with other EU Member States, the UK’s agreements with the IAEA are currently delivered through its membership of Euratom. On leaving the EU, and whatever the nature of the UK’s future relationship with Euratom, the UK will continue to be a member of the IAEA and comply with all its international obligations.

In some areas, the Euratom Treaty goes beyond the IAEA standards, for example in respect of its safeguards regime and the role of the Euratom Supply Agency. Various international agreements, in addition to the agreement with the IAEA, are also currentlydelivered by virtue of the UK’s membership of Euratom.

The current EU regulatory regime

Main sector-specific rules governing the provision of activity in the EU

The most important European instrument affecting the UK nuclear sector is the Treaty establishing the European Atomic Energy Community (Euratom), and in particular the elements of the Euratom Treaty which:
• establish a Common Market for nuclear materials and equipment within the Euratom Community;
• establish a nuclear safeguards regime within the Euratom Community to confirm that states are not diverting nuclear material or technology from civil programmes into non-peaceful uses;
• establish a framework for nuclear safety and the safe and responsible management of radioactive waste;
• create a system that governs the shipment of radioactive waste across the borders of EU Member States; and
• Allow for third party co-operation agreements between Euratom and countries outside the EU.

Other European Union rules or systems directly relevant to the UK nuclear sector include:
• The 1985 EU Declaration of Common Policy (“Dublin Declaration”), simplifying export control (licensing) arrangements on the export and import of nuclear material, equipment and technology with EU states; and
• Council Directive 2008/68/EC27 on the inland transport of dangerous goods byroad and rail.

The Euratom Treaty establishes a Community for a common approach on civil nuclear and radioactive waste management. All Euratom Member States are EU Member States, and vice versa. The UK became a Member of the Euratom Community at the same time as joining the European Union in 1973. The purpose of Euratom is the promotion of civil nuclear uses of atomic energy. It covers civil nuclear and radioactive waste management issues only – it does not cover military/defence uses of nuclear technology.

In the UK, the Euratom Treaty is given effect by a very wide range of legislation and administrative arrangements including the Nuclear Installations Act 196528, the Health and Safety at Work, etc, Act 197429, the Environmental Permitting Regulations 2010, the Energy Act 201331 and secondary legislation made under these statutes. The majority of the Euratom obligations have either been implemented using domesticlegislation or are directly applicable as Euratom Regulations.

Broad areas covered by the Euratom Treaty

Common Market / Cooperation agreements

The UK is party to a number of existing nuclear co-operation agreements, some of which are between Euratom and a third country and some of which are bilateral between the UK and a third country, the latter being permissible under Euratom rules provided they have been declared to Euratom in advance. Euratom currently has eight NCAs with third countries. The UK Government has made clear its intention to have new legally binding agreements in place with third countries that require them as a condition of nuclear trade (USA, Japan, Canada, Australia) in anticipation of the UK no longer being party to the
Euratom agreements with those countries. Other new NCAs are also being explored but are not a requirement for continuity of trading.

Both the Euratom common market and NCAs, as well as the 1985 EU Declaration of Common Policy (“Dublin Declaration”), simplify export control (licensing) arrangements on the export and import of nuclear material, equipment and technology with EU Member States and those countries with which Euratom has NCAs (It should be noted that even where an NCA exists export control rules apply, although processes may be simplified).

Additionally, Euratom establishes the Euratom Supply Agency (ESA), which is intended to ensure a regular supply of nuclear materials to Euratom Member States and facilitate materials transfer arrangements (to date no Member State has had the need to use the ESA to supply nuclear material).

Safeguards

Euratom establishes measures to confirm that states are not diverting nuclear material or technology from civil programmes into non-peaceful uses – Commission Regulation (Euratom) No 302/2005 of 8 February 2005 on the application of Euratom safeguards establishes reporting requirements, while Articles 81/82 of the Euratom Treaty specify Commission inspections to verify safeguards information and reporting.

Euratom safeguards provisions obliges users to keep accurate records and make declarations on civil nuclear material and programmes to the European Commission.The Commission verifies these declarations and performs inspections.

Failure to comply with Euratom safeguards requirements can, and has led to, Commission sanction and/or infraction proceedings under the Treaty. The UK, during its membership of Euratom, has not been subject to such sanctions or infractionproceedings by the Commission.

Nuclear safety / radioactive waste management

There are several Euratom Directives and Regulations that establish a framework for nuclear safety and the safe and responsible management of radioactive waste. These include:

• Council Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations as amended by 2014/87/EURATOM of 8 July 2014 amending Directive;
• Council Directive 2011/70/EURATOM of 19 July 2011 establishing a Community framework for the responsible and safe management of spent fuel and radioactive waste;
• Council Directive 2013/59/Euratom of 5 December 2013 on the protection against the harmful effects of ionising radiation (‘the Basic Safety Standards Directive’).

This Directive, among other things, specifies requirements for nuclear emergency preparedness and response arrangements in Members;
• Regulation 300/2007/Euratom: Council Regulation of 19 February 2007 establishing an Instrument for Nuclear Safety Cooperation (It facilitates the Euratom Community financing of measures to support the promotion of a high level of nuclear safety, radiation protection and the application of efficient and effective safeguards of nuclear material in third countries).

The Euratom Treaty also places specific obligations on the UK in relation to nuclear safety and radioactive waste management including reporting. While compliance with this reporting does not require transposition into domestic legislation (instead compliance is achieved through administrative arrangements) failure to report as required can result in infraction proceedings. The main reporting requirements are:
• Article 37 – the provision of general data on proposal to dispose of radioactive materials;
• Article 35/36 the reporting and verification of monitoring arrangement; and
• Article 41 – the communication to the Commission of information on investment projects relating to new installations and major projects.

Transport

Council Directive 2006/117/Euratom on the supervision and control of shipments of radioactive waste and spent fuel creates a system that governs the shipment of radioactive waste across the borders of EU Member States.

Main cross-sectoral rules, technical requirements and frameworks

In addition to the nuclear/radioactive waste specific legislation listed above, this sector is subject to health and safety legislation (at the EU level the Health and Safety Framework Directive, the Workplace Directive, Manual Handling Directive, etc) which has been implemented through domestic legislation such as the Health and Safety at Work, etc, Act 1974 and the Management of Health and Safety Regulations 1999. This generalhealth and safety legislation applies to all work activities in the UK so is not specific to the nuclear/radioactive waste management sector.

The Euratom Treaty has specific provisions on the movement of workers and for the free movement of capital for investment in the field of nuclear energy.

Rules affecting current trade between the UK and non-EU countries

Within the Euratom Community/EU there is a tariff-free common market in nuclear materials and equipment. From an export control and licensing perspective, the global import and export of nuclear materials, equipment and technology is covered by Nuclear Suppliers Group, of which the UK is a full member. The 1985 EU Declaration of Common Policy (“Dublin Declaration”) established simplified arrangements for the export control of nuclear material, equipment and technology.

The Euratom Community has in place a range of Nuclear Cooperation Agreements (NCAs) with States outside of the EU. These agreements apply to the Euratom Community as a whole and also to individual Member States and allow the trade and movement of materials, equipment and technology. Without coverage by such agreements the UK would need to negotiate individual NCAs with each state which require such an agreement. The UK itself does not require NCAs to be in place, but some countries have legal or political requirements which make such agreements necessary. For the majority of countries, Government to Government Assurances are sought in support of export licence applications, as is current practice.

Transfers of nuclear material within the Euratom Community and with third countries are subject to Euratom Safeguards arrangements (as well as IAEA safeguards requirements that are in large part complied with through the UK’s membership of Euratom).

Devolved areas of responsibility and impacts on Gibraltar, the Crown Dependencies and Overseas Territories

Civil nuclear is generally a reserved matter, with the exception of certain aspects of radioactive waste management being devolved to Scotland, Wales and Northern Ireland. Gibraltar does not have a civil nuclear sector though they have transposed the relevant legislation into law. Gibraltar is responsible for radioactive waste management which is restricted to low level materials such as those used in the medical profession and sealedsources used for non-destructive testing.

IAEA safeguards obligations do not for the most part extend to Gibraltar, the Crown Dependencies or overseas territories (certain aspects of the Additional Protocol could theoretically apply however); Euratom safeguards obligations do in principle extend to Gibraltar, the Crown Dependencies and the overseas territories (though we understand that no material that would be subject to Euratom safeguards is in fact held in any of these jurisdictions).

Planning for the future

The White Paper The United Kingdom’s exit from and new partnership with the European Union (Cm 9417) published in February 201732 outlined 12 principles which will guide the Government in fulfilling the democratic will of the people of the UK. The key principles of relevance here are: providing certainty and clarity; taking control of our ownlaws; controlling immigration; ensuring free trade with European markets; securing new trade agreements with other countries; ensuring the United Kingdom remains the best place for science and innovation; and delivering a smooth, orderly exit from the EU.

Nuclear safeguards

The civil nuclear sector is subject to robust international non-proliferation measures, which include nuclear safeguards and material accounting. Nuclear safeguards are reporting and verification processes to demonstrate that civil nuclear material is not diverted into military or weapons programmes. The UK’s current international safeguards obligations are primarily fulfilled through the UK’s membership of the Euratom Treaty. Safeguards arrangements are essential to enable the UK to continue to trade and to fulfil the UK’s international obligations as a responsible nuclear state.

Because the UK relies on its membership of Euratom to fulfil its current safeguards obligations, the decision to leave Euratom will require changes to the UK’s current safeguards arrangements. We have a clear objective of ensuring that continued safeguards arrangements are in place to maintain the UK’s reputation as a nonproliferation leader and to ensure compliance with the UK’s international obligations through agreements with the IAEA. To do this the UK will be required to:
• Renegotiate, or amend, existing International Atomic Energy Agency (IAEA) agreements; in particular a Voluntary Offer Agreement (VOA) and Additional Protocol (AP); and
• Establish a State System of Accounting and Control (SSAC). Euratom currently performs the function of a State System of Accounting and Control (SSAC) for all Member States.

A domestic SSAC consists of three basic components:
• An infrastructure and IT system to obtain, process and ensure timely submission to the IAEA of all the nuclear material accounting and other safeguards reports required by any future safeguards agreements, and reporting to States required by Nuclear Cooperation Agreements;
• Assurance arrangements to ensure the quality of the reporting provided by the UK to the IAEA. This can include domestic telemetry (e.g. cameras and seals installed by the SSAC) and inspections for assurance purposes; and
• Arrangements to facilitate and otherwise support IAEA verification activities in the UK at facilities chosen for inspection. This includes supporting IAEA telemetry at UK sites.

Safeguards regime

The UK will be required to set up a domestic SSAC. This will constitute a major project to set up and deliver. The Office for Nuclear Regulation (ONR) currently performs some inspections on UK nuclear facilities for a range of purposes including safety and security.

They are also involved in aspects of the current reporting regime to Euratom and other third country States. ONR have a significant capability and knowledge base in respect of the UK’s safeguards, therefore they are well positioned to take on the function of an SSAC. There will however be a need to substantially increase the ONR’s inspection and assurance capabilities before they are able totake on the role of an SSAC.

Primary legislation will be required to give the ONR the function of establishing and maintaining a UK SSAC, and ensuring that it has the necessary powers to do so. It is the intention of the UK Government that the future domestic safeguards regime, to be run by the ONR, is robust and as comprehensive as that currently provided for by Euratom. The Nuclear Safeguards Bill and the regulations that will be made using the powers provided for in the Bill, are designed to establish a future UK safeguards regime that will deliver a regime of broadly equivalent standards to existing Euratom standards and exceeds the standard that the international community would expect from the UK as a member of the IAEA.

Enabling trade: movement of technology and material between UK and countries outside the EU

The Government’s priority is to ensure that UK companies are able to maintain the ability to trade in civil nuclear material, equipment and technology. In particular, for international partners that require Nuclear Cooperation Agreements (NCAs), this means ensuring that new bilateral NCAs are negotiated and in place to ensure smooth transition.

NCAs are needed only with countries which themselves have a legal or policy requirement for an NCA to be in place. It is not UK policy to require a NCA with any other countries to enable bilateral civil nuclear trade. However, the UK will need to ensure that we have agreements in place with the limited number of states which have legal or policy requirements for NCAs; this is the case for USA, Canada, Japan and Australia. New agreements with those countries are therefore being prioritised.

Once the UK withdraws from Euratom we will continue to be able to engage in civil nuclear trade with European partners, as neither the UK nor Euratom has a requirement for an NCA to be in place. Euratom facilitates trade with third countries as it can negotiate NCAs on behalf of the community. NCAs facilitate trade but are not in themselves trade agreements. Being in Euratom enables the UK to conduct civil nuclear trade through Euratom’s NCAs (these are with; Argentina, Australia, Canada, Japan, Kazakhstan, South Africa, Ukraine, US, and Uzbekistan). Once the UK has withdrawn from Euratom we will no longer be covered by these NCAs. We will need to make alternative arrangements to replace the provisions Euratom currently provides.

Separately to Euratom’s agreements the UK has bilateral agreements in place with key partners (including with Australia and Japan). These are however, predicated on the UK’s safeguards arrangements and membership of Euratom; hence there will be a need to update these existing bilateral NCAs to reflect the UK’s new arrangements outside of Euratom, including on safeguards provision.

Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

The Prime Minister has set out that the UK is seeking an ambitious arrangement with the EU which builds on our unique position of regulatory alignment. Internationally there are a number of rules, agreements and treaty based approaches that govern nuclear trade which demonstrate that there are existing frameworks for trade in this sector.

Nuclear Safeguards are overseen by the International Atomic Energy Agency (IAEA) on a global basis. As a Nuclear Weapon State (as defined by the Treaty on the NonProliferation of Nuclear Weapons (NPT)), the UK is not required to have IAEAsafeguards oversight of its nuclear facilities, but voluntarily agrees to accept the application of IAEA safeguards to its civil nuclear facilities. The UK’s “voluntary offer” on nuclear safeguards currently constitutes a tripartite arrangement involving the UK, IAEA and Euratom through two agreements: a “voluntary offer agreement” and “Additional Protocol”. All states (with the exception of North Korea and Iran) that have a nuclear sector follow the IAEA approach and are signatories to the Non-proliferation Treaty.

Non Euratom states implement their own safeguards arrangements domestically and these are verified by the IAEA rather than – as with Euratom Member States – being subject to a supra-national approach administered by the European Commission. Euratom nuclear safeguards arrangements, as applied to the UK, are similar, but more extensive in scope, to IAEA nuclear safeguards arrangements – at sites the IAEA currently inspects (primarily Sellafield and URENCO Capenhurst), it collaborates with Euratom safeguards inspectors to reduce duplication of effort.

Since 2014, Switzerland has participated in Euratom programmes as an associated state (through an “agreement for scientific and technological cooperation”) – this arrangement only covers Research and Development. The agreement is also contingent on other aspects of the EU acquis such as the free movement of people.

Global export controls for nuclear material, equipment and technology are derived from the Guidelines agreed by the Nuclear Suppliers Group (NSG), of which the UK is a full member. Euratom has no special role within the NSG.

In relation to safety and environmental considerations there are international instruments in place that largely mirror or are reflected in the objectives of relevant Euratom/EU Directives that apply in the nuclear field. For example, the Nuclear Safety Directive has broadly the same objectives as the international Convention on Nuclear Safety. The UK is a contracting party to the following binding international agreements that underpin Euratom or EU obligations such as: the Convention on Nuclear Safety (Nuclear Safety Directive); the Joint Convention on Radioactive Waste and Spent Fuel Management (the Radioactive Waste and Spent Fuel Directive); and the ESPOO Convention (Environmental Impact Assessment Directive). Additionally the UK also supports the non-binding IAEA General Safety Requirements (the international equivalent to the emergency planning and response elements of the Basic Safety Standards Directive), which represent international best practice in the field of nuclear emergency planning and response.

Nuclear Cooperation Agreements (NCAs) are binding treaties between parties that provide assurances in relation to safeguards and non-proliferation. While not trade agreements they provide a framework within which trade is permitted between states. It is not UK policy to require a NCA with any other countries to enable bilateral civil nuclear trade. NCAs are needed only with countries which themselves have a legal or policy requirement for an NCA to be in place; this includes the USA, and Canada. For the majority of countries, Government to Government Assurances are sought in support of export licence applications. It is not a legal requirement for Euratom to have NCAs to enable bilateral civil nuclear trade. However, the Euratom Community as a whole does have in place NCAs with a range of states where it is beneficial/necessary to have such an agreement in place. The existing Euratom NCAs are with Argentina, Australia, Canada, Japan, Kazakhstan, South Africa, Ukraine, US, and Uzbekistan.

Free-trade Agreements (FTAs) may include, aspects of trade in nuclear material, for example lowering of tariffs and quotas, though they are still subject to both partiesmeeting international non-proliferation and safeguards obligations. For example the EUKorea FTA covers tariffs on nuclear materials and equipment and provisions on limitation to market access. Not all FTAs include such provisions though – for example, CETA doesnot (see below).

CETA is an existing free trade agreement between Canada and the EU. It seeks to strengthen their economic relationship through the creation of an “expanded and secure market” for their goods and services. Beneficial aspects of the agreements include: savings on customs duties; the creation of a more level playing field for intellectual property rights; ease of access to professionals on account of mutual recognition of professional qualifications; commitment from both sides to sustainable development. CETA does not include a nuclear aspect as this relationship specifically covered by anNCA between Canada and Euratom.

European Economic Area (EEA) Agreement entered into force on 1 January 1994 and brings together the EU Member States and the three EEA EFTA States — Iceland, Liechtenstein and Norway — in a single market, referred to as the “Internal Market”. In order to be part of the EEA, and be part of the Internal market, states need to demonstrate compliance with the EU/Euratom Acquis. (Switzerland, who have a civil nuclear programme, are also an EFTA state but are not an EEA State). The EEA EFTA Member States are not Members of the Euratom so do not participate in its processes.None of the current EEA States have a civil nuclear sector programmes though they do need to manage non-civil nuclear power radioactive waste (for example, hospital wastes) in line with the Acquis.

World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade (GATT) is the WTO’s principal rule-book for trade in goods. The WTO rules also include rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries’ markets. Each promises to do the same for imports into its own market. Under WTO rules civil nuclear trade is subject to relevant, standard, tariffs which differ depending on the materials/goods being traded (for example; concrete needed for the building of nuclear power plants is subject to a different level of tariff to nuclear fuel).