Reference: Your Telegram 3163 December 30.
Repeat Vienna, London, Geneva, T&C (Information).

SAFEGUARDS: USA NOTE OF DECEMBER 29 ¹

As you are aware, the present situation of the Canadian uranium industry requires that we give increasingly careful scrutiny to any proposals that may appear to impose extra or discriminatory restrictions on the industry in its search for export markets, even though such proposals may be intended to further our objective of achieving a generally accepted and workable system of controls for nuclear exports. Owing to their current heavy schedule of meetings, Ministers have not had an opportunity to consider the USA note and we are therefore unable for the present to make any formal reply. You may, however, speak informally to the State Department along the lines given below, emphasizing that Ministerial approval has not been given and that the following comments represent the preliminary reaction of officials.

2. As regards the proposal for the registration of nuclear exports, there are several points on which we consider that some clarification would be desirable. In the first place, we should be interested in knowing whether the USA proposes that the supplier nations seek agreement by all Agency members “to register sales of natural uranium” for any sizes of transaction or only for transactions above some established exemption limit. The question would then arise whether the safeguard exemption limit is to be established on the basis of total imports by any one state and if so, at what stage it is proposed to register the transaction, since it is possible to envisage a case where a bilateral uranium sale would have to be suspended in mid-course because the Agency had discovered that its completion would raise the importing country’s cumulative total above the exemption limit. The problem would not occur if the exemption limit were based on the cumulative total of exports by one specific state to another. Another point on which we are not entirely clear is what is meant by the stated willingness of the USA to register exports “subject to USA safeguards,” since all parties to an agreement of the kind proposed would presumably have to use the same criteria, whether Agency safeguards, USA safeguards, or some other agreed criteria.

3. With further reference to the proposal for registration of nuclear exports, we note that, except as it applies to the USA, it is confined to sales of natural uranium. We would question the desirability of this limitation, which it seems might create serious difficulties for the future, when other countries besides the USA will presumably be exporting special fissionable materials and nuclear equipment. The paradoxical situation would then arise in which registration was enforced for [Ligne manquante dans l’original /Line missing in original] into bombs, while leaving free sales of special fissionable materials and reactors, both of which are used directly in the production of nuclear weapons. We should also, from the special Canadian point of view, be reluctant to accept a limitation which, in appearance at least, is even now discriminatory against the exporters of natural uranium.

4. If, however, these difficulties can be overcome, we should probably be ready to go along with the registration proposal, which is consistent with our established position of support for the Agency and appears to be a natural and necessary extension of the proposed control system, the scope of which could otherwise be severely limited. In the event that the attempt to get the same undertaking from other members of the Agency were to fail, we should of course have to review our position.

5. With reference to the adoption of bilateral controls compatible with those of the Agency, the USA is already fully aware of our policy in this respect by which we have required a bilateral agreement with provisions for Agency-type safeguards before permitted exports of nuclear material and facilities, except for small quantities of uranium for research and development purposes under a cumulative total of 2500 lbs for each recipient country. We have several times in the past (and most recently at the meeting of officials held in Washington last September 3) given our assurance of our willingness to continue this limitation, provided other Western suppliers continue to observe the same restriction. Any uncontrolled sales, or a failure on the part of Agency members to agree by the end of the Fourth General Conference (October 1960) upon the safeguards system called for by the statute would of course create a new situation.

Following for Vienna (for action) and Geneva (for information)

6. You should be guided by the above in any discussions at the suppliers meeting and Board of Governors. Please inform us at once of any significant reactions to the USA note.

¹ Voir/See Volume 26, document 479.