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Expert warns China trade barriers threaten US nuclear energy's future

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Elina Teplinsky, far right, a lawyer at Pillsbury Winthrop Shaw Pittman, speaks at the Bipartisan Policy Center's discussion on nuclear export controls.

Source: Bipartisan Policy Center / Greg Gibson

American nuclear energy companies are clamoring to work in China and with Chinese firms but an industry expert said tight U.S. restrictions on nuclear exports to its economic rival are threatening to push the U.S. industry out of the reactor design and construction business.

The negative impact of America's love-hate relationship with China loomed large at a Feb. 26 discussion hosted by the Bipartisan Policy Center in Washington, D.C. on boosting the efficiency of U.S. export controls on nuclear energy technologies.

The paneled discussion follows a recent report by the Nuclear Innovation Alliance that outlined recommendations to increase the competitiveness of American nuclear companies in foreign markets by speeding up lengthy Part 810 authorizations by the U.S. Department of Energy of unclassified nuclear energy technology and assistance without weakening nonproliferation safeguards.

Elina Teplinsky, a lawyer at Pillsbury Winthrop Shaw Pittman, asserted that the report's various recommendations aimed at "general" authorizations, such as eliminating the need for the U.S. energy secretary to sign off on every low-level matter, would not impact the roughly 90% of export control applications she works on that are China-related. U.S. companies seeking to do business with Chinese, Indian and Russian entities face higher regulatory hurdles, the lawyer explained.

"Not being able to do business in China and with Chinese companies is hugely constraining for the U.S. nuclear industry," Teplinsky said. "I've seen concrete examples where companies have chosen either to walk away [from doing business or merging with Chinese firms] or just change their scope completely because they were not sure they were going to get an export license."

Teplinsky said opening up the world's largest nuclear energy market would be very beneficial for U.S. nuclear companies that are currently looking abroad for the only current opportunities for growth. Likewise, she said Chinese companies are in need of American expertise in boosting reactor efficiencies and building and safely running new reactors.

Nuclear energy analyst and Harvard Kennedy School professor Matthew Bunn warned that in the wake of the bankruptcy of America's main nuclear developer Westinghouse Electric Co. LLC, denying U.S. nuclear companies market access to China would put the U.S. nuclear energy industry out of the reactor design and construction business. But he expects that U.S. reactor sales will be minimal in the future even with export reforms. "There may be a few, here and there, but we will continue to play for some time an important role in services markets and consulting markets," he said.

Kate Strangis, senior policy adviser for the Office of Nonproliferation and Arms Control at the DOE's National Nuclear Security Administration, acknowledged that U.S. government policy seems to be often at odds with industry interests but said the Trump administration's "anti-regulation" stance offers an opportunity to improve the export control process and "not create unnecessary barriers." Already, Strangis said the DOE is considering reverting to a faster, pre-2005 parallel authorization process, as recommended by the Nuclear Innovation Alliance report, as well as eliminating the need for the Energy Secretary's signature for every application.

However, Strangis does not foresee the opening of U.S. and China nuclear trading, especially in light of the recent sentencing of a former Tennessee Valley Authority manager for spying for a Chinese nuclear company and the country's close ties to nuclear-armed North Korea and Pakistan.

"With regard to China and Russia, I think the fact that they're nuclear weapons states and especially now with political considerations and the global situation, I don't think that a good case could be made to give those countries general authorization — that we wouldn't want to know in advance where the technology was going," Strangis said.

Bunn noted that current U.S. policy prohibits the export of the most sensitive of nuclear technologies, such as fuel cycle enrichment and reprocessing technologies, to any countries that do not already have those capabilities that could produce a nuclear weapon.

Teplinsky also countered that already regulatory-burdened U.S. nuclear energy companies are more than happy to comply with whatever restrictions they need to as a prerequisite to working in China and with Chinese businesses.

"There is really a very urgent need to resolve the China issue and decide what we're going to do," Teplinsky said. "Industry is willing to be flexible. There just needs to be some sort of policy in China."