out with the normal rate for that facility. If it is a new process in some significant respect, then I agree with you that it may not be possible to know what the normal rate is without having experience, and this would require a very close surveillance of the plant during some test period in order to establish the normal loss rate.

Representative HOSMER. Let me say this: I am not technically capable of a proper line of questioning in this regard, but I also think that you may not be technically capable of answering such a line of questioning. It is probably something we could and should get in on, probably another occasion. I have a feeling, however, that, from what you said relative to the very small increase in the number of IAEA people, what you have told us of their technological capability for inspection, certainly our job in creating the IAEA as a proper inspection agency, not only for the burgeoning nuclear peacetime activities that are going on in the world and the nuclear aspects, or in connection with the possibility of IAEA control inspection under some of these treaties, is not yet at a point of competence-perhaps we could get into that later, at another time.

I have nothing further on the Colombian agreement.
Thank you, Mr. Chairman.

AMENDMENT TO THE AGREEMENT WITH AUSTRALIA

Representative YOUNG (presiding). Will you proceed with the Australian agreement, Dr. Nabrit?

Dr. NABRIT. Mr. Chairman and members of the committee, the amendment to the Australian Agreement for Cooperation, which is before the committee has several features on which I believe it would be helpful to comment.

The immediate reason for the amendment, of course, is to extend the term of the agreement for cooperation which will otherwise expire on May 27. In extending it, we have taken the opportunity to incorporate a number of provisions to reflect both the current policies of the Commission and the needs of Australia.

As the committee will note, the term of the amended agreement will be extended for an additional 30 years, a period that corresponds to the terms of the recent Swiss and Swedish agreements.

AUSTRALIAN POWER PROGRAM

This reflects both our own policy to provide long-term assurances for the supply of nuclear materials and the Australian desire to have such assurances. Nuclear-power plans in Australia are now in a formative stage. The 31-year term of the agreement, therefore, provides Australia assurance that it can consider enriched uranium reactors in developing its power program and provides us with the assurance that this will in all probability be done.

The fact that the amendment does not contain an annex listing the power reactor projects to be supplied under the agreement is also attributable to the fact that the Australian program has not reached the definite stage that would make this possible.

For this same reason, the quantity of material which can be transferred under the amended agreement is retained at the 500 kg. limit of the current agreement.

LONG-TERM POWER AGREEMENT

In its amended form, therefore, the agreement provides the framework of a long-term power agreement, such as those concluded with Switzerland and Sweden last year.

At such time as the Australian program is formulated, we would anticipate that the comparison with those agreements would be made more complete through the addition of an annex listing specific projects to be supplied and an increase in the quantity of U235 which could be transferred to supply those projects. These actions would, of course, require a further amendment of the agreement.

TOLL ENRICHMENT

The present amendment reflects for the first time-in article VI, which amends article VII of the agreement-the recently adopted policy of the Commission to make toll enrichment the basic method of providing significant quantities of enriched uranium in which a transfer of title is involved.

This, except for limited situations, relieves the Commission of the responsibility of commercially acquiring the uranium needed for feed material, as is the case when enriched uranium is provided by sale, and will contribute to the development of normal commercial market conditions in uranium sales. In establishing toll enrichment as the basic method of supply, we have agreed that the Commission will be prepared to furnish the natural uranium required for any particular delivery of enriched uranium upon timely advice that the required natural uranium is not reasonably available to the other party.

The provision of the natural uranium would be under terms and conditions to be agreed. Such a willingness to provide natural uranium is required, we believe, in keeping with our intent that the agreement constitute a long-term assurance of dependable supply.

SALE OF ENRICHED URANIUM

Additionally, the possibility of sale of enriched uranium by the Commission, in response to a request, has been retained but could be at the election of the Commission."

PROVISIONS OF MATERIAL FOR RESEARCH

The provisions which I have been describing pertain primarily to the supply of enriched uranium for power reactors. The provisions with respect to transfers for research purposes, in which the quantities involved would be smaller, provide greater flexibility, but at the same time, provide the Commission the option of limiting to toll enrichment those arrangements in which there would be a title transfer.

PROVISION FOR EXCHANGE OF CLASSIFIED INFORMATION DISCONTINUED

One other result of the amendment to which I should refer, Mr. Chairman, is the elimination from the agreement of those provisions which pertain to exchanges of classified information. Such exchanges are no longer required in the areas of civil uses, and provisions for them are obsolete.

In removing them from the agreement, we have in turn incorporated provisions currently used in similar agreements on such matters as the scope of the agreement in article II, the exchange of information in article III, and the guarantees in article XI.

We have also provided, as in other recent agreements, authorization for private persons to make arrangements for the transfer of special nuclear materials and for the performance of services with respect

thereto.

Mr. Chairman, I have commented primarily upon those significant features of the proposed amendment which distinguish it from other agreements which have been before the committee. Should there be any questions on these or other aspects of the amendment, I shall be glad to respond to them.

Representative YOUNG. Dr. Nabrit, we appreciate very much your willingness to respond. Without objection, I think we will hear the other statement, and then put all the questions en bloc.

Would you proceed, Mr. Zook?

Mr. Zook. Thank you, Mr. Chairman.

I am pleased to have this opportunity to appear before the Joint Committee to testify on behalf of the Department of State in favor of the proposed amendment to the Agreement for Coopration with Australia.

The current agreement has been a fruitful avenue of cooperation between the United States and Australia. The Director of International Scientific Affairs in the Department, Mr. Herman Pollack, had the privilege of visiting the Australian Atomic Energy Commission's establishments with Chairman Seaborg and other AEC officials recently and seeing at first hand some of the results of United StatesAustralian cooperation.

This amendment facilitates continued cooperation in the peaceful uses of atomic energy and also provides for the continuance of safeguards responsibilities by the International Atomic Energy Agency under a trilateral agreement which entered into force on September 26,

1966.

IAEA SAFEGUARDS

We are gratified with this arrangement, which is of course fully consistent with Australia's support of the Agency since its inception in 1957. Indeed, Australia was an active member of the Preparatory Commission which drafted the Agency statute, and she has been a member of the Agency's Board of Governors every year since that

Thank you, Mr. Chairman.

PRIVATE EXPORTS OF SPECIAL NUCLEAR MATERIAL

Representative YOUNG. Dr. Nabrit and Mr. Zook, whoever wants to comment on it, both the Colombian and Australian agreements state that any transaction between private parties in those countries and private parties in this country will be subject to applicable laws, regulations, requirements, and policies of the countries involved. What is meant by the term "policies"?

Either of you or both of you can comment on this if you like.

Dr. NABRIT. Actually we did not intend for the term to be simply an escape hatch to save the Commission. But the policies being developed for regulations governing transfers to private parties and for sale and control of the special nuclear fuels in countries had not been developed at the time that the draft was made and it included in there the term policies.

Actually policies will be developed. Some have been developed already, but there are situations in which the policies will be revised. So this was not designed as an escape mechanism but simply recognized the fact that the policies were in the process of development rather than having been completely formed.

Representative HOSMER. Will the chairman yield?
Representative YOUNG. Yes, indeed.

Representative HOSMER. We keep telling these various countries they are always going to have an assured supply of enriched uranium for their peaceful activities and that they don't have to worry.

We sell a reactor and 5 minutes later they come back and say, do you really mean it, are we going to be able to get the next fuel loading and so forth?

What you are saying here about policy indicates to me that somebody downtown might just take a notion to say, "Well, we are not going to supply any more. You put $12 million up for your reactor but we are not going to give you any more fuel after you run out of what is in your pot now."

Does this policy raise a red flag in that direction?

AVAILABILITY OF SPECIAL NUCLEAR MATERIAL

Dr. NABRIT. Actually bear in mind when we were talking about supply we indicated that we would offer either enrichment services through a toll procedure or we would offer enriched uranium for sale if the conditions in a competitive market made it such that it would not be reasonably available to the person wishing to purchase it.

Under these circumstances actually we have assured the individuals that as long as we had adequate raw materials we would provide the services for a foreign country the same as we would for our domestic agencies without any discrimination.

Representative HOSMER. This is an honest to goodness assurance that that is going to happen?

Dr. NABRIT. We make this provision for approximately 30 years when we can project that we see an adequate fuel supply.

Representative HOSMER. This policy business or policies that are being talked about here do not have anything to do with cutting of

anybody's supply of enriched uranium once they are assured that they are going to have it?

Dr. NABRIT. No.

Representative HOSMER. I assume insofar as the capability to enrich is concerned that the AEC and the U.S. Government making these commitments has bound itself, if in fact the separation capacity that we possess is inadequate, to take care of both our external commitments and our internal requirements that we will expand that capacity so that they can be taken care of?

Dr. NABRIT. This is a good faith commitment.

RELATIONSHIP OF SUPPLY TO DIFFUSION PLANT CAPACITY

Mr. KRATZER. May I add that the commitments we have made to date, Mr. Hosmer, have all been made within the limitations of existing capacity. In other words we have projected our diffusion plant capacity ahead and each time we enter into one of these commitments we deduct on paper, or reserve in effect a certain portion of our diffusion plant capability to meet that commitment. Every one of these commitments is backed up by capability in our diffusion plant which is not allocated to any other purpose.

Representative HOSMER. I realize that, Mr. Kratzer, but I also recall that between the time of the 1962 report to the President on civilian nuclear power and the completion of the recent supplement thereto (see app. 8, p. 211) a vast increase in the requirements for enriched materials over that projected earlier has occurred. I am not ruling out that it will not occur again or saying that it will, but if it does, does the U.S. Government commitment to our overseas customers go to the extent that we would supply the requirements at least for separation, not for raw material, but for the separation requirements that are needed?

Mr. KRATZER. These are not open ended commitments. These are commitments for specific quantities.

When we make them they are made within the limits of existing capacity and we know that we can meet them without any enlargement of our capacity.

REQUEST FOR URANIUM

Now when we reach the point which we have estimated to be in the late 1970's or possibly beyond, in the 1980's, when our existing capacity is fully committed to reactors that have been built up to that time, we will have to face the question of how we meet requests for additional uranium that do in fact depend on new capacity.

My guess is by that time the question will have answered itself by the addition of new capacity and we will not have to face it.

Representative HOSMER. As a matter of fact you are not waiting for an answer to come up. You have already started to engage in conferences with the Atomic Industrial Forum people in an attempt to keep on top of the problem at all times.

Mr. KRATZER. That is right.

Dr. NABRIT. Even though Australia does not know at the present time what its needs really will be, a part of the reasoning for this particular amendment to the treaty is to gain this assurance before we