UK: Brexatom: How Will Leaving The Euratom Treaty Impact The UK Nuclear Sector?

Today, the House of Lords have debated the premise that leaving the EU should not mean leaving the Euratom Treaty. In the debate, it was stated that most ministers see the benefits of Euratom and recognise its efficiency. This adds to the debate in the last month on the wisdom of the UK exiting the Euratom Treaty.

In March 2017, the UK wrote to the President of the EU Commission saying the UK would be exiting the Euratom Treaty in parallel with the wider Brexit.

At the time we published a note on the implications for the nuclear industry and internationally. We pointed out that the continued operation of the UK's operating nuclear stations and the trade in nuclear fuel, goods and technology as well as compliance with our International Atomic Energy Agency (IAEA) obligations on safeguards depended on having a replacement to the Euratom safeguards regime in place and in operation. It also requires having in place nuclear cooperation agreements with key trading partners to replace those currently put in place by Euratom.

The debate has centred around three questions:

  • Is it necessary to exit Euratom if the UK is exiting the EU?
  • How long will it take to put an alternative safeguards regime in place and bring replacement nuclear cooperation agreements into force?
  • Will the chosen path have a disruptive impact on the UK's nuclear sector?

Most recently the debate has extended to the effect on nuclear material involved in medical care.

Is leaving Euratom necessary if the UK leaves the EU?

The Euratom Community is established by a separate treaty dating from 1957 (though the UK joined it in 1973). While Euratom uses a number of common EU institutions (the EU Commission effectively undertakes the administration and the European Court of Justice (ECJ) rules on interpretation judgements) it is a separate treaty with a number of non EU associate members such as Switzerland. That allows non EU members to be part of the Euratom community, and enjoy its cooperation arrangements with other countries inside and outside the community.

It seems likely the UK could remain a member of Euratom while leaving the EU. However, to maintain the freedom to trade nuclear goods and materials, share knowledge, research and skills and maintain common safeguards would involve accepting some jurisdiction for the ECJ to police the treaty, controls on uranic trade, and acceptance of Euratom oversight of a safeguards regime. We will continue to abide by IAEA regulations post Brexatom under current plans. In this specialist sector, some fettering of national freedom has been acceptable in the past and few in the nuclear industry are in favour of leaving Euratom.

However, this cannot be divorced from the wider political context and the Brexit negotiations - Brexit is essentially a political decision and the future shape of relations between the UK and the EU is a matter for mutual negotiation and agreement. Equally, having signalled intent to leave, reversing that is entering unknown territory.

How long will it take to put in place an alternative safeguards regime and bring replacement nuclear cooperation agreements into force?

The current regime putting in place nuclear safeguards and an anti-proliferation inspection regime is administered by Euratom for the treaty participants. The proliferation detection equipment and compliance systems in place in the UK are owned and administered by Euratom. In order to replace it the UK needs to give its national agencies (principally the Office of Nuclear Regulation "ONR") new powers to administer the regime and negotiate the transfer of property and responsibilities from Euratom.

Government is providing for this in the Nuclear Safeguards Bill mentioned in the Queen's Speech , but the detail has yet to be provided.

Having an adequate and operating safeguards regime is an IAEA pre requisite for international trade and cooperation in nuclear technology and fissile materials. So, once the UK has a safeguards regime in place , it needs to negotiate suitable agreements or treaties with nuclear partners such as USA, Canada, Russia, Kazakhstan ,the EU, Japan, South Korea, Taiwan and various other countries.

Agreements will also be needed with countries:

  • which supply the UK with uranium or uranic services and fuel;
  • to whom we want to sell nuclear or dual use technology; and
  • in which UK suppliers would like to help develop a nuclear sector.

These agreements are complex and take time to negotiate as well as needing people who understand the sector to undertake that work. The agreements also need inter - governmental approval, which can be an extended and difficult process to manage. For example, US agreements (known as section 123 Agreements), require Congressional as well as Presidential approval and can take years to obtain these approvals and come into force.

So the target date of May 2019 looks heroically short and unrealistic.

While the UK starts with a good reputation for compliance and controls, the task of replacing the Euratom safeguards regime may prove tortuous and extended. Having the safeguards regime in operation is a pre-requisite for putting in place nuclear trading and cooperation. However, without safeguards and cooperation agreements trade in nuclear goods and services would be illegal for both provider and user - it is not just a UK compliance matter. The issue is likely to affect all UK nuclear licences and their supply chains as the nuclear industry is a very international one.

Will the chosen path have a disruptive impact on the UK's nuclear sector?

The UK imports its uranium needs. Its world leading enrichment services company, Urenco, is jointly owned with the German and Dutch governments and operates in all three countries, the US and elsewhere, exporting its products to many nuclear entities worldwide. The UK's operating civil nuclear stations are ultimately owned by EDF, a French company that provides specialist support from elsewhere in the group. The UK's new nuclear build projects all involve implementing designs from overseas, international components and overseas parent companies. Most SMR offerings come from outside the UK and we want to continue to participate in international research programmes like JET and ITER. And in the decommissioning arena, international contractors and know how are important to the success of the NDA's projects and the levels of competition in the industry. This is a very international high technology sector where interactions are tightly regulated and where failure to maintain a legal framework could cause major disruption. Not reaching an agreement here is simply not a feasible option.

A sensible transition period for some years after May 2019 is a necessity. The UK will inevitably want to access the Euratom community and its markets after Brexit and that is likely to involve accepting Euratom's requirements and rules. It remains unclear whether Brexatom will deliver any significant benefit for the UK or whether our withdrawal from Euratom is necessary or even sensible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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