Nuclear Nonproliferation:

Implications of the U.S./North Korean Agreement on Nuclear Issues

RCED/NSIAD-97-8: Published: Oct 1, 1996. Publicly Released: Oct 21, 1996.

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Pursuant to a congressional request, GAO reviewed the agreement between the United States and North Korea that addresses the threat of North Korean nuclear proliferation, focusing on whether: (1) the agreement is a non-binding political agreement; (2) the United States could be held financially liable for a nuclear accident at a North Korean reactor site; (3) North Korea is obligated to pay to upgrade its existing electric power distribution system; and (4) the agreement is being implemented consistent with the applicable laws governing the transfer of U.S. nuclear components, materials, and technology.

GAO found that: (1) the Agreed Framework can be properly described as a nonbinding political agreement; (2) therefore, its pledges, including those involving financial outlays, are not legally enforceable; (3) agreements of this type do not require the Congress's prior involvement or approval and can have the effect of pressuring the Congress to appropriate money to implement an agreement with which it had little involvement; (4) according to the Department of State, the United States executed a nonbinding agreement because it would not have been in the country's interest to legally obligate itself to provide the reactors and interim energy to North Korea; (5) GAO's analysis of the existing nuclear liability protections confirms that the foundation of the Korean Peninsula Energy Development Organization's (KEDO) risk protection program is in place; (6) KEDO plans to obtain additional protections to ensure that KEDO and its members are fully shielded from possible liability claims; (7) without knowing the contents of these future protections, it is not possible to fully assess the adequacy of the liability protection that will be provided to KEDO and its members; (8) nevertheless, GAO's assessment of the liability provisions in the KEDO and supply agreements and KEDO's intention to secure additional protections, suggests that KEDO and its members will be adequately protected against nuclear damage claims from North Korea and third-party countries; (9) according to KEDO, it will not ship any fuel assemblies to North Korea or allow the reactors to be commissioned unless and until KEDO and its members consider that all aspects of the risk protection program are in place; (10) North Korea's existing electricity transmission and distribution system will need to be modernized to distribute the electricity generated by the two light-water reactors being provided; (11) upgrading the power grid could cost as much as $750 million; and thus far, no party has obligated itself to pay for the upgrade; (12) the United States and KEDO maintain that North Korea is responsible; however, North Korea has not yet legally obligated itself to pay; (13) this leaves open the possibility that, in the future, North Korea could exert pressure on others to pay for upgrading the grid; (14) it is too early to say whether the United States and North Korea will need to conclude an agreement for cooperation because decisions have not yet been made about what, if anything, the United States will supply for the reactors; and (15) nevertheless, an agreement appears likely because a U.S. firm currently supplies a major component for the reactors that are to be delivered.

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