U.S and South Korea Agree to an Extension of the 123 Civil Nuclear Agreement

The United States and South Korea announced today that they have agreed on a two-year extension of the current bilateral civil nuclear agreement (the so-called 123 agreement) rather than seek a revised and new agreement. This announcement in the run-up to the summit meeting between Presidents Obama and Park on May 7 temporarily removes from the agenda what many in Seoul saw as the main deliverable of the meeting and Park’s first test as the nation’s new leader.

Q1: What is the background?

A1: With the U.S.-ROK 123 Agreement of 1972 (revised 1974) expiring in March 2014, the United States and the South Korea have remained deadlocked in a high-stakes civil nuclear negotiation aimed at revising the old agreement. Not only had no agreement been reached at the end of the first Obama administration, but each side had dug into their negotiating positions with little inclination for compromise. Two years of slow-paced talks have now gained a sense of urgency. Given the highly complex nature of these negotiations, the two governments had to reach some form of agreement in early summer of 2013 in order for the necessary procedures and legislative approvals to be put in place by the 2014 expiration of the original agreement. Korean officials believed this agreement’s revision to be a clear “deliverable” for the Park-Obama May 7 summit.

Q2: What is the crux of the disagreement?

A2: There are many elements, but South Korea simply wants a new nuclear agreement that grants them U.S. advanced consent for the enrichment of uranium fuel on the front-end of the nuclear fuel cycle and reprocessing of spent plutonium rights on the back-end of the cycle.

South Korea is currently the fifth largest producer of nuclear energy in the world and has extensive plans to significantly expand their civil nuclear program by 2030. However, as South Korea’s nuclear energy production and consumption grows, its options for storing spent nuclear fuel shrink. In addition, Koreans harbor strong ambitions to become a full-service global supplier of nuclear energy. These two considerations drive South Korea’s demand for U.S. advance consent on enrichment and reprocessing.

For nonproliferation reasons, the United States has been historically opposed to allowing reprocessing and enrichment with its nuclear partners and has held out the “gold standard” in its agreements, most recently with the UAE, that legally binds U.S. partners to foreswear enrichment and reprocessing. In the case of South Korea, the United States has not demanded the gold standard but has expressly shown disinterest in South Korean desires for a full nuclear fuel cycle.

In their first round of negotiations, the two parties have agreed to conduct a 10-year joint study into pyroprocessing, a yet unproven fuel recycling technology that potentially cannot produce weapon-grade plutonium.

Q3: What is at stake?

A3: More than just nuclear energy and fuel. A failure to reach an agreement would have had a major impact on both South Korean and U.S. nuclear industries. Not only is South Korea dependent on U.S. nuclear material for its emerging role in the market as a global supplier, but U.S. reactors are built with indispensable Korean components. An inability to reach an agreement would also have been perceived as a major blow to the alliance. It could have had a political impact on the overall relationship, particularly if Koreans take offense at perceived unequal treatment among U.S. allies. In turn, this could have had a degrading impact on the U.S. pivot strategy in Asia.

Q4: So how does an extension solve the problem?

A4: It doesn’t solve the problem, but it does buy time. Both sides can now take the negotiations out of the political spotlight (particularly in South Korea). For President Park, some opponents will try to characterize the outcome as a “defeat” to U.S. strong-arm tactics but the reality is that this is a highly complex negotiation that requires more time than was available in the run-up to the summit. “Punting” the negotiations down the road for two years is advisable, benefits industry by creating some sense of predictability, and is politically neutral.

Q5: What is the road ahead?

A5: The simple two-year extension will require an affirmative vote of congressional approval from both houses; the Obama administration will begin consultations immediately on the Hill to seek approval of the extension. Negotiators will resume talks as early as June to reach a new agreement within the next 24 months.

Q6: What if the two governments cannot reach agreement?

A6: There is always the possibility of another extension if there is no agreement within the next 24 months, if agreed upon by the two governments.

Victor Cha holds the Korea Chair at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

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Victor Cha
Senior Vice President for Asia and Korea Chair