James ActonIndia's NSG Exemption

The US has apparently finished drafting the NSG exemption for nuclear trade with India (apologies, this is a few days old—I’ve been behind on my blogging). At a meeting in London last month US Ambassador to the IAEA Greg Schulte said that both India and the US wanted a “clean” exemption (i.e. one with no strings attached). And that appears to be what the US has proposed (although it’s not 100% clear).

According to the Hindu:

The draft was finalised in consultation with India and first handed over on Thursday to Germany, which heads the NSG.

The draft drops “gratuitous” references made on committing the NSG members to ensuring that India adopted full-scope safeguards at the earliest, said the officials.

India has resisted full-scope safeguards and wants only those plans identified by it to be under International Atomic Energy Agency (IAEA) safeguards.

The officials said the draft, after being fine-tuned several times in consultation with the U.S., was more or less to India’s satisfaction.

Obviously, requiring India to accept full-scope safeguards “at the earliest” would be effectively meaningless but it would irritate India while placating some of the more sceptical NSG states. More significant, I think, is the fact that the draft was “more or less to India’s satisfaction,” which suggests that any restrictions are minimal.

The irony is, of course, that having done all the leg work to enable nuclear trade with India (including a clean NSG exemption), the US could well lose out on Indian contracts because its own national law, the Hyde Act, is more restrictive than that of other countries.


  1. mlt

    I don’t quite understand the position of India on the issue of additional protocols. This would be harmless because the model that would be applied to India would have to be the addtional protocols for NWS (applying the moded for non NWS doesn’t make sense). And the model for NWS is pretty much innocuous as those States can basically report whatever they want.

    Now, you are right to say that the US proposal doesn’t even meet the requirements of the Hyde Act. But the draft submitted by the US has to be seen from a negotiating/tactical angle. They know that other countries will want to see the decision reinforced with some conditionnalities and have the decision amended. So the US starts at one extreme (no condition) to be in a position to move towards the centre. They certainly are not going to start from the centre.

  2. Siddharth

    MLT — India has no problem negotiating, signing and adhering to an additional protocol. This is not an issue.

    Acton — A more detailed account of the NSG draft exemption can he found here:

  3. Andy Grotto (History)

    When push comes to shove, there is no way the U.S. Congress will allow French and Russian companies to get all the contracts–and the Bush administration knows it. That is why the administration could care less about working the Hyde Act conditions into the exemption.

    By getting the NSG to approve an exemption devoid of conditions, the administration sets up the Congress as the obstacle standing before American industry doing business with India while the French and the Russian nuclear industries go on a feeding frenzy there. The nuclear industry’s lobbyists, and perhaps organized labor, will descend on Congress asking why it is fair that French and Russian companies get all the fruits of our diplomatic heavy-lifting, while American industry gets nothing.

    This is a very shrewd, clever political gambit on the part of the administration, and I would put my money on the lobbyists: under such pressure, Congress would probably repeal the restrictions in the Hyde Act.

    If I am right, the last best chance advocates against the deal have to kill it is to prevent the Bush administration’s draft from carrying the day.

  4. Max Postman (History)

    Also, the economic kick-backs associated with the US-India nuclear deal extend beyond the US nuclear industry. It’s widely supposed that, for Indian policymakers, the nuclear deal is linked to the Indian Air Force’s massive, as-yet-undecided fighter jet contract. Completion of the nuclear deal would benefit the American firms that are competing for the jet contract. The US’ “leg work” on the nuclear deal thus could yield benefits to US industry even if the Hyde Act prevented American companies from getting a piece of the nuclear energy action. (Which is not to say that the agreement is a good idea).

  5. Major Lemon (History)

    The Chinese could be the wildcard in events unfolding. Sonia Ghandi went to the Olympics to talk, not to watch the javelin throwers.