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THE LEGAL INTERPLAY BETWEEN TRADE LAW AND NUCLEAR
TECHNOLOGY TRANSFER
Sayidkomil Ibodullaev
Lecturer at “Private International Law”
Department of the Tashkent State University of Law
https://doi.org/10.5281/zenodo.16949690
Introduction
The transfer of nuclear technology occupies a unique position at the
intersection of international trade law, nuclear non-proliferation, and global
energy governance. Unlike most traded goods and services, nuclear technology
is simultaneously a driver of economic development and a subject of intense
security regulation. Its dual-use nature—capable of serving both peaceful and
military purposes—means that the legal regimes governing its exchange are
characterised by a delicate balance between the promotion of legitimate
commerce and the prevention of proliferation.
This legal balancing act has gained renewed relevance in recent years. The
International Atomic Energy Agency (IAEA) notes that over 30 countries are
actively considering the introduction of nuclear power, with several emerging
economies negotiating cooperation agreements with established nuclear
suppliers. At the same time, the value of global trade in nuclear-related goods
and services—ranging from reactor components to enrichment technology—has
grown steadily, driven by projects in Asia, the Middle East, and Africa. Yet this
growth is constrained by a multi-layered regulatory environment that
incorporates the rules of the World Trade Organization (WTO), multilateral
export control regimes, and binding nuclear safety and security treaties.
The legal interplay between trade law and nuclear technology transfer is
complex because it is not solely a matter of applying the General Agreement on
Tariffs and Trade (GATT) or the General Agreement on Trade in Services (GATS)
to nuclear transactions. Instead, the trade dimension is deeply influenced by
specific non-proliferation obligations under the Treaty on the Non-Proliferation
of Nuclear Weapons (NPT), the guidelines of the Nuclear Suppliers Group (NSG),
and the bilateral or plurilateral agreements that operationalise such transfers.
These instruments operate in parallel, and sometimes in tension, with the
general principles of non-discrimination, most-favoured-nation treatment, and
market access that form the foundation of international trade law.
This paper examines the normative and practical dimensions of that
interplay, focusing on three principal themes: the compatibility of nuclear export
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controls with WTO law; the influence of trade-related intellectual property
norms on nuclear technology licensing; and the role of bilateral nuclear
cooperation agreements (NCAs) as hybrid legal instruments that blend trade
facilitation with proliferation safeguards.
1. The International Trade Law Context
The starting point for analysing nuclear technology transfer within trade
law is the WTO legal framework. At first glance, the GATT 1994 and GATS might
appear to support open trade in nuclear-related goods and services, subject to
the same market access and non-discrimination disciplines as other sectors. For
example, Article I of GATT mandates most-favoured-nation (MFN) treatment,
and Article XI prohibits quantitative restrictions on imports and exports.
Similarly, GATS Articles XVI and XVII commit members to grant market access
and national treatment in scheduled service sectors, which could, in theory,
include engineering, consultancy, or project management services related to
nuclear infrastructure.
In practice, however, WTO members have long recognised that nuclear
technology raises national security and public safety concerns that justify
restrictive measures. Article XXI(b) of GATT contains a security exception that
allows members to take “any action which it considers necessary for the
protection of its essential security interests” relating to fissionable materials or
the materials from which they are derived. This provision, coupled with Article
XX(b) (protection of human, animal, or plant life or health), provides a legal
basis for export licensing regimes and import controls on nuclear technology,
even where such measures might otherwise contravene market access
obligations.
The scope of these exceptions has been the subject of considerable debate
in WTO jurisprudence, particularly in the context of security exceptions.
Although no dispute settlement case to date has directly addressed nuclear
technology transfer under Article XXI, recent panel decisions—such as
Russia–
Traffic in Transit
(2019)—have clarified that while members retain a degree of
discretion in invoking security exceptions, their measures remain subject to a
requirement of good faith and a genuine connection to essential security
interests. This interpretation implies that blanket restrictions on nuclear
technology transfers, if challenged, would still need to demonstrate a credible
security rationale rather than functioning as disguised protectionism.
Beyond the multilateral framework, nuclear trade is also shaped by
plurilateral export control regimes, most notably the Nuclear Suppliers Group.
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Although the NSG is not a treaty-based organisation and operates outside the
WTO, its guidelines are implemented through national laws that directly affect
trade flows. This arrangement creates a unique legal interface: NSG guidelines
have no direct binding effect in trade law, yet their domestic incorporation can
lawfully limit trade under WTO security exceptions. In effect, the trade regime
accommodates the parallel operation of non-proliferation norms, even at the
cost of market liberalisation.
2. Export Controls, Non-Proliferation Obligations, and WTO
Compatibility
Export controls are the primary legal instrument through which states
manage the flow of nuclear technology, striking a balance between facilitating
peaceful uses and preventing proliferation. These controls are not merely
administrative mechanisms; they emdiv the commitments states have
undertaken under the Treaty on the Non-Proliferation of Nuclear Weapons
(NPT) and the voluntary guidelines of the Nuclear Suppliers Group (NSG).
Under Article III(2) of the NPT, non-nuclear-weapon states agree not to
receive nuclear material or equipment without IAEA safeguards, and nuclear-
weapon states pledge not to transfer such items unless safeguards are in place.
The NSG operationalises this requirement by maintaining a “Trigger List” of
items whose export triggers the application of IAEA safeguards, as well as a list
of dual-use items that could contribute to nuclear fuel cycle activities. These lists
are periodically updated to reflect technological developments and proliferation
concerns—most recently in 2023, when the NSG revised its guidance on the
export of advanced reactor designs, including small modular reactors (SMRs).
From a trade law perspective, such controls inherently limit the free flow of
goods and services. National laws implementing NSG guidelines typically require
licensing for exports of listed items, with criteria including the non-proliferation
record of the recipient state, the existence of a nuclear cooperation agreement,
and assurances regarding peaceful use. The European Union, for example,
integrates NSG commitments through Council Regulation (EC) No 428/2009 (as
amended), which establishes a common EU regime for the control of exports,
transfer, brokering, and transit of dual-use items. Similarly, the United States
enforces its obligations through the Nuclear Non-Proliferation Act of 1978 and
the regulations administered by the Nuclear Regulatory Commission (NRC) and
the Department of Energy under Part 810 of Title 10 of the Code of Federal
Regulations.
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The legal question is whether these restrictions are compatible with the
market access and non-discrimination principles of WTO law. In theory, an
exporting country could be challenged if its controls were applied in a manner
inconsistent with GATT Article I (MFN) or Article XI (quantitative restrictions).
However, the security exception in GATT Article XXI(b)(i), which explicitly
references fissionable materials, provides a robust legal defence. In addition,
Article XX(b) on measures necessary to protect life or health could serve as an
alternative justification, given the catastrophic potential of misused nuclear
materials.
It is noteworthy that WTO panels have so far avoided direct rulings on the
legality of nuclear export controls, likely recognising the political sensitivity of
the issue. However, the 2019
Russia–Traffic in Transit
decision is instructive:
while it affirmed members’ discretion in determining essential security
interests, it also confirmed that such determinations are subject to an obligation
of good faith and a requirement that the measures bear a plausible connection to
the stated objective. This means that an export control regime must be
demonstrably linked to legitimate non-proliferation or safety concerns, and not
function as a disguised trade restriction benefiting domestic industries.
The compatibility of export controls with trade law is further reinforced by
the fact that many states apply them in a non-discriminatory manner, adhering
to NSG’s principle of “non-discrimination among recipients meeting the supply
criteria.” That said, political considerations can influence licensing decisions.
The U.S. decision to conclude “123 Agreements” (named after Section 123 of the
U.S. Atomic Energy Act) with certain trading partners but not others illustrates
how commercial, geopolitical, and legal factors intertwine. For instance, while
the U.S. has agreements with the UAE, India, and South Korea, negotiations with
Saudi Arabia have stalled due to differing views on enrichment and reprocessing
rights, underscoring how non-proliferation commitments can shape trade
outcomes.
In China’s case, its dual role as both a major exporter and an importer of
advanced nuclear technologies has led to a layered approach to export control.
China’s 2020 Export Control Law consolidates various sectoral controls and
incorporates NSG guidelines, while also asserting broad national security
grounds for denying exports. Such provisions are broadly consistent with WTO
security exceptions but, if applied selectively or without transparent criteria,
could invite allegations of disguised trade restrictions.
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Ultimately, the current legal equilibrium between export controls and trade
law rests on the willingness of WTO members to treat nuclear technology as a
category warranting exceptional handling. While this pragmatic accommodation
has so far prevented disputes, it remains a fragile balance—particularly as more
states enter the nuclear market and as technological advances blur the line
between civilian and dual-use items.
3. Intellectual Property, Technology Licensing, and Trade-Related
Legal Issues
While nuclear trade is often framed in terms of the movement of physical
goods and specialised equipment, the most commercially sensitive and
strategically valuable aspect of such transactions frequently lies in the
transfer
of intellectual property (IP)
. Modern nuclear projects rely heavily on
proprietary reactor designs, fuel cycle technologies, and engineering processes
protected under national patent laws and international agreements. The legal
framework governing this dimension of nuclear commerce is shaped not only by
non-proliferation obligations but also by the
Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS)
under the WTO.
TRIPS obliges members to provide minimum standards of protection for
patents, trade secrets, and related rights, as well as effective enforcement
mechanisms. In the context of nuclear technology, this means that reactor
vendors—whether Westinghouse, Rosatom, Framatome, or CNNC—can expect
their designs and associated know-how to be protected against unauthorised
use in the importing country, provided that the relevant IP is registered or
otherwise enforceable there. For supplier states, strong IP protection is a
prerequisite for engaging in technology transfer; for recipient states, particularly
in emerging markets, it can pose a barrier if the licensing terms are
commercially restrictive or if access to certain technical details is withheld for
proprietary or security reasons.
Licensing agreements for nuclear technology occupy a hybrid legal space
between trade and security regulation. On the trade side, they are governed by
contract law, IP statutes, and, in cross-border situations, by the private
international law rules applicable to choice of law and jurisdiction. On the
security side, such agreements must comply with the exporting state’s national
export control laws and, where applicable, the terms of intergovernmental
nuclear cooperation agreements (NCAs). In many cases, the latter will include
clauses limiting the use of transferred technology to peaceful purposes,
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prohibiting retransfer without the supplier’s consent, and subjecting certain
design information to classification.
A prominent example is the Barakah Nuclear Power Plant in the United
Arab Emirates, where technology supplied by the Korea Electric Power
Corporation (KEPCO) is licensed under strict contractual terms that limit access
to certain proprietary reactor design features. These terms are embedded not
only in the commercial contracts but also in the UAE–Republic of Korea
intergovernmental agreement, illustrating the intertwined nature of IP
protection and international treaty commitments.
In some cases, the IP dimension intersects with WTO trade principles in
complex ways. While TRIPS allows members to adopt measures necessary to
protect public health and safety (Article 8), it does not explicitly reference
national security or non-proliferation. This gap is bridged in practice by the fact
that nuclear IP licensing agreements almost always include security restrictions
derived from export control regimes. However, tension can arise if a supplier
refuses to license certain technology on security grounds while offering it to
other trading partners, potentially raising MFN concerns under WTO law. The
supplier would likely invoke GATT Article XXI to justify such differential
treatment, but this would need to be framed as a bona fide security measure
rather than an economic preference.
Another important factor is the treatment of
trade secrets and
confidential business information
in nuclear contracts. Many nuclear designs
are protected not through patents—which eventually expire and become
public—but through the maintenance of information as trade secrets. TRIPS
Article 39 requires members to protect undisclosed information against unfair
commercial use, but the enforcement of such protections depends heavily on
domestic legal systems. In states where trade secret law is underdeveloped,
suppliers may be reluctant to transfer sensitive know-how, thereby limiting the
depth of technology transfer.
Finally, the rise of
joint ventures and co-development agreements
in the
nuclear sector adds another layer of complexity. For example, the joint China–
Pakistan Chashma nuclear projects involve both licensed technology from China
and locally developed adaptations, raising questions about co-ownership of IP,
the right to export modified designs, and the application of TRIPS provisions on
compulsory licensing in the event of disputes. These situations demonstrate that
IP law, far from being a peripheral consideration, is central to the legal
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architecture of nuclear technology transfer and can directly shape trade
outcomes.
4. Bilateral Nuclear Cooperation Agreements as Trade–Security
Hybrids
Bilateral Nuclear Cooperation Agreements (NCAs) are among the most
consequential legal instruments governing international nuclear technology
transfers. They occupy a unique hybrid space in international law, functioning
simultaneously as enablers of trade in nuclear goods and services and as
mechanisms to enforce stringent security, safety, and non-proliferation
obligations. In many cases, they form the indispensable legal precondition for
any commercial transactions involving nuclear technology between two states.
At their core, NCAs are treaties—often ratified by the legislatures of the
contracting parties—that establish the terms and conditions under which
nuclear materials, equipment, and technology may be transferred. These
agreements are typically required by the national laws of nuclear supplier
states. For example, under Section 123 of the United States Atomic Energy Act,
the U.S. government must conclude an NCA—known colloquially as a “123
Agreement”—with any state before it can authorise the export of significant
nuclear items or technology. Such agreements stipulate peaceful use assurances,
require the application of IAEA safeguards, prohibit enrichment and
reprocessing of U.S.-origin material without consent, and impose conditions on
retransfers to third parties.
From a trade perspective, NCAs act as
framework agreements
that give
legal certainty to suppliers and importers by setting predictable rules for
licensing, intellectual property rights, and dispute resolution. The UAE–U.S. 123
Agreement, often cited as a “gold standard,” enabled the Barakah Nuclear Power
Plant project by providing the necessary legal environment for U.S.-origin
technology to be incorporated into Korean reactor designs supplied to the UAE.
The agreement’s stringent non-proliferation commitments—including a legally
binding renunciation of enrichment and reprocessing—also served to reassure
potential suppliers and financiers, thereby lowering commercial risk.
However, NCAs are not purely facilitative instruments; they also function as
trade filters
, determining which transactions are permissible and under what
conditions. This dual role can create tension with WTO principles of non-
discrimination and market access. For example, the U.S. has concluded 123
Agreements with some states (e.g., Japan, South Korea, India) but not others,
effectively precluding U.S. nuclear exports to the latter. While such selective
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engagement is justifiable under GATT Article XXI (security exceptions) and the
NPT’s non-proliferation framework, it nonetheless introduces an asymmetry in
nuclear trade flows.
Other supplier states follow similar patterns. Russia, through Rosatom,
typically anchors its export projects in intergovernmental agreements that
include not only technical cooperation clauses but also financing arrangements,
fuel supply guarantees, and obligations for spent fuel return. The Turkey–Russia
intergovernmental agreement for the Akkuyu Nuclear Power Plant is
illustrative: it combined a BOO (build–own–operate) commercial model with
long-term fuel cycle commitments and Russian operational control, embedded
in a binding state-to-state treaty framework.
China’s NCAs, while less publicised, have increasingly mirrored these
hybrid characteristics, particularly in projects with Belt and Road Initiative
(BRI) partners. Agreements with Pakistan for the Chashma and Karachi nuclear
plants include clauses on technology transfer, local manufacturing participation,
and training, alongside detailed fuel supply and return obligations designed to
align with IAEA safeguards.
From a legal perspective, NCAs blend elements of public international law,
domestic export control law, and private commercial arrangements. Their
provisions often cascade down into commercial contracts, licensing agreements,
and joint venture arrangements, creating a vertically integrated regulatory
environment. This layering can be advantageous in providing clarity and
predictability, but it can also create rigidity, making it difficult to adapt to
technological advances or changing market conditions without renegotiating at
the intergovernmental level.
In effect, NCAs serve as
gatekeepers
for nuclear trade: they open the door
for lawful transactions while simultaneously locking in a set of security and
policy constraints that override general trade liberalisation commitments. This
hybrid nature is both their strength—ensuring alignment between trade and
non-proliferation—and a potential limitation, as it embeds political
considerations deeply into the mechanics of nuclear commerce.
5. Conclusions and Policy Directions
The transfer of nuclear technology sits at the confluence of two legal
currents that are often in tension: the liberalising ethos of international trade
law and the restrictive imperatives of nuclear security and non-proliferation. On
one side, the WTO system promotes transparency, non-discrimination, and
predictable market access; on the other, the nuclear governance regime—
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anchored in the NPT, IAEA safeguards, NSG guidelines, and bilateral NCAs—
imposes layered controls that limit the scope and pace of nuclear commerce.
This interplay is not merely a theoretical construct; it has tangible effects on
the timing, cost, and viability of nuclear projects worldwide. Export controls and
licensing regimes, while necessary to prevent proliferation, can slow the
dissemination of advanced reactor designs, particularly to states without
longstanding nuclear relationships. Intellectual property protections under
TRIPS, though essential for encouraging innovation, can create commercial
bottlenecks in the transfer of sensitive know-how. Bilateral NCAs, while enabling
lawful trade, also serve as political filters that shape global nuclear market
dynamics in ways that may diverge from pure trade law principles.
The legal system has, thus far, accommodated these tensions through the
security exceptions in GATT Article XXI and related WTO provisions, which
explicitly recognise the unique status of nuclear materials. Yet this
accommodation depends heavily on members applying such exceptions in good
faith and maintaining a credible link between trade restrictions and legitimate
security objectives. The risk of abuse—whether for protectionist ends or as
leverage in geopolitical disputes—remains an ongoing concern.
For policymakers, the challenge lies in crafting legal instruments that
reconcile the facilitation of safe and secure nuclear trade with the imperatives of
non-proliferation and public safety. Based on the foregoing analysis, several
policy directions emerge:
1.
Codifying best practices for nuclear trade within the WTO
context
While the WTO has not directly adjudicated nuclear trade disputes, a joint
working group between the WTO Secretariat and the IAEA could clarify the
scope of GATT Article XXI as applied to nuclear technology, providing greater
predictability for both suppliers and importers.
2.
Enhancing transparency in export licensing decisions
Supplier states should adopt clearer criteria and publish annual reports on
licensing decisions for nuclear items, reducing the risk of perceptions that such
controls are being applied in a discriminatory or protectionist manner.
3.
Integrating
IP
and
non-proliferation
considerations
Model clauses for nuclear technology licensing agreements could be developed
under IAEA auspices, ensuring that proprietary protections do not unduly
hinder legitimate technology transfer while maintaining robust security
safeguards.
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4.
Modernising
Nuclear
Cooperation
Agreements
Future NCAs could incorporate built-in review mechanisms to adapt to
technological advances—such as small modular reactors—and evolving safety
standards without requiring complete treaty renegotiation.
5.
Facilitating
capacity-building
in
recipient
states
Strengthening the domestic legal and institutional frameworks of importing
countries not only ensures compliance with non-proliferation norms but also
builds the trust necessary for suppliers to engage in deeper technology transfer.
The path forward will require coordination across trade, security, and
energy policy communities. A siloed approach—treating nuclear technology
transfer purely as a trade matter or purely as a security matter—cannot
adequately address the cross-cutting legal and political realities. As global
demand for low-carbon energy intensifies and more states seek access to
nuclear technology, the need for a coherent, integrated legal framework that
balances openness with vigilance will become ever more pressing
References:
1.
General Agreement on Tariffs and Trade 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187.
2.
General Agreement on Trade in Services 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1B, 1869 U.N.T.S. 183.
3.
WTO Panel Report, Russia – Measures Concerning Traffic in Transit,
WT/DS512/R, adopted 26 April 2019.
4.
Treaty on the Non-Proliferation of Nuclear Weapons, 729 U.N.T.S. 161
(entered into force 5 March 1970).
5.
International Atomic Energy Agency, The Structure and Content of
Agreements Between the Agency and States Required in Connection with the
Treaty on the Non-Proliferation of Nuclear Weapons (INFCIRC/153), Vienna,
1972.
6.
Nuclear
Suppliers
Group,
Guidelines
for
Nuclear
Transfers
(INFCIRC/254/Part 1) and Guidelines for Transfers of Nuclear-Related Dual-Use
Equipment, Materials, Software, and Related Technology (INFCIRC/254/Part 2),
as amended 2023.
7.
Agreement on Trade-Related Aspects of Intellectual Property Rights,
Marrakesh Agreement Establishing the World Trade Organization, Annex 1C,
1869 U.N.T.S. 299.
8.
United States Atomic Energy Act of 1954, as amended, Section 123.
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9.
European Union, Council Regulation (EC) No 428/2009 setting up a
Community regime for the control of exports, transfer, brokering and transit of
dual-use items, OJ L 134/1, 29 May 2009 (as amended).
10.
Korea Electric Power Corporation (KEPCO) – United Arab Emirates
Nuclear Energy Corporation (ENEC), Barakah Nuclear Power Plant Agreements
(2010).
11.
Intergovernmental Agreement between the Government of the Republic of
Turkey and the Government of the Russian Federation on Cooperation in
Relation to the Construction and Operation of a Nuclear Power Plant at the
Akkuyu Site in the Republic of Turkey (2010).
12.
Chashma and Karachi Nuclear Power Plant Agreements, Government of
Pakistan – Government of the People’s Republic of China (1991–present).
