Nuclear trade at risk after EU-US talks break down

Crisis talks will begin in the European Council of Ministers tomorrow following an embarrassing rift between Europe and the United States over nuclear weapons proliferation. A months-long breakdown of trade relations is certain and all transatlantic trade in nuclear materials and nuclear technology could collapse at the beginning of next year after talks between officials in Washington last week failed to avert a breakdown.

Sir Leon Brittan, the European Union's Trade Commissioner, will head the European team in talks in Brussels at the end of the month. At stake is more than $2bn (£1.3bn) of existing sales and future trade which could be lost if the US government and the EU do not quickly agree to renew their nuclear co-operation agreement, which expires on 31 December.

The agreement, between the US and Euratom, the nuclear energy branch of the EU, was originally signed in 1958. It was the political conduit by which US nuclear fuels and technologies entered the European Community. The US has been forced by its 1978 Nuclear Non-Proliferation Act to impose more stringent controls to prevent the technology being diverted from peaceful purposes and the Europeans bitterly resent these new controls.

Even if agreement could be reached in Brussels, the USCongress would take so long to ratify it that, at best, observers believe transatlantic co-operation will have to be suspended "for several months" in early 1996.

At stake also is the £300m mixed oxide fuel fabrication plant which British Nuclear Fuels is building at Sellafield in Cumbria. This is intended to mix reprocessed uranium and plutonium to make 120 tons a year of new fuel, primarily for Japanese reactors. But without theagreement, the Japanese would not get the required permission from the US, which supplied the uranium, and the plant would be deprived of its main customer.

When the agreement lapses it will be illegal for the German company Siemens to import into Germany anything made by its US-based fuel manufacturing subsidiary, and Nuclear Electric will be unable to import uranium from its mine in Wyoming.

Efforts to remove bomb-grade highly enriched uranium from the former Soviet Union and dilute it to civilian-grade material could also collapse. More worrying still would be the effect on the renewal of the nuclear Non-Proliferation Treaty (NPT). Iran, which is complaining that its rights under the treaty to acquire peaceful technology are being impeded, could make political capital out of the US-EU dispute when NPT renewal negotiations open on 17 April.

The issue has been given a further twist by French politics. According to sources in Paris, the foreign minister, Alain Jupp, has told the European Commission to keep nuclear trade off the agenda of the Council of Ministers until after the French presidential elections. The Europeans will be unable to discuss the issue at their meeting on 10 April and will have to wait until 29 May to review progress.