GUANGDONG NUCLEAR PROJECT
BACKGROUND NOTE
CONFIDENTIAL
ANNEX A
UK POLICY ON NUCLEAR PARTNER
The UK does not at present have the capability to produce a pressur- ised water reactor. On the nuclear island we would need to work with either the French (Framatome) or the Americans (Westinghouse). There are a number of complex arguments for and against pursuing either an Anglo/French or Anglo/American option. The French option could be favoured because they are likely to offer more competitive financial terms than the Americans and it is clear that this would weigh heavily with the Chinese. However the attraction of the American option has been and continues to be the greater value of UK goods and services that could be provided. Accordingly early this year the Secretary of State for Industry recommended and the Prime Minister agreed that both options should be pursued until such time as the Chinese provide a clear indication of their preference.
There continue to be drawbacks in adopting either partner:-
a) FRENCH
They are reluctant to draw up an exclusivity agreement for a joint approach by GEC/Framatome which would prevent Alsthom Atlantique bidding separately for the conventional island in the event of the Chinese putting the two islands out to separate international tender.
b) AMERICANS
The US State Department is concerned over Chinese activities in the non-proliferation area. Until these concerns are satisfactorily allayed they are not willing to authorise the export of nuclear technology to China.
Moreover,
until the State Department take a view, Eximbank will not be willing to give any detailed commitment on their financing terms.
Following the Chinese expression of interest in the provision of Westinghouse technology for the nuclear island, in the course of the UK delegation's discussions in Guangdong in July, policy has been to move forward on the Anglo/American option. However, despite persistent diplomatic pressure on the State Department a response is still out- standing. Accordingly it may yet be necessary to review our options again and possibly favour collaboration with the French. In the mean- time, in order to keep up the momentum of discussions with the client it has been agreed that a technical visit to China should be made by Westinghouse, NNC and BNFL,
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