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India's Prime Minister Manmohan Singh welcomes his Canadian counterpart Stephen Harper during a ceremonial reception at the forecourt of India's presidential palace Rashtrapati Bhavan, in New Delhi Nov. 6, 2012. At left is Mr. Harper's wife Laureen and Mr. Singh's wife Gursharan Kaur is at right. (B MATHUR/REUTERS)
India's Prime Minister Manmohan Singh welcomes his Canadian counterpart Stephen Harper during a ceremonial reception at the forecourt of India's presidential palace Rashtrapati Bhavan, in New Delhi Nov. 6, 2012. At left is Mr. Harper's wife Laureen and Mr. Singh's wife Gursharan Kaur is at right. (B MATHUR/REUTERS)

Canada, India reach agreement on nuclear trade Add to ...

Canadian uranium and nuclear hardware may soon be shipping to India for the first time in nearly four decades after a deal reached during Stephen Harper’s visit to New Delhi.

Canada and India announced they’ve cleared a diplomatic logjam that prevented Canadians from selling nuclear material and technology to the energy-hungry south Asian country.

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Mr. Harper, speaking to reporters, didn’t provide answers when asked when nuclear trade might resume or how the deal satisfied Canada’s concerns.

“We’ve worked very closely with the Canadian Nuclear Safety Commission to confirm they achieved all of our objectives in terms of non-proliferation,” he told reporters.

Commission spokesman Aurèle Gervais explained how the new deal satisfies Canada’s concerns about ensuring its nuclear material is only used for peaceful means.

He said under the agreement announced Tuesday the International Atomic Energy Agency will monitor India on behalf of Canada.

“The IAEA will provide those assurances to us,” Mr. Gervais said. The two countries have agreed that “uranium will only be going to those [nuclear] facilities inspected by the IAEA.”

The deal is a modest win for Prime Minister Harper who is spending six days touring India to convince New Delhi it should devote more effort to signing agreements that would expand trade and investment between the two countries.

Ottawa ended its nuclear trade with India in 1976 when India tested its first nuclear bomb using plutonium from a Canadian-donated test reactor. The ensuing fallout hampered bilateral relations for decades.

Mr. Harper and his Indian counterpart Manmohan Singh announced Tuesday their countries had concluded difficult negotiations on resuming nuclear trade – talks designed to address Canadian concerns about verifying that any nuclear material supplied is only used for peaceful purposes.

It was two years ago that Canada and India reached a nuclear co-operation deal with great fanfare – one that was supposed to pave the way for a vast new export business for Canadian uranium and reactor companies.

That breakthrough helped the two countries move past decades of awkward and sometimes chilly relations over India’s misuse of nuclear fuel obtained from Canada in the 1970s.

But the 2010 deal never came into force though because India balked at Canada’s insistence that it should have the right to verify India’s handling of any Canadian nuclear material. India already reports its activities to the International Atomic Energy Agency and didn’t believe it should have to pass muster with Canada too.

A new accord announced between Mr. Harper and Mr. Singh on Tuesday – what’s being called an administrative arrangement – appears to remove the last obstacle to proceeding with the 2010 nuclear trade deal.

Breaking this impasse is crucial for the Harper government: Canada’s re-engagement with India revolves around the nuclear accord because the highly symbolic deal demonstrates it no longer considers the South Asian country a nuclear pariah for using Canadian and U.S. nuclear material to build its first bomb nearly 40 years ago.

Mr. Harper predicted the outcome of talks would open the door for Canadian companies to play a greater role in helping India meet its growing energy needs.

“It is expected to generate millions of dollars in new business contacts between our countries and to create high-quality new jobs here at home,” he said in a statement.

The nuclear industry welcomed the news Tuesday, saying it would provide long-term opportunities in a country that has major expansion plans and shares Canada’s  unusual focus on heavy-water technology.

It’s unlikely India will purchase a Candu reactor from SNC Lavalin Group, which acquired  the former federally-owned Atomic Energy of Canada Ltd. last year.

But companies that have supplied SNC’s Candu Energy Inc. and its heavy-water projects are well-positioned to make inroads in India, said Ron Oberth, president of the Organization of Candu Industries, which represents 180 Canadian-based suppliers.

“I can’t put a number on it,” Mr. Oberth said. “The Indians aren’t about to sign a deal for a Candu reactor but there are areas in which Canadians industry and Candu Energy have advanced Candu technology in ways that are superior to what the Indians have achieved.  . . So hopefully, we can find a way now that the path is cleared to do some nuclear trade.”

Mr. Oberth said the Canadian companies will very quickly mount a trade mission to India to scout business prospects. He acknowledged, however, that India remains determined to rely as much as possible on local sources for the publicly funded power sector, and it will be touch for foreign suppliers to crack the market.

However, Canadian nuclear supplies remain concerned about India’s liability laws, which could leave them vulnerable to major financial damages in the case of an accident at a plant where they supplied parts or uranium. Most countries limit the liability to the plant operator. But, in the wake of the 1984 Union Carbide disaster in Bhopal, India has been tougher in suppliers and has resisted pressure from the United States and others to limit the liability.

Canada had faced rising pressure to bridge its differences with India and ease Ottawa’s traditional non-proliferation safeguards to allow Canadian companies to cash in on India’s expanding appetite for energy.

The nuclear co-operation agreement will allow Canadian firms to export and import controlled nuclear materials, equipment and technology to and from India to facilities under safeguards applied by the International Atomic Energy Agency.

Canada was not alone in insisting on safeguards that are tighter than the Indians are willing to accept. The Australians only recently agreed to pursue a nuclear co-operation agreement that would allow its firms to sell uranium to India, and is demanding the same monitoring safeguards that Ottawa wants.

Canada and India did not specify in their announcement how long it would take before nuclear trade can restart.

Canada only said now that the administrative arrangement was complete, the Canadian Nuclear Safety Commission and India’s Department of Atomic Energy would formally sign both the original deal and the implementation agreement and then both countries would take the “necessary steps to bring the nuclear cooperation agreement into force in a timely manner.”

The administrative deal reached Tuesday establishes a joint committee between Canada and India to ensure what they call “ongoing discussions and information-sharing”

Canada and India were vague in their official announcements on how the negotiations have satisfied Canada’s need to monitor the south Asian country’s use of nuclear material.

The Canadian Nuclear Safety Commission said in a release that the arrangement will “ensure that the appropriate oversight is exercised with respect to the information required by Canada.” The agency said “through this arrangement, Canada will receive the necessary assurances on the peaceful use of Canadian exports to India of nuclear material, equipment and technology, equivalent to arrangements with other countries.”

Talks to break the impasse resumed only last month.

In late October, ahead of Mr. Harper’s visit, Canadian and Indian officials began a second round of talks aimed at bridging the gap. Representatives of Canada’s Department of Foreign Affairs and the Canadian Nuclear Safety Commission met with their Indian counterparts in New Delhi.

They took a break late last week to report back to their respective capitals before resuming again on the weekend of Nov. 3 and 4.

Courting trade in India is politically wise for the Conservatives. There are more than a million people of Indo-Canadian origin in Canada and voters with Indian ties helped clinch Greater Toronto Area seats in the past election, when Mr. Harper won his first majority government.

But it’s also good business. A study commissioned by Canada and India concluded that free trade could boost Canada’s annual economic output by at least $6-billion. The Tories are also keen to diversify trade beyond Canada’s heavy dependence on U.S. customers and is targeting rapidly emerging economies such as China, India and Brazil.

- With a report from Shawn McCarthy

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