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Strong US. and Canadian pressure on South Korea to buy NPP

Nuclear Monitor Issue: 

(June 18, 1999) The Canadian government has threatened South Korea to reduce Canadian imports of non-nuclear Korean key products, including cars, if the nuclear utility Kepco doesn't order a CANDU-9 reactor with state-owned Atomic Energy of Canada Ltd. (AECL). The US is also pressing the Koreans to buy US reactors.

(513.5041) WISE Amsterdam - A US senior nuclear official said Canada routinely links AECL nuclear exports to non-nuclear business between Canada and countries in the nuclear market. "They did that in China," he said, when AECL sold two Candus at Qinshan, "and they are doing it in Korea." Canadian officials reacted with rumors that the US State Department was involved in the firing in April of Kepco chief Chang, thereby influencing Kepco's nuclear policy. Of course, US embassy officials at Seoul denied this. Korean government and Kepco officials strongly suggested that both US and Canadian governments exerted influence in a heavy-handed manner to make sure their national nuclear firms were not excluded from Kepco orders.

Officially, South Korean power plans call for building only new Pressurized Water Reactors (PWRs), leaving the expansion of Canadian Pressurized Heavy Water Reactors (PHWRs or Candus) an option (see also WISE News Communique 487.4837: AECL may lose South Korean Candu bid). AECL is trying to convince Kepco to continue building Candus that are not yet in the government power plans. To realize that goal, the Canadian government has taken action, according to US officials, which the US government cannot and would not do: linking sales of nuclear reactors to other trade agreements with South Korea.

Canada apparently succeeded: both US and Canadian officials said that after months of discussions, a de facto accord had been reached among the three parties, that both US-designed PWRs and Canadian PHWRs would be involved in the next Kepco orders.

ABB-CE is the only PWR vendor active in the Korean market and its technology is the basis for the Korean PWR program.

The firing of Kepco chief Chang in April, be it through US pressure or not, has resulted in at least a two-month delay of nuclear contracts. Kepco would have announced a decision to order four reactors from US and Canadian nuclear firms. The new Kepco president will have a look at the situation first, which may take eight weeks. President Kim Dae Jung is sheduled to visit Washington around July 4, the US national holiday, and possibly Ottawa after his US trip, Canada hopes.

Competition behind the scenes between the US-Sweden ABB-Combustion Engineering combination and the Canadian AECL has been fierce. Near-term Korean reactor sales contracts are up to US$8 billion.

Source: Nucleonics Week, 6 May 1999
Contact: WISE Seoul