The Agreed Framework Can Be Properly Characterized as a Nonbinding Political Agreement

The Agreed Framework can be properly described as a nonbinding political agreement. Officials at State said that the United States executed a nonbinding political document because it would not have been in the United States’ interest to accept an internationally binding legal obligation to provide the reactors and interim energy to North Korea. Without knowing the contents of these future protections, it is not possible to fully assess the adequacy of the liability protection that will be provided to KEDO and its members. Questions Remain About North Korea’s Obligation to Pay for Upgrading Its Electricity Power Grid

North Korea’s existing electricity transmission and distribution system is inadequate to handle the electricity that would be generated by two new 1,000-MW(e) light-water reactors. State estimates that the cost of the upgrade could reach $750 million. The State Department and KEDO maintain that North Korea is responsible; however, North Korea has not yet legally obligated itself to pay. This leaves open the possibility that, in the future, North Korea could exert pressure on others to pay for the grid upgrade. The U.S. However, given the agreement’s political importance and the fact that most of its provisions have been incorporated into binding international agreements, the agreement’s broad pledges could have the effect of pressuring the Congress to appropriate moneys to implement an agreement with which the Congress had little involvement.Nevertheless, funding for the Agreed Framework is essentially a congressional matter, and disagreements about any of its particulars can be expressed through conditions and limitations on the activity’s appropriations. Our analysis of the existing nuclear liability protections confirms that the foundation of KEDO’s protection program is in place. KEDO is aware that additional steps need to be taken and, as a result, plans to build upon the foundation of its existing coverage to fully shield KEDO and its members from possible liability claims. Nevertheless, our assessment of the liability provisions in the KEDO and supply agreements and KEDO’s plan to secure additional protections, suggests that KEDO and its members—including the United States—will be adequately protected against nuclear damage claims from North Korea and third-party countries. Finally, according to KEDO, it will neither ship any fuel assemblies to North Korea nor allow the reactors to be commissioned “nless and until KEDO and its members consider that all aspects of the risk management program are in place.”

	Protections Against North Korean Nuclear Claims Appear Sufficient

The supply and KEDO agreements contain a number of protections that are intended to preclude North Korea from making claims against KEDO or KEDO members for damages from a nuclear incident. It is too early to say whether the United States and North Korea will need to conclude an agreement for nuclear cooperation because the decisions about what, if anything, the United States will supply for the reactors have not yet been made. Nevertheless, an agreement appears likely because a U.S. firm currently supplies a major component for the reactors expected to be supplied to North Korea.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the agreement between the United States and North Korea that addresses the threat of North Korean nuclear proliferation, focusing on whether: (1) the agreement is a non-binding political agreement; (2) the United States could be held financially liable for a nuclear accident at a North Korean reactor site; (3) North Korea is obligated to pay to upgrade its existing electric power distribution system; and (4) the agreement is being implemented consistent with the applicable laws governing the transfer of U.S. nuclear components, materials, and technology.

What GAO Found

GAO found that: (1) the Agreed Framework can be properly described as a nonbinding political agreement; (2) therefore, its pledges, including those involving financial outlays, are not legally enforceable; (3) agreements of this type do not require the Congress's prior involvement or approval and can have the effect of pressuring the Congress to appropriate money to implement an agreement with which it had little involvement; (4) according to the Department of State, the United States executed a nonbinding agreement because it would not have been in the country's interest to legally obligate itself to provide the reactors and interim energy to North Korea; (5) GAO's analysis of the existing nuclear liability protections confirms that the foundation of the Korean Peninsula Energy Development Organization's (KEDO) risk protection program is in place; (6) KEDO plans to obtain additional protections to ensure that KEDO and its members are fully shielded from possible liability claims; (7) without knowing the contents of these future protections, it is not possible to fully assess the adequacy of the liability protection that will be provided to KEDO and its members; (8) nevertheless, GAO's assessment of the liability provisions in the KEDO and supply agreements and KEDO's intention to secure additional protections, suggests that KEDO and its members will be adequately protected against nuclear damage claims from North Korea and third-party countries; (9) according to KEDO, it will not ship any fuel assemblies to North Korea or allow the reactors to be commissioned unless and until KEDO and its members consider that all aspects of the risk protection program are in place; (10) North Korea's existing electricity transmission and distribution system will need to be modernized to distribute the electricity generated by the two light-water reactors being provided; (11) upgrading the power grid could cost as much as $750 million; and thus far, no party has obligated itself to pay for the upgrade; (12) the United States and KEDO maintain that North Korea is responsible; however, North Korea has not yet legally obligated itself to pay; (13) this leaves open the possibility that, in the future, North Korea could exert pressure on others to pay for upgrading the grid; (14) it is too early to say whether the United States and North Korea will need to conclude an agreement for cooperation because decisions have not yet been made about what, if anything, the United States will supply for the reactors; and (15) nevertheless, an agreement appears likely because a U.S. firm currently supplies a major component for the reactors that are to be delivered.