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The nuclear power industry in the Asia-Pacific region
Energy Vol. 9. No. g/IO. PP. 87%882. Printed in the U.S.A.
03@S442/84 S3.00 + .W CC I985 Pergamon Press Ltd.
1984
THE ASIA-PACIFIC Department
REGION
RICHARD K. LESTER of Nuclear Engineering, Massachusetts Institute of Technology, Cambridge, MA 02139, U.S.A. (Received 21 September 1983)
Abstract-The development of the nuclear reactor industry in the Pacific Basin began in the United States and Canada and spread to Japan and, more recently, to South Korea and Taiwan. The American and Canadian industries face serious economic and political difficulties; indeed, their current plight is so severe that their survival no longer seems assured. Because of the key regional role played up to now by the North American industries, and by the U.S. industry in particular, the realization of this scenario would have important repercussions for nuclear trade and investment throughout the region. In the longer run, some basic structural changes would seem likely, with the focal point of industrial strength and technological leadership in the region shifting to Northeast Asia, and to Japan in particular. Already there is evidence of this shift. But the prospect of a smooth, gradual transition toward a new regional industrial structure centered on Japan may be misleading. What is missing from this picture is a full measure of the extent to which nuclear industrial development elsewhere in the region is positively correlated with the trend in the United States.
INTRODUCTION
A quarter of a century after the commissioning of the world’s fist commercial nuclear power station at Calder Hall, England, and 20 years after Jersey Central’s Oyster Creek order ushered in the commercial phase of the American light-water reactor (LWR) program, an industry of major proportions is today engaged in the supply of nuclear plant, fuel, and services in more than 40 countries throughout the world. The international development of this industry has occurred in three stages. The original foundations were laid in those countries that had launched military nuclear programs during and immediately following World War II: the United States, Canada, and the United Kingdom in the West and the Soviet Union in the East. Later, in the 1960s and 197Os, civil nuclear industries were built up in the advanced industrialized nations of Europe and Japan. And today, in the third stage of development, new industrial structures are being established in several of the newly industrialized and developing countries, including Spain, Brazil, Argentina, South Korea, and India. The development of the nuclear industry in the Pacific Basin has conformed to this global pattern, beginning in the United States and Canada and spreading to Japan and, more recently, to South Korea and Taiwan. But today, in the Pacific Basin as elsewhere, nuclear energy programs are facing delay, and the nuclear supply industry is having to adjust to a period of vastly lower growth than even very recent forecasts suggested was likely. Although no nation has escaped difficulty, the American and Canadian industries have been most seriously affected; in neither country has an order been placed for a nuclear power plant for several years, while the international nuclear market, where American firms have previously enjoyed considerable success and the Canadian industry has also been active, is today almost completely quiescent. Indeed, the current plight of both the U.S. and Canadian industries is so severe, and the short-term prospects so poor, that their survival in anything like their current configuration no longer seems assured. It is thus at least plausible that the fourth stage of nuclear industrial evolution in the region will actually consist of the erosion of industrial capacity in Canada and the United States, a completion, in a sense, of the developmental cycle. Because of the key role in the regional development of nuclear power played until now by the North American industries, and by the U.S. industry in particular, the realization 875
R. K. LES’IZR
876
of this scenario would unquestionably have important repercussions throughout the area. This essay explores the possible implications of nuclear “deindustrialization” in North America for the regional structure of nuclear investment and trade.? A DEFINITION
OF THE NUCLEAR
SUPPLY
INDUSTRY
The nuclear supbly industry is defined here to include all of the functions necessary for the design, manufacture, construction, and maintenance of nuclear power stations and associated fuel cycle facilities. Excluded from this group of activities are the generation of nuclear electricity itseif and the supply of uranium and fuel cycle services (see Fig. l).$ Individual nuclear fuel cycle facilities are typically very large and costly, but the number actually built is small, and the primary activity of the industry as defined here is the supply of the nuclear power plants themselves. The principal functions involved include the design and manufacture of nuclear and conventional equipment and components; civil construction; equipment assembly and installation; site infrastructure development; and a wide range of project management and engineering services including feasibility studies, environmental surveys, overall plant layout and detailed design, procurement, quality assurance and quality control, safety analysis, construction supervision, plant testing and
ELECTRIC UTILITY INDUSTRY
-----
-_-
------
NUCLEAR FUEL SUPPLY I
AND I
SERVICE
INDUSTRY
I
: Uranium mining and
-
Enrichment
Fuel Fabrication
-
_
Reprocessing
-
Waste management
+
Nuclear fuel cycle plant
Nuclear fuel cycle plant
__-----
__---__-_-----t Nuclear
t
t energy
r research
t
t
t
and development
Figure I. The nuclear power industry.
tNo attempt is made here to assess the likelihood of such a scenario. The point is simply that this possibility is no longer so remote that it can be safely ignored. For a discussion of the current problems facing the U.S. nuclear industry and the prospects for its recovery, see Ref. 1. $ In one sense, the boundaries set by this definition are artificial. In most countries, the division of corporate responsibility is much less clear-cut. For example, many utilities, whether private or government-owned, participate in the supply of fuel cycle and power plant, either directly or through financial holdings in engineering and manufacturing firms. Also, design, construction, and operation of fuel cycle facilities may all be carried out by the same firm or firms. Moreover, many key engineering and manufacturing concerns involved in nuclear plant supply are large, diversified firms for whom the nuclear business is only a part (for some a rather small part) of their overall operations. Nevertheless, though it lacks an autonomous corporate structure, the nuclear plant supply industry serves a clearly demarcated market and is based on technologies many of which have no significant application elsewhere. For these reasons, it can be regarded as a,distinct industrial sector.
The nuclear power industry in the Asia-Pacific
region
877
commissioning, manpower training and such post-commissioning services as component repair and replacement, in-service inspection, and decontamination and decommissioning. For nuclear power plants built in the United States, the proportion of the total physical plant cost (i.e., excluding time-related costs) accounted for by construction materials and finished equipment and components is 4(1-45x, construction and installation about 30x, and indirect costs and architect engineering services the rest.? The manufacture of the many systems and components contained in a nuclear plant is typically divided between one or two large primary contractors and a large number of secondary material and component suppliers. Depending on the contractual arrangements for the project, a single primary contractor may be responsible for the supply of both the nuclear island and the balance of plant; alternatively, separate contracts may be awarded for each. Hardware design and engineering capabilities are concentrated within the primary contracting firm, which may also manufacture some of the major plant components. The division of manufacturing effort between the primary contractor and its subcontractors varies widely. For example, the German nuclear plant manufacturer Kraftwerk Union (KWU) manufactures its own turbine generator sets, but most of the heavy nuclear components for its plants are supplied by subcontractors. Westinghouse, in contrast, has traditionally manufactured both turbine generators and most heavy nuclear components in its own facilities. Responsibility for project engineering management is divided among the utilities, architect engineering companies, and primary nuclear contractors. Once again the division of responsibility varies widely. Civil construction is generally carried out by specialized construction firms. Finally, the large research and development establishments associated with the nuclear plant supply industry are normally housed both within the primary plant manufacturing firms and in goverment research laboratories. REGIONAL
IMPLICATIONS
OF AMERICAN
NUCLEAR
DEINDUSTRIALIZATION
There have been no new orders for nuclear power plants in the United States since 1978. Since then, 43 previously ordered units have been cancelled, 15 in 1982 alone (as of November). Altogether, nearly 80 plants have been cancelled and only 13 ordered since 1974, the last year in which the number of new orders exceeded the number of cancellations. During this period, construction work on many other plants has been deferred, in some cases indefinitely. The U.S. nuclear power plant supply industry, which by the mid-1970s had established a combined manufacturing capacity of 25-30 GWe per year in response to high plant ordering rates by American and foreign utilities, thus now confronts a serious problem of surplus capacity. All four primary LWR manufacturers have for some time been scaling back component manufacturing capacity and shifting engineering personnel away from core and systems design work toward fuel management and a variety of engineering service functions for operating plants. Some staff layoffs have also been reported, and there is a real risk that the nuclear engineering and design teams so vital to the preservation of a manufacturing capability will be dissipated over the next several years3q4 Nevertheless, even if the current U.S. moratorium on nuclear plant ordering continues indefinitely, the impact on the industrial capacity of the United States wiI1 be gradual rather than sudden. The two main vendors, Westinghouse and General Electric, each committed to remaining in the nuclear market in a service capacity and neither yet ready to give up hope of a resumption of nuclear ordering, will continue to look for low-cost ways of preserving at least a residual capability to meet possible future demand. In part, this will involve phasing out costly in-house manufacturing facilities and placing greater reliance on domestic and foreign subcontractors. In this regard, although Westinghouse and probably also General Electric will continue to bid on the few international tenders that are anticipated during tThese proportions were obtained from data in Ref. 2 by assuming an allowance for contingencies of 17% in all three categories. The authors estimate a total physical plant cost for a lOOO-MWe PWR plant starting construction in 1981 of $1.3 x 104(198 1 dollars). When escalation and interest incurred during construction are included, a total plant cost of $4.3 x lo9 (1993 dollars) is reported, assuming a 1Zyear plant lead-time.
R. K. LESTER
878
the next few years, for both companies the trend will increasingly be toward the formation of partnerships with past or present licensees (and potential rivals), in which design and manufacturing work will be shared internationally.? SHIFTING
TECHNOLOGICAL
LEADERSHIP
What consequences is an extended and possibly permanent decline of the civil nuclear enterprise in the United States likely to have for nuclear industrial capacity and trade elsewhere in the region? The immediate effect will be small. Because the withdrawal of the two U.S. vendors with a major international presence will be quite gradual, the projects and technology transfer programs in which they are currently involved overseas will be largely unaffected. In the longer run, however, some basic structural changes in the industry seem likely, with the focal point of industrial strength and technological leadership shifting to Northeast Asia, where further nuclear power growth remains a key element of national energy policies, and to Japan in particular. Indeed, the Japanese nuclear supply industry is already among the most advanced in the world. At the heart of this industry are the three primary manufacturers of light-water nuclear plants, Mitsubishi, Toshiba, and Hitachi. Licensing agreements with the American vendors were the principal means by which LWR technology was introduced into Japan. During the mid-1960s, Mitsubishi, in an extension of its long-standing ties with Westinghouse in the field of conventional power plant technology, obtained a license to manufacture pressurized-water reactors (PWR) to the latter’s design. Similarly, General Electric granted boiling-water reactor (BWR) manufacturing licenses to its traditional partners Toshiba and Hitachi. Much of the design work and many of the specialist nuclear components for the early plants were supplied by the American firms, but Japanese participation has steadily increased to the point at which plant design and the supply of virtually the full range of systems and components are now carried out domestically. Elsewhere in the Asia-Pacific region, both the Republic of Korea and Taiwan are becoming heavily reliant on nuclear power as a source of electricity: the Korean nuclear program is expected to account for about 40% of that country’s electricity supply by 1991, while in Taiwan the level of dependence on nuclear is projected to exceed 50% by 1985. During the latter half of the 197Os, the Republic of Korea embarked on a major effort to establish a domestic LWR nuclear power plant industry in support of its nuclear electric power program. The Korean nuclear supply industry is intended eventually to provide the bulk of the equipment and engineering services required for the country’s nuclear power plant projects and, in time, to compete for sales in international markets. To accomplish this, engineering and manufacturing technology is being transferred in stages from foreign (primarily American) suppliers in parallel with the power plant construction projects themselves. Although the nuclear program in Taiwan is of a similar scale, the pace of domestic nuclear industrial development is appreciably slower than in Korea. Recent developments in LWR innovation suggest a longer-term shift in the focus of industrial leadership toward Northeast Asia. In 1981, Hitachi and Toshiba concluded an agreement with General Electric and a group of Japanese utilities led by the Tokyo Electric Power Company (TEPCO) to develop an advanced boiling-water system tailored to the Japanese market. A similar agreement to develop an advanced PWR has also been concluded by Mitsubishi Heavy Industries, Westinghouse, and a second group of Japanese utilities led by the Kansai Electric Power Company. The Ministry of International Trade and Industry is providing financial support for both of these projects. The extent to which these new systems will depart from current designs remains to be seen. It seems clear, however, that the Japanese firms not only have taken the initiative in this latest phase of LWR development but also are regarded, both within Japan and by their American counterparts, as being, at the least, equal technological partners. Indeed, the two American tSuch behavior was evident in the bidding in 1982 for the two nuclear units to be built in Mexico (later cancelled by the Mexican government). General Electric reportedly invited Hitachi and Toshiba to supply primary system components (Ref. 5) and the JGC Corporation to provide the waste treatment system (Ref. 6) as part of its bid package. In connection with the tender, Westinghouse and Mitsubishi heavy industries agreed that the latter was to be responsible for supplying the complete nuclear steam supply system (Ref. 7).
The nuclear power industry in the Asia-Pacific
region
879
firms attach considerable importance to these projects, since at present such international joint ventures represent for them the only practical way of remaining at the forefront of LWR technology. Another indication of the changing U.S.-Japanese technological balance was provided by the revision of the original BWR licensing agreement between General Electric and Toshiba and Hitachi. Though the details of the new agreement have not been divulged, the corporate relationship has changed, according to a senior GE official, from a licenser-licensee arrangement to one of “teammates” involved in “technological cooperation and information exchange”.8 NUCLEAR
TRADE
PATTERNS
One probable longer-run consequence of a declining U.S. nuclear industry is a stronger European commercial presence in East Asia. In the past, market penetration by the European nuclear suppliers was checked by the strength of the American industry, whose technological and commercial superiority was reinforced by the dominant geopolitical and economic position of the United States in the region. The barriers to European entry have already begun to be breached, however; the most recent Korean nuclear plant orders were awarded to the French reactor manufacturer Framatome and turbine generator supplier Alsthom-Atlantique; and for the first time the European suppliers were invited to bid for the next two units to be built in Taiwan (since deferred). Moreover, the recent selection of the West German PWR manufacturer Kraftwerk Union (KWU) to supply Indonesia’s first large nuclear research reactor strengthens the German manufacturer’s position in the expected international competition for Indonesia’s first order for a commercial power reactor, now planned for operation in the 1990s. Such decisions were doubtless strongly influenced by commercial and financial considerations, as well as broader political calculations. But utilities acquiring nuclear power plants expect that the supplier will remain available to assist in performing maintenance, component replacement, and other services for the full operating lifetime of the plant. And in the future, if not already, the conspicuously uncertain outlook for nuclear power in the United States may weigh against American vendors in international competition against suppliers with a more dynamic domestic base of onerations. One further development in this connection deserves mention. In late 1981 a series of agreements was concluded between Tokyo Electric, Toshiba, Hitachi, a third Japanese heavy electrical manufacturer, Fujii Electric, and Kraftwerk Union to undertake a feasibility study of the use of KWU’s PWR technology in Japan. The agreements leave open the possibility that if the studies are favorable Tokyo Electric will introduce PWRs into its hitherto all-BWR system. The reactors would be manufactured under German license in Japan9 The development is potentially significant in several respects. Until now none of the large private Japanese utilities has publicly contemplated abandoning the practice of only building a single reactor type (i.e., either PWR or BWR). Moreover, the agreements mark the first time that serious consideration has been given to the importation into Japan of LWR technology supplied by non-American firms. There are indications that TEPCO’s interest in the German reactor technology was prompted in part by unresolved questions regarding General Electric’s long-term commitment to the BWR market. Third, if the PWR option were to be pursued to the full extent, competitive pressures would build within the Japanese nuclear industry: not only would the Mitsubishi-Westinghouse partnership lose its position as the sole supplier of PWRs, but the arena of competition between PWRs and BWRs would be broadened to include the Tokyo Electric Power system (which alone constitutes 30% of Japan’s installed electric capacity) and, possibly, other BWR utilities in Japan, which in the past have tended to follow TEPCO’s example.7 tThe prospect of a new entry into the Japanese market is apparently of some concern to the Ministry of International Trade and Industry, which is reported to favor some consolidation in what it sees as an already overpopulated reactor industry (Ref. 9). The prospect is naturally also of considerable concern to General Electric; TEPCO is the largest user of BWRs in the world, and its latest initiative comes at a time when the BWR is losing ground to the PWR in several other markets.
R. K. LESTER
880
Finally, and on a more speculative note, in view of the great financial, technological, and international marketing resources to which such a partnership would have access, a joint venture involving KWU and one or more Japanese manufacturers could conceivably emerge as a dominant force in the international nuclear reactor industry in the longer run. JAPANESE
NUCLEAR
EXPORTS
Even in the shorter run, a fading U.S. industrial presence might be expected to open new international market opportunities for the Japanese industry. Until now, Japanese nuclear exports have been limited to a small number of plant components (principally pressure vessels and turbine generators) and at no time have accounted for more than 4% of total industry sales, a strikingly low export ratio by the standards both of Japanese technological industry as a whole and of the strongly export-oriented nuclear industries of the other advanced industrialized nations.? That the Japanese nuclear industry by its own assessment only recently reached maturity does not in itself adequately explain this performance. As Table 1 shows, no other exporting nation has accumulated as much domestic industrial experience as Japan in advance of its first nuclear plant sale overseas. Of the other possible explanations, the generally tighter market in recent years, with more suppliers pursuing fewer orders, was certainly also an inhibiting factor; so, probably, was the inability of Japan to offer uranium supplies and fuel cycle services in conjunction with nuclear power plant equipment, at a time when such comprehensive packages have become a staple of international nuclear trade. Moreover, it is possible that the original licensing agreements restricted the freedom of the Japanese vendors to compete with their American licensers in third-country markets or, even when not competing directly, to make the provisions for technology transfer so higly valued by importers. Fourth, diplomatic considerations may also have intervened: the practitioners of Japan’s unassertive, unobtrusive postwar foreign policy were perhaps reluctant to taken on the added political responsibilities associated with the negotiation of nonproliferation-related conditions on major international nuclear transactions, especially in light of the sensitive security situation in Northeast Asia, the natural market for the Japanese nuclear industry. Recently, however, there have been several harbingers of a more active Japanese role in international markets. Policy statements made by both government and industry officials have explicitly drawn attention to the emerging opportunities for nuclear power plant exports to developing nations.* More concretely, Mitsubishi’s bid to supply complete
Table 1. Experience acquired before exporting nuclear power plants. Domestic nuclear power plants completed before building first exported unit of all type*
Canada France West Germany Japant Sweden United Kingdom United States UeBtinBhouse General Electric
0 10 2 >24 1 2 1 1
of the aaoe type
0 1 >kI(BM) >lO (PWB) 1 2 1 1
Source: Nuclear EnKineerinS International, July 1981 (World List of Nuclear Power Plants). tJapan has yet to export a complete nuclear steam supply system.
tin 1977, the most active year for Japan to date, the total value of nuclear exports was under SlOO x 106, compared with total industry sales of about S2.2 x lo9 (Ref. 10, p. 23). $ The nuclear energy policy division of the Japanese government’s General Energy Council has recommended more vigorous government promotion of such exports (Ref. 1l), and the chairman of the Japan Atomic Industrial Forum recently called for the Japanese industry to export both nuclear power plant and fuel cycle services (Ref. 12).
The nuclear power industry in the Asia-Pacific region
881
nuclear steam supply systems for the third and fourth Mexican units was the first such action by a Japanese vendor. Also, within the last two years negotiations on technological cooperation agreements in the nuclear power field have begun with several East Asian countries, including Malaysia, Indonesia, South Korea, and the People’s Republic of China.? A NEW INTERNATIONAL
CONFIGURATION
The discussion thus far suggests a smooth, gradual transition away from a regional structure of investment and trade dominated by the United States toward a new industrial configuration, centered on Japan, with greater European participation and a more diversified pattern of trading relationships. What is missing from this picture, however, is a full measure of the extent to which nuclear industrial development elsewhere in the region is positively correlated with the trend in the United States. Fundamental in this regard is the problem of technological innovation on the scale required to commercialize the next generation of nuclear reactor systems. In previous years, other nations benefited from the ability and predisposition of the United States, with its vast domestic economy and electric power industry, to assume much of the risk and cost of civil nuclear development. But the erosion in domestic utility interest in nuclear power is undermining the traditional commitment of the United States to preserve its position of technological leadership in the field. At the same time, research and development costs continue to mount. A diminished U.S. willingness to assume the burdens of development, either alone or in international cost- and risk-sharing arrangements, may seriously impair parallel efforts overseas. In Japan, for example, in addition to the very large program of investment in nuclear power and fuel cycle plant construction, government and private funds amounting to many billions of dollars have been committed to the development of advanced LWRs, the advanced heavy-water-moderated reactor concept of which the Fugen reactor is the prototype, the liquid-metal-cooled fast-breeder reactor, and several advanced fuel cycle technologies. Despite the great size of Japan’s economy and the sophisticated approach to research and development risk-sharing taken by government and industry, the nuclear development program may be in danger of outpacing the availability of domestic risk capital. A second issue concerns the regional politics of nuclear trade. For Japan to supplant the United States as the primary nuclear trading nation in the region may appear to be a natural transition given the diverging directions of their domestic nuclear policies, but the change raises several political problems. Could the government of Taiwan, for example, expect more or less from Japan (and from the European suppliers) than from the United States in the face of potential future pressure from Beijing to curtail nuclear trade with the Taipei regime? Would Japan be prepared to take the lead in developing a regional framework for spent fuel management, reprocessing, and plutonium storage and use involving Taiwan, South Korea, and possibly other nations? More fundamentally, without the unique combination of geopolitical and nuclear industrial strength presented by the United States until now, can a workable nuclear trading regime be sustained? It is very doubtful that the existing international regime could have been established without the leadership of the United States, whose promotional efforts were prompted by both strategic and commercial interests. Indeed, the character of the current regime derived in significant part from an internal weighing of those interexts within the United States. A continued retreat from nuclear power in the United States will affect that internal balance, with potentially important international consequences. Without the domestic political counterweight provided by influential nuclear interests, U.S. international nuclear policy is more likely to oscillate between extremes of disinterest and vigorous pursuit of more restrictive trading practices. While the latter possibility is of more obvious concern to other nations, the former may present equally serious difficulties, since the onus of leadership would then shift to others either less willing or less qualified to respond. t Also, a nuclear plant construction company has been set up as a joint venture between subsidiaries of Taipower and Mitsubishi (Ref. 13, p. 48).
882
R. K. LESTER
A third issue concerns the indirect impacts of the retreat from nuclear power in the United States on domestic nuclear policymaking in other countries. In earlier years, the enthusiastic commitment to nuclear power, and the LWRs in particular, by the American electric utilities was an influential example to the electric power planners elsewhere (as well as significantly enhancing the international marketing efforts of the American reactor vendors). It is thus legitimate to ask to what degree the reverse relationship also holds. Today, of course, utility planners considering new nuclear commitments are subject to a broader range of international influences, at least some of which (for example, that emanating from France) are more reassuring than the American case. At the same time, and despite a general perception that the peculiarities of the American political process and the luxury of abundant indigenous fossil fuel resources have been key contributors to the present crisis, the continuing reports from the United States of cost overruns, delays, cancellations, poor plant reliability statistics, financial vulnerabilities, and regulatory uncertainties are surely a source of concern, if not discouragement. For many countries, after all, the United States was once the principal apostle of nuclear power, and its evident conversion to agnosticism cannot help but carry weight. Moreover, even if utility planners conclude that the circumstances in the United States are much different from their own, and that the American example is therefore of only limited relevance, public opinion may be less discriminating, especially given the common base of technology and the obfuscations of the American nuclear debate, which make it extremely difficult to determine which among the array of safety, environmental, economic, and so&o-political issues have most strongly influenced the most recent phase of U.S. nuclear policy. i4 In countries where public opinion is a significant influence on policymaking, the effect will be to strengthen criticism of nuclear programs and policies. So far, this link has primarily been evident in Western Europe, and to a lesser extent in Japan, though the indirect impacts are more widely distributed. The picture that emerges is that of a highly integrated international industry, whose various national segments are so tightly coupled that, despite the efforts of national governments to maximize their autonomy, each is vitally affected by developments that lie beyond its control. In this sense, the long-term problems of the American nuclear industry are global problems, affecting all nations. In the event of an irreversible decline of the nuclear industry in the United States, the long-run contribution of nuclear power elsewhere in the Pacific Basin will primarily depend on the Japanese response. The main questions at this point do not concern Japan’s technological and industrial capabilities but seem rather to center on two essentially political issues: How successful will Japan’s leaders be in decoupling the Japanese nuclear program from the nuclear crisis in the United States, and will Japan be prepared to assume the international responsibilities of being the premier civil nuclear power in the region? REFERENCES 1. R. K. Lester, Tech. Rev. 8y7), 38 (1982). 2. J. H. Crowley and J. D. Griffith, Nucl. Engng Int. 27(328), 25 (1982). 3. J. Surrey and W. Walker, The European Power Plant Industry: Structural Responses to International Market Pressures, European Research Center Monograph, Sussex University (May 1981). 4. M. Lonnroth and W. Walker, “The Viability of the Civil Nuclear Industry”, In World Nuclear Energy (Edited by Ian Smart), pp. 199-203, Johns Hopkins University Press, Baltimore, MD (1982). 5. Japan Economic Journal, Feb. 23, 1982, p. 5. 6. Nucl. Engng. ht. 27(328), 14 (1982). 7. Japan Economic Journal, 22 Sept. 1981, p. 1 8. Nucleonics Week, 17 Dec. 1981, p. 8. 9. Oriental Economist, Jan. 1982, pp. 8-12. 10. Industrial Bank of Japan, Japanese Finance and Industry Quarterly Survey 50 (1982). 11. Japan Economic Journal, 2 June 1981, p. 1. 12. Nucl. Engng In?. 27(327), 4 (1982). 13. Economist Intelligence Unit, Quarterly Energy Review: Far East and Australasia (1st quarter 1981). 14. R. K. Lester, Asian Survey 22, 417 (1982).
03@S442/84 S3.00 + .W CC I985 Pergamon Press Ltd.
1984
THE ASIA-PACIFIC Department
REGION
RICHARD K. LESTER of Nuclear Engineering, Massachusetts Institute of Technology, Cambridge, MA 02139, U.S.A. (Received 21 September 1983)
Abstract-The development of the nuclear reactor industry in the Pacific Basin began in the United States and Canada and spread to Japan and, more recently, to South Korea and Taiwan. The American and Canadian industries face serious economic and political difficulties; indeed, their current plight is so severe that their survival no longer seems assured. Because of the key regional role played up to now by the North American industries, and by the U.S. industry in particular, the realization of this scenario would have important repercussions for nuclear trade and investment throughout the region. In the longer run, some basic structural changes would seem likely, with the focal point of industrial strength and technological leadership in the region shifting to Northeast Asia, and to Japan in particular. Already there is evidence of this shift. But the prospect of a smooth, gradual transition toward a new regional industrial structure centered on Japan may be misleading. What is missing from this picture is a full measure of the extent to which nuclear industrial development elsewhere in the region is positively correlated with the trend in the United States.
INTRODUCTION
A quarter of a century after the commissioning of the world’s fist commercial nuclear power station at Calder Hall, England, and 20 years after Jersey Central’s Oyster Creek order ushered in the commercial phase of the American light-water reactor (LWR) program, an industry of major proportions is today engaged in the supply of nuclear plant, fuel, and services in more than 40 countries throughout the world. The international development of this industry has occurred in three stages. The original foundations were laid in those countries that had launched military nuclear programs during and immediately following World War II: the United States, Canada, and the United Kingdom in the West and the Soviet Union in the East. Later, in the 1960s and 197Os, civil nuclear industries were built up in the advanced industrialized nations of Europe and Japan. And today, in the third stage of development, new industrial structures are being established in several of the newly industrialized and developing countries, including Spain, Brazil, Argentina, South Korea, and India. The development of the nuclear industry in the Pacific Basin has conformed to this global pattern, beginning in the United States and Canada and spreading to Japan and, more recently, to South Korea and Taiwan. But today, in the Pacific Basin as elsewhere, nuclear energy programs are facing delay, and the nuclear supply industry is having to adjust to a period of vastly lower growth than even very recent forecasts suggested was likely. Although no nation has escaped difficulty, the American and Canadian industries have been most seriously affected; in neither country has an order been placed for a nuclear power plant for several years, while the international nuclear market, where American firms have previously enjoyed considerable success and the Canadian industry has also been active, is today almost completely quiescent. Indeed, the current plight of both the U.S. and Canadian industries is so severe, and the short-term prospects so poor, that their survival in anything like their current configuration no longer seems assured. It is thus at least plausible that the fourth stage of nuclear industrial evolution in the region will actually consist of the erosion of industrial capacity in Canada and the United States, a completion, in a sense, of the developmental cycle. Because of the key role in the regional development of nuclear power played until now by the North American industries, and by the U.S. industry in particular, the realization 875
R. K. LES’IZR
876
of this scenario would unquestionably have important repercussions throughout the area. This essay explores the possible implications of nuclear “deindustrialization” in North America for the regional structure of nuclear investment and trade.? A DEFINITION
OF THE NUCLEAR
SUPPLY
INDUSTRY
The nuclear supbly industry is defined here to include all of the functions necessary for the design, manufacture, construction, and maintenance of nuclear power stations and associated fuel cycle facilities. Excluded from this group of activities are the generation of nuclear electricity itseif and the supply of uranium and fuel cycle services (see Fig. l).$ Individual nuclear fuel cycle facilities are typically very large and costly, but the number actually built is small, and the primary activity of the industry as defined here is the supply of the nuclear power plants themselves. The principal functions involved include the design and manufacture of nuclear and conventional equipment and components; civil construction; equipment assembly and installation; site infrastructure development; and a wide range of project management and engineering services including feasibility studies, environmental surveys, overall plant layout and detailed design, procurement, quality assurance and quality control, safety analysis, construction supervision, plant testing and
ELECTRIC UTILITY INDUSTRY
-----
-_-
------
NUCLEAR FUEL SUPPLY I
AND I
SERVICE
INDUSTRY
I
: Uranium mining and
-
Enrichment
Fuel Fabrication
-
_
Reprocessing
-
Waste management
+
Nuclear fuel cycle plant
Nuclear fuel cycle plant
__-----
__---__-_-----t Nuclear
t
t energy
r research
t
t
t
and development
Figure I. The nuclear power industry.
tNo attempt is made here to assess the likelihood of such a scenario. The point is simply that this possibility is no longer so remote that it can be safely ignored. For a discussion of the current problems facing the U.S. nuclear industry and the prospects for its recovery, see Ref. 1. $ In one sense, the boundaries set by this definition are artificial. In most countries, the division of corporate responsibility is much less clear-cut. For example, many utilities, whether private or government-owned, participate in the supply of fuel cycle and power plant, either directly or through financial holdings in engineering and manufacturing firms. Also, design, construction, and operation of fuel cycle facilities may all be carried out by the same firm or firms. Moreover, many key engineering and manufacturing concerns involved in nuclear plant supply are large, diversified firms for whom the nuclear business is only a part (for some a rather small part) of their overall operations. Nevertheless, though it lacks an autonomous corporate structure, the nuclear plant supply industry serves a clearly demarcated market and is based on technologies many of which have no significant application elsewhere. For these reasons, it can be regarded as a,distinct industrial sector.
The nuclear power industry in the Asia-Pacific
region
877
commissioning, manpower training and such post-commissioning services as component repair and replacement, in-service inspection, and decontamination and decommissioning. For nuclear power plants built in the United States, the proportion of the total physical plant cost (i.e., excluding time-related costs) accounted for by construction materials and finished equipment and components is 4(1-45x, construction and installation about 30x, and indirect costs and architect engineering services the rest.? The manufacture of the many systems and components contained in a nuclear plant is typically divided between one or two large primary contractors and a large number of secondary material and component suppliers. Depending on the contractual arrangements for the project, a single primary contractor may be responsible for the supply of both the nuclear island and the balance of plant; alternatively, separate contracts may be awarded for each. Hardware design and engineering capabilities are concentrated within the primary contracting firm, which may also manufacture some of the major plant components. The division of manufacturing effort between the primary contractor and its subcontractors varies widely. For example, the German nuclear plant manufacturer Kraftwerk Union (KWU) manufactures its own turbine generator sets, but most of the heavy nuclear components for its plants are supplied by subcontractors. Westinghouse, in contrast, has traditionally manufactured both turbine generators and most heavy nuclear components in its own facilities. Responsibility for project engineering management is divided among the utilities, architect engineering companies, and primary nuclear contractors. Once again the division of responsibility varies widely. Civil construction is generally carried out by specialized construction firms. Finally, the large research and development establishments associated with the nuclear plant supply industry are normally housed both within the primary plant manufacturing firms and in goverment research laboratories. REGIONAL
IMPLICATIONS
OF AMERICAN
NUCLEAR
DEINDUSTRIALIZATION
There have been no new orders for nuclear power plants in the United States since 1978. Since then, 43 previously ordered units have been cancelled, 15 in 1982 alone (as of November). Altogether, nearly 80 plants have been cancelled and only 13 ordered since 1974, the last year in which the number of new orders exceeded the number of cancellations. During this period, construction work on many other plants has been deferred, in some cases indefinitely. The U.S. nuclear power plant supply industry, which by the mid-1970s had established a combined manufacturing capacity of 25-30 GWe per year in response to high plant ordering rates by American and foreign utilities, thus now confronts a serious problem of surplus capacity. All four primary LWR manufacturers have for some time been scaling back component manufacturing capacity and shifting engineering personnel away from core and systems design work toward fuel management and a variety of engineering service functions for operating plants. Some staff layoffs have also been reported, and there is a real risk that the nuclear engineering and design teams so vital to the preservation of a manufacturing capability will be dissipated over the next several years3q4 Nevertheless, even if the current U.S. moratorium on nuclear plant ordering continues indefinitely, the impact on the industrial capacity of the United States wiI1 be gradual rather than sudden. The two main vendors, Westinghouse and General Electric, each committed to remaining in the nuclear market in a service capacity and neither yet ready to give up hope of a resumption of nuclear ordering, will continue to look for low-cost ways of preserving at least a residual capability to meet possible future demand. In part, this will involve phasing out costly in-house manufacturing facilities and placing greater reliance on domestic and foreign subcontractors. In this regard, although Westinghouse and probably also General Electric will continue to bid on the few international tenders that are anticipated during tThese proportions were obtained from data in Ref. 2 by assuming an allowance for contingencies of 17% in all three categories. The authors estimate a total physical plant cost for a lOOO-MWe PWR plant starting construction in 1981 of $1.3 x 104(198 1 dollars). When escalation and interest incurred during construction are included, a total plant cost of $4.3 x lo9 (1993 dollars) is reported, assuming a 1Zyear plant lead-time.
R. K. LESTER
878
the next few years, for both companies the trend will increasingly be toward the formation of partnerships with past or present licensees (and potential rivals), in which design and manufacturing work will be shared internationally.? SHIFTING
TECHNOLOGICAL
LEADERSHIP
What consequences is an extended and possibly permanent decline of the civil nuclear enterprise in the United States likely to have for nuclear industrial capacity and trade elsewhere in the region? The immediate effect will be small. Because the withdrawal of the two U.S. vendors with a major international presence will be quite gradual, the projects and technology transfer programs in which they are currently involved overseas will be largely unaffected. In the longer run, however, some basic structural changes in the industry seem likely, with the focal point of industrial strength and technological leadership shifting to Northeast Asia, where further nuclear power growth remains a key element of national energy policies, and to Japan in particular. Indeed, the Japanese nuclear supply industry is already among the most advanced in the world. At the heart of this industry are the three primary manufacturers of light-water nuclear plants, Mitsubishi, Toshiba, and Hitachi. Licensing agreements with the American vendors were the principal means by which LWR technology was introduced into Japan. During the mid-1960s, Mitsubishi, in an extension of its long-standing ties with Westinghouse in the field of conventional power plant technology, obtained a license to manufacture pressurized-water reactors (PWR) to the latter’s design. Similarly, General Electric granted boiling-water reactor (BWR) manufacturing licenses to its traditional partners Toshiba and Hitachi. Much of the design work and many of the specialist nuclear components for the early plants were supplied by the American firms, but Japanese participation has steadily increased to the point at which plant design and the supply of virtually the full range of systems and components are now carried out domestically. Elsewhere in the Asia-Pacific region, both the Republic of Korea and Taiwan are becoming heavily reliant on nuclear power as a source of electricity: the Korean nuclear program is expected to account for about 40% of that country’s electricity supply by 1991, while in Taiwan the level of dependence on nuclear is projected to exceed 50% by 1985. During the latter half of the 197Os, the Republic of Korea embarked on a major effort to establish a domestic LWR nuclear power plant industry in support of its nuclear electric power program. The Korean nuclear supply industry is intended eventually to provide the bulk of the equipment and engineering services required for the country’s nuclear power plant projects and, in time, to compete for sales in international markets. To accomplish this, engineering and manufacturing technology is being transferred in stages from foreign (primarily American) suppliers in parallel with the power plant construction projects themselves. Although the nuclear program in Taiwan is of a similar scale, the pace of domestic nuclear industrial development is appreciably slower than in Korea. Recent developments in LWR innovation suggest a longer-term shift in the focus of industrial leadership toward Northeast Asia. In 1981, Hitachi and Toshiba concluded an agreement with General Electric and a group of Japanese utilities led by the Tokyo Electric Power Company (TEPCO) to develop an advanced boiling-water system tailored to the Japanese market. A similar agreement to develop an advanced PWR has also been concluded by Mitsubishi Heavy Industries, Westinghouse, and a second group of Japanese utilities led by the Kansai Electric Power Company. The Ministry of International Trade and Industry is providing financial support for both of these projects. The extent to which these new systems will depart from current designs remains to be seen. It seems clear, however, that the Japanese firms not only have taken the initiative in this latest phase of LWR development but also are regarded, both within Japan and by their American counterparts, as being, at the least, equal technological partners. Indeed, the two American tSuch behavior was evident in the bidding in 1982 for the two nuclear units to be built in Mexico (later cancelled by the Mexican government). General Electric reportedly invited Hitachi and Toshiba to supply primary system components (Ref. 5) and the JGC Corporation to provide the waste treatment system (Ref. 6) as part of its bid package. In connection with the tender, Westinghouse and Mitsubishi heavy industries agreed that the latter was to be responsible for supplying the complete nuclear steam supply system (Ref. 7).
The nuclear power industry in the Asia-Pacific
region
879
firms attach considerable importance to these projects, since at present such international joint ventures represent for them the only practical way of remaining at the forefront of LWR technology. Another indication of the changing U.S.-Japanese technological balance was provided by the revision of the original BWR licensing agreement between General Electric and Toshiba and Hitachi. Though the details of the new agreement have not been divulged, the corporate relationship has changed, according to a senior GE official, from a licenser-licensee arrangement to one of “teammates” involved in “technological cooperation and information exchange”.8 NUCLEAR
TRADE
PATTERNS
One probable longer-run consequence of a declining U.S. nuclear industry is a stronger European commercial presence in East Asia. In the past, market penetration by the European nuclear suppliers was checked by the strength of the American industry, whose technological and commercial superiority was reinforced by the dominant geopolitical and economic position of the United States in the region. The barriers to European entry have already begun to be breached, however; the most recent Korean nuclear plant orders were awarded to the French reactor manufacturer Framatome and turbine generator supplier Alsthom-Atlantique; and for the first time the European suppliers were invited to bid for the next two units to be built in Taiwan (since deferred). Moreover, the recent selection of the West German PWR manufacturer Kraftwerk Union (KWU) to supply Indonesia’s first large nuclear research reactor strengthens the German manufacturer’s position in the expected international competition for Indonesia’s first order for a commercial power reactor, now planned for operation in the 1990s. Such decisions were doubtless strongly influenced by commercial and financial considerations, as well as broader political calculations. But utilities acquiring nuclear power plants expect that the supplier will remain available to assist in performing maintenance, component replacement, and other services for the full operating lifetime of the plant. And in the future, if not already, the conspicuously uncertain outlook for nuclear power in the United States may weigh against American vendors in international competition against suppliers with a more dynamic domestic base of onerations. One further development in this connection deserves mention. In late 1981 a series of agreements was concluded between Tokyo Electric, Toshiba, Hitachi, a third Japanese heavy electrical manufacturer, Fujii Electric, and Kraftwerk Union to undertake a feasibility study of the use of KWU’s PWR technology in Japan. The agreements leave open the possibility that if the studies are favorable Tokyo Electric will introduce PWRs into its hitherto all-BWR system. The reactors would be manufactured under German license in Japan9 The development is potentially significant in several respects. Until now none of the large private Japanese utilities has publicly contemplated abandoning the practice of only building a single reactor type (i.e., either PWR or BWR). Moreover, the agreements mark the first time that serious consideration has been given to the importation into Japan of LWR technology supplied by non-American firms. There are indications that TEPCO’s interest in the German reactor technology was prompted in part by unresolved questions regarding General Electric’s long-term commitment to the BWR market. Third, if the PWR option were to be pursued to the full extent, competitive pressures would build within the Japanese nuclear industry: not only would the Mitsubishi-Westinghouse partnership lose its position as the sole supplier of PWRs, but the arena of competition between PWRs and BWRs would be broadened to include the Tokyo Electric Power system (which alone constitutes 30% of Japan’s installed electric capacity) and, possibly, other BWR utilities in Japan, which in the past have tended to follow TEPCO’s example.7 tThe prospect of a new entry into the Japanese market is apparently of some concern to the Ministry of International Trade and Industry, which is reported to favor some consolidation in what it sees as an already overpopulated reactor industry (Ref. 9). The prospect is naturally also of considerable concern to General Electric; TEPCO is the largest user of BWRs in the world, and its latest initiative comes at a time when the BWR is losing ground to the PWR in several other markets.
R. K. LESTER
880
Finally, and on a more speculative note, in view of the great financial, technological, and international marketing resources to which such a partnership would have access, a joint venture involving KWU and one or more Japanese manufacturers could conceivably emerge as a dominant force in the international nuclear reactor industry in the longer run. JAPANESE
NUCLEAR
EXPORTS
Even in the shorter run, a fading U.S. industrial presence might be expected to open new international market opportunities for the Japanese industry. Until now, Japanese nuclear exports have been limited to a small number of plant components (principally pressure vessels and turbine generators) and at no time have accounted for more than 4% of total industry sales, a strikingly low export ratio by the standards both of Japanese technological industry as a whole and of the strongly export-oriented nuclear industries of the other advanced industrialized nations.? That the Japanese nuclear industry by its own assessment only recently reached maturity does not in itself adequately explain this performance. As Table 1 shows, no other exporting nation has accumulated as much domestic industrial experience as Japan in advance of its first nuclear plant sale overseas. Of the other possible explanations, the generally tighter market in recent years, with more suppliers pursuing fewer orders, was certainly also an inhibiting factor; so, probably, was the inability of Japan to offer uranium supplies and fuel cycle services in conjunction with nuclear power plant equipment, at a time when such comprehensive packages have become a staple of international nuclear trade. Moreover, it is possible that the original licensing agreements restricted the freedom of the Japanese vendors to compete with their American licensers in third-country markets or, even when not competing directly, to make the provisions for technology transfer so higly valued by importers. Fourth, diplomatic considerations may also have intervened: the practitioners of Japan’s unassertive, unobtrusive postwar foreign policy were perhaps reluctant to taken on the added political responsibilities associated with the negotiation of nonproliferation-related conditions on major international nuclear transactions, especially in light of the sensitive security situation in Northeast Asia, the natural market for the Japanese nuclear industry. Recently, however, there have been several harbingers of a more active Japanese role in international markets. Policy statements made by both government and industry officials have explicitly drawn attention to the emerging opportunities for nuclear power plant exports to developing nations.* More concretely, Mitsubishi’s bid to supply complete
Table 1. Experience acquired before exporting nuclear power plants. Domestic nuclear power plants completed before building first exported unit of all type*
Canada France West Germany Japant Sweden United Kingdom United States UeBtinBhouse General Electric
0 10 2 >24 1 2 1 1
of the aaoe type
0 1 >kI(BM) >lO (PWB) 1 2 1 1
Source: Nuclear EnKineerinS International, July 1981 (World List of Nuclear Power Plants). tJapan has yet to export a complete nuclear steam supply system.
tin 1977, the most active year for Japan to date, the total value of nuclear exports was under SlOO x 106, compared with total industry sales of about S2.2 x lo9 (Ref. 10, p. 23). $ The nuclear energy policy division of the Japanese government’s General Energy Council has recommended more vigorous government promotion of such exports (Ref. 1l), and the chairman of the Japan Atomic Industrial Forum recently called for the Japanese industry to export both nuclear power plant and fuel cycle services (Ref. 12).
The nuclear power industry in the Asia-Pacific region
881
nuclear steam supply systems for the third and fourth Mexican units was the first such action by a Japanese vendor. Also, within the last two years negotiations on technological cooperation agreements in the nuclear power field have begun with several East Asian countries, including Malaysia, Indonesia, South Korea, and the People’s Republic of China.? A NEW INTERNATIONAL
CONFIGURATION
The discussion thus far suggests a smooth, gradual transition away from a regional structure of investment and trade dominated by the United States toward a new industrial configuration, centered on Japan, with greater European participation and a more diversified pattern of trading relationships. What is missing from this picture, however, is a full measure of the extent to which nuclear industrial development elsewhere in the region is positively correlated with the trend in the United States. Fundamental in this regard is the problem of technological innovation on the scale required to commercialize the next generation of nuclear reactor systems. In previous years, other nations benefited from the ability and predisposition of the United States, with its vast domestic economy and electric power industry, to assume much of the risk and cost of civil nuclear development. But the erosion in domestic utility interest in nuclear power is undermining the traditional commitment of the United States to preserve its position of technological leadership in the field. At the same time, research and development costs continue to mount. A diminished U.S. willingness to assume the burdens of development, either alone or in international cost- and risk-sharing arrangements, may seriously impair parallel efforts overseas. In Japan, for example, in addition to the very large program of investment in nuclear power and fuel cycle plant construction, government and private funds amounting to many billions of dollars have been committed to the development of advanced LWRs, the advanced heavy-water-moderated reactor concept of which the Fugen reactor is the prototype, the liquid-metal-cooled fast-breeder reactor, and several advanced fuel cycle technologies. Despite the great size of Japan’s economy and the sophisticated approach to research and development risk-sharing taken by government and industry, the nuclear development program may be in danger of outpacing the availability of domestic risk capital. A second issue concerns the regional politics of nuclear trade. For Japan to supplant the United States as the primary nuclear trading nation in the region may appear to be a natural transition given the diverging directions of their domestic nuclear policies, but the change raises several political problems. Could the government of Taiwan, for example, expect more or less from Japan (and from the European suppliers) than from the United States in the face of potential future pressure from Beijing to curtail nuclear trade with the Taipei regime? Would Japan be prepared to take the lead in developing a regional framework for spent fuel management, reprocessing, and plutonium storage and use involving Taiwan, South Korea, and possibly other nations? More fundamentally, without the unique combination of geopolitical and nuclear industrial strength presented by the United States until now, can a workable nuclear trading regime be sustained? It is very doubtful that the existing international regime could have been established without the leadership of the United States, whose promotional efforts were prompted by both strategic and commercial interests. Indeed, the character of the current regime derived in significant part from an internal weighing of those interexts within the United States. A continued retreat from nuclear power in the United States will affect that internal balance, with potentially important international consequences. Without the domestic political counterweight provided by influential nuclear interests, U.S. international nuclear policy is more likely to oscillate between extremes of disinterest and vigorous pursuit of more restrictive trading practices. While the latter possibility is of more obvious concern to other nations, the former may present equally serious difficulties, since the onus of leadership would then shift to others either less willing or less qualified to respond. t Also, a nuclear plant construction company has been set up as a joint venture between subsidiaries of Taipower and Mitsubishi (Ref. 13, p. 48).
882
R. K. LESTER
A third issue concerns the indirect impacts of the retreat from nuclear power in the United States on domestic nuclear policymaking in other countries. In earlier years, the enthusiastic commitment to nuclear power, and the LWRs in particular, by the American electric utilities was an influential example to the electric power planners elsewhere (as well as significantly enhancing the international marketing efforts of the American reactor vendors). It is thus legitimate to ask to what degree the reverse relationship also holds. Today, of course, utility planners considering new nuclear commitments are subject to a broader range of international influences, at least some of which (for example, that emanating from France) are more reassuring than the American case. At the same time, and despite a general perception that the peculiarities of the American political process and the luxury of abundant indigenous fossil fuel resources have been key contributors to the present crisis, the continuing reports from the United States of cost overruns, delays, cancellations, poor plant reliability statistics, financial vulnerabilities, and regulatory uncertainties are surely a source of concern, if not discouragement. For many countries, after all, the United States was once the principal apostle of nuclear power, and its evident conversion to agnosticism cannot help but carry weight. Moreover, even if utility planners conclude that the circumstances in the United States are much different from their own, and that the American example is therefore of only limited relevance, public opinion may be less discriminating, especially given the common base of technology and the obfuscations of the American nuclear debate, which make it extremely difficult to determine which among the array of safety, environmental, economic, and so&o-political issues have most strongly influenced the most recent phase of U.S. nuclear policy. i4 In countries where public opinion is a significant influence on policymaking, the effect will be to strengthen criticism of nuclear programs and policies. So far, this link has primarily been evident in Western Europe, and to a lesser extent in Japan, though the indirect impacts are more widely distributed. The picture that emerges is that of a highly integrated international industry, whose various national segments are so tightly coupled that, despite the efforts of national governments to maximize their autonomy, each is vitally affected by developments that lie beyond its control. In this sense, the long-term problems of the American nuclear industry are global problems, affecting all nations. In the event of an irreversible decline of the nuclear industry in the United States, the long-run contribution of nuclear power elsewhere in the Pacific Basin will primarily depend on the Japanese response. The main questions at this point do not concern Japan’s technological and industrial capabilities but seem rather to center on two essentially political issues: How successful will Japan’s leaders be in decoupling the Japanese nuclear program from the nuclear crisis in the United States, and will Japan be prepared to assume the international responsibilities of being the premier civil nuclear power in the region? REFERENCES 1. R. K. Lester, Tech. Rev. 8y7), 38 (1982). 2. J. H. Crowley and J. D. Griffith, Nucl. Engng Int. 27(328), 25 (1982). 3. J. Surrey and W. Walker, The European Power Plant Industry: Structural Responses to International Market Pressures, European Research Center Monograph, Sussex University (May 1981). 4. M. Lonnroth and W. Walker, “The Viability of the Civil Nuclear Industry”, In World Nuclear Energy (Edited by Ian Smart), pp. 199-203, Johns Hopkins University Press, Baltimore, MD (1982). 5. Japan Economic Journal, Feb. 23, 1982, p. 5. 6. Nucl. Engng. ht. 27(328), 14 (1982). 7. Japan Economic Journal, 22 Sept. 1981, p. 1 8. Nucleonics Week, 17 Dec. 1981, p. 8. 9. Oriental Economist, Jan. 1982, pp. 8-12. 10. Industrial Bank of Japan, Japanese Finance and Industry Quarterly Survey 50 (1982). 11. Japan Economic Journal, 2 June 1981, p. 1. 12. Nucl. Engng In?. 27(327), 4 (1982). 13. Economist Intelligence Unit, Quarterly Energy Review: Far East and Australasia (1st quarter 1981). 14. R. K. Lester, Asian Survey 22, 417 (1982).