There’s No Need To Subsidize American Uranium

Posted on Wed 06/19/2019 by

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By Katie Tubb ~

There is no compelling evidence that uranium imports present a threat to America’s national security interests. But President Donald Trump is expected to weigh in on a petition between now and mid-July brought by two uranium mining companies that have tried to build that case.

“Any administration treads in dangerous territory when ‘all of the above’ becomes a policy of ‘subsidies for all of the above,'” writes Katie Tubb. (Photo: Pallava Bagla/Corbis/Getty Images)

If their lobbying efforts are successful, the payout could be a guaranteed 25% of the U.S. civilian market for uranium via an import quota imposed on foreign suppliers by Washington.

That may be good for these two uranium companies (in the short term) but bad for American energy consumers and the nuclear energy industry.

It is true, as the companies note, that the uranium mining industry in America has decreased steadily over the last 40 years. It’s also true that nuclear energy companies in the U.S. imported 40% of their uranium from Russia, Kazakhstan, and Uzbekistan in 2018.

From this, the two uranium companies slide to the conclusion that imports jeopardize U.S. military assets and leave nuclear power plants overly reliant on countries that “weaponize” energy supplies for political leverage. The petitioners even throw China into the mix, even though the U.S. imports no uranium from China.

But is the companies’ desire for greater market share truly a threat to national security?

Uranium mining in America has struggled since the early 1980s when the government finally dismantled policies that had, until then, effectively closed U.S. markets to international competition.

By then it was too late, as America’s protectionist policies frustrated allies and mobilized them to build out their own uranium and nuclear fuel industries.

Ironically, at the climax of the Cold War, the American uranium mining industry responded to these freer markets by asking the president to invoke Section 232 of the Trade Expansion Act—which empowers presidents to implement trade barriers unilaterally without Congress—against our allies, Australia and Canada. Clearly, neither nation threatened our security then, or now.

Nevertheless, misrepresentation today plays out in a number of ways. For example, former Assistant Secretary of Commerce for International Economic Policy Thomas Duesterberg suggested that Russia could turn off the spigot of uranium supply to make a political point, as it did with Ukraine’s natural gas supply.

The argument is a hollow matryoshka doll. Unlike natural gas plants that need on-time supply, American nuclear power reactors run about 18 months before refueling.

Even then, commercial uranium stockpiles in the U.S. are almost double what they were in 1995, and U.S. allies Canada and Australia continue to supply the most uranium to U.S. reactors.

Purported supply chain disruptions for the military’s needs are just as unconvincing.

Uranium used for defense purposes (namely, nuclear weapons and the Navy’s nuclear submarines and carriers) must be domestically sourced and processed at conversion and enrichment facilities—at first glance a toehold for the petitioner’s case to subsidize mining.

Yet, the Department of Energy states its uranium inventory meets all current government requirements. The most immediate need for domestic uranium is for tritium production for nuclear weapons around 2038 and for naval reactor fuel in 2060.

Even then, the Defense Production Act empowers the Pentagon to prevent critical shortages in a way that does not include trade barriers that treat allies the same as unfriendly nations.

It’s perhaps worth noting that industry—not the Pentagon—brought the petition for trade barriers to the Trump administration.

Despite the evidence, the uranium companies have moved ahead with a Section 232 petition, which offers them more attractions: The burden of proof for presidential action is low, and the application of barriers is sweeping rather than targeted to specific countries.

The World Trade Organization’s General Agreement on Tariffs and Trade waives trade barriers for national security concerns, and the national security purpose of Section 232 easily plays off the petitioners’ narrative of nationalism and anxiety directed toward Russia and China.

The president campaigned on an “all of the above” energy policy. It was a clear rejection of the Obama administration’s efforts to use the force of government to prop up favored energy technologies and shut down others.

The president needs to stay the course he set out on. Any administration treads in dangerous territory when “all of the above” becomes a policy of “subsidies for all of the above.” Uranium is no exception.

Katie Tubb contributes Posts at The Daily Signal, and she is a policy analyst for the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation . http://www.heritage.org/

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