June 7, 1982

June 7, 1982 | Backgrounder on Energy and Environment

The Law of the Sea Treaty: Can the U.S. Afford to Sign?


(Archived document, may contain errors)

188 June 7, 1982 THE LAW OF THE SEA TREATK I CAN THE US. AFFORD ,TO SIGN INTRODUCTION After participating in eight years of negotiations over eleven different sessions, the U.S. Delegation to the Third United Nations Law of the Sea Conference (UNCLOS 111) on April 30, 1982, refused to approve the Draft Convention of the Law of the Sea Treaty. Turkey, and Israel Seventeen countries, including most of the industrial countries of Western Europe and the Eastern bloc, abstained Signing the treaty draft we r e 130 countries, almost all from the Third World, but with significant votes from France, Canada, and Japan The U.S. was'joined in this action by Venezuela From the start, the negotiations were an arena for deep The developing nations of the U.N philosoph i cal conflict represented by a coalition commonly referred.to as the Group of 77 or G-77, used the negotiations as part of their general effort to establish the "New International Economic Order" (NIEO). They insisted that the Sea Law Treaty be based on th e notion that resources of the earth, particularly the deep seabed mineral deposits, were the IICommon Heritage of Mankind," to be exploited and enjoyed by all. The U.S. delegation could not accept this notion, nor implicitly the NIEO's attempts to effect a massive redistribution of wealth and technology, because of the basic conflict with American concepts of private property, free enter- prise, and competition well as treaty supporters within the United States, argue that the rationale for U.S. opposition to the treaty has been mainly philosophical, and not practical or pragmatic. They have also maintained that, under a different Administration, the U.S. will eventually return to the negotiating table and will sign the treaty Treaty proponents at the final session of UNCLOS 111, as 2 There are, however, practical. as well as philosophical arguments against the Draft Convention, which are held by the Reagan Administration, its supporters in private industry, and public interest groups.

The first philosophical argument is that the Third World concept of the IICommon Heritage of Mankind as stated in the Draft Convention, is antithetical to the American belief that the ownership of property devolves on those who take risks to identify natu r al resources and mix their labor with them.l Second, in creating the IIEnterprise" as an operating unit for seabed explorations, with such economic advantages as a high level of ensured funding and technology transfer, the Convention transgresses the gene r al American principles of opposition to monopolies and governmental discrimination.2 International Seabed Authority the Authorityt1 a seabed mining regime, to be controlled and administered by the same developing nations that have negotiated the Conventio n . As a spearhead for the establishment of the NIEO, such a regime would stifle and restrict, rather than encourage, mineral production in the deep seabed. This is the price demanded by the G-77 for the lladvancesll on territorial restrictions, which, at m o st, may be termed modest In summary, the practical arguments against the Draft Conven- tion are Finally, the current Draft Convention would establish the 1) that the draft treaty restricts the world supply of minerals, and U.S. access to strategic mineral s ; especially the seabed mining articles, as they would create a bias against production; mandate technology transfer; prevent assured and non-discriminatory access; discriminate in favor of the Enterprise stipulate large costs to su port the Authority; an d create a hostile investment climate 2) that the concessions made by the developed nations within the articles of the Draft Convention create a harmful precedent for future negotiations in the international arena; and U.S. with navigation rights, fishing p rivileges, and jurisdiction over the continental shelf, for some of which, in the non-seabed areas, the U.S. would have to pay for rights that it already en j oys 3) that customary international law already provides the Vesting ownership of previously uno wned resources in producers has substan tial historical support, particularly in the Spitzbergen Archipelago case. See: Doug Bandow UNCLOS 111: A Flawed Treaty San Diego Law Review, Volume 19, April 1982, p. 478, at note 15.

Ibid -9 P- 480 m pp. 481-487. 3 Neither during the first seven years of treaty negotiations nor during the past year has the U.S. ever veered from its intent to negotiate honestly and forthrightly for a settlement that could be agreed upon by the developing and industrial nations alike . Both President Reagan and the U.S. Delegation to the eleventh session of the Conference have stated that the U.S might accept an agreement that did not deter development of seabed mineral resources to meet national and world demands and did not deny acce s s to these resources by present or future qualified entities. The Reagan Administration has likewise maintained that, if these objectives cannot be reached within the negotiating process, the U.S. will seek reciprocal agreements with any country that is t ruly interested in maintaining freedom of access, transit, exploration, and exploitation of the world's oceans, rather than bargain endlessly for compromise and conces- sions within the forum of the Sea Law Conference.

The U.S. Delegation was justified in refusing to approve the Draft Convention of the Sea Law treaty, and in declining to concede damaging, and what eventually would have been unacceptable, compromise in the Convention its stand, the Administration should hold its ground against those who wil l be pressuring the U.S. to reconsider and sign the treaty Now that the Delegation has made BACKGROUND The current U.N. Conference on Law of the Sea began in 1973 as an outgrowth of two historic developments. The first was the trend among both developed an d developing nations to expand territorial and economic claims on the continental shelf. Terri torial waters were moved from the traditional three miles to twelve miles from each nation's coastline, while Exclusive Economic Zones (EEZs) were set at 200 mil es. Between 1958 and 1968, the proportion of coastal states claiming territorial extensions of twelve miles or more increased from 18 to 43 percent4 and today stands at more than two-thirds.

This trend has had clear military implications, particularly in t he Middle East where most of the critical narrow straits are found. Richard Darman, a U.S. official involved in the Law of the Sea negotiations since their beginning, has written Expansion of the territorialist claims of 12 miles or more, if accepted, thr e atened to 'tclosell more than 100 straits, removing from the traditional high seas freedom of transit, and imposing instead the restrictions of innocent passage I In particular, imposition of an Richard G. Darman The Law of the Sea: Re-thinking U.S. Inter ests,"

Foreign Affairs, January 1978, Vol. 56, No. 2, p. 375. 4 innocent passage regime could require submarines to surface when passing through straits, and could serious ly limit air overflight in crisis situation The second development involved technolo gical advances in the extraction of minerals from the seabed It has been estimated that 1.5 trillion tons of manganese, nickel, copper, and cobalt in the form of nodules lie on the seabed, mainly in the Pacific Ocean.6 Since the U.S. is critically deficie nt in domestic supplies of all these minerals but copper, the capability of American industries to mine the seabed has important ramifications for those industries and the country as a whole.

Concern over these basic flaws in the Convention led the U.S. in March 1981, only a few days before the opening of the ninth UNCLOS session, to announce its intention to conduct a Ilpolicy review" before concluding negotiations and to remove the delegation leaders held over from the Carter Admini~tration In calling fo r the policy review, the Reagan Administration adhered to the GOP platform plank emphasizing that multilateral negotiations had not focused enough attention on the long-term security requirements of the United States.8 The Republican Party maintained that t he oceans have the potential to help meet the U.S. need to develop new sources of minerals as well as energy and that negotiations prior to 1981 had served to "inhibit United States ex loration of the seabed for its abundant natural re sources. II E Moreo v er, the principles of the NIEO are in deep disagreement with the Administration's view on foreign assistance that Itthe key to national development and human Progress is individual freedom, both political and economic This disagreement forms a major aspec t of the Administration's philosophical objections to the Draft Convention, as well as the rationale for the 1981 policy review.

As a precedent for international negotiations, the Law of the Sea Treaty is extremely important to the G-77 in its attempt to legitimize the concept of the NIEO critic of the Treaty, the Sea Law Treaty would be In the words of a prominent Ibid -9 P* 375.

Stephen Chapman, "Underwater Plunder," The New Republic, April 21, 1982 p. 17.

Bandow, op. cit., p. 476.

William R. Hawkins, "How .to Give Away Your Future: Law of the Sea,"

National Review, April 16, 1982, p. 410.

Quoted in ibid p. 410.

Remarks by President Ronald Reagan to the Opening Session of the Annual Meeting of the Boards of Directors of the World Bank and the I.M.F. at Cancun, Mexico, September 29, 1981. lo 5 the leading edge of the attempt to instill NIEO principles in all international organizations and institutions, and over other global problems, including energy, Antarctica, and 0uterspace.l During the tenth UNC L OS session in August 1981, negotiations again were not finalized, since the policy review had not been completed. The Conference then established a I1final1l eight-week session to begin in March 1982 in New York. The U.S. decided to continue negotiations, in part, because valid questions had been raised about the ability of the treaty to adequately defend vital U.S. economic interests in deep seabed minin and to protect the technology necessary to perform the mining 1 pl Before the final eight-week session began, President Reagan The President called outlined six points which he maintained required attention, if an acceptable Sea Treaty were to be achieved. for a treaty that to meet national and world demands 1 will not deter development of any seabed miner a l resources 2) will assure national access to these resources by current and future qualified entities to enhance U.S. security of supply to avoid monopolization of the resources by the operating arm of the International Authority, and to promote the econ o mic develop ment of the resources 3 regime that fairly reflects and effectively protects the political and economic interests and financial contributions of participat ing states 4) will not allow for amendments to come into force without approval of the p articipating states, including the advice and consent of the U.S. Senate will provide a decision-making role in the deep seabed 5) will not set other undesirable precedents for interna tional organizations; and 6) will be likely to receive the advice and c onsent of the Senate. In this regard, the Convention should not contain provi l1 Gary Knight, "Legal Aspects of Current United States Law of the Sea Policy p. 5 (Paper presented to an AEI Conference: United States Interest in the Law of the Sea The princi ples of the NIEO and the concept of the Common Heritage of Mankind have already found their way into the basis for negotiations at the U.N. Conference on the Exploration and Peaceful Uses of Outer Space UNISPACE).

Guy M. Hicks, "The Law of the Sea Treaty Heritage Backgrounder No. 138, April 28, 1981, p. 1 Review and Analysis, October 19, 1981 l2 A Review of the Issues," 6 sions for the mandatory transfer of private technology and garti cipation by and funding for n a tional liberation m0vernents.l THE FINAL SESSION OF UNCLOS I11 In describing the rationale for the continuing objections of the U.S. Delegation at the end of the eleventh session, the chief U.S. Delegate, James L. Malone, explained that, although modest i m provements had been made in the treaty text, there continued to be an Ifunyielding refusall' on the part of some of the delegates "to engage in real negotiations on most of the major These concerns involved, at least in part, the following provisions of t h e draft treaty The Decision-Makinq Process The first object Convention, Sect 4 with fundina from the ion is to the decision-making process (Draft The Authority, designed to be supported industrial countries 25 percent by the United Stat& alone was given a l most unlimited control over the worldls oceans. It would establish its own mining concern, the Enterprise, and would answer to a 36-nation governing council and assembly modeled on the U.N. Security Council and General Assembly, respectively. Unlike the S e curity Council, however, in which the five permanent members have the power of veto, the Authority's governing council would require a three-fourths majority vote to adopt major decisions with no veto power, thus not providing a proportionate voice to tho s e countries most affected by the decisions. to mine, and would be specifically charged to favor the interests of the developing and the l'other so-called disadvantaged States.Itl5 The United States and its mining industries would thereby be placed in an e x tremely precarious position The Authority would be empowered to deny permission Costs of the Authority and the Enterprise Another serious objection to the Draft C.onvention.lies in the exorbitant costs that would be incurred by the United States and other industrialized nations, if they were to sign the treaty.

The United States would be committed to administrative costs of approximately 20 to $40 million a year to finance the Authority until it became I1self-financingl1 from revenues generated from privat e mining corporations. And the U.S. would have little control over the Authority's budgeting of these funds l3 U.S. Chamber of Commerce, International Business Review, Volume I, No. 1 April 30. 19

82. D. 6. l4 l5 Bandow, op. cit p. 477.

Quoted in The Was hington Post, Saturday, May 1, 1982, p. A16. 7 Secondly, the U.S. would be obliged to provide 25 percent of the costs'of the initially integrated mining operations of the Enterprise, which have been estimated at $1.2 billion in 1979 dollars, 50 percent of which would be provided in interest-free long-term loans and 50 percent in debt guarantees.16 The U.S would have no control over when the interest-free loans might be called or the pay-back schedule for the loans. Furthermore, the U.S. would be obliged to provide 25 percent of the operating costs of the Enterprise per annum, a cost that has not yet been determined.

Third, considering the restrictions that would be placed on their operations, the cost to U.S. private corporations would not be worth their in vestment. Each company involved in seabed mining operations would be required to pay the Authority an initial license application fee of $500,000 and a fixed annual fee of $1,000,000 for exploration rights (there is nothing in the treaty that requires the Authority ever to grant a license however). Under two different systems for the levying of produc tion charges, it has been estimated that, over a 25=year, life-of- contract period, payments from private corporations to the Author- ity would range between $250 million and $2 billion, and that each 25-year contract would generate approximately $400 to $800 million over that period for the Authority costs, each company would have to incur the costs of starting up an operation, which could run as high as $1.5 billion.

Fourth, although figures on the potential revenues from hyrdocarbons extracted from beyond the 200-mile EEZ are imprecise at the present time, it has been estimated that the long-term costs to private oil companies would be two to three percent o f the value of the oil extracted in each field. After the sixth year of operations, payments to the Authority would be one percent of the value of production, and would increase by one percent per annum until reaching seven percent. In summary, these cost s would seem an extremely high price for the U.S. government and American industry to pay in exchange for the uncertainty of U.S influence over the Authority and for the sacrifice of the princi ples of free enterprise and competition.

The Pioneer Mining Pr ovisions After assuming these The third objectionable aspect of the Draft Convention is in the pioneer mining provisions of the Preparatory Investment Proposal (PIP).17 The PIP is a I1grandfather1' clause that allows industrial nations to explore ocean mi neral sites before treaty l6 Figures provided by the U.S. Department of the Treasury, May 5, 1982 based on U.N. estimates. See also: Draft Convention, Annex 111, Article 13.

Draft Convention, Annex 111, Article 2. l7 a ratification. The PIP would be direct ed by a council of four members the Soviet Union, the United States, and two other developed countries. One specific problem for the U.S. is that it is unclear how much power this council would have over the Authority, and how long the U.S. would retain i ts membership.

Secondly, the U.S. would have to garner the vote of one other member on the council to disapprove any action of the Authority.

This would create a situation in which the U.S. could be outvoted if the Soviet Union were able to form a coaliti on with the other members of the council on such critical questions as technology transfer Although the PIP would provide access to pioneer mining firms and allow them to keep the site that they had explored before treaty ratification, it would not ensure that other quali- fied miners from the private sector would have access to future mine sites. U.S. acceptance of this position would be completely contrary to U.S. domestic laws on competition, and would pave the way for the establishment of a monopoly in seabed mining produc- tion.

Treaty Amendment The fourth major objection to the draft treaty lies in the provision to allow the treaty to be opened to amendment after twenty years.18 amended after the necessary period had elapsed, if the G-77 decided that the NIEO were not progressing fast enough, but it would do so without a provision to allow the U.S. to prevent unwanted changes in mining procedures.lg Theoretically, the G-77 could decide at the end of this period to deny U.S. mining ventures full return on their investments or to eliminate their participa- tion completely.26 session understated this as "clearly incompatible with United States processes for incurring treaty obligations."21 Not only does it ensure that the treaty would be The chief America n delegate to the eleventh Mandatory Technology Transfer A fifth objection is in the provision mandating transfer of mining technology from private firms to the Enterprise.22 The l8 l9 Draft Convention, Section 3, Article 155.

A comDromise was effected in New York in April 1982 so that the 20-year revisions will have to be decided by consensus, and not by three-fourths vote of the council years, the council would revert to the "three-fourths" rule.

Miners granted licenses by the Authority must make payment s to the Enter prise ranging from 35 to 70 percent of any return on investment However, if consensus was not reached within five 2o See W. Scott Burke and Frank Brokaw, "Law at Sea," Policy Review No. 20 Spring 1982, p. 74.

Quoted in The Washington Post, Saturday, May 1, 1982, p. A16.

Draft Convention, Annex 111, Article 5 21 22 9 U.S. Delegation answered this at the final session with an option paper that called for the removal of the requirements for mandatory private tech nology transfer and the "Green Book,Il which contained U.S. amendments to the Draft Convention. These amendments proposed in addition to the option paper, that, if technology were to be transferred, it would become the responsibility of governments, not p r ivate companies. The G-77 and the Eastern bloc nations rejected these proposals Itout of hand.1t23 According to the Draft Convention, the Authority would assign sites and approve the contracts of private firms applying to mine seabed minerals. The Enterpr i se, the actual mining arm of the Authority, would extract seabed resources on behalf of the develop ing countries. In summary, there are three basic problems with this organizational structure of the technology transfer provisions of the Convention First, the Authority may enforce compliance with its technol ogy transfer rules by revoking mining contracts Second, if the Authority wishes, it can pass technology on to underdeveloped third parties, which could include the Soviet Union and Eastern bloc nations or Third World countries within the Soviet Itorbit.lt This would present national security problems since the U.S. restricts transfer of security sensitive technology to potential ad~ersaries Third, there is little or no protection of intellectual propert y rights, and the Authority remains the only recourse to judicial arbitration in this area.25 Production Limitations The sixth major objection to the Draft Convention stems from the provision that limits production from seabed mining operations and provide s for commodity agreements.26 These restrictions are part of an attempt to protect land-based producers in both indus trialized and developing nations, and are particularly important to such sub-Saharan African countries as Zimbabwe, Zambia, and Zaire. The establishment of production ceilings represents a 23 24 U.S. Chamber of Commerce, op. cit p. 6 Several "Black-box" technologies used in deep seabed mining are unique to the U.S. They include such items as: subsea robotics; shipboard computers low-light te l evision, and others. The treaty prevents Western industries from using any technologies, even if they had been developed and produced by those industries, in the exploration or exploitation of the seabed if that technology cannot be transferred to the Ent e rprise. This clause by itself could either stymie seabed mining by preventing the use of restrict ed technologies or invite violations of U.S. national security laws U.S. Chamber of Commerce, op. cit p. 5 25 26 Draft Convention, Article 151.lo further exa mple of the bias against production, brought to the conference table by the majority of delegates to UNCLOS 111 According to the chief U.S. delegate to the final session, this anti-production bias should be of primary concern to the U.S Congress.

Benefits to National Liberation Groups The seventh major objection arises from the stipulation for the provision of benefits to national liberation groups and a guarantee to the developing nations of a disproportionate share of the production of the industrialized countries.

The participation of national liberation movements within the scope of this treaty and the distribution of benefits to them was opposed by the United States throughout the final session of UNCLOS 1

11. These groups do not represent entire nations or even their own sizable ethnic groups. Their political and economic goals are antithetical to those of the United States and its allies.

Overall, the redistribution of wealth and benefits, envisioned by the G-77 as an objective of the Seabed Authori ty and the Enterprise, will give rise to three major problems First, it will discourage real economic development by making parasitism comparatively more profitable than self- sufficiency.

Second, redistribution of wealth in this manner will channel money, not to the billions of starving and destitute in the Third World, but to their governments, few of which are democratic, and many of which are corrupt and self-serving.

Third, it will eliminate most prospective mining, with the result that there will be very little revenue to divide among the nations who are signatories to the treaty.28 Nearly all the preceding objections were raised by the U.S Delegation during the final session in March and April 1982 These objections certainly go beyond merely philos ophical excep tions that the Delegation had posed during the negotiations.

Delegation also proposed modifications to the provisions, almost all of which were found unacceptable by the G-77 and the Eastern The In a recent Heritage Foundation Backgrounder, P olicy Analyst Thomas Gulick traces both the indirect and direct support which the United Nations has provided to Marxist-oriented, Soviet-backed guerrilla or liberation groups, such as SWAP0 and the PLO. See How the U.N. Aids Marxist Guerrilla Groups," Ba ckgrounder No 177, The Heritage Foundation April 8, 1982.

Stephen Chapman, op. cit., p. 18 28 11 bloc nations.29 Under the circumstances, the U.S. had little choice but to insist on a vote and vote against treaty adoption NON-SEABED ARTICLES: DOUBTS ABOUT THE TREATY The Draft Convention encompasses subjects other than seabed mining, including the establishment gf Exclusive Economic Zones EEZs marine research, environmental protection, and navigation.

Many treaty proponents in the United States have argued that, even though the mining provisions for the seabed are flawed, the benefits that the U.S. could gain from other parts of the treaty particularly the navigation provisions, would make the proposed treaty worthwhile. If this is the case, and if the econ o mic interests of the United States are not going to be !'sacrificed in the perceived furtherance of narrow folitico-military objectives and amorphous foreign policy goals e, the benefits of other portions of the treaty must significantly outweigh the seve re costs imposed by the seabed mining provisions.

Yet the evidence clearly shows that purported benefits are not significant enough to outweigh the latter costs cases, they do not provide benefits at all, but impose additional costs on the U.S. It is, in f act, possible that the U.S. would fare better in respect to each of these areas of the draft treaty either with a treaty on the terms made available through UNCLOS 111, or with no treaty at all In some Naviaation Articles The provisions for navigation in t he Draft Convention would allow the U.S at best, ambiguous rights of freedom of navigation in the EEZs and submerged transit through straits.31 customary international law for navigation, however, allows the U.S. unrestricted navigation freedom of the hig h seas in the EEZs and the right of submerged transit through straits consisting entirely of territorial waters.32 Even if the U.S. were to accept the establishment of a 12-mile territorial sea, those straits consisting entirely of territorial waters would still be subject to free passage, includ Existing 29 30 See: UNCLOS 111, AICONF. 62/L141/ADD1/28, April 1982, Report to the President of the Conference.

Remarks by Theodore Xronmiller before the Conference on the Economic Aspects of National Security and Foreign Policy Enterprise Society (December 13, 1981 p. 3.

Knight, op. cit., p 9. Although 200-mile exclusive fishing zones are a part of the body of customary international law, the more sophisticated notion of an EEZ, with potential regulatory powers over navigation by coastal states, has not been incorporated a s international law the Challenge to a Free 31 32 12 ing submerged transit international law and state practice.33 The point is well-established in customary Two additional points concern transit passage through straits and the ability of the U.S. to ensu r e this passage without a Law of the Sea Treaty. First of all, significant protection for the few straits that involve U.S. national security would probably be available through bilateral or regional treaties or informal arrangement The ability and willing n ess of the participants in such arrangements, as well as the nature of their bilateral relations with the U.S would constitute the most important factors for compliance jeopardy with or without a Sea Law Treaty, the U.S. would not allow theoretical intern a tional law claims to stand in the way of protecting vital national needs. Likewise, if a coastal state believed that the interdiction of U.S. shipping was in its national interest, and that U.S. military power would or could not prevent such interdiction, the coastal state would be unlikely to hesitate because of a general treaty signed by 150 nations during the past year Secondly, if U.S. national interests appeared to be in Continental Shelf Jurisdiction In the area of continental'shelf jurisdiction, the goal of the United States continues to be unrestricted access to hydrocar- bon deposits anywhere along the natural projection of the North American land mass, subject only to "lateral and opposite state boundary agreements. These rights are provided to th e United States under existing international law. Under the provisions of the Draft Convention, the U.S. would retain jurisdiction'over the Continental Shelf, but only at the price of "revenue sharing which would require the payment of royalties to the Aut hority on oil and gas production from the continental shelf located more than 200 miles from the coast. Thus, the U.S. would not really gain anything in terms of jurisdiction by signing the treaty, and would have to assume an extra cost burden.

Scientific Marine Research The U.S. now possesses the following rights for scientific marine research 33 34 35 Knight, op. cit., p. 9.

Bandow, op. cit., p. 490.

Robert Eckert, "United States Interests and Law of the Sea Treaty versus Reality" (paper presented at th e AEI Conference, October 19 1981), p. 8, cited in Bandow, op. cit., p. 490, note 91 Myths 36 Knight, op. cit p. 10 13 1) unrestricted research rights in the water column, on the surface, and in the atmosphere of ocean areas outside territorial waters, an d 2) a llconsentll regime for continental shelf research as provided b Article 5 (8) of the 1958 Convention on the Continen- tal Shelf. x7 Under the terms of the Draft Convention, U.S. scientists would have to obtain advance permission before undertaking s cien tific investigation anywhere within the 200-mile EEZs permission could, of course, be denied if the G-77 or its suppor ters within the regime desired to prevent such investigation.

Thus, the treaty would be detrimental to U.S. marine research This Fis heries Management In the area of fisheries management, the U.S. requires a system that offers protection to coastal fishery resources and regulates access by foreign fisherman, in addition to non discriminatory access on acceptable terms for the national d istant water tuna and shrimp fleets operating off the coasts of other countries.38 At the present time, under the Magnuson Fishing Conservation and Management Act of 1976 (MFCMA the U.S. has exclusive fishery management authority over all fish within a fi s hery conservation zone (FCZ) extend.ing 200 miles from the U.S. coastline. The MFCMA represents a sophisticated system for managing fisheries by regional fishery management councils. The MFCMA determines the optimum yield for each fishery on an annual bas i s and provides a recommendation, based on that figure, as to the Total Allowable Level of Foreign Fishing (TALFF). Under the Draft Convention the councils's determination of the optimum yield for a given fishery or fisheries and thus too the TALFF may be b rought under severe questioning and even changed arbitrarily. The draft treaty could also seriously inhibit the U.S. tuna fleet's pursuit of migratory schools of tuna into foreign waters, and, in such cases, would deny reimbursement or retribution for sei zure of U.S. tuna vessels.

THE LAW OF THE SEA TREATY AND THE ASSAULT ON MNCS Through its rules for mandatory technology transfer and production limitations, the Law of the Sea Treaty draft represents an important vehicle with which the U.N.'s G-77 hopes to regulate and restrict the activities of multinational corporations (MNCs) that comprise the various mining consortia 37 38 Knight, op. cit p. 11.

Interview with Lucy Stone, Executive Director, National Federation of Fishermen, May 3, 19

82. See also: Kn ight, op. cit p. 11. 14 Assault on the E2NCs includes other U.N. bodies, such as the World Intellectual Property Organization (WIPO through which the G-77 has attempted to revise provisions within the Paris Convention on Patents to require automatic forfe i ture of patent rights and compulsory licensing by the MNCs In an equally significant attempt to restrict the activities of mcs, the developing nations have, through the Commission on Transnational Corporations, which reports to the U.N. Economic and Socia l Council (ECOSOC formulated a IlCode of Conduct" for the MNCs. This code would uphold the absolute power of a state over its wealth natural resources, and economic activities exclusively according to national law allow that the responsibilities of enterpr i ses need not be balanced by any government responsibilities link the negotiation of the Code of Conduct and the Illicit Payments Treaty assist developing nations in reaching their objectives of an increased flow of technology through regulation of the act ivities of the MNCs and significant alteration of the current commercial methods of technology transfer.39 U.S WHAT NEXT?

Overall, few U.S. interests would be protected by the Law of the Sea treaty in its present form that would not be protected just as we ll without a treaty. Notes Richard Darman: the notion of conceding (the negative international precedents set by the proposed treaty) to avoid the precedent of Conference llfailurell (meaning lack of agreement") seems absurd. It would be to trade long ter m substantive failure for avoidance of temporary procedural failure. Trading these objectionable elements for marginal gains in the system of environmental protection and dispute settlement seems out of proportion.

Trading them for questionable interests i n treaty protection of distant-water military mobility seems a tie to the past at the expense of the future.40 Among the questions that the United States must now ask are 39 U.S. Department of State, EB/IFD/OIA, "Current Status of International Activities Relating to Transnational Enterprises (TNEs) as of September 1980, September 16, 1980. 40 Darman, op. cit., p. 375. 15 1) Can the U.S. survive in an often unfriendly global environment, avoid isolation within that environment, and ensure future independen c e of critical mineral supply, if it does not sign the Law of the Sea treaty 2) Under these same circumstances, will U.S. industry be able to exercise a market approach to deep seabed mining, with incentives rather than disincentives for producing minerals from the deep seabed?

Although the U.S. faces potential problems by not signing the treaty, it does not find itself alone in having raised serious and justifiable questions concerning the provisions of the document particularly in the seabed mining area. If the U.S. can continue to find support and cooperation among those countries who raised objections to the treaty throughout the course of the negotiations, the answer to both these questions should be alyes.al THE RECIPROCATING STATES AGREEMENT The most practical alternative to the seabed mining structure established within the Draft Convention would be the Reciprocating States Agreement (RSA). This agreement, though not a treaty in itself, could form the basis of a I1mini-treatya1 among both signa- tori e s and non-signatories to the Law of the Sea treaty. As a mutual claims agreement, the RSA would allow its signatories to harmonize their national ocean mining legislation and to prevent overlapping of mine sites. France, the Federal Republic of Germany, t h e United Kingdom, and the United States drew up the agreement in the early part of 1982. say which, if any, of these countries will sign the RSA with the United States, it offers a reasonable opportunity to'establish a viable alternative to the Sea Law tr e aty. Efforts to convince American allies of this will be facilitated if the President steadfastly supports the decision of the U.S. Delegation to UNCLOS I11 and avoids postponing a final statment of opposition to the Draft Convention Although it is too ea r ly to Based on customary international law, the RSA could be signed by any nation, industrial or developing A developing nation could contract with a Western company to identify a mining site, and could claim and mine it under the agreement. Develop ing n a tions could participate in joint ventures, apply to govern ments, or to the International Monetary Fund, for loans to purchase mining equipment to mine their sites, or they could join a consor tium of western mining c~mpanies seabed as would the Sea Treat y through the establishment of the The RSA would not attempt to regulate the mining of the 41 U.S. Chamber of Commerce, op. cit p. 7. I 16 Authority and the Enterprise. The RSA would allow companies to obtain exploration licenses as a necessary step in det ermining that their exploration sites could be transformed into mining sites, and that they would be able to produce the quantities of minerals necessary to realize a return on their investment.

After exploration had begun, the activities of the companies would be regulated by respective national laws It is the consensus among government officials who have negotiated in the UNCLOS forum for the past several years, as well as among industry representatives who have monitored the progress of the negotiations for the same period, that, once the RSA has been signed between the United States and other indus trial nations, the differences between the various national laws governing mining operations will become less distinct and more compatible with one another w ithout a great deal of bilateral pressure being applied to effect that change.

The capital investment necessary to develop ocean mining sites is of such magnitude that it is unlikely to attract many entrepreneurs unless assurances are forthcoming that the mining property worked will be secure, particularly against opposing claims. Observed Conrad Welling, the senior vice president of Ocean Minerals Company, one of three U.S.-based consortia that have been set up to mine the seabed It will take ten years an d a billion and a half dollars to get the industry started up, but it is not possible to start it until a company is absolutely sure it has a mine site and a production quota.42 If ocean operations are to commence, the companies doing the mining will have t o be assured of their rights to mine by the United States and other maritime' nations. Such assurance could be provided on a unilateral basis with each nation protecting the operations of its own citizens or by a convention among maritime states.43 Certai n ly, the current Draft Convention does not provide such protection. The RSA, on the other hand, establishes provisions for such protection on a bilateral basis between the U.S. and other nations as well as for the resolution of claims and the harmonization of national laws It is uncertain at the present time as to who will sign the RSA. Industry circles speculate, however, that even the Soviets and the Eastern bloc nations may approach the U.S. to sign the RSA, since the protection of their mining interests and the resolution of mutual claims are clearly matters of fundamental concern.44 42 43 44 Quoted in The Journal of Commerce, April 28, 1982, p. 1 William R. Hawkins, "Reaffirming Freedom of the Seas ,I' The Freeman, March 1982, p. 184.

The Journal of Commerce, op. cit p. 1 17 As mentioned previously, the "grandfather clausell of the Draft Convention would allow mining companies to explore the seabed in an effort to determine whether their exploration sites could be transformed into mini n g sites, and' whether they would be able to produce the quantities of minerals necessary to realize a return on their investment. However, the Sea Law treaty would guarantee only one of the identified sites to each respective company or consortium for min i ng purposes. Any other identified sites could be handed over to the Enterprise or to a Third World country which might have contracted with another mining firm that had not invested anything in the exploration of the site more, the mining firm or consorti u m initially undertaking the exploration would have to meet all the other conditions for exploration dictated by the Authority under the terms of the treaty, including: front-end financing, mandatory training of Enterprise personnel, mandatory technology t r ansfer, and parallel exploration by the Enterprise. The RSA, would impose no such restrictions and would, in particular, place no ceiling on the number of sites that the U.S. company could mine Further The RSA is a significant means of providing Western i ndus- tries with the opportunity to mine the seabed on a profitable basis, and, at the same time, satisfy the interests of the develop ing nations in the distribution of the oceans' resources and a share of their profits.

The Question of llBankabilityll of U.S. Mininq Firms Critics of U.S. opposition to the treaty have raised the fear among those who oppose the treaty for valid and substantive reasons that, in the absence of the U.S. signature on the final document, the banking industry would not lend the U .S. companies the cash necessary for the start-up of mining operations since they would lack clear title to the sites. There is a significant opinion among industry representatives and officials that First, it is doubtful that the banking industry would f ully support those companies whose mining activities would be regulated by a Sea Law regime that had not been signed by several, if not all, of the major industrial powers.

One banker with an expertise in funding seabed mining projects maintains that, unde r the present terms of the Sea Law treaty U.S. mining operations would not be Ifbankable,l1 simply because of the restrictions that would be placed on them within the Law of the Sea regime As mentioned previously, the Authority's require ment for technolo g y transfer, and limitation on mining to one explored site only, would make it difficult.for these firms to realize a return on investment.45 45 C. Richard Tinsley, Mining Division, Continental Bank of Chicago The Financing of Deep Sea Mining Paper present e d at the AEI Conference October 19, 1981 18 Second, for many of the companies involved in seabed mining it is likely that there would, at least for the present time, be enough If.in-house funding" to allow those companies to begin operations, even if they were not otherwise llbankable.ll This would be particularly true under present financial conditions, in which the cost of borrowing money is exceedingly high, and the cost of funding an operation estimated to be between $1.25 and 1.5 billion could be stre t ched out over several years be unlikely that a U.S. mining firm would ask a bank for 100 percent financing on a mining operation the support of a capital base or line of credit for several million dollars over several years. The line of credit would not r e present a loan, and would not be contingent upon the firm's ability to produce minerals from the seabed, but on the soundness of the existent assets of the company. Therefore, the argument that under a treaty-less regime, mining companies will not be llba n kablell is not totally relevant in this instance. Convention- al banking terms will, in all likelihood, not be offered to mining companies, whether or not the U.S. signs the treaty Finally, with or without a Law of the Sea Treaty, it would A firm might as k for In addition to the banking question, the mining firms would have to face the possibility that their regular suppliers might be less than willing to provide them with necessary mining techno logy and equipment if they were operating under the Law of t h e Sea regime. At least four major suppliers of mining technology have declared in writing to the National 0cean.Industries Associa tion that they will not supply their technology to the consortia involved in seabed mining because of the inadequate protect ion that would be afforded such te~hnology Under the terms of an RSA, the odious burden of mandatory technology transfer would be lifted, as would the hesitancy of suppliers to provide the consor tia with the technology necessary to mine the seabed.

The Pr omise of Alternative Mineral Sources The prospe.ct of finding other minerals in the seabed that would help the United States become more self-sufficient in the critical minerals of manganese, cobalt, copper, and nickel has also given the U.S. pause in eva l uating the Draft Convention of the Law of the Sea treaty. One promise of alternative sources lies in the further exploration and exploitation of polymetallic sulphide ore deposits, mostly along the continental shelf. These ores are metal-bearing minerals f rom which it is believed a metal or metallic compound can be extracted commercially. Although these minerals were discovered only in 1978 along the Inner Rift Valley of the East Pacific Rise off the southern tip of the Baja 46 Conversation with Richard Le g atsky, Attorney, National Ocean Industries Association (NOIA), May 13, 1982. 19 Peninsula in Mexico by a U.S.-French submersible-based expedition, there is widespread belief that the sulphide deposits may be able to provide some of the same critical miner a ls that can be extracted from the deep seabed. Not only may such extraction be technically possible, but these minerals are likely to be found in higher concentrations than the nodules, and closer to or on the continen- tal shelf. For example, to produce one ton of manganese nodules from the deep seabed, approximately five acres of the seabed would have to be mined In contrast, mining one ton of polymetal lic sulphides would require only about two cubic feet.

More needs to be known about these sulphides, f or it is certain that they could be mined more efficiently than nodules and that they may contain some of the same mineral deposits. If the U.S. were to sign the Law of the Sea Treaty, it is probable that a regime as unacceptable as the one represented by the current treaty draft would eventually be imposed upon the mining of sulphide deposits by which the Authority would exercise the same onerous control over the mining of those deposits that it now proposes for the mining of the deep seabed.

Treaty opponents are not the only group to have raised the possibility of conducting seabed mining in a "treaty=lesstf environ ment. Elliott Richardson, himself former Ambassador to UNCLOS 111, and a steadfast proponent of the treaty, told the U.S.

Congress in 1978 S eabed mining can and will go forward with or without a treaty We have the means at our disposal to protect our ocean interests And we will protect these interests if a comprehensive treaty eludes us.47 We had the means at our disposal in 1978, and we cert ainly have the means today. A comprehensive treaty, as was presented at the eleventh session of UNCLOS 111, has not eluded us; we have, it is hoped, eluded it.

CONCLUSION Given the refusal of many delegates to UNCLOS 111, particular ly among the developing nations, to negotiate in earnest toward fulfilling the six objectives of the Reagan Administration, the decision of the U.S. Delegation not to approve the Sea Law Treaty is justified It should be supported not only by those who had urged the Reagan Admin i stration to reconsider the direction of the negotiations during the past decade, but also by those con cerned with maintaining freedom to transit and explore the oceans and to develop the oceans' resources. For these groups, and for 56 Department of State Bulletin (Washington, D. C Office, February 1981 p. 57 Government Printing I I 20 the Reagan Administration itself, however, several immediate, challenging tasks remain. Among them Demonstrating clear support for the rationale and decision of the U.S. Del e gation to cast a negative vote on the Draft Commission Demonstrating to the American public and to the rest of the world community through all available media why approving the treaty in its present form fails to serve the best interests of either the U.S . or the developing nations Presenting equally clear reasoning, based on the above why the U.S. should not sign the treaty, and why the President should not ratify it Demonstrating that both the ideological and practical objections to the Draft Convention a re shared by a large, diverse body of public and private interest groups, politicians, businessmen, and concerned citizens, and that these objections will neither diminish nor disappear with a change in the political power structure in Washington Stressin g the willingness of the United States to enter into reciprocal arrangements with its allies and with any other nation who wishes to cooperate in acknowledging mutual recognition of claims and ensuring a market approach to the mining of minerals within the seabed summary, the main philosophical argument against the Draft Convention of the Sea Law treaty is that it is based on the concept of property that the seabed is the IfCommon Heritage of Mankind which is antithetical to the American belief that propert y ownership devolves on those who take risks to identify natural resources and mix their labor with them.

Secondly, the concept of the ifcommon Heritage of Mankind" has been used by the U.N.'s G-77 as a vehicle to establish the "New International Economic Order a massive redistribution of wealth from the developed to the undeveloped nations of the world. Such direct transfer of wealth and resources is certainly not in the best interests of the United States or its industrial allies, nor would it ultimately benefit those nations who seek it has already been identified as antithetical to the long-term goal of improving the social and economic ills within the Third World. The Reagan Administration has proposed more workable solutions that would rely on self-su f ficiency, supply-side economics, and Ifbottom-uptf development initiatives The NIEO From the practical point of.view, the current draft of the Sea Law treaty is objectionable because its anti-production bias would restrict the world supply of minerals and U.S. access to strategic minerals; and because it contains concessions to the 1 21 developing nations that would create a disastrous precedent for future international negotiations.

Finally, since all maritime states already enjoy through accepted interna tional law the privileges that would supposedly be granted in the non-seabed articles of the treaty, it offers no additional benefits to its potential signatories. In certain instances, the non-seabed articles may demand that the major maritime states giv e up much of what they now enjoy in such areas as fisheries management.

For these many practical and philosophical reasons, the United States should refuse to become a signatory of the Draft Convention of the Sea Law treaty as it now stands, and should act ively seek an alternative regime that would allow, in coopera tion with other nations, true freedom of access to the sea and its many valuable resources.

Roger A. Brooks United Nations Assessment Project

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