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Refloating the Law of the Sea treaty

By Ronald S. KatzRonald S. Katz was deputy director of the US State Department's Office of the Law of the Sea Negotiations in 1977-1978. Now in private law practice, he has provided consultation services on foreign investment in developing countries. / February 1, 1982



The majority of countries at the Third United Nations Conference on the Law of the Sea have served notice that they will conclude a treaty governing the world's seas this year whether the United States joins with them or not. Although the significance of such a threat is difficult to assess, its potential for creating instability and hostility is considerable. In any event, it seems clear that after more than seven years of negotiation, the time has come for the US to fish or cut bait on this effort by 157 countries to replace the work of the 17th-century Dutchman, Grotius.

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The historical potential of the treaty is awesome. Consider the possibility that the treaty's most unusual concept, that resources beyond the jurisdiction of any nation are ''the common heritage of mankind,'' could become in 300 years the commonplace that Grotius's ''freedom of the seas'' is today. Whether that step toward international cooperation will be taken depends in large part on US participation.

In the summer of 1980, Elliot Richardson, President Carter's representative to the Law of the Sea conference, stated that the draft treaty would probably be initialed in 1981. Last spring, however, the leaders of the US delegation to the conference were relieved of their duties the day before the conference was to reconvene and the Reagan administration announced that the treaty would be extensively reviewed because of dissatisfaction with the part of the treaty which provides for the mining of manganese nodules thousands of feet below the ocean's surface and thousands of miles from any land. The administration's unhappiness stems primarily from the fact that the principles proposed to govern the mining of this heritage do not comport with American free enterprise. The administration has now stated that it will attempt to renegotiate the provisions of the draft treaty dealing with deep seabed mining.

If American free enterprise is the objective of the Reagan administration in the Law of the Sea negotiations, it is clear that the US will not sign a treaty. Indeed, when the conference started in 1974, one could have predicted without much difficulty that the fruits of the negotiations of 157 countries would not produce American free enterprise.

Assuming, then, that another standard is appropriate, what should it be? US policy surely deserves a heavy influence in the deep seabed mining portion of the treaty, not only because of the political and economic importance of the US but also because it will be mainly US companies who are developing the technology and risking the capital necessary to mine the deep seabed. Therefore, it would be reasonable for the US to expect and for the conference to produce a treaty which created conditions in which well-run deep seabed mining companies can make a reasonable return on their investment.

To create such conditions, it is quite clear that the treaty does not have to reflect American free enterprise in all of its particulars. US multinational mining companies have for many years been investing capital in countries where free enterprise is unheard of. These ventures exist not because of the economic principles of the host countries but rather because the terms and conditions under which the mining companies operate are sufficient to allow them to make a reasonable return on their investment.

If the Law of the Sea treaty provisions on deep seabed mining compare favorably with the terms and conditions offered by developing countries where multinational mining companies are making profits, then those treaty provisions should not be an obstacle to the ratification of the entire treaty, which provides important navigational, fishing, resource exploitation, and environmental benefits to the US.

The fact is that the draft treaty seems to provide better terms and conditions for mining than are currently available in the third world. Payments to the proposed International Seabed Authority, for example, are not more onerous than payments to third-world governments, and the Authority, because of its international nature, is likely to be far less corrupt and to provide more evenhanded dispute settlement than many third-world governments.

Similarly, transfer of technology provisions in the draft treaty seem no more onerous than those required in some developing countries and are certainly less onerous than so-called ''infrastructure clauses,'' by which some developing countries require investors to build roads, hospitals, schools, and other infrastructure for general use.

Finally, production limitations in the draft Law of the Sea treaty, which are designed to protect land-based developing country producers of the same minerals which come from the seabed, are set so high that they may not ever limit production. In any event, such limitations are not unique to the treaty: they exist not only in the third world but even in our own state of Texas.

Because the terms and conditions under which mining companies will mine the deep seabed are better than those offered to mining companies in the third world , it is in the interest of the US to sign a Law of the Sea treaty with the majority of other nations next year. Having failed to become the policeman of the world, we should not try to become its mining commissioner. Rather, we should participate in multilateral efforts which, although they do not perfectly reflect US domestic principles, reasonably accommodate them.

Ronald S. Katz was deputy director of the US State Department's Office of the Law of the Sea Negotiations in 1977-1978. Now in private law practice, he has provided consultation services on foreign investment in developing countries.