Faulty Repairs: The Law of the Sea Treaty is Still Unacceptable
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Some advocates of the LOST have argued that a universal accord would promote seabed mining. A truly market-oriented accord might do so; not, however, a system that includes the ISA, the Enterprise, the Council, revenue sharing, international royalties, Western subsidies for the Enterprise, a Council veto for land-based minerals producers, and the like. Yet all of those anti-development provisions remain in the revised text.
That the treaty would favor political over productive activity should come as no surprise. The LOST was created in a different era. It was intended to inaugurate large and sustained wealth transfers from the industrialized states. The structure was therefore crafted to advance ideological, not economic, goals. Since then, however, most developing states have moved away from collectivism, and the promise of undersea mining has largely evaporated. Yet the original collectivist framework remains. Even the State Department acknowledges that the new "agreement retains the institutional outlines of Part XI," which contains the seabed mining provisions.10 The treaty has become a solution in search of a problem.
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Still, treaty supporters point out, the LOST, having gained more than the necessary 60 ratifications from UN member nations, will go into effect in November 1994 irrespective of Washington's ratification decision. However, nations cannot be held to surrender their rights because other states have ratified a treaty. Put bluntly, it matters little whether or not Djibouti, Fiji, or Zambia approves of American mining consortia operating in the Pacific. An ISA without any industrialized states as members would be about as effective as the "international regime" that is supposed to be established under the UN Moon Treaty, which--I am not making this up, to quote humorist Dave Barry--formally took effect 10 years ago in July.13
A decentralized and relatively informal system, perhaps with a small international office, that provided for mutual recognition of mine sites and arbitration of conflicts would offer adequate security of tenure for mining companies. In fact, the United States and the Europeans implemented that type of strategy when they rejected the LOST.14 Other nations, particularly those like China, India, and South Korea, which have indicated an interest in seabed mining, could be invited to join such a system as well. That approach would operate with minimal bureaucracy and cost and would be confined to essentials--most important, developing a stable investment regime.
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Finally, there is technology transfer, one of the most odious redistributionist clauses of the original convention. The mandatory requirement has been discarded, replaced by a duty of sponsoring states to facilitate the acquisition of mining technology "if the Enterprise or developing States are unable to obtain" equipment commercially.29 Yet the Enterprise and developing states would find themselves unable to purchase machinery only if they were unwilling to pay the market price or were perceived as being unable to preserve trade secrets. The clause might be interpreted to mean that industrialized states, and private miners, whose "cooperation" is to be "ensured" by their respective govern- ments, are then responsible for subsidizing the Enterprise's acquisition of technology.30 Presumably, the United States and its allies could block such a proposal in the Council, but again, it is hard to predict future legislative dynamics and potential logrolling in an obscure UN body.
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Indeed, production controls, one of the most perverse provisions of the original text, could recur under the revised agreement. The revision does excise most of article 151 and related provisions, which set a convoluted ceiling on seabed production to protect land-based miners. However, it leaves intact article 150, which, among other things, states that the ISA is to ensure "the protection of developing countries from adverse effects on their economies or on their export earnings resulting from a reduction in the price of an affected mineral, or in the volume of exports of that mineral, to the extent that such reduction is caused by activities in the area."22 That wording would seem to authorize the ISA to impose production limits. The United States might have to rely on its ability to round up allied votes to block such a proposal in the Council in perpetuity.
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ISA fees have been lowered, but companies will continue to owe a $250,000 application fee and some, as yet undetermined, level of royalties and profit sharing. (The "system of payments," intones the compromise text, shall be "fair both to the contractor and to the Authority," whatever that means. Fees "shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals," even though seabed production is more expensive, riskier, and occurs in territory beyond any nation's jurisdiction.18 The revised LOST establishes a new "economic assistance fund" to aid land-based minerals producers.19 Surplus funds will still be distributed "taking into particular consideration the interests and needs of the developing States and peoples who have not attained full independence or other self-governing status"--such as the Palestine Liberation Organization.20 Theoretically, America could block inappropriate payments--at least as long as it was a member of the Finance Committee--but over time the United States would come under enormous pressure to be "flexible" and "reasonable."