Testimony of John B. Bellinger III: On Law of The Sea Convention (June 14, 2012)
[ Page 2-3 ]
When the Bush Administration came into office in January 2001, we began a careful review of all of the treaties that had been submitted to the Senate by the Clinton Administration to determine which treaties the Bush Administration would support and would not support. The Bush Administration did not support all of the treaties that had been supported by the prior Administration. For example, the Bush Administration did not support the Comprehensive Nuclear Test Ban Treaty, which had been strongly supported by the Clinton Administration. We did not support the Kyoto Protocol, which had been signed by the Clinton Administration. Many Bush Administration officials were similarly skeptical of the Law of the Sea Convention because it was a multilateral treaty, and President Reagan had refused to sign it. However, after a year-long interagency review, the Bush Administration concluded that the Convention was in the U.S. national interest and decided strongly to endorse the treaty. In February 2002, the Administration submitted its first Treaty Priority List to this Committee and listed the Law of the Sea Convention as a treaty for which there was an “urgent need for Senate approval.”
Let me emphasize that the Bush Administration did not decide to support the Law of the Sea Convention out of a blind commitment to multilateral treaties or international organizations. No one has ever accused the Bush Administration of an over-abundance of enthusiasm for the United Nations or multilateralism. Indeed, the Bush Administration was especially skeptical of the United Nations and many U.N. bodies, such as the Human Rights Council. And the Bush Administration was especially committed to defending U.S. sovereignty and international freedom of action, particularly after September 11.
The Bush Administration decided to support the Law of the Sea Convention and to provide senior Administration officials to testify in favor of the Convention only after weighing the Convention’s benefits against its risks. We ultimately concluded that, on balance, the treaty was clearly in the U.S. national security, economic, and environmental interests.
[ Page 7-8 ]
Third, U.S. companies have been unwilling to begin costly exploration and extraction activities in reliance on theoretical and untested legal arguments that have not been accepted by other countries and that are flatly contrary to the terms of Law of the Sea Convention. Companies instead want the clear legal certainty provided by the Convention before making investments that could run into the billions of dollars. Critics of the Convention who are concerned about the possibility of international litigation should be much more concerned about the possibility of lawsuits against the United States or U.S. companies if the United States were to engage in resource extraction on the U.S. extended continental shelf or on the deep seabed contrary to the terms of the Convention, than about possible environmental claims against the United States if the U.S. were to join the Convention. Moreover, a U.S. company that initiates deep seabed mining outside the Convention risks having a foreign company sponsored by a country that is party to the Convention jump on its claim after it has proven to be profitable. No U.S. company would want to take that legal risk.
[ Page 10-11 ]
Environmental Obligations/Environmental Disputes. Some have argued that the Convention might obligate the U.S. to comply with international environmental agreements (such as the Kyoto Protocol) to which the U.S. is not a party, or subject the U.S. to mandatory dispute resolution for marine pollution (such as atmospheric pollution or pollution from land-based sources). I share the concerns of some critics of the Convention about the goals of some groups to embroil the U.S. in international litigation. As the State Department Legal Adviser during the Bush Administration, I witnessed first-hand the efforts of many groups hostile to U.S. counter-terrorism actions to wage “lawfare” against the United States. In my view, however, joining the Law of the Sea Convention does not subject the United States to significant new legal risks, especially when compared to the benefits of joining the Convention.
The terms of the Convention do not require Parties to comply with other international environmental treaties. With respect to land-based sources and pollution through the atmosphere, Part XII, Section 5 of the Convention requires Parties at most to adopt laws and regulations to prevent, reduce and control marine pollution, but in doing so, parties are required only to “tak[e] into account internationally agreed rules, standards and recommended practices and procedures.” This does not impose an obligation to comply with Kyoto or any other environmental treaty or standard, including treaties to which the U.S. is not a party.
In addition, the U.S. would not be subject to dispute resolution for allegedly violating the Kyoto protocol or any other environmental treaty, including agreements governing pollution from land-based sources. The Convention’s dispute settlement system applies only to disputes “concerning the interpretation or application” of the Convention itself, not to the alleged violation of other treaties. Articles 297 and 298 of the Convention further exclude certain potentially sensitive disputes from dispute settlement.
[ Page 11 ]
Finally, as I have noted previously, those who are rightly concerned about international litigation against the United States should be much more concerned about subjecting the United States and U.S. businesses to international claims if the United States were to try to claim the resources on its extended continental shelf or on the deep seabed without becoming party to the Law of the Sea Convention. In my view, the risk of environmental litigation against the United States if it joins the Convention is low. The risk of international litigation against the United States if it were unilaterally to claim the resources on its extended continental shelf or on the deep seabed, without becoming party to the Convention, is much higher.
[ Page 8-9 ]
U.N. “Taxes”/Royalty Payments. Some have objected that the U.S. would be obligated to pay fees to the International Seabed Authority -- which some have inaccurately called “U.N. taxes” -- if the U.S. were to join the Convention and allow resource development on its extended continental shelf. Some have suggested that these fees could result in the loss of billions of dollars to the U.S. Treasury. The Bush Administration carefully considered these concerns and concluded that the licensing and fee structure established by the Convention was acceptable.
First, the fees are minimal in comparison to the enormous economic value that would be received, and the jobs that would be created, by the United States if its industry were to engage in oil, gas, and mineral development on the U.S. extended continental shelf in the Arctic. The U.S. would be required to make no payments for the first five years of production at any site, and then to pay a fee of one percent per year starting in year six, up to a maximum of seven percent in year twelve. Assuming the U.S. Government imposed, for example, a royalty fee of approximately 18 percent on the value of production on the U.S. extended continental shelf, that would be 18 percent more than the U.S. would gain if we stayed outside the Convention. In other words, joining the Convention would attract substantial investment, and produce substantial revenues for the Treasury, that would not otherwise be produced. So, even when the Convention payment is at its highest rate of 7 percent, the U.S. Treasury would still be 11 percent better off with respect to each production site than it would be if the U.S. does not join the Convention. This would be an enormous benefit -- not a loss -- to the U.S. budget.
Second, these fees would only have to be paid by the United States if there is actually production on the U.S. extended continental shelf.
Third, these fees were negotiated by U.S. negotiators in consultation with experts from the U.S. oil and gas industry, who deemed them to be acceptable.
Fourth, all of the western industrialized countries, including our major allies, as well as Russia and China, have concluded that these fees are acceptable and have joined the treaty. If these fees would actually cause the economic woes claimed by critics, then certainly these other countries would not have been willing to agree to pay them. Instead, most of these countries are already busily surveying and staking claims to their extended continental shelves so that their oil, gas, and mining companies can exploit these resources. For example, Norway -- which already has a sovereign wealth fund worth $700 billion, all of which has been derived from Arctic oil and gas profits -- is preparing to make a claim to the oil and gas on its extended continental shelf in the Arctic. Russia, Canada, and Denmark are all preparing to make similar claims in the Arctic using the provisions of the Convention, and they have agreed to pay royalties if they exploit the resources on their extended continental shelves.
Finally, royalty fees would not be paid to the United Nations. They would be paid through the International Seabed Authority, and back to the Parties to the Convention under a distribution formula developed by the Seabed Authority’s Council, where the U.S. would have a permanent seat and a decisive voice on how fees would be spent.