Draft Sea-Bed Convention

The year 1970 saw major developments in the search for a regime for international control of the sea-bed.

In the summer of 1967 Ambassador Arvid Pardo of Malta asked the United Nations to consider a proposal reserving the bed of the sea exclusively for peaceful purposes and for the benefit of mankind. He did so in response to growing commercial interest in the resources of the sea-bed beyond limits of national jurisdiction and because of apprehensions about the use of the bed for the placement of nuclear weapons.

The question of nuclear weapons was turned over to the Eighteen Nation Disarmament Committee. This Committee produced a treaty which was adopted by the UN General Assembly in November 1970. To handle the issue of mineral exploitation, the General Assembly created a special Sea-Bed Committee. While this committee failed after numerous meetings to reach agreement on general principles, its discussions permitted the General Assembly to reach an agreement in December. This agreement states that the sea-bed resources beyond national jurisdiction should be considered the "common heritage" of mankind, but still leaves unanswered questions on the meaning of common heritage and on the appropriate limits of coastal state jurisdiction.

During early discussions of the Sea-Bed Committee many alternatives were advanced, but they were not presented by the major powers and they were too vague to provide a sharp focus for debate. Finally, at the August meeting of the Sea-Bed Committee in Geneva, the United States submitted a proposal which provided the first real attempt to give character and substance to the concept of common heritage.

The document, titled the "Draft United Nations Convention on the International Seabed Area," proposes that coastal state jurisdiction over sea-bed resources terminate at the depth of 200 meters and that resources beyond that limit be governed by a strong regulatory and revenue-collecting international agency, the International Seabed Resource Authority (ISRA). It proposes also that the revenues collected (net of administrative costs) should be devoted to the economic advancement of the developing states that are parties to the convention.

That the 200-meter depth marks the edge of the continental shelf, despite the fact that the edge of the shelf may occur anywhere from 50 to 550 meters of depth, represents a legal fiction resting on the idea that the average is about 130 meters. More importantly, the edge of the shelf may occur within a few miles of the coast (as off Santa Barbara, where deep water leases have already been let to oil companies) or at distances up to 800 miles. The minimum distance would be stretched a bit by another U.S. proposal—the adoption of a 12-mile territorial sea (which many nations have already claimed) within which the coastal nation would have all resource rights, but through which there would be freedom of transit. Even so, the U.S. position (as advanced at Geneva) calls for the narrowest limit that has thus far been proposed.

There are, however, some blurred edges to the U.S. proposal. Beyond 200 meters to the line where the continental margin meets the ocean abyss, the sea-bed resources would fall within the "trusteeship" of the adjacent coastal nation. Within this international trusteeship area, the coastal nation could decide whether to issue a license and to whom. It would collect all the payments required by the convention and turn over between a half and two-thirds of these payments to the sea-bed authority. And it would enforce environmental and other standards and work requirements (to prevent anyone from just "sitting" on a lease) at least as high as those set by the authority.

Beyond the trusteeship zone, ISRA would have full jurisdiction over the exploitation of sea-bed mineral resources. It would, among other things, issue licenses, supervise the operations of the licensees, and arrange for the collection of international fees and other forms of payments. In the appendices of the draft convention, the terms of the exploitation rights and the means for their allocation are spelled out in great detail. Suggestions are made with respect to size of blocks, rental fees, annual work requirements, cash production payments, etc. It is also suggested that in the area beyond the trusteeship zone, leases will be awarded on the basis of competitive bids for a cash bonus when there is more than one applicant for the same site.

A great amount of detail is presented in the convention with respect to the structure, functions, and operations of the governing body and the constituent assembly, council, tribunal, and various commissions. All together, the package is presented in about 80 pages made up of 77 articles and 5 appendices. In view of the fact that exploitation of sea-bed minerals has not yet taken place beyond 200 meters and that the operations of a deep-sea dredging venture are still highly speculative, the proposal may appear to be excessively detailed and of questionable relevance to activities that might actually take place in the foreseeable future.

However, as stated on the cover, "the draft Convention and its Appendices raise a number of questions with respect to which further detailed study is clearly necessary and do not necessarily represent the definitive views of the United States Government. The Appendices in particular are included solely by way of example."

The "example," according to Ambassador Christopher Phillips when he introduced the draft, "is intended to help the process of reaching agreement on principles. It is an attempt to provide substantive meaning to the principle of common heritage and to demonstrate how nation states may gain by joining in a strong international authority and by adopting narrow limits of sea-bed jurisdiction.

But that is not the only interpretation. Leigh Ratiner, chairman of the Department of Defense's Advisory Group on the Law of the Sea, told the Subcommittee on Seapower of the House Committee on Armed Services that "if we demonstrate sincerely that we are prepared to see the law of the sea modernized, squared with the interests of landlocked states, states with smalls coastlines, states with long coastlines, states that are technologically capable of exploiting the ocean, and states not technologically capable of exploiting the ocean, then perhaps we can obtain the limited rights which the United States needs for its own survival, at least as the world's military situation is today."

The threat to U.S. "survival" is based on two assumptions. The first is that seabed rights tend to migrate upwards through the superjacent waters, surface waters, and air column, and interfere with other freedoms. If, for example, this should lead to claims that the waters are part of the coastal state's territorial sea, then submarines would lose the right to pass through the waters while submerged and aircraft would lose the freedom to pass over the waters. The second assumption is that such losses of naval mobility would be extremely damaging to U.S. interests ("at least as the world's military situation is today"). As Ratiner stated at the Fifth Annual Conference of the Law of the Sea Institute, "the credibility of the Polaris submarine as a deterrent force relies on the ability of the Polaris to avoid identification as to location . . . . Therefore the right of submerged transit through international straits is crucial; if we must surface a Polaris submarine, its nose can be counted as it goes through a strait."

But even a 200-meter-12-mile territorial sea combination would lead to severe restrictions of mobility. A change from 3 to 12 miles would mean that 116 narrow international straits would be overlapped by territorial seas. Thus, when U.S. spokesmen talk about the possibility of a move to 12 miles, it is accompanied by the proviso that this not interdict free transit of military craft. "It is doubtful," states Ratiner, "that if we fail to obtain the necessary protection through international straits at a conference, that we could accept the 12-mile territorial sea.”

This desire for freedom of transit is clearly an important motivation behind the proposal which might be considered, in this sense, as an attempt to "buy" narrow limits of national jurisdiction by promising large revenues from a strong industrial authority. This approach is likely to cloud the issues and exacerbate opposition to what may be considered, in other terms, as a major innovative step in promoting harmony among nations and in providing mankind benefits that may eventually be quite significant. It might also be pointed out that, were it not for military considerations, the U.S. position would probably be quite different and more reflective of the interests of the U.S. Petroleum industry in wide national limits and a relatively weak international authority.

There are no objective economic criteria for setting the limits of jurisdiction at the 200-meter isobath, at the ocean abyss, or any number of miles from shore, though both the desire for a specific limit and the effects thereof have a decisive relation to the distribution of wealth. But economic criteria can be used in examining the proposal for a sea-bed authority; at least in light of speculation about the likely characteristics of a seabed mining venture. From this point of view, the draft convention does an excellent job in providing for orderly and economically efficient operations.

It ensures, for example, that the entrepreneur will have exclusive rights of exploitation. It provides, through the auction mechanism, for a nonarbitrary means of allocating the exclusive rights and of choosing between competing claimants. The auction mechanism together with the royalty payments set the basis for the extraction of a fair amount of the economic rent.

However, the proposed rules and regulations for the area beyond the trusteeship zone do not anticipate the difficulties that may occur from excessively rapid rates of production. Most analyses of the mining of manganese nodules indicate that the output of a single commercially profitable venture will have a significant effect on the market for the constituent metals. It has been estimated that this would lead to major drops in the prices of manganese and cobalt, a slight drop in the price of nickel, and probably no change in the price of copper. Two or three producers would, of course, have considerably greater effects on world prices—and thereby, on the revenues to all producers.

In such a situation, it is likely that the producers themselves would attempt some form of production control or oligopoly to prevent price drops that would make their operations uneconomical. No provisions are made in the draft convention for protecting world community interests in this kind of situation. In fact, it would appear that the rules and regulations would serve to aggravate the condition rather than alleviate it. The work requirements, desirable to prevent speculative holdings, also have the effect of stimulating rapid development, as do cash bonuses at the initiation of production. When commercial exploitation becomes feasible, in the next decade or two, the problems of overproduction may be the most difficult of all for the international authority.

The proposal calls for a striking innovation in international machinery and in the law of the sea. Whether it will succeed remains to be seen. There is strong opposition within the United States, particularly with respect to the termination of sea-bed limits at the 200-meter isobath. The National Petroleum Council, for example, has forcefully recommended full U.S. jurisdiction over mineral exploitation rights out to the place where the continental margin meets the ocean abyss.

Opposition to narrow limits is also very strong outside the United States, particularly among several Latin American states which are adamant in their claims to limits of 200 miles. Soviet opposition is based not on the limits but on the concept of an international authority and sharing of revenues. The Soviets appear to favor the doctrine of laissez faire for the resources of the sea. And many of the developing states are guided by their general suspicions of U.S. motives and by concepts of "common heritage" that place lesser emphasis on goals of economic efficiency and economic rent.

Actually, the promise of great economic rent from the sea-bed may be highly overstated. Oil production has not yet progressed much beyond the 100-meter mark and except in certain isolated instances may not get beyond the 200-meter mark for many years. While several remarkable technological innovations are being developed, the costs of deepwater oil production (200 meters and beyond) are likely to remain high. Whether or not these costs will deter production depends upon many factors, several of which are political and noneconomic in nature. But even if production does take place beyond 200 meters, the high costs make such production marginal in terms of income; this will mean that there is little taxable revenue available for either the coastal nation or the international community.

The development of the sea-bed manganese nodules is equally speculative. A major commercial effort is now being made by Deep Sea Ventures, Inc. Several observers feel that its target date of 1974 for production is unrealistic or that the venture will be uneconomical because of the high initial investments in research and development. Eventually, however, the dredging of deep-sea minerals will become an established fact. But even then, the initial efforts will not produce large taxable profits because of the effect of large-scale output on the markets. There may be little real incentive, in terms of economic rewards, either for the adoption of a strong international authority or for unilateral extensions of sea-bed jurisdiction.

Even if abundant wealth were readily available, this still might not satisfy nations that are less enchanted by concepts of economic efficiency than by concepts of participation in developments. As Ambassador Phillips acknowledged at the termination of the August meetings, "some delegations have raised a second major point [in addition to the meaning of trusteeship], saying that the U.S. draft places undue emphasis on distribution of revenues as distinguished from actual participation in exploration and exploitation by developing countries." For many of the developing states, the concept of "common heritage" is not simply a sharing in the pot, but rather an integral involvement in the administration, management, and development of sea-bed minerals.

These states fear that the draft convention would ensure that the sea-bed would be preserved for the technologically advanced states, would enlarge the technological gap, and would put them in the position of receiving charity. While these fears reflect the overall difficulties between developing and developed states, they are heightened because they relate to an area that is considered the common property of mankind. These opponents may consider their stake in the sea-bed to be more a matter of rights than of privileges, and they may insist that this be reflected in the principles underlying the convention as well as in its substance.

A further difficulty facing the draft is the inability to separate sea-bed issues from issues concerning other uses and resources of the sea. The intricate relationship between sea-bed limits and U.S. military interests is only a small part of the parcel. Fisheries, far more important economically than sea-bed minerals beyond 200 meters, are also involved, as are problems of pollution and waste disposal, maritime commerce, and scientific investigation. And each state brings to these issues a different set of values and a different set of goals.

While the draft convention may help (even if negatively) in establishing principles and defining common heritage, it is not likely to succeed in keeping the issues separate from each other. Indeed, in late 1970 the General Assembly resolved to open up all the issues of the sea at a new conference of plenipotentiaries to be convened in 1973.

In order for agreement to be reached during a new conference, there will have to be considerable compromises among the various positions. In closing his remarks at the end of the August meeting, Ambassador Phillips said, "We are at a dangerous crossroads. We have a choice: one path may give future generations hope for a world in which international cooperation and sanity will prevail. . . .The other path will perpetuate a world of international rivalry and selfishness. . . .This crossroads, Mr. Chairman, is all the more dangerous because mere inaction on our part precludes the first path and dooms us to the second."