More than two decades of negotiation culminated in 1982 when the Third United Nations Conference on the Law of the Sea (UNCLOS) approved the Law of the Sea Treaty. The U.S. was not among the 117 nations (and two other delegations) that penned their approval of the treaty. American opposition was not without effect, however: the LOST failed to gain the 60 ratifications necessary to take effect. Even the Soviet Union, which had proudly proclaimed its solidarity with the developing nation lobby pushing the treaty, did not formally bind itself.

What is the LOST?

The genesis of the treaty was President Truman’s 1945 proclamation asserting U.S. jurisdiction over America’s continental shelf, and similar extensions of national control by other states. The First UNCLOS was opened in 1958; it drafted conventions dealing with resource jurisdiction and fishing. UNCLOS II convened in 1960 to take up unresolved fishing and navigation issues. Soon thereafter the possibility of seabed mining led the United Nations to declare the seabed to be the “common heritage of mankind.” A Seabed Committee was established, eventually leading to UNCLOS III, which first met in 1973. Nine years and eleven sessions later a treaty was born.

The LOST, which runs 175 pages and contains 439 articles, covers seabed mining, navigation, fishing, ocean pollution, marine research, and economic zones. Much of the treaty is unobjectionable, or at least unimportant when in error; the navigation sections are a modest plus. But not so Part 11, as the Orwellian provisions governing seabed mining are called. So flawed was this section that it could be fixed only by tearing it up.

The LOST’s fundamental premise is that all unowned resources on the ocean’s floor belong to the people of the world, meaning the United Nations. The U.N. would assert its control through an International Seabed Authority, ruled by an Assembly, dominated by poorer nations, and a Council (originally on which the then‑U.S.S.R. was granted three seats), which would regulate deep seabed mining and redistribute income from the industrialized West to developing countries. The Authority’s chief subsidiary would be the Enterprise, to mine the seabed, with the coerced assistance of Western mining concerns, on behalf of the Authority.

Any extensive international regulatory system would likely inhibit development, depress productivity, increase costs, and discourage innovation, thereby wasting much of the benefit to be gained from mining the oceans. But the byzantine regime created by the LOST is almost unique in its perversity. Unfortunately, the amendments made in 1994, which I discuss below, do not change the essential character of the treaty.

For instance, as originally written, the treaty was explicitly intended to restrict, not promote, mineral development. Among the treaty’s objectives were “rational management,” “just and stable prices,” “orderly and safe development,” and “the protection of developing countries from the adverse effects” of minerals production. The LOST explicitly limited mineral production, authorizing commodity agreements (rather like OPEC). Further, the treaty placed a moratorium on the mining of other resources, such as sulphides, until the Authority adopted rules and regulations — which could be never.

The process governing mining reflected this anti-production bias. A firm had to survey two sites and turn one over gratis to the Enterprise even before applying for a permit, in competition with the favored Enterprise and developing states. The Authority could deny an application if the firm would violate the treaty’s antidensity and antimonopoly provisions, aimed at U.S. operators. And the Authority’s decisions in this area were to be set by the Legal and Technical Commission, the membership of which could be stacked, and the 36-member Council, which would be dominated by developing states, making access for American firms dependent upon the whims of countries that might oppose seabed mining for economic or political reasons.

Who Would Want to Bid?

Indeed, it is not clear that a firm would have wanted to bid even if it thought it could win approval. The convention required that private entrepreneurs transfer their mining technology to the Authority, for use by the Enterprise and developing states. The term technology was so ill-defined that the Authority might be able to claim engineering and technical skills as well as equipment, yet the treaty imposes no effective penalties for improper disclosure or misuse of transferred technology. Miners would also have to pay their overseer, the Authority, and competitor, the Enterprise: $500,000 to apply, $1 million annually, plus a royalty fee. The sponsoring country would be responsible if a firm failed to pay; moreover, the industrialized West would have to provide interest-free loans and loan guarantees, for which Western taxpayers would be liable in the event of a default, to the U.N.‘s mining operation.

All told, the Enterprise would enjoy free mine site surveys, transferred technology, and Western subsidies. The Enterprise also, naturally, would be exempt from Authority taxes and royalty payments. Also favored are developing states and 105 “land-locked and geographically disadvantaged” countries.

Even this attenuated right to mine the seabed could have been dropped at the Review Conference to be held to assess the LOST 15 years after the commencement of commercial operations if three-fourths of the member states so decided. The mere possibility of Third World states effectively confiscating potentially enormous investments made over more than a decade would have discouraged potential private entrepreneurs. That, in turn, would have given the well-pampered Enterprise and likely state-subsidized firms of developing states a further advantage.

Admittedly, such practical objections might seem of little import since the promise of seabed mining is far less bright today than it was when UNCLOS convened, but operations might still become economically feasible later this century, especially as technological innovation makes the mining process less expensive. But even if no manganese nodules are ever likely to be lifted commercially from the ocean’s floor, the LOST remains unacceptable because of its coercive, collectivist underpinnings.

The New International Economic Order

UNCLOS III was held in a different era, a time when communism reigned throughout much of the world, Third World states were proclaiming socialism to offer the true path to progress and prosperity, and international organizations were promoting the “New International Economic Order,” or NIEO, to engineer massive wealth redistribution from the industrialized to the underdeveloped states. Indeed, much of the LOST, particularly regarding seabed mining, was dictated by the so-called Group of 77, the developing states’ lobby.

These nations saw the LOST as the leading edge of a campaign that included treaties covering Antarctica and outer space, expanded bilateral and multilateral aid programs, and a veritable gallery of UN alphabet-soup agencies — CTC, ILO, UNCTAD, WHO, and WIPO. Commented former Maltan U.N. Ambassador Arvid Pardo, who coined the phrase, “common heritage of mankind,” American acceptance of the sea treaty “however qualified, reluctant, or defective, would validate the global democratic approach to decision making.”

Economic reality eventually hit many poorer states. Developing states began to adopt market reforms and the NIEO disappeared from international discourse, along with any mention of the LOST.

Although American ratification of the LOST would not be enough to resurrect the NIEO, it would nevertheless enshrine into international law some very ugly precedents. One is that the nation states (not peoples) of the world collectively own “all the unclaimed wealth of this earth,” in the words of former Malaysian prime minister Mahathir Min Mohamad. Granting ownership and control to petty autocracies with no relationship to the resource and nor any ability to contribute to their development makes neither moral nor practical sense. The LOST raises to the status of international law self-indulgent claims of ownership to be secured through an oligarchy of international bureaucrats, diplomats, and lawyers. And the treaty’s specific provisions, mandating global redistribution of resources, creating a monopolistic public mining entity, restricting competition, and requiring the transfer of technology, reflect the sort of statist panaceas that were discredited by the historical wave that swept away Soviet-style communism and lesser socialist variants around the globe.

Countervailing Benefits?

Some observers acknowledged the treaty’s failings, but nevertheless contended that it had more than enough positive benefits to warrant signing. However, gains in other areas are limited at best. Many of the non-seabed provisions are marginally beneficial, while a number are somewhat harmful. Sections governing fishing and maritime research, for instance, make few changes in current law; the boundary-setting process strips some resources away from the U.S.; the pollution provisions restrict America’s ability to control some emission sources; and the U.S. might eventually have to share oil revenues from development of the outer-continental shelf. The treaty’s authorization of 200-mile exclusive economic zones (EEZs) merely reflects what has become customary international law.

Perceived as far more important are the navigation provisions. A number of officials at both the Departments of State and Defense have argued that the document is vital to guarantee American naval rights. Yet Washington’s refusal to sign the LOST left critics predicting chaos and combat on the high seas two decades ago — since then we have witnessed not one incident as a result of America’s failure to join the LOST.

Nor is the treaty unambiguously favorable to transit rights. The document introduces some new limitations on navigation involving the EEZs, territorial seas, and water surrounding archipelagic states. At other times the LOST’s language is ambiguous — regarding transit rights for submerged submarines, for instance — limiting the value of the treaty guarantee. International law analyst Gary Knight even argues that “the difficulty of establishing our legal right to EEZ navigation and submerged straits passage would be no more difficult under an existing customary international law argument than under the convoluted text of the proposed UNCLOS.” In short, there is only modest theoretical advantage in this area for which to trade away the mining provisions.

Moreover, any LOST legal protections offer little by way of real practical gain. Few nations are likely to interfere with commercial shipping because they have far more to gain economically from allowing unrestricted passage. Where countries perceive their vital national interests to be at stake — Great Britain in World War I and Iran and Iraq during their war throughout the 1980s — they are not likely to allow juridical niceties to stop them from interdicting or destroying international commerce. Even unambiguous rights under international law did not protect American vessels and aircraft when North Korea seized the USS Pueblo and China held the EP‑3 surveillance plane. Most coastal nations will make policy based on perceived national interest more than abstract legal norms.

Indeed, LOST membership has not prevented Brazil, China, India, Malaysia, North Korea, Pakistan, and others from making ocean claims deemed excessive by some. In testimony last October Adm. Mullen warned that the benefits he believed to derive from treaty ratification did not “suggest that countries’ attempts to restrict navigation will cease once the United States becomes a party to the Law of the Sea Convention.”

As for military transit, with or without the LOST, America needs to concentrate on maintaining good relations with the handful of strategically-placed countries. The prowess of the U.S. Navy, not the LOST, will remain the ultimate guarantor of America’s ability to roam the seas. Of course, even with friendly states Washington would prefer not “to have to use muscle to exercise our rights,” observed former LOST negotiator Elliot Richardson. But the treaty is likely to matter only where countries have neither the incentive nor the ability to interfere with U.S. shipping. Moreover, in a world in which the U.S.S.R. has disappeared, the Red Navy is rusting in port, China has yet to develop a blue water navy, and Third World conflicts no longer threaten America through their connection to the Cold War, Washington is rarely going to have to send its fleet where it is not wanted.

Another concern is the impact of LOST on the President’s Proliferation Security Initiative. Although treaty advocates suggest that the LOST would provide an additional forum through which to advance the PSI, it seems more likely that adherence to LOST would constrain Washington’s ability to intercept weapons shipments which are problematic, even if legal under international law, including the treaty. After all, any anti-proliferation policy treats nations differently based upon a subjective assessment of the stability and intention of a particular regime. The LOST makes no such distinctions. At best, the treaty is ambiguous regarding the seizure of WMD shipments. Adopting such ambiguity probably does not strengthen Washington’s position.

Further, treaty advocates contend that whatever the faults of LOST, only participation in the treaty can prevent future damaging interpretations, amendments, and tribunal decisions. However, there is no guarantee that interpretations under the LOST would not impinge upon U.S. military activities. In his Senate testimony last fall, State Department legal adviser William H. Taft IV noted the importance of conditioning acceptance “upon the understanding that each Party has the exclusive right to determine which of its activities are ‘military activities’ and that such determination is not subject to review.” Whether other members will respect that claim is not so certain. Adm. Michael G. Mullen, the Vice Chief of Naval Operations, acknowledges the possibility that a LOST tribunal could assert jurisdiction and rule adversely, impacting “operational planning and activities, and our security.”

Moreover, American friends and allies, both in Asia and Europe, have an incentive to protect American navigational freedom. So long as the U.S. maintains good relations with them — admittedly a more difficult undertaking because of strains in the aftermath of the war in Iraq — it should be able to defend its interests indirectly through surrogates. If the nations which most benefit from American navigational freedom are unwilling to aid the U.S. while Washington is outside the LOST, they are unlikely to prove any more steadfast if Washington is inside the LOST.

Collectivism or Chaos?

The final argument on behalf of the LOST is that no matter how unfavorable it may be for international mining, it is better than nothing. Without some security of tenure to deep sea mining sites, it is said, companies will not invest the millions necessary to begin operations. Certainly firms will not take the potentially enormous risks of such a new venture if they might face conflicting claims under a competing treaty and regulatory regime.

However, most businessmen understand that it makes little difference whether or not, say, Zimbabwe recognizes their right to harvest manganese nodules in the Pacific. Indeed, given the dynamics of seabed mining, it probably doesn’t even matter if other industrialized nations, with firms capable of mining the ocean floor, recognize one’s claim. The seabed’s irregular geography and surplus of nodules make “poaching” uneconomical — it would make more sense to develop a new site rather than attempt to overrun someone else’s. The dynamics of other resource development vary to some degree, but in general it would have been quite simple to build a simple alternative to the LOST.

In 1980 the U.S. passed unilateral legislation, The Deep Seabed Hard Minerals Act, to provide interim protection for American miners until implementation of the LOST. The Act could have been amended to create a permanent process for recording seabed claims and resolving conflicts. Such legislation could then have been coordinated with that of the other leading industrialized states through a formal treaty. No international bureaucracy was ever necessary.

In the end, a bad treaty is worse than no treaty. Back when the LOST was a major political issue, the American Mining Congress observed:

While the best of all worlds would be a comprehensive, universally acceptable treaty, a treaty such as the current UNCLOS draft that fails to protect American interests is no basis for investment. We can easily do without the “comprehensive” and “universal,” but we cannot do without “acceptable.”

A Window that Should Remain Closed

Despite predictions of doom after the U.S. refused to sign the treaty, the world moved America’s way. As mineral prices declined, so too did the prospects of massive mineral harvests from the seabed. Third World states that had begun planning on how to spend the windfall they expected to collect through the UN began to face reality. And as developing countries started experimenting with market economics, they backed away from the collectivist NIEO, of which the LOST had been an integral part. By the early 1990s some Third World diplomats were privately admitting to U.S. officials that the Reagan administration had been right to kill the treaty.

But in Washington bad ideas never die. They simply lie dormant, waiting for a sympathetic bureaucrat or politician to revive them. Moreover, international treaties attract State Department negotiators like lights attract moths. Thus, the Clinton administration decided to “fix” the LOST.

Negotiations followed in 1993 and 1994. After winning a few changes in the treaty’s most burdensome provisions, the State Department enthusiastically endorsed the agreement. On July 27, 1994 before the UN General Assembly U.S. Ambassador Madeleine Albright praised the LOST for providing “for the application of free market principles to the development of the deep seabed” and establishing “a lean institution that is both flexible, and efficient. Two days later Washington formally affixed its signature to the convention, which now sits before the Senate for ratification.

Although the revised LOST is not as bad as its predecessor, it would still create a Rube Goldberg system — with International Seabed Authority, Enterprise, Council, Assembly, and more — that is guaranteed to become yet another multilateral boondoggle. Its performance so far has been mixed at best: For instance, the ISA has been on the losing end of fights with the government of Jamaica when the latter turned off the ISA’s air conditioning. With no seabed mining in the offing, protecting “the emblem, the official seal and the name” of the ISA, as well as abbreviations of that name through the use of its initial letters,” has been a matter of some concern to authority officials.

A fully-functioning ISA is likely not only to waste money, but also to discourage ocean minerals production. Moreover, the treaty would resurrect the redistributionist lobbying campaign once conducted by developing states unwilling to deal with the real causes of their economic failures. Indeed, the LOST would essentially create a another UN with the purpose of transferring wealth from industrialized states to the Third World voting majority.

Of course, treaty proponents all say that the treaty was “fixed.” Actually, that’s not the case. For instance, the treaty still includes an Authority, Enterprise, Assembly, Council, revenue sharing, international royalties, Western subsidies for the Enterprise, a Council veto for land-based minerals producers, and the like. The original statist framework remains. Even the State Department has acknowledged that the new “Agreement retains the institutional outlines of Part XI.”

The Clinton administration did work hard to turn a disastrous accord into a merely bad one. But for all of its emphasis on the individual trees, it left the worst forests standing. In some places it substituted ambiguity for clearly negative provisions. The result is an improvement — and a dramatic testament to the distance that market ideas have traveled since the LOST was opened for signature in 1982. But the ISA remains an unnecessary boondoggle, intended only to hinder seabed development. The Enterprise continues to serve as an economic white elephant. The financial redistribution clauses remain a special interest sop to poor states. And the entire system is likely to end up bloated and politicized, like the UN.

For instance, the treaty retains both the ISA, of undetermined size, and the Enterprise, an international version of the ubiquitous state enterprises that have failed so miserably all over the world. The Authority remains almost comically complicated, with an Assembly and Council, and such subsidiary bodies as the Finance Committee and Legal and Technical Commission, all with their own arcane rules for agendas, memberships, procedures, and votes. The LOST revisions restrict some of the ISA’s discretion, but still submerge seabed mining in the bizarre political dynamics of international organizations. Private firms must continue to survey and provide, gratis, a site for the Enterprise for each one they wish to mine. Anti-monopoly and ‑density provisions would still apply disproportionately to American mining firms.

ISA fees have been lowered, but companies would continue to owe a $250,000 application fee and some 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.)

The revised LOST establishes a new “economic assistance fund” to aid land-based minerals producers. Surplus funds would 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 PLO. Theoretically America could block inappropriate payments — at least so long as it was a member of the Finance Committee — but over time the U.S. would come under enormous pressure to be “flexible” and “reasonable.”

In fact, redistribution has been an important objective for the ISA during its short life so far. For example, a proposal was made for an African institute of the oceans, as if that was the highest priority for countries suffering from civil war, economic collapse, and social chaos. Voluntary trust funds have been established to aid developing countries, though few people or nations have rushed forward to contribute — forcing the ISA to fill the fund coffers.

Even some of the specific “fixes” look inadequate. Consider the voting system, admittedly a major improvement over that in the original accord. According to the revised treaty, the U.S. would be guaranteed a seat on the Council, though still not a veto. The Council would consist of four chambers, any one of which could block action if a majority of its members voted no. On matters of serious interest the U.S. probably could win the necessary extra two votes in its chamber to form a majority, but not necessarily. The career foreign service officers likely to represent most nations, including America, at the ISA would not want to be forever known as obstructionists. Moreover, this purely negative veto power does not guarantee that the ISA would act when required, to approve rules for mining applications, for instance.

An additional problem occurs because the land-based mineral producers, whose interest is antagonistic to the very idea of seabed mining, and “developing States Parties, representing special interests,” such as “geographically disadvantaged” nations, each have their own chamber, and thus a de facto veto over the ISA’s operations. Moreover, the qualification standards for miners are to be established by “consensus,” essentially unanimity, which gives land-based producers as much influence as the U.S. The possession of a veto provides them with an opportunity to extract potentially expensive concessions — new limits on production, for instance — to let the ISA function. Unfortunately, once the Authority asserts jurisdiction over seabed mining, potential producers would be hurt by a deadlock.

Indeed, production controls, one of the most important controversies in the original text, could recur under the new 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.” That wording would seem to authorize the Authority to impose production limits. The U.S. might have to rely on its ability to round up allied votes to block such a proposal in the Council in perpetuity.

Funding remains a problem as well. The U.S., naturally, would be expected to provide the largest share of the ISA’s budget, 25 percent to start. How much that would be we don’t know; the budget is to be developed through “consensus” by the Finance Committee, on which the U.S. is temporarily guaranteed a seat (“until the Authority has sufficient funds other than assessed contributions to meet its administrative expenses”), and approved by the Assembly and Council. Years ago the U.N. estimated that the ISA could cost between $41 and $53 million annually, on top of initial building costs of $104 and $225 million. The Clinton administration contended that the new agreement provided for “reducing the size and costs of the regime’s institutions.” How? By adopting a paragraph in the revised text pledging that “all organs and subsidiary bodies to be established under the Convention and this Agreement shall be cost-effective.”

Similarly, states the new accord, the royalty “system should not be complicated and should not impose major administrative costs on the Authority or on a contractor.” These sentiments might be genuine. In fact, so far the Authority has been spending only about $10 million annually. But then, the world’s wealthiest nation is not yet a member, and you can’t pluck the goose until you have it in hand. Moreover, the revised agreement changed none of the underlying institutional incentives that bias virtually every international organization, most obviously the UN itself, towards extravagance.

In fact, concern over bloated budgets was a major factor in Moscow’s initial decision not to endorse the treaty. Russian Ambassador H.E. Ostrovsky explained to the General Assembly that though the revisions were “a step forward,” he doubted the new agreement could achieve its goals. Of particular concern was the fact that “general guidelines such as necessity to promote cost-effectiveness can not be seriously regarded as a reliable disincentive.” Even before the treaty had even gone into force, Ambassador Ostrovsky pointed to “a trend to establish high paying positions which are not yet required.”

Technology Transfer

Finally, there is technology transfer, one of the most odious redistributionist clauses from the original convention. The mandatory requirement has been discarded, replaced by a duty by sponsoring states to facilitate the acquisition of mining technology “if the Enterprise or developing States are unable to obtain” equipment commercially. Yet the Enterprise and developing States would find themselves unable to purchase machinery only if they were unwilling to pay the market price or preserve trade secrets. The new clause might be interpreted to mean that industrialized states, and private miners, whose “cooperation” is to be “ensured” by their respective governments, are therefore responsible for subsidizing the Enterprise’s acquisition of technology. Presumably the U.S. and its allies could block such a proposal in the Council, but, again, it is hard to predict the future legislative dynamics and potential log-rolling in an obscure UN body in upcoming years.

Moreover, the amended agreement leaves intact a separate, open-ended mandate for coerced collaboration. The Authority, states Article 144, “shall take measures”:

(b) to promote and encourage the transfer to developing States technology and scientific knowledge so that all States Parties benefit therefrom.

2. To this end the Authority and States Parties shall co-operate in promoting the transfer of technology and scientific knowledge relating to activities in the Area so that the Enterprise and all States Parties may benefit therefrom. In particular they shall initiate and promote:

(a) programmes for the transfer of technology to the Enterprise and to developing States with regard to activities in the Area, including, inter alia, facilitating the access of the Enterprise and of developing States to the relevant technology, under fair and reasonable terms and conditions;

(b) measures directed towards the advancement of the technology of the Enterprise and the domestic technology of developing States, particularly by providing opportunities to personnel from the Enterprise and from developing States for training in marine science and technology and for their full participation in activities in the Area.

At best this suggests that Western firms would be expected to help equip and train their competition. At worst it could end up authorizing some sort of mandatory system — one close to that originally intended by LOST’s framers. Ambiguous and obscure grants of power in the service of a highly politicized organization could turn out to be quite dangerous.

At issue is not just technology useful for seabed mining. Dual use technologies with military applications might also fall under ISA requirements. Peter Leitner, a DOD adviser, points to “underwater mapping and bathymetry systems, reflection and refraction seismology, magnetic detection technology, optical imaging, remotely operated vehicles, submersible vehicles, deep salvage technology, active and passive military acoustic systems, classified bathymetric and geophysical data, and undersea robots and manipulators.” Acquisition of these and other technologies could substantially enhance the undersea military activities of potential rivals, most notably China, which already has purchased some mining-capable technologies from U.S. concerns.

The treaty is a solution in search of a problem. A good international treaty would be useful, but it is not necessary. And once Washington ratified the treaty, any future renunciation of the LOST, resulting from miuse or misinterpretation of the agreement, might not be considered enough to reestablish Americans’ traditional high seas freedoms.

Conclusion

All in all, the LOST remains captive to its collectivist and redistributionist origins. It is a bad agreement, one that cannot be fixed without abandoning its philosophical presupposition that the seabed is the common heritage of the world’s politicians and their agents, the Authority and Enterprise. The issue is not just abstract philosophical principle, but very real American interests, including national security. For these reasons, the Senate should reject the treaty.


Footnotes

1. Doug Bandow is a Senior Fellow at the Cato Institute. While serving as a Special Assistant to President Ronald Reagan, he was a Deputy Representative to the Third United Nations Conference on the Law of the Sea. The Cato Institute receives no government funds.