The LOST Attack on Entrepreneurship

by Doug Bandow | October 10th, 2007 | |Subscribe

Once the scourge of reflexive internationalism, the Bush administration is now dressing in multilateralist garb. The president’s latest concession is pushing the Law of the Sea Treaty, appropriately known as LOST.

The treaty declares all seabed resources to be the “common heritage of mankind,” hits Western mining companies and their sponsoring nations with fees and royalties, and creates a new global bureaucracy to divvy up the spoils. There are authorities, enterprises, committees, commissions, tribunals, and rules galore.

Unfortunately, decades ago the so-called Group of 77, the developing nations’ political lobby, appended this money-making scheme to [add] proposals to improve ocean resource exploitation, regularize petroleum exploration, improve environmental protection, and strengthen navigational freedom. Turn over the globe’s unowned resources to us, the Third World states offered, and we’ll recognize some of your rules–many of which already had been accepted as customary international law.

Newly elected President Ronald Reagan spent more than a year fighting to “fix” the treaty. The effort failed, so Washington refused to sign and the LOST seemed to die. However, President Bill Clinton negotiated an addendum that addressed a few of the treaty’s most egregious failings.

Senate Republicans then blocked ratification, but now Senate Democrats, along with President George W. Bush, are committed to moving the treaty forward.

Unfortunately, LOST remains a bad deal.

The fishing, ocean pollution, marine research, and exclusive economic zone (EEZ) provisions are largely noncontroversial. Nevertheless, even here there is reason for some caution. LOST imposes fees on some off-shore oil production, for instance, probably the first international tax applied to Americans, and one imposed without congressional approval.

Moreover, the treaty’s ambiguities invite legal mischief. William C.G. Burns, with the Monterey Institute of International Studies, argues that LOST “is a promising instrument through which such [legal] action might be taken, given its broad definition of pollution to the marine environment and the dispute resolution mechanisms contained within its provision.”

Indeed, long-time treaty supporter Bernard Oxman warned LOST advocates not to begin suing the U.S. until Washington ratified the convention. It “is an easy target,” he writes, since “it is amply endowed with indeterminate principles, mind-numbing cross-references, institutional redundancies, exasperating opacity and inelegant drafting, not to mention a potpourri of provisions that any one of us, if asked, would happily delete or change.”

The U.S. Navy backs the treaty as strengthening transit freedoms, but when the right of passage is truly vital LOST will be only a make-weight. If a hostile nation desires and is able to stop U.S. passage, it is unlikely to spend much time parsing treaty language. Good relations with straits nations offer a better guarantee for navigation rights.

Finally, to regulate ocean resources the convention creates a gobbledy-gook bureaucracy called the International Seabed Authority (ISA). The system is unique in its byzantine perversity.

The Enterprise, subsidized by private miners, is to mine the seabed for the ISA. Among the system’s formal objectives is redistributing the revenues collected to enrich the usual Third World regimes.

Today few people defend the original treaty: the mantra is that LOST has been “fixed.” But despite a few improvements, the essentials of the LOST system remain unchanged.

The ISA, with its nonsensical governing regime, and the Enterprise remain. Some provisions on mandatory technology transfer were cut, but other language remains that could lead to the same result.

The same problem exists with production controls. The U.S. possesses no veto, and land-based minerals exporting countries as well as developing states could block exploitation of the seabed, allowing them to demand expensive concessions in return for their support.

Most important, the terrible precedent remains: LOST turns over a vast amount of the earth’s wealth to a highly politicized international bureaucracy. This global regulatory system would restrict entrepreneurship.

In doing so it would do more than hinder seabed resource development. Such rules could deter the production of software, technology, and processes designed for seabed mining, as well as those with dual use capabilities. The treaty also would create a precedent for a LOST-like regime to govern other, currently unowned “resources,” ranging from the Internet to broadcast airwaves to space.

Protecting navigational rights and the ocean environment are legitimate, even important, goals. But LOST’s provisions advancing these ends should not be paired with creation of a redistributionist regulatory regime for the ocean’s floor.

America’s response to LOST should be the same today as in 1982: no.

Doug Bandow is the Robert A. Taft Fellow at the American Conservative Defense Alliance and the author of Foreign Follies: America’s New Global Empire (Xulon Press). He served as a Special Assistant to President Ronald Reagan and Deputy Representative to the Third United Nations Conference on the Law of the Sea.  Last month, Mr. Bandow published an Issue Analysis report on the Law of the Sea Treaty at the Competitive Enterprise Institute.  Click here for the full report.

2 Comments »

  1. Debating the Law of the Sea Treaty | freedomactivists.net wrote,

    [...] Doug Bandow, who wrote a paper for Cato on the subject two years ago, makes a strong case for why the Senate should reject the treaty and continue with the status quo. He squares off this week against Raj Purohit of Citizens for Global Solutions in an online debate at the Partnership for a Secure America. [...]

    Pingback on October 11, 2007 @ 6:52 am

  2. peter sterling wrote,

    LOST
    Negraponte and his socialist friends should be sacked for attempting to give away so much in return for nothing.
    The high seas has been seen from time immemoriable as belonging to no country or individual but open to those willing to take the risk and invest the labor necessary to derive benefit from the abundant resources the seas contain.
    ISA was set up to control development of the worlds undersea minerals resources within international waters. It has been a complete failure to date.
    The Seabed authority is in disarray having come under relentless attack for not protecting the rights of humanity from encroachments like that planned in the Arctic Commons by Russia.
    There are increasing calls for the disbandment of the seabed authority in its current form so as to allow private enterprise to take over the oceans minerals development.
    Free enterprise is responsible for all the worlds shipping, cruise lines and fishing which moves 95% of the world’s products and feeds millions of people. The UN has no business interfering there.
    ISA treaty should be abrogated as it is without customary legal foundation and plainly wrong.
    As a non signing state party to the convention the US is not currently bound by any of LOST’s absurd rules, and so it should remain.
    The carrot of US access to the estimted 400 billion barrels of arctic oil and gas being dangled in front of the senate is completely bogus. Article 76 of the law also allows countries to extend their submarine claims beyond the 200-mile limit only if they can provide solid scientific evidence that the continental shelf under their territory extends beneath the ocean beyond 200 miles. If the US signs LOST it will not gain any of the arctic oil as LOST rules preclude any claim extension beyond the Alaska 200 mile zone as the US continental shelf only extends an average of 50-100 miles from shore.
    A US company (see; http://www.unoilgas.com )made a solid hydrocarbons rights claim to the Arctic Oceans Commons under customary international law on May 9th 2006. This claim gives the US priority over developing the Arctic oil and gas resources with or without LOST.

    Comment on October 11, 2007 @ 5:55 pm

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