No Man's Sea

One of the knottiest questions of resource use confronting nations today is how they can reach an agreement on sharing the rich supply of mineral deposits known to exist on the deep sea floor. These deposits, in the form of nodules rich in manganese, cobalt, nickel, and copper, are becoming increasingly attractive as economic sources of supply and are opening up the whole thorny matter of who has the right to exploit them, what limits should be put upon their exploitation, and by whom.

There is no clear-cut limit to the extent of the rights of the coastal state to the resources of the sea bottom. And there is no jurisdiction to govern the interests of the world community in the resources that lie beyond the limits of the coastal states, however these limits are defined.

The Geneva Convention on the Continental Shelf (1958) states that the limits of the exclusive rights of a coastal state extend "to a depth of 200 meters or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources." Thus, the only limit is that which is measured by the criterion of exploitability.

This open-endedness resulted chiefly from reluctance of the Convention delegates to grapple with the apparent inequities of a geologically determined boundary. For the continental shelf is not uniform in width; it may be only a few miles wide off one state's coast, several hundred miles wide off another's. Most authorities feel that some limit is necessary at some point short of mid-ocean, and that beyond that limit the sea bottom is international in character. However, there is no jurisdiction or set of rules to govern exploitation in this international area. The sea's bottom might be considered as no one's property, and therefore subject to appropriation. Or it might be considered (as is accepted for the fish in the superjacent waters) as the property of the world community, and therefore not subject to unilateral appropriation. If the former view holds, then the sea bottom is up for grabs—to be appropriated by the first party to make its claim and defend it successfully. Under the latter view, rights to the sea bottom would have to be constrained by some concept of the public interest.

There are some who think the best approach to future exploitation is essentially passive. Let us wait and see, they say, until a pioneer exploiter mines an area of the deep sea, so that we can learn from his experience the technological, economic, and policy problems involved.

The danger in such an approach is obvious. If we postpone the establishment of a jurisdictional regime, we may find ourselves locked into an undesirable position because of the pressures stimulated by the initial development. I believe that it is necessary to work out some set of rules to govern exploitation of the bottom of the sea before the act. The question is, which of three possible regimes would be feasible, most efficient and most acceptable to a sufficient number of nations in both the short and long run?

The national lake or coastal state approach has superficial appeal. The exploitability criterion of the Convention on the Continental Shelf opens the way for appropriating larger and larger areas of the sea bottom adjacent to a state's coasts. By accepting or asserting this Convention as a valid guide, a state could extend its jurisdiction across the sea bottom until it reaches a point midway between its shores and those of an opposite coastal state. The attraction to the United States is that we have long coastlines on the Atlantic and Pacific Oceans and the Gulf of Mexico.

The regime would permit each coastal state to lease and protect exclusive rights to the resources within its area, and to extend its administrative techniques out to deep water, choosing as rapid or as slow a development as it deemed economical. If the state did not care to exploit the resources itself, it could lease rights to foreign companies and extract a royalty income. This solution, at least on the surface, appears clean and easy. But there are some major drawbacks.

The drawbacks chiefly hinge on the role of the world's islands. According to the Continental Shelf Convention, islands have the same rights as mainlands, and, indeed, it is difficult to see how they could be excluded. Thus, the French and the British would be among the chief beneficiaries of the national lake approach. The French would receive a vast area of the Indian Ocean because of Kerguelen, Crozet, and others islands, and a large area of the eastern tropical Pacific, in part because of tiny Clipperton Island. To the British would go more than half of the South Atlantic Ocean, because of Ascension, St. Helena, Tristan da Cunha, and South Georgia, and a large share of the North Atlantic because of Bermuda and the Bahamas.

But what about the other powerful nations? The United States would win a vast section of the North Pacific, but at the same time it would find its freedom to operate in all oceans to be severely restricted. Since special-purpose rights tend to become generalized, jurisdiction over the bottom could extend upwards through the superjacent waters and the fish therein, to the surface waters, until all the seas become territorial seas, thereby restricting both commercial and military mobility. Even if that didn't happen, US firms would have to deal with a multitude of coastal states to operate outside their own waters.

More significantly, perhaps, the national lake approach would provide virtually no gains to the Soviet Union, other than a small slice of the Northwest Pacific and the Barents Sea and Arctic Ocean. And without the agreement of the USSR, no regime would be viable.

The flag nation approach would permit the exploiter to operate under the protection of the nation whose flag he flies, appropriating a section of the sea bed wherever he finds resources of value. The exploiter might be an individual firm, a consortium, a mixed public-private enterprise, or a government itself. If the respective government is willing to guarantee protection and the exploiter, feels that the guarantee will be effective over a sufficient length of time, then one of the major deterrents to exploitation becomes insignificant.

There would, of course, eventually be conflict and competition for the same resource area. If it were between two firms flying the same national flag, it could be resolved through some form of bidding mechanism, similar to the arrangement for allocating oil rights on the US continental shelf. If it were between different nations, however, the absence of international authority would require some other mechanism for allocating resources. Resolution might be possible through bilateral or multilateral agreement.

This approach, which calls for minimal government involvement, has much appeal as a simple, straightforward development. However, the proposal assumes that nations will be willing to protect the claims of their companies or operations in international areas—an unlikely event if political reaction looms greater than the potential benefit. Moreover, this approach would require the influential nations to establish rules that would prevent a headlong race to appropriate vast areas of the sea bottom. Proof of performance within a certain length of time might be a requirement preventing the race, but how would such a rule be established and enforced? And how would controls be enforced governing a firm's output—which could be so huge as to upset the world market for any one mineral? A performance requirement in itself would create incentives to produce more rapidly than might be economically justified.

An international regime seems the approach most likely to be acceptable over the long run, and also most likely to protect the interests and permit the efficient operations of the exploiting firms. Whether it is feasible depends upon man's ability to develop the required stitutions, which, I suggest, can best be developed under the umbrella of the United Nations.

Let us see how the regime might work.

The individual entrepreneur, from whatever nation, would bid for the exclusive right to explore and exploit a certain area for a specified resource. This bid might be expressed in terms of royalty payments.

Other mechanisms might also be possible, such as a bid on percentage of net revenue, or on a cash bonus payable in installments. For high-risk operations, such as manganese mining, the initial bids would not be enough to deter exploitation, and, over the long run, would be no greater than the payments the firm would be expected to make under the flag nation approach.

An international authority would be in a position to prevent excessively rapid rates of output that would depress prices and revenues to all producers.

Some requirement for performance within a period of years should be invoked.

An inspection scheme would ensure that the rights of the lease were not abused and that the operation would not damage the marine environment or make inefficient use of the resource.

None of these international requirements differs substantially from the domestic ones relating to the exploitation of oil resources on the US continental shelf.

Determination of a boundary between the interests of the coastal states and the interests of the world Community is obviously difficult. An international regime, however, may facilitate reaching a decision. For example, a relatively restrained coastal state limit might be selected along with a scheme that would recognize the interests of the coastal state outside of that limit. Where a resource is exploited relatively close to a coastal state, the royalties paid to the international authority might be split between that authority and the adjacent state: the closer to shore, the higher the percentage are received by the state; and the farther from shore, the greater the percentage to the authority. This would permit US firms to operate throughout the world's oceans and under a single set of rules. Problems of expropriation and inflated royalty rates would be greatly diminished.

The most crucial point, however, would lie in the ability of the authority to guarantee and protect the exclusive rights of the exploiters—a matter that would depend upon the degree to which the regime was accepted by the world community. This, in turn, would depend upon how each participant viewed his net gains against the net gains of all others. For the exploiting nations, the gains would be in terms of orderly development, control over uneconomical rates of exploitation, and a better guarantee of exclusive rights than under a flag nation approach. For the non-exploiting nations, gains would be obtained by direct sharing of royalties where exploitation takes place close to their shores, and by indirect sharing of royalties where exploitation is clearly within international waters.

If the non-exploiting nations are to feel that they are sharing in the benefits of the regime, indirect sharing of royalties is essential. This might take the form of devoting the revenues to some generally beneficial purpose such as reducing worldwide malnutrition. It would seem advisable to place the task of revenue distribution or use in the province of the General Assembly, thus leaving the authority free to conduct its primary task of management reflecting the interests of the exploiting nations.