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must be developed under which limited rights, rights simply to exploit 

 the resources, can be obtained by the entrepreneurs who wish to exploit. 

 This to me at the moment would actually provide the best guarantee 

 to the exploiter and would permit the nations to operate as freely and 

 widely as they choose. I would suggest, in the interest of economic effi- 

 ciency, that there should be some bidding mechanism under which the 

 exploiters would apply and bid for the right to operate. This bid would 

 reflect the value of the property to the producer and it would be similar 

 to the operation on the U.S. Continental Shelf. 



Let me approach the problem in a veiy diifcrent way in summariza- 

 tion. 



What mechanism should be formed to allocate these resources to 

 firm A or firm B or nation C when there is competition for the same 

 resource area ? 



If it is on a first-come, first-served basis, this could develop into a 

 race unless there are controls. If there are controls, then it may be 

 unacceptable to the world community and we will not have a stable 

 and viable regime. We could also allocate these resources by force. I 

 don't think this is good. We could do it by agreement, and this leads 

 us into a box. If we begin by allocating and resolving conflicts between 

 nations on the basis of bilateral or multilateral agreements, we will 

 be setting a principle whereby these resources are divided on an arbi- 

 trary basis and I know this is not what we want to do. So the final 

 method of allocating, I think, is simply by the marketplace. Let those 

 producers or nations bid as they want to and let the monetary oper- 

 ation work to divide the access and the rights to the resources. 



Thank you. 



Mr. Fascell. Thank you very much, Mr. Christy. 



Gentlemen, I want to thank all of you for coming here this morn- 

 ing and giving a new dimension to our consideration of this entire 

 problem. I appreciate Mr. Danzig and Mr. Eichelberger coming down 

 from New York. 



I think it has not been made sufficiently clear until now that we are 

 talking about at least three different things. As always, the biggest 

 problem in communicating is for everybody to talk in the same lan- 

 guage. I want to be sure that we are talking in the same language, at 

 least on this record. 



For this reason, let me ask : 



Is there general acceptance in the international community of what 

 constitutes "territorial waters" ? 



Mr. Danzig. May I address myself to that ? 



Mr. Fascell, Mr. Danzig. 



Mr. Danzig. Wliile there is no general agreement in specific terms, 

 I would say that as to total outer limits, the vast majority of all in- 

 ternational law experts say that it does not extend more than 12 miles 

 from shore. 



Mr. Fascell. But we have no complete agreement in international 

 law as to what constitutes territorial waters ? 



Mr. Danzig. Well, if by agreement you mean something written 

 down in a treaty, no. But if you mean the general opinion of interna- 

 tional scholars, yes. As far as the United States is concerned, the 

 United States has consistently defined the territorial watei-s as ex- 



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