242 



vent a race to claim vast regions of the sea. There should also be some inspec- 

 tion scheme to ensure that the rights of the lease are not being abused and that 

 the operation is not damaging the marine environment or making ineflficient 

 use of the resource. None of these requirements differs substantially from those 

 relating to the exploitation of oil resources on the U.S. continental shelf. The only 

 difference is that administration is in the hands of an international body rather 

 that the U.S. federal government. 



The determinatinn 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. In other words, 

 where a resource is exploited relatively close to a coastal state, the royalties 

 paid to the international authority vpould be split between that authority and 

 the adjacent state. The closer to shore, the higher the percentage received by 

 the state ; and the farther from shore, the greater the percentage to the authority. 

 This would permit U.S. firms to operate throughout the world's oceans under a 

 single set of rules. Problems of expropriation and inflated royalty rates would 

 be greatly diminished. 



It would appear that the international regime would meet the criterion of 

 economic efficiency better than the flag nation approach. The payments to be 

 made to the authority would not be sufficient to deter exploitation. Over the 

 long run, the bidding mechanism would reflect the value of the exclusive rights 

 to the producer and would ensure, through this means, an efficient allocation of 

 resources and distribution of effort over the mineral properties. These payments 

 would be no greater than those required under a flag nation approach, where 

 different firms ma.v be vying for the same resource. An international authority 

 would be better able to prevent excessively rapid rates of output that would de- 

 press prices and revenues to all producers. The registration of exclusive rights 

 within a single agency would more likely reduce the possibility of conflict than 

 a situation where no such agency exists. 



The most crucial point, however, would lie in the ability of the authorit.v to 

 guarantee and protect the exclusive rights of the exploiters. This ability would 

 depend upon the degree to which the regime is accepted by the world community. 

 Obviously, the simple assertion of authority would carry little weight. But if the 

 regime is widely accepted, then this acceptance alone would probably be suflScient 

 to guarantee the protection of exclusive rights. 



The question of acceptability would depend, as noted above, upon how each 

 participant views his net gains against the net gains of all others. For the exploit- 

 ing 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 a direct sharing of royalties, where exploitation takes place close 

 to their shores, and by an indirect sharing of royalties where exploitation is 

 clearly within international waters. In other words, the mechanism should be 

 worked out so that it is in the mutual interests of all parties to maintain the 

 regime. 



The indirect sharing of royalties is essential to meet the criterion of accept- 

 ability. The non-exploiting nations would have to feel that they are sharing in 

 the benefits of the regime. This might be accomplished if the revenues were de- 

 voted to some purpose generally accepted as beneficial to mankind, such as the 

 reduction of protein malnutrition. The task of the authority, however, would 

 be primarily with respect to management and it should, therefore, reflect the 

 interests of the exploiting nations. The task of revenue distribution or use might 

 be separated from the authority and fall within the province of the General 

 Assembly. 



The administration and management of the oil resources of the U.S. conti- 

 nental shelf is analogous to an international authority for the resources of the 

 sea bottom. The continental shelf resources are considered as part of the public 

 domain. The Federal government, as administrator, leases exclusive rights to the 

 exploiters, guarantees these rights, and ensures an orderly rate of exploitation. 

 The revenues received from the cash bonuses and royalty payments are used for 

 the benefit of the public. 



