known today, but which may be of very substantial economic im- 

 portance in the future. 



The draft convention also would establish a supranational 

 mining company, called the Enterprise, which would benefit from 

 significant discriminatory advantages relative to the companies of 

 industrialized countries. Arguably, it could eventually monopolize 

 production of seabed minerals. Moreover, the draft convention re- 

 quires the United States and other nations to fund the initial 

 capitalization of the Enterprise in proportion to their contributions 

 to the U.N. 



Through its transfer of technology provisions, the draft conven- 

 tion compels the sale of proprietary information and technology 

 now largely in U.S. hands. Under the draft convention, with cer- 

 tain restrictions, the Enterprise, through mandatory transfer, is 

 guaranteed access on request to the seabed mining technology 

 owned by private companies and also technology used by them but 

 owned by others. 



The text further guarantees similar access to privately owned 

 technology by any developing country planning to go into seabed 

 mining. We must also carefully consider how such provisions relate 

 to security-related technology. 



The draft convention limits the annual production of manganese 

 nodules from the deep seabed, as well as the amount which any 

 one company can mine for the first 20 years of production. The 

 stated purpose of these controls is to avoid damaging the economy 

 of any country which produces the same commodities on land. In 

 short, it attempts to insulate land-based producers from competi- 

 tion with seabed mining. 



In doing so, the draft treaty could discourage potential investors, 

 thereby creating artificial scarcities. In allowing seabed production, 

 the International Seabed Authority is granted substantial discre- 

 tion to select among competing applicants. Such discretion could be 

 used to deny contracts to qualified American companies. 



The draft convention creates a one-nation one-vote international 

 organization which is governed by an Assembly and a 36-member 

 Executive Council. In the Council, the Soviet Union and its allies 

 have three guaranteed seats, but the United States must compete 

 with its allies for any representation. The Assembly is character- 

 ized as the "supreme" organ and the specific policy decisions of the 

 Council must conform to the policies of the Assembly. 



The draft convention provides that after 15 years of production 

 the provisions of the treaty will be reviewed to determine whether 

 it has fulfilled overriding policy considerations, such as protection 

 of land-based producers, promotion of Enterprise operations, and 

 equitable distribution of mining rights. 



If two-thirds of the states parties to the treaty wish to amend 

 provisions concerning the system of exploitation, they may do so 

 after 5 years of negotiation and after ratification by two-thirds of 

 the states parties. If the United States were to disagree with duly 

 ratified changes, it would be bound by them nevertheless, unless it 

 exercised its option to denounce the entire treaty. 



The draft convention imposes revenue-sharing obligations on 

 seabed mining corporations which would significantly increase the 

 costs of seabed mining. 



