Panetta seeks ratification of the Law of the Sea Convention

By Eric Watkins

LOS ANGELES, May 9 – If U.S. Secretary of Defense Leon E. Panetta has anything to do with it, Washington will soon be ratifying the Law of the Sea Convention, a document that has been moldering in Senate corridors far too long.

Panetta and the Chairman of the Joint Chiefs of Staff Gen. Martin E. Dempsey will deliver remarks as the keynote speakers today at the Forum on the Law of the Sea Convention at the Willard Intercontinental Washington Hotel.

In his speech, Panetta is expected to argue that ratifying the treaty would help ensure that the U.S. has freedom of navigation in the world’s oceans at a time when a new defense strategy acknowledges America’s return to its maritime roots.

“The time has come for the United States to fully assert its role as a global leader, and accede to this important treaty,” Panetta will say, according to a draft of his remarks reviewed by The Wall Street Journal.

ENSURING RIGHTS

“By moving off the sidelines and leading the discussion, we would be able to influence those treaty bodies that develop and interpret the Law of the Sea,” Panetta will say. “In that way, we would ensure that our rights are not whittled away by the excessive claims and erroneous interpretations of others.”

Behind Panetta’s push for U.S. acceptance of the Law are concerns over China, which has ratified the treaty and uses it as justification to limit military activities within its exclusive economic zone, which extends 200 nautical miles from the shoreline.

Under that interpretation, the U.S. would find itself incapable of aiding its allies in the region, a point of considerable concern in recent weeks, given China’s confrontation with the Philippines over the Scarborough Shoals, an out-cropping of rock in the resource-rich South China Sea.

NO MILITARY RESTRICTION

For its part, the U.S. denies China’s interpretation of the Law, saying there is no restriction on military use of areas outside a country’s territorial waters, which extend 12 nautical miles from shore.

But the U.S. cannot make that argument in any formal way, not being party to the Law – a point Panetta is expected to raise today.

Apart from matters of defense, ratification of the Law will also ensure that the U.S. has a place at the table when it comes to adjudicating the coming rush over mineral rights around the globe, but especially in the Arctic.

At the moment, the U.S. does not have a formal seat at the table of the Commission on the Limits of the Continental Shelf, a body established under the Law of the Sea Convention to review and certify claims.

ESPECIALLY WORRISOME

That is especially worrisome, given the 2008 report by the U.S. Geological Survey that some 90 billion barrels of oil, 1669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids could be found in the Arctic region.

The importance of having a seat on the CLCS is underlined by the fact that the Arctic ice is melting and that several nations, including Russia, already are staking sovereignty claims to portions of the Arctic.

U.S. ratification of the Convention could also be hastened by the progress of oil and gas drilling into deeper waters, and the beginnings of a deep seabed mining industry.

SEABED AUTHORITY

But claims over deep seabed minerals can only be resolved in a recognized forum such as the International Seabed Authority, an autonomous organization established under the Convention on the Law of the Sea.

Recently, the ISA approved applications for exploratory contracts, involving China, Russia, Nauru, and Tonga. But the U.S. had no voice in the debate, lacking a seat at the ISA.

Ironically enough, the ISA is one reason why Republican Senator Mike Lee (Utah) stands in opposition to ratification of the Convention by the U.S.

Last autumn, Lee told a gathering at the conservative think tank The Heritage Foundation that he would do everything in his power to block US accession of the treaty.

SHARING FEELS RIGHT

Lee specifically expressed opposition to Article 82 of the treaty, which calls for royalties starting at 1% and rising to 7% to be paid to the ISA on Arctic oil and gas production.

“This is quite arguable a tax,” said Lee, who added that the proceeds would be distributed to “state parties” to the treaty, with landlocked, developing countries first in line.

“Of course, sharing feels right,” said Lee. “But one man’s sharing is another man’s socialism.”

Lee also criticized provisions of the treaty requiring signatories to seek permission from the ISA to extract oil, gas and minerals from the deep seabed, and questioned the accountability of international bodies.

MOTHER MAY I?

“This puts the US in a ‘Mother May I?’ posture, which could be devastating to our economic development,” Lee said, adding that the treaty also would set a precedent for further international regulation and taxation.

Of course, that could be true. But one has to balance the income to be derived from development of the natural resources with the royalties to be paid. If the income outweighs the royalties, then sharing not only feels good, it makes economic sense.

As the point man for the Obama administration on ratification of the treaty, Panetta will clearly underline its importance from the standpoint of defense. But whether for defense or to secure mineral rights, the U.S. surely needs to be at the table.

Ratification of the treaty is the only way to ensure that place in the debate.

© Glamma Productions Inc. 2012

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About Eric Watkins

Eric Watkins is a consultant specializing in oil diplomacy. A former journalist, Mr. Watkins's work has appeared in numerous leading publications including The Wall Street Journal, The Economist, The Financial Times, and specialist media such as Oil & Gas Journal, Middle East Economic Survey (MEES), and Lloyd's List.
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