Timothy P. Carney, The Examiner
Big Business is LOST at sea
Sun Aug 19, 2007 11:33

Big Business is LOST at sea

Timothy P. Carney, The Examiner
2007-08-10 16:06:22.0
Current rank: # 635 of 6,273

Bush administration officials, the Democratic leadership on Capitol Hill, and most Non-Governmental Organizations (NGOs) at the UN support it. So do the American Petroleum Institute, the Chamber of Shipping of America, and AT&T. With this cast of supporters, something fishy is going on.

It's the United Nations Convention on the Law of the Sea, but its detractors still use its old name: the Law of the Sea Treaty, or LOST. LOST was originally drafted at the end of the Carter administration, but was scuttled President Reagan.

During the presidencies of George H. W. Bush and Bill Clinton, negotiators revised the treaty, and President Clinton signed it. The Senate has never ratified it, however, but the present Bush Administration recently called on the upper chamber to do just that.

The treaty, which went into effect elsewhere in 1994 and has been ratified by more than 150 nations, codifies much existing international common law about navigation, but it also created a new supranational organization called the International Seabed Authority (ISA).

Because the treaty declares the oceans, the seabed, and all its resources "the common heritage of all mankind," the ISA effectively claims property rights over the oceans and everything in and under them. The ISA also has the power to regulate any mining or drilling that goes on beyond the continental shelf (which would still be under control individual nations).

Of course, the ISA would charge fees and assessments for companies that mine or drill the waters. In the eyes of longtime conservative activist Phyllis Schlafly, this makes the ISA an international taxing body.

Schlafly was among the conservatives who helped deep-six the treaty in the early 1980s, and she is one of the chief opponents of the revised treaty today. She writes of the ISA: "The purpose of the taxing power is to compel the United States to pay billions of private-enterprise dollars to International Seabed Authority bureaucrats, who can then transfer U.S. wealth to socialist, anti-American nations (euphemistically called 'developing countries') ruled by corrupt dictators."

This doesn't sound like a good deal for the companies who would want to tap into the seabed's resources, but the American Petroleum Institute supports U.S. ratification of the treaty, as does the International Association of Drilling Contractors.

Why would these companies want the U.S. to endorse a global regulation—including environmental regulation or the power to prohibit exploration, mining, and drilling in some areas—and taxation of their industry? The answer is in the word "global."

While Americans as a people are hardwired to resist giving real authority to supranational bodies—we're skeptical of the UN, and we reject outright subjecting ourselves to the International Criminal Court—multinational businesses, in general, are warm to the idea of globalizing governance.

Jack Welch, when he was the CEO of General Electric, famously told a reporter his vision of rising above the shackles of existing within a particular nation: "Ideally, you'd have every plant you own on a barge."

U.S. accession to LOST would further empower the ILA, an agency that—like all agencies—will steadily increase its own authority. But any regulatory or tax burden the ILA could slap on oil companies would at least be uniform.

Just as national countries prefer federal regulation to state regulation, multinational companies prefer global regulation to national regulation. Such uniformity wipes out any home-field advantage local companies might have over the big guys, and so even if the total regulatory burden is heavier, it's still easier to navigate.

Europeans are seeing this dynamic at play currently as many big businesses are pushing for EU-wide "tax harmonization." Sure it might result in higher taxes, but if everyone has to pay them, higher taxes usually don't hurt bigger businesses on balance.

It's understandable that business wants to simplify the hodgepodge of regulations they face from hundreds of different governments. Such simplification would provide some new economic efficiencies, too. But if LOST poses a threat to American sovereignty and would drive up the costs of natural resources, then business's gain could be our loss.

Examiner columnist Timothy P. Carney is author of "Big Ripoff: How Big Government and Big Business steal your money."



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