WORLD TRADE WT/CTE/W/62
16September 1997
ORGANIZATION(97-3702)
Original: English Committee onTrade andEnvironment
THE 1994 AGREEMENT RELATING TOTHE IMPLEMENTATION OFPART XIOFTHE
1982 UNCONVENTION ONTHE LAW OFTHE SEA: PROVISIONS DEALING WITH
PRODUCTION POLICY FOR DEEP SEABED MINERALS
Communication from theUnited Nations Division forOcean Affairs
andtheLawoftheSea,Office ofLegal Affairs
I. INTRODUCTION
1. Oneofthetenitems included inthemandate oftheCommittee onTrade andEnvironment
(CTE) istodealwiththerelationship between theprovisions ofthemultilateral trading system and
trade measures forenvironmental purposes, including those pursuant tomultilateral environment
agreements (MEAs) (Item 1).Arelated itemistodealwiththedispute settlement mechanisms inthe
multilateral trading system andthose found inMEAs (Item 5).TheCTEhasbeeninterested inthe
trade-related provisions ofthe1994 Agreement relating totheimplementation ofPartXIofthe
1982 United Nations Convention ontheLawoftheSea(hereinafter "theImplementing Agreement").
TheDivision forOcean Affairs andtheLawoftheSeaoftheOffice ofLegal Affairs ofthe
United Nations, astheSecretariat ofthe1982 United Nations Convention ontheLawoftheSea
(hereinafter "theConvention"), expresses itsappreciation totheChairman oftheCTEfortheinvitation
toprepare abackground paper onthetrade-related provisions oftheImplementing Agreement, contained
inSection 6ofitsAnnex.
2. Thispaper willpresent basic information ontheprovisions ofSection 6oftheAnnex tothe
Implementing Agreement. Section 6oftheAnnex tothe1994Agreement relating totheimplementation
ofPartXIoftheConvention contains anexplicit reference totheapplicability oftheprovisions of
theGATT anditsrelevant codes andsuccessor orsuperseding agreements concerning subsidies inthe
deepseabed mining area. Section 6alsorefers torecourse totheGATT dispute settlement procedures.
3. Ananalysis willbeprovided oftheprinciples thatformed thebasis oftheprovisions, andof
theprocess ofhowthese provisions were arrived at.Thisisintended tofacilitate thediscussion of
twomain issues thatarebeing addressed bytheCTE: (i)theconsistency oftrade-related provisions
ofMEAs withtheprovisions oftheWorld Trade Organization (WTO); and(ii)theconvergence of
thedispute settlement procedures intrade-related matters under MEAs withthose oftheWTO.
II. THEREGIMEFORTHEINTERNATIONALDEEPSEABEDAREAANDITSRESOURCES
A. TheUnited Nations Convention ontheLawoftheSea
4. TheConvention laysdown acomprehensive regime fortheworld 'soceans andseas; itprovides
thelegalframework anddetailed rules governing allocean usesandaccess totheirresources. The
seabed andocean floorandsubsoil thereof, beyond thelimits ofnational jurisdiction, hasbeendefined
asthe"Area" bytheConvention (Article 1(1)). TheUNGeneral Assembly, inresolution 2749(XXV)
of17December 1970, declared thattheArea aswellasitsresources arethecommon heritage of
mankind, theexploration andexploitation ofwhich shallbecarried outforthebenefit ofmankind asWT/CTE/W/62
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awhole. Thistotally newconcept ininternational relations andininternational lawwasgiven practical
meaning intheConvention. PartXIoftheConvention andtherelated Annexes (Annexes IIIandIV)
laydown theregime fortheinternational deepseabed Area anditsresources.
5. Thefundamental reason thatthepossibilities forconflicts areminimized between thetrade
agenda andtheenvironment agenda pursued under theConvention isthattheConvention isoneof
theforemost multilateral agreements formulated withtheprinciple ofsustainable development asa
central theme. Thisbalance between trade anddevelopmental objectives, ontheonehand, and
environmental objectives, ontheother, withrespect tomarine andcoastal resources andenvironment
achieved under theConvention issosound andeffective thattheUNCED tookitasthebasis of
developing Chapter 17ofAgenda 21.1Inthiscontext, itcanbesaidthattheprinciple contained in
theMarrakesh Ministerial Decision onTrade andEnvironment isalready implicit intheConvention:
there should notbe,norneedbe,anypolicy contradiction between upholding andsafeguarding an
open, non-discriminatory andequitable multilateral trading system ontheonehand, andacting for
theprotection oftheenvironment ontheother.
6. TheConvention isconsidered anMEA although itisrecognized thatthere isnodefinition of
what exactly constitutes anMEA. However, oneimportant matter needs tobeborne inmind: the
Convention provides theframework forocean andcoastal development andfortrade ingoods and
services fromthemarine andcoastal sector. Inparticular, PartXIoftheConvention andtherelated
Annexes laydown theregime forthedevelopment andmanagement oftheresources oftheinternational
deepseabed Area. Article 150,under PartXI,setsforththeoverall policy inrelation toexploration
forandexploitation ofthese resources: suchactivities shall"becarried insuchamanner astofoster
healthy development oftheworld economy andbalanced growth ofinternational trade ..."(emphasis
added). Inthissense, theConvention canalsobeconsidered amultilateral trade agreement. This
isanother important reason thatthereisaharmony between thetradeagenda andtheenvironment agenda
pursued under theConvention.
B. Production policy fordeepseabed minerals under theConvention
7. Resources oftheinternational deepseabed Area aredefined bytheConvention asallsolid,
liquid orgaseous mineral resources insituintheArea atorbeneath theseabed (Article 133(a)).
8. Atthetimethenegotiators intheThird United Nations Conference ontheLawoftheSeawere
formulating theprovisions ofPartXIoftheConvention, i.e.during thelate1970s andtheearly1980s,
thegrowth inmetal demand wasimpressive; atthesame time, theresearch anddevelopment efforts
formining andprocessing technologies forpolymetallic nodules were pointing toveryencouraging
outcomes.2Under thesecircumstances, land-based miners ofthemetals inquestion became concerned
about losing theirmarket share tothisnew, seemingly attractive source ofmetals. Theprospective
deepseabed miners, ontheotherhand, wereapprehensive thatasnewcomers theymight notbeallowed
intothemarket.
1Chapter 17deals withthe'protection oftheoceans, allkinds ofseas, including enclosed andsemi-enclosed
seas, andcoastal areas andtheprotection, rational useanddevelopment oftheir living resources '.See
United Nations, Agenda 21: Programme ofAction forSustainable Development, UN, New York, 1993,
paragraph 17.1.
2Research inthepastfewdecades suggests thatseveral types ofmetalliferous minerals maybefound inthe
international deep seabed Area. These minerals are: polymetallic nodules; manganese crusts; polymetallic
sulphides; andmetalliferous redclay. Polymetallic nodules contain about 55metallic andnon-metallic elements
outofwhich copper, nickel, cobalt andmanganese areofeconomic interest.WT/CTE/W/62
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9. Withthisbackdrop, theproduction policy related todeepseabed polymetallic nodules, aslaid
outinArticle 151under PartXIoftheConvention andArticles 6and7ofAnnex IIItotheConvention,
hadtwobasic features:
- With aviewtoachieving abalance between thesupply from land-based sources and
thatfrom thenewseabed sources, theInternational Seabed Authority would limit
production ofmetals from polymetallic nodules. Theproduction limitation formula
waslinked tothegrowth ofdemand fornickel -totalproduction fromseabed sources
inanyyearwould notexceed 60percentofthegrowth indemand fornickel.
Production authorizations willbeissued bytheInternational Seabed Authority to
individual seabed miners within theoverall limitsetbytheformula.
- Incaseaselection among applicants forproduction authorizations wascalled for,the
International Seabed Authority would make suchselection applying certain criteria.
TheInternational Seabed Authority ("the Authority") istheorganization through which itsmembers
shall organize andcontrol activities ofexploration for,andexploitation of,theresources ofthe
international deepseabed Area, particularly withaviewtoadministering theseresources (Convention,
Article 156(1)).
C. Formulation oftheprovisions ofSection 6(Production policy) oftheAnnex totheImplementing
Agreement
10. TheConvention wasadopted inApril 1982 andentered intoforce inNovember 1993, with
the60thratification. AsofSeptember 1997, 120States haveratified oracceded totheConvention.
Intheearly1980s, itwasacknowledged thattherewereproblems withsome aspects ofthedeepseabed
mining provisions oftheConvention which hadprevented some States from ratifying oracceding to
theConvention.
11. Intheearly1990s, itwasfeltthatintheyears thathadelapsed sincetheConvention wasadopted,
certain significant political andeconomic changes hadoccurred which hadhadamarked effect onthe
regime fordeepseabed mining contained intheConvention. Prospects forcommercial mining ofdeep
seabed minerals hadreceded intothenextcentury, which wasnotwhat wasenvisaged during the
negotiations attheThird United Nations Conference ontheLawoftheSea. Thegeneral economic
climate hadbeentransformed asaresult ofthechanging perception withrespect totheroles ofthe
public andprivate sectors. There wasadiscernible shifttoward amore market-oriented economy.
Inaddition, therewastheemergence ofanewspiritofinternational cooperation inresolving outstanding
problems ofregional andglobal concerns. These factors contributed toafavourable atmosphere to
dealwiththeproblems inrespect ofthedeepseabed mining regime. Thusbegan aseries ofconsultations
under theaegis oftheSecretary-General oftheUnited Nations onoutstanding issues relating tothe
deepseabed mining provisions oftheConvention. These informal consultations tookplace intheyears
1990 to1994.
12. There wasgeneral agreement among participants intheSecretary-General 'sconsultations that
theformula intheConvention wasnolonger practical. There wasalsogeneral agreement thatitwas
neither necessary norprudent atthisstagetoestablish anewsetofdetailed rulesfortheimplementation
ofproduction policy inthelightoftheexpected delay incommercial deepseabed mining andthelack
ofadequate dataonitsimpact. There wasbroad agreement thatitwasbetter atthisstage toestablish
certain principles onthebasis ofwhich detailed rules andregulations might beestablished when
commercialproductionbecomesimminent.TheImplementingAgreementthussetsforthsuchprinciples
ofproduction policy related todeepseabed polymetallic nodules, inSection 6ofitsAnnex.WT/CTE/W/62
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13. Thecrucial policy perspective oftheproduction policy under Section 6oftheAnnex tothe
ImplementingAgreementistheapplicationofthefreemarketprinciplesreplacingthecontrolledeconomy
principles implicit inArticle 151oftheConvention. Faircompetition isthefundamental mechanism
fortheapplication offreemarket principles. Right from theoutset, intheSecretary-General 's
consultations, onceitwasagreed thatthecontrolled economy principles behind theproduction policy
under PartXIoftheConvention would bediscarded, emphasis wasplaced onensuring faircompetition
between land-based andseabed miners. Itfollowed logically thatparticipants intheSecretary-General 's
consultations would lookuptotheexisting multilateral system ofensuring faircompetition -theGeneral
Agreement onTariffs andTrade (GATT). Such reliance ontheGATT wasaccentuated because of
thecoincidence ofthetimeperiods when theprotracted negotiations intheUruguay Round werecoming
toasuccessful culmination andalsowhen theSecretary-General 'sconsultations ontheoutstanding
issues related tothedeepseabed mining regime were progressing well.
14. Onefundamental principle onthebasisofwhich theConvention wasformulated wasthat"the
problems ofocean space areclosely interrelated andneedtobeconsidered asawhole" (Convention,
preamble). Once anintegrated approach toocean affairs wastaken bythenegotiators intheThird
United Nations Conference ontheLawoftheSea,theyrecognized thatavastamount oflawsand
rulesalready exists among international organizations, along individual sectors orparticular disciplines
orspecific aspects ofocean affairs. Thisledtoastrategy ofutilizing therespective competence of
theexisting international organizations. Inthiscontext, numerous provisions intheConvention make
reference to"competent" or"appropriate" or"relevant" international organizations, insome cases such
organizations being expressly identified.
15. Anexamination oftheproduction policy inSection 6oftheAnnex totheImplementing
Agreement demonstrates thatitisactually anamalgam offairtrade measures. Inlaying down these
trademeasures, following thestrategy taken intheConvention, participants intheSecretary-General 's
consultations deferred totheauthority ofthecompetent international organization, which inthiscase
istheGATT. Thisistheultimate reason thatthepossibilities ofconflicts between thetrademeasures
pursuant totheImplementing Agreement andtheWTO measures would beminimal, ifany.
16. Theprovisions contained inSection 6oftheAnnex totheImplementing Agreement evolved
overseveral rounds ofconsultations. Thefirstversion ofthetextwasdiscussed andagreed uponduring
theDecember 1991 round. Thisversion includes thefollowing basic principles: (a)anti-subsidy
principle (refer toparagraph 1(c)ofSection 6);(b)anti-discrimination principle (refer toparagraph 1(d)
ofSection 6);(c)principle relating totheproblem ofunfair economic practices (refer toparagraph 7
ofSection 6);and(d)dispute settlement procedures setoutintheConvention (refer toparagraph 1(f)(ii)
ofSection 6).(ThetextofSection 6oftheAnnex totheImplementing Agreement isreproduced in
Annex Itothispaper). TheConvention itselfhadprovisions relating totheproblem ofunfair economic
practices (Article 151(8)). Attheend,theagreed provision intheImplementing Agreement wasthe
same asintheConvention. Thus, Article 151,paragraph 8,oftheConvention wasretained inthe
ImplementingAgreement.Article151,paragraph8,specificallymentions"rightsandobligationsrelating
tounfair economic practices under relevant multilateral trade agreements". Alegislative history of
thisprovision points tothefactthattheGATT wasconsidered tobethemain "relevant multilateral
trade agreement".
17. Since theearly rounds oftheconsultations, thethree main themes thatwere repeatedly
emphasized were theneedfornon-subsidization, fornon-discrimination between land-based mining
anddeepseabed mining, andformeasures against unfair economic practices. During theJune1992
round, asignificant development occurred thatinitiated thelinkage totheGATT. Inthecontext of
theabove mentioned needs, participants intheSecretary-General 'sconsultations pointed outthedirect
relevance andapplicability oftherelated provisions oftheGATT. Thedispute settlement procedures
ofGATT werealsoemphasized, anditwasurged thatsince theConvention already included recourseWT/CTE/W/62
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tosuchprocedures, oneshould revert backtotheConvention provisions inthisconnection. Itwas
nocoincidence thatthedeference toGATT intrade-related matters andanexplicit recognition ofthe
authority ofGATT insuchmatters came atatimewhen theUruguay Round ofMultilateral Trade
Negotiations wascoming toasuccessful conclusion andthere wasgeneral agreement among the
participating Governments intheNegotiations about theprovisions related tonon-subsidization,
non-discrimination andthemeasures against unfair economic practices.
18. Thus, theversion ofthetextoftheprovisions on"Production policy" available forconsideration
attheJanuary 1993 consultations hadanexplicit reference totheapplicability ofGATT rules asfar
asanti-subsidy provisions withregard todeepseabed mining wereconcerned. Italsomade anexplicit
referencetotherecoursetothedisputesettlementproceduresofmultilateraltradeagreements,essentially
GATT.
19. There wasalonghistory ofconsideration ofmeasures against subsidization, discrimination,
unfair economic practices andtraderestrictions, ingeneral, inSpecial Commission 1ofthePreparatory
Commission fortheInternational Seabed Authority andfortheInternational Tribunal fortheLawof
theSea.ThePreparatory Commission wassetupbytheThird United Nations Conference ontheLaw
oftheSeawithamandate totakemeasures toensure theentry intoeffective operation without undue
delay oftwoinstitutions established bytheConvention--the International Seabed Authority andthe
International Tribunal fortheLawoftheSea.Special Commission 1wasestablished bythePreparatory
Commission tostudy theproblems which would beencountered bydeveloping land-based producer
States likely tobeseriously affected bydeep seabed production. Inthedeliberations ofSpecial
Commission 1also,themeasures ofGATT were often mentioned.
20. Further consolidation andrefinement oftheprovisions related tonon-subsidization,
non-discrimination andmeasures against unfair economic practices occurred during theJanuary 1993
roundoftheSecretary-General'sconsultationsandsubsequentrounds.Suchconsolidationandrefinement
addressed basically three matters: (a)thegeneral applicability oftheprovisions oftheGATT was
recognized withrespect totheexploration forandexploitation oftheresources oftheinternational
deepseabed area; thisbroadened theauthority oftheGATT incomparison withprevious textswhich
mentioned GATT inrelation tospecific matters only,e.g.,non-subsidization, unfair economic practices,
etc.; (b)thecomplexity oftheissue ofsubsidization, asaddressed intheprovisions oftheGATT,
wasrecognized; thus, aneedtoaddadefinition of"subsidy" wasavoided, andatthesame time, the
permissibility ofsubsidization under certain circumstances wasaccepted -thiswasaccomplished by
simply linking theprovisions ofSection 6totherelevant onesofGATT; and(c)whenever applicable,
theauthority offreetrade agreements andofcustoms union agreements wasalsorecognized.
21. Non-subsidization andnon-discrimination measures were further strengthened byproviding
foraction byStates Parties andforcontractual obligations ofseabed miners with respect to
non-subsidization. AStateParty mayatanytimebring totheattention oftheCouncil (theexecutive
organ oftheAuthority) activities which initsview areinconsistent with therequirements of
non-subsidizationandnon-discriminationaslaidoutinSection6.Incircumstanceswhereadetermination
ismade under theGATT thataState Party hasengaged insubsidization which isprohibited orhas
resulted inadverse effects ontheinterests ofanother StateParty andappropriate steps havenotbeen
taken bytherelevant State Party orState Parties, theaffected State Party mayrequest theCouncil
totakeappropriate measures. Theacceptance byacontractor ofsubsidies other thanthose which may
bepermittedundertheGATTshallconstituteaviolationofthefundamentaltermsofthecontractforming
aplanofwork forthecarrying outofexploration orexploitation activities intheinternational deep
seabed area.WT/CTE/W/62
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22. Theabove elements thatalsoenjoyed general agreement were reflected inthefinalversion
ofthetextoftheprovisions on"Production policy", contained inSection 6oftheAnnex tothe
Implementing Agreement.
D. Dispute settlement procedures under theConvention
23. Further refinement wasalsoachieved intheprovisions related todispute settlement. Itwas
recognized thatmany States which werenotsignatories totheGATT could nothaverecourse tothe
dispute settlement procedures oftheGATT. ForsuchStates provision needed tobemade -ageneral
agreement emerged thatsuchStates could haverecourse tothedispute settlement procedures setout
intheConvention itself.3
24. Since theConvention isunique inthatthemechanism forthesettlement ofdisputes is
incorporated intothedocument thusmaking itobligatory forParties totheConvention togothrough
thesettlement procedure incaseofadispute withanother party. During thedrafting oftheConvention,
some countries were opposed inprinciple tobinding settlement tobedecided bythirdparty judges
orarbitrators, insisting thatissues could bestberesolved bydirect negotiations between States without
requiringthemtobringinoutsiders.Others,pointingtoahistoryoffailednegotiationsandlong-standing
disputes often leading toauseofforce, argued thattheonlysurechance forpeaceful settlement lay
inthewillingness ofStates tobindthemselves inadvance toaccept thedecisions ofjudicial bodies.
What emerged fromthenegotiations wasacombination ofthetwoapproaches, regarded bymany as
alandmark ininternational law.
25. Ifdirect talks between theParties fail,theConvention gives them achoice among four
procedures, some new, some old:submission totheInternational Tribunal fortheLawoftheSea,
established bytheConvention itself; adjudication bytheInternational Court ofJustice; submission
tobinding international arbitration procedures; orsubmission tospecial arbitration tribunals with
expertise inspecific types ofdisputes. Allofthese procedures involve binding third-party settlement,
inwhich anagent other thantheParties directly involved hands down adecision thattheParties are
committed inadvance torespect.
26. Disputes overseabed activities aretobearbitrated byan11-member Seabed Disputes Chamber,
which hasbeensetupwithin theInternational Tribunal fortheLawoftheSea. TheChamber will
havecompulsory jurisdiction overallsuchconflicts, whether involving States, theInternational Seabed
Authority orcompanies orindividuals having seabed mining contracts.
III. CONCLUDING REMARKS
27. Theabove information andanalysis which, inasense, constitute alegislative history ofthe
trade-related provisions oftheImplementing Agreement, pointtotheconclusion thatitisaquiteunique
MEA from theperspective oftheCTE. Itsuniqueness liesinthefactsthatnotonlyitattributes
competencetotheWTOinsettlingdisputesinvolvingtrade-relatedmeasures,notablyproductionsubsidies
3Thenumber ofStates Parties totheConvention andalsothenumber ofmembers oftheWTO areincreasing
overtime. AsofApril 1997, thefollowing 31States areStates Parties totheConvention, butnotWTO Members
(the13States marked withanasterisk areWTO observers): Algeria*, Bahamas, Bosnia andHerzegovina, Cape
Verde,China*,Comoros,CookIslands,Croatia*,Georgia*,Iraq,Jordan*,Lebanon,MarshallIslands,Micronesia
(Federated States of),Monaco, Nauru, Oman*, Palau, Panama*, Russian Federation*, Samoa, SaoTome and
Principe,SaudiArabia*,Seychelles*,Somalia,Sudan*,theFormerYugoslavRepublicofMacedonia*,Vietnam*,
Yemen, Yugoslavia, andZaire.WT/CTE/W/62
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andtrade restrictions, butalsoitexplicitly recognizes theauthority oftheWTO intheapplicability
oftrade-related measures withrespect todeepseabed mining.4
28. Thecomprehensiveness ofthedispute settlement provisions isalsounique inthattheyprovide
forbothParties andnon-Parties totheWTO. Butaninteresting point isthatsince theauthority of
theWTO intheapplicability oftrade-related measures hasbeenexplicitly builtintothetrade-related
provisions, thetribunal/court orarbitrator chosen bythenon-parties totheWTO, under thedispute
settlement procedures oftheConvention, aremostlikely toapply therulesoftheWTO asthesubstantive
law.5
29. Ashasbeenpointed out,"uptonow, there hasbeennoGATT orWTO dispute concerning
trade measures applied pursuant toanMEA"6;itcanbeadded thatneither hasthere been any
trade-related dispute, under theConvention, withrespect todeepseabed mining. Thecurrent stage
ofdevelopment ofseabed mining pointing tothefactthatcommercial exploitation isunlikely before
2010, further reduces thepotential fortrade-related disputes inthenearfuture. Itcanalsobeargued
thattheexistence ofaresource administration agency, theInternational Seabed Authority, itself may
beadeterrent forconflict emergence.
30. Itistobeadded thatinrelation totheprovision ofparagraph 6ofSection 6oftheAnnex to
theImplementing Agreement, theAuthority isatthistimeintheprocess offinalizing rules, regulations
andprocedures forprospecting andexploration ofpolymetallic nodules.7Informulating suchrules,
regulations andprocedures, theAuthority hastoensure theimplementation oftheprovisions ofSection
6,afactthattakesonebacktotheauthority oftheWTO intheapplicability oftrade-related measures.
There areenvironmental provisions inthedraftrules, regulations andprocedures forprospecting and
exploration, but"thetypes ofactivities anticipated during exploration consist primarily ofnon-invasive
survey work andarenotexpected tobeofserious concern interms ofenvironmental impact."8Thus,
itishighly unlikely thatthetrade-related impacts ofthese minimal environmental provisions would
beofserious concern, either.
4Inthiscontext, oneimportant matter thatmaynotbeunder thepurview oftheCTEbutwould beofinterest
totheWTO, canbementioned: inthe"Rules ofOrigin", while thegeneral concept oforigins beyond oroutside
accepted national jurisdiction isclear from thefrequent usage of"high seas, Antarctica andouter space",
accommodation mayhavetobemade inthedefinitions forthe"international deepseabed Area". Thismayalso
haveimplications for"double taxation" inrelation topayments tobemade byfuture deepseabed miners totheir
national governments andtotheInternational Seabed Authority.
5SeeWorld Trade Organization, Committee onTrade andEnvironment, "Communication from Chile"
(WT/CTE/W/2 of16February 1995).
6World Trade Organization, Committee onTrade andEnvironment, "Report (1996) oftheCommittee on
Trade andEnvironment" (WT/CTE/1 of12November 1996), paragraph 174.
7Asubsidiary organ oftheInternational Seabed Authority, a22-member expert body called theLegal and
Technical Commission, isconsidering these rules, regulations andprocedures. Based ontherecommendations
ofthisbody, theCouncil oftheAuthority isexpected toadopt these rules. Thelatest version ofthese rules,
regulations andprocedures arecontained inInternational Seabed Authority, Legal andTechnical Commission,
"Draft regulations onprospecting andexploration forpolymetallic nodules intheArea: Provisional textprepared
bytheLegal andTechnical Commission" (ISBA/3/LTC/WP.1/Rev.1 of28May 1997).
8International Seabed Authority, Assembly, "Report oftheSecretary-General oftheInternational Seabed
Authority under Article 166,paragraph 4,oftheUnited Nations Convention ontheLawoftheSea"(ISBA/3/A/4
of31July1997), paragraph 54.WT/CTE/W/62
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ANNEX I
Section 6oftheAnnex tothe
1994 Agreement relating totheimplementation ofPartXIofthe
1982 United Nations Convention ontheLawoftheSea
SECTION 6.PRODUCTION POLICY
1. Theproduction policy oftheAuthority shallbebased onthefollowing principles:
(a) Development oftheresources oftheAreashalltakeplace inaccordance withsound
commercial principles;
(b) Theprovisions oftheGeneral Agreement onTariffs andTrade, itsrelevant codes and
successor orsuperseding agreements shallapply withrespect toactivities intheArea;
(c) Inparticular, there shallbenosubsidization ofactivities intheArea except asmay
bepermitted under theagreements referred toinsubparagraph (b).Subsidization for
thepurpose ofthese principles shallbedefined interms oftheagreements referred
toinsubparagraph (b);
(d) There shallbenodiscrimination between minerals derived from theArea andfrom
other sources. There shallbenopreferential access tomarkets forsuchminerals or
forimports ofcommodities produced from suchminerals, inparticular:
(i) Bytheuseoftariff ornon-tariff barriers; and
(ii) Given byStates Parties tosuchminerals orcommodities produced bytheir
stateenterprisesorbynaturalorjuridicalpersonswhichpossesstheirnationality
orarecontrolled bythem ortheirnationals.
(e) Theplanofwork forexploitation approved bytheAuthority inrespect ofeachmining
areashallindicate ananticipated production schedule which shallinclude theestimated
maximum amounts ofminerals thatwould beproduced peryearunder theplanofwork;
(f) Thefollowing shallapply tothesettlement ofdisputes concerning theprovisions of
theagreements referred toinsubparagraph (b):
(i) Where theStates Parties concerned areparties tosuchagreements, theyshall
haverecourse tothedispute settlement procedures ofthose agreements;
(ii) Where oneormore oftheStates Parties concerned arenotparties tosuch
agreements, theyshallhaverecourse tothedispute settlement procedures set
outintheConvention.
(g) Incircumstances where adetermination ismade under theagreements referred toin
subparagraph (b)thataState Party hasengaged insubsidization which isprohibited
orhasresulted inadverse effects ontheinterests ofanother StateParty andappropriate
steps havenotbeentaken bytherelevant State Party orStates Parties, aState Party
mayrequest theCouncil totakeappropriate measures.WT/CTE/W/62
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2. Theprinciples contained inparagraph 1shallnotaffect therights andobligations under any
provision oftheagreements referred toinparagraph 1(b),aswellastherelevant freetradeandcustoms
union agreements, inrelations between States Parties which areparties tosuchagreements.
3. Theacceptance byacontractor ofsubsidies other thanthose which maybepermitted under
theagreements referred toinparagraph 1(b)shallconstitute aviolation ofthefundamental terms of
thecontract forming aplanofwork forthecarrying outofactivities intheArea.
4. AnyStateParty which hasreason tobelieve thatthere hasbeenabreach oftherequirements
ofparagraphs 1(b)to(d)or3mayinitiate dispute settlement procedures inconformity with
paragraph 1(f)or(g).
5. AStateParty mayatanytimebring totheattention oftheCouncil activities which initsview
areinconsistent withtherequirements ofparagraph 1(b)to(d).
6. TheAuthority shalldevelop rules, regulations andprocedures which ensure theimplementation
oftheprovisions ofthissection, including relevant rules, regulations andprocedures governing the
approval ofplans ofwork.
7. TheprovisionsofArticle151,paragraphs1to7and9,Article162,paragraph2(q),Article165,
paragraph 2(n),andAnnex III,Article 6,paragraph 5,andArticle 7,oftheConvention shallnot
apply.