International Waters is the final policy that accelerates naval unit production. Only the Aircraft Carrier doesn't benefit from it - every other late-game naval unit, including the Germans' U-Boat, does, making it a boon to players who need to build a large navy in a hurry.
“International waters” is the term that refers to the notion that certain bodies of water transcend (supposedly) national boundaries and are free to passage by all; while it can be applied to some lakes, rivers, and swamps, in general it is used in relation to oceans and seas. While all nations can claim sovereignty over their territorial waters extended out 12 nautical miles (22.2 kilometers), they have no jurisdiction past that limit. Although the concept of “freedom of the seas” dates to the 17th Century, it was not codified until several United Nations conventions were passed in the 1960s.