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Moment for compromise in the South China Sea

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In Brief

Last week's much anticipated ruling in favour of the Philippines' claims in the South China Sea against China in the Permanent Court of Arbitration was decisive. In its unambiguous dismissal of China's 'historic rights' claims and in other respects, the ruling went well beyond what was expected.

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The unanimous decision by the Tribunal judges has big implications for management of one of the most hotly contested international issues in our region.

As China’s economy has grown to become the second largest in the world, so have its interests and power. Its claim of historic rights over roughly 90 per cent of the South China Sea and its land reclamation activities have set it against other claimants in the region. These activities are seen as a challenge to the United States’ continued capacity to secure shipping lanes and act as the guarantor of maritime security in Asia.

Manila’s big win at the Tribunal makes this a time for compromise, restraint and diplomacy. It is not a time for grandstanding, adding insult to injury or taking action that could be construed as provocative.

This is a test of China’s respect for the international law that it signed up to. Jerome Cohen argues in the first of our feature pieces this week that by ‘ratifying the Convention, which requires compulsory dispute resolution and commits all parties to abide by whatever decision results, China clearly consented to accept the arbitration tribunal’s decision’.

Three critical issues were at stake. And Manila won on all three.

First, the Tribunal clarified the historic rights regime under the United Nations Convention on the Law of the Sea (UNCLOS). The Tribunal held that there is no legal basis for any Chinese historic rights within the nine-dash line. It ruled that any historic rights to resources China may have had were extinguished to the extent they were incompatible with UNCLOS. Interestingly, it also ruled that Manila was entitled to reach beyond the text of the convention to enjoy traditional fishing rights in the territorial sea of the Scarborough Shoal, which it observed had remained protected by international law and was preserved by UNCLOS.

Second, the Tribunal set out the legal threshold for what constitutes an island, as opposed to a rock, for the first time. According to the Tribunal, to qualify as an island a geographical feature in its natural condition needs to be able to sustain ‘a stable community of people’ and economic life. The Tribunal ruled that all features under review in the Philippines’ submission were ‘rocks’, and thus incapable of generating their own exclusive economic zone (EEZ). This means that there is no legal basis for any entitlement by China to an EEZ around any of the features it administers in the long-disputed Spratly Islands chain or, for that matter, around the Scarborough Shoal.

Third, by declaring the features to be rocks, the Tribunal was effectively able to affirm the validity of the Philippines’ EEZ — without de jure delimiting any boundaries, over which the Tribunal lacks jurisdiction. Mischief Reef, part of the Spratly Islands and where China has carried out reclamation work, is located within the EEZ claimed by the Philippines. Ruling that Itu Aba — the largest of the Spratly Islands — is a rock and therefore cannot generate an EEZ, cleared the way for the Tribunal to declare that the various Spratlys features were part of the Philippines’ EEZ. This allowed the Tribunal to conclude further that Chinese interference with Philippine fishing and construction of an artificial island on Mischief Reef violated the Philippines’ sovereign rights.

Beijing refused to recognise the case and did not make any submissions. Its policy was one of non-acceptance, non-compliance and non-implementation.

Beijing has predictably denounced the ruling. Some in China have threatened to declare an Air Defence Identification Zone (ADIZ) over the South China Sea, just as Beijing did in the East China Sea in November 2013. That would increase tensions and would be a mistake. But the statement from Beijing released in direct response to the arbitration and a White Paper Beijing released the same day point to a shift in language and perhaps some space for compromise.

In our other feature piece this week, Andrew Chubb finds ‘welcome hints that China may be subtly … bringing its South China Sea maritime rights claims into line with UNCLOS’.

Beijing’s statement and White Paper bring clarity and nuance, according to Chubb, to its claims around an EEZ and continental shelf, nine-dash line and historic rights. It makes a distinction between sovereignty and maritime rights. This distinction is ‘crucial because it is overwhelmingly the enforcement of China’s maritime rights claims — not its territorial sovereignty claims — that have caused so much tension and concern since 2007’.

The Tribunal does not have jurisdiction over matters of territorial sovereignty. Chubb says Beijing has given itself space by ‘[d]riving attention towards this tough-sounding stance on territorial sovereignty’. Such a move ‘provides good political cover for the quiet clarification of China’s maritime rights claims that may be underway’.

‘Instead of trying to stand international law on its head’, Cohen suggests, ‘China would be wiser to renew bilateral negotiations with the Philippines on the basis of the tribunal’s binding decision’.

Beijing has consistently stated its preference to settle these disputes bilaterally, an approach that Manila rejected when submitting its claims in 2013. With Manila holding the moral high ground, now would be a good time for the two countries to negotiate. Philippine president Rodrigo Duterte has thus far shown restraint and a feel for diplomacy. Becoming president only at the end of June, he is able to approach Beijing without the baggage of the previous Filipino administration.

A cynic might say Duterte is likely to be bought off by Chinese economic inducements. But what better outcome could Manila want than resolving their longstanding maritime dispute and deepening their economic relationship with the Philippines’ largest economic partner? Besides, aside from Manila and Beijing, no third party enjoys an enforcement right on the subject matter of this dispute.

The United States — the only country with the capability to enforce the ruling by force — has also shown restraint and played a role in keeping other South China Sea claimants from gloating or overreacting.

Beijing, like many other countries, has to manage nationalists at home and find a way to compromise without loss of face. The approach of ASEAN to the Tribunal’s rulings demonstrates understanding of that. There is no need for grandstanding, united claims of victory, immediate demands on China or statements that close the negotiating space. ASEAN can work with China over time towards a code of conduct on maritime security issues and better management of its economic security interests in the South China Sea with its major neighbour.

The window of opportunity for compromise is open. This is an important turning point in China’s relations with Southeast Asia which ASEAN and the Philippines can help Beijing negotiate to mutual advantage.

The EAF Editorial Group is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.

3 responses to “Moment for compromise in the South China Sea”

  1. Because the Philippines has won its international legal case, it is, apparently, now time for Manila to accept Beijing’s longstanding insistence that it be allowed to play off one Southeast Asian country against another.

    If the Philippines had lost its case, what would the authors of this post have advocated? That Beijing, holding the ‘moral high ground’, drop its insistence on bilateral negotiations?

    One cynic might say that Duterte would be ‘bought off by Chinese economic inducements’. Another cynic, or group of cynics, would propose that Duterte forget about the interests of other ASEAN states and extract the best deal he can for his country alone.

  2. It will be interesting to see how well this ruling is accepted once the ramifications of its definition of an island is more widely understood. This ruling sets a very high bar for defining an island, essentially there must be historical evidence of sustained human organic habitation. That is, the population cannot have been put there and sustained by a government. Certainly Japan will need to abandon its claim to an EEZ around Okinotori. Equally, it does not appear that the Senkakus would be entitled to more than 12 nm of territorial water. More broadly, however, there are many small islands throughout the Pacific and Indian Oceans for which the possessors have claimed 200 nm EEZs,but which may have to be reclassified has rocks under the definitions of this ruling. Midway Island, for instance, does not appear to qualify as an island.
    Of course future panels do not have accept this ruling has precedent setting. Just as it ignored previous rulings in regards to historic rights, future panels may feel that this one overreached in regards to defining an island. What we can be sure of is that this ruling will keep lawyers and students of maritime law busy for the foreseeable future and that it is likely to cause heartburn in the foreign ministries of those states possessing small maritime features.

  3. Your heading itself holds out great hope. You have indicated that China’s White Paper brought out on the day of the verdict suggests space for adjustment. The backdrop of China’s slowing down, to be borne by a generation unused to any reduction in production or income, to the accompaniment of a nationalist surge, will make an abrupt turnaround in the official position difficult. Restraint on the part of the victors of the unenforceable verdict can help retrieve the situation and create terms on which mutual agreement can be reached. The Philippines is showing its wisdom through controlled behavior.

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