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Joint Development

China’s Influence in the South China Sea and the Failure of Joint Development

The following is an excerpt of book chapter by Ralf Emmers, “China’s Influence in the South China Sea and the Failure of Joint Development,” in Evelyn Goh, ed., Rising China’s Influence in Developing Asia (Oxford Scholarship Online: May 2016), DOI:10.1093/acprof:oso/9780198758518.003.0007.

Abstract 

This chapter examines China’s efforts to shelve the South China Sea territorial disputes by negotiating joint development agreements (JDA) with rival claimants. Through JDAs China aims to influence indirectly how other claimants manage the sovereignty conflicts, by leveraging on their shared preferences for economic development and re-framing the issue with the narrative of joint development bringing mutual gains, thereby putting aside the sovereignty conflicts through constructive cooperation. However, Vietnam and the Philippines have resisted China’s attempt at discursive persuasion, and Beijing has failed to achieve its aims of shifting their focus away from formal multilateral conflict management mechanisms, and international arbitration of the sovereignty disputes. But Beijing’s influence is constrained by China’s own behaviour. Its refusal to clarify its territorial claims in accordance with international law, unilateral development of oil and gas exploration, and coercion of other claimants contradicts the JDA narrative.

The chapter consists of four sections. The first examines the resource dimension of the South China Sea disputes and introduces the notion of joint development as a form of conflict management. The second reviews Chinese proposals made since the 1990s to jointly develop the resources of the South China Sea while the third section assesses China’s impact on the policy choices and behaviour of the Philippines and Vietnam. The final section discusses why Beijing has failed despite its repeated offers to frame the conflict and influence the two Southeast Asian claimant states.

Why has China Failed to Influence the Philippines and Vietnam?

The Philippines and Vietnam have sought in recent years to internationalize and legalize the South China Sea question and to manage the disputes through the negotiation of a binding COC. They have also turned down proposals that may have legitimized Chinese claims in their EEZs and continental shelves. All this is problematic for China and in contrast to its own policy preferences and objectives. Hence, it can be argued that China has failed, through its joint development proposals, to influence the policy choices and behaviour of the Philippines and Vietnam on the South China Sea question. The two Southeast Asian states have become over the years increasingly sceptical about China’s proposals to jointly develop the resources of the South China Sea. This section asserts that this is primarily due to three main reasons, namely, China’s refusal to clarify its sovereignty claims, its continuation in developing unilateral development capabilities, and its demonstrated ability and willingness to coerce others in staking its claims. Let us discuss these reasons in greater detail.

First, the Southeast Asian states have supported in principle the idea of joint development in disputed areas as long as it occurs in full accordance with the principles of UNCLOS. Critically, this involves clarifying claims in conformity with international law. One may question how the clarification of China’s sovereignty claims would ultimately help with joint development, and conversely how Beijing’s refusal to do so has impeded the negotiation of such agreements in the South China Sea.

Before a JDA can be negotiated, claimant states should agree on the geographical area under dispute. Even if the exact size of the oil and gas reserves of the South China Sea were ever determined, the Philippines and Vietnam would still need to determine with China where their claims overlap before they can proceed in sharing these commodities. This is the reason why the ZoPFFC and its reference to disputed and non-disputed areas constituted a first attempt at implementing the Chinese calls for joint development. Reaching an agreement on what is disputed and on how to proceed with the common exploration and exploitation of the disputed resources will ultimately be a complex and difficult challenge. This is especially true in light of the asymmetry in power capabilities that exist between the claimants and the absence of an overall agreement on the sovereign rights of the coastal states. Both these factors directly affect the negotiating position of Manila and Hanoi as well as leave them in a fragile situation if conditions were to worsen in the disputed areas. To prevent such a scenario from occurring, a JDA should be as clearly negotiated as possible both in terms of its geographical ambit and in terms of its implementation. Tonnesson reminds us in the context of the South China Sea that if ‘oil is going to be produced, a sophisticated legal regime with clear rules for how to divide costs, obligations, and revenues must be established.’[25] The Philippines and Vietnam are fully aware of the complexity of reaching such a long-term and binding agreement with China.

Yet, despite its joint development proposals, China has failed to clarify its ambiguous claims in the South China Sea in conformity with UNCLOS and has continued instead to rely on its U-shaped line. In February 1992, the Chinese National People’s Congress passed the controversial Law on Territorial Waters and Their Contiguous Areas. It reaffirmed Chinese sovereignty over the Paracel and Spratly Islands and laid claim to a large but not clarified part of the South China Sea.[26] Beijing has not further clarified its claims since the adoption of its 1992 law of the sea. The Philippine statement of claim under Annex VII of UNCLOS is partly meant to force China to clarify its claims in the South China Sea in conformity with international law. As noted above, the Philippine submission was rapidly dismissed by Beijing. As a result, no consensus has emerged among the claimant states on disputed areas that may be subject to joint development arrangements. Wain argues that joint development is ‘a long-proclaimed Chinese policy that has proved elusive, mainly because Beijing has not clarified its claims in the South China Sea, and there is no consensus on areas in dispute that may be subject to joint development arrangements.’[27] Beckman makes a similar point when noting that JDAs may only be concluded in the South China Sea once all the claimants have clarified their ambiguous claims in conformity with UNCLOS.[28]

Nevertheless, it needs to be said that the Southeast Asian claimants have sought to clarify their claims in the South China Sea at the expense of China. Let us mention again the joint claims submitted by Malaysia and Vietnam to CLCS in May 2009. While the CLCS is not permitted to consider submissions in an area subject to a sovereignty dispute, the joint Malaysian and Vietnamese submission still ‘amounted to a claim by these countries to the resources of the entire southern part of the South China Sea.’[29] China’s angry response was not unexpected, as the joint submission overlapped with its own claims and excluded the PRC from a large part of the South China Sea, including in terms of the allocation of its hydrocarbon resources. In its response, Beijing included the U-shaped line map in its Note Verbale to the UN Secretary-General, therefore reviving old suspicions in Hanoi, Kuala Lumpur, and Manila. Beijing also established a new Department of Boundary and Ocean Affairs and enhanced its patrolling capabilities in an attempt to further assert its sovereignty in the South China Sea.

Second, despite its repeated calls for joint development, China has over the years developed its own capabilities to explore and exploit hydrocarbon resources unilaterally in the South China Sea. China’s deep-water oil and gas exploration technologies have continued to advance rapidly. In particular, CNOOC is investing heavily to explore deep-water hydrocarbon resources. For example, the state-owned company launched its newest drilling rig in May 2012 that can, for the first time, mine seabed resources as deep as 3,000 metres.[30] Moreover, China has invited foreign energy companies to tender for exploration rights in disputed areas. In June 2012, for instance, CNOOC invited foreign energy companies to tender for exploration rights for nine oil blocks in a southern area of the South China Sea. Discussing the significance of the CNOOC announcement, Beckman writes that it seems to ‘confirm the suspicion that although China is only claiming “sovereignty” over the islands and their adjacent waters, it is also claiming “rights and jurisdiction” to the resources in and under the waters within the nine-dashed lines.’[31] Vietnam reacted angrily to the CNOOC tender stating that the area under consideration was located within its 200 nm EEZ and that it impinged on blocks Hanoi had already awarded to Gazprom and ExxonMobil for oil exploration.[32] The legality of CNOOC’s offer is dubious, as it infringes on Vietnam’s sovereignty rights within its own EEZ and is thus incompatible with UNCLOS.[33]

Third, since 2010, there has been an increase in the number of incidents all over the South China Sea involving the harassment of survey vessels, the cutting of cables, and the repeated arrest of fishermen. Beijing has continued to protest against survey drilling conducted by other claimant states within the U-shaped line. Vietnam accused China in May 2011 of cutting the exploration cables of one of its oil survey ships. In April 2012, Chinese and Philippine vessels were involved in a stand-off at Scarborough Shoal in the South China Sea. Philippine naval authorities had discovered several Chinese fishing vessels anchored at the Shoal disputed by both China and the Philippines. A Philippine navy ship attempted to arrest the Chinese fishermen allegedly accused of poaching and illegal fishing. Two Chinese maritime surveillance ships intervened, however, and prevented the arrest from occurring. This incident led to a tense stand-off between the Philippine navy ship and the Chinese maritime vessels and eventually resulted in severe tensions between Beijing and Manila that lasted for several weeks.[34] Finally, in May 2014, CNOOC unilaterally placed a deep sea drilling oil rig in the disputed waters south of the Paracel Islands in an area within Vietnam’s EEZ. In response, Hanoi sent approximately thirty vessels to disrupt the drilling operations while the Chinese, in turn, deployed roughly eighty vessels to protect the rig. The situation escalated rapidly when Hanoi accused Chinese boats of ramming and using water cannons on Vietnamese vessels. The dispute over the rig also led to anti-Chinese protests in Vietnam. Drilling works were expected to last from May until August 2014, but in July that year China announced the withdrawal of the oil rig from the disputed area.

Read the full text of the book chapter at 

http://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780198758518.001.0001/acprof-9780198758518-chapter-7

Read other commentaries and analyses on the same topic at 

https://seasresearch.wordpress.com/category/joint-development/

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