International Trade

Dangerous Ground – The Lawless Sea

It was announced last week the Permanent Court of Arbitration (PCA) in The Hague ruled in favor of the Philippines in their dispute with the People’s Republic of China over territorial claims in the South China Sea. Shortly after the announcement, Beijing rejected the ruling as illegal while Washington immediately chimed in with a statement that The Hague ruling was both legal and binding. The PRC’s rejection of the ruling hinges on two points: the first that arbitration requires two parties and China did not participate; the second as both China and the Philippines are signatories to the UN Convention on Law of the Sea (UNCLOS) they are bound by the agreement to “negotiate” any dispute. An important footnote to this dispute is the U.S. never signed UNCLOS. Itu Aba, or as China calls it Taiping Island (ironically translating to something close to Peace Island), has been administered by Taiwan since the end of the Second World War. As such, each, China and Taiwan, has claimed Taiping Island as part of their national territory. However, it sits in the middle of the South China Sea, closer to the Philippines island of Palawan than mainland China. For this reason and the associated claims, it has been a sore spot for all the countries involved in the South China Sea’s disputed legacy. Back in the 1970s the of Law-of-the-Sea – or more appropriately lack thereof - in the South China Sea had already begun to simmer with “boat people” escaping from Vietnam and conflict over potential oil and gas reserves. A key segment of the ocean transit between the Straits of Malacca and Japan, the South China Sea was a large translucent blue rice bowl rimmed with conflicting interests – China (and Taiwan), Vietnam, the Philippines, Singapore, Thailand, Cambodia, Malaysia, Indonesia, Brunei, Japan and the U.S. all had, and indeed still have, direct interest in the 1.35 million square mile, oval body of water. The adjacent Straits of Malacca are one of the world’s great maritime corridors funneling nearly a third of the world’s ship traffic through its 1.7 mile wide opening. The Straits averages 215 ships per day. In 2015 over 25,000 containerships and 5,300 tankers transited the Straits with a vast majority traveling through the South China Sea. Indeed it is estimated that $5.3 trillion worth of trade passes through the South China Sea. With the U.S. accounting for $1.2 trillion of the total, this arguably makes the South China Sea the second most commercially important restricted body of water behind the Gulf of Mexico for U.S. interests. For this reason, the “Freedom of Navigation” element in the South China Sea imbroglio is of paramount importance to the U.S. Dangerous Ground Depending on who is doing the surveying (or counting) there are at least 250 major and probably nearly the same amount of minor islands dotting the South China Sea. Most of these are little more than coral atolls or sand bars but nonetheless they are specks of land where land is at a premium. Cradled in an area northwest of Sabah and Brunei (island of Borneo) and abutting the Philippine archipelago is a region aptly described by early English surveyors as the “Dangerous Ground”. Frankly speaking, the entire South China Sea deserves the sobriquet – typhoons, uncharted reefs (or semi-submerged islands), density of ship traffic of all types (see above), piracy in its many forms ranging from opportunistic fishermen to organized crime at sea are but part of a lethal combination that claims men and ships.
China Atlas page 22
China Atlas page 22
Despite the many complications to the South China Sea, the overarching concern is China’s claims in the South China Sea. Zonghua Renmin Gongheguo Fen Sheng Dituji Back in the 1970s, during a trip to Brunei, a veteran mariner working an offshore oil support boat, explained to this writer, if he relieved himself off a beach in Brunei the stream would be landing in China. His comments were partially about the presence of quasi-militia style (often tricked out fishing vessels) or the rare PLA (Peoples Liberation Army) vessel that would make an appearance in what was otherwise a U.S. Navy lake. The presence of the U.S. Navy in the South China Sea has always frayed the nerves and relations between the two superpowers. While the US Navy presence supported by bases in the Philippines and Japan was a demonstrative reality, Beijing insisted it had historical claims (artifacts - arguably rather seasoned flotsam and jetsam) to the entire South China Sea, virtually up to the beach in Brunei where the ancient mariner made his claim. For those who discounted by the genuineness (if not the accuracy) of China’s claims (the US, Philippines, Vietnam and nearly everyone else with waterfront property) there was a publication Zonghua Renmin Gongheguo Fen Sheng Dituji (loosely translated as Atlas of China by Province) published by the Chinese government in 1977 – one of the first books widely available in simplified characters. On page 22 is a map of “Nan Hai” (South China [Sea]) containing some wide brush stroke “borders” (called the nine dashes in some documents) that verify China’s claims not only to the Borneo shoreline but place Chinese waters within spitting distance (quite literally) of Manila. Vietnam’s waters are also similarly depicted and vigorously disputed, as is a small section of Indonesia. For years, while there were the occasional dustups well documented between China and its South China Sea neighbors, particularly Vietnam (this author wrote in the Far Eastern Economic Review of 1978 “Coming Conflict of Comrades” referring to South China Sea disputes), by and large, Beijing and indeed all the parties preferred to avoid direct confrontation and sought dispute resolution through the United Nation’s accords. But times have changed as Beijing’s interest in the South China Sea has intensified with the building of structures on formerly underwater reefs (Subic Reef) defacto extending jurisdiction with permanent presence. While this may seem to run contrary to Beijing’s geo-political efforts of expanding new trade (and political) ties through the new “Silk Road” nonetheless it is important to China’s own view of its place in the Asian community of nations, and the world in general. This puts the entire region at risk of an escalating confrontation that would impact global trade like the closing of the Suez Canal or a blockade of the Straits of Gibraltar. Dr. Mark Valencia, a long-time observer (author of numerous article and books on the subject) of the South China Sea wrote in 2015 as the dispute went to The Hague arbitration, “If the U.S., China and other claimants do not work out a modus operandi pronto there could be violent incidents. If ship captains did not have enough to worry about, now they have to keep a weather eye on possible conflicts that could affect their vessels or routing. This situation is a lose-lose for everyone.” At this writing, news reports indicate the U.S. is trying to “de-escalate” the rising tension in the region between China, the Philippines and the other South China Sea nations. Washington has also said that working with the U.S. would give the other nations more leverage in talks with China than trying to go it alone. China for its part has said it advocates direct talks between the parties (Philippines) and has reached bilateral agreements with Vietnam over their maritime boundary in the Gulf of Tonkin and is engaged in negotiations with South Korea. With so much hinging on an “open” South China Sea, resolving the territorial issues is in everyone’s interest.
George Lauriat
George Lauriat

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