China Watch 15: FTA, ASEAN and UNCLOS

I posted China Watch 14: More on the SCS/WPS Noise in my facebook wall last July 11, then it attracted a healthy exchange from a few friends, most notably from Aiken Tafgar and Doods de los Reyes. The exchange actually expanded to other topics like economic policies; I removed that part, retained the discussions related to foreign policy and the Spratlys issue. I am posting this exchange -- in its raw form, unedited for capitalization, etc. -- with their permission.
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Aiken: Noy, if ever...i believe, this case will be tried first through the ASEAN-China dispute settlement mechanism, which is an agreement under the FTA. it will be long and costly for ASEAN, not to mention stalling the targets of the agreement. and magulo eto; viet nam, malaysia, brunei, phil, china all claiming to spratlys. i don't think international orgs will automatically assume the responsibility of resolving this issue because these countries have an existing FTA which has an agreement on dispute settlement mechanism. also, international orgs are handling too many cases where china is involved; china is causing them so much resources wasted on cases

But on second thought, hinde ata covered ng dispute settlement agreement ang geographic concerns or law of the sea, which is really handled by UN. or there must be a vague part of the agreement to cover that. masayang issue eto sa ASEAN, hehe!

Doods: I think China will push for a joint exploration agreement without clearly establishing which nation has sovereignty, they won't allow themselves to be dragged to the UN because they know that under the law of the sea they may be seen to be in the wrong. In the meantime, they will continue to build and strengthen their military presence while simultaneously giving lip service to pronouncing their willingness to settle the dispute in an amicable manner.

Nonoy: Hi Ken. I also doubt the Asean-China FTA dispute settlement body can resolve it because it is a strictly legal issue covered by the UNCLOS. ASEAN is a HUGE exports market for China, also a HUGE import sources. I really doubt that China will use force to settle this dispute, especially in areas too far south like the Kalayaan and Pag-asa islands which are very close to Palawan and RP.

Aiken: noy, goods (including SPS) and services disputes should be resolved by the FTA; the dispute settlement mechanism covers all the agreement's Annexes kasi. If parties signed a dispute settlement agreement, that must be accessed, 1st, before resorting to an international dispute settlement body, accdg to wto lawyers. But this geographic and LOS concerns, I doubt if this is covered by the FTA. On the other hand, UN may choose to withdraw itself from this issue, as well. It seems that UNCLOS doesn't settle geographic disputes. China will continue military intimidation in Spratlys until it achieves its goals. It's better for ASEAN-China FTA to use its Investment Agreement (signed in 2009) or those who claim on Spratlys can come up with a subregional investment cooperation. the first issue there is profit sharing. based on cost of investment and geographic rights? pwede! but who will determine geographic rights? hopefully, ASEAN will be able to form an arbitration panel to settle this part para masimulan ang investments sa Spratlys. sayang naman ang spratlys if underutlized!

Doods: like i said, China won't allow the dispute to go to the UN. http://globalnation.inquirer.net/5776/china-rejects-philippine-proposal-on-spratlys

Nonoy: China govt, being a communist govt, is a dictator. It puts guns on the heads of its people to support it or otherwise... The same dictatorial policy by the China govt will be imposed on other countries. So RP govt can negotiate with it on a bilateral level, but there is nothing to stop us from pursuing multilateral talks -- at ASEAN+6, APEC, UN, etc. Keep pressuring China at the international and multilateral level. That's why I argued that we hire more top caliber martime lawyers and diplomats, but never use tax money to procure more miitary armaments for Spratlys bec its useless. China would be happy to see a poor and highly indebted RP govt borrow more to buy token warships, then China will sink them anytime they want. But China will be hurting if pressured at the intl and multilateral diplomatic talks.

Doods: China is a bully, and that is worrisome. It throws its weight around instead of being diplomatic and negotiating. They have massive resources at their disposal, have built up their military arsenal and basically holds other countries by the throat because of their buying power and manufacturing facilities. They have no concept of honor, only face. Basically, they are not cowed by anything, even the UN. This is not some small country the international community can slap a trade embargo on.

Nonoy: But many if not all BIG governments are bully. China, the US, UK, France, etc. The US just enters militarily any country it does not like, like Afghanistan and Iraq. UK, France, Spain, Japan, just colonized many countries in the past. We have to live with a world with many bullies, we only learn how to deal with them, find out their soft part. For me, their soft part is not arms for arms, but international diplomacy and really hard research on intl law.

Aiken: ‎@doods and Nonoy Oplas, in the 1st place, it's even unsure if UNCLOS will be relevant to this issue because it has no provision on territorial sovereignty disputes, and China, actually, didn't accept certain procedures in UNCLOS (disputes concerning maritime boundary delimitation, military activities and historic bays or titles), which is its right evoked under Article 298 of UNCLOS (Beckham, 2010). here's the link http://cil.nus.edu.sg/wp/wp-content/uploads/2009/08/Beckman-ILA-Taiwan-May-2011-UNCLOS-DS-and-SCS-1-June-pdf.pdf.

Aiken: I believe, China is open for investment cooperation but profit sharing has to be based largely on cost of investment rather than territorial rights defined in UNCLOS because that's the only way China wins the game. China bullies because diplomacy will not achieve its goals. Even, law and maritime experts will not win this game for Philippines, Nonoy Oplas! Phil has to level down its expectations of asserting its rights under UNCLOS provisions. So long as we get some income benefits and market access to services (seafarers, professionals, etc.) from Spratlys, we should give in nalang, otherwise, we could be liquidated by China. And once the bratty bully china naman finds the negotiations slow moving, it will increase aggression in Spratlys or just continue with its exploration there. And the world will not rally against China for Phil.

Doods: Historically, the US has never "invaded" any country but rather "liberates" it. As for the "expand the empire" mindset of the past, that no longer generally applies ever since the entire world has been mapped and tagged and the UN came into being to keep the world from blowing itself up.

Doods: ‎@Aiken: I believe a joint exploration pact (which is what China is proposing) could be the best scenario. The Philippines does not have the capability to explore and harness the natural resources that the Spratlys are said to contain without a foreign partner. It would be nice to establish once and for all who really owns Spratlys, but what if the international ruling is that China has greater rights than us, the UNCLOS notwithstanding? We will be left on the outside looking in and no economic benefit to us, plus we will have to dedicate more security forces to make sure that China does not encroach further into our waters. China and the Philippines has historically been good economic partners and I'm hopeful that a fair agreement can be arrived at.

Aiken: Doods, no fair agreement will be arrived at because China will, by any means, win the game. the fact that China resorts to military aggression in Spratlys sends a message that it recognizes the overlapping claim with Phil. any arbitral body created to mediate here will determine territorial rights based on UNCLOS. but still, Phil will benefit from any agreement arrived at so long as we get access for our services and some rents on areas with overlapping claims. alternatively, since Phil has investment treaty with the US, i think, that can be used now to develop Spratlys and have US as ally against China's military aggression. China wouldn't also want an outright war with the US involved as it is a major trade partner. the problem with Phil is that it's not being resourceful and forward-looking. Had it been, massive foreign investments could have poured into Spratlys before China did this, and China would have had difficulty in intimidating us. But in any case (US or CHina as investment partner), Phil is down the drain; US will give us the same negotiation treatment as China would; US wouldn't give us more than what's available in the market for us. I'd prefer US as partner over China, though.

‎Noy, you should do a paper on Spratlys conflict, using game theory approach, detailing possible negotiation scenarios (US, China). remember the nobel prize piece on game theory approach to conflict? i'd like to write a paper now (katuwaan lang), but still swamped with many pending papers.

Doods: Aiken yes, I know China has the tendency to seek more while giving up only crumbs. but again i'm hopeful that given our neighbor status and good relationship with China our ambassadors can wrangle a good deal for us. I'm not really that excited about the US as a partner, though the MDT may prove to be useful in making sure that China toes the line in any agreement we arrive at with them.

Aiken: ‎@doods, i don't believe we have a good diplomatic relationship with china after hostage taking and drugs issues. the reason i like US over China is because the latter has no care on diplomatic relations. MDT should only come along with the investment cooperation as spillover benefits. tapping US as military ally purpose alone, in this case, will not benefit Phil much. it will be just like the issue of south K and the crazy north K.

Doods: the hostage taking incident is literally so last year. regarding the drug issue, China will continue to apprehend and convict, perhaps execute drug couriers whether they are Filipino nationals or not.China always thinks long term, centuries even.

Aiken: hostage taking was the 1st dent. on drugs, i know...and our govt shouldn't have negotiated there, what a waste and another stupid dent. despite those, china has no care on diplomatic relations...reason enough for preference of alternative powers. and this world, i believe, shouldn't be ruled by a bully! for me, china is distasteful! no matter how economically powerful it is, it remains distasteful in any angle -- diplomatic relations, products, government, etc...all distasteful!

Doods: i agree that China's diplomatic policies leave a lot to be desired. still, it's remarkable that a country such as China was able to emerge from a closed nation into a superpower that is even beginning to venture into space! if China were to help us start and build up our manufacturing facilities so that we can manufacture most of the stuff we currently have to import, we could see lots of progress in our country plus provide the employment opportunities that we sorely lack. The US would rather we continue to buy their products (most of which are now manufactured in China) rather than see us manufacture our own. just my two cents. :)

Aiken: Tafgar ‎@doods, i believe China will NOT help us become a manufacturing-driven economy. we'll be competing with China, then, and china will lose its market access here if we locally produce what we are, now, importing. on top of that, i believe we have edge on services, which china finds unnecessary, given it's manufacturing-driven economy. US, by the way, has been shifting some manufacturing from china to viet nam because of the latter's better quality. if i remember well, china had a history of rising to power, beginning from its ancient empire. with such enormous population and area, it has to evolve into cheap manufacturing, otherwise, its people will die. undeniably, china's rise to power is unintentional; the drive of the economy is to give billions of people temporary jobs so they can eat! china is a bitter economic power! same can be said for US and EU after the crisis, but the latter, in many respects, appear respectable. they bring technology to their partners; they spread knowledge. china is incapable of this and has no respect for IPR. if china rules the world, spell chaos :)

Nonoy: About the hostage taking, it's true that China got angry with Pinas. One consolation by PNoy was the boycott of RP diplomatic community of the Nobel Peace prize awarding to the Chinese dissident, Liu Xiaobo in Oslo as China waged a formal protest and urged countries to boycott the awarding.

The hawks in the china military would wish to knock down and sink any fighter plane or battle ship that will attempt to take on china militarily. They've done that to the Viets before, they sunk at least 2 Viet battle ships in the 80s I think. That's why a military solution to the Spratlys issue is the most expensive yet the most ineffective way to deal with those hawks. It's really diplomacy, officially and unofficially, say via the Fil-Chinese business community to possibly do back channel talks with their mainland business buddies who have influence with the top offiicials of the CCP.

Aiken: ‎in a way bayad tayo sa China since Pnoy boycotted the nobel event. but that was bad international publicity for us. and yes, military solution should be opted out. we'll lose resources, we'll lose in the war and we'll just pass the burden of war to the next generations. so long as we get our minimal expectations (jobs, rents, shares) from any investment cooperation in Spratlys, we should give it a go to either China or US. pero malabo na pumasok US at this point. too late, i guess.

Doods: i didn't like the fact that PNoy skipped the Nobel event just to appease a giant. in a way, we are no longer free with our political will because we as a nation have to show outward support for another country's political ideals to gain their favor.

Nonoy: About the Nobel Peace prize for achinese dissident, both China and RP govt are OA. Nobel is a private foundation, it is not an event by the Norwegian govt. So what if a private foundation like Nobel will give an award, say war freak award or peace award to somebody? China being a dictatorial communist govt, over-reacted. And PNoy being "we're ashamed of the hostage taking incident" tried to appease a foreign dictator with its own lousy boycott of the awarding. Kumbaga eh, parehong OA nagsama.

Doods: China, not US, may now be the world's leading superpower http://globalspin.blogs.time.com/2011/07/15/america-or-china-the-world-has-already-decided-whos-no-1/

Aiken: ‎@doods, oh yes. we all know that even before the series of recessions hit US and EU. china is unstoppable. china joined every economic cooperation i've reviewed. and we know that those cooperation have silent political/security motives. i would understand losing some political will along the way because we have to play this global political economy. in fact, in general, some FTAs exist to ensure numbers in international politics. those ftas are usually trade diverting rather than trade creating (which means partners don't get the most out of it; partners are forced to source out products from their fta partners even if there are other countries that produce the same products at better quality and price).
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See also:
China Watch 1: World's Largest Economies, Population, 2005, April 20, 2006
China Watch 2: China's Tourism, May 17, 2006
China Watch 3: World's Largest Traders, 2004, June 03, 2006
China Watch 4: Chinese Nationalism, Tibet, April 23, 2008
China Watch 5: China's New Patent Law, February 10, 2009
China Watch 6: China-India Blog, Eco-Protectionism, August 30, 2009
China Watch 7: Rising Yuan, Economic Bubbles, April 07, 2010
China Watch 8: World's Largest Economies in 2010, August 16, 2010
China Watch 9: Liu Xiaobo, Human Rights and the NPA, December 10, 2010
China Watch 10: Is China Still a Communist Country?, December 21, 2010
China Watch 11: Big Brother and Inflationary Pressure, March 07, 2011
China Watch 12: The Spratlys and SCS Conflict, June 08, 2011
China Watch 13: More on the Spratlys/SCS Conflict, June 25, 2011
China Watch 14: More on the SCS/WPS Noise, July 11, 2011