‘Code of Conduct framework not instrument to settle territorial disputes’

Southeast Asian countries and China have agreed that the framework for the Code of Conduct(COC) of Parties in the South China Sea was “not an instrument to settle territorial disputes or maritime delimitation issues.”

This developed even after the Association of Southeast Asian Nations (Asean) and the Chinese government both sought to craft a “legally-binding” COC that would address sea dispute.

A draft framework, which would be endorsed by Asean and China foreign ministers on August 6 in Manila, would be “rules-based,” containing “a set of norms to guide the conduct of parties and promote maritime cooperation in the South China Sea.”

According to documents obtained by INQUIRER.net, the parties agreed that the framework must “promote mutual trust, cooperation and confidence, prevent incidents, manage incidents should they occur and create a favorable environment for the peaceful resolution of disputes.”

They also decided to maintain “respect for each other’s independence, sovereignty and territorial integrity in accordance with international law, and the principle of non-interference in the internal affairs of other states.”

The draft framework also highlights the need for “full and effective implementation of the DOC (declaration on the code of conduct of parties in the South China Sea).”
The DOC, signed by both parties in 2002, mandates self-restraint and non-militarization in the disputed waters.

The framework was finalized during the senior officials meeting in Guiyang, China, last May.

During the 30^th Association of Southeast Asian Nations (Asean) Summit last April, Asean member states chose not to mention China’s reclamation activities and apparent militarization in the disputed territories.

Tensions between the Philippines and China erupted after Beijing’s expansive claims over the South China Sea and full scale reclamation activities in the contested waters.
The South China Sea issue also has strained the Philippines’ relations with China after Beijing claimed almost all parts of the minerals-rich region.

But since President Rodrigo Duterte assumed office in June 30 last year, he has maintained “a soft approach” to China as he favored bilateral talks to settle the South China Sea disputes.

The Philippines won a landmark decision at the United Nations-backed arbitral tribunal but China has repeatedly rejected the decision.

In May, the Philippines and China held bilateral talks to discuss “sensitive” issues over the disputed sea.

source:  Philippine Daily Inquirer

Taking the Next Step on the Code of Conduct

Just over a year ago, the Permanent Court of Arbitration in The Hague ruled that China’s vaunted “nine-dash line” and subsequent historic claims over much of South China Sea had no basis in international law, in particular the United Nations Convention on the Law of the Sea (UNCLOS). The decisive legal victory for the Philippines, the first state to challenge Beijing in such a public forum, marked an important milestone in a protracted territorial dispute.

HIGHLIGHT THE LAWAS THE BASIS OF OUR DIPLOMACY
As our country takes its next steps in protecting its interests in the West Philippine Sea, we should resume our leadership in fortifying international law. As this year’s chair of ASEAN, we have an opportunity to steer the discussions on the Code of Conduct. In our view, the Code of Conduct must reaffirm the Arbitral Tribunal’s Award to the Philippines as a guide for all our countries’ behavior in the South China Sea. In this context, bears emphasis that The Hague ruling affirmed that maritime entitlements should be governed by UNCLOS and that any alleged right not anchored on UNCLOS should be denied. The conclusion of a legally binding Code of Conduct along these lines must be a priority.

Moreover, the Philippines should continue to actively present its case as a legal precedent for ASEAN claimant-states to further clarify their respective maritime entitlements and boundaries as well as align their respective domestic policies with UNCLOS provisions. Ultimately, the award should not be seen as mere beneficial to the interest of the Philippines, but to all claimants in the South China Sea with common interests in freedom of navigation for trade and other legitimate activities.

At the end of the day, we believe that all the claimants should work toward resolving their disputes peacefully and amicably by making full use of the legal processes available to them, in accordance with the milestones that the region has reached, such as in the 2002 Declaration on the Conduct of Parties in the South China Sea and, of course, the Arbitral Tribunal’s ruling.

CAUTION SHOULD NOT PARALYZE US
Since the ruling was released, caution has replaced the optimism that had accompanied the decision in Manila. While the ruling indeed set a key precedent in terms of clarifying the country’s rights under the purview of international law, some say President Rodrigo Duterte’s pursuit of a so-called “independent foreign policy” may imperil -- if not completely compromise -- the potential value of the decision.

Even so, the administration’s choice to normalize diplomatic relations with Beijing while cooling ties with its traditional ally the United States has effectively put the ruling on the back burner. Under the chairmanship of the Philippines, the Association of Southeast Asian Nations (ASEAN) was likewise lukewarm in terms of taking China to task over its militarization of the South China Sea.

Whether this direction will bear fruit eventually is a matter of conjecture, but in the intervening months since the ruling, Chinese military buildup in the disputed waters as well as harassment of Filipino fishermen by Chinese vessels didn’t abate. Recently, a report from the Asia Maritime Transparency Initiative revealed that new missile shelters and radar and communication facilities are being installed in Fiery Cross and Mischief and Subi Reefs.

There is a sense of fragile peace in the region, a peace that is undermined by what many see as China’s willful disregard and flouting of international law. A year after the ruling, perhaps it is high time to revisit and reassess the Philippines’ policy position in light of China’s actions.

Facing continued antagonism from Beijing, the country should adopt a strategy akin to Japan’s so-called multilayered security cooperation by leading the way in upholding international order.

All diplomatic avenues must be exhausted that are in promoting the rule of international law. We must protest what is unlawful, coercive, and contrary to the correct principles that govern relations between states. We should be ready to appeal to the UN General Assembly in moving towards peace, not war. Ultimately, in taking the right strategy, our government can only enhance its standing among our peers and ensure its legacy for the generations that will succeed us.

Victor Andres “Dindo” C. Manhit is the founder and managing director of the Stratbase Group and president of its policy think tank, Albert del Rosario Institute for Strategic and International Studies (ADRi). Prof. Manhit is a former chair and retired associate professor of Political Science of De La Salle University. He has authored numerous papers on governance, political, and electoral reforms.

source:  Businessworld

Commentary: Trojan Horse in the West Philippine Sea

By: Florin T. Hilbay - @inquirerdotnet

In the recently concluded Belt and Road Forum in Beijing, the special envoy for intercultural dialogue Jose de Venecia Jr. revived proposals for joint oil and gas exploration in the West Philippine Sea, citing the joint seismic marine undertaking among the Philippines, China and Vietnam during the term of President Gloria Arroyo as a model for cooperation. He said “[i]t is obvious as members of the Asean family that today, with China, we must find ways and means to jointly develop the area’s hydrocarbon potential to help lessen our common dependence on distant petroleum sources in the Middle East.”

The government must exercise utmost caution and tread very carefully on this matter, for the protection of the national interest.

Prior to Philippines v. China, the idea of joint exploration and development in the WPS may have had some plausible justification on the ground that the rights of the Philippines and China in our exclusive economic zone were theoretically contested. After that decision, such plausible deniability is no longer tenable. Simply put, joint exploration and development are incompatible with the Constitution.

The arbitral award declared that the Philippines does not share with China any overlapping entitlements. In the language of our Constitution, areas in the WPS believed to contain oil and gas, such as Reed Bank, are part of our “marine wealth” and the State must “reserve [their] use and enjoyment exclusively to Filipino citizens.” Because they “are owned by the State,” their “exploration, development, and utilization … shall be under the full control and supervision of the State.”

What this means is that any joint agreement to explore, develop, and utilize our marine wealth with China is null and void. Such agreements effectively impair the authority of the State to control and supervise the use and enjoyment of our marine wealth through its institutional machineries—the executive, legislative and judicial branches. They also materially diminish the rights of Filipinos to the benefits arising from such resources. We cannot, for example, compel China to submit to the Commission on Audit and/or pay income or franchise taxes for its share in the income—forms of control sovereigns traditionally impose.

The most insidious aspect of a joint agreement with China is the fact that the basis of such economic sharing is the recognition of China’s sovereign rights over our exclusive economic zone—a culpable violation of the Constitution and an implied waiver of our victory at The Hague.

The Duterte administration must realize that whatever economic gains there may be from any joint agreement with China over the WPS can only be made at the expense of giving away our sovereign rights over the area. Joint agreements are a Trojan Horse against our country’s continuing efforts to effectively assert the rights we have won at The Hague.

Lest anyone forget, China is bound by that judgment because it is a party to the UN Convention on the Law of the Sea. We must construe its present refusal to abide by that judgment as a strategic effort on its part to buy time as it attempts to secure a waiver of judgment—express or implied—from any post-Aquino administration.

In response to criticisms that President Duterte has been timid on the matter of enforcing the Philippines’ rights against China, he recently revealed that he had previously informed Xi Jinping of his intention to drill oil in our EEZ, but was threatened with war. He seems to imply, in the balance of his remarks, that he does not intend to go to war with China over oil.

This is, of course, well and good, insofar as practical politics goes. But one also hopes that such a pacifist line is not later transformed into a pragmatic justification for entering into an unconstitutional and inequitable joint agreement over the WPS that simultaneously waives our sovereign rights.

Florin T. Hilbay is a former solicitor general. He was agent to the Republic in Philippines v. China.

In first under Trump, U.S. warship challenges Beijing's claims in South China Sea

The Arleigh Burke-class guided-missile destroyer USS Dewey prepares for a replenishment-at-sea in the South China Sea May 19, 2017. Picture taken May 19, 2017. Kryzentia Weiermann/Courtesy U.S. Navy/Handout via REUTERS

By Idrees Ali and Phil Stewart

WASHINGTON (Reuters) - A U.S. Navy warship sailed within 12 nautical miles of an artificial island built up by China in the South China Sea, U.S. officials said on Wednesday, the first such challenge to Beijing in the strategic waterway since U.S. President Donald Trump took office.

The officials, speaking on condition of anonymity, said the USS Dewey traveled close to the Mischief Reef in the Spratly Islands, among a string of islets, reefs and shoals over which China has territorial disputes with its neighbors.

The so-called freedom of navigation operation, which is sure to anger China, comes as Trump is seeking Beijing's cooperation to rein in ally North Korea's nuclear and missile programs.

Territorial waters are generally defined by U.N. convention as extending at most 12 nautical miles from a state's coastline.

One U.S. official said it was the first operation near a land feature which was included in a ruling last year against China by an international arbitration court in The Hague. The court invalidated China's claim to sovereignty over large swathes of the South China Sea.

The U.S. patrol, the first of its kind since October, marked the latest attempt to counter what Washington sees as Beijing's efforts to limit freedom of navigation in the strategic waters.

The United States has criticized China's construction of the man-made islands and build-up of military facilities in the sea, and expressed concern they could be used to restrict free movement.

U.S. allies and partners in the region had grown anxious as the new administration held off on carrying out South China Sea operations during its first few months in office.

Last month, top U.S. commander in the Asia-Pacific region, Admiral Harry Harris, said the United States would likely carry out freedom of navigation operations in the South China Sea soon, without offering any details.

Still, the U.S. military has a long-standing position that these operations are carried out throughout the world, including in areas claimed by allies, and they are separate from political considerations.

The Pentagon said in a statement it was continuing regular freedom of navigation operations and would do more in the future but gave no details of the latest mission.

"We operate in the Asia-Pacific region on a daily basis, including in the South China Sea. We operate in accordance with international law," Pentagon spokesman Captain Jeff Davis said in the statement.

U.S.-CHINA RELATIONS

Under the previous administration, the U.S. Navy conducted several such voyages through the South China Sea. The last operation was approved by then-President Barack Obama.

China's claims to the South China Sea, which sees about $5 trillion in ship-borne trade pass every year, are challenged by Brunei, Malaysia, the Philippines, and Vietnam, as well as Taiwan.

The latest U.S. patrol is likely to exacerbate U.S.-China tensions that had eased since Trump hosted Chinese President Xi Jinping for a summit at the U.S. leader's Florida resort last month.

Trump lambasted China during the 2016 presidential campaign, accusing Beijing of stealing U.S. jobs with unfair trade policies, manipulating its currency in its favor and militarizing parts of the South China Sea.

In December, after winning office, he upended protocol by taking a call from the president of self-ruled Taiwan, which China regards as its own sacred territory.

But since meeting Xi at his Mar-a-Lago resort, Trump has praised Xi for efforts to restrain North Korea, though Pyongyang has persisted with ballistic missile tests despite international condemnation.

U.S.-based South China Sea expert Greg Poling of the Center for Strategic and International Studies, said the operation was also the first conducted by the United States close to an artificial feature built by China not entitled to a territorial sea under international law.

Previous freedom of navigation operations have gone within 12 nautical miles of Subi and Fiery Cross reefs, two other features in the Spratlys built up by China, but both of those features are entitled to a territorial sea.

Mischief Reef was not entitled to a territorial sea as it was underwater at high tide before it was built up by China and was not close enough to another feature entitled to such a territorial sea, said Poling.

He said the key question was whether the U.S. warship had engaged in a real challenge to the Chinese claims by turning on radar or launching a helicopter or boat -- actions not permitted in a territorial sea under international law.

Otherwise, critics say, the operation would have resembled what is known as "innocent passage" and could have reinforced rather than challenged China's claim to a territorial limit around the reef.

(Reporting by Idrees Ali and Phil Stewart; Additional reporting and writing by Matt Spetalnick and David Brunnstrom; Editing by Cynthia Osterman and Sandra Maler)

Occupation with consent

AS EASY AS ABC By Atty. Alex B. Cabrera (The Philippine Star)

If occupying and building artificial islands within Philippine territory were a commercial deal, we would have done a valuation – what did they gain in exchange for what we gave up? Well, we have not given anything up yet, but we haven’t exactly been paid at all, either.

In an actual business valuation of a private company (which is done when an investor is coming in, or when the business is about to be sold), we look at a few things, such as physical assets, profitability and sustainability, cash flow and liquidity, and its market and intellectual properties.

The other thing that is quite important though is establishing the value of the business after the investor comes in or after it is bought, in the hands of the buyer. There could be a huge strategic value to the buyer’s business, and there could be a lot of synergies. As the seller, you would want to share in the value of that synergy. As a negotiator, if you can estimate in dollar terms what the strategic value of your business is to the investor, you can have leverage in negotiating for a better price.

The Jollibee-Mang Inasal deal fascinated people because Jollibee bought its Mang Inasal stake (the initial 70 percent) at three times what was offered by one potential buyer. The synergistic value to Jollibee was obvious because before the deal, Mang Inasal stores were already side by side with Jollibee’s. (And Jollibee loves to do that with McDonald’s.) The combined Jollibee-Mang Inasal offering was a bigger draw, and more importantly, the revenue is now in the same pocket after the deal. (Now, I suddenly miss that palabok, and that spiced chicken barbecue over rice, but that is not the point here.)

So, theoretically, if the value of your standalone business is 100, and to the buyer, with synergies and all, it is worth 1,000, you know you can get a bit more even if you are already offered 300.

The situation of the artificial islands built by China as being within Philippine territory (or most of it are) is already official as ruled upon by the UN Arbitral Court at The Hague. Just a brief refresh: the UN Tribunal has said that China has no historical rights because while they have always claimed it historically, other claimant states, especially the Philippines, do not agree with China’s claims.

To top it all, there is the international Law of the Sea that shows that China is way off the mark. Vietnam is about a bit more than the benchmark, at 200 miles away from the Spratlys, and Malaysia has an overlapping claim with the Philippines. To be fair, we only claim about seven “islands” out of the hundred there, but we want our 200-mile exclusive economic zone respected.

Assuming that occupation is consensual and not by coercion, they would need to give compensation to the Philippines for the tons of fishes, the oil and natural gas that are in there. (The US Energy Information Administration (USEIA) estimates that the South China Sea contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proven and probable reserves.)

You can count and conclude that the strategic value to China is bigger because they have bigger ships for fishing, more fishermen out of their much, much bigger population, better-equipped to extract the oil and natural gas in the area, and – very important to them – the military positioning and defense that the South China Sea offers.

Economically, and militarily, they simply have more at stake there than the Philippines, with one big “but”. The territory, within the 200-mile exclusive economic zone, is ours.

Sure, it is encouraging that investments, financing, and tourists are coming in or are promised by China. Allow me though to sound a little bit ungrateful here just to bring in a point. The investments have dividends for the investors, the trade deals benefit both countries, and the financing helps in the trade and even gets Chinese companies a piece of the action, and Chinese tourists know it is more fun in the Philippines. My point is, these are hardly compensation for the West Philippine Sea.

The reality is, they will not remove that structure they already built. This cuts out our work for us: we need to put in the Code of Conduct that is not inconsistent with the international Law of the Sea, secure just compensation for the Philippines, secure at least co-use and co-exploration, and rule against militarization of the islands. Let’s make it consensual and be mindful of what should be outside the commerce of men, like the preservation of marine life.

Regarding the Scarborough (Panatag) Shoal, which is figuratively a stone’s throw away from Subic, I guess we cannot be blamed for being suspicious about negative pregnant statements. When China said there were no radar systems there, could they mean that some other system was being developed there instead? After all, they did insist in the beginning that the artificial islands in the Spratlys were for marine research, and not to support a sturdy, permanent aircraft carrier with multiple runways.

I would believe the President when he said that he made no secret deal regarding Panatag, or the Spratlys for that matter, because what comes first in the job description of the President, as a civilian, is to lead the military in defending Philippine territory. We can start by sending erring anti-narcotics policemen to man a post in the Panatag Shoal. If their blood spills there during a standoff, they would have died not as villains, but as heroes.

* * *

Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the Tax Committee of the Management Association of the Philippines (MAP). Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Primer on Philippine maritime areas

I am pleased   to send  herewith a  copy  of  the  “Primer”  I prepared   on  “The  Ocean  Space   or  The  Maritime   Area  of  the Philippines  (Including  the Seabed  and Subsoil  and  their  Air Space under the Law of the Sea Convention  [particularly Part IV], the Philippine  Constitution  and Relevant Laws)”.

The Primer is intended to inform of the maritime areas over which the Philippines  has  sovereignty,  sovereign  rights  or jurisdiction, principally its territorial sea, the contiguous zone, its exclusive economic zone and the continental shelf.  For convenient reference, the pertinent provisions of the Law of the Sea Convention (LOSC),  the   Philippine Constitutions   and   relevant   statutes   are quoted.

Far too frequently opinions and views are expressed,  not in accord even with explicit provisions  of the LOSC.  A recent example are views on the Benham Rise, a part of the extended continental shelf of the Philippines.

It was my privilege  to  have  been  a  vice chairman of  the Philippine delegation  to the Law of the Sea Conference,  initially in the  Seabed  Committee, which  convened in 1968,  and  in the  United Nations  Conference  on  the Law  of  the  Sea,  which   convened  in December 1973.   The Law of the Sea Convention was adopted by the United Nations in 1982, and it entered into force in 1994.

Some observations are made on the Arbitral Award  on  the Philippine Claim  of  July 12, 2016, particularly  in  relation   to  the tensions  in  the  South  China  Sea  and  how  the  administration of President  Duterte  is addressing  its enforcement  and overall relationship with China.

It is my hope that the Primer will contribute to a more enlightened and   productive exchange of   views   in   regard the problems  facing   the  Philippines  in  protecting  and  enhancing  its rights over the maritime areas over which it has sovereignty or jurisdiction.

Estelito P. Mendoza

source:  Business Mirror

Get It Real: The Arroyo/Mendoza gospel and Carpio’s book

One is not sure why lawyer (for Marcos and cronies), former solicitor general and former Pampanga governor Estelito Mendoza has jumped into the conversation on the Philippines’ maritime issues with China, especially since he was quoted as saying that there are currently “too many conversations” on the issues. But he has jumped in with a big splash, launching a “primer” (his description) titled “The Ocean Space or the Maritime Area of the Philippines” in a press conference held at the House of Representatives.

How did he manage that location given that he is not a member of the House? Well, because his costar was none other than former president and now Pampanga Rep. Gloria Arroyo, who was in turn supported by her erstwhile executive secretary, Eduardo Ermita.

That press conference, from the quotes in the media reports, essentially blamed Arroyo’s successor, P-Noy Aquino, for China’s buildup of infrastructures (island-building) in these here parts. How? According to Mendoza, China itself said so. It categorically stated that the Philippines’ case against China in the Permanent Court of Arbitration (in The Hague) had provoked its island-building. Mendoza said there was “relative quiet and peace” during the Arroyo administration. In apparent support of Mendoza, Arroyo chimed in three times that China’s artificial islands were all built during P-Noy’s term.

Get the logic?  If the Philippines hadn’t brought up the case in the first place, China would not have done what it did (spending all that money to build all those structures, reclaiming the land, and destroying the environment). Thus, it was all P-Noy’s fault. We shouldn’t have challenged China at all.

Gott im Himmel. The gospel according to Arroyo/Mendoza. China’s actions have all been in reaction to the Philippines’ actions. It had no global strategy at all. So if we had just kept quiet, there would be peace now, and President Duterte would not be facing this “most difficult problem.”

This scenario is not only logically flawed (e.g. post hoc: The buildup started after P-Noy, so he must have caused it), there are factual errors, too.  The Trump-Duterte syndrome is spreading very fast.

Thank heaven we have Justice Antonio T. Carpio’s new e-book, “The South China Sea Dispute: Philippine Sovereign Rights and Jurisdiction in the West Philippine Sea.” It is going to be launched soon, and it can be freely downloaded. And it tells you everything about the matter, in a very simple, understandable manner, so there is no excuse for not reading it, and getting the facts straight. The best of research.

Let’s see what Carpio’s book can tell us about the Arroyo/Mendoza gospel:

Well, it turns out that China first brought to the world’s attention its nine-dash line (which it adopted in 1948) in 2009—in protest against Malaysia and Vietnam’s extended continental shelf (ECS) claims. Notice: 2009 was during Arroyo’s watch.

What are the ramifications of China’s nine-dash line? Asean countries would lose anywhere from 30 percent to 80 percent of their exclusive economic zones (EEZs). The Philippines, in particular, would lose 80 percent of its EEZ comprising about 381,000 square kilometers of maritime space including the entire Reed Bank and part of the Malampaya gas field, and 100 percent of its ECS.

Malaysia and Vietnam lost no time in protesting this. Arroyo didn’t do anything about it while she was president. The note verbale was sent only during P-Noy’s time (2011). No wonder there was relative peace and quiet with Arroyo.

The problem, Reader, is that “silence or inaction can be interpreted as a state’s acceptance of a factual or legal situation.”

By the way, it was in the Philippines’ case against China that the Permanent Court of Arbitration ruled that China’s nine-dash line was baloney (although not in such graphic terms). Asean, I think, has yet to thank us.

Carpio’s book also discusses China’s objective: economic and military control of the South China Sea, not a fit of pique versus the Philippines.

Is it a case of nothing-can-be-done? No. Carpio suggests, among other things, lawfare (with specific examples), and missiles. Read his book.

By: Solita Collas-Monsod - @inquirerdotnet

Philippine Daily Inquirer / 12:28 AM April 22, 2017