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Background Briefing: Implications of the Philippines Submission to the Arbitral Tribunal - 1 Carlyle A. Thayer March 28, 2014

[client name deleted] We will be doing a report on the Philippines submission of its memorial at the end of March. We request your assessment of the following issues: Q1. What will be the impact of the Philippines submission of the memorial on the current situation in the South China Sea? Will this inflame the already tense relations between the Philippines and China? ANSWER: From the moment the Philippines informed China of its intent to lodge a claim for an Arbitral Tribunal, China has attempted to pressure the Philippines into withdrawing from the legal process. China has also put diplomatic pressure on other claimant states not to support the Philippines. China is now reconciled to the fact that the Philippines will press ahead and submit its memorial on 30th March. Chinas fallback position is that it is not bound by this international legal process. Once the Philippines lodges its claims the Arbitral Tribunal will pass a copy to China and give it thirty days to reply. China will once again denounce the proceedings and refuse to participate. The Arbitral Tribunal must, on receipt of the Philippines memorial, make two determinations. First, is the Philippines case well founded in international law? Second, does the Arbitral Tribunal have jurisdiction over the issues raised? If the Arbitral Tribunal decides in the negative, China will have won a victory. If the Arbitral Tribunal decides in the affirmative, it will then review the evidence, call for further information, consult with experts as appropriate before making its decision. Q2. Would the memorial provoke retaliation from China and further embolden it to seize more features within the Philippines Exclusive Economic Zone (EEZ) or continental shelf, such as the Ayungin Shoal (Second Thomas Shoal)? Or do you see Beijing issuing more restrictions in the South China Sea, like the recent fishing ban it imposed last January? Or perhaps an Air Defense Identification Zone (ADIZ) in the South China Sea? ANSWER: The arbitral process could take up to a year or longer. China would have the opportunity to engage in more salami slicing tactics to present a fait accompli on the sea when the Arbitral Tribunal announces its decision.

2 The fate of Ayungin Shoal is likely to be decided well before the Arbitral Tribunal makes its decision. If China continues to block resupply the position of the marines will become untenable. The Philippines is unlikely to confront China, thus conceding Chinas blockage of resupply by sea. Continual resupply by air will be difficult. The United States shows no sign of according the same recognition to the Philippines occupancy of Ayungin Shoal as it does to Japanese administration over the Senkakus. During this period China is more likely to take action against any move by the Philippines to develop resources in Recto Bank or in other contested areas. Q3. What does the memorial mean for ASEAN and other claimants? ANSWER: The Philippines memorial raises the stakes for all other ASEAN claimant states. If the Arbitral Tribunal decides the Philippines does not have a case in international law and that the Tribunal does not have jurisdiction, it will mean that international law, including the UN Convention on Law of the Sea, is undermined. This will embolden China to be more assertive in pressing its sovereignty claims. If the Arbitral Tribunal finds in favour of the Philippines, this will impact on Vietnam. Vietnams baseline in the southeast are exaggerated and not in accord with international law. Also, Vietnam occupies low tide elevations and will be unable to claim the waters and resources around these maritime features. But other than the impact on Vietnam, an Arbitral Tribunal decision in favour of the Philippines would strengthen the rule of international law. But UNCLOS has no provisions for enforcement. Q4. How important it is for the Philippines to submit the memorial? ANSWER: It is extremely important for the Philippines to submit its memorial on time. The Philippines cannot hope to confront China by physical means. The Philippines cannot count on a U.S. presence acting as any sort of deterrent given the policy stance Washington has taken. Using international law may be the weapon of the weak but the valiant attempt by the Philippines to employ legal means to create a stable regional order will be viewed positively by most regional states including those in ASEAN. It will add moral pressure on China to make its claims to historic rights and indisputable sovereignty clearer in terms of international law.

Suggested citation: Carlyle A. Thayer, Implications of the Philippines Submission to the Arbitral Tribunal, Thayer Consultancy Background Brief, March 28, 2014. All background briefs are posted on Scribd.com (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key. Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: Implications of the Philippines Submission to the Arbitral Tribunal - 2 Carlyle A. Thayer March 29, 2014

[client name deleted] We request your assessment of the following issues: Q1. What are the Philippines considerations behind submitting a memorial to the Arbitral Tribunal? ANSWER: The Philippines claims it exhausted all bilateral means to settle its territorial dispute with China through negotiations. The Philippines had no other recourse than to use legal means. The Philippines faced a situation where China began asserting its claims to historical rights and indisputable sovereignty through aggressive means, including harassing oil exploration ships and Filipino fishermen, and more to the point, by physically occupying features in the South China Sea that were low tide elevations. Such features form part of the Philippines continental shelf and no other nation can claim sovereignty over them. The Philippines seeks to have the Arbitral Tribunal rule on the Philippines entitlements under international law, including the right to an Exclusive Economic Zone and to features on its continental shelf. China has not clarified the legal basis of its claims under international law and the Philippines found it impossible to discuss territorial disputes with China. This is because China asserts indisputable sovereignty thus leaving nothing to discuss but surrender to Chinese demands. Q2. Will the Philippines formal plea work? Will it contribute to the peaceful and diplomatic solution of the territorial disputes in the South China Sea? ANSWER: Once the Philippines submits its memorial to the Arbitral Tribunal, the Tribunal has to make two determinations. First, does the Philippines claim have merit in international law? Second, does the Arbitral Tribunal have jurisdiction over the issues raised by the Philippines? Since this is an unprecedented case under the United Nations Convention on the Law of the Sea (UNCLOS) it is impossible to know what decisions the Arbitral Tribunal will make. There are three basic scenarios: (1) the Tribunal rules that the Philippines has no legal case and the Tribunal does not have jurisdiction; (2) the Tribunal rules entirely in favour of the Philippines; and (3) the Tribunal gives a mixed judgment. China claims it is not bound by the proceedings of the Arbitral Tribunal. If the Arbitral Tribunal declines to take up the case then China will feel embolden to advance all sorts of concocted claims to the South China Sea such as historical righrs.

2 In any of the last two scenarios regional peace and stability will be undermined if China disregards the decisions of the Arbitral Tribunal. There is no power of enforcement under UNCLOS. China will only isolate itself more from the international community if it disregards a decision of the Arbitral Tribunal and continues to act in an assertive and aggressive manner. Q3. Do you think this formal plea made by the Philippines will be detrimental to the unity of ASEAN, leading to another farce like the 45th ASEAN Foreign Ministers Meetings in Phnom Penh on 2013 July 9 where no Joint Communique was concluded because ASEAN failed to agree on the code of conduct on the South China Sea? ANSWER: Initially the Philippines legal action caused some concern among ASEAN members because it was unilateral. It is customary within ASEAN to confer in advance on matters impacting on regional security. But the core ASEAN membership upholds the UN Charter, international law, and the UNCLOS in particular. All the core ASEAN nations respect the right of the Philippines to settle its territorial disputes by peaceful means including recourse to international law. Regarding the 45th ASEAN Ministerial Meeting (AMM), it should be noted that ASEAN Foreign Ministers on July 9th unanimously approved ASEANs Proposed Elements of a Regional Code of Conduct in the South China Sea (COC) between ASEAN Member States and the Peoples Republic of China before the ASEAN Ministerial Retreat where problems arose over the wording of the joint statement. The issue was not over any mention of a Code of Conduct after all ASEAN members have agreed to the Declaration on Conduct of Parties in the South China Sea that mentions the COC. Rather the disagreement was over a decision by the ASEAN Chair, Cambodias Foreign Minister Hor Namhong, to exclude any reference to Chinese actions in occupying Scarborough Shoal and actions by the China National Offshore Oil Company in awarding exploration blocks in the South China Sea that overlapped with Vietnams own oil blocks, located within its EEZ, in the joint statement. Immediately after the 45th AMM Indonesia intervened and got the unanimous agreement of all ASEAN members on ASEANs Six-Point Principles on the South China Sea. Far from causing concern, some ASEAN members are now considering whether or not they should join the Philippines at some stage in the proceeding, especially if their own national interests become involved. When Chinas Foreign Minister Wang Yi attempted to get Vietnam to agree not to join the Philippines, Vietnam replied that it reserved the right to intervene if its national interests were affected. Vietnam, like China, occupies some low tide elevations. Q4. What impact will it have on the China-ASEAN economic and trade cooperation in the future? ANSWER: China is seeking to enhance the existing China-ASEAN Free Trade Agreement (CAFTA). For ASEAN this is a case of one for all, all for one. If China attempted to punish the Philippines or otherwise tried to use economic means to pressure the Philippines, it would be affecting all ten ASEAN members not just one. China is already bound by the original CAFTA. Chinese punitive economic actions would be politically and diplomatically counterproductive.

3 China is already committed to developing good relations with ASEAN. It would be wise for Beijing to keep economic issues separate from bilateral disputes with individual ASEAN members. Contrary to Chinese assertions that US rebalancing has emboldened regional states, the historical record shows that it has been Chinese assertiveness long prior to the US pivot to the Asia-Pacific that has been counterproductive.

Suggested citation: Carlyle A. Thayer, Implications of the Philippines Submission to the Arbitral Tribunal - 2, Thayer Consultancy Background Brief, March 29, 2014. All background briefs are posted on Scribd.com (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key. Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: Implications of the Philippines Submission to the Arbitral Tribunal - 3 Carlyle A. Thayer March 31, 2014

[client name deleted] WE saw this today http://www.bloomberg.com/news/2014-03-30/philippines-callschina-threat-to-security-over-isles-squabble.html:

Philippines Sues China to Assert Claim Over Gas-Rich Waters By Joel Guinto and Norman P. Aquino Mar 31, 2014 2:10 PM ET

Photographer: Jay Directo/AFP/Getty Images A China Coast Guard ship, top, and a Philippine supply boat engage in a stand off as... A China Coast Guard ship, top, and a Philippine supply boat engage in a stand off as the A China Coast Guard ship, top, and a Philippine supply boat engage in a stand off as the Philippine boat attempts to reach Ayungin Shoal on March 29, 2014. The Philippines challenged Chinas claims to much of the South China Sea at a United Nations tribunal yesterday, seeking to check its neighbors push for control of disputed waters rich in oil, gas and fish. The Southeast Asian nation asked the UNs Permanent Court of Arbitration in The Hague to uphold its right to exploit waters within its 200-nautical mile exclusive economic zone under

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the United Nations Convention on the Law of the Sea. The arbitration pleading, almost 4,000 pages long, was submitted electronically. It is about defending what is legitimately ours, Foreign Affairs Secretary Albert del Rosario said at a briefing in Manila. It is about guaranteeing freedom of navigation for all nations. It is about helping preserve regional peace, security and stability. The latest move to contain China comes as President Benigno Aquino negotiates a defense pact that would let the U.S. boost its troop presence in the Philippines and build facilities inside military bases there. The Philippines lacks the military muscle to thwart China, which has a defense budget 47 times that of the Philippines. As a U.S. treaty ally, Manila counts on U.S. support in any potential conflict. The case could further heighten tensions and prompt China to move to shoals claimed by the Philippines, Ramon Casiple, executive director of the Institute for Political and Electoral Reform in Manila, said yesterday. Other claimant nations such as Vietnam, Brunei and Malaysia are watching how this case will play out. The filing met yesterdays deadline set by the UN tribunal and came after Chinese vessels a day earlier ordered a civilian Philippine vessel away from Ayungin Shoal, the second incident in the area this month. Just and Durable It is about seeking not just any kind of resolution but a just and durable solution grounded in international law, del Rosario said yesterday. Eighty-two percent of Filipinos support the arbitration case against China and 93 percent said the government should defend its territory through lawful means, the foreign affairs department said last month, citing a state-commissioned poll. Aggression is contrary to good order and the U.S. has an obligation to help the Philippines in case of conflict, Admiral Jonathan Greenert, U.S. Navy chief of naval operations, said at a forum in Manila in February. The U.S. strongly supports legal, peaceful and diplomatic solutions to claims and conduct in the South China Sea, Ambassador Philip Goldberg said today in a posting on Twitter. The Philippines first brought the sea dispute with China to the arbitration tribunal in January last year, saying it had exhausted political and diplomatic avenues to resolve the case. Right Track China cannot accept the international arbitration sought by the Philippines, Foreign Ministry spokesman Hong Lei said yesterday in a statement on the ministrys website. The Philippines occupies some islands in the South China Sea illegally, Hong said. The Philippines should be on the right track of using bilateral talks to resolve territorial disputes, Hong said in the statement. Chinese ships used water cannons in January to drive Filipino fishermen away from the Scarborough Shoal, the Philippine military said on Feb. 24. China warned off two Philippine boats near the Second Thomas Shoal early this month, its Foreign Ministry said on March 10. Chinas refusal to join the arbitration will cost it both from a legal standpoint and publicopinion view, Casiple said. It will be viewed by the global community as a rogue state that doesnt recognize international law. The Philippines amended its arbitration filing last month to include Ayungin Shoal, Solicitor General Francis Jardeleza said in the briefing yesterday.

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We hope we can get a favorable decision soonest, Jardeleza said.

### QUESTION: To what extent do you think this latest development is important? ANSWER: There are two separate developments. The first development is the lodgment of a memorial a legal submission by the Philippines to the UN Arbitral Tribunal by the deadline set previously. The Philippines has crossed the Rubicon and there is no turning back without conceding the Philippines maritime zones to China. The Arbitral Tribunal is entering new ground and there is no precedent to help us to predict what will follow. The Arbitral Tribunal must digest the thousands of pages of evidence submitted by the Philippines and make two important decisions. First, it must determine that the Philippines has a valid case in international law. Second, the Arbitral Tribunal must decide that it has competence or jurisdiction of the matters raised. Any negative finding will leave the Philippines claim dead in the water. This will really exacerbate regional tensions because China will be able to ride roughshod over any legal objections to its assertive actions, including occupying reefs and shoals in dispute. If the Tribunal decides in the affirmative a long process of examining the details of the Philippiness case will begin. China will be provided with a complete set of the Philippines submission (memorial) and be given a deadline to respond. China is likely to reject the arbitral proceedings out of hand. The Arbitral Tribunal can continue without China. Some experts say this will hasten the process of reaching a determination. The judges on the Arbitral Tribunal will examine the evidence, raise questions for the Philippines to answer, and hear other expert witnesses. No one can confidently predict how long this process will last. In the end, when the Tribunal reaches its decision, it is binding on all parties without recourse to appeal. But the UN Convention on Law of the Sea contains no enforcement mechanism. China can refuse to accept the Tribunals findings. The second develop in the Bloomberg story is what a senior judge in the Philippines has described as Chinas salami slicing tactics. China will continue to apply pressure on the Philippines to prevent it from resupplying the marines at Second Thomas Shoal. China will up the ante in the face of Philippine resistance. China will double its efforts to prevent the fiasco it suffered when the Philippines successfully resupplied the marines from taking place again. During the period when the Arbitral Tribunal is deliberating, China is likely to alter facts on the ground or rather facts on the water by pressing its sovereignty claims. China is mindful that any other claimant could join the arbitral proceedings once they have commenced. China will use the Philippines as an object lesson to Vietnam and Malaysia to stay out of the proceedings. Chinas confrontation at Second Thomas Shoal directly undermines the basis of nearly completed US-Philippines agreement on enhanced defense cooperation. This agreement will allow the increased rotational presence of US armed forces in the Philippines. This agreement will serve no purpose if China is not deterred. The US position up to now is not to get involved in territorial disputes of this nature. The US

4 lacks the effective means to respond to Chinese assertiveness because China is using civilian Coast Guard vessels not military warships. There are some international legal specialists who speculate that Arbitral Tribunal will shy away from making decisions that directly challenges the status quo and provoke China. Therefore, it is in Chinas interests to feed these fears by calculated acts of brinkmanship. In the long-run China can out wait the Aquino and Obama administrations. A change of government in Manila could result in a change in current pro-US policies.

Suggested citation: Carlyle A. Thayer, Implications of the Philippines Submission to the Arbitral Tribunal - 3, Thayer Consultancy Background Brief, March 31, 2014. All background briefs are posted on Scribd.com (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key. Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.