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Background Brief: South China Sea: ASEAN Moves On With Code of Conduct Carlyle A. Thayer July 26, 2012

[client name deleted] Q1. What is your assessment of the damage control by Indonesia and ASEAN on the South China Sea issue last week? ANSWER: Foreign Minister Marty Natalegawa was successful in getting all foreign ministers to agree to “ASEAN’s Six Point Principles on the South China Sea.” This had several positive effects. It served to boost ASEAN morale after the disappointment of the previous week. It sent a reassuring message of ASEAN unity to ASEAN's dialogue partners including China. And it served notice on Cambodia that it could not use its role as ASEAN Chair to pursue its own agenda at the expense of other members. Indonesia's foreign minister in effect undertook the role that Cambodia as ASEAN Chair should have performed. Foreign Minister Marty sought consensus. Q2. What is your prognosis for the Code and Conduct and the possibility of some settlement between China and ASEAN going forward? ANSWER: The entire flare up over the joint communique debacle obscured the important fact that prior to this all ASEAN foreign ministers, including Cambodia, agreed on the key elements of the Code of Conduct. Cambodia, as ASEAN Chair, hosted two informal sessions with the Chinese to discuss where to go. The first meeting was positive. The second a bit strained. Nonetheless China has indicated its willingness to discuss the COC with the caveat "when conditions are mature" or "when conditions are ripe." ASEAN is now looking to inaugurate these discussions in September. The ASEAN draft COC includes two forms of dispute settlement: the Treaty of Amity and Cooperation's (TAC) provision for a ministerial level ASEAN High Council, and if this fails through international law including UNCLOS. China signed on to the TAC and committed itself formally in writing to faithfully carry out its provisions. Both suggested dispute settlement mechanisms require the consent of both parties. I think there will be forward movement on the diplomatic front between now and November because ASEAN is now committed to intensifying consultation on the COC and China will want to deflect any U.S. intervention in the discussions. Q3. What is your assessment of why, on the South China Sea issue, the Filipinos and Vietnamese push back harder, and Malaysians and Bruneians remain silent?

2 ANSWER: At the ASEAN Ministerial Meeting retreat, when the draft joint communique was discussed, both the Philippines and Vietnam were at pains to argue that there were new developments in the South China Sea that needed recording for the record. They rejected previous formulations about "areas in dispute" and argued that Scarborough Shoal and Vietnam's Exclusive Economic Zone (EEZ) were not in dispute. What was new according to Del Rosario was that Chinese aggressiveness forced the Philippines to retreat from its own EEZ. Vietnam argued that CNOOC's [China National Offshore Oil Company] award of licenses to explore oil fell within its EEZ and continental shelf. Vietnam argued that China was trying to turn a non-disputed area into a disputed area. In other words, both the Philippines and Vietnam felt that their sovereignty was under greater threat that before. Notes taken at the AMM Retreat by an official who was present show that Malaysia came out comparatively strongly and Brunei barely uttered a word. At the AMM Retreat plenary session when the South China Sea was raised the Philippines spoke first, followed by Vietnam, Indonesia, Malaysia and all the other ASEAN members with Cambodia speaking last. According to notes taken at this meeting, Malaysia's foreign minister said, “we must talk with a single voice. ASEAN must show [its] united voice; [otherwise] our credibility will be undermined.” The Malaysian foreign minister concluded, “We must refer to the situation in the South China Sea, particularly any acts that contravene the international law on EEZ and continental shelves. It is totally unacceptable that we can’t have it in the Joint Communique. It is important that ASEAN has a clear expression of our concerns on the South China Sea in the Joint Communique.” Brunei spoke after Malaysia. Its foreign minister endorsed engagement with China on the COC and was recorded as stating "the proposed elements are fine with me. [I will be] guided by your decision. I can support the [joint communique]. He concluded by noting the importance of maintaining "mutual trust and confidence between ASEAN and China." When Cambodia spoke its foreign minister issued the first of two threats to withhold the joint communique. The Retreat then moved into an exchange between Cambodia, the Philippines, Vietnam, Indonesia, Malaysia and Singapore. Indonesia's foreign minister stated it would be "more ideal in our view if we can address this para [paragraph on the South China Sea] now... [as] "we are going to conclude the AMM section." Malaysia endorsed Indonesia's proposal. When Malaysia spoke next its foreign minister referred to the ASEAN Foreign Ministers' 2011 joint communiqué: in 2011 and observed "it is not close to what we can came to." Malaysia's foreign minister was recorded as stating that he was "concerned: how to settle our disputes; respect the freedom of navigation… Only reference to freedom of navigation; it does not specifically mention the settlement of disputes though international law and UNCLOS. [I] am concerned what have left out the most important concern; all disputes must be settled in international law. We have to be mindful of the disputes. UNCLOS and international law should be the mechanism."

3 No foreign minister directly challenged Cambodia's actions as ASEAN Chair including its threat to withhold the joint communique. Basically there were three groups: a partisan Cambodia; a vocal group of five that wanted a clear reference to Scarborough Shoal, EEZs and continental shelves mentioned in the joint communique; and the silent minority (Brunei, Thailand, Myanmar and Laos).

Suggested citation: Carlyle A. Thayer, “South China Sea: ASEAN Moves On With Code of Conduct,” Thayer Consultancy Background Brief, July 24, 2012.