Will 2022 see signing of a South China Sea Code of Conduct?

Ian Storey

In January, after a hiatus of over a year due to the Covid-19 pandemic, officials from the 10 Asean members and China quietly resumed negotiations for a Code of Conduct (COC) in the South China Sea.

In August, during a visit to Phnom Penh, Chinese Foreign Minister Wang Yi said he hoped it could be signed next year when Cambodia takes over the Asean chairmanship. But negotiations have proven difficult and failed to yield substantial progress.

The COC isn't a magic bullet that will resolve the maritime disputes involving China, Taiwan and five South-east Asian countries (Brunei, Indonesia, Malaysia, the Philippines and Vietnam). That can be achieved only through a political or legal settlement among the disputants themselves. But as neither of those things is in prospect, in the meantime, the COC is designed to promote cooperation and reduce tensions among the claimants.

Now that the 11 parties have started meeting again, albeit virtually, it's a good time to take stock of the COC process and ask three key questions: What's been achieved so far? What's at stake? And what's next?

What's been achieved so far?

All parties were committed to negotiating a COC when they signed the Declaration on the Conduct (DOC) of Parties in the South China Sea in 2002. But due to Chinese foot dragging, talks didn't get under way until 2014. And China didn't get serious about the process until after an arbitral tribunal ruled in 2016 that its claims to "historic rights" within its nine-dash line that covers 80 per cent of the South China Sea were invalid.

By showing more enthusiasm for the COC process, Beijing could divert attention away from its rejection of the 2016 award and reinforce its narrative that China and Asean were actively managing the dispute and there was no need for other countries, especially the United States, to "interfere" and raise tensions by deploying warships to the area.

Over the next three years, Chinese and South-east Asian officials achieved three milestones. In August 2017, they agreed on a one-page framework to guide future discussions. A year later, they endorsed a 19-page Single Draft Negotiating Text (SDNT) which contained submissions by each of the 11 parties on what the COC should include. In August 2019, they issued a first draft (altogether three are envisaged) which consolidated the SDNT and added new suggestions.

The next step was to negotiate the second draft, but due to the pandemic no meetings, either in-person or virtual, were held during the whole of last year.

In the first half of this year, however, the parties put aside their concerns about discussing sensitive issues by video link and met virtually six times.

In August, the Chinese Foreign Minister revealed that agreement had been reached on the preamble to the Code. As Asean agreements start with a general statement of principles, this did not signal major progress - but at least it meant the two sides could now get down to the nitty gritty of the COC.

What's at stake?

There is broad agreement among the parties that peace and stability in the South China Sea is in everyone's interests. They also agree on the need to maintain maritime safety, security and freedom of navigation in accordance with international law, including the United Nations Convention on the Law of the Sea (Unclos). The parties have agreed to promote practical cooperation in areas such as marine environmental protection and scientific research, safety of navigation, combating transnational crime and the conservation of living resources.

But there are serious disagreements in other areas.

The most important is China's attempt to get the other parties to acknowledge its jurisdictional claims within the nine-dash line. For instance, China has suggested that oil and gas development projects in the South China Sea should only be undertaken by the littoral states and exclude energy companies from outside the region. This is in line with Beijing's longstanding position that the South-east Asian claimants should join China in jointly developing energy resources in disputed areas.

The problem is that the "disputed areas" China refers to include the exclusive economic zones (EEZs) belonging to the South-east Asian claimants and which they are legally entitled to under Unclos. While sovereignty of the atolls is disputed, the arbitral tribunal invalidated China's nine-dash line claims in the EEZs of the littoral states.

In addition, China doesn't want South-east Asian countries to hold military exercises in the South China Sea with navies from outside the region.

Most of the Asean members baulked at these provisions, and in the first reading they emphasised their maritime rights under Unclos, including their right to conduct activities with foreign countries or companies.

Another area of disagreement is the kind of activities the Code should prohibit. Vietnam wants the parties to exercise "self-restraint" by not building artificial islands, not militarising the atolls they occupy by deploying offensive weaponry, not harassing fishermen, oil companies and ships resupplying troops, and not declaring air defence identification zones. Not coincidentally, these are the very activities that China uses to press its claims.

Vietnam also wants the Code to apply to all disputed features in the South China Sea, including the Paracel Islands which China occupied in 1974 but which Vietnam still claims sovereignty of. Beijing does not recognise a dispute with Hanoi over the islands.

What's next?

In a speech delivered in Singapore in late 2018, Chinese Premier Li Keqiang called for the COC to be concluded by 2021. Most Asean members viewed China's unilateral deadline as unrealistic, or, as they politely put it, "aspirational". In any case, Covid-19 put paid to China's 2021 target.

In August, during his visit to Phnom Penh, Mr Wang said he hoped the COC could be signed next year when Cambodia, China's closest friend in South-east Asia, is chair of Asean.

Is 2022 a realistic target?

Supposing China wants the COC to be signed at the annual Asean-China Summit in November next year, it's going to be a very big ask to complete negotiations within the next 14 months. As Asean chair, Cambodia will have some influence over the agenda, but it won't be able to rush through a China-friendly COC. The 11 parties will need to achieve consensus on the complex and contentious issues outlined above.

And remember, it has taken seven years for them to merely state what they would like to see included in the COC - and it will be during the talks for the second and third readings that the hard bargaining will really begin.

The Asean countries, especially the five littoral states, will fight to ensure that the Code unequivocally preserves their maritime rights and entitlements enshrined in Unclos and endorsed in the arbitral tribunal ruling. China may pay lip service to Unclos, but its goal is to nullify the 2016 award and push its nine-dash line claims. Beijing will vehemently oppose Vietnam's list of prohibitions and its attempt to include the Paracels.

Key terms will need to be defined, including "militarisation", "self-restraint" and "relevant features in the South China Sea". Deciding whether the Code will be legally binding or not could also prolong the talks. Crucially, this issue will decide the tenor of the talks, for officials from all parties will inevitably negotiate with more tenacity if their countries are to be legally bound by the final outcome.

That means every word and clause will be parsed and debated. For these reasons it is unlikely that the COC will be inked towards the end of next year. Perhaps 2023 or 2024 is more realistic. But more important than the date is the outcome. What will the final COC look like?

Three possible outcomes

There are three possible outcomes. The first, and most inimical to the interests of South-east Asian countries and regional security as a whole, would be a COC that fails to underscore the primacy of Unclos, and includes references to China's "historic rights" within the nine-dash line, thereby eroding the littoral states' maritime rights and placing restrictions on commercial deals and naval exercises with foreign countries. Fortunately, there is little likelihood that the key Asean states will place China's interests above their own and willingly accept constraints on their political autonomy.

In the second scenario, the parties consign their differences to the "too hard" basket and instead endorse a declaratory code that contains the usual truisms about the importance of peace, stability and freedom of navigation, and promotes voluntary cooperative activities, but provides little value-add to the DOC.

The third and most optimal outcome for South-east Asia is a Code that upholds the rights and obligations of coastal states under Unclos, rejects China's historic rights, specifies in detail a list of unacceptable behaviours, includes mechanisms to prevent and de-escalate crises and preserves the maritime environment and fish stocks.

Achieving this third outcome will require the South-east Asian claimants to forge a common negotiating position and resist attempts by China to undermine Unclos and delegitimise the 2016 arbitral ruling.

If this cannot be accomplished they should walk away. For at the end of the day, for their own sake and for the sake of the region, it's better to have no COC than a bad COC.

Ian Storey is a senior fellow at the ISEAS - Yusof Ishak Institute.