US containing a rising Chinese power


Might the rush to arbitration be nothing more than a US provocation to provide an excuse for military engagement? asks Shannon Ezra

 

The most effective way to halt China’s global rise is to exert control over its gateway to the sea, through which it conducts 80 percent of its trade, says the writer. File picture: Eugene Hoshiko. Credit: AP

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Video: South China Sea Is Indisputable Part of China

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8th China-U.S. S&ED & 7th CPE

Johannesburg – If the containment of China is one of the key strategic pillars of US foreign policy, the impending outcome of The Hague’s arbitration on the South China Sea dispute is of critical importance to the US.

Even though China disregards the arbitration process as illegitimate, the decision of the tribunal, which is due in the next 10 days, will ratchet up tensions in one of the world’s most hotly contested bodies of water. It will set the stage for what could degenerate into a serious conflagration, as the US pulls out all the stops to encircle China, and China takes measures to assert its sovereignty.

America’s objective is to contain a rising power, which presents itself as a major challenge to US global hegemony. Geo-strategically, the most effective way to impede China’s rise is to exert control, through proxies, over China’s gateway to the sea, through which it conducts 80 percent of its trade and transports its energy supplies.

This strategic waterway has turned into a game of chess between China, which claims sovereignty over four main archipelagos, and some of its neighbours along the South China Sea, which have made a series of territorial claims and are backed by the US.

The US claims its interest in the South China Sea is to protect the freedom of navigation as US trade through this waterway is worth $1.2 trillion (R17.6 trillion) annually. To date, China has posed no threat to international navigation in the waters of the South China Sea and also seeks to protect its annual $5 trillion worth of trade.

Despite the tug of war, the situation was under control prior to 2009. When President Barack Obama took office in that year, he announced his keystone foreign policy undertaking as a “strategic pivot to Asia” or rebalancing strategy to the Asia-Pacific. The entire region intuitively recognised that the rebalance was, and is, about China.

A new determination emerged within the US administration to support the territorial claims in the South China Sea of China’s neighbours. It was in this way that the US was arguably the invisible hand behind the rising tension in the region since 2009.

From the Chinese perspective, it was the US that plotted behind the scenes the arbitration of its South China Sea dispute with the Philippines. There have been allegations that the US staffed a team of lawyers to lead the Philippines through the arbitration process, and encouraged them to launch their arbitration case when a Japanese national was president of the International Tribunal for the Law of the Sea. The Japanese national in question had been previously opposed to China’s positions in previous cases and became one of the five arbitrators in the case.

From the time that the Philippines took the unilateral initiative of taking the South China Sea arbitration to the tribunal in January 2013, China has refused to accept or participate in the arbitration. It maintains that territorial sovereignty issues are beyond the purview of the UN Convention on the Law of the Sea (UNCLOS).

As for maritime delimitation, China made an exclusion declaration in 2006, thereby lawfully excluding itself from any compulsory dispute settlement procedure by a third party. Apart from China, more than 30 other countries, including the UK, France, and Russia have made the same exclusion declaration.

China also maintains that, together with the Philippines, they have reaffirmed settling the South China Sea dispute through bilateral negotiations. This is in keeping with the Declaration on the Conduct of Parties in the South China Sea, signed between China and the Association of South-east Asian Nations, which explicitly states that the parties concerned should undertake to resolve their disputes through consultations and negotiations.

From the perspective of the Philippines, there have been a number of exchanges of views with China since 1995, which led to no resolution. But China argues that the two states have never engaged in any serious negotiations on the dispute. According to UNCLOS, China has the right to choose the means of dispute settlement, which means it cannot be forced to accept dispute settlement which is imposed on it, including a third-party settlement. But this has not stopped the arbitration from continuing without China’s participation.

What kind of consequences could the rush to arbitration, encouraged by the US, result in? Would China withdraw from UNCLOS and expand its Air Defence Identification Zone over all its territories in the South China Sea?

This was always a likely scenario, which begs the question of whether the US is keen to provoke a military confrontation as part of its containment strategy. Why else would it be deploying 60 percent of its naval fleet and 60 percent of its overseas air force to the South China Sea by 2030?

By Shannon Ebrahim who is the foreign editor for Independent Media http://www.iol.co.za/

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The nine-dashed line was first discovered and owned by China. It is a
maritime boundary line formed after China’s long-term jurisdiction and
development of the South China Sea islands.

China holds sovereignty and jurisdiction rights within the nine-dashed line. Other countries’ ships have the right to freedom of navigation and their aircraft enjoy rights to fly over the territory. There had been no problem with the nine-dashed line before the 1970s, but with Vietnam, the Philippines and other countries pushing further territorial claims, more governments are beginning to deny legitimacy of
the nine-dashed line.

The United States and other countries have intervened in the South China Sea issue; using the so-called freedom of navigation in the South China Sea to deny the nine-dashed line to disregard China’s territorial
rights.

Xi eyes joint bid to boost Manila ties

Beijing would like to improve relations with Manila through joint efforts,
President Xi Jinping told the Philippines’ new president, who was sworn
in on Thursday.
  
South China Sea arbitration nothing more than a political farce: People’s DailyGiven
the lack of legal validity of the arbitral tribunal of the South China
Sea case, China does not accept any propositions or actions based on the…

Duterte’s inauguration can put ties on new track

Immediately prior to Rodrigo Duterte’s inauguration as the new
Philippine leader, The Hague-based Permanent Court of Arbitration
announced it would deliver a ruling on July 12 in the Philippines’ case
against China over their South China Sea dispute.


 More support for China against arbitration

Tribunal arbitration escalates sea tensions

The tribunal’s involvement goes against the principles of the convention.

South China Sea arbitration abuses international law, threatens world order


A seminar on the South China Sea Arbitration and International Rule of Law was held on Sunday in the Hague, the location of the Permanent Court of Arbitration’s arbitral tribunal. At the seminar hosted by both Chinese and Dutch academic institutions, experts from various countries warned that the unilateral filing of the South China Sea arbitration case by the Aquino administration of the Philippines and the arbitral tribunal’s overreach and abuse of power is a desecration of the spirit of the rule of law and pose a threat to current international order.

Exclusive interview: Limitation of UNCLOS Dispute Settlement System

 A legal expert at the University of Oxford has published apaper on resolving disputes in the South China Sea. It relates to thearbitration unilaterally initiated by the Philippines against China.

With this move, the Philippines is just adorning itself with borrowed plumes. First of all, estoppel is a basic principle of international law. As is known to all, China and ASEAN countries, including the Philippines, signed the Declaration on the Conduct of Parties in the South China Sea (DOC) in 2002, in which all sides agreed to settle disputes over the South China Sea through friendly negotiation and consultation by parties directly concerned.

Experts call for reasonable and effective dialogue on China South Sea issue

 A group of experts on international law have called thearbitration that was unilaterally filed by the Philippines against Chinaover the South China Sea “questionable”.

In 2011, the Philippines and China issued a joint statement, reiterating their respect and observation of the DOC. However, just two years later, the Aquino administration unilaterally submitted the South China Sea case for arbitration in spite of its previous commitments.

Secondly, the Philippines ignores basic historical facts by presumptuously claiming that the Chinese people never lived or conducted activities in the South China Sea region, thus bearing no sovereignty over the islands in the region.

Cambodia criticizes arbitration filed by Philippines

 Cambodia’s ruling party has spoken out against the arbitration court’s upcoming decision over the South China Sea issue. Yet no one can deny the historical fact that those islands have been part of China’s territory since ancient times. Successive Chinese governments have continued to govern the islands through multiple approaches including setting administrative divisions, military patrols and conducting salvages at sea.

Respecting historical fact is an important principle of international law. Through its lack of respect for the facts, the South China Sea case violates this principle.

Chinese Foreign Ministry condemns Japan

 Chinese Foreign Ministry spokesman Hong Lei has condemnedJapan’s remarks over the South China Sea arbitration unilaterallylaunched by the Philippines. He urged for Japan to stop making suchirresponsible remarks.

Moreover, the Philippines’ interpretation of the legal status of the islands and reefs in the South China Sea is not in line with the United Nations Convention on the Law of Sea (UNCLOS) and other international laws.

South China Sea FAQ ep12: Why does Beijing reject Manila’s arbitration case?

 The requests raised by the Philippines in the arbitrationcase are, in essence, about territorial sovereignty and maritime demarcation.

The Southeast Asian nation claims that the Huangyan Island and the Nansha islands cannot be considered islands as such no one can establish exclusive economic zones or claim the continental shelves there. Such an argument flies in the face of objective reality.

  • South China Sea FAQ ep13: China’s solution for resolving the disputes


  • South China Sea FAQ ep13: China’s solution for resolving the disputes. As tensions in the South China Sea region continue, China continues to insist on a dual-track approach to resolve disputes. This is governed by the Declaration on the Conduct of Parties in the South China Sea made in 2002 between China

The Philippines deliberately misrepresented factual information about the islands and reefs in the South China Sea during the trial and carelessly negated the integrity of the Nansha islands as well as the island status of Taiping Island and other large islands in area. However, its claims are not only  inconsistent with reality, but also incompatible with UNCLOS and other international laws.

The legal representatives of the Philippines also withheld necessary information concerning other islands in the South China Sea (not included in its arbitration request) on purpose, and refused to present them to the court. It is safe to say that the Philippines’ argument concerning the South China Sea islands and reefs lacks basic credibility.

Taking this into consideration, the arbitral tribunal has clearly violated UNCLOS, abused the UNCLOS settlement procedure and exceeded its jurisdiction by accepting the unilateral request of the Philippines and even trying to deliver a verdict on the South China Sea issue. Its self-proclaimed “jurisprudence” and “normative power” demonstrate great irony.

The core of the South China Sea issue between China and the Philippines are territorial and maritime delimitation disputes. Territorial issues do not fall within the scope of UNCLOS authority. Additionally, as early as 2006, China has excluded compulsory settlement procedures from maritime delimitation disputes in accordance with Article 298 of UNCLOS.

As a temporary institution founded on UNCLOS, the tribunal has zero jurisdiction over this case. Arbitration and other international judicial methods to resolve disputes means resorting to third-party settlement. However, this option has already been excluded by internationally binding bilateral agreements between China and the Philippines.

The tribunal chose to ignore these binding documents and breached the premises, exclusions and exceptions for compulsory settlement procedure stipulated in UNCLOS to establish jurisdiction on its own.

The tribunal’s blatant disregard for the agreement China and the Philippines made concerning settling disputes has irresponsibly broken the consensus reached between the two states and has seriously violated China’s right as a sovereign state and UNCLOS signatory to choose its own dispute settlement method.

What’s more, by repeatedly referencing UNCLOS and extending the convention’s coverage to all maritime issues, the tribunal has in fact turned a blind eye to conventional international law.

Any practitioner of international law is aware that articles in UNCLOS are a summary of the historical maritime practices and common will of all countries. UNCLOS shows nothing but respect to conventional international law. However, the tribunal today has discredited all previous practices, contradicting the basic purpose and spirit of UNCLOS.

International law has played a significant role in maintaining a relatively stable international order after World War II. In the decades after the war, hundreds of international treaties were drafted to regulate the conduct of states and people’s lives.

From the planet where we live to outer space, from security to arms control, from economic development to environmental protection, from human rights to judicial cooperation and other areas, these international laws are ubiquitous. The diplomatic actions of every county call for international law. In other words, it is a commonly recognized standard for the international community. The world would fall into chaos without it, and the law of the jungle would once again dominate.

Therefore, the abuse of international law by the Philippines and the tribunal has undermined the authority of the law, which will in turn greatly impact the stability of international order.

It is worth mentioning that the US, a country outside the region, has been eager to play a hand in the issue. Those who are familiar with the “America-style” of dealing with international affairs know that “safeguarding the integrity of international law” is a catchphrase for the country when it comes to international dealings.

However, as a country that attaches such importance to the protection of international law, why has the US supported the illegal acts of the Philippines and the tribunal? The answer is simple: The US only protects those international laws that benefit itself. In the eyes of the US, any illegal act can be considered “an act that protects international law” so long as it benefits its own strategic interests.

A scholar at the seminar pointed out that what the Philippines has done to China today could happen to other countries in the future. If the tribunal comes to a conclusion that does not conform to the facts and the law, then the same twisted logic could be misapplied to other countries with territorial disputes.

Such apprehension is not without merit. If the irresponsible actions of the Philippines, the US and the arbitral tribunal are not faced head on, they will severely affect the authority of international law. From this perspective, China’s fight against the abuse of international law is not only the country safeguarding its territorial sovereignty, but also a contribution to lasting peace and stability in the world. – People daily

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China, the shy superpower


This once sleeping dragon has taken full flight but believes in flapping its wings softly to allay fears of its real intentions.

Vision and ambition: Xi (right) speaking with US Secretary of State John Kerry at the end of the eighth round of the US-China Strategic and Economic Dialogue at the Great Hall of the People in Beijing, China. — EPA

TWO years ago, it was predicted that China’s economy would surpass the United States as the world’s biggest. But instead of rejoicing and thumping its chest, the Chinese government strenuously sought to play it down.

This led to several articles on the Internet sporting headlines like “Why China doesn’t want to be number one”, “Why China hates being No. 1” and “China ‘fearful’ of becoming world’s number one economy”. This was in the first half of 2014.

Indeed, China was declared No. 1 by the end of that year but with the slowing down of its economy, it has slipped back to second place with the United States taking back the pole position.

Beijing must have heaved a sigh of relief but to many, China is still the power to reckon with. After all, the ambitious One Belt, One Road (Obor) Initiative launched by President Xi Jinping in 2013 remains a key strategy, through which China will become an undisputed regional and global power.

In fact, even if its economy is now second to the United States, China is widely seen as the superpower of the 21st century. But that is also a title Beijing is extremely uncomfortable with and one which Chinese leaders reject vehemently.

“China is not a superpower, we are still a developing country … we have a long way to go to realise modernisation” was how Chinese premier Li Keqiang responded to questions from visiting editors from Asia News Network in Beijing on May 31.

Granted, China is a very big country and there are still millions among its 1.3 billion citizens who need to be lifted out of poverty. But by just about every yardstick, China measures up to superpowerhood.

By some reckoning, it achieved that status when it successfully detonated its first nuclear bomb in the late 1960s. Since then, it has built up a formidable military force with the world’s biggest standing army of 2.2 million.

Results from a survey in Australia and major Asian countries by a group of regional think tanks released last week showed that a wide majority of Australians and significant numbers of Asians already consider China more powerful than the United States.

China, once the sleeping dragon, is fully awake and airborne, creating huge turbulence and strong winds that are felt across the globe.

But no, “there are no grounds for China to become a superpower and neither does China have the intention to be one,” Li told the ANN editors.

Neither does it see itself as a Big Brother but a good friend to all, regardless of size and wealth.

The same consistent message of assurance was given by Jin Liqun, president of the Asian Infrastruc­ture Investment Bank (AIIB), when he met the editors in a separate session.

The AIIB was one of the financial institutions created to support Obor, now renamed the Belt and Road Initiative, which came about because China was dissatisfied with existing multilateral lending entities like the World Bank, the International Monetary Fund and the Asian Development Bank.

But the AIIB has also created suspicion and skepticism over China’s motives.

The eloquent Jin, who fielded a wide range of questions, kept to the script which was to give the assurance that China had no ill intentions and that the AIIB would be fully transparent in its activities and guided by three principles in choosing the projects to fund, namely that they must be financially sustainable, environmentally friendly and socially acceptable.

What’s more, he pointed out that if the AIIB is so bad, why have 57 countries become members and another 30 on the waiting list?

Why indeed. While he admitted that the AIIB had an international trust and credibility issue, he bristled when I suggested that nations signed up because they were basically hedging their bets.

After all, which country wouldn’t want the chance to get their development projects funded by a new lender in town? It is no skin off their nose.

Neither did Jin take kindly to my comment that he had painted a very rosy picture of the bank and its aims.

“I take issue with you. I never pick the rosy pictures, I always pick the realistic pictures,” he said.

Yet for all his claims of openness and transparency, no editor could pin him down on details on the type of projects that the AIIB would fund and the shortcomings of existing development banks that led to the creation of the AIIB.

Instead, Jin quoted from Jane Austen’s Mansfield Park, “Skepticism must always be forgiven, you know, because there is no hope of a cure”, substituting “selfishness” in the original text with “skepticism”.

Even though the editors met Jin and Li separately, their answers to all the questions were essentially same: China comes in peace; all it wants is cooperation and stability; it believes in prospering with its neighbours and has no desire to bully any country, no matter how small or weak; and it definitely has no wish to be a superpower.

As the Chinese say, you can talk till your saliva dries up but to no avail. China is just too massively important and influential, and it also harbours ambitions that go beyond military and economic ascendancy.

It is, as the BBC puts it, even “supersizing science” in its quest to become a global leader in science and technology. One of its most visible efforts is the building of the biggest radio telescope, the 500m Aperture Spherical Teles­cope, that when completed in September, will dwarf the current title holder, the 300m Arecibo Observatory in Puerto Rico.

It is also making huge investments in medical research and in the exploration of both inner and outer space. Its scientists have built a vessel to explore the world’s deepest oceanic trenches, all in the name of science.

But even that has reportedly spooked certain nations as they fear China will use its advanced marine technology to further its control in the territorial disputes in the South China Sea which have been dragging on for years.

The world’s “beautiful game” too has caught China’s fancy. It wants to be a football superpower by 2050 and has unveiled a blueprint on how to achieve it: build at least 20,000 football training centres and 70,000 pitches by 2020, according to the BBC.

Clearly, this is a nation with great ambitions and many achievements that it can be justifiably proud of, so why such extreme modesty and humility in dealing with the world?

Back in 2014, various experts and observers gave their take on it. The general consensus was that one of the biggest reasons was China’s fear of responsibility as in the classic line, “with great power comes great responsibility”.

Fortune.com opined that while the Chinese government would love to brag about its growing global influence, it is also pragmatic. It doesn’t want the “cumbersome international obligations” like being the world’s policeman and donor that are expected of a superpower or economic giant.

It would also seem that Chinese leaders believe taking the “softly, softly does it” line of diplomacy is most reassuring to the rest of the world and will create the least line of resistance to their overtures.

But it appears that this overly modest and diffident approach hasn’t quite worked as planned. Beijing may want to rethink its strategy because, to quote Shake­speare, it’s a case of “the lady doth protest too much, me thinks”.

By June H.L. Wong Sunday Star Focus

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Analysts pooh-pooh US Defence Secretary’s ‘self-isolation’ as an exaggeration


Analysts refute Ashton Carter’s China ‘self-isolation’ claims

SINGAPORE – US defense secretary’s China “self-isolation” claims were totally incorrect, local analysts said here on Saturday.

In a speech delivered here Saturday at the on-going Shangri-La Dialogue, US Defense Secretary Ashton Carter said China could end up erecting a Great Wall of self-isolation, but analysts here refuted Carter’s remarks as one-sided and over-exaggerated.

As China develops, Asia-Pacific countries had built close relations with not only the United States but also China, which proves Carter’s China “self-isolation” claims at best “exaggerated,” said Huang Jing, Professor and Director of Center on Asia and Globalization, Lee Kuan Yew School of Public Policy, National University of Singapore.

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South China Sea Is Indisputable Part of China

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Carter’s claims are misinterpreting China’s policies, and are not in line with the two countries’ consensus on forging new pattern of relationship, said Colonel Lu Yin, Associate Researcher from the Institute of Strategic Studies of China’s National Defense University.

The colonel noted that Carter’s remarks revealed logical paradoxes in the US rebalance strategy in the Asia-Pacific.

“I don’t see it possible that without efforts from China, the United States can realize its rebalance strategic in the Asia-Pacific region as well as achieve common prosperity as envisioned,” said Lu.

In his half-hour or so speech, the US defense secretary mentioned the word “principle” for as many as 37 times. In Professor Huang Jing’s view, it is fairly disputable that the United States does faithfully stick to principle.

When asked about the fact that not only China, but countries including Japan, the Philippines and Vietnam all had similar construction actions, Carter said there are differences in the scale of such activities.

If one really sticks to principles, it doesn’t matter what scale the actions might be, any construction activity is against the principle, argued Professor Huang.

On matters of navigation freedom, the professor said that navigation freedom should be guaranteed, but any country’s freedom shall not be at the cost of posing threats to others.

Although tensions in the South China Sea are included in Carter’s speech, analysts pointed out that the US defense secretary had also elaborated on the fact that China and the United States do have cooperation potentials over a number of international agendas. To safeguard peace and stability in Asia-Pacific, the two countries need to cooperate.

Oh Ei Sun, senior fellow with S. Rajaratnam School of International Studies in Singapore, said that Carter actually adopted a relatively “mild” approach when addressing disputes in the Asia-Pacific and gave much emphasis on setting up security networks in the region.

William Choong, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security, said he thought the US-China relations are far more inclusive.

It’s a broader relationship, although they disagree on the South China Sea issue, they can agree on many other issues which are important, such as the cooperation in cyber space, the DPRK issue, and climate change, he said.

The two countries are preparing for their upcoming strategic economic dialogue as well, he noted.

“To put it very simply, even though there are tensions in the South China Sea, I think the relationship is broad enough and strong enough, and has enough institutional mechanism for both sides to avoid their differences and work on potential solutions,” said the researcher.

China refutes US defense secretary’s China ‘self-isolation’ claims

SINGAPORE – A high-ranking Chinese military official Saturday refuted US Defense Secretary Ashton Carter’s “self-isolation” claims about China.

“Carter’s claims are incorrect and do not accord with the actual situation,” Guan Youfei, director of the Office for International Military Cooperation of the Chinese Central Military Commission, told the media.

Guan’s comments came after Carter’s claims at the ongoing Shangri-La Dialogue that China’s military activities in the South China Sea would isolate itself.

Guan said the United States should learn lessons from the wars it had waged in the Asia-Pacific region after World War II and play a constructive role in the region.

Guan urged the United States to keep its security pledges, withdraw troops from Afghanistan as soon as possible, stop arms sale to China’s Taiwan and refrain from holding military drills on the Korean Peninsula.

Guan said China has made great efforts in promoting international and regional security cooperation since its reform and opening-up, and China’s achievements in areas such as peacekeeping, disaster relief and naval escort missions are obvious.

China will continue to enhance cooperation with other Asia-Pacific countries under the Belt and Road initiative in various fields, the Chinese military official added.

The US defense secretary had earlier made similar accusations against China in a speech delivered at the US Naval Academy. The Chinese Foreign Ministry had responded, saying such claims reflected “American-style mentality” and “American-style hegemony.”

Sources: China Daily/Asia News Network

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Even the claimant countries in the waters want to prioritize safeguarding peaceful development in the region.

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But Carter won’t change his attitude. He represents a clique that is eager to sustain Washington’s hegemony in the Western Pacific by reinforcing military deployments and containing China’s peaceful rise.

Image for the news result

China urges US, Japan to stop pointing fingers on South China Sea

Free trade in rhetoric, not in practice by Western countries


WESTERN countries commonly proclaim the great benefits of free trade and the evils of protectionism.

In reality, many developed countries practise double standards, insisting on free trade in areas where they are strong, whilst using protectionist measures in sectors where they are weak.

In the worst case, within the same sector they have designed rules that impose liberalisation on developing countries but allow themselves to maintain high protectionism.

An outstanding example is in agriculture, in which the rich counties are not competitive.

If “free trade” were to be practised, a large part of global agricultural trade would be dominated by the more efficient developing countries.

But until today, agricultural trade is dominated instead by the major developed countries.

For many decades they got an exemption for agriculture from trade liberalisation rules.

This exemption ended when the World Trade Organisation (WTO) was crea­ted in 1995 and the rich countries were expected to open their agriculture to global competition.

But in reality, WTO’s agriculture agreement allowed them to have both high tariffs and high subsidies.

The subsidies have enabled far­mers to sell their products at low prices, often below production cost, yet allowed them to get adequate revenues (which include the subsidies) that keep them in business.

This has four negative effects on developing countries.

Firstly, those countries that are agri­­culturally competitive cannot pe­­netrate the rich countries’ markets.

Secondly, the developing countries are deprived of other markets because the United States and Europe can export the same farm products at artificially cheap prices. This is a complaint of African cotton-producing countries.

Thirdly, by exporting a product cheaply, the developed country reduces the demand for a competitor substitute product. If the US did not subsidise its soybean, enabling soybean oil to be cheaper, Malaysian or Indonesian palm oil would have a bigger market.

Fourthly, these cheap products (such as chicken from US and Europe) have entered many deve­loping countries, damaging the livelihoods of their local farmers.

In 2001, the WTO launched a Doha development agenda whose chief goal was to liberalise the agriculture of developed countries.

Much energy was spent over many years to devise methods and formulae to liberalise agricultural trade, and a high degree of consensus was reached.

However, the US, backed by Europe, has now made it clear they do not intend to conclude the Doha Round.

Future WTO negotiations have to be on a new basis, and not based on existing texts.

An article by Chris Horseman in the bulletin Agra Europe (May 12) analysed why the US now cannot accept the existing text.

A reduction in the maximum limit of one type of allowed subsidies (called de minimis) would have pushed the US to increase by 58% another type of disallowed subsidies (known as AMS).

This partly explains “why the US is keen to move away from the formulae on the table and to negotiate a fresh approach,” said the article.

Due to its powerful farm lobbies, the US will not change its domestic policies (embodied in its 2014 Farm Bill) to meet the Doha agenda’s new limits on the allowed amounts of domestic subsidies.

The same article also shows how the European Union has meanwhile changed the types of subsidies it provides, in order to better comply with WTO rules. This also allowed the EU countries to maintain their total domestic subsidies at around €80bil (RM356bil) annually from 2004 to 2013.

Two decades after the WTO was set up, the rich countries have continued the high level of their agricultural protection.

There is little prospect that they will agree to changes in the trading system that will effectively eliminate or reduce the massive subsidies that keep their farming systems afloat.

The poorer countries simply do not have the money to match the subsidies of the rich.

If they want to defend their far­mers and their food security, they can only put up tariffs to levels that keep out the cheap subsidised pro­ducts.

But those developing countries that sign free trade agreements with the US and the EU have to cut their agriculture tariffs to zero or very low levels.

At the same time, at the insistence of developed countries, agricultural subsidies are kept off the FTA agenda. Thus, the rich countries can keep their subsidies and swamp developing countries with their farm products.

The US and EU are also taking protectionist measures in other areas against developing countries.

For example, the US successfully filed a case against India at the WTO, that the latter’s National Solar Mission favours local firms through its domestic content requirements for solar cells and modules.

This kind of objection makes it extra difficult for India or other developing countries to take action against climate change.

The European Parliament recently voted to refuse giving China the status of a market economy in the WTO, although WTO members are obliged to recognise China as a market economy by December 2016, 15 years after it joined the WTO in 2001.

By denying China this status, it is easier for other countries to suc­­­­­­c­e­ed when taking anti-dumping cases against China, and thus to place extra tariffs on Chinese exports.

China and India are fighting back.

India last week announced it will file 16 cases against the US for violating WTO rules when providing subsidies under its renewable energy programmes.

China won a case against the US in the WTO for wrongly imposing countervailing duties against 15 Chinese products including solar panels, steel sinks and thermal paper.

However, the US has not complied with the panel decision to withdraw the duties, and China is now starting action at the WTO to get the US to comply.

It seems impossible to prevent or reduce the rich countries’ high protection of their agriculture. And it also seems they will continue using protectionist measures against products or policies of developing countries.

There is indeed a big gap between the rhetoric and practice of free trade.

By Martin Khor Global trends

Martin Khor (director@ southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.

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The arbitration decision on South China Sea could ‘change the world’


Chinese J-11 fighter jets intercepted the U.S. EP-3 spy aircraft

THE ruling on an international arbitration case, brought by the Philippines against China on rival claims to the South China Sea, is expected soon.

With the decision widely predicted to favour the Philippines, China – which has refused to participate in the proceedings – has revved up its efforts to influence public opinion at home and abroad.

State-owned media outlets, such as China Radio International’s WeChat account “Watch Asean”, began posting materials provided by the Chinese Foreign Ministry in late April to prove that China lays historical claim to the territory.

Turning to age-old manuscripts like the Book of Han and Record of Foreign Matters written during the Eastern Han Dynasty (25 AD – 220 AD), China said its people were the first to discover, name and administer va­­rious South China Sea islands and therefore enjoy priority rights to own and use the features.

“History has irrefutably proved that China is the sole owner of the South China Sea islands,” it said.

China also cited foreign publications, such as The China Sea Directory by United Kingdom’s Hydrographic Office in 1868 and a 1933 French magazine Le Monde Colonial Illustré, as evidence that Chinese fishermen did live on the islands.

As for other South-East Asian nations that border the South China Sea, China claimed they did not challenge its sovereignty until rich deposits of oil and natural gas were discovered there in the 20th century.

“Vietnam, the Philippines, Malaysia, etc, then ‘occupied’ parts of Nansha (Spratly Islands) and hence the territorial spat ensued,” said Li Guoqing, research fellow of the Institute of Chinese Borderland Studies of the Chinese Academy of Social Sciences told local and international journalists in Beijing.

The conflicts brewed for decades and heightened over the past two years with China’s massive expansion and construction activities in the area, adding airfields, ports and lighthouses to seven islands and reefs.

Its explanation that these facilities were intended for civilian use was not too convin­cing, especially for the United States, which criticised China for “militarising” the disputed waters.

On the international front, China appeared as an aggressive claimant who insists that historical evidence can substantiate its assertion over the territory.

It uses the “nine-dash line” to demarcate its boundary on maps, covering most of the South China Sea and overlapping the exclusive economic zones (EEZ) of Malaysia, Bru­nei, Vietnam, the Philippines and Indo­nesia.

If China is so confident of its sovereignty over the South China Sea, why is it reluctant to appear before the Permanent Court of Arbitration in The Hague?

China said territorial sovereignty is beyond the purview of the United Nations Convention on the Law of the Sea (UNCLOS).

It added that both countries have agreed in the Declaration on the Conduct of Parties in the South China Sea (DOC) to settle disputes through bilateral channels, which means the Philippines’ arbitration has thus breached its obligation under international law.

But the Philippines has emphasised to the five-person tribunal that it is not asking for a ruling on territorial sovereignty, but to clarify its maritime entitlements in the South China Sea.

The tribunal decided in October last year that it has the authority to consider the Philippines’ submissions, adding that the DOC was only a political agreement, which is not legally binding.

The tribunal will rule on whether China’s “nine-dash line” violates UNCLOS, whether the maritime features claimed by both parties should be characterised as “islands, rocks, low-tide elevations or submerged banks” (to determine the maritime zones they are entitled to), and whether “certain Chinese activities” in the South China Sea have violated UNCLOS.

China is adamant that it would not entertain the decision.

“No matter what verdict the arbitration case will be, it is unlawful and invalid. China will neither accept nor recognise it,” Ouyang Yujing, director-general of the Department of Boundary and Ocean Affairs of the Chinese Foreign Ministry, said in a press conference in early May.

Li said it is foreseeable that the disputes over the South China Sea would continue to exist for a long time after the verdict is delivered.

He downplayed the significance of the arbitration, saying that it has been hyped up to appear as if it could “change the world”.

“While China is the most experienced country in the world in solving boundary disputes (through bilateral negotiations), it is also the least experienced when it comes to dealing with territorial claims through international arbitration, so I think China has made the right decision to stay away from the arbitration,” he said.

As China slammed countries outside of the region, such as the US and Japan, for meddling in the maritime row, it is actively lobbying for international support on its stance.

Chinese Foreign Minister Wang Yi, during his three-nation visit to South-East Asia in April, said that Brunei, Cambodia and Laos reached a consensus with China to, among others, agree that countries can choose their own ways to solve disputes and oppose unilateral attempts to impose an agenda on others.

National news agency Xinhua reported that Fiji supported China’s position in a meeting between their foreign ministers in Beijing last month (although the Fijian government quickly clarified that it did not, according to the Fiji Broadcasting Corporation).

Last week, a Doha Declaration was signed by China and 21 countries of the Arab League to support peaceful settlement of disputes through negotiation.

Chinese Foreign Ministry spokesperson Lu Kang said that Gabon, Mauritania and Venezuela have also voiced their support for China.

“We highly commend these countries and regional organisations for their calling for justice,” he said in a daily press briefing.

Judging from China’s behaviour, it is very likely that it will follow up with another publicity blitz to denounce the tribunal’s verdict, if the latter does indeed rule in favour of the Philippines.

The disputes, meanwhile, will be far from over.

By Tho Xin Yi

Check-in China

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‘Free trade’ in trouble in the United States


  The United States
  Current Bilateral/Multilateral FTA’s
  Proposed/Suspended Bilateral/Multilateral FTA’s

As free trade reaches a crossroads in the US, developing countries have to rethink their own trade realities for their own development interests.

“FREE trade” seems to be in deep trouble in the United States, with serious implications for the rest of the world.

Opposition to free trade or trade agreements emerged as a big theme among the leading American presidential candidates.

Donald Trump attacked cheap imports especially from China and threatened to raise tariffs. Hillary Clinton criticised the Trans-Pacific Partnership Agreement (TPPA) which she once championed, and Bernie Sanders’ opposition to free trade agreements (FTAs) helped him win in many states before the New York primary.

That trade became such a hot topic in the campaigns reflects a strong anti-free trade sentiment on the ground.

Almost six million jobs were lost in the US manufacturing sector from 1999 to 2011.

Wages have remained stagnant while the incomes of the top one per cent of Americans have shot up.

Rightly or wrongly, many Americans blame these problems on US trade policy and FTAs.

The downside of trade agreements have been highlighted by economists like Joseph Stiglitz and by unions and NGOs. But the benefits of “free trade” have been touted by almost all mainstream economists and journalists.

Recently, however, the establishment media have published many articles on the collapse of popular support for free trade in the US:

> Lawrence Summers, former Treasury secretary, noted that “a revolt against global integration is under way in the West”. The main reason is a sense “that it is a project carried out by elites for elites with little consideration for the interests of ordinary people”.

> The Economist, with a cover sub-titled “America turns against free trade”, lamented how mainstream politicians are pouring fuel on the anti-free trade fire. While maintaining that free trade still deserves full support, it cites studies showing that the losses from free trade are more concentrated and longer-lasting than had been assumed.

> Financial Times columnist Phillip Steven’s article “US politics is closing the door on free trade” quotes Washington observers saying that there is no chance of the next president or Congress, of whatever colour, backing the TPPA. The backlash against free trade is deep as the middle classes have seen scant evidence of the gains once promised for past trade deals.

> In a blog on the Wall Street Journal, Greg Ip’s article The Case for Free Trade is Weaker Than You Think concludes that if workers lose their jobs to imports and central banks can’t bolster domestic spending enough to re-employ them, a country may be worse off and keeping imports out can make it better off.

Orthodox economists argue that free trade is beneficial because consumers enjoy cheaper goods. They recognise that companies that can’t compete with imports close and workers get retrenched. But they assume that there will be new businesses generated by exports and the retrenched workers will shift there, so that overall there will be higher productivity and no net job loss.

However, new research, some of which is cited by the articles above, shows that this positive adjustment can take longer than anticipated or may not take place at all.

Thus, trade liberalisation can cause net losses under certain conditions. The gains from having cheaper goods and more exports could be more than offset by loss of local businesses, job retrenchments and stagnant wages.

There are serious implications of this shift against free trade in the US.

The TPPA may be threatened as Congress approval is required and this is now less likely to happen during Obama’s term.

Under a new president and Congress, it is not clear there will be enough support.

If the US does not ratify the TPPA, the whole deal may be off as the other countries do not see the point of joining without the US.

US scepticism on the benefits of free trade has also now affected the multilateral arena. At the World Trade Organisation, the US is now refusing attempts to complete the Doha Round.

More US protectionism is now likely. Trump has threatened to slap high tariffs on Chinese goods. Even if this crude method is not used, the US can increasingly use less direct methods such as anti-dumping actions. Affected countries will then retaliate, resulting in a spiral.

This turn of events is ironic.

For decades, the West has put high pressure on developing countries, even the poorest among them, to liberalise their trade.

A few countries, mainly Asian, staged their liberalisation carefully and benefited from industrialised exports which could pay for their increased imports.

However, countries with a weak capacity, especially in Africa, saw the collapse of their industries and farms as cheap imports replaced local products.

Many development-oriented economists and groups were right to caution poorer countries against sudden import liberalisation and pointed to the fallacy of the theory that free trade is always good, but the damage was already done.

Ironically, it is now the US establishment that is facing people’s opposition to the free trade logic.

It should be noted that the developed countries have not really practised free trade. Their high-cost agriculture sector is kept afloat by extremely high subsidies, which enable them to keep out imports and, worse, to sell their subsidised farm products to the rest of the world at artificially low prices.

Eliminating these subsidies or reducing them sharply was the top priority at the WTO’s Doha Agenda. But this is being jettisoned by the insistence of developed countries that the Doha Round is dead.

In the bilateral and plurilateral FTAs like the TPPA, the US and Europe have also kept the agriculture subsidy issue off the table.

Thus, the developed countries succeeded in maintaining trade rules that allow them to continue their protectionist practices.

Finally, if the US itself is having growing doubts about the benefits of “free trade”, less powerful countries should have a more realistic assessment of trade liberalisation.

As free trade and trade policy reaches a crossroads in the US and the rest of the West, developing countries have to rethink their own trade realities and make their own trade policies for their own development interests.

By Martin Khor

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.

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