How to Protect Europe’s Interests in the South China Sea

After Beijing’s rejection of an international legal ruling, Europe can no longer take a back seat.

By Jan Gaspers & Thomas Eder for
How to Protect Europe’s Interests in the South China Sea
Credit: China-EU flags image via Shutterstock.com

In rejecting the arbitral award on the South China Sea (SCS), Beijing has made it clearer than ever that it has no intention to seamlessly integrate into the existing international order.

After more than three years of deliberation, the tribunal at the Permanent Court of Arbitration in The Hague has made it remarkably clear that China’s extensive historical rights claims to maritime areas within the so-called “nine-dash line” are incompatible with the UN Convention on the Law of the Sea (UNCLOS) and therefore illegitimate. The tribunal also underscored that none of the land features claimed by China qualify as an “island,” which would in turn warrant the claiming of an exclusive economic zone under UNCLOS. There can be no doubt that China has suffered a massive defeat.

However, Beijing remains unimpressed by the tribunal’s decision and its binding nature under UNCLOS, which China has ratified. The Chinese administration maintains what others have rightly criticized as a “ridiculously weak” argument, namely that the rejection of the award constitutes a commendable defense of international law rather than a deeply troubling violation of the same.

China’s express unwillingness to play by the rules of the norms-based international order and suggestions that Beijing might even denounce UNCLOS will most likely result in a further escalation of tensions in the SCS. Partially as a response to the award, Beijing seems determined to reassert itself on the ground. This in turn will prompt other claimants to reinforce their actions and the United States to intensify its so-called Freedom of Navigation Operations (FONOPs).

Europe faces significant economic, political, and normative risks

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What makes for an uneasy mix for regional stability and U.S.-China relations also poses significant risks to Europe. Heightened tensions in the SCS may result in the need to alter the routes of cargo ships to avoid an increase in insurance rates, causing longer transit times. This would adversely affect the profit margins associated with European industries’ almost one trillion euro annual trade with East Asia and Southeast Asia.

An increase in tensions in the SCS will further increase the pressure on EU member states to clearly position themselves with regard to the disputes. However, taking a firm position would either harm relations with the United States and partners in the region or – much more likely – cause tensions with China.

Of most immediate concern, China’s non-compliance with the verdict undermines the existing international legal order, the maintenance of which is a crucial lowest common denominator foreign policy goal for all 28 EU member states. It also challenges UNCLOS, which provides a legitimate basis for upholding almost unparalleled maritime claims EU member states enjoy around the world.

In light of these risks, taking a back seat is clearly no longer an option for Europe. EU member states and institutions have a fundamental interest in upholding the international legal order and freezing the conflict in the short term as a basis for contributing to its resolution in the medium- to long-term.

With a view to attaining these interests, Europe needs to make sure that it swiftly and effectively deploys the best tools it has available, namely de-escalatory diplomacy and integrative tactics aimed at protecting the existing international legal order.

At the same time, it is more important than ever that leading EU member states, namely Germany and France, strengthen cooperation with regional partners and the United States to promote all around restraint in the region and to send a clear diplomatic signal to Beijing. This could be done most effectively within a G7+ Working Group on the SCS.

De-escalatory diplomacy and integrative tactics

In a joint statement on the award, which is scheduled for public release in the upcoming days, EU member states will most likely point to the fact that as a party to the “Treaty of Amity and Cooperation in Southeast Asia” (TAC) Europe has a legitimate role to play in regional de-escalatory diplomacy. To make active use of this legitimate role, EU member states should initiate a diplomatic conference under the TAC. This conference would serve the purpose of rebuilding trust among SCS claimants and reviving work toward the adoption of a regional Code of Conduct on acceptable claimant behavior.

In order to effectively protect the existing international legal order and UNCLOS, leading EU member states should engage in a pragmatic dialogue with Beijing. They must emphasize the downsides of non-compliance with international maritime law and potential Chinese denouncing of UNCLOS: Losing access to effective legal protection for China’s burgeoning commercial fleet and to deep seabed resources for its industries.

Working in close consultation with the United States, other G7 countries, and regional partners, Europe can also play a lead role in strengthening Chinese ownership with regard to the existing international legal order. Specifically, EU member states and institutions should create opportunities for UNCLOS members to address and discuss the concerns of China and others about the alleged ambiguity of certain norms related, for example, to freedom of navigation or island status. More generally, EU member states should also consider selective support for greater Chinese representation in international courts and tribunals.

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Working with ASEAN

Apart from serving as a diplomatic broker and champion of the existing international legal order, Europe also needs to think about new ways to support affected partners in the region without impairing its role as a neutral arbiter. Suggestions for joint EU FONOPs in the SCS or a more “flexible” European defense equipment export policy towards Southeast Asian countries are not necessarily the tools of choice in this respect.

Rather, EU member states and institutions should increase financial and institutional support to ASEAN with the aim of creating greater unity within the organization. At the same time, the European Commission’s Directorate General (DG) Trade must not let a more protectionist post-Brexit EU stall on free trade negotiations with ASEAN countries.

It seems almost inevitable that in the upcoming months some member states will also launch a discussion on whether the recent Commission proposal on security and defense-related use of development funds could allow for funding specific components and activities of ASEAN militaries. Discussing such a step, which could help free up parts of ASEAN defense budgets for spending on additional deterrence capabilities vis-à-vis China, carries significant risks for Europe’s neutral appearance and therefore needs to be carefully managed.

Dealing with rising tensions in the SCS through a G7+ Working Group

With a view to dealing with any escalatory dynamics in the SCS, Germany and France should also consider pushing for the creation of a G7+ Working Group, consisting of civilian and military experts from the G7 countries plus Australia, Indonesia, and South Korea – and potentially even claimants like the Philippines and Vietnam. The Working Group should also be open to the idea of inviting and consulting Chinese representatives as appropriate and aim to promote all around restraint in the region. At the same time, the Working Group could become a useful vehicle for sending clear, decisive, and united diplomatic signals to Beijing whenever necessary.

For example, in the absence of any conciliatory moves on China’s part over the upcoming weeks, G7 countries and their regional partners could use the G20 summit in September 2016 in Hangzhou as an effective platform to publicly convey their concern in a high-profile manner. Should China escalate along the lines of previous policies, such as interfering with ASEAN fishing fleets and building artificial islands, the option of full-blown boycott of the G20 summit could even be put on the table.

If Beijing was to adopt even more confrontational policies in the future, such as declaring an Air Defense Identification Zone or attempting to transform Scarborough Shoal into an artificial island, the G7+ Working Group would also be the right venue to contemplate proportionate counter-measures. However, it will clearly be in Europe’s interest to make sure that such a scenario does not materialize.

Jan Gaspers is Head of Research of the European China Policy Unit, Mercator Institute for China Studies (MERICS) in Berlin. Thomas Eder is Research Associate with the European China Policy Unit, MERICS.