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How Significant Is the New U.S. South China Sea Policy?

By Gregory Poling

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Yesterday, July 13, Secretary of State Mike Pompeo announced an important shift in U.S. declaratory policy on the South China Sea. This morning, Assistant Secretary of State David Stilwell elaborated further during remarks at CSIS’s annual South China Sea Conference. The press statement from Pompeo listed specific Chinese maritime claims the United States considers illegal. The statement marks a significant clarification of prior U.S. positions but not a radical break from past policy. It makes explicit things that had been implied by previous administrations. And in that, it sets the stage for more effective diplomatic messaging and stronger responses to China’s harassment of its neighbors. U.S. partners and allies in the region were seemingly briefed in advance—the Philippine defense secretary, for instance, was ready with a positive statement within hours. And the new policy sparked excited, and often hyperbolic, coverage in the press and social media.

Q1: What is the new U.S. position?

A1: Pompeo’s statement does not alter U.S. neutrality on the territorial disputes in the South China Sea. Washington still has no interest in wading into the historical morass of which country has sovereignty over each of the Spratly and Paracel Islands. But it does now explicitly take a position on the maritime disputes over water and seabed rights. The opening paragraph says, “We are making clear: Beijing’s claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them.” The remainder of the statement explains what exactly that means.

The United States is more firmly endorsing the substance of a 2016 ruling by a tribunal convened under the UN Convention on the Law of the Sea (UNCLOS). That tribunal had ruled overwhelmingly in favor of Manila’s case against Beijing. It found that China has no basis to assert “historic rights” or make any other claims beyond those permitted by UNCLOS. This nullified the so-called “nine-dash line” as a claim to maritime space. The tribunal then determined that none of the Spratly Islands or Scarborough Shoal are entitled to their own exclusive economic zone (EEZ) or continental shelf. They are legally “rocks” incapable of supporting human habitation or independent economic life. And as such, they only generate 12-nautical-mile territorial seas.

The new U.S. position follows this ruling to its logical conclusion. China may claim the resources of the EEZ and continental shelf from its southern coast and perhaps in similar zones generated by the Paracel Islands, which were not covered by the 2016 award. It may also claim rights within 12 nautical miles of rocks in the Spratlys and Scarborough Shoal (and so can other claimants). But China has no claim to any other areas. Most of the resources of the South China Sea therefore belong to the nearest coastal state (Brunei, Indonesia, Malaysia, the Philippines, or Vietnam). The United States is now explicitly declaring it illegal for China to engage in fishing, oil and gas exploration, or other economic activities in those areas, or to interfere with its neighbors’ rights to do so.

The 2016 arbitral award also found that several of the features claimed by China, including Mischief Reef, Second Thomas Shoal, and Reed Bank, are naturally underwater and therefore not subject to any claim of sovereignty. The tribunal ruled that they are all part of the continental shelf of the Philippines, as the nearest coastal state, and that Manila has sole rights to their resources. The new U.S. policy explicitly endorses this and applies it to other underwater features claimed by China: Luconia and James Shoals off Malaysia and Vanguard Bank off Vietnam. This means the United States considers the entire Chinese base on Mischief Reef illegal. And it considers Chinese efforts to assert sovereignty over these other locations baseless.

Finally, Pompeo’s statement declares Chinese interference with Filipino fishing rights at Scarborough Shoal illegal. Even though that feature is entitled to a 12-nautical-mile territorial sea, the 2016 arbitral award declared that both China and the Philippines are entitled to traditional fishing rights within it. So again, the United States has not modified its position on territorial sovereignty but is taking a more explicit position on maritime rights.

Q2: How different is this position?

A2: The Obama administration had strongly endorsed the Philippines’ right to take China to arbitration. It then noted that the ruling was binding according to UNCLOS and called on both parties to comply. But it also couched its responses in careful legalese. Within hours of the ruling, the State Department declared it “final and legally binding on both China and the Philippines.” But it also noted, “We are still studying the decision and have no comment on the merits of the case.” At the East Asia Summit in Vientiane later that month, and afterward during a stop in Manila, Secretary of State John Kerry repeated that the award was legally binding and called for compliance. And he repeatedly voiced support for international law and maritime freedoms in general. But neither he nor any other U.S. official, either in the previous administration or the first three years of this one, explicitly endorsed the substance of the ruling. It was a subtle but deliberate choice.

By joining UNCLOS, countries agree to be legally bound by the outcome of any arbitration they take part in. But that doesn’t automatically give the arbitral award the weight of customary international law. And it doesn’t mean other states have to agree that the judges got it right or follow the precedents they set. This is how all arbitration works, whether between states, companies, or individuals. As a result, U.S. officials have called on China to comply with the ruling, but they have also avoided calling specific Chinese actions that violate it “illegal.” Washington has saved that term for the smaller subset of Chinese claims that directly infringe on U.S. navigational freedoms under customary law. These include China’s straight baselines around the Paracel Islands, its demand for prior notification for innocent passage through the territorial sea, and its attempts to regulate navigation and overflight around underwater Mischief Reef. While the United States has often criticized China’s fishing, oil and gas exploration, and harassment of its neighbors in their EEZs as “destabilizing” or “aggressive,” it has avoided labelling them “illegal.”

This fed a narrative in Southeast Asia that the United States prioritized its own “freedom of navigation,” which many interpreted as only covering U.S. military operations but not their “freedom of the seas,” which includes their economic rights as guaranteed by international law. Did prior U.S. administrations consider China’s actions in its neighbors’ EEZs and continental shelves illegal? Almost certainly. But they would not come out and say so until now.

Q3: What impact will this have?

A3: This new rhetorical position won’t have much effect by itself. But as the opening gambit in a long-term effort to impose cost on China and rally support for U.S. partners, it could be significant. The most immediate effect of this policy change will be on the diplomatic front. It is much easier to rally international support against “illegal” activity than against actions that are merely distasteful or destabilizing. It is also much more damaging to a country that aspires to global leadership to be accused of gross violations of international law. U.S. officials will likely begin working this stronger language into statements at international forums and putting pressure on partners and allies to do the same. This can be expected not just at regional meetings like the East Asia Summit, but in bodies like the Quad, the Group of Seven, and various bilateral and trilateral meetings. This might also encourage Southeast Asian claimants, particularly Vietnam and the Philippines, to advocate for themselves more forcefully. The next time a China Coast Guard ship plays chicken with an oil rig off Vietnam or a flotilla of Chinse fishing boats appears in Indonesian waters, the United States will likely speak up more forcefully to decry the illegal action. And that will have a proportionately greater effect on China’s international reputation. This approach will likely extend beyond November, as any future administration will find it difficult to walk back this new rhetorical position.

Economic costs for China might also follow from this policy. By declaring so much of China’s maritime activities illegal, the administration has provided a justification for potential sanctions against Chinese companies and entities that conduct them. This would involve a much wider and timelier set of potential targets than previously mooted U.S. sanctions legislation. Bills introduced in the Congress in 2017 and 2019 for example focused more narrowly on dredging, construction, and other activities on Chinese artificial islands. During his remarks at CSIS, Stilwell specifically directed attention at the role of Chinese state-owned enterprises engaged in illegal maritime activity. He declared, “We should also shine light on how these companies operate around the world, including across Southeast Asia and in the United States. In all our societies, citizens deserve to know the differences between commercial enterprises and instruments of foreign state power.” And when asked whether the new U.S. position might lead to sanctions against Chinese entities, the assistant secretary said that option is “on the table.” There is significant congressional support for the new policy. Within hours of its release, the chairs and ranking members of the Senate Foreign Relations Committee and House Foreign Affairs Committee issued a bipartisan statement endorsing the administration’s position.

Of course, there will also be downsides to this policy. It will raise tensions between Beijing and Washington in the short term. The next time China does engage in illegal harassment of its neighbors within their EEZs, a more forceful U.S. response might lead China to double down out of a sense of nationalism. This seems especially likely amid the current pandemic, which has led Chinese diplomats to favor chest-thumping nationalism over de-escalation with its neighbors. But in the long term, if successfully couched within a broader policy combining pressure on Beijing and greater international coalition building to support Southeast Asian parties, it could help steer China toward a compromise that the international community could live with. And that ultimately is the best chance to peacefully manage the South China Sea disputes.