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Managing the South China Sea: Where Policy Meets Science

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The South China Sea is in a crisis. The problems facing the sea are as vast, deep and seemingly intractable as the oceans themselves.

Rival countries have wrangled over a string of atolls, coral reefs, and islets in this contested region for centuries but now these competing claims are viewed as a serious challenge to peace and prosperity in the region. These disputes, which are associated with continuous coastal development, escalating reclamation, and increased maritime traffic, also draw attention to the destruction of coral reefs and the overall environmental degradation in the troubled waters.

Furthermore, they reveal how claimant nations—the People’s Republic of China (PRC), Vietnam, the Philippines, Malaysia, Brunei, and the Republic of China (ROC) on Taiwan—have a legal and ethical responsibility to ensure that none of their activities harm or create long-term damage to the fragile marine ecosystems.

In this sea of opportunities, uncertainties and threats, environmental degradation remains at the center of scientific conversation as an increasing number of marine scientists sound the alarm about how to address issues of acidification, biodiversity loss, climate change, destruction of coral reefs, and fishery collapses.

With environmental security shaping a new South China Sea narrative about the ecological challenges, this concept represents a crucial effort to link the impact of environmental change to both national and international security.

Paul Berkman, oceanographer and former head of the Arctic Ocean Geopolitics Program at the Scott Polar Research Institute, provided his own definition of environmental security. “It’s an integrated approach for assessing and responding to the risks as well as the opportunities generated by an environmental state-change.” 1

Through studying the sustainability of the biological seascape and navigating the development of science diplomacy to prevent geopolitical battles over the management of marine resources, marine biologists’ efforts to respond to the damage done to the “Global Commons” will require scientific forums and collaborative problem solving among all neighbors.

Last year, the unanimousdecision reached by The Hague’s five-judge tribunal,found that China’s large-scale reclamation and construction of artificial islands has caused severe harm to coral and violated the country’s obligation to preserve fragile marine environments. Furthermore, it denied them any legal basis to claim historic rights over a vast majority of the South China Sea. It was a striking victory for the Philippines, which filed the case. Among many dramatic findings, the tribunal declared China’s so-called “nine-dash line” invalid.

“The Tribunal has no doubt that China’s artificial island-building activities on the seven reefs in the Spratly Islands caused devastating and long-lasting damage to the marine environment,” stated the judgment. 2

In addition, the United Nations Convention on the Law of the Sea (UNCLOS) stipulates in two of the 17 Parts of UNCLOS a direct application to the merits of marine science research with an emphasis on encouraging bilateral and multilateral agreements to create favorable conditions for marine science study. 3

Professor John McManus, a marine biologist at the University of Miami and a notable coral reef specialist, who has regularly visited the region and provided analysis to the tribunal, has stated that based on satellite imagery the environmental damage done by the Chinese’s dredgers and clam poaching is most severe.

McManus has researched this region for over a quarter of a century. He knows that the most important resource in these heavily fished waters is the larvae of fish and invertebrates. As a result, he has called repeatedly for the development of an international peace park in this contested region.

“Territorial disputes have led to the establishment of environmentally destructive, socially and economically costly military outposts on many of the islands. Given the rapid proliferation of international peace parks around the world, it is time to take positive steps toward the establishment of a Spratly Islands Marine Peace Park,” claims McManus. 4

His peace park proposal includes management of the area’s natural resources and alleviation of regional tensions via a freeze on claims.

As early as 1992, McManus was one of several marine scientists who completed scientific articles advocating for an international peace park or marine protected area. Despite the geopolitical SCS intractability, the Spratly Islands appear to him as a “resource savings bank,” where fish, as trans-boundary residents, spawn in the coral reefs and encircle all of the South China Sea waters, before returning home.

Policy makers may do well to take a lesson or two from nature as they examine how best to address the complex and myriad of sovereignty claims.

Even the Association of Southeast Asian Nations (ASEAN) Working Group on Coastal and Marine Environment recognizes that the region faces enormous challenges to sustainability in coastal and shared ocean regions. Unless a scientific ecosystem approach is adopted, trans-boundary marine areas conflicts can and are getting worse.

Since ASEAN’s inception, it has been occupied with the task of identifying shared solutions to common security problems. To a large degree, one may say that security questions have been the driving force for continued regional integration in Southeast Asia. In the future questions of environmental security may play the same role.

According to Karin Dokken, a political scientist at the University of Oslo, “The states around the South China Sea are to a large degree interdependent when it comes to questions of the human environment. They are interdependent to the degree that if they fail to find common solutions to environmental problems they may end up in violent conflict against each other. In general, environmental interdependence is both a source of conflict and a potential for international integration.” 5

Without agreement on these environmental problems there’s a bleak future for the sea. Nearly 80 percent of the SCS’s coral reefs have been degraded and are under serious threat in places from sediment, overfishing, destructive fishing practices, pollution, and climate change.

Challenges around food security and renewable fish resources are fast becoming a hardscrabble reality for more than just fishermen. With dwindling fisheries in the region’s coastal areas, fishing state subsidies, overlapping EEZ claims, and mega-commercial fishing trawlers competing in a multi-billion-dollar industry, fish are now the backbone in this sea of troubles.

An ecological catastrophe is unfolding in the SCS’sonce fertile fishing grounds, as repeated reclamations destroy reefs, agricultural and industrial run-off poison coastal waters, and overfishing depletes fish stocks.

And in 2014, the Center for Biological Diversity warned that it could be a scary future indeed, with as many as 30 to 50 percent of all species possibly headed towards extinction by mid-century.” Fish catches have remained at an unsustainable 10-12 million tons per year for decades—a number that could double when Illegal, Unreported, and Unregulated (IUU) fishing practices is included.

A recent issue of The Economist underscores the importance for science diplomacy: “The littoral states ought to be working together to manage the sea, but the dispute over sovereignty fosters the fear that any collaboration will be taken as a concession.” 6

The lack of any effective international governanceremains at the epicenter of the SCS sustainability problems.As a result, the marriage of policy and science is essential to navigating these perilous geopolitical passages and to provide some science based solutions. Although not a new paradigm, more policy planners and marine scientists appear to be devoting their studies to establish the linkage that places the environment squarelyat center of national security.

After all, the United Nations Environmental Program (UNEP) confirms that the South China Sea accounts for as much as one tenth of global fish catches and by 2030, China will account for 38 percent of global fish consumption. Overfishing and widespread destruction of coral reefs now necessitates the intervention of science policy to safeguard stewardship of this vital area.

While other regions stabilized the size of their fishing fleets, Asia’s has doubled in size and makes up three quarters of the world’s powered fishing fleets.

Sent by their governments to find food for their people, fishers find themselves on the front lines of this new ecological battle. These fishing sentinels and their trawlers are fighting the maritime disputes between China and its neighbors.

This fishing competition for available fish has resulted in increased number of fishing vessel conflicts. These hostile sea encounters have been witnessed in Indonesia waters where 23 fishing boast from Vietnam and Malaysia were accused of poaching in that nation’s waters.As a result, Indonesia’s fisheries minister, Susi Pudijastuti, ordered the dynamiting of these boats and over 170 fishing vessels have been sunk in their waters over the past two years. The increasing number of fishing incidents reflects not only deeply different interpretations and application of the law of the sea, but a fundamental conflict of interest between coastal states and maritime powers.

Foreign Policy magazine asserts that these fishing incidents and direct acts of violence is significant “because it underscores how central fishing is to the simmering territorial disputes that are turning the South China Sea into a potential global flash point — and how far countries are willing to go to defend their turf, or at least what they claim is theirs.” 7

Within the disputed territory, there are over 1.9 billion people, seventy-five percent of them living within one hundred kilometers of the coast. Nearly eighty-five percent of the world’s fishers are concentrated in Asia, particularly in the South China Sea, according to the Food and Agriculture Organization of the United Nations.

Subsequently, fishing remains a politically sensitive and emotionally charged national security issue for all claimant nations. This ocean plundering presents the region witha looming food crisis. Any effort to balance the economic benefits with the security context within the South China Sea will require a coordinated, multi-level response from scientists, historically engaged in collaborative research and already addressing issues of sustained productivity and environmental security in the region.

The immense biodiversity that exists in the South China Sea cannot be ignored. The impact of continuous coastal development, escalating reclamation and increased maritime traffic is now regularly placed in front of an increasing number of marine scientists and policy strategists.

Marine biologists, who share a common language that cuts across political, economic and social differences, recognize that the structure of a coral reef is strewn with the detritus of perpetual conflict and represents one of nature’s cruelest battlefields, pitting species against species.

While traditional diplomatic and military tactics are not completely exhaustedin the latest round of diplomatic salvos between China and the U.S., perhaps the timing is excellent for the emergence of science as an optimal tool to bring together various claimants, including Brunei, China, Malaysia, the Philippines, Vietnam, and Taiwan in the highly nationalistic contested sea disputes.

For several decades, science has been adopted as a diplomatic tool for peace building by many countries, including the United States, and there are many organizations that strengthen global scientific relationships. Formed in1848, the American Association for the Advancement of Science is the largest scientific organization in the world and houses a Center for Science Diplomacy that effectively builds cooperation and collaboration. The Center’s journal, Science and Diplomacy, provides a forum for open policy discussion.

Also, representatives from the Soviet Union, the United States, and 10 other Eastern and Western bloc countries to use “scientific cooperation to build bridges across the Cold War divide, and to confront growing global problems on an international scale” established the International Institute for Applied Analysis (IIASA) in 1972. Since then, the institute has developed a mission with the help of 24 national member organizations to bring together a wide range of scientific skills to provide science-based insights into critical policy issues in international and national debates on global change.

Although nation states have different approaches toward science diplomacy, in general this type of diplomacy is defined by the American Association for the Advancement of Science (AAAS) as (i) science in diplomacy (science to inform foreign policy decisions); (ii) diplomacy for science (promotion of international scientific collaborations); and (iii) science for diplomacy (establishment of scientific cooperation to ease tensions between nations) (The Royal Society 2010). In that sense, it is widely accepted among environmental policy planners that science diplomacy positively contributes to the terms of conflict resolution.

As such, science diplomacy is not a completely new approach to international relations in general, and to South China Sea dispute management in particular. However, at this moment it seems that this type of diplomacy has raised two important questions in efforts to successfully settle the South China Sea dispute, namely: should we do it? And can it be successful?

What’s clear is that an insightful understanding of historical and scientific perspectives in the context of both Arctic and Antarctic environmental policies offers valuable lessons for possible adoption in the South China Sea. The Antarctic Treaty system involved seven claimant nations by 1943. Others signed a treaty in 1959 by 12 countries, including the seven claimants, and later to a total of 53 nations. Because of the leadership of scientists, they set Antarctica aside as a scientific preserve and recognized it as a multilateral, trans-boundary peace park in 1998.

The success of the treaty was predicated on three key elements: 1) a freeze on claims (no modifications or additions to existing claims are allowed. 2) a freeze on claim-supportive activities (nothing a claimant does during the time of the treaty can be later used in support of a claim), and 3) joint resource management.

To be clear, science diplomacy does help by directly and indirectly promoting confidence building among the parties involved in the South China Sea dispute. Science diplomacy, characterized by scientific cooperation activities, has contributed to solving many trans-boundary issues among nations sharing the same marine waters and in marine areas beyond national jurisdiction. Also, environmental monitoring successfully offers a context for countries to express their true perception of the region without being affected by other nationalistic, political, or economic factors like sovereignty or foreign policy direction.

As a result, it provides claimants and other parties involved in the South China Sea with an effective way to evaluate the political willingness of other partners and policy makers among the claimants, as well as a better understanding of the overall picture of what is happening in the South China Sea.

Consequently, claimants can be more confident in future cooperation on other issues. In other words, science diplomacy can establish a useful and convenient starting point for regional cooperation to deal with not only international environmental problems but also the achievement of a South China Sea settlement in particular and the region’s prosperity and peace in general. 7

The role of science diplomacy in solving illegal fishing in the South China Sea can be seen as an example. Fishermen act as sentinels in maritime territorial disputes where nations already employ naval forces to bolster sovereignty claims. In the contested waters, clashes between the claimant governments and foreign illegal fishermen continue. In that regard, the prospect of South China Sea claimants going to war over access to fishing waters is a real and immediate threat. 8

However, compared to other issues like the claims over sovereignty, science diplomacy’s approach to fishery collapse may be one of the most urgent but least sensitive problems, as it can be solved without provoking nationalism and other traditional concerns which are currently much higher than they need be in the region. Simply put, science diplomacy provides the parties involved in the South China Sea disputes with a rational and transparent way to avoid the worst while looking for the best.

The timing for a joint scientific declaration for urgent action on an environmental moratorium on dredging is much needed. Recent biological surveys in the region and even off Mainland China reveal that the losses of living coral reefs present a grim picture of decline, degradation, and destruction. More specifically, reef fish species in the contested region have declined precipitously to around 261 from 460 species.

After all, this environmental change is a global issue that holds no regard to sovereignty. The destruction and depletion of marine resources in the Spratly Islands harms all claimant nations. Perhaps, citizens from the region, who are directly impacted by the environmental attack on their sea and their fragile coral formations, can create something like a Coral Reef Action Network, similar to the Rainforest Action Network.

Protected marine reserves are an emerging tool for marine conservation and management. Sometimes called “ecological reserves” or “no take areas,” these marine protected areas are designated to enhance conservation of marine resources. 9

Vietnam, another claimant nation is wasting little time responding to the region’s environmental challenges and is fast-tracking its own model marine protected area program.

Cu Lao Cham is located about 20 kilometers off Vietnam’s central coast. The Cham Islands is a marine protected area (MPA) that was established by the Provincial People’s Committee of Quang Nam Province in December 2005. Professor Chu Manh Trinh, a 53-year-old Da Nang University biology professor, is largely responsible for mapping out the agreed upon objectives of protecting natural resources, and cultural and historical values of the Cham archipelago. In 2009, the area was designated a World Biosphere Reserve by UNESCO.10

“Yes, it took a sustained educational campaign to convince the population that conservation would provide long-term benefits to their way of life,” claims Trinh. 11

The senior marine science expert goes even further in reinforcing that the coral reefs in the Paracels and Spratlys need to be carefully protected for the whole East Sea region, that is not only for the life of fish but the life of people in the region and the world.

Vietnam has adopted marine protected areas to address present and future food security issues. These MPAs play an important role in the development of the marine economy; improve livelihoods of coastal fishing communities, and also serves to protect national sovereignty claims.

Scientific and policy cooperation required

This paper’s position is that it’s time to bring together the most qualified scientists who have experience studying the marine biodiversity and environmental sustainability in the troubled SCS waters to participate in a science policy forum.

While other types of diplomacy tend only to solve issues at the state level, like sovereignty or territorial integrity, science research cooperation in the South China Sea is aimed at a more “down-to-earth” approach, namely ensuring that fishermen can fish safely, marine products are unpolluted, and marine resources are protected correctly.

Their collaborative work may lead to the successful development of a South China Sea International Science Commission. As a result, their scientific efforts may then inspire the Association of Southeast Asian Nations (ASEAN) to cooperate in responding to regional resource management by issuing a call for a moratorium on any further damaging reclamation work.

Of course, China has many excellent coral reef scientists of its own, who recognize it is in the best interests of Beijing to protect coral reefs, maintain sustainable fisheries, and to eventually avail themselves of ecofriendly tourism once tensions decline.

Thus, it came as a surprise and somewhat of a mystery to scientists last year why China insisted that the portions of the coral reefs on which they have built consisted of dead corals.

Dr. Wu Shicun, president and senior research fellow of the National Institute for South China Sea Studies, claims that the Spratly Islands are territory of China, and that his country has adopted “green engineering” measures before, during, and after the completion of its entire reclamation in the South China Sea in order to protect the region’s ecology.

In an email, Wu claims that, “China carries out its construction projects on the inner reef flat where corals have basically died. China gathers loose soil for its land reclamation on the flat lagoon basin, which is not fit for coral growth. China has adopted “natural simulation,” applied a new type of “cutter-suction dredging and land reclamation method,” and has paid attention to the spread of sediment floating in its construction.”

There are many inconsistencies associated with China’s assertions about conservation.  The most revealing includes Google satellite images that identified hundreds of these clam “cutter boats” operating on an unidentifiable reef located between Thitu Island and Tieshi Jiao referred to now as “Checkmark Reef”,where large areas of sand and dead coral were piled into arc-like ridges. In most of the area, there was not a single living organism—no visible sea urchins, sea cucumbers, worms, corals or other organisms present.

Revisited satellite imagery of the Spratly Islands, which is freely available on Google Earth, confirms that for each of China’s newly constructed islands, the cutter boats had been operating on the reef prior to construction. Thus, it seems likely that when the coral reef scientists had been asked to assess each potential site, they truthfully reported that the coral was dead.

Professor McManus claims that “these areas of living coral reef would have been killed as the sand and silt from dredging and island construction leaked out to envelop them, just as is happening around the cutter boats. It can take a reef in these areas a thousand years to create a meter or so of gravel, sand, and silt, and so places from which they have been removed are essentially permanently altered.” 12

The common ground shared by all claimants is that an increasing number of South China Sea fisheries are hurtling towards collapse and this translates into a looming environmental security issue, and the outcome is all too likely to be conflict. The global scientific, conservation and legal communities must unite to halt the coral reef destruction, biodiversity loss, and fisheries depletion.

China with the world’s largest fleet of deep-sea fishing vessels is plundering the ocean to feed their enormous population. China’s distant-water fishing fleet has grown to nearly 2,600 vessels (the United States has fewer than one-tenth as many), with 400 boats coming into service between 2014 and 2016. The data is clear: these unsustainable fishing practices threaten food security for the region and the world. 13

Since there remain serious concerns about what will happen next to address further ecological damage, it may be thatscientific interest and environmental objectives in the region could strengthen diplomacy within both legal and scientific frameworks and lead to cooperation and to insuring environmental security for all in the region.

For ASEAN, the South China Sea links their global economies, remains an energy-shipping route and provides the essential sea lanes between Southeast Asian islands. With an escalation of fishing boat clashes, ASEAN leaders may be taking notes on how to reduce fishing incidents rather than to resorting to sending more fleets into the commons.

For many policy observers, it’s odd that while ASEAN countries quickly reached a consensus to issue statements to address the terror attacks in Istanbul;they failed to be united on the international tribunal’s ruling.

Since last year’s tribunal decision was the first international rulingon the South China Sea, it offered an opportunity for measured steps towards peace and security. Of course, ASEAN has demonstrated a weak institutional capacity to address complex political and environmental issues simultaneously, but the world, including the United Nations and Washington are watching carefully how international law and its application on various claims can lead to a peaceful and lawful path forward.

Lawrence E. Susskind, a Ford Professor of Urban and Environmental Planning at Massachusetts Institute of Technology (MIT), also raises the issue of China’s support for science diplomacy. He asserts that although China did not join a few of the science diplomacy initiatives in the past, Beijing has its own agencies to deal with environmental issues. 14

However, it’s telling that China is not among the states that share data with the Pacific Tsunami Warning Center in Hawaii (PTWC), which collaborates with countries all over the globe to warn at-risk populations of impending tsunami. Conversely, China established its own tsunami-warning center in the South China Sea, which it counts among its diplomatic rationales for its South China Sea activities. So China may already have its own science policy in the South China Sea, which could simultaneously prove both diplomatic and controlling. Consequently, Beijing may tend not to protest other, similar initiatives.

The Philippines and Vietnam have time and again chosen to look at the South China Sea as a sea that binds rather than divides claimant nations by trying to promote cooperation on common interests.

The Joint Oceanographic Marine Scientific Research Expedition organized between the Philippine Maritime and Ocean Affairs and the Vietnamese Institute of Oceanography provides evidence that science offers confidence-building opportunities through diffusion and exchange of information on marine resources. There have been three joint science operations conducted between 1996-2007 covering the southern part of the South China Sea. 15

Informal conversations are now taking place between the Philippines and Vietnam about reviving joint maritime research activities in 2018.

But the crucial point here is that the assemblage of the South China Sea is increasingly shaped in scientific terms. Nevertheless, it’s painfully clear that today’s ecological policy issues face formidable challenges to inform policy deliberations. As the disposition of regional maritime space becomes greater, adding seabed research, geology and mapping, deep-sea biology, underwater archaeology, cultural registers, environmental symposia, and marine protected areas, it revealsmore avenues for thecreation of common ground for all claimants. In this unfolding maritime drama, science offers all claimants the ability to monitor and to intervene.

Although science diplomacy is not a completely new approach to solving conflicts in general and in South China dispute management in particular, the urgent adoption of such a peace-building mechanism by all claimants is desperately needed.

Perhaps a few of these suggested actions directed to all claimant nations marine scientists and policy shapers may bolster peace building in the region:

  • Create regional Marine Science Council to address environmental degradation issues;
  • Expand science cooperation among ASEAN marine scientists through more informal workshops;
  • Provide an ASEAN regional cooperation science framework that mobilizes countries to address trans-boundary issues;
  • Place aside all territorial claims;
  • Establish complete freedom of scientific investigation in the contested atolls and reclaimed islands;
  • Foster dialogue for a proposed marine peace park;
  • Propose a science-led ASEAN committee to study the Antarctica Treaty and the United Nations Environmental Program initiative under the East Asian Seas Action Plan;

ASEAN does recognize the importance of fisheries to food security and to the economy. Because China has become the world’s top producer and exporter of fishery products, there’s more responsibility for them to operate in alignment with shared sustainable practices among their neighbors.

If there are to be any fish left in the contested sea, an ASEAN ecological agreement––led by Brunei, Malaysia, the Philippines, and Vietnam––can steer others to unite around a proposed international peace park or at the very least, a cooperative marine protected area situated prominently in the Spratlys.

It’s the first step in supporting trust and confidence among neighbors and in implementing a common conservation policy.

After all, coral reefs are the cathedrals of the South China Sea. It’s time for more citizens and policy shapers to join the chorus and rally around marine scientists so that they can “net” regional cooperation and ocean stewardship to benefit all before it’s too late.

Endnotes

1.Berkman, Paul, Power point presentation. http://www.envirosecurity.org/arctic/Presentations/EAC_Berkman. 
pdf

2.https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN- 20160712-Press-Release-No-11-English.pdf

3.Nordquist, Myron H., Ronan Long, Tomas H. Heidar, and John Norton Moore, Ed.

                2007    Law, Science & Ocean Management, Leiden/Boston: Martinus Nijhoff Publishers. Pp 271-293.

4.http://www.csmonitor.com/World/Asia-Pacific/2016/0720/In-South-China-Sea-case-ruling-on-environment-hailed-as-precedent

5.http://www.tandfonline.com/doi/abs/10.1080/09512740110087311

http://www.economist.com/news/leaders/21650122-disputed-sea- growing-security-nightmareand-increasingly-ecological-one-sea- 
troubles

Hong, Nong. “Marine Environmental Security as a Driving Force of Cooperation in the South China Sea.” Paper presented at Taiwan and the 2016 Elections: The Road Ahead- The Twenty-Fourth Annual Conference on Taiwan Affairs, Walker Institute of International and Area Studies University of South Carolina, September 24, 2016.

Bergenas, Johan, and Ariella Knight. Secure Oceans: Collaborative Policy and Technology Recommendations for the World’s Largest Crime Scene. Washington, DC: The Stimson Center, 2016 https://www.stimson.org/sites/default/files/file-attachments/Secure-Oceans.pdf.

http://foreignpolicy.com/2016/04/07/fishing-disputes-could-spark-a-south-china-sea-crisis/

http://marineprotectedareas.noaa.gov/pdf/helpful-resources/factsheets/reserves-factsheet2014.pdf

Interview conducted with Professor Chu Manh Trinh in Cu Lao Cham June 2, 2016.

Panelist Dr. John McManus at the East West Center in Washington DC on May 3, 2016.

https://www.nytimes.com/2017/04/30/world/asia/chinas-appetite-pushes-fisheries-to-the-brink.html

https://lawrencesusskind.mit.edu/blog/we-need-science-diplomacy

http://www.international-relations.com/CM7-1WB/SouthChinaSea.htm

Southeast Asia

CPTPP Serving Vietnam as Opportunities and Challenges

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CPTPP is originated from the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP) (it is also so call P4) signed in 2005 by Singapore, Chile, New Zealand and Brunei. Since September 2008, the United States, Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan have jointly negotiated at the aim of setting up the Trans-Pacific Partnership Agreement (TPP). The TPP negotiation process ended in 2015 under the agreement of the 12 member states; however, Trump administration announced its withdrawal from the agreement in January 2017. After a number of adjustments, including postponing the implementation of the 20 TPP provisions with the expectation that the United States would return to the Agreement, the 11 remaining TPP members unanimously continued to promote this process by establishing Comprehensive and Progressive Agreement for Trans-Pacific Partnership -CPTPP). After completely reviewing the content and approved by the member parliaments, estimated by March 2018, CPTPP will officially become a large economic zone in Asia-Pacific with a population of over 460 million, contributing 14% of world GDP and 1/6 of global trade.

The agreement is expected to establish a new common framework for regional free trade arrangement for Asia-Pacific countries, to support trade, to attract foreign investment, and to promote institution reformation in those countries. CPTPP has the basic advantages as the members of the negotiation are the countries that have been strongly committed to the trade liberalization. Given the disclosed commitments, CPTPP is considered as a model treaty for the 21st century because of its overwhelming scale and influence in comparison with other trade agreements regionally and globally.

Given the competitiveness, the economic size and the inadequacies of the current institutional system, it is surprised that Vietnam has strongly participated in CPTPP. Compared with other members, it has the least competitive economy and the loosest legal system. Despite its 20-year-old experience in the process of international economic integration, Vietnam lacks the practices in a highly competitive and demanding integration environment since it is only familiar with first-generation FTAs, where the open commitments and reform pressures are readily accepted in a transitional and distinctive economy.

Meanwhile, CPTPP’s regulations set out in the negotiations are evaluated as far beyond the ability of the current economy of Vietnam. What is the motive of Vietnam to join CPTPP?

Given the economic size of the members and the terms of trade liberalization, joining CPTPP is obviously advantage to empower Vietnamese economy in the Southeast Asia in terms of economic growth, trade as well as FDI attraction. In the economic perspective, Vietnam is a country to achieve the most benefit from the CPTPP.

Firstly, the opportunities to increase the export of goods that are the advantages of Vietnam (i.e. textiles, footwear, electronic products and equipments) are relatively high by combining the tariff reduction and the experiences in these markets.

Secondly, the attraction of foreign investment into Vietnam is greatly promising. The access to large markets such as Japan and Canada together with the clearer commitments to improve the investment environment and protect intellectual property rights will become a significant attraction for international investors. Moreover, Vietnam, under the framework of CPTPP, is able to attract large inflows from the member countries through the membership of regional economic organizations such as AFTA and ACFTA.

Thirdly, the chances of faster economic growth are strongly wide. The expansion of the major export industries such as textiles, footwear, fishery, etc., will help stimulate the income growth from domestic production, thereby support the increase of the overall demand.

Fourthly, Vietnam will have an opportunity to form a more comprehensive economic structure. CPTPP will urge the domestic investors as well as the regional ones to invest in the supporting industries to create local material resources given the extremely high standards on the place of origin.

Fifthly, it is a chance to complete the institutions that govern the market economy. CPTPP sets out a clear legal framework for not accepting concessions to any business. Because of its high and foreseen requirements on policy transparency, compared to many other agreements, CPTPP could become one of the important premises for Vietnam to carry out institutional and market reforms thoroughly and comprehensively.

However, among the countries participating in CPTPP, Vietnam achieves the lowest level of development and faces big challenges.

Firstly, the production industry structure is not consistent with the provisions of CPTPP. The economy is not well-prepared and the supporting industry is weak. With regard to the requirements of origin, the sectors which are the advantages of Vietnam’s export sector are not able to exploit the concessions from the CPTPP because their inputs do not contain domestic factors.

The second challenge is from the stagnation of the enterprise system. The adaptability to the market economy of Vietnamese enterprises is weak. The lack of an effective investment strategy for the supporting production industry and “traditional outsourcing” works have made the overall benefit of the economy declined.

Thirdly, the limitation of state enterprises’ role in the national economy becomes a content of CPTPP. The external pressure is positive only if it meets the community benefits. If the selection of CPTPP is purely commercial-economic aspect, it will not cause the objection against the reformation within the SOE system.

The fourth challenge is from the increasing competition of goods from the members of CPTPP. At present, Vietnamese enterprises are well-protected by the high tariffs. The trend and demand for zero tariff reduction will be applied to CPTPP members in the coming time. In the analysis of the export structure of CPTPP countries, it can be seen that the manufacturing industries of Vietnam facing difficulty are automobile industry and agriculture, especially the husbandry which remains mall and fragmented, and unable to compete against the large, experienced and traditional competitors.

The fifth challenge from the requirements of intellectual property protection in CPTPP is much more critical. The continuing possibility of “appearing to court” by infringing intellectual property law is present in countries previously without adequate preparation of intellectual property law. Furthermore, the requirements for increasing the level of protection of intellectual property rights over inventions, copyrights, and trade marks can lead to the escalation of drug prices and create a health burden to the emerging economy like Vietnam. More than that, the measures to protect intellectual property related to biology also affect agriculture which accounts for more than 60% of the population of Vietnam. The prices of agricultural products such as veterinary drugs, fertilizer, etc. will thereby grow significantly, which increases costs and reduces the efficiency of agricultural production in general.

In regard of the need for economic reform and the promotion of economic growth, the process of further integration into the world economy is not allowed to slow down. The question is what Vietnam needs to do to facilitate the upcoming integration roadmap.

Firstly, administrative reform and severely corruption offence are the most important things. It is shown that the WTO supports free market economy so that it could operate and develop only in a healthy competitive environment. Since the joining in the WTO, Vietnamese economy has not really created a healthy competitive environment. Meanwhile, corruption has created more conditions for interest groups to ramp up and distort even the good national policies. If the administrative procedures remain cumbersome and troublesome, corruption will still restrain the required transparency in corporate management. In accordance, CPTPP is not an opportunity, but a challenge to the whole system.

Secondly, the reformation of the legal environment and policies to ensure a single “standard” prescribed by CPTPP is a difficult for Vietnam. But in the long run, this reform of the institutional environment towards the international “rules” is a necessary condition for growth in the context of globalization. In this perspective, although adjusting the policy system involving the regulation of CPTPP is a difficult and costly process, Vietnam’s commitments can be seen as an external “push” to provide additional momentum for domestic efforts towards a transparent institutional environment and economic growth.

Thirdly, it is needed to organize the perfect communication to all classes of people, especially the business and the production circles in the countryside. The participation in CPTPP without fast updating to the farmers might cause the loss of market, the high pressure of competition, and even the legal disadvantage in disputes and sues.

Fourthly, the reform of SOE and the development of SMEs is the key solution. Given the population and economic growth, the number of enterprises in Vietnam is relatively low. This is a major constraint in economic development, employment, creation of competitive markets and the mobilization of resources from society.

In the context of limited resources and high demands of work, the development of these types of enterprise is appropriate not only to the internal capacity but also the preferences of CPTPP. Hence, it is essential to reform SOEs in a substantial way and enable them to have a transparent business environment.

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Southeast Asia

Time to Divest from Myanmar? Not Quite

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In an op-ed that ran in the Guardian last week, Hannah Lownsbrough of the NGO SumOfUs put forward a highly provocative take on the Rohingya crisis gripping Myanmar. Running just a few days before Christmas, Lownsbrough asked whether Christmas shoppers buying gifts from brands like Bulgari wanted to “consider their role in propping up the genocide of Rohingya people.” As she tells it, outside companies that source materials from Myanmar (and, by extension, their customers) are bankrolling the violence against the one of the world’s most persecuted minorities.

The article puts forward an appealingly simple narrative of corporate complicity in Myanmar’s conflict. Unfortunately, that simplicity ignores far more important factors in the Rohingya’s ongoing suffering and advocates a course of action (divestment) whose efficacy is a matter of contentious debate. Why the fixation on what the Guardian op-ed refers to as “genocide gems” just one year after the Obama administration lifted remaining US sanctions on the industry?

One possible explanation: the people advocating divestment may not be exactly who, or what, they seem. In her op-ed, Lownbrough states her organization is campaigning alongside the International Campaign for the Rohingya (ICR) to “cut off this income stream to the Burmese military.” The ICR indeed seems laser focused on pressing multinational companies do “no business with genocide” but does not otherwise seem active in supporting relief efforts.

In a peculiar coincidence, the organization seems to be led by American lobbyist Joseph Grieboski and staffed entirely by his associates. Grieboski’s wife is named as ICR co-chair, while the campaign’s treasurer is an employee at Grieboski Global Strategies and the chief strategy officer at Grieboski’s firm Grieboski Jolly Caraway is listed as the group’s “secretary.” Joseph Grieboski is also founder of the obscure “Institute on Religion and Public Policy” and known for his connections to the controversial Church of Scientology (including alleged lobbying work on its behalf).

Does this mean there are ulterior motives behind the SumOfUs/ICR campaign against foreign companies who do business in Myanmar? The ICR’s website makes no mention of funding sources (other than pointing visitors to a donate button). However, one of Grieboski’s major clients is the 57-country Organization for Islamic Cooperation (OIC). The OIC, which technically represents the entire Islamic world but in practice is closely aligned with Saudi Arabia, has offered more rhetorical support for the Rohingya than concrete assistance.

If there were a deeper connection between the OIC and the ICR, it would be a bizarrely roundabout way of responding to the crisis. Fully 860,000 Rohingya men, women, and children have sought refuge in Cox’s Bazar in Bangladesh. The UN and other aid organizations need hundreds of millions of dollars to assist up to 1.2 million people impacted by the crisis.

Funding shortfalls mean those organizations do not have the resources on hand to handle the sheer scope of the exodus. The UN’s Office for the Coordination of Humanitarian Affairs (OCHA) has met only 35% of its $434 million US fundraising target. The $15 million in aid Saudi Arabia’s King Salman pledged for the Rohingya in September does not stake up to the generosity of previous monarchs: during a previous crisis 2012, King Abdullah donated $50 million. Before that, King Faisal allowed many Rohingya families to resettle in Saudi Arabia. Salman, for reasons that remain unclear, later moved to deport many of them.

There are reasons for Riyadh to dissimulate its criticism of Myanmar, many of them economic. Saudi oil uses a new, 771-kilometer pipeline that starts in Rakhine State and traverses Myanmar to reach customers in China’s Yunnan Province. Myanmar’s central location gives it a key role in Saudi regional economic aspirations. Curiously, the ICR has not called on companies like Saudi Aramco to abandon their interests in the country.

Saudi Arabia isn’t the only Muslim country with a problematic stance. Bangladesh has taken in the vast majority of the Rohingya to flee Rakhine State over the past few months, but is making their stay a precarious one. Bangladeshi prime minister Sheikh Hasina is moving ahead with a proposal to resettle 100,000 Rohingya refugees on a remote, flood-prone island liable to being completely submerged by the tides. Dhaka signed a deal with Myanmar to repatriate displaced Rohingya to Myanmar, even as Rohingya villages still burned.

The campaign to force corporate interests out of Myanmar raises a broader question: what, if anything, would divestment actually do for the Rohingya? Campaigners like SumOfUs point to apartheid-era South Africa to illustrate the power of ostracization. However, comparing South Africa in the 1980s to Myanmar today is problematic at best. This is not least because Suu Kyi, the one leader who could translate a global divestment campaign into effective grassroots action, is herself guilty of ignoring the crimes perpetrated against the Rohingya by her country’s military.

One of the most important factors driving the Rohingya crisis is the fear, hatred, and suspicion with which even pro-democracy members of Myanmar’s Buddhist majority view their Muslim neighbors. While Myanmar’s military is obviously implicated in the deadly attacks on Rohingya communities, vigilante groups and the Buddhist nationalist movement have actively stoked and committed anti-Muslim violence for years.

Having grown accustomed to decades of seclusion, it is difficult to imagine Myanmar’s generals or sectarian extremists bowing to pressure from abroad. Economic isolation may instead produce the same retrenchment Myanmar’s junta fostered for decades. Western officials recognize that blanket sanctions and economic disengagement are unlikely to help the Rohingya, but even the targeted measures now under consideration by American policymakers could undermine Myanmar’s economy and end up strengthening domestic support for the military’s anti-Rohingya campaign.

As Hannah Lownsbrough herself wrote in the Guardian, untangling the conflict between Myanmar’s government and its Rohingya will “not be straightforward.” Unfortunately, changing the government’s behavior is also far more complicated than her piece lets on. If the international community (and especially Muslim-majority countries) want to help the Rohingya, they should look directly to the refugee camps where the need is greatest.

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Southeast Asia

Bringing electricity to all corners of Southeast Asia

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Providing electricity access for all remains a critical topic in many parts of the developing world. The challenge is especially acute in Southeast Asia, one of the most dynamic regions of the global energy system, but whose rich and varied environment defies one-size-fits-all energy solutions.

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