Posts Tagged ‘Chinese retaliation’

Huawei Warnings May Bring Chinese Retaliation, Czech Leader Says

January 11, 2019
Pro-Chinese Czech President says report puts economy at risk
Western governments debate whether company is security threat
Photographer: Greg Baker/AFP via Getty Images

China is preparing a reprisal against the Czech Republic after authorities there issued warnings about Huawei Technologies Co. and risks it poses to the country’s security, President Milos Zeman said.

Czech President Milos Zeman arrives for a summit in Brussels on 25 May, 2017
President Milos Zeman

Zeman, who has named Chinese government-linked officials as advisers and tried to promote his country as a potential investment gateway to Europe for Beijing, was responding to a report from the National Cyber and Information Security Agency issued last month. The report, which advised against using Huawei and ZTE Corp. software and hardware, would undermine the Czech economy, he said.

Signage is displayed atop a ZTE Corp. building in Beijing.

Photographer: Gilles Sabrie/Bloomberg

“Some members” of the Czech government have information that China will take “retaliatory steps,” Zeman said late Thursday in an interview on Barrandov TV. He cited investments by Volkswagen AG’s Czech unit, Skoda Auto AS, in China and an agreement with PPF AS with Huawei about building a 5G wireless network as potential targets for reprisals.

Read more: Germany Prioritizes 5G Network Security as It Mulls Huawei Risks

Western governments are worried that Huawei’s systems could be used by Chinese intelligence to gather data. On Friday, Poland arrested a Huawei employee and a former Polish security agent and accused them of spying for China.

Germany is also weighing whether to restrict the role of Huawei in building the country’s future telecom infrastructure. Australia and New Zealand have banned Huawei equipment from participating in planned 5G networks, and the head of British MI6 said last month the government needs to decide whether to ban the company.

Zeman, whose position is largely ceremonial, said the Czech report contained no proof that would justify the warnings and that it had resulted in a “serious” threat for economic interests in China.

Image result for Andrej Babis, pictures

Czech Prime Minister Andrej Babis Meets Angela Merkel In Berlin

At the same time, Prime Minister Andrej Babis said his government has no information that China is preparing sanctions against Prague because of the report, the CTK news service reported. The premier noted that the cyber security office should explain how it arrived at its conclusions.

https://www.bloomberg.com/news/articles/2019-01-11/huawei-warnings-may-bring-chinese-retaliation-czech-leader-says

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Some US business groups criticise latest Trump tariffs on China — European firms swinging toward U.S. side…

September 19, 2018

Trade associations say there are better ways to prod China to open markets
Treasury Secretary Steve Mnuchin last week invited Chinese officials to Washington for more negotiations on President Trump’s tariffs.
Treasury Secretary Steve Mnuchin last week invited Chinese officials to Washington for more negotiations on President Trump’s tariffs.PHOTO: EVAN VUCCI/ASSOCIATED PRESS

Critics calls President Turmp’s latest tariffs ‘a tax on American families’ © Getty

Andrew Edgecliffe-Johnson in New York 


Donald Trump’s newest round of tariffs on Chinese imports put off the worst of the impact until after US retailers’ critical Christmas season and spared a few businesses, including smartwatches and high chairs, but corporate America still decried the move as a costly and counterproductive answer to its concerns about China.

Washington’s largest trade associations have spent months ramping up their campaigns against the escalating trade war, identifying state by heartland state how many jobs and export dollars they put at risk. In public hearings, small business owners making everything from fishing nets to wooden crates urged Washington to reconsider, but Mr Trump tuned out the chorus.

“As thousands of businesses have testified and explained in comments to the administration, tariffs are a tax on American families,” National Retail Federation president Matthew Shay lamented after the new 10 per cent tariff on $200bn of Chinese imports was announced. It was “disappointing” that the administration had ignored the voices of those affected, he said.

Gary Shapiro, president of the Consumer Technology Association, said his industry appreciated the exemption of some connected devices but was still worried about the impact on printed circuit assemblies, routers and networking equipment.

Now is the time for talk — not just tariffs

National Association of Manufacturers


Tariffs were an ineffective — and possibly illegal — tool, he argued. “Congress has not given the president or the [US trade representative] a blank check to pursue a trade war.”

The Trade Act of 1974 says that the president must consult with the private sector and “shall take the advice received” into account in setting trade policy, John Murphy, senior vice-president for international policy at the US Chamber of Commerce, echoed on Twitter.

Several US business group support the idea of pushing China to open its markets to US imports, and penalising it for intellectual property infringements, but disagree with Mr Trump’ tactics.

“The administration has correctly identified the real problem of China’s discriminatory trade practices. But unilaterally imposing tariffs is the wrong way to achieve real reforms,” the Business Roundtable said, urging Washington to work with its allies to push for long-term reforms in China.

Craig Allen of the US-China Business Council, which represents about 200 US companies that do business with China, said the administration’s focus on market access, IP rights and technology transfer was correct but using tariffs was “counterproductive”.

Tom Donohue, the Chamber’s president, agreed that the US had “serious issues to resolve with China on market access, unfair subsidies, technology theft, and cyber security” but expressed dismay that the administration did not heed US companies’ warnings about rising costs and lost jobs.

Before announcing the latest measures, Mr Trump played down the extent to which tariffs were increasing prices, tweeting that “cost increases have thus far been almost unnoticeable”. Companies from Coca-Cola to Whirlpool have announced price increases, however, expressing confidence in a strong economy allowing them to pass the burden to customers.

“We cannot afford further escalation, especially with the holiday shopping season right around the corner,” the NRF’s Mr Shay said. The administration’s decision “has not gone the way we hoped it would,” Macy’s chief executive Jeff Gennette told a CNBC conference on Tuesday: “We’re going to see how the customer votes on this.”

Some business groups said the biggest disruption came from the uncertainty produced by the trade dispute. “With every day that passes without progress on a rules-based, bilateral trade agreement with China, the potential grows for manufacturers and manufacturing workers to get hurt,” the National Association of Manufacturers said. “Now is the time for talk — not just tariffs”.

The escalation of the trade tensions comes at the start of the US reporting season, when companies are expected to spell out the impact on their earnings and outlook. FedEx, the Memphis-based courier that is seen as a bellwether of global business confidence, said on Monday it had started to see economic activity “moderate” in China as a result of the trade tensions.

Hours before Mr Trump announced the latest tariffs, Fred Smith, FedEx chairman and chief executive, told analysts that the US-China trade dispute was “worrisome to everyone . . . because history is very, very clear that countries that pursue the most open markets are the ones that prosper the most”.

Rajesh Subramaniam, FedEx’s chief marketing officer, said China-US business represented only about 2 per cent of the company’s revenues, of which only about a quarter could be affected by the promised new US tariffs. It had not yet seen significant shifts in customers’ supply chains, he added, but expected them to diversify their sources of supply if the trade tensions continued.

Several companies remain unsure of the administration’s next steps. Thomas Joyce, chief executive of Danaher, told analysts last week that the industrial group had no privileged insight into the administration’s thinking despite being headquartered in Washington. “The narrative out of the White House . . . and the US trade representatives changes as often in our minds as it does in yours,” he said.

Additional reporting by James Politi in Washington

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China Retaliates With Tariffs on $60 Billion of U.S. Goods

September 18, 2018

New tariffs will take effect on Sept. 24 and will apply to 5,207 U.S. products, including farm goods, machinery and chemicals

Treasury Secretary Steve Mnuchin last week invited Chinese officials to Washington for more negotiations on President Trump’s tariffs.
Treasury Secretary Steve Mnuchin last week invited Chinese officials to Washington for more negotiations on President Trump’s tariffs.PHOTO: EVAN VUCCI/ASSOCIATED PRESS
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Breaking News:

*China Announces New Tariffs on $60 Billion of U.S. Goods, Following Up on Retaliation Pledges

*New Chinese Tariffs Will Take Effect on Sept. 24 and Range From 5% to 10%

*China Pledges to Increase Tariff Rates if U.S. Goes Ahead With Higher Rates in January

*New Chinese Tariffs Applied to 5,207 American Products, Including Farm Products, Machinery and Chemicals

Update to come…

BEIJING—New U.S. tariffs on China’s exports escalated the countries’ trade fight, with Chinese officials scrambling on how to retaliate and whether to accept Washington’s offer for more negotiations.

After President Trump announced the new tariffs on $200 billion in Chinese goods, the Chinese leadership’s economic troubleshooter, Vice Premier Liu He, huddled Tuesday with his top lieutenants to devise a response, according to officials briefed on the matter. On the agenda was whether Mr. Liu or lower-level officials should go to Washington for a fresh round of trade talks.

China’s Commerce Ministry, in a brief statement midday, said that the U.S. tariffs create “new uncertainty” for negotiations and vowed that China would retaliate. Unmentioned was whether China would go ahead with an earlier threat to place tariffs on $60 billionworth of U.S. products.

Beijing’s more muted response reflects the dilemma the Chinese leadership faces as the world’s two largest economies pitch closer to a full-bore trade war. President Xi Jinping has banked his popularity and strongman reputation on turning China into a global power and can’t afford to back off, instructing officials to stand firm and punch back in negotiations.

Meanwhile, concerned that a spiraling trade fight could harm an already slowing economy and derail China’s onward rise, Mr. Xi has also ordered his officials to keep engaging with Washington and American businesses, according to Chinese officials and government advisers.

President Trump upped the stakes for Beijing Monday, first by saying that the new 10% tariffs on $200 billion in Chinese goods would take effect in only one week’s time. Then he reiterated a threat to hit another $267 billion of Chinese imports with tariffs if Beijing retaliates. Combined with goods already hit with punitive levies, the total would exceed the $505 billion in Chinese goods the U.S. imported last year.

Because China imports far fewer goods from the U.S.—just under $130 billion last year—Beijing is running out of products to penalize.

“The U.S. is in the driver’s seat,” a Chinese official said.

President Trump first threatened the $200 billion tariff round in July. While companies have had more than two months to digest the possibility, the escalation still jangled nerves. Business executives, including e-commerce titan Jack Ma, took the new tariffs as a signal that trade tensions aren’t going to dissipate soon.

The new U.S. tariffs will affect a broad range of products used by business and consumers, from auto parts to luggage. That’s a particular problem, business representatives warned, for companies with global supply chains reliant on China.

China has pledged to retaliate against U.S. tariffs in “equal scale and equal strength.” In addition to tariffs, here are three ways Beijing could hit back at Washington. Photo composite: Adele Morgan/The Wall Street Journal

“Strategically, I think they should have a plan B,” said Carlo Diego D’Andrea, chairman of the manufacturing-heavy Shanghai chapter of the European Chamber of Commerce in China. While in past episodes of U.S.-China trade fights, European companies could expect to win orders at the expense of American firms, this time, they expect to be caught in the crossfire, according to a survey of member companies by the European Chamber.

In recent days with the new U.S. tariffs looming, Chinese officials and government advisers have questioned whether it’s time to negotiate with the Trump administration.

Vice Premier Liu gathered with other senior economic officials on Tuesday to consider Treasury Secretary Steven Mnuchin’s invitation last week for more talks in Washington, the officials briefed on the matter said.

Accepting the U.S. invitation would go against Beijing’s public stance that it won’t negotiate under the gun, the officials said, while declining could risk aggravating the tensions.

An option being considered, the officials said, involves sending a lower-level trade official—Vice Minister of Commerce Wang Shouwen—for talks this month while sparing Mr. Liu. Under the original plan, lower-level talks were to take place this week ahead of Mr. Liu’s trip to Washington late next week. As of late Tuesday, no final decisions were made on the issue, according to the officials.

Chinese Vice Premier Liu He is working with top lieutenants to devise a response to President Trump’s latest tariffs.
Chinese Vice Premier Liu He is working with top lieutenants to devise a response to President Trump’s latest tariffs.PHOTO: JASON LEE/REUTERS
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An ally of Mr. Liu’s vented Tuesday about the pressure from Washington. “Negotiations can’t be done with this kind of tactic,” Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said at a World Economic Forum meeting in the coastal city of Tianjin.

“It may work with some small country,” he said. “It doesn’t work with China.” The new U.S. tariffs, he said, have “poisoned the atmosphere for negotiations.”

Voices have been rising in Chinese policy circles in recent weeks saying that Beijing should wait to negotiate until after the November midterm elections. Many Chinese officials think President Trump isn’t ready to cut a deal, is bashing China now to appeal to his political base and may be more willing to negotiate after the elections.

The $60 billion worth of U.S. goods China said last month it would hit with retaliatory tariffs of 5% to 25% include farm products, machinery and chemicals. The levies, if implemented, would come on top of the tariffs on $50 billion in American goods that are already in force, bringing the total amount of U.S. products subject to Chinese tariffs to $110 billion—or 85% of U.S. goods entering China last year, according to U.S. statistics.

Some Chinese officials advising the leadership are proposing to restrict China’s sales of materials, equipment and other parts key to U.S. manufacturers’ supply chains. If adopted, such a measure could hurt companies like Apple Inc., which assembles most of its gadgets in China, but also put millions of Chinese jobs in jeopardy.

Many American companies operating in China are growing increasingly worried about Chinese retaliation. In addition to tariffs, more than half of member firms surveyed by the American Chamber of Commerce in China earlier this month said they have experienced a rise in nontariff barriers in recent months, including increased inspections and slower customs clearance.

“Contrary to views in Washington, China can—and will—dig its heels in and we are not optimistic about the prospect for a resolution in the short term,” William Zarit, a business consultant and chairman of the chamber, said Tuesday.

https://www.wsj.com/articles/chinese-officials-scramble-to-respond-to-trumps-new-tariffs-1537275015

Trump Administration Tries to Ease Republican Worries About Trade Fights

July 27, 2018

Truce with Europe is touted, but lawmakers push for accelerated efforts on other fronts

Image may contain: 1 person, crowd

A crowd listens to President Donald Trump as he speaks at Granite City Work, Granite City Ill, Thursday, July 26, 2018. Photo by Cristina M. Fletes, St. Louis Post-Dispatch

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WASHINGTON—The Trump administration on Thursday touted its truce with Europe to nervous lawmakers as evidence that its trade policies are starting to show results, but Republicans pushed the administration to accelerate efforts to find similar solutions on other trade fronts.

President Trump flew to the agricultural and industrial Midwest Thursday to highlight what he said are the emerging successes from his hardball trade tactics, such as reopened steel mills protected by tariffs and European pledges to buy crops recently shut out of China, part of an accord reached on Wednesday with European Commission President Jean-Claude Juncker.

President Trump spoke about trade at U.S. Steel's Granite City Works in Granite City, Ill., on Thursday.
President Trump spoke about trade at U.S. Steel’s Granite City Works in Granite City, Ill., on Thursday. PHOTO: SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Mr. Trump’s aides said his threats were also starting to show results in the form of newly active negotiations from North America to Asia to Africa. They said that has raised the prospect of new trade gains amid the pain already felt in the U.S. from higher import prices and from exports lost due to retaliation by trading partners.

“This is a real vindication that the president’s trade policy is starting to work,” Commerce Secretary Wilbur Ross told reporters as he traveled with Mr. Trump. Mr. Trump, he said, hopes to push for a global reduction in trade barriers, “but to get there, we had to take a route of trying to make it more painful for the other parties to continue bad practices.”

Back in Washington, Trump advisers got an earful from angry lawmakers on Capitol Hill, who blasted the administration’s approach, criticized the Europe pact as weak, demanded faster relief for ailing constituents and pledged to ramp up efforts to tie Mr. Trump’s hands in shaping trade policy going forward.

“There was a lot of pushback on the strategy,” said Rep. Andy Barr (R., Ky.), following a closed meeting between House Republicans and two administration officials—Lawrence Kudlow, head of the National Economic Council, and Peter Navarro, a White House trade adviser. Mr. Barr is one of 24 GOP representatives whose re-election this November is rated a toss-up by the Cook Political Report, and he complained that bourbon makers in his district were being hurt by European retaliation for U.S. steel tariffs. “We want to know when we’re going to get a solution.”

With Republicans growing increasingly worried about losing control of the House this fall, fears aggravated by polls showing the unpopularity of Trump trade policies, Rep. Bill Huizenga (R., Mich.) read aloud to the White House advisers a text from a tool-and-die maker in his district who was facing higher raw-material costs because of the aluminum and steel tariffs. “I was making sure that they heard the message that this is not just uncomfortable—it’s painful and it’s damaging,” Mr. Huizenga later told reporters. He said that because his district also includes farmers, who are getting squeezed by the retaliatory tariffs, “we’re getting it coming and going in western Michigan.”

Many of the lawmakers said the GOP-led Congress should keep alive the prospect of legislation to curb Mr. Trump’s ability to impose tariffs on the table, even after the apparent thaw in relations between the U.S. and EU. Senate Finance Committee Chairman Orrin Hatch (R., Utah) indicated that he wasn’t ready to drop his threat to advance such a measure, which Republicans on his panel have been discussing for weeks, saying, “We’re still going with that.”

In the Europe statement, Mr. Trump and Mr. Juncker agreed to launch trade talks that would seek to eliminate tariffs, non-tariff barriers and subsidies on industrial goods, and would suspend Mr. Trump’s threat of auto tariffs as long as those negotiators were continuing. The two sides also agreed to try to reach an agreement to lift U.S. tariffs on European steel and aluminum and European tariffs imposed in retaliation, though they didn’t give a timetable for doing so.

As part of their campaign to reassure anxious lawmakers, Trump officials said they were moving to follow the European announcement with more trade deals. U.S. Trade Representative Robert Lighthizer told a Senate hearing Thursday morning that “we are close to beginning negotiations” with a number of countries, citing the Philippines and sub-Saharan Africa as specific prospects.

He said he was also optimistic about striking a deal soon to modernize North American Free Trade Agreement with Mexico and Canada, and followed his Senate appearance with meetings with his visiting Mexican counterpart to accelerate the process. “I think we’re close to the point where we’re going to have that finished,” Mr. Lighthizer said.

While the Trump team now seems in a rush to show progress in improving relations with a roster of trading partners, officials indicated they didn’t anticipate any quick fixes in their expanding battle with China. In fact, they suggested their motivation for striking deals with Europe and others was an attempt to line up allies in their standoff with Beijing.

“China is going to be a longer-term problem,” Mr. Lighthizer told lawmakers. The Trump administration has already imposed tariffs on $34 billion in Chinese imports, prompting equivalent retaliation from China, and the U.S. has proposed duties on more than $200 billion in additional imports.

Asked what he considered the most important part of the Europe agreement, Mr. Kudlow told Fox News that “No. 1: the United States and the EU will be allied in the fight against China…. President Juncker made it very clear yesterday that he intended to help us.”

A worker walked past steel coils at the U.S. Steel Corp. Granite City Works facility on Thursday.
A worker walked past steel coils at the U.S. Steel Corp. Granite City Works facility on Thursday. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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Mr. Trump’s trip to the Midwest had him visiting a region that was crucial to his 2016 election victory, but where polls show his popularity slumping ahead of this year’s election. In Granite City, Ill., he held a rally at a steel factory that recently restarted long-idled blast furnaces, a move the company has attributed to the higher prices made possible by the metals tariffs.

A series of workers and managers came up and personally thanked Mr. Trump for helping get their jobs back.

In his visit to the Midwest, Mr. Trump also suggested a link between his agreement with Europe and his desire to keep a GOP majority in Congress this fall, saying his actions were designed to help farmers, who might otherwise vote for Democrats in the fall. But Mr. Trump, in that speech, and one earlier in the day in Iowa, appeared to exaggerate the extent that the Europe deal would help farmers, as sharply different explanations from Washington and Brussels emerged over just the breadth of agricultural talks.

“We just opened up Europe for you farmers,” Mr. Trump said in Iowa. And Mr. Lighthizer told Congress that “our view is that we are negotiating about agriculture, period. That’s part of the process.”

But the joint statement between the sides makes no mention of covering agriculture beyond a pledge to buy more soybeans, nor any promises to discuss addressing European agriculture tariffs and subsidies—a major source of trade tensions with the U.S. European officials said they had successfully rebuffed such a demand, making clear that no broader agricultural talks would be held. Officials on both sides said Europe also agreed to revive an old, unfilled pledge to buy more American beef.

The U.S. “heavily insisted to insert the whole field of agricultural products—we refused that because I don’t have a mandate and that’s a very sensitive issue in Europe,” Mr. Juncker told reporters after his joint announcement with Mr. Trump.

And while European officials did vow to try and buy more soybeans—to help offset American sales lost as a result of Chinese retaliation against the U.S.—they said that was really an affirmation of market forces, as prices for U.S. crops tumble, rather than a promise to buy a quota.

“We are not going to turn into some kind of a Soviet-style economy,” one said. “Market rules will remain in place.”

Write to Siobhan Hughes at siobhan.hughes@wsj.com and Jacob M. Schlesinger at jacob.schlesinger@wsj.com

Appeared in the July 27, 2018, print edition as ‘Trump Tries to Ease GOP Trade Worries.’

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Vietnam seeks South Korean support in South China Sea

March 20, 2017

Reuters

South Korean Foreign Minister Yun Byung-Se is welcomed by Vietnam’s Deputy Prime Minister Pham Binh Minh in Hanoi, Vietnam March 20, 2017. REUTERS/Kham

Vietnam’s Prime Minister sought support for the nation’s stance in the South China Sea when he met South Korea’s foreign minister in Hanoi on Monday.

Vietnam is the country most openly at odds with China over the waterway since the Philippines pulled back from confrontation under President Rodrigo Duterte.

“The Prime Minister proposed that South Korea continue its support over the position of Vietnam and Southeast Asia on the South China Sea issue and to help the country improve its law enforcement at the sea”, the government said in a statement on its website after the meeting between Prime Minister Nguyen Xuan Phuc and South Korea’s Foreign Minister Yun Byung-se.

The statement did not say whether South Korea backed Vietnam’s position on the South China Sea.

Yun did affirm his country’s willingness to promote ties despite instability in South Korea after the ousting of President Park Geun-hye over a graft scandal.

South Korea is Vietnam’s biggest foreign investor thanks to companies like Samsung.

South Korea and China are currently in dispute over deployment of the U.S. anti-missile defense system. South Korea on Monday has complained to the World Trade Organization about Chinese retaliation against its companies over the deployment.

Last week, Vietnam demanded China stop sending cruise ships to the area in response to one of Beijing’s latest moves to bolster its claims to the strategic waterway.

China claims 90 percent of the potentially energy-rich South China Sea. Brunei, Malaysia, the Philippines, Vietnam and Taiwan lay claim to parts of the route, through which about $5 trillion of trade passes each year.

(Reporting by My Pham; Editing by Julia Glover)

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South Korea to express concern over China’s behavior — South Korea says China may be “punishing” via trade restrictions

January 12, 2017
Reuters

South Korea may complain to China about actions perceived to have been taken in retaliation for a South Korean decision last year to deploy a U.S. anti-missile system, its trade minister said on Thursday.

“We plan to present the relation between China’s actions that have been pointed out by our companies and the THAAD deployment during a meeting on Friday regarding the free trade agreement between South Korea and China,” Trade Minister Joo Hyung-hwan told parliament.

Joo said South Korea’s concern over China’s behavior would be expressed at the meeting.

South Korea’s finance minister said this month China was suspected to be taking indirect action against the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system as China worries its powerful radar can penetrate its territory.

Beijing has objected to the deployment, which South Korea and the United States say is only aimed at defending against any threat from North Korea.

China recently rejected applications by South Korean carriers to add charter flights between the two countries.

Finance Minister Yoo Il-ho later said the government was looking into whether China’s decision was related to the deployment of the anti-missile system.

China has not commented on South Korea’s concern about retaliation.

(Reporting by Jane Chung and Christine Kim; Editing by)

Philippines-China: With South China Sea Dispute At The International Court, What Could Possibly Go Wrong?

April 7, 2014

China: Will the Philippines’ legal challenge against China work?

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A Philippine national flag flutters in the wind aboard the BRP Sierra Madre on the disputed Second Thomas Shoal, part of the Spratly Islands, in the South China Sea on March 29, 2014. According to local media, two Chinese Coast Guard vessels on Saturday tried to block a Philippine government civilian ship from bringing troops and supplies to the military detachment. BRP Sierra Madre has been aground on the disputed shoal, which is known as the Ren’ai reef in China and the Ayungin Shoal in the Philippines, since 1999. REUTERS/
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April 6, 2014 8:40pm

Recently, our government took the bold decision to take China before a United Nations (UN) court at The Hague. It represented the culmination of years of preparing a legal challenge to China’s increasingly belligerent actions in the West Philippine Sea.It also reflected our exasperation with existing diplomatic mechanisms under the aegis of the Association of Southeast Asian Nations (ASEAN), which has, so far, failed to establish a legally-binding Code of Conduct (CoC) across the contested waters.  As of this writing, the Philippines is the only country that has chosen to stand up to China in an international court in such an explicit, high-profile manner. And this may explain China’s expressed outrage at the Aquino administration’s latest legal maneuver. Far from calming the warm waters of the West Philippine Sea, tensions are bound to rise in the coming months.There is a clear and present risk of Chinese retaliation in the future. Beijing can (once again) not only resort to imposing economic sanctions and travel bans against the Philippines, but it can also up the ante by expanding its maritime patrols across the West Philippine Sea. China has the option of further tightening its ongoing siege of Philippine marine detachments in the Second Thomas Shoal as well as consolidating its control over the Scarborough Shoal. If push comes to shove, there is also the possibility of targeted attacks against the Philippines’ key infrastructures, especially the electricity sector, which is heavily deregulated. In short, the Philippines is highly vulnerable, and there should be a coherent strategy to prevent a destructive confrontation.

Since the Philippines is the only country to have legally challenged Chinese claims in the Western Pacific, China has the option of engaging in a targeted, concentrated punishment of the Philippines. Obviously, the situation would have been much different if we coordinated our legal challenge against China with other like-minded countries such as Vietnam, Japan, and India, which share similar territorial disputes with China. But we didn’t do so, choosing instead to be a trailblazer for using international law as an instrument of resolving an increasingly militarized maritime dispute.

An uncertain strategy 

“By going to arbitration, the Philippines has signaled its fidelity to international law… We are defending what is legitimately and rightfully ours,” declared Foreign Secretary Albert del Rosario.

On the surface, the Philippines has a strong case to make. Our territorial disputes with China concern a number of maritime features, which unequivocally fall well within our 200-nautical-mile Exclusive Economic Zone (EEZ). China’s nearest shores are several times farther.

The picture, however, gets a bit more complicated once you jump into the complexity of the case at hand. First of all, there is no established “enforcement mechanism” to ensure that China will respect the outcome of the arbitration, assuming the Philippines wins the case.

As a permanent member of the UN Security Council, China has unequivocally expressed its refusal to subject itself to any international arbitration concerning, among other things, “territorial delimitation”. Based on Annex VII of UN Convention on the Law of the Sea (UNCLOS), it can be argued that the ITLOS can exercise jurisdiction over an arbitration case in which parties such as China refuse to participate. But China has the wherewithal to ignore or veto any international resolution questioning its territorial and key foreign policies, or simply quit the UNCLOS.

Then, one must consider the fact that the deliberate vagueness of China’s territorial claims, based on unprecedented historical grounds, poses complications for the ITLOS arbitration panel, which would face considerable challenge at arriving at a clear-cut decision in a short period.

Potential rewards 

The strength of the Philippines’ case, however, lies in its strategy of questioning the legal validity of China’s sweeping territorial across the South China Sea basin, rather than definitively determining sovereignty claims over the disputed features in the area. In this sense, the Philippines’ legal case is more about undermining the legitimacy of China’s territorial claims, which, in turn, would place tremendous international pressure on Beijing.

There is also a strategic element. Depending on how the arbitration case moves forward, the Philippines can gradually cajole other like-minded countries such as Vietnam and Japan to file similar cases against China — cementing a regional counter-alliance against Beijing based on international law.

The ultimate goal of the Aquino administration’s latest legal maneuver shouldn’t be to antagonize China, which is poised to become the preeminent power in Asia in the coming decades. Instead, it should focus on generating enough strategic pressure to convince Beijing to get back to the negotiating table, de-escalate its para-military maneuvers in the contested waters, and accede to a legally-binding CoC in the West Philippine Sea.

There are two elements that will be extremely crucial to the success of the Philippines territorial policy. In the absence of a credible minimum deterrence capability, the Philippines has little choice but to maximize its strategic partnership with external powers such as Japan and the U.S. It is extremely important to garner maximum guarantees of support from Washington in an event of a Philippine-China confrontation in the West Philippine Sea. But the most crucial element is the development of our own maritime defense capabilities, with special focus on the Philippine Navy and Coast Guard, which are pivotal to the preservation of our territorial claims.

In times of crisis, international affairs become largely a realm of ‘balance of power’ politics and military self-reliance, rather than evoking laws and norms. Therefore, we should view the arbitration maneuver as only a supplement to a broader strategy of defending our territorial claims. – GMA News