THE South China Sea (as is commonly known internationally, although also variously known as West Philippine Sea in the Philippines and South Sea in China) is vital for both the world and the Asian regional economy for at least three reasons. First, the SCS straddles the busiest shipping routes, with a large portion of the world’s seaborne goods and energy resources traversing it. Second, SCS is endowed with abundant maritime resources, from minerals and oil and gas to intensive fishery. Third, the land areas surrounding SCS waters are also blessed with similar mineral and energy resources as well as bountiful agricultural potentials, such as plantation and livestock farming.
The countries and economies within and around the greater SCS region are also some of the fastest growing in the world, with trading and manufacturing as the mainstays of their economic performance, in addition to traditional resource extraction. Nevertheless, the continuing worldwide economic doldrums over the past decade have also been taking a huge toll on the region. As such, it is not surprising that many other economies within and around the greater SCS region look forward to ever closer economic cooperation and deeper economic integration with each other so as to harness their respective comparative advantages for the benefits of common growth.
Indeed, in view of the above, there are at least four economic sectors where economies within and around the greater SCS region should deepen their cooperation, not least with a keen expectation toward greater economic integration with each other. First and foremost is perhaps in the shipping sector, where the geographical and operational rationalization of existing and potential shipping routes is of paramount importance. For example, the usually strictly enforced cabotage policies in many countries and economies (ostensibly to boost their respective domestic shipping industry) within and around the greater SCS region often have the practical effect of distorting otherwise financially optimized shipping logistics, not to mention constricting the trading potentials of various otherwise strategically located regional hubs. These and other similarly harmful and self-defeating shipping policies should be abolished in favor of more inclusive shipping practices that would benefit everyone’s true growth prospects. Economies within and surrounding the greater SCS region must improve their port infrastructure and management, so that more goods can be traded more efficiently.
The second is in the energy and mineral sectors. When it comes to extraction of such maritime resources, most countries and economies within and surrounding the greater SCS region have long adopted a very pragmatic attitude, often working with domestic or foreign parties with the necessary professional expertise to harness these resources and splitting the profitable proceeds of such expensive endeavors. These existing cooperative extraction practices should be widened to include a large part of the greater SCS region, with the possibility of diverting some of the expectedly large proceeds into a common fund to assist some of the least developed economies within and surrounding the region, and with due regard to environmental sustainability.
The third has to do with fisheries, which are an important food source for the population living within and around the greater SCS region. Better coordinated management of traditional fishing grounds instead of intense, sometimes violent, contests over them, such that the fishing resources are sustainable over the long term should be a common goal for all stakeholders concerned. Fish farming, instead of continuous poaching, should also be seriously explored as a viable outlook for the fishing industry.
And the fourth is the upgrading along their respective value chains of land-bound agricultural activities surrounding the SCS. The traditional harvest-and-export model prevalent in many such places can produce only a very low amount of economic values. Processing plants and sales channels must be set up, not least by end-user economies, closer to the places of origin, such that more local employment and economic growth can be generated and a more equitably developed region can be envisioned.
Nevertheless, the prospects for closer economic integration in the greater SCS region are sometimes faced with challenges. The first challenge is a somewhat subtle but significant one. Many countries and economies within and around the greater SCS region are eager to deepen their trade ties and economic cooperation with each other, but they often prefer to do so at “arm’s length,” i.e., to craft their respective economic and other types of policies in their own way with their own understanding of special local circumstances. Second is the continuing dire safety and security circumstances in the greater SCS region. All of the above positive economic cooperative prospects are in a sense held hostage by the lack of improvements in proper and adequate law enforcement.
It is therefore crucial for all parties to pay heed to at least two aspects when it comes to economic cooperation and possibly integration in the greater SCS region. The first challenge is the need, to the greatest extent possible, to promote such integration within or deriving from existing bilateral and multilateral frameworks. The “Asean Plus” concept, which is premised on Asean centrality should be preserved and magnified. The long-overdue upgrading of the China-Asean free trade agreement must be speeded up, as businesspeople from all sides have been clamoring for it for many years, expecting even deeper cuts in tariffs and non-tariff barriers. The equally long-awaited regional comprehensive economic partnership (RCEP), covering the Asean region, China, Japan, Korea, India, Australia and New Zealand, must also see the acceleration of negotiations toward its adoption. The granting of visa-free status to residents of the greater SCS region will also go a long way toward promoting regional economic integration.
And the second aspect is the determination by all concerned parties within and surrounding the SCS region to join hands to reduce and remove the occurrence of piracy, robbery and terrorist activities in the high seas, and to undertake humanitarian searches and rescues in the case of natural resources. The negotiations toward the eventual adoption of the SCS Code of Conduct should be made an absolute priority for all concerned. Joint patrols must also be deployed where necessary to enforce the rule of law in the region.
Closer economic cooperation and eventual integration is perhaps the ultimate vision for many parties in the greater SCS region. A realistic understanding of the myriad nuances of such aspirations, and “smart” crafting of solutions to address such needs would be crucial to ensure eventual success for the benefit of all.