Taiwan Hosts East China Sea Peace Forum

The Asia-Pacific region has for decades been a powerful engine of economic growth, and it now accounts for 54.9% of global GDP and 47.1% of trade. Mainland China and Japan are the most important players, being respectively the second and third largest economies in the world.

In September of 2012 the government of Japan announced that it would acquire three of five disputed islets in the East China Sea—known in Japan as the Sen­ka­kus and in Taiwan as the Diao­yu­tais—from their private owner. This step promptly raised tensions in the region, having a serious impact on trade, investment, and tourism for the affected parties.

Last August 5, on the 60th anniversary of the coming into effect of the ROC–Japan Peace Treaty, President Ma Ying-jeou proposed the East China Sea Peace Initiative, in which he called on all parties to shelve disputes on the basis that although national territorial sovereignty cannot be divided, natural resources can be shared. The initiative calls for the building of mechanisms for dialogue leading to mutually beneficial cooperation, with shared development of regional resources.

In his remarks to the forum, President Ma Ying-jeou noted that the principles of peace and prosperity enunciated in his East China Sea Peace Initiative could also be applied to disputes elsewhere, such as the South China Sea.

So how important are the natural resources in the East China Sea?

A geological evaluation conducted by the United Nations Economic and Social Council in 1968 found abundant marine and energy resources in the waters surrounding the Diao­yu­tai Islets. For example, the five existing oil and gas drilling “blocks” in the East China Sea, covering 240,000 square kilometers, have estimated petroleum reserves of 19.3 to 52.5 billion barrels, with natural gas reserves estimated at 3.27 to 8.93 trillion cubic meters.

Of these five, Block I is located mainly within the Taiwan Strait, so there are fewer disputes over development. However, Blocks II and III exist in waters claimed as overlapping exclusive economic zones (EEZs) by the ROC, Japan, and mainland China, with Blocks IV and V in waters claimed by those three parties plus South Korea, so there are frequent disputes over sovereignty and allocation of assets.

Lin ­Sheng-­chung, chairman of CPC (Taiwan’s state-owned and largest petroleum firm), noted at the forum that as early as the 1970s CPC had begun cooperating with US oil companies to conduct exploratory drilling in Blocks II through IV. But CPC had no choice but to shelve development projects in the 1980s because of widening disputes over sovereignty.

Of the countries touching the East China Sea, the most active in terms of oil and gas exploration has been mainland China. The mainland has been developing oil and gas resources, such as the Chun­xiao and Duan­qiao fields, since 1974. Of these, Chun­xiao currently produces 2.5 billion cubic meters of natural gas per year, making it economically quite significant.

However, Japan has on many occasions called on mainland China to halt exploration and development activities near the maritime midline between the two countries, in order to avoid drawing oil out of Japan’s waters through the “straw effect.” But the mainland has been unmoved by these appeals. At one point back in 2008 the two parties agreed that Japan could participate in the development of Chun­xiao’s oil and gas, under the precondition of doing so under mainland legal jurisdiction. But the agreement later fell apart over differences of opinion on sovereignty questions.

The five major “blocks” for oil and gas exploitation in the East China Sea.

At the East China Sea Peace Forum, President Ma suggested that the parties to the East China Sea dispute could learn from the example of the North Sea, located between the United Kingdom and Norway.

Ma noted that controversy broke out between countries around the North Sea when huge oil reserves were discovered back in the 1960s and 1970s. To resolve differences, the Federal Republic of Germany, the UK and Norway referred their boundary disputes to the International Court of Justice in The Hague. A decision was handed down in 1969 that set clear principles for defining the boundaries.

From that point on, the interested parties ceased getting bogged down in territorial claims and began to enjoy collective development and sharing of the North Sea’s resources. Today the North Sea is one of the most important sources of oil in the world, and the “Brent Crude” produced there has become the standard for high-quality petroleum.

John Hoadley, an associate professor of political studies at the University of Auckland in New Zealand, says that besides the North Sea precedent, it is also worth looking at how Vietnam and Malaysia handled their dispute over development of crude oil resources: by turning the negotiations over to their national petroleum companies. Because the negotiators had no standing to discuss political matters, they could set aside complex issues of sovereignty and instead rationally discuss the substantive distribution of resources and the benefits of their exploitation. The two sides reached a cooperation agreement in a mere four years.

Besides gas and oil, the East China Sea also has rich fisheries resources, and has long been a major fishing ground for boats from Taiwan. However, because of the overlapping EEZs, disputes often arise over alleged “fishing over the boundary,” creating considerable uncertainty for fishermen.

Taiwan and Japan conducted 16 rounds of negotiations over the years to resolve fisheries disputes. Finally, after the two sides agreed in November of 2012 to set aside questions of territory and sovereignty, the 17th round went very smoothly and ended in a fisheries agreement that was signed in April of 2013.

Under the agreement, fishing vessels from either party may operate in specified fishing grounds (covering an area twice the size of the island of Taiwan) without being constrained by the laws of the other party. The agreement also includes a “without prejudice” clause, which ensures that the agreement will not be used to promote or denigrate any claims made under the UN Convention on the Law of the Sea. In plain language, the fisheries agreement cannot in any way be interpreted to affect the claims of either side regarding sovereignty or territory. This marks a great step forward toward orderly management of fishing in the East China Sea.

With respect to the fisheries negotiations now beginning between Taiwan and the Philippines, President Ma noted at the forum that the two sides had had their first preliminary meeting in June and had reached consensus on a number of points, including that neither side would use armed force to resolve disputes, and that the other party would be notified immediately in the event of a dispute arising. Hopefully this will prevent a repeat of the recent tragic death of a Taiwanese fisherman that occurred when the boat he was working on was fired upon by a Philippine government vessel.

Now that the Taiwan–Japan Fisheries Agreement is a done deal, President Ma has advocated the use of “three sets of bilateral negotiations” among three of the interested parties in the East China Sea: (1) Taiwan and Japan, (2) Taiwan and mainland China, and (3) mainland China and Japan. When a foundation of mutual trust between the countries has been established, they can all proceed with a single trilateral discussion.

Richard Bush, former head of the American Institute in Taiwan, who was invited to address the forum, remarked that President Ma’s initiative shows self-restraint and determination to peacefully resolve differences, while simultaneously upholding Taiwan’s territorial claims over the Diao­yu­tai Islets, making it the best platform for dialogue to resolve differences of opinion about the East China Sea.

Bush also noted that the US has yet to state any position on the issues involved in the East China Sea, nor support for any particular party’s claims. However, he said, the US welcomes any approach that will ease regional tensions. He added that the ability of Taiwan and Japan to shelve intractable issues and reach a pragmatic fisheries agreement sets an excellent example for maintaining regional stability.

Building on improved cross-strait relations, Taiwan will continue to seek mutually beneficial cooperation with neighboring countries on practical issues of resource sharing, maritime safety, sea rescues, and prevention of piracy, aiming to turn both the East China Sea and the South China Sea into “waters of peace and cooperation.”