Joint Development Areas: A Way Forward for Sino-Vietnamese Maritime Cooperation?

By Matthew McGee


Source: CSIS’s Asia Maritime Transparency Initiative.

China has become increasingly assertive in pursuing its maritime claims in recent years, particularly in the South China Sea. Although Beijing has conducted negotiations with many of its neighbors in an attempt to decrease tensions, it has signed only one treaty delimiting maritime borders: the December 2000 agreement demarcating the exclusive economic zone (EEZ) and continental shelf between China and Vietnam in the Gulf of Tonkin. Sino-Vietnamese cooperation has progressed in the gulf, but overall relations have deteriorated due to tensions in the South China Sea. It is worth examining progress made in oil and gas exploration since the Gulf of Tonkin agreement, to see whether similar progress is possible in the South China Sea.

The 2000 agreement contained only one vaguely worded article about natural resource development, but cooperation on hydrocarbon exploration in the Gulf of Tonkin has progressed steadily. China and Vietnam in 2006 sealed a pact supporting joint exploration for oil and gas, which has since been extended until 2016. Under this agreement, Hanoi and Beijing agree to split the costs and responsibilities of exploration and jointly produce any discovered oil and gas. While no commercially viable reserves have been found, it is believed that the Gulf of Tonkin could contain up to 95 million barrels of oil. Thus far, joint resource exploration has proceeded without incident. This success is important because it demonstrates not only China’s capacity to resolve maritime disagreements through bilateral negotiations, but also its credibility in abiding by such agreements once signed. This could serve as a precedent for managing seemingly intractable disputes elsewhere.

Negotiations to delimit maritime borders in the rest of the South China Sea have not produced any concrete results. The ambiguity of China’s vague “nine-dash line” claim to the South China Sea has fueled tensions with Vietnam and other Southeast Asian claimants over waters and resources. Sino-Vietnamese relations deteriorated sharply in 2014 when China deployed the Haiyang Shiyou 981 oil rig to an area also claimed by Vietnam. And while Chinese president Xi Jinping’s recent visit to Vietnam was aimed at repairing ties damaged by the rig deployment and China’s recent land reclamation on features in the disputed Spratly Islands, bilateral relations remain tense.

Is it plausible, then, for the two countries to jointly develop oil and gas resources beyond the Gulf of Tonkin? Some scholars have suggested that tensions over territorial and maritime disputes in the South China Sea could be reduced by establishing joint development areas (JDAs), in which disputes could be shelved while the resources within are jointly developed. Unlike the Gulf of Tonkin agreement, creating a JDA would not require an explicit delimitation of maritime borders, thus allowing governments to maintain their claims while working together to develop resources. JDAs are a common mechanism already used elsewhere in the Asia Pacific, where countries have been able to decrease tensions while increasing bilateral cooperation. In fact, such an approach was raised in the joint communiqué issued following Vietnamese party secretary Nguyen Phu Trong’s April 2015 visit to China.

A JDA in the South China Sea could include areas where Vietnamese and Chinese claims to the continental shelf overlap but exclude the potential territorial waters generated by disputed land features. This is similar to the approach Japan and Taiwan took in their 2013 fisheries agreement, which excluded the territorial waters around the disputed Senkaku Islands. Alternatively, a JDA could be established away from contested islands and rocks, thus entirely avoiding the issue of who owns which feature. Such agreements would allow China and Vietnam to avoid directly addressing sovereignty over disputed features while still pursuing joint oil and gas development.

Creating JDAs in the South China Sea would also demonstrate Beijing’s willingness to engage in bilateral diplomacy and give Hanoi greater access to much needed natural resources. Besides improving Sino-Vietnamese relations, successfully creating JDAs could also lead other countries in the region to pursue similar cooperative approaches. The Philippines and other countries have claimed that attempts at maritime negotiations with China never produce results. A successful JDA between Vietnam and China could set an important precedent for bilateral or multilateral dispute management. Greater cooperation with China via JDAs would allow Vietnam to expand its hydrocarbon production to meet increasing domestic demand and grow its developing economy.

Such an approach would have potential downsides. No matter how many JDAs were created by South China Sea claimants, the thorny underlying territorial disputes would remain. Additionally, bilateral JDAs that failed to incorporate other affected claimants could prove counterproductive by creating new tensions. This was the case with the creation of a JDA between Vietnam and Malaysia in 2009 which did not account for the Philippines’ potential claim to the same area.

A delimitation of boundaries in the South China Sea similar to the Gulf of Tonkin agreement is unlikely, but the use of JDAs is a viable way to decrease tensions and boost cooperation between China and Vietnam. Such an approach would allow both sides to maintain their maritime claims while simultaneously pursuing joint development of potentially rich oil and natural gas reserves. Indeed, Chinese and Vietnamese leaders have already discussed the possibility.

Mr. Matthew McGee is a research intern with the Asia Maritime Transparency Initiative at CSIS, and is a cadet in Air Force ROTC. The views expressed in this article are his own and do not reflect the views of the U.S. government or U.S. Air Force.


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