Philippines is
fortunate to have an economic growth anchored on consumption but is unfortunate
to have an economic partner anchored on compulsion. Philippines and China had
been ensnared in territorial dispute after China underscored the territorial
claims in the West Philippine Sea that includes the shoals within the
Philippines exclusive economic zone. Based on the United Nations Convention on
the Law of the Sea (UNCLOS) an exclusive economic zone refers to an area within
200 nautical miles from the territorial sea of the coastal state. UNCLOS
provides the regulatory framework for marine conservation, navigational rights,
maritime zones and sovereignty. Due to the exhausted diplomatic channels the Philippines
commenced arbitral proceedings to the Permanent Court of Arbitration but China
refused to partake. As a signatory China agreed to refer the interpretation and
application of the UNCLOS to the compulsory and binding dispute resolution procedure
of the convention. By prohibiting reservations and adopting provisions on the
basis of consensus it was the intention of the UNCLOS to eliminate the use of
force in territorial dispute resolution among member states. Why did China
refuse to partake? We do not know the answer but what we do know that prolonged
territorial dispute could lead to adverse trade relations between Philippines
and China. West Philippine Sea Coalition (WPSC) revealed that China warned the
Philippines of economic consequences once it starts arbitral proceedings
against them at the Permanent Court of Arbitration. WPSC was formed by the concerned
citizens to protest absolute violations and pursue peaceful resolution of
territorial disputes within the West Philippine Sea. Based on intelligence
analysis these economic consequences could range from sanctions to sabotage. WPSC
stated that parts of these economic consequences were the spontaneous import restrictions
and strenuous inspection protocols imposed on Philippine banana exports to
China. Based on the data compiled by Bloomberg the Philippine exports to China decreased
to $19.02 billion in 2015 from $21.05 billion in 2014. Economic coincidence or
economic consequence? Although the China economic growth as measured by the
Gross Domestic Product (GDP) decreased to 6.8% in 2015 from 7.2% in 2014 China
remains as the Philippines largest export market. Based on the data forecasted
by the Development Budget Coordination Committee from 2014 to 2016 the average
annual export growth is 8.0%. Perhaps the Philippines should manage export
growth, expand export products and penetrate export markets before the China
economic diplomacy agenda turns from bad to worst.
