Reining in North Korea and discussing bilateral trade with China were at the top of U.S. President Donald Trump's Asian tour agenda. But after he left Beijing and visited Vietnam, Trump addressed an issue that he hadn't mentioned while in China: the dispute in the South China Sea, regarding territorial claims by Beijing as well as Vietnam, the Philippines, Taiwan, Brunei, and Malaysia.
And Trump offered to mediate in the dispute.
"South China Sea-as you know, we're looking at-we're looking at it together. If I could help mediate or arbitrate, please let me know. I know we've had a dispute for quite a while with China. If I can help in any way, I'm a very good mediator and a very good arbitrator. I have done plenty of it from both sides. So if I can help you, let me know," President Trump said before his meeting with Vietnam's President Tran Dai Quang on Sunday.
Trump's offer was cautiously welcomed by local leaders, and it's not clear if the U.S. president's remarks signal a more proactive role of the United States in finding a solution to the six-nation dispute over one of the world's crucial trade waterways estimated to have more than $5 trillion of annual shipping trade passing through the region.
Apart from being a critical global trade route, the South China Sea is estimated to hold around 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves, with conventional hydrocarbons mostly residing in undisputed territory, according to the EIA.
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This summer, a year after the Permanent Court of Arbitration had ruled in favor of the Philippines in a case the country brought against China regarding its territorial claims in the South China Sea, the two countries were said to be mulling over joint oil and gas exploration in the basin.
China never accepted the court's 2016 ruling, and still claims rights to most of the South China Sea. It has threatened anyone daring to encroach on these territories, the most recent example being Vietnam's Block 136-3, where drilling was suspended a week after it began when Beijing threatened to attack Vietnamese infrastructure in the Spratly Islands.
Since taking office in the middle of last year, the Philippines President Rodrigo Duterte sought to thaw relations with China, and said on Sunday that "The South China Sea is better left untouched."
"Nobody can afford to go to war," Duterte said, as quoted by Bloomberg.
Vietnam's President Quang didn't comment directly on President Trump's offer for mediation, and only said that his country wanted the dispute to be settled via "peaceful negotiations".
According to Anders Corr, founder of Corr Analytics, if China were to become more aggressive in the South China Sea, then the Philippines and Vietnam could publicly agree to President Trump's role as mediator, and the U.S. president's offer could be a bargaining chip for the smaller nations against China.
"Trump's offer to mediate has the immediate effect of constraining further expansion by China in the South China Sea," Corr told Quartz.
The joint U.S-Vietnam and U.S-Philippines statements following the bilateral meetings of their respective leaders with Trump call for peaceful negotiations and restraint from military activity.
"The two sides reiterated the stance on the South China Sea in the previous United States-Vietnam and United States-ASEAN joint statements, including their call on parties to refrain from escalatory actions, the militarization of disputed features, and unlawful restrictions on freedom of the seas," the U.S. and Vietnam said. Related: Oil Prices Slip After EIA Reports Builds Across The Board
Both sides "stressed the importance of peacefully resolving disputes in the South China Sea, in accordance with international law, as reflected in the Law of the Sea Convention," the U.S. and Philippines said.
Meanwhile, at the ASEAN summit on Monday, the leaders formally announced the start of the negotiations on the Code of Conduct (COC) in the South China Sea.
Chinese Premier Li Keqiang said that the start of talks on the code would help to stabilize the region, and would boost mutual trust and understanding.
Talks on that code of conduct may help quell further escalation of tensions in at least one part of Asia Pacific: the South China Sea.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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