Given its sweeping conclusions favoring the Philippines, the Award may seem to have nothing

positive in it for China. But the Tribunal offered an important qualification to its judgment, and
perhaps a bit of an olive branch toward the end of a decision it knew would not be well
received in Beijing.

The issuance of this Award by no means puts to rest the disputes or the tensions in the South
China Sea. The arbitration was never going to resolve issues of sovereignty over the islands and
rocks in the South China Sea, because disputes over territorial sovereignty are beyond the
jurisdiction of an UNCLOS Tribunal. And since the Tribunal has no power to enforce its
nominally binding decision, questions now turn to what any form of implementation might
look like and the effect this ruling will have on future negotiations over territorial sovereignty.

To sum it all up, the purpose of dispute resolution proceedings is to clarify the Parties
respective rights and obligations and thereby to facilitate their future relations in accordance
with the general obligations of good faith that both governments unequivocally recognize.

But what are the implications of this arbitration to the diplomatic relations of Philippies, more
specifically, on the roots of trade and economy? You see, the bigger issue, above all other
implications, is the state of bilateral relations between the Philippines and China. Arguably, the
Philippines unprecedented decision to take China to the court over the ongoing territorial
disputes has had a negative impact on bilateral trade and investment relations, with Beijing
seemingly withholding large-scale investments from the Southeast Asian country.

While China stands as a leading source of capital and affordable technology to developing
countries around the world, the Philippines, quite astonishingly, has had more direct
investments in China, than the other way around. By some accounts, the Philippines is
deliberately excluded from Chinas ambitious Maritime Silk Road initiative. With the exception
of the Philippines, China is also the top trading partner of almost all East Asian economies.

More importantly, there is hardly any sustained, formal high-level dialogue between the two
countries, especially above the ambassadorial level. The implications of which have been felt in
the banana industry wherein China customers destroyed 34.78 ton of substandard bananas
from Philippines because the carbendazim in sample is almost one time higher than China food
requirement. The total value of the destroyed bananas is $33,000. China urged Philippine to
take measures to improve the quality of bananas and at the same time, China stopped
importing bananas from certain Philippine exporters. These actions were taken after Philippines
raised issue against China over South China Sea in the international Court of Arbitration.

The bilateral relationship between China and Philippines is most complicated and grim. The
dispute over sovereignty and territory of China South Sea has been ongoing for years, with
claims of various countries. It is important in territorial integrity, natural resource especially in
oil, fishing resource and freedom of navigation. Among these factors, fishing opportunity and
oil exploration are most valued by both China and Philippines. The tension has increased
recently mainly because China naval patrols in the islands. Philippines, on the other side,
asserted that Chinas behavior is against international law and expelled Filipinos from fishing.

On a personal note, it is undeniable that China, being the superpower that it is, has been
damaging trade and economic relations on a purely political platform. It will sooner reflect and
undermine the reputation of China as a reliable trade partner. If China would like to pursue this
kind of conduct, it would definitely affect us on a wider scale, but in the long run, it would be
more destructive on Chinas future than ours combined.