Extension of Korea-Japan Continental Shelf Agreement

 

Always hungry for natural resources, the whole of Korea went crazy with the No. 1 hit song “Block 7” in 1980. I was glued to the TV when that song was aired. The song was written after the Korea-Japan Continental Shelf Agreement, which was signed in January 1974, and which came into effect in June 1978 with a 50-year validity. That craze drove all Koreans to be hopeful of an oil-producing Korea, especially after the two oil shocks of the 1970s.

The once epoch-making agreement is due to expire in June 2028 if either party does not notify of its intention for an extension before June 2025, the end date for its termination. Korea needs to quickly start working on the extension of the agreement to ensure the joint exploration and exploitation of oil, gas and minerals in the Joint Development Zone (JDZ), also known as Block 7, in the East China Sea as stipulated in the agreement.

The grounds for the existence of the agreement stem from a survey conducted by a United Nations agency, the Committee for the Coordination of Joint Prospecting for Mineral Resources in Asian Offshore Areas (CCOP) and the U.S. Naval Oceanographic Office in 1968. It addressed a high probability that the continental shelf between Taiwan and Japan may be one of the largest unexplored oil and gas reservoirs in the world. The survey result was published as the so-called Emery Report of 1969. A similar report was released by the Wilson Center in 2005.

Ever since the discovery, however, this continental shelf has been subject to disputes over offshore boundaries between Korea, Japan, China, Taiwan and Vietnam. On top of boundary disputes, changes in international maritime law have led Japan to demonstrate lukewarm responses to joint activities in the JDZ. At the time of the agreement, the predominant international maritime application was the natural prolongation theory of the continental shelf. Despite that approximately 90 percent of the JDZ is allegedly in Japan’s Exclusive Economic Zone (EEZ), Japan had to accept the concept of JDZ. Hence, Japan had little reason to be enthusiastic about joint activities in the JDZ.

With the signing of the United Nations Convention on the Law of the Sea (UNCLOS) in 1982, the median line principle replaced the natural prolongation theory as the norm for maritime delimitation. The median line principle is more favorable to Japan than to Korea; thus, Japan has fewer reasons and incentives for joint activities. That explains why Japan has kept silent about the JDZ issue. Coincidentally, in 1986 Japan withdrew from the joint exploration on grounds of the little commercial value of Block 7.

In the meantime, however, some evidence against Japan’s claim that there was no commercial viability took place. China began producing natural gas offshore in the Chunxiao gas field near the JDZ, or Block 7, in January 2006 and developed four more offshore gas fields in the Xihu Trough in the East China Sea. An unnerved Japan signed a joint development agreement with China in 2008. Korea was not invited as a party to the agreement, leaving room for potential tension and disputes among the three countries with regard to the JDZ and its impact on each of their EEZs that overlapped.

Given the chronological developments in and surrounding the JDZ, one cannot rule out the possibility of Block 7 holding a significant amount of oil, gas and minerals, although untested yet. Thus, Korea should waste no time in urging Japan to commence immediate joint activities in Block 7 and keep raising with Japan the extension of the Agreement beyond 2028. Japan should also accept the offer from Korea and come to the negotiating table. The two countries should capitalize on the improved bilateral relations that have been absent for more than a decade. If the two sides let this golden opportunity slip due to mutual unwillingness and inertia, the improved relations will be short lived, let alone the demise of Block 7 and the death of the possibility of enjoying the offshore natural resources.

Failure to extend the agreement is tantamount to opening a Pandora’s Box. It will highly likely create territorial, security and economic challenges in the East China Sea and the Indo-Pacific region. It is especially burdensome for the neighboring countries when China is flexing its muscles all over the region with increased maritime activities including exploring offshore natural resources. So the failure will likely lead to disputes over the JDZ, which will worsen the relations among the three countries having overlapped the EEZs. Strained China-Japan relations will also likely amplify the China-Japan territorial dispute over the Senkaku/Diaoyu Islands, further destabilizing bilateral relations and fanning ominous geoeconomic and geopolitical challenges. What matters most is that it will most negatively affect and limit the maritime access of Korea, which is a major trading nation, leading to disruptions to the global supply chain. Without the three countries’ cooperation regarding the JDZ, regional economic and security stability will be greatly disturbed.

Dr. Song Kyung-jin (kj_song@hotmail.com) led the Institute for Global Economics (IGE), based in Seoul and served as special adviser to the chairman of the Presidential Committee for the Seoul G20 Summit in the Office of the President. Presently, she is executive director of the Innovative Economy Forum.