Revisiting the SCO in the Context of Its Enlargement

China International Studies (English) - - Contents - Li Ziguo

The membership expansion of the Shanghai Cooperation Organization brings positive effects but also gives rise to new uncertainties. In the face of evolving internal and external environment, it is necessary to understand the organization’s original principles so that both old and new members can recognize the SCO’S core values.

At the Astana summit in 2017, the Shanghai Cooperation Organization (SCO) officially incorporated India and Pakistan as its member states, which is a major milestone in the organization’s development. The expansion of membership brings positive effects, but it also gives rise to new uncertainties. Under such circumstances, it is necessary to clarify some important questions. What is the “gene” of the SCO, namely the unshakable fundamental that makes the SCO what it is? What is the purpose and significance of the enlargement, and how can the organization ensure the efficiency of decision-making with a larger membership? What does the SCO mean to its new members and how should the newcomers work with old ones? Does the SCO have a geographical boundary of expansion and how should it be defined? And finally, how can we stop the SCO from being marginalized as new regional cooperation initiatives spring up?

What is Enlargement? Has it Just Started?

Apart from having more members, the significance of the SCO’S enlargement lies in the acceptance and adoption of the organization’s values and guidelines for mutual relations in a wider context, and the recognition of the “Shanghai Spirit,”1 as the “gene” of the SCO, by more countries. If a country obtains membership Li Ziguo is Associate Research Fellow and Acting Director of the Department for European-central Asian Studies, China Institute of International Studies (CIIS).

1 The Shanghai Spirit features mutual trust, mutual benefit, equality, consultation, respect for cultural diversity and pursuit of common development.

but does not comply with the “Shanghai Spirit” and the SCO Charter, this kind of superficial expansion is worse than no expansion at all. After the SCO’S founding, more and more countries have recognized the “Shanghai Spirit” and worked to obtain observer or dialogue partner status, in which sense the SCO’S enlargement process had already begun.

Established on June 15, 2001, the SCO adopted its most fundamental document, namely the Charter of the Shanghai Cooperation Organization, and formulated the “Shanghai Spirit” over the next three years. The Organization entered a growth period in 2004, marked by the adoption of the Regulation on the Status of Observer to the SCO, the establishment of the observer mechanism, and the admission of Mongolia as its first observer at the Tashkent summit in June. It explicitly requests that all new participants act in accordance with the “Shanghai Spirit” and the Charter. A state or organization wishing to obtain a status of observer to the SCO “based on respect for sovereignty, territorial integrity and equality of the member states and recognition of the fundamental purposes, principles and actions of the Organization” shall forward an application through the SCO Executive Secretary to the Council of Heads of State.2 At the fifth SCO summit in Astana in July 2005, Pakistan, Iran and India were granted observer status. Those steps can be interpreted as the first stage of the SCO’S quasi-enlargement.

The SCO entered the second stage of quasi-enlargement at the Dushanbe summit in August 2008. With the adoption of the Regulation on the Status of Dialogue Partner of the SCO, a new pattern of expanding the “circle of friends” was formed. The Regulation demonstrates that the SCO adheres steadfastly to its principles of making friends: “The status of Partner shall be granted to a state or an organization that shares the SCO goals and principles and wishes to establish relations of equal and mutually beneficial partnership with the Organization.”3 At the ninth summit held in Yekaterinburg in June 2009, the SCO admitted 2 “Regulation on the Status of Observer to the Shanghai Cooperation Organization,” Shanghai Cooperation Organization Secretariat,

3 “Regulation on the Status of Dialogue Partner of the Shanghai Cooperation Organization,” Shanghai Cooperation Organization Secretariat,

Eurasian Economic Union (EAEU), the Belt and Road Initiative and the Greater Eurasian Partnership. Many people have suggested that the SCO, with its various meeting mechanisms and cooperation in economics and people-to-people cultural exchanges, can serve as a platform for their synergy. Seemingly, the SCO does overlap with those regional integration architectures to different degrees, but due to its relatively weak economic functions, the SCO is not the preferable choice for a synergy platform. Expansion itself will not automatically solve the low efficiency problem in economic cooperation, and the SCO should have an urgent sense of being economically marginalized.

The most extensive regional synergy with the widest geographical coverage is that between the Belt and Road Initiative and the Greater Eurasian Partnership. China and Russia issued a joint statement in June 2016, declaring the goal of “a comprehensive partnership between Europe and Asia on the basis of openness, transparency and consideration of each other’s interests, including the possibility of joining together the EAEU, the SCO, and the Association of Southeast Asian Nations (ASEAN).”14 The two countries finalized an Eurasian Economic Partnership after coordination, and the Russian Ministry of Economic Development and the Chinese Ministry of Commerce signed a joint statement on the joint feasibility study for an agreement on the partnership on July 4, 2017, with which they intend to establish a comprehensive and high-level trade and investment liberalization arrangement that is open to other mechanisms. Although there are no concrete measures yet, it obviously would not be built on the SCO platform. Instead, it would be based on the close China-russia coordination and aimed to build a new type of economic relations open to all nations. Naturally, it would cover the SCO economic cooperation in both scope and agenda.

The synergy of the Silk Road Economic Belt and the EAEU is more specific and concrete. Launched in October 2016 and ended on October 1, 2017, the five rounds of negotiations within twelve months led to the signing 14 “Joint Statement between the People’s Republic of China and the Russian Federation,” Chinese Ministry of Foreign Affairs, June 25, 2016, 770/1206_679110/1207_679122/t1375315.shtml.

of a joint statement on finalizing the negotiations process on the trade-economic agreement between the EAEU and China. In the joint statement, the synergy between the two sides covers ten fields, namely trade facilitation, customs procedures, technical trade barriers and sanitary and phytosanitary measures, trade remedies, competition, intellectual property rights, e-commerce, legal and mechanism clauses, government procurement, and departmental cooperation. This is the first institutional arrangement on the economic front between China and the EAEU. Although member states of the EAEU and China are all participants of the SCO, and the content of the synergy greatly coincides with the trade facilitation objective promoted by the SCO, evidently the new framework is more efficient. In addition, negotiation on a free trade agreement between the EAEU and India has kick started and is expected to conclude in two years; the ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP), of which China and India are both participants, also aim at achieving a “modern, comprehensive, high-quality and mutually beneficial economic partnership agreement.”15 All these multilateral economic mechanisms will divert spotlight from the SCO economic cooperation.

Without doubt, the more efficient and pragmatic bilateral cooperation is favored by regional countries. A case in point is the China-kazakhstan cooperation on the synergy of the Silk Road Economic Belt and the Bright Road new economic policy. Within less than three years, the two countries held 13 rounds of dialogues on capacity and investment cooperation, upgrading from specific cooperation such as the project list and the financing model, to harmonization of visa facilitation, standard certification and other aspects involving regulations and the legal system. Another case is the construction of the China-pakistan Economic Corridor. Within four years since the initiative was proposed in 2013, a large number of projects have been launched and over $55 billion worth of agreements signed. Bilateral efficiency and multilateral inefficiency stand in strong contrast. 15 “Joint Leaders’ Statement on the Negotiations for the Regional Comprehensive Economic Partnership,” November 14, 2017, pdf.

Economic cooperation mainly deals with three issues: concrete projects, funding sources and institutional arrangements. Over the years, without an SCO development bank, there are no special funding sources for the organization, despite year after year’s repetition that “The member states will continue the work related to the establishment of the SCO Development Fank (Special Account) and SCO Development Bank in order to encourage trade and investment links in the region.”16 Institutionally, the construction of an SCO free trade zone can hardly forge ahead. Although the idea was briefly brought up in 2015, it was then shelved as many member states believed the timing was too early, and even guiding documents like the Development Strategy of the SCO until 2025 do not place free trade arrangements on the agenda. With no institutional arrangements or funding sources within the SCO framework, it is natural that member states will seek to explore other channels. The SCO has paved the way for regional economic cooperation in many aspects, but unfortunately, its roles in synergizing and cooperating with new mechanisms are limited. It is fair to say that in the economic cooperation field, the SCO is sailing against the current: if it does not forge ahead, it will be driven backwards.

To avoid being marginalized in economic cooperation, the SCO needs to advance with the times and fully utilize its expertise and strengths. To begin with, in the advantageous fields of transportation and customs facilitation, tremendous efforts are needed to implement the existing outcomes. For instance, the Agreement between the Governments of the Member States of the SCO on Creating Favorable Conditions for International Road Transportation signed in 2014 has finally entered the implementation stage after years of hard work, and it ought to be landed efficiently and rigorously. In the customs cooperation field, the Agreement on Cooperation and Mutual Assistance in Customs Affairs between the Governments of the Member States of the SCO signed in 2007 and the now-implemented Program of Cooperation between Customs Services

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