You are given two reports by the government agency.  

Report 1:
This report provides background information and issues for Congress regarding China's actions in the South China Sea (SCS) and East China Sea (ECS), with a focus on implications for U.S. strategic and policy interests. Other CRS reports focus on other aspects of maritime territorial disputes involving China. The issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly China's island-building and base-construction activities in the Spratly Islands in the SCS—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy—and an appropriate amount of resources for implementing that strategy—for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region. Decisions that Congress makes on these issues could substantially affect U.S. strategic, political, and economic interests in the Indo-Pacific region and elsewhere. In this report, the term China's near-seas region refers to the SCS, ECS, and Yellow Sea. The term first island chain refers to a string of islands, including Japan and the Philippines, that encloses China's near-seas region. The term second island chain , which reaches out to Guam, refers to a line that can be drawn that encloses both China's near-seas region and the Philippine Sea between the Philippines and Guam. The term exclusive economic zone ( EEZ ) dispute is used in this report to refer to a dispute principally between China and the United States over whether coastal states have a right under international law to regulate the activities of foreign military forces operating in their EEZs. Although maritime territorial disputes in the SCS and ECS involving China and its neighbors may appear at first glance to be disputes between faraway countries over a few rocks and reefs in the ocean that are of seemingly little importance to the United States, the situation in the SCS and ECS can engage U.S. interests for a variety of strategic, political, and economic reasons, including but not necessarily limited to those discussed in the sections below. The SCS, ECS, and Yellow Sea border three U.S. treaty allies—Japan, South Korea, and the Philippines. In addition, the SCS and ECS (including the Taiwan Strait) surround Taiwan, regarding which the United States has certain security-related policies under the Taiwan Relations Act ( H.R. 2479 / P.L. 96-8 of April 10, 1979), and the SCS borders Southeast Asian nations that are current, emerging, or potential U.S. partner countries, such as Singapore, Vietnam, and Indonesia. In a conflict with the United States, Chinese bases in the SCS and forces operating from them would add to a regional network of Chinese anti-access/area-denial (A2/AD) forces intended to keep U.S. military forces outside the first island chain (and thus away from China's mainland). Among other things, Chinese bases in the SCS and forces operating from them could help create a bastion (i.e., a defended operating sanctuary) in the SCS for China's emerging sea-based strategic deterrent force of nuclear-powered ballistic missile submarines (SSBNs). In a conflict with the United States, Chinese bases in the SCS and forces operating from them would be vulnerable to U.S. attack. Attacking the bases and the forces operating from them, however, would tie down the attacking U.S. forces for a time at least, delaying the use of those U.S. forces elsewhere in a larger conflict, and potentially delay the advance of U.S. forces into the SCS. Short of a conflict with the United States, Chinese bases in the SCS, and more generally, Chinese domination over or control of its near-seas region could help China to do one or more of the following on a day-to-day basis: control fishing operations and oil and gas exploration activities in the SCS; coerce, intimidate, or put political pressure on other countries bordering on the SCS; announce and enforce an air defense identification zone (ADIZ) over the SCS; announce and enforce a maritime exclusion zone (i.e., a blockade) around Taiwan; facilitate the projection of Chinese military presence and political influence further into the Western Pacific; and help achieve a broader goal of becoming a regional hegemon in its part of Eurasia. In light of some of the preceding points, Chinese bases in the SCS, and more generally, Chinese domination over or control of its near-seas region could complicate the ability of the United States to intervene militarily in a crisis or conflict between China and Taiwan; fulfill U.S. obligations under U.S defense treaties with Japan and the Philippines and South Korea; operate U.S. forces in the Western Pacific for various purposes, including maintaining regional stability, conducting engagement and partnership-building operations, responding to crises, and executing war plans; and prevent the emergence of China as a regional hegemon in its part of Eurasia. A reduced U.S. ability to do one or more of the above could encourage countries in the region to reexamine their own defense programs and foreign policies, potentially leading to a further change in the region's security architecture. Some observers believe that China is trying to use disputes in the SCS and ECS to raise doubts among U.S. allies and partners in the region about the dependability of the United States as an ally or partner, or to otherwise drive a wedge between the United States and its regional allies and partners, so as to weaken the U.S.-led regional security architecture and thereby facilitate greater Chinese influence over the region. Some observers remain concerned that maritime territorial disputes in the ECS and SCS could lead to a crisis or conflict between China and a neighboring country such as Japan or the Philippines, and that the United States could be drawn into such a crisis or conflict as a result of obligations the United States has under bilateral security treaties with Japan and the Philippines. Most recently, those concerns have focused more on the possibility of a crisis or conflict between China and Japan over the Senkaku Islands. A key element of the U.S.-led international order that has operated since World War II is the principle that force or coercion should not be used as a means of settling disputes between countries, and certainly not as a routine or first-resort method. Some observers are concerned that China's actions in SCS and ECS challenge this principle and—along with Russia's actions in Crimea and eastern Ukraine—could help reestablish the very different principle of "might makes right" (i.e., the law of the jungle) as a routine or defining characteristic of international relations. Another key element of the U.S.-led international order that has operated since World War II is the treatment of the world's seas under international law as international waters (i.e., as a global commons), and the principle of freedom of operations in international waters. The principle of freedom of operations in international waters is often referred to in shorthand as freedom of the seas. It is also sometimes referred to as freedom of navigation, although this term can be defined—particularly by parties who might not support freedom of the seas—in a narrow fashion, to include merely the freedom for commercial ships to navigate (i.e., pass through) sea areas, as opposed to the freedom for both commercial and naval ships to conduct various activities at sea. A more complete way to refer to the principle of freedom of the seas, as stated in the Department of Defense's (DOD's) annual Freedom of Navigation (FON) report, is "all of the rights, freedoms, and lawful uses of the sea and airspace, including for military ships and aircraft, guaranteed to all nations under international law." The principle of freedom of the seas dates back hundreds of years. Some observers are concerned that China's actions in the SCS appear to challenge the principle that the world's seas are to be treated under international law as international waters. If such a challenge were to gain acceptance in the SCS region, it would have broad implications for the United States and other countries not only in the SCS, but around the world, because international law is universal in application, and a challenge to a principle of international law in one part of the world, if accepted, could serve as a precedent for challenging it in other parts of the world. Overturning the principle of freedom of the seas, so that significant portions of the seas could be appropriated as national territory, would overthrow hundreds of years of international legal tradition relating to the legal status of the world's oceans and significantly change the international legal regime governing sovereignty over much of the surface of the world. Some observers are concerned that if China's position that coastal states have a right under international law to regulate the activities of foreign military forces in their EEZs were to gain greater international acceptance under international law, it could substantially affect U.S. naval operations not only in the SCS and ECS, but around the world, which in turn could substantially affect the ability of the United States to use its military forces to defend various U.S. interests overseas. Significant portions of the world's oceans are claimable as EEZs, including high-priority U.S. Navy operating areas in the Western Pacific, the Persian Gulf, and the Mediterranean Sea. The legal right of U.S. naval forces to operate freely in EEZ waters—an application of the principle of freedom of the seas—is important to their ability to perform many of their missions around the world, because many of those missions are aimed at influencing events ashore, and having to conduct operations from more than 200 miles offshore would reduce the inland reach and responsiveness of ship-based sensors, aircraft, and missiles, and make it more difficult to transport Marines and their equipment from ship to shore. Restrictions on the ability of U.S. naval forces to operate in EEZ waters could potentially require changes (possibly very significant ones) in U.S. military strategy or U.S. foreign policy goals. Major commercial shipping routes pass through the SCS, which links the Western Pacific to the Indian Ocean and the Persian Gulf. An estimated $3.4 trillion worth of international shipping trade passes through the SCS each year. DOD states that "the South China Sea plays an important role in security considerations across East Asia because Northeast Asia relies heavily on the flow of oil and commerce through South China Sea shipping lanes, including more than 80 percent of the crude oil [flowing] to Japan, South Korea, and Taiwan." In addition, the ECS and SCS contain potentially significant oil and gas exploration areas. Exploration activities there could potentially involve U.S. firms. The results of exploration activities there could eventually affect world oil prices. As China continues to emerge as a major world power, observers are assessing what kind of international actor China will ultimately be. China's actions in the SCS and ECS could influence assessments that observers might make on issues such as China's approach to settling disputes between states (including whether China views force and coercion as acceptable means for settling such disputes, and consequently whether China believes that "might makes right"), China's views toward the meaning and application of international law, and whether China views itself more as a stakeholder and defender of the current international order, or alternatively, more as a revisionist power that will seek to change elements of that order that it does not like. Developments in the SCS and ECS could affect U.S.-China relations in general, which could have implications for other issues in U.S.-China relations. China is a party to multiple maritime territorial disputes in the SCS and ECS, including in particular the following (see Figure 1 for locations of the island groups listed below): a dispute over the Paracel Islands in the SCS, which are claimed by China and Vietnam, and occupied by China; a dispute over the Spratly Islands in the SCS, which are claimed entirely by China, Taiwan, and Vietnam, and in part by the Philippines, Malaysia, and Brunei, and which are occupied in part by all these countries except Brunei; a dispute over Scarborough Shoal in the SCS, which is claimed by China, Taiwan, and the Philippines, and controlled since 2012 by China; and a dispute over the Senkaku Islands in the ECS, which are claimed by China, Taiwan, and Japan, and administered by Japan. The island and shoal names used above are the ones commonly used in the United States; in other countries, these islands are known by various other names. These island groups are not the only land features in the SCS and ECS—the two seas feature other islands, rocks, and shoals, as well as some near-surface submerged features. The territorial status of some of these other features is also in dispute. There are additional maritime territorial disputes in the Western Pacific that do not involve China. Maritime territorial disputes in the SCS and ECS date back many years, and have periodically led to diplomatic tensions as well as confrontations and incidents at sea involving fishing vessels, oil exploration vessels and oil rigs, coast guard ships, naval ships, and military aircraft. In addition to maritime territorial disputes in the SCS and ECS, China is involved in a dispute, principally with the United States, over whether China has a right under international law to regulate the activities of foreign military forces operating within China's EEZ. The position of the United States and most other countries is that while the United Nations Convention on the Law of the Sea (UNCLOS), which established EEZs as a feature of international law, gives coastal states the right to regulate economic activities (such as fishing and oil exploration) within their EEZs, it does not give coastal states the right to regulate foreign military activities in the parts of their EEZs beyond their 12-nautical-mile territorial waters. The position of China and some other countries (i.e., a minority group among the world's nations) is that UNCLOS gives coastal states the right to regulate not only economic activities, but also foreign military activities, in their EEZs. In response to a request from CRS to identify the countries taking this latter position, the U.S. Navy states that countries with restrictions inconsistent with the Law of the Sea Convention [i.e., UNCLOS] that would limit the exercise of high seas freedoms by foreign navies beyond 12 nautical miles from the coast are [the following 27]: Bangladesh, Brazil, Burma, Cambodia, Cape Verde, China, Egypt, Haiti, India, Iran, Kenya, Malaysia, Maldives, Mauritius, North Korea, Pakistan, Portugal, Saudi Arabia, Somalia, Sri Lanka, Sudan, Syria, Thailand, United Arab Emirates, Uruguay, Venezuela, and Vietnam. Other observers provide different counts of the number of countries that take the position that UNCLOS gives coastal states the right to regulate not only economic activities but also foreign military activities in their EEZs. For example, one set of observers, in an August 2013 briefing, stated that 18 countries seek to regulate foreign military activities in their EEZs, and that 3 of these countries—China, North Korea, and Peru—have directly interfered with foreign military activities in their EEZs. The dispute over whether China has a right under UNCLOS to regulate the activities of foreign military forces operating within its EEZ appears to be at the heart of incidents between Chinese and U.S. ships and aircraft in international waters and airspace, including incidents in March 2001, September 2002, March 2009, and May 2009, in which Chinese ships and aircraft confronted and harassed the U.S. naval ships Bowditch , Impeccable , and Victorious as they were conducting survey and ocean surveillance operations in China's EEZ; an incident on April 1, 2001, in which a Chinese fighter collided with a U.S. Navy EP-3 electronic surveillance aircraft flying in international airspace about 65 miles southeast of China's Hainan Island in the South China Sea, forcing the EP-3 to make an emergency landing on Hainan Island; an incident on December 5, 2013, in which a Chinese navy ship put itself in the path of the U.S. Navy cruiser Cowpens as it was operating 30 or more miles from China's aircraft carrier Liaoning , forcing the Cowpens to change course to avoid a collision; an incident on August 19, 2014, in which a Chinese fighter conducted an aggressive and risky intercept of a U.S. Navy P-8 maritime patrol aircraft that was flying in international airspace about 135 miles east of Hainan Island —DOD characterized the intercept as "very, very close, very dangerous"; and an incident on May 17, 2016, in which Chinese fighters flew within 50 feet of a Navy EP-3 electronic surveillance aircraft in international airspace in the South China Sea—a maneuver that DOD characterized as "unsafe." Figure 2 shows the locations of the 2001, 2002, and 2009 incidents listed in the first two bullets above. The incidents shown in Figure 2 are the ones most commonly cited prior to the December 2013 involving the Cowpens , but some observers list additional incidents as well. DOD stated in 2015 that The growing efforts of claimant States to assert their claims has led to an increase in air and maritime incidents in recent years, including an unprecedented rise in unsafe activity by China's maritime agencies in the East and South China Seas. U.S. military aircraft and vessels often have been targets of this unsafe and unprofessional behavior, which threatens the U.S. objectives of safeguarding the freedom of the seas and promoting adherence to international law and standards. China's expansive interpretation of jurisdictional authority beyond territorial seas and airspace causes friction with U.S. forces and treaty allies operating in international waters and airspace in the region and raises the risk of inadvertent crisis. There have been a number of troubling incidents in recent years. For example, in August 2014, a Chinese J-11 fighter crossed directly under a U.S. P-8A Poseidon operating in the South China Sea approximately 117 nautical miles east of Hainan Island. The fighter also performed a barrel roll over the aircraft and passed the nose of the P-8A to show its weapons load-out, further increasing the potential for a collision. However, since August 2014, U.S.-China military diplomacy has yielded positive results, including a reduction in unsafe intercepts. We also have seen the PLAN implement agreed-upon international standards for encounters at sea, such as the Code for Unplanned Encounters at Sea (CUES), which was signed in April 2014. A recent incident in the SCS occurred on September 30, 2018, between the U.S. Navy destroyer Decatur (DDG-73) and a Chinese destroyer, as the Decatur was conducting a freedom of navigation (FON) operation near Gaven Reef in the Spratly Islands. In the incident, the Chinese destroyer overtook the U.S. destroyer close by on the U.S. destroyer's port (i.e., left) side, requiring the U.S. destroyer to turn starboard (i.e., to the right) to avoid the Chinese ship. U.S. officials stated that at the point of closest approach between the two ships, the stern (i.e., back end) of the Chinese ship came within 45 yards (135 feet) of the bow (i.e., front end) of the Decatur . As the encounter was in progress, the Chinese ship issued a warning by radio stating, "If you don't change course your [sic] will suffer consequences." One observer, commenting on the incident, stated, "To my knowledge, this is the first time we've had a direct threat to an American warship with that kind of language." U.S. officials characterized the actions of the Chinese ship in the incident as "unsafe and unprofessional." A November 3, 2018, press report states the following: The US Navy has had 18 unsafe or unprofessional encounters with Chinese military forces in the Pacific since 2016, according to US military statistics obtained by CNN. "We have found records of 19 unsafe and/or unprofessional interactions with China and Russia since 2016 (18 with China and one with Russia)," Cmdr. Nate Christensen, a spokesman for the US Pacific Fleet, told CNN. A US official familiar with the statistics told CNN that 2017, the first year of the Trump administration, saw the most unsafe and or unprofessional encounters with Chinese forces during the period. At least three of those incidents took place in February, May and July of that year and involved Chinese fighter jets making what the US considered to be "unsafe" intercepts of Navy surveillance planes. While the 18 recorded incidents only involved US naval forces, the Air Force has also had at least one such encounter during this period…. The US Navy told CNN that, in comparison, there were 50 unsafe or unprofessional encounters with Iranian military forces since 2016, with 36 that year, 14 last year and none in 2018. US and Iranian naval forces tend to operate in relatively narrow stretches of water, such as the Strait of Hormuz, increasing their frequency of close contact. DOD states that Although China has long challenged foreign military activities in its maritime zones in a manner that is inconsistent with the rules of customary international law as reflected in the LOSC, the PLA has recently started conducting the very same types of military activities inside and outside the first island chain in the maritime zones of other countries. This contradiction highlights China's continued lack of commitment to the rules of customary international law. Even though China is a state party to the LOSC [i.e., UNCLOS], China's domestic laws restrict military activities in its exclusive economic zone (EEZ), including intelligence collection and military surveys, contrary to LOSC. At the same time, the PLA is increasingly undertaking military operations in other countries' EEZs. The map on the following page [not reproduced here] depicts new PLA operating areas in foreign EEZs since 2014. In 2017, the PLAN conducted air and naval operations in Japan's EEZ; employed an AGI [intelligence-gathering ship] ship, likely to monitor testing of a THAAD system in the U.S. EEZ near the Aleutian Islands; and employed an AGI ship to monitor a multi-national naval exercise in Australia's EEZ. PLA operations in foreign EEZs have taken place in Northeast and Southeast Asia, and a growing number of operations are also occurring farther from Chinese shores. The issue of whether China has the right under UNCLOS to regulate foreign military activities in its EEZ is related to, but ultimately separate from, the issue of territorial disputes in the SCS and ECS: The two issues are related because China can claim EEZs from inhabitable islands over which it has sovereignty, so accepting China's claims to sovereignty over inhabitable islands in the SCS or ECS could permit China to expand the EEZ zone within which China claims a right to regulate foreign military activities. The two issues are ultimately separate from one another because even if all the territorial disputes in the SCS and ECS were resolved, and none of China's claims in the SCS and ECS were accepted, China could continue to apply its concept of its EEZ rights to the EEZ that it unequivocally derives from its mainland coast—and it is in this unequivocal Chinese EEZ that several of the past U.S.-Chinese incidents at sea have occurred. Press reports of maritime disputes in the SCS and ECS sometimes focus on territorial disputes while devoting little or no attention to the EEZ dispute, or do relatively little to distinguish the EEZ dispute from the territorial disputes. From the U.S. perspective, the EEZ dispute is arguably as significant as the maritime territorial disputes because of the EEZ dispute's proven history of leading to U.S.-Chinese incidents at sea and because of its potential for affecting U.S. military operations not only in the SCS and ECS, but around the world. For background information on treaties and international agreements related to the disputes, see Appendix C . For background information on the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China concerning maritime territorial issues in the SCS, see Appendix D . In general, China's approach to the maritime disputes in the SCS and ECS, and to strengthening its position over time in the SCS, can be characterized as follows: China appears to have identified the assertion and defense of its maritime territorial claims in the SCS and ECS, and the strengthening of its position in the SCS, as important national goals. To achieve these goals, China appears to be employing an integrated, whole-of-society strategy that includes diplomatic, informational, economic, military, paramilitary/law enforcement, and civilian elements. In implementing this integrated strategy, China appears to be persistent, patient, tactically flexible, willing to expend significant resources, and willing to absorb at least some amount of reputational and other costs that other countries might seek to impose on China in response to China's actions. Observers frequently characterize China's approach to the SCS and ECS as a "salami-slicing" strategy that employs a series of incremental actions, none of which by itself is a casus belli , to gradually change the status quo in China's favor. At least one Chinese official has used the term "cabbage strategy" to refer to a strategy of consolidating control over disputed islands by wrapping those islands, like the concentric leaves of a cabbage, in successive layers of occupation and protection formed by fishing boats, Chinese Coast Guard ships, and then finally Chinese naval ships. Other observers have referred to China's approach as a strategy of gray zone operations (i.e., operations that reside in a gray zone between peace and war), of creeping annexation or creeping invasion, or as a "talk and take" strategy, meaning a strategy in which China engages in (or draws out) negotiations while taking actions to gain control of contested areas. Perhaps more than any other set of actions, China's island-building (aka land-reclamation) and base-construction activities at sites that it occupies in the Paracel Islands and Spratly Islands in the SCS have heightened concerns among U.S. observers that China is rapidly gaining effective control of the SCS. China's island-building and base-construction activities in the SCS appear to have begun around December 2013, and were publicly reported starting in May 2014. Awareness of, and concern about, the activities appears to have increased substantially following the posting of a February 2015 article showing a series of "before and after" satellite photographs of islands and reefs being changed by the work. China occupies seven sites in the Spratly Islands. It has engaged in island-building and facilities-construction activities at most or all of these sites, and particularly at three of them—Fiery Cross Reef, Subi Reef, and Mischief Reef, all of which now feature lengthy airfields as well as substantial numbers of buildings. Although other countries, such as Vietnam, have engaged in their own island-building and facilities-construction activities at sites that they occupy in the SCS, these efforts are dwarfed in size by China's island-building and base-construction activities in the SCS. DOD stated in 2017 that In 2016, China focused its main effort on infrastructure construction at its outposts on the Spratly Islands. Although its land reclamation and artificial islands do not strengthen China's territorial claims as a legal matter or create any new territorial sea entitlements, China will be able to use its reclaimed features as persistent civil-military bases to enhance its presence in the South China Sea and improve China's ability to control the features and nearby maritime space. China reached milestones of landing civilian aircraft on its airfields on Fiery Cross Reef, Subi Reef, and Mischief Reef for the first time in 2016, as well as landing a military transport aircraft on Fiery Cross Reef to evacuate injured personnel.... China's Spratly Islands outpost expansion effort is currently focused on building out the land-based capabilities of its three largest outposts—Fiery Cross, Subi, and Mischief Reefs—after completion of its four smaller outposts early in 2016. No substantial land has been reclaimed at any of the outposts since China ended its artificial island creation in the Spratly Islands in late 2015 after adding over 3,200 acres of land to the seven features it occupies in the Spratlys. Major construction features at the largest outposts include new airfields—all with runways at least 8,800 feet in length—large port facilities, and water and fuel storage. As of late 2016, China was constructing 24 fighter-sized hangars, fixed-weapons positions, barracks, administration buildings, and communication facilities at each of the three outposts. Once all these facilities are complete, China will have the capacity to house up to three regiments of fighters in the Spratly Islands. China has completed shore-based infrastructure on its four smallest outposts in the Spratly Islands: Johnson, Gaven, Hughes, and Cuarteron Reefs. Since early 2016, China has installed fixed, land-based naval guns on each outpost and improved communications infrastructure. The Chinese Government has stated that these projects are mainly for improving the living and working conditions of those stationed on the outposts, safety of navigation, and research; however, most analysts outside China believe that the Chinese Government is attempting to bolster its de facto control by improving its military and civilian infrastructure in the South China Sea. The airfields, berthing areas, and resupply facilities on its Spratly outposts will allow China to maintain a more flexible and persistent coast guard and military presence in the area. This would improve China's ability to detect and challenge activities by rival claimants or third parties, widen the range of capabilities available to China, and reduce the time required to deploy them.... China's construction in the Spratly Islands demonstrates China's capacity—and a newfound willingness to exercise that capacity—to strengthen China's control over disputed areas, enhance China's presence, and challenge other claimants.... In 2016, China built reinforced hangars on several of its Spratly Island outposts in the South China Sea. These hangars could support up to 24 fighters or any other type of PLA aircraft participating in force projection operations. In April, May, and June 2018, it was reported that China has landed aircraft and moved electronic jamming equipment, surface-to-air missiles, and anti-ship missile systems to its newly built facilities in the SCS. In July 2018, it was reported that "China is quietly testing electronic warfare assets recently installed at fortified outposts in the South China Sea…." Also in July 2018, Chinese state media announced that a Chinese search and rescue ship had been stationed at Subi Reef—the first time that such a ship had been permanently stationed by China at one of its occupied sites in the Spratly Islands. For additional discussion of China's island-building and facility-construction activities, see CRS Report R44072, Chinese Land Reclamation in the South China Sea: Implications and Policy Options , by Ben Dolven et al. In addition to the island-building and base-construction activities discussed above, additional Chinese actions in the SCS and ECS have heightened concerns among U.S. observers. Following a confrontation in 2012 between Chinese and Philippine ships at Scarborough Shoal, China gained de facto control over access to the shoal and its fishing grounds. Subsequent Chinese actions that have heightened concerns among U.S. observers, particularly since late 2013, include the following, among others: China's announcement on November 23, 2013, of an air defense identification zone (ADIZ) over the ECS that includes airspace over the Senkaku Islands; frequent patrols by Chinese Coast Guard ships—some observers refer to them as harassment operations—at the Senkaku Islands; Chinese pressure against the small Philippine military presence at Second Thomas Shoal in the Spratly Islands, where a handful of Philippine military personnel occupy a beached (and now derelict) Philippine navy amphibious ship; the implementation on January 1, 2014, of fishing regulations administered by China's Hainan province applicable to waters constituting more than half of the SCS, and the reported enforcement of those regulations with actions that have included the apprehension of non-Chinese fishing boats; and a growing civilian Chinese presence on some of the sites in the SCS occupied by China in the SCS, including both Chinese vacationers and (in the Paracels) permanent settlements. China asserts and defends its maritime claims not only with navy ships, but also with coast guard cutters and maritime militia vessels. Indeed, China employs its coast guard and maritime militia more regularly and extensively than its navy in its maritime sovereignty-assertion operations. DOD states that China's navy, coast guard, and maritime militia together "form the largest maritime force in the Indo-Pacific." DOD states that the China Coast Guard (CCG) is the world's largest coast guard. It is much larger than the coast guard of any country in the region, and it has increased substantially in size in recent years through the addition of many newly built ships. China makes regular use of CCG ships to assert and defend its maritime claims, particularly in the ECS, with Chinese navy ships sometimes available over the horizon as backup forces. The Defense Intelligence Agency (DIA) states the following: Under Chinese law, maritime sovereignty is a domestic law enforcement issue under the purview of the CCG. Beijing also prefers to use CCG ships for assertive actions in disputed waters to reduce the risk of escalation and to portray itself more benignly to an international audience. For situations that Beijing perceives carry a heightened risk of escalation, it often deploys PLAN combatants in close proximity for rapid intervention if necessary. China also relies on the PAFMM—a paramilitary force of fishing boats—for sovereignty enforcement actions…. China primarily uses civilian maritime law enforcement agencies in maritime disputes, employing the PLAN [i.e., China's navy] in a protective capacity in case of escalation. The CCG has rapidly increased and modernized its forces, improving China's ability to enforce its maritime claims. Since 2010, the CCG's large patrol ship fleet (more than 1,000 tons) has more than doubled in size from about 60 to more than 130 ships, making it by far the largest coast guard force in the world and increasing its capacity to conduct extended offshore operations in a number of disputed areas simultaneously. Furthermore, the newer ships are substantially larger and more capable than the older ships, and the majority are equipped with helicopter facilities, high-capacity water cannons, and guns ranging from 30-mm to 76-mm. Among these ships, a number are capable of long-distance, long-endurance out-of-area operations. In addition, the CCG operates more than 70 fast patrol combatants ([each displacing] more than 500 tons), which can be used for limited offshore operations, and more than 400 coastal patrol craft (as well as about 1,000 inshore and riverine patrol boats). By the end of the decade, the CCG is expected to add up to 30 patrol ships and patrol combatants before the construction program levels off. In March 2018, China announced that control of the CCG would be transferred from the civilian State Oceanic Administration to the Central Military Commission. The transfer occurred on July 1, 2018. On May 22, 2018, it was reported that China's navy and the CCG had conducted their first joint patrols in disputed waters off the Paracel Islands in the SCS, and had expelled at least 10 foreign fishing vessels from those waters. China also uses the People's Armed Forces Maritime Militia (PAFMM)—a force that essentially consists of fishing ships with armed crew members—to defend its maritime claims. In the view of some observers, the PAFMM—even more than China's navy or coast guard—is the leading component of China's maritime forces for asserting its maritime claims, particularly in the SCS. U.S. analysts in recent years have paid increasing attention to the role of the PAFMM as a key tool for implementing China's salami-slicing strategy, and have urged U.S. policymakers to focus on the capabilities and actions of the PAFMM. DOD states that "the PAFMM is the only government-sanctioned maritime militia in the world," and that it "has organizational ties to, and is sometimes directed by, China's armed forces." DIA states that The PAFMM is a subset of China's national militia, an armed reserve force of civilians available for mobilization to perform basic support duties. Militia units organize around towns, villages, urban subdistricts, and enterprises, and they vary widely from one location to another. The composition and mission of each unit reflects local conditions and personnel skills. In the South China Sea, the PAFMM plays a major role in coercive activities to achieve China's political goals without fighting, part of broader Chinese military doctrine that states that confrontational operations short of war can be an effective means of accomplishing political objectives. A large number of PAFMM vessels train with and support the PLA and CCG in tasks such as safeguarding maritime claims, protecting fisheries, and providing logistic support, search and rescue (SAR), and surveillance and reconnaissance. The Chinese government subsidizes local and provincial commercial organizations to operate militia ships to perform "official" missions on an ad hoc basis outside their regular commercial roles. The PAFMM has played a noteworthy role in a number of military campaigns and coercive incidents over the years, including the harassment of Vietnamese survey ships in 2011, a standoff with the Philippines at Scarborough Reef in 2012, and a standoff involving a Chinese oil rig in 2014. In the past, the PAFMM rented fishing boats from companies or individual fisherman, but it appears that China is building a state-owned fishing fleet for its maritime militia force in the South China Sea. Hainan Province, adjacent to the South China Sea, ordered the construction of 84 large militia fishing boats with reinforced hulls and ammunition storage for Sansha City, and the militia took delivery by the end of 2016. China regularly states that it supports freedom of navigation and has not interfered with freedom of navigation. China, however, appears to hold a narrow definition of freedom of navigation that is centered on the ability of commercial cargo ships to pass through international waters. In contrast to the broader U.S./Western definition of freedom of navigation (aka freedom of the seas), the Chinese definition does not appear to include operations conducted by military ships and aircraft. It can also be noted that China has frequently interfered with commercial fishing operations by non-Chinese fishing vessels—something that some observers would regard as a form of interfering with freedom of navigation for commercial ships. An August 12, 2015, press report states the following (emphasis added): China respects freedom of navigation in the disputed South China Sea but will not allow any foreign government to invoke that right so its military ships and planes can intrude in Beijing's territory, the Chinese ambassador [to the Philippines] said. Ambassador Zhao Jianhua said late Tuesday [August 11] that Chinese forces warned a U.S. Navy P-8A [maritime patrol aircraft] not to intrude when the warplane approached a Chinese-occupied area in the South China Sea's disputed Spratly Islands in May.... "We just gave them warnings, be careful, not to intrude," Zhao told reporters on the sidelines of a diplomatic event in Manila.... When asked why China shooed away the U.S. Navy plane when it has pledged to respect freedom of navigation in the South China Sea, Zhao outlined the limits in China's view. "Freedom of navigation does not mean to allow other countries to intrude into the airspace or the sea which is sovereign. No country will allow that," Zhao said. "We say freedom of navigation must be observed in accordance with international law. No freedom of navigation for warships and airplanes ." A July 19, 2016, press report states the following: A senior Chinese admiral has rejected freedom of navigation for military ships, despite views held by the United States and most other nations that such access is codified by international law. The comments by Adm. Sun Jianguo, deputy chief of China's joint staff, come at a time when the U.S. Navy is particularly busy operating in the South China Sea, amid tensions over sea and territorial rights between China and many of its neighbors in the Asia-Pacific region. "When has freedom of navigation in the South China Sea ever been affected? It has not, whether in the past or now, and in the future there won't be a problem as long as nobody plays tricks," Sun said at a closed forum in Beijing on Saturday, according to a transcript obtained by Reuters. "But China consistently opposes so-called military freedom of navigation, which brings with it a military threat and which challenges and disrespects the international law of the sea," Sun said. A March 4, 2017, press report states the following: Wang Wenfeng, a US affairs expert at the China Institute of Contemporary International Relations, said Beijing and Washington obviously had different definitions of what constituted freedom of navigation. "While the US insists they have the right to send warships to the disputed waters in the South China Sea, Beijing has always insisted that freedom of navigation should not cover military ships," he said. A February 22, 2018, press report states the following: Hundreds of government officials, experts and scholars from all over the world conducted in-depth discussions of various security threats under the new international security situation at the 54 th Munich Security Conference (MSC) from Feb. 16 to 18, 2018. Experts from the Chinese delegation at the three-day event were interviewed by reporters on hot topics such as the South China Sea issue and they refuted some countries' misinterpretation of the relevant international law. The conference included a panel discussion on the South China Sea issue, which China and the Association of Southeast Asian Nations (ASEAN) countries have been committed to properly solving since the signing of the draft South China Sea code of conduct. Senior Colonel Zhou Bo, director of the Security Cooperation Center of the International Military Cooperation Office of the Chinese Ministry of National Defense, explained how some countries' have misinterpreted the international law. "First of all, we must abide by the United Nations Convention on the Law of the Sea (UNCLOS)," Zhou said. "But the problem now is that some countries unilaterally and wrongly interpreted the 'freedom of navigation' of the UNCLOS as the 'freedom of military operations', which is not the principle set by the UNCLOS," Zhou noted. A June 27, 2018, opinion piece in a British newspaper by China's ambassador to the UK stated that freedom of navigation is not an absolute freedom to sail at will. The US Freedom of Navigation Program should not be confused with freedom of navigation that is universally recognised under international law. The former is an excuse to throw America's weight about wherever it wants. It is a distortion and a downright abuse of international law into the "freedom to run amok". Second, is there any problem with freedom of navigation in the South China Sea? The reality is that more than 100,000 merchant ships pass through these waters every year and none has ever run into any difficulty with freedom of navigation.... The South China Sea is calm and the region is in harmony. The so-called "safeguarding freedom of navigation" issue is a bogus argument. The reason for hyping it up could be either an excuse to get gunboats into the region to make trouble, or a premeditated intervention in the affairs of the South China Sea, instigation of discord among the parties involved and impairment of regional stability…. China respects and supports freedom of navigation in the South China Sea according to international law. But freedom of navigation is not the freedom to run amok. For those from outside the region who are flexing their muscles in the South China Sea, the advice is this: if you really care about freedom of navigation, respect the efforts of China and Asean countries to safeguard peace and stability, stop showing off your naval ships and aircraft to "militarise" the region, and let the South China Sea be a sea of peace. A September 20, 2018, press report stated the following: Chinese Ambassador to Britain Liu Xiaoming on Wednesday [September 19] said that the freedom of navigation in the South China Sea has never been a problem, warning that no one should underestimate China's determination to uphold peace and stability in the region…. Liu stressed that countries in the region have the confidence, capability and wisdom to deal with the South China Sea issue properly and achieve enduring stability, development and prosperity. "Yet to everyone's confusion, some big countries outside the region did not seem to appreciate the peace and tranquility in the South China Sea," he said. "They sent warships and aircraft all the way to the South China Sea to create trouble." The senior diplomat said that under the excuse of so-called "freedom of navigation," these countries ignored the vast sea lane and chose to sail into the adjacent waters of China's islands and reefs to show off their military might. "This was a serious infringement" of China's sovereignty, he said. "It threatened China's security and put regional peace and stability in jeopardy." Liu stressed that China has all along respected and upheld the freedom of navigation and over-flight in the South China Sea in accordance with international law, including the United Nations Convention on the Law of the Sea. "Freedom of navigation is not a license to do whatever one wishes," he said, noting that freedom of navigation is not freedom to invade other countries' territorial waters and infringe upon other countries' sovereignty. "Such 'freedom' must be stopped," Liu noted. "Otherwise the South China Sea will never be tranquil." In contrast to China's narrow definition, the U.S./Western definition of freedom of navigation is much broader, encompassing operations of various types by both commercial and military ships and aircraft in international waters and airspace. As discussed earlier in this report, an alternative term for referring to the U.S./Western definition of freedom of navigation is freedom of the seas, meaning "all of the rights, freedoms, and lawful uses of the sea and airspace, including for military ships and aircraft, guaranteed to all nations under international law." When Chinese officials state that China supports freedom of navigation, China is referring to its own narrow definition of the term, and is likely not expressing agreement with or support for the U.S./Western definition of the term. China prefers to discuss maritime territorial disputes with other regional parties to the disputes on a bilateral rather than multilateral basis. Some observers believe China prefers bilateral talks because China is much larger than any other country in the region, giving China a potential upper hand in any bilateral meeting. China generally has resisted multilateral approaches to resolving maritime territorial disputes, stating that such approaches would internationalize the disputes, although the disputes are by definition international even when addressed on a bilateral basis. (China's participation with the ASEAN states in the 2002 declaration of conduct DOC and in negotiations with the ASEAN states on the follow-on binding code of conduct (COC) [see Appendix C ] represents a departure from this general preference.) Some observers believe China is pursuing a policy of putting off a negotiated resolution of maritime territorial disputes so as to give itself time to implement the salami-slicing strategy. Along with its above-discussed preference for treating territorial disputes on a bilateral rather than multilateral basis, China resists and objects to U.S. involvement in maritime disputes in the SCS and ECS. Statements in China's state-controlled media sometimes depict the United States as an outsider or interloper whose actions (including freedom of navigation operations) are seeking to "stir up trouble" in an otherwise peaceful regional situation. Potential or actual Japanese involvement in the SCS is sometimes depicted in China's state-controlled media in similar terms. Depicting the United States in this manner can be viewed as consistent with goals of attempting to drive a wedge between the United States and its allies and partners in the region and of ensuring maximum leverage in bilateral (rather than multilateral) discussions with other countries in the region over maritime territorial disputes. A July 31, 2018, press report stated the following: The Philippines has expressed concern to China over an increasing number of Chinese radio messages warning Philippine aircraft and ships to stay away from newly fortified islands and other territories in the South China Sea claimed by both countries, officials said Monday. A Philippine government report showed that in the second half of last year alone, Philippine military aircraft received such Chinese radio warnings at least 46 times while patrolling near artificial islands built by China in the South China Sea's Spratly archipelago. The Chinese radio messages were "meant to step up their tactics to our pilots conducting maritime air surveillance in the West Philippine Sea", the report said, using the Philippine name for the South China Sea. A Philippine air force plane on patrol near the Chinese-held islands received a particularly offensive radio message in late January according to the Philippine government report. It was warned by Chinese forces that it was "endangering the security of the Chinese reef. Leave immediately and keep off to avoid misunderstanding," the report said. Shortly afterwards, the plane received a veiled threat: "Philippine military aircraft, I am warning you again, leave immediately or you will pay the possible consequences." The Filipino pilot later "sighted two flare warning signals from the reef", said the report, which identified the Chinese-occupied island as Gaven Reef. Philippine officials have raised their concern twice over the radio transmissions, including in a meeting with Chinese counterparts in Manila earlier this year that focused on the Asian countries' long-unresolved territorial disputes, according to two officials who spoke on condition of anonymity because they were not authorised to discuss the issue publicly. It is a new problem that emerged after China transformed seven disputed reefs into islands using dredged sand in the Spratlys… The messages used to originate from Chinese coastguard ships in past years but US military officials suspect transmissions now are also being sent from the Beijing-held artificial islands, where far more powerful communications and surveillance equipment has been installed along with weapons such as surface-to-air missiles. "Our ships and aircraft have observed an increase in radio queries that appear to originate from new land-based facilities in the South China Sea," Commander Clay Doss, public affairs officer of the US 7th Fleet, said by email in response to questions about the Chinese messages. "These communications do not affect our operations," Doss said…. US Navy ships and aircraft communicate routinely with regional navies, including the Chinese navy. "The vast majority of these communications are professional, and when that is not the case, those issues are addressed by appropriate diplomatic and military channels," Doss said. For discussion of some additional elements of China's approach to maritime disputes in the SCS and ECS, including China's nine-dash line in the SCS, see Appendix E . The U.S. position on territorial and EEZ disputes in the Western Pacific (including those involving China) includes the following elements, among others: The United States supports the principle that disputes between countries should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law. The United States supports the principle of freedom of seas, meaning the rights, freedoms, and uses of the sea and airspace guaranteed to all nations in international law. The United States opposes claims that impinge on the rights, freedoms, and lawful uses of the sea that belong to all nations. The United States takes no position on competing claims to sovereignty over disputed land features in the ECS and SCS. Although the United States takes no position on competing claims to sovereignty over disputed land features in the ECS and SCS, the United States does have a position on how competing claims should be resolved: Territorial disputes should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law. Claims of territorial waters and EEZs should be consistent with customary international law of the sea and must therefore, among other things, derive from land features. Claims in the SCS that are not derived from land features are fundamentally flawed. Parties should avoid taking provocative or unilateral actions that disrupt the status quo or jeopardize peace and security. The United States does not believe that large-scale land reclamation with the intent to militarize outposts on disputed land features is consistent with the region's desire for peace and stability. The United States, like most other countries, believes that coastal states under UNCLOS have the right to regulate economic activities in their EEZs, but do not have the right to regulate foreign military activities in their EEZs. U.S. military surveillance flights in international airspace above another country's EEZ are lawful under international law, and the United States plans to continue conducting these flights as it has in the past. The Senkaku Islands are under the administration of Japan and unilateral attempts to change the status quo raise tensions and do nothing under international law to strengthen territorial claims. For additional information regarding the U.S. position on the issue of operational rights of military ships in the EEZs of other countries, see Appendix F . U.S. Navy ships challenge what the United States views as excessive maritime claims and carry out assertions of operational rights as part of the U.S. Freedom of Navigation (FON) program for challenging maritime claims that the United States believes to be inconsistent with international law. The FON program began in 1979, involves diplomatic activities as well as operational assertions by U.S. Navy ships, and is global in scope, encompassing activities and operations directed not only at China, but at numerous other countries around the world, including U.S. allies and partner states. DOD's record of "excessive maritime claims that were challenged by DoD operational assertions and activities during the period of October 1, 2016, to September 30, 2017, in order to preserve the rights, freedoms, and uses of the sea and airspace guaranteed to all nations by international law" includes a listing for multiple challenges that were conducted to challenge Chinese claims relating to "excessive straight baselines; jurisdiction over airspace above the exclusive economic zone (EEZ); restriction on foreign aircraft flying through an Air Defense Identification Zone (ADIZ) without the intent to enter national airspace; domestic law criminalizing survey activity by foreign entities in the EEZ; prior permission required for innocent passage of foreign military ships through the TTS; and actions/statements that indicate a claim to a TTS [territorial sea] around features not so entitled." Some observers now assess that China's actions in the SCS have achieved for China a more dominant or more commanding position in the SCS. One observer, for example, writes in a March 28, 2018, commentary piece that as Beijing's regional clout continues to grow, it can be hard for weaker nations to resist it, even with these allies' support. Barely three weeks after the [the U.S. aircraft carrier Carl] Vinson's visit [to Vietnam], the Vietnamese government bowed to Chinese pressure and canceled a major oil drilling project in disputed South China waters. It was yet another sign of the region's rapidly shifting dynamics. For the last decade, the United States and its Asian allies have been significantly bolstering their military activities in the region with the explicit aim of pushing back against China. But Beijing's strength and dominance, along with its diplomatic, economic and military reach, continues to grow dramatically.... Western military strategists worry that China will, in time, be able to block any activity in the region by the United States and its allies. Already, satellite photos show China installing sophisticated weapons on a range of newly-reclaimed islands where international law says they simply should not be present. In any war, these and other new weapons that China is acquiring could make it all but impossible for the U.S. Navy and other potential enemies of China to operate in the area at all.... China's increasing confidence in asserting control over the South China Sea has clearly alarmed its neighbors, particularly the Philippines, Vietnam, Malaysia, Indonesia and Brunei, all of whom have competing territorial claims over waters that China claims for itself. But it also represents a major and quite deliberate challenge to the United States which, as an ally to all these nations, has essentially staked its own credibility on the issue. Over the last several years, it has become common practice for U.S. warships to sail through nearby waters, pointedly refusing to acknowledge Chinese demands that they register with its unilaterally-declared air and maritime "identification zones" (which the United States and its allies do not recognize).... None of this, however, addresses the seismic regional change produced by China's island-building strategy.... ... China sees this confrontation as a test case for its ability to impose its will on the wider region—and so far it is winning.... The United States remains the world's preeminent military superpower, and there is little doubt it could win a fight with China almost anywhere else in the world. In its own backyard, however, Beijing is making it increasingly clear that it calls the shots. And for now, there is little sign anyone in Washington—or anywhere else—has the appetite to seriously challenge that assumption. An April 9, 2018, article from a Chinese media outlet states the following: The situation in the South China Sea has been developing in favor of China, said Chinese observers after media reported that China is conducting naval drills in the region, at the same time as "three US carrier battle groups passed by" the area. "The regional strategic situation is tipping to China's side in the South China Sea, especially after China's construction of islands and reefs," Chen Xiangmiao, a research fellow at the National Institute for the South China Sea, told the Global Times on Sunday. China has strengthened its facilities in the region and conducted negotiations and cooperation on the South China Sea, which have narrowed China's gap in power with the US, while gaining advantages over Japan and India, according to Chen. U.S. Navy Admiral Philip Davidson, in responses to advance policy questions from the Senate Armed Services Committee for an April 17, 2018, hearing before the committee to consider nominations, including Davidson's nomination to become Commander, U.S. Pacific Command (PACOM), stated the following in part (emphasis added): With respect to their actions in the South China Sea and more broadly through the Belt and Road Initiative, the Chinese are clearly executing deliberate and thoughtful force posture initiatives. China claims that these reclaimed features and the Belt and Road Initiative [BRI] will not be used for military means, but their words do not match their actions.... While Chinese air forces are not as advanced as those of the United States, they are rapidly closing the gap through the development of new fourth and fifth generation fighters (including carrier-based fighters), long range bombers, advanced UAVs, advanced anti-air missiles, and long-distance strategic airlift. In line with the Chinese military's broader reforms, Chinese air forces are emphasizing joint operations and expanding their operations, such as through more frequent long range bomber flights into the Western Pacific and South China Sea. As a result of these technological and operational advances, the Chinese air forces will pose an increasing risk not only to our air forces but also to our naval forces, air bases and ground forces.... In the South China Sea, the PLA has constructed a variety of radar, electronic attack, and defense capabilities on the disputed Spratly Islands, to include: Cuarteron Reef, Fiery Cross Reef, Gaven Reef, Hughes Reef, Johnson Reef, Mischief Reef and Subi Reef. These facilities significantly expand the real-time domain awareness, ISR, and jamming capabilities of the PLA over a large portion of the South China Sea, presenting a substantial challenge to U.S. military operations in this region.... China's development of forward military bases in the South China Sea began in December 2013 when the first dredger arrived at Johnson Reef. Through 2015, China used dredging efforts to build up these reefs and create manmade islands, destroying the reefs in the process. Since then, China has constructed clear military facilities on the islands, with several bases including hangars, barracks, underground fuel and water storage facilities, and bunkers to house offense and defensive kinetic and non-kinetic systems. These actions stand in direct contrast to the assertion that President Xi made in 2015 in the Rose Garden when he commented that Beijing had no intent to militarize the South China Sea. Today these forward operating bases appear complete. The only thing lacking are the deployed forces. Once occupied, China will be able to extend its influence thousands of miles to the south and project power deep into Oceania. The PLA will be able to use these bases to challenge U.S. presence in the region, and any forces deployed to the islands would easily overwhelm the military forces of any other South China Sea-claimants. In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States .... Ultimately, BRI provides opportunities for China's military to expand its global reach by gaining access to foreign air and maritime port facilities. This reach will allow China's military to extend its striking and surveillance operations from the South China Sea to the Gulf of Aden. Moreover, Beijing could leverage BRI projects to pressure nations to deny U.S. forces basing, transit, or operational and logistical support, thereby making it more challenging for the United States to preserve international orders and norms.... With respect to the Indo-Pacific region, specifically, I am concerned that some nations, including China, assert their interests in ways that threaten the foundational standards for the world's oceans as reflected in the Law of the Sea Convention. This trend is most evident off the coast of China and in the South China Sea where China's policies and activities are challenging the free and open international order in the air and maritime domains. China's attempts to restrict the rights, freedoms, and lawful uses of the sea available to naval and air forces is inconsistent with customary international law and as President Reagan said in the 1983 Statement on United States Oceans Policy, "the United States will not, however, acquiesce in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight." A May 8, 2018, press report states the following: China's neighbors and rivals fear that the Asian powerhouse is slowly but surely establishing the foundation of an Air Defense Identification Zone (ADIZ) in one of the world's most important and busy waterways…. Boosting China's missile defense system in the area would allow it to progressively restrict the movement as well as squeeze the supply lines of smaller claimant states, all of which maintain comparatively modest military capabilities to fortify their sea claims." Another observer writes in a May 10, 2018, commentary piece that All these developments [in the SCS], coupled with the lack of any concerted or robust response from the United States and its allies and partners in the region, point to the inevitable conclusion that the sovereignty dispute in the SCS has – irreversibly – become a foregone conclusion. Three compelling reasons justify this assertion…. First, China sees the SCS issue as a security matter of paramount importance, according it the status of a "core interest" – on par with resolution of the Taiwan question…. Second, the sovereignty of SCS waters is a foregone conclusion partly because of U.S. ambivalence toward Chinese military encroachment…. Third, the implicit acquiescence of ASEAN [Association of Southeast Asian Nations] states toward China's moves in the SCS has strengthened its position that all features and waters within the "nine-dashed line" belongs to Beijing…. The above three factors – Beijing's sharpened focus on national security, lack of American resolve to balance China in the SCS, and ASEAN's prioritization of peace and stability over sovereignty considerations – have contributed to the bleak state of affairs today…. From the realist perspective, as Beijing accrues naval dominance in the SCS, the rules meant to regulate its behavior are likely to matter less and less—underscoring the geopolitical truism that 'might is right.' While China foreswears the use of coercive force on its Southeast Asian neighbors and may indeed have no offensive intentions today, it has now placed itself in a position to do so in future. In other words, while it had no capacity nor intent to threaten Southeast Asian states previously, it has developed the requisite capabilities today. Another observer writes in a separate May 10, 2018, commentary piece that the South China Sea is being increasingly dominated militarily by China at both its eastern and western ends. This is what researchers at the US Naval War College meant when they told the author that Chinese militarization activities in the region are an attempt to create the equivalent of a "strategic strait" in the South China Sea. In other words, through the more or less permanent deployment of Chinese military power at both extreme ends of the South China Sea – Hainan and Woody Island in the west, and the new (and newly militarized) artificial islands in the east – Beijing is seeking to transform the South China Sea from an international SLOC into a Chinese-controlled waterway and a strategic chokepoint for other countries…. This amalgamation of force means that China's decades-long "creeping assertiveness" in this particular body of water has become a full-blown offensive. What all this means is that China is well on its way toward turning the South China Sea in a zone of anti-access/area denial (A2/AD). This means keeping military competitors (particularly the US Navy) out of the region, or seriously impeding their freedom of action inside it. A June 1, 2018, press report states the following: Through its navy, coast guard, a loose collection of armed fishing vessels, and a network of military bases built on artificial islands, Beijing has gained de facto control of the South China Sea, a panel of Indo-Pacific security experts said Friday. And the implications of that control—militarily, economically, diplomatically—are far-reaching for the United States and its partners and allies in the region. "Every vessel [sent on a freedom of navigation transit] is shadowed" by a Chinese vessel, showing Beijing's ability to respond quickly events in areas it considers its own, retired Marine Lt. Gen. Wallace "Chip" Gregson said during an American Enterprise Institute forum. Another observer writes in a June 5, 2018, commentary piece that It's over in the South China Sea. The United States just hasn't figured it out yet…. It is past time for the United States to figure out what matters in its relationship with China, and to make difficult choices about which values have to be defended, and which can be compromised. A June 21, 2018, editorial states the following: America's defence secretary, James Mattis, promised "larger consequences" if China does not change track [in the SCS]. Yet for now [Chinese President Xi Jinping], while blaming America's own "militarisation" as the source of tension, must feel he has accomplished much. He has a chokehold on one of the world's busiest shipping routes and is in a position to make good on China's claims to the sea's oil, gas and fish. He has gained strategic depth in any conflict over Taiwan. And, through the sheer fact of possession, he has underpinned China's fatuous historical claims to the South China Sea. To his people, Mr Xi can paint it all as a return to the rightful order. Right now, it is not clear what the larger consequences of that might be. Another observer writes in a July 17, 2018, commentary piece that Two years after an international tribunal rejected expansive Chinese claims to the South China Sea, Beijing is consolidating control over the area and its resources. While the U.S. defends the right to freedom of navigation, it has failed to support the rights of neighboring countries under the tribunal's ruling. As a result, Southeast Asian countries are bowing to Beijing's demands…. In late July 2017, Beijing threatened Vietnam with military action if it did not stop oil and gas exploration in Vietnam's exclusive economic zone, according to a report by the BBC's Bill Hayton. Hanoi stopped drilling. Earlier this year, Vietnam again attempted to drill, and Beijing issued similar warnings…. Other countries, including the U.S., failed to express support for Vietnam or condemn China's threats. Beijing has also pressured Brunei, Malaysia and the Philippines to agree to "joint development" in their exclusive economic zones—a term that suggests legitimate overlapping claims. Meanwhile China is accelerating its militarization of the South China Sea. In April, it deployed antiship cruise missiles, surface-to-air missiles and electronic jammers to artificial islands constructed on Fiery Cross Reef, Subi Reef and Mischief Reef. In May, it landed long-range bombers on Woody Island. The Trump administration's failure to press Beijing to abide by the tribunal's ruling is a serious mistake. It undermines international law and upsets the balance of power in the region. Countries have taken note that the tide in the South China Sea is in China's favor, and they are making their strategic calculations accordingly. This hurts U.S. interests in the region. Up through 2014, U.S. concern over maritime territorial and EEZ disputes involving China centered more on their potential for causing tension, incidents, and a risk of conflict between China and its neighbors in the region, including U.S. allies Japan and the Philippines and emerging partner states such as Vietnam. While that concern remains, particularly regarding the potential for a conflict between China and Japan involving the Senkaku Islands, U.S. concern since 2014 (i.e., since China's island-building activities in the Spratly Islands were first publicly reported) has shifted increasingly to how China's strengthening position in the SCS may be affecting the risk of a U.S.-China crisis or conflict in the SCS and the broader U.S.-Chinese strategic competition. A key issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly its island-building and base-construction activities in the Spratly Islands—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region. In considering how to respond to China's actions in the SCS and ECS, an initial step can be to review China's approach to the region. As stated earlier, in general, China's approach to the maritime disputes in the SCS and ECS, and to strengthening its position over time in the SCS, can be characterized as follows: China appears to have identified the assertion and defense of its maritime territorial claims in the SCS and ECS, and the strengthening of its position in the SCS, as important national goals. To achieve these goals, China appears to be employing an integrated, whole-of-society strategy that includes diplomatic, informational, economic, military, paramilitary/law enforcement, and civilian elements. In implementing this integrated strategy, China appears to be persistent, patient, tactically flexible, willing to expend significant resources, and willing to absorb at least some amount of reputational and other costs that other countries might seek to impose on China in response to China's actions. The above points raise a possible question as to how likely a U.S. response might be to achieve U.S. goals if it were one-dimensional rather than multidimensional or whole-of-government; halting or intermittent rather than persistent; insufficiently resourced; reliant on imposed costs that are not commensurate with the importance that China appears to have assigned to achieving its goals in the region, or some combination of these things. Potential general U.S. goals in responding to China's actions in the SCS and ECS include but are not necessarily limited to the following, which are not mutually exclusive: fulfilling U.S. security commitments in the Western Pacific, including treaty commitments to Japan and the Philippines; maintaining and enhancing the U.S.-led security architecture in the Western Pacific, including U.S. security relationships with treaty allies and partner states; maintaining a regional balance of power that is favorable to the United States and its allies and partners; de fending the principle of peaceful resolution of disputes , under which disputes between countries should be resolved peacefully, without coercion, intimidation, threats, or the use of force, and in a manner consistent with international law, and resisting the emergence of an alternative "might-makes-right" approach to international affairs; defending the principle of freedom of the seas , meaning the rights, freedoms, and uses of the sea and airspace guaranteed to all nations in international law, including the interpretation held by the United States and many other countries concerning operational freedoms for military forces in EEZs; and preventing China from becoming a regional hegemon in East Asia, and potentially as part of that, preventing China from controlling or dominating the ECS or SCS. Potential specific U.S. goals in responding to China's actions in the SCS and ECS include but are not necessarily limited to the following, which are not mutually exclusive: dissuading China from carrying out any additional base-construction activities that it might be planning for sites that it occupies in the SCS; dissuading China from moving any additional military personnel, equipment, and supplies to bases at sites that it occupies in the SCS, and persuading China to remove military personnel, equipment, and supplies that have already been moved to those bases; dissuading China from initiating island-building or base-construction activities at Scarborough Shoal; dissuading China from declaring an ADIZ over the SCS; encouraging China to reduce or end Chinese Coast Guard ships at the Senkaku Islands in the ECS; encouraging China to halt actions intended to put pressure against the small Philippine military presence at Second Thomas Shoal in the Spratly Islands (or against any other Philippine-occupied sites in the Spratly Islands); encouraging China to provide greater access by Philippine fisherman to waters surrounding Scarborough Shoal or in the Spratly Islands; encouraging China to adopt the U.S./Western definition regarding freedom of the seas, including the freedom of U.S. and other non-Chinese military vessels to operate freely in China's EEZ; and encouraging China to accept and abide by the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China (see Appendix D ). In terms of identifying specific actions that are intended to support U.S. policy goals, a key element would be to have a clear understanding of which actions are intended to support which goals, and to maintain an alignment of actions with policy goals. For example, U.S. freedom of navigation (FON) operations, which often feature prominently in discussions of actual or potential U.S. actions, can directly support a general goal of defending principle of freedom of the seas, but might support other goals only indirectly, marginally, or not at all. In assessing how the United States should respond to China's actions in the SCS, another factor that policymakers may consider is the potential contribution that could be made by allies such as Japan, the Philippines, Australia, the UK, and France, as well as potential or emerging partner countries such as Vietnam, Indonesia, and India. Most or all of the countries just mentioned have taken steps of one kind or another in response to China's actions in the SCS and ECS. For U.S. policymakers, one key question is how effective those steps by allies and partner countries have been, whether those steps could be strengthened, and whether they should be undertaken independent of or in coordination with the United States. A second key question concerns the kinds of actions that Philippine president Rodrigo Duterte might be willing to take, given his largely nonconfrontational policy toward China regarding the SCS, and what implications Philippine reluctance to take certain actions may have for limiting or reducing the potential effectiveness of U.S. options for responding to China's actions in the SCS. In apparent response to China's actions in the SCS and ECS, the United States during the Obama Administration took a number of actions, including the following: reiterating the U.S. position on maritime territorial claims in the area in various public fora; expressing strong concerns about China's island-building and base-construction activities, and calling for a halt on such activities by China and other countries in the region; taking steps to improve the ability of the Philippines, Vietnam, Malaysia, and Indonesia to maintain maritime domain awareness (MDA) and patrol their EEZs, including the Southeast Asia Maritime Security Initiative (MSI), an initiative (since renamed the Indo-Pacific MSI) announced by the Obama Administration in May 2015 and subsequently legislated by Congress to provide $425 million in maritime security assistance to those four countries over a five-year period; taking steps to strengthen U.S. security cooperation with Japan, the Philippines, Vietnam, and Singapore, including signing an agreement with the Philippines that provides U.S. forces with increased access to Philippine bases, increasing the scale of joint military exercises involving U.S. and Philippine forces, relaxing limits on sales of certain U.S. arms to Vietnam, and operating U.S. Navy P-8 maritime patrol aircraft from Singapore; expressing support for the idea of Japanese patrols in the SCS; and stating that the United States would support a multinational maritime patrol of the SCS by members of ASEAN. Some observers, both during and after the Obama Administration, have criticized the Obama Administration for not doing enough to counter China's actions in the SCS and ECS. In particular, they have argued that the Obama Administration did not react strongly enough to China's occupation of Scarborough Shoal in 2012; react strongly enough to China's island-building and base-construction activities in the Spratly Islands starting around December 2013; do enough in terms of conducting and offering sufficiently clear and strong legal rationales for U.S. freedom of navigation (FON) operations in the SCS; do enough to publicize, rhetorically support, and enforce the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China; and impose sufficiently strong costs on China's for its actions in the SCS and ECS. As a result of the above, these critics have argued, the Obama Administration in effect sent a message to China that the United States would not strongly oppose China's actions in the SCS and ECS—a message, these critics have argued, that may have encouraged and accelerated China's actions. Supporters of the Obama Administration's actions in response to China's actions in the SCS and ECS have argued that those actions were substantial and proportionate to China's actions and successful in deterring China from initiating island-building and base-construction activities at Scarborough Shoal; having U.S. military aircraft disregard the ADIZ that China declared over the ECS, and in deterring China from declaring an ADIZ over the SCS; imposing political and reputational costs on China for its actions in the ECS and SCS during this time; and working with regional allies and partners to impose costs on China and strengthen the U.S.-led security architecture for the region. In addition to continuing to implement the above-mentioned Indo-Pacific MSI and conducting recurring freedom of navigation (FON) operations in the SCS (see next section), the Trump Administration reportedly has taken other actions to promote U.S. interests in that area. These steps include actions to increase U.S. defense and intelligence cooperation with Vietnam and Indonesia, and U.S. assistance to improve the maritime security capabilities of the two countries. A January 9, 2018, press report states the following: The United States has accused China of "provocative militarisation" of disputed areas in the South China Sea and will continue sending vessels to the region to carry out freedom-of-navigation patrols, according to a top US adviser on Asia policy. Brian Hook, a senior adviser to US Secretary of State Rex Tillerson, said on Tuesday [January 9] that the issue of the South China Sea was raised at all diplomatic and security dialogues between China and the US... "China's provocative militarisation of the South China Sea is one area where China is contesting international law. They are pushing around smaller states in ways that put a strain on the global system," Hook said during a media telephone conference. "We are going to back up freedom-of-navigation operations and let them know we will fly, sail and operate wherever international law allows."... "We strongly believe China's rise cannot come at the expense of the values and rule-based order. That order is the foundation of peace and stability in the Indo-Pacific and also around the world," Hook said. "When China's behaviour is out of step with these values and these rules we will stand up and defend the rule of law." A May 3, 2018, press report stated the following: The United States has raised concerns with China about its latest militarization of the South China Sea and there will be near-term and long-term consequences, the White House said on Thursday [May 3]. U.S. news network CNBC reported on Wednesday that China had installed anti-ship cruise missiles and surface-to-air missile systems on three manmade outposts in the South China Sea. It cited sources with direct knowledge of U.S. intelligence. Asked about the report, White House spokeswoman Sarah Sanders told a regular news briefing: "We're well aware of China's militarization of the South China Sea. We've raised concerns directly with the Chinese about this and there will be near-term and long-term consequences." Sanders did not say what the consequences might be. On May 23, 2018, DOD announced that it was disinviting China from the 2018 RIMPAC (Rim of the Pacific) exercise. RIMPAC is a U.S.-led, multilateral naval exercise in the Pacific involving naval forces from more than two dozen countries that is held every two years. At DOD's invitation, China participated in the 2014 and 2016 RIMPAC exercises. DOD had invited China to participate in the 2018 RIMPAC exercise, and China had accepted that invitation. Observers who have argued for the United States to take stronger actions in response to China's actions in the ECS and SCS have argued that the United States should, among other things, not invite China to participate in the 2018 RIMPAC exercise, on the grounds that doing so would in effect reward China for its recent actions in the ECS and SCS. They have also argued that the value to the United States and its allies of information gained from observing Chinese naval forces operate during the exercise would be outweighed by the value to China of information that China would gain from observing U.S. and other allied and partner navies operate during the exercise. After DOD had issued the invitation to China to participate in the 2018 RIMPAC exercise, these observers argued that the invitation should be withdrawn. Supporters of having China participate in RIMPAC exercises have argued that they are valuable for maintaining a constructive working relationship with China's navy—something, they argue, that could be of particular value if there were a U.S.-Chinese incident at sea or a U.S.-China crisis over some issue. They have also argued that China's participation in RIMPAC exercises provides opportunities to encourage China's navy to adopt U.S. and Western norms relating to issues such as freedom of the seas and avoidance of incidents at sea, and that the value to the United States and its allies of information gained from observing China's naval forces operate during the exercise is not outweighed by value to China of the information gained by China from observing U.S., allied, and partner navies operate during the exercises, particularly since China could observe the exercise using intelligence-gathering ships or perhaps other means, even without participating in the exercise. A statement from DOD about the withdrawal of the invitation for China to participate in the 2018 RIMPAC exercise states the following: The United States is committed to a free and open Indo-Pacific. China's continued militarization of disputed features in the South China Sea only serve to raise tensions and destabilize the region. As an initial response to China's continued militarization of the South China Sea we have disinvited the PLA Navy from the 2018 Rim of the Pacific (RIMPAC) Exercise. China's behavior is inconsistent with the principles and purposes of the RIMPAC exercise. We have strong evidence that China has deployed anti-ship missiles, surface-to-air missile (SAM) systems, and electronic jammers to contested features in the Spratly Islands region of the South China Sea. China's landing of bomber aircraft at Woody Island has also raised tensions. While China has maintained that the construction of the islands is to ensure safety at sea, navigation assistance, search and rescue, fisheries protection, and other non-military functions the placement of these weapon systems is only for military use. We have called on China to remove the military systems immediately and to reverse course on the militarization of disputed South China Sea features. We believe these recent deployments and the continued militarization of these features is a violation of the promise that President Xi made to the United States and the World not to militarize the Spratly Islands. A May 23, 2018, press report states the following: The Pentagon rescinded an invitation to China to participate in an international military exercise in the Pacific Ocean next month, signaling disapproval to Beijing for what U.S. officials say is its refusal to stop militarizing South China Sea islands. Defense Secretary Jim Mattis, after weeks of internal debate within the Pentagon, concluded that China shouldn't be allowed to participate in the American-led biennial Rim of the Pacific exercise, slated to begin in June, according to U.S. officials. The invitation's withdrawal hasn't been previously disclosed. Chinese officials in Washington were notified of the decision Wednesday morning, said the U.S. officials. China's top diplomat, State Councilor Wang Yi, criticized the Pentagon's decision in comments while visiting the State Department Wednesday. "We find that a very unconstructive move, nonconstructive move," Mr. Wang told reporters. "We hope the U.S. will change such a negative mindset."... After The Wall Street Journal published [an initial version of] this article on Wednesday [May 23], Pentagon officials called their move "an initial response" to China's militarization of the islands. "We have strong evidence that China has deployed anti-ship missiles, surface-to-air missile (SAM) systems, and electronic jammers to contested features in the Spratly Islands region of the South China Sea," Lt. Col. Chris Logan, a Pentagon spokesman, said in a statement. "China's landing of a bomber aircraft at Woody Island has also raised tensions." Eric Sayers, of the Center for Strategic and International Studies, a think tank in Washington, and a former adviser to U.S. Pacific Command, said the Pentagon move "will be a minor blow to the PLA Navy's prestige." He said, "It will also send the signal to Beijing that China cannot expect to continue to militarize the South China Sea and still be treated as a welcomed member of the international maritime community." But, Mr. Sayers added, the Trump administration must still develop an overall strategy in the Indo- Pacific region if it hopes to influence the maritime domain there. "Thus far, there is little evidence or new initiatives one can point to that distinguishes this administration's regional policy from the previous one," he said. The decision to rescind the invitation came after more than a month of internal Trump administration debate about China, including the timing of any rescission, the officials said, especially given the trade talks. Top State Department officials initially advised against rescinding the invitation, hoping that diplomatic interventions would convince China to at least remove missiles from those islands, said the U.S. officials. State Department officials didn't immediately respond to a request for comment. But Pentagon officials held the view that it was time to impose a cost on the Chinese for their behavior in the South China Sea, the officials said. A June 3, 2018, press report states the following: The United States is considering intensified naval patrols in the South China Sea in a bid to challenge China's growing militarization of the waterway, actions that could further raise the stakes in one of the world's most volatile areas. The Pentagon is weighing a more assertive program of so-called freedom-of-navigation operations close to Chinese installations on disputed reefs, two U.S. officials and Western and Asian diplomats close to discussions said. The officials declined to say how close they were to finalizing a decision. Such moves could involve longer patrols, ones involving larger numbers of ships or operations involving closer surveillance of Chinese facilities in the area, which now include electronic jamming equipment and advanced military radars. U.S. officials are also pushing international allies and partners to increase their own naval deployments through the vital trade route as China strengthens its military capabilities on both the Paracel and Spratly islands, the diplomats said, even if they stopped short of directly challenging Chinese holdings. "What we have seen in the last few weeks is just the start, significantly more is being planned," said one Western diplomat, referring to a freedom of navigation patrol late last month that used two U.S. ships for the first time. "There is a real sense more needs to be done."… Critics have said the patrols have little impact on Chinese behavior and mask the lack of a broader strategy to deal with China's growing dominance of the area…. U.S. Defence Secretary Jim Mattis warned in Singapore on Saturday [June 2] that China's militarization of the South China Sea was now a "reality" but that Beijing would face unspecified consequences. A November 13, 2018, press report states the following: National security adviser John Bolton said [on November 13] the U.S. would oppose any agreements between China and other claimants to the South China Sea that limit free passage to international shipping, and that American naval vessels would continue to sail through those waters. Mr. Bolton's remarks served as a warning to Southeast Asian leaders, who are preparing for a regional summit in Singapore this week, and particularly for the Philippines, which is now in talks with Beijing about jointly exploring natural resources in the contested area. In meetings to develop a code of conduct this year for the South China Sea, China has tried to secure a veto over Southeast Asian nations hosting military exercises with other countries in the disputed waters…. Mr. Bolton said the U.S. welcomes the negotiations in principle. In a media briefing in Singapore, he described them as a plus. But he stressed that "the outcome has to be mutually acceptable, and also has to be acceptable to all the countries that have legitimate maritime and naval rights to transit and other associate rights that we don't want to see infringed." Some observers have expressed concern that the Trump Administration's focus from time to time on North Korea has sometimes distracted the Administration from the situation in the SCS, permitting China to more easily increase or consolidate its gains in the area. Other observers have expressed concern that the Trump Administration's focus on reducing the U.S. trade deficit with China could distract the Administration from other issues relating to China, including China's actions in the SCS. At a September 17, 2015, hearing before the Senate Armed Services Committee on DOD's maritime security strategy in the Asia-Pacific region, DOD witnesses stated, in response to questioning, that the United States had not conducted a freedom of navigation (FON) operation within 12 miles of a Chinese-occupied land feature in the Spratly Islands since 2012. This led to a public debate in the United States (that was watched by observers in the Western Pacific) over whether the United States should soon conduct such an operation, particularly given China's occupation of Scarborough Shoal in 2012 and China's island-building activities at sites that its occupies in the SCS. Opponents argued that conducting a FON operation could antagonize China and give China an excuse to militarize its occupied sites in the SCS. Supporters argued that not conducting such an operation was inconsistent with the underlying premise of the U.S. FON program that navigational rights which are not regularly exercised are at risk of atrophy; that it was inconsistent with the U.S. position of taking no position on competing claims to sovereignty over disputed land features in the SCS (because it tacitly accepts Chinese sovereignty over those features); that it effectively rewarded (rather than imposed costs on) China for its assertive actions in the SCS, potentially encouraging further such actions; and that China intends to militarize its occupied sites in the Spratly Islands, regardless of whether the United States conducts FON operations there. The Obama Administration reportedly considered, for a period of weeks, whether to conduct such an operation in the near future. Some observers argued that the Obama Administration's extended consideration of the question, and the press reporting on that deliberation, unnecessarily raised the political stakes involved in whether to conduct what, in the view of these observers, should have been a routine FON operation. The Obama Administration decided in favor of conducting the operation, and the operation reportedly was conducted near the Chinese-occupied site of Subi Reef on October 27, 2015 (which was October 26, 2015, in Washington, DC), using the U.S. Navy destroyer Lassen in conjunction with a U.S. Navy P-8 maritime patrol aircraft flying overhead. Statements from executive branch sources about the operation that were reported in the press created some confusion among observers regarding how the operation was conducted and what rationale the Obama Administration was citing as the legal basis for the operation. In particular, there was confusion among observers as to whether the United States was defending the operation as an expression of the right of innocent passage —a rationale, critics argued, that would muddle the legal message sent by the operation, possibly implying U.S. acceptance of Chinese sovereignty over Subi Reef, which would inadvertently turn the operation into something very different and perhaps even self-defeating from a U.S. perspective. A second FON operation in the SCS was conducted on January 29, 2016, near Triton Island in the Paracel Islands, by the U.S. Navy destroyer C urtis Wilber . A third FON operation in the SCS was conducted on May 10, 2016, in which the destroyer William P. Lawrence conducted an innocent passage within 12 nautical miles of Fiery Cross Reef, a Chinese-occupied feature in the Spratly Islands that is also claimed by Taiwan, Vietnam, and the Philippines. A fourth FON operation in the SCS occurred on October 21, 2016, involving the destroyer Decatur operating near the Paracel Islands. This was the final announced FON operation in the South China Sea during the Obama Administration. As of early May 2017, the Trump Administration had not conducted any announced FON operations in the SCS, and DOD reportedly had turned down proposals from the Navy to conduct such operations, prompting some observers to argue that the Trump Administration, in its first few months in office, appeared to be more hesitant about conducting FON operations in the SCS than the Obama Administration was during its final 15 months in office (i.e., since October 2015). DOD officials stated that in spite of the absence of announced FON operations in the SCS, U.S. policy on such operations had not changed, and that the United States intended to conduct FON operations in the SCS in the near future. As shown in Table 1 , the Trump Administration conducted an FON operation in the SCS on May 25, 2017, and has conducted multiple additional FON operations in the SCS since then. In general, China has objected to each of these operations and has stated that it sent Chinese Navy ships in each case to warn the U.S. Navy ships to leave the areas in question. The FON operation conducted on September 30, 2018, led to an intense encounter, discussed elsewhere in this report, between the U.S. Navy ship that conducted the operation (the USS Decatur [DDG-73]) and the Chinese Navy ship that was sent to warn it off. In addition to conducting FON operations in the Spratly and Paracel islands, U.S. Navy ships have steamed through the Taiwan Strait on multiple occasions, and Air Force long-range bombers have periodically conducted flyovers above the ECS and SCS. A September 1, 2017, press report states that The Pentagon for the first time has set a schedule of naval patrols in the South China Sea in an attempt to create a more consistent posture to counter China's maritime claims there, injecting a new complication into increasingly uneasy relations between the two powers. The U.S. Pacific Command has developed a plan to conduct so-called freedom-of-navigation operations two to three times over the next few months, according to several U.S. officials, reinforcing the U.S. challenge to what it sees as excessive Chinese maritime claims in the disputed South China Sea. Beijing claims sovereignty over all South China Sea islands and their adjacent waters. The plan marks a significant departure from such military operations in the region during the Obama administration, when officials sometimes struggled with when, how and where to conduct those patrols. They were canceled or postponed based on other political factors after what some U.S. officials said were contentious internal debates. The idea behind setting a schedule contrasts with the more ad hoc approach to conducting freedom-of-navigation operations, known as "fonops" in military parlance, and establish more regularity in the patrols. Doing so may help blunt Beijing's argument that the patrols amount to a destabilizing provocation each time they occur, U.S. officials said.... Officials described the new plan as a more predetermined way of conducting such patrols than in the past, though not immutable. The plan is in keeping with the Trump administration's approach to military operations, which relies on giving commanders leeway to determine the U.S. posture. In keeping with policies against announcing military operations before they occur, officials declined to disclose where and when they would occur.... In a new facet, some freedom-of-navigation patrols may be "multi-domain" patrols, using not only U.S. Navy warships but U.S. military aircraft as well. Thus far, there have been three publicly disclosed freedom-of-navigation operations under the Trump administration. The last one was conducted on Aug. 10 by the navy destroyer, the USS John S. McCain, which days later collided with a cargo ship, killing 10 sailors. That patrol around Mischief Reef—one of seven fortified artificial islands that Beijing has built in the past three years in the disputed Spratlys archipelago—also included an air component. According to U.S. officials, two P-8 Poseidon reconnaissance aircraft flew above the McCain in a part of the operation that hadn't been previously disclosed. More navigation patrols using warships likely now will include aircraft overhead, they said." An October 12, 2017, blog post states the following: The [reported October 10, 2017,] FONOP is the fourth in just five months and demonstrates that the Trump administration is accepting a higher frequency for these operations. After the Obama administration initiated South China Sea operations in October 2015, beginning with challenges to Chinese and other South China Sea claimant state possessions in the Spratly group, it only carried out three additional operations in 2016. Critics of the Obama administration's approach to the U.S. Navy's freedom of navigation operations in the South China Sea suggested that the relative infrequency and perception that the operations were subject of the overall ebbs and flows of the U.S.-China bilateral relationship undermined their stated utility as legal signaling tools. Even with stepped up FONOPs this year, the Trump administration hasn't changed the fundamentals of U.S. South China Sea policy, which continues to remain agnostic about sovereignty claims and focuses exclusively on freedom of navigation, overflight, and the preservation of international law and order in the region. With the exception of USS Dewey's May 2017 FONOP around Mischief Reef—notable for being the first FONOP this year—successive Trump administration FONOPs have attracted comparatively less attention in the press. Proponents of these operations in the United States have argued that they should not be seen as noteworthy events, but more as a fact of life in the South China Sea—a reminder of the U.S. Navy's forward presence in the area and its commitment to freedom of navigation. A corollary of the increased pace of operations this year is that a slowdown in U.S. FONOPs could appear to be motivated by broader diplomatic concerns in the bilateral U.S.-China relationship. In assessing U.S. FON operations that take place within 12 nautical miles of Chinese-occupied sites in the SCS, one question relates to whether to conduct such operations, exactly where, and how often. A second question relates to the rationale that is cited as the legal basis for conducting them. Regarding this second question, one U.S. specialist on international law of the sea states the following regarding three key legal points in question (emphasis added): Regarding features in the water whose sovereignty is in dispute, "Every feature occupied by China is challenged by another claimant state, often with clearer line of title from Spanish, British or French colonial rule. The nation, not the land, is sovereign, which is why there is no territorial sea around Antarctica—it is not under the sovereignty of any state, despite being a continent. As the United States has not recognized Chinese title to the features, it is not obligated to observe requirements of a theoretical territorial sea. Since the territorial sea is a function of state sovereignty of each rock or island, and not a function of simple geography, if the United States does not recognize any state having title to the feature, then it is not obligated to observe a theoretical territorial sea and may treat the feature as terra nullius . Not only do U.S. warships have a right to transit within 12 nm [nautical miles] of Chinese features, they are free to do so as an exercise of high seas freedom under article 87 of the Law of the Sea Convention, rather than the more limited regime of innocent passage. Furthermore, whereas innocent passage does not permit overflight, high seas freedoms do, and U.S. naval aircraft lawfully may overfly such features.... More importantly, even assuming that one or another state may have lawful title to a feature, other states are not obligated to confer upon that nation the right to unilaterally adopt and enforce measures that interfere with navigation, until lawful title is resolved. Indeed, observing any nation's rules pertaining to features under dispute legitimizes that country's claim and takes sides." Regarding features in the water whose sovereignty has been resolved, "It is unclear whether features like Fiery Cross Reef are rocks or merely low-tide elevations [LTEs] that are submerged at high tide, and after China has so radically transformed them, it may now be impossible to determine their natural state. Under the terms of the law of the sea, states with ownership over naturally formed rocks are entitled to claim a 12 nm territorial sea. On the other hand, low-tide elevations in the mid-ocean do not qualify for any maritime zone whatsoever. Likewise, artificial islands and installations also generate no maritime zones of sovereignty or sovereign rights in international law, although the owner of features may maintain a 500-meter vessel traffic management zone to ensure navigational safety." Regarding features in the water whose sovereignty has been resolved and which do qualify for a 12-nautical-mile territorial sea, " Warships and commercial vessels of all nations are entitled to conduct transit in innocent passage in the territorial sea of a rock or island of a coastal state, although aircraft do not enjoy such a right." These three legal points appear to create at least four options for the rationale to cite as the legal basis for conducting an FON operation within 12 miles of Chinese-occupied sites in the SCS: One option would be to state that since there is a dispute as to the sovereignty of the site or sites in question, that site or those sites are terra nullius , that the United States consequently is not obligated to observe requirements of a theoretical territorial sea, and that U.S. warships thus have a right to transit within 12 nautical miles of the site or sites as an exercise of high seas freedom under article 87 of the Law of the Sea Convention. A second option, if the site or sites were LTEs prior to undergoing land reclamation, would be to state that the site or sites are not entitled to a 12-nautical-mile territorial sea, and that U.S. warships consequently have a right to transit within 12 nautical miles as an exercise of high seas freedom. A third option would be to state that the operation was being conducted under the right of innocent passage within a 12-nautical-mile territorial sea. A fourth option would be to not provide a public rationale for the operation, so as to create uncertainty for China (and perhaps other observers) as to exact U.S. legal rationale. If the fourth option is not taken, and consideration is given to selecting from among the first three options, then it might be argued that choosing the second option might inadvertently send a signal to observers that the legal point associated with the first option was not being defended, and that choosing the third option might inadvertently send a signal to observers that the legal points associated with the first and second options were not being defended. Regarding the FON operation conducted on May 24, 2017, near Mischief Reef, the U.S. specialist on international law of the sea quoted above states the following: This was the first public notice of a freedom of navigation (FON) operation in the Trump administration, and may prove the most significant yet for the United States because it challenges not only China's apparent claim of a territorial sea around Mischief Reef, but in doing so questions China's sovereignty over the land feature altogether.... The Pentagon said the U.S. warship did a simple military exercise while close to the artificial island—executing a "man overboard" rescue drill. Such drills may not be conducted in innocent passage, and therefore indicate the Dewey exercised high seas freedoms near Mischief Reef. The U.S. exercise of high seas freedoms around Mischief Reef broadly repudiates China's claims of sovereignty over the feature and its surrounding waters. The operation stands in contrast to the flubbed transit by the USS Lassen near Subi Reef on October 27, 2015, when it appeared the warship conducted transit in innocent passage and inadvertently suggested that the feature generated a territorial sea (by China or some other claimant). That operation was roundly criticized for playing into China's hands, with the muddy legal rationale diluting the strategic message. In the case of the Dewey, the Pentagon made clear that it did not accept a territorial sea around Mischief Reef—by China or any other state. The United States has shoehorned a rejection of China's sovereignty over Mischief Reef into a routine FON operation. Mischief Reef is not entitled to a territorial sea for several reasons. First, the feature is not under the sovereignty of any state. Mid-ocean low-tide elevations are incapable of appropriation, so China's vast port and airfield complex on the feature are without legal effect. The feature lies 135 nautical miles from Palawan Island, and therefore is part of the Philippine continental shelf. The Philippines enjoys sovereign rights and jurisdiction over the feature, including all of its living and non-living resources.... Second, even if Mischief Reef were a naturally formed island, it still would not be entitled to a territorial sea until such time as title to the feature was determined. Title may be negotiated, arbitrated or adjudicated through litigation. But mere assertion of a claim by China is insufficient to generate lawful title. (If suddenly a new state steps forward to claim the feature—Britain, perhaps, based on colonial presence—would it be entitled to the presumption of a territorial sea?) Even Antarctica, an entire continent, does not automatically generate a territorial sea. A territorial sea is a function of state sovereignty, and until sovereignty is lawfully obtained, no territorial sea inures. Third, no state, including China, has established baselines around Mischief Reef in accordance with article 3 of UNCLOS. A territorial sea is measured from baselines; without baselines, there can be no territorial sea. What is the policy rationale for this construction? Baselines place the international community on notice that the coastal state has a reasonable and lawful departure from which to measure the breadth of the territorial sea. Unlike the USS Lassen operation, which appeared to be a challenge to some theoretical or "phantom" territorial sea, the Dewey transit properly reflects the high seas nature of the waters immediately surrounding Mischief Reef as high seas. As a feature on the Philippine continental shelf, Mischief Reef is not only incapable of ever generating a territorial sea but also devoid of national airspace. Aircraft of all nations may freely overfly Mischief Reef, just as warships and commercial ships may transit as close to the shoreline as is safe and practical. The Dewey transit makes good on President Obama's declaration in 2016 that the Annex VII tribunal for the Philippines and China issued a "final and binding" decision.... The United States will include the Dewey transit on its annual list of FON operations for fiscal year 2017, which will be released in the fourth quarter or early next year. How will the Pentagon account for the operation—what was challenged? The Dewey challenged China's claim of "indisputable sovereignty" to Mischief Reef as one of the features in the South China Sea, and China's claim of "adjacent" waters surrounding it. This transit cuts through the diplomatic dissembling that obfuscates the legal seascape and is the most tangible expression of the U.S. view that the arbitration ruling is "final and binding." Regarding this same FON operation, two other observers stated the following: The Dewey's action evidently challenged China's right to control maritime zones adjacent to the reef—which was declared by the South China Sea arbitration to be nothing more than a low tide elevation on the Philippine continental shelf. The operation was hailed as a long-awaited "freedom of navigation operation" (FONOP) and "a challenge to Beijing's moves in the South China Sea," a sign that the United States will not accept "China's contested claims" and militarization of the Spratlys, and a statement that Washington "will not remain passive as Beijing seeks to expand its maritime reach." Others went further and welcomed this more muscular U.S. response to China's assertiveness around the Spratly Islands to challenge China's "apparent claim of a territorial sea around Mischief Reef…[as well as] China's sovereignty over the land feature" itself. But did the Dewey actually conduct a FONOP? Probably—but maybe not. Nothing in the official description of the operation or in open source reporting explicitly states that a FONOP was in fact conducted. Despite the fanfare, the messaging continues to be muddled. And that is both unnecessary and unhelpful. In this post, we identify the source of ambiguity and provide an overview of FONOPs and what distinguishes them from the routine practice of freedom of navigation. We then explain why confusing the two is problematic—and particularly problematic in the Spratlys, where the practice of free navigation is vastly preferable to the reactive FONOP. FONOPs should continue in routine, low-key fashion wherever there are specific legal claims to be challenged (as in the Paracel Islands, the other disputed territories in the SCS); they should not be conducted—much less hyped up beyond proportion—in the Spratlys. Instead, the routine exercise of freedom of navigation is the most appropriate way to use the fleet in support of U.S. and allied interests.... ... was the Dewey's passage a FONOP designed to be a narrow legal challenge between the US and Chinese governments? Or was it a rightful and routine exercise of navigational freedoms intended to signal reassurance to the region and show U.S. resolve to defend the rule sets that govern the world's oceans? Regrettably, the DOD spokesman's answer was not clear. The distinction is not trivial.... The U.S. should have undertaken, and made clear that it was undertaking, routine operations to exercise navigational freedoms around Mischief Reef—rather than (maybe) conducting a FONOP. The first problem with conducting FONOP operations at Mischief Reef or creating confusion on the point is that China has made no actual legal claim that the U.S. can effectively challenge. In fact, in the Spratlys, no state has made a specific legal claim about its maritime entitlements around the features it occupies. In other words, not only are there no "excessive claims," there are no clear claims to jurisdiction over water space at all. Jurisdictional claims by a coastal state begin with an official announcement of baselines—often accompanied by detailed geographic coordinates—to put other states on notice of the water space the coastal state claims as its own. China has made several ambiguous claims over water space in the South China Sea. It issued the notorious 9-dashed line map, for instance, and has made cryptic references that eventually it might claim that the entire Spratly Island area generates maritime zones as if it were one physical feature. China has a territorial sea law that requires Chinese maritime agencies only to employ straight baselines (contrary to international law). And it formally claimed straight baselines all along its continental coastline, in the Paracels, and for the Senkaku/Diaoyu Islands, which China claims and Japan administers. All of these actions are contrary to international law and infringe on international navigational rights. These have all been subject to American FONOPs in the past—and rightly so. They are excessive claims. But China has never specified baselines in the Spratlys. Accordingly, no one knows for sure where China will claim a territorial sea there. So for now, since there is no specific legal claim to push against, a formal FONOP is the wrong tool for the job. The U.S. Navy can and should simply exercise the full, lawful measure of high seas freedoms in and around the Spratly Islands. Those are the right tools for the job where no actual coastal state claim is being challenged. Second, the conflation of routine naval operations with the narrow function of a formal FONOP needlessly politicizes this important program, blurs the message to China and other states in the region, blunts its impact on China's conduct, and makes the program less effective in other areas of the globe. This conflation first became problematic with the confused and confusing signaling that followed the FONOP undertaken by the USS Lassen in the fall of 2015. Afterward, the presence or absence of a FONOP dominated beltway discussion about China's problematic conduct in the South China Sea and became the barometer of American commitment and resolve in the region. Because of this discussion, FONOPs became reimagined in the public mind as the only meaningful symbol of U.S. opposition to Chinese policy and activity in the SCS. In 2015 and 2016 especially, FONOPs were often treated as if they were the sole available operational means to push back against rising Chinese assertiveness. This was despite a steady U.S. presence in the region for more than 700 ship days a year and a full schedule of international exercises, ample intelligence gathering operations, and other important naval demonstrations of U.S. regional interests. In consequence, we should welcome the apparent decision not to conduct a FONOP around Scarborough Shoal—where China also never made any clear baseline or territorial sea claim. If U.S. policy makers intend to send a signal to China that construction on or around Scarborough would cross a red line, there are many better ways than a formal FONOP to send that message.... The routine operations of the fleet in the Pacific theater illustrate the crucial—and often misunderstood—difference between a formal FONOP and operations that exercise freedoms of navigation. FONOPs are not the sole remedy to various unlawful restrictions on navigational rights across the globe, but are instead a small part of a comprehensive effort to uphold navigational freedoms by practicing them routinely. That consistent practice of free navigation, not the reactive FONOP, is the policy best suited to respond to Chinese assertiveness in the SCS. This is especially true in areas such as the Spratly Islands where China has made no actual legal claims to challenge. As mentioned earlier, in terms of identifying specific actions that are intended to support U.S. policy goals, a key element would be to have a clear understanding of which actions are intended to support which goals, and to maintain an alignment of actions with policy goals. U.S. freedom of navigation (FON) operations can directly support a general goal of defending principle of freedom of the seas, but might support other goals only indirectly, marginally, or not at all. Some of the actions taken to date by the United States, as well as some of those suggested by observers who argue in favor of stronger U.S. actions, are intended to impose costs on China for conducting certain activities in the ECS and SCS, with the aim of persuading China to stop or reverse those activities. Cost-imposing actions can come in various forms (e.g., reputational/political, institutional, or economic). Although the potential additional or strengthened actions often relate to the Western Pacific, potential cost-imposing actions do not necessarily need to be limited to that region. As a hypothetical example for purposes of illustrating the point, one potential cost-imposing action might be for the United States to respond to unwanted Chinese activities in the ECS or SCS by moving to suspend China's observer status on the Arctic Council. Expanding the potential scope of cost-imposing actions to regions beyond the Western Pacific can make it possible to employ elements of U.S. power that cannot be fully exercised if the examination of potential cost-imposing strategies is confined to the Western Pacific. It may also, however, expand, geographically or otherwise, areas of tension or dispute between the United States and China. Actions to impose costs on China can also impose costs, or lead to China imposing costs, on the United States and its allies and partners. Whether to implement cost-imposing actions thus involves weighing the potential benefits and costs to the United States and its allies and partners of implementing those actions, as well as the potential consequences to the United States and its allies and partners of not implementing those actions. Some observers argue that the current response to China's actions in the SCS is inadequate, and have proposed taking stronger actions. Appendix G presents a bibliography of some recent writings by these observers. In general, actions proposed by these observers include (but are not limited to) the following: making a statement (analogous to the one that U.S. leaders have made concerning the Senkaku islands and the U.S.-Japan treaty on mutual cooperation and security) that clarifies what the United States would do under the U.S.-Philippines mutual defense treaty in the event of certain Chinese actions at Scarborough Shoal, Second Thomas Shoal, or elsewhere in the SCS; further increasing and/or accelerating actions to strengthen the capacity of allied and partner countries in the region to maintain maritime domain awareness (MDA) and defend their maritime claims by conducting coast guard and/or navy patrols of claimed areas; further increasing U.S. Navy operations in the region, including sending U.S. Navy ships more frequently to waters within 12 nautical miles of Chinese-occupied sites in the SCS, and conducting FON operations in the SCS jointly with navy ships of U.S. allies; further strengthening U.S. security cooperation with allied and partner countries in the region, and with India, to the point of creating a coalition for balancing China's assertiveness; and taking additional actions to impose costs on China for its actions in its near-seas region, such as inviting Taiwan to participate in the 2018 RIMPAC exercise. As mentioned earlier, some observers remain concerned that maritime territorial disputes in the ECS and SCS could lead to a crisis or conflict between China and a neighboring country such as Japan or the Philippines, and that the United States could be drawn into such a crisis or conflict as a result of obligations the United States has under bilateral security treaties with Japan and the Philippines. Regarding this issue, potential oversight questions for Congress include the following: Have U.S. officials taken appropriate and sufficient steps to help reduce the risk of maritime territorial disputes in the SCS and ECS escalating into conflicts? Do the United States and Japan have a common understanding of potential U.S. actions under Article IV of the U.S.-Japan Treaty on Mutual Cooperation and Security (see Appendix B ) in the event of a crisis or conflict over the Senkaku Islands? What steps has the United States taken to ensure that the two countries share a common understanding? Do the United States and the Philippines have a common understanding of how the 1951 U.S.-Philippines mutual defense treaty applies to maritime territories in the SCS that are claimed by both China and the Philippines, and of potential U.S. actions under Article IV of the treaty (see Appendix B ) in the event of a crisis or conflict over the territories? What steps has the United States taken to ensure that the two countries share a common understanding? Aside from public statements, what has the United States communicated to China regarding potential U.S. actions under the two treaties in connection with maritime territorial disputes in the SCS and ECS? Has the United States correctly balanced ambiguity and explicitness in its communications to various parties regarding potential U.S. actions under the two defense treaties? How do the two treaties affect the behavior of Japan, the Philippines, and China in managing their territorial disputes? To what extent, for example, would they help Japan or the Philippines resist potential Chinese attempts to resolve the disputes through intimidation, or, alternatively, encourage risk-taking or brinksmanship behavior by Japan or the Philippines in their dealings with China on the disputes? To what extent do they deter or limit Chinese assertiveness or aggressiveness in their dealings with Japan the Philippines on the disputes? Has the DOD adequately incorporated into its planning crisis and conflict scenarios arising from maritime territorial disputes in the SCS and ECS that fall under the terms of the two treaties? Another issue for Congress—particularly the Senate—is the potential impact of China's actions in the SCS and ECS on the question of whether the United States should become a party to the United Nations Convention on the Law of the Sea (UNCLOS). UNCLOS and an associated 1994 agreement relating to implementation of Part XI of the treaty (on deep seabed mining) were transmitted to the Senate on October 6, 1994. In the absence of Senate advice and consent to adherence, the United States is not a party to UNCLOS or the associated 1994 agreement. During the 112 th Congress, the Senate Foreign Relations Committee held four hearings on the question of whether the United States should become a party to the treaty on May 23, June 14 (two hearings), and June 28, 2012. Supporters of the United States becoming a party to UNCLOS argue or might argue one or more of the following: The treaty's provisions relating to navigational rights, including those in EEZs, reflect the U.S. position on the issue; becoming a party to the treaty would help lock the U.S. perspective into permanent international law. Becoming a party to the treaty would give the United States greater standing for participating in discussions relating to the treaty—a "seat at the table"—and thereby improve the U.S. ability to call on China to act in accordance with the treaty's provisions, including those relating to navigational rights, and to defend U.S. interpretations of the treaty's provisions, including those relating to whether coastal states have a right under UNCLOS to regulate foreign military activities in their EEZs. At least some of the ASEAN member states want the United States to become a member of UNCLOS, because they view it as the principal framework for resolving maritime territorial disputes. Relying on customary international law to defend U.S. interests in these issues is not sufficient, because it is not universally accepted and is subject to change over time based on state practice. Opponents of the United States becoming a party to UNCLOS argue or might argue one or more of the following: China's ability to cite international law (including UNCLOS) in defending its position on whether coastal states have a right to regulate foreign military activities in their EEZs shows that UNCLOS does not adequately protect U.S. interests relating to navigational rights in EEZs; the United States should not help lock this inadequate description of navigational rights into permanent international law by becoming a party to the treaty. The United States becoming a party to the treaty would do little to help resolve maritime territorial disputes in the SCS and ECS, in part because China's maritime territorial claims, such as those depicted in the map of the nine-dash line, predate and go well beyond what is allowed under the treaty and appear rooted in arguments that are outside the treaty. The United States can adequately support the ASEAN countries and Japan in matters relating to maritime territorial disputes in the SCS and ECS in other ways, without becoming a party to the treaty. The United States can continue to defend its positions on navigational rights on the high seas by citing customary international law, by demonstrating those rights with U.S. naval deployments (including those conducted under the FON program), and by having allies and partners defend the U.S. position on the EEZ issue at meetings of UNCLOS parties. In H.R. 5515 as reported by the House Armed Services Committee ( H.Rept. 115-676 of May 15, 2018), Section 1254 states the following: SEC. 1254. Modification, redesignation, and extension of Southeast Asia Maritime Security Initiative. (a) Modification and redesignation.— (1) IN GENERAL.—Subsection (a) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 129 Stat. 1073; 10 U.S.C. 2282 note), as amended by section 1289 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328; 130 Stat. 2555), is further amended— (A) in paragraph (1), by striking "South China Sea" and inserting "South China Sea and Indian Ocean"; and (B) in paragraph (2), by striking "the 'Southeast Asia Maritime Security Initiative'" and inserting "the 'Indo-Pacific Maritime Security Initiative'". (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: "Sec. 1263. Indo-Pacific Maritime Security Initiative.". (b) Covered countries.—Subsection (e)(2) of such section is amended by adding at the end the following: "(D) India.". (c) Designation of additional countries.—Such section is further amended— (1) in subsection (e)(1), by striking "subsection (f)" and inserting "subsection (g)"; (2) by redesignating subsections (f), (g), and (h) as subsections (g), (h), and (i), respectively; and (3) by inserting after subsection (e) the following: "(f) Inclusion of additional countries.—The Secretary of Defense, with the concurrence of the Secretary of State, is authorized to include additional foreign countries under subsection (b) for purposes of providing assistance and training under subsection (a) and additional foreign countries under subsection (e)(2) for purposes of providing payment of incremental expenses in connection with training described in subsection (a)(1)(B) if, with respect to each such additional foreign country, the Secretary determines and certifies to the appropriate committees of Congress that it is important for increasing maritime security and maritime domain awareness in the Indo-Pacific region.". (d) Extension.—Subsection (i) of such section, as redesignated, is amended by striking "September 30, 2020" and inserting "September 30, 2023". On May 22, 2018, as part of its consideration of H.R. 5515 , the House agreed to by voice vote H.Amdt. 644 , an en bloc amendment including, inter alia, amendment number 91 as printed in H.Rept. 115-698 of May 21, 2018, providing for consideration of H.R. 5515 . Amendment 91 added Section 1298, which states the following: SEC. 1298. Modification to annual report on military and security developments involving the People's Republic of China. Paragraph (22) of section 1202(b) of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106–65; 10 U.S.C. 113 note), as most recently amended by section 1261 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1688), is further amended by striking "activities in the South China Sea" and inserting the following: ""activities— "(A) in the South China Sea; "(B) in the East China Sea, including in the vicinity of the Senkaku islands; and "(C) in the Indian Ocean region.". In S. 2987 as reported by the Senate Armed Services Committee ( S.Rept. 115-262 of June 5, 2018), Section 1064 states the following: SEC. 1064. United States policy with respect to freedom of navigation and overflight. (a) Declaration of policy.—It is the policy of the United States to fly, sail, and operate throughout the oceans, seas, and airspace of the world wherever international law allows. (b) Implementation of policy.—In furtherance of the policy set forth in subsection (a), the Secretary of Defense should— (1) plan and execute a robust series of routine and regular air and naval presence missions throughout the world and throughout the year, including for critical transportation corridors and key routes for global commerce; (2) in addition to the missions executed pursuant to paragraph (1), execute routine and regular air and maritime freedom of navigation operations throughout the year, in accordance with international law, including the use of expanded military options and maneuvers beyond innocent passage; and (3) to the maximum extent practicable, execute the missions pursuant to paragraphs (1) and (2) with regional partner countries and allies of the United States. Section 1241 of S. 2987 as reported states the following: SEC. 1241. Redesignation, expansion, and extension of Southeast Asia Maritime Security Initiative. (a) Redesignation as Indo-Pacific Maritime Security Initiative.— (1) IN GENERAL.—Subsection (a)(2) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (10 U.S.C. 333 note) is amended by striking "the 'Southeast Asia Maritime Security Initiative'" and inserting "the 'Indo-Pacific Maritime Security Initiative'". (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: "SEC. 1263. Indo-Pacific Maritime Security Initiative". (b) Expansion.— (1) EXPANSION OF REGION TO RECEIVE ASSISTANCE AND TRAINING.—Subsection (a)(1) of such section is amended by inserting "and the Indian Ocean" after "South China Sea" in the matter preceding subparagraph (A). (2) RECIPIENT COUNTRIES OF ASSISTANCE AND TRAINING GENERALLY.—Subsection (b) of such section is amended— (A) in paragraph (2), by striking the comma at the end and inserting a period; and (B) by adding at the end the following new paragraphs: "(6) Bangladesh. "(7) Sri Lanka.". (3) COUNTRIES ELIGIBLE FOR PAYMENT OF CERTAIN INCREMENTAL EXPENSES.—Subsection (e)(2) of such section is amended by adding at the end the following new subparagraph: "(D) India.". (c) Extension.—Subsection (h) of such section is amended by striking "September 30, 2020" and inserting "December 31, 2025". Regarding Section 1241, S.Rept. 115-262 states the following: Redesignation, expansion, and extension of Southeast AsiaMaritime Security Initiative (sec. 1241) The committee recommends a provision that would amend section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92) to: redesignate the Southeast Asia Maritime Security Initiative as the Indo-Pacific Maritime Security Initiative; add Bangladesh and Sri Lanka as recipient countries of assistance and training; add India as a covered country eligible for payment of certain incremental expenses; and extend the authority under the section through December 31, 2025. The committee continues to strongly support efforts under the Southeast Asia Maritime Security Initiative aimed at enhancing the capabilities of regional partners to more effectively exercise control over their maritime territory and to deter adversaries. The committee is encouraged by the progress that has been made under the initiative, and notes that to date, the Department of Defense has utilized the authority under section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92), as amended, to support specified partner capacity-building efforts in the region, to include the provision of training, sustainment support, and participation in multilateral engagements. The committee recognizes that the initiative was designed to support a long-term capacity building effort, which will require increased resources in future years as requirements are established and refined, as programs mature, and as the regional security environment continues to evolve. The committee believes the Department's efforts to improve maritime domain awareness and maritime security should be fully integrated into a U.S. strategy for a free and open Indo-Pacific. Therefore, the committee supports redesignating the authority under section 1263 as the Indo-Pacific Maritime Security Initiative, the inclusion of Bangladesh and Sri Lanka as recipient countries, and the addition of India as a covered country to encourage its participation in regional security initiatives of this kind. Furthermore, as a demonstration of the United States' commitment to allies and partners in the region, the committee supports the extension of the Indo-Pacific Maritime Security Initiative through the end of 2025. Beyond the Indo-Pacific Maritime Security Initiative, the committee encourages the Department to make use of the full complement of security cooperation authorities available to the Department, particularly those under section 1241 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328), to enhance the capabilities of foreign security partners in South and Southeast Asia to protect mutual security interests. (Pages 296-297) Section 1245 of S. 2987 as reported states the following: SEC. 1245. Prohibition on participation of the People's Republic of China in Rim of the Pacific (RIMPAC) naval exercises. (a) Sense of Congress.—It is the sense of Congress that— (1) the pace and militarization by the Government of the People's Republic of China of land reclamation activities in the South China Sea is destabilizing the security of United States allies and partners and threatening United States core interests; (2) these activities of the Government of the People's Republic of China adversarially threaten the maritime security of the United States and our allies and partners; (3) no country that acts adversarially should be invited to multilateral exercises; and (4) the involvement of the Government of the People's Republic of China in multilateral exercises should undergo reevaluation until such behavior changes. (b) Conditions for future participation in RIMPAC.—The Secretary of Defense shall not enable or facilitate the participation of the People's Republic of China in any Rim of the Pacific (RIMPAC) naval exercise unless the Secretary certifies to the congressional defense committees that China has— (1) ceased all land reclamation activities in the South China Sea; (2) removed all weapons from its land reclamation sites; and (3) established a consistent four-year track record of taking actions toward stabilizing the region. A June 26, 2018, statement of Administration policy regarding S. 2987 stated the following: Prohibition on Participation of the People's Republic of China in Rim of the Pacific (RIMPAC) Naval Exercises. The Administration objects to section 1245 because China's participation in RIMPAC and other military-to-military events may be appropriate or inappropriate in any given year, depending on numerous other factors. Section 1245 would place restrictions on the Secretary of Defense's ability to manage a strategic relationship in the context of competition, limiting DOD's options on China and ability to act in the national security interest of the United States. Section 1251 of S. 2987 as reported states the following: SEC. 1251. Report on military and coercive activities of the People's Republic of China in South China Sea. (a) In general.—Except as provided in subsection (d), immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction, the Secretary of Defense, in coordination with the Secretary of State, shall submit to the congressional defense committees, and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity. (b) Elements of report to public.—Each report on a significant reclamation or militarization activity under subsection (a) shall include a short narrative on, and one or more corresponding images of, such significant reclamation or militarization activity. (c) Form.— (1) SUBMITTAL TO CONGRESS.—Any report under subsection (a) that is submitted to the congressional defense committees shall be submitted in unclassified form, but may include a classified annex. (2) RELEASE TO PUBLIC.—If a report under subsection (a) is released to the public, such report shall be so released in unclassified form. (d) Waiver.— (1) RELEASE OF REPORT TO PUBLIC.—The Secretary of Defense may waive the requirement in subsection (a) for the release to the public of a report on a significant reclamation or militarization activity if the Secretary determines that the release to the public of a report on such activity under that subsection in the form required by subsection (c)(2) would have an adverse effect on the national security interests of the United States. (2) NOTICE TO CONGRESS.—If the Secretary issues a waiver under paragraph (1) with respect to a report on an activity, not later than 48 hours after the Secretary issues such waiver, the Secretary shall submit to the congressional defense committees written notice of, and justification for, such waiver. Regarding Section 1251, S.Rept. 115-262 states the following: Report on military and coercive activities of the People's Republic of China in the South China Sea (sec. 1251) The committee recommends a provision that would require the Secretary of Defense, in coordination with the Secretary of State, to submit to the congressional defense committees and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction. The committee is concerned that sufficient information has not been made publicly available in a timely fashion regarding China's reclamation and militarization activities of China in the South China Sea. Therefore, the committee urges the Secretary of Defense to determine that the public interest in selective declassification of China's activities in the South China Sea outweighs the potential damage from disclosure. The Secretary should consider mandating that the directors of National Geospatial-Intelligence Agency and the Defense Intelligence Agency provide the Bureau of Intelligence and Research (INR) at the State Department with declassified aircraft-generated imagery and supporting analysis describing Chinese activities of concern. The committee also urges that the State Department brief and distribute the reports to the media and throughout Southeast Asia. (Page 300) In the conference report ( H.Rept. 115-874 of July 25, 2018) on H.R. 5515 / P.L. 115-232 of August 13, 2018, Section 1086 states the following: SEC. 1086. UNITED STATES POLICY WITH RESPECT TO FREEDOM OF NAVIGATION AND OVERFLIGHT. (a) DECLARATION OF POLICY.—It is the policy of the United States to fly, sail, and operate throughout the oceans, seas, and airspace of the world wherever international law allows. (b) IMPLEMENTATION OF POLICY.—In furtherance of the policy set forth in subsection (a), the Secretary of Defense should— (1) plan and execute a robust series of routine and regular air and naval presence missions throughout the world and throughout the year, including for critical transportation corridors and key routes for global commerce; (2) in addition to the missions executed pursuant to paragraph (1), execute routine and regular air and maritime freedom of navigation operations throughout the year, in accordance with international law, including, but not limited to, maneuvers beyond innocent passage; and (3) to the maximum extent practicable, execute the missions pursuant to paragraphs (1) and (2) with regional partner countries and allies of the United States. Section 1252 of H.R. 5515 states the following: SEC. 1252. REDESIGNATION, EXPANSION, AND EXTENSION OF SOUTHEAST ASIA MARITIME SECURITY INITIATIVE. (a) REDESIGNATION AS INDO-PACIFIC MARITIME SECURITY INITIATIVE.— (1) IN GENERAL.—Subsection (a)(2) of section 1263 of the National Defense Authorization Act for Fiscal Year 2016 (10 U.S.C. 333 note) is amended by striking ''the 'Southeast Asia Maritime Security Initiative' '' and inserting ''the 'Indo-Pacific Maritime Security Initiative' ''. (2) CONFORMING AMENDMENT.—The heading of such section is amended to read as follows: ''SEC. 1263. INDO-PACIFIC MARITIME SECURITY INITIATIVE.''. (b) EXPANSION.— (1) EXPANSION OF REGION TO RECEIVE ASSISTANCE AND TRAINING.—Subsection (a)(1) of such section is amended by inserting ''and the Indian Ocean'' after ''South China Sea'' in the matter preceding subparagraph (A). (2) RECIPIENT COUNTRIES OF ASSISTANCE AND TRAINING GENERALLY.—Subsection (b) of such section is amended— (A) in paragraph (2), by striking the comma at the end and inserting a period; and (B) by adding at the end the following new paragraphs: ''(6) Bangladesh. ''(7) Sri Lanka.''. (3) COUNTRIES ELIGIBLE FOR PAYMENT OF CERTAIN INCREMENTAL EXPENSES.—Subsection (e)(2) of such section is amended by adding at the end the following new subparagraph: ''(D) India.''. (c) EXTENSION.—Subsection (h) of such section is amended by striking ''September 30, 2020'' and inserting ''December 31, 2025''. Section 1259 of H.R. 5515 states the following: SEC. 1259. PROHIBITION ON PARTICIPATION OF THE PEOPLE'S REPUBLIC OF CHINA IN RIM OF THE PACIFIC (RIMPAC) NAVAL EXERCISES. (a) CONDITIONS FOR FUTURE PARTICIPATION IN RIMPAC.— (1) IN GENERAL.—The Secretary of Defense shall not enable or facilitate the participation of the People's Republic of China in any Rim of the Pacific (RIMPAC) naval exercise unless the Secretary certifies to the congressional defense committees that China has— (A) ceased all land reclamation activities in the South China Sea; (B) removed all weapons from its land reclamation sites; and (C) established a consistent four-year track record of taking actions toward stabilizing the region. (2) FORM.—The certification under paragraph (1) shall be in unclassified form but may contain a classified annex as necessary. (b) NATIONAL SECURITY WAIVER.— (1) IN GENERAL.—The Secretary of Defense may waive the certification requirement under subsection (a) if the Secretary determines the waiver is in the national security interest of the United States and submits to the congressional defense committees a detailed justification for the waiver. (2) FORM.—The justification required under paragraph (1) shall be in unclassified form but may contain a classified annex as necessary. Section 1262 of H.R. 5515 states the following: SEC. 1262. REPORT ON MILITARY AND COERCIVE ACTIVITIES OF THE PEOPLE'S REPUBLIC OF CHINA IN SOUTH CHINA SEA. (a) IN GENERAL.—Except as provided in subsection (d), immediately after the commencement of any significant reclamation, assertion of an excessive territorial claim, or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction, the Secretary of Defense, in coordination with the Secretary of State, shall submit to the appropriate congressional committees, and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity. (b) ELEMENTS OF REPORT TO PUBLIC.—Each report on the commencement of a significant reclamation, an assertion of an excessive territorial claim, or a militarization activity under subsection (a) shall include a short narrative on, and one or more corresponding images of, such commencement of a significant reclamation, assertion of an excessive territorial claim, or militarization activity. (c) FORM.— (1) SUBMISSION TO CONGRESS.—Any report under subsection (a) that is submitted to the appropriate congressional committees shall be submitted in unclassified form, but may include a classified annex. (2) RELEASE TO PUBLIC.—If a report under subsection (a) is released to the public, such report shall be so released in unclassified form. (d) WAIVER.— (1) RELEASE OF REPORT TO PUBLIC.—The Secretary of Defense may waive the requirement in subsection (a) for the release to the public of a report on the commencement of any significant reclamation, an assertion of an excessive territorial claim, or a militarization activity by the People's Republic of China in the South China Sea if the Secretary determines that the release to the public of a report on such activity under that subsection in the form required by subsection (c)(2) would have an adverse effect on the national security interests of the United States. (2) NOTICE TO CONGRESS.—If the Secretary issues a waiver under paragraph (1) with respect to a report on an activity, not later than 48 hours after the Secretary issues such waiver, the Secretary shall submit to the appropriate congressional committees written notice of, and justification for, such waiver. (e) APPROPRIATE CONGRESSIONAL COMMITTEES DEFINED.—In this section, the term ''appropriate congressional committees'' means— (1) the congressional defense committees; and (2) the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives. Regarding Section 1262, H.Rept. 115-874 states the following: Report on military and coercive activities of the People's Republic of China in South China Sea (sec. 1262) The House bill contained a provision (sec. 1261) that would require Secretary of Defense, in consultation with the Director of National Intelligence and the Secretary of State, to submit a report to appropriate congressional committees on a quarterly basis describing China's activities in the Indo-Pacific region, and to disseminate the report to regional allies and partners and provide public notification, as appropriate. The provision would require that the dissemination and availability of the report and public notification be made in a manner consistent with national security and the protection of classified national security information. The Senate amendment contained a similar provision (sec. 1251) that would require the Secretary of Defense, in coordination with the Secretary of State, to submit to the congressional defense committees and release to the public, a report on the military and coercive activities of China in the South China Sea in connection with such activity immediately after the commencement of any significant reclamation or militarization activity by the People's Republic of China in the South China Sea, including any significant military deployment or operation or infrastructure construction. The House recedes with an amendment that would clarify that the required report shall be submitted to the congressional defense committees immediately after the commencement of any significant reclamation, assertion of an excessive territorial claim, or military activity by the People's Republic of China in the South China Sea. The conferees are concerned that sufficient information has not been made publicly available in a timely fashion regarding China's reclamation and militarization activities in the South China Sea. Moreover, the conferees recognize that China has engaged in provocative military activities elsewhere throughout the Indo-Pacific Region, including the East China Sea, the Taiwan Strait, and the Indian Ocean. The conferees urge the Secretary of Defense to give full consideration to the strategic and public interest in selective declassification of China's activities in the South China Sea and elsewhere in the Indo-Pacific region. (Pages 993-994) Section 1288 of H.R. 5515 states the following: SEC. 1288. MODIFICATION OF FREEDOM OF NAVIGATION REPORTING REQUIREMENTS. Subsection (a) of section 1275 of the National Defense Authorization Act for Fiscal Year 2017 (Public Law 114–328; 130 Stat. 2540), as amended by section 1262(a)(1) of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1689), is further amended by striking ''the Committees on Armed Services of the Senate and the House of Representatives'' and inserting ''the Committee on Armed Services and the Committee on Foreign Relations of the Senate and the Committee on Armed Services and the Committee on Foreign Affairs of the House of Representatives''. Appendix A. Strategic Context from U.S. Perspective This appendix presents a brief discussion of some elements of the strategic context from a U.S. perspective in which the issues discussed in this report may be considered. There is also a broader context of U.S.-China relations and U.S. foreign policy toward the Indo-Pacific that is covered in other CRS reports. Shift in International Security Environment World events have led some observers, starting in late 2013, to conclude that the international security environment has undergone a shift from the familiar post-Cold War era of the past 20 to 25 years, also sometimes known as the unipolar moment (with the United States as the unipolar power), to a new and different situation that features, among other things, renewed great power competition with China and Russia and challenges by these two countries and others to elements of the U.S.-led international order that has operated since World War II. China's actions in the SCS and ECS can be viewed as one reflection of that shift. Uncertainty Regarding Future U.S. Role in World The overall U.S. role in the world since the end of World War II in 1945 (i.e., over the past 70 years) is generally described as one of global leadership and significant engagement in international affairs. A key aim of that role has been to promote and defend the open international order that the United States, with the support of its allies, created in the years after World War II. In addition to promoting and defending the open international order, the overall U.S. role is generally described as having been one of promoting freedom, democracy, and human rights, while criticizing and resisting authoritarianism where possible, and opposing the emergence of regional hegemons in Eurasia or a spheres-of-influence world. Certain statements and actions from the Trump Administration have led to uncertainty about the Administration's intentions regarding the future U.S. role in the world. Based on those statements and actions, some observers have speculated that the Trump Administration may want to change the U.S. role in one or more ways. A change in the overall U.S. role could have profound implications for U.S. foreign policy, including U.S. policy regarding maritime territorial and EEZ disputes involving China. U.S. Grand Strategy Discussion of the above-mentioned shift in the international security environment has led to a renewed emphasis in discussions of U.S. security and foreign policy on grand strategy and geopolitics. From a U.S. perspective, grand strategy can be understood as strategy considered at a global or interregional level, as opposed to strategies for specific countries, regions, or issues. Geopolitics refers to the influence on international relations and strategy of basic world geographic features such as the size and location of continents, oceans, and individual countries. From a U.S. perspective on grand strategy and geopolitics, it can be noted that most of the world's people, resources, and economic activity are located not in the Western Hemisphere, but in the other hemisphere, particularly Eurasia. In response to this basic feature of world geography, U.S. policymakers for the past several decades have chosen to pursue, as a key element of U.S. grand strategy, a goal of preventing the emergence of a regional hegemon in one part of Eurasia or another, on the grounds that such a hegemon could represent a concentration of power strong enough to threaten core U.S. interests by, for example, denying the United States access to some of the other hemisphere's resources and economic activity. Although U.S. policymakers have not often stated this key national strategic goal explicitly in public, U.S. military (and diplomatic) operations in recent decades—both wartime operations and day-to-day operations—can be viewed as having been carried out in no small part in support of this key goal. Focus on Great Power Competition with China and Russia The Trump Administration's December 2017 National Security Strategy (NSS) and the 11-page unclassified summary of its January 2018 National Defense Strategy (NDS) reorient U.S. national security strategy and, within that, U.S. defense strategy, toward an explicit primary focus on great power competition with China and Russia and on countering Chinese and Russian military capabilities. The new U.S. strategy orientation set forth in the 2017 NSS and 2018 NDS is sometimes referred to a "2+3" strategy, meaning a strategy for countering two primary challenges (China and Russia) and three additional challenges (North Korea, Iran, and terrorist groups). Concept of a Free and Open Indo-Pacific (FOIP) In addition to the 2017 NSS and 2018 NDS, the Trump Administration has highlighted the concept of a free and open Indo-Pacific (FOIP), with the term Indo-Pacific referring to the Indian Ocean, the Pacific Ocean, and the countries (particularly those in Eurasia) bordering on those two oceans. The concept, which is still being fleshed out by the Trump Administration, appears to be a general U.S foreign policy and national security construct for the region, but observers view it as one that includes a military component. Challenge to U.S. Sea Control and U.S. Position in Western Pacific Observers of Chinese and U.S. military forces view China's improving naval capabilities as posing a potential challenge in the Western Pacific to the U.S. Navy's ability to achieve and maintain control of blue-water ocean areas in wartime—the first such challenge the U.S. Navy has faced since the end of the Cold War. More broadly, these observers view China's naval capabilities as a key element of an emerging broader Chinese military challenge to the long-standing status of the United States as the leading military power in the Western Pacific. Regional U.S. Allies and Partners The United States has certain security-related policies pertaining to Taiwan under the Taiwan Relations Act ( H.R. 2479 / P.L. 96-8 of April 10, 1979). The United States has bilateral security treaties with Japan, South Korea, and the Philippines, and an additional security treaty with Australia and New Zealand. In addition to U.S. treaty allies, certain other countries in the Western Pacific can be viewed as current or emerging U.S. security partners. Appendix B. U.S. Treaties with Japan and Philippines This appendix presents brief background information on the U.S. security treaties with Japan and the Philippines. U.S.-Japan Treaty on Mutual Cooperation and Security The 1960 U.S.-Japan treaty on mutual cooperation and security states in Article V that Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes. The United States has reaffirmed on a number of occasions over the years that since the Senkaku Islands are under the administration of Japan, they are included in the territories referred to in Article V of the treaty, and that the United States "will honor all of our treaty commitments to our treaty partners." (At the same time, the United States, noting the difference between administration and sovereignty, has noted that such affirmations do not prejudice the U.S. approach of taking no position regarding the outcome of the dispute between China, Taiwan, and Japan regarding who has sovereignty over the islands.) Some observers, while acknowledging the U.S. affirmations, have raised questions regarding the potential scope of actions that the United States might take under Article V. U.S.-Philippines Mutual Defense Treaty The 1951 U.S.-Philippines mutual defense treaty states in Article IV that Each Party recognizes that an armed attack in the Pacific Area on either of the Parties would be dangerous to its own peace and safety and declares that it would act to meet the common dangers in accordance with its constitutional processes. Article V states that For the purpose of Article IV, an armed attack on either of the Parties is deemed to include an armed attack on the metropolitan territory of either of the Parties, or on the island territories under its jurisdiction in the Pacific or on its armed forces, public vessels or aircraft in the Pacific. The United States has reaffirmed on a number of occasions over the years its obligations under the U.S.-Philippines mutual defense treaty. On May 9, 2012, Filipino Foreign Affairs Secretary Albert F. del Rosario issued a statement providing the Philippine perspective regarding the treaty's application to territorial disputes in the SCS. U.S. officials have made their own statements regarding the treaty's application to territorial disputes in the SCS. Appendix C. Treaties and Agreements Related to the Maritime Disputes This appendix briefly reviews some international treaties and agreements that bear on the issues discussed in this report. UN Convention on Law of the Sea (UNCLOS) The United Nations Convention on the Law of the Sea (UNCLOS) establishes a treaty regime to govern activities on, over, and under the world's oceans. UNCLOS was adopted by Third United Nations Conference on the Law of the Sea in December 1982, and entered into force in November 1994. The treaty established EEZs as a feature of international law, and contains multiple provisions relating to territorial waters and EEZs. As of May 10, 2018, 168 nations were party to the treaty, including China and most other countries bordering on the SCS and ECS (the exceptions being North Korea and Taiwan). The treaty and an associated 1994 agreement relating to implementation of Part XI of the treaty (on deep seabed mining) were transmitted to the Senate on October 6, 1994. In the absence of Senate advice and consent to adherence, the United States is not a party to the convention and the associated 1994 agreement. A March 10, 1983, statement on U.S. ocean policy by President Ronald Reagan states that UNCLOS contains provisions with respect to traditional uses of the oceans which generally confirm existing maritime law and practice and fairly balance the interests of all states. Today I am announcing three decisions to promote and protect the oceans interests of the United States in a manner consistent with those fair and balanced results in the Convention and international law. First, the United States is prepared to accept and act in accordance with the balance of interests relating to traditional uses of the oceans—such as navigation and overflight. In this respect, the United States will recognize the rights of other states in the waters off their coasts, as reflected in the Convention, so long as the rights and freedoms of the United States and others under international law are recognized by such coastal states. Second, the United States will exercise and assert its navigation and overflight rights and freedoms on a worldwide basis in a manner that is consistent with the balance of interests reflected in the convention. The United States will not, however, acquiesce in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight and other related high seas uses. Third, I am proclaiming today an Exclusive Economic Zone in which the United States will exercise sovereign rights in living and nonliving resources within 200 nautical miles of its coast. This will provide United States jurisdiction for mineral resources out to 200 nautical miles that are not on the continental shelf. UNCLOS builds on four 1958 law of the sea conventions to which the United States is a party: the Convention on the Territorial Sea and the Contiguous Zone, the Convention on the High Seas, the Convention on the Continental Shelf, and the Convention on Fishing and Conservation of the Living Resources of the High Seas. 1972 Convention on Preventing Collisions at Sea (COLREGs) China and the United States, as well as more than 150 other countries (including all those bordering on the South East and South China Seas, but not Taiwan), are parties to an October 1972 multilateral convention on international regulations for preventing collisions at sea, commonly known as the collision regulations (COLREGs) or the "rules of the road." Although commonly referred to as a set of rules or regulations, this multilateral convention is a binding treaty. The convention applies "to all vessels upon the high seas and in all waters connected therewith navigable by seagoing vessels." It thus applies to military vessels, paramilitary and law enforcement (i.e., coast guard) vessels, maritime militia vessels, and fishing boats, among other vessels. In a February 18, 2014, letter to Senator Marco Rubio concerning the December 5, 2013, incident involving the Cowpens , the State Department stated the following: In order to minimize the potential for an accident or incident at sea, it is important that the United States and China share a common understanding of the rules for operational air or maritime interactions. From the U.S. perspective, an existing body of international rules and guidelines—including the 1972 International Regulations for Preventing Collisions at Sea (COLREGs)—are sufficient to ensure the safety of navigation between U.S. forces and the force of other countries, including China. We will continue to make clear to the Chinese that these existing rules, including the COLREGs, should form the basis for our common understanding of air and maritime behavior, and we will encourage China to incorporate these rules into its incident-management tools. Likewise, we will continue to urge China to agree to adopt bilateral crisis management tools with Japan and to rapidly conclude negotiations with ASEAN on a robust and meaningful Code of Conduct in the South China in order to avoid incidents and to manage them when they arise. We will continue to stress the importance of these issues in our regular interactions with Chinese officials. In the 2014 edition of its annual report on military and security developments involving China, the DOD states the following: On December 5, 2013, a PLA Navy vessel and a U.S. Navy vessel operating in the South China Sea came into close proximity. At the time of the incident, USS COWPENS (CG 63) was operating approximately 32 nautical miles southeast of Hainan Island. In that location, the U.S. Navy vessel was conducting lawful military activities beyond the territorial sea of any coastal State, consistent with customary international law as reflected in the Law of the Sea Convention. Two PLA Navy vessels approached USS COWPENS. During this interaction, one of the PLA Navy vessels altered course and crossed directly in front of the bow of USS COWPENS. This maneuver by the PLA Navy vessel forced USS COWPENS to come to full stop to avoid collision, while the PLA Navy vessel passed less than 100 yards ahead. The PLA Navy vessel's action was inconsistent with internationally recognized rules concerning professional maritime behavior (i.e., the Convention of International Regulations for Preventing Collisions at Sea), to which China is a party. 2014 Code for Unplanned Encounters at Sea (CUES) On April 22, 2014, representatives of 21 Pacific-region navies (including China, Japan, and the United States), meeting in Qingdao, China, at the 14 th Western Pacific Naval Symposium (WPNS), unanimously agreed to a Code for Unplanned Encounters at Sea (CUES). CUES, a nonbinding agreement, establishes a standardized protocol of safety procedures, basic communications, and basic maneuvering instructions for naval ships and aircraft during unplanned encounters at sea, with the aim of reducing the risk of incidents arising from such encounters. The CUES agreement in effect supplements the 1972 COLREGs Convention (see previous section); it does not cancel or lessen commitments that countries have as parties to the COLREGS Convention. Two observers stated that "the [CUES] resolution is non-binding; only regulates communication in 'unplanned encounters,' not behavior; fails to address incidents in territorial waters; and does not apply to fishing and maritime constabulary vessels [i.e., coast guard ships and other maritime law enforcement ships], which are responsible for the majority of Chinese harassment operations." DOD stated in 2015 that Going forward, the Department is also exploring options to expand the use of CUES to include regional law enforcement vessels and Coast Guards. Given the growing use of maritime law enforcement vessels to enforce disputed maritime claims, expansion of CUES to MLE [maritime law enforcement] vessels would be an important step in reducing the risk of unintentional conflict. U.S. Navy officials have stated that the CUES agreement is generally working well, and that the United States (as noted in the passage above) is interested in expanding the agreement to cover coast guard ships. Officials from Singapore and Malaysia reportedly have expressed support for the idea. An Obama Administration fact sheet about Chinese President Xi Jinping's state visit to the United States on September 24-25, 2015, stated the following: The U.S. Coast Guard and the China Coast Guard have committed to pursue an arrangement whose intended purpose is equivalent to the Rules of Behavior Confidence Building Measure annex on surface-to-surface encounters in the November 2014 Memorandum of Understanding between the United States Department of Defense and the People's Republic of China Ministry of National Defense. A November 3, 2018, press report published following an incident in the SCS between a U.S. Navy destroyer and a Chinese destroyer stated the following: The U.S. Navy's chief of naval operations has called on China to return to a previously agreed-upon code of conduct for at-sea encounters between the ships of their respective navies, stressing the need to avoid miscalculations. During a Nov. 1 teleconference with reporters based in the Asia-Pacific region, Adm. John Richardson said he wants the People's Liberation Army Navy to "return to a consistent adherence to the agreed-to code that would again minimize the chance for a miscalculation that could possibly lead to a local incident and potential escalation." The CNO cited a case in early October when the U.S. Navy's guided-missile destroyer Decatur reported that a Chinese Type 052C destroyer came within 45 yards of the Decatur as it conducted a freedom-of-navigation operation in the South China Sea. However, he added that the "vast majority" of encounters with Chinese warships in the South China Sea "are conducted in accordance with the Code of Unplanned Encounters at Sea and done in a safe and professional manner." The code is an agreement reached by 21 Pacific nations in 2014 to reduce the chance of an incident at sea between the agreement's signatories. 2014 U.S.-China MOU on Air and Maritime Encounters In November 2014, the U.S. DOD and China's Ministry of National Defense signed a Memorandum of Understanding (MOU) regarding rules of behavior for safety of air and maritime encounters. The MOU makes reference to UNCLOS, the 1972 COLREGs convention, the Conventional on International Civil Aviation (commonly known as the Chicago Convention), the Agreement on Establishing a Consultation Mechanism to Strengthen Military Maritime Safety (MMCA), and CUES. The MOU as signed in November 2014 included an annex on rules of behavior for safety of surface-to-surface encounters. An additional annex on rules of behavior for safety of air-to-air encounters was signed on September 15 and 18, 2015. An October 20, 2018, press report states the following: Eighteen nations including the U.S. and China agreed in principle Saturday [October 20] to sign up to guidelines governing potentially dangerous encounters by military aircraft, a step toward stabilizing flashpoints but one that leaves enough wiggle room to ignore the new standards when a country wants. The guidelines essentially broaden a similar agreement reached by the U.S. and China three years ago and are an attempt to mitigate against incidents and collisions in some of the world's most tense areas…. The in-principle agreement, which will be put forward for formal adoption by the group of 18 nations next year, took place at an annual meeting of defense ministers under the aegis of the 10-country Association of Southeast Asian Nations, hosted by Singapore. Asean nations formally adopted the new guidelines themselves Friday. "The guidelines are very useful in setting norms," Singapore's defense minister Ng Eng Hen told reporters after the meeting. "All the 18 countries agreed strong in-principle support for the guidelines."… The aerial-encounters framework agreed to Saturday includes language that prohibits fast or aggressive approaches in the air and lays out guidelines on clear communications including suggestions to "refrain from the use of uncivil language or unfriendly physical gestures." Signatories to the agreement, which is voluntary and not legally binding, would agree to avoid unprofessional encounters and reckless maneuvers…. The guidelines fall short on enforcement and geographic specifics, but they are "better than nothing at all," said Evan Laksmana, senior researcher with the Center for Strategic and International Studies in Jakarta. "Confidence-building surrounding military crises or encounters can hardly move forward without some broadly agreed-upon rules of the game," he said. Negotiations on SCS Code of Conduct (COC) In 2002, China and the 10 member states of ASEAN signed a nonbinding Declaration on the Conduct (DOC) of Parties in the South China Sea in which the parties, among other things, ... reaffirm their respect for and commitment to the freedom of navigation in and overflight above the South China Sea as provided for by the universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea.... ... undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign states directly concerned, in accordance with universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea.... ... undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.... ...reaffirm that the adoption of a [follow-on] code of conduct in the South China Sea would further promote peace and stability in the region and agree to work, on the basis of consensus, towards the eventual attainment of this objective.... In July 2011, China and ASEAN adopted a preliminary set of principles for implementing the DOC. U.S. officials since 2010 have encouraged ASEAN and China to develop the follow-on binding Code of Conduct (COC) mentioned in the final quoted paragraph above. China and ASEAN have conducted negotiations on the follow-on COC, but China has not yet agreed with the ASEAN member states on a final text. On March 8, 2017, China announced that the first draft of a framework for the COC had been completed, and that "China and ASEAN countries feel satisfied with this." On May 18 and 19, 2017, it was reported that the China and the ASEAN countries had agreed on the framework. An article from a Chinese news outlet stated the following: All countries involved have agreed not to release the framework document, but to maintain it as an internal document at this time since the consultation will continue and they do not want any external interference, [Vice-Foreign Minister] Liu [Zhenmin] said. "Against the backdrop of economic globalization, China and ASEAN countries should continue making our regional rules to guide our own actions and protect our common interests," Liu said. A May 18, 2017, press report stated that Liu Zhemin "called on others to stay out [of the negotiations], apparently a coded message to the United States. 'We hope that our consultations on the code are not subject to any outside interference,' Liu said." An August 3, 2017, press report stated the following: Southeast Asian ministers meeting this week are set to avoid tackling the subject of Beijing's arming and building of manmade South China Sea islands, preparing to endorse a framework for a code of conduct that is neither binding nor enforceable. The Association of South East Asian Nations (ASEAN) has omitted references to China's most controversial activities in its joint communique, a draft reviewed by Reuters shows. In addition, a leaked blueprint for establishing an ASEAN-China code of maritime conduct does not call for it to be legally binding, or seek adherence to the United Nations Convention on the Law of the Sea (UNCLOS).... Analysts and some ASEAN diplomats worry that China's sudden support for negotiating a code of conduct is a ploy to buy time to further boost its military capability.... The agreed two-page framework is broad and leaves wide scope for disagreement, urging a commitment to the "purposes and principles" of UNCLOS, for example, rather than adherence. The framework papers over the big differences between ASEAN nations and China, said Patrick Cronin of the Center for a New American Security. "Optimists will see this non-binding agreement as a small step forward, allowing habits of cooperation to develop, despite differences," he said. "Pessimists will see this as a gambit favorable to a China determined to make the majority of the South China Sea its domestic lake." An August 6, 2017, press report stated the following: Southeast Asian nations agreed with China on Sunday [August 6] to endorse a framework for a maritime code of conduct that would govern behavior in disputed waters of the South China Sea, a small step forward in a negotiation that has lasted well over a decade. Though not the long-discussed code itself, the framework sets out parameters for discussion of an agreement intended to bring predictability to a potential flashpoint as China increasingly asserts its military presence over the area in the face of rival claims. The 10 countries of the Association of Southeast Asian Nations will meet with China at the end of August to discuss legalities for negotiations on the code of conduct, with formal talks beginning soon after, Philippines department of foreign affairs spokesman Robespierre Bolivar said Sunday. The endorsement of the framework, which was tentatively agreed to in May, came during a bilateral meeting between China and Asean on the sidelines of a series of security-oriented meetings that will conclude Tuesday. The unsticking of the framework after years of obstruction is widely seen as a concession by China, which has opposed any legally binding code on maritime engagement, stepped up naval patrols and built artificial islands to enforce its claims, equipping them with military weapons. Beijing's move to allow discussion on the code of conduct follows a resetting of ties with the Philippines under President Rodrigo Duterte, who in October—just four months after taking office—visited Beijing and declared a new friendship between the two countries. An August 8, 2017, blog post about the framework states the following: In Manila on 6 August 2017, the foreign ministers of ASEAN and China endorsed the framework for the Code of Conduct for the South China Sea (COC). While the framework is a step forward in the conflict management process for the South China Sea, it is short on details and contains many of the same principles and provisions contained in the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DOC) which has yet to be even partially implemented. The text includes a new reference to the prevention and management of incidents, as well as a seemingly stronger commitment to maritime security and freedom of navigation. However, the phrase "legally binding" is absent, as are the geographical scope of the agreement and enforcement and arbitration mechanisms. The framework will form the basis for further negotiations on the COC. Those discussions are likely to be lengthy and frustrating for those ASEAN members who had hoped to see a legally binding, comprehensive and effective COC. Some observers have argued that China has been dragging out the negotiations on the COC for years as part of a "talk and take strategy," meaning a strategy in which China engages in (or draws out) negotiations while taking actions to gain control of contested areas. A May 25, 2017, news report states the following: To call negotiations between China and the ten-country Association of South-East Asian Nations (ASEAN) over rival claims in the South China Sea "drawn out" would be a gross understatement. At the centre of the matter is an unsquareable circle: the competing claims of China and several South-East Asian countries. Nobody wants to go to war; nobody wants to be accused of backing down. Still, at a meeting of senior Chinese and ASEAN officials on May 18 th , something happened: the two sides agreed on a "framework" for a code of conduct. An official from Singapore (which currently co-ordinates ASEAN-China relations) called the agreement a sign of "steady progress".... ASEAN members called for a legally binding code of conduct as far back as 1996.... Since then, code-of-conduct negotiations have proceeded glacially.... Last July, after China received an unfavourable ruling on its maritime claims in a case brought by the Philippines to a tribunal in The Hague, China agreed to expedite the talks.... The draft framework will be presented to ASEAN and Chinese foreign ministers at a conference in August. This will then form the basis for the thorny negotiations to follow. The text has not (yet) been leaked. But its most salient feature may be what it appears to lack: any hint of enforcement mechanisms or consequences for violations. China has long rejected a legally binding agreement—or indeed any arrangement that could limit its actions in the South China Sea. The result, explains Ian Storey, of the ISEAS-Yusof Ishak Institute, a think-tank in Singapore, is a framework "that makes China look co-operative…without having to do anything that might constrain its freedom of action". ASEAN, meanwhile, gets the appearance of progress. "The ASEAN secretariat is a bureaucracy, and bureaucrats like process," explains Mr Storey. A July 13, 2018, blog post states the following: The COC has become a "holy grail," highly desired but unattainable. A major concern should be that this holy grail could turn into a tool for China to legitimize its actions in the South China Sea by engaging in the process while subverting its spirit. To this end, the challenges to the COC process are likely to be: China will use the COC talks to delay, exploit, and divert focus from any ASEAN consensus on the South China Sea; China will seek to include unhelpful and imprecise language in the COC which it could then use to justify its actions; China will nonetheless claim the COC as a diplomatic success and will use it as cover to avoid criticism while still pursuing its unilateral strategy to control the South China Sea…. If the COC process continues on its current trajectory, and China succeeds in filling the document with vague articles that would have little impact on its behavior, it would effectively be abusing the rules-based order to its own benefit. Instead of protecting against unilateral actions in the South China Sea, the rules-based order in the form of the COC could assist and justify China's expansion and ultimately its sole control of the South China Sea. Other regional actors need to recognize these traps of concluding a counter-productive COC, and resist the urge to reach an agreement just to be able to say they made progress. Instead, they should insist on negotiating the terms and conditions of a real COC, one that would establish effective rules-based dispute management mechanisms, not one that would by-pass them for the sake of an easy "win." An August 2, 2018, press report states the following: After more than a decade of talks, a bloc of Southeast Asian nations and China have agreed on a draft code of conduct that will lay the foundation for negotiations over the disputed South China Sea. Observers said the agreement showed that China and the Association of Southeast Asian Nations (Asean) could make progress through talks despite rising regional tensions, but they also warned that there was still a long way to go until a final deal. The agreement on the "Single Draft COC Negotiating Text" was announced at a meeting of Asean foreign ministers in Singapore on Thursday [August 2], after being nailed down at a China-Asean meeting in the central Chinese city of Changsha in June. An August 9, 2018, press report stated the following: Talks on completing a code of conduct for the disputed South China Sea will be long and complex and it would be unrealistic to set a timetable, state media on Thursday [August 9] cited a senior Chinese diplomat as saying…. In an interview with China Newsweek magazine, Yi Xianliang, Director General of the Chinese Foreign Ministry's Department of Boundary and Ocean Affairs, said the talks were continuing. Many of the topics were complex and sensitive and there were many different points of view, he said. "If these issues are to be resolved, and the code finally comes together, all sides need to keep looking for the greatest common denominator," Yi added. "There are voices from the outside, who are trying to set a timetable for the talks on the code. I think this is unrealistic," he said. Any multilateral talks take time, especially on such a complex issue as the South China Sea, Yi added. "It is impossible to define a timetable. Instead of setting the timetable unrealistically, and binding one's hands, it's better to step forward one foot at a time."… "Certain countries outside the region have been agitating that the code must be legally binding. This issue is quite complicated, including the domestic legal procedures involved in the countries concerned," he added, without elaborating. An October 22, 2018, press report stated the following: As China moves to complete the creation of military outposts in the South China Sea, Beijing's negotiation with southeastern Asian nations over a binding code of conduct is gaining momentum. But U.S. officials and experts warn China's insertions in the draft South China Sea code of conduct may put Washington and Beijing on a collision course. The text of the draft also shows that deep divisions remain among claimants. One of the Chinese provisions in the text states, "The Parties shall not hold joint military exercises with countries from outside the region, unless the parties concerned are notified beforehand and express no objection." China also proposed cooperation on the marine economy "shall not be conducted in cooperation with companies from countries outside the region." A State Department spokesperson told VOA the United States is concerned by reports China has been pressing members of the Association of Southeast Asian Nations "in the closed-door talks, to accept restrictions on their ability to conduct exercises with security partners, and to agree not to conduct oil and gas exploration in their claimed waters with energy firms based in countries which are not part of the ongoing negotiations." "These proposals, if accepted, would limit the ability of ASEAN nations to conduct sovereign, independent foreign and economic policies and would directly harm the interests of the broader international community," added the State Department spokesperson…. "In other words, China would like a veto over all the military exercises held by ASEAN countries with other nations. I think this really provides some evidence that China indeed is trying to limit American influence in the region, one might go so far as to say to push American military presence out of the region eventually, but certainly in the area of the South China Sea," said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies in Washington…. The United States is also calling for ongoing discussions on the South China Sea code of conduct to be transparent and consultative with the rest of the international community. U.S. officials said the international community has direct stakes in the outcome. A September 6, 2018, blog post stated the following: After two decades of talks, scepticism about the development of a South China Sea Code of Conduct (COC) is well-deserved, but it is also important to acknowledge progress when it happens. The agreement on a single draft negotiating text, revealed ahead of the ASEAN–China Post Ministerial Meeting on 2 August 2018, is an important step in the process that deserves recognition. The COC will not resolve the South China Sea disputes, nor was it ever meant to. Instead the COC is intended to manage disputes to avoid conflict pending their eventual resolution by direct negotiation or arbitration among the claimants. But any system to effectively manage the South China Sea disputes would require three things, none of which are achieved yet in the draft text. First, an effective COC would need to be geographically defined…. Second, an effective COC would need a dispute settlement mechanism…. Third, any effective regime to manage the South China Sea disputes would need detailed provisions on fisheries management and oil and gas development…. The solution to this problem could be a COC signed by all 10 ASEAN members and China that establishes general rules of behaviour within a clear geographic area, sets up an effective dispute settlement mechanism and endorses the immediate start of follow-on negotiations involving only the relevant claimants on fisheries management and oil and gas cooperation. Such a document would be a major step towards peacefully managing the South China Sea disputes and there are hints that at least some sections of the negotiating text might be on the right track. But the differences between parties remain considerable and final agreement on an effective COC still seems some way off. An October 29, 2018, press report states the following: The Philippines on Monday said a set of rules intended to prevent conflict in the South China Sea need not legally compel countries to follow it—an issue of importance for the Chinese government. Philippine Foreign Affairs Secretary Teodoro Locsin Jr. raised this possibility during a joint news conference with Wang Yi, his Chinese counterpart, in Davao City where they held bilateral talks to firm up preparations for President Xi Jinping's visit to Manila next month. The Association of Southeast Asian Nations and China are negotiating a code of conduct in the South China Sea. The 10-member bloc wants it to be legally binding, but Beijing prefers just "binding," ASEAN diplomats have said. "Perhaps, we will not be able to arrive at a legally binding COC, but it will be a standard on how people of ASEAN and governments of ASEAN will behave with each other -- always with honor, never with aggression, and always for mutual progress," Locsin said…. Wang said China will abide by the code whether it is legally binding or not. He said China hopes to finish the negotiations before Manila's term as ASEAN-China coordinator ends. "We welcome constructive opinions within the framework... that has been agreed," Wang said, referring to the general outline agreed last year, which dropped a reference to a legally binding code. The framework essentially repeats the spirit of a 2002 declaration on the South China Sea that called on parties to exercise restraint to avoid escalating tensions, and respect international law, among other things. Critics and ASEAN officials said the declaration failed to manage tensions in the disputed area because it was not legally binding. A November 14, 2018, press report stated the following: A rulebook to settle disputes in the hotly contested South China Sea should be finished in three years, Chinese Premier Li Keqiang said on Tuesday, insisting his nation does not seek "hegemony or expansion." Li's comments appeared to be the first clear timeframe for finishing the code of conduct. Talks have dragged on for years, with China accused of delaying progress as it prefers to deal with less powerful countries on a one-to-one basis. Appendix D. July 2016 Tribunal Award in SCS Arbitration Case Involving Philippines and China This appendix provides background information on the July 2016 tribunal award in the SCS arbitration case involving the Philippines and China. Overview In 2013, the Philippines sought arbitration under UNCLOS over the role of historic rights and the source of maritime entitlements in the South China Sea, the status of certain maritime features and the maritime entitlements they are capable of generating, and the lawfulness of certain actions by China that were alleged by the Philippines to violate UNCLOS. A tribunal was constituted under UNCLOS to hear the case. China stated repeatedly that it would not accept or participate in the arbitration and that, in its view, the tribunal lacked jurisdiction in this matter. China's nonparticipation did not prevent the case from moving forward, and the tribunal decided that it had jurisdiction over various matters covered under the case. On July 12, 2016, the tribunal issued its award (i.e., ruling) in the case. The award was strongly in favor of the Philippines—more so than even some observers had anticipated. The tribunal ruled, among other things, that China's nine-dash line claim had no legal basis; that none of the land features in the Spratlys is entitled to any more than a 12-nm territorial sea; that three of the Spratlys features that China occupies generate no entitlement to maritime zones; and that China violated the Philippines' sovereign rights by interfering with Philippine vessels and by damaging the maritime environment and engaging in reclamation work on a feature in the Philippines' EEZ. Under UNCLOS, the award is binding on both the Philippines and China (China's nonparticipation in the arbitration does not change this). There is, however, no mechanism for enforcing the tribunal's award. The United States has urged China and the Philippines to abide by the award. China, however, has declared the ruling null and void. Philippine President Rodrigo Duterte, who took office just before the tribunal's ruling, has not sought to enforce it. The tribunal's press release summarizing its award states the following in part: The Award is final and binding, as set out in Article 296 of the Convention [i.e., UNCLOS] and Article 11 of Annex VII [of UNCLOS]. Historic Rights and the 'Nine-Dash Line': ... On the merits, the Tribunal concluded that the Convention comprehensively allocates rights to maritime areas and that protections for pre-existing rights to resources were considered, but not adopted in the Convention. Accordingly, the Tribunal concluded that, to the extent China had historic rights to resources in the waters of the South China Sea, such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention. The Tribunal also noted that, although Chinese navigators and fishermen, as well as those of other States, had historically made use of the islands in the South China Sea, there was no evidence that China had historically exercised exclusive control over the waters or their resources. The Tribunal concluded that there was no legal basis for China to claim historic rights to resources within the sea areas falling within the 'nine-dash line'. Status of Features: ... Features that are above water at high tide generate an entitlement to at least a 12 nautical mile territorial sea, whereas features that are submerged at high tide do not. The Tribunal noted that the reefs have been heavily modified by land reclamation and construction, recalled that the Convention classifies features on their natural condition, and relied on historical materials in evaluating the features. The Tribunal then considered whether any of the features claimed by China could generate maritime zones beyond 12 nautical miles. Under the Convention, islands generate an exclusive economic zone of 200 nautical miles and a continental shelf, but "[r]ocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf." ... the Tribunal concluded that none of the Spratly Islands is capable of generating extended maritime zones. The Tribunal also held that the Spratly Islands cannot generate maritime zones collectively as a unit. Having found that none of the features claimed by China was capable of generating an exclusive economic zone, the Tribunal found that it could—without delimiting a boundary—declare that certain sea areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China. Lawfulness of Chinese Actions: ... Having found that certain areas are within the exclusive economic zone of the Philippines, the Tribunal found that China had violated the Philippines' sovereign rights in its exclusive economic zone by (a) interfering with Philippine fishing and petroleum exploration, (b) constructing artificial islands and (c) failing to prevent Chinese fishermen from fishing in the zone. The Tribunal also held that fishermen from the Philippines (like those from China) had traditional fishing rights at Scarborough Shoal and that China had interfered with these rights in restricting access. The Tribunal further held that Chinese law enforcement vessels had unlawfully created a serious risk of collision when they physically obstructed Philippine vessels. Harm to Marine Environment: The Tribunal considered the effect on the marine environment of China's recent large-scale land reclamation and construction of artificial islands at seven features in the Spratly Islands and found that China had caused severe harm to the coral reef environment and violated its obligation to preserve and protect fragile ecosystems and the habitat of depleted, threatened, or endangered species. The Tribunal also found that Chinese authorities were aware that Chinese fishermen have harvested endangered sea turtles, coral, and giant clams on a substantial scale in the South China Sea (using methods that inflict severe damage on the coral reef environment) and had not fulfilled their obligations to stop such activities. Aggravation of Dispute: Finally, the Tribunal considered whether China's actions since the commencement of the arbitration had aggravated the dispute between the Parties. The Tribunal found that it lacked jurisdiction to consider the implications of a stand-off between Philippine marines and Chinese naval and law enforcement vessels at Second Thomas Shoal, holding that this dispute involved military activities and was therefore excluded from compulsory settlement. The Tribunal found, however, that China's recent large-scale land reclamation and construction of artificial islands was incompatible with the obligations on a State during dispute resolution proceedings, insofar as China has inflicted irreparable harm to the marine environment, built a large artificial island in the Philippines' exclusive economic zone, and destroyed evidence of the natural condition of features in the South China Sea that formed part of the Parties' dispute. Assessments of Impact of Arbitral Award One Year Later In July 2017, a year after the arbitral panel's award, some observers assessed the impact to date of the award. For example, one observer stated the following: One year ago, China suffered a massive legal defeat when an international tribunal based in The Hague ruled that the vast majority of Beijing's extensive claims to maritime rights and resources in the South China Sea were not compatible with international law. Beijing was furious. At an official briefing immediately after the ruling, Vice Foreign Minister Liu Zhenmin twice called it "nothing more than a piece of waste paper," and one that "will not be enforced by anyone." And yet, one year on, China is, in many ways, abiding by it.... China is not fully complying with the ruling—far from it. On May 1, China imposed a three-and-a-half-month ban on fishing across the northern part of the South China Sea, as it has done each year since 1995. While the ban may help conserve fish stocks, its unilateral imposition in wide areas of the sea violates the ruling. Further south, China's occupation of Mischief Reef, a feature that is submerged at high tide and the tribunal ruled was part of the Philippines' continental shelf, endures. Having built a vast naval base and runway here, China looks like it will remain in violation of that part of the ruling for the foreseeable future. But there is evidence that the Chinese authorities, despite their rhetoric, have already changed their behavior. In October 2016, three months after the ruling, Beijing allowed Philippine and Vietnamese boats to resume fishing at Scarborough Shoal, west of the Philippines. A China Coast Guard ship still blocks the entrance to the lagoon, but boats can still fish the rich waters around it. The situation is not perfect but neither is China flaunting its defiance.... Much more significantly, China has avoided drilling for oil and gas on the wrong side of the invisible lines prescribed by the United Nations Convention on the Law of the Sea (UNCLOS).... ... the ruling means China has no claim to the fish, oil or gas more than 12 nautical miles from any of the Spratlys or Scarborough Shoal. The Chinese authorities appear not to accept this.... There are clear signs from both China's words and deeds that Beijing has quietly modified its overall legal position in the South China Sea. Australian researcher Andrew Chubb noted a significant article in the Chinese press in July last year outlining the new view.... ... China's new position seems to represent a major step towards compliance with UNCLOS and, therefore, the ruling. Most significantly, it removes the grounds for Chinese objections to other countries fishing and drilling in wide areas of the South China Sea.... Overall, the picture is of a China attempting to bring its vision of the rightful regional order (as the legitimate owner of every rock and reef inside the U-shaped line) within commonly understood international rules. Far from being "waste paper," China is taking the tribunal ruling very seriously. It is still some way from total compliance but it is clearly not deliberately flouting the ruling. Another observer stated the following: A year ago today, an arbitral tribunal formed pursuant to the United Nations Convention for the Law of the Sea issued a blockbuster award finding much of China's conduct in the South China Sea in violation of international law. As I detailed that day on this blog and elsewhere, the Philippines won about as big a legal victory as it could have expected. But as many of us also warned that day, a legal victory is not the same as an actual victory. In fact, over the past year China has succeeded in transforming its legal defeat into a policy victory by maintaining its aggressive South China Sea policies while escaping sanction for its non-compliance. While the election of a new pro-China Philippines government is a key factor, much of the blame for China's victory must also be placed on the Obama Administration.... International law seldom enforces itself, and even the reputational costs of violating international law do not arise unless other states impose those costs on the law-breaker. Both the Philippines and the U.S. had policy options that would have raised the costs of China's non-compliance with the award. But neither country's government chose to press China on the arbitral award.... Looking back after one year, we cannot say (yet) that U.S. policy in the South China Sea is a failure. But we can say that the U.S. under President Obama missed a huge opportunity to change the dynamics in the region in its favor, and it is hard to know whether or when another such opportunity will arise in the future. Reported Chinese Characterization of Arbitral Award as "Waste Paper" When the arbitral panel's award was announced, China stated that "China does not accept or recognize it," and that the award "is invalid and has no binding force." The first of the two passages quoted above states that "at an official briefing immediately after the ruling, Vice Foreign Minister Liu Zhenmin twice called it 'nothing more than a piece of waste paper,' and one that 'will not be enforced by anyone.'" A November 22, 2017, press report states the following: An eight-page essay pumped through social media and Chinese state newspapers in recent days extolled the virtues of president Xi Jinping. Among his achievements, in the Chinese language version, was that he had turned the South China Sea Arbitration at The Hague—which found against China—into "waste paper". It was an achievement that state news agency Xinhua's lengthy hymn, entitled "Xi and His Era", did not include in the English version for foreign consumption. Assessments and Events Two Years Later Another observer writes in a May 10, 2018, commentary piece that Two years after an international tribunal rejected expansive Chinese claims to the South China Sea, Beijing is consolidating control over the area and its resources. While the U.S. defends the right to freedom of navigation, it has failed to support the rights of neighboring countries under the tribunal's ruling. As a result, Southeast Asian countries are bowing to Beijing's demands…. While Beijing's dramatic military buildup in the South China Sea has received much attention, its attempts at "lawfare" are largely overlooked. In May, the Chinese Society of International Law published a "critical study" on the South China Sea arbitration case. It rehashed old arguments but also developed a newer one, namely that China is entitled to claim maritime zones based on groups of features rather than from individual features. Even if China is not entitled to historic rights within the area it claims, this argument goes, it is entitled to resources in a wide expanse of sea on the basis of an exclusive economic zone generated from outlying archipelagoes. But the Convention on the Law of the Sea makes clear that only archipelagic states such as the Philippines and Indonesia may draw straight archipelagic baselines from which maritime zones may be claimed. The tribunal also explicitly found that there was "no evidence" that any deviations from this rule have amounted to the formation of a new rule of customary international law. China's arguments are unlikely to sway lawyers, but that is not their intended audience. Rather Beijing is offering a legal fig leaf to political and business elites in Southeast Asia who are already predisposed to accept Beijing's claims in the South China Sea. They fear China's threat of coercive economic measures and eye promises of development through offerings such as the Belt and Road Initiative. Why did Washington go quiet on the 2016 tribunal decision? One reason is Philippine President Rodrigo Duterte's turn toward China and offer to set aside the ruling. The U.S. is also worried about the decision's implications for its own claims to exclusive economic zones from small, uninhabited land features in the Pacific. The Trump administration's failure to press Beijing to abide by the tribunal's ruling is a serious mistake. It undermines international law and upsets the balance of power in the region. Countries have taken note that the tide in the South China Sea is in China's favor, and they are making their strategic calculations accordingly. This hurts U.S. interests in the region. A July 12, 2018, press report stated the following: The Philippines is celebrating today the second anniversary of its landmark arbitration award against China's territorial claims in the South China Sea handed down by an arbitral tribunal in The Hague…. Until now, the Philippines remains sharply divided on how to leverage its arbitration award. Filipino President Rodrigo Duterte has repeatedly downplayed the relevance of the ruling by questioning its enforceability amid China's vociferous opposition. Soon after taking office in mid-2016, Duterte declared that he would "set aside" the arbitration award in order to pursue a "soft landing" in bilateral relations with China. In exchange, he has hoped for large-scale Chinese investments as well as resource-sharing in the South China Sea…. Other major leaders in the Philippines, however, have taken a tougher stance and continue to try to leverage the award to resist China's expanding footprint in the area. The Stratbase-Albert Del Rosario Institute, an influential think tank co-founded by former Philippine Secretary of Foreign Affairs Albert del Rosario, hosted today a high-level forum on the topic at the prestigious Manila Polo Club. Del Rosario oversaw the arbitration proceedings against China under Duterte's predecessor, Benigno Aquino. He opened the event attended by dignitaries from major Western and Asian countries with a strident speech which accused China of trying to "dominate the South China Sea through force and coercion." He defended the arbitration award as an "overwhelming victory" to resist "China's unlawful expansion agenda." The ex-top diplomat also accused the Duterte administration of acquiescence to China by acting as an "abettor" and "willing victim" by soft-pedaling the Philippines' claims in the South China Sea and refusing to raise the arbitration award in multilateral fora. The keynote speaker of the event was Vice President Leni Robredo, who has recently emerged as the de facto leader of the opposition against Duterte. Though falling short of directly naming Duterte, her spirited speech served as a comprehensive indictment of the administration's policy in the South China Sea…. Her keynote address, widely covered by the local media, was followed by an even more spirited speech by interim Supreme Court Chief Justice Antonio Carpio, another leading critic of Duterte's foreign policy. The chief magistrate, who also oversaw the Philippines' arbitration proceedings against China, lashed out at Duterte for placing the landmark award in a "deep freeze." He called on the Duterte administration to leverage the award by negotiating maritime delimitation agreements with other Southeast Asian claimant states such as Malaysia and Vietnam which welcomed the arbitral tribunal's nullification of China's nine-dashed-line map. He also called on the Philippines to expand its maritime entitlement claims in the area, in accordance to the arbitration award, by applying for an extended continental shelf in the South China Sea at the UN. Another July 12, 2018, press report stated the following: Tarpaulins bearing the words "Welcome to the Philippines, province of China" were seen hanging from several footbridges in Metro Manila Thursday, two years after the country won its arbitration case against China. The red banners bore the Chinese flag and Chinese characters. It is unclear who installed the tarpaulins, which are possible reference to a "joke" by President Rodrigo Duterte that the country can be a province of the Asian giant. "He (Xi Jinping) is a man of honor. They can even make us 'Philippines, province of China,' we will even avail of services for free," Duterte said in apparent jest before an audience of Chinese-Filipino business leaders earlier in 2018. "If China were a woman, I'd woo her."… In a Palace briefing, presidential spokesperson Harry Roque said enemies of the government are behind the tarpaulins. A report on ANC said that the Metro Manila Development Authority already took the banners down. The tarpaulins sparked outrage among social media users. A July 17, 2018, press report stated the following: Protesters held a rally in front of the Chinese Consulate [in San Francisco] before proceeding to the Philippine Consulate downtown, demanding that China "get out of Philippine territory in the West Philippine Sea." The protest was timed with others in Los Angeles and Vancouver on the second anniversary of the UN's Permanent Court of Arbitration ruling that China had no right to the territory it was claiming. Filipino American Human Rights Advocates (FAHRA) in a statement celebrated the court's finding that "China's historical claim of the "nine-dash line" [is] illegal and without basis." "China continues to violate the UN's decision with the backing of its puppet Philippine government headed by President Duterte, who is deceived by the 'build, build, build' economic push while China establishes a 'steal, steal, steal' approach to islands and territories belonging to the Exclusive Economic Zone (EEZ) of the Philippines as determined by UN," the statement lamented. FAHRA also found it unacceptable that Filipino fishermen must now ask permission to fish in the Philippine waters from "a Chinese master." "Duterte is beholden to the $15-billion loan with monstrous interest rate and China's investments in Boracay and Marawi, at the expense of Philippine sovereignty," FAHRA claimed. "This is not to mention that China remains to be the premier supplier of illegal drugs to the country through traders that include the son, Paolo Duterte, with his P6 billion shabu shipment to Davao," it further charged. The group demanded that "China abide by the UN International Tribunal Court's decision two years ago, to honor the full sovereignty of the Philippines over all territories at the Exclusive Economic Zone (EEZ) including the West Philippine Sea and the dismantling of the nuclear missiles and all military facilities installed by the Chinese government at the Spratly islands meant to coerce the Filipinos and all peace-loving people of Southeast Asia who clamor for equal respect and equal sovereignty in the area" among others. Appendix E. Additional Elements of China's Approach to Maritime Disputes This appendix presents background information on additional elements of China's approach to the maritime disputes in the SCS and ECS. Map of Nine-Dash Line China depicts its claims in the SCS using the so-called map of the nine-dash line—a Chinese map of the SCS showing nine line segments that, if connected, would enclose an area covering roughly 90% (earlier estimates said about 80%) of the SCS ( Figure E-1 ). The area inside the nine line segments far exceeds what is claimable as territorial waters under customary international law of the sea as reflected in UNCLOS, and, as shown in Figure E-2 , includes waters that are within the claimable EEZs (and in some places are quite near the coasts) of the Philippines, Malaysia, Brunei, and Vietnam. The map of the nine-dash line, also called the U-shaped line or the cow tongue, predates the establishment of the People's Republic of China (PRC) in 1949. The map has been maintained by the PRC government, and maps published in Taiwan also show the nine line segments. In a document submitted to the United Nations on May 7, 2009, which included the map shown in Figure E-1 as an attachment, China stated the following: China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters, and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof (see attached map [of the nine-dash line]). The above position is consistently held by the Chinese Government, and is widely known by the international community. The map does not always have exactly nine dashes. Early versions of the map had as many as 11 dashes, and a map of China published by the Chinese government in June 2014 includes 10 dashes. The exact positions of the dashes have also varied a bit over time. China has maintained ambiguity over whether it is using the map of the nine-dash line to claim full sovereignty over the entire sea area enclosed by the nine-dash line, or something less than that. Maintaining this ambiguity can be viewed as an approach that preserves flexibility for China in pursuing its maritime claims in the SCS while making it more difficult for other parties to define specific objections or pursue legal challenges to those claims. It does appear clear, however, that China at a minimum claims sovereignty over the island groups inside the nine line segments—China's domestic Law on the Territorial Sea and Contiguous Zone, enacted in 1992, specifies that China claims sovereignty over all the island groups inside the nine line segments. China's implementation on January 1, 2014, of a series of fishing regulations covering much of the SCS suggests that China claims at least some degree of administrative control over much of the SCS. An April 30, 2018, blog post states the following: In what is likely a new bid to reinforce and even expand China's sweeping territorial claims in the South China Sea, a group of Chinese scholars recently published a "New Map of the People's Republic of China." The alleged political national map, reportedly first published in April 1951 but only "discovered" through a recent national archival investigation, could give new clarity to the precise extent of China's official claims in the disputed waters. Instead of dotted lines, as reflected in China's U-shaped Nine-Dash Line claim to nearly all of the South China Sea, the newly discovered map provides a solid "continuous national boundary line and administrative region line." The Chinese researchers claim that through analysis of historical maps, the 1951 solid-line map "proves" beyond dispute that the "U-boundary line is the border of China's territorial sea" in the South China Sea. They also claim that the solid administrative line overlaying the U-boundary "definitely indicated that the sovereignty of the sea" enclosed within the U-boundary "belonged to China." The study, edited by the Guanghua and Geosciences Club and published by SDX Joint Publishing Company, has not been formally endorsed by the Chinese government. April 2018 Press Report of Proposal for Continuous Boundary Line in SCS An April 22, 2018, press report states the following: Researchers are proposing a new boundary in the South China Sea that they say will help the study of natural science while potentially adding weight to China's claims over the disputed waters, according to a senior scientist involved in the government-funded project. The new boundary will help to define more clearly China's claims in the contested region, but it is not clear whether or when it will be officially adopted by Beijing, the scientist said. A precise continuous line will split the Gulf of Tonkin between China and Vietnam, go south into waters claimed by Malaysia, take a U-turn to the north along the west coast of the Philippines and finish at the southeast of Taiwan. For decades, China's sovereign claim in the South China Sea has been murky, in large part because of the use of a segmented, vaguely located borderline known as the 'nine-dash line'. A United Nations tribunal ruled in July 2016 that China had no legal basis to claim the area within the dash lines. One reason for China losing the case was that it could not define the territory precisely. However, analysts said Beijing was unlikely to officially change the nine-dash line any time soon, in the face of potential international opposition.... The vast area of blue outlined by the new boundary, hanging on a map like a Christmas stocking under South China, overlaps the dashes and fills in the gaps. It includes all contested waters, such as the Paracel Islands, the Spratly Islands, James Shoal and Scarborough Shoal. The boundary would determine for the first time the exact area that China claimed to own with historic rights in the South China Sea, according to the researcher. Its purpose was partly the study of natural science and partly driven by a political motivation "to strengthen China's claims" over the waters to prepare for possible changes in its South China Sea policy in the future, the researcher said. Within the boundary, China would claim the right to activities ranging from fishing, prospecting and mining for energy or mineral resources to the construction of military bases with deep water ports or airports. Other countries' access to these rights would, however, be open for discussion, as is the case at Scarborough Shoal, which China controls but allows Philippine fishing boats to access. While Beijing would consider the area within the boundary its territory, other countries would still have freedom of navigation, the researcher said.... "Soon we will have a clear idea of what belongs to us in the South China Sea and what does not," said the researcher. "This will allow us to better plan and coordinate the efforts to protect our national interest in the region while reducing the risk of conflict with other countries caused by the absence of a border over the ocean."... "More often, when we are sending vessels out to the sea or looking down at an area via satellite, we are not sure whether it was our water," said the researcher in the boundary-drawing project. "The nine-dash line can no longer meet the demands of increasing Chinese activities in the South China Sea."... The continuous boundary was generated not only by curve-extending, gap-filling algorithms on computer. It was also based on a solid piece of historic evidence, according to the project team. In 1951, an official map approved by the central government of China marked the China-claimed area in the South China Sea with a pair of non-stopping lines. There was an inner black line indicating the sovereign boundary and an outer red line representing where China could exercise administrative power. "We were thrilled when we found the map," the researcher said. "It is something we can show the world." A detailed description of the map was published by the project team in a paper in domestic academic journal China Science Bulletin in March this year. Its authors recommended using the continuous U-shape boundary line as a replacement for the nine-dash line. The "U-boundary is the border of China's sea in the South China Sea, and its sovereignty belongs to China", the authors wrote in the paper. It "can further express the certainty of the integrity, continuity and border of China's seas in the South China Sea", they wrote, adding that it was "more vivid, accurate, complete and scientific". Professor Yu Minyou, director of the China Institute of Boundary and Ocean Studies at Wuhan University, said that if the old map was published with government approval, which was usually the case in China, "it surely will add legal weight to China's claim" in the region.... But other countries should bear in mind that it did not represent the Chinese government's position as long as the dash lines stayed on official maps, Yu said, adding that China's strategy for the South China Sea was "open and clear". "China wants to achieve peace, stability, harmony and prosperity in the region," he said. "We are willing to share natural resources with other countries and leave the disputes to be solved in the future. "What we are doing now is creating a suitable environment for the final settlement of the issue." A government expert at the National Institute for South China Sea Studies in Haikou, Hainan, said the continuous boundary would serve as a useful tool for some studies of natural science. But it was highly unlikely to be printed on an official map, said the expert, who requested not to be named because he was not allowed to speak to overseas media about sensitive issues. "To my knowledge, the Chinese government currently has no plan to change the dash lines," he said. "Most diplomats and ocean law experts will oppose joining the dashes." The tension in the South China Sea has eased significantly in recent times, with neighbouring countries such as the Philippines and Vietnam no longer seeking direct confrontation with China over disputed areas. "Things are moving towards the right direction," the government expert said. "It is not the best time to cut a boundary." September 2017 Press Report of Potential New "Four-Sha" Legal Claim A September 21, 2017, press report states the following: The Chinese government recently unveiled a new legal tactic to promote Beijing's aggressive claim to own most of the strategic South China Sea. The new narrative that critics are calling "lawfare," or legal warfare, involves a shift from China's so-called "9-Dash Line" ownership covering most of the sea. The new lawfare narrative is called the "Four Sha"—Chinese for sand—and was revealed by Ma Xinmin, deputy director general in the Foreign Ministry's department of treaty and law, during a closed-door meeting with State Department officials last month. China has claimed three of the island chains in the past and recently added a fourth zone in the northern part of the sea called the Pratas Islands near Hong Kong. The other locations are the disputed Paracels in the northwestern part and the Spratlys in the southern sea. The fourth island group is located in the central zone and includes Macclesfield Bank, a series of underwater reefs and shoals. China calls the island groups Dongsha, Xisha, Nansha, and Zhongsha, respectively. Ma, the Foreign Ministry official, announced during the meetings in Boston on Aug. 28 and 29 that China is asserting sovereignty over the Four Sha through several legal claims. He stated the area is China's historical territorial waters and also part of China's 200-mile Exclusive Economic Zone that defines adjacent zones as sovereign territory. Beijing also claims ownership by asserting the Four Sha are part of China's extended continental shelf. U.S. officials attending the session expressed surprise at the new Chinese ploy to seek control over the sea as something not discussed before.... A State Department notice at the end of what was billed as an annual U.S.-China Dialogue on the Law of the Sea and Polar Issues made no mention of the new Chinese lawfare tactic. The statement said only that officials from foreign affairs and maritime agencies "exchanged views on a wide range of issues related to oceans, the law of the sea, and the polar regions." A September 25, 2017, blog post about the claim states the following: While dropping or even de-emphasizing China's Nine-Dash Line claim in favor of the Four Shas has important diplomatic and political implications, the legal significance of such a shift is harder to assess. The constituent parts of China's Four Sha claims have long been set forth publicly in Chinese domestic law and official statements. Based on what we know so far, these new Chinese legal justifications are no more lawful than China's Nine-Dash Line claim. The challenge for critics of Chinese claims in the South China Sea, however, will be effectively explaining and articulating why this shift does not actually strengthen China's legal claims in the South China Sea. The Four Sha claim has a long pedigree in Chinese law and practice. China's 1992 law on the territorial sea and contiguous zone, for example, declared that China's land territory included the "Dongsha island group, Xisha island group, Zhongsha island group, [and] Nansha island group." A 2016 white paper disputing the Philippines' claims in the South China Sea arbitral process similarly claimed that: China's Nanhai Zhudao (the South China Sea Islands) consist of Dongsha Qundao (the Dongsha Islands), Xisha Qundao (the Xisha Islands), Zhongsha Qundao (the Zhongsha Islands) and Nansha Qundao (the Nansha Islands). These Islands include, among others, islands, reefs, shoals and cays of various numbers and sizes.... In a 2016 white paper, Beijing stated that, "China has, based on Nanhai Zhudao [the "Four Sha"], internal waters, territorial sea, contiguous zone, exclusive economic zone and continental shelf." Neither the white paper nor the Beacon's report explain how China derives these maritime zones from the four island groups.... Because China is not constituted "wholly by one or more archipelagos" (think Indonesia or the Philippines), the U.S. and most countries would view straight baselines around an island group as contrary to the UN Convention on the Law of the Sea (UNCLOS).... For this reason, this new Chinese legal strategy is even weaker than the Nine-Dash Line given that it clearly violates UNCLOS (e.g., Articles 46 and 47). Most Chinese defenses of the Nine Dash Line argued that the claim predated China's accession to UNCLOS and therefore not governed by it. Despite the legal weaknesses of its possible new strategy, China may still reap some benefits from trading the Nine-Dash Line for the Four Shas. First, the Chinese leadership may have realized that the Nine Dash Line has become too much of a diplomatic liability. The Nine-Dash Line is completely sui generis and no other state has made a historic maritime claim anything like it. For this reason, the Nine-Dash Line makes China an easy target for foreign criticism in a way that straight baselines around island groups probably will not. Second, by adopting language more similar to that found in UNCLOS, China may be betting that it can tamp down criticism, and win potential partners in the region.... Third, and most intriguingly, China may have concluded that it can better shape (or undermine, depending on your point of view) the law of the sea by adopting UNCLOS terminology.... So while we might be encouraged to see the Nine-Dash Line pass into the (legal) dustbins of history, we should be skeptical about whether the Four Shas herald a new more modest Chinese role in the South China Sea. China's legal justification for the Four Shas is just as weak, if not weaker, than its Nine-Dash Line claim. But explaining why the Four Shas is weak and lawless will require sophisticated legal analysis married with effective public messaging. Comparison with U.S. Actions Toward Caribbean and Gulf of Mexico Some observers have compared China's approach toward its near-seas region with the U.S. approach toward the Caribbean and the Gulf of Mexico in the age of the Monroe Doctrine. It can be noted, however, that there are significant differences between China's approach to its near-seas region and the U.S. approach—both in the 19 th and 20 th centuries and today—to the Caribbean and the Gulf of Mexico. Unlike China in its approach to its near-seas region, the United States has not asserted any form of sovereignty or historical rights over the broad waters of the Caribbean or Gulf of Mexico (or other sea areas beyond the 12-mile limit of U.S. territorial waters), has not published anything akin to the nine-dash line for these waters (or other sea areas beyond the 12-mile limit), and does not contest the right of foreign naval forces to operate and engage in various activities in waters beyond the 12-mile limit. Appendix F. U.S. Position on Operational Rights in EEZs This appendix presents additional background information on the U.S. position on the issue of operational rights of military ships in the EEZs of other countries. Operational Rights in EEZs Regarding a coastal state's rights within its EEZ, Scot Marciel, then-Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs, stated the following as part of his prepared statement for a July 15, 2009, hearing before the East Asian and Pacific Affairs Subcommittee of the Senate Foreign Relations Committee: I would now like to discuss recent incidents involving China and the activities of U.S. vessels in international waters within that country's Exclusive Economic Zone (EEZ). In March 2009, the survey ship USNS Impeccable was conducting routine operations, consistent with international law, in international waters in the South China Sea. Actions taken by Chinese fishing vessels to harass the Impeccable put ships of both sides at risk, interfered with freedom of navigation, and were inconsistent with the obligation for ships at sea to show due regard for the safety of other ships. We immediately protested those actions to the Chinese government, and urged that our differences be resolved through established mechanisms for dialogue—not through ship-to-ship confrontations that put sailors and vessels at risk. Our concern over that incident centered on China's conception of its legal authority over other countries' vessels operating in its Exclusive Economic Zone (EEZ) and the unsafe way China sought to assert what it considers its maritime rights. China's view of its rights on this specific point is not supported by international law. We have made that point clearly in discussions with the Chinese and underscored that U.S. vessels will continue to operate lawfully in international waters as they have done in the past. As part of his prepared statement for the same hearing, Robert Scher, then-Deputy Assistant Secretary of Defense, Asian and Pacific Security Affairs, Office of the Secretary of Defense, stated that we reject any nation's attempt to place limits on the exercise of high seas freedoms within an exclusive economic zones [sic] (EEZ). Customary international law, as reflected in articles 58 and 87 of the 1982 United Nations Convention on the Law of the Sea, guarantees to all nations the right to exercise within the EEZ, high seas freedoms of navigation and overflight, as well as the traditional uses of the ocean related to those freedoms. It has been the position of the United States since 1982 when the Convention was established, that the navigational rights and freedoms applicable within the EEZ are qualitatively and quantitatively the same as those rights and freedoms applicable on the high seas. We note that almost 40% of the world's oceans lie within the 200 nautical miles EEZs, and it is essential to the global economy and international peace and security that navigational rights and freedoms within the EEZ be vigorously asserted and preserved. As previously noted, our military activity in this region is routine and in accordance with customary international law as reflected in the 1982 Law of the Sea Convention. As mentioned earlier in the report, if China's position on whether coastal states have a right under UNCLOS to regulate the activities of foreign military forces in their EEZs were to gain greater international acceptance under international law, it could substantially affect U.S. naval operations not only in the SCS and ECS (see Figure F-1 for EEZs in the SCS and ECS), but around the world, which in turn could substantially affect the ability of the United States to use its military forces to defend various U.S. interests overseas. As shown in Figure F-2 , significant portions of the world's oceans are claimable as EEZs, including high-priority U.S. Navy operating areas in the Western Pacific, the Persian Gulf, and the Mediterranean Sea. Some observers, in commenting on China's resistance to U.S. military survey and surveillance operations in China's EEZ, have argued that the United States would similarly dislike it if China or some other country were to conduct military survey or surveillance operations within the U.S. EEZ. Skeptics of this view argue that U.S. policy accepts the right of other countries to operate their military forces freely in waters outside the 12-mile U.S. territorial waters limit, and that the United States during the Cold War acted in accordance with this position by not interfering with either Soviet ships (including intelligence-gathering vessels known as AGIs) that operated close to the United States or with Soviet bombers and surveillance aircraft that periodically flew close to U.S. airspace. The U.S. Navy states that When the commonly recognized outer limit of the territorial sea under international law was three nautical miles, the United States recognized the right of other states, including the Soviet Union, to exercise high seas freedoms, including surveillance and other military operations, beyond that limit. The 1982 Law of the Sea Convention moved the outer limit of the territorial sea to twelve nautical miles. In 1983, President Reagan declared that the United States would accept the balance of the interests relating to the traditional uses of the oceans reflected in the 1982 Convention and would act in accordance with those provisions in exercising its navigational and overflight rights as long as other states did likewise. He further proclaimed that all nations will continue to enjoy the high seas rights and freedoms that are not resource related, including the freedoms of navigation and overflight, in the Exclusive Economic Zone he established for the United States consistent with the 1982 Convention. DOD states that the PLA Navy has begun to conduct military activities within the Exclusive Economic Zones (EEZs) of other nations, without the permission of those coastal states. Of note, the United States has observed over the past year several instances of Chinese naval activities in the EEZ around Guam and Hawaii. One of those instances was during the execution of the annual Rim of the Pacific (RIMPAC) exercise in July/August 2012. While the United States considers the PLA Navy activities in its EEZ to be lawful, the activity undercuts China's decades-old position that similar foreign military activities in China's EEZ are unlawful. In July 2014, China participated, for the first time, in the biennial U.S.-led Rim of the Pacific (RIMPAC) naval exercise, the world's largest multilateral naval exercise. In addition to the four ships that China sent to participate in RIMPAC, China sent an uninvited intelligence-gathering ship to observe the exercise without participating in it. The ship conducted operations inside U.S. EEZ off Hawaii, where the exercise was located. A July 29, 2014, press report stated that The high profile story of a Chinese surveillance ship off the cost of Hawaii could have a positive aspect for U.S. operations in the Pacific, the head of U.S. Pacific Command (PACOM) said in a Tuesday [July 29] afternoon briefing with reporters at the Pentagon. "The good news about this is that it's a recognition, I think, or acceptance by the Chinese for what we've been saying to them for sometime," PACOM commander Adm. Samuel Locklear told reporters. "Military operations and survey operations in another country's [Exclusive Economic Zone]—where you have your own national security interest—are within international law and are acceptable. This is a fundamental right nations have." One observer stated the following: The unprecedented decision [by China] to send a surveillance vessel while also participating in the RIMPAC exercises calls China's proclaimed stance on international navigation rights [in EEZ waters] into question... During the Cold War, the U.S. and Soviets were known for spying on each other's exercises. More recently, Beijing sent what U.S. Pacific Fleet spokesman Captain Darryn James called "a similar AGI ship" to Hawaii to monitor RIMPAC 2012—though that year, China was not an official participant in the exercises.... ... the spy ship's presence appears inconsistent with China's stance on military activities in Exclusive Economic Zones (EEZs).... That Beijing's AGI [intelligence-gathering ship] is currently stationed off the coast of Hawaii suggests either a double standard that could complicate military relations between the United States and China, or that some such surveillance activities are indeed legitimate—and that China should clarify its position on them to avoid perceptions that it is trying to have things both ways.... In its response to the Chinese vessel's presence, the USN has shown characteristic restraint. Official American policy permits surveillance operations within a nation's EEZ, provided they remain outside of that nation's 12-nautical mile territorial sea (an EEZ extends from 12 to 200 nautical miles unless this would overlap with another nations' EEZ). U.S. military statements reflect that position unambiguously.... That consistent policy stance and accompanying restraint have characterized the U.S. attitude toward foreign surveillance activity since the Cold War. Then, the Soviets were known for sending converted fishing ships equipped with surveillance equipment to the U.S. coast, as well as foreign bases, maritime choke points, and testing sites. The U.S. was similarly restrained in 2012, when China first sent an AGI to observe RIMPAC.... China has, then, sent a surveillance ship to observe RIMPAC in what appears to be a decidedly intentional, coordinated move—and in a gesture that appears to contradict previous Chinese policy regarding surveillance and research operations (SROs). The U.S. supports universal freedom of navigation and the right to conduct SROs in international waters, including EEZs, hence its restraint when responding to the current presence of the Chinese AGI. But the PRC opposes such activities, particularly on the part of the U.S., in its own EEZ.... How then to reconcile the RIMPAC AGI with China's stand on surveillance activities? China maintains that its current actions are fully legal, and that there is a distinct difference between its operations off Hawaii and those of foreign powers in its EEZ. The PLAN's designated point of contact declined to provide information and directed inquiries to China's Defense Ministry. In a faxed statement to Reuters, the Defense Ministry stated that Chinese vessels had the right to operate "in waters outside of other country's territorial waters," and that "China respects the rights granted under international law to relevant littoral states, and hopes that relevant countries can respect the legal rights Chinese ships have." It did not elaborate. As a recent Global Times article hinted—China's position on military activities in EEZs is based on a legal reading that stresses the importance of domestic laws. According to China maritime legal specialist Isaac Kardon, China interprets the EEZ articles in the United Nations Convention on the Law of the Sea (UNCLOS) as granting a coastal state jurisdiction to enforce its domestic laws prohibiting certain military activities—e.g., those that it interprets to threaten national security, economic rights, or environmental protection—in its EEZ. China's domestic laws include such provisions, while those of the United States do not. Those rules would allow China to justify its seemingly contradictory approach to AGI operations—or, as Kardon put it, "to have their cake and eat it too." Therefore, under the Chinese interpretation of UNCLOS, its actions are neither hypocritical nor illegal—yet do not justify similar surveillance against China. Here, noted legal scholar Jerome Cohen emphasizes, the U.S. position remains the globally dominant view—"since most nations believe the coastal state has no right to forbid surveillance in its EEZ, they do not have domestic laws that do so." This renders China's attempted constraints legally problematic, since "international law is based on reciprocity." To explain his interpretation of Beijing's likely approach, Cohen invokes the observation that a French commentator made several decades ago in the context of discussing China's international law policy regarding domestic legal issues: "I demand freedom from you in the name of your principles. I deny it to you in the name of mine." Based on his personal experience interacting with Chinese officials and legal experts, Kardon adds, "China is increasingly confident that its interpretation of some key rules and—most critically—its practices reinforcing that interpretation can over time shape the Law of the Sea regime to suit its preferences." But China is not putting all its eggs in that basket. There are increasing indications that it is attempting to promote its EEZ approach vis-à-vis the U.S. not legally but politically. "Beijing is shifting from rules- to relations-based objections," Naval War College China Maritime Studies Institute Director Peter Dutton observes. "In this context, its surveillance operations in undisputed U.S. EEZs portend an important shift, but that does not mean that China will be more flexible in the East or South China Seas." The quasi-authoritative Chinese commentary that has emerged thus far supports this interpretation.... [A recent statement from a Chinese official] suggests that Beijing will increasingly oppose U.S. SROs on the grounds that they are incompatible with the stable, cooperative Sino-American relationship that Beijing and Washington have committed to cultivating. The Obama Administration must ensure that the "new-type Navy-to-Navy relations" that Chinese Chief of Naval Operations Admiral Wu Shengli has advocated to his U.S. counterpart does not contain expectations that U.S. SROs will be reduced in nature, scope, or frequency.... China's conducting military activities in a foreign EEZ implies that, under its interpretation, some such operations are indeed legal. It therefore falls to China now to clarify its stance—to explain why its operations are consistent with international law, and what sets them apart from apparently similar American activities. If China does not explain away the apparent contradiction in a convincing fashion, it risks stirring up increased international resentment—and undermining its relationship with the U.S. Beijing is currently engaging in activities very much like those it has vociferously opposed. That suggests the promotion of a double standard untenable in the international system, and very much at odds with the relationships based on reciprocity, respect, and cooperation that China purports to promote.... If, however, China chooses to remain silent, it will likely have to accept—at least tacitly, without harassing—U.S. surveillance missions in its claimed EEZ. So, as we watch for clarification on Beijing's legal interpretation, it will also be important to watch for indications regarding the next SROs in China's EEZ. In September 2014, a Chinese surveillance ship operated in U.S. EEZ waters near Guam as it observed a joint-service U.S. military exercise called Valiant Shield. A U.S. spokesperson for the exercise stated the following: "We'd like to reinforce that military operations in international commons and outside of territorial waters and airspace is a fundamental right that all nations have.... The Chinese were following international norms, which is completely acceptable." Appendix G. Options Suggested by Observers for Strengthening U.S. Actions This appendix presents a bibliography of some recent writings by observers who have suggested options (or are reporting on options suggested by others) for strengthening U.S. actions for responding to China's actions in the SCS and ECS, organized by date, beginning with the most-recent item. Andrew S. Erickson, "Maritime Numbers Game, Understanding and Responding to China's Three Sea Forces," Indo-Pacific Defense Forum , January 28, 2019. James R. Holmes, "Use It or Lose It: Seagoing Nations Must Defend Embattled Waterways," The Hill , January 27, 2019. Gregory Poling and Eric Sayers, "Time to Make Good on the U.S.-Philippine Alliance," War on the Rocks , January 21, 2019. Gregory Poling and Bonnie S. Glaser, "How the U.S. Can Step Up in the South China Sea," Foreign Affairs , January 16, 2019. Zack Cooper and Gregory Poling, "America's Freedom of Navigation Operations Are Lost at Sea, Far Wider Measures Are Needed to Challenge Beijing's Maritime Aggression," Foreign Policy , January 8, 2019. Andrew S. Erickson, "Shining a Spotlight: Revealing China's Maritime Militia to Deter its Use," National Interest , November 25, 2018. Eric Sayers, "Assessing America's Indo-Pacific Budget Shortfall," War on the Rocks , November 15, 2018. Patrick N. Cronin and Richard Javad Heydarian, "This Is How America and the Philippines Can Upgrade Their Alliance," National Interest , November 12, 2018. John Lee, Freedom of Navigation and East Asian Stability: Countering Beijing's Campaign of Historical Revisionism ," Hudson Institute, November 2018, 8 pp. Ryan Martinson and Peter Dutton, "Chinese Scientists Want to Conduct Research in U.S. Waters—Should Washington Let Them?" National Interest , November 4, 2018. Hunter Stires, "Understanding and Defeating China's Maritime Insurgency in the South china Sea," National Interest , November 1, 2018. Robert D. Kaplan, "How President Trump Is Helping Beijing Win in the South China Sea," Washington Post , October 9, 2018. Tuan Pham, "China's Worth Nightmare: RIMPAC 2020 in the South China Sea?" National Interest , September 29, 2018. Patrick M. Cronin, "China is Waging a Maritime Insurgency in the South China Sea. It's Time for the Unitd States to Counter It." National Interest , August 6, 2018. Shigeki Sakamoto, "China's South China Sea Project Must Not Succeed; The International Community Shouldn't Quietly Let China Ignore the 2016 [Arbitral Tribunal] Decision." Diplomat , August 6, 2018. James Amedeo, "America Needs a Clear Strategy to Counter China's Expansion in the South China Sea," National Interest , August 1, 2018. Lynn Kuok, "Countering China's Actions in the South China Sea," Lawfare , August 1, 2018. Timothy Perry, "Use Maritime-Law Trends to Offset Beijing's Gains in the South China Sea," Defense One , July 24, 2018. J. Michael Cole, "It's Time to Stop China's Seaward Expansion," National Interest , July 21, 2018. Lindsey W. Ford, "Was China's RIMPAC Exclusion An Opening or a Wasted Shot?" East Asia Forum , July 20, 2018. Lynn Kuok, "China Is Winning in the South China Sea," Wall Street Journal , July 17, 2018. "Washington and Its Allies Need to Contain Beijing," Financial Times , July 1, 2018. Patrick M. Cronin and Melodiw Ha, "Toward a New maritime Strategy in the South China Sea," The Diplomat , June 22, 2018. (A similar version was posted as: Patrick M. Cronin and Melodie Ha, "Toward a New Maritime Strategy in the South China Sea," CSIS, June 21, 2018 (PacNet #42). Paul J. Leaf, "Taiwan and the South China Sea Must Be Taken Off the Back Burner," National Interest , June 18, 2018. Robert E. McCoy, "A Better Way to Repel China in the South China Sea," Asia Times , June 8, 2018. Robert Farley, "The South China Sea Conundrum for the United States," The Diplomat , June 5 2018. Joel Gehrke, "Marco Rubio: US Must Develop Plan to 'Destroy' Chinese Assets in South China Sea," Washington Examiner , June 4, 2018. Duncan DeAeth, "Taiwan Should Invite US to Open Military Base on Taiping Island, Says DPP Think-Tank," Taiwan News , June 4, 2018. Julian Ku, "It's Time for South China Sea Economic Sanctions," Lawfare , June 1, 2018. Eric Sayers, "Time to Launch a Combined Maritime Task Force for the Pacific," War on the Rocks , June 1, 2018. Matthew Krull, "America's Annual Naval Patrol Report and How to Fix It," National Interest , May 29, 2018. Tuan N. Pham, "A Sign of the Times: China's Recent Actions and the Undermining of Global Rules, Pt. 3," CIMSEC (Center for International Maritime Security), May 24, 2018. Ryan D. Martinson and Andrew Erickson, "Re-Orienting American Seapower for the China Challenge," War on the Rocks , May 10, 2018. Ben Cipperley, "In the Era of Great Power Competition, the US Needs to Step Up Its Game," The Diplomat , May 8, 2018. Stephen Bryen, "How to Counter China's Fortified Islands in South China Sea," Asia Times , May 5, 2018. Ely Ratner, "Exposing China's Actions in the South China Sea," Council on Foreign Relations, April 6, 2018. Shawn Lansing, "A White Hull Approach to Taming the Dragon: Using the Coast Guard to Counter China," War on the Rocks , February 22, 2018. Dean Cheng, "Wanted: A Strategy to Limit China's Grand Plans for the South China Sea," National Interest , January 30, 2018. Hal Brands, "China Hasn't Won the Pacific (Unless You Think It Has)," Bloomberg , January 5, 2018.

 

 Report 2:
The defense lab enterprise consists of 63 labs, warfare centers, and engineering centers across the Departments of the Army, Navy, and Air Force, as shown in Figure 1 below. About 50,000 federally employed scientists and engineers work at these defense labs to support warfighter needs and develop transformative capabilities. Defense labs are managed and operated within the military service chain of command. DOD budgets for technology and product development activities under its research, development, test, and evaluation budget, which DOD groups into seven budget activity categories for its annual budget estimates. Air Force and Army labs rely on appropriated funding provided from the service—often referred to as mission funding—or from customers (or some combination thereof). Customers, such as program offices, provide funding to defense labs for technology development activities and related research. The Air Force and Army funding structure is in contrast to Navy research and development activities, which operate under the Navy Working Capital Fund—a revolving fund that finances Department of the Navy activities on a reimbursable basis. Under this funding model, the Navy employs a Capital Investment Program to obtain capital assets, including minor military construction projects for labs. The program provides the framework for planning, coordinating, and controlling Navy working capital funds and expenditures to obtain capital assets. Figure 2 illustrates the varying funding models used by the military service labs. In addition to its labs, DOD sponsors other entities to provide for its technology development needs. Specifically, these include: FFRDCs are operated by universities, other not-for-profit or nonprofit organizations, or private firms under long-term contracts and provide special research and development services that generally cannot be readily satisfied by government personnel or private contractors. For example, the Massachusetts Institute of Technology Lincoln Laboratory develops key radar and electronic warfare technologies for integrated air and missile defense systems. In addition, the Software Engineering Institute operated by Carnegie Mellon University provides cybersecurity solutions for defense entities. While DOD sponsors 10 FFRDCs in total, it designates 3 FFRDCs as research and development labs, which maintain long-term competencies in key technology areas. In addition to these, DOD sponsors 2 systems engineering and integration FFRDCs and 5 studies and analysis FFRDCs. UARCs provide specialized research and development services similar to FFRDCs and also operate under long-term contracts. However, unlike FFRDCs, DOD requires that UARCs be affiliated with a university. Generally, UARCs may not compete against industry in response to a competitive Request for Proposals for development or production that involves engineering expertise. DOD currently sponsors 13 UARCs. Key DOD offices provide oversight to the defense labs: The Under Secretary of Defense for Research and Engineering (USD(R&E))—the principal advisor to the Secretary of Defense for research, engineering, and technology development activities and programs—serves as DOD’s chief technology officer. The powers and duties of this office include establishing policies and providing oversight for DOD’s research, engineering, and technology development activities. The Defense Laboratories Office—within the Office of the USD(R&E)—supports DOD’s research and engineering mission by helping to ensure comprehensive department-level insight into the activities and capabilities of the defense labs. This office carries out a range of core functions related to the defense labs, including analysis of capabilities, alignment of activities, and advocacy. Congress has granted authorities that address hiring, infrastructure, and technology transition challenges to defense labs since 1995. These authorities provide defense lab directors with certain flexibilities within the established legal framework to manage their operations. While Congress has provided a number of authorities, in this report we focus on four authorities that our prior work on best practices in science and technology management and expedited lab hiring has shown are, or have the potential to be, the most crucial for supporting innovation within DOD labs. Laboratory Initiated Research Authority. This authority provides lab directors with the means to fund some of the research projects that the lab will pursue. The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with a means to fund projects they consider to be a priority in four allowable categories: (1) basic and applied research, (2) technology transition, (3) workforce development, and (4) revitalization, recapitalization, or repair or minor construction of lab infrastructure. These projects include those not specifically tied to defined requirements, outside of the normal 2-year budget planning process. The authority directs the Secretary of Defense to establish mechanisms under which lab directors may use an amount of funds equal to not less than 2 percent and not more than 4 percent of all funds available to the defense lab for projects under the four allowable categories. Further, lab directors are permitted to obtain additional funding by charging customers a fixed percentage fee that may not exceed 4 percent of costs. Direct Hire Authorities. These authorities provide lab directors with a streamlined and accelerated hiring process. Congress has enacted four types of direct hire authorities since 2008, which help labs compete with private industry and academia for high-quality scientific, engineering, and technical talent. Specific types of direct hire authorities include hiring: (1) candidates with advanced degrees; (2) candidates with bachelor’s degrees; (3) veterans; and (4) students currently enrolled in graduate or undergraduate science, technology, engineering, and mathematics (STEM) programs., Laboratory Enhancement Pilot Program. This authority provides methods for effective lab management operations. Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing labs, and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods, unless such implementation would be prohibited by a provision of an existing statute or common law. Micro-purchase Authority. This authority facilitates the purchasing process for labs. The FAR states a preference for government agencies to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods. This facilitates the ability of lab officials to quickly and easily acquire needed items for their activities and reduce the administrative costs associated with such small purchases. While the FAR micro-purchase was generally $3,500 during our review, Congress increased it to $10,000 for activities of the science and technology reinvention labs in Section 217 of the National Defense Authorization Act for Fiscal Year 2017. As we found in June 2018, the federal government spends approximately $137 billion annually government-wide on research and development (R&D) to help further agencies’ missions, including at federal labs. From fiscal years 2015 to 2017, DOD, Energy, and NASA represented three of the top four federal agencies with the highest annual federal R&D spending, accounting for about 66 percent of total federal R&D spending on average, as shown in Figure 3. While the labs primarily support the agencies that directly fund them, DOD, Energy, and NASA research entities also collaborate extensively to support activities of shared interest. For example, DOD and NASA research centers have collaborated to develop hypersonic vehicle capabilities. Further, Energy’s national labs help provide critical national security capabilities for DOD and support NASA’s deep space mission radioisotope requirements. In 2017, Energy reported performing about $2.6 billion of work per year from fiscal years 2011 through 2015 for other federal agencies and other customers, including DOD. Most defense labs have used the selected authorities since 2008, but their use has sometimes been limited for a variety of reasons. According to lab directors, this is because of DOD legal and policy restrictions and stakeholder concerns. For example: Use of the laboratory initiated research authority was limited by DOD’s military construction funding and financial management policies. Use of the direct hire authority was limited, in part, by personnel- related delays, security clearance challenges, and military hiring restrictions. Use of the laboratory enhancement pilot program was limited by stakeholder uncertainty about how to use this authority effectively. Use of the increased micro-purchase authority was limited by stakeholder concerns about the authority’s potential effect on small businesses. We found that most defense labs have used the laboratory initiated research authority. Twenty-three of 31 of respondents to our survey— about 74 percent—reported obligating funds under this authority. However, we found that most labs are not using the full 4 percent of all funds available to each lab, or charging customers the full fixed percentage fee of 4 percent of costs, as allowed by law. Specifically, we found that, as of September 2018: Navy labs reported charging customers a percentage fee of about 2 percent of costs as of fiscal year 2018. Prior to this, Navy labs only charged a 1 percent fixed fee on these costs. Because Navy labs are working capital funded organizations, they can use payments from customers for goods delivered or services performed. Army labs reported using between 2 and 3 percent of all funds available to the lab for projects under the four allowable categories and charging customers a fixed fee of between zero and 3 percent of costs to fund such activities. Only the Air Force Research Laboratory reported using the full 4 percent of all funds available to the lab. According to agency officials, the lab is using 3 percent of all funds available to the lab and is allowing individual technology directorates the option to use the additional 1 percent of funds available. In fiscal year 2018, three of the lab’s nine technology directorates chose to use this additional 1 percent. However, the lab has not charged customers a fixed percentage fee on their costs at all. As figure 4 shows, in fiscal year 2017, the aggregate fixed percentage fee charged by labs in each of the military departments totaled under the full 4 percent allowed by law for each funding source. Decisions to charge lower percentages are decisions to forego additional potential funding, although agencies have various reasons why this can happen, as we will discuss later. In total, DOD reported that this authority provided almost $300 million to labs in fiscal year 2017 and funded more than 1,750 projects across the four allowable categories, as Figure 5 illustrates. We previously found, in June 2017, that the laboratory initiated research authority provides defense lab directors with limited flexibility to initiate science and technology projects. These projects include those that are not road mapped or tied to defined requirements outside of the normal 2- year budget planning process, and are focused on both near- and long- term needs. For this review, defense lab officials we interviewed stated that the laboratory initiated research authority enables their scientists and researchers to pursue projects not necessarily tied to requirements and provides necessary funds for workforce development and lab infrastructure projects. Further, as shown in Figure 6, lab directors we surveyed generally view the authority as both fostering innovation and increasing efficiency across the four allowable categories on which funds can be used. In accordance with the one of the statutory purposes for the use of the funds, lab directors have developed new, innovative technologies using this authority. For example, DOD reported that: In fiscal year 2017, the Naval Surface Warfare Center, Crane Division, developed and fielded a solution to an urgent requirement for defeating small unmanned aerial vehicles that attack Navy assets or surveil naval activities. The center delivered this technology to the warfighter in May 2017 just 7 weeks after the Navy submitted the requirement. The Army Research Laboratory used the authority to fund a project that eventually developed a material that could increase the speed and lower the power needs of future generations of computer chips, thereby supporting Army networks. The Navy invested more than $700 thousand in laboratory initiated research authority funds to commission a Ballast Water Research Lab at Naval Surface Warfare Center, Carderock Division. Through the use of this new facility, engineers will be able to study ways to treat ballast water to prevent introduction of non- native aquatic species into a new environment that can be disastrous for the marine life that already inhabit that environment, and ensure that the Navy is able to meet various port regulations around the world for its ships. The Air Force Research Laboratory invested funds in fiscal year 2017 to renovate an existing facility to provide high performance computing capability to aid the rapid development of “game-changing” technologies and weapon systems. Officials at the Army’s Space and Missile Defense Command Technical Center noted they used the laboratory initiated research authority for the first time in fiscal year 2018 because the current executive director, who assumed the position in 2017, prioritized implementing this authority. Most of the Center’s planned investments are focused on workforce development and laboratory infrastructure projects; officials cited a high energy laser technology lab as one of the projects being supported by the revitalization, recapitalization, or minor military construction portion of this authority. Although the majority of defense labs reported using the laboratory initiated research authority, interviews we conducted throughout our review, along with other DOD reports, identified certain obstacles that have, at times, impeded wider usage. DOD-wide military construction funding restrictions. DOD restrictions limit the amount of laboratory initiated research authority funds that labs can spend on lab infrastructure. DOD’s limit is $6 million for the revitalization and recapitalization projects that can be funded under the laboratory initiated research authority. Lab officials stated that this amount is often insufficient to construct advanced lab facilities. Air Force Research Laboratory officials indicated that it is nearly impossible to construct lab facilities for less than $6 million. Officials at the Army’s Aviation and Missile Research, Development and Engineering Center echoed this sentiment and noted that they have primarily used funds to renovate existing buildings rather than fund new lab facility construction. In January 2017, the Defense Science Board identified lab infrastructure challenges, including that the average age of research and development facilities was nearly 50 years. Further, the Board reported that the labs are usually not successful in competing against broader service needs for military construction funds. Air Force does not charge customers a fixed percentage fee of costs. The Air Force Research Laboratory reported that it is not charging customers the allowable fixed percentage fee of costs to fund science and technology activities because it does not have a mechanism in place to do so. Air Force Research Laboratory officials estimated the lab would collect approximately $3 million a year if the lab charged customer activities the maximum allowable fee (4 percent). Air Force financial management officials stated that the service’s accounting system does not currently have an automated capability to transfer the allowable percentage fee of costs to a central account at the Air Force Research Laboratory. This lack of capability, officials noted, creates a significant administrative burden for charging these fees. The officials stated that they have not yet estimated the cost to add an automated capability. Although it is possible for the Air Force Research Laboratory to charge customer work orders manually—outside of the Air Force’s accounting system—officials with the Office of the Assistant Secretary of the Air Force for Financial Management and Comptroller perceive that the resources (time and people) required to manage such a process would be cost prohibitive. However, according to these officials, the Air Force has not assessed the costs required to improve the accounting system to do so, nor has it identified the potential benefits any improvements would provide. Federal internal control standards state that changes in condition affecting an entity and its environment often require changes to the entity’s internal control system, as existing controls may not be effective for meeting objectives (or addressing risks) under changed conditions. Further, these standards state that any internal control deficiencies require further evaluation and remediation by management. By not assessing the potential costs and benefits related to the options for collecting these allowable fees, the Air Force could be missing out on a potential source of funding to support its needs. DOD lacks clear guidance on how the Navy should use the initiated research authority for some infrastructure investments within the Capital Investment Program. In our review of DOD documentation, we found that, among the military departments, Navy labs funded recapitalization and revitalization projects using the laboratory initiated research authority the least. As recently as early 2017, a DOD-commissioned study found that defense labs face substantial infrastructure deficiencies that it has not yet identified funding to address. In fiscal year 2017, Navy labs invested $7.3 million in lab recapitalization projects, compared to $32.9 million and $53.7 million at the Air Force and Army, respectively. Navy lab officials told us that their ability to fund lab recapitalization and revitalization projects using funds available under the laboratory initiated research authority is limited because they have not been provided with clear guidance as to whether and how to use the laboratory initiated research authority within the Capital Investment Program of the Navy Working Capital Fund. Some Navy lab officials stated that they have found ways to use the initiated research authority for certain infrastructure investments. These officials stated that they used authority outside of the Capital Investment Program of the Navy Working Capital Fund, for instance, for projects below applicable thresholds because using the authority within the Program creates a bureaucratic and financial burden for them. For example, officials at two separate warfare centers—Naval Surface Warfare Center, Crane Division, and the Naval Air Warfare Center, Aircraft Division, noted that they did not expend funds in either fiscal year 2016 or fiscal year 2017 for recapitalization and revitalization projects. Both cited the Capital Investment Program as a significant barrier to their desired use of the laboratory initiated research authority. Officials from the Office of Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller agreed that, to date, clarifying guidance on the use of the laboratory initiated research authority within the Capital Investment Program has not been issued, effectively limiting the extent to which the labs can use it for infrastructure needs. According to these officials, the Office of the Secretary of Defense (OSD) Comptroller—in coordination with the Office of Financial Policy and Systems within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller—is responsible for developing the clarifying guidance their office has sought. This persistent lack of guidance on whether or how Navy labs should use the laboratory initiated research authority within the context of the Capital Investment Program presents an opportunity cost. Namely, the Navy’s labs have missed out on, and continue to miss, opportunities to invest in needed improvements to its aging lab infrastructure. The Army requires its laboratories to apply similar percentages to what is refers to as “Army direct appropriations” and “customer funds.” The Army requires that the percentage fee applied to direct appropriations not vary from the percentage fee applied to customer funds by more than 1 percent. The Army implemented this policy to maximize the laboratory initiated research authority’s effect on its 17 laboratories. However, the Office of the USD(R&E) reported in March 2018 that the policy was having a significant limiting effect on the breadth and scope of activities executed under this authority. Similarly, we found that the policy may, in practice, create a disincentive for Army lab directors to use the authority. In their responses to our survey, Army lab directors, representing key capability areas, acknowledged their concern about the percentage fee they assessed on customer funds affecting their ability to increase or maintain their customer bases. Further, some Army lab directors reported assessing a lower percentage fee on customer funds than allowed, which could help retain customers that might otherwise be driven away with higher assessed fees to carry out activities. As a result, these labs generally are setting a lower percentage fee on their directly appropriated funds, thereby lowering the overall laboratory initiated research funding available to them. Nonetheless, the Army has not assessed its policy to determine whether changes are needed to eliminate these disincentives. Continuing to operate without such an assessment could result in Army labs using the laboratory initiated research authority to fund fewer self-initiated projects—with the downstream effect that fewer new technologies for warfighters are available. The Navy applies a consistent fixed percentage fee of costs across its labs. Within the Navy, senior leadership has set the fixed percentage fee of costs the labs charge on customer funds at 2 percent. A senior Navy science and technology official stated that Navy leadership set a uniform fixed percentage fee to charge to customer activities across the Navy lab enterprise, in part, to ensure the labs were not inadvertently competing against one another for customer funds. For example, without a uniform rate, a Navy warfare center could offer a lower fee to entice a customer to use it rather than another center. The use of a fixed percentage fee facilitates program offices selecting warfare centers on the basis of best available match in capabilities. On the other hand, the Navy’s fixed 2 percentage fee of costs does limit—by half, as compared to the maximum 4 percent allowable—the amount of fees that Navy labs can collect. Consequently, several Navy lab directors told us that they would like to have the ability to increase the fixed percentage fee of costs above the Navy’s 2 percent to provide their labs with additional resources they said they need for innovation-related investments. Among the lab directors that responded to our survey, 30 of 31 replied that their lab had used at least one of the four types of direct hire authorities previously discussed since fiscal year 2014. Officials view direct hire authority as allowing the labs to compete with private industry for qualified applicants. Lab directors reported they generally believe that each type of direct hire is extremely or very useful for fostering innovation and increasing efficiency, as shown in Figure 7. Selected Officials’ Testimony on the Value of Direct Hire Authority: The U.S. Army Engineer Research and Development Center “was able to meet this important goal [of annually hiring more than 160 new researchers] in large part because of its direct hiring authorities, which save time, effort, and costs, and allow the organization to more effectively hire the best and brightest minds available.” – Dr. Jeffrey P. Holland, Past Director, U.S. Army Engineer Research and Development Center, in testimony before the Senate Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), May 3, 2017. “The Air Force’s ability to recruit, retain, and develop the STEM workforce is vital toward building the future Air Force; Congress has been greatly supportive of these efforts…the addition of direct hire for candidates has been extremely useful in hiring qualified scientists and engineers in less than half the time of traditional hiring methods.” – Jeffrey Stanley, Air Force Deputy Assistant Secretary— Science, Technology and Engineering in testimony before the House Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), March 14, 2018. Although participation in the laboratory enhancement pilot program is open to the DOD labs—and 19 of the 31 lab directors, or 61 percent, that responded to our survey reported they were participating—to date, only the Navy has formally established a pilot program for its labs. The Army and Air Force have not yet used this relatively new authority. A senior Navy science and technology official told us the Navy took important steps to facilitate the implementation of that service’s pilot program. According to the Navy official: The Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test and Evaluation led the effort across the Navy labs, compiling—from each lab’s submission—a single list of proposals to forward to Navy leadership that would apply to all participating Navy labs. The Navy pursued a three-phased approach with its pilot program, with Phase 1 primarily focused on contracting and acquisition policy- related matters. Senior Navy research and development officials perceived these matters as being the easiest from which to obtain buy-in from Navy policy officials and attorneys, as well as Navy leadership. Phase 2 will include proposals related to Information Technology systems for research and development networks, while Phase 3 will most likely address personnel issues. Navy research and development officials deferred proposals— including information technology network enhancements—that might require extensive discussions with policy officials and attorneys stakeholders across the Navy. These proposals were pushed back to allow time for those stakeholders to see how the pilot program was being implemented and executed by the labs. None of the Army and Air Force labs has yet established a laboratory enhancement pilot program. Consistent with Army policy, the Medical Research and Materiel Command and the Space and Missile Defense Command Technical Center submitted proposals; however, they have yet to establish a pilot program. The Army’s Research, Development and Engineering Command, with input from its subordinate labs and engineering centers, developed a list of lab enhancement proposals but, as of September 2018, had yet to formally submit these final proposals to Army leadership for approval. These include initiatives in business operations, contracting, finance, information technology, and personnel management. A senior Army science and technology acknowledged that organizations across the military department have concerns about providing the labs with too much autonomy to use this new authority. Air Force Research Laboratory officials said they previously submitted a list of approximately 30 proposals to the Defense Laboratories Office in September 2017, but ultimately pulled back those requests because of stakeholder concerns within the Air Force. Specifically, officials with the Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering stated that the Air Force Materiel Command, to which the lab is a subordinate organization, had not seen the proposals before they were submitted. In addition, these officials identified concerns about how various stakeholders throughout the Air Force—such as those from financial management and personnel—would react to these proposals. These proposals could potentially sidestep the stakeholders’ oversight function of related lab activities. A senior Air Force Research Laboratory official stated that the lab re-submitted its proposals to the Air Force Materiel Command and that Air Force leadership was still reviewing them at the time of this report. Twenty-six of 31 labs directors—84 percent—reported having used the $10,000 micro-purchase threshold authority granted by Congress in 2016. However, we found that contracting and small business management officials’ concerns with this authority have created implementation challenges at some defense labs. For instance, a senior Navy official indicated that multiple stakeholders from across the Navy—including its Office of Small Business Programs—raised concerns about the authority’s potential impact on small businesses as micro-purchasing allows defense labs to bypass small business set asides. Several labs reported similar stakeholder concerns that prevented implementation of the micro-purchase threshold increase. At the same time, however, lab officials we interviewed expressed the view that the increased threshold will be beneficial, consistent with their opinions about the laboratory enhancement pilot program. For example, officials at the Naval Research Laboratory stated that increasing the threshold to $10,000 allows their scientists and engineers to directly purchase necessary equipment and materials through simplified procedures. They identified examples of projects that had been delayed by as much as several months because scientists and engineers used other than simplified acquisition procedures to purchase a relatively inexpensive piece of equipment, such as a specialized microscope, because the cost was above the previous threshold of $3,500. Similarly, the Army’s Armament Research, Development and Engineering Center reported that the micro-purchase threshold increase enables the lab to use simplified acquisition procedures for more items. As a result, they noted that the new authority increases efficiency by reducing contracting time and cost for those additional items. The Navy’s Space and Naval Warfare Systems Center Atlantic similarly reported that requirements, which were previously procured using other than simplified acquisition procedures, took up to 60 to 90 days to procure, while it took as little as 3 to 4 days under this new authority, which enabled its scientists and engineers to purchase materials needed for critical, time sensitive projects. However, lab officials acknowledged that the $10,000 micro-purchase threshold authority—like the laboratory enhancement pilot program—is too new to fully understand how it will increase efficiency and foster innovation over the long term. DOD sponsors several research centers, which are governed through noncompetitive agreements, including contracts. These centers provide the department with access to scientific experts employed by universities and other non-profit organizations. Scientists employed by these external to DOD research centers—specifically, three lab FFRDCs and 13 UARCs—execute DOD-funded science and technology development projects in emerging technical areas. DOD staff oversee these centers using routine oversight of funded research tasks and comprehensive reviews, which help DOD determine whether the centers’ funding should continue. DOD and research center officials told us that their ability to authorize work at the FFRDCs that DOD sponsors is limited by legislative restrictions on the staffing levels at these centers, as well as by infrastructure modernization challenges they face. DOD sponsors three research and development FFRDC labs that were established under noncompetitive procedures. Two of the three lab FFRDCs are operated by universities and one is operated by a nonprofit company. DOD also has contracts with 13 UARCs that fulfill a similar scientific role as the lab FFRDCs, while also differing from them in other respects. These differences are described in more detail in table 1. DOD’s contractor-operated research centers received about $1.3 billion annually in DOD funding in fiscal year 2016 and fiscal year 2017, according to DOD data. The two largest research and development FFRDCs, the Lincoln Laboratory and the Software Engineering Institute, received about 67 percent of total research center funding from DOD in 2017. UARCs received an average of $27 million in DOD funding, which was a 15 percent decrease from 2016. Research centers may also receive work and funding from other federal departments and private companies after obtaining DOD sponsor approval. Appendix II provides an overview of DOD FFRDC and UARC funding in fiscal years 2016 and 2017. DOD Sponsorship and Contract Awards: We reported in 2014 that FFRDCs in the federal government are defined through the sponsoring agreement between the agency and the contractor retained to operate the FFRDC. A written agreement of sponsorship between the government and the FFRDC must be prepared when the FFRDC is established, which may be included in a contract between the government and the FFRDC, or in another legal instrument under which an FFRDC accomplishes effort, or it may be in a separate written agreement. Historically, DOD sponsors retain contractors for many years or decades as FFRDC operators. We found that research centers undertake DOD-sponsored projects and, in some limited instances, scientific projects initiated by centers that are overseen by DOD staff. Individual sponsors enter into noncompetitive contracts with FFRDCs and UARCs. DOD uses noncompetitive contracts to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center. Scientific Project Funding: We found that project sponsors provide funding to existing contracts. For example, the government issues orders for requirements under Lincoln Laboratory’s indefinite delivery indefinite quantity base contract as funding sponsors approve new projects. Individual project sponsors, along with the primary sponsor, oversee how project funds are spent by the centers. Project sponsors decide whether they will continue to work with these entities based on perceived performance success. This effectively provides an incentive for FFRDCs and UARCS to perform successfully. This work and review cycle is described in Figure 9 below. FFRDCs and UARCs also partner with DOD government-operated labs to plan and execute technology development projects. For example, according to Navy officials, Naval Surface Warfare Center, Carderock Division collaborated with Navy-sponsored UARCs, such as Penn State’s Applied Research Laboratory, to help develop Navy submarine propeller and propulsion designs. Self-initiated Projects: Research center officials said that DOD provides some research centers with limited funds to self-initiate innovative projects. This funding helps the centers ensure that development projects are not limited to just satisfying near-term DOD requirements. Instead, future generations of DOD technologies can be funded. For example, officials at Johns Hopkins University Applied Physics Laboratory proactively conducted work on advanced naval defense technologies in response to similar technology development in adversary countries. Although Navy sponsors did not fund this initial work, they subsequently provided funding in this area after Hopkins’ research identified a risk reduction strategy for the Navy, according to the Johns Hopkins officials. This allowed the UARC to move relatively quickly on a new science and technology project idea. DOD uses 13 UARCs and three lab FFRDCs to obtain direct access to scientific expertise in emerging technical areas, supplementing research conducted at DOD’s government-owned and operated labs. These research centers provide DOD with additional scientific capabilities and the ability to expand quickly into new technical fields. Hiring Scientific Personnel: Although FFRDCs are largely federally funded, they are generally operated, managed, and administered by either a university or consortium of universities, other not-for-profit or nonprofit organization, or an industrial firm, as an autonomous organization or as an identifiable separate operating unit of a parent organization. The contractor operating the FFRDC exercises primary control over its FFRDC’s business concerns, such as personnel policies and compensation. DOD-funded research centers have flexibility in hiring scientists that leverage a parent institution’s expertise in emerging scientific fields. For example, leadership officials at the Army Institute for Soldier Nanotechnologies UARC at MIT and the Software Engineering Institute FFRDC at Carnegie-Melon University noted that projects they have conducted for DOD have benefitted from university experts in fields such as dark matter physics and artificial intelligence. Personnel Compensation: Research center officials we spoke with noted that their workforce policies permit them to flexibly hire, fire, and compensate staff as needed. Although employee salaries are established separately from the government schedule, they are approved by the government. Further, officials noted that university centers typically offer salaries in line with the labor market, but do not attempt to compete on a salary basis with relatively high, unaffordable private sector company salaries. Instead, they compete on the basis of other factors, such as offering scientists the opportunity to work for a prestigious university conducting science and technology research. Research Center Infrastructure: As with personnel matters, research centers have discretion to manage infrastructure in accordance with the policies and procedures of their parent institutions. While one center, Lincoln Laboratory, is located on government property, others primarily reside on property owned or leased by their parent institutions. According to agency officials, DOD contributes funding for the use and repair of these facilities through their contracts with research centers. Officials noted that Lincoln Laboratory uses military construction funding to pay for new buildings as it is located on government property. Trusted Advisor Role: FFRDCs and UARCs function as trusted advisors for the government and operate in the public interest with objectivity and independence. FFRDCs are independent, private-sector, non-profit organization units required to be free from personal or organizational conflicts of interest, as the FFRDCs answer to the government customer. As a result, DOD’s lab FFRDCs perform tasks that are closely associated with the performance of inherently governmental functions and have access to sensitive and proprietary data. Research center officials noted challenges limiting their work providing scientific expertise to DOD. FFRDCs are also limited in executing infrastructure investments. Limitation on Available Work Hours: DOD FFRDCs are limited by an annual ceiling set by Congress on the amount of staff years of technical effort (STE) that may be funded for defense FFRDCs. We previously found in October 2008 these limits were imposed in response to concerns that DOD was inefficiently using its FFRDCs. We found that the STE workload limitation aimed to ensure that FFRDC work was appropriate and limited resources were being used for DOD’s highest priorities. As a result, Software Engineering Institute officials said they decline many DOD programs’ requests for assistance due to the annual work hour limitation. Further, officials at the Office of the Secretary of Defense’s Studies and FFRDC Management Office reported that this limit significantly constrains the use of DOD’s FFRDCs and that DOD customer demand for their services is significantly greater than the annual STE limit. OSD officials indicated that FFRDC related work must be deferred to later years when these limits are reached, since there are no other legally compliant alternatives capable of fulfilling these requirements. Infrastructure: FFRDC officials we interviewed identified infrastructure challenges—including aging facilities and equipment—as hindering their research and development efforts. For example, many buildings at the Massachusetts Institute of Technology (MIT) Lincoln Laboratory are over 60 years old; MIT considers over half of them to be in substandard condition. According to an MIT official, these facilities, located on government property, were not structurally designed for modern research and have relatively poor vibration isolation, resulting in inefficient workarounds or work that could not be performed. Officials from the Defense Laboratories Office noted that the MIT Lincoln Laboratory is unique among DOD’s FFRDCs in that it is operated on government- owned property. A 2013 study, conducted on behalf of the White House Office of Science and Technology Policy, found that lab infrastructure project funding proposals must compete with hospitals, barracks, runways, and roads and, therefore, tend to be lower on the priority list for military construction funding. A 2017 Defense Science Board report and DOD officials we spoke with indicated this continues to be true. While contract research centers have significant flexibility to execute infrastructure work, they are still affected by limited availability of military construction funding. Officials at another center noted that in some instances, DOD sponsors have been unable or slow to provide required secure facilities and equipment within needed time frames. Delays of this nature can affect the research centers’ ability to deliver the technologies or related services needed by DOD. The Department of Energy (Energy) primarily relies on contractor- operated FFRDCs to operate its labs, while the majority of NASA labs and centers are government-operated. Energy’s national labs form the core of the agency’s scientific work and mission. This is in contrast to DOD-funded labs, which constitute a relatively small aspect of DOD’s overall mission. We have previously found that Energy’s labs can use funding for minor infrastructure improvements. NASA centers can also approve and fund certain facility projects, in accordance with NASA policies, and they have encountered significant challenges with aging infrastructure. Also, in some cases, energy and space research centers have significant challenges with hiring replacement staff and competing with private sector employers for staff. Energy’s labs can hire scientific personnel with the flexibility of private companies, while NASA centers were previously provided hiring flexibilities by Congress in 2004 to facilitate staff hiring. While Energy and NASA’s research entities follow their specific governance models, there are broad characteristics common across these agencies as well as DOD. Table 2 illustrates that while research centers are largely government-owned, the government is not always the operator. As we have reported, Department of Energy national labs are primarily operated by for-profit, non-profit and university FFRDC contractors using management and operating contracts, which are competed on a limited basis. Energy’s funding sponsors and headquarters officials are required to reevaluate FFRDC performance in increments not to exceed 5 years by federal acquisition regulations, which inform future decisions to renew the agreement. In 1990, we designated Energy’s contract management—including both contract administration and project management—a high-risk area because of Energy’s inadequate management and oversight of contractors, leaving the department vulnerable to fraud, waste, abuse, and mismanagement. In 2009, we subsequently narrowed the focus of Energy’s high-risk designation to the National Nuclear Security Administration and Office of Environmental Management, which together oversee four national labs. Further, in our 2017 High Risk report, we found that these two agencies had made progress in addressing our contract management concerns, but we identified continued problems with the agencies having sufficient capacity to mitigate contract and project management risks. Also, we found that they had demonstrated little progress in addressing contract management challenges, particularly in the area of financial management. The Department of Energy uses performance-based management and operating contracts, which have been subject to limited competition, with universities, non-profit companies and for-profit companies to operate the national labs on government-owned property. These contractor-operated FFRDCs provide the vast majority of Energy’s science and technology capacity, rather than supplementing the work of government-operated labs like DOD’s FFRDCs. Energy has depended on the expertise of private organizations to execute its science and technology work since the Manhattan Project produced the first atomic bomb during World War II. The Spallation Neutron Source is an experimental research facility at Oak Ridge National Laboratory—a government-owned contractor-operated laboratory. The Spallation Neutron Source includes the world’s most powerful pulsed-neutron sources and provides information about the structure and properties of materials that cannot be obtained by other means. The Spallation Neutron Source is a user facility whereby researchers from universities, national laboratories, and industry submit proposals, which are peer- reviewed and must compete for time at the user facility. The primary focus of each lab varies based on its expertise and facilities. Energy largely oversees its lab contractors through its headquarters program offices, which include the National Nuclear Security Administration, Office of Science, the Office of Fossil Energy, as well as co-located government field offices. Office of Science-sponsored labs primarily support scientific research for energy and physical sciences, while the National Nuclear Security Administration-sponsored (NNSA) labs primarily focus on nuclear weapons and related science and technologies. Energy also oversees its lab contractors’ activities through on-site Energy oversight offices that work alongside lab management at each FFRDC. Some labs specialize in earlier-phase science, while other labs work on later-phase nuclear weapons technologies in addition to earlier-phase science. As Figure 10 shows, these labs are spread across the United States. Energy has only one government-operated and government-owned lab, the National Energy Technology Laboratory. Key differences between Energy’s contractor-operated and government-operated governance models are described in table 3. Energy’s FFRDCs use their own personnel systems, which Energy officials stated provide more flexibility for hiring and retaining qualified staff. Management within these FFRDCs can move staff in or out of scientific areas more quickly than government labs can, thereby providing greater agility to meet Energy’s needs in emerging science areas. For example, Energy’s lab oversight staff at Oak Ridge National Laboratory told us that use of lab contractors’ human resources management systems allows for workforce flexibilities to meet Energy’s needs. While these contractors have leeway in managing their human resources systems, Energy’s headquarters maintains oversight—through its contracting officers—over employee compensation. Energy’s FFRDC contractors manage and operate nearly all of the department’s government-owned national lab facilities—including day-to- day management of government-controlled facilities and real property. Lab operators used funding to complete minor construction projects, which cost $10 million or less. This funding comes from a percentage of science and technology projects’ funding, requires local Energy oversight office approval, and has streamlined project management requirements. In contrast, major infrastructure upgrades are funded through relatively long and complex line-item funding processes, and projects over $50 million are subject to more rigorous project management requirements. Energy’s labs use a small portion of their funding to initiate discretionary projects for science and technologies that will benefit sponsors in the long-term by maintaining the scientific and technical vitality of the laboratories. To maintain and enhance lab expertise, the National Defense Authorization Act for Fiscal Year 1991 authorized Energy’s contractor-operated labs receiving funding for national security programs to use a percentage of lab funds to perform lab-directed R&D of a creative and innovative nature. The actual percentages allowed to be used for lab-directed R&D are subject to Energy’s approval. Energy’s entities sponsor most national lab projects based on their needs and lab expertise. Typically, earlier foundational science projects are funded through a process whereby funding sponsors issue calls for proposals to Energy’s national labs. Interested scientific teams at labs provide proposals to conduct these projects for sponsor consideration. Sponsors then assess proposals for scientific merit and decide which teams receive funding to execute their projects. NNSA provides funding for later-phase nuclear technology development projects to its labs after agreement is made regarding objectives and deliverables for specific projects, according to Lawrence Livermore National Laboratory officials. Despite their flexibilities with regard to hiring and infrastructure decisions compared to government operated labs, Energy’s lab leadership and government oversight officials noted human resource and facilities related challenges, such as: Sufficiently compensating staff located in high-cost of living areas. For example, the labor market of the San Francisco area, where several Department of Energy national labs are located, is highly competitive for employers. Commercial firms offer salaries and compensation that typically exceed those of government-funded, contractor-operated labs, although Energy’s contractors have more pay flexibility than is allowed for Energy’s government employees. Obtaining government clearances in a timely manner. Energy’s NNSA oversight officials and lab management staff, in particular, cited this challenge, which they stated has led to a backlog of people needing clearances. Government hiring freeze constraining overall hiring. Officials at Energy’s government-operated National Energy Technology Laboratory reported that as a result of a government hiring freeze, the lab has increasingly hired private contractor staff to the point that more than half of the total lab staff is now comprised of contractor employees. Major infrastructure challenges at Energy labs. Energy reported in July 2018 that over half of all national lab buildings are in either substandard or inadequate condition. The Energy Inspector General also identified infrastructure modernization as one of Energy’s top management challenges. This finding followed a mandated commission’s report in 2015 that facilities and infrastructure across Energy’s national lab network were hampered by high levels of deferred maintenance and excess facilities. The majority of NASA’s science and technology facilities are operated within the governance framework of government-operated research centers, similarly to most DOD labs. While government-operated, they have been granted additional legislative flexibilities for hiring employees beyond those normally available to government entities. NASA locates its science and technology staff at four government- operated research centers, one contractor-operated FFRDC, and at five NASA centers assisting space and space flight development. These centers and the Jet Propulsion Laboratory—NASA’s sole sponsored FFRDC—execute NASA’s research missions including technology development in exploration and aeronautics. The differences between these two governance approaches are described in Table 4. NASA also works with Johns Hopkins University Applied Physics Lab, a UARC, to develop major space flight missions. The NASA Glenn Research Center—a government- operated laboratory—is currently developing solar electric propulsion technologies intended to allow manned and unmanned spacecraft to be propelled far beyond earth orbit using solar power. This project is developing large, flexible, radiation-resistant solar arrays that can be unfurled to capture solar energy powering fuel-efficient electrostatic thrusters. Scientists expect a system-level flight test within the next decade to demonstrate key technologies supporting NASA’s Lunar Orbital Platform-Gateway project, a platform to mature necessary short- and long-duration deep space exploration capabilities. Headquarters, including funding sponsors providing oversight for their individual projects. Title 51, Chapters 201 and 203 of U.S. Code and technology efforts with DOD and other organizations, including use of NASA lab and test facilities. Operated by university contractor having sole source contract. Not permitted to compete against industry, except for operation of an FFRDC. property (originally part of DOD). 5-year contract renewable to 10 years total. Headquarters, including funding sponsors providing oversight for their individual projects. Title 51, Chapters 201 and 203 of U.S. Code; 10 U.S.C. § 2304 (c) (3)(B) ; Federal Acquisition Regulation § 35.017 based NASA oversight staff. sponsors seeking FFRDC assistance with NASA approval. “Lab” as used in this context refers to science and technology organizations equivalent to NASA Research Centers, DOD UARCs and FFRDCs. Mission leadership officials at NASA Headquarters—including the Associate Administrators for Aeronautics Research, Human Exploration, Science and Space Technology—oversee NASA’s research centers as well as the Jet Propulsion Laboratory. These officials are responsible for technology programs providing funds to research centers and the Jet Propulsion Laboratory to support their specific mission areas. NASA’s science and technology project portfolios are based on the requirements and priorities established by NASA’s leaders in collaboration with key stakeholders in academia and industry among others. In planning their science and technology work, NASA’s Glenn Research Center officials noted that NASA research center directors consider the capabilities and resources—including staff and facilities—of other research centers to minimize redundant work. NASA depends on a highly skilled civil servant and contractor workforce to plan and execute its missions. Congress provided NASA with additional human resource authorities beyond those otherwise allowed for federal government personnel through the NASA Flexibility Act of 2004. We found in September 2008 that NASA sought this flexibility to ensure that it could hire and retain the workforce it desired. This law consisted of multiple provisions to address a range of human capital challenges and to strengthen all levels of the workforce. The provisions included incentives—including compensation—to allow NASA to compete successfully in the labor market with the private sector and reshape its workforce more effectively to support the Agency’s mission. NASA also employs a significant contractor workforce across its different centers. Glenn Research Center officials we interviewed stated their portfolio of science and technology projects—and funding—mostly aligns with NASA’s top requirements and priorities. They, along with NASA sponsors, create technology roadmaps and investment plans to determine their future projects. NASA policy requires that NASA’s scientific teams offer proposals for potential research and science and technology projects. This is similar in some ways to how many DOD and Energy centers must find sponsors willing to fund specific technology development projects, rather than receiving technology development funding for a given year. These proposals are reviewed by peer review teams, who identify for selecting officials those proposals they believe have the most scientific merit. Ames Research Center officials said they believe this process can foster innovation, encourage employees to keep skills honed, and mitigate complacency. Glenn Research Center officials said that while most of the work they conduct is for sponsored applied research or advanced technology development, about 2 percent of their science and technology budget is spent on early-stage scientific innovation. Recommended projects of this nature proposed by the research center are typically approved by headquarters officials, according to these Glenn officials. NASA provides technical grants for basic research and applied science to university scientists nationwide on a competitive basis, and also funds similar research done internally at research centers. As with DOD and Energy’s research centers, NASA officials have identified some key operating challenges, including: Aging infrastructure and facilities. The NASA Inspector General listed infrastructure area as one of the top five management and performance challenges facing NASA. Further, the Inspector General identified deficiencies with facilities planning and reported that about 80 percent of facilities at three of four NASA research centers are over 50 years old, while about half of the facilities at the Jet Propulsion Laboratory and the fourth research center are that old. Infrastructure projects and upgrades of $1 million or less are undertaken by research center management instead of at the NASA headquarters level. Construction above this threshold has significantly more requirements and is approved by NASA headquarters. Glenn Research Center officials indicated it is difficult to obtain funding for projects that exceed the minor infrastructure threshold, in part, due competition with major construction of facilities proposals from across the agency for limited funds. As a result, they put most of their efforts into sustaining existing infrastructure. Workforce shortages in key technical areas. As we found in May 2018, NASA has experienced workforce challenges on several major projects such as the Mars 2020 and Europa Clipper projects. Also, over 40 percent of NASA’s workforce is either eligible to retire now or will be eligible in the next 5 years. NASA headquarters officials noted that NASA’s workforce is aging because NASA has a low attrition rate—about 4 percent annually—and high numbers of staff stay several years beyond retirement. Further, in 2017, the NASA Inspector General found gaps in NASA’s workforce planning for specific capability areas and how workforce plans would meet future needs, and recommended that NASA establish standardized guidance defining the data and analyses for these planning efforts. NASA concurred with and identified its plan to implement this recommendation. However, NASA has not implemented this recommendation, according to the NASA Inspector General’s latest semiannual report to Congress. Congress provided DOD lab directors with key authorities to foster targeted, timely investments in the most pressing technology areas. Lab directors have used these authorities—such as laboratory initiated research and direct hire authorities—to varying degrees, but more needs to be done to facilitate innovation and efficiency. Specifically, service specific obstacles in the Air Force, Navy, and Army impede lab directors from capitalizing on laboratory initiated research authority to a greater extent. Service leadership can take actions to better understand and potentially remove barriers to more fully use laboratory initiated research tools. We are making the following three recommendations to DOD: The Secretary of the Air Force should assess the potential costs and benefits of implementing accounting system improvements that would allow the Air Force Research Laboratory to charge customers a fixed percentage fee on provided science and technology activities to the extent allowed under the laboratory initiated research authority. (Recommendation 1) The Secretary of the Navy should clarify whether and how to use the laboratory initiated research authority within the Capital Investment Program. (Recommendation 2) The Secretary of the Army should assess existing Army policy for laboratory initiated research authority and determine whether to implement changes to eliminate disincentives for lab usage of the authority. (Recommendation 3) We provided a draft of this report to DOD, Energy, and NASA for review and comment. Energy and NASA did not provide any comments on the draft report. In DOD’s written comments, reproduced in appendix III, DOD concurred with our three recommendations. Further, in its response to our third recommendation, DOD stated that the Army plans to initiate a study by January 2, 2019, regarding its use of the laboratory initiated research authority. According to DOD, the Army’s study will identify potential opportunities for policy improvements. We are sending copies of this report to the appropriate congressional committees and offices; the Secretary of Defense; the Secretaries of the Army, Navy, and Air Force; the Secretary of Energy; and the NASA Administrator. In addition, the report will be made available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions concerning this report, please contact me at (202) 512-4841. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff members making key contributions to the report are listed in appendix IV. This report examines (1) how the Department of Defense (DOD) labs have used selected legislative authorities to foster innovation and efficiency and identify what barriers impede their use; (2) identifies and describes governance models used by selected DOD-sponsored federally funded research centers and university affiliated research centers; and (3) identifies and describes governance models used non-defense labs, specifically at the Department of Energy (Energy) and National Aeronautics and Space Administration (NASA). To address the first objective, we selected four specific authorities for our review based on previous work identifying science and technology best practices and expedited lab hiring: Laboratory Initiated Research Authority. The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with flexibility to fund projects in four allowable categories: basic and applied research; technology transition; workforce development; and revitalization, recapitalization, or repair or minor military construction of lab infrastructure. Laboratory Enhancement Pilot Program. Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing and operating labs and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods unless such implementation would be prohibited by a provision of an existing statute or common law. Direct Hire Authority. Four types of direct hire authorities authorized by Congress since 2008 are intended to provide a streamlined and accelerated hiring process to allow the labs to successfully compete with private industry and academia for high-quality scientific, engineering, and technician talent. Micro-purchase Authority. The Federal Acquisition Regulation states a preference for government agencies, to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods. While the FAR micro-purchase threshold was generally $3,500 at the time of our review, Congress increased this threshold to $10,000 for activities of DOD science and technology reinvention laboratories in Section 217 the National Defense Authorization Act for Fiscal Year 2017. Although Congress has provided additional legislative authorities to defense lab directors to address hiring, infrastructure, and technology transition challenges, the authorities that we covered in our review are the ones that our prior and current work have shown are currently, or have the potential to be, the most critical for supporting science and technology reinvention laboratories’ innovation mission within DOD labs. DOD lab leaders use these authorities to flexibly fund projects intended to facilitate research and development; propose alternative and innovative methods that might lead to more effective lab management; directly hire personnel at DOD labs including students currently enrolled in science, technology, engineering, and mathematics (STEM) programs; and expand critical science and technology purchases using simplified acquisition methods. To identify the extent to which DOD laboratories have used these authorities as well as to identify what potential barriers existed to using these authorities, we administered a survey to 44 STRL directors (or their equivalent) to collect information on the use of these specific authorities, their perceptions about the effectiveness of those authorities, and their perceptions about any barriers to using these authorities. The members of the population surveyed were the 44 defense laboratories defined as science and technology reinvention laboratories. For the purposes of our review, we defined laboratories as inclusive of Air Force technical directorates (10), Army warfare centers (17), and Navy warfare centers (17). We emailed questionnaires to the laboratories beginning in late March 2018, and survey data collection ended in early May 2018, with 31 labs returning completed questionnaires, for an overall response rate of 71 percent at the laboratory level. We took steps to minimize the potential errors that the practical difficulties of conducting any survey may introduce. Nonresponse error can result when a survey fails to capture information from all population members selected into a survey sample. Of the 13 questionnaires not returned, 4 were Army warfare centers, and 9 were Air Force research directorates. Throughout the data collection period, we made multiple follow-up attempts by email and phone to those labs not yet responding. The Air Force Research Laboratory (AFRL) provided a single survey response for the entire laboratory enterprise. Not all returned questionnaires may have answers to every question applicable to a respondent. However, this question-level nonresponse did not exceed one for any of the questions applicable to all 31 labs. Because we selected the entire population of laboratories for our survey, our estimates are not subject to sampling error. We developed our list of the 44 labs in our population in consultation with DOD, and are confident that none were left out, so our or survey has no known sources of coverage error. We conducted pretests of the draft questionnaire with 3 laboratories in the population and made revisions to reduce the possibility of measurement error from differences in how questions were interpreted and the sources of information available to respondents. After reviewing the answers received, we also followed up as necessary with respondents to clarify apparent inconsistencies or other possible misreports, and made changes to responses where corrections were needed. A second, independent analyst checked the accuracy of all computer analyses to minimize the likelihood of errors in data processing. To obtain additional information on this objective, we reviewed relevant legislation which established or amended these authorities and reviewed applicable DOD and service policy documentation. Further, we collected military service related information on the usage of two authorities, such as: Spending data on the use of the laboratory initiated research authority. We gathered this information from DOD-mandated reports to Congress on the use of this authority and military service officials. We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials. Data on the usage of direct hire authorities by the service laboratories. We collected direct hire data from each of the military services including the number of direct hire authority candidates hired as well as the number of direct hire positions the laboratories were authorized to hire. We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials. We also used select findings from our May 2018 report where we evaluated DOD’s use of hiring authorities, including direct hire authority. More information about the scope and methodology of our prior work can be found in that report. In addition, we also collected information on military service proposals to utilize the laboratory enhancement pilot program authority. To obtain further information on department- and service-level involvement in and perspectives of defense laboratory authorities and challenges, we interviewed officials responsible for the management, execution, and oversight of DOD’s science and technology enterprise, including military service labs. At the Office of the Secretary of Defense and military department headquarters level, those responsible for the management and oversight of science and technology activities, we met with officials from the: Office of the Assistant Secretary of Defense for Research and DOD Defense Laboratories Office; Office of the Deputy Assistant Secretary of the Army for Research and Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering; Office of the Assistant Secretary of the Air Force for Financial Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test, and Evaluation; and Office of the Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller We also met with military department lab officials responsible for the management and execution of science and technology activities from the: Army Research, Development and Engineering Command; Army Research Laboratory; Army Aviation and Missile Research, Development, and Engineering Air Force Research Laboratory; Naval Research Laboratory; Naval Surface Warfare Center, Headquarters; and Naval Surface Warfare Center, Carderock Division To identify and describe governance models used by selected DOD- sponsored federally funded research centers (FFRDCs) and university affiliated research centers (UARCs), we focused our review on the 3 FFRDCs designated as research and development labs as well as all 13 UARCS sponsored by DOD entities. We reviewed appropriate sections of the FAR language related to FFRDCs and UARCs, DOD guidance for working with FFRDCs and UARCs, relevant contracts, and performance assessments. Further, we met with officials from the office of the Deputy Director, OSD Studies and Federally Funded Research & Development Centers Management and Office to discuss overall FFRDC and UARC management, policies, and challenges facing FFRDCs and UARCs. We interviewed officials at selected research and development FFRDCs and UARCS to discuss their experience conducting DOD research and interactions with their customers, such as defense program executive offices. We met with officials at the two major research and development lab FFRDCs—The Lincoln Laboratory at the Massachusetts Institute of Technology (MIT) and the Software Engineering Institute at Carnegie Mellon University. We also selected a university affiliated research center sponsored by the Army and Navy: The Applied Physics Laboratory at Johns Hopkins University and the Institute for Soldier Nanotechnologies also at the MIT. To identify and describe governance models by non-defense labs, we selected Energy and NASA to focus our efforts. We identified 17 Energy national labs and 4 NASA research centers conducting basic and applied research similar to DOD labs. These agencies, along with DOD, represent 3 of the top 4 agencies in terms of average federal research and development spending from fiscal years 2015 to 2017. In our August 2016 GAO Technology Readiness Assessment Guide, we drew heavily from DOD, NASA, and Energy for best practices, terminology, and examples. This contributed to our decision to focus on Energy and NASA’s research entities in this laboratory governance review. We did not include the fourth agency—the National Institutes of Health—in our review because it is not as similar to DOD. We also reviewed relevant Energy and NASA guidance as well as relevant FAR sections. At Energy, we met with officials from the National Nuclear Security Administration which is semi-autonomous entity within Energy responsible for managing the nation’s nuclear weapons and nuclear security. We also met with Officials from the Office of Science, a program office responsible for supporting energy related fundamental science and research. To gain further insights on operating structures, funding arrangements, and their overall experience we met with lab leadership at selected Energy labs which were chosen based on initial discussions with agency officials and our review of past GAO work: Oak Ridge National Laboratory, Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, and National Energy Technology Laboratory (the sole Energy government owned and operated laboratory) We also met with leadership from Battelle Memorial Institute, which is the sole or joint contract manager for five Energy national labs including Oak Ridge National Laboratory. In addition, Battelle is an integrated subcontractor at Lawrence Livermore National Laboratory. At NASA, we met with officials with NASA’s Science Mission Directorate and Mission Support Directorate to discuss overall research center management and operations. We also leveraged ongoing and recently completed work at GAO to gain additional insight on NASA’s operations such as human capital management. Almost all of NASA’s research, space, and space flight centers conduct research and development activities. However, we focused our review on four research centers where NASA primarily conducts its aeronautics research, which has substantial overlap with DOD activities. To gain additional insight into the experience of lab leaders at NASA research centers, we met with officials at NASA’s Glenn Research Center and Ames Research Center. In addition, we also met with officials at the NASA Jet Propulsion Center, which is the only NASA-sponsored FFRDC. We conducted this performance audit from July 2017 to December 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Office of the Secretary of Defense (OSD) In addition to the contact named above, Christopher R. Durbin (Assistant Director); Charlie Shivers, III (Analyst-in-Charge); Emily Bond; Lorraine Ettaro; Carl Ramirez; Sylvia Schatz; Sean Seales; Brian Smith; and Robin Wilson made significant contributions to this report.

Question: Write a one-page summary of the report 1.

Answer: China's actions in recent years in the South China Sea (SCS)—particularly its island-building and base-construction activities at sites that it occupies in the Spratly Islands—have heightened concerns among U.S. observers that China is rapidly gaining effective control of the SCS, an area of strategic, political, and economic importance to the United States and its allies and partners, particularly those in the Indo-Pacific region. U.S. Navy Admiral Philip Davidson, in his responses to advance policy questions from the Senate Armed Services Committee for an April 17, 2018, hearing to consider his nomination to become Commander, U.S. Pacific Command (PACOM), stated that "China is now capable of controlling the South China Sea in all scenarios short of war with the United States." Chinese control of the SCS—and, more generally, Chinese domination of China's near-seas region, meaning the SCS, the East China Sea (ECS), and the Yellow Sea—could substantially affect U.S. strategic, political, and economic interests in the Indo-Pacific region and elsewhere. China is a party to multiple territorial disputes in the SCS and ECS, including, in particular, disputes with multiple neighboring countries over the Paracel Islands, Spratly Islands, and Scarborough Shoal in the SCS, and with Japan over the Senkaku Islands in the ECS. Up through 2014, U.S. concern over these disputes centered more on their potential for causing tension, incidents, and a risk of conflict between China and its neighbors in the region, including U.S. allies Japan and the Philippines and emerging partner states such as Vietnam. While that concern remains, particularly regarding the potential for a conflict between China and Japan involving the Senkaku Islands, U.S. concern since 2014 (i.e., since China's island-building activities in the Spratly Islands were first publicly reported) has shifted increasingly to how China's strengthening position in the SCS may be affecting the risk of a U.S.-China crisis or conflict in the SCS and the broader U.S.-Chinese strategic competition. In addition to territorial disputes in the SCS and ECS, China is involved in a dispute, particularly with the United States, over whether China has a right under international law to regulate the activities of foreign military forces operating within China's exclusive economic zone (EEZ). The position of the United States and most other countries is that while international law gives coastal states the right to regulate economic activities (such as fishing and oil exploration) within their EEZs, it does not give coastal states the right to regulate foreign military activities in the parts of their EEZs beyond their 12-nautical-mile territorial waters. The position of China and some other countries (i.e., a minority group among the world's nations) is that UNCLOS gives coastal states the right to regulate not only economic activities, but also foreign military activities, in their EEZs. The dispute appears to be at the heart of multiple incidents between Chinese and U.S. ships and aircraft in international waters and airspace since 2001, and has potential implications not only for China's EEZs, but for U.S. naval operations in EEZs globally, and for international law of the sea. A key issue for Congress is how the United States should respond to China's actions in the SCS and ECS—particularly its island-building and base-construction activities in the Spratly Islands—and to China's strengthening position in the SCS. A key oversight question for Congress is whether the Trump Administration has an appropriate strategy—and an appropriate amount of resources for implementing that strategy—for countering China's "salami-slicing" strategy or gray zone operations for gradually strengthening its position in the SCS, for imposing costs on China for its actions in the SCS and ECS, and for defending and promoting U.S. interests in the region.