Why Joint Development Agreements Fail: Implications for the South China Sea Dispute

Although nearly twenty joint development agreements have been signed since the 1950s, only a few have been implemented and even fewer have achieved successful commercialization. This article discusses the conditions leading to the implementation failures of joint development agreements. Applying the Crisp-set Qualitative Comparative Analysis method to nineteen joint development agreements between 1958 and 2008, this article argues that the only causally-related condition associated with the failed implementation of joint development agreements is the deterioration of bilateral relations, often arising from the maritime boundary dispute that the joint development agreement was supposed to resolve. Other possible hypotheses, such as lack of economic incentives, energy independence, domestic opposition, third-party intervention and disagreements over the details of the project, do not show any correlated pattern with the failure to implement such agreements. The finding provides policy implications for the current boundary disputes in the South China Sea: improved bilateral relations is the prerequisite for the effective implementation of joint development ventures, and not the other way around. Littoral states should also not pursue joint development agreements as a false pretext to secretly consolidate their maritime boundary claims, or to confirm the status of a "dispute". Furthermore, successful negotiations for a Code of Conduct for the South China Sea may help to create a conducive atmosphere for claimant states to agree on the joint development of offshore hydrocarbon resources.