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International efforts, such as the Paris Agreement, aim to reduce greenhouse gas emissions. But experts say countries aren’t doing enough to limit dangerous global warming. Summary Countries have debated how to combat climate change since the early 1990s. These negotiations have produced several important accords, including the Kyoto Protocol and the Paris Agreement. Governments generally agree on the science behind climate change but have diverged on who is most responsible, how to track emissions-reduction goals, and whether to compensate harder-hit countries. The findings of the first global stocktake, discussed at the 2023 UN Climate Summit in Dubai, United Arab Emirates (UAE), concluded that governments need to do more to prevent the global average temperature from rising by 1.5°C. Introduction Over the last several decades, governments have collectively pledged to slow global warming. But despite intensified diplomacy, the world is already facing the consequences of climate change, and they are expected to get worse. Through the Kyoto Protocol and Paris Agreement, countries agreed to reduce greenhouse gas emissions, but the amount of carbon dioxide in the atmosphere keeps rising, heating the Earth at an alarming rate. Scientists warn that if this warming continues unabated, it could bring environmental catastrophe to much of the world, including staggering sea-level rise, devastating wildfires, record-breaking droughts and floods, and widespread species loss. Since negotiating the Paris accord in 2015, many of the 195 countries that are party to the agreement have strengthened their climate commitments—to include pledges on curbing emissions and supporting countries in adapting to the effects of extreme weather—during the annual UN climate conferences known as the Conference of the Parties (COP). While experts note that clear progress has been made towards the clean energy transition, cutting current emissions has proven challenging for the world’s top emitters. The United States, for instance, could be poised to ramp up fossil fuel production linked to global warming under the Donald Trump administration, which has previously minimized the effects of climate change and has withdrawn twice from the Paris Agreement. What are the most important international agreements on climate change? Montreal Protocol, 1987. Though not intended to tackle climate change, the Montreal Protocol [PDF] was a historic environmental accord that became a model for future diplomacy on the issue. Every country in the world eventually ratified the treaty, which required them to stop producing substances that damage the ozone layer, such as chlorofluorocarbons (CFCs). The protocol has succeeded in eliminating nearly 99 percent of these ozone-depleting substances. In 2016, parties agreed via the Kigali Amendment to also reduce their production of hydrofluorocarbons (HFCs), powerful greenhouse gases that contribute to climate change. UN Framework Convention on Climate Change (UNFCCC), 1992. Ratified by 197 countries, including the United States, the landmark accord [PDF] was the first global treaty to explicitly address climate change. It established an annual forum, known as the Conference of the Parties, or COP, for international discussions aimed at stabilizing the concentration of greenhouse gases in the atmosphere. These meetings produced the Kyoto Protocol and the Paris Agreement. Kyoto Protocol, 2005. The Kyoto Protocol [PDF], adopted in 1997 and entered into force in 2005, was the first legally binding climate treaty. It required developed countries to reduce emissions by an average of 5 percent below 1990 levels, and established a system to monitor countries’ progress. But the treaty did not compel developing countries, including major carbon emitters China and India, to take action. The United States signed the agreement in 1998 but never ratified it and later withdrew its signature.  Paris Agreement, 2015. The most significant global climate agreement to date, the Paris Agreement requires all countries to set emissions-reduction pledges. Governments set targets, known as nationally determined contributions (NDCs), with the goals of preventing the global average temperature from rising 2°C (3.6°F) above preindustrial levels and pursuing efforts to keep it below 1.5°C (2.7°F). It also aims to reach global net-zero emissions, where the amount of greenhouse gases emitted equals the amount removed from the atmosphere, in the second half of the century. (This is also known as being climate neutral or carbon neutral.) The United States, the world’s second-largest emitter, is the only country to withdraw from the agreement, a move President Donald Trump made during his first administration in 2017. While former President Joe Biden reentered the agreement during his first day in office, Trump again withdrew the United States on the first day of his second administration in 2025. Three other countries have not formally approved the agreement: Iran, Libya, and Yemen. Is there a consensus on the science of climate change? Yes, there is a broad consensus among the scientific community, though some deny that climate change is a problem, including politicians in the United States. When negotiating teams meet for international climate talks, there is “less skepticism about the science and more disagreement about how to set priorities,” says David Victor, an international relations professor at the University of California, San Diego. The basic science is that:• the Earth’s average temperature is rising at an unprecedented rate; • human activities, namely the use of fossil fuels—coal, oil, and natural gas—are the primary drivers of this rapid warming and climate change; and,• continued warming is expected to have harmful effects worldwide. Data taken from ice cores shows that the Earth’s average temperature is rising more now than it has in eight hundred thousand years. Scientists say this is largely a result of human activities over the last 150 years, such as burning fossil fuels and deforestation. These activities have dramatically increased the amount of heat-trapping greenhouse gases, primarily carbon dioxide, in the atmosphere, causing the planet to warm. The Intergovernmental Panel on Climate Change (IPCC), a UN body established in 1988, regularly assesses the latest climate science and produces consensus-based reports for countries. Why are countries aiming to keep global temperature rise below 1.5°C? Scientists have warned for years of catastrophic environmental consequences if global temperature continues to rise at the current pace. The Earth’s average temperature has already increased approximately 1.1°C above preindustrial levels, according to a 2023 assessment by the IPCC. The report, drafted by more than two hundred scientists from over sixty countries, predicts that the world will reach or exceed 1.5°C of warming within the next two decades even if nations drastically cut emissions immediately. (Several estimates report that global warming already surpassed that threshold in 2024.) An earlier, more comprehensive IPCC report summarized the severe effects expected to occur when the global temperature warms by 1.5°C: Heat waves. Many regions will suffer more hot days, with about 14 percent of people worldwide being exposed to periods of severe heat at least once every five years. Droughts and floods. Regions will be more susceptible to droughts and floods, making farming more difficult, lowering crop yields, and causing food shortages.  Rising seas. Tens of millions of people live in coastal regions that will be submerged in the coming decades. Small island nations are particularly vulnerable. Ocean changes. Up to 90 percent of coral reefs will be wiped out, and oceans will become more acidic. The world’s fisheries will become far less productive. Arctic ice thaws. At least once a century, the Arctic will experience a summer with no sea ice, which has not happened in at least two thousand years. Forty percent of the Arctic’s permafrost will thaw by the end of the century.  Species loss. More insects, plants, and vertebrates will be at risk of extinction.  The consequences will be far worse if the 2°C threshold is reached, scientists say. “We’re headed toward disaster if we can’t get our warming in check and we need to do this very quickly,” says Alice C. Hill, CFR senior fellow for energy and the environment. Which countries are responsible for climate change? The answer depends on who you ask and how you measure emissions. Ever since the first climate talks in the 1990s, officials have debated which countries—developed or developing—are more to blame for climate change and should therefore curb their emissions. Developing countries argue that developed countries have emitted more greenhouse gases over time. They say these developed countries should now carry more of the burden because they were able to grow their economies without restraint. Indeed, the United States has emitted the most of all time, followed by the European Union (EU).   However, China and India are now among the world’s top annual emitters, along with the United States. Developed countries have argued that those countries must do more now to address climate change.   In the context of this debate, major climate agreements have evolved in how they pursue emissions reductions. The Kyoto Protocol required only developed countries to reduce emissions, while the Paris Agreement recognized that climate change is a shared problem and called on all countries to set emissions targets. What progress have countries made since the Paris Agreement? Every five years, countries are supposed to assess their progress toward implementing the agreement through a process known as the global stocktake. The first of these reports, released in September 2023, warned governments that “the world is not on track to meet the long-term goals of the Paris Agreement.” That said, countries have made some breakthroughs during the annual UN climate summits, such as the landmark commitment to establish the Loss and Damage Fund at COP27 in Sharm el-Sheikh, Egypt. The fund aims to address the inequality of climate change by providing financial assistance to poorer countries, which are often least responsible for global emissions yet most vulnerable to climate disasters. At COP28, countries decided that the fund will be initially housed at the World Bank, with several wealthy countries, such as the United States, Japan, the United Kingdom, and EU members, initially pledging around $430 million combined. At COP29, developed countries committed to triple their finance commitments to developing countries, totalling $300 billion annually by 2035. Recently, there have been global efforts to cut methane emissions, which account for more than half of human-made warming today because of their higher potency and heat trapping ability within the first few decades of release. The United States and EU introduced a Global Methane Pledge at COP26, which aims to slash 30 percent of methane emissions levels between 2020 and 2030. At COP28, oil companies announced they would cut their methane emissions from wells and drilling by more than 80 percent by the end of the decade. However, pledges to phase out fossil fuels were not renewed the following year at COP29. Are the commitments made under the Paris Agreement enough? Most experts say that countries’ pledges are not ambitious enough and will not be enacted quickly enough to limit global temperature rise to 1.5°C. The policies of Paris signatories as of late 2022 could result in a 2.7°C (4.9°F) rise by 2100, according to the Climate Action Tracker compiled by Germany-based nonprofits Climate Analytics and the NewClimate Institute. “The Paris Agreement is not enough. Even at the time of negotiation, it was recognized as not being enough,” says CFR’s Hill. “It was only a first step, and the expectation was that as time went on, countries would return with greater ambition to cut their emissions.” Since 2015, dozens of countries—including the top emitters—have submitted stronger pledges. For example, President Biden announced in 2021 that the United States will aim to cut emissions by 50 to 52 percent compared to 2005 levels by 2030, doubling former President Barack Obama’s commitment. The following year, the U.S. Congress approved legislation that could get the country close to reaching that goal. Meanwhile, the EU pledged to reduce emissions by at least 55 percent compared to 1990 levels by 2030, and China said it aims to reach peak emissions before 2030. But the world’s average temperature will still rise more than 2°C (3.6°F) by 2100 even if countries fully implement their pledges for 2030 and beyond. If the more than one hundred countries that have set or are considering net-zero targets follow through, warming could be limited to 1.8˚C (3.2°F), according to the Climate Action Tracker.   What are the alternatives to the Paris Agreement? Some experts foresee the most meaningful climate action happening in other forums. Yale University economist William Nordhaus says that purely voluntary international accords like the Paris Agreement promote free-riding and are destined to fail. The best way to cut global emissions, he says, would be to have governments negotiate a universal carbon price rather than focus on country emissions limits. Others propose new agreements [PDF] that apply to specific emissions or sectors to complement the Paris Agreement.  In recent years, climate diplomacy has occurred increasingly through minilateral groupings. The Group of Twenty (G20), representing countries that are responsible for 80 percent of the world’s greenhouse gas pollution, has pledged to stop financing new coal-fired power plants abroad and agreed to triple renewable energy capacity by the end of this decade. However, G20 governments have thus far failed to set a deadline to phase out fossil fuels. In 2022, countries in the International Civil Aviation Organization set a goal of achieving net-zero emissions for commercial aviation by 2050. Meanwhile, cities around the world have made their own pledges. In the United States, more than six hundred local governments [PDF] have detailed climate action plans that include emissions-reduction targets. Industry is also a large source of carbon pollution, and many firms have said they will try to reduce their emissions or become carbon neutral or carbon negative, meaning they would remove more carbon from the atmosphere than they release. The Science Based Targets initiative, a UK-based company considered the “gold standard” in validating corporate net-zero plans, says it has certified the plans of  over three thousand firms, and aims to more than triple this total by 2025. Still, analysts say that many challenges remain, including questions over the accounting methods and a lack of transparency in supply chains. Recommended Resources This timeline tracks UN climate talks since 1992. CFR Education’s latest resources explain everything to know about climate change.  The Climate Action Tracker assesses countries’ updated NDCs under the Paris Agreement. CFR Senior Fellow Varun Sivaram discusses how the 2025 U.S. wildfires demonstrate the need to rethink climate diplomacy and adopt a pragmatic response to falling short of global climate goals. In this series on climate change and instability by the Center for Preventive Action, CFR Senior Fellow Michelle Gavin looks at the consequences for the Horn of Africa and the National Defense University’s Paul J. Angelo for Central America. This backgrounder by Clara Fong unpacks the global push for climate financing.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском AbstractPurpose The purpose of this paper is to analyse the international political economy of Korea and its effects due to geopolitical tension between China and the USA. Design/methodology/approach Economic war between China and the USA has prolonged longer than expected. Aftermath of the COVID-19 pandemic, reforming the supply chain has been the centre of economic tension between China and the USA. Quite recently, with the rapid expansion of Chinese e-commerce platforms, distribution channels come upon a new economic tension between the two. And now is the time to pivot its pattern of conflict from competition into cooperation. In this end, economic diplomacy could be a useful means to give a signal of cooperation. From the view of economic diplomacy, this paper tries to analyse the projected transition of economic war between China and the USA with its implication on the trade policy of Korea. Findings As an implementation of economic diplomacy, China suggested the Belt and Road Initiative (BRI), enhancing trade logistics among related countries to gain competitiveness. In 2023, the Biden administration suggested the India-Middle East and Europe Economic Corridor as a counter to BRI, which will be a threshold for changing trade policy from economic war into economic diplomacy. As a result, it is expected China and the USA will expand their economic diplomacy in a way to promote economic cooperation among allied states, while the distribution channel war would continue to accelerate the economic tension between China and the USA. Korea has to prepare for and provide measures handling this geopolitical location in its trade policy or economic diplomacy. Originality/value This research contributes to the awareness and understanding of trade environments from the perspective of economic diplomacy. 1. Introduction The advent of globalisation has led to widespread economic integration, creating global production networks and markets. However, the COVID-19 pandemic has acted as a significant setback to this trend. In the wake of COVID-19, an economic war has arisen between China and the USA, centred on the restructuring of global supply chains following widespread disruptions. International political economy (IPE) examines the power dynamics between states and the structures of influence within regional economies. Consequently, economic diplomacy has gained unprecedented attention. Economic diplomacy focuses on government actions regarding international economic issues, distinct from political diplomacy through its market-oriented approach in foreign policy. Putnam (1988) categorises economic diplomacy into two levels: unilateralism and bilateralism. Unilateral economic diplomacy (or unilateralism) often relies on hard power, involving decisions on trade liberalisation or market protection without negotiation. Bilateral economic diplomacy (or bilateralism) or multilateral economic diplomacy (or multilateralism), by contrast, involves negotiation among trade partners, resulting in agreements such as regional or global free trade agreements (FTAs). A vast range of state or non-state actors engage in economic diplomacy, navigating the complex interplay between international and domestic factors. Defining economic diplomacy is extremely challenging, but one useful definition is “the broad concept of economic statecraft, where economic measures are taken in the pursuit of political goals, including punitive actions such as sanctions” (Blanchard and Ripsman, 2008).  Figure 1 Recent trend of economic diplomacy To exert influence internationally, ministers and heads of government strive to demonstrate their capacity for national security through two primary approaches, as shown in Figure 1 (above): economic war (or competition) and economic diplomacy (or international cooperation). In the context of global supply chain restructuring, the economic conflict between China and the USA has intensified, marked by threats of supply chain disruptions. This has led to emerging strategies aimed at “crowding out” the USA from global supply chains (去美戰略) or excluding China through alliances such as the Allied Supply Chain and Chip 4. While economic war is inherently “temporary” due to its painstaking nature, economic diplomacy or international cooperation offer a more “long-term” approach because it is gains-taking. This paper analyses the factors contributing to the prolonged nature of this economic war and explores potential outcomes of the supply chain tensions between China and the USA from the perspectives of IPE or geo-economics. In conclusion, it highlights the importance of preparing for trade policy adjustments and strategic economic diplomacy. 2. International trade war and strategic items2.1 Supply chain The supply chain encompasses a network of interconnected suppliers involved in each stage of production, from raw materials and components to the finished goods or services. This network can include vendors, warehouses, retailers, freight stations and distribution centres. Effective supply chain management is a “crucial process because an optimised supply chain results in lower costs and a more efficient production cycle” [1]. Within the supply chain, a leading company typically holds governance power, enabling it to coordinate scheduling and exercise control across the interconnected suppliers, resulting in reduced costs and shorter production times (Gereffi et al., 2005) [2]. Since the 2000s, forward and backward integration have been key strategies for managing time, cost and uncertainty in supply chains. For example, Toyota’s Just-In-Time (JIT) system demonstrated the efficiency of locally concentrated supply chains until disruptions from the 2011 East Japan Earthquake and the Thailand flood. Following supply chain shutdowns in 2020, many businesses shifted from local to global supply chains, utilising advancements of the information technology (IT) and transportation technologies to geographically diversify operations. As the need for a systematically functioning global supply chain has grown, a leading nation, much like a leading company, often assumes governance power in international trade and investment, as illustrated in Figure 2 (below), by aligning with the leadership of a dominant market competitiveness, which makes this leadership valuable.  Figure 2 Supply chain The COVID-19 pandemic dealt a severe blow to the global supply chain, causing sudden lockdowns that led to widespread supply chain disruptions. To mitigate the risks of future global disruptions, supply chains have begun restructuring to operate on a more regionally segmented basis. In this shift toward regional supply chains, China and the USA are at the centre, drawing allied countries within their spheres of influence. This alignment helps explain why the economic war between China and the USA has lasted longer than anticipated. 2.2 Strategic items China has restricted exports of two rare metals, gallium and germanium, which are critical to semiconductor production. Kraljic (1983) highlighted the importance of managing “strategic items” within the framework of supply chain management, as shown in Figure 3. Kraljic emphasises the need to strengthen and diversify critical items. The Kraljic matrix provides a valuable tool for identifying essential items that require focused management within the supply chain.  Figure 3 Kraljic matrix Kraljic identified the importance of managing “bottleneck items” in strategic supply chain management – items that present high supply risk but have relatively low business value. Due to the potential costs associated with non-delivery or compromised quality of strategic items, these must be closely monitored and controlled. From a risk management perspective, establishing medium-term business relationships and collaboration with suppliers is essential. For example, South Korea imports over 90% of its urea for agricultural and industrial purposes from China [3]. Heavily dependent on China for urea supplies due to pricing factors, Korea faced challenges when China imposed export controls on urea, underscoring Korea’s vulnerability within China’s sphere of influence. The European Union (EU) also faces challenges with critical raw materials (CRMs). China remains the EU’s sole supplier of processed rare earth elements, while Chile supplies 79% of its lithium. In response, the EU introduced the CRM Act (CRMA) to support projects aimed at increasing “the EU’s capacity to extract, process, and recycle strategic raw materials and diversify supplies from the third countries” [4]. 2.3 Resilient supply chain alliance In contrast to China’s approach of leveraging supply disruptions to strengthen its influence, the Biden administration in the USA has adopted a cooperative approach focused on building resilient supply chains (Pillar 2) through the Indo-Pacific Economic Framework (IPEF), which includes 14 member countries [5]. The need for resilient supply chains has been further underscored by the Russia–Ukraine crisis. The IPEF aims to address supply chain vulnerabilities by fostering global efforts to reduce risks associated with concentrated, fragile supply chains [6].  Figure 4 Resilient supply chain alliance In Figure 4, the EU Commission presented the Single Market Emergency Instrument (SMEI) in September 2022, a crisis governance framework designed to ensure the availability of essential goods and services during future emergencies. The SMEI operates on three levels: contingency planning, vigilance and emergency. The contingency planning phase focuses on collaboration among member states to mitigate supply chain disruption and monitor incidents. The vigilance phase can be activated when a significant disruption is anticipated, enabling specific measures such as mapping and monitoring supply chains and production capacities. Finally, the emergency phase is activated in cases of severe disruption to the functioning of the single market [7]. Establishing a resilient supply chain through international cooperation may be appealing, yet the reality often falls short of the ambition. In South Korea, the IPEF took effect on 17 April 2024, after an extended negotiation process, marking the first multilateral agreement on supply chains. As a result, during non-crisis periods, the 14 member countries will collaborate to strengthen international trade, investment and trade logistics. In times of crisis, member countries will activate a “crisis response network”. Conversely, opportunities for negotiation with China, South Korea’s largest trading partner, are essential for building supply chain resilience [8]. China has pursued an industrial policy focused on enhancing its supply chain management capabilities. In the semiconductor sector, the decoupling between China and the USA has become increasingly evident. Contrary to expectations, China has adopted a policy of internalising its supply chains, returning to the integration strategies of the 2000s rather than furthering globalisation. A promising opportunity for transformation between the two countries has emerged recently. Since 2015, China and South Korea have maintained bilateral FTA, and with the second phase of FTA negotiations currently underway, there is an opportunity to strengthen trade and investment ties, fostering positive progress through international cooperation. 2.4 China manufacturing exodus During the COVID-19 pandemic, China imposed sudden lockdowns without prior notice or preparation, halting production and logistics cycles. This “zero COVID” policy may have triggered a shift towards “de-risking” China from supply chain disruptions. Although China still offers significant advantages as “the factory of the world,” with vast market potential, prolonged trade tensions with the USA, intensified during the Trump administration, have prompted global manufacturers with substantial USA market bases to relocate operations amid rising geopolitical uncertainties. For example, Nike and Adidas have shifted much of their footwear manufacturing to Vietnam, Apple has begun iPhone production at a Foxconn in Chennai, India, and AstraZeneca has contracted production with India’s Serum Institute. In the pre-globalised era, defining the Rule of Origin (ROO) was straightforward, as a product’s components were usually manufactured and assembled within a single country. However, with the complexity of global supply chains, particularly since 2012, determining ROO has become a time-consuming and subjective process. ROO are classified as either non-preferential or preferential. The USA applies non-preferential ROO to restrict imports from countries like Cuba, Iran and North Korea, while offering trade preference programmes for others. Preferential ROO are used to determine duty-free eligibility for imports from approved countries [9], whereas non-preferential ROO play a crucial role in “country of origin labelling, government procurement, enforcement of trade remedy actions, compilation of trade statistics, supply chain security issues.” [10] China manufacturing exodus may negatively impact capital inflows into Hong Kong, traditionally seen as the Gateway to China. In 2023, Hong Kong’s initial public offering volume fell to a 20-year low of $5.9bn [11]. While China-oriented business remains in Hong Kong, which returns fully to Chinese control in 2047, non-China-oriented businesses have migrated to Singapore. As the certainty of contract and ownership rights forms the foundation of capitalism, this capital flight from Hong Kong is likely to persist. 3. Trade logistics and economic corridors Globalisation has allowed supply chains to leverage interdependence and interconnectedness, maximising efficiency. However, while these efficiencies have been beneficial, they have also created a fertile ground for friction between trade partners due to a “survival of the fittest” mindset and the principle of “winner takes all.” This interdependence has also highlighted vulnerabilities; the global supply chain struggled to manage the disruptions caused by COVID-19, prompting a shift towards regional integration initiatives, such as Association of Southeast Asian Nations, Regional Comprehensive Economic Partnership, United States–Mexico–Canada Agreement and Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As the global economy seeks stability, collaboration over competition has become increasingly essential, with economic diplomacy emerging as a priority. The prolonged economic war between China and the USA arguably needs to shift towards economic diplomacy. The global supply chain is restructuring into regional supply chains, building resilience by operating in regional segments that can withstand crises. Michael Porter introduced the concept of value chain as “a set of activities that a firm performs to deliver a valuable product or service to the market.” [12] Complex finished goods often depend on global value chains, traversing multiple countries. As shown in Figure 5, the value chain consists of supply chain and trade channel components. While the focus has traditionally been on which country holds lead status within a regional supply chain, the emphasis is now shifting to how these regional segments can be interconnected and relayed. In this context, the supply chain competition may evolve into a “channel war” in international trade, where trade logistics will centre on the internal flow of goods, standardising channel processes and establishing authority over these channels.  Figure 5 Supply chain v. trade channel 3.1 Trade logistics It is natural for governments to seek environments that enhance competitiveness within in their countries. In terms of trade, effective trade logistics are essential for maintaining competitive advantage. As a prerequisite, a strong IT management infrastructure is indispensable. As shown in Figure 6, trade logistics encompass the internal flow of goods to market, integrating physical infrastructure with operating software – such as transport hubs, warehouses, highways, ports, terminals, trains and shipping vessels. Key areas of conflict in trade logistics involve the standardisation of channel processes and determining who holds governance over operation of these logistics systems. This is equally relevant within the digital economy. Recently, Chinese e-commerce – often referred to as C-commerce – has aggressively sought to gain control over digital distribution channels, interconnected delivery networks and trade logistics via digital platforms. Chinese platforms such as Taobao, Temu and AliExpress are actively working to increase their monthly active users (MAUs), positing themselves as counterweights to USA-based platforms such as Amazon and eBay in digital trade [13].  Figure 6 Trade logistics When the agenda of establishing international trade logistics is introduced to relevant trade members across various countries, initial progress and effective responses are often achieved. However, efforts soon encounter obstacles related to standardising logistics processes and establishing operational governance. Greater reliance on international institutions could help resolve these issues (Bayne, 2017). Yet governments frequently prioritise domestic interests, and after prolonged negotiations, the risk of international agreements failing increases. Amid the economic war between China and the USA, China launched a trade logistics initiative known as the Belt and Road Initiative (BRI), or One Belt One Road, in 2013. Often referred to as the New Silk Road, the BRI aims to establish economic corridors for trade logistics. The World Bank estimates that the BRI could boost trade flows by 4.1% and reduce trade costs by 1.1% [14]. In response, the Biden administration proposed the India-Middle East and Europe Economic Corridor (IMEC) in September 2023 to strengthen transport and communication links between Europe and Asia as a countermeasure to China’s BRI. IMEC has been well received by participating countries, with expectations of fostering economic growth, enhancing connectivity and potentially rebalancing trade and economic relations between the EU and China [15]. Both BRI and IMEC are ambitious projects aimed at boosting international trade through substantial investments in trade logistics infrastructure. Each seeks to assert governance over international trade channels, signalling that the supply chain war may soon evolve into a trade channel war between China and the USA. 3.2 Economic corridors Economic corridors are transport networks designed to support and facilitate the movement of goods, services, people and information. These corridors often include integrated infrastructure, such as highways, railways and ports, linking cities or even countries (Octaviano and Trishia, 2014). They are typically established to connect manufacturing hubs, high-supply and high-demand areas, and producers of value-added goods. Economic corridors comprise both hard infrastructure – such as trade facilities – and soft infrastructure, including trade facilitation and capacity-building measures. The Asian Development Bank introduced the term “economic corridor” in 1998 to describe networks connecting various economic agents within a region [16]. Economic corridors are integrated trade logistics networks, providing essential infrastructure for connecting regional segments of supply chains. As supply chains increasingly operate in regional “chunks,” linking these segments becomes ever more important. Economic corridors typically include a network of transport infrastructure, such as highways, railways, terminals and ports. Initiatives like the BRI and IMEC use economic corridors as instruments of economic diplomacy, shifting strategies from hard power to soft power, as shown in Figure 7. Because less-developed or developing countries often lack sufficient funding to invest in trade logistics, they tend to welcome these initiatives from developed countries, which offer international collaboration and support. However, these initiatives usually come with the condition that participating countries must accept standardised trade processes and governance led by the sponsoring developed country.  Figure 7 Economic corridor initiatives as economic diplomacy To succeed, economic corridors must meet three key conditions [17]. First, government intervention is essential, as economic corridor initiatives primarily involve public infrastructure investments beyond the scope of the private sector. In realising these projects, governments must reconcile three tensions to ensure their policies are mutually supportive: tensions between politics and economics, between international and domestic pressures and between governments and other stakeholders. Second, intermediate outcomes should be measured and demonstrated as results of economic corridors, allowing participants to experience tangible benefits throughout these longer-term projects. Finally, economic corridors should deliver broader benefits. Participants need incentives to utilise the infrastructure sustainably. These benefits may extend beyond economic welfare, such as wages and income, to include social inclusion, equity and environmental gains, which support the long-term viability of the infrastructure. 4. BRI vs IMEC4.1 Belt and Road Initiative (BRI) - Silk Road The BRI can be a modern-day realisation of the Silk Road concept, connecting Europe as a market base with China as a production base. Unlike the ancient Silk Road, which connected trade routes across Eurasia, the BRI poses potential challenges due to its extensive connectivity. Firstly, there are social and environmental externalities, such as increased congestion and accidents from concentrating traffic flows through limited links and nodes within trade networks. Secondly, while the connectivity may benefit the production and market bases at either end, regions situated between these hubs, through which highways and railways pass, may gain minimal advantage. Thirdly, there is often a mismatch between where costs and benefits are realised. Transit regions that facilitate network traffic often see fewer direct benefits compared to high-density nodes within the network. 4.2 India-Middle East and Europe Economic Corridor (IMEC) - The Spice Road The ancient Spice Roads once connected the Middle East and Northeast Africa with Europe, facilitating the exchange of goods such as cinnamon, ginger, pepper and cassia, which, like silk, served as a form of currency. The IMEC proposes a modern route from India to Europe through the United Arab Emirates (UAE), Saudi Arabia, Israel and Greece. Since its announcement in September 2023, some regional experts have expressed reservations about its feasibility, particularly regarding the connection between the Middle East and Israel. The project has faced delays due to the Israel–Hamas war. Despite these challenges, IMEC holds potential to drive economic growth and strengthen connectivity, especially as countries like Vietnam and India emerge as alternative manufacturing bases for companies relocating from China. For Saudi Arabia and the UAE, IMEC is not viewed as a challenge to China but rather as an opportunity to diversify their economies and solidify their roles within the Middle East region [18]. 5. Conclusion A new trade war between China and the USA has begun, with the Biden Administration’s introduction of IMEC as a counter to China’s BRI. This shift could soon transform the nature of economic war from a focus on supply chains to one on trade channels. The China manufacturing exodus was further accelerated by supply disruptions during the COVID-19 pandemic. Amidst the economic tensions between China and the USA, the restructuring of global supply chains into regional networks has made significant progress. With China maintaining its stance on export controls for strategic items, South Korea must prepare for resilient supply chain management. In relation to China–Korea FTA, which is currently undergoing its second phase of negotiation, South Korea should seek clarity on the transparency of China’s strategic item controls. The Committee on Foreign Investment in the United States (CFIUS) plays a key role in monitoring the quality of inbound investments; similarly, South Korea is experiencing increased inbound investment due to the manufacturing shift from China and should apply similar standards to evaluate investment quality. This emerging economic war between China and the USA is now marked by the competing initiatives of the BRI and IMEC. The BRI can be viewed as a modern Silk Road, linking China with Europe, while the IMEC seeks to establish a trade logistics corridor connecting Saudi Arabia, the UAE, Israel and Greece. The South Korean Government should take proactive steps to prepare for the evolving dynamics of the trade war between China and the USA. CitationOh, J.S. (2025), "International trade war - Spice Road against Silk Road", International Trade, Politics and Development, Vol. 9 No. 1, pp. 2-11. https://doi.org/10.1108/ITPD-06-2024-0031  Notes 1. https://www.investopedia.com/terms/s/supplychain.asp2. According to Gary Gereffi et al, 5 governance types of a lead company could be categorised as market, modular, relational, captive and hierarchy.3. Korea imports urea from 12 countries including Qatar, Vietnam, Indonesia and Saudi Arabia, in addition to China.4. https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/strategic-projects-under-crma_en5. IPEF was launched on May 23,2022 at Tokyo. 14 member countries are Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and the USA. 4 Pillar of IPEF are Trade (Pillar 1), Supply Chain (Pillar 2),Clean Economy (Pillar 3) and Fair Economy (Pillar 4).6. Critics say “lack of substantive actions and binding commitments, instead focusing on process-driven framework building.” https://www.piie.com/blogs/realtime-economics/its-time-ipef-countries-take-action-supply-chain-resilience7. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_54438. As of 2023, the first-largest trade partner of Korea is China (Trade volume of $267.66bn), the second is the US ($186.96bn) and the third is Vietnam ($79.43bn)9. As preferential ROO contain the labour value content requirement in the USMCA, it could increase compliance costs for importers. https://crsreports.congress.gov/product/pdf/RL/RL3452410. USITC(1996), Country of Origin Marking: Review of Laws, Regulations and Practices, USITC Publication 2975, July, pp. 2–411. https://www.barrons.com/articles/hong-kong-financial-center-china-46ba5d3612. Porter identifies a value chain broken in five primary activities: inbound logistics, operations, outbound logistics, marketing and sales and post-sale services. https://www.usitc.gov/publications/332/journals/concepts_approaches_in_gvc_research_final_april_18.pdf13. MAU is a metric commonly used to identify the number of unique users who engage with apps and website. MAU is an important measurement to the level of platform competitiveness in the digital trade logistics or e-commerce industry.14. https://home.kpmg/xx/en/home/insights/2019/12/china-belt-and-road-initiative-and-the-global-chemical-industry.html15. https://www.bradley.com/insights/publications/2023/10/the-india-middle-east-europe-economic-corridor-prospects-and-challenges-for-us-businesses16. The Asian Development Bank (ADB), which first used the term in 1998, defines economic corridors as important networks or connections between economic agents along a defined geography, which link the supply and demand sides of markets. http://research.bworldonline.com/popular-economics/story.php?id=350&title=Economic-corridors-boost-markets,-living-conditions17. Legovini et al. (2020) comments traditional cross border agreements of transport investment focuses only on a narrow set of direct benefits and cost. However, economic corridors can entail much wider economic benefits and costs such as trade and economic activity, structural change, poverty reduction, pollution and deforestation.18. Arab Centre Washington D.C. https://arabcenterdc.org/resource/the-geopolitics-of-the-india-middle-east-europe-economic-corridor/ References Bayne, N. (2017), Challenge and Response in the New Economic Diplomacy, 4th ed., The New Economic Diplomacy, Routledge, London, p. 19.Blanchard, J.M.F. and Ripsman, N.M. (2008), “A political theory of economic statecraft”, Foreign Policy Analysis, Vol. 4, pp. 371-398, doi: 10.1111/j.1743-8594.2008.00076.x.Gereffi, G., Humphrey, J. and Sturgeon, T. (2005), “The governance of value chain”, Review of International Political Economy, Vol. 12 No. 1, pp. 78-104, doi: 10.1080/09692290500049805.Kraljic, P. (1983), “Purchasing must be supply management”, Harvard Business Review, Vol. 61 No. 5, September.Legovini, A., Duhaut, A. and Bougna, T. (2020), “Economic corridors-transforming the growth potential of transport investments”, p. 10.Octaviano, B.Y. and Trishia, P. (2014), Economic Corridors Boost Markets, Living Conditions, Business World Research, Islamabad, October.United States International Trade Commission (USITC) (1996), “Country of origin marking: Review of Laws, Regulations, and Practices”, USITC Publication, Vol. 2975, July, pp. 2-4.Further readingPorter, M. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press.Putman, R.D. (1988), “Diplomacy and domestic politics; the logic of two-level games”, International Organization, Vol. 42 No. 4, pp. 427-600.USITC (2019), “Global value chain analysis: concepts and approaches”, Journal of International Commerce and Economics, April, pp. 1-29.