[Opinion] In the Era of Economic Security, Solidarity and Value-Centered Complex Diplomacy

[Asia Economy] A 'pivot to pivot' war is underway between the US and China to seize leadership of the international order. The 'pivot to pivot' war demands a reorganization of the new international order and is also triggering changes in the Global Value Chain (GVC).

The value of the previous global value chain was economically centered, focusing on value-added creation. However, after the 'pivot to pivot' war, value has taken on a complex form by combining value-added and political values.

In other words, the economy and security are not separate issues but are being unified to promote bloc formation. One axis of the bloc is based on freedom, democracy, human rights, rule of law, and norms, while the other axis is based on anti-freedom, tyranny, closed nationalism, and oppression.

The US-China trade war and Russia's invasion of Ukraine have accelerated the bloc formation of economic and security alliances. There is criticism that the bloc formation of economic-security alliances leads to a retreat from the free trade principle.

Of course, behind the bloc formation of economic-security alliances lies the US's containment of China. However, bloc formation can transform the China-centered monopolistic global supply structure into a multipolar supply structure, allowing the international order to shift toward a more cooperative structure.

Last month, US President Joe Biden made his first visit to the Indo-Pacific region since taking office, with South Korea as the first country on his itinerary. The South Korea-US leaders confirmed that the alliance would expand and strengthen from security-centered to include economy, advanced technology, energy, and supply chain management. The first step was the launch of the Indo-Pacific Economic Framework (IPEF) on May 23.

On the other hand, China clearly feels uncomfortable about South Korea's participation in the IPEF because it conflicts with the China-led Regional Comprehensive Economic Partnership (RCEP).

However, RCEP is evaluated to have limitations due to China's authoritarian values. The IPEF differs from Free Trade Agreements (FTAs), which aim to abolish or reduce tariffs; IPEF allows for item-by-item negotiations rather than a package deal, and as an administrative agreement rather than a treaty, it does not require parliamentary ratification.

Meanwhile, South Korea's participation in the IPEF under the Yoon Suk-yeol administration also signifies normalizing the abnormal policies of the Moon Jae-in administration.

In particular, Biden's inspection of a semiconductor factory signifies that South Korea and the US are strengthening and expanding economic security based on supply chain management, technological alliance, and norms. They have been given roles and responsibilities beyond the Korean Peninsula and Northeast Asia to a global level.

Moreover, economic security is a strategy that uses economic interdependence as a weapon to pressure the opposing country to achieve one's diplomatic goals. South Korea experienced harsh economic security in 2016 due to China's retaliatory measures against the deployment of THAAD.

In such economic coercion, supply chain stability and securing technological sovereignty are key. Establishing bloc solidarity sharing liberal values is urgent for supply chain stability.

Also, to secure technological sovereignty, talent cultivation, regulatory reform for re-shoring, and building friend-shoring with value-sharing countries must be established. Furthermore, the quality of economic security diplomacy must be enhanced through complex diplomacy centered on solidarity and shared values. Only then can the waves of economic security be overcome.

Jo Young-gi, Chairman of the Advanced Unification Research Group, Korea Peninsula Advancement Foundation