Against the backdrop of growing political, diplomatic, and military- security significance, the strategic value of the Global South has been steadily increasing. The Global South is not an entirely new concept; rather, it constitutes a meta-category encompassing what were previously referred to as the Third World or developing countries, as well as regions sharing geographical commonalities in the Southern Hemisphere and historical experiences of discrimination and structural inequality.

Alongside the rising prominence of the Global South, another critical issue has recently drawn considerable attention in the international community: economic security. This reflects how the economy and security are once again becoming closely linked amid intensifying U.S.–China strategic competition and escalating rivalry over leadership in advanced science and technology. Contemporary discussions of economic security primarily focus on key areas such as supply chain resilience; the enhancement of industrial competitiveness, including the protection of advanced technologies; the prevention of excessive dependence on specific countries through the diversification of trade and investment; and responses to economic coercion (or economic statecraft).

As the importance of both the Global South and economic security has grown, it has become increasingly necessary to conceptualize these two dimensions in an integrated manner and to devise effective policy responses accordingly. Japan and China, both neighboring countries of the Republic of Korea, have already been actively pursuing Global South strategies and linking them closely with their respective economic security policies.

Against this backdrop, this study examines Japan’s and China’s Global South strategies from the perspective of economic security; analyzes the implications of these strategies for Korea’s own Global South strategy; and explores the potential for cooperation among Korea, China, and Japan in areas where economic security policy intersects with Global South strategies.

The analysis suggests that, compared with the Global South strategies of Japan and China, Korea’s approach remains insufficiently systematized. In particular, there appears to be a notable lack of systematic consideration regarding how to formulate and implement a Global South strategy explicitly grounded in economic security concerns. In response, this study offers several policy recommendations.

First, Korea should urgently establish a comprehensive and coherent Global South strategy, supported by a governance framework that brings together actors from government, academia, and the private sector. Policymakers, scholars, and business stakeholders should engage in joint deliberations on how to systematically design and implement a national Global South strategy, culminating in a unified strategic guideline.

Second, the Global South strategy should be closely aligned with economic security considerations and tailored accordingly. Based on a comprehensive assessment of Korea’s economic security environment, detailed analyses are needed to identify priority needs and to determine which Global South countries should be engaged first to strengthen cooperation. In particular, given that stability and progress in inter- Korean relations are crucial for establishing a stable economic security environment, this unique geopolitical context should be actively reflected in the formulation of Korea’s Global South strategy.

Third, institutional frameworks to promote people-to-people exchanges with the Global South should be strengthened. Such exchanges should encompass a wide range of areas, including tourism, international students, and highly skilled talent in science and engineering, and urgent institutional reforms are required to facilitate these interactions.

Fourth, Korea should develop a long-term Global South strategy that can be pursued consistently regardless of changes in political leadership, similar to China’s Belt and Road Initiative and Global Development Initiative (GDI), as well as Japan’s New Policy toward Enhanced Cooperation with Global South Countries.

Along with these implications for Korea’s Global South strategy, it is also necessary to consider cooperation among Korea, China, and Japan. To enhance the effectiveness of their respective Global South policies, the three countries should seek ways to reduce unnecessary competition and expand avenues for mutual cooperation. A representative example is cooperation with African partners. Rather than operating separate and competing platforms for engagement with Africa, the three countries could consider establishing an integrated framework—such as an “Africa + Korea–China–Japan” platform—to pursue more efficient cooperation. However, instead of hastily advancing “Korea–China–Japan + α” cooperation platforms in regions such as Africa or Latin America, a phased approach grounded in a long-term vision would be more appropriate. As an initial area of cooperation, the joint pursuit of secure access to critical minerals—an issue prioritized by all three countries—could be considered.

Finally, it is important to note that trilateral economic security cooperation should not remain confined to institutional or technical dimensions, such as critical mineral supply chains, but should also entail a broader shift in perception. Korea, China, and Japan need to move beyond zero-sum thinking, in which each views the others as competitors or potential threats to national economic security, and instead embrace a win–win perspective that recognizes the possibility of mutual benefit and coexistence. Under such a mindset, the Global South can emerge not as another arena of competition among the three countries, but as a new space for cooperation that generates shared national interests.

The study examines methodologies for quantitatively analyzing the impact of global supply chain fragmentation and applies these approaches to scenarios involving critical minerals. It identifies two primary analytical approaches: microeconomic and macroeconomic.

Microeconomic methods provide detailed insights at the item or firm level but face challenges due to limited access to specific supply chain data. Macroeconomic methods, while suitable for industry- or national-level analysis, often rely on unrealistic assumptions when applied to item-level fragmentation. Despite the significant macroeconomic effects of disruptions in critical supply chains, existing item-level analysis techniques struggle to capture these impacts accurately. For instance, efforts to link item-level analysis with GDP using linear programming or inoperability input-output analysis often encounter limitations due to rigid assumptions about input-output structures. High-tech items, in particular, pose challenges due to their complex supply chain interdependencies and their significant influence on final production.

To address these issues, the study proposes an integrated methodology combining machine learning techniques for microeconomic analysis with the OECD METRO model for macroeconomic evaluation. This approach considers key issues and transmission channels identified in previous research. The study also reviews critical mineral management policies in major economies such as the United States, European Union, China, and Korea. The United States identifies critical minerals essential for economic and national security through legislative measures like the 2020 Energy Act and has implemented strategies to strengthen North American supply chain resilience. The European Union has updated its critical raw materials list every three years since 2008 and enacted the Critical Raw Materials Act in 2024 to expand production capacity and enhance international cooperation. China, despite lacking a clear legal definition of critical minerals, strengthens its resource management through export controls and cooperation with resource-rich countries. Korea designated 33 minerals as critical through its 2023 Critical Minerals Securing Strategy, prioritizing 10 strategic minerals essential for industries like electric vehicles and semiconductors. However, Korea’s reliance on imports for most critical minerals highlights its vulnerability.

The study conducts a vulnerability analysis of Korea’s critical mineral supply chains using indicators such as the Trade Specialization Index (TSI) and Herfindahl-Hirschman Index (HHI). It identifies high global supply chain concentration in minerals like cobalt, lithium, and neodymium, which are crucial for secondary batteries and electric vehicles. To assess geopolitical risks, it examines import trends from China across seven countries from 2017 to 2023. Sharp declines in imports of gallium, graphite, and rare earth elements suggest potential disruptions due to trade conflicts or export controls.

The study employs a Dual-Stage Attention-Based Recurrent Neural Network (DA-RNN) model to predict the impact of critical mineral fragmentation on Korea’s exports of key items like batteries and semiconductors under three scenarios involving germanium, graphite, and rare earth elements. The results show significant decreases in export values across all scenarios. For example, restrictions on germanium imports led to a 3.9% decline in battery exports, while rare earth element shortages caused a 10.8% drop.

Using the OECD METRO model, the study evaluates the macroeconomic impact of critical mineral fragmentation under two approaches: direct analysis of import disruptions (Approach 1) and integration of microeconomic results into macroeconomic simulations (Approach 2). The findings indicate that germanium fragmentation could reduce Korea’s real GDP by 0.15%, while graphite and rare earth element disruptions could lead to decreases of 0.14% and 0.89%, respectively.

Based on these findings, the study recommends strengthening supply chain monitoring systems by integrating fragmented platforms across government agencies and establishing a centralized control tower. It also suggests diversifying procurement strategies, promoting R&D for substitute materials, and supporting SMEs through digital-based supply chain management platforms. Additionally, it emphasizes harmonizing policies with major economies to prevent over-securitization and redundant investments while expanding international cooperation for joint mineral exploration and development projects.

The purpose of this study is to assess the supply chain risks of critical minerals that form the foundation of strategic industries such as electric vehicle batteries, semiconductors, and renewable energy equipment. Focusing on Korea’s “Top 10 Strategic Critical Minerals,” it identifies the import dependency structure and key partner countries, and proposes ways to strengthen supply chains through trade agreements. The analytical scope of this report follows the classification of Kowalski and Legendre (2023) and links raw materials, intermediates, and scrap by HS6 codes for each of Korea’s ten strategic critical minerals. The report consists of two main parts: a global supply chain and risk analysis, including Korea’s import structure (Chapters 2-3), and an agreement network, clause analysis, and strategic proposals (Chapters 4-6).

Chapter 2 analyzes the global supply chain structures and risks of Korea’s ten critical minerals. Lithium is supplied as raw ore from Australia and Chile, while China handles refining. Argentina and Zimbabwe have recently emerged as new suppliers, and the United States is pursuing localization efforts under the IRA. Nickel is mainly supplied by the Philippines and New Caledonia, while Indonesia has restricted ore exports and expanded intermediate production. The intermediates are exported to China for refining, and the final high-value-added products such as alloys are produced mainly in the United States and Europe. The Democratic Republic of Congo monopolizes cobalt ore production, with Canada and Finland handling most refining. In 2023, excess supply and weak demand contracted the market, while recycling activities centered in the United States and the United Kingdom expanded. Manganese production is concentrated in South Africa, Gabon, and Australia. China leads intermediate production but has reduced exports due to domestic prioritization. Japan and Spain supply high-purity refined products, while Indonesia and South Africa are expanding their smelting capacities. China dominates both natural and synthetic graphite production but began tightening export controls in 2023, prompting supply diversification. Tanzania and Madagascar have emerged as alternative sources, while Japan and Germany are expanding production of synthetic graphite based on technological advantages. For rare earths, China maintains dominance across all stages—from mining to permanent magnet manufacturing. In response, the United States and the EU have strengthened cooperation with Australia and Vietnam, while Malaysia has become a refining hub, and Myanmar and Laos have developed as chemical compound exporters.

Chapter 3 examines Korea’s import dependency for the ten critical minerals, classified by FTA status and supply chain stage. For lithium, imports are almost entirely from FTA partner countries, with dependence reaching about 99 percent for both lithium hydroxide and lithium carbonate as of 2023. While lithium hydroxide imports rely heavily on China, imports from Chile are increasing. Lithium carbonate remains concentrated in Chile and China. Nickel shows high dependence on non-FTA countries for ore imports but high FTA dependence for compounds. Nickel oxide and hydroxide are fully imported from FTA partners, while nickel sulfate and chloride record 93 and 85 percent dependence, respectively. Intermediates are largely imported from non-FTA countries such as Indonesia and Türkiye, and unalloyed nickel shows lower dependence (about 65 percent) on FTA partners. Overall, dependence on Chinese-refined nickel compounds stands out across product stages. Cobalt imports are mostly from FTA partners but are concentrated in a few countries. Concentrates, oxides/hydroxides, and scrap are wholly imported from FTA partners, while intermediates such as matte are 86 percent FTA-sourced. Imports of oxides/hydroxides are mainly from China and Belgium. Manganese ore and concentrate imports come 98 percent from non-FTA countries, predominantly South Africa; however, refined products such as manganese dioxide are nearly all imported from FTA partners, mainly China, Japan, and the United States. Graphite imports are highly concentrated by product in either China or the United States: natural graphite relies 97 percent on China, while “other forms” depend 80 percent on U.S. imports. Synthetic graphite imports show nearly full FTA dependence (over 98 percent), though electrode-grade imports are concentrated among a few countries, and other types remain China-dependent. Rare earth imports are almost entirely FTA-sourced, but actual supply remains concentrated in China and Japan, limiting effective diversification.

Chapter 4 analyzes the structure and evolution of global critical mineral agreement networks using IEA data. Before 2010, such agreements were few, but since 2021, networks have expanded rapidly through multilateral frameworks such as the Mineral Security Partnership (MSP) and the Indo-Pacific Economic Framework (IPEF), alongside numerous bilateral MOUs. Network analysis shows that the EU exhibits the highest centrality, acting as a core hub connecting resource producers and consumers. This indicates the EU’s elevation as a central actor in mineral supply chain governance, grounded in its extensive network of FTAs. The EU has introduced “Energy and Raw Materials (ERM)” chapters within FTAs that include export tax bans, non-discrimination in pricing, and binding ESG compliance obligations. Japan incorporates mineral-related provisions within Economic Partnership Agreements (EPAs), exemplified by the Australia-Japan EPA, which bans export restrictions to secure supply stability. Japan is also expanding mega-FTA negotiations with Latin American countries to enhance resource access. The United States has shifted from traditional FTA reliance toward leading multilateral initiatives such as the MSP or IPEF. The most notable development is the U.S.-Japan Critical Minerals Agreement (CMA), established in March 2023 under the Inflation Reduction Act (IRA). The CMA grants Japan FTA-equivalent status under U.S. law for EV subsidy eligibility and institutionalizes bilateral cooperation on critical minerals. Post-agreement data indicate a shift in Japan’s sourcing of five key minerals (cobalt, graphite, lithium, manganese, nickel) toward the United States and Canada, particularly in nickel and manganese imports. Following the IRA and CMA, Japanese investment in U.S. battery and material sectors increased markedly in late 2022 and 2023, while joint patent applications in mining, refining, and recycling also rose, reflecting deepening technological integration. These trends demonstrate that the CMA functions not only as a trade mechanism but as a combined platform for trade, investment, and technology cooperation aimed at realigning allied supply chains.

Chapter 5 proposes directions for agreement provisions supporting Korea’s critical mineral supply chain stabilization, investment protection, and skilled labor mobility.

First, institutional measures are required to mitigate sudden export restrictions by resource-holding countries. Cases such as Indonesia’s nickel ore export ban and China’s graphite export controls disrupt supply planning and investment decisions. Agreements should mandate advance notification (6-12 months) for new restrictions and provide a 2-3-year grace period for existing investors. Rapid consultation mechanisms—for instance, ministerial meetings convened within five days of a supply disruption—should be institutionalized to enable joint responses. Violations of export restriction obligations should be subject to dispute settlement under the WTO or the agreement itself.

Second, legal safeguards are needed to protect Korean investors against growing political and institutional uncertainty in emerging resource economies. Agreements should prohibit retroactive application of new regulations to pre-existing investments, define licensing procedures and responsible authorities across exploration, mining, and refining, and ensure transparency. Investor-state dispute settlement (ISDS) provisions must be included to address expropriation or unfair, inequitable treatment.

Third, mobility clauses are required to ensure deployment of technical personnel essential to projects. Due to labor and visa barriers, Korean skilled engineers often face delays in facility construction and commissioning abroad. Agreements should create special visa and work permit quotas for “core technical personnel” and establish mutual recognition agreements (MRAs) for Korea’s national technical licenses. While respecting local employment obligations, Korean specialists should be allowed to operate on-site for one to two years to provide training and technical transfer, linking labor mobility with capacity-building.

Chapter 6 synthesizes the results from previous analyses to classify potential counterpart countries into three categories and propose differentiated agreement strategies.

The first category, “strategic core partners,” includes Canada, the United States, and Australia—major resource holders and rule- makers in the global mineral governance system, as well as Korea’s key suppliers. Comprehensive, high-standard agreements anchored in international norms are recommended. Drawing from the U.S.- Japan CMA model, these should prohibit export restrictions, establish transparent investment screening and enforceable ISDS procedures, and include regulatory frameworks for MRA-based qualification recognition and fast-track visa issuance.

The second category, “supply chain and network partners,” includes Japan, India, the United Kingdom, Germany, and China. These countries possess advanced processing technologies and significant market influence. Agreements should pursue strategic reciprocity by requiring scientific justification and advance notification for export restrictions, modernizing existing Bilateral Investment Treaties (BITs) to clarify ambiguous clauses, and enhancing stabilization provisions. Labor mobility should focus on expanding joint R&D and technology exchange programs.

The third category, “resource-rich and specialized supply partners,” includes Indonesia, Chile, the Democratic Republic of Congo, South Africa, Brazil, and Vietnam. A development- cooperation-linked approach is most effective: combining Korean investment in refining facilities, technology transfer, and infrastructure assistance with commitments for stable resource supply. Agreements should incorporate MIGA’s political risk insurance (PRI) and link official development assistance (ODA) financing to reduce investment risks. Labor mobility measures should align with local training programs led by dispatched Korean technical experts.

Finally, the report presents overarching recommendations for future negotiation strategies.

First, ESG should be positioned not as a regulatory burden but as a tool for mutual cooperation, contributing to partner countries’ sustainable development while establishing resilient supply chains and responding collectively to G7/EU-led governance frameworks. Second, MIGA’s guarantee schemes should be institutionalized within agreements, embedding ESG compliance into project design phases to lower corporate investment risks.

Third, domestic policy instruments such as the National Resource Security Act should be aligned with external negotiation agendas on critical mineral designation, stockpiling, and recycling targets. Parallel efforts should include establishing HS codes and customs standards for recycled materials such as black mass.

Lastly, Korea should integrate and coordinate numerous MOUs and bilateral committees under a unified framework, ensuring coherence and performance monitoring. Drawing from the Korea-Australia example, accumulated public-private consultative mechanisms should be used to review implementation progress and connect new cooperation initiatives, ensuring that agreements deliver tangible results beyond declarations.

With the expansion of BRICS into BRICS+ in 2024, it has shown the potential for establishing a global order led by Global South countries. BRICs, officially launched in 2009 with four countries (China, Russia, India, Brazil), approved the accession of four new member countries (UAE, Egypt, Iran, Ethiopia) for the first time in 13 years since South Africa joined in 2011, and Indonesia formally joined as a member in 2025. Consequently, as of 2023, BRICS+ is a massive economic bloc, accounting for 28.1% of global GDP and 48.7% of the world’s population. Discussions are underway as to whether it will emerge as a new alternative to Western-centric economic cooperation, such as the G7, and the Bretton Woods financial order.

Particularly as economic and security cooperation with the Global South strengthens, centered around China and Russia, and the so-called Global South rises, BRICS+ is drawing attention as a focal point for Global South cooperation. China is expanding industrial, technological, financial, and supply chain cooperation with developing countries through initiatives like the Belt and Road Initiative (BRI), while Russia is expanding its influence centered on security cooperation. This has led the United States, among others, to closely monitor whether BRICS+ will bring structural changes to the international order. Especially in the 2020s, amid complex crises such as the COVID-19 pandemic, the Russia-Ukraine War, and the Israel-Hamas conflict, coupled with the escalating US-China competition, Global South countries are adopting diplomatic strategies that seek their own national interests by balancing between the US and China/Russia to diversify risks. Global South countries, including the new members, aim to achieve various goals — such as attracting domestic industries, acquiring technology, and securing stable supply chains — by strategically utilizing BRICS+. Recently, cases of South-South cooperation centered on BRICS+ member countries have also been increasing.

Against this backdrop, this study aims to derive policy implications for South Korea’s foreign economic policy by answering the following questions: (1) Why is BRICS+ expanding, and what are the motivations of the countries to join BRICS+? (2) Is strategic interdependence among BRICS+ countries increasing? (3) Will the economic power of BRICS+ in the global market be strengthened? (4) What are the future directions and challenges for BRICS+? Accordingly, this study focuses on 11 countries: the 10 BRICS+ nations and Saudi Arabia, which deferred its accession.

The expansion of BRICS+ was influenced by the rise of the Global South and the backlash against the Western-led international order. In particular, intensified Western containment of China and Russia provided the motivation for them to pursue the expansion of BRICS. The weakening of multilateralism and disappointment with Western leadership post-pandemic activated the discourse on the ‘rise of the Global South’, which led to high interest and positive responses from emerging countries regarding BRICS expansion. As Russia and China use BRICS+ as part of their strategy to counter the US, there is a view that sees BRICS+ as an anti-Western bloc. However, this dichotomous perspective has limitations, as it oversimplifies the complex participation motives of other BRICS+ members. It is true that BRICS+ member states are dissatisfied with the current order led by a few advanced nations. However, for original members like India, Brazil, and South Africa, as well as the new members, BRICS+ functions not as participation in an anti-Western coalition, but as a consultative body to reform the global governance system — which is unfair to developing countries — and to secure their own strategic and economic interests. Amid growing uncertainty in the international order due to the US-China strategic competition and the Russia- Ukraine War, many member states seek to use BRICS+ as a means for economic and diplomatic diversification. For example, BRICS+ provides Iran with a channel to bypass economic isolation, and offers Egypt and Ethiopia opportunities to receive financial support without relying on the IMF or World Bank. Furthermore, BRICS+ serves as a platform for countries like the UAE, which have felt marginalized in the Western-centric system, to enhance their global standing.

Above all, BRICS+ is becoming a key consultative body driving international cooperation that reflects the demands of the Global South. Member states are strengthening cooperation on common challenges for developing countries, such as climate change, health, and the eradication of hunger and poverty, in addition to calling for increased representation for developing countries at the IMF and reform of the UN Security Council. At the 2025 Rio Summit, they emphasized cooperation to protect the interests of the Global South, including a partnership to eradicate poverty, a declaration on climate finance, and the establishment of inclusive and fair global AI governance. This shows that BRICS+ is evolving from its existing financial cooperation into a multidimensional cooperative body representing the interests of the Global South across a wide range of fields, including health, climate, digital, and new technologies. Meanwhile, BRICS+ movements toward local currency settlement, the establishment of a grain exchange board, and cooperation in energy and advanced technology suggest the potential for economic solidarity among member states. Recently, the tariff policies of the Trump administration have also acted as an external factor promoting intra-bloc cooperation within BRICS+.

BRICS+ countries exert significant influence in the energy, critical minerals, and grain markets, as the membership includes major producers of crude oil, natural gas, and grains, as well as exporters of critical minerals. What is particularly noteworthy is the gradual increase in commodity trade among BRICS+ countries and the very low volume of trade with G7 nations. In other words, commodity trade between the G7 and BRICS+ is not active, which also suggests that the space for BRICS+ to align with the G7 during a complex crisis is diminishing. Meanwhile, commodity trade between non-BRICS+ Global South countries and BRICS+ is on an upward trend, which can be interpreted as the strengthening of BRICS+’s economic influence over the wider Global South. BRICS+ is strengthening cooperation on agriculture, energy, and critical minerals, and bilateral cooperation is also becoming more active.

In the manufacturing sector, China plays a core role in BRICS+ production, with over 83% of BRICS+ manufacturing exports originating from China. The countries with the next highest manufacturing export shares are India and the UAE, but their shares are very low compared to China’s. Consequently, manufacturing cooperation within BRICS+ is centered on China, and it should be seen that the Partnership on New Industrial Revolution (PartNIR), the Strategy for BRICS Economic Partnership, and the BRICS Industry Ministers’ Meeting are also, in effect, led by China. BRICS+ has expanded its export share to other BRICS+ members and third countries, centered on traditional manufacturing sectors like electrical/electronic equipment, machinery, and automobiles, with the export share of intermediate goods gradually increasing between 2013 and 2023. However, unlike the G7, the export share of capital goods has stagnated, suggesting that BRICS+ countries are engaged in cooperation closer to building a supply chain through intermediate goods trade, rather than acting as an export base.

Investment inflow into BRICS+ amounts to $330.6 billion (as of 2024), accounting for 21.9% of total global investment. Of this, China’s share alone accounts for 7.7% of the global total. In contrast, investment outflow from BRICS+ is only 15.1%, indicating a significant net investment inflow. The BRICS+ investment cooperation strategy is mainly composed of financial support through the multilateral financial institution, the New Development Bank (NDB), and investment cooperation via platforms (Business Council, Business Forum, PartNIR). In 2015 and 2021, they also agreed to promote investment among BRICS countries through the Strategy for BRICS Economic Partnership.

Meanwhile, contrary to concerns, bilateral investment among BRICS+ members is not large compared to their investments in the G7, and the investment sectors are also limited. An analysis of policy-driven investment trends, centered on sovereign wealth funds (SWFs), to gauge the investment policy direction of each BRICS+ government shows that major countries such as China, Russia, the UAE, and Saudi Arabia have recently been expanding their investments, focusing on advanced industries such as IT and bio industry. However, due to the nature of policy finance — seeking long-term returns — investments are heavily concentrated in politically stable and large markets like the G7 (especially the US and UK), suggesting limitations to bilateral investment cooperation within BRICS+. The reason for this phenomenon is that China and India are effectively the only countries within BRICS+ with high technological levels and large consumer markets, while the remaining countries have high demand for infrastructure and resource development. Financial cooperation among BRICS countries stems from the belief that their voting power in major multilateral financial institutions like the IMF and World Bank is low, and that the dollar-centric settlement structure can be disadvantageous due to factors like foreign exchange losses. In particular, after the financial crisis, restrictions on the voice of developing countries in the IMF and World Bank heightened the sense of crisis that the supply of international financial liquidity could operate primarily for the benefit of advanced nations. Consequently, China has long attempted to internationalize the RMB to reduce its financial dependence on the US, and RMB transactions have indeed increased slightly. In addition to traditional finance, BRICS+ countries have formalized the establishment of a BRICS digital payment network to expand digital financial cooperation, which is also linked to building a financial settlement safety net. Accordingly, the original five countries are leading the development and commercialization of CBDCs. BRICS financial cooperation is divided into emergency liquidity support (e.g., currency swaps, Contingent Reserve Arrangement), development finance through the NDB, and digital financial cooperation, and has produced various achievements.

However, as US countermeasures intensify in response to expanded financial cooperation, and the US formalizes the launch of stablecoins, challenges for BRICS+ financial cooperation are coming to the fore. Above all, the main challenges include: right-sizing the CRA fund to reflect the expanded membership and improving the efficiency of the risk management system; streamlining NDB voting rights; and building the digital infrastructure for the digital finance system centered on BRICS Pay and BRICS Bridge, as well as responding to stablecoins. Furthermore, the fact that countries like the UAE and Saudi Arabia use a dollar peg, and that their positions differ from those of Russia and Iran, which advocate for de-dollarization, is another factor to consider in the advancement of financial cooperation.

Based on previous analysis, this study suggests directions for cooperation between South Korea and BRICS+ countries, focusing on the future development path and challenges of BRICS+. First, BRICS+ is expected to develop in a direction that reduces economic dependence on the West. This can be seen as BRICS+ acting as an alternative cooperative body rather than an exclusive bloc. Accordingly, cooperation is expected to expand around: (1) strengthening economic cooperation in traditional industries, (2) leading global agendas that reflect the voices of developing countries (e.g., climate change, energy security, SDGs, poverty), and (3) expanding cooperation in advanced industries and technology. It is projected that the bloc-formation of BRICS+ will not threaten the existing international order system, contrary to some concerns. This is also linked to the following challenges. The main challenges facing BRICS+ are that member states have differing positions on the future direction of BRICS+, as well as on their stance toward the US, the accession of new members, and de-dollarization. The fact that they face US countermeasures, which also require a response, is another challenge. However, it is anticipated that as US containment of BRICS+ countries becomes more overt and its economic impact grows, it will create a space for BRICS+ countries to-solidify their solidarity.

Therefore, South Korea needs to strengthen: (1) expansion of minilateral cooperation, (2) joint responses to global agendas, (3) reinforcement of commodity supply chain cooperation, and (4) expansion of “software” cooperation to build cooperative networks with BRICS+ countries. However, rather than engaging with BRICS+ as a single bloc, it is necessary to maintain a direction that pursues South Korea’s economic interests through minilateral and bilateral cooperation with individual countries, while simultaneously expanding Korea’s economic footprint within the BRICS+ nations.

This study’s core objective is to identify the direction and policy tasks for a new Northern Strategy amid the shifting global order. This report focuses its analysis on three fundamental aspects, striving to ensure consistency within its content. First, it comprehensively examines the new external environment and conditions for cooperation between South Korea and Northern countries in the era of global order restructuring in 2025. Second, it comprehensively evaluates the 35 years of Northern Policy implemented since the establishment of diplomatic relations with the Soviet Union in 1990, identifying key achievements, challenges, and future cooperation needs. Third, based on these new demands for cooperation, it analyzes the economic impact of the Northern Strategy. By synthesizing the results of this analysis, it proposes a new direction for the Northern Strategy and a plan for managing neighboring countries.

Chapter 2 provides an in-depth examination of the structural changes in the global strategic environment and the new geopolitics of Eurasia. To deeply identify the key characteristics of the new foreign strategic environment and the conditions for pursuing the Northern Strategy, this study comprehensively analyzed the following: changes in the external environment and the direction of the new international order; alternatives to the post-Cold War system and the US's composite strategy; the rise of Eurasian regionalism and the changing external environment; and new dynamics and future challenges in Eurasian international relations.

Chapter 3 provides a comprehensive assessment of the Northern Policy over the past 35 years. It examines Korea's economic relations with key Northern cooperation partners—Russia, Mongolia, Central Asia, and the Caucasus—and identifies the growth goals and challenges these countries face amid a rapidly changing international order and uncertainty. This analysis aims to provide meaningful implications for formulating a new Northern Policy.

Chapter 4 examines the economic impact of the new Northern Strategy. To measure the economic spillover effects of cooperation with Northern countries, particularly Russia, we utilized a Computable General Equilibrium (CGE) model to analyze the GDP, total consumption, and total investment effects of each simulation of economic cooperation. Because partial equilibrium analysis may not adequately reflect the influence of markets, we examined the entire national economy through general equilibrium analysis. The countries analyzed included Russia, Central Asia (Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan), China, and Mongolia. Specific targets and sectors were simulated based on existing research identifying areas with significant economic impact. Specifically, we analyzed the economic impacts of strategic industries such as logistics and power grids, energy and industrial cooperation, and ICT, as well as cultural exchange and tourism cooperation, where demand intersects. Based on this analysis, we aimed to identify areas of strategic cooperation that are expected to generate mutual benefits, including the potential economic spillover effects following the Russia-Ukraine War, such as the easing of sanctions against Russia.

Chapter 5 outlines policy implications of the research and proposes policy measures that take into account the new external environment. The most crucial element in formulating and implementing a new Northern Eurasian policy is the in-depth consideration of macroeconomic and structural factors. In other words, we must first understand the changing direction of the international order and its key characteristics to develop effective response measures. In this context, South Korea needs to consider the new challenges and cooperation needs of the countries of Northern Eurasia and formulate policies centered on strategic priority areas of cooperation.

This study examines the recent evolution of U.S. foreign economic policy, confirming through multiple sources that it is increasingly converging toward a stronger form of economic nationalism under the “America First” banner. It empirically evaluates whether major U.S. policies have achieved their intended economic outcomes and assesses their broader implications for Korea. Building on these findings, the study projects the likely trajectory of U.S. policy and derives implications for Korea’s trade, industrial cooperation, and collaboration with like-positioned partners.

Chapter 2 reviews the background and current direction of U.S. foreign economic policy. The Trump 2.0 administration’s approach represents a continuation of long-standing U.S. protectionism and isolationism, now reshaped into a 21st-century form of economic nationalism. Historical precedents include McKinley’s tariff policies and Reagan’s strategic protectionism, but current policies are more explicitly geopolitical—responding to China’s rise and global supply chain shifts. Under the four core themes of border security, energy independence, government reform, and value restoration, the administration is using Section 232, Section 301, and the IEEPA to enhance U.S. bargaining power while strengthening domestic manufacturing and tax bases through the One Big Beautiful Bill Act (OBBBA). The chapter also highlights the enduring anti-China orientation shaping U.S. policy since the Obama administration’s Pivot to Asia, sustained through both Trump and Biden presidencies. Recent U.S.–China tariff negotiations have only delayed, not resolved, structural trade frictions.

Chapter 3 presents empirical analyses of key policies. The Tax Cuts and Jobs Act of 2017 (TCJA) reduced U.S. outbound FDI but increased inbound FDI, indicating a re-concentration of global investment around the U.S. economy. This suggests that Korea must adapt its FDI strategies and risk management accordingly. The analysis of Section 301 tariffs shows heterogeneous impacts: while overall benefiting Korean exports, gains largely reflect indirect trade diversion amid heightened U.S.-China tensions. A qualitative comparison of industrial policies under successive administrations reveals that Trump 2.0 policy prioritizes shipbuilding, nuclear, and AI industries, while semiconductor and renewable sectors face greater policy uncertainty—underscoring the need for sector-specific strategies in U.S.–Korea cooperation.

Chapter 4 concludes that U.S. economic nationalism will intensify, with China containment at its core. The United States is expected to further promote domestic production in strategic sectors such as steel, autos, shipbuilding, semiconductors, and biopharma, while excluding China from key supply chains. Under Trump, unilateral measures such as tariffs, export controls, and investment restrictions will likely prevail, whereas a future Democratic administration may revive alliance- based approaches.

While WTO-level discussions on digital trade rules have been delayed, rule-making at the bilateral and regional levels—through e-commerce chapters in free trade agreements (FTAs) and stand-alone digital trade agreements (DTAs)—has advanced rapidly. However, because these agreements differ substantially across countries and over time in both the depth and scope of their provisions, regulatory fragmentation has intensified. At the same time, the rapid development of artificial intelligence (AI) is introducing new challenges to the emerging digital trade order. Issues such as privacy and copyright infringement arising from large-scale data collection and use, data dominance by digital platforms, the spread of misinformation, and heightened cyber security risks fall outside what traditional trade rules anticipated. AI technologies now generate multidimensional implications across data governance, intellectual property rights, competition policy, and ethical and safety standards, thereby heightening the need for domestic regulatory preparedness as well as international cooperation and institutionalization.

Digital trade agreements can be broadly classified into: (1) agreements embedded in FTAs (as e-commerce or digital trade chapters) and (2) stand-alone digital agreements concluded separately from FTAs. The former category can also be typologized—such as U.S.-style, EU-style, and China-style models—for comparative analysis. The U.S.-style model (e.g., TPP, USMCA) typically incorporates, as a dedicated FTA chapter, high-standard and open provisions on cross-border data transfers, prohibitions on data localization requirements (including restrictions on mandating the use or location of computing facilities), and prohibitions on requiring the transfer of, or access to, source code. By contrast, EU-style agreements often include e-commerce disciplines within the services framework; they tend to address cross-border data flows and prohibitions on data localization within a single provision and do not generally include a rule on non-discriminatory treatment of digital products. By contrast, so-called China-style digital disciplines, as reflected in RCEP, tend to remain closer to a “status quo maintenance” approach with respect to the moratorium/non-imposition of customs duties on electronic transmissions, rather than establishing stronger new obligations, and do not include source code protection provisions. They also accord relatively broad regulatory discretion by allowing Parties, where deemed necessary, to apply exceptions for legitimate public policy objectives (LPPO) and national security exceptions with respect to cross-border data transfers. Notably, China’s recent pursuit of accession to DEPA and CPTPP suggests a potential pathway toward engagement with higher-standard digital trade disciplines. Representative stand-alone digital agreements include DEPA and the U.S.–Japan Digital Trade Agreement. Overall, digital trade agreements tend to be more detailed and more binding with respect to core issues—such as data transfers, localization prohibitions, and source code—when they are concluded more recently and when they are negotiated among advanced economies.

Against the backdrop of the AI era, this study examines those areas of digital trade disciplines most closely linked to AI—data governance, technical barriers to trade (TBT), competition, intellectual property rights, and AI regulation and cooperation. It analyzes major economies’ domestic legal frameworks and the current state of digital trade rules, anticipates the direction of AI-era digital trade norms, and explores implications for Korea’s regulatory strategy.

From a data governance perspective, the EU has developed a dual structure—promoting the free flow of data within the internal market while maintaining strict controls over external access—through the GDPR and related legislation such as the Data Act and the Data Governance Act. The United States generally prioritizes free cross- border data transfers, but it has strengthened national-security-driven controls by restricting transfers of sensitive data to adversarial countries, including through the enactment of the Protecting Americans’ Data from Foreign Adversaries Act (PADFA) in 2024. China adopted the 2024 Provisions on Promoting and Regulating Cross-Border Data Flows, expanding exemptions from security assessments and standard contractual requirements and thereby improving predictability. Korea comprehensively overhauled its rules on overseas transfers of personal information through the 2023 amendment to the Personal Information Protection Act (PIPA), shifting from a predominantly consent-based structure to a framework that recognizes multiple legal bases, including treaties and international agreements, adequacy decisions by the supervisory authority, and certifications. In parallel, Korea has sought to strengthen the enabling conditions for industrial data use through legislation such as the Data Industry Act and the Industrial Digital Transformation Promotion Act. Going forward, to support AI development, the domestic framework may need to be adjusted to facilitate appropriate data use for AI, and—regarding cross-border transfers—Korea should consider adopting a risk-based approach, while ensuring alignment with domestic law and applying calibrated restrictions where warranted, including on a reciprocity basis.

In the TBT area, the WTO TBT Agreement remains focused on goods and does not directly apply to services or AI technologies. The EU has institutionalized a risk-based approach through the EU AI Act, while the United States continues to lack comprehensive federal regulation despite growing state-level legislative activity. China has introduced AI-related TBT-type regulations by imposing filing and labeling obligations for generative AI and algorithmic services and by issuing numerous national standards. Korea has enacted the Artificial Intelligence Basic Act (scheduled to take effect in 2026), establishing a domestic AI regulatory framework. However, current digital trade disciplines do not yet establish direct, binding obligations specifically tailored to AI-TBT issues, although certain ICT-related provisions (including those involving the use of cryptography) have been introduced in some agreements. Meanwhile, the Korea–EU DTA and the EU–Singapore DTA extend elements traditionally associated with the TBT domain—such as international standardization, mutual recognition of conformity assessment, information exchange, and enhanced transparency—into the digital services space. This suggests that future digital trade agreements may increasingly seek to apply and expand TBT-type disciplines to digital services. Korea, for its part, should participate more proactively in international standard-setting processes and, where appropriate, expand mutual recognition arrangements in order to adapt flexibly to fast-evolving AI technologies and maintain global competitiveness.

From a competition policy perspective, the concentration of data and platform markets has intensified concerns about dominance, and AI development may further strengthen data concentration and platform lock-in structures. Yet current digital trade agreements have not sufficiently developed direct and binding rules to address these concerns. Some agreements—such as the Korea–Singapore DPA and DEPA—include competition-related cooperation provisions centered on information exchange and voluntary cooperation among authorities. Over the medium to long term, attempts could emerge to incorporate obligations on data portability and interoperability into digital trade rules in order to mitigate lock-in effects and promote fair competition; however, given differences in domestic regulatory systems and national interests, it is unlikely that such obligations will be adopted as binding treaty commitments in the near term.

In the intellectual property area, digital trade disciplines often include protections such as prohibitions on requiring the transfer of, or access to, source code (and algorithms) as a condition for market access. With the spread of generative AI, a central issue is whether data use in training may infringe copyrights or other IP rights, and a key focal point is the recognition and scope of a text and data mining (TDM) exception. The EU explicitly provides for TDM exceptions in its copyright framework, and Japan has adopted provisions that broadly allow data use for analysis purposes under its Copyright Act. By contrast, Korea does not have a TDM-specific exception; instead, legality is assessed case-by-case primarily through the “fair use” clause (Copyright Act Article 35-5). From the standpoint of enhancing legal predictability in potential infringement disputes, Korea should consider either (i) introducing a TDM-specific exception or (ii) clarifying, through guidelines and/or legislative refinement, the applicability criteria of the fair use clause to TDM and AI training contexts.

As the importance of AI regulation and international cooperation has grown, recent digital trade agreements have increasingly incorporated AI-related cooperation provisions. For example, the Korea–Singapore DPA and DEPA include dedicated provisions on AI, and also contain separate provisions on data innovation. While the UK–Singapore Digital Economy Agreement (DEA) explicitly provides for joint research and policy cooperation across the AI domain. Looking ahead, rising demands for trust and transparency amid the spread of generative AI may prompt digital trade agreements to address “responsible AI” measures—such as labeling requirements for AI-generated outputs—through cooperation clauses, best-endeavor language, or gradually strengthened commitments. In light of these developments, Korea’s Framework Act on Artificial Intelligence (AI Basic Act) should consider introducing an AI sandbox mechanism, and it would be desirable to issue clear guidance on the scope and implementation of labeling obligations for AI-generated content.

Korea’s current portfolio of digital trade agreements varies considerably across instruments in terms of both the level of disciplines and the degree of bindingness. As Korea expands its engagement in digital trade agreements, it will be important to include core disciplines—such as cross-border data transfers, prohibitions on data localization requirements, and source code protection—as consistently as possible as a common baseline, and to institutionalize them as effective, enforceable obligations in order to reduce firms’ compliance costs arising from rule fragmentation. In addition, meeting the demands of the AI era calls for a balanced digital trade framework that advances openness while maintaining appropriate safeguards. This, in turn, will require a coordinated set of measures—refined risk-based data disciplines, expanded TBT-type disciplines for digital services, and an institutionalized governance framework for AI ethics and safety.

This study examines Japan’s labor shortage, tracing it from cyclical tightness in the early 1970s and the late-1980s/early-1990s bubble to a structural shortfall since the mid-2010s driven by the sustained contraction of the working-age population. Earlier episodes were demand-led and policy-induced (for example, the transition to a 40-hour work week), whereas today’s tightness is demographic in origin and therefore persistent. Chapter 2 details these dynamics and the underlying structural constraints.

To manage this challenge, Japan’s policy response combines mobilization of domestic labor—most notably rising participation by women and older workers—with an expanded intake of foreign workers. The foreign-resident population grew from roughly 2.09 million in 2014 to about 3.59 million in 2024, with rapid increases in Technical Intern Trainees and Specified Skilled Workers. These increases reflect domestic drivers—population aging and acute shortages in care, hospitality, construction, etc.—as well as international forces, including a surge in Asia-centered labor migration and policy shifts. Chapter 3 assesses Japan's policy efforts to engage women and older workers into the labor market, while Chapter 4 reviews the theory, history, and practice of international labor migration in Asia. Chapter 5 disaggregates Japan’s foreign-worker regime into three pillars—high-skilled channels, the Technical Intern Training Program, and the Specified Skilled Worker system—and evaluates their policy design, outcomes, and outstanding issues. Chapter 6 assesses integration through wages and social-insurance coverage as indicators of how well foreign workers are settling into Japanese labor markets and society.

This study sets out the following policy implications for Korea. For older workers, Japan’s experience shows the effectiveness of gradual, sequenced reform—phased extensions of employment guarantees—backed by targeted subsidies, sustained social dialogue, and flexible compliance options for firms. Firm-level transparency and action plans, combined with workplace redesign, childcare provision, and well-targeted grants, have helped lift women’s participation. On foreign workers, Japan and Korea should streamline its fragmented governance and build a more efficient architecture for lower-skilled pathways, with clear skill-progression ladders that link training and language support to advancement in wages and roles. Korea should also better leverage international students by smoothing school-to-work transitions and strengthening settlement support. Finally, Japan and Korea could co-lead rules-based cooperation with major sending countries to stabilize flows and alleviate persistent shortages.

Foreword

Part 1 Key Policies for Open Strategic Autonomy
01. The Evolution of South Korea’s Economic Security Strategy | Seungjoo Lee |
02. Partners Under Pressure: Strengthening Dutch-South Korean Economic Security Amid a Fractious Indo-Pacific | Richard Ghiasy |
03. Toward a Strategic Partnership in Science and Technology between Korea and the Netherlands | Myong Hwa Lee |
04. Cooperation on Control Points is Needed for Strategic Autonomy | Joris Vierhout, Amber Geurts |

Part 2 Key Technologies for Open Strategic Autonomy
01. Korea–Netherlands Cooperation Agenda for Advanced AI Semiconductor R&D | Seokjoon Kwon |
02. Quantum Technology as a New Frontier of Cooperation: NL-ROK Partnership Opportunities | Anna Grashuis, Ingrid Romijn, Ulrich Mans, Mayra van Houts |
03. ROK-NL Strategic Cooperation in Energy Security | Sunghun Cho |
04. Key technologies for Open Strategic Autonomy in Korea and the Netherlands: Critical Raw Materials for Defense | Irina Patrahau, Benedetta Girardi |

Conclusion and Policy Recommendations

As has recently been observed, the global economic order is undergoing a profound transformation. The intensifying geopolitical rivalry among great powers, the retreat from multilateralism, the resurgence of protectionist policies, and the weaponization of trade and technology have shaken the foundation of the open and inclusive global economic order, which has been around for a long period. These changes underscore the growing importance of technological leadership, secure supply chains, and resilient industrial ecosystems in shaping the economic security and strategic autonomy of individual nations. However, pursuing security and autonomy does not mean isolation. Ironically, the necessity for like-minded countries to cooperate has never been greater, as no single nation can cope alone with the shift in the global economic order.

The Republic of Korea and the Netherlands, as middle powers and trading nations, share a deep interest in preserving the stability, openness, and resilience of the global economy, which ultimately contribute to the prosperity of all participating countries. South Korea, for example, has long been a globalized manufacturing power house, heavily relying on global value chains to support its growth. However, a series of shocks, including China’s economic retaliation over THAAD, Japan’s export controls, the COVID-19 pandemic, and US–China technology competition, revealed structural vulnerabilities of Korea’s export-oriented economy. Korea’s new economic security strategy, as detailed in this volume, reflects efforts to reconcile its position as an export leader and an import-dependent economy. Similarly, the Netherlands, one of Europe’s most open trading nations, faces the challenge of mitigating risks while preserving openness. The country positions itself as a logistics hub, a high-tech innovator, and a host of globally competitive firms such as ASML. As the European Union attempts to lower its external dependencies in strategic sectors, the Netherlands plays a significant role in shaping Europe’s economic security agenda.

Against this backdrop, Korea and the Netherlands emerge as natural partners. Their complementary strengths in semiconductors, advanced manufacturing, quantum technology, and clean energy transition can create opportunities for them to build resilient supply chains and shape global standards jointly. Their partnership also aligns with broader Indo-Pacific regional frameworks, including the EU–Korea Strategic Partnership and the international component of Horizon Europe, positioning both countries to contribute to a stable, rules-based global order.

This edited volume, “Industrial Open Strategic Autonomy in the Indo-Pacific: Focusing on High-tech Industrial Innovation and Supply Chain Security”, examines how Korea and the Netherlands can deepen their cooperation across key policy areas and critical technologies to advance open strategic autonomy. Drawing on contributions from leading experts, the volume is organized into two parts. Part I analyzes the policy foundations of economic security and strategic autonomy and Part II explores the technological domains essential to achieving these goals. Based on the authors’ in-depth analyses, three main recommendations for ROK-Netherlands cooperaion on open strategic autonomy are suggested: first, establish a shared economic security foresight mechanism. Third, coordinate sustainable supply chain resilience. Third, coordinate sustainable supply chain resilience.

Executive Summary

1. Introduction

2. Model

3. Data and Calibration

4. Assessing Debt Sustainability in the APEC Economies

5. Conclusion

References

Appendix
A. OLG Model and Calibration
B. Dynamics of the Debt-to-GDP Ratio
C. Additional Tables

In this paper, we estimate additional government expenditure used to reduce AI’s existential risk and assess public debt sustainability. Our most important policy-relevant finding is that even under the conservative assumption that government expenditure equals the maximum amount society is willing to sacrifice to mitigate AI risk, and that all such expenditure is financed by issuing sovereign bonds rather than raising taxes, government debt does not necessarily become explosive. Instead, in our benchmark scenario—where the growth-enhancing effect of AI is calibrated to the average of prior studies—the debt ratio remains sustainable for most APEC economies. We also find that, except for Russia, an additional AI-driven growth effect of 3.4–6.1% would suffice for debt financing to remain sustainable for many APEC economies. In particular, for the United States, the required effect is 3.8% or 4.6%, depending on parameter assumptions. For faster growing economies such as China and Korea, the required additional effect is even smaller than for the United States.