• Korea Trade Review
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• v.44 no.6
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• pp.327-344
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• 2019

This paper explores the hub-and-spoke system as the structure of the global economic network that presents obstacles for international cooperation. With its exclusive jurisdiction and control over the hub, a powerful state can employ coercive economic measures to compel and deter unwanted behavior of rogue states and even its allies. Against this backdrop, this study analyzes the cases of the US blocking access to its market by Chinese Huawei as well as the case of Japan in restricting trade for highly advanced goods to South Korea. This analysis reveals that both measures are forms of secondary boycotts, which affect not only the entities within their jurisdiction but also others located in third countries. In addition, this paper extends its findings to free trade agreements and offers implications on the outward processing scheme for the Gaeseong Industrial Complex in the KORUS FTA and the Korea-China FTA. These events result in a gray-risk for South Korea, a country that aims to resolve North Korea's denuclearization and inter-Korean economic cooperation.