A new American initiative to develop supply chains outside of China has put Korea both in the driver’s seat and in a delicate position to balance its relationship with the U.S. and China.

The initiative, called the “Economic Prosperity Network” (EPN), is in part a result of the frustrations seen in Washington with its response to the COVID-19 pandemic and by having to rely on China for both pharmaceuticals and protective equipment in combatting the deadly virus. While the EPN programs predates the coronavirus outbreak, the pandemic has been a stark reminder of the dangers of relying on one country – China – for essential supplies.

“This moment is a perfect storm; the pandemic has crystallized all the worries that people have had about doing business with China,” one senior U.S. official recently told Reuters.

The Economic Prosperity Network identifies “like-minded” countries, companies and “civil societies” that share a set of democratic values in global trade. According to Keith Krach, the U.S. Undersecretary of State for Economic Growth, Energy and the Environment, “those operating principles are things that we would call democratic values — transparency, integrity, accountability, respect for the rule of law, respect for the property of all kinds, respect for the sovereignty of nations, respect for the planet and respect for labor rights.”

Krach, speaking during a teleconference organized by the Asia-Pacific Media Hub of the U.S. State Department, identified commerce, trade, digital strategy, energy, infrastructure, education, research, health care, and financial services, as the areas of economic collaboration, all working under a set of agreed-upon principles, that lend themselves to a shared approach by EPN governments. These democratic values would be difficult for a nation like China to adhere to.

Many observers who have been closely watching the economic initiative say that China’s role in the COVID-19 response has given a strong impetus for the program. China’s dominance in global supply chains has come to a head with questions about its capacity to produce and distribute both medical supplies and equipment to protect healthcare workers and others during the worldwide quarantine. Many nations, including the United States, are hoping to have to rely less on China for these critical supplies, particularly as trade negotiations with China continue to create tensions between it and the rest of the world.

However, that has the potential to put Korea in the middle of the U.S.-China trade wars. Korea, like other American allies that also have strong trade relations with China, will have to make important choices about working with the two major powers who are in an increasingly intense rivalry over technology and security.