Melting Ice Caps: Implications for Asian trade with North America and Europe

Article by Amanda M. Countryman; Joseph F. Francois; Hugo Rojas-Romagosa in International Journal of Trade and Global Markets, Vol. 9, No.4  pp. 325-369

ABSTRACT: Arctic ice caps have been melting at an increased pace and projections imply that the ice cover will be greatly reduced in the near future. This climatic phenomenon has important socio-economic implications, as it would open up shipping routes in the Arctic including the Northern Sea Route (NSR) and the North-West Route (NWR). The NSR connects North-east Asia with North-western Europe, while the NWR connects North-east Asia and the East Coast of the USA. In this paper, we analyse the commercial feasibility of the NWR and the economic impact of reducing the trade distances between Asia and the US East Coast. In particular, we examine the extent to which the NWR would compete with the Panama Canal for certain trade routes. Such competition has significant geopolitical implications linked to changes in trade flows and the global supply chains that currently link East Asia and the USA.