Supply Chain Report Calls for New ‘Trade Strike Force’ and Tougher Trade Enforcement Measures

Trade Update • JUNE 11, 2021

This week, the Biden administration released a report called for by an Executive Order issued in February, which established a wide-ranging whole-government evaluation of America’s supply chains.

The 250-page final report including findings and recommendations concerns 100-day reviews involving four specific supply chains:

• semiconductors and advanced packaging;
• high-capacity batteries;
• critical minerals and other identified strategic materials; and
• active pharmaceutical ingredients.

The reviews sought to determine whether certain key industries critical to U.S. national security are overly reliant on foreign suppliers, particularly in China, or affected by pandemic-related shortages, such as that currently disrupting the global supply of semiconductors.

Recommendations

In addition to a deeper analysis of risks and vulnerabilities involved, the report included six broad recommendations for strengthening U.S. supply chains:

• Rebuild production and innovation capabilities
• Support the development of markets with high road production models, labor standards, and product quality
• Leverage the government’s role as a market actor
• Strengthen international trade rules, including trade enforcement mechanisms
• Work with allies and partners to decrease vulnerabilities in the global supply chains
• Partner with industry to take immediate action to address existing shortages

The Administration says it is taking immediate action to address vulnerabilities and strengthen resilience with the launch of a new effort aimed at addressing near-term supply chain disruptions. And, pursuant to E.O. 14017, it is crafting strategies for six industrial bases that underpin America’s economic and national security, which will be completed within a year.

Trade-Related Initiatives

Sustainable Supply Chains
The Federal Acquisition Regulatory Council, the body overseeing Government-wide procurement policy and regulatory activities, plans to issue a proposed rule to develop a new process for preferencing critical products that are in manufactured products or component parts, under the Buy American Act. The White House says this “will leverage the buying power of the nearly $600 billion in federal contracting to strengthen domestic supply chains for critical products.”

Combatting Unfair Trade Practices
The U.S. Trade Representative will lead a new “Trade Strike Force” charged with proposing unilateral and multilateral enforcement actions against unfair foreign trade practices that have eroded critical supply chains. It will also be tasked with identifying opportunities to use trade agreements to strengthen collective approaches to supply chain resilience with U.S. partners and allies.

Section 232 investigation on imports of Neodymium Magnets
Commerce will evaluate whether to initiate an investigation into neodymium magnets, which are critical inputs in motors and other devices, and are important to both defense and civilian industrial uses, under Section 232 of the Trade Expansion Act of 1962.

Tougher Trade Rules & Trade Enforcement Mechanisms

The report says the U.S. government must implement a comprehensive strategy to push back on unfair foreign competition that erodes the resilience of U.S. critical supply chains and industries. To this end, it calls on the administration to develop a comprehensive trade strategy to support supply chain resilience and U.S. competitiveness, which should then be incorporated into the U.S. trade policy approach towards China and the improvement of existing trade agreements.