Related News

ECAs continue to debate fate of Mozambique LNG project

EU makes fresh bid for OECD export credit fossil fuel ban

US Exim readies for US$2bn domestic financing boom

Banks urge OECD to resurrect down-payment rule

US Exim urged to put “absolute limits” on fossil fuel projects: report

The Biden administration has called for tens of billions of dollars in funding for strengthening supply chains for critical goods, after publishing its wide-ranging 100-day review into supply chains for key products.

This week, the US government announced the conclusion of its 100-day analysis of supply chain vulnerabilities for pharmaceuticals, semiconductors, advanced batteries and critical minerals.

The move follows an executive order (EO) on supply chains signed in late February, where President Joe Biden directed government departments to assess supply chain vulnerabilities for the four “key products”, which the administration has said are critical for the country’s economic prosperity and national security.

The administration established an internal task force spanning more than a dozen federal departments and agencies, which consulted with key stakeholders such as businesses, academic institutions and politicians in Congress.

The EO came in the wake of a disruptive and precarious year for US companies involved in global trade, with the 100-day report noting that the Covid-19 pandemic and resulting economic dislocation “revealed long-standing vulnerabilities in our supply chains”.

The paper points to the demand for a range of medical products, including essential medicine, the shortage of which “wreaked havoc on the US healthcare system”.

The report’s executive summary also details how the shift to remote working and learning helped drive a global semiconductor shortage, which in turn took its toll on automotive, industrial and communications products.

The 100-day review comes after months of consultation and work by the Departments of Energy, Commerce, Defense and Health, which were each tasked with assessing one of the critical products outlined in Biden’s executive order.

While there are specific weaknesses for each sector to address, the review finds that there are a string of historical underlying vulnerabilities that apply across the board, including a decline in US manufacturing and innovation capacity, and the fact that other nations have adopted strategic programmes to advance their own domestic competitiveness in various fields.

 

Key recommendations

Based on the findings of the four departments, the review puts forward more than two dozen recommendations for strengthening supply chains for each of the four key products.

Several of the suggestions rehash policies already announced in Biden’s vast US$2tn infrastructure-focused “American Jobs Plan”.

As already outlined in that plan, Biden is pushing for Congress to approve more than US$50bn in funding for investments advancing domestic manufacturing of semiconductors, as well as research and development.

The Biden administration has also previously called for consumer rebates and tax incentives to spur adoption of electric vehicles (EVs), and the new 100-day review recommends that Congress approve US$5bn to make the country’s fleet of federal vehicles, such as buses, electric and American-made, as well as US$15bn to build a national EV charging infrastructure.

In terms of new measures, the paper calls for a new Supply Chain Resilience Program within the Department of Commerce, “to monitor, analyse, and forecast supply chain vulnerabilities and partner with industry, labour, and other stakeholders to strengthen resilience”.

“We recommend Congress back this program with US$50bn in funding that will give the federal government the tools necessary to make transformative investments in strengthening US supply chains across a range of critical products,” it says.

The Biden administration also says it plans to establish a “strike force” office led by the US Trade Representative to identify and tackle unfair trade practices from other nations.

Like its predecessor, the Biden administration has made clear that it will work to counter China’s trade practices.

In its 2021 trade agenda, delivered by the Office of the United States Trade Representative (USTR) to Congress in early March, the administration pointed to “detrimental actions” taken by China, including tariffs and non-tariff barriers on US exports, government-sanctioned forced labour programmes, “unfair subsidies” and infringement of American intellectual property.

Notably, the 100-day review also lays out the role the Export-Import Bank of the United States (US Exim) and the US Development Finance Corporation (DFC) could play in supporting supply chain resilience.

The administration says it will examine the ability of US Exim to use existing authorities to “further support” domestic manufacturing.

“We recommend that Exim develop a proposal for Board consideration regarding whether and how to implement a new Domestic Financing Program to support the establishment and/or expansion of US manufacturing facilities and infrastructure projects in the United States that would support US exports,” the review says.

The White House says it also backs an increase in DFC capacity for investments in projects that will expand production capability for critical products, including vital minerals.