Mar 7 -- The Office of the United States Trade Representative (USTR) requests comments and will hold a public hearing to inform objectives and strategies that advance U.S. supply chain resilience in trade negotiations, enforcement, and other initiatives. April 22, 2024: Due date for submission of written comments. May 2, 2024: USTR will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436 beginning at 10:00 a.m.
Strengthening our supply chains is a critical component of the Biden-Harris Administration's efforts to advance our worker-centered trade policy, create sustainable economic growth, ensure that our economy is more resilient in the face of supply shocks, and enhance U.S. economic security. From the COVID–19 pandemic to Russia's full-scale invasion of Ukraine, Americans have felt first-hand the impacts of supply chain disruptions, which include volatile prices for critical consumer goods and medical products and widespread product shortages that contribute to inflationary dynamics. Further, global supply chains have been designed to maximize short-term efficiency and minimize costs, leading to greater vulnerability and unsustainable dependencies, and furthermore have promoted trade that may not reflect our core values, like labor standards and environmental protection.
This is why the Administration is undertaking a whole-of-government effort to proactively strengthen domestic manufacturing and to secure trusted supply chains through strategic arrangements with trusted partners (friend-shoring) and with regional partners (near-shoring). The President is using all the tools at his disposal, including new authorities under the CHIPS and Science Act, Inflation Reduction Act, and Bipartisan Infrastructure Law, to incentivize the re-shoring and domestic expansion of critical supply chains. Enduring resilience will require new investments in infrastructure, new incentives to increase the supply of key inputs, and new forms of cooperation with allies and trading partners to prevent and withstand supply chain disruptions and mitigate risks of price spikes and volatility that could contribute to inflationary dynamics.
To advance these policy priorities on behalf of the American people, USTR has been crafting a new approach to trade and investment policy that promotes supply chain resilience. Resilient supply chains provide a range of sources for critical inputs; adapt, rebound, and recover with agility when faced with economic shocks; uphold labor rights and environmental protections; and strengthen the domestic manufacturing base and workforce that drive economic growth and world-class American innovation.
Over the last several decades, however, U.S. trade and investment policy—including rules related to supply chains—were designed to incentivize short-term cost-efficiency and drive tariff liberalization, with the goal of creating an unfettered global marketplace. This approach helped shape producers' decision-making that, in many cases, fostered geographically concentrated and operationally complex supply chains. For instance, natural disasters overseas in 2011 disrupted “just-in-time” supply chains with significant negative impacts for U.S. automakers. In geopolitically fraught regions, the challenges are frequently even greater; when low cost is the driver of sourcing decisions, and absent incentives for improving standards over time, production becomes increasingly consolidated in economies with lower labor standards, weaker environmental protections, and transparency and governance challenges
This is the race to the bottom. It leaves critical sectors vulnerable to non-market policies and practices, economic coercion, and other unfair trade practices, and deprives consumers of goods whose production reflects our core values. It has also contributed to the hollowing out of the American industrial base and vital U.S. jobs, and harmed many of our communities and working families, undermining support for democracy itself.
Under the Biden-Harris Administration, USTR endeavors to empower American workers and businesses, large and small, that are recalibrating and rebuilding secure and trusted supply chains for resilience, through a new approach to trade and investment policy—one that is supported by innovative strategies, tools, and mechanisms, and also integrated with domestic economic policy to position U.S. manufacturing and services for continued leadership and competitiveness. This approach also entails collaborating with trading partners and allies to incentivize a race to the top through stronger coordination and alignment on labor and environmental protections within trusted networks, and to build our middle classes together, rather than pitting them against each other.
Through trade negotiations, efforts to enforce fair trade, and other engagement with trading partners, USTR seeks to advance and implement these principles of supply chain resilience—transparency, diversity, security, and sustainability. To promote transparency, USTR confronts supply chain risks arising from unfair trade and competition practices among our trading partners. To enhance diversity, USTR creates opportunities for businesses of all sizes to increase sourcing options, including those located domestically and in underserved communities.[2]
To bolster security, USTR takes trade action to facilitate the strengthening of agile supply chains with trusted networks sharing our values, including through friend-shoring and near-shoring in furtherance of high-quality economic growth. And to support sustainability, USTR works to promote respect for labor standards and environmental protections governing global supply chains and to strengthen those standards and protections.
By strengthening resilient supply chains, trade and investment policy can help ensure the prosperity of American workers, businesses, and communities, foster a broad American industrial base, and fortify our partnerships with trusted partners and allies.
Commenters should submit information related to one or more of the following questions:
1. How can U.S. trade and investment policy, in conjunction with relevant domestic incentive measures, better support growth and investment in domestic manufacturing and services?
2. What existing or new tools could help ensure that growth in domestic manufacturing and services does not undergo the same offshoring that we have experienced over the past few decades?
3. How can U.S. trade and investment policy promote a virtuous cycle and “race to the top” through stronger coordination and alignment on labor and environmental protections within trusted networks among regional and like-minded trading partners and allies?
4. What are examples of trade and investment policy tools that potentially could be deployed in the following sectors to enhance supply chain resilience? In these sectors, what features of the current policy landscape are working well, or less well, to advance resilience?
-- Aerospace and aerospace components.
-- Agriculture, forestry, and fisheries.
-- Automobiles and automotive parts.
-- Call centers, business processing operations, and related services.
-- Critical minerals, including for electric vehicle and large-scale energy storage batteries, and related recycling.
-- Metals.
-- Pharmaceutical and medical goods.
-- Semiconductors, microelectronics, and inputs thereto.
-- Renewable energy generation, transmission, and storage, including solar and wind technology and inputs thereto.
-- Textiles, such as yarns, fabrics, apparel, and other finished goods.
5. What additional sectors may need dedicated trade and investment policy approaches to advance supply chain resilience? What should such approaches entail? With respect to those sectors, what features of the current policy landscape are working well, or less well, to advance resilience?
6. Across sectors, how does access to capital equipment, manufacturing equipment, and technology support supply chain resilience for U.S. producers, and is there a role for trade and investment policy?
7. How can the development of technical standards and regulations support supply chain resilience?
8. There is concern that preferential rules of origin in free trade agreements can operate as a “backdoor” benefiting goods and/or firms from countries that are not party to the agreements and are not bound by labor and environmental commitments. What actions could be taken to mitigate these risks and maximize production in the parties? What policies could support strong rules of origin and adherence to rules of origin?
9. What factors are driving supply chain and sourcing decisions, and how does trade and investment policy impact them? How do companies factor geopolitical risk into their global and domestic manufacturing and sourcing decisions? How do companies take into account traceability and transparency considerations in supply chain and sourcing decisions?
10. To what extent is supply chain resilience shaping capital allocation decisions among industry and investors?
11. How can supply chain resilience be measured, including the costs of insufficient resilience, and the impacts of trade and investment policy on resilience? What are appropriate quantitative or qualitative data to consider?
12. How can U.S. trade and investment policy support supply chains that are inclusive of small disadvantaged businesses and underserved businesses, including minority-owned and women-owned businesses, veteran-owned businesses, service-disabled veteran owned small businesses, and HUBZone businesses, and promote trade opportunities in underserved communities?
FRN:
https://www.federalregister.gov/d/2024-04869