Jun 3 -- The International Trade Administration (ITA), Department of Commerce (Commerce), seeks public comment to inform its work on assessing and analyzing risk in global supply chains. This includes input into a determination of an initial list of “critical sectors” and “key goods” as provided under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience (Supply Chain Agreement). The United States' initial list will be shared with the IPEF Supply Chain Council members and will inform work undertaken pursuant to the Agreement. Comments will also inform other analytical tools and methodologies developed by Commerce's Industry & Analysis unit to support resilient supply chains for U.S. industry.
To be assured of consideration, submit any written comments by the June 21 deadline. Commerce may consider comments filed after the deadline.
Building supply chain resilience is a top priority of the Department of Commerce, building on a long history of supply chain work led by the Industry & Analysis (I&A) unit in the ITA. I&A is comprised of a broad set of industry experts with unique commercial perspectives in understanding supply chains and informing and driving policy action. In 2023, the Department launched a first-of its-kind Supply Chain Center to serve as an analytic engine to help drive decision-making and policy action on efforts to strengthen supply chain resilience, leveraging I&A's deep industry expertise, quantitative data, and advanced analytics to help make the government's work on supply chains more proactive and impactful. The Center is facilitating collaboration across I&A, other parts of Commerce, and other government agencies to support a proactive approach by the U.S. government in getting ahead of supply chain challenges, to be strategic in setting priorities for policy focus and action based on data-driven risk analysis, and to serve as a force multiplier in improving the targeting and effectiveness of U.S. government investments. Across these efforts, the Department depends on close partnerships with stakeholders from government, industry, academia, labor, and civil society.
Department of Commerce Supply Chain Risk Assessment:
Central to the Supply Chain Center's work are efforts to boost the U.S. government's ability to understand systemic supply chain risks by building a cross-sectoral risk assessment framework (the “tool”). The tool will utilize a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy, with an emphasis on risks to national security, including economic security, most relevant to the U.S. government. The goal is to help the U.S. government more comprehensively and systematically identify supply chain vulnerabilities and pursue in-depth analysis for actionable and evidence-based policy recommendations.
This is the first effort by the U.S. government to assess supply chain vulnerability across all major sectors of the economy. This tool will help the U.S. government to determine—at the sectoral, and eventually product, level—where there are hidden vulnerabilities that could be addressed through policy action by the U.S. government and/or public-private partnerships.
The supply chain risk assessment framework is an iterative tool. The latest version of the framework incorporates upwards of 40 indicators of risk that relate to a sector's criticality to the U.S. government, vulnerability to disruption, and resilience in the face of disruption.
Examples of criticality of a product or sector include products listed in the White House Critical and Emerging Technologies list, the products required for the Department of Defense industrial base, and products central to U.S. public health and safety, such as pharmaceuticals and certain nutritional foods.
The vulnerability indicators cover six categories of risk: geopolitical; economic; logistical; business/financial; technological; and environmental.
Resiliency indicators focus on how quickly a sector can bounce back from a disruption, considering levels of substitutability, unutilized capacity, and replacement of key inputs.
The Center has been consulting with relevant external stakeholders in the development of this tool as well, including reaching out to dozens of industry and academic experts. The vision and success of this framework depend on close collaboration with industry stakeholders, as well as those from government, academia, civil society, labor, and others, to gather insights, develop accurate assessments of risks and mitigation options, and then take targeted and coordinated action to advance U.S. supply chain resiliency and competitiveness.
The creation of an economy-wide risk tool is an important element of the Commerce Department's Supply Chain Center work, though not the only instance in which the Center is leveraging big data and the qualitative insights of industry experts and economists. The Center is also leveraging analytic tools for targeted scans of critical sectors; expanding its ability to model scenarios and evaluate the potential impacts of proposed policy actions; and deepening its proactive analysis through case studies and replicable and scalable frameworks and toolkits for supply chain analysis and policy action. The Center is also bolstering its ability to produce quick-turn analysis in the event of supply chain disruptions by building partnerships with academia, civil society, labor and others as well as standing playbooks that can help inform policy responses and industry engagement.
IPEF List of Critical Sectors and Key Goods:
Commerce's supply chain resilience efforts are also being advanced through the Supply Chain Agreement. Launched in May 2022 with 13 regional partners—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam—IPEF seeks to establish a platform for long-term economic engagement and cooperation, and to tackle present-day challenges.
Negotiations among the 14 IPEF partners for the Supply Chain Agreement substantially concluded on May 27, 2023, and a signing ceremony of the Agreement was held on November 14 of that same year. The Supply Chain Agreement entered into force on February 24, 2024, after the fifth partner deposited its instrument of ratification, acceptance, or approval. As of May 6, 2024, a total of six partners—Japan, the United States, Singapore, Fiji, India, and the Republic of Korea—have deposited their instruments, in that order.
Parties to the Supply Chain Agreement intend to collaborate on initiatives aimed at strengthening the resilience and competitiveness of target supply chains, better preparing for and responding to supply chain disruptions, and enhancing the role of workers across these supply chains. To do this, the Supply Chain Agreement establishes three supply chain bodies tasked with facilitating various forms of cooperation—a Supply Chain Council, a Crisis Response Network, and a Labor Rights Advisory Board. Parties to the Supply Chain Agreement shall, and signatories that have not deposited an instrument of ratification, acceptance, or approval may designate representatives to these bodies to discuss and carry out this work.
Article 10 of the Supply Chain Agreement requires the development of initial lists of “critical sectors” and “key goods,” which will then be shared through the Supply Chain Council. The Parties can change or update these lists at any time. As the U.S. Government's representative to the Council, the Department of Commerce, through the International Trade Administration (ITA), is leading the process to prepare and submit this list on behalf of the United States, and intends to update the list periodically, as appropriate and as envisioned under the Supply Chain Agreement.
These lists will, among other things, inform discussions among the members of the IPEF Supply Chain Council on opportunities for collaboration under the Supply Chain Agreement through the IPEF Supply Chain Council. Such collaboration could take the form of actions to promote business matchmaking, encourage investment, or improve policy coordination in areas impacting supply chains, among others. The Council may establish teams to develop Action Plans to provide recommendations to promote resilience and competitiveness for critical sectors or key goods based on the lists provided. Those critical sectors and key goods that appear on three or more lists are eligible for the development of an Action Plan.
Article 1 of the Supply Chain Agreement provides the following definitions of “critical sectors” and “key goods”: . . . .
Article 10 of the Supply Chain Agreement further outlines the factors intended to be considered in identifying respective critical sectors and key goods. These include: . . . .
The Department of Commerce recognizes the importance of a deliberative and inclusive review and selection process for identifying the United States' initial list of critical sectors and key goods under the Supply Chain Agreement.
To assist in these endeavors, Commerce requests information from the public on the topics provided below. . . .
FRN:
https://www.federalregister.gov/d/2024-12240