Regulatory policy

America can use supply chains to achieve new foreign policy goals

National security concerns about China and pandemic-induced supply chain shortages have led to a bipartisan push to bolster American competitiveness and encourage American manufacturing. Russia’s war in Ukraine and the resulting sanctions against Russia have sparked new interest in reducing the US supply chain’s dependence on these autocratic regimes.

In late February, the White House released a plan to revitalize American manufacturing and secure critical supply chains, which details how to rebuild national supply chains by reinvigorating America’s industrial base. This policy shift toward restoring American competitiveness and manufacturing is also visible in the United States Competition and Innovation Act (USICA), a 2021 Senate bill aimed at countering China’s influence. , and the America COMPETES Act of 2022 passed by the House.

Since not everything can be produced in America, the United States should strive to “bring together” global supply chains to achieve a range of foreign policy goals. Working with allies and partners, this “friendship shoring” can be an important part of supplier resiliency, especially when moving sourcing of key technologies out of China – for example, the effort to coordination of semiconductor supply chains within the framework of the US-EU Tech and Trade Council. Concern over the possibility of quick access to certain goods is an argument for looking to countries closer to America, such as Canada and Mexico, to allow ground shipping and eliminate port delays.

Rethinking US supply chains creates an opportunity to think strategically about new foreign policy goals and the incentives to support those goals. Now is the time to encourage growth in strategically important developing countries, advance labor and human rights, and support decarbonization.

Support countries of strategic interest

US trade policy has always been part of its broader geopolitical strategy, typically using tariff preference programs to support growth in major developing countries. Tariff preference programs, such as the Generalized System of Preferences or the African Growth and Opportunity Act, and free trade agreements, such as the Central American Free Trade Agreement, eliminate most customs duties for goods from these countries entering the United States.

The Biden administration has launched a program to encourage private sector investment in the Northern Triangle – El Salvador, Guatemala and Honduras – with the aim of stimulating economic development to reduce the incentive for migration from these countries to United States. This program engages the Department of State, USAID, and other agencies to support U.S. companies looking to invest or source there. For companies wishing to relocate textile manufacturing from Xinjiang, the Northern Triangle countries are an option worth exploring.

This effort can be a model to support other developing countries, especially in Africa, as a counterbalance to China’s massive investments in the region and as an investment in the rule of law and national security of States. -United.

Support labor rights and human rights

The importation of goods by forced labor has been prohibited since the Tariff Act of 1930, although the law has been underused until recently. In 2016, the ban was tightened, and U.S. Customs and Border Control began to enforce it more aggressively.

In December, President BidenJoe BidenRussian rocket attacks left five people injured in the western Ukrainian city of Lviv. If we deregister the IRGC, what will the dictators think? Biden to propose minimum tax on billionaires in MORE budget signed the Uyghur Forced Labor Prevention Law, which prohibits imports from Xinjiang and aims to ensure that goods produced wholly or partly with forced labor in other parts of China do not enter the United States. United. The law also calls on the United States to lead international efforts to end forced labor practices around the world and coordinate with Mexico and Canada to implement the USMCA ban on imports of goods produced by forced labor in all three countries.

This ban on imports produced by forced labor is an important example of ways to advance labor and human rights through supply chain regulation. As companies source their supplies outside of China, they should be encouraged to look to countries with higher labor standards.

Support decarbonization

In recent years, the United States has increasingly incorporated environmental measures into its trade agreements to encourage greener practices. Rethinking supply chains can also encourage green sourcing.

In a recent groundbreaking steel and aluminum agreement, the United States and the European Union agreed to tackle carbon intensity and overcapacity in high-grade steel and aluminum in carbon. This arrangement aims to discourage the production of high-carbon steel and aluminum and to ensure national policies aimed at reducing the carbon intensity of these industries, and it could be a model for the United States to achieve low-carbon production in other sectors.

All of these ideas open the door for the United States to use supply chains to accomplish new foreign policy priorities. The Biden administration’s plan for a U.S.-led Indo-Pacific Economic Framework (IPEF) includes pillars that will encourage countries to commit to higher labor and environmental standards. The United States should reward countries that adopt these standards by encouraging private sector sourcing from these locations.

Taken together, the IPEF, the US-EU Steel and Aluminum Agreement, the sanctions on Xinjiang, and the initiative to encourage sourcing in the Northern Triangle illustrate how the United States can use supply chains to achieve new foreign policy objectives.

Dr. Orit Frenkel is co-founder and CEO of the American Leadership Initiative. She is a former senior executive of the General Electric Company and served as director of high-tech products trade in the Office of the United States Trade Representative. Follow her on Twitter @OritFrenkel.