Government Strategic Supply Chain Efforts Must Overcome Lack of Data, Report Says
An executive order to address supply chain challenges is not that easy to put into practice, since the private sector runs the supply chains, and companies are either reluctant to share their information with the government or may not know their own supply chains, according to a new GAO report.
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The Office of the U.S. Trade Representative and the Commerce and State departments have been trying to coordinate with allies to construct more resilient supply chains in semiconductor manufacturing and packaging, critical minerals, large capacity batteries, medical supplies related to the pandemic, and pharmaceuticals and active pharmaceutical ingredients.
USTR is trying to figure out how free trade agreements -- aside from the trade facilitation agreement at the WTO -- can support these endeavors.
"According to USTR officials, current U.S. trade agreements generally were not designed to address supply chain disruptions or build resiliency. USTR officials noted that U.S. trade agreements historically focused on trade liberalization and maximizing economic efficiency. The officials added that trade agreements and trade preference programs can serve as tools for addressing supply chain resiliency concerns, but this may require renegotiating current agreements, negotiating new agreements, or modifying trade preference programs. In addition, they said that for longterm resilience, the U.S. will need policies that incentivize allies and partners to work with the U.S. to build resilient supply chains," the report said.
GAO analysts spoke to government officials and to those in the semiconductor industry. "Companies may be reluctant to share data on their supply chains due to business confidentiality concerns, or may not have the data. Moreover, the complexity of particular supply chains has limited agencies’ abilities to collect and manage data to assess supply chain structure and resiliency," they wrote. They said that semiconductor industry experts said businesses themselves find it hard "to compile accurate information about their own supply chains."
The report noted that the U.S.-EU Trade and Technology Council has established a plan to address vulnerabilities in the semiconductor, clean energy, critical mineral and pharmaceutical supply chains, particularly in rare earth magnets, solar panels and semiconductors.
The Commerce Department wants to hire 38 people in the International Trade Administration to fulfill supply chain resilience directives; it also wants to hire 15 people to analyze the composition of products. The State Department wants to hire seven people to help secure supply chains and counter strategic competitors, the report said.