In a bid to build supply chains less reliant on China, U.S. President Joe Biden is expected to sign an executive order in the coming days that lays out a new strategy covering products such as semiconductors, high-capacity batteries, medical supplies and rare earth metals.
Any order would be part of a larger effort by the Biden team to determine how dependent the U.S. economy and military are on certain key Chinese exports.
The executive order, media reports say, is also expected to focus on a key tenet of Biden’s foreign policy — partnering with allies, including Japan, South Korea, Australia and Taiwan.
“Working with allies can lead to strong, resilient supply chains,” an early draft of the order says, according to the Nikkei business daily, suggesting that allies and partners will be crucial to the Biden plan.
The U.S. plans to share information with allies and partners on supply chain networks for important products and will look to leverage complementary production, the report said. It will consider a framework for the speedy sharing of these products in emergencies, while also discussing the creation of secure stockpiles and spare manufacturing capacity.
Partners could be asked to do less business with China, the report added.
White House press secretary Jen Psaki teased the executive order Friday, telling reporters that more information would be released “soon.”
“It will be a big day for you and others who are very excited about this issue, as are we,” Psaki said. “We have been doing a range of outreach to … folks in the international community about this issue.”
Biden and Vice President Kamala Harris were scheduled to meet with a bipartisan group of House and Senate lawmakers to talk about supply chains Wednesday. Details of the pending executive order, which is reportedly set to be signed as early as this month, were expected to be discussed.
The Biden administration has followed the Trump White House in targeting supply chains as a glaring point of strategic vulnerability for the United States as Washington’s ties with Beijing plummet to fresh lows over trade and security issues. But the COVID-19 pandemic also laid bare U.S. shortcomings and medical supply chain concerns, adding momentum to the push to review the issue.
The U.S. has reached out to allies and partners involved in key technology sectors or rich in crucial resources.
This has included Taiwan, which inked a memorandum of understanding in late November that envisions an ongoing economic dialogue where they will promote “safe, secure, and reliable supply chains and resilient manufacturing.”
Japan, for its part, has taken gradual and low-key steps to untangle its supply chains with China in an attempt to avoid alienating its top trading partner.
As a way of weaning Japanese firms off an overdependence on China, the government said earlier this month — without mentioning the Asian neighbor — that it will offer an additional ¥222.5 billion ($2.1 billion) in the coming months to help with that process. That will go into an earlier program that assists with funding for projects bolstering domestic manufacturing or diversifying supply chains across Asia as part of an attempt to boost ties with the Association of Southeast Asian Nations.
Japan has found itself in a tough spot on the issue of supply chains. Relying too heavily on China risks exposing the country to potential security risks from Beijing, a possibility brought into sharp relief in 2010 after tensions with Beijing exploded over the Japanese-administered Senkaku Islands and China imposed a de facto embargo on rare earth exports to Japan. China claims the islands as its own and calls them the Diaoyu.
The executive order will also reportedly mandate a thorough review of supply chain concerns and will take place in two phases.
The first will consist of a 100-day review process, during which officials will analyze and report on a handful of high-priority supply chains, CNBC reported earlier this month. The second phase will broaden to a focus on various sectors, including the production of equipment for defense, public health, energy and transportation.
Once those phases conclude, one year after the order’s issuance, a task force will submit recommendations to the president for potential action, CNBC said, “including diplomatic agreements, trade-route edits or other ways to ensure supply chains are not monopolized.”
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