What Will US Supply Chains Looks Like Under New Administration?

What Will US Supply Chains Look Like Under New Administration?

Jan. 12, 2021
"One key priority will be building greater cooperation among partners and allies in the Americas, as this will be a determining factor for the future of supply chains, and the Americas overall."

A recent report, “The Biden-Harris Administration and the Future of Supply Chains in the Americas,” produced by Baker McKenzie, Atlanta Council and Experts of the Americas, poses key supply chain questions to experts in the field.

The report notes that President-Elect Joe Biden has “pledged to build broad-based supply-chain resilience and to work collaboratively with the private sector to improve productivity and avoid unnecessary costs and bureaucracy.”

To get find out what these policies will look like the report spoke to seventeen authors from various countries, regions, and industries, representing the public and private sectors.

Here are some excerpts from the report, so please take a look at the report for more in-depth answers.

Given what is known about the incoming Biden-Harris administration, what might be the US role in advancing the development of greater commercial integration in the Western Hemisphere?

 Lisa Schroeter Global Director of Trade and Investment Policy Dow spoke to the role of the private sector in driving integration.

At a time when the world is struggling to recover from the devastating impacts of COVID-19, to restore economic growth, and to create high-quality jobs, there has never been a better moment for the United States to energize Western Hemispheric integration, building on the innovative contributions of the U.S.  private sector. Ultimately, companies are already drivers of integration. They invest in each other’s countries, source customers over borders, and, more importantly, engage strategically to share innovation and to partner on supporting customers to deliver new, more sustainable products to market.

In 2021, the public and private sectors can align to support an integrated policy agenda that enables growth, including through regulatory cooperation, as the United States has demonstrated tangible impacts of regulatory reform, streamlining and making procedures more efficient based on sound science and risk assessment principles so that companies large and small can operate efficiently and with certainty; trade facilitation, as COVID demonstrates the essential value of timely products to market, and supply chains need efficient and clear procedures, leveraging technology so that materials get to markets, especially critical inputs that support domestic manufacturing and highly skilled workers; and sustainability, as one of the greatest areas of opportunity is to share the common goal of better environmental performance in order to support better, more resource-efficient manufacturing, combat climate change, and introduce fit-to-purpose products on the market. Sustainability means both better environmental and economic performance. A common effort to reduce barriers—tariff, non-tariff, regulatory—will enable access and investment in these technologies that can contribute to a more sustainable planet, and can better all communities.

Integration across the Western Hemisphere already happens across supply chains, between customers and people to people. Twenty twenty-one offers the opportunity to build on these strong alliances, with a focused agenda and a common effort to share best practices and build capacity for a more integrated, and better performing, Western Hemisphere market.

In what ways might the next U.S.  administration advance policies that allow for supply chains in the Western Hemisphere to withstand major disruptions/shocks similar to COVID-19?

Christina Conlin partner, International Commercial Practice Group Baker McKenzie  spoke about tax, trade, and labor policy certainty to strengthen supply-chain resilience

 Businesses need certainty. This year has provided anything but that, with challenges and instability due to COVID-19, extreme climate events, and civil protests and disruption in the United States. Supply-chain stability and resilience can be enhanced by the US administration providing quick, clear guidance on its intended tax, labor, and trade policies to support diversification of the supply chain.

The disruption from COVID-19 has placed a new emphasis on companies’ strategies for reshoring, nearshoring, or multi-jurisdictional diversification of suppliers. COVID19 laid bare the need to diversify all tiers of suppliers to more than one location or region. Tax, trade, and labor policy certainty is needed across industries, though there will be a necessary focus on healthcare and PPE in the immediate future.

While company leaders may not appreciate, nor agree with, all or some of the administration’s policies, they will nonetheless appreciate knowing toward which direction they need to pivot, and how these policies will impact their companies’ supply-chain investment and strategy. Regulatory alignment with key trading partners would also bolster stability by reducing legal and operational challenges across markets. With an early indication of intended policies, businesses can promptly evaluate their investments, commercial contracts, and overall supply chain strategy.

How can supply chains be used to strengthen efforts to meet environmental, social, and governance (ESG) goals in the Americas—the main pillars that measure sustainability and societal impact of the private sector—and how might the new administration’s policies impact these goals?

Landon Loomis Vice President, Global Policy Managing Director Boeing Brazil  spoke on lessons learned from the aerospace and aviation industry

Boeing has longstanding supply-chain relationships across Latin America that support the firm’s global commercial, defense, and service business. These ties are a testament to the region’s growing technological capabilities, and demonstrate the importance of focused investments in research and development, infrastructure, and education. Yet the nature of supply chains is evolving, and has expanded beyond the traditional metrics of quality, capability, and value, increasingly encompassing ESG standards as well.

On environmental, social and governance issues, supply-chain relationships can help drive meaningful change in at least two ways: first, by using ESG criteria to evaluate and select potential suppliers, and second, by including ESG within the contracted work itself. True collaboration on ESG goals would also empower suppliers to speak up and identify problems they see within the contracting company – further enhancing accountability.

Boeing is hard at work on these issues with a stakeholder-focused approach. The company appointed a chief sustainability officer to lead its ESG agenda companywide, made significant commitments to diversity and inclusion programs, and are investing heavily in breakthrough environmental technologies.

Boeing’s supply chain and government partners across Latin America will magnify the impact of this effort, and help the company continue to meet consumer expectations to source responsibly, foster economic inclusion, and drive environmental sustainability

How can lessons from other regions in deepening regional supply-chain integration be applied to the Americas, especially with an eye toward leapfrogging economic development in the region?

 Omar Vargas Global Head of Government Affairs 3M spoke on government best practices for addressing supply-demand imbalances.

 In a world of just-in-time production and consumption, little supply-chain elasticity exists when there are dramatic demand spikes. With COVID-19, demand spikes ranged from twenty times to forty times pre-COVID-19 averages. Total global industrial capacity was not enough to respond to the sharp supply-demand imbalance, which was further exacerbated by rigid regulatory and trade practices.

There are several key global government best practices for developing a sustainable national stockpile for future emergencies. Governments that were able to enact the following did best in their national responses. These lessons are equally applicable in the Americas. Governments are resilient, and can respond to sudden demand spikes by having immediate access to a national stockpile of needed supplies.
  • Governments have “emergency-supplies stockpile” specified in their laws as a fully funded, non-negotiable national requirement. 
  • Governments must have the budgetary flexibility to procure what they need when they need it.  -Governments have established “emergency-use authorizations” as part of their national public health laws to enable rapid regulatory access to needed supplies beyond their borders.
  • Governments must have globally harmonized standards, so they have access to global supply chains. The more nonstandard the regulation, the more difficult the task of procurement becomes for a country.
  • Governments must have good legal and customs systems to fight product fraud and counterfeits.  
  • Looking ahead to what the Biden administration needs to do,  the authors say that "one key priority will be building greater cooperation among partners and allies in the Americas. How it does so will be a determining factor for the future of supply chains, and the Americas overall."