Yesterday, the Senate Finance Committee Subcommittee on International Trade, Customs, and Global Competitiveness held a hearing entitled “Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security.” The witnesses in the hearing were:
- Scott Paul, President, Alliance for American Manufacturing
- Doug Potvin, CFO, Trinity Logistics
- Orit Frenkel, CEO, American Leadership Initiative
-
Gilman Louie, CEO, America’s Frontier Fund
Below are some key takeaways from the hearing prepared by Delta Strategy Group:
Subcommittee Chairman Tom Carper (D-DE)
- Americans are seeing the major impacts of supply chain challenges, namely heightened prices and empty shelves. While the pandemic has played a role is harming our supply chains, long term systematic flaws have existed well before the pandemic. We must rethink how we move goods across the globe. This begins by critically evaluating our infrastructure. We must also expand investment in technology. We must work with our global partners to improve our supply chains.
Subcommittee Ranking Member John Cornyn (R-TX)
- This administration’s Indo-Pacific Economic Framework (IPEF) is a positive step, but it is not a replacement to the Trans Pacific Partnership (TPP), and it does not do enough to open up new markets and truly address China’s influence in the region. U.S. firms are investing far too much into the Chinese economy. I believe that we should grant the US government visibility of all U.S. investment in foreign nation supply chains. I have also proposed a revised version of our National Critical Capabilities Defense Act to defend our critical capabilities.
-
The U.S. supply chains are broken, and the pandemic has only highlighted our reliance on global supply chains. We are increasingly dependent on imports largely from foreign adversaries. Our vulnerabilities reflect an outdated notion of the benefits of hyper-globalization. We must break the cycle of implementing policies that support imports over domestic production. Supply chain resiliency is not something the private sector can handle entirely alone.
-
Trade enforcement prevents leakage. Too often, we have lost good jobs and capacity because we are not enforcing agreements. The reason for trade enforcement is we have to have a rules-based system that our corporations can rely on. It sends a market signal that if they invest in the US, we will stand up to unfair trade practice that may affect them. The problem is that importers have figured out ways around these laws over the years. We can invest all we want in our domestic industries, but we must provide a level playing field for them.
Doug Potvin, CFO, Trinity Logistics
- Over the last two years, we have seen broken international supply chains. We are seeing freight volumes increase, so we need more people interested in interstate freight driving careers. The lack of a Federal Motor Carrier Safety Selection standard is crippling trucking companies and their ability to remain consistently safe. Highway safety must be improved.
Orit Frenkel, CEO, American Leadership Initiative
- Current supply shortages have raised awareness of our need to diversify supply chains and reduce dependency on adversarial supply chains. We must find balance between on-shoring and right-shoring. We need to rely on our allies for key goods, not China. The IPEF is focused on supply chain resiliency. The U.S. must invest in capacity building to fulling invest IPEF countries. Supply chains can also support green-sourcing. The recent U.S.-EU agreements can serve as a model for promoting eco-friendly supply chains and production.
- Taiwan would be a beneficial trade partner, but I understand the potential political concerns with including them in IPEF. Maybe one day down the line we could include Taiwan as a full member of IPEF.
Gilman Louie, CEO, America’s Frontier Fund
- The U.S. faces a new, full spectrum of competition against nations committed to out-investing and out-innovating the U.S. Underinvestment in foundational technologies has stifled investment and innovation. Countries in east Asia have created artificially attractive off-shoring investments. The U.S. has high barriers to entry for domestic advance manufacturing. Russia’s invasion of Ukraine highlights the perils of a fragile supply chain. Over the long term, we face a greater risk of being passed by China in technological innovation. We invite trouble by falling behind our adversaries.
- Moving forward, first, we must reimagine US manufacturing capabilities. Public funding must unlock necessary private capital. We must expand our talent pools at in all areas of education. Second, we must invest in promising technology hubs across the US. Third, we must disclose the risk of investing in authoritarian nations. Fourth, we must deepen our technology engagement with allies. We must embrace friend-shoring.