The Office of the U.S. Trade Representative has released a series of six policy papers on trade and investment policy initiatives that promote supply chain resilience. It is unclear whether or how the Trump administration might consider or implement any of the approaches suggested in these papers.
One of these papers, titled “Reshaping the Global Trade Paradigm,” asserts that the U.S.’ trade and investment policy of the last several decades, “including the pursuit of traditional comprehensive free trade agreements, was designed to drive tariff liberalization and incentivize short-term cost-efficiency, profit maximization, and shareholder returns.” This approach shaped decisions that “in many cases, fostered geographically concentrated and operationally complex supply chains” and “helped enable supply chain bottlenecks that heighten the risk of volatility, harms to competition, and inflationary dynamics.” This fragility has been exacerbated by “disruptions wrought by a pandemic, war, and geopolitical tensions.”
Going forward, USTR states, the U.S. should consider how a new model of formal trade agreements could provide a broad and meaningful framework for achieving the principles and objectives of supply chain resilience. These agreements could target specific sectors, industries, or partners; e.g., by reducing tariffs for like-minded partners or allowing for partial or sectoral removal of trade preferences to encourage improvements in designated criteria. Such an approach “can enable greater precision in crafting disciplines and incentives addressed to resilience,” “affords more latitude to test innovative, new approaches and gauge their suitability for other sectors,” and allows agreements to be “negotiated and implemented on shorter timelines” to better address the rapidly-evolving nature of the opportunities and risks that shape supply chains.
Other papers issued by USTR (1) present trade policy approaches to support more resilient textile and apparel supply chains, (2) emphasize the need for preferential rules of origin in trade arrangements to create meaningful incentives to locate substantial production activities in the covered territories and for non-preferential ROO to inform the design of enforcement actions, (3) outline ways to address non-market policies and practices and their effects on supply chains (e.g., imposing tariffs or other measures to protect domestic investments in critical sectors), and (4) examine data and analytical challenges in measuring and assessing supply chain resilience, review U.S. government supply chain-related data gathering efforts, and outline new approaches and implications for harnessing existing and new data and analytics resources.
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