The Department of Commerce’s Advisory Committee on Supply Chain Competitiveness recently recommended that Commerce Secretary Gina Raimondo take a number of steps to further strengthen the resilience of U.S. supply chains.
The committee asserted that these supply chains “are healthier today than they have been at any point over the last three years” and that “these moments of calm and ‘normal’ business operations hold the greatest opportunity for you to lead in making constructive changes and to effectively address underlying problems, which are more difficult to resolve in times of crisis.” The committee therefore called on the DOC to work with U.S. Customs and Border Protection, the Federal Maritime Commission, and other federal agencies to implement the following actions.
Rules of Origin
The committee said that country of origin and tariff designations currently come from one step of a manufacturing process, typically assembly, which can account for the lowest value of the process. However, the committee pointed out that determinations of the value of components could consider the value added in each step of the manufacturing process, as well as intangible sources of value such as research and development and intellectual property, and that such changes “could incentivize companies to re-shore functions if they were able to claim credit towards U.S. production.”
The committee therefore recommended that the DOC initiate a study to identify the most immediate and impactful actions federal agencies can take to (1) re-evaluate current rules governing country of origin to account for the totality of the manufacturing process and the various stages from development to end products and (2) accelerate initiatives around trade modernization (e.g., digitization of entry processes, adoption of electronic bills of lading). This study should be provided to Congress to help with customs modernization legislation.
The committee urged federal agencies to conduct an assessment of what it would take to achieve a 20-day throughput time for shipping via ocean from Asia to the U.S. This effort might explore whether additional funding should be appropriated and allocated to CBP cargo processing and trade facilitation capabilities (e.g., advanced technologies like artificial intelligence/machine learning, robotic facilities, and non-intrusive imaging), or whether it would be helpful to prioritize potential improvements at U.S. ports and the inland transportation system where U.S. officials and stakeholders have greater opportunity to influence changes.
Pillar II of the Indo-Pacific Economic Framework focuses on promoting more resilient supply chains, but key details of recommendations in this area have been under legal review since May. The committee recommended that its Data Innovation and Technology Subcommittee be engaged for feedback on the best ways to achieve Pillar II goals, stating that “understanding what data can be easily provided by industry will help ensure that the agreement is successful.”
Manufacturing Data Platform
The committee said manufacturers often have limited data, with little visibility on what happens in the bigger supplier network, which can result in situations where a small dip in demand can lead to amplified orders and reactions. The committee therefore urged the creation of a blueprint for the development of a manufacturing data platform that provides visibility of demands and orders at multiple levels of a supply chain, from downstream to upstream, adding that this effort should leverage lessons learned from ongoing related efforts to the greatest extent possible.
Stating that efforts to create early warning systems often face obstacles such as data quality, data provenance, data security, data anonymization, access controls, automation, etc., the committee suggested convening a summit intended to (1) highlight new developments and future opportunities in data sharing efforts, (2) identify best practices to overcoming common obstacles, (3) showcase both public and private sector led approaches, (4) identify remaining gaps, opportunities, and help needed to make progress, and (5) review the standards environment to highlight current and in-development standards efforts as well as opportunities and needs for new standards and specifications.
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