Biden's Executive Order Mandating Review of U.S. Supply Chains for Access to Critical Goods Is an Important First Step

The Biden administration's supply chain review should be welcome news for millions of Americans who were awakened to extreme U.S. supply chain vulnerabilities created by decades of hyperglobalization when they could not obtain critical goods during the COVID-19 crisis. The review must identify the sectors in which more U.S. production and diversification of import sources are necessary to create more resilient, reliable supplies.

Analysis conducted by Public Citizen of key medical and other COVID-19 response goods show the U.S. has grown even more dependent on imports from China and other nations during the COVID-19 crisis and is highly reliant on imports for certain categories of medicines.

"It's good the review extends beyond COVID-19 because thin globalized supply chains and concentration of production in too few locations leave us equally vulnerable to natural disasters that destroy critical infrastructure or computer viruses that undermine critical communications or energy systems," said Lori Wallach director of Public Citizen's Global Trade Watch. "The review must also consider the specific trade, procurement, subsidy, anti-trust and other policies needed to rebuild our resilience after decades of hyperglobalization gutted our domestic production capacity for essential goods and made us reliant on too few import sources."

The infographic display of this research shows that decades of hyperglobalization have undermined U.S. resilience against the COVID-19 crisis. Even into late 2020 as infections rose, the U.S. was unable to make or get critical goods people needed with growing shortages of Personal Protective Equipment (PPE). Corporate-rigged trade policies are to blame. These policies have eliminated more than 60,000 U.S. manufacturing facilities over the past 26 years and made it cheaper and less risky to move production overseas, pay workers less and trash the environment.

The infographics here show that:

• When it comes to critical medical goods, the U.S. has grown even more dependent on imports from China and the rest of the world. Data shows that the U.S.-China and U.S.-world deficits in COVID-19 related medical goods increased through June 2020 and did not returned to pre-pandemic levels in the fall of 2020.
• Data showing from what countries imports into the U.S. of key COVID-19 response goods are sourced over time. (Wherever possible, we include data showing volume, not only value. Volume more accurately represents what is being traded, given that the value data often reflects distortions in price caused by corporate tax manipulations and transfer pricing.)
• The U.S. has a deep reliance on China and India for many categories of medicines, as shown by information about the countries the U.S. imported medicines from in 2019.
• U.S. exports of masks to the world continued to spike through September 2020. In fact, when domestic demand was highest (between January and April 2020) there was a major increase in U.S. exports of critical medical goods to China.

The U.S. has the world's largest trade deficit, which leaves it extremely reliant on other countries for essential goods. As the COVID-19 crisis emerged in early 2020, instead of considering American's needs, U.S. government officials urged U.S. firms to expand exports to China of the limited domestic production of key medical goods. Effective implementation of the Defense Production Act (DPA) to purchase and domestically allocate PPE, ventilators and more would have preempted the export frenzy we see in the data.

With many critical medical goods made in just one or two countries, when workers there fall ill or governments prioritize their own peoples' needs before exporting critical goods, a worldwide shortage of masks, gloves, medicine and more quickly develops.

Long, thin globalized supply chains have made it difficult to quickly increase domestic production. With key inputs, parts and components only produced in a few locations, manufacturers could not scale up production during the crisis. Additionally, monopoly patent protections in many trade agreements expose countries to trade sanctions if they produce medicine, ventilators and more without approval by and payment to pharmaceutical and other firms.

With policymakers and the public distracted, corporate lobbyists are pushing for more of the same trade policies that hatched the unreliable supply chains now failing us all. Instead, we must fundamentally Rethink Trade. The goals should be healthy, resilient communities and economic well-being for more people - not the current priority of maximizing corporate profits.