NEW REPORT: Addressing U.S. and EU Supply Chain Frailty and Security Risks

The Open Markets Institute recently submitted the following report in response to a request for comment on addressing supply chain fragility and security risks in critical sectors by the Bureau of Industry and Security to inform the U.S. - EU Trade and Technology Council Secure Supply Chains Working Group.

Open Markets' comments focus on identifying points of vulnerability in supply chains and policies that the Supply Chains Working Group should take to strengthen supply chain resilience, diversification, and security in semiconductors and material inputs, solar photovoltaics, critical minerals and materials, lithium-ion batteries, and pharmaceuticals.

Our report makes clear that the Biden Administration must greatly speed up its efforts to map out and rebuild the core industrial capacities on which the American people most depend.

Open Markets' research over the past few decades has shined a light on the pitfalls of geographic and corporate concentration on the industrial capacity of critical sectors. "The concentration of capacity in these sectors pose an enormous threat to the economic and national security of the U.S. and the EU, as well as key allies in Asia, such as Japan, South Korea, and Taiwan," says Open Markets Institute Reporter - Researcher Garphil Julien. "While the U.S. and EU have taken steps in the right direction, like beginning to re-distribute industrial capacity for critical goods, to truly address the supply chain problem we must break up monopolistic control over key production systems at home and abroad."

Key Takeaways from Open Markets' Comments include:

• While the U.S. and Europe have major vulnerabilities in securing the supply chain of key goods, both governments also have a comparative advantage in the production of key materials needed by foreign adversaries and allies.
• The Concentration of Industrial Production needs to be broken not only in regions such as East Asia, but also in the United States and Europe.
• Numerous actions can be taken to widely distribute supply chains such as: using trade tools to break China's chokehold on the production of key materials, forcing U.S. companies to audit and fully report supply chain chokepoints, using the Defense Production Act to bolster production of materials in vulnerable sectors, forcing companies to multi-source essential components, stockpiling critical materials, and strengthening the review process for foreign acquisitions.

Read the full report here.