On February 24, 2021 President Biden signed an Executive Order with the intention of creating more resilient and secure supply chains for what the administration has deemed to be “critical and essential goods.” The Biden Administration stated that shortages of personal protective equipment for front-line healthcare workers at the beginning of the COVID-19 pandemic were “unacceptable,” and that recent shortages of automotive semiconductor chips have forced slowdowns at car manufacturing plants, highlighting how shortages can impact U.S. workers and consumers. While the administration has stated it cannot predict what crisis may appear next, the Order hopes to lay the groundwork necessary to allow the nation to quickly respond in the face of any future challenges.
First, the Order instructs federal agencies to conduct an immediate 100-day review of vulnerabilities in the supply chains of four key products.
APIs, the part of a pharmaceutical product that contains the active drug;
Critical minerals and other identified strategic materials, including rare earth elements;
Semiconductors and advanced packaging; and
Large capacity batteries
The review is aimed at identifying near term steps the administration can take, with the support of Congress, to address vulnerabilities in the supply chains of these critical goods. As stated by the Biden Administration, the COVID-19 pandemic has underscored concerns related to the ongoing offshoring of many critical goods, further stating that in recent decades more than 70 percent of API production facilitators supplying the U.S. have moved offshore. Likewise, the administration stated that the U.S. has “underinvested” in semiconductor production while other countries have simultaneously increased their investments in the industry. While the U.S. is a net exporter of electric vehicles and the Biden Administration has so far placed a large emphasis on electric vehicle innovation and production, the U.S. is not a leader in the supply chain associated with large capacity electric battery production, according to the Administration. The Order directs the U.S. to better leverage the country’s sizeable lithium reserves and manufacturing capabilities to expand domestic battery production capabilities.
Second, the Order calls for a more in-depth one-year review of a broader set of U.S. supply chains, directing federal agencies to review a variety of risks to supply chains and industrial bases. The following supply chains and industrial bases are subject to a one-year review:
The defense industrial base;
The public health and biological preparedness industrial base;
The information and communications technology (ICT) industrial base;
The energy sector industrial base;
The transportation industrial base; and
The supply chains for agricultural commodities and food production
As part of this review, agencies and departments are directed to identify locations of key manufacturing and production assets, highlight the availability of substitutes or alternative sources for critical goods, examine the state of workforce skills and identified gaps for all sectors, and study the role of transportation systems in supporting supply chains and industrial bases. Agencies and departments are further directed to make specific policy recommendations to address identified risks related to each area.
Finally, the Assistant to the President for National Security Affairs (APNSA) and the Assistant to the President for Economic Policy (APEP), in coordination with the heads of appropriate agencies are directed to provide the President “one or more” reports making recommendations concerning Federal incentives along with any amendments to Federal procurement regulations that may be deemed necessary to attract and retain investments in critical goods, including any new programs that might encourage both domestic and foreign investment in critical goods and materials.
If you have any questions or would like more information about the Executive Order on America’s Supply Chains do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.