Review: U.S. Executive Order on Supply Chains
Within the first weeks into his presidency, President Biden issued a comprehensive Executive Order (EO) on America’s Supply Chainson February 24, 2021. Through supply chain diversification of critical components and reduced reliance on foreign suppliers, the order aims to bolster the government’s efforts in economic prosperity and national security. Moreover, it also addresses how supply chains can enable innovations in research and development, generate well-paying jobs, support small businesses, advance environmental sustainability, and create opportunities within socioeconomically disadvantaged communities.
The United States needs resilient, diverse, and secure supply chains to ensure our economic prosperity and national security. Pandemics and other biological threats, cyber-attacks, climate shocks and extreme weather events, terrorist attacks, geopolitical and economic competition, and other conditions can reduce critical manufacturing capacity and the availability and integrity of critical goods, products, and services.
To strengthen the resilience of America’s supply chains, the EO sets up four concrete actions to be completed in milestones:
Coordination. The Assistant to the President for National Security Affairs (APNSA) and the Assistant to the President for Economic Policy (APEP) will be responsible for coordinating with the executive branch and consulting with outside stakeholders (industry experts, academia, local government) to fulfill the EO.
100-Day Review. Within 100 days of the EO (i.e. by June 4, 2021), cabinet Secretaries including Commerce, Energy, and Defense shall submit a report that identifies supply chain risks and provides recommendation to address those risks in four key commodities: semiconductors, high-capacity batteries, rare earth minerals, and pharmaceutical ingredients.
Sectoral Assessments. Within one year of the EO (i.e. by February 24, 2022) cabinet Secretaries including Homeland Security, Transportation, and Agriculture shall submit reports on their respective sectors to address the defense, intelligence, cyber, homeland security, health, climate, environmental, natural, market, economic, geopolitical, human rights, or other contingencies that may disrupt, strain, compromise, or eliminate supply chains. Specific executive, legislative, regulatory, and policy changes shall also be included to mitigate these risks.
Review and Recommendations. Following the Sectoral Assessments, APNSA and APEP shall submit a follow-up report that reviews the actions taken over the previous year (2022) and makes further recommendations. It also establishes a quadrennial supply chain review and actions with allies and partners to strengthen supply chains jointly.
The 100-Day Review and Sectoral Assessments will be submitted in an unclassified form, opening up the possibility for the public to review those findings as well.
Although there are no statutory, regulatory, procedural, or institutional changes being implemented now, it is the right step toward securing not only U.S. supply chains but those of global allies as well. Impactful advancements in supply chain security will require substantial legislation and funding — actions that the President alone cannot enact. On the positive side, there is bipartisan support on both sides of the aisle, further underlining the importance of this issue.
President Biden’s Executive Order is one of the most comprehensive reviews of supply chains in U.S. history. Not only does it address traditional operational risks such as sole sourcing and manufacturing capacity, it also confronts emerging threats in climate change, cyber security, workforce development, and financing. If successful in its goal, the Executive Order will better position the U.S. and its allies against the next threats to supply chains. After all, it is not a question of if another global supply chain crisis will occur, but when.
