White House Sets Out Action Plan for Supply Chain

The White House on June 8 released the findings of a 100-day review of critical supply chains. 

The report was based on an order President Biden signed,  E.O. 14017, onn February 24, 2021, directing a whole-of-government approach to assessing vulnerabilities in, and strengthening the resilience of, critical supply chains.

Stemming from that effort, the Biden-Harris Administration said it  has already begun to take steps to address supply chain vulnerabilities:

• The Administration’s COVID-19 Response Team has drastically expanded the manufacture of vaccines and other essential supplies, enabling more than 137 million Americans to get fully vaccinated.
• The Administration has also worked with companies that manufacture and use semiconductor chips to identify improvements in supply chain management practices that can strengthen the semiconductor supply chain over time.
• The Department of Defense (DOD) has announced an investment in the expansion of the largest rare earth element mining and processing company outside of China to provide the raw materials necessary to help combat the climate crisis. 
• And the Biden-Harris Administration is working to address critical cyber vulnerabilities to U.S. supply chains and critical infrastructure, including issuing E.O. 14028 on “Improving the Nation’s Cyber Security” just last month. 

Building on these efforts, the Administration released findings from the comprehensive 100-day supply chain assessments for four critical products: semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceuticals and active pharmaceutical ingredients (APIs).

The Administration is taking immediate action to address vulnerabilities and strengthen resilience with the launch of a new effort aimed at addressing near-term supply chain disruptions. And, pursuant to E.O. 14017, it is crafting strategies for six industrial bases that underpin America’s economic and national security, which will be completed within a year. The supply chain reviews reinforce the need for the transformative investments proposed in the President’s American Jobs Plan.  

“Today’s report recognizes that the strength and resilience of our economy depends on investing in manufacturing and in workers here at home and in rebuilding safe, secure, and responsible production and manufacturing of the clean technologies and advanced materials essential to our economy today and tomorrow," said  BlueGreen Alliance  Executive Director Jason Walsh in a statement. "Additionally, the report highlights the importance of responsible, fair, and safe production of critical minerals and of onshoring and strengthening domestic manufacturing of the advanced materials, components, and technologies essential for the future of transportation and energy.. We look forward to working with the administration and Congress to make essential reinvestments in production, innovation, and good union jobs—like those included in the American Jobs Plan—a reality for manufacturing workers and communities across America.”

The administration said that it will take these actions:

Support domestic production of critical medicines

• The Department of Health and Human Services (HHS), under the Defense Production Act (DPA) and building on current public-private partnerships, will establish a public-private consortium for advanced manufacturing and onshoring of domestic essential medicines production. The consortium’s first task will be to select 50-100 critical drugs, drawn from the Food and Drug Administration’s essential medicines list, to be the focus of an enhanced onshoring effort.
• HHS will make an initial commitment of approximately $60 million from the Defense Production Act appropriation in the American Rescue Plan to develop novel platform technologies to increase domestic manufacturing capacity for API. Greater API production domestically will help reduce reliance on global supply chains for medications that are in shortage, particularly during times of increased public health need.

Secure an end-to-end domestic supply chain for advanced batteries

• The Department of Energy (DOE) will release a National Blueprint for Lithium Batteries. This Blueprint will codify the findings of the battery supply chain review in a 10-year, whole-of-government plan to urgently develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America. Later this month, the Department of Energy will host a Battery Roundtable, including representatives from each segment of the battery supply chain, to discuss the Blueprint.
• DOE’s Loan Programs Office (LPO) will immediately leverage the approximately $17 billion in loan authority in the Advanced Technology Vehicles Manufacturing Loan Program (ATVM) to support the domestic battery supply chain. LPO will leverage full statutory authority to finance key strategic areas of development and fill deficits in the domestic supply chain capacity. This will include the ATVM program making loans to manufacturers of advanced technology vehicle battery cells and packs for re-equipping, expanding or establishing such manufacturing facilities in the United States.
• DOE’s Federal Energy Management Program (FEMP) will launch a new effort to support deployment of energy storage projects by federal agencies. It will begin with a federal government-wide energy storage review that will evaluate the current opportunity for deploying battery storage at federal sites. FEMP will also launch a call for projects from federal sites interested in deploying energy storage projects, and provide the necessary technical assistance to get those projects built. These actions build on steps taken earlier this year to leverage $13 million in FEMP’s Assisting Federal Facilities with Energy Conservation Technologies grants to unlock an estimated $260 million or more in project investments, including battery storage projects.

Invest in sustainable domestic and international production and processing of critical minerals

• The Department of Interior (DOI), with the support of the White House Office of Science and Technology Policy, will establish a working group composed of agencies such as the Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) to identify sites where critical minerals could be produced and processed in the United States while adhering to the highest environmental, labor, and sustainability standards. This working group will collaborate with the private sector, states, Tribal Nations, and stakeholders—including representatives of labor, impacted communities, and environmental justice leaders—to expand sustainable, responsible critical minerals production and processing in the United States.
• The Administration will establish an interagency team composed of staff from agencies including DOI, USDA, EPA, and others with expertise in mine permitting and environmental law. This team will identify gaps in statutes and regulations that may need to be updated by Congress to ensure: new production meets strong standards before mining begins, during the mining process, and after mining ends; meaningful community engagement and consultation with Tribal Nations, respecting the government-to-government relationship at all stages of the mining process; and opportunities to reduce time, cost, and risk of permitting without compromising strong environmental and consultation benchmarks are fully explored. 
• DOD will deploy DPA Title III incentives—including grants, loans, loan guarantees, and offtake agreements—to support sustainably-produced strategic and critical materials, including scaling proven research and development (R&D) concepts and emerging technologies from other programs such as the Small Business Innovation Research awardees.
• The DOE LPO, through its Title 17 Renewable Energy and Efficiency Energy Projects solicitation, has more than $3 billion in loan guarantees available to support efficient end-use energy technologies, such as mining, extraction, processing, recovery, or recycling technologies, of critical materials projects that satisfy Title 17 requirements.
• The U.S. Development Finance Corporation will expand international investments in projects that will increase production capacity for critical products, including critical minerals and other products identified pursuant to the E.O. 14017 process, ensuring that investments that support supply chain resilience and uphold international standards of environmental and social performance.

Partner with industry, allies, and partners to address semiconductor shortages

• Through strategic engagement with industry, the Department of Commerce (DOC) has supported nearly $75 billion in direct investments from the private sector in domestic semiconductor manufacturing and R&D. DOC will bolster its partnership with industry to facilitate information flow between semiconductor producers and suppliers and end-users. Leveraging the Department’s convening power, including through its advisory committees, DOC will bring stakeholders together to promote improved transparency and data sharing.
• Building on the success of recent engagements with Japan and the Republic of Korea, including the announcement of more than $17 billion in U.S. semiconductor investments by leading companies in ROK, the Administration will strengthen engagement with allies and partners to promote fair semiconductor chip allocations, increase production, and promote increased investment.

In addition to the immediate actions taken in the supply chains of the critical products identified in E.O. 14017, the Administration is also announcing a series of actions to be taken across the Federal government to support supply chain resilience, workforce development, production and innovation, and strong sustainability and labor standards at home and abroad.

The Administration will:

Support American workers and innovation

• The Department of Labor (DOL) will announce later this month more than $100 million in grants to support state-led apprenticeship expansion efforts as well as establish national Registered Apprenticeship Technical Assistance Centers of Excellence. The Apprenticeship Occupations and Standards Center of Excellence will provide support and technical assistance to employers and industry to build out model registered apprenticeship programs in critical supply chains.
• DOE will announce a new policy to ensure that all innovations that are developed with taxpayer dollars through DOE’s Science and Energy Programs require awardees to substantially manufacture those products in the United States, creating good-paying domestic jobs. This change will cover more than $8 billion in clean energy and climate innovation funding requested in the President’s Budget for Fiscal Year 2022, as well as future fiscal year spending. DOE will implement these actions through a Determination of Exceptional Circumstances under the Bayh-Dole Act. Additionally, the Administration will establish an interagency working group to identify best practices to develop and implement further improvements across the government.                                                             

Invest in sustainable supply chains at home and abroad

• The Federal Acquisition Regulatory Council, in connection with the implementation of Executive Order 14005, “Ensuring the Future is Made in America with All of America’s Workers,” plans to issue a proposed rule to develop a new process for preferencing critical products that are in manufactured products or component parts, under the Buy American Act. This will leverage the buying power of the nearly $600 billion in federal contracting to strengthen domestic supply chains for critical products. 
• USDA will commit more than $4 billion in a new, robust suite of Build Back Better initiatives focused on rebuilding the U.S. food system and strengthening and diversifying supply chains for food production, food processing, food distribution and aggregation, and markets and consumers. Build Back Better efforts by USDA will seek to provide improved access to nutritious food, address racial equity and justice as well as climate change, make markets fair and competitive, provide ongoing support for producers and workers, and create greater resilience in the food supply chain.
• The President will convene a global forum on supply chain resilience that will bring together key government officials and private sector stakeholders from across key U.S. allies and partners to collectively assess vulnerabilities, develop common approaches to supply chain challenges, and work to build strength through diversity and shared prosperity.

Combat unfair trade practices

• The Administration will establish a trade strike force led by the U.S. Trade Representative to propose unilateral and multilateral enforcement actions against unfair foreign trade practices that have eroded critical supply chains. The trade strike force will also identify opportunities to use trade agreements to strengthen collective approaches to supply chain resilience with U.S. partners and allies.
• DOC will evaluate whether to initiate an investigation into neodymium magnets, which are critical inputs in motors and other devices, and are important to both defense and civilian industrial uses, under Section 232 of the Trade Expansion Act of 1962.

Tackling Near-Term Supply Chain Disruptions As the Economy ReopensThe Administration’s historic vaccination and economic relief efforts have spurred a rapid return of economic activity. As the United States and the broader global economy emerge from the pandemic, we have seen signs of new pressures on supply chains due to changes in demand. While these short-term supply chain disruptions are temporary, the President has directed his Administration to closely monitor these developments and take actions to minimize the impacts on workers, consumers, and businesses in order to bolster a strong economic recovery. To address these challenges, the Administration will:

Establish a whole-of-government effort to monitor and address transitory supply chain challenges

• The Administration will establish new Supply Chain Disruptions Task Force to provide a whole-of-government response to address near-term supply chain challenges to the economic recovery. The Task Force will be led by the Secretaries of Commerce, Transportation, and Agriculture and will focus on areas where a mismatch between supply and demand has been evident: homebuilding and construction, semiconductors, transportation, and agriculture and food. The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions—large and small, public or private—that could help alleviate bottlenecks and supply constraints. 
• DOC will lead a coordinated effort to bring together data from across the federal government to improve the federal government’s ability to track supply and demand disruptions and facilitate information sharing between federal agencies and the private sector to more effectively identify near-term risks and vulnerabilities.

Charting A New Course: Toward a Long-Term Strategy for Strengthening U.S. Supply Chain Resilience

President Biden believes this is the moment to reimagine and rebuild a new American economy, not go back to the way things used to be. The report delivered to the President offers six sets of recommendations that, collectively, will not only strengthen the four prioritized supply chains but will rebuild the U.S. industrial base and restart our innovation engine.

Key Recommendations Include:

Rebuild America’s production and innovation capabilities. Long-term competitiveness will require an ecosystem of production, innovation, skilled workers, and diverse small and medium-sized suppliers. Those ecosystems are the infrastructure needed to spur private sector investment in manufacturing and innovation. But that infrastructure cannot be created or sustained without the support and leadership of the federal government. Specific recommendations to rebuild our industrial base for critical sectors include:

• Provide dedicated funding for semiconductor manufacturing and R&D: We recommend Congress support at least $50 billion in investments to advance domestic manufacturing of critical semiconductors and promote semiconductor R&D.
• Provide funding and financial incentives to spur consumer adoption of EVs and other EV incentives: We recommend Congress authorize new and expanded incentives to spur consumer adoption of U.S.-made electric vehicles. In addition, we recommend Congress support $5 billion in investments to electrify the federal fleet with U.S.-made EVs, and $15 billion in infrastructure investment to build out a national charging infrastructure to facilitate the adoptions of EVs.
• Provide financing to support advanced battery production: DOE should use existing authorities and funding to support U.S. manufacturing of advanced technology vehicle battery cells.
• Establish a new Supply Chain Resilience Program: We recommend Congress enact a Supply Chain Resilience Program at DOC to create a focal point within the government to monitor and address supply chain challenges. This program should be backed with $50 billion to make transformative investments in strengthening U.S. supply chains across a range of critical products.  
• Deploy the DPA to expand production capacity in critical industries: A DPA Action Group should determine how best to leverage the authorities of the DPA to strengthen supply chain resilience, building off work done to respond to the COVID-19 pandemic.
• Invest in the development of next generation batteries: Agencies should support technologies that will reduce the critical mineral requirements for next generation electric vehicle batteries and grid storage technologies, and that improve U.S. competitiveness in this critical sector.
• Invest in the development of new pharmaceutical manufacturing processes: Agencies should increase their funding of advanced manufacturing technologies to increase production of key pharmaceuticals and ingredients, including using both traditional manufacturing techniques and on-demand manufacturing capabilities for supportive care fluids, APIs, and finished dosage form drugs.
• Work with industry and labor to create pathways to quality jobs, with a free and fair choice to join a union, through sector-based community college partnerships, apprenticeships and on-the-job training: DOL’s Employment and Training Administration should support sector-based pathways to jobs, for example in the semiconductor industry. 
• Invest in small, medium and disadvantaged businesses in critical supply chains: The Small Business Innovation Research and Small Business Technology Transfer competitive programs should support a diverse portfolio of small businesses to meet R&D needs, and increase commercialization. 
• Examine the ability of the U.S. Export-Import Bank (EXIM) to use existing authorities to support U.S. manufacturing of products: EXIM should develop a proposal for Board consideration regarding whether EXIM should establish a new Domestic Financing Program that would provide financing to support the establishment and/or expansion of U.S. manufacturing facilities and infrastructure projects in the United States that would facilitate U.S. exports.

Support the development of markets that invest in workers, value sustainability, and drive quality. These reports identify key areas where government could play a more active role in setting standards and incentivizing high-road business practices. By establishing strong domestic standards and advocating for the establishment of global standards, the United States can support the private sector’s ability to create and adopt sustainable and resilient practices.

• Create 21^st century standards for the extraction and processing of critical minerals at home and abroad: The government, working with private sector and non-governmental stakeholders, should encourage the development and adoption of comprehensive sustainability standards for essential minerals, such as lithium, cobalt, nickel, copper, rare earth elements, and other materials.
• Identify potential sustainable production and processing locations for critical minerals:  The United States’ non-fuel mineral resources are significantly under-mapped relative to those of other developed nations. Congress should fully resource programs like the U.S. Geological Survey’s Mineral Resources Program at DOI to develop a comprehensive map of domestic critical mineral resources and reserves.
• Improve transparency throughout the pharmaceuticals supply chain: HHS should develop and make recommendations to Congress on new authorities that would allow HHS to track production by facility, track API sourcing, and require that API and finished dosage form sources be identified on labeling for all pharmaceuticals sold in the United States. 

Leverage the government’s role as a purchaser and investor in critical goods. As a significant customer and investor, the Federal Government has the capacity to shape the market for many critical products. The public sector can deploy this power in times of crisis, as in the case of Operation Warp Speed, or in normal times. The Administration should leverage this role to strengthen supply chain resilience and support national priorities.

• Reform and strengthen U.S. stockpiles: The Administration and Congress should take actions to recapitalize and restore the National Defense Stockpile of critical minerals and materials. In the private sector, industries that have faced shortages of critical goods should evaluate mechanisms to strengthen corporate stockpiles of select critical products to ensure greater resilience in times of disruption.
• Ensure that new automotive battery production in the United States adheres to high labor standards: Tax credits, lending and grants offered to businesses to produce batteries domestically should ensure the creation of quality jobs with the free and fair choice to organize and bargain collectively for workers.

Strengthen international trade rules, including trade enforcement mechanisms. While fair competition from abroad is welcome, too often unfair foreign subsidies and other trade practices have adversely impacted U.S. manufacturing and more broadly, U.S. competitiveness. The U.S. government must implement a comprehensive strategy to push back on unfair foreign competition that erodes the resilience of U.S. critical supply chains and industries.

• Develop a comprehensive trade strategy to support fair and resilient supply chains: The Administration should develop a comprehensive trade strategy to support supply chain resilience and U.S. competitiveness. Supply chain resilience should be incorporated into the U.S. trade policy approach towards China, including in the ongoing review of U.S.-China trade policy. The Administration should also examine existing U.S. trade agreements to identify ways to strengthen collective supply chain resilience.

Work with allies and partners to decrease vulnerabilities in the global supply chains. The United States cannot address its supply chain vulnerabilities alone. Even as the U.S. makes investments to expand domestic production capacity for some critical products, we must work with allies and partners to secure supplies of critical goods that we will not make in sufficient quantities at home. We must work with America’s allies and partners to strengthen our collective supply chain resilience, while ensuring high standards for labor and environmental practices are upheld. 

• Use diplomatic tools to encourage and facilitate resilient supply chains: The U.S. should expand multilateral diplomatic engagement on supply chain vulnerabilities, particularly through groupings of like-minded allies such as the Quad and the G7.
• Leverage financial tools to support sustainable and resilient international supply chains: U.S. development and international finance tools offer a powerful avenue for working with allies and partners to strengthen supply chains for key products. The U.S. should explore initiatives and mechanisms for investing in projects to expand production in critical supply chains. Even as the U.S. expands the manufacture and mining of critical products domestically, it must take steps to ensure that the manufacturing and mining that takes place abroad supports supply chain resilience and meets high labor and environmental standards.