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July 21, 2022

Supply chain resilience is key to new international effort

A new international collaboration aims to alleviate near-term disruptions and prevent any future global supply chain risks.

By Michelle Russell

The US has partnered with 17 other economies in an attempt to build long-term resilience in the supply chain through more diversification, in addition to a push on sustainability and improved transparency.

The cooperation, which was announced yesterday (20 July) at the Supply Chain Ministerial Forum, is aimed at alleviating near-term disruptions and preventing any future global supply chain risks.

The US’ 17 partners, including the UK, the European Union, Australia, Brazil, Canada, the Democratic Republic of the Congo, India, Indonesia, Italy, Japan, Korea, Mexico, the Netherlands, Singapore, and Spain, will focus on transportation, logistics and supply chain disruptions and bottlenecks.

“The shocks to global supply chains from pandemics, wars and conflicts, extreme climate impacts, and natural disasters have put in stark relief the urgent need to further strengthen supply chains, to work to reduce and end near-term disruptions, and to build long-term resilience. This is a global challenge we intend to approach resolutely and cooperatively,” the nations said in a joint statement.

“To ensure this effort is effective and reaches those most in need, we intend to engage on this work with businesses, workers, academia, labour and civil society, including women, representatives from local and other communities, consistent with Participants’ domestic laws and international obligations, and different levels of government.”

Focus will be on the following principles:

  • Promoting diversification and increasing global capacities for multiple, reliable, and sustainable sources of materials and inputs, intermediate goods, and finished goods in (as yet unidentified) priority sectors, along with logistics infrastructure capacities (e.g. promoting public and private investment into supply chains in priority sectors and encouraging partnerships and co-investment for access to and development of environmentally and socially responsibly sourced materials and inputs)
  • Identifying and addressing risks arising from supply dependencies and potential vulnerabilities in critical infrastructure, including working to eliminate corruption in support of supply chain security
  • Encouraging global sustainability and responsible business conduct across supply chains, including eradicating the use of forced labour, fostering the increased use of recycled materials and product components, and supporting the fair and sustainable manufacturing and trade of products
  • Promoting predictability, openness, fairness, and non-discrimination in economic relations as they impact supply chains
  • Promoting the involvement of small and medium-sized businesses in priority supply chains; the adoption of digital technologies by micro, small, and medium-sized companies; and investments into a broad range of communities
  • Transparency in consultations with the private sector, civil society, different levels of government, and other relevant stakeholders, including advancing information sharing, common approaches, and early warning systems about potential, emerging, and systematic supply challenges.

“To ensure this effort is effective and reaches those most in need, we intend to engage on this work with businesses, workers, academia, labour and civil society, including women, representatives from local and other communities, consistent with participants’ domestic laws and international obligations, and different levels of government,” they added.

The news came as Treasury Secretary Janet Yellen this week urged more work to ensure US supply chains shift more toward friendly countries and minimise reliance on China and other authoritarian regimes.

“Friend-shoring is about deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs,” Yellen said in a speech in South Korea.

“To make our supply chains more resilient we need to maintain strong economic ties with critical allies like Korea, while lessening the risks associated with the over-concentration of key supplies in unreliable countries.”

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