U.S. trade chief Tai calls for more diverse, resilient supply chains

5:16 am Thursday, June 15th, 2023

By Andrea Shalal

WASHINGTON (Reuters) – U.S. Trade Representative Katherine Tai on Thursday will call for continued work to redesign global supply chains to emphasize resilience and a more diverse set of economies producing steel, aluminum and other goods.

In a speech at the National Press Club, Tai will explain how decades of trade policies focused on efficiency and low costs led to fragile supply chains and an “unsustainable version of globalization”, according to excerpts released by her office.

The excerpts show Tai offering a spirited defense of the Biden administration’s decision to eschew traditional trade agreements, arguing that such deals contributed to the vulnerability of supply chains exposed during the COVID-19 pandemic, and a major shift was needed.

Focusing on efficiency and low cost meant those agreements had allowed free riders – other countries who had not signed up to labor, environmental and other obligations – to produce significant content and benefit from those rules.

Instead, U.S. officials were focused on a more sustainable approach that prioritizes the needs of workers and producers and sees standards improve over time, said Tai, who has faced criticism for not pursuing traditional trade agreements.

“Resilient supply chains are vital for greater national and economic security,” she said in the excerpts, citing a need for production which can adapt to crises more easily because it has more options in different regions.

“But getting there requires a fundamental shift.  A shift in the way we incentivize decisions about what, where, and how we produce goods and supply services.”

Building resilient supply chains is a key goal in the administration’s Indo-Pacific Economic Framework discussions, Tai said, referring to work underway by 14 countries in the U.S.-led initiative, which is aimed in part at providing countries in Asia an alternative to closer ties with China.

U.S. officials are aiming for more results by the time of the Asia Pacific Economic Cooperation (APEC) leaders summit in San Francisco in November.

“A lot of what we are trying to do is orient the rules toward working people, the environment, and small businesses,” she said, drawing a sharp contrast to the “traditional priority” long placed on promoting the interest of the ‘bigs.’

(Reporting by Andrea Shalal; Editing by Shri Navaratnam)