Why has the US launched a supply chain review?

The Biden administration in the US  is to conduct a supply chain review of “critical and essential goods”.

The review, which will cover rare earth metals, semiconductors, car batteries and pharmaceuticals, follows shortages of key supplies and an increasing awareness of dependency on foreign resources.

The administation announced an executive order would be signed to launch a 100-day review into four key products, followed by an “in-depth” one-year review across the wider supply chain.

“While we cannot predict what crisis will hit us, we should have the capacity to respond quickly in the face of challenges,” it said in a statement.

“The United States must ensure that production shortages, trade disruptions, natural disasters and potential actions by foreign competitors and adversaries never leave the United States vulnerable again.”

The administration said it needed to invest in its pharmaceutical sector, as “more than 70% of API [active pharmaceutical ingredients] production facilitators supplying the US have moved offshore in recent decades”.

“Over the years we have underinvested in semiconductor production – hurting our innovative edge – while other countries have learned from our example and increased their investments in the industry,” it added.

Meanwhile, identifying supply chain risks across battery production would help “accelerate leadership of clean energy technologies”, and enable better use of resources, such as the country's “sizable lithium reserves and manufacturing know-how”.

The US also plans to support rare earth mineral production to remove “dependence upon foreign sources or single points of failure”, as the largest current sources remain concentrated in China and Australia.

A wider, one-year review will assess six key sectors: public health, defence, ICT, energy, transportation, and agriculture and food. The government asked departments to identify "critical" goods, manufacturing needs, and risks due to lack of domestic capabilities.

This will be the start of regular supply chain assessments and consultations with external stakeholders, such as NGOs, labour unions and local councils.

Gordon Flake, CEO of the Perth USAsia Centre at The University of Western Australia, told Sky News Australia the country would need to be “trusted” part of the US supply chain, as it has the only commercial-scale rare earths processing company outside of China.

“It’s good to see the United States taking a focus on this looking at it through the prism of supply chains because it’s through that context that Australia’s importance is self-evident,” he said.

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