How Biden can build supply chain resilience

7 January 2021

The next US administration should help businesses build resilient supply chains through nearshoring, according to a report.

The report, by law firm Baker McKenzie, said the government should align policies with business's strategies to diversify supply and decrease risks by localising production and using more suppliers from nearby countries including Columbia and Mexico.

President-elect Joe Biden, due to be inaugurated as the 46th president on 20 January, has made it a future priority to collaborate with the Americas to make supply chains stronger and improve productivity and trade.

Certainty around tax, trade, and labour policies is also needed to help businesses make faster decisions around “investments, commercial contracts, and overall supply chain strategy”, said the report.

Christina Conlin, partner of the International Commercial Practice Group at Baker McKenzie, said: “Supply chain stability and resilience can be enhanced by the US administration providing quick, clear guidance on its intended tax, labour, and trade policies to support diversification of the supply chain.

“The disruption from Covid-19 has placed a new emphasis on companies’ strategies for reshoring, nearshoring, or multi-jurisdictional diversification of suppliers. Covid-19 laid bare the need to diversify all tiers of suppliers to more than one location or region.”

The report covered a range of topics addressing how the Biden administration can improve trade, responses to a national emergency, and import and export issues.

It also discussed key future industry supply chain trends and how different elements will contribute to supply chain resilience, including an acceleration of ESG governance and technological innovation.

Jason Marczak, director of the Adrienne Arsht Latin America Center at the Atlantic Council, who contributed to the report, said supply chain resilience could be built through existing trade agreements that ensure “free flow of commerce”, as well as facilitating more “efficient” coordination of supply within regions.

He recommended creating mechanisms to tackle major disruptions in “essential industries” and investing in physical and digital infrastructure. 

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