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The White House on Tuesday announced a plan to produce more crucial drugs in the United States through the expanded implementation of the Defense Manufacturing Act, a relic of the Cold War this gives the president the authority to direct industrial production for national defense purposes.
The decision comes after a coronavirus pandemic exposed vulnerabilities in an already fragile supply chain system.
It is also part of a broader strategy to reduce the shortage of key goods that President Biden says is crucial to national security, while making the United States more competitive against its main economic rival, China.
The announcement on Tuesday followed an administrative review of 100 days in the supply chain, the result of an an executive order signed by Biden in February.
The review was tasked with examining four key sectors:
- pharmaceutical products;
- semiconductor chips;
- high-capacity batteries, such as those used in electric vehicles;
- and critical minerals.
“For too many years, we have allowed our production capacity for critical goods to migrate abroad, instead of investing in support of American production and American workers,” a senior administration official told reporters.
Biden intends to use section 232 of the Trade Expansion Act to investigate whether imports of Chinese neodymium magnets – commonly used in cars – harm national security and whether protections such as tariffs are needed. Tariffs under Article 232 are known use former President Donald Trump to protect U.S. steel and aluminum producers from imports, and were challenged at the World Trade Organization.
The Directorate has also detailed plans for a public-private consortium that will select 50 to 100 drugs from the Food and Drug Administration’s list of essential drugs and focus on their production in the United States. The White House intends to invest $ 60 million in domestic drug production for key drugs that are not enough.
Biden will also establish a “trade strike force” led by a U.S. trade representative that could execute some sort of punishment for unfair trade practices that erode critical supply chains.
“We do not want to wage trade wars with our allies and partners,” an administration official said. “We look at highly targeted products where we think there are effective tools we could apply to strengthen our own supply chains and reduce vulnerabilities.”
Here’s what’s still in review:
– Mining: The review calls on the Department of the Interior to “identify places where critical minerals could be produced and processed in the United States.”
– Advanced batteries: The review also outlines steps towards building a domestic supply chain of advanced batteries.
– Semiconductors: As for addressing semiconductor deficiency – which experts say could last until next year – the review does not offer clear guidelines. He recommends that Congress pass a law that could help strengthen domestic production and research and development.
The White House has also increased its work on cooperation with allies and partners on the import of materials, especially on semiconductors. Intel is expanding its capacity, and Samsung is also considering investing.
The review insists that any long-term change would require deeper investment, such as a master infrastructure plan that remains to be debated in Congress.
The White House is also announcing plans for a supply chain disruption task force to address bottlenecks in some key industries: semiconductors; house building and construction; transportation; and agriculture and food.