Skip to content

Leveraging Federal Procurement Policy to Secure America’s Supply Chains

Shortages of essential personal protective equipment (PPE) and medicines during the Covid-19 pandemic endangered the lives of many Americans and medical personnel, while the inflation-stoking shortages that have followed pandemic-caused lockdowns have illustrat­ed the dangers of disruptions to supply chains of many kinds. At the same time, the deepening military and strategic rivalry between the United States and China and the crisis that has followed Russia’s invasion of Ukraine have caused alarm over the extent of the dependence of U.S. military and civilian industries, as well as consumers, on China and Russia in particular.

Minimizing supply chain disruptions that can endanger U.S. national security, the economy, and long-term national productivity will require an all-of-government approach encompassing many agencies and mo­dalities, and including different areas of public policy, from trade to tax policy and government-supported R&D. Together with other reforms, leveraging more than $600 billion in annual federal government procure­ment contracts can make a major contribution to achieving these goals.

Domestic content rules and trusted sourcing as elements of federal procurement policy can play an important role in ensuring the resilience of supply chains that are essential to U.S. national security, economic continuity, or long-term industrial capacity. Unfortunately, the Buy American Act of 1935 and other major procurement laws were enacted before the present era of global value chains and transnational production. Rather than try to patch up an anachronistic framework that originated nearly a century ago, when both the U.S. and global economies were radically different, the federal government should replace the Buy American Act, the Trade Agreements Act (TAA), and other legacy laws and regulations with a new, comprehensive strategic supply-chain legal framework to govern federal procurement policy.

We propose a new “Trusted Country System” based on critical components identified by stress tests of supply chains. The new Trusted Country System would replace the existing price-preference system embodied in Buy American, along with domestic or regional content rules in some areas, with a more flexible and targeted country-of-origin system that focuses on critical components and the industries that supply them. The Trusted Country System would minimize bureaucratic complexity and needless costs to businesses in the United States and allied nations, while maximizing U.S. supply-chain security. In the words of Treasury secretary Janet Yellen, “Favoring the friend-shoring of supply chains to a large number of trusted countries, so we can continue to securely extend market access, will lower the risks to our economy as well as to our trusted trade partners.”1

The Complexity of Global Supply Chains in the
Twenty-First Century

When the Buy American Act was signed into law by President Herbert Hoover in 1933, it was much easier to distinguish products that were “made in America” than it is today. Thanks to outsourcing and offshoring, many familiar products are assembled from parts that origi­nate in many countries. Here are a few examples:

Pharmaceuticals. The production of drugs and other pharmaceutical products is a multistage process that begins with the combination of chemical inputs into “Active Pharmaceutical Ingredients” (APIs). The APIs are then processed by combining them with inactive materials to produce final dosage forms such as tablets or liquids (FDFs).

The United States sources 80 percent of its APIs from overseas.2 As of August 2019, the U.S. Food and Drug Administration (FDA) estimat­ed that there were 1,788 API manufacturing sites supplying the U.S. market. Of those, 28 percent (510) were located in the United States, 31 percent (552) in China and India, and 41 percent (726) in other countries.3 For generics, the percentage of facilities outside the United States is higher, and “a substantial portion of U.S. generic drug imports come either directly from China or from third countries like India that use APIs sourced from China.”4 In fact, the U.S. generic drug industry can no longer produce certain critical medicines such as penicillin and doxycycline, and the APIs needed to make these antibiotics are sourced from China.5 In addition, as of March 2021, 52 percent of all FDA-registered final manufacturing facilities were outside the United States.6

Smartphones. The complexity of global supply chains leaves the smartphone industry vulnerable to disruptions at multiple points. For example, raw materials for the electronic components including copper, gold, silver, platinum, palladium, and tungsten are sourced from many countries, including Chile, China, Australia, Mexico, South Africa, and Russia.7 For smartphones that use lithium-ion batteries, cobalt and lithium are sourced from nations that include the Democratic Republic of Congo, Australia, China, and Russia.8

The components, including the touch screen, microprocessors, and batteries, can number in the hundreds and are sourced from suppliers from all over the world. In 2019, Apple had more than two hundred suppliers, with 93 percent of its top two hundred suppliers located outside the United States, in China, Japan, Taiwan, Europe, and Latin America, among other countries and regions.9 The final assembly of the iPhone is a complex process that takes ninety-four production lines and about four hundred steps.10 With the exception of Brazilian iPhones, all Apple iPhones are assembled in China.

Automobiles. Like many other industries, the automobile industry relies on suppliers that provide components directly to the brand-name manufacturers or original equipment manufacturers (OEMs); these are called Tier 1 suppliers. While these suppliers work with a variety of manufacturers, they tend to have closer relationships with one or two.11 Some of the largest suppliers are based in Germany (Robert Bosch GmbH, Continental AG, ZF Friedrichshafen AG), Japan (Denso Corp., Aisin Seiki Co. Ltd), Canada (Magna International), Korea (Hyundai Mobis).12

Tier 2 suppliers, such as computer chip manufacturers, do not sell directly to the auto manufacturers and tend to supply a variety of industries.13 Despite their categorization, however, these components are just as essential to the production of a vehicle. For example, cars today can have dozens of microchips controlling processes like fuel management and stability control, and in the case of luxury vehicles that have advanced features, there may be more than a hundred processors.14

Ultimately, the car manufactures, Tier 1, and Tier 2 suppliers are all dependent on the availability of raw materials (or nearly raw materials like steel and plastic) by Tier 3 suppliers. Disruptions at any of these stages of production can produce shortages, which in turn can drive supply-side inflation. For example, the recent shortage of chips impacted auto manufacturing.15

The list of industries in which the United States has lost market share or relies on foreign producers can be extended. Despite the economic malaise that followed the crash of Japan’s economic bubble in the 1990s, in 2020 Japan manufactured 47 percent of the world’s robots.16 A single Chinese company, DJI, produces more than half of all civilian drones that are purchased worldwide.17 Meanwhile, in the last three decades, the United States has lost 70 percent of its semiconductor manufacturing industry to other countries, in particular Taiwan. The global market share of American machine tool manufacturing, another key industry, has plunged from 28 percent in 1965 to 5 percent today. America’s share of civilian jet engine exports fell from 70 percent to 39 percent between 1991 and 2009, while its share of global solar cell manufacturing declined by three-quarters in a mere six years from 2006 to 2013.18 Chinese companies make 60 percent of the world’s wind turbines.19 The only American company among the top fifteen wind turbine manufactures, GE Renewable Energy, contributed a mere 10 percent to the global market in 2018.20 In 2020, China made 76 percent of the world’s lithium-ion batteries, essential for electric cars. The U.S. made only 8 percent.21

Compounding the complexity is the domination of many global industries by one or a few global corporations. Sometimes called “original equipment manufacturers,” these firms orchestrate production in numerous countries, shipping components from one affiliate or arm’s‑length supplier to another across borders.

Consider the following examples. For decades, the global wide-bodied jet manufacturing industry has been a duopoly dominated by Boeing and Airbus. In 2019, 66.8 percent of new automobiles were manufactured by the ten largest global car companies: Toyota, VW, Hyundai, GM, Ford, Nissan, Honda, Fiat, Renault, and PSA.22 In 2021, the global drone market was dominated by the Chinese company DJI (54 percent), followed by Autel (7 percent), Custom/DIY (4 percent), Skydio (3 percent), Parrot (3 percent), and others.23 In 2020, the largest commercial shipbuilding companies in the world were Hyundai Heavy Industries (South Korea), STX Offshore & Shipbuilding (South Korea), DSME (South Korea), Samsung Heavy Industries (South Korea), Sumi­tomo Heavy Industries (Japan), Fincantieri (Italy), United Shipbuilding Corporation (Russia), CSSC (China), Sembcorp Marine (Singapore), and Tsuneishi Shipbuilding (Japan).24

The U.S. share of global semiconductor manufacturing has declined to 12 percent from 37 percent in 1990.25 The semiconductor market in 2021 was dominated by a single company, Taiwan’s TSMC, with 54 percent of global market share, followed by South Korea’s Samsung (17 percent), Taiwan’s UMC (7 percent), with U.S.-based Global Foundries coming in fourth at a mere 7 percent.26 In 2021, the global lithium-ion battery market was dominated by China’s CATL (32.5 percent), fol­lowed by South Korea’s LG Chem (21.5 percent) and Japan’s Panasonic (14.7 percent).27 Four-fifths of the world’s plate glass market in 2017 was dominated by a few companies: Asahi Glass, Saint-Gobain, Nippon Sheet Glass, and Guardian, while Corning had 52 percent of the global LC display glass market, followed by Asahi Glass (24 percent), Nippon Sheet Glass (17 percent), AvanStrate (2 percent), and others (5 percent).28 The global steel market is much less concentrated, with the top five companies—China Baowu Group, ArcelorMittal, HBIS Group, Shagang Group, and Nippon Steel Corporation—making up only 17.5 percent of global manufacturing in 2020.29 This list is far from comprehensive, and it leaves out alliances among companies, as well as arm’s-length supply chains coordinated by a single firm which may include dozens of countries in the case of particular products.

Outmoded Procurement Laws in the United States

A number of domestic content laws require federal agencies to procure goods that are produced in the United States. Domestic content rules that govern federal procurement are based on multiple statutes and treaties that have been enacted or ratified over nearly a century, beginning in 1933.

The Buy American Act of 1933 (BAA) (41 U.S.C. §§ 8301–8305), as amended, generally prevents federal agencies from purchasing or leasing “foreign” goods by requiring federal agencies to purchase “domestic end products” and/or use “domestic construction materials” in certain contracts above minimal monetary thresholds, absent waivers. The price preferences favor “domestic end products” and “domestic construction materials” that are produced in the United States and are slightly more expensive than foreign products. Nevertheless, the BAA as amended gives federal government agencies the option of waiving the rules in certain circumstances.

The Trade Agreements Act of 1979 (TAA), as amended, allows the Buy American Act to be waived in the case of “eligible products” from “designated countries” in cases of federal procurement above a minimal designated dollar amount. The Berry Amendment (Title 10 United States Code §2533a) was enacted in 1941. At that time, it was narrowly tailored to ensure that U.S. military uniforms and food for the military were produced in the United States. Since then, items such as specialty metals were added. The amendment became permanent with the fiscal year 2002 National Defense Authorization Act. Today, certain items that the Defense Department purchases are required to be 100 percent domestic in origin (including the inputs of the purchased items).

The Kissell Amendment was enacted in 2009 and made permanent in 2013. It requires the Department of Homeland Security to buy textiles, clothing, and footwear from domestic sources when using appropriated funds to purchase these items and they are directly related to national security interests. As a practical matter, the Transportation Security Administration is the only agency affected by the Kissell Amendment because the amendment only applies in situations in which a trade agreement does not apply.

Section 232 of the Trade Expansion Act of 1962 continued provisions of the Trade Agreements Extension Act of 1958, which, in turn, expanded provisions of the Trade Agreements Act of 1954. Amendments to Section 232 of the Trade Expansion Act of 1962 have changed time limits, the advisory body, and limited the president’s authority to adjust petroleum imports. Through this statute, Congress delegated to the president the ability to impose restrictions on certain imports based on an affirmative determination by the Commerce Department that the product “is being imported in the United States in such quantities or under such circumstances as to threaten to impair the national security.” Any interested party may request a Section 232 investigation and there are tight timelines on the Commerce Department’s investigation author­ity and the president’s authority to take action. There have been a total of thirty‑four investigations between 1962 and 2020.

In addition to these major legislative frameworks, specific “buy American” procurement provisions are scattered through numerous federal laws and a number of trade treaties, including the United States–Mexico-Canada Agreement (usmca). Instead of the price preference system enshrined in the BAA and similar laws, the rules of origin system used in the usmca (formerly nafta) and other U.S. trade agreements provides preferential tariff treatment for goods based on a percentage of the value of the good that originates in the territory of the treaty members. For example, the usmca requires that 75 percent of the value of the automobile be made in North America, compared to 62.5 percent under the superseded nafta treaty. The usmca provides that the value of regional content can be calculated by one of two methods: the trans­action value method and the net cost method.30

Unfortunately, these legacy laws and treaties fail to address today’s challenges because they are indiscriminate and costly in time and money. The essence of strategy is the assignment of priorities. If everything is strategic, then nothing is. And yet the existing domestic content regime favors American goods of all kinds over others, regardless of whether the goods are strategically important or not.

A rational domestic content system would focus on distinguishing strategic goods—whether they are finished goods, components, or raw materials—from the rest. For example, a well-designed rules of origin system in the automotive sector might focus on microchips vulnerable to supply-chain disruptions, rather than tires, if the latter are not subject to shortages. And because a single group of components like microchips can be critical to many different industries, focusing on critical components would be more efficient than focusing on final products.

When the Buy American Act was enacted in 1933, the United States was much less integrated into the world economy. At that time, many U.S. manufacturing firms were vertically integrated corporations, such as automobile companies that controlled every stage of production from raw materials to the finished product. Today, in contrast, much cross-border trade takes place within multinational firms and among their formal affiliates or arm’s-length suppliers in different countries. An estimated 36 percent of the value of manufacturing imports is intra-firm trade.31 Intra-firm trade is concentrated among 5 percent of multinational corporations which account for 23 percent of the total, while only 9 percent of total intra-firm trade is generated by the bottom 50 percent of multinationals.32 The increasing rarity of wholly “made in America” products requires contractors for federal agencies to apply for waivers, even for nonstrategic goods, at significant expense in time and money for taxpayers and businesses alike.

Federal Procurement and Supply Chains:
Recent Executive Actions

Recognizing the need to modernize the legacy procurement system, the Trump and Biden administrations have undertaken significant executive action, in the form of executive orders and rule changes, focusing on domestic content requirements in federal procurement. The Biden administration’s actions for domestic content requirements in federal procurement in some cases have built upon actions taken during the Trump administration.

On January 25, 2021, immediately after taking office, President Biden issued Executive Order (EO) 14005, titled “Ensuring the Future Is Made in All of America by All of America’s Workers,” pushing federal agencies to “maximize the use of goods, products and materials pro­duced in, and services offered in, the United States.” EO 14005 created a Made in America office within the OMB to review waivers to purchase goods from outside the United States and directs the GSA to create a public website making proposed waivers and justifications available to the public. The executive order also built on the Buy American Act and directed the Federal Acquisition Regulatory (FAR) Council to consider certain implementation issues such as replacing the “component test” (which says that a certain percentage of a product’s cost must have a domestic origin), increasing the numerical threshold for domestic content requirements for construction materials and end products, and increasing the price preferences for domestic construction materials and end products. The EO does not apply to situations in which the Trade Agreements Act applies.

The FAR Council published a final rule in March 2022 that increases the domestic content requirements under the BAA and gives preferences for critical products and critical components. This recent rule builds upon a final rule issued by the Trump administration in January 2021 and based on EO 13881, “Maximizing Use of American-Made Goods, Products, and Materials,” issued by President Trump in July 2019. The earlier final rule increased the domestic content threshold from 50 percent to more than 55 percent for most products and the price preference from 6 percent to 20 percent for large businesses, and from 12 percent to 30 percent for small businesses (excluding Defense Department procurements). The latest rule increases the 55 percent threshold of the total cost of products made wholly or predominantly of iron or steel (created in January 2021 by the Trump administration) through an escalation process—eventually requiring 75 percent by 2029.

Beyond Incremental Reform

To date, proposals for using federal procurement to preserve U.S. production or reshore strategic supply chains have been incremental, building on the legacy frameworks we have discussed. For example, the Biden administration has created a “Made in America” office to centralize decision-making about agency waivers for BAA, among other tasks. Many members of Congress have proposed new “Made in America” laws in addition to those which already exist.

Many of these incremental reforms are thoughtfully designed and would be helpful. It is our judgment, however, that the legacy system of procurement preferences is so out of alignment with the realities of twenty-first-century industry and commerce, and the imperatives of national security, that a more radical approach is necessary.

On rare occasions, usually following a great national crisis, Congress has engaged in a comprehensive reform of laws and institutions in an entire area of U.S. public policy. Following World War II, in the early years of the Cold War, Congress passed the National Security Act of 1947, which modernized the U.S. military and laid the groundwork for the contemporary system of U.S. intelligence agencies. Following the terrorist attacks of September 11, 2001, Congress consolidated twenty-two agencies into the new Department of Homeland Security, a Cabinet‑level department.

Similar bold and transformative renovation is necessary today in the area of federal procurement policy. What is needed is not necessarily administrative centralization, which could produce new choke points, but rather a new approach to the issue of supply-chain security, embod­ied in a new legal framework that would replace the BAA, the TAA, and many other inherited laws. Rather than elaborating detailed legislation, in this concept paper we seek to provoke debate by proposing the general outlines of an up-to-date and flexible approach to supply‑chain issues, which we call the Trusted Country System.

The Trusted Country System

The Trusted Country System that we propose would eliminate and replace most legacy legislation in federal procurement policy—not only the BAA price preference system and various sector-specific “Buy American” rules but also regional value content rules like those found in the usmca and various international trade treaties. Trusted Country rules of origin for components in supply chains are easier to oversee, less likely to antagonize U.S. trading partners and military allies, and less likely to require frequent and time-consuming waiver applications than the indiscriminate application of arbitrary price preferences or value-added content quotas.

Under the Trusted Country System, the cumbersome price preference system of the BAA would be eliminated and with it the need for agencies to waste valuable time submitting waivers for particular goods or contractors. Requirements in some areas for percentages of value added, another indiscriminate and unnecessarily complex approach, would also be eliminated.

Instead, the federal government would make lists of trusted country trading partners. Rather than a single list of trusted countries, there might be several lists, with the closest and most reliable U.S. allies in one and non-U.S. allies in another. Depending on how critical they are, some essential strategic components and in some cases entire products or raw materials might be required to be sourced from the United States alone.

In addition, there should be lists of countries of concern, including but not limited to military rivals. The origins of noncritical components that are joined with critical components in the same finished product might be a matter of indifference, as long as they were not sourced from a country of concern or a foreign supplier over which a country of concern exerts control or significant influence.

Here is one of various possible ways that a Trusted Country System of rules for federal procurement might be designed. After a stress test or similar analysis suggests that a particular kind of component is critical, the next step might be to assign the component a “criticality level” from one to three. Level one critical components might be required to be sourced entirely in the United States—perhaps in the continental United States, to minimize the threat of maritime interdiction. Level two critical components, important but less essential, might be sourced from allies and trusted trading partners of the U.S. Finally, level three critical components might be sourced from any country in the world, other than those of concern, for reasons of military rivalry, political instability, or other factors.

Already, the federal government defines the National Technology and Industrial Base (NTIB) to include the United Kingdom, Canada, and Australia as well as the United States.33 Building on this precedent, we propose that, for purposes of federal procurement, countries might be assigned to one of three groups: the Domestic Industrial Base (DIB), the Allied Industrial Base (AIB), and the Global Industrial Base (GIB). The Domestic Industrial Base would be limited to the United States and its territories. The Allied Industrial Base would be limited to military allies of the U.S. The Global Industrial Base would include all other countries in the world, except for designated countries of concern, from which critical components and resources could not be used without special permission.

On the basis of their criticality-level designation, critical components would then be sourced from one of the three country groups. Depending on the criticality level, 100 percent of a critical component would have to be sourced from the DIB, the AIB, or the GIB. The origins of noncritical components that are joined with critical components in the same finished product would be a matter of indifference, as long as they were not sourced from a country of concern or a foreign supplier over which a country of concern exerts control or significant influence.

While American producers would not be favored, except for level one critical goods, all producers in the United States would belong to all three country groups—domestic, allied, and global. In the case of level one critical components, American suppliers would have no foreign competition. But in the case of level two and level three critical components, American products would compete with foreign products on an even playing field. This approach promotes the goals of national security, national economic resilience, and national industrial capacity in a far more focused and discriminating way than the inherited approaches of indiscriminate price preferences or local content quotas combined with waivers.

Identifying Critical Components with Stress Tests

The difficulty of identifying which supply chains are critical is illustrated by the recent debate that culminated in the passage of the chips and Science Act in August 2022.34 The focus of the act is on using financial incentives for multinationals including TSMC and Intel to bring certain advanced chip manufacturing capabilities important for U.S. military and other uses to the United States, in order to lessen American depend­ence on Taiwan.

But a shortage of basic chips, not the most advanced chips, led to shortages in car production and supply, which in turn fed the greatest American and global inflation since the 1970s. Moreover, as experts pointed out, the development of advanced chip manufacturing in the United States, to be successful, needs to be accompanied by the onshor­ing or reliable supply of other kinds of production capability, including the manufacturing of semiconductor packaging.35

At the other end of the production chain are critical minerals like fluorspar, a source of high-purity electronic-grade hydrofluoric acid, used in chip manufacturing.36 Minerals and chemicals that are critical in chip manufacturing in addition to fluorspar include neon, xenon, kryp­ton, germanium, helium, argon, liquid hydrogen, enriched isotopes (D2, B11), sulfuric acid, hydrogen peroxide, high purity solvents (ipa/pgmea), and tantalum.37 Many of these critical materials are mined or refined in countries that are geopolitical rivals or threatened by political instability. For example, in 2022, the top five countries that mined tantalum were the Democratic Republic of Congo, Brazil, Rwanda, Nigeria, and China.38

What makes a component in a supply chain critical is not some innate characteristic but rather its importance in a particular supply chain. A raw material input, intermediate input, or finished product that might not be considered important or strategic in other contexts can be critical if a shortage or absence of that component could cause an entire com­plex supply chain to topple like a row of dominos, with disastrously ramifying effects.

Because the context determines whether a component is potentially critical or not, the component’s criticality can be determined best by analytical exercises based on scenarios like prospective stress tests of supply chains. These stress tests could be carried out by federal agencies or perhaps by a specialized agency tasked with this purpose.

Once a stress test or similar analysis suggests that a particular kind of component is critical, in light of the potential for a shortage to disrupt an entire national or transnational military or civilian supply chain, the next step would be to assign the component a “criticality level.” The most critical would have to be sourced entirely in the United States. Other critical components, important but less essential, could be sourced from allies and trusted trading partners. Finally, some critical components could be sourced from any country in the world, other than those of concern.

Stress testing supply chains to identify potential critical components will make it necessary to ascertain the nationality of the firms that produce particular raw materials, intermediate inputs, and finished products. In the case of lead firms or original equipment manufacturers (OEMs), which outsource much or all of their production to arm’s-length suppliers, this could be difficult.

The need for end-to-end supply-chain visibility will impose some new costs on suppliers to the U.S. government, even as the costs imposed on suppliers by the complexity of the existing BAA system and other legacy rules are reduced or eliminated. Weighed against the costs to American and global society of critical shortages during wars and cold wars, or the kinds of disruptions that were manifested in the Covid‑19 pandemic and its aftermath, the cost to government contractors of compliance with end-to-end supply-chain transparency rules would be trivial. In some cases, contractors might choose to insource some formerly outsourced activities or to shorten their supply chains, measures which might improve supply-chain resilience and security.

Following the identification of critical components by means of stress tests or other analyses, their assignment to one of three levels of criticality, and their subsequent assignment to one of three groups of trusted countries of origin, the next stage under a new Trusted Country System would be federal government support to help particular indus­tries avert potential shortages or expand their capacity. A variety of measures could be used for this purpose, from subsidies for stockpiling to federal grants, loan guarantees, and tax incentives to promote invest­ment in reshoring or expanding existing capacity. Of particular promise might be government-sponsored consortiums, with appropriate exemp­tions from antitrust laws, designed to promote precompetitive collaboration on R&D and investment in particular industries identified as critical to one or more major supply chains.

Existing authorities under the Defense Production Act (DPA) could be revised and expanded to enable the executive branch to help companies avert or overcome critical component shortages. It is important that any such revisions of the DPA allow the federal government, when it is in the U.S. national interest, to fund or finance foreign firms or foreign governments in trusted countries of origin when strategic considerations make this important.

Supply-Chain Security for the Contemporary World

In his Annual Message to Congress on December 1, 1862, in the midst of the Civil War, President Abraham Lincoln observed, “The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew.”

Pandemic-induced supply-chain shortages and deepening great power rivalries in an age of transnational production and global supply chains have convinced a growing number of policymakers and experts that the U.S. requires a different approach to supply-chain security than that embodied in legacy laws from a century or half a century ago. The imperative of leveraging federal procurement policy to defend U.S. national security and the American and global economies from intimidation or disruption in today’s world requires policymakers, stakeholders, and the American public to “think anew, and act anew.”

This article originally appeared in American Affairs Volume VI, Number 4 (Winter 2022): 53–67.

Notes
This article is based on “Securing America’s Supply Chains: A Proposal for a Trusted Country System in Federal Procurement Policy,” a project of the Clements Center for National Security that was made possible by the generous support of the Hewlett Foundation.

1 Transcript: US Treasury Secretary Janet Yellen on the Next Steps for Russia Sanctions and ‘Friend-Shoring’ Supply Chains,” Atlantic Council, April 13, 2022.

2 U.S. Food and Drug Administration, FDA at a Glance: FDA-Regulated Products and Facilities, April 2017; quoted in U.S.-China Economic and Security Review Commission, 2019 Annual Report to Congress, November 2019, 250.

3 Commissioner of Food and Drugs, Food and Drug Administration, testimony before the House Committee on Energy and Commerce, Subcommittee on Health, October 30, 2019; quoted in Inspector General U.S. Department of Defense, Evaluation of the Department of Defenses Mitigation of Foreign Suppliers in the Pharmaceutical Supply Chain, September 20, 2021, 1.

4 U.S.-China Economic and Security Review Commission, “Hearing on Exploring the Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products,” written testimony of Katherine Eban, July 31, 2019, 1; quoted in U.S.-China Economic and Security Review Commission, 2019 Annual Report to Congress, 250.

5 U.S.-China Economic and Security Review Commission, “Hearing on Exploring the Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products,” oral testimony of Rosemary Gibson, July 31, 2019, 39; quoted in U.S.-China Economic and Security Review Commission, 2019 Annual Report to Congress, 253.

6 White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth, June 2021, 214.

7 Global Smartphones,” December 11, 2017, in Earthdate, produced by the Bureau of Economic Geology, podcast, audio, 1:59.

8 “Global Smartphones.”

9 Daniel Martins, “Apple: 3 Facts about the World’s Best Supply Chain,” The Street, June 9, 2020.

10 David Barboza, “An iPhone’s Journey, from the Factory Floor to the Retail Store,” New York Times, December 29, 2016.

11 David Silver, “The Automotive Supply Chain Explained,” Medium, May 31, 2016.

12 The Seven Biggest Automotive Suppliers in the World,” Tetakawi, October 26, 2021.

13 Silver, “The Automotive Supply Chain Explained.”

14 Benjamin Preston, “Global Chip Shortage Makes It Tough to Buy Certain Cars,” Consumer Reports, October 4, 2021.

15 Sebastian Blanco, “Feds Taking a Harder Stance on Chip Shortage, May Suspect Hoarding,” Consumer Reports, September 24, 2021.

16 Dillon Jaghory, “Japan’s Robot Dominance,” nasdaq, May 16, 2022.

17 DJI (website), accessed October 8, 2022.

18 Stephen Ezell, “Going, Going, Gone? To Stay Competitive in Biopharmaceuticals, America Must Learn from Its Semiconductor Mistakes,” ITIF, November 22, 2021.

19 “China’s Wind Giant Sees Demand Boom Resuming after 2021 Blip,” Bloomberg, October 27, 2021.

20 “GWEC Releases Supply Side Data 2018 Report,” Windfair, April 17, 2019.

21 Lili Pike, “China Is Owning the Global Battery Race. That Could Be a Problem for the US,” Grid, December 28, 2021; updated January 18, 2022.

22 “Internationalization Favors Automakers with Worldwide Market Shares from 5% to under 10%,” Quest Trend Magazine, July 4, 2019.

23 Zacc Dukowitz, “DJI Loses Big Share of Commercial Drone Market, DroneAnalyst Report Finds,” UAV Coach, September 22, 2021.

24 Top 10 Largest Shipbuilding Companies in the World 2020, Biggest Shipbuilding Companies,” BizVibe.

25 Stephen Nellis and Hyunjoo Jin, “Biden’s Chip Dreams Face Reality Check of Supply Chain Complexity,” Reuters, April 13, 2021.

26 The Top 10 Semiconductor Companies by Market Share,” Visual Capitalist, December 14, 2021.

27 “Global Market Share of Lithium-Ion Battery Makers in 2021,” Statista, March 3, 2022.

28 Glass Market Is an Oligopolistic Market, But!?,” Piece of Japan, accessed October 8, 2022.

29 Global Steel Market: The 5 Largest Companies Increase Their Share,” Opportimes, November 21, 2021,

30 “Rules of Origin—Usmca Chapter 4,” United States–Mexico-Canada Agreement, accessed May 10, 2022.

31 Boris Guannel and Claire Plateau, “Les échanges internationaux intragroupe dans la mondialisation industrielle en 1999” (SESSI, 2003), cited in Gregory Corcos et al., “The Determinants of Intrafirm Trade: Evidence from French Firms,” Review of Economics and Statistics 95, no. 3 (2013): 825–38; See also: Kim J. Ruhl, “How Well Is US Intrafirm Trade Measured?,” American Economic Review 105, no. 5 (2015): 524–29.

32 Natalia Ramundo, Veronica Rappoport, and Kim J. Ruhl, “Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations,” Journal of International Economics 98 (2016): 51–59.

33 10 U.S.C. § 2500. See, generally, Heidi M, Peters, “Defense Primer: The National Technology and Industrial Base,” Congressional Research Service, updated February 3, 2021.

34 Josh Boak, “Bumps, Bipartisanship in Long Fight for Semiconductor Bill,” Associated Press, August 1, 2022; Editors, “New Chips Act Could Become a $280 Billion Boondoggle,” Bloomberg, August 1, 2022.

35 Willy Shih, “American Semiconductor Is Taking a Step toward Domestic Chip Packaging,” Forbes, January 9, 2022.

36 Sue Shaw, “Fluorspar: Semiconductor Disruption Continues as South Korea Imports of HF Remain Low in H1,” LinkedIn, July 5, 2021.

37 Semiconductor Industry Association, “Comments of the Semiconductor Industry Association (SIA) on the Notice of Request for Information on ‘Critical and Strategic Materials Supply Chains,’” Federal Register 79, no. 140 (July 22, 2014): 42560.

38 Melissa Pistilli, “Top 5 Tantalum-Mining Countries (Updated 2022),” Investing News, March 16, 2022.


Sorry, PDF downloads are available
to subscribers only.

Subscribe

Already subscribed?
Sign In With Your AAJ Account | Sign In with Blink