“Supply chain risks have undermined economic growth”

HASThroughout 2022, the Biden administration has promoted an economic plan to build US resilience to supply disruptions, easing bottlenecks at ports, investing heavily in infrastructure and by developing national manufacturing capacities in the key sectors of the 21^e century, such as semiconductors and renewable energies.

But the success of this plan will also depend on our economic policy abroad. According to the traditional conception of free trade, each national economy would benefit from producing what it does best compared to the others. This “comparative advantage” would explain the efficiency gains of international trade and specialization. However, we now know that we also have to take into account the reliability of trade.

In today’s world, any economic program should consider the potential for regional and global shocks that could affect our supply chains, including shocks caused by the policies of certain foreign governments. We must beware of the vulnerabilities created by over-concentration, geopolitical and security risks, and human rights abuses. Through an approach called “friend shoring” (“trade between friendly countries”), the Biden administration intends to maintain the efficiency of trade while promoting the economic resilience of the United States and its partners.

No State is capable of producing all the goods that its economy needs, and none would have an interest in doing so. Trade brings significant economic benefits to all countries involved. International trade provides access to a larger market and enables our most productive businesses to grow and create quality jobs for more people. On the consumer side, it means lower prices and greater choice. Trade also encourages the global flow of ideas essential to scientific discovery and technological advancement.

Remediate vulnerabilities

We need trade that reaps the benefits of economic integration, but over the past two years supply chain risks have undermined economic growth, led to rising prices and impacted our national security. Now is the time to take a systematic approach to addressing these vulnerabilities.

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