[CTC] White House to set up ‘trade strike force’ led by USTR, eyes Section 232 magnet probe

[Arthur Stamoulis]

White House to set up ‘trade strike force’ led by USTR, eyes Section 232 magnet probe
By Dan Dupont, Inside US Trade 
6/8/2021
 
The U.S. Trade Representative will helm a new “strike force” to recommend enforcement actions against trade practices that have harmed critical supply chains, the White House said on Tuesday, unveiling the results of four 100-day reviews in a report that also suggests a new investigation under Section 232 of the Trade Expansion Act of 1962.

The strike force, according to a White House fact sheet <https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/> on the report, will “propose unilateral and multilateral enforcement actions against unfair foreign trade practices” and “identify opportunities to use trade agreements to strengthen collective approaches to supply chain resilience with U.S. partners and allies.”

Top White House advisers recommend as well that “supply chain resilience be incorporated into the U.S. trade policy approach towards China,” a major concern throughout the 250-page report <https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf> on the review.

The report also says the Commerce Department should study whether to initiate a Section 232 probe into imports of neodymium permanent magnets, which “play a key role in motors and other devices, and are important to both defense and civilian industrial uses.  Yet the U.S. is heavily dependent on imports for this critical product.”

Such magnets, the report notes, are used in products including hard disk drives, magnetic resonance imaging systems, precision guided munitions, automotive motors and wind turbines. They feature rare earth elements, a crucial supply chain concern for the U.S.

“The United States and other nations are dependent on a range of critical minerals and materials that are the building blocks of the products we use every day,” the report notes. “Rare earths metals are essential to manufacturing everything from engines to airplanes to defense equipment. Demand for many of these metals is projected to surge over the next two decades, particularly as the world moves to eliminate net carbon emissions by 2050.”

Two key materials, lithium and graphite, are essential for electric vehicle batteries, and demand for both “is estimated to grow by more than 4000 percent by 2040 in a scenario where the world achieves its climate goals, with graphite projected to grow nearly 2500 percent,” the report states. “China was estimated to control 55 percent of global rare earths mining capacity in 2020 and 85 percent of rare earths refining. The United States must secure reliable and sustainable supplies of critical minerals and metals to ensure resilience across U.S. manufacturing and defense needs, and do so in a manner consistent with America’s labor, environmental, equity and other values.”

President Biden called for the four 100-day supply chain results in a February executive order. They cover the semiconductor, high-capacity battery, critical mineral and pharmaceutical supply chains.

The report on those reviews, compiled by National Security Adviser Jake Sullivan and National Economic Council Director Brian Deese, divides its many recommendations into six categories: “1) Rebuilding our production and innovation capabilities; 2) supporting the development of markets with high road production models, labor standards, and product quality; 3) leveraging the government’s role as a market actor; 4) strengthening international trade rules, including trade enforcement mechanisms; 5) working with allies and partners to decrease vulnerabilities in the global supply chains; and 6) partnering with industry to take immediate action to address existing shortages.”

In the first category, the White House repeats its recommendation that Congress provide “at least $50 billion in investments to advance domestic manufacturing of leading edge semiconductors; expand capacity in mature node and memory production to support critical manufacturing, industrial, and defense applications; and promote R&D to ensure the next generation of semiconductors in developed and produced in the United States.”

The Senate on Tuesday is set to take up a massive legislative package that includes funding for semiconductor research and production incentives.

In the report, the White House said Congress also should appropriate $50 billion for a new Supply Chain Resilience Program, led by Commerce, to “monitor, analyze, and forecast supply chain vulnerabilities and partner with industry, labor, and other stakeholders to strengthen resilience.”

In their recommendations for how to ensure federal procurement powers aid in strengthening supply chains, Deese and Sullivan look to “Buy American” initiatives. They say the administration should establish “a list of designated critical products” to receive “additional preferences under the Buy American Act” and other rules.



Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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