2. But there are still some interesting parallels. Like our article, the Biden plan emphasizes resilience rather than reshoring. We talk in our piece about recoupling as opposed to decoupling, but the logic is the same. How is this to be accomplished? Biden suggests the following
3. First - use of federal procurement. This is a standard policy tool in the US, where it is often hard to get extensive standards through Congress (business has powerful lobbies) but where the administration has a lot of freedom to set procurement rules.
4. These may then become the basis of implicit standards, that everyone who wants the government as a customer has to follow, and that can then perhaps gradually extend to industry as a whole.
5. Second - use the Defense Production Act. The Trump administration has used the DPA as a bludgeon but not in any systematic way. The Biden team suggests that they would be more strategic in thinking about how to use this.
6. Third - a series of measures aimed at the pharmaceutical industry, including both greater state involvement in planning vaccines, and changes to taxes intended to onshore pharmaceutical production. This is bad news for Ireland as @toddntucker has noted
7. since a lot of US pharmaceutical production is based in Ireland because of a combination of Irish industrial policy and tax advantages, which a Biden administration would seek to eliminate.
8. Perhaps the most interesting proposal, from our perspective, is the "comprehensive review of U.S supply chain vulnerabilities and implement a national strategy to close them." This would be a big, big change to US policy.
9. First, it would require a very substantial investment in bureaucratic capacity. Biden notes that the Department of Defense is doing similar reviews - but the rest of the government has little capacity or expertise for carrying out this analysis.
10. We talk about this in the new piece, and at greater length here - https://www.foreignaffairs.com/articles/china/2020-06-03/folly-decoupling-china - the federal government has little understanding of how supply chains work, and businesses think of these relationships as commercially sensitive.
11. Doing this right will require new bureaucracies, extensive reporting requirements, and the transformation of network analysis into a tool of security analysis (see e.g. this paper http://covid.econ.cam.ac.uk/carvalho-elliott-spray-supply-chain-bottlenecks-in-a-pandemic by Carvalho et al, which I owe to @billjaneway ).
12. It will also require much more extensive intervention by the state in the economy. One of the key arguments in our @foreignpolicy piece is that the vulnerabilities that we now see post-coronavirus are an emergent product of individual firm strategies.
13. Individual businesses have strong incentives to pursue relationships that can create macro-scale risks in times of sudden crisis. Limiting these incentives will require robust government intervention (with associated costs of its own - figuring out the balance will be hard).
14. Finally, there are foreign policy aspects too. The Biden approach suggests that these security problems will require different kinds of alliance politics - and rewriting trade rules to ensure that supply chain weaknesses can be addressed through cooperation among allies.
15. The implication is that BFF relationships will trump MFN rules when security is at stake. Equally, the Biden team proposes that the US take action when "foreign governments ... take illegal steps to keep these materials away from U.S. companies."
16. The politics of both of these are going to be tricky. What this policy does not explicitly recognize is that the US too takes measures to keep critical US materials out of the hands of foreign companies, e.g. sophisticated semiconductors and Huawei.
17. The implication (and this is not addressed, but is surely at least present in the minds of the people thinking this through), is that we need to think about supply chain questions in strategic rather than just tactical terms.
18. And we need to be aware of the risks of possible escalation when the US exploits other states vulnerabilities. If you want to think about this in dialectical terms, the US has been ruthlessly taking advantage of other states' dependence on networked globalization for a while.
19. This is the message of the work that Abe and I have been doing on weaponized interdependence http://weaponizedinterdependence.com/ . But the US is now starting to figure out the corollary - that it too, relies on globalization, and is potentially vulnerable to others.
20. So the synthesis requires that the US (and other states) start to think systematically about the balance of vulnerabilities that they and other states face, and figure out a modus vivendi for core vulnerabilities rather than engaging in unwittingly escalatory actions.
21. The Biden policy is a very interesting beginning point for this broader debate, which will certainly be one of the key questions facing his administration if he wins in November. Finis.
You can follow @henryfarrell.
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