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The White House on Tuesday announced a plan to manufacture more crucial drugs in the United States through expanded use of the Defense Production Act, a Cold War relic that gives the president the power to direct industrial production for any purpose. of national defense.
The move comes after the coronavirus pandemic exposed vulnerabilities in an already fragile supply chain system.
It’s also part of a broader strategy to reduce shortages of key commodities that President Biden says are essential for national security while making the United States more competitive with its main economic rival, China. .
Tuesday’s announcement follows the administration’s 100-day supply chain review, the result of an executive order signed by Biden in February.
The review was tasked with studying four key areas:
- semiconductor chips;
- large capacity batteries, such as those used in electric vehicles;
- and critical minerals.
“For too many years, we have allowed our capacity to produce essential goods to migrate overseas rather than making investments to support American industry and American workers,” a senior administration official said at the time. a call to journalists.
Biden intends to use Section 232 of the Trade Expansion Law to determine whether imports of Chinese neodymium magnets – commonly used in cars – harm national security and whether protections such as tariffs are required. Section 232 tariffs were used by former President Donald Trump to protect U.S. steel and aluminum producers from imports, and have been challenged in the World Trade Organization.
The administration also detailed plans for a public-private consortium that will select 50 to 100 drugs from the Food and Drug Administration’s essential drugs list and focus on their production in the United States. The White House intends to invest $ 60 million in national drug production for key drugs. lacking.
Biden will also establish a “trade strike force” led by the US trade representative that would have the power to enforce some type of sanction for unfair trade practices that erode critical supply chains.
“We are not seeking to wage trade wars with our allies and partners,” an administration official said. “We are looking at highly targeted products where we believe there are effective tools we could deploy to strengthen our own supply chains and reduce vulnerabilities.”
Here’s what’s else in the review:
– Mining: The review calls on the Home Office to “identify sites where essential minerals could be produced and processed in the United States.”
– Advanced batteries: The review also outlines the steps towards building a national supply chain for advanced batteries.
– Semiconductors: When it comes to addressing the semiconductor shortage – which experts say could last until next year – the review doesn’t offer such clear directions. He recommends that Congress pass a bill that could help boost domestic production and R&D.
The White House has also stepped up efforts to work with allies and partners on material imports, especially semiconductors. Intel is expanding its capacity and Samsung is also considering investments.
The review insists that any long-term changes would require larger investments, such as the major infrastructure plan that remains to be debated in Congress.
The White House is also announcing plans for a supply chain disruption task force to tackle bottlenecks in some key industries: semiconductors; construction and construction of dwellings; transport; and agriculture and food.