Agencies Are Taking Steps to Expand Diplomatic Engagement and Coordinate with International Partners (GAO-23-105534)
Summary
A GAO report to congressional committees, GAO-23-105534, dated February 2023, on supply chain resilience. It states that the COVID-19 pandemic and the war in Ukraine resulted in economic fallout that disrupted global supply chains and highlighted their vulnerabilities. GAO reports that since the onset of the pandemic the Departments of Commerce and State and the Office of the U.S. Trade Representative have expanded diplomatic engagement on strengthening supply chains, and as of October 2022 had initiated over a dozen engagements, including dialogues. Its title states that agencies are taking steps to coordinate with international partners.
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United States Government Accountability Office
Report to Congressional Committees
February 2023
SUPPLY CHAIN
RESILIENCE
Agencies Are Taking
Steps to Expand
Diplomatic
Engagement and
Coordinate with
International Partners
Accessible Version
GAO-23-105534
February 2023
GAO Highlights SUPPLY CHAIN RESILIENCE
Highlights of GAO-23-105534, a report to Agencies Are Taking Steps to Expand Diplomatic
congressional committees.
Engagement and Coordinate with International
Partners
Why GAO Did This Study What GAO Found
The COVID-19 pandemic and the war Since the onset of the COVID-19 pandemic, the Departments of Commerce,
in Ukraine resulted in economic fallout State, and the Office of the U.S. Trade Representative have expanded diplomatic
that disrupted global supply chains and engagement on strengthening supply chains. As of October 2022, these
highlighted their vulnerabilities. Supply agencies have initiated over a dozen engagements, including dialogues, working
chain disruptions have resulted in groups, and forums, to coordinate with allies and partners on supply chain
shortages in multiple sectors, and resilience. The agencies have coordinated with allies and partners to develop
continue to present economic
supply chain principles and plans, which include efforts to address disruptions
challenges.
from the pandemic and the war in Ukraine. For example, the Supply Chain
In February 2021, Executive Order Ministerial Forum led to agreement on global supply chain principles. In addition,
14017, “America’s Supply Chains,” the U.S.-European Union Trade and Technology Council established a Secure
directed a whole-of-government Supply Chains working group that identified shared supply chain vulnerabilities.
approach to assessing vulnerabilities
in, and strengthening the resilience of, U.S.-European Union Trade and Technology Council meeting, September 2021
critical supply chains. It also
highlighted the need for international
coordination. Subsequent reviews
recommended steps to strengthen
supply chain resilience, including
increased international coordination.
Commerce, State, and USTR have key
roles in advancing U.S. economic
interests and responding to Executive
Order 14017.
The CARES Act includes a provision
for GAO to report on its ongoing
monitoring and oversight efforts related
to the COVID-19 pandemic. This report
describes (1) Commerce, State, and
USTR’s diplomatic efforts to strengthen
supply chains since the onset of the According to agency officials, the primary challenges they face include (1)
pandemic and (2) challenges barriers to data collection, (2) limited flexibility in established trade agreements
coordinating with allies and partners. and programs, and (3) pandemic-related delays or virtual alternatives to
GAO reviewed agency documents and meetings, which have hampered effective diplomacy. To address data collection
interviewed agency officials. challenges, agency officials said they have developed multiple data collection
and analysis initiatives. These initiatives include mapping exercises in which
participating stakeholders from the U.S. and partner nations share information
about how goods flow through the production process. Also, in May 2022,
agencies announced a pilot with European counterparts for a joint early alert
system to more effectively share data on potential bottlenecks in the
semiconductor supply chain. In addition, to address challenges and further
improve coordination, agencies requested additional staffing resources to
enhance diplomacy efforts related to supply chain resilience.
View GAO-23-105534. For more information,
contact Kimberly Gianopoulos at (202) 512-
8612 or gianopoulosk@gao.gov.
United States Government Accountability Office
Contents
GAO Highlights ii
Why GAO Did This Study ii
What GAO Found ii
Letter 1
Background 3
Commerce, State and USTR Expanded Diplomatic Engagement
and Coordinated with Partners on Supply Chain Resilience 19
Agencies Face Challenges Coordinating With Partners on Supply
Chain Resilience and Have Taken Steps to Improve
Coordination 27
Agency Comments 34
Appendix I: GAO Contact and Staff Acknowledgments 37
Tables
Table 1: Examples of Multilateral Supply Chain Engagements Led
by Commerce, State, and USTR 20
Table 2: Examples of Bilateral Supply Chain Engagements Led by
Commerce, State, and USTR 22
Table 3: Agency Fiscal Year 2023 Budget Requests for Additional
Staff to Enhance Supply Chain Resilience and Related
Diplomacy Efforts 33
Figures
Figure 1: Global Supply Chain Pressure Index, January 1998
through July 2022 5
Accessible Data for Figure 1: Global Supply Chain Pressure
Index, January 1998 through July 2022 5
Figure 2: Illustrated Steps of a Global Semiconductor Production
Process 15
Figure 3: Timeline of Key Federal Efforts to Strengthen Supply
Chains 16
Figure 4: U.S.-EU Trade and Technology Council Ministerial
Meeting (September 2021) 25
Figure 5: U.S.-Mexico High-Level Economic Dialogue Press
Meeting (September 2022) 26
Page i GAO-23-105534 Supply Chain Resilience
Abbreviations
Commerce Department of Commerce
E.O. Executive Order
EU European Union
IPEF Indo-Pacific Economic Framework for Prosperity
Quad Quadrilateral Security Dialogue
State Department of State
TTC Trade and Technology Council
TFA Trade Facilitation Agreement
UK United Kingdom
USTR Office of the U.S. Trade Representative
WHO World Health Organization
WTO World Trade Organization
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Page ii GAO-23-105534 Supply Chain Resilience
441 G St. N.W.
Washington, DC 20548
Letter
February 2, 2023
Congressional Committees
The COVID-19 pandemic and war in Ukraine resulted in economic fallout
that disrupted global supply chains and highlighted their vulnerabilities.
Supply chains—links enabling the production of finished goods and
services from raw materials—faced significant disruptions, leading to
product shortages and inflationary pressures.1 For example, disruptions in
semiconductor production led to a 2.3 million shortfall of automobiles
produced in 2021 in North America, contributing to an inflation rate of
almost 13 percent for new automobiles between March 2021 and March
2022.2 According to the Office of the U.S. Trade Representative (USTR),
the pandemic and the war in Ukraine have contributed to a “paradigm
shift” emphasizing supply chain resilience in policymaking.3
On February 24, 2021, the President signed Executive Order (E.O.)
14017, “America’s Supply Chains,” directing a whole-of-government
approach to assessing vulnerabilities in, and strengthening the resilience
of, critical supply chains.4 Subsequent reviews directed by E.O. 14017
identified limited international coordination as a driver of supply chain
vulnerability, and recommended working with allies and partners to
decrease global supply chain vulnerabilities.5 These reviews
recommended that the Departments of Commerce and State engage
allies and partners on supply chain resilience, and recommended that
1Congressional Research Service (CRS), Supply Disruptions and the U.S. Economy,
IN11926 (May 13, 2022).
2CRS, IN11926.
3Inside U.S. Trade, “USTR’s Baltzan: China tariffs part of economic shift from efficiency to
resiliency,” accessed January 5, 2023, https://insidetrade.com/daily-news/ustr’s-baltzan-
china-tariffs-part-economic-shift-efficiency-resiliency.
4America’s Supply Chains, Exec. Order 14017, 86 Fed. Reg. 11849 (Mar. 1, 2021).
5The White House, Department of Commerce, Department of Energy, Department of
Defense, Department of Health and Human Services, Building Resilient Supply Chains,
Revitalizing American Manufacturing, and Fostering Broad-Based Growth: 100-Day
Reviews under Executive Order 14017 (Washington, D.C.: June 2021).
Page 1 GAO-23-105534 Supply Chain Resilience
Letter
USTR lead an interagency trade task force to help strengthen supply
chain resilience.6
The CARES Act includes a provision for GAO to report on the federal
response to the COVID-19 pandemic.7 GAO, reporting under the CARES
Act, has examined medical supply chain issues, including shortages of
medical supplies needed to respond to the pandemic.8 GAO has also
reviewed supply chain issues specific to certain economic sectors. In
June 2022, we reviewed federal efforts to advance critical minerals
recovery and substitution, and recommended updating the national
strategy for ensuring secure and reliable supplies of critical minerals.9 In
July 2022, we reported on policy considerations for reducing risks and
mitigating shortages in light of the global semiconductor shortage that
began in 2020.10
As part of GAO’s body of work on supply chain issues, this report
describes (1) Commerce, State, and USTR’s diplomatic efforts to
strengthen supply chains since the onset of the pandemic and (2)
challenges coordinating with allies and partners.
To describe Commerce, State, and USTR’s diplomatic efforts, we
reviewed relevant documentary and testimonial information on the
agencies’ international coordination activities from March 2020 to October
2022. We obtained this information from Commerce’s Bureau of Industry
6The 100-day supply chain reviews developed under Executive Order 14017 refer
collectively to allies and partners as nations that are not geopolitical competitors with the
United States for key products. The reviews state that supply chains used by the United
States and its allies and partners could be strengthened if they were moved to friendly
shores. However, the reviews do not identify a list of allies and partners. For the purposes
of this report, we refer to allies and partners as described in the 100-day supply chain
reviews. See The White House, et al., Building Resilient Supply Chains.
7Specifically, the CARES Act directs us to monitor and oversee the federal government’s
efforts to prepare for, respond to, and recover from the pandemic. Pub. L. No. 116-136, §
19010, 134 Stat. at 579-81 (2020). We have regularly issued reports on the federal
response to the COVID-19 pandemic, available at https://www.gao.gov/coronavirus.
8GAO, COVID-19: Federal Efforts Could Be Strengthened by Timely and Concerted
Actions, GAO-20-701 (Washington, D.C.: September 21, 2020); GAO, COVID-19: Urgent
Actions Needed to Better Ensure an Effective Federal Response, GAO-21-191
(Washington, D.C.: November 30, 2020).
9GAO, Critical Minerals: Building on Federal Efforts to Advance Recovery and Substitution
Could Help Address Supply Risks, GAO-22-104824 (Washington, D.C.: June 16, 2022).
10GAO, Semiconductor Supply Chain: Policy Considerations from Selected Experts for
Reducing Risks and Mitigating, GAO-22-105923 (Washington, D.C.: July 26, 2022).
Page 2 GAO-23-105534 Supply Chain Resilience
Letter
and Security and International Trade Administration, State’s Bureau of
Economic and Business Affairs, and USTR’s Office of Small Business,
Market Access, and Industrial Competitiveness, among other sources.
We described examples of multilateral and bilateral engagements related
to supply chain resilience to illustrate the range of agencies’ diplomatic
efforts.
To identify key challenges coordinating with allies and partners, as well as
steps taken to address those challenges, we reviewed relevant
documents and conducted interviews with officials from Commerce,
State, and USTR. These interviews covered any challenges that the
agencies identified as key to their efforts to coordinate with allies and
partners on strengthening supply chains, as well as any steps they have
taken to address these challenges since the pandemic began. For
additional context regarding the challenges that the agencies identified,
we conducted interviews with 17 experts in the semiconductor industry,
one of the industries recently affected by supply chain disruptions. We
selected experts based on subject matter expertise and the balance of
perspectives they represented across the industrial, academic, nonprofit,
and government sectors.11
We conducted this performance audit from December 2021 to February
2023 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for
our findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
Background
COVID19 Pandemic and Supply Chain Disruptions
The COVID-19 pandemic caused severe health and economic impacts
worldwide. The World Health Organization (WHO) has estimated that the
global death toll associated with the COVID-19 pandemic between
January 1, 2020 and December 31, 2021 was approximately 14.9
11Our July 2022 report summarized these experts’ views on policy options that could
reduce semiconductor supply chain risks and help mitigate future semiconductor
shortages in the United States. See GAO-22-105923.
Page 3 GAO-23-105534 Supply Chain Resilience
Letter
million.12 The pandemic led to a global economic recession in 2020 and
supply chain disruptions, which continue to constrain production and
exacerbate inflationary pressures. In addition, the 2022 Russian invasion
of Ukraine resulted in new supply shocks, including increases in world
energy prices and the prices of certain commodities.13 These economic
challenges have raised concerns about the risk of a global economic
slowdown.14
According to the Federal Reserve Bank of New York’s Global Supply
Chain Pressure Index, supply chains have faced greater disruptions,
including production delays and elevated shipping costs, since the onset
of the pandemic compared to recent decades.15 Figure 1 shows monthly
data, current as of August 4, 2022, for the index over the period January
1998 through July 2022.
12World Health Organization, “Global excess deaths associated with COVID-19, January
2020 - December 2021” (May 2022), accessed October 27, 2022,
https://www.who.int/data/stories/global-excess-deaths-associated-with-covid-19-january-2
020-december-2021.
13CRS, IN11926.
14According to the International Monetary Fund’s October 2022 World Economic Outlook
Update, global economic growth was 6 percent in 2021, and is projected to be 3.2 percent
in 2022 and 2.7 percent in 2023. See International Monetary Fund, “World Economic
Outlook Update” (October 2022), accessed November 9, 2022,
https://www.imf.org/en/Publications/WEO/Issues/2022/10/11/world-economic-outlook-octo
ber-2022.
15The GIobal Supply Chain Pressure Index integrates transportation cost data and
manufacturing indicators to provide a gauge of global supply chain conditions. See
Federal Reserve Bank of New York, “Global Supply Chain Pressure Index,” accessed
November 9, 2022, https://www.newyorkfed.org/research/policy/gscpi#/overview.
Page 4 GAO-23-105534 Supply Chain Resilience
Letter
Figure 1: Global Supply Chain Pressure Index, January 1998 through July 2022
Accessible Data for Figure 1: Global Supply Chain Pressure Index, January 1998 through July 2022
Calendar year Standard deviations from average
"1998" -0.94
28-Feb-1998 -0.44
31-Mar-1998 -0.08
30-Apr-1998 -0.12
31-May-1998 -0.49
30-Jun-1998 -0.81
31-Jul-1998 -0.92
31-Aug-1998 -0.93
30-Sep-1998 -0.92
31-Oct-1998 -0.76
30-Nov-1998 -0.82
31-Dec-1998 -0.56
"1999" -0.26
28-Feb-1999 -0.06
31-Mar-1999 -0.35
30-Apr-1999 -0.33
31-May-1999 -0.36
Page 5 GAO-23-105534 Supply Chain Resilience
Letter
Calendar year Standard deviations from average
30-Jun-1999 -0.42
31-Jul-1999 -0.61
31-Aug-1999 -0.49
30-Sep-1999 -0.33
31-Oct-1999 -0.12
30-Nov-1999 -0.09
31-Dec-1999 -0.02
"2000" -0.47
29-Feb-2000 -0.34
31-Mar-2000 -0.25
30-Apr-2000 0.09
31-May-2000 0.18
30-Jun-2000 -0.10
31-Jul-2000 -0.11
31-Aug-2000 -0.08
30-Sep-2000 -0.19
31-Oct-2000 -0.66
30-Nov-2000 -0.92
31-Dec-2000 -1.12
2001 -1.14
28-Feb-2001 -0.95
31-Mar-2001 -0.96
30-Apr-2001 -1.18
31-May-2001 -1.26
30-Jun-2001 -0.81
31-Jul-2001 -0.85
31-Aug-2001 -0.73
30-Sep-2001 -0.63
31-Oct-2001 -1.13
30-Nov-2001 -1.23
31-Dec-2001 -1.01
"2002" -0.89
28-Feb-2002 -0.41
31-Mar-2002 -0.43
30-Apr-2002 -0.48
31-May-2002 -0.25
30-Jun-2002 -0.47
Page 6 GAO-23-105534 Supply Chain Resilience
Letter
Calendar year Standard deviations from average
31-Jul-2002 -0.86
31-Aug-2002 -0.96
30-Sep-2002 -0.93
31-Oct-2002 -1.13
30-Nov-2002 -0.77
31-Dec-2002 -0.56
"2003" -0.49
28-Feb-2003 -0.38
31-Mar-2003 -0.25
30-Apr-2003 -0.50
31-May-2003 -0.21
30-Jun-2003 -0.21
31-Jul-2003 -0.11
31-Aug-2003 -0.16
30-Sep-2003 -0.07
31-Oct-2003 -0.31
30-Nov-2003 -0.32
31-Dec-2003 -0.27
"2004" -0.38
29-Feb-2004 -0.27
31-Mar-2004 0.07
30-Apr-2004 0.48
31-May-2004 0.49
30-Jun-2004 0.44
31-Jul-2004 -0.32
31-Aug-2004 0.22
30-Sep-2004 -0.03
31-Oct-2004 -0.57
30-Nov-2004 0.01
31-Dec-2004 0.18
"2005" -0.13
28-Feb-2005 -0.24
31-Mar-2005 -0.32
30-Apr-2005 -1.37
31-May-2005 -1.11
30-Jun-2005 -0.97
31-Jul-2005 -1.01
Page 7 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
31-Aug-2005 -0.75
30-Sep-2005 -0.04
31-Oct-2005 -0.08
30-Nov-2005 -0.69
31-Dec-2005 -0.72
"2006" -0.41
28-Feb-2006 -0.67
31-Mar-2006 -0.45
30-Apr-2006 0.03
31-May-2006 0.10
30-Jun-2006 0.07
31-Jul-2006 -0.14
31-Aug-2006 0.08
30-Sep-2006 -0.53
31-Oct-2006 -0.40
30-Nov-2006 -0.19
31-Dec-2006 -0.44
"2007" -0.84
28-Feb-2007 -0.72
31-Mar-2007 -0.50
30-Apr-2007 -0.75
31-May-2007 -0.30
30-Jun-2007 -0.37
31-Jul-2007 -0.40
31-Aug-2007 -0.06
30-Sep-2007 -0.08
31-Oct-2007 -0.65
30-Nov-2007 -0.45
31-Dec-2007 -0.17
"2008" -0.34
29-Feb-2008 0.40
31-Mar-2008 0.16
30-Apr-2008 0.12
31-May-2008 -0.11
30-Jun-2008 0.25
31-Jul-2008 0.99
31-Aug-2008 0.25
Page 8 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
30-Sep-2008 -0.57
31-Oct-2008 -1.08
30-Nov-2008 -1.56
31-Dec-2008 -0.66
"2009" -0.47
28-Feb-2009 -0.62
31-Mar-2009 -0.03
30-Apr-2009 0.68
31-May-2009 0.19
30-Jun-2009 -0.66
31-Jul-2009 -0.88
31-Aug-2009 -1.17
30-Sep-2009 -0.50
31-Oct-2009 -0.43
30-Nov-2009 -0.75
31-Dec-2009 -0.62
"2010" -0.25
28-Feb-2010 -0.11
31-Mar-2010 0.41
30-Apr-2010 0.27
31-May-2010 0.39
30-Jun-2010 -0.05
31-Jul-2010 0.02
31-Aug-2010 0.39
30-Sep-2010 0.39
31-Oct-2010 0.73
30-Nov-2010 0.43
31-Dec-2010 0.70
"2011" 0.82
28-Feb-2011 0.40
31-Mar-2011 0.75
30-Apr-2011 1.56
31-May-2011 0.96
30-Jun-2011 0.22
31-Jul-2011 0.27
31-Aug-2011 -0.07
30-Sep-2011 -0.57
Page 9 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
31-Oct-2011 -0.39
30-Nov-2011 0.13
31-Dec-2011 -0.06
"2012" 0.34
29-Feb-2012 -0.04
31-Mar-2012 -0.40
30-Apr-2012 -0.30
31-May-2012 -0.70
30-Jun-2012 -0.67
31-Jul-2012 -0.68
31-Aug-2012 -0.13
30-Sep-2012 -0.23
31-Oct-2012 0.01
30-Nov-2012 -0.35
31-Dec-2012 -0.14
"2013" -0.05
28-Feb-2013 -0.39
31-Mar-2013 -0.54
30-Apr-2013 -0.74
31-May-2013 -0.83
30-Jun-2013 -0.62
31-Jul-2013 -0.66
31-Aug-2013 -0.53
30-Sep-2013 -0.27
31-Oct-2013 -0.16
30-Nov-2013 -0.64
31-Dec-2013 -0.46
"2014" -0.61
28-Feb-2014 -0.25
31-Mar-2014 -0.57
30-Apr-2014 -0.80
31-May-2014 -0.76
30-Jun-2014 -0.64
31-Jul-2014 -0.79
31-Aug-2014 -0.62
30-Sep-2014 -0.80
31-Oct-2014 -0.57
Page 10 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
30-Nov-2014 -0.96
31-Dec-2014 -0.38
"2015" -0.52
28-Feb-2015 -0.31
31-Mar-2015 -0.39
30-Apr-2015 -0.27
31-May-2015 -0.53
30-Jun-2015 -0.82
31-Jul-2015 -0.39
31-Aug-2015 -0.67
30-Sep-2015 -0.41
31-Oct-2015 -0.22
30-Nov-2015 -0.63
31-Dec-2015 -0.59
"2016" -0.75
29-Feb-2016 -0.71
31-Mar-2016 -0.60
30-Apr-2016 -0.21
31-May-2016 -0.71
30-Jun-2016 -0.27
31-Jul-2016 -0.17
31-Aug-2016 0.11
30-Sep-2016 -0.28
31-Oct-2016 -0.04
30-Nov-2016 -0.30
31-Dec-2016 -0.23
"2017" 0.21
28-Feb-2017 0.23
31-Mar-2017 0.12
30-Apr-2017 0.05
31-May-2017 -0.08
30-Jun-2017 0.14
31-Jul-2017 0.16
31-Aug-2017 0.45
30-Sep-2017 0.56
31-Oct-2017 0.80
30-Nov-2017 0.87
Page 11 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
31-Dec-2017 0.72
"2018" 0.60
28-Feb-2018 0.11
31-Mar-2018 0.48
30-Apr-2018 0.57
31-May-2018 0.37
30-Jun-2018 0.42
31-Jul-2018 0.42
31-Aug-2018 0.54
30-Sep-2018 0.48
31-Oct-2018 0.54
30-Nov-2018 0.45
31-Dec-2018 0.46
"2019" 0.54
28-Feb-2019 0.13
31-Mar-2019 0.20
30-Apr-2019 0.03
31-May-2019 -0.65
30-Jun-2019 -0.48
31-Jul-2019 -0.46
31-Aug-2019 -0.32
30-Sep-2019 0.13
31-Oct-2019 0.05
30-Nov-2019 0.12
31-Dec-2019 0.01
"2020" 0.05
29-Feb-2020 1.13
31-Mar-2020 2.51
30-Apr-2020 3.19
31-May-2020 2.65
30-Jun-2020 2.40
31-Jul-2020 2.80
31-Aug-2020 1.32
30-Sep-2020 0.60
31-Oct-2020 0.12
30-Nov-2020 0.70
31-Dec-2020 1.64
Page 12 GAO-23-105534 Supply Chain Resilience
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Calendar year Standard deviations from average
"2021" 1.42
28-Feb-2021 1.89
31-Mar-2021 2.18
30-Apr-2021 2.47
31-May-2021 2.96
30-Jun-2021 2.68
31-Jul-2021 2.95
31-Aug-2021 3.24
30-Sep-2021 3.25
31-Oct-2021 3.80
30-Nov-2021 4.24
31-Dec-2021 4.32
"2022" 3.65
28-Feb-2022 2.76
31-Mar-2022 2.78
30-Apr-2022 3.39
31-May-2022 2.59
30-Jun-2022 2.31
31-Jul-2022 1.84
Pandemic-related shutdowns and labor shortages contributed to supply
chain disruptions. According to the International Labor Organization, 93
percent of the world’s workers resided in countries with COVID-19-related
workplace restrictions, including required closures, in place as of early
January 2021. In 2020, global working hours fell by 8.8 percent relative to
the fourth quarter of 2019, equivalent to the loss of 255 million full-time
jobs.16
Supply chain disruptions resulted in shortages in multiple sectors,
including medical supplies and critical products such as semiconductors.
In a national survey GAO conducted in October 2020, one-third to one-
half of responding states reported ongoing shortages of some COVID-19-
16International Labor Organization, “ILO Monitor: COVID-19 and the World of Work”
(January 25, 2021), accessed January 5, 2023,
https://www.ilo.org/global/topics/coronavirus/impacts-and-responses/WCMS_767028/lang-
-en/index.htm.
Page 13 GAO-23-105534 Supply Chain Resilience
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related testing supplies.17 In July 2022, GAO reported that the global
semiconductor shortage that began in 2020 exposed long-term risks in
the semiconductor supply chain and continues to affect a range of U.S.
industries.18
The complexity of global supply chains can make them vulnerable to risks
such as chokepoints. In our July 2022 report, we noted that the
semiconductor supply chain—from research and development to design,
production, and eventual incorporation into end user products—is
extremely complex and geographically dispersed. For example, a
semiconductor product may cross international borders as many as 70
times before reaching the final consumer.19 Chokepoints can occur within
a complex supply chain when production steps or critical materials and
equipment are reliant on a limited number of suppliers.20 See figure 2 for
an example of a global semiconductor production process that represents
a complex supply chain.
17GAO-21-191.
18GAO-22-105923.
19Accenture and Global Semiconductor Alliance, “Globality and Complexity of the
Semiconductor Ecosystem” (Feb. 2020), accessed November 15, 2022,
https://www.gsaglobal.org/globality-and-complexity-of-the-semiconductor-ecosystem/.
20For example, one Netherlands-based company is the only global supplier for specialized
lithography equipment needed to manufacture the most advanced semiconductors. In
addition, most leading-edge chips are manufactured in Taiwan.
Page 14 GAO-23-105534 Supply Chain Resilience
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Figure 2: Illustrated Steps of a Global Semiconductor Production Process
Page 15 GAO-23-105534 Supply Chain Resilience
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Key Federal Efforts to Strengthen Supply Chains
The U.S. government has taken a number of steps to strengthen supply
chains since the onset of the pandemic. Figure 3 provides a timeline of
key federal efforts.
Figure 3: Timeline of Key Federal Efforts to Strengthen Supply Chains
a
CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020).
b
William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No.
116-283, div. A, tit. XCIX, §§ 9901-9908, 134 Stat. 3388, 4843 (2021) (codified at 15 U.S.C. §§ 4651-
4658).
c
America’s Supply Chains, Exec. Order 14017, 86 Fed. Reg. 11849 (Mar. 1, 2021).
d
CHIPS Act of 2022, Pub. L. No. 117-167, div. A, 136 Stat.1366, 1372 (2022).
In February 2021, E.O. 14017, “America’s Supply Chains,” highlighted the
importance of international coordination on supply chain resilience. In
addition, the order tasked agencies with developing 100-day supply chain
reviews of certain critical products, and one-year reviews of several
industrial base sectors.
Issued in June 2021, the 100-day supply chain reviews assessed supply
chain vulnerabilities for four critical products: semiconductor
manufacturing and advanced packaging; large capacity batteries, like
those for electric vehicles; critical minerals and materials; and
Page 16 GAO-23-105534 Supply Chain Resilience
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pharmaceuticals and advanced pharmaceutical ingredients.21 The reviews
recommended steps to strengthen the resilience of these supply chains,
including increased international coordination. The reviews also
recommended Commerce and State engage allies and partners on
supply chain resilience in semiconductors, and strategic and critical
materials, respectively.
Additionally in June 2021, the White House established two interagency
supply chain task forces with roles for Commerce and USTR:
· Supply Chain Disruptions Task Force. Led by the Departments of
Commerce, Transportation, and Agriculture, this task force is to focus
on addressing supply chain disruptions in homebuilding and
construction, semiconductors, transportation, and agriculture and food
production.
· Supply Chain Trade Task Force. Led by USTR, this task force is to
identify both unfair foreign trade practices that have eroded critical
U.S. supply chains, and opportunities to use trade agreements to
strengthen the collective supply chain resilience of the U.S. and its
trade partners.
In February 2022, seven agencies published one-year supply chain
reviews, assessing and addressing vulnerabilities for six industrial base
sectors: defense, public health and biological preparedness, information
and communications technology, energy, transportation, and agricultural
commodities and food products. Some of the reviews also recommended
international coordination on strengthening supply chain resilience.22
Commerce, State, and USTR Missions and Components
Commerce, State, and USTR have key missions and components to help
advance U.S. economic interests, which include resilient supply chains.
21The White House, et al., Building Resilient Supply Chains.
22The seven agencies that authored the reports included the Departments of Agriculture,
Commerce, Defense, Energy, Health and Human Services, Homeland Security, and
Transportation. See The White House, “The Biden-Harris Plan to Revitalize American
Manufacturing and Secure Critical Supply Chains in 2022” (February 24, 2022), accessed
October 21, 2022,
https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/24/the-biden-harri
s-plan-to-revitalize-american-manufacturing-and-secure-critical-supply-chains-in-2022/.
Page 17 GAO-23-105534 Supply Chain Resilience
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· Commerce’s mission is to create the conditions for economic growth
and opportunity. Within Commerce, the International Trade
Administration works to strengthen the international competitiveness
of U.S. industry, promote trade and investment, and ensure fair trade
and compliance with trade laws and agreements. The Bureau of
Industry and Security works to advance U.S. national security, foreign
policy, and economic objectives by ensuring an effective export
control and treaty compliance system and promoting continued U.S.
strategic technology leadership.
· State’s mission is to protect and promote U.S. security, prosperity,
and democratic values. The Bureau of Economic and Business Affairs
is the department’s functional bureau for economic and business
issues, including efforts to create U.S. jobs and boost economic
opportunities overseas.
· USTR’s mission is to advance U.S. economic interests by developing
and coordinating international trade, commodity, and direct
investment policy, and overseeing negotiations with other countries.
USTR’s Office of Small Business, Market Access, and Industrial
Competitiveness develops, negotiates, and implements U.S. trade
policy related to market access for American manufacturers, and
helps ensure that USTR’s trade policy efforts address the challenges
facing smaller American businesses.
According to agency officials, Commerce’s International Trade
Administration and Bureau of Industry and Security; State’s Bureau of
Economic and Business Affairs; and USTR’s Office of Small Business,
Market Access, and Industrial Competitiveness have led their respective
agencies’ diplomatic efforts related to E.O. 14017. Commerce, State, and
USTR have focused on a variety of areas in their diplomatic engagement
on supply chain resilience.
· Commerce officials said their diplomatic engagement has focused on
semiconductors, and that they also support interagency efforts on
supply chain resilience for other critical sectors. Commerce’s work
includes identifying supply chain bottlenecks, the effects of supply
chain disruptions on U.S. businesses, and potential solutions to
address these issues, according to agency officials.
· State officials said their diplomatic engagement has focused on the
four critical products identified in the White House’s 100-day supply
chain reviews: semiconductor manufacturing and advanced
packaging, large capacity batteries, critical minerals and materials,
and pharmaceuticals and active pharmaceutical ingredients. They
Page 18 GAO-23-105534 Supply Chain Resilience
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also said State has focused on sharing information with allies and
partners on efforts to strengthen critical supply chains, eliminate
bottlenecks, and address shortages.
· USTR officials said their diplomatic engagement has focused on
pandemic-related supplies in addition to the four critical products
identified in the 100-day supply chain reviews. They also said USTR
has focused on identifying ways to use free trade agreements, such
as the United States-Mexico-Canada Agreement, to strengthen
collaboration with allies and partners on supply chain challenges.
Commerce, State and USTR Expanded
Diplomatic Engagement and Coordinated with
Partners on Supply Chain Resilience
Commerce, State, and USTR have expanded diplomatic engagement on
supply chains since the onset of the pandemic. As of October 2022, the
agencies have initiated over a dozen dialogues, working groups, forums,
and other channels to coordinate with allies and partners on supply chain
resilience. The agencies have coordinated with allies and partners to
develop supply chain principles and plans for action to strengthen supply
chain resilience. These efforts aim to address challenges including
disruptions from the pandemic and war in Ukraine.
Expanded Diplomatic Engagement on Strengthening
Supply Chain Resilience
Commerce, State, and USTR have expanded their diplomatic
engagements on strengthening supply chains since the onset of the
pandemic. Prior to E.O. 14017, diplomatic engagement on supply chains
included State-led efforts to coordinate internationally on securing critical
minerals supplies.23 USTR also coordinated with World Trade
Organization (WTO) members on improving the movement of COVID-19-
related medical goods through the WTO’s Trade Facilitation Agreement
23In 2019, Commerce issued a national strategy to address critical minerals supply chain
risks. See Department of Commerce, A Federal Strategy to Ensure Secure and Reliable
Supplies of Critical Minerals (June 2019). Since the strategy’s issuance, State has
convened critical minerals working groups with partners including Brazil and Canada.
Page 19 GAO-23-105534 Supply Chain Resilience
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(TFA).24 Since the signing of E.O. 14017, Commerce, State, and USTR
have initiated over a dozen diplomatic engagements to coordinate with
allies and partners on strengthening supply chain resilience. Agencies
have launched diplomatic engagements including dialogues, working
groups, and forums.
Table 1 provides examples of multilateral engagement on strengthening
supply chain resilience led by Commerce, State, and USTR.
Table 1: Examples of Multilateral Supply Chain Engagements Led by Commerce, State, and USTR
Launch Lead
Engagement Date U.S. Partners Agencies Goals
Quad Leaders’ March Australia, India, Japan Commerce, Cooperate on pandemic response and global
Summit 2021 State health security, climate, critical and emerging
technologies, cybersecurity, space, and
infrastructure
U.S.-EU Trade and June EU Commerce, Coordinate approaches to key global
Technology Council 2021 State, USTR technology, economic, and trade issues,
including supply chain resilience for key
sectors
Summit on Global Oct 2021 Australia, Canada, Democratic State Address near-term supply chain disruptions
Supply Chain Republic of the Congo, EU, and build long-term supply chain resilience
Resilience Germany, India, Indonesia, Italy,
Japan, Mexico, Netherlands,
Republic of Korea, Singapore,
Spain, UK
COVID-19 Global Feb 2022 African Union, Australia, Canada, State Respond to acute pandemic needs through six
Action Plan Meeting Colombia, EU, France, Germany, lines of global effort, including bolstering
India, Indonesia, Italy, Japan, New medical supply chain resilience
Zealand, Republic of Korea, Saudi
Arabia, Senegal, South Africa,
Spain, UK, WHO
Indo-Pacific May 2022 Australia, Brunei, Fiji, India, Commerce, Establish high-standard commitments that will
Economic Indonesia, Japan, Malaysia, New USTR deepen U.S. economic engagement in the
Framework for Zealand, Philippines, Republic of Indo-Pacific region on trade, supply chain
Prosperity Korea, Singapore, Thailand, resilience, clean energy, and tax and
Vietnam anticorruption
Minerals Security June Australia, Canada, EU, Finland, State Build robust, responsible critical mineral
Partnership 2022 France, Germany, Japan, supply chains to support economic prosperity
Republic of Korea, Sweden, UK and climate objectives
24The TFA, which entered into force in 2017, contains provisions for expediting the
movement, release, and clearance of goods. It also includes measures for addressing
cooperation on trade facilitation and customs compliance issues, as well as related
technical assistance and capacity building.
Page 20 GAO-23-105534 Supply Chain Resilience
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Launch Lead
Engagement Date U.S. Partners Agencies Goals
Supply Chain July 2022 Australia, Brazil, Canada, Costa Commerce, Address near-term supply chain disruptions
Ministerial Forum Rica, Democratic Republic of the State and build long-term supply chain resilience;
Congo, EU, France, Germany, include historically underrepresented groups in
India, Indonesia, Italy, Japan, supply chain solutions
Mexico, Netherlands, Republic of
Korea, Singapore, Spain, UK
Legend: EU = European Union; Commerce = Department of Commerce; Quad = Quadrilateral Security Dialogue; State = Department of State; UK =
United Kingdom; USTR = Office of the U.S. Trade Representative; WHO = World Health Organization
Source: GAO analysis of agency documents and testimonial evidence. | GAO-23-105534
Page 21 GAO-23-105534 Supply Chain Resilience
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Table 2 provides examples of bilateral engagement on strengthening
supply chain resilience led by Commerce, State, and USTR.
Table 2: Examples of Bilateral Supply Chain Engagements Led by Commerce, State, and USTR
Launch U.S. Lead
Engagement Date Partners Agencies Summary of Goals
U.S.-Mexico High-Level Sept Mexico Commerce, Build back from the impact of the global pandemic, promote
Economic Dialogue 2021 State, USTR inclusive trade and investment, prepare workforces for the
future, and strengthen regional supply chains
U.S.-Singapore Partnership Oct 2021 Singapore Commerce Facilitate collaboration in digital economy and smart cities;
for Growth and Innovation energy and environmental technologies; advanced
manufacturing and supply chain resilience; and healthcare
U.S.-Canada Supply Chain Dec 2021 Canada Commerce, Assess supply chain vulnerabilities, identify opportunities to
Working Group NSC, State strengthen bilateral supply chain security and resilience, and
reinforce U.S.-Canada economic relationship
U.S.-Taiwan Technology Dec 2021 Taiwan Commerce Strengthen critical supply chains by promoting two-way
Trade and Investment investment, initially focusing on semiconductors, 5G, electric
Collaboration Framework vehicles, sustainable energy, and cybersecurity
U.S.-UK Dialogue on the March UK USTR Support small-medium enterprise trade, digital trade, worker-
Future of Atlantic Trade 2022 centric trade, supply chain resilience, food security, and
environmental and climate action
U.S.-Korea Supply Chain May 2022 Republic of Commerce Facilitate collaboration in digital economy; export controls;
and Commercial Dialogue Korea advanced manufacturing and supply chain resilience,
including semiconductors; and healthcare and healthcare
technology
U.S.-Thailand Supply July 2022 Thailand State Enhance information sharing, consultation, and program
Chain Resilience development to promote resilient supply chains
Engagement
U.S.-Japan Economic July 2022 Japan Commerce, Realize peace and prosperity through the rules-based
Policy Consultative State economic order, counter economic coercion, promote and
Committee secure critical and emerging technologies, and strengthen
supply chain resilience
Legend: Commerce = Department of Commerce; NSC = National Security Council; State = Department of State; UK = United Kingdom; USTR = Office
of the U.S. Trade Representative
Source: GAO analysis of agency documents and testimonial evidence. | GAO-23-105534
Page 22 GAO-23-105534 Supply Chain Resilience
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Commerce, State, and USTR officials said they solicit input from
stakeholders, including the private sector, to inform supply chain
resilience efforts. For example, Commerce and State included industry,
labor, and civil society stakeholders in discussions at the Supply Chain
Ministerial Forum in July 2022. USTR has also engaged private sector
stakeholders on supply chain issues by convening industry roundtables,
including roundtables with the U.S. textile and apparel industry in late
2021.25
Coordination with Partners to Develop Supply Chain
Principles and Plans for Action
Commerce, State, and USTR have coordinated with allies and partners to
develop supply chain principles and plans for actions to strengthen supply
chain resilience, which include efforts to address disruptions from the
pandemic and war in Ukraine.
Examples of efforts from multilateral engagements include:
· Quadrilateral Security Dialogue (Quad). At the inaugural leader-
level summit in March 2021, Quad partners, comprising Australia,
India, Japan, and the U.S., launched the Critical and Emerging
Technologies Working Group to facilitate cooperation on critical
technologies and their supply chains. At the fourth leaders’ summit in
May 2022, Quad partners issued a statement of principles on critical
technology supply chains. According to the statement, the principles
will guide joint efforts to make critical technology supply chains more
resilient, and are organized around security, transparency, autonomy,
and integrity.26
25See U.S. Trade Representative (USTR), “USTR Roundtable Highlights the United
States-Central America Supply Chain for Textiles and Apparel” (October 29, 2021),
accessed November 4, 2022,
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/october/ustr-roun
dtable-highlights-united-states-central-america-supply-chain-textiles-and-apparel; USTR,
“Readout of USTR Deputies’ Roundtable Discussion with the American Apparel &
Footwear Association” (December 1, 2021), accessed November 4, 2022,
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/december/readout
-ustr-deputies-roundtable-discussion-american-apparel-footwear-association.
26For more information, see Japan Ministry of Foreign Affairs, “Common Statement of
Principles on Critical Technology Supply Chains,” accessed October 28, 2022,
https://www.mofa.go.jp/files/100347806.pdf.
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· U.S.-EU Trade and Technology Council (TTC). At the TTC’s first
meeting in September 2021, shown in figure 4, the U.S. and EU
established the scope of work for supply chain and trade working
groups.27 The Secure Supply Chains Working Group, chaired by
Commerce and State, was tasked with cooperating on strategies to
promote supply chain resilience and diversification, among other
things. At the TTC’s second ministerial meeting in May 2022, the
Secure Supply Chains Working Group defined a work plan focused on
semiconductors, clean energy, critical minerals, and pharmaceuticals.
The group identified shared vulnerabilities and risks in solar panel,
semiconductor, and rare earth magnet supply chains. The Global
Trade Challenges Working Group, chaired by USTR, announced
plans to launch a dialogue on promoting diversified trade in
agricultural commodities and inputs to strengthen the resilience of
global food production and address food security in the wake of
Russia’s invasion of Ukraine.28
27The White House, “U.S.-EU Trade and Technology Council Inaugural Joint Statement”
(September 29, 2021), accessed October 6, 2022,
https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/29/u-s-eu-trade-a
nd-technology-council-inaugural-joint-statement/.
28The White House, “U.S.-EU Joint Statement of the Trade and Technology Council” (May
16, 2022), accessed November 4, 2022,
https://www.whitehouse.gov/wp-content/uploads/2022/05/TTC-US-text-Final-May-14.pdf.
Page 24 GAO-23-105534 Supply Chain Resilience
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Figure 4: U.S.-EU Trade and Technology Council Ministerial Meeting (September
2021)
· Supply Chain Ministerial Forum. At the July 2022 Supply Chain
Ministerial Forum, the U.S. and 18 partners released a joint
statement, agreeing to cooperate on building supply chain resilience
by following global supply chain principles of transparency, diversity,
security, and sustainability.29
· Indo-Pacific Economic Framework for Prosperity (IPEF). At the
September 2022 IPEF ministerial meeting, the U.S. and 13 partners
agreed to establish criteria for identifying critical sectors and goods
through IPEF’s supply chain pillar. They also agreed to increase
resiliency and investment in critical sectors and goods, and to
strengthen supply chain logistics, among other things.30
29Department of State, “Joint Statement on Cooperation on Global Supply Chains” (July
20, 2022), accessed October 28, 2022,
https://www.state.gov/supply-chain-ministerial-joint-statement/.
30Indo-Pacific Economic Framework for Prosperity, “Ministerial Statement for Pillar II of
the Indo-Pacific Economic Framework for Prosperity” (September 9, 2022), accessed
November 2, 2022,
https://www.commerce.gov/sites/default/files/2022-09/Pillar-II-Ministerial-Statement.pdf.
Page 25 GAO-23-105534 Supply Chain Resilience
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Examples of efforts from bilateral engagements include:
· U.S.-Mexico High-Level Economic Dialogue. In September 2021,
the U.S. and Mexico established a working group to coordinate on
identifying critical sectors involved in cross-border supply chains, and
to conduct stakeholder outreach to increase investment and
strengthen supply chain resilience. The working group agreed to
collaborate on the U.S.-Mexico semiconductor and information and
communications technology supply chain ecosystems. Figure 5 shows
the Secretary of State and Secretary of Commerce in Mexico in
September 2022.
Figure 5: U.S.-Mexico High-Level Economic Dialogue Press Meeting (September
2022)
· U.S.-Japan Economic Policy Consultative Committee. At its
inaugural ministerial meeting in July 2022, the committee developed a
plan of action for the year. According to the plan, the U.S. and Japan
will seek to advance efforts under the Japan-U.S. Commercial and
Industrial Partnership and other frameworks to foster supply chain
Page 26 GAO-23-105534 Supply Chain Resilience
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resilience, particularly in semiconductors, batteries, and critical
minerals.31
Agencies Face Challenges Coordinating With
Partners on Supply Chain Resilience and Have
Taken Steps to Improve Coordination
Commerce, State, and USTR reported challenges coordinating supply
chain resilience engagements with allies and partners since the onset of
the pandemic. According to agency officials, the primary challenges they
face are (1) barriers to data collection, (2) limited flexibility in established
trade agreements and programs, and (3) COVID-19-related delays or
virtual alternatives to meetings, which have impeded effective diplomacy.
These challenges affect the agencies’ abilities to coordinate in multilateral
and bilateral engagements, as well as with the private sector. Agency
officials also identified steps they have taken, and continue to take, to
address challenges and improve coordination.
Challenges to Diplomatic Coordination
Barriers to Data Collection
The private sector controls the majority of supply chains. Commerce,
State, and USTR officials said that a lack of accessible data about private
sector supply chains has limited their ability to work with allies and
partners to identify and address vulnerabilities. Companies may be
reluctant to share data on their supply chains due to business
confidentiality concerns, or may not have the data. Moreover, the
complexity of particular supply chains has limited agencies’ abilities to
collect and manage data to assess supply chain structure and resiliency.
State and USTR officials noted that while they use data to inform their
diplomatic engagements with allies and partners on supply chains, they
generally rely on Commerce and other agencies or organizations for data
collection and analysis on specific markets and industries. However,
31Department of State, “Joint Statement of the U.S.-Japan Economic Policy Consultative
Committee: Strengthening Economic Security and the Rules-Based Order” (July 29,
2022), accessed October 17 2022,
https://www.state.gov/joint-statement-of-the-u-s-japan-economic-policy-consultative-comm
ittee-strengthening-economic-security-and-the-rules-based-order/.
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Commerce officials noted that their data collection efforts and tools often
rely on data voluntarily provided by businesses. According to agency
officials and semiconductor industry experts we met with, businesses are
sometimes reticent to share data for fear that any leak of sensitive
information may weaken their competitiveness. Additionally,
semiconductor industry experts noted that businesses struggle to compile
accurate information about their own supply chains. This has made it
difficult for both companies and the government entities relying on their
data to project potential shortages.
Limited Flexibility in Established Trade Tools
According to USTR officials, current U.S. trade agreements generally
were not designed to address supply chain disruptions or build resiliency.
USTR officials noted that U.S. trade agreements historically focused on
trade liberalization and maximizing economic efficiency. The officials
added that trade agreements and trade preference programs can serve
as tools for addressing supply chain resiliency concerns, but this may
require renegotiating current agreements, negotiating new agreements, or
modifying trade preference programs. In addition, they said that for long-
term resilience, the U.S. will need policies that incentivize allies and
partners to work with the U.S. to build resilient supply chains.
For example, the officials pointed to the 2017 TFA as an initiative that
provides a multilateral opportunity for reducing supply chain bottlenecks
abroad. USTR officials stated that they believe the trade facilitation
measures included in the TFA can help alleviate some supply chain
disruptions. In 2020, USTR supported accelerating the implementation of
the TFA to address critical pandemic supply chain disruptions. However,
the officials noted that in 2017, USTR unsuccessfully attempted to include
a provision in the TFA to eliminate the requirement in some countries for
in-person consulate visits to obtain permission to import. The USTR
officials noted that this requirement contributes to supply chain
bottlenecks by hindering the ability of both U.S. and foreign businesses to
import goods.
USTR officials said that future trade negotiations could also address
supply chain resilience. As an example, “rules of origin” could serve as a
mechanism in free trade agreements for the U.S. government to promote
supply chain resilience with trading partners, according to the officials.
The officials said that, for example, these rules specify what percentage
of a good’s components must be produced within the agreement partners’
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countries to qualify for the lower tariffs offered by an agreement.32 The
officials added that the U.S. government might use free trade agreement
rules of origin to incentivize supply in partner countries and promote
resilience that will benefit U.S. consumers. However, they noted that rules
of origin are negotiated when free trade agreements are first established,
meaning USTR must either renegotiate the rules of origin in existing
agreements to specifically address supply chain resilience or wait until
they negotiate new agreements.
COVID-19-Related Constraints on Effective Diplomacy
According to State and USTR officials, COVID-19 outbreaks forced
delays or virtual alternatives to in-person multilateral and bilateral
meetings, which impeded diplomatic coordination. For example, the WTO
rescheduled its twelfth Ministerial Conference, initially planned for
December 2021, to June 2022. According to USTR officials, this delayed
one of USTR’s principal opportunities to discuss supply chain issues with
trading partners.33 Although delayed, USTR officials noted that holding
the conference in person enabled members to reach agreement on a
broader set of ministerial decisions and declarations than might otherwise
have been negotiated virtually. State officials said that while access to
virtual platforms has helped the department gather allies and partners
more quickly, virtual engagement often lacks opportunities to build
relationships with foreign officials and limits chances to observe how
countries respond to various proposals. USTR officials added that, in their
view, efforts to conduct meaningful multilateral and bilateral trade
negotiations remotely have generally been less efficient and effective
than in-person negotiations.
Steps to Address Challenges and Improve Diplomatic
Coordination
Agency officials told us they have taken steps to address data challenges
and improve their ability to coordinate with allies and partners on
strengthening supply chain resilience. In particular, agencies have
32For example, under the 2020 United States-Mexico-Canada Agreement “rules of origin”
for passenger vehicles and light or heavy trucks, seventy percent of a vehicle producer’s
purchases of both steel and aluminum, during a specified time period, must be for goods
that originate in North America to qualify for the lower tariff offered by the agreement.
33The WTO Ministerial Conference usually meets every two years and is the WTO’s top-
most decision-making body, according to the WTO.
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developed multiple data collection and analysis initiatives, and they have
asked for additional staffing resources dedicated to supply chain issues.
Data Collection and Analysis
Commerce, State, and USTR officials told us that they have taken steps
to enhance diplomatic coordination on supply chain resilience through
data collection and analysis. For example:
· Request for information in the Federal Register. Commerce’s data
collection initiatives focus on global semiconductor supply chains,
according to Commerce officials. Commerce issued a Federal
Register notice in September 2021 requesting information from
interested parties, including domestic and foreign semiconductor
manufacturers. The notice’s goal was to identify supply chain data
gaps and bottlenecks and accelerate information flow across various
segments of the supply chain.34 In January 2022, Commerce
published summary findings from its review of over 150 responses to
the notice.35 Commerce officials noted that they used the results to
enhance coordination and information sharing with partners on supply
chain vulnerabilities. According to State officials, State supported
Commerce’s efforts to gather responses to the notice, and the
responses received have also helped inform State’s engagements
with partners abroad.
· Reporting from overseas posts. State’s overseas posts compile
information related to supply chains that the department regularly
shares with other agencies, the National Security Council, and the
34Notice of Request for Public Comments on Risks in the Semiconductor Supply Chain,
86 Fed. Reg. 53031 (Sept. 24, 2021). According to the notice, the department was
seeking responses from interested parties, including domestic and foreign semiconductor
design firms, semiconductor manufacturers, materials and equipment suppliers, as well as
semiconductor intermediate and end-users.
35See Department of Commerce, “Results from Semiconductor Supply Chain Request for
Information,” January 25, 2022, accessed October 31, 2022,
https://www.commerce.gov/news/blog/2022/01/results-semiconductor-supply-chain-reque
st-information. Commerce officials said that they were unable to share country-level
results with allies and partners due to the small sample size and sensitivity concerns.
Page 30 GAO-23-105534 Supply Chain Resilience
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National Economic Council, according to State officials.36 The officials
noted that this information complements other U.S. government data
collection efforts and media reports that may help to identify the
causes of supply chain disruptions. For example, embassies and
consulates worldwide provided information to help assess whether
pandemic-related lockdowns had disrupted critical suppliers.
· Mapping exercises. According to State officials, State has worked
with other agencies, including Commerce, and with allies and partners
at international engagements, to map supply chains for various critical
industries. In these exercises, participating stakeholders from the U.S.
and partner nations share information about how goods flow through
the production process. For example, State and Commerce supported
efforts to map supply chains for clean energy technologies and critical
minerals following the TTC September 2021 inaugural meeting. State
and Commerce also supported efforts to conduct mapping exercises
for semiconductors at the Quadrilateral Security Dialogue Leaders’
Tokyo Summit in May 2022.37 In addition, according to its June 2022
progress report, the U.S.-Canada Supply Chain Working Group has
initiated a Joint Economic Analysis to map supply chains.38 Under this
effort, Commerce and Statistics Canada have collaborated on data
sharing to identify potential vulnerabilities and improve supply chain
resilience.
· Early alert systems. In fall 2021, Commerce and State established a
microelectronics early alert system to gather information voluntarily
provided by semiconductor manufacturers and customers and
36State’s overseas posts include U.S. embassies, consulates, and other posts that
represent the United States in foreign countries. The National Security Council is the
President’s principal forum for national security and foreign policy decision making with his
or her national security advisors and cabinet officials, and the President’s principal arm for
coordinating these policies across federal agencies. The National Economic Council, part
of the Executive Office of the President, advises the President on U.S. and global
economic policy.
37The U.S.-EU Trade and Technology Council (TTC) was established in June 2021 with a
key goal of leading global, like-minded partners in promoting an open, interoperable,
secure, and reliable digital space, and in developing and protecting tomorrow’s
technology. The Quadrilateral Security Dialogue, or Quad, was established in the wake of
the 2004 Indian Ocean tsunami to coordinate humanitarian assistance and disaster relief,
and has evolved into a regional partnership which cooperates on diverse 21st century
challenges. The Quad consists of the U.S. President and the Australian, Indian, and
Japanese Prime Ministers.
38The White House, “U.S.-Canada/Canada-U.S. Supply Chains Progress Report,” June
2022.
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mitigate pandemic-related disruptions to the global supply of chips
and components. Commerce officials said that they share information
gathered from this initiative with foreign governments, as appropriate.
In addition, at the May 2022 TTC meeting, Commerce, USTR, and
European counterparts announced a pilot for a joint early alert system
for the semiconductor supply chain that would allow participants to
more effectively share data on potential bottlenecks.39
· Interagency and private sector input. Commerce, State, and USTR
officials added that the recent expansion in diplomatic engagement
has also provided an opportunity to gather input and facilitate support
from stakeholders, including other agencies and the private sector, for
data collection and analysis efforts. For example, Commerce held a
U.S. stakeholder roundtable with a dozen organizations representing
industry, civil society, think tanks, and academia to inform
Commerce’s engagement with the EU through the TTC.40
Requests for Additional Staff to Address Supply Chain
Challenges
Both Commerce and State have requested additional staff to address
supply chain resiliency challenges (see table 3).
39In the May 2022 TTC Meeting, Commerce, USTR, and European counterparts
announced that the pilot early alert system would include discussions about how to ensure
business confidentiality in the information shared between governments. Following the
December 2022 TTC Meeting, Commerce and the EU announced that, as a result of the
pilot, they were entering into an administrative arrangement to implement an early warning
mechanism to address and mitigate semiconductor supply chain disruptions in a
cooperative way.
40Commerce officials added that they regularly solicit stakeholder input on supply chain
issues through industry meetings, the Bureau of Industry and Security’s technical advisory
committees, and the International Trade Administration’s trade advisory committees.
Page 32 GAO-23-105534 Supply Chain Resilience
Letter
Table 3: Agency Fiscal Year 2023 Budget Requests for Additional Staff to Enhance Supply Chain Resilience and Related
Diplomacy Efforts
Existing Requested Additional
positions positions appropriation
Agency (FY 2022) (FY 2023) requested Purpose
Commerce – 239 positions +38 positions +$10.85 million Fulfill new requirements on supply chain resilience
International Trade (16% increase) (15% increase) across manufacturing and services industries
Administration: covered by International Trade Administration
Industry and industry experts, including the semiconductor
Analysis industry
Commerce – 495 positions +15 positions +$5.22 million Establish a global supply and value chain unit that
Bureau of Economic (3% increase) (5% increase) will develop analytical tools and industry data and
Analysis analysis that track and describe the composition of
products sold both domestically and abroad
State – Bureau of 177 positions +7 positions +$4.68 million Support the bureau’s increasing work on the
Economic and (4% increase) (12% increase) global economic recovery and countering strategic
Business Affairs competitors, including efforts to reopen the U.S.
economy and secure supply chains, among other
efforts
Source: GAO analysis of documents from the Departments of Commerce and State. | GAO-23-105534
Commerce requested additional staff to expand its supply chain analyses
across the sectors and markets that the International Trade
Administration covers. Specifically, according to Commerce officials,
Commerce requested 38 positions for the International Trade
Administration’s Industry and Analysis unit to increase the analytical
capabilities for the bureau’s semiconductor initiatives, implement related
recommendations stemming from E.O. 14017, and support other
analysis. In addition, the Bureau of Economic Analysis requested 15
positions to establish a new unit to conduct supply chain analysis across
domestic and international markets.
State requested additional staff to address short-term disruptions and
long-term resilience in supply chains, among other tasks. Specifically,
State’s Bureau of Economic and Business Affairs requested seven
positions to diversify critical supply chains, and to address other
challenges. According to State officials, the additional staff will augment
the bureau’s supply chain diplomacy efforts.
Page 33 GAO-23-105534 Supply Chain Resilience
Letter
Agency Comments
We provided a draft of this report for review and comment to Commerce,
State, and USTR. The agencies did not provide formal comments on the
draft report. We received technical comments from each agency, which
we incorporated into the draft, as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretaries of Commerce and State, and the U.S. Trade
Representative. In addition, the report is available at no charge on the
GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. GAO staff who made
major contributions to this report are listed in appendix I.
Kimberly Gianopoulos
Director, International Affairs and Trade
Page 34 GAO-23-105534 Supply Chain Resilience
Letter
List of Committees
Chairman
Vice Chairman
Committee on Appropriations
United States Senate
Chair
Ranking Member
Committee on Finance
United States Senate
Chair
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
Chairman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Kay Granger
Chair
The Honorable Rosa L. DeLauro
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Cathy McMorris Rodgers
Chair
The Honorable Frank Pallone, Jr.
Ranking Member
Committee on Energy and Commerce
House of Representatives
The Honorable Mark E. Green, MD
Chairman
The Honorable Bennie G. Thompson
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable James Comer
Chairman
The Honorable Jamie B. Raskin
Ranking Member
Committee on Oversight and Accountability
House of Representatives
The Honorable Jason Smith
Chairman
Page 35 GAO-23-105534 Supply Chain Resilience
Letter
The Honorable Richard E. Neal
Ranking Member
Committee on Ways and Means
House of Representatives
Page 36 GAO-23-105534 Supply Chain Resilience
Appendix I: GAO Contact and Staff
Acknowledgments
Appendix I: GAO Contact and
Staff Acknowledgments
GAO Contact
Kimberly Gianopoulos, (202) 512-8612 or gianopoulosk@gao.gov
Staff Acknowledgments
In addition to the contacts named above, Judith Williams (Assistant
Director), Katherine Forsyth (Analyst-in-Charge), Elisabeth Helmer
(Analyst-in-Charge), Samuel Huang, Timothy Smith, Larissa Barrett, Neil
Doherty, James Boohaker, Justin Fisher, Lilia Chaidez, and Nicole
Willems made key contributions to this report.
(105534)
Page 37 GAO-23-105534 Supply Chain Resilience
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