White House Council on Supply Chain Resilience

Overview

Context and Objective

Executive Order 14123, issued by President Joseph R. Biden Jr. on June 14, 2024, establishes the White House Council on Supply Chain Resilience. This order builds upon previous efforts to address vulnerabilities in America's supply chains, particularly those highlighted by Executive Order 14017 of February 24, 2021. The primary goal of EO 14123 is to fortify the resilience of supply chains that are crucial to the nation's economic stability, public health, and national security. By instituting a more coordinated federal response, this order aims to mitigate risks posed by various threats, including pandemics, cyberattacks, and climate-related incidents. Through these measures, the administration seeks to buttress domestic manufacturing, foster innovation, and enhance the global competitiveness of U.S. industries.

Structure and Operation

The Executive Order outlines the establishment of the White House Council on Supply Chain Resilience within the Executive Office of the President. This Council, chaired by the Assistant to the President for National Security Affairs (APNSA) and the Assistant to the President for Economic Policy (APEP), draws membership from a cross-section of federal agencies, departments, and advisors. By leveraging the expertise of its members, the Council is tasked with coordinating federal efforts to strengthen supply chain resilience. This involves identifying vulnerabilities, recommending best practices, and facilitating cooperation among agencies and with international allies. The Council is also mandated to conduct quadrennial reviews of critical industries, with the inaugural report due by December 31, 2024.

Policy Goals

The policy objectives outlined in EO 14123 underscore the administration's commitment to addressing supply chain vulnerabilities through a comprehensive approach that emphasizes the importance of secure data networks, reliable transportation, diverse supplier bases, and adequate stockpiles. Moreover, the order leverages international partnerships to foster global supply chain resilience, thereby extending its impact beyond domestic concerns. Such multilateral approaches are intended to mitigate disruptions and enhance the United States' capacity to respond to international crises. In fostering these objectives, the order aligns with broader economic goals of creating high-quality jobs and promoting sustainability. This aligns with the administration's emphasis on promoting equity and economic growth across diverse American communities.

Legal and Policy Implications

Statutory Framework

EO 14123 operates under the constitutional and statutory authorities vested in the President to manage national security and economic policy via executive orders. It articulates no new legislation but rather aligns existing efforts through a well-structured interagency framework. This is achieved by supplementing and affirming Executive Order 14017, ensuring that America's supply chains remain robust and resilient.

Interagency Coordination

This order requires enhanced cooperation among federal agencies, mandating that each agency designates a senior official to oversee supply chain-related activities. This move signifies a strategic shift toward a more integrated governmental approach to policy implementation. The established Council ensures a centralized forum for decision-making, which potentially reduces bureaucratic inefficiencies while enhancing policy coordination. The interagency collaboration is expected to extend to global partners, reflecting an understanding that supply chain issues are, by nature, transnational.

Amendments and Revocations

In practical terms, EO 14123 amends parts of Executive Order 14017 by superseding section 5(c) concerning the quadrennial supply chain review process. In doing so, it introduces a more detailed and structured mechanism for these reviews, emphasizing resilience in industries critical to national and economic security. These provisions offer the administration flexibility within pre-existing statutory limits to dynamically respond to evolving global challenges, thus rendering the policy outcomes more robust.

Regulatory Changes

While the order does not introduce immediate regulatory changes, it empowers the Council to recommend actions that may lead to potential amendments in federal procurement regulations and incentivize private sector investments. Such regulatory foresight is designed to attract and safeguard supply chain investments, bolster critical infrastructure, and maintain a competitive edge in global markets.

Budgetary Considerations

The EO identifies budgetary resources necessary for the execution of its directives, signaling potential future appropriations or reallocations to support robust agency capabilities. This could encompass the redirection of existing federal funds or the proposal of new budgetary allocations aimed at bolstering supply chain resilience through appropriate legislative backing. While subject to fiscal constraints, such provisions highlight the administration's strategic prioritization of supply chain security amid budgetary deliberations.

Who Benefits

Industries and Manufacturers

The primary beneficiaries of EO 14123 are industries integral to national supply chains, such as semiconductor, pharmaceutical, rare-earth mineral, and battery manufacturers. By placing a premium on resilience and domestic production, the order incentivizes these sectors to expand their footprint within the United States. This is likely to result in heightened investment, innovation, and job creation in the manufacturing sector, as businesses adapt to new guidelines and government incentives to reduce dependency on imports and foreign supply chains.

Workers and Labor Markets

American workers stand to gain significantly, with the promise of well-paying jobs being a central plank of the order's objectives. By promoting domestic manufacturing and industrial competitiveness, the order aims to create employment opportunities that could offer increased stability and improved working conditions. The EO's focus on education and workforce reforms further supports the development of a skilled labor force capable of meeting the demands of a more robust industrial base.

Small Businesses and Local Economies

Smaller enterprises and economically distressed communities are targeted for support as part of the order's mandate to promote a fair and open marketplace. The emphasis on supply chain policies that bolster small and family-owned businesses may lead to increased opportunities for these entities to participate in national and global supply chains, fostering economic growth in underserved areas through enhanced market access and participation.

Global Partnerships

Internationally, allies and partners could also see benefits, as the order calls for U.S. engagement in regional and global frameworks to ensure supply chain resilience. The collaborative approach may strengthen diplomatic ties and create opportunities for joint initiatives in supply chain security, innovation, and market diversification, fostering economic and security benefits for all involved parties.

Environmental Advocates

Environmental and climate action groups may find EO 14123's implicit focus on sustainability compelling. By emphasizing sound supply chain practices and climate resilience, the order aligns with broader environmental objectives. The inclusion of the National Climate Advisor among the Council members underscores an integrated approach to addressing climate challenges, highlighting potential advances in sustainable and ecologically responsible industrial practices.

Who Suffers

Foreign Suppliers and Economies

Foreign suppliers, particularly those in countries where the U.S. has historically maintained heavy reliance, could experience reduced demand as domestic production increases. EO 14123's push for enhanced domestic manufacturing may shift investment and supply chain dependencies away from international operators, impacting their economic prospects and prompting shifts in their own manufacturing strategies.

Large Monolithic Corporations

Larger corporations with historically dominant market positions might face increased competition and regulatory scrutiny under this order. By promoting supply chain diversity and preventing monopolization, the EO encourages a more competitive marketplace, potentially limiting the ability of large entities to maintain their significant market share uninterrupted.

Import-Heavy Industries

Industries heavily reliant on imports to sustain their operations may face challenges in light of the EO's emphasis on domestic production and supply chain security. These industries may need to adapt their business models and sourcing strategies to comply with evolving regulations that prioritize domestic resilience over reliance on potentially less secure international sources.

Low-Cost Labor Markets

Labor markets in countries that have historically benefited from low-cost production opportunities due to outsourcing may see a downturn in demand. As the EO supports reshoring efforts and the development of domestic supply chains, these international labor markets could experience economic repercussions stemming from reduced U.S. investment and job migration.

Short-Term Global Integration Benefits

The EO's focus on reducing excessive geographic or supplier concentration could, in the short term, pose challenges for global integration efforts, particularly in sectors where the U.S. has actively shared supply chain burdens with partners. Realigning these commitments may necessitate trade-offs that impact current collaborative efforts before long-term resilience adaptations take root.

Historical Context

Progression from Previous Policies

EO 14123 reflects an evolution of policy approaches under the Biden administration, which has consistently prioritized economic security and resilience as core tenets of governance. This order extends the initiatives set forth by EO 14017, which focused on detailed reviews and assessments of supply chain risks. By establishing the Council, EO 14123 institutionalizes and expands these efforts, marking a continuity of the administration's emphasis on proactive supply chain management.

Response to Recent Global Events

In response to disruptions caused by the COVID-19 pandemic and geopolitical tensions, this order underscores broader policy trends toward increasing national self-reliance and security. The pandemic spotlighted vulnerabilities in global supply chains, prompting a reassessment of dependencies that have since informed policy recommendations advocating for greater domestic capability and accountability.

Impact of Geopolitical Context

The EO surfaces in a geopolitical climate fraught with tension around trade imbalances, sanctions, and competition with other major economies such as China. The emphasis on leveraging international alliances and securing critical infrastructures can be viewed as a recalibration of strategies aimed at countering perceived economic threats while underscoring commitments to global cooperation.

Alignment with Economic Ideologies

The order represents an ideological alignment with principles often associated with protectionism and economic nationalism seen in previous administrations. While not entirely isolating, the focus on domestic strengthening is indicative of a pragmatic approach that balances global engagement with national priorities, aligning with broader policy frameworks focused on 'building back better' in sustainable and inclusive ways.

Reflection of Biden Administration Priorities

Furthermore, the EO illustrates prioritization seen across Biden's policies, including commitments to environmental stewardship and equitable economic distribution. By encompassing elements of workforce empowerment and climate resilience, the order mirrors key tenets highlighted in the administration's broader legislative and policy agenda, seeking to integrate economic growth with sustainable development.

Potential Controversies or Challenges

Legal Disputes and Challenges

EO 14123, while comprehensive, could invite legal scrutiny over the scope of its mandates, particularly regarding regulatory changes that impact foreign trade practices and industry standards. Stakeholders might contend that elements of reshoring or procurement policies infringe upon free trade agreements or unnecessarily constrain business operations. Such disputes could lead to challenges in federal courts, where interpretations of regulatory authority will be assessed.

Congressional Pushback

Congress could perceive parts of this order as overstepping executive boundaries, particularly if regulatory implications require new legislative frameworks or appropriations. Members may seek clarifications on provisions related to budgetary resources, inter-agency coordination, and the degree of authority vested in the Council. These discussions might evolve into broader debates over executive authority at the intersection of commerce and national security.

Economic Impact Concerns

Economic criticism could arise, particularly from industries reliant on globalized supply networks resistant to mandated shifts towards domestic production. Concerns over potential cost efficiencies and competitiveness in a globally diversified market might catalyze opposition from stakeholders highlighting risks to the U.S.'s ability to compete on price internationally.

Enforcement and Implementation

Implementation challenges, including ensuring compliance and achieving cross-agency collaboration, present formidable hurdles. The dispersed responsibilities may strain resources and necessitate harmonized protocols, which, if not thoroughly executed, risk diluting the intended outcomes of unified supply chain enhancements. Inspecting mechanisms and accountability frameworks will be critical to fundamentally overcoming these governance challenges.

Public Perception and Critique

Public opinion could sway based on perceived benefits versus costs. If transitional disruptions emerge, such as temporary shortages or increases in consumer prices resulting from supply chain overhauls, public support might fluctuate, leading to broader political debates. Consequently, transparent communication of benefits and a clear demonstration of long-term gains will be pivotal in countering short-term dissatisfaction and securing sustained public backing.