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Globalization Is An Outdated Concept- U.S. Must Become More Self-Sufficient

04/03/2022

Egg-NewsOn February 24th, the White House released a report on the disruption of supply chains resulting from the COVID pandemic.  Concurrently, the U.S. Departments of Defense, Homeland Security, Transportation, Health and Human Services and Commerce released specific reports relating to their areas of remit.

The reports were commissioned by Executive Order 14017 directing an in-depth review of critical supply chain deficiencies and identifying reliance on other nations for critical supplies.

 

It emerged that China represents the greatest risk to U.S. manufacturing and agriculture and hence, our economy.  The White House report included the statement, “We must reduce our dependence on China and other geopolitical competitors with respect to key products.”  In the short term, the U.S. will have to rely on China and other nations and accordingly, must continue diplomatic and trade relations referred colloquially as “friend-shoring”. Nations of the E.U., the U.K. and Japan are obvious partners given common concerns over the rise of China and its domination of critical areas.

 

  • The Department of Energy identified the dominance of China in solar power generation and mining and refining of rare earth elements necessary for electronic components.
  • The Department of Defense is concerned over sourcing of lithium batteries and microelectronics.
  • The Department of Homeland Security notes Chinese advances in information and communication technology and their activities in cyber-espionage through government and state-controlled companies.
  • The Department of Transportation noted that three State-affiliated companies in China are responsible for 95 percent of the manufacture of dry cargo containers.

 

Although the findings of the Department of Health and Human Services were not reviewed, it is evident that China and to a lesser extent India are responsible for synthesis of compounds that form the basis of the manufacture of pharmaceuticals.

China and also Russia are major producers of components required for fertilizers and with disruption of either production or world distribution of phosphates, the U.S. and E.U. agriculture may be impacted if not in yield, certainly as to cost.

 

Egg-NewsThe findings of the various departments under the direction of the White House suggest development of self-sufficiency and where possible, cooperation with friendly nations in mutually beneficial relationships. 

 

This sentiment was expressed by Ambassador Katherine Tai, U.S. Trade Representative, in testimony before a House Committee last week.  Ms. Tai pointed to the disruptions in ocean freight attributed to actions taken by China either deliberately or inadvertently during the COVID shutdowns that affected ports in China shipping to the U.S. and the E.U.  It is possible that a further round of disruptions will occur as China persists with an unsuccessful zero tolerance for COVID.  This has resulted in shutdown of metropolitan Shanghai.  It is considered significant that our Trade Representative, responsible for establishing agreements to promote international trade is now advocating self-sufficiency.  This is in recognition of the policies of China and other unfriendly nations on whom the U.S. has developed a reliance for critical supplies and commodities.

 

Egg-NewsAs a citizen, investor and contributor to our economy and certainly not an isolationist, I look forward to the day when a hammer in my local hardware store is imprinted with the proud words, “Made in the USA”. I look forward to driving past small manufacturing plants in the Midwest that have full employee parking lots and displaying “Help Wanted” signs. I anticipate a resurgence in U.S. design and manufacturing and an industrial renaissance such as occurred following the Great Depression.  For too long we have followed a policy of offshoring, taking advantage of low labor rates at the expense of our manufacturing infrastructure and committing to globalization.  This must change for the benefit of industry, agriculture, our national security and eventually our way of life.