Five Trade Policies to Promote Supply Chain Resilience

By [ Blake Harden ]
05/23/2024

This May, RILA’s Vice President of International Trade Blake Harden participated in an Office of the United States Trade Representative (USTR) hearing, sharing the retail industry’s perspective on leveraging U.S. trade policy to promote supply chain resilience.

The benefits of global trade for the U.S. are well documented, and include lower inflation, more innovation, higher productivity, growth of good jobs, and more. RILA urges USTR to embrace past trade policies that have yielded enormous growth and opportunities for Americans and evolve those policies to meet today’s challenges.

With this in mind, RILA recommends that USTR takes five steps to promote greater supply chain resilience.

Negotiate new trade agreements that lower tariffs and non-tariff barriers.

Coupled with robust enforcement mechanisms to ensure that trading partners abide by their commitments, trade agreements encourage resilient supply chains and raise standards with countries who share our values – setting a gold standard for other countries to follow.

With other countries, including China, actively pursuing new trade agreements, it is essential that the U.S. reclaim its leadership role in negotiating comprehensive trade agreements that tackle tariff and non-tariff barriers and raise standards so that American companies and workers can compete.

Leverage flexibility in existing trade agreements to help drive growth, investment, and more resilient supply chains.

For example, the CAFTA-DR includes a short supply mechanism that allows petitioners to get access to third country fibers, yarns, and fabrics when an administrative process finds that the requested input is not available in commercial quantities in the parties to the agreement. Better processes and utilization of the short supply process would help increase sourcing in the Western Hemisphere and help grow production for all stakeholders in the region.

Support sustainable supply chains by examining the Harmonized Tariff Schedule (HTS) to identify where lower duties could promote greater use of sustainable products, and work with trading partners to develop and align green trade processes, procedures, and incentives.

Creating different systems with diverging rules would increase the costsof compliance for companies and diminish the value of incentives to create more sustainable supply chains.

Avoid adopting policies that create too much dependency on domestic production.

Resilient supply chains are diverse supply chains, and dependency on any one source – including a domestic source – creates supply chain risks. A supply chain which relies predominantly or exclusively on U.S. production is no more resilient than one that relies exclusively on China.

Abandon harmful section 301 tariffs on consumer goods, which have failed to alter China’s behavior.

Tariffs are taxes paid by American businesses and consumers – not China. Tariffs are also regressive and disproportionately impact lower-income Americans – negatively impacting their paychecks.

Read Blake’s full USTR testimony on supply chain resilience here.