Rep. Earl Blumenauer
(D OR) is the chairman of the Trade Subcommittee of the House Committee on Ways and Means, and last week he convened a hearing on “Trade, Manufacturing, and Critical Supply Chains: Lessons from COVID-19” It was hardly exhaustive. No hearing could have been, but it was a useful introduction to an important set of issues, issues on which the landscape is changing daily.
In his opening statement Chairman Blumenauer said:
The COVID-19 pandemic highlights the impact of globalized supply chains designed to pursue the lowest price whatever the true costs without appropriately accounting for the possible risks, such as unanticipated disruptions to sourcing, relying on complicated and multi-tiered supply networks, and losing key manufacturing
flexibilities in United States. We fail to appreciate our vulnerabilities.
In his opening statement, the Ranking Member of the Subcommittee, Rep.
Vern Buchanan
(R-FL) said:
This pandemic has shown us how important it is for us to be medically independent and to have supply chains that are reliable and flexible, no matter how they are structured. If we want stronger and more resilient supply chains here, then this must be the best place in the world to do business.
Leaving aside the specific legislation he endorsed, there is a sense in which Rep. Buchanan’s opening statement was a logical bookend to Chairman Blumenauer’s.
As one would have expected, however, the hearing itself, the give-and-take between the panelists and the members, broadened the discussion. Certainly, that was the case when
Rep. Stephanie Murphy
, a Florida Democrat and the first Vietnamese American woman to serve in Congress, got her chance to speak and ask questions. Today’s featured quote was part of the set-up for her question to
Dr. Prashant Yadav,
an expert on medical supply chains and one of the four witnesses at the July 23 hearing. Here is a more extended version of her question. Rep. Murphy:
I am concerned that some people who are already skeptical of global trade are using this crisis to advance long-held protectionist goals. And I think it’s important that, while we address the issues at hand, we don’t overcorrect in response to this pandemic and assume that all answers lead to tax cuts for businesses to increase domestic capacity. And
I think having exclusive domestic sourcing is both unrealistic and counterproductive. It would just leave us as vulnerable to shocks here at home as to ones abroad.
And so, Dr. Yadav, your testimony rings true to me, and I share a lot of your views. I agree that the goal should be diversification, not domestication of supply chains, not complete domestication of supply chains. So, yeah, so in some instances diversification will include increasing domestic capacity – what you call reactive capacity – but it should not be the only solution to build our resilience.
In his written testimony, Dr. Yadav had talked about where America gets its medical supplies, from personal protective equipment (PPE) – mainly from China – to imported pharmaceuticals from the EU, Switzerland, and India. In addition, he had pointed out that domestic production is no guarantee against disruptions. “We experienced some of the consequences of this approach when hurricane Maria hit Puerto Rico [in 2017],” he said. “There was a concentration of manufacturing in Puerto Rico, especially saline bags, which led to shortages in hospitals across the US.”
Dr. Yadav and Rep. Murphy were clearly on the same page. After thanking her for her question – and noting that he agreed with her about “diversification” rather than “domestication,” Dr. Yadav added:
If our PPE supplies, instead of coming largely from China, let’s imagine they came from a number of manufacturing sites in the U.S. but, in addition, from manufacturers that were in Latin America, in Southeast Asia, in countries in East Africa, perhaps. That would have helped us be more resilient and not have so much reliance on one particular region.
