Biden Issues Executive Order To Review Critical Supply Chains

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President Biden issued an “Executive Order on America’s Supply Chains” (the “EO”) on February 24, 2021, ordering 100-day and 1-year reviews of certain critical supply chains. The initial 100-day review aims to assess risks posed to the following critical supply chains:

  • Semiconductor manufacturing and advanced packaging
  • High-capacity batteries, including electric vehicle batteries
  • Critical minerals, including rare earth elements
  • Pharmaceuticals and active pharmaceutical ingredients

The EO also orders supply chain reviews of six (6) sectors with reports due within one year. The sectoral assessments will cover:

  • Defense
  • Public health and biological preparedness
  • Information and communication technology
  • Energy
  • Transportation
  • Agriculture

The EO leaves open the possibility that other industrial bases may be assessed as part of the one-year review and that digital networks, services, assets, and data (“digital products”), goods, services, and materials not otherwise described in the EO that span more than one sector may be assessed.

The EO directs that both the 100-day and 1-year reports shall review “critical goods and materials,” “other essential goods and materials,” manufacturing and production capabilities of such critical or essential goods and materials, supply chains’ resiliency, and all the major risks to the supply chains. The EO imagines the term “risks” broadly. Risks include physical threats such as climate and other natural events, as well as geopolitical dynamics. Risks also comprise digital products’ inclusion in supply chains and the possibility that such digital products could be exploited. Additionally, the EO directs that the risk of human-rights or forced-labor abuses along the supply chains be described.

The EO arrives as shortages or anticipated shortages of semiconductors are widely reported, especially in the automobile industry. A general policy goal of the Biden Administration is to increase domestic manufacturing capability and economic growth, particularly in communities of color and economically distressed areas. The EO could be the first step in a significant reimagining of how the U.S. incorporates civilian and defense supply chains into its national and economic security and foreign policy strategies. At this time, however, the Administration has only ordered reviews. Interested companies should anticipate and consult the relevant Secretaries’ 100-day and 1-year reports for forthcoming policy suggestions.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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