U.S. Treasury Secretary Janet Yellen (pictured here at a news conference ahead of the G-20 meeting in Bali on July 14) said supply chain resilience is a focus key to the Biden-Harris administration.
Fet Nagi | Reuters
U.S. Treasury Secretary Janet Yellen has reiterated the need for the U.S. and its trusted trading partners to increase supply chain resilience through “friend-shoring,” but said that doesn’t mean that the US withdraws from the rest of the world.
In a speech at the South Korean conglomerate LG’s Science Park in Seoul on Tuesday, Yellen gathered support from U.S. allies to work together to cut more resilient supply chains between trusted partners through “friend-shoring.”
The term is based on the concepts of “onshore” and “nearshoring,” which refer to the transfer of supply chains to or closer to home, rather than having them in foreign countries. “Friend-shoring” goes further, but limits supply chain networks to allies and friendly countries.
The United States has been pushing for more security in its supply chains since the Covid pandemic began. U.S. President Joe Biden signed an order in early 2021 to review U.S. supply chains with the goal of reducing dependence on foreign suppliers.
“Supply chain resilience is a key focus of the Biden-Harris administration. And the need for this work has been clearly illustrated by the events of the last two years, first by Covid-19 and our efforts. to fight the pandemic and now for Russia. brutal war of aggression in Ukraine, “Yellen said.
“Together they have redrawn the contours of global supply chains and trade.”
“Working with allies and partners through friend-shoring is an important element in strengthening economic resilience while maintaining the dynamism and productivity growth that economic integration entails.”
These initiatives, however, have raised concerns of a possible global economic decoupling, especially as the United States and other countries try to avoid over-reliance on China.
Yellen said those measures do not indicate that the U.S. will withdraw from world trade. Rather, he said, they show that friendly countries are taking a long-term perspective on vulnerabilities in an effort to make economies more productive.
“We don’t want a withdrawal from the world, which would make us give up the benefits it brings to the American people and the business and export markets,” Yellen said, referring to the deepening of ties with South Korea.
“By doing so, we can help isolate both American and Korean households from price increases and disruptions caused by geopolitical and economic risks … in this sense, we can continue to strengthen the international system from which we have all benefited. , while protecting ourselves from the fragility of global trade networks “.
Supply chain resilience dominated this stage of Yellen’s visit to Asia, which followed last week’s trip to Bali, Indonesia, for the Group of 20 meeting.
LG of South Korea also reaffirmed its latest U.S. collaboration, a $ 1.7 billion lithium-ion battery manufacturing expansion in Michigan, while Yellen described the manufacturing facilities of Hyundai batteries and electric vehicles in Georgia and Samsung’s semiconductor chip plant in Texas.
Other companies that support supply chain resilience efforts include the recently announced Indo-Pacific Economic Framework, Yellen added.
“With‘ friend-shoring ’, South Korea and the US are in an ideal place,” James Kim, president of AmCham in South Korea, told CNBC’s “Capital Connection” on Tuesday.
“This is the most exciting phase I’ve seen in the last 18 years.”
Kim said that while there were more direct investments from South Korea in the United States than vice versa, U.S. interests in the Asian country are growing.
A recent AmCham survey shows that, for the first time, South Korea ranks as the second most attractive location for regional headquarters in Asia, after Singapore, Kim said.