Build ICT Resilience by Teaming With Trade Partners, Commerce Is Urged

Tech companies and trade associations favor working more closely with U.S. trade partners to diversify information and communications technology (ICT) supply chains and make them more resilient to disruption and bottlenecks, several commented Nov. 4 in BIS-2021-0021. The Commerce Department’s Bureau of Industry and Security sought comment to help the secretaries of Commerce and Homeland Security prepare a report to the White House on supply chain disruptions in the “critical sectors and subsectors” of the ICT “industrial base” by the one-year anniversary of President Joe Biden’s Feb. 24 executive order (see 2109170029).

There isn't “significant capacity” outside China for key portions of the component supply chains, HP said. “China has essentially created an insular supply chain to control the technologies needed for the PC industry," except for microprocessors and solid-state devices, it said. HP encourages the Biden administration “to adopt a global view of strengthening resilience in the ICT supply chain by building diversified capabilities for production of these components in collaboration with allies,” it said.

The administration also should “reassess” Section 301 tariffs on Chinese ICT components, HP said. The current tariffs make it “economically infeasible” to manufacture PCs in the U.S., “even before accounting for other cost differences,” it said. Broadening tariff exclusions for key ICT components “would remove a structural disadvantage to U.S. electronics manufacturing,” it said.

Microsoft agrees the U.S. “should work closely with allies and like-minded countries to coordinate ICT trade policies,” the company said. “Coordinated trade policies should encourage best practice and technology-enabled supply chain risk mitigation measures.” When “employed appropriately,” a “multilateral” supply chain security policy “that incentivizes such measures -- rather than one that imposes undue and unpredictable regulatory burdens -- will better protect supply chain security and help the United States and other democracies maintain tech leadership.”

The U.S. cannot expect to "retain" its technological leadership, “much less strengthen it,” if U.S. industry “is subject to overly restrictive measures that could stall or halt important aspects of its business,” Microsoft said. “The very same companies that are developing cutting-edge products and services for the ICT supply chain are also the companies most likely to be affected by restrictive sourcing requirements.” Companies developing 5G “currently lack a cost-effective way to source key components, either domestically or from allies,” Microsoft said. Developing alternative supply sources will take time and investment, it said. “If U.S. companies lose access to critical components before alternative supply sources exist, their businesses will be disrupted, and U.S. technology leadership will suffer.”

Enhancing cooperation with “global partners” is one of 10 Information Technology Industry Council policy recommendations for building resilience into the ICT supply chain. “ITI supports increased bilateral, regional, and multilateral engagement with partner economies to deepen trade and investment relationships,” the association said.

ITI backs policies that address “negative impacts of tariffs,” including the Section 301 duties on Chinese goods. “Policymakers should consider developing an exemption process that allows for the reduction and/or removal of tariffs that negatively impact the ability of U.S. producers to reliably develop ICT products,” ITI said. “We also encourage continued engagement with Chinese counterparts to develop a schedule to roll back and work to address ongoing trade barriers.”