Press Briefing by Sameera Fazili, and Peter Harrell, supply chains Disruption Task Force 6/7/2021
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June 8, 2021

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Full Transcript
1:15 P.M. EDT

Psaki: Happy Tuesday. So, we have two very special guests with us again today. As you know, the Biden-Harris administration — I’m just going to let you all settle in here. Okay. All right. Great. Okay.

So, as you all know, today, the Biden-Harris administration announced key findings from the reviews directed by the President’s executive order on America’s supply chains. The executive order, signed February 24th, directed a whole-of-government approach to assessing vulnerabilities in and strengthening the resilience of critical supply chains.

So, here to discuss the immediate actions we will be taking to promote economic security, national security, and create good-paying union jobs by strengthening American supply chains are repeat guests — back for the second time; they had so much fun the first time — Deputy Director of the National Economic Council Sameera Fazili and Senior Director of International Economics and Competitiveness at the NSC Peter Harrell.

Okay. Thanks, Sameera. You’re kicking us off.

DEPUTY DIRECTOR FAZILI: Thank you. Hi, everyone. Good afternoon. And thank you, Jen. It is good to be back here at the end of this whole-of-government review that we just undertook of America’s supply chains, following President Biden’s direction back in February.

We said from the beginning that our approach to supply chain policy needs to be an integral part of the President’s overarching economic strategy to grow the economy from the bottom up and the middle out.

We also said that we were not going to simply be writing reports in this 100 days that were going to sit on a shelf; we are going to be taking action to address specific supply chain vulnerabilities. I think today’s reports make both those things crystal clear.

To achieve supply chain resiliency, we need to build back better by leveraging America’s greatest strengths:

First and foremost, American workers. Decades of focusing on labor as a cost to be managed and not an asset to be invested in have weakened our domestic supply chains, undermined wages and union density for workers, and also contributed to companies’ challenges finding skilled talent.

We must focus on creating pathways for all Americans to access well-paid jobs with a free and fair choice to join a union and bargain collectively.

Second, our diversity. We need to unlock the full potential of the American people, including making economic opportunities available across our country and for women and for people of color.

Third, our small businesses. To build a diverse and healthy ecosystem of suppliers, we must rebuild our small- and medium-sized business manufacturing base that has borne the brunt of the hollowing out of U.S. manufacturing.

Fourth, our alliances. We need to diversify our international suppliers and reduce geographic concentration risk. For too long, the U.S. has taken certain features of global markets — especially the fear that companies and capital are going to flee to wherever wages, taxes, and regulation are the lowest — as inevitable. The pandemic laid bare the challenges of this approach, and we need to change it. We are committed to working with partners and allies to decrease the vulnerabilities in our collective supply chains.

And finally, fifth, our imagination. Our approach to supply chain resilience needs to look forward to emerging threats, from cybersecurity to climate issues. And so we are future-proofing and building back better.

Second, it’s clear from these reports that we need to take action. And today, we made a series of announcements to that effect, including on pharmaceuticals.

The Department of Health and Human Services is going to be using its Defense Production Act authority and funding appropriated under the President’s American Recovery Plan to invest $60 million in advanced pharmaceutical manufacturing technologies and R&D.

On advanced batteries, the Department of Energy will take steps to advance its support for battery research, manufacturing, and processing. This is going to include new rules to ensure that companies that develop new products based on federal R&D funding manufacture those products in the U.S., so what is invented in America will also be made in America by American workers.

On critical minerals and materials like lithium and rare earths that are essential in our fight to combat the climate crisis, we will be announcing a comprehensive strategy that includes increases in sustainable U.S. production and processing, and working with allies and partners to increase sustainable global supply and reduce reliance on geopolitical competitors.

Across all of our domestic and international efforts on minerals, we will maintain a commitment to adhere to the highest environmental, labor, and social sustainability standards, and support robust community engagement in the process, including Tribal consultations here in the U.S.

On semiconductors, the Department of Commerce will double down on their ongoing work to convene industry and work with allies and partners to increase transparency, communication, and trust throughout the semiconductor supply chain.

Finally, as we move to focus on our one-year reviews, the Department of Agriculture is announcing more than $4 billion in a robust suite of Build Back Better initiatives focused on building a more fair, competitive, distributed, and resilient food supply chain and food system.

Third, we need to be nimble and be able to address emerging supply chain issues at the same time as we’re continuing this work on these longer supply chain resiliency strategies. And that is why today we are launching a new Supply Chain Disruptions Task Force to tackle near-term bottlenecks in the semiconductor, homebuilding and construction, transportation, and agricultural and food industries.

This task force is going to be led by three Cabinet Secretaries — Secretaries Buttigieg, Raimondo, and Vilsack — and will bring in all-of-government approach to addressing the near-term supply and demand mismatches we are seeing in these sectors as the economy reignites.

They will be collaborating closely with industry, labor, and other stakeholders to surface solutions, share best practices, and take actions. And we at the White House are going to be their partners by their side. It’s going to be NEC, DPC, CEA, NSC — all of us working with them.

Throughout our work on supply chains, we have been heartened to see the bipartisan support for supply chain security and resiliency, including when the President started this review by meeting with a bipartisan group of senators in the Oval Office.

We look forward to working with Congress as we move these ideas into action.

And before I turn it over to my colleague and friend Peter Harrell, I want to note that our report’s findings reinforce the President’s call for making a once-in-a-generation investment in our nation’s production and innovation infrastructure. Those investments proposed in the American Jobs Plan and the American Families Plan will strengthen the public systems that connect manufacturing, researchers, workers, and small businesses, and will help unleash the power and ingenuity of the private markets to drive towards national resiliency.

Thank you. Peter?
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MR. HARRELL: Good afternoon. Thanks, Sameera. And it’s a pleasure for me to be here this afternoon. This is a signature initiative for President Biden. He is focused on supply chain resilience since his campaign, when he promised, almost a year ago, that if elected, he would direct his administration to expand investments in U.S. manufacturing and to take other steps to strengthen the resilience of U.S. supply chains.

Earlier today, pursuant to Executive Order 14017 that President Biden signed in February, we released publicly 250 pages of reports, assessing supply chain vulnerabilities and making recommendations, including immediate actions to address them.

Earlier this morning, National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese convened a meeting of many members of the Cabinet here at the White House, in the Roosevelt Room, to discuss the recommendations in this report and for the Cabinet members to commit to taking action across the U.S. government to implement those recommendations and other critical steps to address supply chain resilience.

While the President’s supply chain initiative has identified a number of vulnerabilities, I want to stress that our work has also found that the United States is well positioned to rebuild our productive capacity in key sectors and to strengthen our innovative leadership. We’re confident that working together with Congress, industry, labor, and other stakeholders, we can chart a new path that emphasizes resilience, security, broad-based growth, and sustainability.

As Sameera mentioned, the President and the entire administration welcome the strong bipartisan support that exists on Capitol Hill for strengthening American supply chain resilience.

Sameera highlighted a number of the domestically focused specific actions that the administration announced earlier today. I want to briefly discuss just a few of the actions that we’re taking internationally.

As Sameera said, America’s allies and partners are a great strength of our nation, and we must work in partnership with them on supply chain resilience. We’re announcing today a commitment from the U.S. Development Finance Corporation to increase high standards overseas investments in U.S. allies and partners and projects that strengthen supply chains.

We’re also asking the U.S. Export-Import Bank to develop a proposal for a new domestic finance window that would, if approved by EXIM’s board, provide financing to build manufacturing facilities and infrastructure here in the U.S. that will support U.S. exports of critical products, which will help our allies and partners.

We’re going to be increasing our diplomatic work with our allies and partners on supply chain security. Supply chain security will feature prominently on the agenda for President Biden’s trip to Europe starting later this week, including at the U.S.-EU Leaders Summit scheduled for early next week, and was already a major element of President Biden’s summits earlier this spring with key U.S. allies in Asia.

We’re also recommending that President Biden host a global forum at the head-of-state level to convene key global leaders to strengthen supply chain cooperation.

Finally, we know that as we strengthen cooperation with our allies and partners, we also have to push back against unfair trade practices by competitor nations that have hollowed out the U.S. industrial base and undermine our supply chain security. We’re launching a U.S. Trade Representative-led supply chain trade strike force to identify unfair trade practices that undermine U.S. supply chains and to identify specific trade actions we can bring to combat those practices.

We’re also asking the Commerce Department to evaluate a Section 232 action on neodymium magnets — which are essential to motors and a range of defense and industrial applications — to identify tools to reduce our foreign dependency. This would demonstrate the type of targeted but tough action we expect the trade strike force to deliver.

I want to thank members of the Cabinet and their staff who contributed to these reports and actions. The initiative represents an immense amount of work, and we know we have much more in the weeks and months ahead. We’ll be working to implement all of the recommendations summarized in the report, and carrying forward the work to a second phase directed by EO 14017, which is already underway and consists of broad studies of the supply chain risks of six key industrial base sectors. Those industrial base sector supply chain reports will be due next February, on the year mark of Executive Order 1417 [14017].

It’s been an honor for all of us to work on this initiative, and I’m sure we’ll be talking about it with you regularly as our work goes forward.

Thank you, and we look forward to a couple of questions.

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Psaki: Okay. Go ahead, Phil.

Question: Thanks, Jen. I think probably for Sameera, can I flesh out a little bit the Supply Chain Disruptions Task Force? Obviously, you guys believe what’s happening right now is transitory. But these mismatches exist; they’re creating near-term problems. Do you expect this task force to be coming up with ideas and proposals in real time? Are they reporting at a specific clip? Kind of, how do you expect this to work to try and address these things that are problems right now?

MS. FAZILI: Yep. Well, one, I want everyone to remember and recognize that these are, kind of, good problems to be having. At this time last year, we had bare grocery shelves and we had people going hungry. And thanks to the President’s American Rescue Plan, we have people finally able to be out there moving again, visiting families this summer, and going out to eat.

So, these are — these are good problems to be having and to be working — working on right now. We’re thankful for that and the success of our COVID vaccination strategy.

But I think what you just saw us do right now is a 100-day sprint around four products. And when we say we’re going to take sprints and take actions, we mean a sprint and we mean action. And so, here, our Cabinet Secretaries, who are in the lead, you’ll see in the days and weeks ahead, they’re going to be bringing together all stakeholders to really diagnose the problems, understand what’s going on out there in these markets, and see what actions can be taken to close those vulnerabilities.

We recognize that, in some instances, those actions are going to be actions that the private sector, other stakeholder groups, they need to be the ones taking action. The answer is not always government taking the action here. But we are — we have learned in our work with the semiconductor, kind of, producers and users that when you bring people together, you help them increase trust, increase transparency, and stimulate a lot of learning that sparks action.

Psaki: April.

Question: This is for Sameera and Peter. Sameera, you used the word “weakened.” And as we’re talking about supplies, I’m looking at the link with inflation. What should the American consumer be looking for now as we’ve come up with this report and the weaknesses that you’ve talked about as it relates to inflation?

And then, Peter, for you: You used the words, “vulnerability.” With putting “weakened” and “vulnerability” together, there’s some kind of economic parallel with this. Where are we economically in this nation? What is our status? We are staving off, or have been trying to stave off depression. Where are we economically? Are we still in recession — a deep recession? Where are we? If you can answer both of those questions.

MS. FAZILI: Look, I think where we are economically is the U.S. is clearly the engine of global growth right now. Our economy has reignited, and the rest of the world is being buoyed by our successes here.

So the economy is fundamentally in a position of strength, but this President has consistently said that what we need to do is take this moment to build back better.

So when we talk about weaknesses and vulnerabilities in this report, we’ve identified structural, long-term problems that have built up over time in our economy, and that is why this President has been out there calling for Congress to take action on his American Jobs Plan and American Families Plan — because what we need now is a transformational investment to make sure we can actually grow from the bottom up and the middle out.

Peter, do you want to —

Question: What about inflation?

MS. FAZILI: Peter.

Question: What about the issue of inflation, though, that’s ()?

MS. FAZILI: Oh, you know, on these supply chain bottlenecks that we’re seeing, these — some of these — these price dislocations, these temporary increases in delivery time — we fully expect these bottlenecks to be temporary in nature and to resolve themselves over the next few weeks. Like, if — again, these are good problems to be having. Demand came back much quicker than even companies expected. I think the success of our vaccination campaign surprised many people, and so they weren’t prepared for demand to rebound in this way. But we still expect this to be transitory in nature. We’re going to keep an eye on it, but we think it should resolve in the next few months.

Question: And the status — and the status of where we are economically? Recession, staving off depression, deep recession — where are we?

Psaki: I mean, I think — I think Sameera addressed that. I just want to —

Question: No, she said — okay, strength.

MS. FAZILI: Strength.

Question: Okay, good.

Psaki: Josh.

Question: Can I ask a little bit more about the semiconductor portion of this?

MS. FAZILI: I mean — and I’ll point you to, on Friday, the OECD report. We’re, like, the one advanced economy that, I think, our growth projections are above where we were at the pandemic. Was it 6.9? So —

Psaki: Go ahead, Josh.

Question: On semiconductors: How do you plan to balance funding or support for foreign manufacturers — allies, partners — and domestic manufacturers? Is there going to be a preference given to domestic, or is there a risk that this could, you know, support foreign manufacturers in a way that actually undercuts the domestic industry? How, if at all, do you plan on balancing that?

MR. HARRELL: So, I think we are taking an all-of-the-above strategy to semiconductor manufacturing and expanding semiconductor manufacturing, both here in the United States and abroad.

As you know, the President has called for Congress to appropriate at least $50 billion to strengthen semiconductor manufacturing here in the United States, including both leading-edge semiconductors and also some of the more mature semiconductors where we’re seeing current shortages for automotive manufacturing and industrial applications.

Generally speaking, consistent with the proposal in Congress, we would expect to encourage both foreign and American companies to invest here in the United States. And I think we’re already seeing some announcements of that where we’ve seen announcements from Intel, from Samsung, from GlobalFoundries, from a whole range of both foreign and American companies to expand capacity here.

But it isn’t just from an overall strategy; that money is going to be about attracting capacity here in the United States. But from our overall strategy, it’s not only about expanding capacity here in the United States, it’s also about working with allies and partners. Yesterday, for example, Bosch, the major European automotive supplier, opened a new automotive semiconductor factory in Germany. That’s going to help alleviate some of the global shortages we’re seeing.

So while that money is going to lead to greater production here in the United States, and we’re expecting to see a major increase in production over the next couple of years, this is also an area where we see opportunities to work with allies and partners.

Question: So you would treat an investment in the U.S., in a semiconductor plant, equally, whether the investor was a foreign company or an American one?

MR. HARRELL: So we expect that the incentives will be available on a competitive basis to both foreign and American companies. I’m not here to get into the specifics of exactly how the program will be implemented, if Congress, in fact, passes — passes it.

Question: And, finally, can you talk a bit about the trade strike force? What are they tasked with doing or able to do that USTR doesn’t do already?

MR. HARRELL: So I think the trade strike force is a vehicle to leverage a number of our existing trade tools, but to really focus them on supply chain vulnerabilities. You know, we have — as we looked across the four products that we are releasing reports on today, we saw example after example where an unfair foreign competitor action had led to the hollowing out of a supply chain for a key U.S. product.

And these are all often very specific things those foreign governments are doing. So what this is going to do is harness and focus the government agencies involved in trade enforcement on how do we use our trade tools to strengthen — to combat unfair trade practices that impact supply chains and to strengthen U.S. supply chains. And I think the neodymium magnet — 232 — we’re asking Commerce to evaluate is an example of that.

Through our reports, we identified a very specific product where there’s a very specific supply chain vulnerability, and we’re getting the task force to look at that.

Psaki: Brian.

Question: Yeah, I guess, the Disruption Task Force — are you all going to be looking at ransomware attacks? And how will you deal with it internationally?

MS. FAZILI: On ransomware?

Question: Yes.

MS. FAZILI: The Disruption Task Force is focused on semiconductors, lumber and construction — or homebuilding and construction materials; it’s not going to focus on ransomware and cybersecurity. We have a whole —

Question: So how will you deal with that?

MS. FAZILI: — other process in place, led by our National Security Council, that addresses cybersecurity risks and issues.

Question: And, internationally, you’ll deal with that how?

MR. HARRELL: So I think you saw, the other day, Deputy National Security Advisor Neuberger talk about some of the steps that the administration is taking to address ransomware. She is leading a process to identify and close vulnerabilities that we face from ransomware.

One of the sets of issues we have been looking at in our supply chain review, both on these four products and in our year-long industrial base, is cybersecurity risks to our supply chains. Clearly, cybersecurity risks can disrupt supply chains. But Ms. Neuberger is leading the, sort of, focus response to the ransomware issue.

Question: So that’ll be two siloed — two different things? Or are they working together ()?

MS. FAZILI: I would not say it’s siloed. We work very closely. I think Peter and I being up here shows you how closely the National Economic Council and National Security Council work together on issues where it makes sense for us to come together. And so, on cybersecurity, you have seen us behind the scenes working together to figure out how we can leverage our tools and our convening power to have a full government response repeatedly.

Psaki: Okay, last one. Right in the middle. Go ahead.

Question: Will the administration unbundle — work on unbundling large contracts to ensure that Black-owned companies can compete for them?

MS. FAZILI: So, we are very focused on trying to make sure that our Build Back Better agenda — sorry, it’s hard to see — is it okay if I stand here —

Psaki: Sure.

MS. FAZILI: — to be able to look — yeah. I relate. I relate.

No, we are — we are really focused on making sure that as we talk about diversifying supplier bases here in these reports, that we are not just talking about small businesses but
we’re talking about disadvantaged businesses as well, and minority-owned businesses. And so, you’ve seen in our American Jobs Plan that we put proposals in there related to small business and strengthening small business. And we know that an important piece of that is leveraging federal procurement and power of the government to support those businesses. So —

Psaki: Christian has been very eager in the back. Go ahead, Christian. Last actual one.

Question: You talked about the Export-Import Bank and some of the financing that is going to be done to shore up industrial manufacturing here in United States. Under the previous administration, though, China was one of the top destinations of U.S. export-import financing. An overwhelming majority of that money actually went to state-owned enterprises. Is the administration looking at anything in terms of financing that goes to some of these industries overseas? Shouldn’t, you know, the priority be making certain that money stays here?

MR. HARRELL: So that’s actually exactly the proposal we’re asking the Export-Import Bank’s board to evaluate: is a new window that would foster direct EXIM Bank financing for the construction and manufacturing in infrastructure here in the United States.

Obviously, they have a longstanding set of programs that finance the export of products made in the United States to foreign buyers. But, actually, it’s exactly what we’re asking them to look at is ways to expand the financing for construction and investment here in the U.S.

Psaki: Thank you both so much for joining us. Appreciate it. Always welcome.

MR. HARRELL: Thank you.

Question: Thank you.

Psaki: We love to talk about supply chains in here.

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