May 2022 Volume 4

WASHINGTON UPDATE

Incongruously, the Administration and many in Congress simultaneously support ratcheting up Made in America rules, restricting imports of steel and aluminum from key allies, and advancing electric vehicle incentives that would harmour allies’ auto sectors. In the State of the Union, President Biden stated, “Instead of relying on foreign supply chains, let’s make it in America.” This may be politically popular rhetoric, but it is not especially prudent policy. An enforceable SEAD that includes market access commitments could foster coordination to promote members’ collective supply chain resiliency, especially in critical and strategic sectors. The SEAD could also drive collaboration on a range of other priorities, such as national security, including export controls; energy security; technology and innovation policy, including digital; labor, environmental and human rights; and combatting climate change. It would also offer a massive playing field upon which to advance the Administration’s worker-centered, inclusive trade policy agenda. Policy questions that the SEAD raises include: • What are the criteria for SEAD admission? Can emerging markets with weaker institutions who can help counter China join? Nations that are key sources of critical and strategic minerals? Nations representing meaningful U.S. export opportunities? • Could the SEAD impair efforts to work with China on shared challenges, like climate change? • What would the SEADmean for the moribundWTO? Could the SEAD drive China and other nations opposing reform to the negotiating table? • If China views the SEAD as a security threat, how will it respond? The SEAD also raises a number of political questions, including: • Could the current G-7/NATO+ collaboration be maintained during a longer, more complex SEAD negotiation intended to counter a far more significant, yet less overt, threat – China? • Will populists in the U.S. and other democracies accept the various negotiated concessions necessary to create the SEAD because it counters China’s threat to economic and national security? If not, what are its prospects? • How does the SEAD handle non-aligned countries? What about Taiwan – can it join? • Is the United States considered sufficiently dependable for other nations to join SEAD negotiations and risk China’s ire?

These questions raise difficult, but not insurmountable, issues that will need to be navigated to successfully conclude the SEAD. And it is obvious that the SEAD is not the elixir that will address all our ills. To ensure our future economic competitiveness, additional work on the domestic policy front is also needed. For instance, as discussed in the Department of Defense’s recent supply chain report, “[t]he U.S. C&F [casting and forging] industry faces challenges related to capability and capacity, workforce, and U.S. Government policies.” But as the last fewmonths have made clear, we have entered the post - post-Cold War trade policy era. Maintaining the current course is neither realistic nor wise. To address the U.S. national and economic security threat posed by China, especially our reliance on Chinese supply chains, we need to go big and pursue the SEAD. Alex Perkins, Principal Mehlman Castagnetti Rosen &Thomas Phone: 202 754 1726 Email: aperkins@mc-dc.com

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