The ongoing coronavirus pandemic tearing through our communities is more than a health crisis — it has “exposed the fragility and flaws of globalized supply chains and extensive offshore production, especially drugs and medical gear,” writes Austin Bay in a new column for Townhall with a special emphasis on China.
Hopes that China would liberalize in the wake of economic globalization that had “entwined the U.S. and Chinese economies in the 1990s” were misplaced. Warning signs of this — and of the consequences of an over-reliance on China for critical materials (such as in the form of the 2010 rare earths embargo) — were ignored, but with COVID-19, the chickens have come home to roost.
To minimize the damage and better prepare for the future, it is time for the United States to “decouple and control,” says Bay, explaining “[d]ecoupling is wonkspeak for separating supply chains. (The word’s easy; the chains and decoupling process are complex horrors.) ‘Control of production’ means ‘build it yourself.’”
Bay invokes last month’s Senate Committee on Energy and Natural Resources hearing on securing supply chains post-COVID, during which panelists briefed Senators on the urgency of the situation and drove home the point that “China and Russia have significant control over ‘upstream raw resource supplies’ and manufacturing finished products.”
He argues that as America begins the – arguably painful — process of decoupling and controlling, it can rely on allies like Mexico, Canada, and “roughly a dozen other nations for the production of critical military and health-related goods,” and that especially the new NAFTA, United States Mexico Canada Agreement (USMCA) which has replaced the nearly 25-year-old North American Free Trade Agreement, can be a “powerful economic and diplomatic tool for decoupling from China’s pirate economy.” Other allied nations in the Indo-Pacific, Bay thinks, might be good candidates for a similar arrangements going forward, as China cannot be trusted.
“Beijing’s recent decision to impose its national security law on Hong Kong renders the Sino-British Joint Declaration of 1984 null and void.(…) So another Chinese Communist Party guarantee has entered the dustbin of history. (…)
To protect their own political, economic and military security, the U.S. and other democracies must treat Beijing’s CCP regime as the aggressive adversary it is.”
Thankfully, the urgency of the situation is — finally — resonating with U.S. policymakers on Capitol Hill, in the Cabinet Departments and at the White House. Legislation has been drafted and introduced, and new executive orders take aim at domestic strategic materials and critical mineral development. Cabinet departments like the Department of Energy are also broadening their focus to account for the risks associated with our over-reliance on foreign (and especially Chinese) critical metals and minerals.
Before the coronavirus pandemic hit, the U.S. had begun to enter into cooperative agreements with allied nations to ensure future supplies of critical materials, specifically with Canada and Australia. As we emerge from the fog of COVID-19, forging ahead with these types of agreements, and fostering a policy environment conducive to harnessing the United States’ vast domestic mineral potential will become paramount for our national security and economic wellbeing.