2024-12240. Request for Comments on Commerce Supply Chain Risk Assessment and IPEF Supply Chains

AGENCY:

International Trade Administration, Department of Commerce.

ACTION:

Notice; request for public comments.

SUMMARY:

The Department of Commerce (Commerce) seeks public comment to inform its work on assessing and analyzing risk in global supply chains. This includes input into a determination of an initial list of “critical sectors” and “key goods” as provided under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience (Supply Chain Agreement). The United States' initial list will be shared with the IPEF Supply Chain Council members and will inform work undertaken pursuant to the Agreement. Comments will also inform other analytical tools and methodologies developed by Commerce's Industry & Analysis unit to support resilient supply chains for U.S. industry.

DATES:

To be assured of consideration, submit any written comments by the June 21 deadline. Commerce may consider comments filed after the deadline.

ADDRESSES:

You may submit comments, identified by 240530-0148 by the following methods:

Online Submission (Strongly Preferred): Submit all electronic public comments via the Federal e-Rulemaking Portal. Go to https://www.regulations.gov and enter 240530-0148 in the Search.

Email Submission to [e-mail]: Comments submitted by email should be machine-readable and should not be copy-protected.

FOR FURTHER INFORMATION CONTACT:

Kevin Doyle, Policy Advisor for IPEF, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone [phone]; or emails at [e-mail].

Ahmad Khalil, Managing Director, Risk Assessment and Advanced Analytics, Supply Chain Center, International Trade Administration, Industry and Analysis unit, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone [phone]; or emails at [e-mail].

Please direct media inquiries to ITA's Office of Public Affairs at [e-mail].

SUPPLEMENTARY INFORMATION:

Background

Building supply chain resilience is a top priority of the Department of Commerce, building on a long history of supply chain work led by the Industry & Analysis (I&A) unit in the International Trade Administration (ITA). I&A is comprised of a broad set of industry experts with unique commercial perspectives in understanding supply chains and informing and driving policy action. In 2023, the Department launched a first-of its-kind Supply Chain Center to serve as an analytic engine to help drive decision-making and policy action on efforts to strengthen supply chain resilience, leveraging I&A's deep industry expertise, quantitative data, and advanced analytics to help make the government's work on supply chains more proactive and impactful. The Center is facilitating collaboration across I&A, other parts of Commerce, and other government agencies to support a proactive approach by the U.S. government in getting ahead of supply chain challenges, to be strategic in setting priorities for policy focus and action based on data-driven risk analysis, and to serve as a force multiplier in improving the targeting and effectiveness of U.S. government investments. Across these efforts, the Department depends on close partnerships with stakeholders from government, industry, academia, labor, and civil society.

Department of Commerce Supply Chain Risk Assessment

Central to the Supply Chain Center's work are efforts to boost the U.S. government's ability to understand systemic supply chain risks by building a cross-sectoral risk assessment framework (the “tool”). The tool will utilize a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy, with an emphasis on risks to national security, including economic security, most relevant to the U.S. government. The goal is to help the U.S. government more comprehensively and systematically identify supply chain vulnerabilities and pursue in-depth analysis for actionable and evidence-based policy recommendations.

This is the first effort by the U.S. government to assess supply chain vulnerability across all major sectors of the economy. This tool will help the U.S. government to determine—at the sectoral, and eventually product, level—where there are hidden vulnerabilities that could be addressed through policy action by the U.S. government and/or public-private partnerships.

The supply chain risk assessment framework is an iterative tool. The latest version of the framework incorporates upwards of 40 indicators of risk that relate to a sector's criticality to the U.S. government, vulnerability to disruption, and resilience in the face of disruption.

Examples of criticality of a product or sector include products listed in the White House Critical and Emerging Technologies list, the products required for the Department of Defense industrial base, and products central to U.S. public health and safety, such as pharmaceuticals and certain nutritional foods.

The vulnerability indicators cover six categories of risk: geopolitical; economic; logistical; business/financial; technological; and environmental.

Resiliency indicators focus on how quickly a sector can bounce back from a disruption, considering levels of substitutability, unutilized capacity, and replacement of key inputs.

The Center has been consulting with relevant external stakeholders in the development of this tool as well, including reaching out to dozens of industry and academic experts. The vision and success of this framework depend on close collaboration with industry stakeholders, as well as those from government, academia, civil society, labor, and others, to gather insights, develop accurate assessments of risks and mitigation options, and then take targeted and coordinated action to advance U.S. supply chain resiliency and competitiveness.

The creation of an economy-wide risk tool is an important element of the Commerce Department's Supply Chain Center work, though not the only instance in which the Center is leveraging big data and the qualitative insights of industry experts and economists. The Center is also leveraging analytic tools for targeted scans of critical sectors; expanding its ability to model scenarios and evaluate the potential impacts of proposed policy actions; and deepening its proactive analysis through case studies and replicable and scalable frameworks and toolkits for supply chain analysis and policy action. The Center is also bolstering its ability to produce quick-turn analysis in the event of supply chain disruptions by building partnerships with academia, civil society, labor and others as well as standing playbooks that can help inform policy responses and industry engagement.

IPEF List of Critical Sectors and Key Goods

Commerce's supply chain resilience efforts are also being advanced through the Supply Chain Agreement. Launched in May 2022 with 13 regional partners—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam—IPEF seeks to establish a platform for long-term economic engagement and cooperation, and to tackle present-day challenges.

Negotiations among the 14 IPEF partners for the Supply Chain Agreement substantially concluded on May 27, 2023, and a signing ceremony of the Agreement was held on November 14 of that same year. The Supply Chain Agreement entered into force on February 24, 2024, after the fifth partner deposited its instrument of ratification, acceptance, or approval. As of May 6, 2024, a total of six partners—Japan, the United States, Singapore, Fiji, India, and the Republic of Korea—have deposited their instruments, in that order.

Parties to the Supply Chain Agreement intend to collaborate on initiatives aimed at strengthening the resilience and competitiveness of target supply chains, better preparing for and responding to supply chain disruptions, and enhancing the role of workers across these supply chains. To do this, the Supply Chain Agreement establishes three supply chain bodies tasked with facilitating various forms of cooperation—a Supply Chain Council, a Crisis Response Network, and a Labor Rights Advisory Board. Parties to the Supply Chain Agreement shall, and signatories that have not deposited an instrument of ratification, acceptance, or approval may designate representatives to these bodies to discuss and carry out this work.

Article 10 of the Supply Chain Agreement requires the development of initial lists of “critical sectors” and “key goods,” which will then be shared through the Supply Chain Council. The Parties can change or update these lists at any time. As the U.S. Government's representative to the Council, the Department of Commerce, through the International Trade Administration (ITA), is leading the process to prepare and submit this list on behalf of the United States, and intends to update the list periodically, as appropriate and as envisioned under the Supply Chain Agreement.

These lists will, among other things, inform discussions among the members of the IPEF Supply Chain Council on opportunities for collaboration under the Supply Chain Agreement through the IPEF Supply Chain Council. Such collaboration could take the form of actions to promote business matchmaking, encourage investment, or improve policy coordination in areas impacting supply chains, among others. The Council may establish teams to develop Action Plans to provide recommendations to promote resilience and competitiveness for critical sectors or key goods based on the lists provided. Those critical sectors and key goods that appear on three or more lists are eligible for the development of an Action Plan.

Article 1 of the Supply Chain Agreement provides the following definitions of “critical sectors” and “key goods”:

• critical sectors means sectors that produce goods and supply any related essential services critical to a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;
• key goods means raw, in-process, or manufactured materials, articles, or commodities, the absence of which could have a significant effect on a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;

Article 10 of the Supply Chain Agreement further outlines the factors intended to be considered in identifying respective critical sectors and key goods. These include:

(a) the impact of a potential shortage on its national security, public health and safety, or prevention of significant or widespread economic disruptions;

(b) the level of dependence on a single supplier or a single country, region, or geographic location;

(c) geographic factors including actual or potential transport constraints, especially for its island or remote regions;

(d) the availability and reliability of alternative suppliers or supply locations;

(e) the extent of imports required to meet domestic demand;

(f) the availability of domestic production capacity; or

(g) the extent of interconnectedness with other critical sectors or key goods.

The Department of Commerce recognizes the importance of a deliberative and inclusive review and selection process for identifying the United States' initial list of critical sectors and key goods under the Supply Chain Agreement.

To assist in these endeavors, Commerce requests information from the public on the topics provided below.

Request for Written Comments

Instructions: This notice is intended to improve Commerce's understanding of public views on how the Department and I&A should assess risk in global supply chains, including what indicators and data sets it should include in the development of an economy-wide risk assessment tool, and how to apply the factors outlined in the Supply Chain Agreement in its determination of the United States' initial list of critical sectors and key goods under the Supply Chain Agreement. This notice is a general solicitation for public comments and further sets forth specific topics for discussion and comment. Commerce seeks broad input from all interested stakeholders, including U.S. industry, researchers, labor organizations, academia, and civil society. Commenters are encouraged to address any or all of the following questions and may respond with general views on how to apply these factors or provide specific information about a specific sector or good. To the extent commenters choose to respond to the specific questions asked, responses may be formatted as the commenter prefers.

Comments will be reviewed by Commerce staff, including the Supply Chain Center, the Industry & Analysis business unit offices, the IPEF team, and, as appropriate, Commerce contractors, and may be used to inform the agency's work on supply chain risk analysis as outlined above, as well as in identifying the United States' initial list of critical sectors and key goods for cooperation under the Supply Chain Agreement. Commerce intends to share the information received with relevant U.S. government departments and agencies, consistent with the Biden-Harris Administration's whole-of-government approach to strengthening supply chains.

Topics

General Methodology Questions (To Inform Commerce's Supply Chain Risk Assessment Framework)

• What tools, approaches, and methodologies do you recommend that Commerce utilize in order to identify priority products and sectors at elevated risk of supply chain disruption, particularly those of relevance to the United States based on national security, including economic security?
• More specifically, what definitions, indicators, and data sets do you recommend that Commerce use to evaluate the following aspects of supply chain risk:

○ Criticality of the product or sector to the United States

○ Vulnerability of the product or sector to supply chain disruption

○ Resiliency of the product or sector in the face of a supply chain disruption

• What tools, approaches, and methodologies could Commerce use to assess a supply chain's areas of greatest vulnerability? How can those vulnerabilities be quantified and tracked over time?
• What factors influence your organization's evaluation of risk in your supply chains? What additional data, information, or analysis from the U.S. government would you view as valuable in this assessment?
• How should the U.S. government leverage technological advancements to foster data collection, analysis, and dissemination for both public and private entities?
• What data, indicia, or criteria might help Commerce identify those supply chains where the market would be least likely to prevent or quickly resolve a disruption?

IPEF-Related Questions (To Inform the U.S. List of Critical Sectors and Key Goods Under the Supply Chain Agreement)

• How should Commerce assess “significant or widespread economic disruptions” for purposes of the Supply Chain Agreement? What thresholds or metrics should Commerce consider in assessing the risk of such disruptions for the purposes of identifying critical sectors and key goods?
• Which, if any, of the factors listed in Article 10 of the Supply Chain Agreement should Commerce prioritize in making its determinations of critical sectors or key goods for cooperation under the Supply Chain Agreement? Please offer a justification.
• In your view, bearing in mind the seven factors outlined above, what sectors and goods best fit the criteria for “critical sectors” and “key goods” for cooperation under the Supply Chain Agreement and why?
• For those sectors and goods that Commerce should consider “critical sectors” and “key goods” for cooperation under the Supply Chain Agreement, what types of activities, either by governments, by companies, or via public-private cooperation, would be most valuable to the private sector?
• The U.S. Department of Commerce requests U.S. small businesses (generally defined by the Small Business Administration as firms with fewer than 500 employees) or organizations representing U.S. small business members that submit comments to self-identify as such, so that we may be aware of issues of particular interest to small businesses.

Requirements for Submissions

To be assured of consideration, submit any written comments by the June 21 deadline. All submissions must be in English. Commerce strongly encourages submissions via Regulations.gov. Commerce may consider comments filed after the deadline. The docket number is 240530-0148.

To submit via Regulations.gov, use Docket Number 240530-0148 in the `search for' field on the home page and click `search'. The site will provide a search results page listing all documents associated with this docket. Find a reference to this notice by selecting `notice' under `document type' in the `refine documents results' section on the left side of the screen and click on the link entitled `comment'. Regulations.gov allows users to make submissions by filling in a `type comment' field, or by attaching a document using the `upload file' field. Commerce prefers that you provide submissions in an attached document named according to the following protocol, as appropriate: Commenter Name or Organization and “Commerce Supply Chain”. If you provide submissions in an attached document, please type `see attached comments' in the `comment' field on the online submission form.

Please include the name, email address, and telephone number of an individual Commerce can contact if there are issues or questions with the submission. You will receive a tracking number upon completion of the submission procedure at Regulations.gov. The tracking number is confirmation that Regulations.gov received your submission. Keep the confirmation for your records.

Commerce is not able to provide technical assistance for Regulations.gov. For further information on using Regulations.gov, please consult the resources provided on the website by clicking on `How to Use Regulations.gov ' on the bottom of the home page. You can contact the Regulations.gov help desk at [e-mail] or 1-866-498-2945 for help with technical questions on submitting comments on Regulations.gov.

If you are unable to submit through Regulations.gov after seeking assistance from the help desk, please contact Kevin Doyle at 202-779-0376 or [e-mail] or Ahmad Khalil at 202-963-9696 or [e-mail] before transmitting your application and in advance of the deadline to arrange for an alternative method of transmission. ITA will not accept hand-delivered submissions. ITA may not consider submissions that you do not make in accordance with these instructions. General information concerning Commerce's Supply Chain Center is available at https://www.trade.gov/​supply-chain-center. Commerce's work on IPEF is available at https://www.commerce.gov/​ipef.

Business Confidential Information (BCI) Submissions

If you ask Commerce to treat information you submit as BCI, you must certify that the information is business confidential and that you would not customarily release it to the public. For any comments submitted electronically containing BCI, the file name of the business confidential version should begin with the characters `BCI.' You must clearly mark any page containing BCI with `BUSINESS CONFIDENTIAL' on the top of that page. Filers of submissions containing BCI also must submit a public version that will be placed in the docket for public inspection. The file name of the public version should begin with the character `P.' Follow the `BCI' and `P' with the name of the individual or organization submitting the comments.

Public Viewing of Review Submissions

ITA will post written submissions in the docket for public inspection, except properly designated BCI. You can view comments on Regulations.gov by entering Docket Number 240530-0148 in the search field on the home page.

Public Burden Statement

A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with an information collection subject to the requirements of the Paperwork Reduction Act of 1995 unless the information collection has a currently valid OMB Control Number. The approved OMB Control Number for this information collection is 0690-0038. Without this approval, we could not conduct this information collection. Public reporting for this information collection is estimated to be approximately 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the information collection. All responses to this information collection are voluntary. Send comments regarding this burden estimate or any other aspect of this information collection, including suggestions for reducing this burden to the International Trade Administration Paperwork Reduction Act Program: [e-mail] or to Katelynn Byers, ITA PRA Process Administrator: [e-mail].

Dated: May 30, 2024.

Sharon H Yuan,

Counselor and Chief Negotiator for IPEF.