Two Big Steps Forward for U.S. Competitiveness

The U.S. Innovation and Competition Act and the White House’s supply chain report signal a new focus on promoting U.S. competitiveness.

06/12/2021 | Silverado Policy Accelerator

This week, with the passage of the U.S. Innovation and Competition Act in the Senate and the release of the White House’s report on supply chain resilience, the United States took two major steps toward securing our nation’s economic competitiveness, promoting its long-term resiliency, and advancing its global leadership. Silverado applauds these actions to address critical strategic challenges facing the U.S. in the 21st century, and we urge lawmakers from both parties to take swift action to realize the strategic vision laid out in these two documents.

Both the Senate’s legislative proposal and the White House’s report highlight issues across Silverado’s three pillars of focus, but taken together, they reinforce the core of Silverado’s vision: that, at the dawn of a new era of great power competition, the U.S. needs a long-term plan that brings together economic, technological, and environmental policies that bolster American competitiveness both at home and abroad.

The series of 100-day reviews compiled into the White House report on U.S. supply chains establishes a blueprint for necessary government action to revitalize manufacturing, double down on domestic investment and workforce development, combat unfair practices, and create more resiliency in the supply chains for four key industries: semiconductor manufacturing and advanced packaging, large capacity batteries, critical minerals and materials, and pharmaceuticals and active pharmaceutical ingredients. The report underscores the need for a rapid and long-term response to ensure an adequate supply of semiconductors, as well as increasing domestic production of critical medicines, securing an end-to-end domestic supply chain for advanced batteries, and investing in the production and processing of critical minerals.

Silverado supports a number of the report’s measures, including the creation of a trade “strike force” to propose enforcement actions against unfair foreign trade practices that have eroded critical supply chains. The report also calls for the establishment of an interagency team to address environmental issues and promote the sustainable production of critical minerals, which could be used as a model to support the production of semiconductors and batteries as well. The report concludes that, together with industry, allies, and partners, the U.S. must lead efforts to address short-term supply chain discontinuities, leverage all tools necessary to create more resilient supply chains, and develop a long-term competitive advantage to strengthen our economic prosperity at home.

The Senate’s proposal, which passed with rare bipartisan support, would commit over $250 billion to bolster critical American industries, support essential scientific and technological research, and counter China’s growing economic and military strength. Critically, the bill would commit over $50 billion in immediate funding to the U.S. semiconductor industry, which produces the ultrasmall computer chips that support America’s critical infrastructure and military technology. Despite its foundational importance to America’s economic development and national security, the American semiconductor industry has been at a grave disadvantage relative to its foreign competitors, many of whom benefit from extensive government subsidies and generous tax incentives. If approved by the House and once distributed by the Department of Commerce, the funds promised by the Senate’s bill would move America’s domestic semiconductor industry one step closer to a path toward long-term prosperity and cutting-edge innovation on a more even playing field.

Of course, these two proposals mark only the beginning of the push to bolster American competitiveness and level the international playing field. The Innovation and Competition Act now advances to an all-important vote in the House of Representatives, and the administration must work with the necessary agencies to effectively implement the key recommendations from the White House’s report.

Nevertheless, we are hopeful the proposals represent an acknowledgement that the U.S. must take immediate and decisive action to match the strategic investments being made by its global competitors. Silverado stands ready to work with Congress, the administration, and a range of stakeholders to ensure the successful implementation of the Supply Chain report and to help legislative proposals like the Innovation and Competition Act become successful policies.


Trade and Industrial Security

Great Power Competition