Published
May 19, 2020
As the United States and other countries respond to the COVID-19 pandemic, shortages of some medical products, like personal protective equipment (PPE), have led to renewed calls for “Buy American” rules and other measures to “reshore” supply chains.
Let’s be very clear: The U.S. Chamber of Commerce is laser-focused on making the United States the best place in the world to invest, manufacture, hire, and do business. Before, during, and after the pandemic, we are working around the clock to strengthen American industry here at home.
But as we debate this issue, we first have to get the facts straight. For example, it’s common to hear that 80% of the pharmaceuticals consumed in the United States come from China, but it happens to be wrong. In fact, 70% of our pharmaceuticals are made in America, and China is the source of less than 1% of all the pharmaceuticals Americans consume.
You wouldn’t know it from today’s press coverage, but the United States is the second largest exporter of medical goods worldwide, the second largest exporter of ventilators, and the third largest exporter of PPE.
Our need to first get the facts straight is why the U.S. Chamber supported the measure in the CARES Act calling for the National Academies to issue a report on the security of the U.S. medical product supply chain to inform policymakers as they examine these issues.
If we misdiagnose the problem, we run the risk of undermining our pandemic response, disrupting supply chains that are already largely domestic, and spurring foreign retaliation against job-sustaining exports.
There won’t be a one-size-fits-all solution to today’s challenges. But as this debate intensifies, here are five principles we hope policymakers can get behind:
First and foremost, stopping COVID-19 is a global emergency, and we need to address the emergency first. We should not impose measures that will complicate efforts to secure imports of goods like PPE that are saving lives.
Second, we mustn’t cut ourselves off from huge export opportunities that have long supported American jobs. For example, Europe is a giant export market for U.S. medical device manufacturers. If we impose “Buy American” rules on these products, it’s likely Europe will retaliate with “Buy European” rules — and American workers will lose out.
Third, a shortage can’t be addressed by reshoring when offshoring never happened. Shortages of PPE have been severe, but these shortages arose because the pandemic caused demand to rise 50 fold. As foreseen in decades of pandemic preparedness plans, the only way to get ahead of a pandemic-driven surge in demand is to stockpile key products in advance, as the administration is now doing.
Fourth, resilience comes from diversity of supply. Sourcing key products from suppliers in different locations is a key principle of risk management, and it’s what we see today in pharmaceuticals, for example, where the United States, Europe, and Asia are all major manufacturing hubs. This allows businesses to minimize the risk of systemic disruption when any one location is knocked offline.
Fifth, where vulnerabilities are clearly identified, strategic patience is required. Take antibiotics, where challenges include growing resistance to existing products and reliance on imports. Further, given the imperative of using antibiotics sparingly, researchers lack clear incentives to develop new products. Experts have called for a new incentive system — perhaps based on cash prizes — that could potentially leapfrog today’s problems. This can happen if we plan carefully and fund appropriately.
To keep America strong, we need to learn from today’s pandemic. In our drive to ensure a safe and secure supply of medical products, we need to look much more seriously at stockpiling, ensuring diversity of supply, and keeping trade open. It’s vital we learn the right lessons and safeguard our supply chains for a more secure future.
About the authors
John G. Murphy
John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.
