Key commodity: Don’t rely on your own supply

Key commodity: Don’t rely on your own supply



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Hello, Brussels.European Union Just announced It did not further increase tariffs on American imports in retaliation for Donald Trump’s 2018 tariffs on steel and aluminum, which will be raised on June 1. . . what exactly is it? More conversations, it will appear.The U.S. says it will adopt a more comprehensive strategy to deal with Global steel overcapacity Tariffs must be raised first. Yes, yes, free ice cream and souvenirs make protectionism respectable again, but baseball caps are everyone’s problem, but overcapacity is mainly a Chinese problem. How should the EU deliver it?

In more transatlantic news, at the Global Health Summit in Rome this weekend, Brussels will try to come up with something that sounds as impressive as the United States’ support for the World Trade Organization (WTO) to abandon vaccine patents.

Today’s main topic is to resume discussions on industrial policy and global supply chain management based on vaccine experience. We are skeptical about this. Charter waters Examining the evidence from North America, it shows that the increase in freight costs is not so much the demand for durable consumer goods, it is more of a restriction on capacity.

We hope to hear from you.Send any ideas to [email protected] Or email me [email protected]

The success of the EU vaccine revives the supply chain debate

An academic economist (in this case, Paul Romer) put forward the slogan “The crisis is a terrible thing”, and later Paul Romer (Paul Romer) continued to win the Nobel Prize (although the fact is not So), policy-making conditions). It is speculated that Covid-19 has unsettling many policy areas that were previously considered unchanged or at least dirty in advanced economies. The private sector-driven model of globalization is among them.

In the months after the first pandemic, people talked about making the supply chain more resilient to shocks, usually involving relocation, proximity, or regionalization.We have been suspicious This would go a long way, and so far we think we have been defended to a large extent. In the EU, resilience is the driving force, Led by French internal market commissioner Thierry Breton (Thierry Breton) has actually not achieved much, except for many voluntary public-private alliances and many counsels.

Three things revitalized the debate.One is the EU’s vaccine problem Make up the ground Very slow from the beginning Bretons believeBecause he is united between drug manufacturers and distributors. The second is Joe Biden, who has excelled in establishing an international alliance to ensure the supply of critical materials.Three, a reminder from vulnerability Global shortage semiconductor.

At this stage, we remain skeptical, but please be careful.The European Commission launched two weeks ago Update In the original industry strategy document released in March 2020, the document discussed some important Industries and products, Including key raw materials such as rare earths, active pharmaceutical ingredients, semiconductors and cloud computing.

However, many of them bear the mark of the Bureau of Trade and Competition and are accustomed to being skeptical of industrial intervention. The assessment shows that the EU only accounts for 0.6% of total imports in value terms. It is severely impacted by insufficient supply and there are few other domestic substitutes. Recommendations to improve resilience include heavy reliance on the private sector itself, plus some existing tools, including trade defense tools and competition policy, as well as the foreign subsidy program we wrote last week.

Unfortunately Industrial policy enthusiastsIt is not clear that the Vaccine Initiative provides a model. It involves several atypical factors: the urgency of the Romean crisis; a large amount of public procurement funds, a department for large-scale government participation (pharmaceuticals), and, most importantly, the existing world-class vaccine production industry Do not rely heavily on inputs that are difficult to replace abroad.

Electric car batteries or semiconductors are difficult to replicate, as a glimpse across the Atlantic will tell you. Chad Bown of Peterson Institute, from a professional point of view, huge The crisis pointed out: “Compared with the European Union, the US government has more funds and power to direct the supply chain, but it also has international coordination problems.”

In the 1980s, in the face of competition from Japan, the U.S. government and more than a dozen U.S. companies established Sematech, a public-private semiconductor research alliance that usually succeeded in establishing a strong influence in the United States.But since then, the supply chain has International decentralization.Indeed, Sematech itself Stop taking The US government invested funds in the mid-1990s and began to look internationally.

So far, the United States strategy The process of establishing semiconductor supply security involves rough measures aimed at restricting exports to China, including pressure on companies from friendly countries such as the Netherlands and Japan.This must have produced Encouraging China’s semiconductor industry serves its domestic market, backed by the kind of government support that its counterparts in rich countries dream of.However, by dragging the US semiconductor industry into trade war And deprived of its profitable foreign market strength, US actions may actually weaken the United States’ resilience in this field. Bowen said again: “The United States not only has to tell Japan, South Korea, and the Netherlands what they can and cannot export. If it wants to subsidize production, it needs to coordinate these subsidies among countries. But when faced with mass deaths, We can’t even do this with vaccines, so it’s not clear whether we will use semiconductors for management.”

As we said, we will continue to focus on this matter. Thank you for receiving any information or ideas. However, although there are some developments that should make the supply chain more resilient, there are still not many signs of coordinated action.

Chartered waters

One aspect of the supply chain debate is of course logistics. But is this a problem of capacity constraints or a problem of the surge in demand for consumer durables? It may be both.But the data from North America is taken from the Cass Freight Index, which is Based on 33 million invoices, It is recommended that you do not have too many unused freight.

The data is not without flaws. We are comparing two different things-price and quantity. But rising prices, coupled with a moderate increase in quantity, indicate that the logistics supply chain is fully functioning.

Due to the lack of Covid-related restrictions, this lack of capacity may disappear. The reopening of restaurants and bars and other public places can also reduce the demand for durable goods. Both of these factors affect freight costs. But people have been talking about the drop in transportation costs for some time. They are still aloof. We may have to wait longer than we thought before actually seeing costs drop to near pre-pandemic levels. Claire Jones

Trade ties

Currently, the market is very scared of this. Possibility of inflation (More about “Financial Times” new Unhedged communication, Signed by the outstanding Robert Armstrong. These price pressures are partly due to bottlenecks in global supply chains. Does all of this have a trade policy perspective? of course. Sebastian Malabi Thinking Will trade tensions and “buy the United States” weaken the ability of global competition to curb price increases?At the same time, Reuters reported that the U.S. Trade Representative Katherine TaiYes Under pressure The measure taken by lawmakers and the construction industry is to relax tariffs on one of the products whose prices have soared: Canadian timber.

Brexit latest: The British minister reached a bad agreement through negotiations. Everyone told him that it was a bad agreement. Recently, he found it was bad. Now he says it’s a bad deal. Let someone else fix it.

The Brussels team of the Financial Times (in conjunction with David Piling in London) has a scoop The EU plans to vigorously promote Expanding vaccine production in Africa. This was carried out before the health summit to be held later this week, with the idea that shooting in the arms of the people is not to give up intellectual property rights, but to make shooting easier.

Nikkei Index Interesting reading how is it Political tensions in Myanmar China, which has led to sanctions, is hurting local companies. An independent report urged Danish bestseller companies to resume sourcing from Denmark “as soon as possible” because the withdrawal of international companies threatens widespread poverty and famine. Like other Western companies, the clothing brand suspended orders after the coup in February. Alan Beattie and Claire Jones

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