Janet Yellen, U.S. Treasury Secretary, reiterated that the United States and trusted trading partners must increase supply chain resilience via “friend-shoring,” but this doesn’t mean that the U.S. has abandoned the rest of the world.
Yellen gathered support from the U.S. allies to help build more robust supply chains with trusted partners via “friend-shoring” in a speech she delivered Tuesday at South Korean conglomerate LG Science Park in Seoul.
This term is based on “onshoring” or “nearshoring”, which are terms that refer to the transfer of supply chains from one country to another. “Friend-shoring” goes beyond that but limits supply chain networks Allies and countries that are friendly.
Since its inception, the United States has been demanding more security for its supply chain. the Covid pandemic started. U.S. President Joe Biden signed an order in early 2021 to review American supply chains with an aim to reduce reliance on foreign suppliers.
Biden Harris administration is very focused on the supply chain. This work is essential, and has been clearly illustrated by events in the past two year: first with Covid-19, and then by our efforts to defeat the pandemic. Russia’s brutal war of aggression in Ukraine,” Yellen said.
They have “redrawn” the lines of trade and supply chain globalization.
It is important to work with partners and friends through friend-shoring in order to increase economic resilience, as well as sustain economic integration’s dynamism.
These initiatives have raised concerns about a global economic decoupling. This is especially true as America and other countries try to reduce dependence on China.
These actions do not mean that the U.S. has stopped trading with other countries, according to Yellen. They are, in fact, a signal that friend countries have a long-term view on vulnerability to help make their economies more productive, according to Yellen.
Yellen declared, “We don’t want a retreat to the world. It causes us to forgo its benefits for the American people as well as the markets for business and exports.” in reference to deepening ties with South Korea.
“In doing so we can help to insulate both American and Korean households from the price increases and disruptions caused by geopolitical and economic risks … in that sense, we can continue to strengthen the international system we’ve all benefited from, while also protecting ourselves from the fragilities in global trade networks.”
This leg of Yellen’s Asia visit was dominated in part by the resilience of supply chains.
South Korea’s LG reaffirmed its U.S. cooperation, a $1.7B lithium ion battery manufacturing expansion. Yellen outlined Hyundai’s electric vehicle production facilities in Georgia as well as Samsung’s Texas semiconductor plant.
There are also other ventures to support supply chain resilience, such as the newly announced Indo-Pacific Economic Framework, Yellen added.
CNBC’s James Kim said that South Korea and America are “in an ideal place” with “friend-shoring”.Capital Connection” on Tuesday.
“This phase is my most thrilling in 18 years.”
Kim stated that while direct South Korean investment in America is higher than vice versa but American interest in Asia are increasing.
Kim stated that South Korea is now the most attractive country for regional headquarters after Singapore in a recent AmCham survey.