Governments should work with industry to mitigate supply chain risks, US official says

State Department’s Matt Murray also hailed agreement on global minimum tax reached in Rome

Governments must work with private industry to better understand and manage security risks to global supply chains, a senior State Department official said on Wednesday.

Matt Murray from the State Department's Bureau of Economic and Business Affairs told reporters that co-ordinating security needs with partners is critical to supply chain resiliency, adding that the issue was discussed at the G20 summit in Rome last week.

In an apparent reference to US-China relations, Mr Murray pointed to the solar sector. In June, the White House announced a ban on imports from a Chinese company that produces raw materials for solar panels due to reports of forced labour at its factory in Xinjiang.

“It's important that governments work with industry to better understand and manage security risks to supply chains and this includes a number of sectors, including in the solar sector," Mr Murray said.

“We’ve discussed that security needs to be recognised as a high priority for all players within supply chains, especially in technology supply chains at critical infrastructure."

Mr Murray touted the “extraordinary achievements” made at the G20 Leaders Summit, such as the agreement on a global minimum tax.

“This represents a once-in-a-generation accomplishment for economic diplomacy that will lead to increased prosperity in America and around the world,” Mr Murray said.

The global minimum tax rate would ensure multinationals pay a tax of at least 15 per cent on profits in each country in which they operate.

More than 130 countries representing 95 per cent of the world's gross domestic product have signed on to the global tax reform deal, building on an agreement reached when the UK hosted G7 ministers in London last month.

Each country must now implement the rules, something that would require broad bipartisan support in the US, where a bitterly divided Congress is unlikely to agree on the issue any time soon.

Multinationals operate in many countries but often pay taxes on profits only in tax domiciles cherry-picked for their low rates.

Mr Murray said that going forward, his office's focus will be on strengthening and diversifying the entire supply chain ecosystem, from raw materials to manufacturing, to shipping and distribution.

White House officials, scrambling to relieve global supply bottlenecks, say Americans may face higher prices and some empty shelves this Christmas season and have called for patience.

President Joe Biden said part of the solution would be to invest more in making products domestically so as to not be too reliant on overseas partners. His administration has been trying to tackle inflation-inducing supply bottlenecks of everything from meat to semiconductors.

Updated: November 3rd 2021, 4:22 PM