CHIPS Act is ‘once-in-a-generation’ opportunity
The pandemic made us all painfully aware of the risk of relying on goods and components from distant locations. Geopolitical shocks, such as the war in Ukraine and ongoing economic and political competition with China, highlight the importance of sourcing products closer to home.
President Joe Biden has emphasized developing more resilient and secure supply chains to strengthen domestic manufacturing and maintain our competitive edge. With the passage of last year’s CHIPS and Science Act, now is the time to improve our North American supply chains.
In early January, the three North American heads of state met in Mexico City and agreed on the need to work together to foster regional integration, strengthen supply chains and attract investment in critical emerging technologies, including semiconductors and electric vehicle batteries. The three heads of state published an aptly named statement, called DNA: The Declaration of North America. Of course, national security will always be first and foremost, but the challenge before us also requires thinking in regional terms.
As a senior member of the House Appropriations Committee, I included language in the appropriations bill directing the Department of State to develop a strategy for bolstering cooperation with Mexico and Canada on supply chain resiliency, with a focus on semiconductors, health care industry products and other critical technologies. Relocating our supply chains closer to home benefits the nation, but especially border states such as Texas, by creating good-paying jobs and fostering trade.
The U.S. and Mexican business sectors have made progress
promoting stronger and more competitive supply chains. They have launched initiatives focused on semiconductors, printed circuit boards, or PCBS, and medical equipment supply chains.
As a result of last year’s CHIPS Act, several companies have announced multibillion dollar investments in new facilities to produce cutting edge microchips in the U.S. Mexico has a complementary role in this supply chain. Several companies are designing microchips and testing, packaging and assembling semiconductors in Mexico. This binational approach will allow for a greater percentage of this supply chain to relocate to the region. The U.s.-mexico High Level Economic Dialogue, a governmentto-government initiative to strengthen the bilateral economic agenda that I helped establish, has already embraced this project.
Through the U.s.–mexico CEO Dialogue, a binational private sector-led effort to produce policy recommendations to governments, U.S., Mexican and foreign firms — such as the Taiwanese PCB leaders — are exploring investment opportunities in the PCB and medical equipment sectors in North America.
Furthermore, the North American heads of state summit resulted in a new trilateral framework to further encourage nearshoring.
Current engagement by senior public officials and private sector leaders from the United
States, Mexico and Canada is encouraging, but not enough to reap the full benefits of this once-in-a-generation opportunity to attract unprecedented investment to the region.
To succeed, North American governments should ensure a favorable investment climate prevails. The first step would be a commitment to the strict implementation of the North American business contract: the United States-mexico-canada Agreement. Solving current compliance disputes on energy, automotive production and genetically modified corn would send the right message to foreign conglomerates eager to relocate in North America. With further collaboration, our three nations can ensure we capitalize on this opportunity to strengthen our supply chains and achieve continued economic prosperity.