The Future of Global Supply Chains

Overview

Global trade and the supply chains that support it are undergoing a period of profound change, including structural transformations in the cross-border flow of goods and services thanks to liberalization and improved communication, as well as sweeping changes in big exporting economies, especially in Asia. At the same time, the United States and countries in Asia, Latin America, and Europe are seeking to update the global trade architecture with ambitious trade pacts such as the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Pact (TTIP), and other regional accords. Global supply chains face several challenges. Trade itself is becoming less of a driver of global growth, and is confronted by a resurgence of protectionism across nearly all major markets. Other threats include climate change, decaying infrastructure, cyberattacks, and human rights abuses, all requiring responses from both corporations and governments.

The Civil Society, Markets, and Democracy program at the Council on Foreign Relations hosted a workshop on May 4, 2016 with current and former government officials, supply chain experts, corporate representatives, finance specialists, and others to explore how globalized production patterns are evolving, the risks they face, and how companies and countries can improve compliance and resilience across supply chains through new trade standards, legal regimes, and policies. The report, which you can download here, summarizes the discussion's highlights. The report reflects the views of workshop participants alone; CFR takes no position on policy issues. 

Framing Questions for the Workshop

The State of Supply Chains

Unfinished goods and services now represent the majority of trade flow between nations as a result of the geographic slicing up of processes and production. What are the main factors that contributed to this emergence of global supply chains? What is the current state of global supply chains? Where are they growing fastest, or shortening, and why? What factors enabled China’s rise as a major manufacturing center? How are those factors and advantages changing now? How did China’s rise shape global supply chains, and what will its recent slowdown mean for trade? What are China’s prospects for future growth, and how effective are its efforts to improve technological innovation and rebalance toward services likely to be? How will consumer preferences, both in the developed world and China, drive changes in the composition and transparency of Asian supply chains?

Risks to Supply Chains and Trends in Compliance

What are the biggest geopolitical, economic, and security threats to supply chains today? How are companies and governments working to make their supply chains more resilient, especially with regard to risks pertaining to the environment, labor and human rights, and cybersecurity? How do infrastructure risks in the United States compare to those in other countries, and how does the state of U.S. infrastructure affect its competitiveness and ability to integrate with global supply chains? What are the governance models for setting labor and environmental standards? How do they shape the choices and business practices of companies along the supply chain?

U.S. Policies to Boost Supply Chain Competitiveness

What can the U.S. government do to improve supply chain competitiveness? How effective are current regulations? How will TPP and other free trade agreements affect supply chain commerce around the world? How do national security concerns play into policy decisions? What effect will supply chains have on the future of trade?

Chart From This Report