Geopolitical Supply Chain Rundown

North America 

North America  

The U.S. – China trade war is here to stay. 

Washington has released its trade report under the Biden administration through the U.S trade representative office, and many of the speculations were right: the trade war between the U.S, and China is here to stay. 

According to the report published by the White House, central components of the 2021 trade agenda will be the development and reinforcement of resilient manufacturing supply chains, especially those made up of small businesses. This is to ensure that the United States is better prepared to confront future public health crises. 

Many have predicted that not much will change with China's stance as well. However, the Biden administration has also vowed to deal with China's coercive and unfair trade practices harm American workers and businesses. Statement from the White House read: ''These detrimental actions include China’s tariffs and non-tariff barriers to restrict market access, government-sanctioned forced labor programs, overcapacity in numerous sectors, industrial policies utilizing unfair subsidies and favoring import substitution, and export subsidies (including through export financing).''

This may be the straw that breaks the camel's back or, at the very least, causes us to see a change in China's position. While we wait as the situation unfolds, it is clear that organizations in both countries and supply chain professionals must pay close attention so as not to be caught unawares. 

Trans-Continental

Georgia must diversify now

In Georgia, pressure is building up where anti-government protests have reached a fever pitch. The recent detention of the United National Movement party's leader in particular has invited criticism from the West.

This is not the first time Georgia is succumbing to conflict. In 1991, large-scale clashes broke out in the breakaway region of South Ossetia, and in 1992, armed clashes erupted in Abkhazia. Russia helped negotiate settlements between them, but further efforts were complicated by Moscow's official recognition of Abkhazia and South Ossetia in 2008 (after fighting a five-day war with Georgia) and by Georgia’s efforts to integrate into NATO. Georgia was more broadly unhappy with the extent of Russia's political and economic influence in the country, which was considerable, and though Tbilisi has never been able to become part of the Western bloc, Russo-Georgian relations were about as low as they could get during this period.

Georgia’s protests pose a bigger threat to the economy than the government. Instability is a hallmark of Georgia and the country has a massive unemployment rate, corruption and slow economic growth. These protests could affect Georgia’s already shaky economy and imperil the recovery of tourism in Georgia. 

For years, Georgia’s strategic position and role as a transit hub were enough to secure its economy. However, things have changed and the new comprehensive investment agreement China signed with the EU ( Georgia’s largest trading partners) may sideline Georgia from its status as a strategic hub. 

Africa

The Vaccines Are Arriving, Now What? 

As the global rollout of COVAX vaccines accelerates, COVID-19 vaccination campaigns in Africa using COVAX doses have begun in some African countries. So far, three countries - Ghana, C?te d'Ivoire and Nigeria - are among the first to receive the COVID-19 vaccines and provided by the COVAX Facility’s Gavi COVAX Advanced Market Commitment (AMC). 

On Tuesday, Nigeria received 3.94 million doses of the COVID-19 vaccine, shipped via the COVAX Facility, a partnership between CEPI, Gavi, UNICEF and WHO. The arrival of COVID-19 vaccines to Africa has marked a historic step towards the goal to ensure equitable distribution of COVID-19 vaccines globally, in what will be the largest vaccine procurement and supply operation in history.

The COVAX Facility is expected to deliver around 90 million doses of COVID-19 vaccines to the African Region in the first quarter of 2021 and has committed to providing up to 600 million doses to the region by end-2021 to cover 20 percent of the population.

Aside from reducing the tragic number of deaths and bringing the pandemic under control, the vaccine will also prevent US$375 billion in losses to the global economy each month. 

As the world moves closer to achieving global and equitable access to a vaccine, supply chain professionals in African countries must work closely with the government to ensure equitable access to COVID-19 vaccines in their countries.

Global and equitable access to a vaccine, which will protect health workers and those at greatest risk of contracting the disease in particular, is the only way to mitigate the impact of the pandemic on public health and the economy.

North America

No Masks Requirements – Are supply Chains Ready? 

On Tuesday, Governor Greg Abbott of Texas and Governor Tate Reeves of Mississippi announced that their states will no longer require masks to be worn mandatorily. 

As expected, there have been instant and diverging reactions to this news. President Biden blasted the decisions by Abbott and Reeves as ''Neanderthal thinking'.' While local authorities, and businesses struggle to decide what to do next. 

In Austin, local officials called an early-morning news conference to beg residents to continue wearing masks, and leaders in the Fort Worth area dropped a face-covering mandate they were planning to extend into May.

Texas and Mississippi drew extra scrutiny because they removed nearly all safety rules. They backed these decisions with the claims that the numbers are reducing, but as medical professionals’ frown at this move, there’s one question that lurks in my heart: Are supply chains ready? While we may not be able to determine if there will be another surge or wave of this disease, it will be rather disturbing for either of these to happen, and supply chains are still grappling to deal with the challenge.

As we watch and see if more states will lift restrictions, organizations and supply chain professionals must begin to once again prepare for any eventuality. The economy has suffered a huge blow in recent times, so another shutdown of supply chains due to lack of proactiveness will be unacceptable. 

We must begin to map our supply chains and see where our vulnerabilities lie. Mapping our supply chain as a nation will also help us review the different tiers of the supply chain, their location, and how they can become vulnerable in a crisis. 

South America 

Venezuela’s Steps to Economic Recovery 

On Tuesday, President Nicolas Maduro of Venezuela met with the National Assembly leader to discuss regulatory reforms, including changes that will create a new business model for the dilapidated oil industry. 

For decades oil has been a vital tool in the country’s foreign policy, and also the most sanctioned product of Venezuela. After years of gross mismanagement by its government and U.S. sanctions on the state-run mining company and its president, production has reduced to a trickle, and the people of Venezuela now pay the price. Although the government did not release details, it seems it is trying to open up the industry to greater private participation. 

However, this is not the time to rejoice. The chronic shortages of food and medicine, closure of companies, unemployment, deterioration of productivity, will not be solved in a flash. The exit of many international organizations and the impact of environmental pollution on general health, fishing, and farming is still a challenge.

For the government to encourage investors back, and build the economy, there are significant steps it must take. 

1.    Allow for proper management of the oil industry and encourage privatization. 

2.   Fix its problems with its trading partners. This is easier said than done. The United States is the country's major trading partner.  Even after it has put in place structures to strengthen its oil industry, it must deal with its issues with the U.S. How it will deal with these issues is what the world is asking. 

Asia

Iran - America Negotiations

Last week, I analyzed the America - Iran strategy and the dilemma President Biden could be facing as he tries to begin negotiations with Iran. This week, the Iranian government refused to attend the first round of negotiations over restoring the agreement that limited its ability to develop nuclear weapons. 

According to the government, Iran will only begin talks with the U.S. if Biden removes the sanctions imposed by former President Trump. These economic sanctions, particularly those imposed on the energy, shipping, and financial sectors in November caused foreign investment to dry up and hit oil exports. The sanctions bar U.S. companies from trading with Iran, but also with foreign firms or countries that are dealing with Iran.

As talks begin, we will see each party try to assert its bargaining power. President Biden is seen to be particularly vulnerable on this issue as he has maintained that he would correct the abandonment of the nuclear deal at the first opportunity, however, as each party begins to act, more changes, trade policies, and decisions that may affect trading may surface. Businesses in both countries must keep their eyes and ears on these negotiations. For Biden, a lot is at stake - his campaign promise, his legacy, and the U.S dominance in the middle east. 

Source- Geopolitical Futures