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Research project

Security, values and trade: supply chain de-risking and due diligence

This project evaluates approaches in major jurisdictions for assessing supply chain risks, focusing on methods, involved actors, and policy instruments addressing security risks. It particularly assesses international spillover effects and focuses on OECD countries leading initiatives motivated by security and non-economic goals like human rights and environmental protection. The project will improve our understanding of institutional frameworks and incentives for international cooperation.

This project is funded by the Economic and Social Science Research Council - Centre for Inclusive Trade Policy

States are increasingly concerned with the implications of supply chain-related interdependence for the realization of essential security and other non-economic objectives, including safeguarding policy autonomy and core values as well as access to critical materials and technologies. Governments have – or are putting in place – institutional frameworks to identify such risks and respond to them. The overall aim of the project is to document and evaluate the approaches being taken in major jurisdictions to assess supply chain risks and resilience to shocks. The project focuses on two dimensions of such frameworks. First, the methods used and the actors involved in risk assessments. Second, the policy instruments that are considered in responding to risks deemed to be critical for national and economic security. Instruments may comprise both domestic policy and international cooperation. Of particular interest to the project is to assess the extent to which international cooperation is considered as an element of approaches to be considered in de-risking dependence on international supply chains and production networks.

The focus of the project will be on major OECD member countries, including the UK, US, Japan, and Korea, as well as the European Union and selected EU member states (France, Germany). These are the nations that are most active in establishing supply chain risk assessment frameworks as a means to inform policy responses. They are also distinct in that motivations for supply-chain-focused policy interventions go beyond national or economic security considerations – such as ensuring access to critical supplies – and reflect human rights concerns and environmental protection goals. This is reflected in the adoption of mandatory due diligence requirements for companies engaging in international trade and investment, and policies that condition trade on satisfying criteria relating to labor standards, fundamental rights, and environmental protection in the countries where production takes place.

Depending on the underlying goals and concerns, supply chain risk assessments and due diligence requirements call for institutional frameworks that involve different actors and stakeholders, including businesses, to evaluate and identify supply chain risks. By documenting what different jurisdictions are doing to implement recent national security/economic security/policy autonomy strategies and the associated methods and processes used, the project will both improve our understanding of the approaches being used and contribute to identifying good practices and the incentives for international cooperation.

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