Notes & Comments: According to Secretary Yellen in her remarks in April 2022, “friend-shoring” refers to a commitment to work with countries that “have a strong adherence to a set of norms and values about how to operate in the global economy and about how to run the global economic system.”
The emergence of “friend shoring” could affect US apparel sourcing directly and profoundly. For example:
- US fashion companies are strongly encouraged to reduce China exposure, diversify their sourcing base and move their supply chain back to the Western Hemisphere.
- Geopolitics is given more weight in fashion companies’ sourcing decisions.
- The Biden administration launched the Indo-Pacific Economic Framework (IPEF) to counter China’s influences and restore American leadership in the Indo-Pacific region. IPEF members include some critical apparel-producing countries such as Vietnam and India (however, India will not participate in the trade pillar negotiation). Meanwhile, almost all Asia-based IPEF members (except for India) have joined the Regional Comprehensive Economic Partnership (RCEP), a traditional free trade agreement led by China.
- Trade policies continue to expand from “measures at the border” (e.g., tariffs and non-tariff barriers) to “measures behind the border.” For example, improving labor standards and combating climate change have become increasingly central to the Biden administration’s trade agenda. Likewise, trade policies are more often used to meet foreign policy goals or address national security concerns (e.g., the decision to keep the Section 301 and Section 232 tariffs).
However, the concept of “friend-shoring” is not without controversies. For example, many developing countries, especially the least developed ones (LDCs) could be left out or further marginalized as the US and the EU prioritize their trade ties with allies or strategic geographic regions. Others worry about the increasing “weaponization of trade” and the implications of “friend-shoring” for the future of globalization, trade liberalization, and the multilateral trading system.
Further learning: 2022 WTO Public Forum – Session 75 (U.S. Trade Policy, the WTO and Reframing Trade Priorities)
One thought on “The Emergence of “Friend-Shoring””
I personally think friend shoring has the potential to disturb many current trade routes in a negative way. While there could be potential benefits in the communication sector, I think this is the wrong direction to go within trade. Right now the US and the Western hemisphere source from places who rely on us to keep their economy stable. For some of these smaller lower income countries, it is crucial that they stay trade partners with the US as their economy lends themselves to labor producing apparel. They rely on heavily exporting to western regions. I think making a move to only trade with allies would also make a more volatile world. It causes more separation around the globe leaving places to feel much more isolated. Especially within the fashion industry friend shoring doesn’t make much sense as we rely on so many different countries who we do not necessarily have great political relations with.