Obama Orders Strategy for Protecting Nation’s Supply Chain

President Barack Obama is directing the Departments of State and Homeland Security to develop a plan to protect the $14.6 trillion U.S. economy from interruptions in the international supply chain.

The White House released today a National Strategy for Global Supply Chain Security that gives officials from those departments six months to make recommendations on how to spot risks and make commercial infrastructure more resilient.

“Disruptions to supply chains caused by natural disasters -- earthquakes, tsunamis and volcanic eruptions -- and from criminal and terrorist networks seeking to exploit the system or use it as a means of attack can adversely impact global economic growth and productivity,” Obama said in a letter dated Jan. 23 and released by the White House today.

“As a nation, we must address the challenges posed by these threats and strengthen our national and international policies accordingly,” he said in the letter.

Hurricane Katrina in 2005 threatened or disrupted the U.S. oil and refining industry. The 2010 eruption of the Eyjafjallajokull volcano in Iceland led to flight cancellations on almost a global scale. The Japan earthquake and tsunami last year interrupted imports and exports and hurt the U.S. auto and other industries, costing jobs.

Terror Threat

Terrorist attacks such as those on Sept. 11 or localized disruptions, such as recent plots involving air cargo shipments filled with explosives shipped via Europe and the Middle East to the U.S., may similarly hurt the U.S. or global economy.

“We must continue to strengthen global supply chains to ensure that they operate effectively in time of crisis, recover quickly from disruptions and facilitate international trade and travel,” Janet Napolitano, secretary of Homeland Security, said at a briefing in Davos, Switzerland, where she is attending the World Economic Forum.

The document released by the White House makes no direct reference to strengthened cybersecurity, though it cites as one of its source documents the International Strategy for Cyberspace released in May.

Hackers might disrupt the global supply chain by attacking computer networks used by banks, phone companies, railroads and airlines. U.S. lawmakers are working on legislation aimed at strengthening cybersecurity at companies that operate infrastructure considered vital to the economy.

Cartridge Bombs

In 2010, the U.S. tightened security procedures for cargo on passenger aircraft after bombs were found in printer cartridges that originated in Yemen.

The new rules include barring “high risk cargo” -- which the U.S. didn’t define publicly -- from passenger planes bound to the U.S. and prohibiting ink cartridges weighing more than a pound (0.45 kilogram) in carry-on and checked baggage. The bombs were found in Dubai and the U.K.

Even so, many countries have differing standards of a so- called “trusted shipper,” Napolitano said.

“If we’re able to agree internationally on standard that protect our security interest and make it easier for companies to move commerce around the globe, then that’s where our business and economic interests coincide.”

Conversion to a single standard may raise costs and “we need to look at costs and benefits,” she said. Still, “many of the costs have already been absorbed.”

Obama directed department officials to confer with state, federal and international government agencies and private industry to identify areas that are most at risk and come up with layered defenses and tightened security steps to guard against disruptions, the strategy says.

To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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