RESOLUTION EC 321

FORUM: ECONOMIC COMMITTEE

QUESTION OF: The question of diversifying supply chains

SUBMITTED BY: Austria

CO-SUBMITTERS:Belgium, Eritrea, France, Indonesia, Jamaica, Jordan, Pakistan, Rwanda, Senegal, South Africa, Spain, Sweden.

STATUSPassed

THE ECONOMIC COMMITTEE,

Acknowledging the fact that many supply chains have not been diversified,

 

Fully aware that the COVID crisis, starting late 2019 and still pending in 2021, has had a significant impact on the economy, particularly because many supply chains had not been diversified, and thus the production of many firms and states was halted,

 

Bearing in mind resolution 75/203, which stated that the UN ought to promote diversification of supply chains, especially in challenging periods,

 

Desiring quick resilience during and after a crisis like COVID, by diversifying supply chains, with the  result that firms’ and states’ productions are not halted nor lowered,

 

Further recalling that diversifying supply chains could aid to decrease political dependence, and give states and countries more liberty by having multiple options in times of political crises,

 

Recognising that countries and states ought not to rely on one country or state in terms of economy or politics during trade wars,

 

Noting with appreciation that if no crisis is present, it would be expensive for firms and states to always have a diversified supply chain,

 

Congratulating World Trade Organisation (WTO) and the Group of Seven (G7) in taking measures concerning diversifying supply chains and helping Less Economically Developed Countries (LEDCs) recover from the economic impact of COVID,

 

Taking into account the advantages of diversifying supply chains, including having a reserve in case of crisis and  not depending on one firm or state politically nor economically,

 

Expressing its satisfaction with former measures taken by firms and states, such as certain measures taken in the private sector by firms which have rapidly diversified their supply chains concerning the COVID-19 pandemic and its effects and measures taken by WTO and G7 to help aid diversified supply chains with regards to LEDCs,

 

  1. Asks that member nations look to LEDCs for new supply chains, to further economic and human development in those nations, and recognize the benefits of sourcing goods from nations with comparatively low labor costs, as well as limiting their reliance on single nations;
  2. Solemnly affirms the value of further discussion regarding establishing a detailed plan to use the essential resources of a diverse supply chain in light of the ongoing COVID-19 pandemic, during which a shift of resources has occurred;
  3. Suggests that if an agreement is made, which outlines and recommends full disclosure of the full export and import of essential resources currently required, it should contain the pandemic in an ever-shifting supply chain;
  4. Recommends member nations promote the diversification of supply chains during the current pandemic, through means such as, but not limited to: 
    1. offering financial support to firms that have not yet been able to diversify their supply chains due to the COVID-19 pandemic
    2. financially incentivising companies who intend to diversify their supply chains in the future, such that:
      1. the companies in question provide an initial request of receiving funding through a report clearly stating their intentions to the World Bank
      2. the World Bank will asses the reports in question, establishing the validity of the report
    3. establishing an initial financial incentive under the World Bank that does not exceed 40% of the total funding requested, whereas the remaining 60% shall be offered once sufficient diversification proof has been provided
    4. creating a special branch of the WTO to act with the functions of:
      1. verifying whether the financially incentivised companies are respecting their stated goals of diversifying their supply chain
      2. Informing companies on whether their current supply chain is robust enough to withstand a similar crisis as the current pandemic, at the request of the business;
  5. Supports the integration of various offshore and onshore providers as a means to reduce dependency on single regions for pharmaceuticals, in order to prevent disruptions in supply chains as seen with COVID-19 through means such as, but not limited to:
    1. ensuring that 20% of the total production of said medicinal products remains onshore, with the rest remaining overseas in order for both local supply and worldwide supply to be diversified on short notice, thus minimizing the impacts of complete disruption of new supply chains by COVID-19
    2. Increasing inventory on intermediates and final products coming from key regions most vulnerable to supply chain disruptions with the assistance of United Nations Conference on Trade and Development (UNCTAD);
  6. Urges the member states to move towards the use of Digital Supply Networks (DSNs) that improve visibility, collaboration, and efficiency across end-to-end supply chain in addition to increasing resistance to global supply shocks such as COVID-19, by enabling companies to react to disruptions in the supply chain, and even anticipate them through measures such as:
    1. the full modeling of the supply network enabling forward-thinking regarding plausible setbacks, regulating to real time conditions
    2. new approaches of product distribution enhanced by advanced forecasting approaches
    3. real-time planning that allows for flexible reactions to changing demand or supply situations
    4. visible and autonomous logistics automation of both physical tasks and planning.