1.

Function as the “Framework Legislation” to Effectively Prevent and Respond to Supply Chain Threats

Until recently, supply chain policies have been implemented through specialized legislations under the individual jurisdiction of various ministries (e.g., the Special Measures Act, National Resource Security Act, Overseas Agricultural Development Act, and Marine Transportation Act). However, the Framework Act on Supply Chain provides an overall direction for the enactment and amendment of such specialized legislations and additional support for the measures codified in the specialized legislations as a “framework legislation” for supply chain stabilization management.

The Framework Act on Supply Chain does not supersede other laws. Its purpose, instead, is to establish an organic management system that supports the implementation of the Act’s key objectives in other specialized legislations.
 

2.

Establish Pan-Governmental Supply Chain Management System, Including the Creation of Central Control Tower

The Framework Act on Supply Chain establishes a Supply Chain Stabilization Committee (the “Committee”), which consists of the Minister of Economy and Finance, the heads of relevant administrative agencies, the head of the National Intelligence Service and outside experts. The Committee serves as a control tower, deliberating and coordinating supply chain-related policies for economic security.

The Act also requires the Ministry of Economy and Finance to establish a comprehensive supply chain stabilization support system. This includes (i) establishing a three-year basic plan, (ii) requesting the designation of economic security items, and (iii) overseeing the management of the supply chain stabilization fund. In addition, the Act requires each government ministry to use its expertise to develop specific plans and measures to implement the basic plan, designate economic security items and services, and recognize business operators that are leading supply chain stabilization efforts.
 

3.

Establishment of a Supply Chain Risk Management Cycle

Once the Framework Act on Supply Chain takes effect, a supply chain risk management cycle encompassing the following three phases will be systematically implemented: (i) Risk Prevention, (ii) Risk Detection, and (iii) Crisis Response. The details of each phase of the management cycle are as follows:
 

(1)

Risk Prevention

The Act designates goods and services that are indispensable to the national economy or essential for the stable operation of the national economy as “economic security goods and services.” Enterprises that help stabilize the supply chain of the designated items are recognized as “Supply Chain Stabilization Leading Business Operators,” and government support, such as tax reductions and other financial incentives, may be provided.
 

(2)

Risk Detection

The heads of relevant administrative agencies and the head of the National Intelligence Service are tasked with operating an early warning system that monitors trends in domestic/overseas market supply and demand, price fluctuations and changes in production. When danger signals are detected, the Minister of Economy and Finance must collaborate with the relevant ministries and stabilize the supply chain through joint review.
 

(3)

Crisis Response

The head of each relevant administrative agency must prepare a crisis response manual. In the event of a crisis, the Minister of Economy and Finance or the head of the relevant administrative agency will designate items or services that pose a significant threat to the supply chain as “crisis items.”