Microchip Technology halted all Huawei shipments in mid-September in compliance with the further Commerce Department export restrictions on the Chinese tech giant that were imposed in August (see 2008170043), said President-Chief Operating Officer Ganesh Moorthy on a Thursday investor call for fiscal Q2, ended Sept. 30. Huawei generated about 2% of Microchip’s Q2 revenue, down sequentially from Q1, said Moorthy, who will succeed Steve Sanghi as CEO March 1 as Sanghi transitions to executive chairman. Microchip is working with Commerce “to apply for licenses for products and technologies that we believe have no impact” on U.S. national security, he said. “We do not know if or when such licenses may be granted,” so Microchip assumes no Huawei revenue in the fiscal third quarter ending Dec. 31, he said. Huawei's push to complete manufacturing of all products before the shipment ban took effect caused wide-scale supply chain "constraints" during the September quarter, he said. The rush of Huawei’s competitors to replace the business Huawei lost “further stressed the supply chain,” he said. The “ongoing shift” of semiconductor manufacturing out of China to avoid the Section 301 tariffs also pressured “the capacity in other Asian countries where we manufacture through our partners,” he said. The supply chain disruptions "are continuing into the December quarter,” he said.

Q3 revenue in the communications “end market” at On Semiconductor declined 7% from the 2019 quarter, said CEO Keith Jackson on a Monday investor call (also see Q3 here.) The chipmaker experienced strong growth in its 5G infrastructure sector, but “our smartphone business declined year over year, in part due to geopolitical factors related to a customer,” said Jackson, obviously referencing Huawei. Communications revenue growth in Q4 likely will be flat or down quarter over quarter, “due to an expected revenue decline from customer-specific geopolitical factors,” he said. “In Q3, there certainly was an impact” from the mid-September halt of shipments to Huawei due to the Commerce Department’s tightened export restrictions on the Chinese smartphone OEM, said Jackson. In Q4, until Commerce grants export licenses authorizing the resumption of shipments, “there is no business at all” with Huawei, he said. “They were one of the top customers.” Jackson thinks “there will be more reluctance” next year among Chinese smartphone OEM customers “to accept sole-source positions from U.S.-based companies as a result of the trade tensions” between the U.S. and China: “They’re very wise economic buyers, and they’re going to do the best thing for their company, but they certainly don’t want to be completely reliant on a U.S. supplier.” The Huawei business that On lost shifted quickly to European competitors, he said.

China as a policy won't comment on Tuesday's U.S. election because it's an "internal affair," said a Foreign Affairs Ministry spokesperson Friday when asked about remarks by a Joe Biden aide that the Democratic nominee, if elected president, would consult with allies on what to do about the Section 301 tariffs on Chinese imports. “China's policy on the United States remains highly stable and consistent,” said the spokesperson. “We are committed to developing a China-U.S. relationship featuring non-conflict, non-confrontation, mutual respect and win-win cooperation.” Biden would seek “collective leverage” against China by bonding with allies to curb Beijing's allegedly unfair trade practices, campaign foreign policy adviser Jeffrey Prescott told Reuters Wednesday. Biden won’t “lock into any premature position before we see exactly what we’re inheriting,” said Prescott when asked if Biden would lift the tariffs unilaterally if elected.

Though World Trade Organization members reached consensus Wednesday on picking Nigerian Finance Minister Ngozi Okonjo-Iweala as the group’s next director-general, the Trump administration prefers South Korean Trade Minister Yoo Myung-hee, said the Office of the U.S. Trade Representative. Yoo is a “bona fide trade expert who has distinguished herself during a 25-year career as a successful trade negotiator and trade policy maker,” said USTR Wednesday. “She has all the skills necessary to be an effective leader of the organization.” The WTO and international trade face “a very difficult time,” said the agency. “There have been no multilateral tariff negotiations in 25 years, the dispute settlement system has gotten out of control, and too few members fulfill basic transparency obligations. The WTO is badly in need of major reform. It must be led by someone with real, hands-on experience in the field.” WTO representatives didn’t respond to questions Thursday.

Importers GHSP and Brose North America have “no doubt” that the first-filed HMTX Industries-Jasco Products complaint should be one of the designated test cases in the massive Section 301 litigation, argued lawyer Paul Vandevert Friday in a response (in Pacer) to DOJ’s Oct. 19 motion for case management procedures (see 2010200020). All the roughly 3,600 complaints seek to vacate the Lists 3 and 4A tariff rulemakings and get the tariffs refunded, alleging the Office of the U.S. Trade Representative overstepped its 1974 Trade Act authority and violated the Administrative Procedure Act. Vandevert is among the few to additionally charge USTR with breaching constitutional protections against federal revenue-raising (see 2010040001). “A number of other cases filed,” including from the GHSP and Brose plaintiffs he represents, “have raised claims that are substantively distinct and discrete” from HMTX-Jasco and should also be weighed as possible test cases, he said. Akin Gump's Sept. 30 motion for a three-judge panel made clear HMTX-Jasco was making no constitutional claim (see 2010010043). Vandevert thinks GHSP and Brose were the first to raise the revenue-raising claim and so should also be considered as first-filed test cases, he said. “It is also our understanding that several other plaintiffs in this Section 301 litigation have amended their complaints to adopt and incorporate the revenue raising claims made by GHSP and Brose,” he said. Vandevert emailed us a list Sunday of 22 complaints that Hogan Lovells filed on behalf of various importers. We reviewed them and found that all but one were filed in September and amended Oct. 9 to add the constitutional claim. The 22nd action (in Pacer), filed Oct. 21 on behalf of spices supplier McCormick, raised the argument as an original claim. The Hogan Lovells complaints also add allegations that USTR violated importers' Fifth Amendment due process rights, a claim that Vandevert didn't argue on behalf of GHSP and Brose. USTR deprived importers of due process on Lists 3 and 4A when it failed to "provide a sufficient opportunity for comment" and didn't "adequately explain" its rationale, said all the various Hogan Lovells complaints. USTR's "predetermined decision-making resulted in the unlawful imposition of tariffs on imports covered by Lists 3 and 4A whose value equals $500 billion," they said. USTR didn't respond to questions Monday. Hogan Lovells declined comment.

HMTX Industries and Jasco Products, first plaintiffs to file in the massive Section 301 litigation seeking to vacate the Lists 3 and 4A tariff rulemakings and get the duties refunded, strongly oppose DOJ’s prolonged briefing format and schedule proposed Monday in a motion for case management procedures (see 2010200020), said Akin Gump in a response (in Pacer) Thursday at the U.S. Court of International Trade. The government proposed the parties not begin to argue the “merits of this dispute” before 2022 or beyond, it said. “Given the ongoing harms to thousands of plaintiffs, among others, that protracted schedule is unacceptable.” The CIT instead should follow the harbor maintenance tax (HMT) litigation as a model by staying all but the HMTX-Jasco complaint and ordering the parties to file “concurrent cross-motions for summary judgment addressing particular issues, including both jurisdictional and merits questions,” said Akin Gump. Adopting the HMT litigation’s cross-motions procedure “will best achieve the aims of resolving the key legal issues in an efficient manner,” it said. “Unnecessarily delaying resolution of this case for additional months or years -- with all the attendant litigation expenses and accruing duties that would entail -- is unwarranted.” Since more than 3,500 importers filed suit, many of whose entries have already liquidated or will liquidate soon, it’s important “to confirm at the outset that the government will stipulate, as it has in other cases, that a refund remedy is available should plaintiffs prevail,” said Akin Gump. “Such relief remains critical to ensuring that these cases are handled efficiently, effectively, and with the least administrative burden possible.” DOJ hasn’t taken a position on refunds and indicated to plaintiffs it won’t do so until a test case is picked. DOJ didn’t respond to questions. DOJ’s motion for case management procedures is likely to face broader opposition, blogged law firm Thompson Hine Wednesday. "This motion is expected to trigger a raft of challenges by plaintiffs’ counsel in all of the Section 301-related cases on such DOJ positions as the composition of the Plaintiffs’ Steering Committee and the designation of appropriate test cases," it said.

New legislation and bigger fines were mentioned in a presidential memorandum Tuesday aimed at stopping imports of counterfeit goods through e-commerce platforms. Customs and Border Protection should seize counterfeit goods imported into the U.S. and impose the “maximum fines and civil penalties permitted by law on any e-commerce platform that directs, assists with, or is in any way concerned in the importation into the United States of counterfeit goods,” wrote President Donald Trump. He sought “legislation that would clarify and strengthen the executive branch’s authority and increase its resources to deter and address counterfeit trafficking on e-commerce platforms.” The Department of Homeland Security and attorney general are directed to “develop a legislative proposal to promote the policy objectives” within 120 days. EBay didn't comment Wednesday. Amazon didn't comment on the record.

An Akin Gump spokesperson declined comment Tuesday on the strategies it will deploy in litigating an end to the Lists 3 and 4A Section 301 tariffs on Chinese imports. The complaint it filed in the U.S. Court of International Trade on behalf of HMTX Industries and Jasco Products alleges the Office of the U.S. Trade Representative overstepped its 1974 Trade Act authority in imposing the third and fourth rounds of tariffs and that it violated the Administrative Procedure Act by running sloppy and nontransparent rulemakings. The complaint seeks to have the rulemakings vacated and the tariffs refunded. Strong parallels exist between the complaint and List 3 comments Akin Gump helped CTA draft in 2018 (see 2010120002). The CIT should deny DOJ’s motion for case management procedures to navigate through the thousands of Section 301 complaints (see 2009240040), argued Snell & Wilmer in an opposition letter (in Pacer) Tuesday in docket 1:20-cv-00177. The firm represents online retailer Shop247.com (in Pacer) and residential electrical supplier L’Image Home Products (in Pacer) in complaints filed Sept. 18. DOJ served its motion only through Akin Gump and not through the 3,500 other lawyers, in violation of CIT rules, said the letter. DOJ requested an immediate stay of the cases other than HMTX-Jasco, but granting it would deprive all the other lawyers “of the opportunity to advocate on their clients’ behalves in any meaningful way,” it said. Snell & Wilmer agrees the "high volume" of cases challenging the Section 301 tariffs "likely requires the Court to implement case-management procedures," it said. But the CIT "should be provided an opportunity to hear the legal and factual arguments of every party asserting claims in these related matters," it said. DOJ didn’t respond to questions Wednesday.

Global supply chains are confronting an “evolution” that will completely change how chief supply chain officers (CSCOs) organize and run their organizations, reported Gartner Thursday. A good supply chain in the past was “efficient and powerful,” but it must now be “agile and fast,” it said. Uncertainty is the new “constant” in supply chains, said Gartner. No one knows "where the next competitor will come from and what their impact will be,” it said. Nearly half of CSCOs Gartner canvassed expressed concern “that their business is at risk of being disrupted in the coming years, with the greatest risk coming from nontraditional businesses such as startups,” it said. Uncertainty from the U.S.-China trade war remains a looming threat that won’t go away soon, it said. “More recently, the COVID-19 pandemic has raised concern about future pandemics, after shutting down global supply chains and trade routes.” The ongoing uncertainty “calls for a new approach to supply chain management,” it said. “CSCOs must build more flexible and resilient networks that can respond effectively to global shocks and disruptions -- be it caused by nature or a competitor.”

Wednesday night's vice presidential debate featured telecom and tech policy, unlike the debate last week between President Donald Trump and Democratic presidential nominee Joe Biden. Democratic vice presidential nominee Sen. Kamala Harris of California contrasted Biden’s infrastructure proposals with Trump’s record. Biden has “a plan that is about investing in infrastructure, something [Trump] said he would do,” Harris said. She cited the Trump administration’s repeated bids for an “Infrastructure Week” aimed at advancing talks on spending for broadband and other projects, but “I don’t think it ever happened.” Trump in March noted interest in pursuing $2 trillion in infrastructure spending as part of COVID-19 legislation (see 2003310070). The House passed the Moving Forward Act (HR-2) in July, including broadband and next-generation 911 funding (see 2007010071). Harris said the administration doesn’t believe sufficiently enough in science, and that hurt the U.S. position as innovation leader. Vice President Mike Pence said Biden is a “cheerleader” for the Communist Party-led Chinese government and “wants to go back to the economic surrender to China.” Harris criticized the Trump administration's trade war with China. Neither candidate named specific Chinese companies that have drawn lawmakers’ scrutiny.