Jabil CEO Mark Mondello has been in “lots of conversations” the past two to three years with customers weighing moving production outside China amid U.S.-Chinese trade tensions and now COVID-19 factory closures, he said on quarterly call Thursday (see Q1 materials here): “When it comes to actioning on those, I don’t think there has been a lot of change." Customers acting to “de-risk mainland China” by moving production have been “the exception, not the rule,” he said. The contract manufacturer builds for Apple, Cisco, HP and other brands. It operates 50 million square feet of factory space at 90 plants in 23 countries, and “our factories are running at what I would call very normalized utilization rates,” said Mondello. COVID-19 “has put a halt” on most companies’ “strategic decisions” to shift from in-house manufacturing to outsourcing production through Jabil and other contract manufacturers, he said. “A lot of companies have battened down the hatches in terms of preservation of cash,” he said. “Everybody kind of wants to see where COVID goes. Does this vaccine work? What does vaccine distribution look like? What’s the timing of the vaccine taking hold?” He expects companies to revisit sourcing decisions late in 2021 into 2022, once they perceive the pandemic has gotten more “stable,” he said. Robust remote-work and learning demand in Jabil’s manufacturing services business for mobility products and connected devices sent revenue soaring 32.3% to $7.83 billion, said Chief Financial Officer Mike Dastoor. Revenue for the quarter ended Nov. 30 came in more that $800 above the midpoint September guidance, he said. Jabil experienced higher revenue through pent-up demand and growth with existing customers, plus “market share gains” said Mondello. The stock closed 7.4% higher Thursday at $44.09.

A fitness data recording device that lacks programming is considered a product of China, Customs and Border Protection determined Monday. The Whoop Strap is programmed in the U.S. after being imported. “The article, in its condition as imported, is incomplete and non-functional as it lacks the software and firmware necessary for it to function,” CBP said. “The incomplete Whoop Strap, at the time of importation, is a product of China. CBP is of the view that programming would not result in a substantial transformation.” China isn't part of the World Trade Organization Government Procurement Agreement, which means the Whoop Strap as imported would not be considered “a product of a foreign country or instrumentality,” CBP said.

Huawei asked the 5th U.S. Circuit Court of Appeals to hear its case seeking to overturn the FCC ban on rural eligible telecom carriers using USF programs to buy equipment from the Chinese firm. Huawei filed the case a year ago (see 1912050050). The FCC’s order approved Thursday (see 2012100054) “leaves no doubt that Huawei’s petition is ripe,” said a filing (in Pacer) posted Friday in docket 19-60896: The order “confirms that only judicial review can relieve Huawei from enforcement of the USF rule.” Protecting national security is a “lame excuse” to oppress certain Chinese enterprises, said a Chinese Foreign Affairs Ministry spokesperson Friday, responding to the FCC’s order approval. “Huawei has built more than 1,500 networks in more than 170 countries and regions,” with no “network security incidents,” she said. “No country has been able to come up with evidence to prove Huawei products have back doors, including the United States, whom we've challenged many times to present evidence.” China urges the U.S. to “stop its arbitrary use” of national security as a pretense for its “unjustified crackdown on certain Chinese enterprises,” she said.

Leaders of the Coalition for a Prosperous America, a nonprofit allied with President Donald Trump’s trade views, urged U.S. Trade Representative Robert Lighthizer to let lapse the Section 301 tariff exclusions on Chinese imports when they expire Dec. 31 and not renew them. The tariffs “have proven a vital and useful tool in addressing the Chinese Communist Party and its countless illegal acts relating to stealing and acquiring US intellectual property,” wrote CPA Chairman Daniel DiMicco and CEO Michael Stumo Thursday. USTR granted the exclusions in response to interest groups and businesses that said the exemptions were necessary “to avoid widespread economic harm,” DiMicco and Stumo said. “We know now that this alarm was unfounded.” The tariffs have given the U.S. treasury a “windfall” exceeding $70 billion, virtually all from importers’ margins, not the American consumer, they said. The granted exclusions gave importers “ample time for supply chains to move out of China,” they said. Lighthizer’s office didn’t comment.

As China gains ground in technology, Congress should pursue more investment and restrictions to prevent China from accessing sensitive U.S. technologies, the U.S.-China Economic and Security Review Commission reported Tuesday. Commissioners said China’s access to U.S. technologies is helping it innovate and export surveillance tools and other advanced technologies globally. Commissioners expect trade restrictions to continue. “There is greater scrutiny and presumably greater action will come as a result of not only what Congress has done, but also the identification of numerous companies on the entity list” barring such transfers and maintained by the U.S. government, Commissioner Michael Wessel told an event hosted by the commission. The report said China is seeking to dominate the development of emerging technologies by securing leadership roles at international standards-setting bodies and “rewriting the norms by which they operate.” China hopes to exclude the U.S. and EU because it views standards as a “policy tool to advance its economic and geopolitical interests,” the report said. Experts told the commission this earlier this year (see 2006250050). The U.S. should create an interagency executive committee on international standards to form a coordinated response to Chinese actions at these bodies, said Commissioner James Talent, ex-Republican senator from Missouri. Talent said the committee would be modeled after the Committee on Foreign Investment in the U.S., with “high-level political appointees” from agencies with jurisdiction over standards setting, such as the Commerce Department. The White House didn't comment Wednesday on the recommendations in the annual report to Congress. China sees "the so-called commission" as having "always been ideologically biased against China," said a Foreign Affairs Ministry spokesperson Wednesday. "There is no factual basis for the vilification and smear of China in various reports it has fabricated."

President-elect Joe Biden's incoming administration can support advanced manufacturing in the U.S. by “immediately lifting” the Section 301 tariffs on a “targeted list” of information and communications technology components and inputs sourced from China, blogged Alan Kohlscheen, IBM director-import compliance and supply chain security, and Michael DiPaula-Coyle, director-international trade policy. “Limited, early removal” of the most “counterproductive” China tariffs could provide relief for U.S. manufacturing, while leaving the new administration space “to negotiate further tariff changes based on Chinese market access commitments,” said the authors Wednesday. The tariffs have raised IBM’s sourcing costs by “tens of millions of dollars,” they said. “These imports do not represent high-value technology products -- rather, they are necessary inputs into U.S.-made systems and include such items as printed circuit board assemblies, mechanical parts, fans, power distribution units, power supplies, and cables -- largely available only from Chinese sources.” The incoming administration “can give a direct boost to U.S. manufacturing through targeted tariff relief on these sorts of component parts and inputs,” said Kohlscheen and DiPaula-Coyle. “Such a step would provide immediate benefits to U.S. manufacturing while also redirecting U.S. policy toward more international, and coordinated, action to address Chinese market access issues.” The Biden transition team didn’t respond to questions. Biden told New York Times columnist Thomas Friedman Tuesday evening that he won’t make “any immediate moves” on China policy after taking office. “And the same applies to the tariffs,” he said. “I’m not going to prejudice my options.” A “major priority” in the opening weeks of the new administration will be to “try to get us back on the same page with our allies” and develop a “coherent strategy” toward China, he said.

China made the strategic “and unfair” decision to ban or discriminate against foreign internet companies in China, and now Chinese firms “want to be able to enter foreign markets,” reported the Information Technology and Innovation Foundation. The Biden administration should work with U.S. allies to “embrace reciprocity” under World Trade Organization rules and principles, said ITIF. As long as China doesn't let foreign internet firms operate fairly in China, those nations should enact measures that “exclude or disadvantage” Chinese internet firms in their own and third-country markets until there's reciprocity, ITIF said. There’s likely little that other governments can do to open up China’s internet market, “but they can and should contest Chinese firms’ efforts to gain market share overseas,” it said. The Commerce Department “should expand and upgrade its network of digital attache positions in China and other U.S. embassies around the world,” it said. “The next administration should work more aggressively in international bodies to defend cross-border data flows and empower industries to forge international standards that ensure a level playing field.”

Chinese President Xi Jinping sent Joe Biden a congratulatory message Wednesday on his victory in the Nov. 3 election, reported the Chinese Embassy in Washington. Promoting “healthy and stable development” of China-U.S. relations “serves the fundamental interests of the people in both countries” and “meets the common expectation of the international community,” Xi told Biden, according to the account. The Biden transition team didn’t comment.

The FCC Public Safety Bureau denied ZTE’s petition for reconsideration of the bureau’s June 30 order designating the Chinese telecom equipment maker as a threat to U.S. national security. The order, which also covers Huawei, bars both companies from participating in the USF (see 2007160051). Huawei also sought reversal (see 2007310048). The FCC denied ZTE’s argument that the FY 2019 National Defense Authorization Act and the Secure and Trusted Communications Networks Act (HR-4998) limit “authority to implement a prohibition on USF support for ZTE equipment. ZTE has previously raised this argument and we find no grounds on which to reconsider it here.” The company “does not dispute critical facts underlying” the ban, “and those uncontroverted facts, standing alone, are enough to sustain” it, the bureau said. It reviewed “the totality of the evidence, which included legal and political analysis from Congress and the Executive Branch, Chinese law experts, as well as evidence of security threats provided by allied intelligence services and outside cybersecurity experts.” The bureau “determined that either directly [through] the application of the Chinese National Intelligence Law, or indirectly through the application of political pressure, Chinese companies like ZTE are required to cooperate with intelligence agencies by providing customer information and network traffic information.” It said ZTE “has substantial ties to the Chinese government and its military” apparatus. “We continue to find that vulnerabilities and cybersecurity risks plague ZTE equipment,” the bureau said. It “also took into account ZTE’s record of knowingly violating U.S. law, obstructing U.S. investigations, and making false statements to U.S. authorities even after entering a guilty plea for violating U.S. trade sanctions.” The gearmaker didn’t comment. The denial is “another important step in our ongoing efforts to protect U.S. communications networks from security risks,” said FCC Chairman Ajit Pai. He noted plans for commissioners to vote Dec. 10 on rules (see 2011190059) to help U.S. telecom companies replace suspect network equipment proposed in HR-4998. “Now it is more vital than ever that Congress appropriate funds so that our communications networks are protected from vendors that threaten our national security,” Pai said. Lawmakers are pushing to allocate $1.6 billion-$1.8 billion (see 2009140062).

The Office of the U.S. Trade Representative set a Dec. 10 deadline for filing requests to testify at a Dec. 29 online hearing on the agency's Trade Act Section 301 investigation into alleged Vietnamese currency manipulation (see 2010070047). Post-hearing rebuttals are due Jan. 7, says a USTR notice for Wednesday's Federal Register. The agency originally planned to forego a public hearing even virtually due to COVID-19 concerns. USTR is seeking testimony into the "nature and level of burden or restriction on U.S. commerce caused by the undervaluation of Vietnam’s currency," among other areas, said the notice. U.S. importers source about a fifth of all smartphone shipments from Vietnam.