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CHICAGO • GUANGZHOU • HONG KONG • MIAMI • NEW YORK • PAWLING, NY • SAN FRANCISCO • SHANGHAI • WASHINGTON D.C.

David Cohen

Member, DC Bar

202-730-4955

dcohen@strtrade.com

(305) 989

PUBLIC VERSION

September 13, 2018

Via www.regulations.gov 

The Honorable Robert E. Lighthizer

United States Trade Representative

Office of the United States Trade Representative

600 17th Street Northwest

Washington, D.C. 20508

Subject: Docket Number USTR-2018-0025

Request for Exclusion of Printing and/or Packaging

Spectrophotometers (9027.30.4040, HTSUS) from the 

Determination of Action Pursuant to Section 301: China’s Acts, 

Policies, and Practices Related to Technology Transfer, 

Intellectual Property, and Innovation

Dear Ambassador Lighthizer:

On behalf of our client, X-Rite, Inc. (“X-Rite”), we submit these comments 

regarding the administration’s decision to place a 25-percent additional tariff on certain 

imports from China, pursuant to your findings of the Investigation into China’s Acts, 

Policies, and Practices Related to Technology Transfer, Intellectual Property, and 

Innovation Under Section 301 of the Trade Act of 1974.

1 Specifically, X-Rite requests that 

the following product not be subject to the 25% ad valorem duty:

																																																							 1 Procedures to Consider Requests for Exclusion of Particular Products from the Determination of Action 

Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual 

Property, and Innovation, 83 Fed. Reg. 32,181 (USTR July 11, 2018) (“Procedures to Request Product 

Exclusions”).
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 2

Product Name HTS Number (10-digit) Product Description2

Spectrophotometer 9027.30.4040 USB powered electronic printing 

and/or packaging

spectrophotometers for physical 

or chemical analysis using 

optical radiations (provided for 

in subheading 9027.30.40)

Background

Headquartered in Grand Rapids, Michigan,

3 X-Rite is a global leader in color 

trends, science and technology. X-Rite delivers innovative color solutions through 

measurement systems, software, color standards and services. X-Rite’s expertise in 

inspiring, selecting, measuring, formulating and matching color helps its customers get 

color right the first time every time, which translates to improved quality and reduced costs. 

X-Rite serves a range of industries including: printing, packaging, photography, graphic 

design, video, automotive, paints, plastics, and textiles.

Founded in 1958, X-Rite built a strong reputation for its color measurement 

technologies. Recent innovations include the Total Appearance Capture system, which 

uses 3D virtualization to migrate real materials into the digital world smoothly and 

accurately.

Discussion

These spectrophotometers should not be subject to the 25% additional tariff for 

three reasons. First, these products are manufactured in a Wholly Foreign-Owned 

Enterprise (WFOE), whose technology is not susceptible to China’s unfair acts, policies, 

and practices. Second, neither the products themselves nor the techniques required to 

																																																							 2 See Annex 1 for more detailed product descriptions.

3 X-Rite’s other U.S. locations are Carlstadt, New Jersey and Tewksbury, Massachusetts. 
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 3

assemble them represent the “cutting-edge” technology targeted by the “Made in China 

2025” initiative. Third, this tariff would harm X-Rite’s business and, in turn, may 

significantly burden U.S. consumers of X-Rite’s spectrophotometers.

1. X-Rite’s spectrophotometers are assembled in a Wholly

Foreign-Owned Enterprise (WFOE)

X-Rite’s spectrophotometers are assembled in China by its affiliated company, 

Videojet, a WFOE whose assets are entirely owned and its associates are employed by XRite’s parent company. Notably, the Section 301 investigation recognizes WFOE (as 

opposed to joint ventures and other legal structures) as the business model least vulnerable 

to state coercion of any kind, including forced technology transfer. 

X-Rite’s manufacturing history in China bears this out: the company has exerted

full autonomy over all operations in China and has never been pressured to license or 

transfer technology to any local firm. X-Rite has never been approached or required to take 

on Chinese investors or sell any of its assets to any Chinese company. 

2. X-Rite’s spectrophotometers and operations in China are not 

targeted by the “Made in China 2025” initiative. 

Not only does X-Rite’s affiliated manufacturing company operate under a legal 

structure that protects it from China’s IP malpractice, it also manufactures 

spectrophotometers with common and widely-used technology that is not contemplated or 

targeted for acquisition by the Chinese government. As evidenced by the “Made in China 

2025” report, X-Rite’s spectrophotometers do not fall under any category of industrially 

significant technology desired by the Chinese government. In fact, all hardware 

components of a spectrophotometer—regardless of the manufacturer—can be purchased 

on the open market. X-Rite assembles these parts in China, using conventional technology 
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 4

that lies far outside the purview of China’s forced technology transfer scheme. Any key 

technology that X-Rite develops outside of China (i.e. firmware, software, and calibration 

tools) is delivered “black box” to the China manufacturing site—that is, such technology 

cannot be reverse-engineered or decompiled by hostile agents.

It is not only to protect its intellectual property that X-Rite places its low-tech 

production activities in China and more sophisticated R&D work in its U.S. locations. Just 

as important, the U.S. labor market has the requisite skillset to perform higher-skilled

(which are also higher-paying) jobs. As a result, operations at X-Rite’s affiliated facility in 

China are simply not an attractive target for intellectual property theft by the Chinese 

government. 

3. This tariff will cause considerable harm to X-Rite’ business

and, in turn, consumers of X-Rite’s spectrophotometers.

A 25-percent additional duty on X-Rite’s products is estimated to increase X-Rite’s 

costs by approximately [ ]

4 annually, which will force X-Rite to make difficult 

decisions to [

]5

Like most U.S. companies that operate WFOEs, X-Rite’s affiliated company is 

highly invested in its operations in China. Currently, the WFOE is the only facility capable 

																																																							 4 Business Confidential information deleted. This information would not customarily be released to the 

public, and disclosure of the information would endanger trade secrets or profitability. 

5 Annex 2 presents the annual quantities and values of these products imported by X-Rite that would be 

subject to Section 301 tariffs, as well as a detailed summary of X-Rite’s annual imported quantities and values 

for the past three years.

PUBLIC	VERSION
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 5

of manufacturing spectrophotometers with X-Rite’s custom specifications—that is, X-Rite 

cannot source these spectrophotometers from anywhere other than from its affiliated 

Chinese supplier. Shifting suppliers (assuming X-Rite could find a suitable alternative in a 

third country or in the United States) would require a considerable amount of time 

(approximately 24 months) and capital expenditure to relocate the dedicated tooling and 

production equipment as well as train new personnel for the processes required to produce 

X-Rite’s products. 

Because of the way X-Rite’s products are typically sold in the market, it would be 

difficult to raise prices to pass on the tariff burden to consumers. For example, X-Rite’s 

printing and packaging spectrophotometers are sold as part of an original equipment 

manufacturer (OEM) bundle that includes an X-Rite spectrophotometers and the 

customer’s printer and software. The X-Rite product price is represented a percentage of 

the overall product price. Because neither the printers nor the software are impacted by the 

Section 301 duties, X-Rite’s OEM seller will not increase the price of the OEM bundle of 

products, which prevents X-Rite from increasing its price to the OEM.

Since it would be prohibitively costly and time-consuming to relocate 

manufacturing and extremely difficult to pass the added tariff cost to customers through 

increased prices, X-Rite will need to cut costs [

]. 

In addition, the increased tariff costs could result in a loss of business in an 

internationally competitive marketplace. X-Rite operates a sole U.S. distribution model 

PUBLIC	VERSION
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 6

which means that X-Rite’s products are entered into the U.S. and then exported for 

distribution globally. In fact, approximately 40% of all X-Rite China made products (now 

dutiable at the additional 25% rate under Sec. 301) imported by X-Rite into the U.S. are 

subsequently exported from the U.S. for sales in other countries. Importantly, X-Rite’s 

main competitors are based in foreign countries and are, therefore, unaffected by Section 

301 tariffs for their global sales. These tariffs place X-Rite at a significant disadvantage 

against its foreign competitors, who will be able to continue manufacturing and selling 

these products internationally at competitive rates. In order to avoid such a result, [

 ]

Whatever adjustments are made, and opportunity costs incurred, the added Section 

301 tariff will cause significant disruptions to X-Rite’s business. More than cost, X-Rite is 

most concerned that these disruptions could potentially undermine the business relations

that the company has spent time and countless resources building over its 60-year history. 

By undermining X-Rite’s business, these tariffs will, over time, harm the 

company’s customer base—a wide variety of industries that use X-Rite’s 

spectrophotometers extensively. While X-Rite cannot increase its prices in the foreseeable 

future, in the longer term passing on part of the tariff burden to its consumers may be 

necessary. It is likely that higher prices for these spectrophotometers would place an 

additional burden on the U.S. production of a diverse array of goods. Worse, X-Rite’s

customers may have to substitute for cheaper and lower-quality alternatives, or forego

investment in an entire category of essential imaging equipment.

PUBLIC	VERSION
The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

September 13, 2018

Page 7

Conclusion

Given X-Rite’s significant contribution to a variety of industries and lack of 

evidence for China’s interest in its products and manufacturing processes, we contend that 

the proposed tariff on these products is unwarranted because it fails to achieve the 

administration’s objective “to obtain the elimination of China’s harmful acts, policies, and 

practices related to technology transfer, intellectual property, and innovation....”6 In fact,

the imposition of Section 301 tariffs threaten severe economic harm to X-Rite’s U.S. 

business, its U.S. employees and customers. We, therefore, respectfully request that USTR 

remove the spectrophotometers specifically classified under HTSUS 9027.30.4040 from 

the proposed list of products subject to Section 301 tariffs.

The submitter certifies that the information provided is complete and correct to the 

best of his knowledge.

Sincerely, 

SANDLER, TRAVIS & ROSENBERG, P.A.

By:_________________________________

 David E. Cohen

																																																							 6 Procedures to Request Product Exclusions, 83 Fed. Reg. 32181 at 32,182.
Annex 1: Printing and/or Packaging Spectrophotometers

Description: USB powered electronic spectrophotometers measuring approximately 155mm x 65mm x 40mm (length, width, height), and weighing approximately 245g, 

provided for in subheading 9027.30.4040. The spectrometer is oblong shaped with rounded edges at the end and includes a lens at the bottom of the device, status LED lights on 

top, and a side-button for activating measurements taking. The rear of the device contains a USB port. Packaged with several accessories, such as: calibration plate, ambient light 

measurement head, monitor holder, positioning target, scanning ruler, and backup board among others.

HTSUS: 9027.30.4040

Status LED Lights

Accessories

USB port

Side button
Annex 2: Annual Quantity and Values 

in USD in pcs

Annual sold value Annual quantity sold 

Product Description 2015 2016 2017 2015 2016 2017 

USB powered electronic printing and/or 

packaging spectrophotometer for 

physical or chemical analysis using 

optical radiations (provided for in 

subheading 9027.30.40) [ ]

PUBLIC VERSION