ENERPACID 

www.enerpac.com 

October 4, 2018 

BUSINESS CONFIDENTIAL INFORMATION 

The Honorable Robert E. Lighthizer 

United States Trade Representative 

Office of the United States Trade Representative 

600 176Street Northwest 

Washington, D.C. 20508 

Re; Docket No. USTR-2018-0025; Enerpac Request for Exclusion of Certain Hydraulic 

Cylinders 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: 

Enerpac respectfully requests that certain hydraulic cylinders and components ("Hydraulic 

Cylinders") imported from China and classifiable under 8412.21.0075, 8413.50.0070, 8413.50.0080, 

8413.91.9050, 8431.10.0090, 8479.90.9496, and 8481.40.0000 of the Harmonized Tariff Schedule of 

the United States ("HTS") be excluded from the additional 25% ad valoremduty that took effect on 

July 6, 2018 pursuant to the United States Trade Representative's determination under Section 301 of 

the Trade Act of 1974.1 

Enerpac requests that certain information in this submission be granted confidential treatment as the 

disclosure of that information would endanger the Company's profitability and would not customarily 

be released to the public. Business confidential information is identified with brackets ("[ ]") and 

each page containing business confidential information is marked "BUSINESS CONFIDENTIAL." 

The hydraulic cylinders in issue are general purpose hydraulic cylinders. These products are 

cylindrically-shaped tubes with a plunger inserted into end of the tube and a hose coupler protruding 

from the other end of the tube. The Hydraulic Cylinders have lengths ranging from [ 

INotice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to 

Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 

83 Fed. Reg. 14,906 (Apr. 6, 2018); Notice of Action and Request for Public Comment Concerning Proposed 

Determination of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, 

Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). 

N86 W12500 Westbrook Crossing • Menomonee Falls, Wisconsin USA Mailing address: PO Box 3241 • Milwaukee, Wl 53201-3241 USA Phone: 262-293-1500 
], outer diameters ranging from [ 1, and maximum cylinder 

capacities of [ ]. The products are made from alloy steel. The Hydraulic Cylinders 

are designed to 

]. 

Enerpac imports the Hydraulic Cylinders and sells them to [ 

]. Enerpac also exports the Hydraulic Cylinders to customers in other countries. 

Enerpac's parent company, Actuant Corporation, based in Menomonee Falls, Wisconsin, whollyowns and operates a manufacturing facility in China, called Actuant China Industries ("Acr). The 

Hydraulic Cylinders are manufactured by ACI. 

As discussed further below, an exclusion for these Hydraulic Cylinders is appropriate and necessary 

to prevent the additional duty, itself, from becoming a burden on U.S. commerce. First, the 

Hydraulic Cylinders are available only from ACI in China. Second, the additional duty will cause 

severe economic harm to Enerpac, which has invested significantly in its manufacturing operations in 

China, and cannot currently source the product from sources outside of China. Third, the Hydraulic 

Cylinders are not products of strategic importance to, nor do they contain the type of advanced 

technology that benefits from, China's industrial policies, in particular the "Made in China 2025" 

plan. Thus, the grant of a product exclusion will not undermine the objective of the Section 301 duty. 

I. Company Background 

Enerpac, a division of Actuant Corporation, is headquartered in Menomonee Falls, Wisconsin. The 

Company is a global leader in manufacturing specialized high-pressure hydraulic products. From 

small cylinders to computer-operated lifting and positioning systems, for the past 60 years the 

Company has been producing and distributing heavy lifting equipment. Enerpac employs [III] 

people in the United States in a variety of capacities, including R&D, engineering, manufacturing, 

sales & service, and various professional and administrative positions. 

11. Enerpac Must Purchase Chinese-Origin Hydraulic Cylinders Because They Are Not 

Currently Produced in the United States or Third Countries 

According to USTR, the objective of the Section 301 duty is to bring about the elimination of China's 

unreasonable and discriminatory acts, policies and practices relating to technology transfers, 

intellectual property and innovation. In theory, the duty will deter imports of Chinese-origin 

products, thereby placing sufficient economic pressure on the Chinese government to force it to cease 
its acts, policies and practices. This strategy will prove unsuccessful for products like Enerpac's 

Hydraulic Cylinders because these products are only produced at ACI in China. Thus, Enerpac must 

continue to purchase these Hydraulic Cylinders from China. 

Enerpac manufactures the Hydraulic Cylinders at its U.S. parent company's (Actuant Corporation) 

wholly-owned entity in China. These products are not available from any other supplier. Providing 

an unrelated manufacturer with the tools and know-how for manufacturing the Hydraulic Cylinders 

would require time, capital, and disclosing intellectual property to unrelated suppliers with which the 

Company does not have an established relationship. While Enerpac is exploring alternative sourcing 

and manufacturing models, including relocating manufacturing operations outside of China, the 

Company has a duty to its employees, shareholders, and customers to exercise diligence when 

making and implementing these decisions. Approving this product exclusion request will afford the 

Company the additional time it needs to reposition its supply chain operations. 

III. The Additional Duty Will Cause Severe Economic Harm to Enerpac 

Enerpac will bear the expense of the additional duty of the Hydraulic Cylinders. Enerpac has made 

strategic investments in manufacturing, including supply chains, capital equipment, processes and 

personnel based on the trade rules in effect for decades. Actuant Corporation's China operations 

produce goods not only for the United States, but also for the local market and global markets. 

Because the Company cannot immediately abandon its investments without substantially harming its 

U.S. employees and shareholders, it will need to continue to produce Hydraulic Cylinders in China 

for some time. 

Further, the duties will mostly likely result in loss of market share to the Company's non-U.S. 

competitors. In the past three years (2015-2017), Enerpac's imports of the Hydraulic Cylinders and 

components have amounted to 111111M. At the proposed duty rate of 25%, it will be 

economically infeasible for Enerpac to import these products without raising prices for U.S. 

customers. If Enerpac raises prices, it will likely lose market share. Loss of market share will result 

in a loss of profitability, decreased investment in existing U.S. manufacturing operations, and a long 

term loss of competitiveness. 

IV. The Grant of a Product Exclusion Will Not Undermine the Objectives of the Section 301 

Duty 

A product exclusion covering the Hydraulic Cylinders will not undermine the ultimate objective of 

the Section 301 duty—to obtain the elimination of China's unreasonable and discriminatory acts, 

policies and practices in relation to technology transfers, intellectual property and innovation— 
because these products are not strategically important to China's industrial policies, including "Made 

in China 2025." As USTR noted in its Section 301 report on the investigation into China's acts, 

policies and practices, the cited acts, policies and practices are driven largely by China's industrial 

policies, which are focused on technology.2At several points, the report highlights the fact that 

China's goal is to become a global leader, particularly with respect to advanced technologies, and that 

it seeks to "move up the value chain, advancing from low-cost manufacturing to become a 'global 

innovation power in science and technology. 3 

Accepting the conclusions in UST's report, the Hydraulic Cylinders cannot be considered products 

of strategic importance to China's industrial policies. The Hydraulic Cylinders, as compared with the 

high-tech sector products identified in the "Made in China 2025" plan,4do not contain advanced 

electronics or software. Rather, the Hydraulic Cylinders are mechanical products for heavy lifting 

applications. To the extent that the products incorporate intellectual property, it is protected by virtue 

of the Hydraulic Cylinders being manufactured at a wholly U.S.-owned entity in China, which are not 

subject to ownership restrictions or forced technology transfers. In fact, Enerpac's intellectual 

property is arguably better protected at Actuant Corporation's facility in China than it would be at an 

unrelated contract manufacturer in a third country. 

In light of China's goal to shift towards higher technology manufacturing, the Hydraulic Cylinders 

are not strategically important products for China and the additional duty on imports of these products 

will not put pressure on China to eliminate its unreasonable and discriminatory practices that are 

focused on advanced technology products and intellectual property. 

Office of the United States Trade Representative, 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 10-17 

(Mar. 22, 2018), https://ustr. eov/sites/default/files/Sectiong2030 I %20FINAL.P1)F. 

I Id. at 10. 

According to the "Made in China 2025" plan, China is focused on growth and competitiveness in ten high-tech sectors 

and on high-value, high-tech products in those sectors, which include information technology, robotics, aerospace 

equipment, maritime engineering equipment and vessel manufacturing, advanced railway equipment, new energy 

vehicles, electrical equipment, biomedicine and high-performance medical devices, and agricultural equipment. U.S. 

Chamber of Commerce, Made in China 2025: Global Ambitions Built on Local Protections 10 (2017), 

https://m, w\A.uschamher.com/si /default/files/final made in china 2025 R rt lull.pdt. 
Respectfu submitted 

0 / 

Rob Carr 

VP Operations, Supply Chain and LEAD 

V. Proposed Tariff Language for the Hydraulic Cylinders 

Enerpac proposes the following language for the Hydraulic Cylinders: 

Hydraulic cylinders, made of alloy steel, incorporating a hose coupler and plunger, and having 

a length and an outer diameter ranging from I and ( 

111M, respectively. 

U.S. Customs and Border Protection (OW") would be able to administer the exclusion of such 

products with minimal difficulty. Specifically, CBP can identify the Hydraulic Cylinders by their 

descriptions on the shipping documentation. Further, the products are visually identifiable as 

cylindrical pumping articles with a hose coupler protruding from one end of the tube. 

VI. Conclusion 

The Hydraulic Cylinders are currently available only in China. Based on the Company's substantial 

investments in its wholly-owned manufacturing facilities in China, and the commercial 

impracticability of immediately moving these manufacturing operations, Enerpac will suffer severe 

economic harm if the Hydraulic Cylinders are subject to the additional 25% duty. The grant of this 

exclusion will not undermine the objective of the Section 301 duty because the Hydraulic Cylinders 

do not contain advanced technology and, to the extent these products any intellectual property, this IP 

is protected by virtue of the products being manufactured at Actuant Corporation's wholly U.S.-

owned entity in China. 

For the reasons set forth above, we respectfully request that USTR grant this request for a product 

exclusion. The undersigned certifies that the information provided herein is complete and correct to 

the best of his knowledge. 
•