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September 26, 2018

VIA ELECTRONIC FILING PUBLIC VERSION

Amb. Robert E. Lighthizer Docket No.: USTR-2018-0025

United States Trade Representative

600 17‘'’ Street NW

Washington, DC 20508

Request to Exclude Certain Magnetic Resonance Imaging 1“MRI”)

Equinment from Section 301 Tariffs

Re:

Dear Ambassador Lighthizer,

Siemens Medical Solutions USA, Inc. (“SMS”, d.b.a. Siemens Healthineers) respectfully

requests for exclusion of certain 1.5T Magnetic Resonance Imaging (“MRl”) devices, classified

under HTS 9018.13.0000, from the Section 301 tariffs enacted against products from the

People’s Republic of China (“China”).

L Background

Siemens Medical Solutions USA, Inc. (“SMS”), with headquarters in Malvern, Pennsylvania, is

a global company with significant operations in the U.S. providing medical diagnostic equipment

to healthcare professionals through its [ ] U.S. employees.

IL The Product

SMS imported certain 1.5T MRI devices from its wholly owned subsidiary in China. The

imported MRI devices are classifiable under the Harmonized Tariff System ofthe U.S.

(“HTSUS”) code 9018.13.0000.

MRI is a medical imaging technique used in radiology to form pictures ofthe anatomy and the

physiological processes ofthe body in both health and disease. MRI scanners use strong

magnetic fields, magnetic field gradients, and radio waves to generate images ofthe organs in

the body. MRI does not involve X-rays or the use ofionizing radiation, which distinguishes it

from CT, CAT, and PET scans. Below is a list ofthe 1.5T MRI equipment. A detailed list of

SMS imported 1.5T MRI devices, including physical dimensions and specifications, is included

herein as Attachment 1.
PUBLIC VERSION

Description Part Number

[ ] I I

[ I I I

I II I

I 1 I 1

III. Rationale for Requested Exclusion

1 .ST MRI Devices Are Not Covered by Made in China 2025

We understand that Section 301 tariffs are designed, among other things, to safeguard U.S.

industries and technologies highlighted in the Chinese government’s ''Made in China 2025” plan.

However, imposition of additional 25% duties on 1.5T MRI devices that SMS imports from

China would serve no practical purpose to eliminate China’s unreasonable and discriminatory

acts, policies, and practices identified by United States Trade Representative (“USTR”),

The MRI devices that SMS imports only constitute a small portion ofimported MRI devices

under HTS 9018.13.0000. These MRI devices are produced from a conventional and older

technology, which was developed in Germany prior to 2003, with China-based manufacturing

established in approximately 2003. The technology utilized a 1.5T magnetic field which is not

covered by the scope of “Made in China 2025” plan.

Specifically, "Made in China 2025” covers the following medical imaging equipment; 3T and

above superconducting magnetic resonance system (MRI), open superconducting system, 128

rows of X-ray computed tomography (CT), positron emission tomography / X-ray computed

tomography (PET-CT) machine, positron emission tomography/magnetic resonance imaging

system (integrated PET-MRI), color doppler ultrasound diagnostic equipment (128 and above

physical channels), micro-ultrasound diagnostic equipment, digital subtraction angiography

system ( new imaging equipment such as DSA), X-ray phase contrast imaging, electrical

impedance imaging equipment, and magnetoencephalography equipment. (Emphasis added)

Our imported 1.5T MRI devices are simply not among those that benefit from the “Made in

China 2025” program, or any other Chinese Government’s acts, policies or practices identified

by USTR as being unreasonable and discriminatory and that burden or restrict U.S. commerce.

A.

The Imported MRI Devices Are Solely from SMS’ Wliolly Owned Subsidiary in

China. No Technology Has Been Transferred For Which the 301 Tariffs Seek to Protect.

B.

We import 1.5T MRI devices exclusively from our wholly owned facility in China. As

recognized by USTR in its March 22, 2018 report, force-transfer oftechnology exists in jointventures between a U.S. and a Chinese company'. However, SMS’ Chinese facility is a wholly

' See Findings ofThe Investigation Into China’s Acts, Policies, And Practices Related to

Technology Transfer, Intellectual Property, and Innovation Under Section 301 ofthe Trade Act of 1974, Executive

Summary, by office ofthe USTR Executive Office ofthe President (March 22, 2018), at vi-vii.
PUBLIC VERSION

owned subsidiary. Unlike joint-ventures, wholly-owned manufacturing subsidiaries are not

susceptible to state coercion of any kind, including forced transfer ofteclinology.

Moreover, wholly owned subsidiaries and manufacturing divisions support our U.S. operations

and U.S. work force, including product development, engineering, testing, information

technology, purchasing and supply chain, finance, plarming, customer service, corporate

development, as well as sales and marketing jobs. Therefore, direct ownership of non-U.S.

suppliers increases U.S. commerce and should be promoted as a matter ofU.S. policy.

Imposition of additional 25% duties on our imported products, however, will only punish SMS

with no practical effect to eliminate China’s unfair trade policies identified by USTR.

C. The Imported MRI Devices Cannot Be Sourced Elsewhere

Manufacturing of 1.5T MRI devices presents a unique business challenge. The devices are

heavily regulated by the U.S. Food & Drug Administration (“FDA”). No other manufacturers are

available outside of China, nor is it feasible to qualify a new manufacturer as it would require

significant capital investment and resources and long lead time due to complex regulatory

schemes. The U.S. market does not demand sufficient quantities ofthe MRI devices to justify

qualification of another manufacturer or relocating manufacturing to the U.S.

Imposing 25% duties on SMS’ imported MRI devices, therefore, would significant increase our

production cost and ultimately result in increased healthcare costs in an already price sensitive

market. In this respect, rather than pay a 25 percent duty and import the devices at a loss, which

could negatively impact the company and our employees, SMS may need to cease selling the

models in the U.S. market all together, which in turn, would negatively impact the U.S.

healthcare industry and the availability ofthese vital diagnostic medical services.

IV. Conclusion

For the reasons outlined above, SMS respectfully request an exclusion ofthe 1.5T MRI devices

from the Section 301 tariffs because it would significantly increase our operating cost and make

us less competitive. The imported devices are not covered by the Made in China 2025 or

otherwise affected by the concerns cited by USTR as justification for implementing the Section

301 tariffs. Tariffs on MRI devices that are not available elsewhere outside of China will not

advance national trade objectives and wil be to the detriment of U.S. manufacturing.

This submission contains business confidential information for which SMS requests confidential

treatment. As permitted in the Exclusion Request Procedures, SMS has identified business

confidential information in brackets and has appropriately stamped each page containing

business confidential information. As requested, we are simultaneously providing a public

version ofthis request. SMS hereby certifies that disclosure ofthe bracketed business

confidential information would endanger trade secrets or profitability, and that the information
PUBLIC VERSION

would not customarily be released to the public. The undersigned further certifies that the

information provided is complete and correct to the best of his knowledge.

Should you have any questions or require additional information, please do not hesitate to

contact the undersigned.

Respectfully submitted,

Daniel J. Cannistra

Counsel to Siemens Medical Solutions USA, Inc.
Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology

Transfer, Intellectual Property, and Innovation - Form to Request Exclusion of Product

When submitting a product exclusion request using this form, enter the specified

information in the following fields and explain the basis and rationale for your statements.

By completing this form, you certify that the information provided is complete and

correct to the best of your knowledge.

1. Indicate whether the comment contains business confidential information (BCI), is a public

document, or is a public version of a BCI document.

Public Version ofBCI

2. Please provide a complete and detailed description ofthe particular product of concern:

Certain Magnetic Resonance Imaging (“MRI”) Equipment. See attached.

10-digit HTSUS item number’*^ for product you wish to address in this product exclusion request:

’'^Use numerical characters only with no special characters (example: 1023456789). For help in finding

the HTSUS item number associated with your product, see https://hts.usitc.gov/

3.

9018.13.0000

Requestor Information

Requestor Name (Last, First): |Petersen, Felicia

Organization Name: Siemens Medical Solutions USA, Inc - Ultrasound Business Unit

Note; Representatives submitting on behalf of an organization must enter information below.

Requestor Representative:

Requestor's relationship to the product:

4.

Cannistra, Daniel

5. Other

6. Does this submission in regulations.gov include additional attachments?

lYES

Please indicate whether any additional attachment contains business confidential information

(BCI), is a public document, or is a public version of a BCI document.

7.

Public Version of BCI

VERSION 2 CONTINUED BELOW 1
Is this product, or a comparable product, available from sources in the United States? (If you

indicate "NO", you must provide support for your assertion in Box 12).

8.

NO

Is this product, or a comparable product, available from sources in third countries? (Ifyou

indicate "NO", you must provide support for your assertion in Box 12).

9.

NO

Please provide the value and quantity (with units) of the Chinese-origin product of concern

that you purchased for each calendar year specified. Limit this figure to the products

purchased by your firm (or by members of your trade association) alone. Please provide

estimates if precise figures are unavailable.

10.

2017 Value: [XXXX] 2017 Quantity: [XXXX]

2016 Value: [XXXX] 2016 Quantity: [XXXX]

2015 Value: 2015 Quantity: [XXXX] [XXXX]

Is the Chinese-origin product of concern sold as a final product or an input used in

the production of a final product or products?

11.

FINAL PRODUCT

For imports sold as final products, please provide: a)

% ofyour total gross sales in 2017 that the Chinese-origin product accounted for. [X]

b) For imports ofinputs used in the production offinal products, please provide:

% ofthe total cost of producing the final product(s) the Chinese-origin input

accounts for.

% ofyour total gross sales in 2017 that sales ofthe final product(s) incorporating

the input accounted for.

VERSION 2 CONTINUED BELOW 2
12. Please provide information in support your request, taldng account ofthe

instructions provided in Section B ofthe Federal Register notice. If you

responded "NO" to Questions 8 or 9, you must provide support for your

assertion in the box below. (Note: text entered below can extend beyond the

apparent size ofthis box).

See attached.

VERSION 2 END 3
ATTACHMENT 1 
Public Version

Business Proprietary Information in Single Brackets Removed or Ranged

THE BALANCE OF THIS DOCUMENT IS 

NOT SUBJECT TO PUBLIC SUMMARY