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 of BCI 

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

Spectrophotometers with integrated LCD screen displays. Please see attached for detailed description. 

3. 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/ 

9027304040 

4. Requestor Information 

Requestor Name (Last, First): 

Organization Name: 

Busch, Albert 

Datacolor, Inc. 

Note: Representatives subrnitting on behalf of an organization must enter information below. 

Requestor Representative: Sarah Nappi, Latham & Watkins LLP 

5. Requestor's relationship to the product: Importer 

6. Does this submission in regulations.govinclude additional attachments? 

YES 

7. Please indicate whether any additional attachment contains business confidential 

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

Public Version of BCI 

VERSION 1 CONTINUED BELOW 1 
8. Is this product, or a comparable product, available from sources in the United States?: 

NO 

9. Is this product, or a comparable product, available from sources in third countries?: 

NO 

10. 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. 

2017 Value: [ ] 2017 Quantity: [ 

2016 Value: [ ] 2016 Quantity: [ 

2015 Value: [ ] 2015 Quantity: [ 

11. Please provide information in support your request, taking account of the instructions 

provided in Section B of the Federal Register notice (note: text entered below can extend 

beyond the apparent size of this box). 

Please see attached. 

VERSION 1 END 2 
5 Princess Road 

Lawrenceville, NJ 08648 USA 

Phone: +1 609.924.2189 

Fax: +1 609.895.7472 

www datacolor.com 

datacolor 

PUBLIC VERSION 

September 21, 2018 

SUBMITTED ELECTRONICALLY VIA REGULATIONS.GOV 

The Honorable Robert E. Lighthizer 

United States Trade Representative 

Office of the United States Trade Representative 

600 17th Street, N.W. 

Washington, D.C. 20508 

Re: Docket Number USTR-2018-0025 

Request for Exclusion of Spectrophotometers with Integrated LCD Screen 

Displays, Classified in HTSUS 9027.30.4040, From Tariff Imposed Under 

Section 301 of the Trade Act of 1974 

Dear Ambassador Lighthizer, 

Datacolor, Inc. ("Datacolor) submits this letter in response to the decision by the Office of the 

U.S. Trade Representative to impose a supplemental 25 percent tariff on U.S. imports of certain 

goods of Chinese origin pursuant to 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. For the reasons set forth below, Datacolor respectfully requests that U.S. 

imports of spectrophotometers with integrated LCD screen displays, classified within 

subheading 9027.30.4040 of the Harmonized Tariff Schedule of the United States (HTSUS"), 

be excluded from the application of this supplemental tariff. 

This request contains business confidential information ("BCI") that would not customarily be 

released to the public, and the disclosure of which would endanger trade secrets or profitability. 

BCI is identified by the use of brackets, and we are submitting a public version of our request 

with BCI redacted. 

l. Company Background 

Datacolor is a U.S. company headquartered in Lawrenceville, New Jersey. It is a global leader 

in color management solutions, providing software, instruments, and services to assure 

accurate color of materials, products, and images. The world's leading brands, manufacturers, 

and creative professionals have used Datacolor's innovative solutions to consistently achieve 

the right color for more than 45 years. Datacolor's customers include companies in the textile 

and apparel, paint and coatings, and automotive industries, as well as individual consumers 

who purchase its color measurement tools for interior design, home improvement, photography. 

and visual arts applications. 

Corrunined to Excellence. Dedicated to Quality. Certified to ISO 9001 in Monufacturing Centers Worldwide. 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 2 

PUBLIC VERSION 

Datacolor is a wholly-owned subsidiary of a Swiss parent company, Datacolor AG, which also 

has business operations in the European Union, Latin America, and Asia. Datacolor employs 

over [ ] people in the United States, who are engaged in research and development (R&D"), 

manufacturing, sales and marketing, and management functions. Based on the R&D performed 

in the United States by U.S. employees, Datacolor contracts with its affiliated company, 

Datacolor Technology (Suzhou) Co., Ltd. ("DTS"), for the manufacture of certain products in 

China that are exported to the United States or sold through Datacolor AG to other markets 

around the world. [ 

.] Datacolor's U.S. operations also consist of assembling full color 

management systems for the retail paint market, servicing Datacolor instruments, conducting 

pilot production, and engaging in laboratory work for building the paint databases that support 

Datacolors proprietary software applications. 

DTS is a wholly foreign-owned enterprise ("WFOE'). Like Datacolor, it is a wholly-owned 

subsidiary of the Swiss parent company, Datacolor AG. DTS has approximately [ ] 

employees, and its 50,000 square foot manufacturing facility (owned by Datacolor AG) is 

located in the Export Zone of Singapore Industrial Park in Suzhou, China. DTS has been in 

operation since 2008 and has never had any Chinese ownership. It is the main manufacturing 

location for Datacolor AG's worldwide operations. 

11. Description of Product 

The products for which Datacolor seeks an exclusion from the supplemental tariff are 

spectrophotometers with integrated LCD screen displays. They are used primarily in the 

manufacturing environment for the textiles, paints and coatings, and plastics industries to 

provide precise color measurement of an inserted sample. The product consists of a benchtop 

spectrophotometer with a pulsed xenon illumination source and an integrated 3.5-inch LCD 

color display, and it may have either a horizontal or vertical sample mount area. Its approximate 

dimensions (with the display screen folded flat) are 12.5 inches wide; 13.2 - 26.5 inches tall; and 

14.6 - 18.5 inches deep. It has a weight of approximately 37.5 pounds, or approximately 46.0 

pounds if incorporating a steel stand for the vertical mount. It is imported with cables and other 

accessories. The spectrophotometer is designed to be connected to the users computer and 

used with Datacolor software to provide accurate color measurement of a sample placed in the 

spectrophotometers port area. (The sample might be a swatch of colored fabric, or a paint 

color card, for example, for which an accurate color measurement is desired.) Photographs of 

the product are provided in the attachment for additional reference, along with proposed tariff 

language. The product is classified in HTSUS subheading 9027.30.4040. 

111. Reasons for Exclusion 

Datacolor respectfully requests that the spectrophotometers with integrated LCD screen 

displays be excluded from the supplemental tariff for the following reasons. The manufacture of 

this product in China does not implicate any of the concerns described in the Section 301 

investigation that led to the imposition of the 25 percent tariff. Moreover, this product is not 

available to Datacolor from any other source, and while other types of spectrophotometers not 

made in China may be available to U.S. customers, such other products are not easily 

interchangeable with the Datacolor product and would not be considered comparable by 

5 Princess Road, Lamencele NI 08648 USA P +1 600 974 2189 F +1 609 895 7472 

www.datacoloncom 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 3 

PUBLIC VERSION 

Datacolor's customers. Finally, the imposition of a 25 percent tariff on imports of this product 

would have a severe economic impact on Datacolor's business operations and damage its 

otherwise successful growth strategy for U.S. R&D and product innovation and its growing U.S. 

sales and support organization. 

A. The spectrophotometers with integrated LCD screen displays are not 

strategically important or related to "Made in China 2025" or other Chinese 

industrial programs. 

Imposing a supplemental tariff on U.S. imports of spectrophotometers with integrated LCD 

screen displays is not warranted by any of the specific concerns identified in the 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 published by 

the Office of the U.S. Trade Representative on March 22, 2018 (hereafter, the "Section 301 

Report"). Specifically, this product is not within any of the categories identified by China as 

strategically significant to its economic and national security goals, and it is manufactured under 

circumstances that have insulated it from the types of trade practices that were identified in the 

Section 301 Report. 

According to the Section 301 Report, the "Made in China 2025" program focuses on ten 

strategic industry areas: (1) advanced information technology; (2) robotics and automated 

machine tools; (3) aircraft and aircraft components; (4) maritime vessels and marine 

engineering equipment; (5) advanced rail equipment; (6) new energy vehicles; (7) electrical 

generation and transmission equipment; (8) agricultural machinery and equipment; (9) new 

materials; and (10) pharmaceuticals and advanced medical devices. 

Datacolor's spectrophotometers with integrated LCD displays are not used in any of these 

industries. Rather, as noted above, these are color measurement tools used in manufacturing 

environments for the textiles, paints and coatings, and plastics industries. They are not 

implicated by the concerns expressed in the Section 301 Report regarding China's efforts to 

achieve domestic dominance in the specified technological areas. Notably, the color 

management industry is a relatively small market, which Datacolor estimates (based on a recent 

detailed market study) at about US $[ ] in yearly revenues worldwide. This is not an 

area in which China has expressed strategic interest for economic or national security reasons. 

Furthermore, Datacolor's spectrophotometers with integrated LCD screen displays and their 

manufacture in China are not subject to any of the circumstances or trade practices identified in 

the Section 301 Report as being unreasonable or discriminatory and as placing a burden or 

restriction on U.S. commerce. Specifically: 

• DTS has not been the subject of any foreign ownership or investment 

restrictions. As noted above, DTS is wholly owned by a Swiss parent company 

and has never had any Chinese ownership in its ten years of operation. The 

Section 301 Report itself distinguishes the level of control and protection 

available to WFOEs operating in China as opposed to joint ventures. 

• DTS has not been forced to transfer technology to the Chinese government in 

exchange for administrative licensing or approvals. 

5 Pdncess Road, LawrenceWle NJ 08648 USA P +1 609 924 2189 F +1 609 895 7472 

www.d ataco lo r. co m 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 4 

PUBLIC VERSION 

• DTS has not been the subject of mandatory adverse licensing terms, and indeed 

has not licensed any Datacolor technology to any Chinese entity. 

• To Datacolor's knowledge, China has made no effort to acquire technology in the 

color management industry through foreign direct investment in the United 

States. 

• To Datacolor's knowledge, China has made no effort to conduct cyber intrusions 

into U.S. commercial networks for the purpose of obtaining confidential business 

information in the color management industry. Furthermore, Datacolor is not 

aware of any breach or attempted breach of the information technology systems 

of either Datacolor or DTS during the ten years that DTS has been operating in 

China. 

In addition, Datacolor takes significant steps to safeguard its intellectual property in the context 

of the China manufacturing operations. Datacolor performs all of its R&D work outside of China, 

and the vast majority of this R&D occurs in the United States. [ 

.] All of the software and 

algorithms needed for the manufacture or operation of Datacolor's products is developed in the 

United States, and all source code remains in — and is protected in — the United States. 

Datacolor and Datacolor AG own all of the worldwide patents for Datacolor's products, including 

patents filed in China. 

Thus, based on the corporate structure and the circumstances of DTS manufacture of 

Datacolor's products, imposing a supplemental tariff on U.S. imports of the spectrophotometers 

with integrated LCD screen displays would not advance the U.S. govemment's interests in 

connection with the concerns expressed in the Section 301 Report. The product is not in an 

industry of strategic importance to the Chinese government, and is not subject to any of the 

unreasonable, burdensome, and restrictive trade practices that led to the U.S. government's 

decision to assess the tariff. It should therefore be excluded. 

B. The spectrophotometers with integrated LCD displays are available to 

Datacolor only from China, and Datacolor's customers could not easily 

switch to products from U.S. or third country sources. 

The spectrophotometers with integrated LCD screen displays are available to Datacolor only 

from China. There is no vendor other than DTS from which Datacolor could buy these 

spectrophotometers, as all other products in this field are manufactured by Datacolor's direct 

competitors. In this regard, it is important to note that color management is a small and highly 

specialized field in which there are a limited number of manufacturers and each manufacturer 

develops its own proprietary color database. Datacolor's instruments are designed to be used 

with Datacolor's own software, which in turn is based on Datacolor's proprietary development of 

its own color reference database. Thus, Datacolor could not simply switch to using another 

company's color management instrument, even if its functionality were very similar to the 

Datacolor product, because any other company's product would be incompatible with 

Datacolor's proprietary software and database. 

5 Princess Road LaVVI-RnfeVIlle 05648 USA P +1 609 924 2189 F +1 609 895 7472 

www.datacolor.com 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 5 

PUBLIC VERSION 

Most of Datacolors customers rely on a suite of Datacolor products and services over the long 

term, purchasing new software, instruments and services over time to ensure sustained quality 

and consistency for their applications. These customers have invested considerably over time 

in the Datacolor color management system. Therefore, for the same reasons identified above, 

these customers could not easily purchase a substitute product from another source because 

the substitute would be incompatible with the Datacolor system that the customer is already 

using. Therefore, there is no feasible alternative to the China-sourced Datacolor product. 

Datacolor believes that there is only one other company that manufactures a similar product in 

the United States, and a handful of companies that manufacture similar products in Japan, 

Germany, and China. These competitors products are similar in their function (they measure 

color), but they are not "comparable" to the Datacolor product for the reasons described above. 

Every spectrophotometer suppliers products are unique and do not measure color in exactly the 

same way. For a customer to assure accurate color throughout its supply chain, consistency is 

critical, and most customers will select one vendor and stick with that vendor over time. There 

are strong commercial disincentives against a customer switching from one vendors product to 

another, as this would be very time consuming and costly to the customers business. 

C. The imposition of additional duties will cause severe economic harm to 

Datacolor and inhibit the company's U.S. growth and innovation strategy. 

Datacolor is a relatively small U.S. company and cannot bear a 25 percent tariff on its imports 

without suffering severe economic harm to its business. [ 

.] Thus, the tariff threatens [ ]. Given 

the competitive nature of the industry, it is simply not possible for the company to pass a 25 

percent price increase through to its customers. Accordingly, Datacolor expects the tariff to 

result in [ ] for the U.S. business, which 

will have a severe impact on the company's profitability and its ability to continue investing in its 

R&D and growth strategies. As noted above, Datacolor cannot simply purchase the 

spectrophotometers with integrated LCD screen displays from another supplier outside of 

China. Datacolor makes all of its own products, which are not compatible with other companies' 

products; therefore, there is no other source or supplier for this product. 

Nor is it economically feasible for Datacolor to move the manufacture of the spectrophotometers 

to a location other than China. Given the company's small volumes, exclusive and longstanding supplier relationships within China, and long-term investment in the Datacolor-affiliated 

manufacturing site in China, relocating the manufacturing operations would be extremely 

disruptive. This would require Datacolors Swiss parent company to relocate its entire supply 

chain (which supports global as well as U.S. operations) and take substantial losses of its 

capital expenditures in China. Datacolor estimates that it would easily take over two years to 

make such a transition, and the costs to the company could be in the millions of dollars. Given 

the incentives described above for customers to use a single color management vendor over 

the long term, such a disruption in Datacolors supply chain could cause irreparable harm to 

existing customer relationships, as customers forced to purchase alternative products during 

Datacolors manufacturing transition might never retum to Datacolor. 

5 Pnncess Road Lawrencemlle NJ 08648 USA P +1 609 924 2189 F +1 609 895 7472 

www.dataco lor. co m 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 6 

PUBLIC VERSION 

Datacolor is a U.S. company dedicated to growth and innovation, and prides itself on its 

contributions to the U.S. economy. The company has its operational headquarters in the United 

States, from where the worldwide business is managed. All of Datacolors innovation in the 

niche field of color management has been created through people who are employed in the 

United States. In recent years, the company has substantially increased the number of its U.S. 

employees and has a strong drive to continue to grow through innovation, giving its customers 

new solutions and tools to become more effective. The supplemental tariff imposed on 

Datacolors imports from China is significantly impacting the company's ability to invest in its 

growth and innovation strategy. The company [ 

as it struggles to navigate the impact of the new tariff and the uncertainty it creates for the 

company and its customers. 

W. Conclusion 

Datacolor wishes to continue its growth and innovation strategy and invest in what it does best 

here in the United States, which is developing new color management solutions for the future. 

Its products do not have strategic economic or national security significance for China, and have 

not been identified or targeted by China for the application of unreasonable, discriminatory, and 

burdensome trade practices as specified in the Section 301 Report. Datacolors affiliated 

Chinese manufacturer is a WFOE not susceptible to such practices, and Datacolor has 

successfully protected its U.S.-owned intellectual property throughout a ten-year history of 

manufacturing in China. 

Datacolor itself cannot source its products outside of China, and while similar products may be 

available to Datacolors customers from other sources, such products should not be considered 

"comparable" because they are incompatible with Datacolors proprietary color management 

system. Datacolor could not change the sourcing of its products without a years-long, extremely 

expensive investment in relocating the entire supply chain, which would likely also result in the 

permanent loss of long-term customers. Bearing the cost of the tariff while being unable to pass 

through a price increase to customers will have a severe financial impact on this small but 

otherwise growing and successful U.S. company. 

Therefore, Datacolor respectfully requests that the Office of the U.S. Trade Representative 

grant an exclusion from the supplemental 25 percent tariff for the spectrophotometers with 

integrated LCD screen displays described in this letter. Datacolor certifies that the information 

provided with this request is complete and correct to the best of our knowledge. 

Sincerely, 

Albert Busch 

President and CEO 

Attachment: Product Description, Proposed Tariff Language, and Photographs 

5 Pnncess Road v 9:74 2109 F 01 609 895 7472 

www.datacolor.com 
The Honorable Robert E. Lighthizer 

September 21, 2018 

Page 7 

PUBLIC VERSION 

Attachment: 

Product Description, Proposed Tariff Language, 

and Photographs 

Product: Spectrophotometer with Integrated LCD Screen Display 

• Benchtop spectrophotometer used primarily in the manufacturing environment for the 

textiles, paints and coatings, and plastics industries to provide precise color 

measurement of an inserted sample. 

• Dimensions (with display screen folded flat): approximately 12.5 inches wide; 13.2 - 25.2 

inches tall; 14.6 - 18.5 inches deep. Weight of approximately 37.5 pounds (46.0 pounds 

if incorporating steel stand for vertical mount). 

• Has a pulsed xenon illumination source and an integrated 3.5-inch LCD color display. 

• Manufactured with either a horizontal or vertical sample mount area. 

• Imported with power cable, USB cable, USB memory stick, color calibration tiles, and 

other accessories. 

• HTSUS classification: 9027.30.4040 

Proposed tariff language: "Spectrophotometers with a pulsed xenon illumination source and an 

integrated LCD screen display" 

Li] 

5 Pnricess Road Lawrencevile t\LI CE1648 USA P +1 505 974 2189 F +1 609 895 7472 

www.datacolor.com