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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.

3.

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

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5. Requestor's relationship to the product:

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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/

1

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VERSION 1

Requestor Information

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VERSION 1

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

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

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PARKER HANNIFIN CORP 2018

October 9, 2018

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 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

Dear Ambassador Lighthizer:

Parker Hannifin (“Parker”) appreciates the opportunity to present this request for a 

product specific exclusion from the 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. Specifically, we request that the following product not be subject to 

the 25% ad valorem duty:

Product Name HTS Number 

(10-digit)

Product Description1

Gears for Hydraulic Fluid 

Gear Pumps

8483.40.9000 Gears for Hydraulic Fluid Gear Pumps

other than toothed wheels (provided for 

in subheading 8483.40.9000).

 

1 See Annex 1 for a sample product (for reference only).
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 2

2

Figure 1 – Gears for Hydraulic Fluid Gear Pumps 

Gears for hydraulic fluid gear pumps are components parts imported by Parker as 

intermediate goods and incorporated into a finished product assembled in the United States 

Approximately 70% of gears for gear pumps made by Parker in China are components that 

go into assemblies made in the U.S.

This product should not be subject to the tariff increases for the following reasons. First, 

though highly commoditized, the Parker gears from China are also highly engineered, with 

specialized parts and close tolerances, built to strict specifications and performance criteria. 

In other words, it would be impracticable – from both a cost and timing standpoint - to move 

production elsewhere. Second, imposing the tariffs will have severe negative impact on the 

company’s manufacturing operations in the United States, Specifically, it will affect Parker’s 

ability to continue manufacturing in the U.S. and investing in U.S. manufacturing at the 

current level. Finally, the technology used to manufacture the product has been present in 

China for decades and presents no interest for the Chinese government.2

 

2 Please see Annex 2 for information regarding quantity of value of these imported goods over the past three 

years, as required by Docket Number USTR-2018-0025.
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 3

3

Parker Hannifin – Company background

Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For 100

years the company has engineered the success of its customers in a wide range of

diversified industrial and aerospace markets. Parker’s engineering expertise and broad range

of core technologies uniquely positions the company to help solve the world’s greatest

engineering challenges.

Parker employs some 30,000 people in some 345 locations across the United States. Some

400 are employed in assembly jobs at the Gear Pump Division located in Kings Mountain, 

NC. These jobs would be directly affected by tariffs on gears for gear pumps. Parker also 

provide indirect employment across a range of ancillary services: Freight carriers, janitorial 

services, preventive maintenance, uniform services, fluid management, first aid and 

emergency lighting, waste removal, metal recycling, cardboard recycling, wood recycling, 

landscapers, security. 

Discussion

We believe that this product should be excluded from the Section 301 duties for the 

following reasons:

2. Gears are not made in the United States at the necessary price point and supply is

restricted outside of China. 

As referenced above, while this product may be considered a commodity product it is 

in fact highly engineered with close tolerances and built to strict specifications and 

performance criteria. Parker does source gears from two other countries – Czech Republic

and South Korea – but it is not clear that those sources would be capable or even willing to 

produce sufficient quantities to be able to supplant our current Chinese sources. Parker is 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 4

4

trying to qualify gear production in India as well but currently there is insufficient capacity 

there as well. Parker is also looking at sourcing from Taiwan and Vietnam, but further 

research is needed and such research is costly and time consuming. In any case, relocating 

production there would first require qualification. In the best case, resourcing these products 

would take 3 – 4 years of effort for requalifying and establishing quality and delivery 

elsewhere. In the meantime, quality engineers, product engineers, supply chain professionals, 

project managers and lab inspection assets would be required to take on such a task which 

would put the remainder of the business at risk.

As for sourcing from the U.S., there are only a few American foundries and many 

lack capacity. U.S. capacity is constrained by two factors: first is capital equipment and 

manufacturing square footage. Lead time on new equipment keeps going up and often 

suppliers amortize their depreciation costs into the piece price which makes them even more 

non-competitive. The second constraint is the inability to hire, train and retain qualified 

workers. Parker is already experiencing late deliveries from several U.S. suppliers due to 

this reason which has forced Parker to source from the Far East. Finally, there is the price 

component. While there are several U.S. based suppliers available, their pricing is simply 

not competitive with the target prices customers expect. It would cost as much to move 

product to the U.S. as it would to pay the tariff. 

3. Tariffs will cause considerable harm to Parker’s business without commensurate benefits 

to related American industries.

The tariff will increase the price which in turn will force customers to seek alternatives. 

Most of the competition manufactures product outside the US, including China. Material 

content is the largest cost our product has, as tariffs rise, Parker has to pass along a portion to 

our customers to help cover our increased costs. This means higher costs for them and 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 5

5

possibly even higher costs as they may be forced to find alternate suppliers which means 

design and engineering work to replace our highly engineered pumps and motors.

The impact is difficult to quantify since the effect on sales is unknown but typically increased 

costs don’t help business. As the profit line is squeezed, the opportunity for increased capital 

investment or the addition of new employees becomes more and more constrained. 

Employee layoffs will likely be the result of lost business due to increased costs pricing 

Parker out of the market and/or reduced demand due to higher prices.

4. Gears for gear pumps are made with widely-used technology which is not contemplated 

for acquisition by the Chinese government, as evidenced by the “Made in China 2025” 

report. 

Although Parker pumps are a highly-engineered product, as mentioned above, there are many 

other competitor products on the market - and, in particular, gear suppliers - all of which are 

made in low-cost countries, including China. In fact, similar products have been available in 

the Chinese market for decades. There is, therefore, no need to use illegal means to acquire 

the technology used to make this product. Moreover, given the age of the product and its low 

cost, there is no incentive for the Chinese government to acquire this product. It is not in any 

of the areas designated as “breakthrough” by the “Made in China 2025” initiative.

Enforceability by Customs

A final note regarding enforceability – the U.S. Customs and Border Protection (CBP) will 

be able to effectively administer and enforce this provision due to the nomenclature 

delineated above and the ability through a simple visual review determine if the unit meets 

the exclusion request. In addition, Parker will ensure that its invoices reflect the specific
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 6

6

terms of the nomenclature and maintain substantive and accessible records of import, 

production and specification standards. Parker will cooperate with CBP with respect to any 

request for back-up documentation including requests to inspect the imported merchandise 

and/or the production facility in China.

Conclusion

The key here is understanding that specific pumps that are made in China are highly 

commoditized and are currently made in China to keep costs low to remain competitive. In 

short, if Parker were to make these specific on-highway pumps here in the United States, 

they would have to sell the products at a loss or price themselves out of the market. 

Currently, although these particular pumps are made in China, there are still dozens of jobs 

tied to bringing them to market (customer service, engineering, sales, purchasing, logistics, 

quality, accounting, etc.). Willfully leaving the market for these items might also incentivize 

customers to look elsewhere for higher margin / unique pumps which are sold to larger 

Original Equipment Manufacturer (OE): many large OE customers purchase an entire 

“package” and assortment of pumps (a mix of unique and commoditized which enables them 

to have volume discounts). 

In short, losing commoditized products made in China could put Parker at risk of losing 

unique pumps that are currently made in the United States. Thus a 25-percent tariff would 

have an effect on Parker’s business that would be more widespread than just a tariff on 

imported goods from China. A 25 percent tariff on pump parts would severely limit Parker’s 

ability to provide goods and services to all its U.S. customers. We respectfully request that 

you exclude gears for hydraulic gear pumps other than toothed wheels (provided for in 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 7

7

subheading 8483.40.9000) from the list of products imported from China subject to Section 

301 tariffs.3

Sincerely, 

_____________________

Craig Schau

Director, International Trade

Parker Hannifin Corporation

 

3 The submitter hereby certifies that the information provided is complete and correct to the best of his 

knowledge.
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 8

8

ANNEX 1: SAMPLE PRODUCT (FOR REFERENCE ONLY)

Type Tariff Code 

(HTS)

Picture Description

Gears for 

Hydraulic 

Fluid 

Gear 

Pumps

8483.40.9000

Gears for Hydraulic Fluid 

Gear Pumps

Other than for toothed 

wheels (provided for in 

subheading 

8483.40.9000).
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

Page 9

9

ANNEX 2: ANNUAL QUANTITY AND VALUE OF IMPORTS

Type Tariff Code 

(HTS)

Annual Quantity and Value

2015 

QTY 

2015 

Import 

Value 

2016 

QTY 

2016 

Import 

Value 

2017 

QTY 

2017 

Import 

Value 

Gears for Gear 

Pumps

8483.40.9000 [...] $[...] [...] $[...] [...] $[...]