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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

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

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correct to the best of your knowledge. 

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

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Submitted Via WWW.Regulations.Gov

October 9, 2018

Ambassador Robert Lighthizer, U.S. Trade Representative

Office of the United States Trade Representative

600 17th Street NW, Room F516

Washington, DC 20508-0001

RE: USTR 2018-00025; Request for Exclusion from the Determination of Action Pursuant 

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

Intellectual Property, and Innovation Tariff Under Harmonized Tariff Code (HTS) 

8414.90.4140

Dear Ambassador Lighthizer,

This request for exclusion is submitted pursuant to Federal Register notice published on July 11, 

20181, establishing the process to submit exclusion requests from tariffs applied to U.S. imports 

pursuant to the Determination of Action Pursuant to Section 301 of the Trade Act of 1974: China's 

Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation.

We hereby respectfully request that the helical rotor screws for refrigeration compressors 

imported by Holroyd Precision Rotors, Inc. (Holroyd or the Company), under HTS code 

8414.90.4140 be excluded from the additional 25% tariff imposed on this HTS code pursuant to 

Section 301.

Background

Holroyd is located in Spartanburg SC with over $6.7m in annual sales and has been in operation 

since 2016. The facility specializes in the production of high-precision rotors that are used in a 

variety of applications, including refrigeration, industrial air compressors and others. 

Holroyd has a sister facility located in Chongqing China which produces a complementary line of 

high precision rotors. The Spartanburg facility specializes in the manufacture of high precision 

screw rotors, whilst the China facility produces a larger range of various sizes of rotors for several

Chinese customers. At present, the Spartanburg facility does not have the capacity to produce 

all its customer requirements for products of all required sizes; however, Holroyd has an

established business plan to increase capacity at the Spartanburg facility in order to transition the 

manufacturing of all products currently sourced from China to the Spartanburg facility and will 

then cease importation of rotors from China into the U.S.

Explained below are the reasons why Holroyd’s high-precision rotor set model 219188146CABRB

meets the elements in the Federal Register notice to be excluded from the additional tariff under 

Section 301.

1. Detailed description of the subject high-precision rotor set model 219188146CABRB

The product of concern is described as a high-precision rotor set, part number 219188146CABRB

and is classified under HTS subheading 8414.90.41, under “parts of compressors, Other”, and is 

 

1 83 Fed. Reg. 32181 – 32184 (July 11, 2018).
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classified to the 10th digit under 8414.90.4140: “parts of compressors, Other, of refrigerating and 

air conditioning compressors, Other”. The high-precision rotors are described as matched sets 

of meshing helical lobed rotors which are made of steel. There is a female drive rotor and a male 

driven rotor. Each rotor is machined from a single round billet of high-quality steel. Both the male 

and female rotor have a protruding shaft at each end which facilitates rotation of the rotors in sync 

with each other in operation. The matched set weighs approximately 291lb. See Attachment 1 

below for a schematic illustration of the rotor set.

2. Holroyd cannot currently produce all its requirements for rotors in the U.S., however is presently 

executing a business plan to move production of all Chinese imported rotors to the Spartanburg,

SC facility

Holroyd’s sister facility in China is managed by Holroyd’s parent company Precision Technologies 

Group (PTG) and the plant is specially designed and equipped to produce the high-precision 

rotors. As the name implies the rotors are high-precision and can only be manufactured in a 

facility dedicated to the production of the rotors using specialized machinery and know-how. 

Holroyd purchases rotors from China because at present it does not have the capacity to meet all 

of its customers’ requirements for rotors and is still ramping up production following the 

Spartanburg’s plant’s start-up in 2016. The Chinese facility supplies the subject rotor set number 

219188146CABRB along with a range of other rotor set sizes. This rotor set represents a smaller 

size rotor set and is less complicated to produce than the larger sets which are presently the focus 

of the Spartanburg facility. At the time of the Spartanburg plant start-up Holroyd began operations 

under a five-year business plan that would progressively provide investment and add the capacity 

necessary to transition the production of this rotor set to the U.S. This plan is currently being 

implemented but in the meantime, Holroyd has no other viable source for the subject rotor set. 

Therefore Holroyd has no other alternative than to continue purchasing the rotor set from China 

as there is ongoing strong customer demand for the product. Under the five-year business plan 

Holroyd will be transitioning the production of the subject rotor to the U.S. no later than 2020 but 

has no other source of supply for the product in the meantime.

Further nearly all Holroyd’s rotor set sales are made under long term agreements with its 

customers. Holroyd’s customers require extensive qualification testing and validation before any 

significant changes in the rotor set manufacturing process can be approved. The key quality 

requirement for the rotor set is the Production Parts Approval Process (PPAP). Even if Holroyd 

took immediate steps to attempt to re-source from its Chinese location, a new facility would have 

to be located and established, and then outfitted with the extremely expensive and complex 

machining centers used in the Chinese facility, which would take up to 12 months (the machine 

lead-time is 12 months), and then the subject rotor set would have to be re-qualified under the 

PPAP process, which could take an additional 3-6 months. In the meantime Holroyd would have 

no source of approved product to sell to its customers in order to fulfill its contractual requirements. 

This unavailability of a substitute product leaves Holroyd no other option but to continue 

purchasing from the China facility during the transition period despite the 25% tariff. The tariff 

completely upsets the financial calculations that went into the decision to open the Spartanburg 

facility, including the five-year transition plan, and will undermine Holroyd’s ability to function 
Page 3

profitably. This also will invariably lead to the loss of sales, and ultimately market share on 

products not subject to long term fixed-price agreements as Holroyd will have to increase prices 

on these sales to remain viable. At the same time, Holroyd’s global competitors outside of the 

U.S. will not be burdened with a 25% tariff on their components and they will surely be able to 

capture sales and market share lost by Holroyd due to the ability to undercut Holroyd on pricing. 

This is all coming at a time when Holroyd is actively increasing its investment in the U.S. in order 

to move the production of this item to the U.S., and as Holroyd has already committed to 

discontinue purchasing from China, the tariffs will only have a counterproductive and 

disproportionate impact on Holroyd which will hinder its ability to remain financially viable during 

its transition plan.

3. Relevance to “Made in China 2025” program

As described above, rotor Set No. 219188146CABRB represents a smaller, less complicated rotor 

set offering, and while they are still a high precision product, these components are not considered 

an item which would be susceptible to potential intellectual property or high-tech appropriation by 

the Chinese factory. 

Further, the rotor set is not covered under one of the ten industries which are the focus of the 

“Made in China 2025” program. Rather, these industries include: (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.

Additionally, the business relationship is not subject to any Chinese administrative policies that 

require transfer of any intellectual property to the Chinese facility. Thus, penalizing a U.S. 

company whose intellectual rights are already protected by forcing it to pay additional duties does 

not further the U.S. government’s policy regarding the “Made in China” initiative. In fact, the 

relationship between the Section 301 tariff goals and the actual impact in this instance is 

nonexistent. Applying the Section 301 tariff to the imports of the subject rotor sets by Holroyd 

does not serve the purpose of the Section 301 goals but in fact contravenes the goals.

There is accordingly no direct link between the import of the rotor set, and the goals of the Section 

301 tariffs to address the targeted industries in the “China 2025” program. 

Conclusion

Holroyd supports U.S. efforts to promote uniformity in global trading regulations with China and 

is committed to helping grow the U.S. economy and in creating U.S. jobs. This is evidenced by 

Holroyd’s commitment to discontinue its purchases from the Chinese facility and its plans to invest 

approximately $6m in capital equipment and expansion of capacity over the remaining three years 

of its five-year transition plan. The result of this investment will also be the creation of an 

additional 10-15 good paying jobs in the Spartanburg area with room for future job growth. The 

unexpected 25% tariffs will dramatically impact Holroyd’s ability to execute its five-year plan and 
Page 4

could require Holroyd to dramatically alter or abandon the plan which would have a direct and 

negative impact on the ongoing and planned investments and associated job growth. 

For these reasons, Holroyd respectfully requests that rotor set No. 219188146CABRB be 

excluded from the Section 301 tariffs covering HTS subheading 8414.90.41.

Best regards,

Adrienne Braumiller, Partner.

Trade Counsel for Holroyd Precision Rotors, Inc.
Page 5

Attachment 1