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 Veriflo (“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-percent ad valorem duty:

Product Name HTS Number 

(10-digit)

Product Description1

Seat Carriers 8481.90.9085 Threaded steel seat carrier for 

regulating valve seat (provided for in 

subheading 8481.90.9085).

 

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

United States Trade Representative

October 9, 2018

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Figure 1 – Seat Carrier

Figure 2

The Seat Carrier is the part used to hold the seat in position in a pressure regulating valve. 

Seat Carriers are component parts imported by Parker as intermediate goods and incorporated 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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into a finished product assembled in the United States. Almost 100% of the imported parts 

are used to manufacture finished goods in the US. These parts are assembled into finished 

goods and sometimes also welded and electropolished before assembly. These operations are 

done in Parker’s Richmond, CA plant.

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

though highly commoditized, Parker Seat Carriers from China is also highly engineered with 

close tolerances and built to strict specifications and performance criteria. In other words, 

the product is not widely available or easily substitutable. Second, imposing the tariffs will 

have severe negative impact on the company’s 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

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

169 people are employed at the Veriflo Division located in Richmond, CA. There are an 

additional 65 employees at the Tuscon, AZ plant, and there are 4-5 full-time jobs at the 

 

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

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Parker Distribution Centers in Fremont, CA and Austin, TX dedicated to servicing related 

operations. The Veriflo Division has a spend of millions of USD per year from third party 

US Suppliers that might be put at risk as well. The components imported from China are 

assembled with other components from American suppliers to make the finished goods. 

Parker also has contracts that with service providers in its American plants - security, 

janitorial, etc. - that would be affected by the tariffs.

Discussion

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

following reasons:

1. Seat Carriers are not made in the United States, rather they are imported into the United 

States for higher value-added assembly. The assembled finished products are then either 

exported or consumed domestically in the United States. Sourcing from China allows for 

manufacturing in the United States and increased export of U.S.-manufactured goods. 

Valve bodies from China that are assembled into regulators, valves and check valves by blue 

collar work force in Richmond, CA, US. Some of the finished goods are then exported (54% 

of our Ultra High Purity Valves and Regulators are directly exported) and some are shipped 

for domestic use in the US (the balance). A significant portion of Parker’s customers 

products that use the finished goods domestically are subsequently exported as well (mainly 

to Asia). Our finished goods are mainly sold to semiconductor equipment manufacturers that 

sell their goods in the US and to Asia (mainly China, Korea, Taiwan, Japan, Singapore, and 

Malaysia). These customers take our valves and utilize them in the production of 

semiconductor equipment and semiconductor production facilities. 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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Sourcing Seat Carriers from another country would take up to 3 years to resource and qualify 

all these parts due to the “Copy Exact” requirements. Originally pioneered by Intel 

Corporation, “Copy Exact” is a policy that requires all manufacturing process steps that 

affect fit, form, function, or appearance of a product or component to remain fixed and not be 

changed without prior notification and approval from the complete chain of customers. This 

is primarily a semiconductor industry-wide standard that ensures that customers always 

receive consistent performance from our products. No changes to Design, Process, 

Equipment, Supplier or Materials can be made without prior notification & approval. The 

prime supplier is responsible for ensuring all sub-tier suppliers & processors are working to 

the same ‘Copy Exact’ requirements.

As for sourcing from the U.S., in addition to the challenges described above, Parker has also 

found it very difficult to find a supplier that is vertically integrated to do all the required 

processes in the US (welding, electropolishing, clean room, etc.) 

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

to related American industries.

The majority of the equipment makers are headquartered in the US. Their final assembly 

processes are in the US, Singapore and China. The primary users of this equipment are 

located China, Korea, Taiwan and Singapore. The valve assembly in the Parker U.S. plant 

and equipment assembly, which occurs mostly in the US, leads to higher export values to 

China and other countries previously mentioned.

Parker Hannifin Veriflo division will become uncompetitive vis-à-vis our competitors 

outside of the U.S. in countries other than China. At a minimum, all the goods that are 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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imported from China are at risk of loss of sales because customers will try and find a new 

supplier internationally. This might cause a significant reduction in the workforce in Parker’s

American Plants and a similar effect might happen in Parker’s American supplier base.

Moreover, the high cost of the tariffs can decrease investments in R&D which are important 

to keep Parker’s technological lead. The division might also consider outsourcing the 

assembly of some finished good outside of the US to be more in line with competition if the 

tariffs persist.

Moreover, the products in question are very price sensitive. Customers are not accepting 

price increases due to tariffs (see attached letter from LAM Research, one of Parker’s main 

customers). At the same time, absorbing the cost will make the business not profitable

As a result, Customers might opt for other non-US non-China manufacturers on approved 

parts which might results in lost sales. Customers might also put Parker in passive or active 

exit strategy and the company might be forced to lay off a significant portion of the U.S. 

workforce.

4. Seat Carriers 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. 

There are many other competitor products on the market 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 that valves are an intermediate 

product and relatively further down on the value chain, there is little incentive for the 
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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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

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 Veriflo Division of Parker Hannifin provides Seat Carriers that are an essential 

component of Parker manufacturing of finished products in the United States, which are in 

turn components of other U.S.-manufactured products, much of which is the exported to 

countries around the world. As illustrated above, this value chain, which provides significant 

value-added manufacturing and employment in the U.S. would be severely disrupted by the 

imposition of 25 percent tariffs.
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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We respectfully request that you exclude Threaded steel seat carrier for regulating valve seat 

(provided for in subheading 8481.90.9085) 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

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ANNEX 1: SAMPLE PRODUCT (FOR REFERENCE ONLY)

Type Tariff Code 

(HTS)

Picture Description

Seat Carriers 8481.90.9085

Threaded steel seat carrier for 

regulating valve seat (provided for in 

subheading 8481.90.9085).
The Honorable Robert E. Lighthizer

United States Trade Representative

October 9, 2018

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ANNEX 2: ANNUAL QUANTITY AND VALUE OF IMPORTS

Type Tariff Code 

(HTS)

Annual Quantity and Value

2015 

QTY 

(est)

2015 

Import 

Value 

(est)

2016 

QTY 

(est)

2016 

Import 

Value 

(est)

2017 

QTY 

(est)

2017 

Import 

Value 

(est)

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