David Cohen

Member, DC Bar

202-730-4955

dcohen@strtrade.com

(305) 989

PUBLIC VERSION

October	4,	2018

Via www.regulations.gov 

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 Electrical Digital Test Strip Readers 

(9027.50.4015) 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, 

On behalf of Hach Company (hereinafter “Hach”), we are submitting written 

comments in response to Docket No. USTR-2018-0025, Notice of Determination and 

Request for Public Comment Concerning Proposed Determination of Action Pursuant to 

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

Intellectual property and Innovation.1 Hach appreciates the opportunity to present this 

request for an exclusion from your decision to place a 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 (“U.S.T.R Investigation”). While 

 1 Procedures to Consider Requests 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, 83 Fed. Reg. 32,181 (USTR July 11, 2018).
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	2

we understand and fully support the Administration’s goal of establishing an equitable and 

mutually rewarding trading relationship with China, we respectfully request that the 

following product not be subject to the 25% ad valorem duty:

Product Name HTS Number 

(10-digit)

Product Description Example Image

Electrical Digital 

Test Strip

Readers

9027.50.4015 Electrical digital test strip 

readers used for chemical 

analysis (provided for in 

9027.50.40)

These products should not be subject to the Section 301 tariff because applying 

additional tariffs will not remedy the trade inequities identified in the in the U.S.T.R. 

Investigation nor stop the damaging industrial practices of the Chinese government. 

Instead, imposing the tariffs will have a significant negative impact on Hach’s operations

in the United States and elsewhere and reduce its ability to continue its long time and 

significant investment in higher paying U.S. jobs and production facilities, as well as 

continued research and development. Moreover, the tariffs would adversely impact public 

health by making it less affordable for American consumers to ensure water quality in their 

recreational and therapeutic water facilities. 

Background

Hach is headquartered in Loveland, Colorado, and has a US-based staff of over 

1,400 associates and contingent workers with significant manufacturing facilities in both 

Loveland and Ames, Iowa. For 80 years, Hach has been dedicated to its mission of ensuring 

water quality for people in the U.S. and around the world. Hach makes instruments and 

reagents to analyze a wide array of water quality parameters that are critical for process 

control and environmental purposes. Today, Hach products can be found across the entire 
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	3

globe and serve industries ranging from municipal drinking and wastewater to food, 

beverage and power, and every other category that touches water. 

Discussion

The Section 301 duties should not be imposed on Hach’s products for several 

reasons. First, China’s annual exports of items like electrical digital test strip readers are 

so miniscule that any reduction in production would have no meaningful impact on China. 

Additionally, the stable and widely used technology used by Hach’s Wholly ForeignOwned Enterprise (“WFOE”) in China to manufacture electrical digital test strip readers is 

of no interest to the Chinese government. Furthermore, imposing the tariffs on electrical 

digital test strip readers will adversely impact Hach’s operations and reduce its ability to 

continue U.S. investment in higher paying jobs, facilities, and research and development. 

Finally, humanitarian products have historically been exempted from trade sanctions on 

import. As Hach’s products promote public health and safety by helping American 

consumers ensure recreational and therapeutic water quality, we respectfully request 

electrical digital test strip readers be excluded from the Section 301 tariffs. 

1. Imposing the additional tariffs will have no impact on China; the products are made with 

stable and widely-used technology that is not contemplated for acquisition by the Chinese 

government, as evidenced by the “Made in China 2025” report. 

China is one of the world’s largest export economies.2 For example, China’s export

value for 2016 was $2.2T.3 Its top exports were Computers, Broadcasting Equipment, 

Telephones, and Integrated Circuits. 4 During that same time, items classified under 

9027.50 of the Harmonized Tariff represented approximately 0.006% of Chinese exports

to the U.S.5 Therefore, there is no reason to believe that the Section 301 tariffs would have 

 2 Massachusetts Institute of Technology, The Observatory of Economic Complexity, available at:

https://atlas.media.mit.edu/en/profile/country/chn/

3 Id.

4 Id.

5 Id., available at: https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/chn/show/902750/2016/. 
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	4

any impact on China, even if every company like Hach that currently produced electrical 

digital test strip readers in China moved that production elsewhere. 

Additionally, production of electrical digital test strip readers represents relatively 

older and stable technology that is largely no longer patented. As observed in the U.S.T.R. 

Investigation report, China is targeting intelligent production lines and manufacturing 

equipment like high-end, digitally controlled machine tools or robots. The technology 

incorporated into the electrical digital test strip readers is simply not the kind of 

“breakthrough” technology that is sought by China. Nowhere in the “Made in China 2025” 

report is there either a general or Hach-specific reference to water analytics technology. 

Furthermore, we are aware of no efforts by the Chinese government, or by Chinese 

companies, to steal this technology and believe there is no incentive for China to attempt 

to control it. The facility in which Hach’s electrical digital test strip readers are made in 

China, Shanghai Shilu Instrument Co., Ltd., is a WFOE. This allows Hach to retain 

complete control over intellectual property and manufacturing processes. We also note that 

the U.S.T.R. Investigation report recognized WFOE as the business model least vulnerable 

to state coercion of any kind, including forced technology transfer, which was one of the 

significant Chinese industrial abuses that the Section 301 tariffs were intended to remedy.

2. The additional Section 301 tariffs will cause considerable harm to Hach’s business without 

commensurate benefits to related American industries.

A 25-percent additional duty on Hach products will have a severe impact on its

business and will require Hach to re-evaluate its operational model. The Annex sets forth

the annual quantity and value imported by Hach that would be subject to Section 301 tariffs

for the past three years. As noted above, electrical digital test strip readers are exclusively 

manufactured and assembled at Hach’s WFOE Shilu facility. Hach has invested heavily in 

that facility, both as a production site and as a platform for distributing Hach product. 

Moving production and raw material sourcing out of China involves extraordinary 

cost, both in terms of the transition and in lost savings that producing in China provides. 
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	5

These savings can be, and have historically been, invested back into Hach and its 

operations worldwide, including the United States. 

Moreover, we do not believe that the costs associated with the additional Section 

301 tariffs can be mitigated through price increases due to the highly competitive nature of 

the market for its products. Few companies can absorb a 25% increase in costs without 

reductions in other expenditures, such as U.S. investment and employment. The 

competitive cost-basis in China, together with revenues that Hach earns through sales of 

its products produced there, has helped Hach to compete better globally and invest more in 

the U.S., including in higher tech and higher paying jobs, as well as research and 

development. In the past year, due in no small part to these benefits of production in China, 

Hach was able to expand its Loveland, Colorado headquarters by building and opening a 

$25 million, 90,000 square foot research and development center. Similar future 

investment activity will be less feasible if Hach faces higher operating costs and additional 

expenditures associated with identifying and shifting an established global supply chain, 

not to mention the loss of business associated with manufacturing delays and increased 

costs. Furthermore, moving production out of China will cause Hach to lose the advantages 

of its access to the Chinese market that it currently enjoys. This access not only allows 

Hach to be competitive in the U.S. market, it makes the company more competitive 

globally, which helps create more opportunities for Hach investment and employment in 

the United States.

3. The Section 301 tariffs should not apply to Hach’s electric digital test strip readers 

imported from China because these products promote public health and safety by helping 

American consumers reliably and affordably ensure water quality in their recreational and 

therapeutic water facilities.

The impact on Hach will have a ripple effect that will reach its customers, including 

everyday American consumers who benefit from Hach’s products and technology aimed 

at ensuring water quality. Historically, humanitarian products are exempt from trade 

sanctions on imported goods. According to Section 7202 of the Trade Sanctions Reform 
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	6

and Export Enhancement Act of 2000, the President’s ability to impose unilateral sanctions 

– defined as “prohibition, restriction or condition on exports” – is limited when it concerns 

medical or humanitarian aid. To date, the tariff exclusions under Section 301 made by the 

U.S. Trade Representative have been consistent with this policy. For example, in its initial 

phase of consideration, U.S.T.R. excluded 516 HTS lines from Section 301 tariffs. Out of 

those exclusions, thirty-five were in Chapter 90, and of those thirty-five, twenty-one of 

those HTS lines were medical or dental related. While Hach may be a water analytics 

manufacturer, its mission is fundamentally a humanitarian one – promoting public health 

and safety by providing reliable solutions to ensure clean water.

The ability to easily and affordably test recreational and therapeutic water quality 

is critical to public health and safety. Recreational water illnesses (“RWIs”), such as 

cryptosporidium, giardia, shigella, norovirus, legionella, and e. coli., are caused by germs 

and chemicals found in pool and spa water. 6 RWIs are spread by having contact with 

contaminated water in swimming pools, hot tubs, water parks, water play areas, and other 

bodies of water which are enjoyed by American families. As noted by the Centers for 

Disease Control and Prevention (“CDC”) , RWIs are on the rise, with the outbreak of 

cryptosporidium linked to swimming pools and water playgrounds more than doubling 

since 2014.7 Properly maintaining water chemistry in recreational water facilities is 

critical to avoiding illness, so much so that the CDC recommends testing to ensure that 

adequate free chlorine and proper pH are present in the public and residential pools and

spas in which they swim and play. Hach’s electrical digital test strip reader is an easy-touse water testing tool designed for use by the general public use, to help verify the water 

is clean and safe. Electrical digital test strip readers should therefore be excluded from 

Section 301 tariffs for humanitarian reasons. 

 6 Centers for Disease Control and Prevention, available at: https://www.cdc.gov/mmwr/volumes/67/wr/

mm6719a3.htm?s_cid=mm6719a3_w. 7 Id., available at https://www.cdc.gov/media/releases/2017/p0518-cryptosporidium-outbreaks.html.
United	States	Trade	Representative

The	Hach	Company

October	4,	2018

Page	7

CBP’s Ability To Administer The Exclusion

U.S. Customs and Border Protection (“CBP”) can easily administer the exclusion. 

The products are described under HTS subheading 9027.50.4015 as chemical analysis 

instruments and apparatus using optical radiations and more specifically as electrical digital 

test strip readers used for chemical analysis (provided for in 9027.50.40). As they are Hach 

products, they are imported by Hach. In addition, the manufacturer identification (MID) 

codes that are part of existing customs entry declarations would help ensure that only 

products produced by Hach’s Shilu WFOE were entered under the requested exclusion.

While the product is not defined by the importer or manufacturer, we believe that these 

factors aid CBP in the administration of this exclusion. Because these products are only 

made by Hach’s related manufacturer and Hach is the only importer, the product 

description, classification, MID, coupled with importer are relevant factors that will assist 

CBP to administer this exclusion. 

Conclusion

In closing, thank you for your attention and consideration. We appreciate the 

administration’s efforts to address China’s trade policies and damaging industrial practices, 

we want to emphasize that electrical digital test strip readers are not subject to those 

practices. We therefore respectfully request that U.S.T.R. exclude electrical digital test 

strip readers as described above from the list of goods subject to the Section 301 tariffs.

Sincerely,

________________________________

David Cohen

Enclosure
PUBLIC	VERSION	- BUSINESS	CONFIDENTIAL	INFORMATION DELETED

ANNEX: ANNUAL QUANTITY AND VALUE OF IMPORTS

Product Description Tariff Code 

(HTS)

2015 QTY 

(est)

2015 

Import 

Value (est)

2016 QTY 

(est)

2016 

Import 

Value (est)

2017 QTY 

Instruments 

(Actual)

2017 Import 

Value (Actual)

Electrical digital test 

strip readers used for 

chemical analysis 

(provided for in 

9027.50.40)

9027.50.4015 [ ] *

 * Business Confidential information deleted. This information would not customarily be released to the public, and disclosure of the 

information would endanger trade secrets or profitability.