Zipline International Inc.

495 Pine Avenue, Half Moon Bay, CA USA

Marina Yang

Director of Global Supply Chain

Zipline International Inc.

495 Pine Avenue

Half Moon Bay,, CA 94019

October 5th, 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

RE: Request for Exclusion of Zipline Parts from Tariffs Pursuant to Section 301

Dear Ambassador Lighthizer:

Zipline International Inc. (“Zipline”) now submits this request for exclusion of certain specified

Zipline parts Center wing (spar) from the imposition of 25-percent additional tariffs, pursuant to

Section 301 of the Trade Act of 1974.

I. INTRODUCTION

Zipline International Inc. is a US company headquartered in California. Zipline designs and

manufactures autonomous robotic aircraft (drones), which are used to provide healthcare

delivery services around the world.

Zipline has been named one of America’s most innovative companies by Fast Company

magazine, and it has been covered positively by major publications such as the New York

Times, CBS News, The Atlantic, The Washington Post, Time Magazine, National Geographic,

and MIT Technology Review. Here is a small selection of the positive press the company has

received over the last few years:

New York Times - April 2016

The Atlantic - April 2016

Washington Post - October 2016

CBS Evening News - October 2016

WIRED article about Secretary Foxx's impression of Zipline - November 2016

World Bank video about Zipline - April 2017

National Geographic Chasing Genius profile video of ZIpline - June 2017
Zipline International Inc.

495 Pine Avenue, Half Moon Bay, CA USA

MIT Technology Review cover article - June 2017

TEDMED - Engineering a new mission for drones 2017

WIRED - The World’s Fastest Drones Want to Save Lives in America, Too - April 2018

TIME - Zipline’s Drones are Saving lives - May 2018

Zipline does not sell its drones or related equipment; instead, Zipline and its wholly-owned

subsidiaries use the equipment and aircraft manufactured in the US to provide delivery services

to both domestic and international customers. Apart from our US manufactured hardware and

software, our international projects also use US-based engineering support staff, who assist our

international employees remotely via the Internet, from our California headquarters.

Our first active deployment of our drone system is in Rwanda. In that country, we've flown

autonomously over 300,000 km over the course of more than 9,000 flights to deliver 17,000

units of blood using our US manufactured aircraft. About a third of all deliveries are in life

threatening situations -- hospitals throughout Rwanda rely on Zipline every day to help them

save patients’ lives. This system will soon be deployed in Ghana, and Zipline is in the process of

offering its services to numerous other countries in Africa. Zipline’s activities in Africa have

drawn the praise of numerous public figures and improved the reputation of US drone

technology internationally.

We've been working hard to make major improvements to our system to scale up its global

impact. We just introduced the world's fastest delivery drone and system capable of flying 80 km

per hour, over a distance of 160 km round trip. And our engineers in California are currently

working on yet another generation of our aircraft, which will carry more, fly farther, and be able

to serve more customers. Our technology has put the US at the forefront of delivery drone

innovation.

Zipline has been selected by the US Federal Aviation Administration as one of 10 participants

nationwide in the UAS Integration Pilot Program. As part of this project, Zipline is working

closely with the North Carolina Department of Transportation and the FAA to enable Zipline to

serve US hospitals in North Carolina.

II. DESCRIPTION OF PARTS AT ISSUE

HTS code: 8803.90.9060

Custom carbon fiber structural spar. Custom tooling, unidirectional prepreg compression molded

carbon fiber structural spar (center). Unidirectional custom layup per ply schedule to meet

strength requirements. Custom tooling, foam care expanded styrene acrylonitrile.
Zipline International Inc.

495 Pine Avenue, Half Moon Bay, CA USA

III. THE PRODUCTS ARE CUSTOM DESIGNED AND CANNOT BE SOURCED OUTSIDE OF

CHINA IN A REASONABLE TIME FRAME

The engineers at Zipline travelled to China to set up the customized tooling and trained the

supplier on the manufacturing process used to fabricate the parts described above, which are

the subject of this petition. Apart from this the custom tooling to manufacture this part is

expensive and difficult to relocate from China to another country.

Zipline sourced these products in China prior to the imposition of the new tariffs. Setting up this

manufacturing in the US or in a third country now would not be practical without creating major

delays in our service deployment schedule.

IV. THE IMPOSITION OF ADDITIONAL DUTIES ON THE DESCRIBED PARTS WOULD

CAUSE SEVERE ECONOMIC HARM TO ZIPLINE AND US INTERESTS

Zipline is strategically important to the United States’ efforts to change the international

perception of American drone technology, and to the competitiveness of the United States in the

critical emergency sector of autonomous aerial logistics. Zipline drones are used for

humanitarian missions and have been recognized for their humanitarian impact by World Bank

President, Jim Kim (https://youtu.be/7ZNzysHBxCg), Bill & Melinda Gates Foundation

Chairman, Bill Gates
Zipline International Inc.

495 Pine Avenue, Half Moon Bay, CA USA

(https://www.linkedin.com/feed/update/urn:li:activity:6440951809581338624), and Rwandan

President, Paul Kagame (http://paulkagame.com/?p=12414).

The items described here are critical, specially designed parts for our drone system. These

parts are not readily available on the market and are fabricated to our specifications.

As described above, sourcing these parts and assemblies from other countries is commercially

impractical given the time and expense required to set up manufacturing of these parts and

assemblies. Finding new suppliers for these parts and assemblies would result in much higher

costs and significant delays to our product manufacturing which would result in delays to our

projects in the USA and abroad.

Since our drones are literally used for life-saving missions (we have responded to almost 3,000

emergency requests for blood since our launch) delays in our projects in the US and abroad

may result in lives lost when emergency requests cannot be serviced due to lack of drones.

Apart from this, delaying Zipline products threatens America’s innovation leadership in the

critical field of autonomous aerial robotics. Zipline has the first commercial, country-scale

deployed autonomous aerial delivery system in the world. Handicapping our manufacturing and

research will allow foreign competitors to catch up or overtake us. Imposing tariffs on these

parts will dramatically increase the cost of our drone system, and that will ultimately affect our

ability to continue to operate successfully as an innovative American company. It bears

repeating that Zipline designs and assembles all of its drones and ground equipment inside the

US The failure of Zipline as a company will result in the loss of many high-paying US-based

engineering, R&D, and manufacturing jobs.

V. THE PARTS AT ISSUE ARE NOT STRATEGICALLY IMPORTANT TO CHINA OR THE

MADE IN CHINA 2025 PROGRAM

The parts at issue are not strategically important to China. Zipline’s “keystone” circuit board (the

“brains”) of Zipline’s aircraft is manufactured for Zipline in the US by a US company; the parts

that Zipline purchases from China are lower-sophistication components that cannot be used to

create an autonomous aerial logistics system except in combination with Zipline’s

US-manufactured circuits and software, which are strictly controlled by Zipline. Specifically, the

components that are manufactured for Zipline in China are plastic, carbon fiber, and foam

components that are made using fabrication techniques that are already standard in China (but

rarer, more expensive, and slower in other countries). These components are manufactured to

fit the specifications defined by Zipline designs, but the processes and the materials used in

manufacturing the components are by no means high-tech or cutting-edge on their own merits.

Thus, there is no risk of technology leakage to China from these manufacturing orders.
Zipline International Inc.

495 Pine Avenue, Half Moon Bay, CA USA

The only effect of applying tariffs to these parts will therefore be to raise Zipline’s cost of doing

business relative to its international competitors, particularly Chinese competitors, thus

endangering the US company’s competitive advantage in the market.

VI. CONCLUSION AND REQUEST FOR RELIEF

Zipline’s services are strategically important to the US from both a diplomatic and competitive

perspective. Harming Zipline’s service deployments will damage the company’s ability to

compete with international rivals as well as slow or halt its ability to improve the perception of

US drone technology abroad.

In addition to this, there is no demonstrated interest shown by the Chinese government with

regards to the parts manufactured by Zipline in China. The company retains its high-tech

intellectual property in the US and manufacturers its high-tech electronic components in the US.

Therefore, the proposed tariff on these parts is unwarranted because such tariffs fail to achieve

the administration’s objective “to obtain the elimination of China’s harmful acts, policies, and

practices related to technology transfer, intellectual property, and innovation....” (See

Procedures to Request Product Exclusions, 83 Fed. Reg. 32181 at 32,182.) In fact,

as described above, the imposition of Section 301 tariffs threaten severe economic harm to

Zipline (a US company) and the perception of the US drone industry abroad (by delaying and

halting Zipline humanitarian missions abroad and in the US).

We therefore request that the department remove the Zipline parts specifically described above

from the proposed list of products subject to Section 301 tariffs.

Please contact the undersigned should you have any questions regarding this submission.

I hereby certify that the information provided is complete and correct to the best of my

knowledge.

Respectfully submitted,

Marina Yang

Director of Global Supply Chain

Email: marina@flyzipline.com

http://www.flyzipline.com/