VIA ELECTRONIC FILING

The Honorable Robert E. Lighthizer 

United States Trade Representative

Office of the United States Trade Representative

600 17th St. NW

Washington, DC 20508

October 2, 2016

PUBLIC VERSION

Docket. No.: USTR-2018-0025

Re: Request for Exclusion from Section 301 Tariffs:

Certain Frozen Beverage Blending Machines (8438.80.0000, HTSUS)

Dear Ambassador Lighthizer:

Pursuant to USTR’s Federal Register Notice,1 on behalf of our client, f’Real! Foods, LLC 

(“f’Real”), we respectfully submit this request for exclusion from the Section 301 tariffs 

imposed on certain products originating from China. Specifically, this request relates to 

certain Frozen Beverage Blending Machines, classified to the ten-digit level at subheading 

8438.80.0000, HTSUS, with a duty rate of “Free.” 

As explained below, granting this request will not undermine USTR’s objectives in its Section 

301 investigation as the subject merchandise is not industrially significant to China. 

Moreover, granting this request will promote the further growth of this U.S. company by 

permitting the uninterrupted, cost-effective supply of its proprietary and specially-designed 

Frozen Beverage Blending Machines to its American customers who, in turn, serve U.S. 

consumers.

The Company

f'Real is an American business that sells frozen beverage blending machines and

accompanying food products such as milkshakes, frozen coffees and smoothies, at over 

18,000 locations in the United States and Canada. Its customers include small, mid-size and 

 

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 FR 32181 (July 11, 2018).
The Honorable Robert E. Lighthizer October 2, 2016

Page 2 PUBLIC VERSION

large stores, markets, schools, movie theaters, hotels, eldercare centers, colleges, offices, and 

hospitals, where these beverages are sold to the public.

f’Real was a Silicon Valley start-up, with its initial operations being managed from its 

founder’s garage. Today, f’Real employs approximately 135 individuals in the United States, 

and it has recently started to offer its products at international locations outside of North 

America. Certain equipment that is proprietary and specially-designed by f’Real and sold by 

the company is assembled in China, with U.S. and foreign components, including its Frozen 

Beverage Blending Machines that are the subject of this request. The company has grown 

successfully, both domestically and internationally, and it anticipates future growth 

provided the proper market and costs conditions exist. However, without an uninterrupted, 

cost-effective supply of its proprietary and specially-designed Frozen Beverage Blending 

Machines from the sole manufacturer of the products, f’Real will not be able to continue to 

grow its business and employment in the United States.

f’Real is the designer and purchaser of the imported Frozen Beverage Blending Machines. 

Under a contract with a U.S. distributor that also acts as a buying agent on behalf of f’Real, 

purchase orders are placed by f’Real with the U.S. distributor which then orders the Frozen 

Beverage Blending Machines from a specific, authorized contract manufacturer of those 

machines. The manufacturer was approved by f’Real to produce its proprietary, speciallydesigned Frozen Beverage Blending Machines and is the sole manufacturer of the f’Real 

equipment. The distributor handles logistics and imports the Frozen Beverage Blending 

Machines for f’Real’s account. 

f’Real is the only party responsible for the sale of its Frozen Beverage Blending Machines, 

which are delivered to f’Real’s customers by the distributor. Under terms of its contract with 

the distributor, f’Real is responsible for the payment of all duties and fees related to the 

importation of the subject merchandise. On entries of the subject Frozen Beverage Blending 

Machines since July 6, f’Real has paid approximately [ ] as a result of the Section 

301 tariffs being imposed. Accordingly, f’Real is an interested party for purposes of 

requesting this product exclusion from the Section 301 tariffs. 

Product Description

f’Real’s Frozen Beverage Blending Machine is an electro-mechanical appliance for preparing 

proprietary f’Real frozen beverages. The Frozen Beverage Blending Machine (model FRLB6) 

is a proprietary and unique design created and owned by f’Real which is the subject of a 
The Honorable Robert E. Lighthizer October 2, 2016

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pending patent application, distinguishing it from other single-serving commercial drink 

blenders, including those such as the product described and depicted in a request for product 

exclusion filed by Hamilton Beach Brands, Inc.2 

The f’Real Frozen Beverage Blending Machine is a stand-alone self-contained system used to 

prepare prepackaged frozen beverages such as ice cream, yogurt, coffee, fruit smoothies and 

protein shakes. The machine does not make the ice-cream, yogurt or any other beverage 

option; rather, it simply reconstitutes prepackaged ingredients in a f’Real proprietary prefilled cup. The machine is designed to be used in retail establishments such as convenience 

stores or cafeterias. A customer selects prepackaged beverage ingredients from a separate 

customized merchandising freezer and then places the ingredients into the Frozen Beverage 

Blending Machine for preparation. 

f’Real’s Frozen Beverage Blending Machine incorporates in a single housing: a mixing device, 

water heaters, flow meter, self-cleaning and steam-sanitization hardware, LCD mechanizing 

display, electronics for machine control and wireless communications for updating display 

content. The machine has the following approximate physical dimensions: 42.5" (h) x 13.5" 

(w) x 22" (d) and weighs approximately 128 pounds. The machine is a countertop device. 

Pictures of a f’Real Frozen Beverage Blending Machine, alone and displayed with the f’Real 

freezer containing beverages in pre-filled cups, are shown below:

 

2 See Request by Hamilton Beach Brands, Inc. for Exclusion from the Section 301 Tariff of SingleServing Drink Mixers/Blenders for Mixing or Blending Drinks in Disposable Cups, with an Automated 

Self-Rinsing Function, of the Type Used in Commercial Foodservice Establishments, USTR-2018-0025-

1381 (posted September 7, 2018), at 2-3.
The Honorable Robert E. Lighthizer October 2, 2016

Page 4 PUBLIC VERSION

f’Real Frozen Beverage Blending Machine (model FRLB6)
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f’Real Frozen Beverage Blending Machine displayed 

with f’Real freezer containing pre-filled cups in various flavors

The Frozen Beverage Blending Machine consists of an injection-molded frame on which 

electrical and mechanical subassemblies are mounted. The electronics consist of an 

embedded computer with dual LCD displays, power supplies, a low voltage control module, 

as well as several sensors, switches, motors, heaters, and associated wiring. The mechanical 

subassemblies include mechanisms for transporting and mixing the pre-frozen beverage cup. 

Plumbing and heating elements warm the milkshake, and wash and sanitize the food contact 

surfaces.
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Tariff Classification and Duty Rate 

At the ten-digit level, the f’Real Frozen Beverage Blending Machine (model FRLB6) is

classified at subheading 8438.80.0000, HTSUS (Machinery, not specified or included 

elsewhere in this chapter, for the industrial preparation or manufacture of food or drink,

other than machinery for the extraction or preparation of animal or fixed vegetable fats or 

oils; parts thereof: Other machinery). The current rate of duty is “Free.” This classification 

was confirmed by CBP in a 2016 ruling.3 

As shown, the f’Real Frozen Beverage Blending Machine is a distinct product from others 

classified at subheading 8438.80.0000, HTSUS. Beyond physical appearance, other factors 

distinguish the product from other goods classified under subheading 8438.80.0000, HTSUS. 

While the subheading under which the f’Real Frozen Beverage Blending Machine is classified 

states it is equipment used in the “industrial” preparation or manufacture of food or drink, 

the machine is clearly not industrial grade in either durability or capacity. Rather, it is 

equipment used for food or drink preparation that is sold at retail locations and used either 

by the consumer/purchaser (self-service) or by employees of the retail establishment who 

serve customers. 

The product is easily distinguished from other products in a broad range of articles covered 

by subheading 8438.80.0000, HTSUS. A survey of CBP rulings under this subheading makes 

this clear. For instance, also classified under this subheading are products described as: a 

hand-held device for mixing and liquifying any number of food items such as pancake batter,

sauces, and soups;

4 an ice cream and candy mixer;5 a beverage blending system;6 seafood 

sorting and glazing machinery;

7 and a yeast revitalization system.8

 

 

3 See N280315, dated November 9, 2016 (classification of f’Real Frozen Beverage Blending Machine, 

model FRLB6, at subheading 8438.80.0000, HTSUS).

4 NY K83378, dated March 2, 2004.

5 HQ 082329, dated January 24, 1990.

6 NY L83594, dated April 18, 2005 (a general-purpose processing module incorporated as part of 

a carbonated beverage filling line blending aerated water with other ingredients, then chilling 

and carbonating before passing on in-bulk to a separate bottling line).

7 NY L83432, dated April 1, 2005 (a composite machine consisting of two parts, a seafood sorter 

and a glazer with associated belt conveyors, with the sorter only classified at subheading 

8438.80.0000, HTSUS, and the glazer classified under Heading 8424, HTSUS).

8 NY N009189, dated May 3, 2007 (an industrial processing system to revitalize yeast in a 

factory setting for brewing or baking, consisting of tanks, valves, pipes, pumps and controls).
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Unlike the aforementioned products, particularly general-use commercial blenders that are 

used to mix and blend a variety of liquid and solid food ingredients, the proprietary 

technology used in the design and manufacture of f’Real Frozen Beverage Blending Machine

means it can only be operated to mix f’Real’s proprietary pre-filled cups. The pre-filled cups 

and the Frozen Beverage Blending Machine are complementary products and cannot 

function with other brands or products. Neither product is designed to be used with other 

general-purpose blenders, liquids, or other ingredients. 

CBP will have no difficulty in administering the exclusion for the f’Real Frozen Beverage 

Blending Machines, regardless of the port of entry. In addition to the above characteristics 

that distinguish them from other items classified under the same subheading, the Frozen 

Beverage Blending Machines are manufactured and exported by the same party [

], has FDA Product Code [ ], and is imported by 

f’Real’s distributor only, [ ]. Therefore, upon granting 

the exclusion, USTR can provide CBP with clear instructions that entries of these products 

are not subject to the Section 301 tariffs, similar to how CBP administers 

antidumping/countervailing duty entries upon receiving instructions from the Department 

of Commerce.

Rationale for Granting the Exclusion Request

Product is not Strategically Important 

f’Real strongly believes its proprietary, specially-designed Frozen Beverage Blending 

Machine assembled in China from U.S.-origin and foreign-made components are neither 

strategically important nor related to Made in China 2025. China’s Made in China 2025

industrial policy program focuses on the following ten (10) sectors: (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. 

It is evident there is no nexus between the manufacture of equipment used in the single-serve 

beverage industry (whether frozen or not), such as f’Real’s proprietary Frozen Beverage 

Blending Machine and the advanced materials, equipment, or technologies that are 
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strategically important to the Made in China 2025 program. While the Section 301 Report9

addresses certain concerns related to the food and agriculture sector, the concerns are not 

related to manufacturing beverage industry equipment manufacturing, the acquisition of 

U.S.-origin technology for the manufacture of such equipment, the forced transfer of 

technologies related to such equipment, or similar matters. In fact, a search of the Section 301 

Report shows neither “beverage” nor “drink” is not used whatsoever.

Moreover, to the extent f’Real’s Frozen Beverage Blending Machine utilizes computers and 

technology, it relies on well-established technologies. Like the design and function of f’Real’s 

Frozen Beverage Blending Machine, the software for operating the embedded computers is 

likewise proprietary and confidential to f’Real and has been developed in the United States. 

It does not appear that food and beverage preparation equipment – particularly that used at 

the retail and consumer level – is strategically important to China’s industrial programs. 

Additionally, there is no indication that production of equipment such as the proprietary 

f’Real Frozen Beverage Blending Machine is the result of China’s unreasonable actions, 

policies, and practices detailed in the Section 301 Report, such as the forced transfer of 

technology.

As stated in its previously filed comments10, f’Real has not encountered any issues or 

concerns related to its intellectual property rights or experienced any unfair trade practices 

related to the assembly of its proprietary Frozen Beverage Blending Machine in China. f’Real 

retains all rights to the intellectual property associated with the Frozen Beverage Blending 

Machine intellectual property. f’Real has over twenty-five (25) patents related to the Frozen 

Beverage Blending Machine (model FRLB6). These patents are registered not only in the 

United States, but in several countries around the world, including China. The company has 

not transferred and has no plans to transfer its intellectual property to any other third-party, 

in China or elsewhere.

 

9 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 (the 

“Section 301 Report”).

10 See Comments, f'Real! Foods, LLC, USTR-2018-0005-2451 (posted May 14, 2018), at 1 

(reporting the company has not been a victim of any unfair trade practices set forth in the 

Section 301 Report).
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Moreover, the unique proprietary features of the f’Real Frozen Beverage Blending Machine 

means there are no equivalent products available domestically or from other third-party 

countries. f’Real is unaware of any such products. 

Significant Economic Impact on f’Real

As stated above, the f’Real Frozen Beverage Blending Machine is specially-designed and for 

use only with f’Real’s prefilled beverage cups. The Frozen Beverage Blending Machines

assembled in China are not imported for any other company’s benefit and sale, other than 

f’Real. f’Real has invested significant time, money, and effort into the design, development, 

and assembly of its Frozen Beverage Blending Machine and selected a sole manufacturer to 

better protect its investment in its proprietary product. The subject Frozen Beverage 

Blending Machine cannot be sourced elsewhere, without significant delays in production and 

delivery, and duplicitous investments of time, money, and effort made by the company.

f’Real’s Frozen Beverage Blending Machine (model FRLB6) is an important product for the 

company’s sales and continued growth and success. The product was introduced to the 

North American market in 2017, with the United States being the largest and most obvious 

market for the product. Although the product was available only in limited quantities in the 

first four (4) months of 2017, as reported, sales of the Frozen Beverage Blending Machine 

made up [ ] percent [ ] of its total gross sales in 2017. The success of the product 

in the marketplace is evident. In 2018, that percentage is on pace to grow to [ ] 

percent [ ] of the company’s total gross sales. 

A twenty-five percent (25%) punitive tariff on f’Real’s proprietary Frozen Beverage Blending 

Machine will erode the company’s profits and nullify its investments. Based on its current 

purchase order commitments for the period September 2018 through February 2019, f’Real 

anticipates increased costs to import its proprietary and specially-designed Frozen Beverage 

Blending Machine (model FRLB6) of approximately [ ] or just over [

] per unit, due to Section 301 tariffs. 

Moreover, f’Real customers that purchase the Frozen Beverage Blending Machines, 

particularly those owners and franchisees of retail outlets such as convenience stores, will be 

economically impacted as well through higher acquisition and replacement costs, increased 

prices to consumers, and the potential for decreased sales and overall revenue. 
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Conclusion

Granting the requested exclusion will not undermine USTR’s objectives in its Section 301 

investigation. Rather, granting the request recognizes there are no other sources outside of 

the single contracted manufacturer located in China for the supply of f’Real’s proprietary 

Frozen Beverage Blending Machines to retail operators in the United States. Granting the 

request will allow f’Real to meet the growing demand for the product which is becoming 

increasingly important to f’Real’s overall sales. Moreover, granting this exclusion request 

means the additional duties will not threaten f’Real’s significant investment made to specially 

design, develop, and protect the proprietary nature of its Frozen Beverage Blending Machine, 

which will facilitate the company’s further growth in the United States. 

For the reasons stated above, f’Real! Foods, LLC respectfully requests that USTR grant this

product exclusion request for its proprietary Frozen Beverage Blending Machines (model 

FRLB6) and further identified above. 

Respectfully submitted,

Phillips Lytle LLP

/s/ James Kevin Wholey

James Kevin Wholey

Jon P. Yormick

Counsel for f’Real! Foods, LLC