PUBLIC VERSION

Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology

Transfer, Intellectual Property, and Innovation - Form to Request Exclusion ofProduct

When submitting a product exclusion request using this form, enter the specified

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

By completing this form, you certify that the information provided is complete and

correct to the best ofyour knowledge.

1. Indicate whether the comment contains business confidential information (BCI), is a public

document, or is a public version of a BCI document.

Public Version of BCI

2. Please provide a complete and detailed description ofthe particular product of concern:

Full Body Mesh Sling with a Commode Opening. See attached letter for detailed description.

3. 10-digit HTSUS item number* for product you wish to address in this product exclusion request:

*Use numerical characters only with no special characters (example: 1023456789). For help in finding

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

8431390080

4. Requestor Information

Requestor Name (Last, First): |Scott Hughes

Organization Name: Invacare Corporation

Note: Representatives submitting on behalf of an organization must enter information below. 

Requestor Representative: Neal J. Reynolds, King & Spalding

5. Requestor's relationship to the product: Purchaser

6. Does this submission in regulations.gov include additional attachments?

YES

7. Please indicate whether any additional attachment contains business confidential information

(BCI), is a public document, or is a public version of a BCI document.

Public Version ofBCI

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PUBLIC VERSION

8. Is this product, or a comparable product, available from sources in the United States? (If you

indicate "NO", you must provide support for your assertion in Box 12).

NO

9. Is this product, or a comparable product, available from sources in third countries? (If you

indicate "NO", you must provide support for your assertion in Box 12).

NO

10. Please provide the value and quantity (with units) ofthe Chinese-origin product of concern

that youpurchased for each calendar year specified. Limit this figure to the products

purchased by your firm (or by members ofyour trade association) alone. Please provide

estimates ifprecise figures are unavailable.

2017 Value: See attached letter 2017 Quantity: See attached letter

2016 Value: See attached letter 2016 Quantity: See attached letter

2015 Value: See attached letter 2015 Quantity: See attached letter

11. Is the Chinese-origin product of concern sold as a final product or an input used in

the production of a final product or products?

FINAL PRODUCT

a) For imports sold as final products, please provide:

See attac^ % ofyour total gross sales in 2017 that the Chinese-origin product accounted for.

b) For imports ofinputs used in the production offinal products, please provide:

% ofthe total cost of producing the final product(s) the Chinese-origin input

accounts for.

% ofyour total gross sales in 2017 that sales ofthe final product(s) incorporating

the input accounted for.

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PUBLIC VERSION

12. Please provide information in support your request, taking account ofthe

instructions provided in Section B ofthe Federal Register notice. Ifyou

responded "NO" to Questions 8 or 9, you must provide support for your

assertion in the box below. (Note: text entered below can extend beyondthe

apparent size ofthis box).

See attached letter,

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PUBLIC VERSION

King 8c Spalding 1700 Pennsylvania Avenue, NW

Washington, DC 20006-4706

Phone: 202/626-2390

Fax: 202/626-3737

www.kslaw.com

October 8, 2018

VIA REGULATIONS.GOV

The Honorable Robert E. Lighthizer

United States Trade Representative

Office ofthe U.S. Trade Representative

600 17th Street, N.W.

Washington, DC 20508

Docket No. USTR-2018-00025

PUBLIC VERSION1 2

Re: Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology

Transfer, Intellectual Property, and Innovation - Exclusion Request of Invacare

Corporation

Dear Ambassador Lighthizer:

On behalf ofInvacare Corporation (“Invacare”), a leading U.S.-based manufacturer of

long term care and home medical equipment, we hereby request that the Office ofthe United

States Trade Representative (“USTR”) exclude imports offull body mesh slings with a

commode opening from the tariffs that have been imposed on these imports under section 301

ofthe Trade Act of 1974. We are filing this exclusion request in accordance with the guidelines

announced in the Federal Register notice that USTR published on July 11, 2018.

1 Invacare requests business confidential treatment of certain information in this document.

Disclosure ofthe information marked “Business Confidential” in this request would endanger trade

secrets or profitability and the information would not customarily be released to the public.

2

Procedures to Consider Requestsfor Exclusion ofParticular Productsfrom the Determination

ofAction Pursuant to Section 301: China’s Acts, Policies, andPractices Related to Technology Transfer,

Intellectual Property, and Innovation, 83 Fed. Reg. 32181 (July 11, 2018).
The Honorable Robert E. Lighthizer

October 8, 2018

Page 2

PUBLIC VERSION

Imposing an additional tariff of 25 percent on Invacare’s imports of home health products

from China will seriously and adversely impact its ability to continue manufacturing its medical

device products in the United States. It will also restrict Invacare’s ability to provide these

products to the seniors, chronically ill individuals and persons with disabilities who need them to

maintain their health and well-being.3 In addition to limiting Invacare’s ability to manufacture

and provide these products to health care consumers in the United States, the duty will have a

severe and adverse impact on Invacare’s sales revenues, profitability, and work force levels. In

the end, the duties imposed by USTR on these products will severely affect Invacare, its

employees, and healthcare consumers throughout the United States.

We discuss these issues in detail below.

I. Invacare and the Home Medical and Long Term Care EquipmentIndustry

a. Invacare

Invacare is one ofthe leading manufacturers of home medical and long term care

equipment and other healthcare products in the United States. Headquartered in Elyria, Ohio,

Invacare has manufacturing and distribution facilities throughout the United States and the rest

ofthe world. In the United States, Invacare has manufacturing facilities in Elyria, Ohio; Simi

Valley, California; Sanford, Florida; and Pinellas Park, Florida. Moreover, Invacare has a strong

presence throughout the rest ofthe world, with offices and facilities located in Canada, Europe,

China, Australia, Mexico, and New Zealand.

3 ... . ......

Invacare is filing a number of individual exclusion requests covering products it is importing

from China. These requests cover a number of products that Invacare uses in its own manufacturing

process or sells to healthcare providers or consumers as part ofits product offerings.
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

Invacare offers a wide range of home and long term care health products that are used by

consumers in the United States, manufacturing a large number ofthem in the United States. In

its U.S. manufacturing facilities, Invacare produces power wheelchairs, manual wheelchairs and

active wheelchairs, long term care beds and home care medical beds, oxygen concentrators

(including portable oxygen concentrators), patient lifts, and other home and long term care

products and supplies.

Importantly, Invacare has a large number of employees in the United States, employing

approximately 1,000 staffin the United States. Invacare is one ofthe nation’s largest home and

long term care medical equipment manufacturers, with annual sales revenues ofmore than $320

million in the United States and nearly $1 billion on a worldwide basis. Invacare is an excellent

example of a U.S.- based manufacturing company that has been able to compete and succeed in a

very competitive global marketplace.

b. The Home andLong Term Care Medical Equipment Industry

As noted, Invacare is a leader in the U.S. home health and long term care industry, which

has become a significant component ofthe overall U.S. economy. The home health care industry

annually sells more than $50 billion worth ofmedical equipment, supplies and services to

healthcare consumers in the United States. All ofthe members ofthe industry, including

Invacare, work on a daily basis to ensure that high-quality health care products and services

remain available to seniors, home-bound patients, chronically ill individuals, and persons with

disabilities, who typically use these products in the comfort and security oftheir homes, or in
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

settings that serve as their homes, such as nursing homes, assisted living centers and group

homes.4

The members ofthis industry furnish a range of home medical products, supplies, and

services to these consumers. The industry provides healthcare products like (i) oxygen

equipment and therapy, (ii) sleep therapy technologies, (iii) mobility assistive technologies

(including wheelchairs), (iv) inhalation drug therapy, (v) home infusion devices and supplies,

(vi) diabetes therapy and related supplies, and (vii) a variety of other medical equipment,

therapies, services, and supplies used in the home setting. Within the industry, these devices and

supplies are referred to as “home medical equipment” (“HME”) and supplies.

Home medical equipment and supplies are often critical components in the treatment of

chronic medical conditions, which include diseases like chronic obstructive pulmonary disease,

congestive heart failure, and neuromuscular diseases (such as cerebral palsy, multiple sclerosis,

muscular dystrophy, and ALS). For example, individuals with chronic pulmonary disease may

need to use oxygen concentrators to remain active and functioning. Similarly, individuals with

spinal cord injuries or muscular dystrophy may need advanced power wheelchairs to remain

mobile and active. On the whole, many seniors, chronically ill individuals, and persons with

disabilities need to know that they have a reliable source ofsupply for their home medical

equipment. Making it harder for these individuals to obtain the healthcare products they need is

neither an effective way to promote the health ofthese Americans nor a desirable policy choice.

Today, in the United States, more than 53 million Americans are disabled. Moreover,

more than 51 million people are over the age of 65 and are eligible for Medicare, which provides

4 For ease ofreference, we use the word “home” to refer to all ofthese types ofliving

arrangements.
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

reimbursement for home medical equipment and supplies. Every day, an additional 10,000

individuals in the United States reach the age of 65 and become eligible for Medicare. Imposing

an additional duty of 25 percent on HME products, including the imported products that Invacare

uses to produce its wheelchairs, long term care beds, patient lifts and oxygen concentrators, will

only serve to limit the ability of consumers to obtain products that they need to maintain their

health.

II. Information Required by USTR For This Exclusion Request

In its July 11, 2018 notice,5 USTR specified that certain information must be included in

any request seeking an exclusion from the duties imposed by USTR under section 301.

Consistent with these guidelines, Invacare provides the following information:

a. Description ofthe Product Covered by this Exclusion Request, the

Applicable 10 Digit Subheading ofthe HTSUS, and theAdministrability of

the Exclusion Request

This exclusion request covers a full body mesh sling with a commode opening. Patient

slings are classified by the FDA as Class II medical devices and are used as an essential part of

Invacare’s patient lifts. Patient lifts and slings are typically used to transfer individuals with

disabilities or severe mobility issues between beds and wheelchairs. The following provides a

detailed description ofthis sling, as required by USTR’s exclusion request guidelines:

A full body mesh sling with commode opening is a patient sling that is designed for

dependent or non-weight bearing patients. The sling has a commode opening, is made of

mesh polyester material and has a weight capacity of 450 pounds. The sling comes in

three sizes. The medium size measures 54.7 inches in length and 41.5 inches in width,

and has a commode opening of 11 inches in length by 8 inches in width. The large size

measures 60.5 inches in length and 45.5 inches in width and has a commode opening of

11 inches in length by 8 inches in width. The extra-large size measures 65.3 inches in

5 83 Fed. Reg. 32181 (July 11, 2018).
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

length and 45.5 inches in width and has a commode opening of 13 inches in length by 9

inches in width.

Imports ofthese slings are covered by the ten-digit HTS number 8431.39.0080. Given the

specificity ofthis product description, U.S. Customs and Border Protection will be able to

readily administer this exclusion.

b. Annual Quantity and Value ofthe Chinese-Origin Product That the

Requestor Purchased in the Last Three Years

In Appendix A, Invacare provides the annual quantity and value ofits purchases of

imports ofthis patient sling from China for the years 2015, 2016, 2017 and the first half of 2018.

As required in USTR’s on-line filing form, Invacare also provides in Attachment A the

percentage ofits total gross U.S. sales in 2017 represented by sales ofthe sling product covered

by this request.

c. Rationale For RequestedExclusion

i. Invacare Cannot Obtain This Productfrom Non-Chinese Sources

Invacare cannot obtain this particular sling product from any non-Chinese supplier.

Invacare imports this product from its Chinese supplier because that supplier is the only source

for this custom-designed product. As noted above, this product is custom-designed for Invacare

for use in its patient lifts, which Invacare produces in the United States. Over time, Invacare has

worked closely with the Chinese supplier ofthis product to ensure that it meets Invacare’s

exacting technical and quality specifications and that the sling will work as expected in these

lifts. Because this product is custom-designed for use with specific Invacare patient slings, there

is no other producer in the world who could the product to Invacare within the next year.
The Honorable Robert E. Lighthizer

October 8, 2018

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Moreover, ifInvacare were looking to replace the Chinese supplier ofthis product with a

U.S. or other non-Chinese supplier, Invacare would need to undertake a lengthy qualification

process for the new supplier. When selecting a new supplier, Invacare would need to comply

with FDA regulations associated with supplier selection, qualification and approval.6 This

requires a detailed search phase, qualification phase, including proof of capability, and then

approval ofthe supplier.7 Further, when Invacare makes changes affecting some ofthese

components, it is required to ensure its continued compliance with applicable, recognized

standards, such as the standards setting organization, Rehabilitation Engineering and Assistive

Technology Society ofNorth America. The change may then require a 510(k) submission to the

FDA and clearance before Invacare can make the change. Based on its past experience,

Invacare believes that this process can take between one to two years. As a result, it is simply not

possible for Invacare to replace this custom-designed sling with a replacement made by a U.S. or

other non-Chinese supplier in the next two years.

Furthermore, Invacare has a number of existing contracts with the Department of

Veterans Affairs (“VA”) that cover its patient lifts, wheelchair, and long term care bed offerings.

These contracts, which last for multiple years, prevent Invacare from changing the specific

components contained in its patient lifts, wheelchairs, and long term care beds. Because ofthese

limitations, Invacare will not be able to change the sourcing ofthe components used in these

products, which includes the product covered by this request. In sum, given these factors,

Invacare could not simply replace the fully body mesh sling with a commode opening it now

6 Invacare is a U.S. manufacturer ofClass I and Class II medical devices, which are regulated by

the Food and Drug Administration (“FDA”).

7 See 21 C.F.R. Part 820.
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

sources from China with a new product within the next year or so. It is, as a practical matter,

impossible for it to do so.

ii. Imposition ofthe Section 301 Duties on Invacare’s Importsfrom

China Will Cause Severe Economic Harm to Invacare and its

Customers

The imposition ofthese duties on the home health products Invacare is now importing

from China, including its slings, will have a severe economic impact on Invacare and its

employees. When considering this issue, it is important to remember, as an initial matter, that

the Federal government has recognized that the medical devices industry, which includes the

HME industry, remains a strong component ofthe continued health ofthe U.S. manufacturing

sector. In a 2016 study ofthe medical devices industry prepared by the Commerce Department,

the agency described the U.S. medical devices industry as “highly regarded globally for their

innovations and high technology products.”8 Commerce went on to note:

The United States medical device industry is known for producing high quality products

using advanced technology resulting from significant investment in research and

development. During the last decade, the United States medical device industry

experienced an unprecedented advancement in innovative and developed technologies,

leading to the birth of new therapies and growth in {the} overall healthcare industry.9

Like the rest ofthe medical devices industry, Invacare continues to work hard to identify,

develop, produce and provide advanced mobility, respiratory and other home health technologies

for its customers, who need these products to remain healthy and functioning. Moreover, unlike

8 Department ofCommerce, International Trade Administration, 2016 Top Markets

Report: Medical Devices, at p. 2 (2016). See

https://www.trade.gov/topmarkets/pdf/Medical_Devices_Executive_Summary.pdf.

9

Id.
The Honorable Robert E. Lighthizer

October 8, 2018

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many ofits competitors, Invacare produces a significant number ofits home health products here

in the United States.

Considering the importance of a financially strong HME industry for the U.S. economy

and U.S. healthcare consumers, it simply does not make sense to impose the proposed duty on

Invacare’s imports from China because doing so will have a severe impact on the company’s

financial health. In this regard, the financial condition of HME manufacturers like Invacare is

dependent on reimbursements paid by Medicare, Medicaid, and private insurers. Unfortunately,

Medicare, Medicaid, and private insurers pay only a fixed reimbursement amount to HME

providers for home medical equipment and supplies. This fixed reimbursement level limits the

sales revenues and operating income levels ofHME providers, who are the firms to whom these

insurers typically make reimbursement payments.

As a result, this fixed payment also limits the sales revenues and operating results of

HME manufacturers like Invacare because their sales revenues are, in effect, derived from the

revenues ofthe downstream providers who furnish home medical equipment and supplies to

home healthcare consumers. In other words, the fixed reimbursement levels paid by Medicare

and other insurers for home medical equipment and supplies severely limit the sales revenues

and profits ofInvacare and other HME manufacturers.

Due to this unusual reimbursement structure in the HME industry, any additional duty

imposed by USTR under section 301 cannot readily be passed on by Invacare to the purchasers

ofits healthcare products, in whole or in part. This means that the additional duty of 25 percent

would need to be fully absorbed by Invacare on its products. IfInvacare is forced to absorb

these duties, it will result in an increase in the cost of goods sold for the company and a
significant reduction in its overall operating income levels.10 After analyzing the impact ofthe

tariffs on its financial results in detail, Invacare estimates that its operating income will be

reduced substantially during the first year ofthe tariffs.

It is also important to note that Invacare’s competitors import the same products that

Invacare now produces in the United States from China, and these imports are not currently

subject to the section 301 tariffs. As a result, Invacare faces the very real possibility that it will

lose significant sales to these competitors, experience significant declines in its revenue and

profitability levels, and will face the need to make significant reductions in its employment

levels. Because ofthis prospect, Invacare may be forced to consider closing its manufacturing

facilities and moving its production facilities to other countries, including China. In light of

these issues, Invacare urges the USTR to consider excluding imports ofthe product covered by

this request from the scope ofthe section 301 tariffs.

Invacare believes that it is unreasonable to place a significant cost burden on Invacare, a

member of an U.S. industry that remains “highly regarded globally for {its} innovations and

high-technology products.”11 Imposing the tariffs on these medical devices will have the

opposite oftheir intended effect. In this case, they will cause significant harm to a U.S.-based

The Honorable Robert E. Lighthizer PUBLIC VERSION

October 8, 2018

Page 10

10 Furthermore, Medicare and Medicaid have adopted policies that result in unreasonably

low fixed reimbursement levels for the HME industry, creating an unsustainable financial

environment for HME manufacturers and providers. In these circumstances, placing an

additional cost burden on Invacare and other members ofthe HME industry - which already faces

significant cost and revenue challenges — will further limit their ability to provide its customers

with the HME products they need.

11 Commerce, International Trade Administration, 2016 Top Markets Report: Medical

Devices, at p. 2

(https://www.trade.gov/topmarkets/pdf/Medical_Devices_Executive_Summary.pdf).
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

manufacturer ofmedical devices, to the advantage ofits competitors that do not invest in USbased manufacturing facilities and employ U.S. workers to manufacture these devices.

Moreover, given that Invacare continues to have a significant manufacturing footprint in

the United States, it cannot be said that its only interest here lies in maintaining its access to

imports ofHME products from China. Instead, Invacare is proud that it has made a significant

investment in its U.S. production facilities but notes that it needs to maintain its access to its

imports from China to continue manufacturing in the United States.

In sum, we urge USTR to grant this request for an exclusion from the section 301 tariffs.

Imposition ofthe duty on these products will have a disproportionately harmful effect on

Invacare, which remains a standard bearer in the development ofsophisticated and advanced

healthcare products here in the United States.

m. Technology Transfer Requirements and The “Made in China 2025”

Program Are NotApplicable to This Product

Finally, we note that Invacare’s imports ofthe product covered by this request are not

subject to technology transfer or licensing requirements by China. They are also not covered by

China’s “Made in China 2025” program.12 As a result, the concerns that caused USTR to impose

duties on imports from China are not implicated by imports ofthis product from China by

Invacare.

III. Conclusion

Imposition ofthe section 301 tariffs on Invacare’s imports ofthe sling product covered

by this request will not have the desired effect ofincreasing employment in the United States or

improving the sales and profitability ofmanufacturing interests in the United States. On the

Patient slings are not an advanced medical device.

12
The Honorable Robert E. Lighthizer

October 8, 2018

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contrary, imposition ofthe tariffs on these imports will significantly increase the cost at which

Invacare obtains this product from China, and will have a direct and severe impact on Invacare’s

bottom line. Moreover, imposing a duty of 25 percent on these imports will seriously and

adversely affect Invacare’s ability to provide health care consumers in the United States with the

health care products they need on a daily basis.

In light ofthese considerations, Invacare respectfully requests that USTR exclude full

body mesh slings with a commode opening from the scope ofits announced duties under section

301. Granting this request will help Invacare continue providing consumers with the products

they need to maintain their health and well-being. Further, granting this exclusion request and

the other requests filed by Invacare will avoid causing severe economic harm to Invacare and its

employees. Accordingly, Invacare believes that excluding these imports from the scope ofthe

section 301 tariffs will not undermine the goals that the Administration hopes to achieve with

these tariffs and is within the best interests ofthe United States.

We appreciate your consideration ofthis request. If you have any questions or require

further information, please do not hesitate to call us.

Respectfully,

/s/ Jeffrey M. Telep

Jeffrey M. Telep

Neal J. Reynolds

Counsel for Invacare Corporation
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

Appendix A

Annual Quantity and Value of Chinese-Origin Product Purchased by Invacare in the Last

Three Years:

2015 2016 2017 2018 (YTD)

Quantity

(Units)

[[ ]] [[ ]] [[ ]] [[ ]]

Value ($1,000) $[[ ]] $[[ ]] $[[ ]] $[[ ]]

Percentage ofInvacare’'s total gross U.S. sales in 2017

Represented by the Chinese Product:

[[ ]]