PUBLIC VERSION 

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

Transfer, Intellectual Property, and Innovation - Form to Request Exclusion of Product 

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 of your 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 BC! 

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

The spindle motors are 3-phase, 4-pole, 200 volt, silver, steel motors that operate at 31 kilowatts with a 

rotation per minute ranging from 5,000 to 12,000. They are approximately 43. 18 cm long end to end 

including front and back shaft with a 31.75 cm long x 24.13 cm square motor body with cast cooling fins, 

a 7.62 cm front shaft, a 3.81 cm back shaft, and a 26.67 cm square mounting flange . 

For more information, see Item 12. In totality, this box as well as Item 12 will allow CBP to administer 

the requested exclusion. 

3. IO-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/ 

8501528040 

4. Requestor Information 

Requestor Name (Last, First): jEspevik, Craig !::=::::====~=============================: Organization Name: !Yaskawa America, Inc. 

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

Requestor Representative: !Kathleen Murphy, Drinker Biddle & Reath LLP 

5. Requestor's relationship to the product: L-!I_m.,_p_o_rt_er _________________ _, 

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

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 of BC! 

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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). 

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). 

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

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

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

estimates if precise figures are unavailable. 

2017 Value: [***********] 2017 Quantity: [***********] 

2016 Value: [***********] 2016 Quantity: [***********] 

2015 Value: [***********] 2015 Quantity: [***********] 

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? 

INPUT 

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

% of your total gross sales in 2017 that the Chinese-origin product accounted for. 

b) For imports of inputs used in the production of final products, please provide: 

[**] % of the total cost of producing the final product(s) the Chinese-origin input 

accounts for. 

[***] 

VERSION 2 

% of your total gross sales in 2017 that sales of the final product(s) incorporating 

the input accounted for. 

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

instructions provided in Section B of the Federal Register notice. If you 

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

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

apparent size of this box); 

Consistent with USTR's Section 301 notice, Yaskawa requests confidential treatment for the information 

designated as business confidential in this submission. Such information consists of infonnation that 

would not customarily be released to the public, including business or trade secrets regarding production 

costs and processes, data on sales, product characteristics, customers, destinations, and other product, 

sales, and cost-related business secrets. Business confidential information has been indicated herein by 

enclosing it in single brackets("[]"). A public version of these comments is also being filed with all 

confidential information removed. 

Please see attached Addendum, but, in summary, Yaskawa requests this exclusion due to tbe following 

reasons. 

• Yaskawa imports the subject spindle motors for sale to a manufacturer in the United States who further 

manufactures them for sale in the United States and for export. This manufacturer will file a letter in 

support of this exclusion request during the 14-day comment period. The manufacturer uses Yaskawa's 

imported spindle motors in the manufacture of machine tools here in the United States. In other words, 

the spindle motors at issue exclusively support U.S. manufacturing and employment and reduce the trade 

deficit of the United States as they are intended to be exported. 

• The Company does not utilize third-party manufacturers due to its protection of its intellectual property 

and trade secrets, as well as its commitment to lean, highly-precise manufacturing. While Yaskawa's 

competitors do produce spindle motors outside China at their own manufacturing plants, Yaskawa has no 

knowledge of independent suppliers outside China who could produce spindle motors for the Company 

at the quantity and quality Yaskawa would require. Even if the Company were to identify a prospective 

supplier, it would cost approximately[**********] and take more than[********] to develop, 

integrate, and qualify such a supplier for its high-precision supply chain. 

• These tariffs severely hann a U.S. company, a U.S. manufacturer, and its employees. IfYaskawa does 

not receive its requested exclusion, it will pass those costs along to its customer, a U.S. manufacturer, 

who would be substantially harmed as it would be unable to pass that additional cost along to its 

customers due to intense competition from foreign competitors. Therefore, this U.S. manufacturer may 

have to adjust its U.S. workforce and would be unable to compete on the g lobal market which would 

increase the U.S. trade deficit in the fonn of declining U.S. exports. 

• The spindle motors at issue do not benefit from, nor are they a target of, the Intellectual Property ("IP") 

practices which the administration is targeting with these tariffs. The specific technology behind these 

spindle motors is based on technology that is more than ten years old. Moreover, Yaskawa's supplier is a 

related party over whom Yaskawa exercises control. Therefore, Yaskawa is not aware of any instances 

of forced technology transfer or violation of its intellectual property rights. 

VERSION 2 END 3 
VASKAWA 

PUBLIC VERSION 

Contains No Confidential Information 

October 9, 2018 

The Honorable Robett E. Lighthizer 

United State Trade Representative 

Office of the United States Trade Representative 

600 I 7th Street NW 

Washington, DC 20508 

Re: Addendum to Request for Exclusion of Particular Products from the 

Determination of Action Pursuant to Section 301 

This letter is submitted by Yaskawa America Inc. ("Yaskawa" or "the Company") 

pursuant to the Procedures to Consider Requests for Exclusion of Particular Products .from 

the Determination of Action Pursuant to Section 301 as set forth in docket number USTR2018-0025. The information contained herein is an addendum to the individual product 

exclusion form and is intended to address questions set forth in the procedures described 

above. 1 For reference, this addendum pertains to spindle motors imported by the Company 

for use in further manufacture in the United States before being sold in the United States and 

exported globally as components of automated vertical and horizontal machining centers. 

These spindle motors are provided for under the Harmonized Tariff Schedule of the 

United States ("HTSUS") subheading 8501.52.8040, which provides for "Electric motors and 

generators (excluding generating sets): Other AC motors, multi-phase: Of an output 

We request confidential treatment for information designated as business confidential in this 

submission. Such information consists of information that would not customarily be released to the 

public, including business or trade secrets regarding production costs and processes, product 

characteristics, and other sale-related business secrets, and the names of individuals or organizations 

that provided price, cost, and other market information. Business confidential information is indicated 

in the request below via single brackets ("( )"). Release of this information would cause irreparable 

harm to the submitter. A public version of this addendum is also being filed with all confidential 

information redacted. 

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exceeding 750 W but not exceeding 75 kW: Other: Other." The spindle motors are 3-phase, 

4-pole, 200 volt, silver, steel motors that operate at 31 kilowatts with a rotation per minute 

ranging from 5,000 to 12,000. They are approximately 43.18 cm long end to end including 

front and back shaft with a 31.75 cm long x 24. 13 cm square motor body with cast cooling 

fins, a 7 .62 cm front shaft, a 3 .81 cm back shaft, and a 26.67 cm square mounting flange. The 

spindle motors' product information and images that distinguish them from other spindle 

motors, is provided as Attachment J. 

I. Executive Summary 

Yaskawa believes that the exclusion request should be granted for the following reasons: 

• Yaskawa imports the subject spindle motors for sale to a manufacturer in the United 

States who further manufactures them for sale in the United States and for export. This 

manufacturer will provide a letter in support of this exclusion request during the 14-

day comment period after filing. The manufacturer uses Yaskawa's imported spindle 

motors in the manufacture of machine tools here in the United States. In other words, 

the spindle motors at issue exclusively support U.S. manufacturing and employment 

and reduce the trade deficit of the United States as they are intended to be exported. 

• The Company does not utilize third-party manufacturers due to its protection of its 

intellectual property and trade secrets, as well as its commitment to lean, highlyprecise manufacturing. While Yaskawa's competitors do produce spindle motors 

outside China at their own manufacturing plants, Yaskawa has no knowledge of 

independent suppliers outside China who could produce spindle motors for the 

Company at the quantity and quality Yaskawa would require. Even if the Company 

were to identify a prospective supplier, it would cost approximately [ ] and 

Yaskawa America, Inc. 1067 Johnson Drive Buffalo Grove, IL 60089 847.887.7000 

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take more than [ 

precision supply chain. 

] to develop, integrate, and qualify such a supplier for its high-

• These tariffs severely harm a U.S. company, a U.S. manufacturer, and its employees. 

[f Yaskawa does not receive its requested exclusion, it will pass those costs along to 

its customer, a U.S. manufacturer, who would be substantially harmed as it would be 

unable to pass that additional cost along to its customers due to intense competition 

from foreign competitors. Therefore, this U.S. manufacturer may have to adjust its 

U.S. workforce and would be unable to compete on the global market which would 

increase the U.S. trade deficit in the form of declining U.S. exports. 

• The spindle motors at issue do not benefit from, nor are they a target of, the Intellectual 

Property ("IP") practices which the administration is targeting with these tariffs. The 

specific technology behind these spindle motors is based on technology that is more 

than ten years old. Moreover, Yaskawa's supplier is a related party over whom 

Yaskawa exercises control. Therefore, Yaskawa is not aware of any instances of 

forced technology transfer or violation of its intellectual property rights. 

The following discussion addresses specific information that is requested in the 

Federal Register, dated July 11, 2018, (83 Fed. Reg. 32 I 81 ). 

JI. Whether the particular product is available only from China? In addressing 

this factor, requestors should address specifically whether the particular 

product and/or comparable product is available from sources in the United 

States and/or in third countries. 

The spindle motor subject to this Exclusion Request is available to Yaskawa only from 

a single supplier in China - a wholly-owned subsidiary of Yaskawa's parent company. 

Simply put, there are no domestic or foreign suppliers who represent satisfactory alternatives 

Yaskawa America, Inc. 1067 Johnson Drive Buffalo Grove, IL 60089 847.887.7000 

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to Yaskawa's supplier in China, which has the specific expertise that is required to efficiently 

produce the quality of spindle motors and the capacity required by Yaskawa's U.S. customer. 

Yaskawa has thrived in this global economy through its commitment to innovation 

combined with its commitment to lean and precise manufacturing. Yaskawa controls its 

intellectual property, trade secrets, and efficient manufacturing by only producing products 

internally within the Company. Yaskawa does not rely on contract manufacturers to produce 

any of its products. Thus, while Yaskawa is aware that foreign competitors produce spindle 

motors outside China, Yaskawa is not aware of any independent manufacturers of spindle 

motors outside China. 

Yaskawa is the only U.S. importer of the spindle motor at issue in this Exclusion 

Request, which was developed by Yaskawa in Japan. The development, integration, and 

qualification of the spindle motors took over four years and cost the Company over [ ]. 

Up to 20% of this cost is directly attributable to U.S. engineering and design work. Since 

there is no untapped or underutilized manufacturing capacity within the United States or 

elsewhere that could supplant the manufacturing process of these spindle motors, identifying 

and moving production to another supplier is not realistic. 

Moreover, even if a feasible non-Chinese supplier option existed, many significant 

challenges would arise. Yaskawa believes that replicating the development, integration, and 

qualification of a new supplier would come at a considerable cost and take a couple years to 

achieve. For example, an alternative production source would have to be fully qualified, at a 

significant expense, to ensure Yaskawa continues to comply with its own quality standards, 

as well as those required by its customer, which include third-party certifications. First, it 

would not be economically feasible to move production to the United States as the costs 

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associated with the reconfiguration and design of our U.S. manufacturing operations, which 

includes the purchase of production and test equipment, would take over a year, even on an 

accelerated basis, and would come at an enormous expense to the Company. From a supply 

chain, quality, and expense perspective, Yaskawa would be forced to move manufacturing to 

Japan. 

In addition to manufacturing operation changes, any change in the suppliers of parts 

and components would necessitate the complete requalification of approximately L 5 critical 

and distinct parts and components that the Company currently sources from third-party 

suppliers for these particular motors. In addition, full certification and qualification is 

required for the motor assembly by Yaskawa's customer. Required tests on motors and 

components include corrosion, material composition, durability, and performance, both 

mechanically and electrically. All these tests are preformed prior to testing machine 

performance after the spindle motor is integrated to the final machine tool that is manufactured 

in the United States. Some of these tests would need to be performed for each re-sourced 

component, as well as each associated system, both of which would require significant cost 

and investment of time. Accordingly, alternative sources of production would have to be fully 

qualified, at a significant expense, to ensure the Company continues to comply with the 

customer's performance specifications - mechanically, electrically, and functionally. 

Further, any expenditures on re-qualification or re-sourcing of components will 

require considerable capital and resources that will be diverted away from U.S. investment, 

U.S. engineering and U.S. product development. Indeed, without the subject tariffs, these 

resources would be available and used for investments and projects to support continued 

growth of Yaskawa's U.S. operations, capabilities, and workforce. Given that there are no 

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alternative suppliers outside of China and it will be difficult to develop manufacturing outside 

China, the USTR should grant the Company's request to be excluded from the 25 percent 

tariff. 

III. Whether the imposition of additional duties on the particular product would 

cause severe economic harm to the requestor or other U.S. interests? 

The imposition of a high tariff to Yaskawa's spindle motors will cause severe 

economic harm to our U.S. buyer, [ ], one of the only U.S. 

manufacturers of machine tools who is committed to U.S. manufacturing and employment. 

Yaskawa opened its first manufacturing facility in 1991 in Illinois to manufacture 

variable-frequency AC drives (i.e., inverters) and machine tool cabinet assemblies. Today, 

Yaskawa has three key factories and one large distribution center in the United States. It 

employs roughly [ ] people throughout the Midwest who utilize knock-down lean assembly 

to make inverters, motors, controllers, semi-conductor panels, and robot-arm manipulators for 

custom applications on more than [ ] square feet of factory space. Yaskawa has 

invested more than [ ] in these facilities and operations over the past 28 years. 

Yaskawa was planning to continue its investments in the Midwest by purchasing a large 

amount of land on which to build a campus and additional factory space. 

Yaskawa's U.S. customer uses the imported spindle motors for further manufacture at 

its facility in Oxnard, California. [ ] exclusively manufactures machine tools, including 

the ones that utilize the spindle motor, in the United St~tes and sells them domestically and 

globally. [ ] employs more than 1,000 people at its manufacturing operations, and many 

more people throughout its U.S. supply chain. [ ] manufactures more than [ ] 

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machines tools monthly. [ ] has been successful in maintaining a competitive position in 

the global machine tool market by pushing their suppliers for all possible cost advantages. 

Yaskawa designed the spindle motors in Japan exclusively for [ ] . In order to meet 

[ ] production cost requirements, as well as its output and quality requirements, Yaskawa 

opened its facility in China. [ ] increasing success increased the orders it placed with 

Yaskawa, causing Yaskawa to invest in additional tooling at its Chinese plant to accommodate 

its customer's needs for its U.S. manufacturing operations. 

As noted above, there are no available suppliers of the subject spindle motors outside 

China because they are all direct competitors of Yaskawa. Therefore, Yaskawa would have 

to incur the additional tariffs for the year until it could develop a supplier outside China. 

Yaskawa would have no choice but to pass this cost along to [ ]. [ ] would lose some 

of its competitive edge in the global marketplace by being forced to pay more for the inputs 

that it uses in its U.S. manufacturing operations. This could cause [ ] to curtail planned 

investment in the United States and possible increases in future hiring in the United States. It 

is likely that [ ] will also lose sales, causing it to order less of the subject spindle motors 

from Yaskawa. Therefore, the tariffs on the spindle motors will cause severe economic harm 

to a U.S. manufacturer and its employees, as well as causing an increase in the U.S. trade 

deficit. 

IV. Whether the particular product is strategically important or related to "Made in 

China 2025" or other Chinese industrial programs? 

Yaskawa's spindle motors are not at all covered by the Government of China's Made 

in China 2025 ("MIC") initiative. The technology underlying these particular spindle motors 

has been in existence for over ten years, but spindle motors generally have been in existence 

for almost a century. Although the MIC does emphasize "high-end numerical control 

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machinery and robotics," the spindle motors developed by Yaskawa are not integral 

components of high-end numerical control machinery ("CNC"). The accuracy and control of 

CNC machines is imparted by the spindle itself, but, more importantly, from the software 

programmed into the machine. The spindle motor simply allows the spindle to rotate. Thus, 

Yaskawa 's imports of spindle motors have not benefitted from and are not connected in any 

way to China's lvfade in China 2025 policies and practices. 

ln addition, Yaskawa owns the Chinese manufacturer who manufactures its spindle 

motors. Yaskawa protects its intellectual property carefully; unique aspects of the motor 

design are closely held by the employees of Yaskawa and not shared with outside suppliers. 

Thus, the Company's spindle motors have not been involved in any forced technology 

transfers. Similarly, the Company knows of no breaches in cyber-security involving its 

Chinese manufacturer. Therefore, the spindle motors at issue are not strategically important, 

are not related to the MIC initiative, and have not been the subject of IP theft. 

V. Conclusion 

As captured above, the 25 percent tariff on spindle motors imported from China for 

further manufacture in the United States and classified under HTS US subheading 8501 .52.80 

is borne by Yaskawa's U.S. customer whose U.S. employees are likely to suffer from its 

increased costs. The high tariff also triggers an unintentional consequence of rendering a U.S. 

manufacturer significantly less price competitive than its competitors globally. That unjust 

result is heightened by the fact that there are no alternative U.S. or foreign manufacturers of 

the spindle motors which would allow the Company to altogether avoid the high tariff 

assessment. 

Moreover, if the USTR does not grant the exclusion request and the Company has no 

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other choice but to establish an alternative supplier other than China, it would take an extended 

period to make significant changes to manufacturing operations, to qualify new supplier parts, 

and to meet stringent and numerous customer requirements. Further, the cost of doing so 

would be exorbitant and diminish future capital expenditures or needed investments in 

production capabilities and R&D activities. 

In addition, it is clear that Yaskawa's spindle motors are not at all relevant to China's 

MIC program, which we understand is a key factor that prompted the Section 301 

investigation. These products, which are not sold in China and were developed in Japan, will 

in no manner contribute to China's aspirations to transform itself into an advanced 

manufacturing economy. To the contrary, sales of these products primarily benefit a U.S. 

company and its U.S. employees, as well as a U.S. manufacturer and its employees 

For these reasons, Yaskawa respectfully requests an exclusion from the Section 30 I 

tariff for its spindle motors. We would be pleased to provide additional information that is 

needed by the USTR to facilitate its determination. 

Respectfully submitted, 

Craig Espevik 

Vice President, Operations 

Yaskawa America, Inc. 

l 067 Johnson Drive 

Buffalo Grove IL 60089 USA 

847-887-7916 

Yaskawa America, Inc. 1067 Johnson Drive Buffalo Grove, IL 60089 847.887.7000 

PUBLIC VERSION 
ATTACHMENT 1 

Contains Business Confidential Information that has been redacted. 

94239640.1 

PUBLIC VERSION