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 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 ofBCI

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

Customized control board assemblies (network interface modules). 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/

8536908585

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 confidentialinformation

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

Public Version of BCI

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PUBLIC VERSION

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

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? (Ifyou

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 you purchased 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

2016 Value: See attached letter

2015 Value: gee attached letter

2017 Quantity: See attached letter

2016 Quantity: See attached letter

2015 Quantity: gee 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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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 extendbeyondthe

apparent size ofthis box).

See attached letter,

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PUBLIC VERSION

King 6c 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

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 of customized control board

assemblies (network interface modules) 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

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.
The Honorable Robert E. Lighthizer

October 8, 2018

Page 2

PUBLIC VERSION

accordance with the guidelines announced in the Federal Register notice that USTR published

on July 11, 2018.2

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

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).

T < .....

Invacare is filing a number ofindividual 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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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.

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 and Long Term Care Medical EquipmentIndustry

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
The Honorable Robert E. Lighthizer

October 8, 2018

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disabilities, who typically use these products in the comfort and security oftheir homes, or in

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.

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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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

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 customized control board assembly (network

interface module). This product is used by Invacare as a component in the control system ofits

power wheelchairs. Power Wheelchairs are classified by the FDA as Class II medical devices

and provide mobility to individuals who have disabilities or severe mobility issues. The

following sets forth a detailed description of a customized control board assembly (network

interface module), as required by USTR’s exclusion request guidelines:

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

October 8, 2018

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A customized control board assembly (network interface module) is a product that acts as 

a network interface for the power wheelchair. It has a custom-designed printed circuit

board with a specified resistor combination that establishes the functionality ofthe power

wheelchair. The resistance value ofthe control board assembly can be 136 ohms, 102

ohms, 68 ohms or 34 ohms. The assembly has two (2) small circular ports for stereo jack

connections or a 9 pin, sub D connector input.

The control board assembly is contained in a box that measures approximately 20 mm by

35 mm by 75 mm, which has attached to it a long cable with a 6-pin connector that can be

attached to the wheelchair.

Imports ofthese assemblies are covered by the ten-digit HTS number 8536.90.8585. 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 of customized control board assembly (network interface module) 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 (i) the percentage ofthe total cost ofthe downstream

product that is represented by the cost ofthe product covered by this request, and (ii) the

percentage ofInvacare’s total gross sales in 2017 that is represented by the downstream product.

c. Rationale For Requested Exclusion

i. Invacare Cannot Obtain This Productfrom Non-Chinese Sources

Invacare cannot obtain this particular 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 in the world. As noted above, this product is custom-designed for

Invacare and used by Invacare as a specialized component ofits power wheelchairs, which

Invacare produces in the United States. Over time, Invacare has worked closely with the
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

Chinese supplier ofthis product to ensure that it meets Invacare’s exacting technical and quality

specifications and that it will work as expected in Invacare’s power wheelchairs. Because this

product is custom-designed for use by Invacare, there is simply no other producer in the world

who can supply the product to Invacare within the next year to two years.

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

U.S. or other non-Chinese suppliers, 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 and unique product with one 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 wheelchair, long term care beds, and patient lifts

offerings. These contracts, which last for multiple years, prohibit Invacare from changing the

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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specific components contained in its wheelchairs, long term care beds, and patient lifts. 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 this customized control board assembly (network interface

module) 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 products Invacare is now importing from China 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

o

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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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

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.

As a result ofthis 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
The Honorable Robert E. Lighthizer

October 8, 2018

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PUBLIC VERSION

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

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

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.

iii. 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 of customized control board

assemblies (network interface modules) from China will not have the desired effect of

This product is not listed as one ofthe advanced medical devices covered by the program.

12
The Honorable Robert E. Lighthizer

October 8, 2018

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increasing employment in the United States or improving the sales and profitability of

manufacturing interests in the United States. On the 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

customized control board assemblies (network interface modules) 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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Business Confidential Information

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 ofthe total cost ofthe downstreamproduct represented by the Chinese-origin

inputproduct:

[[ ]]

Percentage ofInvacare’s total gross U.S. sales in 2017 accountedfor by the cost ofthe

downstream product:

[[ ]]