Hogan Lovells US LLP

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www.hoganlovells.com

October 9, 2018

BY ELECTRONIC FILING PUBLIC DOCUMENT

Mr. Arthur Tsao

Assistant General Counsel

Office of the United States Trade Representative

600 17th Street, N.W.

Washington, DC 20508

Re: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual 

Property, and Innovation, Docket Number USTR-2018-0025: Exclusion Request of 

BYD USA Regarding Electric Forklift Model ESC14

Dear Mr. Tsao:

On behalf of BYD Motors Inc. (“BYD”), an American manufacturer of material handling 

solutions for U.S. manufacturers, distributors and small businesses, we respectfully submit this 

exclusion request pursuant to the publication by the Office of the United States Trade 

Representative (“USTR”) of 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 Fed. Reg. 

32,181 (July 11, 2018) (the “Exclusion Procedures”). For the reasons set forth below, a 25 

percent tariff on electric forklift model ESC14 would harm the competitiveness of U.S. 

businesses and, most importantly, the health of U.S. workers who would be denied access to a 

cleaner and safer workplace product. Accordingly, USTR should grant an exclusion from the 

Section 301 tariffs for this product as described below.

I. Introduction

BYD began as a start-up in 1995 and has grown into a global leader in electric products. 

We are not owned, controlled or directed by any foreign government. Our largest public 

shareholder is Warren Buffet’s firm, Berkshire Hathaway, based in Omaha, Nebraska. While 
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BYD’s parent company is based in China, BYD is a U.S. manufacturing success story. BYD 

opened its U.S. headquarters in Los Angeles in 2011. Three years later, BYD opened its first 

U.S. electric mobility manufacturing plant in Lancaster, California. BYD then created a separate 

unit, BYD Energy, in Lancaster to manufacture electric vehicle battery packs and battery 

modules. BYD Energy supplies all of the electric battery modules for BYD’s state-of-the-art, 

550,000 sq. ft. electric bus manufacturing facility located nearby.

BYD has scaled up quickly during the past four years and continues to grow U.S. 

manufacturing. BYD currently employs over 1,000 people in its U.S. operations and BYD plans 

to grow its workforce to approximately 1,200 as it expands its facility to encompass increased 

manufacturing. BYD’s total investment in U.S. manufacturing over the last seven years, through 

facilities, American workers, and partnerships with U.S. vendors, exceeds $250 million.

BYD is proud that our manufacturing workers are members of SMART Local 105 (“Local 

105”), a labor union representing sheet metal, air, rail, and transportation workers. BYD and 

Local 105 recently signed an agreement in January increasing wages and implementing 

enhanced training opportunities. Commentators have declared that “[t]here is no [other] 

company that has a contract like this in the industry.” 1/

BYD invests in its community. Through an agreement with Local 105, BYD has 

committed to work toward the goal of recruiting and hiring 40 percent of our workers from 

populations facing significant barriers to employment, such as veterans. BYD has also initiated 

an effort to recruit workers from other populations that have been historically underrepresented 

in the manufacturing industry, including women and African Americans. BYD has sponsored an 

endowment at nearby Antelope Valley College to train students for manufacturing jobs in the 

technology sector. BYD and Local 105 have also worked in partnership with the college to 

create a state-of-the-art green high-technology manufacturing training program. The program 

 

1/ SMART Local Union 105, BYD Workers Ratify Unprecedented Contract (Feb. 7, 2018), available 

at: http://local105.org/2018/02/07/byd-workers-ratify-unprecedented-contract (Exhibit 1).
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will not only help BYD develop the next generation of green high-technology manufacturing 

workers for a career at our manufacturing facilities, but also enhance the region’s economic 

development opportunities by creating an elite pool of highly-skilled advanced green 

manufacturing workers. Congressman Steven Knight, among many others, has applauded 

BYD’s investments: “BYD is a company that has brought good-paying manufacturing jobs back 

to California while other companies are choosing to export those jobs to other states and 

countries. . . . We need more companies like BYD in California that are training and building up 

a workforce of skilled individuals that are prepared for the manufacturing jobs of the future.” 2/

II. Tariffs will Harm U.S. Businesses and the Health of U.S. Workers

Tariffs on these material handling solutions will harm U.S. manufacturing – both at BYD 

as well as at its customers. As an initial matter, the imported products are assembled to form a 

complete material handling solution consisting of a chassis, an internal, non-removable battery, 

and a charger, in our Lancaster facility. They are also customized at the Lancaster facility for 

the given customer – i.e., a manufacturer, a warehouse, or a small business. Customization 

can add significant value-add depending on the application, often doubling the value of the 

material handling solution sold to the customer. These manufacturing operations support 12

direct jobs in Lancaster, with 30 more jobs projected by the end of 2019. Tariffs on these 

products could lead to the loss of these jobs. In addition, BYD’s plan is to manufacture these 

products in the United States once it achieves an adequate market share. Tariffs threaten those 

plans.

More broadly, our products differ from other imported items in that they use a lithium 

iron-phosphate, rather than lead-acid, battery. These products are better for worker health and 

safety. Unlike lead-acid batteries, BYD’s lithium iron-phosphate batteries do not “gas” or require 

 

2/ Charged Electrical Vehicles Magazine, BYD expands California electric bus factory, Charged (Oct. 

17, 2017), available at https://chargedevs.com/newswire/byd-expands-california-electric-bus-factory 

(Exhibit 2); Ross Naksone, Electric Buses = More Good, Union Jobs for Low-Income Californians, Blue 

Green Alliance (Aug. 1, 2017), available at https://www.bluegreenalliance.org/resources/electric-busesmore-good-union-jobs-for-low-income-californians (Exhibit 3).
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other maintenance considered a liability given the hazardous material found inside lead-acid 

batteries. Gassing refers to the release of hydrogen and oxygen gases when a lead-acid 

battery is recharged. The process produces a characteristic acid smell. The released gasses 

are both toxic and potentially explosive, causing the battery’s casing to burst if not done 

correctly, spraying acid and casing fragments. More generally, BYD’s batteries are non-toxic, 

with no ventilation or water needed for their operation. 3/

The benefits to workers safety and health are not limited to the gassing issue. As noted 

by one of BYD’s American-based resellers:

The battery is housed in an enclosed case which is designed to never need to be 

opened or removed. It has gone through extensive abuse testing from drops, to 

punctures, to extreme vibrations, to being grilled on an open flame. The results are the 

same: no runaway thermal reaction, they do not rupture, they do not {produce} harmful 

gases: the units remain stable and safe for proper disposal by certified technicians. 

There is no need for watering, no need for swapping, no need for venting, no fear of 

fumes or corrosion. When you need to charge the unit you simply plug-in to the side 

charging port like you would a cell phone. 4/

The following battery charging checklist provides the list of precautions that must be followed 

when recharging a lead-acid battery:

 

3/ Modern Group, BYD Forklift, available at https://www.moderngroup.com/byd/ (Exhibit 4).

4/ Id.
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BYD’s material handling solutions also save U.S. manufacturers significant resources 

and, by extension, money. Unlike a traditional lead-acid battery, BYD’s product has up to 18 

hour run-time and can be recharged in 90 minutes. This allows the product to be used over 

multiple shifts. 

The continued application of a 25 percent tariff on these material handling solutions will 

decrease the competitiveness of U.S. manufacturers, who will see their material handling costs 

increase as use of this developing technology slows.

III. The Product is Only Available from China

BYD understands that material handling solutions using lithium iron-phosphate batteries 

are only available in commercial quantities from China.

IV. The Product is Neither Strategically Important nor Related to “Made in 

China 2025”

Material handling solutions like forklifts, pallet and terminal trucks are not covered by the 

Made in China 2025 program highlighted by USTR in its Section 301 report. In fact, they are 

not even mentioned in the report. 

V. The 10 Digit Subheading of the HTSUS Applicable to the Product 

Requested for Exclusion

The 10 digit subheading of the HTSUS applicable to the product at issue here is 

8427.10.40.10: Fork-lift trucks; other works trucks fitted with lifting or handling equipment: Selfpropelled trucks powered by an electric motor: Rider-type, counterbalanced fork-lift trucks.

VI. Identification of the Particular Product and Ability of CBP to Administer the 

Exclusion

BYD USA proposes that forklifts with a length of 66 inches, width of 42 inches, and 

height of 88.5 inches that are equipped with an IEC 621961 Type 2 charger be excluded from 

the Section 301 tariffs. A picture of a IEC 621961 Type 2 charger is provided below:
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VII. Physical Description of the Product

The physical specifications of the electric forklift model ESC14 is provided below:

Std (lb, in)

Metric (kg, 

mm)

capacity at 118" (3m) 24" LC 3000 1360

capacity at 189" (4.8m) 24" 

LC 3000 1360

Overall Length w/o forks 66 1676

Overall Width 42 1066

OHG height 88.5 2250

Drive Motors 2

Batttery Size (AH) 270

Voltage (volts) 80

IIX. Quantity and Value of the Product over the Last Three Years

The quantity and value of imports for 2015-2017 were as follows. Of note, the product is 

set to launch in 2019.

Quantity Value

2015 0 0

2016 0 0

2017 0 0

 
************** 

For the reasons explained above, we urge USTR to grant an exemption for electric 

forklift model ESC14 from the Section 301 tariffs. Failure to do so would hurt BYD's U.S. 

operations. Failure to do so would also hurt the competitiveness, health and safety of American 

workers. 

Respectfully submitted, 

HOGAN OVELLS U LP 

Craig ewis 

Jared essel 

Counsel to BYD Motors, Inc. 
Exhibit 1 


Exhibit 2 




Exhibit 3 


Exhibit 4