Organization Name:

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

Requestor Representative:

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.

3.

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

4.

5. Requestor's relationship to the product:

CONTINUED BELOW

*

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/

1

7.

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

Please indicate whether any additional attachment contains business confidential

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

VERSION 1

Requestor Information

Requestor Name (Last, First):
END 2

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

VERSION 1

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

provided in Section B of the Federal Register notice (note: text entered below can extend

beyond the apparent size of this box).

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

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.

2016 Value:

2015 Value:

2017 Value:

2016 Quantity:

2015 Quantity:

2017 Quantity:
2500 Citywest Blvd., Suite 1110

Houston, TX 77042-3049

Office: 713.932.0168 Fax: 713.932.0497

October 9, 2018

The Honorable Robert E. Lighthizer

United States Trade Representative

Office of the United States Trade Representative

600 17th Street Northwest

Washington, D.C. 20508

Re: Docket No. USTR-2018-0025; Request for Exclusion of Certain Artificial Lift Parts 

from the Determination of Action Pursuant to Section 301: China’s Acts, Policies, 

and Practices Related to Technology Transfer, Intellectual Property, and 

Innovation

Dear Ambassador Lighthizer:

The Petroleum Equipment & Services Association (“PESA” or “the Association”), on behalf of its 

member companies, respectfully requests that certain steel rods classifiable in subheading 

8413.91.9080 of the Harmonized Tariff Schedule of the United States (“HTS”) be excluded from 

the additional 25% ad valorem duty that took effect on July 6, 2018 pursuant to the United 

States Trade Representative’s determination under Section 301 of the Trade Act of 1974.1

The rods at issue are hollow cylindrical articles made from steel (“the Rods”). The inner portion 

of the Rods is threaded. The Rods are used exclusively as parts of artificial lift systems, which 

are large pumping machines used to extract oil and gas from the earth. The Rods are lowered 

into an oil and gas wellbore for the purpos of displacing and pumping oil and gas. They are 

specifically designed to prevent the well casing and the rod itself from corroding. They have a 

corrosion-resistant surface with a low coefficient of friction to reduce wear on the well casing 

and the coupling. The couplings are made from high-strength alloy steel to carry the high-end 

torque requirements of cavity pumping applications and the high loads of deep wells. 

As discussed further below, an exclusion for the Rods is appropriate and necessary to prevent 

the additional duty, itself, from becoming a burden on U.S. commerce. First, comparable 

products are not currently available outside of China in sufficient quantities. Second, the 

additional duty on the Rods will cause severe economic harm to PESA’s member companies 

and to the U.S. oil and gas industry. Third, the articles at issue are not products of strategic 

importance to, nor do they contain the type of advanced technology that benefits from, China’s 

industrial policies, in particular the “Made in China 2025” plan. Thus, the grant of a product 

exclusion will not undermine the objective of the Section 301 duty. 

 

1

Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action 

Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, 

and Innovation, 83 Fed. Reg. 14,906 (Apr. 6, 2018); Notice of Action and Request for Public Comment Concerning 

Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to 

Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018).
I. Requestor Background

PESA is the unified voice for the energy industry’s services and equipment organizations, 

advocating for and supporting this sector’s achievements in job creation, technological 

innovation and economic stability. We represent more than 200 energy services and equipment 

organizations that employ a diverse workforce of approximately 1.3 million. Its members include 

the largest oil and gas companies in the United States. PESA is headquartered in Houston, 

Texas. 

II. PESA Members Must Purchase Chinese-Origin Rods Because Comparable 

Products Are Not Currently Produced in the United States or Third Countries 

According to USTR, the objective of the Section 301 duty is to bring about the elimination of 

China’s unreasonable and discriminatory acts, policies and practices relating to technology 

transfers, intellectual property and innovation. In theory, the duty will deter imports of Chineseorigin products, thereby placing sufficient economic pressure on the Chinese government to 

force it to cease its acts, policies and practices. This strategy will prove unsuccessful for the 

Rods because comparable products are not currently produced in sufficient quantities in the 

United States or third countries. The oil and gas industry has slowly shifted to China over the 

past two decades in response to US trade policies, especially China's accession to the WTO 

and grant of MFN duty rate. Certain aspects of the industry have evolved into regionally 

centralized production with integration of multiple tiers of suppliers and sub-suppliers and 

related infrastructure to move volumes efficiently. Thus, PESA’s members must continue to 

purchase these products from China.

PESA members which import the Rods have spent years qualifying, and building relationships 

with, certain suppliers that are proficient in producing rods specifically designed for oil and gas 

extraction applications. These products have corrosive-resistant properties and are made to 

withstand extreme environmental conditions. Our members have invested in tooling and 

manufacturing training with particular suppliers in China. These investments cannot be quickly 

abandoned and relocated without significant financial losses and comprising quality. While 

substitute products are not available outside of China, PESA members are exploring the 

availability of comparable products from sources in third countries. However, given our 

members’ long-standing investments in and relationships with suppliers in China, and the 

Company’s duty to exercise diligence in onboarding new suppliers, it will take some time for 

members to develop alternative sourcing strategies. Approving this product exclusion request 

will afford PESA members the additional time needed to transition sourcing operations to 

suppliers located in countries outside of China.

III. The Additional Duty Will Cause Severe Economic Harm to U.S. Interests 

The U.S. oil and gas industry will bear the expense of the additional duty imposed on the Rods. 

The effect will be two-fold. First, it will be economically infeasible for our members to continue 

importing the Rods without raising prices on customers to help offset the cost. These price 

increases will be passed down to the end users of oil and gas, which is virtually the entire 

population of the United States. As a result, U.S. consumers will pay more for oil and gas, and 

for petro-based products (e.g., products made from rubber, plastic, etc.). 

Second, imposing a 25% duty on oil and gas extraction equipment will discourage additional 

investment in oil and gas extraction. One of the pillars of the current U.S. national security 
strategy is to “promote American prosperity” by “embracing energy dominance.”2

 The “priority 

actions” for accomplishing this objective include limiting burdens that “encumber energy 

production and constrain economic growth,” while encouraging maximum technological 

efficiency in fossil fuel exploitation to “promote exports of our energy resources.” Simply put, the 

products imported by PESA members serve this pillar of U.S. national security strategy. 

The National Security Strategy of the United States of America issued by the administration in 

December 2017 states that the United States will prioritize being an “energy-dominant nation.” 

The National Security Strategy prioritizes “unleashing . . . abundant energy resources,” including 

“coal, natural gas, [and] petroleum” in order to “stimulate[] the economy and build[] a foundation 

for future growth.” The success of this objective is dependent on PESA members, which exist 

solely to serve the needs of the extractives industry. 

In summary, the additional 25% duty on the Rods will result in higher costs for U.S. consumers 

and hinder U.S. national security strategy of achieving and maintaining energy dominance. 

IV. The Grant of a Product Exclusion Will Not Undermine the Objectives of the 

Section 301 Duty

A product exclusion covering the Rods will not undermine the ultimate objective of the Section 

301 duty—to obtain the elimination of China’s unreasonable and discriminatory acts, policies 

and practices in relation to technology transfers, intellectual property and innovation—because 

these products are not strategically important to China’s industrial policies, including “Made in 

China 2025.” As USTR noted in its Section 301 report on the investigation into China’s acts, 

policies and practices, the cited acts, policies and practices are driven largely by China’s 

industrial policies, which are focused on technology.3 At several points, the report highlights the 

fact that China’s goal is to become a global leader, particularly with respect to advanced 

technologies, and that it seeks to “move up the value chain, advancing from low-cost 

manufacturing to become a ‘global innovation power in science and technology.’”4

Accepting the conclusions in USTR’s report, the Rods cannot be considered products of 

strategic importance to China’s industrial policies. The Rods are, as compared with the hightech sector products identified in the “Made in China 2025” plan,5

devoid of advanced 

technology, electronics or software. In light of China’s goal to higher technology manufacturing, 

the Rods are not strategically important products for China and the additional duty on imports of 

these Rods will not put pressure on China to eliminate its unreasonable and discriminatory 

 

2

National Security Strategy of the United States, Executive Office of the President (December 2017) (available at: 

https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905-2.pdf). 

3

Office of the United States Trade Representative, 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 10-17 (Mar. 22, 2018), https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. 

4

Id. at 10.

5

According to the “Made in China 2025” plan, China is focused on growth and competitiveness in ten high-tech 

sectors and on high-value, high-tech products in those sectors, which include information technology, robotics, 

aerospace equipment, maritime engineering equipment and vessel manufacturing, advanced railway equipment, 

new energy vehicles, electrical equipment, biomedicine and high-performance medical devices, and agricultural 

equipment. U.S. Chamber of Commerce, Made in China 2025: Global Ambitions Built on Local Protections 10 

(2017), https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf.
practices that are focused on advanced technology products and intellectual property.

V. Proposed Tariff Language for the Rods

PESA proposes the following language for the Rods:

Rods, made of steel having corrosion-resistant properties, used solely or principally with 

artificial lift systems for oil and gas extraction

U.S. Customs and Border Protection (“CBP”) would be able to administer the exclusion of such 

products with minimal difficulty. Specifically, CBP can identify the Rods by their descriptions on 

the shipping documentation. Further, the products are visually identifiable as equipment used 

for oil and gas extraction.

VI. Conclusion

Comparable Rods are not currently available in countries other than China. Given the 

commercial impracticability of immediately abandoning current sources of supply and 

establishing new relationships with suppliers that have not yet been qualified, granting this 

product exclusion request will protect PESA members and the U.S. oil and gas industry from 

economic harm while companies reposition their sourcing strategies. Not granting this request 

will cause severe economic harm to our members, lead to higher prices for U.S. consumers, 

and undermine U.S. energy independence. Last, the grant of this exclusion will not undermine 

the objective of the Section 301 duty because the Rods do not incorporate advanced 

technology, electronics or software. As such, these units are not strategically important to 

China’s industrial policies. 

For the reasons set forth above, we respectfully request that USTR grant this request for a 

product exclusion. The undersigned certifies that the information provided herein is complete 

and correct to the best of his knowledge. If you have any questions, please contact the 

undersigned at 713-932-0168.

Respectfully submitted,

Tim Tarpley

Vice President Government Affairs