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 machined pump components classifiable 

in subheading 8421.91.6000 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 articles at issue are electric submersible pump components made from carbon and 

stainless steel (“ESP Pump Units”). The carbon and steel incorporates nickel to produce an 

austenitic structure which has unique and superior properties. The ESP Pump Units have 

diameters ranging from 3 to 12 inches, and heights ranging from 1 to 9 inches tall. Their main 

external components include a pipe housing with a machined head, and a base attached on 

each end. Their main internal components include impellers, diffusers, carbide bushings, and 

keyed spacers. The ESP Pump Units are imported at the component level. Post importation, 

the components at issue are assembled into centrifugal pumps, which are designed to increase 

the pressure and flow of fluids, and are key parts of artificial lift systems. Artificial lift systems 

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

As discussed further below, an exclusion for the ESP Pump Units 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. Second, the additional duty 

on the ESP Pump Units 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 

 

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).
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. 

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 ESP Pump Units 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 

ESP Pump Units 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 ESP Pump Units have spent years qualifying, and building 

relationships with, certain suppliers that are proficient in producing the ESP Pump Units. These 

products have precise geometrical designs that allow industry-leading efficiency and 

performance at various fluid flow rates. These designs combined with material selections 

provide increased reliability and the ability to withstand extreme conditions (i.e., pressure and 

temperatures) associated with oil and gas extraction. Our members have invested heavily in 

tooling in China which cannot be quickly relocated and which requires substantial training to 

operate. 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 

(approximately 18 months) 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 ESP 

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

to continue importing ESP Pump Units 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 ESP Pump Units 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 ESP Pump Units 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 ESP Pump Units cannot be considered 

products of strategic importance to China’s industrial policies. The ESP Pump Units are, as 

compared with the high-tech sector products identified in the “Made in China 2025” plan,5

 

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, 
devoid of any advanced technology, electronics or software. The underlying technology in the 

ESP Pump Units, using rotational energy to induce the movement of fluid, is centuries-old 

technology. In light of China’s goal to higher technology manufacturing, the ESP Pump Units 

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

pump components will not put pressure on China to eliminate its unreasonable and 

discriminatory practices that are focused on advanced technology products and intellectual 

property.

V. Proposed Tariff Language for the ESP Pump Units

PESA proposes the following language for the ESP Pump Units:

Machined castings, made from carbon and stainless steel, for use solely or principally 

with centrifugal pumps 

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 ESP Pump Units by their 

descriptions on the shipping documentation. Further, the products are visually identifiable as 

machined pump components.

VI. Conclusion

Comparable pump components 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 ESP Pump Units 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

 

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.