If you have business with Vietnam, you should be aware of some recent action by the U.S. Trade Representative (USTR). On October 2, 2020, the USTR initiated two Section 301 investigations against Vietnam—one regarding currency valuation and the other regarding timber were published in the Federal Register late last week.
Here are the details:
- Currency Valuation. The administration suspects that the State Bank of Vietnam (SBV) tightly manages the value of its currency. Specifically, the claim is that the dong was undervalued on a real effective basis by approximately 7 percent in 2017 and by approximately 8.4 percent in 2018. The investigation will focus on whether Vietnam's interventions—through the SBV—in exchange markets and other related actions that contribute to the undervaluation of Vietnam's currency are unreasonable or discriminatory and burden or restrict U.S. commerce. USTR invites comments regarding:
- Whether Vietnam's currency is undervalued, and the level of the undervaluation;
- Vietnam's acts, policies, or practices that contribute to undervaluation of its currency;
- The extent to which Vietnam's acts, policies, or practices contribute to the undervaluation;
- Whether Vietnam's acts, policies, or practices are unreasonable or discriminatory;
- The nature and level of burden or restriction on U.S. commerce caused by the undervaluation of Vietnam's currency; and
- The determinations required under section 304 of the Trade Act, including what action, if any, should be taken.
- Timber. The administration suspects that a significant portion of the timber imported to Vietnam and used in wood products exported to the United States may be illegally harvested or traded (illegal timber). Specifically, some of that timber may be from species listed under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The investigation will focus initially on the following issues:
- Vietnamese imports of illegal timber may be inconsistent with Vietnam's domestic laws, the laws of exporting countries, or international rules. The import of illegal timber may indicate that Vietnam is not enforcing its own laws concerning the import and processing of timber, such as laws requiring that wood processors ensure the lawful origins of the timber they use. For species listed under the CITES that are imported from Cambodia or the Democratic Republic of the Congo (DRC), there is evidence that Vietnamese authorities are not requiring the permits or certificates that should be needed to enter or re-export from Vietnam;
- Evidence indicates that Vietnam may at least tacitly support the import and use of illegal timber. For example, reports indicate that Vietnamese officials do not record the origin of timber crossing the Cambodia-Vietnam border. This practice would enable Vietnamese exporters to disclaim knowledge of illegal timber inputs when exporting wood products to third countries. Vietnam may have allowed the importation of CITES-listed species based on invalid CITES permits. At the provincial government level, there are reports of Vietnamese officials accepting payments in return for facilitating illegal timber imports; and
- Other acts, policies, and practices ofVietnam relating to the import and use of illegal timber.
Based on the above, USTR invites comments regarding:
- The extent to which illegal timber is imported into Vietnam;
- The extent to which Vietnamese producers, including producers of wooden furniture, use illegal timber;
- The extent to which products of Vietnam made from illegal timber, including wooden furniture, are imported into the United States;
- Vietnam's acts, policies, or practices relating to the import and use of illegal timber;
- The nature and level of the burden or restriction on U.S. commerce caused by Vietnam's import and use of illegal timber; and
- The determinations required under section 304 of the Trade Act, including what action, if any, should be taken.
Given the uncertainties arising from COVID-19 restrictions, USTR is not scheduling a public hearing at this time. However, USTR is inviting interested parties to submit written comments on these investigations, which are due on or by November 12, 2020. If these proceedings might impact your business activities, we encourage you to reach out to the authors for information and assistance.