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USTR Begins New Trade Remedy Investigation Aimed at Vietnam

The Office of the United States Trade Representative (“USTR”) has announced an investigation into Vietnam’s currency practices and its import and use of illegal lumber, with notices in the Federal Register planned for publication on October 8, 2020. The probes would fall under Section 301 of the 1974 Trade Act and are expected to follow a similar path as the Section 301 investigation affecting imports from China, which resulted in approximately $550 billion in tariffs.

This is a potentially significant development for U.S. companies sourcing from Vietnam should the investigation lead to restrictions on imports from that country in the form of tariffs, quotas, or other measures.

The first investigation focuses on Vietnam’s actions, through the State Bank of Vietnam, to manage the value of its currency – the dong. USTR charges that available analysis indicates that Vietnam’s currency was undervalued over the past three years. Specifically, analysis indicates that the dong was undervalued on a real effective basis by approximately 7 percent in 2017, 8.4 percent in 2018, and remained undervalued in 2019.

USTR welcomes comments from interested parties on Vietnam’s currency undervaluation and potential actions under the Trade Act. USTR is particularly interested in comments addressing:

  • 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, and 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.
  • The determinations required under the Trade Act, including what action(s), if any, should be taken.

As a result of the COVID-19 pandemic, USTR will not be holding a public hearing in this action but will be accepting comments instead. Comments may be either public or confidential and must be submitted by November 12, 2020, for consideration.

The second investigation focuses on Vietnam’s trade and use of lumber. Vietnam is one of the world’s largest exporters of wood products, including to the United States. Vietnam has a highly developed wood products manufacturing sector, which relies on imports of timber harvested in other countries. USTR states that available evidence suggests that a significant portion of that imported timber was illegally harvested or traded (illegal timber). A portion of that timber may also be protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). In particular, USTR points to imported wood from Cambodia, Cameroon, and the Democratic Republic of the Congo (DRC), which may have been harvested against those countries’ laws and traded lumber from Cambodia, which may be in violation of Cambodia’s log export ban. USTR challenges that the importation and processing of this timber also may violate Vietnam’s domestic law and be inconsistent with the country’s CITES obligations.

USTR welcomes comments from interested parties on Vietnam’s lumber trade and potential actions under the Trade Act. USTR is particularly interested in comments addressing:

  • 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.
  • The determinations required under the Trade Act, including what action(s), if any, should be taken.

As a result of the COVID-19 pandemic, USTR will not be holding a public hearing in this action but will be accepting comments instead. Comments may be either public or confidential but must be submitted by November 12, 2020, for consideration.

If you have any questions regarding the content of this alert, please contact Mark Ludwikowski (mludwikowski@clarkhill.com; 202-640-6680), Kevin Williams (kwilliams@clarkhill.com; 312-985-5907); William Sjoberg (wsjoberg@clarkhill.com; 202-772-0924), Courtney Gayle Taylor (cgtaylor@clarkhill.com; 202-552-2350); Dennis Devaney (ddevaney@clarkhill.com); or another member of Clark Hill's International Trade Business Unit.