On October 2, 2020, the U.S. Trade Representative (USTR) announced the initiation of two investigations under Section 301 of the Trade Act of 1974 into certain Vietnamese trade policies and practices. In the first notice, the USTR announced an investigation into certain actions by the National Bank of Vietnam to devalue the Vietnamese currency by approximately 7% to 8.4% between 2017 and 2019. As this investigation is into Vietnam’s currency practices, the USTR will consult with the Department of Treasury. Note that under new regulations published this year by the Department of Commerce, currency undervaluation may be treated as a countervailable subsidy in countervailing duty (CVD) proceedings. Thus, a finding that by the USTR that Vietnam has unfairly devalued its currency may also impact future countervailing duty proceedings on Vietnamese products.
In the second notice, the USTR announced a Section 301 investigation into Vietnam’s import and use of illegal timber from Cambodia, Cameroon, and the Democratic Republic of Congo. The USTR alleges that these timber imports are used in production of wooden furniture in Vietnam, with Vietnam’s exports to the United States totaling more than $3.7 billion in 2019. This investigation also raises potential issues under the Lacey Act, which prohibits the importation of illegally harvested timber.
Under Section 301, the USTR may take appropriate and feasible action to obtain the elimination of a trade policy or practice that violates or is inconsistent with the provisions of any trade agreement or unjustifiably burdens U.S. commerce. In past Section 301 investigations, the USTR has taken a wide range of actions following the conclusion of these investigations, e.g., taking no action, calling for negotiations on the contested policy or practice, and imposing retaliatory tariffs (for example, the additional Section 301 duties currently imposed on certain products of China). We note that as a result of the ongoing trade issues between the United States and China, some firms exporting merchandise to the United States have shifted certain manufacturing from China to Vietnam.
Comments on these two investigations must be submitted by November 12, 2020. Due to COVID-19, USTR is not currently scheduling a public hearing.