USTR Won't Take Section 301 Action 'at This Time' on Vietnam Currency
The Office of the U.S. Trade Representative will not impose Trade Act Section 301 tariffs on Vietnam imports in the remaining days of the Trump administration for Hanoi’s allegedly improper devaluation of the dong against the dollar, though it did find Vietnam’s practices “actionable” under the statute, and “will continue to evaluate all available options,” the agency said Jan. 15. The decision to forgo tariffs was sure to bring welcome relief to the hundreds of companies, trade associations and business groups that argued vehemently against them in recent weeks, including in a Dec. 29 virtual hearing (see 2012290036).
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“Unfair acts, policies and practices that contribute to currency undervaluation harm U.S. workers and businesses, and need to be addressed,” departing USTR Robert Lighthizer said. “I hope that the United States and Vietnam can find a path for addressing our concerns.” The finding that Hanoi’s currency behavior was actionable under Section 301 technically leaves the door legally open to tariffs or other remedies under the Joe Biden administration.
The “facts and circumstances” examined in the Section 301 investigation “support a finding that Vietnam’s acts, policies, and practices related to currency valuation, including excessive foreign exchange market interventions and other related actions, taken in their totality, are unreasonable,” USTR’s investigative report said. The “purported justifications” for Vietnam’s recent foreign exchange market interventions “do not undermine the basis for finding actionability,” it said.
Hanoi’s currency behavior works to “burden or restrict U.S. commerce within the meaning” of Section 301, the report said. Devaluing the dong against the dollar “effectively lowers the price” of Vietnamese imports to the U.S., it said. That makes them “less expensive than they would otherwise be, which undermines the competitive position” of U.S. firms that are competing with those imports, it said. Currency undervaluation also raises the price of U.S. exports to Vietnam, undermining “the competitive position of U.S. firms in the Vietnamese market,” it said.
Excessive foreign exchange intervention undertaken when Vietnam has a significant trade surplus with the U.S. “also undermines U.S. export opportunities,” the report said. Without Hanoi’s market intervention, “the value of Vietnam’s currency would tend to appreciate in the context of a current account surplus, enhancing domestic consumption in a manner more favorable to U.S. exports,” it said. USTR also released an official notice.