On October 2, 2020, the Office of the U.S. Trade Representative (USTR) announced that it was initiating two Section 301 investigations regarding certain trade practices by the Socialist Republic of Vietnam (Vietnam) related to its import and use of timber illegally harvested or traded and the country’s policies that may contribute to the undervaluation of its currency (Vietnamese dong). Section 301 of the 1974 Trade Act authorizes the USTR to initiate an investigation to determine whether an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts U.S. commerce. USTR Robert Lighthizer stated in a brief press release: “Using illegal timber in wood products exported to the U.S. market harms the environment and is unfair to U.S. workers and businesses who follow the rules by using legally harvested timber. In addition, unfair currency practices can harm U.S. workers and businesses that compete with Vietnamese products that may be artificially lower-priced because of currency undervaluation. We will carefully review the results of the investigation and determine what, if any, actions it may be appropriate to take.”

Investigation into Import and Use of Illegal Timber

In a forthcoming Federal Register notice, the USTR  alleges that Vietnam relies on imports of timber harvested in other countries and that the “evidence suggests that a significant portion of that imported timber was illegally harvested or traded (illegal timber). Some of that timber may be from species listed under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).”  USTR further states that timber imported from Cambodia, Cameroon and the Democratic Republic of the Congo may have been harvested against those countries’ laws and traded illegally. This Section 301 investigation will focus on:

  • Whether Vietnamese imports of illegal timber are 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.
  • Whether evidence indicates that Vietnam tacitly supports the import and use of illegal timber and allows Vietnamese exporters to disclaim knowledge of illegal timber inputs when exporting wood products to third countries.
  • Any other acts, policies, and practices of Vietnam relating to the import and use of illegal timber.

The USTR is requesting that interested parties submit written comments no later than November 12, 2020, regarding:

  1. The extent to which illegal timber is imported into Vietnam.
  2. The extent to which Vietnamese producers, including producers of wooden furniture, use illegal timber.
  3. The extent to which products of Vietnam made from illegal timber, including wooden furniture, are imported into the United States.
  4. Vietnam’s acts, policies, or practices relating to the import and use of illegal timber.
  5. The nature and level of the burden or restriction on U.S. commerce caused by Vietnam’s import and use of illegal timber.
  6. Any determinations that should be issued by USTR, including what action, if any, should be taken.

All written comments must be submitted via the Federal eRulemaking portal at http://www.regulations.gov on docket number USTR-2020-0036.

Investigation into Currency Valuation

In a forthcoming Federal Register notice, the USTR  alleges that Vietnam, through the State Bank of Vietnam (SBV), “tightly manages the value of its currency” and that analysis indicates that the Vietnamese dong has been undervalued over the past several years. Specifically, USTR alleges that “the dong was undervalued on a real effective basis by approximately 7 percent in 2017 and by approximately 8.4 percent in 2018…. [and] was undervalued in 2019 as well.”  The USTR further states that the SBV intervened in the exchange market with net purchases of foreign exchange that resulted in undervaluing the dong’s exchange rate with the U.S. dollar.

This Section 301 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.  The USTR states that it will consult with the Department of the Treasury in the investigation as to matters of currency valuation and Vietnam’s exchange rate policy.

The USTR is requesting that interested parties submit written comments no later than November 12, 2020, regarding:

  1. Whether Vietnam’s currency is undervalued, and the level of the undervaluation.
  2. Vietnam’s acts, policies, or practices that contribute to undervaluation of its currency.
  3. The extent to which Vietnam’s acts, policies, or practices contribute to the undervaluation.
  4. Whether Vietnam’s acts, policies and practices are unreasonable or discriminatory.
  5. The nature and level of burden or restriction on U.S. commerce caused by the undervaluation of Vietnam’s currency.
  6. Any determinations that should be issued by USTR, including what action, if any, should be taken.

All written comments must be submitted via the Federal eRulemaking portal at http://www.regulations.gov on docket number USTR-2020-0037.

The USTR notes that for both investigations it will not be accepting hand-delivered submissions. Also, interested parties may file comments containing business confidential information (BCI) as long as such information is clearly marked and bracketed and that a public version of the comments is also submitted. At this time, due to COVID-19 restrictions, the USTR is not scheduling a public hearing for either investigation.