On January 15, 2021, barely two weeks after holding a public hearing into the matter and just over three months after initiating an investigation under Section 301 of the Trade Act of 1974, the Office of the U.S. Trade Representative (USTR) issued its findings regarding Vietnam’s currency valuation. USTR found 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 and burden or restrict U.S. commerce.” In particular, the Notice of Determination states:
- Vietnam’s acts, policies and practices as to currency valuation “are unreasonable in light of U.S. and international norms that exchange rate policy should not be undertaken to gain an unfair competitive advantage in international trade, should not artificially enhance a country’s exports and restrict its imports in ways that do not reflect the underlying competitiveness, should not prevent exchange rates from reflecting underlying economic and financial conditions, and should not prevent balance of payments adjustment;”
- Vietnam’s actions in support of this currency valuation contribute to undervaluation of its currency through excessive foreign exchange market interventions and other related actions that burden or restrict U.S. commerce; and
- The acts, policies and practices are actionable under Section 301 of the Trade Act.
USTR also released a report in support of this determination. Despite this ruling, USTR announced that the United States will take no action at this time and these matters will be addressed in the future. Ambassador Robert Lighthizer stated, “Unfair acts, policies and practices that contribute to currency undervaluation harm U.S. workers and businesses, and need to be addressed. … I hope that the United States and Vietnam can find a path for addressing our concerns.”
See Update of October 6, 2020, for additional background information on the investigation. The investigation into Vietnam’s possible import and use of illegal timber remains ongoing.