U.S. Trade Representative Announces Two Section 301 Investigations Against Vietnam

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Authors: Carrie Bethea Connolly , Nicolas Guzman , Douglas J. Heffner , Kathleen M. Murphy , Randy Rucker , James L. Sawyer , Richard Ferrin , Mollie D. Sitkowski

The Office of the U.S. Trade Representative (USTR) published in the Federal Register on October 8, 2020 the initiation of two investigations into Vietnam’s acts, policies and practices related to currency valuation, and the import and use of potentially illegal timber. USTR has given interested parties until November 12, 2020 to file comments regarding both investigations.

The USTR’s investigations are being conducted under Section 301 of the Trade Act of 1974, which has previously been used by the Trump administration to investigate and levy tariffs pursuant to China’s acts, policies and practices related to technology transfer, intellectual property and innovation. In addition to the Section 301 retaliatory tariffs imposed against certain Chinese origin products, the same Section 301 statute is currently being used by the administration to investigate digital service taxes (DST) being implemented by several countries, including proposed Section 301 retaliatory tariffs against France for its implementation of a DST.

Timber Investigation

In a statement released by USTR, the agency framed its position with regard to its investigation into the use of allegedly illegal timber by focusing on the environment, stating “{u}sing 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.” USTR has specifically invited parties to comment on the following issues with respect to its investigation into the import and use of illegal timber:

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 Vietnamese products 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 section 304 of the Trade Act, including what action, if any, should be taken

While the scope of the investigation focuses on Vietnamese products made from timber, interested parties should consider commenting on this investigation even if they are not importing these kinds of products. As was the case in the USTR’s Section 301 investigation into China’s acts, policies and practices related to technology transfer, intellectual property and innovation that focused on vulnerabilities in the 10 strategic advanced technology manufacturing industries named in China’s Made in China 2025 Program, the imported products ultimately subject to retaliatory tariffs may be wholly unrelated to the underlying investigation. Thus, interested parties may wish to take this opportunity to comment on the propriety of subsequent tariff actions to help ensure their unrelated products are not targeted based on the outcome of the investigation.

Currency Investigation

The investigation into Vietnamese currency follows a determination made by the U.S. Department of Commerce in conjunction with the Treasury Department earlier this year that Vietnam had manipulated its currency such that it gave an unfair subsidy to Vietnamese producers. Here too, USTR intends to work with the Treasury Department on “issues of currency valuation and exchange rate policy,” according to its October 2, 2020 statement announcing the investigations. USTR has specifically invited parties to comment on the following with respect to this investigation:

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 section 304 of the Trade Act, including what action, if any, should be taken

As noted above, the ramifications of any positive determinations by the USTR in the currency (or timber) investigation may have broad implications for other products imported from Vietnam.

Interested in Filing Comments?

Faegre Drinker has assisted clients at all stages of past Section 301 investigations, from preparing comments and testimony, to successfully implementing strategies to mitigate the impact of trade disputes on their operations. We are well versed in the history of Vietnamese currency manipulation findings by the U.S. Department of Commerce and the Treasury Department and stand ready to assist clients in preparing comments regarding these new investigations.

If you are interested in filing comments, or if you have any questions about this matter, please contact one of the Faegre Drinker professionals below as soon as possible.