On July 23, 2021, the U.S. Trade Representative issued a formal determination deciding not to take action against Vietnam in response to their currency practices under Section 301. The investigation, which was initiated in October of 2020 to examine Vietnam’s acts, policies, and practices related to the valuation of their currency, effectively concluded following the announcement of a currency agreement between the U.S. and Vietnam on July 19, 2021. While the investigation found evidence that Vietnam engaged in activities that warranted action under Section 301, “the determination finds that the Treasury-State Bank of Vietnam (SBV) agreement provides a satisfactory resolution of the matter subject to investigation and accordingly that no trade action is warranted at this time.  USTR, in coordination with Treasury, will monitor Vietnam’s implementation going forward.”

Investigation findings, as outlined by USTR:

  1. Vietnam’s acts, policies, and practices with respect to currency valuation, including excessive foreign exchange market interventions and other related actions, taken in their totality and as discussed in further detail in the Report, 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.
  2. Vietnam’s acts, policies, and practices that contribute to undervaluation of its currency through excessive foreign exchange market interventions and other related actions burden or restrict U.S. commerce; and, accordingly,
  3. The acts, policies, and practices under investigation are actionable under Section 301(b) of the Trade Act

The report is available here.

The Federal Register Notice is available here

Action, as outlined by the formal determination:

  • Citing the July 19, 2021, Treasury-SVB currency agreement, the determination notes that, where an agreement or measures provide a satisfactory resolution of the matter subject to investigation, USTR may determine under Section 304 that no action is appropriate.

Next Steps, as outlined by the formal determination:

  • Acknowledging that Section 304 allows USTR to defer 301 actions in favor of an alternative agreement or measures, the determination notes that, Section 306 of the Trade Act, requires USTR to monitor the agreement or measures, and may take action at a future time upon a finding that the implementation has not been satisfactory.

The full determination can be found here.

USTR’s press release can be found here.

For more information on the Vietnam and currency issues please reach out to our team and see previous posts below.

Vietnam Archives | International Trade Law (cmtradelaw.com)