WASHINGTON – The U.S. Government’s Section 301 investigation into Vietnam will specifically look at whether products such as wooden furniture shipped to the U.S. market are made with illegally harvested timber.
This inquiry will squarely focus on the extent to which illegal timber is imported into Vietnam from neighboring countries such as Cambodia and also the extent to which wood furniture producers use these illegally harvested woods.
The Section 301 investigation also will consider Vietnam’s practices regarding the valuation of its currency, the dong, and to what extent the country – through the State Bank of Vietnam – is undervaluing its currency.
According to one analysis, the office of the U.S. Trade Representative said, the dong was undervalued by approximately 7% in 2017 and by about 8.4% in 2018. The USTR also noted the currency was undervalued in 2019 based on allegations that the Government of Vietnam, through the SBV, actively intervened in the exchange market, thereby contributing to its undervaluation that year.
These practices, the U.S. Government and Trump Administration say, are placing an unreasonable or discriminatory burden on and/or are restricting U.S. commerce. As with the Section 301 investigation involving China, the Vietnam inquiry could result in tariffs on products shipped to the U.S. market, including furniture.
While other products also could be affected, furniture is in the crosshairs primarily due to allegations regarding Vietnam’s importation and use of illegal timber.
According to a recently published announcement in the Federal Register, the country shipped more than $3.7 billion of wood furniture to the United States in 2019.
“To supply the timber inputs needed for its wood products manufacturing sector, Vietnam relies on imports of timber harvested in other countries,” the notice read. “Available 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 in Endangered of Wild Fauna and Flora (CITES).
The report went on to suggest that much of the timber imported by Vietnam was harvested against the laws of the source country and that a significant amount of timber exported from Cambodia to Vietnam was harvested on protected lands, such as wildlife sanctuaries, or outside of and “therefore in violation of legal timber concessions.”
It went on to say that timber sourced from Cameroon and the Democratic Republic of the Congo also may have been harvested against those countries’ laws. In addition, it noted, it appears most timber exported from Cambodia to Vietnam “crosses the border in violation of Cambodia’s log export ban. In addition, aspects of the importation and processing of this timber also may violate Vietnam’s domestic law and be inconsistent with CITES.
The investigation will initially focus on the following issues:
- Vietnamese imports of illegal timber that may be 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 wood processors ensure the lawful origins of the timber they use. For species listed under the CITES that are imported from Cambodia or the DRC, there is evidence that Vietnamese authorities are not requiring the permits or certificates that should be needed to enter or re-export from Vietnam, the USTR said.
- Evidence that indicates that Vietnam at least tacitly may support the import and use of illegal timber. For example, reports indicate that Vietnamese officials do not record the origin of timber crossing the Cambodia-Vietnam border. This practice would enable Vietnamese exporters to disclaim knowledge of illegal timber inputs when exporting wood products to third countries. Vietnam, the USTR said, also may have allowed the importation of CITES-listed species based on invalid CITES permits. At the provincial government level, the USTR noted, there are reports of Vietnamese officials accepting payments in return for facilitating illegal timber imports.
Regarding the currency issue, the investigation will focus on these main issues:
- Whether Vietnam’s currency is undervalued and the level of the undervaluation
- Vietnam’s acts, policies or practices that contribute to the undervaluation of its currency
- The extent to which Vietnam’s acts, policies and 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
Interested parties can submit written comments on both aspects of the investigation by Nov. 12. For more information on how to submit comments, click here for the currency notice and here for the timber notice.
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