The US Department of the Treasury has dropped Vietnam from its list of currency manipulators, a move that could reassure that the US might not impose new tariffs, quotas or other restrictions on Vietnamese imports as part of its Section 301 investigation.
In October, the US Trade Representative launched a Section 301 investigation over Vietnam’s acts, policies and practices related to the import and use of timber that is illegally harvested or traded, and Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to US commerce.
Trade bodies, including the National Retail Federation (NRF) urged the USTR to avoid placing tariffs on imports of Vietnamese goods and rely on other remedies to address trade complaints as it has released a report revealing the price of goods from the country could increase by up to 23%, triggering a hunt for new sources of supply.
In its semiannual ‘Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States’, the USTR said it concluded that Taiwan, Vietnam and Switzerland continue to meet all three criteria under the Trade Facilitation and Trade Enforcement Act of 2015 (the 2015 Act) during the period under review.
For the four quarters ending 2020, the Treasury said it could not find sufficient evidence any of the countries manipulated its exchange rate for the purposes of preventing effective balance of payments adjustments and gaining unfair competitive advantage in international trade.
“Treasury will continue its enhanced engagement with Vietnam and Switzerland, and Treasury will commence enhanced engagement with Taiwan. This engagement includes urging the development of a plan with specific actions to address the underlying causes of currency undervaluation and external imbalances.”
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No other major US trading partner met the relevant 1988 or 2015 legislative criteria for currency manipulation or enhanced analysis during the review period. Treasury urged China to improve transparency regarding its foreign exchange intervention activities, the policy objectives of its exchange rate management regime, the relationship between the central bank and foreign exchange activities of the state-owned banks, and its activities in the offshore RMB market.
“Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” secretary of the Treasury, Janet Yellen, said.