Following an agreement with the State Bank of Vietnam, the USTR announced Friday that it will not impose tariffs on that country related to a Section 301 investigation into Vietnam‘s monetary practices.
The official determination was made following an agreement between the Department of the Treasury and the State Bank of Vietnam, which includes monitoring of compliance.
Already since last Monday, the Department of the Treasury and the central bank of Vietnam announced that agreement.
It was until this Friday that the USTR issued a formal determination in the investigation of Section 301 of the Vietnam Currency that reflects the agreement reached earlier this week between the Department of the Treasury and the State Bank of Vietnam (SBV).
First of all, the investigation against Vietnam began in October 2020 and was related to the policies and practices of that country regarding the valuation of its currency.
From the initial US perspective, Vietnamese laws, policies and practices related to currency valuation, including excessive interventions in the foreign exchange market, taken in their entirety, are unreasonable and tax or restrict US trade.
State Bank of Vietnam
Section 301 of the Trade Act of 1974 gives the USTR a range of responsibilities and authorities to investigate and take action to enforce the rights of the United States under trade agreements and to respond to certain foreign trade practices.
The determination states that the Tesoro-SBV settlement provides a satisfactory resolution of the matter under investigation and, therefore, no commercial action is warranted at this time.
The USTR, in coordination with the Treasury, will oversee the implementation of Vietnam in the future.
“I congratulate Vietnam on its commitment to addressing the concerns of the United States with its monetary practices and setting an important example for the Indo-Pacific region. American workers and businesses are stronger when our partners value their currency fairly and compete on a level playing field. Moving forward, in coordination with the Treasury, we will work together with Vietnam to ensure implementation and we will continue to examine the exchange practices of other major trading partners,” the USTR said in a statement.
The Federal Register notice summarizing the determination is available here.
Vietnam recently made progress on free trade agreements.
The EU-Vietnam Free Trade Agreement (EVFTA) entered into force on August 1, 2020.
Vietnam also signed the Free Trade Agreement between the United Kingdom and Vietnam on December 31, 2020, which will enter into force on May 1, 2021.
Furthermore, on November 15, 2020, Vietnam signed the Regional Comprehensive Economic Partnership (RCEP).