U.S. Cites Vietnam for Manipulating Currency

By Emerson Schwartzkopf

WASHINGTON – Vietnam is now considered a currency manipulator and a potential harm to U.S. commerce, according to this country’s leading trade official, but there’s no penalty on Vietnamese goods — yet.

Robert LighthizerU.S. Trade Representative (USTR) Robert Lighthizer issued the finding on Friday as part of a Section 301 investigation into international-currency-market actions by Vietnam’s state bank. The report will be noted in the Federal Register, the official journal of the U.S. government, later this week.

The action came after an investigation by USTR staff and a Dec. 29 virtual public hearing on the issue. The USTR also held consultations with representatives of the Vietnamese government on Dec. 23.

“Unfair acts, policies and practices that contribute to currency undervaluation harm U.S. workers and businesses, and need to be addressed,” Lighthizer said. “I hope that the United States and Vietnam can find a path for addressing our concerns.”  .

The USTR announced last October that it would investigate charges of Vietnam’s government undervaluing its state currency – the dong – to give the country’s exports an unfair trade advantage in the U.S. market.

At issue is whether the State Bank of Vietnam used its management of the dong/U.S dollar exchange rate and actions in the foreign-exchange market to keep the dong’s value low. The result would lower the market value of Vietnamese goods in foreign markets.

“In sum,” the USTR official report noted, “the findings in this investigation support that 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, are unreasonable and burden or restrict U.S. commerce, and are thus actionable under section 301 of the Trade Act.

The investigation also noted that the overall U.S. trade deficit with Vietnam doubled from $32 billion in 2016 to $64 billion as of November 2020. The United States is the largest export market for Vietnamese goods.

The finding and the investigation report stop short of recommending immediate actions against Vietnam, including any 301 tariffs.

Previous USTR actions under Section 301 jurisdiction during the Trump administration include the blanket U.S. tariffs on all Chinese goods of 25%, sparking the trade war between the two countries

The U.S. Treasury Department also cited Vietnam in Decmvber as one of two countries working as a currency manipulator. (Switzerland is the other.) The Treasury report also specifically named Vietnam as manipulating exchange rates “for gaining unfair competitive advantage in international trade as well.”