Contact us

Vietnam 301 threatens supply chain relocations

The Office of the United States Trade Representative (USTR) earlier this month announced the opening of two investigations in the country of Vietnam. Interested members of the public can submit comments through November 12th – more on that later.

 

A great explanation of Section 301 investigations can be found here on Wikipedia. In short, an investigation is initiated either by a petition from a private sector entity or from the USTR. An investigation is opened, facts are gathered, comments are weighed and adjudicated and the finding presented to the President.

 

Importers from China are acutely aware of the Section 301 duties which have inched increasingly upward and applied to a growing list of products since 2018. Those Section 301 duties have caused importers to carry larger continuous bonds, secure additional collateral and have to pay larger amounts of duty with every shipment.

 

Sure, there are exclusions, but the majority of importers are continuing to shoulder the burden of duty bills of double-digit percentages on products which, according to the HTS, are duty-free ad valorem.

 

The Vietnam investigations are focused on two areas. Quoting USTR:

“USTR will investigate Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded, and will investigate Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.”

Importers of wooden bedroom furniture were among the first to relocate to Vietnam following the imposition of antidumping duties from China and have found success with the commodity – and it has powered some of Vietnam’s export growth.

Interested parties have the opportunity to submit comments for the public record. These comments will then be reviewed by USTR along with the findings of their investigation and will guide the agency’s recommendation to the President.

  • Comments are due for both investigations by November 12th.
  • The Federal Register notice for the currency undervaluation can be found here.
  • The Federal Register notice for the timber issue can be found here.

If your supply chain is in Vietnam or contemplating a move to Vietnam and wanting to know what this means for your company, contact your RIM representative for more information and a consultation.