[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Notices]
[Pages 40675-40676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16095]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2020-0037]


Determination on Action and Ongoing Monitoring: Vietnam's Acts, 
Policies, and Practices Related to Currency Valuation

AGENCY: Office of the United States Trade Representative.

ACTION: Notice.

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SUMMARY: Based on an agreement reached between the Department of the 
Treasury (Treasury) and the State Bank of Vietnam (SBV) regarding 
Vietnam's currency practices, the U.S. Trade Representative has 
determined that no action under the Section 301 investigation is 
warranted at this time because Vietnam's agreement with Treasury 
provides a satisfactory resolution of the matter subject to this 
investigation. The U.S. Trade Representative, in coordination with 
Treasury, will monitor Vietnam's implementation of its commitments 
under the agreement and associated measures.

FOR FURTHER INFORMATION CONTACT: For questions concerning the 
investigation, contact Michael T. Gagain, Assistant General Counsel, 
202-395-9529, or Marta M. Prado, Acting Assistant U.S. Trade 
Representative for Southeast Asia and the Pacific, 202-395-6216.

SUPPLEMENTARY INFORMATION:

I. Proceedings in the Investigation

    The U.S. Trade Representative initiated an investigation of 
Vietnam's acts, policies, and practices related to the valuation of its 
currency pursuant to Section 302(b)(1)(A) of the Trade Act of 1974, as 
amended (the Trade Act), on October 2, 2020. See 85 FR 63637 (Oct. 8, 
2020) (notice of initiation). On the same date, USTR requested 
consultations with Vietnam. Consultations were held on December 23, 
2020. The Section 301 Committee solicited public comments, and held a 
public hearing on December 29, 2020. See 85 FR 75397 (Nov. 25, 2020).
    On January 15, 2021, in consultation with Treasury, based on the 
information obtained during the investigation, and taking account of 
public comments and the advice of the Section 301 Committee and 
Advisory Committees, the U.S. Trade Representative determined that 
Vietnam's acts, policies, and practices related to currency valuation, 
including excessive foreign exchange market interventions and other 
related actions, taken in their totality, are actionable under Sections 
301(b)(1)(A) and 304(a) of the Trade Act. See 86 FR 6732 (Jan. 22, 
2021) (actionability notice). The U.S. Trade Representative's 
determination was accompanied by a comprehensive public report (the 
Report). The Report is posted on the USTR website at https://ustr.gov/sites/default/files/enforcement/301Investigations/Vietnam_Currency_301_Actionability_Report_Jan_15_21.pdf.
    In particular, the U.S. Trade Representative determined:
    1. 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 and as discussed in 
further

[[Page 40676]]

detail in the Report, are unreasonable in light of U.S. and 
international norms that exchange rate policy should not be undertaken 
to gain an unfair competitive advantage in international trade, should 
not artificially enhance a country's exports and restrict its imports 
in ways that do not reflect the underlying competitiveness, should not 
prevent exchange rates from reflecting underlying economic and 
financial conditions, and should not prevent balance of payments 
adjustment;
    2. Vietnam's acts, policies, and practices that contribute to 
undervaluation of its currency through excessive foreign exchange 
market interventions and other related actions burden or restrict U.S. 
commerce; and, accordingly,
    3. The acts, policies, and practices under investigation are 
actionable under Section 301(b) of the Trade Act.

II. Determination on Action

    Sections 301(b) and 304(a)(1)(B) of the Trade Act provide that if 
the U.S. Trade Representative determines that an act, policy, or 
practice of a foreign country is unreasonable or discriminatory and 
burdens or restricts U.S. commerce, the U.S. Trade Representative shall 
determine what action, if any, to take under Section 301(b). Where an 
agreement or measures provide a satisfactory resolution of the matter 
subject to investigation, the U.S. Trade Representative may determine 
under Section 304 that no action is appropriate. Under Section 306 of 
the Trade Act, in such circumstances the U.S. Trade Representative must 
monitor the agreement or measures, and may take action at a future time 
upon a finding that the implementation has not been satisfactory.
    In its December 2020 and April 2021 semiannual foreign exchange 
reports to Congress, Treasury determined that Vietnam satisfied the 
three criteria in Section 701 of the Trade Facilitation and Trade 
Enforcement Act of 2015 regarding Vietnam's currency practices, which 
triggered enhanced bilateral engagement between Treasury and the SBV on 
this issue.
    On July 19, 2021, Treasury and the SBV issued a joint statement 
announcing that they had reached an agreement. The joint statement 
provides, inter alia, that:

    Treasury and the SBV have had constructive discussions in recent 
months through the enhanced engagement process, and reached 
agreement to address Treasury's concerns about Vietnam's currency 
practices as described in Treasury's Report to Congress on the 
Macroeconomic and Foreign Exchange Policies of Major Trading 
Partners of the United States.

. . . Vietnam confirms that it is bound under the Articles of 
Agreement of the IMF to avoid manipulating its exchange rate in 
order to prevent effective balance of payments adjustment or to gain 
an unfair competitive advantage and will refrain from any 
competitive devaluation of the Vietnamese dong. The SBV is also 
making ongoing efforts to further modernize and make more 
transparent its monetary policy and exchange rate framework. In 
support of these efforts, the SBV will continue to improve exchange 
rate flexibility over time, allowing the Vietnamese dong to move in 
line with the stage of development of the financial and foreign 
exchange markets and with economic fundamentals, while maintaining 
macroeconomic and financial market stability.

    The SBV will continue to provide necessary information for 
Treasury to conduct thorough analysis and reporting on the SBV's 
activities in the foreign exchange market in Treasury's semiannual 
Report to Congress on the Macroeconomic and Foreign Exchange 
Policies of Major Trading Partners of the United States.

See Joint Statement from the U.S. Department of the Treasury and the 
State Bank of Vietnam (July 19, 2021), https://home.treasury.gov/news/press-releases/jy0280.
    The U.S. Trade Representative has found that that the Treasury-SBV 
agreement and the measures of Vietnam called for in the agreement 
provide a satisfactory resolution of the matter subject to 
investigation. Accordingly, the U.S. Trade Representative has 
determined under Section 304 of the Trade Act that no action at this 
time is appropriate in this investigation. The Trade Representative's 
determination was made in consultation with Treasury, and takes into 
account the advice of the interagency Section 301 Committee and public 
comments and Advisory Committee advice received during the 
investigation.

III. Ongoing Monitoring

    Pursuant to Section 306(a) of the Trade Act, the U.S. Trade 
Representative, in coordination with Treasury, will monitor Vietnam's 
implementation of its commitments under the agreement and associated 
measures. Pursuant to Section 306(b) of the Trade Act, if the U.S. 
Trade Representative in consultation with Treasury subsequently 
considers that Vietnam is not satisfactorily implementing the agreement 
or associated measures, then the U.S. Trade Representative will 
consider further action under Section 301.

Greta Peisch,
General Counsel, Office of the United States Trade Representative.
[FR Doc. 2021-16095 Filed 7-27-21; 8:45 am]
BILLING CODE 3290-F1-P