Vietnam Seeks ‘Good Relations,’ 'Dialogue' With US, Says Harvard Economist
The Office of the U.S. Trade Representative never publicly addressed the request of two dozen trade associations and business groups, including CTA and the National Retail Federation, to delay Tuesday’s Section 301 investigative hearing into Vietnam’s alleged currency manipulation practices to allow them time to digest the Treasury Department’s Dec. 16 report blasting Vietnam’s trade behavior (see 2012230008).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The hearing went on as scheduled (see 2012290034). But USTR on Tuesday posted a Dec. 22 letter responding to the groups, permitting anyone to comment on Treasury’s report “under the existing timeline for public input,” including in post-hearing rebuttals due Jan. 7.
USTR also greenlighted witnesses at the public hearing to discuss Treasury’s report in their testimony, “regardless of whether such matters were covered in their initial summary of testimony.” The prehearing summaries could not have possibly covered Treasury's report because they were due Dec. 10, nearly a week before the report became available. Few witnesses at the hearing discussed the Treasury report, with Vanessa Sciarra, National Foreign Trade Council vice president-legal affairs and trade and investment policy, an exception.
Treasury's report alleged Vietnam and Switzerland “intervened in the foreign exchange market in a sustained, asymmetric manner,” to the detriment of U.S. interests. Sciarra's group looks forward "to the administration engaging in robust discussions with both countries regarding Treasury’s concerns,” she said. “Clearly Treasury has identified concerns and has a clear plan to address those concerns with the government of Vietnam,” she said, suggesting Section 301 was the wrong tool for curbing Vietnam’s alleged currency abuses.
Contrary to allegations Vietnam is intervening in foreign exchange markets to devalue the dong and stymie U.S. economic growth, “what they’re doing is completely standard, keeping a stable exchange rate in real terms,” testified Harvard University economist David Dapice. “Right now it’s leading to a buildup” of foreign trade surpluses in Vietnam's favor, he said. “I’m quite confident from my 30 years there that they will start importing a lot more” as the country adapts to the huge influx of foreign direct investment (FDI) in its supply chain, he said.
Vietnam's big trade imbalance with the U.S. and the inundation of FDI “has all happened very quickly due to the U.S. policy of putting tariffs on China,” shifting production sourcing from China to Vietnam, said Dapice. Vietnam’s economy is 1%-2% that of the U.S. and a “tiny fraction” of China’s, he said. The incoming FDI “has hit them a little bit like a tsunami, and they’re scrambling to adjust to it,” he said. Vietnam is “very interested in good relations with the U.S.,” he said. “They want to have a dialogue.” It would be a huge “mistake” for USTR to slap Section 301 tariffs on Vietnamese imports for unfounded allegations of currency “cheating,” he said.