ITC Greenlights Countervailing Duties on Tires From Vietnam Due to Undervalued Currency
Illegally subsidized imports of passenger vehicle and light truck tires from Vietnam are causing injury to U.S. industry, the International Trade Commission said in a June 23 press release on its final injury determination in the ongoing countervailing duty investigation, which gives the green light to Commerce to issue a countervailing duty order based on currency undervaluation for the first time since it issued regulations on the subject in 2020 (see 2002030016).
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Commerce had finalized its subsidy determination in May, finding its new authority in line with World Trade Organization commitments, including the WTO Agreement on Subsidies and Countervailing Measures, according to the agency's issues and decision memorandum issued alongside the final determination.
Commerce is now set to issue a countervailing duty order in July on passenger vehicle and light truck tires from Vietnam. The ITC came to a negative injury determination in the concurrent antidumping duty investigation, finding that imports of passenger and light truck tires from the country sold at less than fair value are negligible.
The government of Vietnam unsuccessfully argued against Commerce's ability to impose such a countervailing duty. It said that an exchange of currency is "not an enumerated financial contribution, nor is it an example of a direct transfer of funds." Since the exchange of currency is reciprocal in nature, it cannot come to mean a "direct transfer of funds" as required in U.S. law to establish a countervailable subsidy, Vietnam said.
Loans, as an example, are reciprocal yet are countervailable, the U.S. responded. "The GOV appears to be reading a requirement into the statute that only grant-like transfers can constitute a direct transfer of funds -- a requirement that plainly does not exist via the inclusion of loans and equity infusions as specifically enumerated examples of direct transfers of funds," the Commerce memo said. Commerce also found that the government of Vietnam entrusted private banks to provide the financial contribution granted via undervalued currency by "requiring private banks to exchange currency with any party wishing to do so."
In its memo, Commerce addressed a host of other concerns from the government of Vietnam and the mandatory respondents in the investigation. Among them, whether the Vietnamese dong was actually undervalued during the period of investigation and whether countervailing currency exchanges constitute a double remedy. Commerce sided with the Treasury Department's methodology for determining undervaluation, and said that double remedy concerns only exist for antidumping investigations.