Witnesses Dispute Currency Reasoning, Argue Vietnam Tariffs Counterproductive to China Goals
Witnesses overwhelmingly argued against tariffs on Vietnamese imports, during a virtual hearing Dec. 29 hosted by the Office of the U.S. Trade Representative, with numerous business representatives saying it was the choice not to sign the Trans-Pacific Partnership, not any kind of currency issue, that makes it harder for U.S. exports to penetrate Vietnam. Trade groups representing importers from Vietnam noted that their members moved sourcing from China to Vietnam precisely to avoid Section 301 tariffs, and some said putting comparable tariffs on Vietnamese imports would cause companies to relocate back to China.
Only two new witnesses, aside from a small furniture maker who testified a day earlier on timber practices, said that Vietnam is damaging American production: Magnum Magnetics and the United Steelworkers union.
General Electric, one of the major exporting companies in America, said that Vietnam provides “incredible opportunities for export markets,” and that the company is not affected by short-term moves in currency, which he argued is already changing since the analysis from Treasury and USTR.
Maria Zieba, director of international affairs for the National Pork Producers Council, said that if the Vietnamese currency is undervalued, it hasn't prevented pork sales from the U.S. from more than tripling in the first 10 months of 2020 compared with the same period in 2009, nor did it prevent a 370% increase in exports from 2015 to 2019. “Although there are barriers which suppress U.S. exports to Vietnam, an undervalued currency is not one of them,” she said. She said the U.S. has a harder time selling in Vietnam because Canada and now the European Union have gained lower tariffs through trade deals.
She said that Vietnam lowered its most favored nation tariff on frozen pork from 15% to 10% in 2020, which primarily benefits the U.S. since its Canadian competitors already had a tariff just under 10% through the TPP. She said that if the USTR were to impose tariffs on Vietnamese exports, Vietnam would likely retaliate against American pork, as China did when it was targeted.
Virginia Foote, chair of the AmCham in Vietnam, said that her group works with USTR all the time for help on export barriers -- and currency has never been one of the issues companies doing business in Vietnam wanted addressed. Instead, she said, USTR should be working on intellectual property, pharmaceutical imports and customs and tax procedures if it wants to help American exporters.
John Goyer, executive director of the U.S. Chamber of Commerce's Southeast Asia program, said that imposing tariffs because of a growing trade deficit in goods with Vietnam would be an odd reaction to changing trade patterns that the Donald Trump administration encouraged. Footwear Distributors and Retailers of America CEO Matt Priest said as he's talked to executives at footwear manufacturing brands, “the predominant view of the impact of any tariff action on Vietnamese exports to the United States is that it would be only one winner -- China.” He said that 20% of imported shoes come from Vietnam, and the share from Vietnam and China combined is 87%.
In response to a question from Sarah Bonner of the Small Business Administration, he said his group is adamant that it does not experience price savings by importing from Vietnam because of artificially depressed currency. Not only have prices spiked this year as more factories are established in Vietnam, driving up labor costs, he said, but most of the contracts for shoes -- and their inputs -- are in U.S. dollars.