Though further submissions are possible and more public hearings are scheduled, it looks unlikely that these tariffs, through the 301 investigation process, will be avoidable.
The United States Trade Representative (USTR) has proposed new tariffs on imports from 60 trading partners, including a minimum 10 percent rate on goods from Canada, Mexico, the European Union, Taiwan and the United Kingdom, and 12.5 percent for all others under investigation, including Vietnam.
The proposal will undergo public consultation, with hearings beginning June 22, written submissions accepted until July 6, and public hearings scheduled from July 7.
The crux of the USTR’s argument rests mostly on polysilicon imports, used in solar cells, and cotton, produced in China’s Xinjiang province.
On polysilicone, it says that “the dramatic increase in imports from Thailand and Vietnam of downstream polysilicon products after the enactment of the UFLPA, in conjunction with existing evidence of attempted circumvention of US trade remedy laws, suggests that downstream products incorporating forced labour polysilicon inputs from China may be entering the United States through manufacturing in third economies.”
On cotton, it says that “given that the vast majority of cotton produced in China is produced in Xinjiang, it is likely that at least some, if not a significant volume, of China’s exports of cotton goods to intermediary producers in third economies are produced in that region and, therefore, are presumed to be produced with forced labour under US law.”
To support this claim, the report leans on a 2021 paper Laundering Cotton: How Xinjiang Cotton is Obscured in International Supply Chains which links at least six Vietnam apparel manufacturers to Xinjiang cotton.
In the report, the USTR acknowledges that the government of Vietnam has said it has measures to prevent the sale of forced-labour-made goods in Vietnam, though the USTR also notes there are no measures to prevent forced-labour goods from being imported.
Vietnam, however, has made claims to the contrary.
In its submission to the investigation, it said forced labour imports were prohibited in the Law on Foreign Trade Management under a “public morals” clause.
“Vietnam may prohibit the importation of goods where such goods adversely affect public morals. Forced labour is prohibited under Viet Nam’s Constitution, the Penal Code, and the Labour Code, and is widely recognised as conduct contrary to fundamental principles of public morals,” Vietnam’s submission reads.
This argument, however, appears not to have been accepted.
Indeed, the report doesn’t seem to leave much room for interpretation, instead looking for laws that explicitly prohibit the import of goods produced with forced labour.
Even then, when countries were found to have sufficient laws in place — Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan — they were all found to have been inadequately enforced.
Though further submissions are possible and more public hearings are scheduled, it looks unlikely that these tariffs, through the 301 investigation process, will be avoidable.
(On a side note, the Vietnam News Agency (VNA), the main state-controlled news provider, omitted mention of Vietnam in its reporting of this development, noteworthy in that it might speak to the sensitivity around Vietnam’s trade development trajectory.)