The USTR has tagged Vietnam as a “Priority Foreign Country” in its latest Special 301 Report. Here’s what it says about why it made the decision.
The Office of the United States Trade Representative released its 2026 Special 301 Report last week, singling out Vietnam as a “Priority Foreign Country (PFC)”.
This is a designation reserved for “countries with the most egregious IP-related acts, policies, and practices” and means that the USTR can initiate a 301 investigation that, if issues raised are unresolved, could result in trade remedies being applied.
This report is an interesting read for a number of reasons.
Firstly, it makes a point of asserting the independence of its assessment.
“Vietnam’s identification as a PFC in this report is solely based on the IP-related concerns identified… and not on any other aspect of Vietnam’s international or domestic actions or policies,” it reads.
It also, however, specifically mentions a failure on Vietnam’s behalf to make “meaningful progress” on IP-related issues “in recent negotiations for an Agreement on Reciprocal, Fair, and Balanced Trade (ARFBT)” as evidence of a “persistent failure to resolve long-standing concerns about IP protection”.
Furthermore, in the USTR’s 2025 301 Report, Vietnam was put on the Watch List. This is the lowest designation in the report, with more serious offenders put on a Priority Watch List, which is the precursor to being tagged a PFC — Vietnam seems to have skipped the Priority Watch List altogether.
Inconsistencies in motivations aside, taken at face value, this would indicate that, relatively speaking, since the last report, Vietnam’s IP protection regime has deteriorated significantly.
So what does that deterioration look like?
The report notes that the reorganisation of the government last year saw enforcement work transferred from the Market Surveillance Agency to local authorities, which it says stakeholders have reported has left gaps in enforcement that purveyors of counterfeit goods have exploited.
It also notes that under the new government structure, enforcement in both physical and online marketplaces has declined, with the number of violations recorded last year half of what was recorded in 2024.
However, that’s about the extent of the downside changes it lists.
In fact, on piracy, it actually notes an uptick in prosecutions, citing a case brought against the operators of streaming site Fmovies. It does, however, go on to argue that the ruling of the court — a fine and restitution worth a combined US$38,470 — was insufficient.
“In order to have a greater deterrent effect… Vietnamese courts should impose prison sentences, monetary fines, and other criminal penalties at the higher levels that are available under Vietnamese law, to reflect the harm caused by such piracy operations,” it reads.
Likewise, it makes basically the same call in its second point on counterfeiting, using word-for-word, identical text under both points.
“Vietnam’s continued reliance on administrative enforcement actions over civil or criminal enforcement has been another long-standing concern, particularly as administrative enforcement does not have the same deterrent effect as civil remedies and criminal penalties,” it says.
The report’s third point is also enforcement-related, though it focuses on Vietnam Customs exercising its powers to stop suspected counterfeit or pirate shipments from crossing its borders.
Its fourth point calls for greater enforcement of IP law, though against the use of pirated software, with its fifth point relating to cable signal theft — its interception and unauthorised decoding — with the report taking issue with a lack of criminal penalties for the practice.
All of that is to say, of its five points, there are really only two key issues: the lax enforcement of IP law and insufficient punishments.
With this in mind, what stands out in the report after all that is this paragraph:
“The United States acknowledges enforcement actions to shut down Fmovies and associated piracy sites in 2024, Y2Mate and 11 other stream-ripping websites in 2025, and piracy platforms Xoilac TV and R*phim in 2026, including collaboration between the Ministry of Public Security (MPS), the Supreme People’s Procuratorate, and U.S. enforcement authorities and stakeholders in the Fmovies case,” it reads.
And this one:
“In March 2026, after MPS sought feedback on a draft decree on piracy of printed publications in electronic formats, major Vietnamese pirated e-book sharing platforms, including TVE-4U, VCTVEGroup, and Ebookvie, ceased operations or stopped the sharing of copyrighted materials. In April 2026, Vietnam-based HiAnime.to, which was one of the most popular pirate sites in the world and listed in the 2025 Notorious Market List, shut down, along with related mirror sites.”
This seems to contradict the thrust of the report, rather suggesting positive steps forward have been made and have been at least somewhat effective. This would align with broader efforts in Vietnam to crack down on IP infringements, particularly since the issue was raised as part of the ARFBT negotiations last year.
This then raises the question: if Vietnam’s PFC designation is not based “on any other aspect of Vietnam’s international or domestic actions or policies” what outcome is the USTR looking for, and are its expectations realistic?