U.S., Vietnam Reach Agreement to End Sec. 301 Timber Probe

Trade Update • OCTOBER 5, 2021

Following a year-long investigation into Vietnamese timber practices, the Office of the United States Trade Representative on Friday announced it had determined that no trade remedies are presently warranted.

In a statement, USTR Katherine Tai said the two countries have come to an agreement that “provides a satisfactory resolution” by securing “commitments that will help keep illegally harvested or traded timber out of the supply chain and protect the environment and natural resources.”

Background

The Trump administration last October initiated a probe under Section 301 of the Trade Act of 1974 into the alleged importation and use of illegally harvested timber by Vietnamese manufacturers. At the time, the USTR asserted that much of the timber used in the production of wooden furniture exported to the U.S. is harvested and exported in violation of the laws of the source country (Cambodia in particular), and that some of the timber may be from species listed under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

According to a Congressional Research Service report, U.S. imports from Vietnam of timber-based products totaled $5.8 billion—wooden furniture comprising $3.7 billion of that figure.

In a public hearing on the matter last December, Vietnamese industry associations and furniture manufacturers said there was no evidence that the country’s booming furniture exports were built on timber “harvested against the laws of the source country” or taken from protected lands in countries like Cambodia, Laos, Cameroon and the Congo, as claimed by the USTR.

Nevertheless, it was reported in January that the government of Vietnam, fearing that its exports may be hit with hefty tariffs as a result of the USTR’s probe, was taking steps to crack down on illegal timber imports by, for example, doubling its fine for such activities to about $22,000 with prison sentences as much as 10 years.

A Comprehensive Trade Enforcement Model

The Agreement, that Tai said “will provide a model – both for the Indo-Pacific region and globally – for comprehensive enforcement against illegal timber,” contains multiple commitments by Vietnam, including:

• To improve its Timber Legality Assurance System;
• Keep confiscated timber (i.e., timber seized for violating domestic or international law) out of the commercial supply chain
• Verify the legality of domestically harvested timber regardless of export destination; and
• Work with high-risk source countries to improve customs enforcement at the border and law enforcement collaboration.

Tai said her office “looks forward to working with Vietnam to deepen collaboration and information exchange,” including through a Timber Working Group established by the agreement. Also looking ahead, Tai added that “USTR’s first use of Section 301 in this investigation shows the strength of using this tool to address concerns regarding environmental risks or the enforcement of environmental laws.”