Commerce Defends Position That Vietnamese Currency Undervaluation Specific to Traded Goods Sector
The Commerce Department defended its finding that currency undervaluation in Vietnam is specific to the traded goods sector, submitting remand results to the Court of International Trade on Jan. 15. The agency addressed various points the trade court sent back for further explanation, including Commerce's statutory authority for its specificity finding and the information the agency found missing from the record as its basis for using facts available (Kumho Tire (Vietnam) Co. v. United States, CIT Consol. # 21-00397).
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Last year, the trade court said that Commerce had the authority to countervail currency undervaluation, though it remanded the CVD rate imposed on exporter Kumho Tire (Vietnam) Co. in the CVD investigation on passenger vehicle and light truck tires from Vietnam (see 2410280035). Among the elements the court remanded was the statutory authority for Commerce's specificity finding.
On remand, Commerce said that there were two issues with the agency's findings: its use of U.S. dollar inflows as a proxy for U.S. dollar conversions in Vietnam and the agency's use of data from the International Monetary Fund in place of information submitted by the Vietnamese government in its questionnaire responses.
On the first issue, Commerce said it would ideally use data on currency conversions for its specificity analysis, but the Vietnamese government told the agency that it "does not maintain information on total currency conversion in Vietnam or conversions by the traded goods sector." As a result, the agency said it used Section 776(a)(1) of the Trade Act of 1930, which says that Commerce can use facts otherwise available if necessary information is not on the record.
Since the Vietnamese government and Kumho Tire said exporters aren't required to convert their earned U.S. dollars into Vietnamese dong, meaning there may not be a "one-to-one correlation" between U.S. dollar inflows and currency conversions, Commerce said it "had no choice but to use a proxy" in light of the lack of information regarding conversions.
Regarding its authority to use the IMF data, Commerce based the decision on Section 776(a)(2)(A), which allows for the use of facts available when a party withholds requested information, or alternatively, Section 776(a)(2)(B), which allows for the use of facts available if a party fails to provide information in the "form and manner requested."
The agency said the Vietnamese government only provided net commodity trade data, which included data on U.S. dollar inflows and outflows and not just inflows. The Vietnamese government didn't provide the "figures that went into the 'net commodity trade' data originally reported and did not report the original values of USD inflows from the traded goods sector," the brief said. The Vietnamese government didn't even give "reasonable estimates for the balance of inflows versus outflows," only stating that the net commodity trade data is calculated from general customs statistics, the brief said.
Commerce explicitly said it's not using adverse facts available since the Vietnamese government didn't fail to cooperate by not acting to the best of its ability.
The court also asked Commerce to give a clear statement of what the agency considers to be missing from the record and address alternative data submitted by the Vietnamese government. The agency said the Vietnamese government "failed to provide total USD inflows from exporter," adding that Hanoi's supplemental data wasn't usable. The Vietnamese government's response "did not satisfy Commerce’s request to explain how the numbers from the GOV’s initial response were obtained" and what went into the calculations, the brief said.
The Vietnamese government only ever gave a net figure for the traded goods sector that didn't represent "total USD inflows from the export of goods," Commerce said. "The IMF data, on the other hand, clearly provided USD inflows from the export of goods." In addition, Commerce said that even if it used the Vietnamese government's data, "the ultimate finding of predominant use would not have changed," since the traded goods sector would still be found to be a predominant user of the currency undervaluation.
The trade court also asked Commerce to give a clearer explanation of the size of the discrepancy in net purchases in foreign exchange between a Treasury report used by Commerce and a report Treasury sent to Congress in January 2020. In the report used by Commerce, Treasury said the Vietnamese government oversaw around $2.1 billion in net foreign exchange purchases over the four quarters through June 2019. In the congressional report, Treasury said the same number in the 2019 calendar year was around $22 billion.
Commerce said on remand that "the discrepancy in the net foreign exchange transactions is largely attributable to inconsistent time periods between the Reports." Treasury's information reported to Commerce covers the entire 2019 investigation period, while the congressional report "only covered the first six months of the relevant" investigation period, "as well as six months prior" to the period, the brief said.
The trade court additionally told Commerce to specify whether it made the assumption that the use of the currency undervaluation is spread evenly in the traded goods sector. Commerce said on remand that this assumption was not made but is also irrelevant. The question is "not whether the subsidy is distributed or used evenly within the beneficiary group or industry or even enterprise, but rather whether it is distributed or used evenly among different groups or industries or enterprises," the remand results said.