US Defends Specificity Finding of Vietnamese Currency Undervaluation
The U.S. defended its decision to find that Vietnamese currency undervaluation is de facto specific to the traded goods sector at the Court of International Trade. Responding to arguments from exporter Kumho Tire (Vietnam) Co., the government said the exporter failed to undermine Commerce's conclusion that the traded goods sector was the "predominant user of the subsidy" (Kumho Tire (Vietnam) Co. v. United States, CIT Consol. # 21-00397).
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Kumho Tire argued that the specificity finding, which centered on the fact that 72% of the subsidy benefited the traded goods sector, would render specificity "meaningless" (see 2502180015). The exporter also argued that Commerce failed to address the issue raised by the court's remand order, which told the agency to specify whether it made the assumption in its specificity finding that the use of the currency undervaluation subsidy is spread evenly in the traded goods sector (see 2410280035).
In response, the U.S. argued that it complied with the court's order and that Kumho Tire's claim "is simply not true." Commerce said it "squarely answered" the question raised by the court, stating that it hasn't made an assumption "whether the subsidy usage was spread evenly within the traded goods sector, i.e., within the group of companies that sell goods internationally.”
The government said it considers this question irrelevant, adding that its stance on the irrelevancy of the issue "does not detract from the fact that Commerce complied with the Court’s direction to specify whether or not it had made an assumption as to whether the subsidy usage was spread evenly."
The brief added that the "pertinent question" is "how a subsidy is distributed among different groups, industries, or enterprises, not whether the subsidy is distributed or used evenly within the beneficiary group." The U.S. noted that the court already agreed with Commerce's finding that companies that "sell goods internationally can comprise a 'group,' explaining that there is no limitation on the size of a 'group' in the statute" and that the agency defined the group in line with the statute.
The U.S. said Kumho Tire failed to cite any authority or "reason for treating disproportionate use the same as predominant use."
The government also defended Commerce's explanation of the discrepancy between two Treasury Department reports. The trade court 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.
Kumho Tire said Commerce's explanation of the Vietnamese government's depreciation of the Vietnamese dong in the second half of 2019 isn't supported. In response, the government said the exporter failed to explain why "this should matter," since the key issue is "whether Commerce sufficiently explained the reason for the discrepancy between the Treasury Report and the KTV Treasury Report."
While the agency said the increase in purchases was "likely attributable to the GOV’s efforts to depreciate the VND vis-à-vis the USD during the period leading up to and including the holiday season in the United States," this conclusion wasn't "crucial to Commerce’s explanation as to why a discrepancy existed between the two reports," the brief said. Though Kumho Tire said the increase was a "response to market developments to stabilize the currency's value," the U.S. again said the only relevant question is whether the discrepancy between the reports was explained.
The U.S. added that both reports still confirm that the Vietnamese government "significantly increased its foreign exchange purchases during 2019, depreciating the VND."