The US and Vietnam reached an agreement over illegally harvested and traded timber that will see the Asian nation avert punitive tariffs in the process.
The accord "secures commitments that will help keep illegally harvested or traded timber out of the supply chain and protect the environment and natural resources,” and no trade action is warranted for now, the Office of the US Trade Representative said in an emailed statement Friday.
The USTR opened a so-called section 301 investigation on Vietnam’s wood industry in October last year -- the same law that enabled the nation to levy billions of dollars of tariffs on Chinese imports.
The US is the biggest market for Vietnamese wood products, representing an estimated US$6.5 billion in 2020, about half of the nation’s total agricultural shipments to the US in 2020, according to the nation’s agriculture ministry. Vietnamese wood-furniture makers’ customers include Walmart Inc. and Ashley Furniture Industries Inc.
"With this agreement, Vietnam will provide a model -- both for the Indo-Pacific region and globally -- for comprehensive enforcement against illegal timber,’ Trade Representative Katherine Tai said in the statement.
The investigation is the first to use section 301 of the Trade Act address environmental concerns.