Vietnam agreement a positive outcome, possible model for free trade agreements
By Bradley A. McKinney
November 15, 2021 | 1:45 pm CST
IWPA Brad McKinney

Bradley A. McKinney is Executive Director of the International Wood Products Association.

America is facing a historical supply chain reckoning, with ripple effects impacting virtually all Americans, and nearly all sectors of the U.S. economy.  The wood products industry is no exception.  U.S. trade policy leaders have their work cut out for them, but they have displayed a willingness to work with and listen to our industry.  Some positive signs are emerging, including the Administration’s rollout of a China trade strategy, in that it allows a broader trade agenda to take shape; developments with the European Union on Section 232 tariffs and aircraft subsidies; and the Port of Los Angeles’ announcement about opening around the clock, which alleviates at least some supply chain pressure.  So, too, is the recently announced Agreement between the Office of the U.S. Trade Representative (USTR) and Vietnam to resolve the Section 301 timber investigation without imposing tariffs.

The agreement represents a win for American consumers, manufacturers, workers, and exporters, as well as the wood products industry, as imported Vietnamese timber products are important inputs to U.S. manufacturers.  It also presents a replicable approach to trade policy, generally – one in which tariffs are avoided and dialogue through Trade Investment and Framework Agreements (TIFAs) is pursued.  This approach could lead to more Free Trade Agreements (FTAs), as it links incentives on environmental and other such policies to greater access to the U.S. market.  Equally as important, the agreement shows the U.S. is serious about eliminating illegal logging and strengthening the sustainable harvest of timber from forests around the globe.  Avoiding tariffs and pursuing commitments through the TIFA with Vietnam is a positive outcome for our trade relationship.  

Section 301, spelled out in the Trade Act of 1974, is an important “tool” in the U.S. trade “toolbox.”  It allows USTR to investigate certain foreign trade practices.  This can, but need not always, result in duties upon a foreign country.  The Vietnam 301 timber investigation, begun by the Trump Administration in October 2020, stemmed from concerns that illegally-harvested timber from other countries could be present in Vietnam’s supply chain.  The pertinent U.S. law in this situation is the Lacey Act, which prohibits the trade in wood products sourced from illegally-harvested timber. 

We at the International Wood Products Association (IWPA) are committed to the promotion of sustainable, legal forestry practices worldwide.  Our association brings together every segment of the global supply chain, from producers and service providers to importers, distributors, manufacturers, and retailers.  Enabling importers to source from suppliers following the relevant laws, particularly the Lacey Act, is paramount.  This is why we conveyed to USTR that we are “committed to working with the U.S. government and key stakeholders to ensure trade in wood products with Vietnam uses legal inputs.”

Vietnam is an important source of timber not grown in North America, that is used in the creation of an array of U.S. products, a significant amount of which have considerable value added by American workers – from furniture on which you sit and desks on which you work, to flooring and doors Americans use every day.  Many of these products include U.S. hardwoods, and are ultimately exported to Vietnam, which makes this Agreement good for exporters and importers alike.  An imposition of tariffs on Vietnam would have made these goods more expensive, less unique, and brought uncertainty to their American manufacturers and workers.  Not to mention the possibility of retaliation by Vietnam, a strategic partner whose trade relationship we should value at a premium amid ongoing, and likely long-lasting, U.S.-China trade tensions.  The wood products industry supports U.S. jobs up and down the supply chain, and across the country, particularly in rural areas.  Levying duties could have jeopardized these jobs and U.S. market share in this sector. 
We commend USTR for choosing the course outlined in the Agreement.  Negotiation through the TIFA, which was established to assist with just such trade policy issues, is the more prudent course than punitive tariffs.  Using the TIFA as a mechanism for securing additional commitments, controls, and due diligence in the wood products supply chain benefits all these stakeholders in the long run and shows good faith to a strategic and important trade partner.  We urge USTR and our partners in Congress to leverage this dialogue to advance towards a broader trade agreement, and to view avoidance of tariffs and the use of TIFAs as a model for pursuing FTAs with additional countries.

The commitments laid out in this important Agreement lend confidence that Vietnam takes the U.S. concerns very seriously and is taking steps to continually improve at preventing illegal logging and promoting sustainable forestry around the world.  More importantly, as additional trade irritants emerge, we hope the Administration will continue to make a good-faith effort at dialogue that can lead to greater trade ties which benefit U.S. consumers, manufacturers, and workers.  IWPA and its members view this as a win for “free and fair” trade, and stand ready and willing to support USTR, its interagency partners, Congress, and other stakeholders during the implementation of this and future such agreements. 

Bradley A. McKinney is Executive Director of the International Wood Products Association.

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