Vietnam Circumvention Ruling Sets New Precedent

The Commerce Department’s Vietnam circumvention ruling on Tuesday represents a departure in the U.S. government’s interpretation of what constitutes adding “minor or insignificant” value to a product. This is a key issue in determining whether importation of a product from a country not directly subject to a trade remedy amounts to a “circumvention” of existing trade orders. 

Washington trade attorney Lewis Leibowitz was not surprised by the circumvention determination. “It has been widely expected that Commerce would reach out to penalize imports of steel products from Vietnam. However, it remains to be decided whether the ruling is consistent with U.S. law or trade agreements. Until this decision, it seemed clear that if a product is transformed “substantially” such that it is a new and different product, it cannot also be a “minor or insignificant” change. Commerce ignored their previous jurisprudence on “substantial transformation” to reach a result that looks out of phase with international trade norms. This could have widespread implications for other cases and other countries that process steel from China and elsewhere.”