Last month, the U.S. Trade Representative ( USTR ) issued its annual Special 301 Report, signaling which countries can make improvements on the IP enforcement front.

In the most recent report, the USTR applied the “Priority Foreign Country” status for the first time in thirteen years, calling out Vietnam for persistent failures to deter online piracy and counterfeiting.

In recent years Vietnamese authorities reportedly helped to shut down several pirate sites, including the massive Fmovies network, which served billions of visitors. However, the criminal prosecution of Fmovies resulted in suspended prison sentences, which lack a serious deterrent effect by U.S. standards. Meanwhile, many piracy operations continue to link back to the country.

Under the Trade Act of 1974, the Priority Foreign Country designation triggers a 30-day window for USTR to decide whether to open a formal investigation. Late last week, Ambassador Jamieson Greer formally made that call.

USTR Opens Investigation

The Section 301 investigation will examine whether Vietnam’s policies and practices related to copyright protection and enforcement are unreasonable or discriminatory, hindering U.S. commerce. Judging from the comments released by the USTR, it believes that Vietnam’s shortcomings are serious.

“While Vietnam has recently taken some steps toward addressing IP concerns that the United States has chronicled over many years in USTR’s Annual Special 301 Report, IP infringement in Vietnam continues to impair the competitive position of U.S. innovators and creators,” Ambassador Greer said.

“We need to see Vietnam resolve these long-standing concerns, including on a range of IP enforcement issues, in a manner that is sustained and that deters future IP infringements,” he adds.

With the announcement of the investigation, USTR also opened a consultation round, asking stakeholders to comment on their trade-related experiences with Vietnam. This includes the piracy challenges and concerns, which are highlighted as the primary concern in the federal register notice.

Piracy First

The notice mentions that Vietnam’s failure to provide effective enforcement against online piracy is the primary reason why Vietnam is designated as a priority foreign country. The USTR wants to see significant improvement on that front.

“The United States has repeatedly raised strong concerns about Vietnam’s role in online piracy worldwide,” the notice reads.

“Vietnam remains a significant source of online piracy and continues to host popular English-language copyright infringement sites and services that target a global audience. Some of these sites provide piracy services, including extensive libraries of pirated movies and TV shows.”

The USTR notice doesn’t mention any sites and services by name. However, its earlier Notorious Markets report flagged HiAnime, Myflixerz, and MegaCloud as key threats . Interestingly, these sites all went offline in the days and week before the USTR’s Special 301 Report came out.

Whether the operators of these sites are targeted in criminal investigations in unknown. However, USTR’s notice mentioned that pirate site operators in Vietnam have had it relatively easy in recent years.

There have been criminal prosecutions in high profile piracy cases, including the cases against the operators of BestBuyIPTV and Fmovies. However, these resulted in mild suspended sentences with relatively low fines. According to USTR, these lack a proper deterrent effect.

“Despite Vietnam having criminal laws that provide for substantial fines and years of incarceration for copyright infringement, the defendants in recent criminal prosecutions received suspended sentences and were only ordered to pay relatively low financial penalties,” USTR writes.

“The operators of these sites and services likely based themselves in Vietnam because Vietnam’s IP enforcement efforts have historically lacked the follow-through and substantial penalties needed to deter infringement.”

The problem runs deeper than lenient sentences alone. According to the federal register notice, rightsholders face informal pressure from Vietnamese enforcement authorities to file administrative complaints rather than pursue civil or criminal enforcement. These administrative proceedings carry no meaningful deterrent effect.

Tariffs are on the Table

The request for public comments asks stakeholders to weigh in on “what action, if any, should be taken, including tariff and non-tariff actions.” This means that different types of trade sanctions are now on the table.

The USTR must make its final determination within six months and right holders and other parties have a month to submit their comments.

Behind the scenes, USTR will also consult with the Vietnamese government to see if the concerns can be addressed before it makes a decision, in consultation with President Trump. If Vietnam engages, in order to avoid possible sanctions, we might see more enforcement actions taking place in the country.

In that sense, the recent disappearances of Myflixerz and MegaCloud , and the shutdown of HiAnime , may have been a primer for what’s to come.

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The Federal Register Notice is available here (pdf) . The USTR press release can be found here .

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