Despite reforms, Vietnam remains a non-market economy, US declares – Technologist

“Despite Vietnam’s substantive reforms made over the past 20 years, the extensive government involvement in Vietnam’s economy distorts Vietnamese prices and costs and ultimately render them unusable for the purpose of calculating US anti-dumping duties,” the US Commerce Department said.

The department added that it would continue to use market-based prices and costs of similar goods from a country at a comparable level of economic development as Vietnam to calculate anti-dumping duties.

In response, the Vietnamese Ministry of Industry and Trade expressed its regret that the US has yet to recognise its market economy status although Washington has acknowledged positive changes in its economy in recent years.

The ministry said the decision meant that “Vietnamese businesses exporting goods to the US market will continue to face discrimination in US anti-dumping and anti-subsidy investigations.”

It noted that 72 countries recognise Vietnam as a market economy, including Australia, Britain, Canada, Japan, Mexico and South Korea.

It has also enforced 17 free trade agreements with Britain, the European Union and countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, with commitments on tax cuts, labour standards, environmental protection, sustainable development, government procurement and transparency.

The International Trade Administration, a division of the Commerce Department, said that the US is now Vietnam’s largest export market and a major source of foreign direct investment. Vietnam’s export revenue to the US jumped 230 per cent over the past five years, while its import value grew by more than 175 per cent.

Nazak Nikakhtar, a partner at Wiley Rein, said the department took a key step to “level the playing field and deliver an important win for dozens of American industries and their workers, who have been forced to compete with the unfair trade practices of Vietnamese companies”.

“Ignoring distortions in the economies of trading partners is unfair and prejudicial to American interests,” Nikakhtar, an assistant commerce secretary during the Donald Trump administration, said.

Liang Yan, an economist at Willamette University in the US state of Oregon, called the decision “kind of surprising” because Washington has hoped to build supply chains outside China – with Vietnam a likely alternative.

“Vietnam is one of the prime candidates, so I’d think they’d want to help its supply chains there,” she said.

However, she said, the US is wary of China using Vietnam for transshipments and would “want to prepare themselves for a bit more leeway as more Chinese companies are going to try to shift to Vietnam” to avoid US tariffs.

Yun Sun, director of the China programme at the Stimson Centre think tank, said she thought “the perception [in Washington] is that Vietnam has not done enough to justify a change in the policy”.

Moreover, she noted, the Biden administration faces “tremendous pressure” to prove its record on foreign policy in an election year, she said – especially when Vice-President Kamala Harris is the presumptive Democratic presidential nominee.

In addition to labour and human rights issues in Vietnam, she said that US officials were concerned about “China using Vietnam as a back door into the US market”.