U.S. officials are considering Vietnam’s request to be removed from a list of “non-market” economies, a move that would spur improved diplomatic ties with potential allies in Asia but anger some U.S. lawmakers and manufacturing companies.
The Southeast Asian country is classified by the United States as one of the non-market economies, which also includes China and Russia, because of strong state intervention in its economy.
Analysts believe Hanoi hopes to make a decision before the US election in November, which could mean a return to power for Donald Trump. During his last term as president, Trump threatened to raise tariffs on Vietnam because of its huge trade surplus with the United States.
Under the Trump administration, the U.S. Treasury Department also placed Vietnam on its list of currency manipulators, which could result in its exclusion from U.S. government procurement contracts or other remedies. The Treasury Department under the Biden administration removed Vietnam from the list.
On the eve of President Joe Biden’s visit to Hanoi in September, he and Vietnam Secretary-General Nguyen Phu Trong upgraded the U.S.-Vietnam relationship to a comprehensive strategic partnership.
Citing its economic reforms in recent years, Vietnam formally requested the U.S. Department of Commerce to remove it from the list of non-market economies.
The Biden administration subsequently launched a review of Vietnam’s non-market economy (NME) status. The Commerce Department will issue a final decision by July 26, 270 days after initiating the review.
“Achieving market economy status is Vietnam’s leader’s top diplomatic priority this year, especially after the twin upgrades in diplomatic relations last fall,” said Zachary Abuza, a professor at the National War College who focuses on Southeast Asian politics and security issues. express.
He told VOA Vietnamese that the Vietnamese “really link the implementation of the joint vision statement to obtaining this status.”
U.S. census data shows that the United States is Vietnam’s most important export market, and total bilateral trade will exceed US$125 billion in 2023. But Washington has launched more trade defense investigations against Vietnam than against any other country, mainly anti-dumping investigations.The Vietnam Trade Office in the United States stated that as of August 2023, Vietnam had received a total of 58 U.S. trade remedy cases, including 26 anti-dumping cases.
Vietnam has hired a Washington lobbying firm to help it win congressional support for a status upgrade. A Foreign Agents Registration Act statement filed with the U.S. Department of Justice shows that Washington-based Steptoe is assisting Vietnam’s Ministry of Industry and Trade and supporting the Vietnamese government “in obtaining market economy status in anti-dumping proceedings.”
“I understand why the Vietnamese are lobbying,” said Murray Hiebert, a senior fellow in the Southeast Asia Program at the Center for Strategic and International Studies (CSIS).
“One of the reasons is that the U.S.-Vietnam relationship has grown to such an extent and to remain non-market [status] It’s a bit dishonest, because most of the countries with this status are countries like China, Russia, and North Korea that are not very friendly to the United States.So I think [the U.S. recognition of Vietnam as a market economy] This will be a sign of improvement in the relationship. “
U.S. election key
Both Abuza and Hibbert believe Vietnam is working toward an upgrade before the U.S. election in November, which could return Trump to office.
“Trump started an investigation into dumping in Vietnam toward the end of his term. He may start the process again,” said Hibbert, who was senior director for Southeast Asia at the U.S. Chamber of Commerce before joining the Center for Strategic and International Studies.
But Vietnam’s campaign faces opposition within the U.S.
In January, more than 30 U.S. lawmakers signed a letter to U.S. Commerce Secretary Gina Raimondo urging the Biden administration not to grant Vietnam market economy status. They argued that Vietnam did not meet the procedural requirements for a change of status and that accommodating Hanoi’s wishes would be “a serious mistake.”
In 2002, the United States classified Vietnam as a non-market economy country during an anti-dumping investigation into Vietnamese catfish exports. Over the past 21 years, the United States has imposed anti-dumping duties on many Vietnamese exports, including agricultural products and industrial products.
In its request to Raimondo to initiate a change of situation review, Vietnam’s Ministry of Industry and Trade said that Vietnam’s economy has “experienced tremendous development and reform” over the past 20 years. According to the report, 72 countries recognize Vietnam as a market economy country, especially the United Kingdom, Canada, Australia and Japan.
“Unfairly traded Chinese goods”
U.S. manufacturing groups have expressed opposition to Vietnam’s request, arguing that Vietnam continues to operate as a non-market economy. The Alliance for American Manufacturing (AMM) said in comments sent to Raimondo that Vietnam “cannot reasonably be understood as exhibiting the characteristics of a market economy.”
“The ruling Communist Party still intervenes heavily [of Vietnam]said AMM President Scott Paul. “There are a lot of signs that China may be using Vietnam as a platform to export to the United States, and that’s obviously concerning for businesses here,” he said.
In a January 28 letter, eight senators wrote: “Granting market economy status to Vietnam without addressing its apparent non-market practices and serious deficiencies in labor laws will exacerbate ongoing trade distortions and erode U.S. manufacturing base, threatening U.S. workers and industry, and reinforcing Vietnam’s role as a conduit for goods produced with Chinese forced labor.”
Since Trump launched a trade war with China in 2018, many Chinese products have been found to be disguised or labeled “Made in Vietnam” to avoid U.S. tariffs. Vietnam has pledged to crack down on the practice.
Abuza pointed to what he called inconsistencies in U.S. policy.
“Vietnam is too important to the U.S. economy in terms of trade and foreign direct investment, and if Vietnam does not have market economy status, we cannot expect Vietnam to diversify its supply chain beyond China.”
Hibbert said the United States “should do this and take action” because Vietnam is “one of America’s best friends in Asia and Southeast Asia and helps counter China.”
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