There are moves from both Vietnamese authorities and special interest groups to change the country’s status. It would be a mistake to do so.
Ministry of Commerce A public hearing was held on Wednesday. It is part of an ongoing review of whether Vietnam should be granted “market economy” status, a move that would reduce tariffs on imports from the Southeast Asian country.
The review will begin in October 2023, and the Department of Commerce is expected to announce a decision by mid-July. Vietnamese officials have pushed for the change, arguing it would help the communist country avoid tough anti-dumping duties currently in place that regulate exports to the United States.National Retail Federation also supportsProbably because imports from Vietnam are even cheaper.
But there is a big pitfall. Vietnam does not actually meet the criteria for non-market economy status.
There are six factors that the Department of Commerce must consider when awarding market status. Whether Vietnam meets these requirements is tenuous.As an Alliance for American Manufacturing Sent a letter to Secretary of Commerce Gina Raimondo in DecemberVietnam is a socialist republic with a one-party dictatorship ruled by the Communist Party of Vietnam.
In the letter we quoted The following are specific reasons why Vietnam cannot be understood as exhibiting the characteristics of a market economy.
- Vietnamese currency cannot be freely exchanged. Vietnam continues to restrict currency and capital accounts, impacting the foreign exchange market. Vietnam has also been manipulating the value of its currency, and the Treasury Department has put Vietnam back on its watch list for currency manipulation.
- Wages in Vietnam are not determined by free negotiations between labor and management.. Workers in Vietnam lack basic rights to organize, bargain, and strike.
- Vietnam restricts joint ventures and investments with foreign companies. Much of the foreign investment allowed in Vietnam comes from China, allowing the Chinese Communist Party to control companies operating in Vietnam and, by extension, sectors of the Vietnamese economy.
- Vietnam’s economy is full of state-owned enterprises. And government influence over domestic means of production and resources is far-reaching.
- Commercial banking sector is state controlled It lacks the characteristics of a competitive banking system.
- Vietnam has significant control over determining the allocation of resources, prices, and output of its operations. As a result, Vietnam’s private sector remains constrained and disadvantaged by the prevalence of state-owned enterprises and central government control over the financial sector.
And finally, elevating Vietnam to market economy status would jeopardize U.S. economic and national security interests. The Vietnamese government has formal political, defensive, and economic ties to China, and there is evidence that China is using Vietnam as a base to circumvent U.S. laws, including: Uighur Forced Labor Prevention Law and various trade enforcement mechanism.
AAM is not alone in its opposition to giving Vietnam market economy status. Many U.S. manufacturers and the United Steelworkers (USW) also argued that changing Vietnam’s non-market economy designation would weaken trade remedies for U.S. industries facing unfair trade. opposes any change in its status. The Southern Shrimp Alliance is a group that is not typically involved in trade issues such as those that concern us. publicly opposed the change.
American steelworkers are well aware of China’s practice of dumping steel products into the United States via third countries. Many Chinese state-owned enterprises have invested heavily in Vietnam. Already shipping products to the US via Vietnam; they are likely to benefit even more from Vietnam’s transition to a market economy at the expense of U.S. workers and manufacturers.
Roy Hausman, USW State Legislative Director; I said it’s a change. It would “erode the domestic manufacturing base, weaken the resilience of the U.S. supply chain, and strengthen Vietnam’s role as a conduit for the influx of unfairly traded Chinese goods.”
Members of both the House of Representatives and the Senate I repeated these same feelings. In a letter to Raimondo, they argued that Chinese-backed companies in Vietnam are sure to take advantage of the change by more easily avoiding U.S. tariffs.
“Vietnam must not circumvent existing trade measures and Uyghur Forced Labor Prevention Act (UFLPA) regulations against Chinese forced labor, reinforcing Vietnam’s position as a vector for a flood of illegally traded Chinese products.” AAM wrote. letter to raimond. “The aspirational benefits to U.S. foreign policy far outweigh the actual economic costs that would result, including significant U.S. job losses across the country while undermining the resilience of U.S. supply chains. ”
