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The tales that matter on cash and politics within the race for the White Home
The US has rejected Vietnam’s bid to be designated as a “market economy”, thwarting Hanoi’s diplomatic push to deepen commerce ties with its most necessary export market because it grows in clout as a producing various to China.
The improve from Vietnam’s present designation as a “non-market economy” would have additional boosted exports and lowered punitive tariffs on merchandise comparable to shrimp from the south-east Asian nation.
The US has labelled Vietnam a “non-market economy” since 2002 on account of state interventions in commerce, pricing and forex, a standing that ranks the nation alongside China, Russia and North Korea. The EU additionally designates Vietnam as a non-market economic system.
However as Vietnam has emerged as a crucial hyperlink within the world manufacturing provide chain for western firms looking for to diversify their operations away from China, it has elevated its efforts to be upgraded.
In a September 2023 request filed to the US commerce division, Vietnam requested Washington to rethink its standing, citing “economic reforms made in recent years”.
The US commerce division stated on Friday that the choice to retain Vietnam’s non-market economic system standing had been made after a radical analysis of feedback from US home industries and the Vietnamese authorities.
“Despite Vietnam’s substantive reforms made over the past 20 years, the extensive government involvement in Vietnam’s economy distorts Vietnamese prices and costs,” the division stated in an announcement.
Vietnam has emerged as one of many greatest beneficiaries of escalating commerce tensions between the US and China, with firms shifting manufacturing services to the south-east Asian nation in an effort to keep away from geopolitical disruption.
Vietnam has additionally strengthened its relationship with the US, a realignment that it has sought to leverage to pursue market economic system standing. Its request to the commerce division got here simply days earlier than a go to by President Joe Biden, throughout which the 2 nations upgraded their ties to a “comprehensive strategic partnership”, the best degree of diplomatic ties accorded by Hanoi.
Senior Vietnamese officers, together with the prime minister, have additionally made the request. Nguyen Quoc Dzung, Vietnam’s ambassador to the US, stated earlier this yr that if Washington didn’t grant the nation market economic system standing, “it would be very, very bad for the two countries”.
Vietnam’s push, nonetheless, bumped into opposition from some US senators, steelmakers and different producers, in addition to producers of shrimp and honey over what they name unfair commerce practices and in depth authorities intervention.
In July, Republican senator Tom Cotton urged commerce secretary Gina Raimondo to not grant Vietnam’s request, citing its “controlled currency, lack of labour rights, and extensive state intervention”. Six different Republican senators co-signed the letter.
“There is no doubt that the country’s non-market economic practices already violate fair competition and lawful trade,” the senators wrote.
Earlier this yr, one other group of senators together with Democrats Elizabeth Warren and Bernie Sanders additionally opposed the market economic system standing, citing greater than two dozen anti-dumping orders in opposition to Vietnam by the US and pending dumping investigations.
Thuy Anh Nguyen, of Vietnam-focused asset supervisor Dragon Capital, stated the failure would disappoint Hanoi, and was stunning given Washington’s “intense courtship of Vietnam in recent years, the high-level visits and the accompanying rhetoric”.
An improve would have boosted Vietnamese exports to the US, which might have benefited from decrease costs of these items, she stated.
“The US has made no secret of its desire to cultivate Vietnam as a strategic counterbalance to China’s influence in the region, and we do not believe that Vietnam not being upgraded to ‘market economy’ status will affect this.”
