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Vietnam pushes US to grant it ‘market economy’ status

, February 6, 2024, 0 Comments

vietnam-e-car-vinfast-marketexpess-inHanoi has spent the past year lobbying Washington intensely to bring its anti-dumping rules closer in line with the EU’s approach.

Vietnam hopes the United States will quickly change its rules over alleged export “dumping,” bringing them closer in line with the European Union’s reformed criteria.

Hanoi, said a Vietnamese government official who asked not to be named, is “very keen” for the Biden administration to change its “non-market economy” classification before the US presidential elections in November.

The United States continues to classify communist-run Vietnam as a non-market economy, which is loosely defined as a country in which the state has either a monopoly or near-monopoly on trade.

China and Russia are also on Washington’s list of 12 non-market economies.

Impact on anti-dumping proceedings
This designation primarily affects responses to “dumping,” when a country’s export prices are deemed to be intentionally set below domestic prices, thus causing harm to industries in the importing country.

Washington uses different criteria to assess dumping in market and non-market economies, the latter of which are liable to pay significantly higher anti-dumping duties.

On October 24, 2023, the US Commerce Department announced it would review Vietnam’s non-market economy classification, a decision that must be made within 270 days, meaning around mid-July.

A change of status by Washington would essentially bring US anti-dumping rules in line with the EU’s, analysts say.

Difference between EU and US approach

In December 2017, the EU did away with the distinction between “market economies” and “non-market economies.” Instead, a distinction is now made between countries that are World Trade Organization (WTO) members and those that are not, an EU official told DW.

For WTO members, including Vietnam, the EU uses an undistorted benchmark to determine the “normal value” of the product, the source explained. The EU’s new system simplifies how Brussels determines the cost of a product in its domestic market, giving more weight to the exporting country’s estimation when assessing if it engages in anti-dumping activity.

By comparison, the United States — because it considers Vietnam a non-market economy — assesses a Vietnamese product’s value based on what it is worth in a third country (a market economy) and then assumes this is the likely production cost to a Vietnamese company, rather than using data provided by the company itself.

This calculation, which the EU has moved away from, causes the “dumping margin to be pushed up very high” and does not actually reflect the situation of Vietnamese companies, according to Vietnam’s Center for WTO and International Trade, a unit under the Vietnam Chamber of Commerce and Industry.