Vietnam Persists in Pursuit of Market Economy Recognition

Vietnam's economy has demonstrated remarkable growth in recent years, with an average annual increase of around 6%. Despite substantial reforms and acknowledgment as a market economy by 72 countries, Vietnam has yet to receive official recognition as a market economy from the United States.

Shrimp exports to the US demonstrate strong growth in the last  months of the year

Vietnam affirms meeting market economy criteria

On August 2, 2024, US Department of Commerce (DOC) concluded that, despite many positive changes in Vietnam's economy, the country has not been recognized as a market economy. As a result, Vietnamese exporters will continue to encounter discriminatory measures in antidumping and anti-subsidy investigations by the US. This means that the actual production costs of Vietnamese companies will remain unacknowledged, and a "substitute value" from a third country will be used to calculate the dumping margin.

Vietnamese Ministry of Industry and Trade (MOIT) said that if DOC had conducted a more objective and fair review of Vietnam’s economic records and practices, it would have recognized Vietnam as a market economy, as have 72 other countries, including major economies such as the United Kingdom, Canada, Mexico, Australia, Japan, India, Korea, and New Zealand.

Additionally, 41 organizations, individuals, and business and trade associations from the US voiced strong support for recognizing Vietnam as a market economy including National Association of State Departments of Agriculture (NASDA), American Chamber of Commerce (AmCham), US-ASEAN Business Council (USABC), and the US National Retail Federation.

According to MOIT, Vietnam has signed and successfully implemented 17 free trade agreements, including new-generation, high-standard FTAs with the European Union, CPTPP countries, and the United Kingdom. These agreements feature extensive commitments ranging from tax reductions to labor standards, environmental protection, sustainable development, government procurement, and transparency. MOIT affirmed that Vietnam has fully and consistently met the six criteria set by DOC for recognition as a market economy. These advancements have been detailed in over 20,000 pages of information and documents submitted to DOC.

The arguments demonstrate that Vietnam's market economy performance is at least on par with, and often surpasses, that of other countries already recognized as market economies. In fact, Vietnam's economic practices are equivalent to or exceed those of countries traditionally considered market economies.

Thus, according to the specific criteria established by US law, recognizing Vietnam as a market economy is both an objective and fair assessment.

The lack of recognition of Vietnam as a market economy by the United States presents many challenges, yet it does not diminish the country's progress and accomplishments. The textile and garment sector, for example, continues to demonstrate strong growth potential. In the first half of 2024, Vietnam’s textile and garment exports reached an impressive US$16.2 billion, with the US market contributing 44.2% of this total. The recent easing of inflation in the US has spurred a recovery in consumer demand, benefitting Vietnamese textile and garment firms. Furthermore, leading companies in this sector have secured orders through early Q4 2024, reflecting market confidence in the industry’s ongoing recovery and expansion.

Vietnam’s footwear industry continues to be focused on five primary markets, with the U.S. accounting for the largest share at approximately 35%

More recommendations to be sent

In the coming time, MOIT will study and analyze arguments in DOC’s review report on Vietnamese economy. The ministry will supplement and complete arguments to submit a request to DOC for reviewing the market economy status for Vietnam. This move aims to solidify the Vietnam-US Comprehensive Strategic Partnership, thereby enhancing bilateral economic, trade, and investment cooperation and delivering tangible benefits to businesses and citizens in both countries.

In addition, MOIT affirmed that it will support Vietnamese exporters in navigating anti-dumping and anti-subsidy investigations in the US market, ensuring that the Vietnamese business community secures the maximum benefits and protection.

Spokesperson of the Vietnamese Ministry of Foreign Affairs (MOFA) Pham Thu Hang emphasized that, in line with the spirit of the Comprehensive Strategic Partnership, Vietnam urges the United States to uphold its commitment to extensive, strong, and constructive collaboration and to work toward the timely recognition of Vietnam's market economy status. Vietnamese agencies will maintain close coordination with their US counterparts to ensure that bilateral economic and trade relations continue to progress steadily and harmoniously, delivering benefits to businesses and citizens in both countries.

With backing from many countries, international organizations, and businesses, coupled with sufficient supporting arguments, Vietnam is confident that market economy recognition is imminent. This development will unlock new opportunities for the growth of Vietnam-US economic and trade cooperation.

By Huong Ly, Vietnam Business Forum