The United States is contemplating granting market economy status to Vietnam, a move that could alleviate trade barriers for Vietnamese goods entering the US market.
Marc Knapper, the US Ambassador to Vietnam, mentioned two weeks ago that the US government is presently evaluating Vietnam’s non-market economy status and its request for market economy classification.
“Our Department of Commerce (DoC) is actively engaged in this process. We’re operating within a 270-day deadline that commenced in October 2023. The US is committed to a fair and transparent assessment, adhering to international regulations,” Knapper affirmed. “We anticipate the Department of Commerce’s thorough review and look forward to further strengthening our trade and investment ties with Vietnam.”
The review process includes a public comment period before a final decision is reached, with the conclusion expected around mid-July this year.
On September 8, the Vietnamese government formally petitioned the DoC to recognize it as a market economy, citing recent economic reforms.
Since 2002, the US has regarded Vietnam as a non-market economy, impacting Vietnamese businesses, especially in anti-dumping investigations. The determination of market economy status by the US involves evaluating six criteria established by the DoC, including currency conversion rates, labor practices, foreign investment levels, ownership structures, government control over resources and prices, among others.
Currently, the US designates 12 countries as non-market economies in trade defense cases, significantly affecting Vietnamese businesses.
Under current practices, the US assesses the value of Vietnamese products based on prices in a third country (considered a market economy), rather than data provided by Vietnamese companies.
The US is a crucial export market for Vietnam, with bilateral trade growing from $450 million in 1995 to $110.6 billion last year. Vietnam is the eighth-largest trading partner of the US and its largest within ASEAN, while the US ranks as Vietnam’s second-largest trading partner and primary export market.
To date, 72 countries, including major economies like Canada, Australia, Japan, and South Korea, have acknowledged Vietnam as a market economy. Most recently, the UK recognized Vietnam’s market economy status in a formal letter upon joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.