In late October, the United States published an announcement in its official gazette stating that it was initiating a review of changing circumstances to examine Vietnam's market economy status.
PV. VietNamNet had an interview with Mr. Trinh Anh Tuan, Director of the Trade Defense Department ( Ministry of Industry and Trade ), on this issue.
Favorable circumstances and positive actions by the US.
- Could you explain the process by which the US initiated a review of changes in circumstances to recognize Vietnam as a market economy, including the timeline for reaching a final conclusion on Vietnam's market economy status?
Mr. Trinh Anh Tuan:
On September 8, 2023, the Ministry of Industry and Trade submitted a request to the US Department of Commerce (DOC) to initiate a Conditional Review (CCR) to recognize Vietnam as a market economy within the framework of the first administrative review of anti-dumping duties on honey, via the US Trade Remedies Electronic Information Portal (ACCESS). According to US regulations, the DOC has 45 days to consider initiating the CCR.
On October 23, 2023, the DOC officially initiated a Critical Control Point (CCR) to review Vietnam's economic status. Accordingly, unless extended, interested parties will have 30 days from the date of publication in the Federal Register (October 30) to submit comments (deadline November 29, 2023), and a further 14 days to submit counter-arguments (deadline December 13, 2023). According to the CCR procedure, unless the case is extended, the DOC will have 270 days from the date of initiation to complete this review and issue its final conclusion (expected by July 26, 2024).
- How do you assess this action by the US, given that our senior leaders have recently repeatedly requested that the US soon recognize Vietnam as a market economy?
It can be said that the issue of market economy is one of the important issues that both countries are concerned about and has been included in the Joint Statement on upgrading Vietnam-US relations. Therefore, the US initiating a review of changing circumstances to consider the issue of market economy for Vietnam is seen as a positive and goodwill gesture from the US side.
However, examining Vietnam's market economy requires adherence to US legal regulations. This process demands the participation of the Vietnamese government , relevant organizations, individuals, associations, industries, and businesses, and must comply with the deadlines set by the US. Currently, the Ministry of Industry and Trade is coordinating with relevant ministries and agencies to participate in the US investigation process.
The current context presents us with several advantages, particularly the recognition of Vietnam's economy by many countries and its active integration into bilateral and multilateral free trade agreements. Currently, 72 countries recognize Vietnam as operating under a market economy mechanism, including the United Kingdom, Canada, Australia, and Japan.
Vietnam has also signed more than 90 bilateral trade agreements and approximately 60 agreements on investment promotion and protection. As of August 2023, Vietnam was a member of 16 Free Trade Agreements (FTAs) involving about 60 economies, of which 15 FTAs were in effect and 1 FTA was officially signed. Vietnam is currently negotiating 3 other FTAs.
These include many new-generation FTAs such as CPTPP and EVFTA, meeting high standards in traditional areas such as trade in goods and services, as well as new areas such as labor, environment, government procurement, transparency, investment dispute resolution mechanisms, and state-owned enterprises.
"The task is extremely urgent."
- So, what specific steps and preparations has the Ministry of Industry and Trade taken recently to contribute to the process of the US recognizing Vietnam as a market economy?
According to US regulations, recognizing a country as having a market economy is a rigorous process that considers six criteria stipulated by the country's macroeconomic and business environment laws, including: the convertibility of the currency; the negotiation of wages and salaries between employees and employers; the level of foreign investment in economic activities; the issue of state and private ownership; the degree of government control over certain resources and prices; and other factors.
Since 2008, Vietnam and the United States have established the Structural Issues Working Group (SIWG) and have held 10 technical meetings to exchange information based on six US criteria. This has helped the US stay updated on the strong progress of the Vietnamese economy in recent years, creating a foundation for the US to consider and reconsider the issue of a market economy for Vietnam.
Recently, the Ministry of Industry and Trade has closely coordinated with ministries, agencies, associations, and domestic and foreign business communities to analyze and synthesize information as requested by the DOC regarding the positive changes in the Vietnamese economy. This includes emphasizing the degree of economic openness, trade policy, monetary policy, foreign investment, and progress in integration efforts to meet the six criteria of the US for a market economy.
To proactively and thoroughly prepare for participating in the review process of changes in circumstances in a trade defense case aimed at proving that Vietnam is a market economy, the Ministry of Industry and Trade has been developing counterarguments, explanations, clarifications, or refutations to the opinions of other relevant parties regarding Vietnam's market economy.
Promoting the recognition of Vietnam as a market economy by the United States is an extremely urgent and necessary task in the current context. To implement this work systematically, synchronously, and comprehensively, close coordination among relevant ministries, industry associations, businesses, organizations, and individuals is essential.
- Currently, the US is still the country that investigates and applies the most trade protection measures against Vietnamese exports. So, if Vietnam is recognized as a market economy, what advantages will it have?
In the context of Vietnam's increasing exports to the US (with total merchandise exports reaching US$109.39 billion in 2022), the recognition of the Market Economy principle is of great significance for our manufacturing and export industries, creating a level playing field for our goods compared to those of other countries when the anti-dumping duties accurately reflect production practices in Vietnam. The Market Economy principle is particularly important in anti-dumping cases.
Specifically, in anti-dumping cases: Being considered a non-market economy means that the usual pricing principles will not be applied. The country conducting the anti-dumping investigation will use a third country to calculate the surrogate price when determining the dumping margin, resulting in very high margins that do not accurately reflect Vietnam's production practices. This creates a significant disadvantage for Vietnamese exports, making them unable to compete with exports from other countries. For example, in the anti-dumping investigation case concerning honey, the high dumping margin calculated by the US for Vietnamese businesses reached a preliminary tax rate of over 410% and ultimately 60%.
In the US investigations into anti-circumvention of countervailing duties/subsidy measures on Vietnamese exports, the US has applied the methodology for non-market economies to calculate production costs in Vietnam to determine whether assembly or finishing processes in Vietnam are substantial.
Furthermore, the nationwide tax rate regulation hinders the lifting of the tariff order. Specifically, classifying Vietnam as a non-market economy allows the DOC to apply a nationwide tax rate – a rate applied to businesses that do not cooperate or cannot demonstrate they are not under government control. This nationwide tax rate is typically calculated based on available data, resulting in a very high rate, equivalent to a ban, and is maintained throughout all reviews, thus obstructing consideration of lifting the tariff order.
Furthermore, the frequent changes in the surrogate value used for Vietnam's products prevent businesses from proactively controlling the anti-dumping duties, often resulting in higher rates. For example, in many cases involving pangasius, basa, and shrimp, the US has used the normal value of several countries such as Bangladesh, Indonesia, India, and the Philippines as surrogate values when calculating the dumping margin for Vietnam. With the frequent changes in surrogate countries during reviews, Vietnamese pangasius, basa, and shrimp businesses have repeatedly received high duty rates.
Thank you, sir!
Source
Comment (0)