The autumn of Kabul has drawn comparisons to America’s chaotic withdrawal from Saigon, elevating issues in regards to the timing of Vice President Kamala Harris’s go to to Vietnam. Her journey is meant to reassure Southeast Asian international locations that the U.S. sees the area as extra than simply actual property in its rivalry with China. That’s a tough activity in the very best of instances, and these aren’t these. There’s something Harris can do to get the job finished: give Vietnam “market economic system” standing. 

Vietnam is one in every of 11 international locations the U.S. designates as a “non-market economic system.” This implies Washington doesn’t consider Vietnam’s economic system works on “market rules of price or pricing constructions….” Moderately, Washington says the seen hand of presidency orchestrates financial outcomes, not the invisible hand of the market. This isn’t just a few slight. The upshot of being designated a non-market economic system is that Vietnam’s exporters are extremely uncovered to U.S. commerce cures, notably antidumping duties. Let me clarify.

Think about a U.S. firm alleges {that a} overseas agency is promoting beneath its price. That is referred to as dumping, the treatment for which is an antidumping responsibility, or tariff, to offset this low cost. You’d suppose dumping can be welcome, on condition that it means cheaper imports. However the U.S., like different international locations, retaliates for it. That’s due to concern of predation: A overseas agency would possibly promote beneath price to drive out its opponents, after which worth like a monopolist.

If that overseas agency is from a “market economic system,” like Canada, it’s allowed to defend itself with its personal price knowledge. But when the overseas agency is from a non-market economic system, like Vietnam, then it will possibly’t, since these knowledge are believed to be tainted by authorities intervention. Thus, like different international locations, the U.S. can use a 3rd nation as a proxy for the agency’s price construction. This alternative of a proxy is politically charged as a result of if its price construction doesn’t actually line up, the investigation’s final result is prone to be a forgone conclusion.

The expectation had been that the U.S. would designate Vietnam as a market economic system in 2019. The considering had been that Vietnam would be capable to transition from a “socialist-oriented market economic system,” because it’s referred to as within the nation’s structure, to a market one inside 12 years of becoming a member of the World Commerce Group (WTO). 

However in 2019, U.S. commerce relations with Vietnam have been on the rocks. President Trump seen Vietnam as a significant financial risk, saying in an interview that the nation “is sort of the one worst—that’s a lot smaller than China, a lot—nevertheless it’s nearly the one worst abuser of everyone.” This was, and is, nonsense.

The U.S. definitely has complaints about market entry in Vietnam. However for those who merely depend pages of the 2021 Nationwide Commerce Estimate Report on International Commerce Limitations devoted to every U.S. commerce companion, the USA commerce consultant spends solely 10 on Vietnam. To place this in perspective, there are seven pages on Canada, 35 on China and 50 on the European Union (EU). Furthermore, for those who look intently at what these complaints are about, they principally concern the type of complicated measures that confound U.S. commerce relations with each nation, like meals security requirements. 

Or contemplate WTO litigation as a metric. The U.S. has by no means sued Vietnam. No nation has. For its half, Vietnam has filed 4 WTO instances towards the U.S., three over antidumping duties on seafood, and one over meals security requirements on pangasius. Vietnam’s solely different WTO case was towards Indonesia, additionally over antidumping duties. Extra telling, some two-thirds of Vietnam’s 34 appearances as a 3rd social gathering in WTO litigation concern commerce cures, and antidumping duties particularly. This speaks volumes to the load of the difficulty.

Designating Vietnam as a market economic system gained’t finish U.S. antidumping duties towards the nation, least of all on catfish. It can merely imply that Vietnamese producers can use their very own price knowledge to defend themselves. This won’t sound like an enormous deal, however it’s going to imply every part to Vietnam. 

From Vietnam’s perspective, this could be essentially the most credible sign that the U.S. is lastly inquisitive about “normalizing” bilateral commerce. Nations equivalent to Australia, India, Japan and South Korea have already granted Vietnam market economic system standing. The message would additionally not be misplaced on China, the opposite non-market economic system the U.S. was anticipated to reclassify in 2016 however didn’t. There are few, if any, gestures that may have this similar political signal-to-noise ratio.

Furthermore, the Biden administration doesn’t have an extended listing of financial concessions it will possibly credibly supply Vietnam proper now. A bilateral funding treaty has been within the works since 2008, however this isn’t on Biden’s radar. The U.S. can also be not in any obvious rush to rejoin the Trans-Pacific Partnership, a lot to Vietnam’s remorse. One thing may maybe be finished to deepen the 2007 U.S.-Vietnam Commerce and Funding Framework. However compared to Vietnam’s free commerce offers with Canada, the EU and Mexico, for instance, this can come throughout as being trite.

The optics of visiting Vietnam this week are lower than ideally suited. However Harris can ship on the journey’s goal by vowing to provide the nation market economic system standing.

Marc L. Busch is the Karl F. Landegger Professor of Worldwide Enterprise Diplomacy on the Walsh College of International Service at Georgetown College. Observe him on Twitter @marclbusch.


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