Why is it in the news?
- Vietnam is urging the Biden administration to swiftly reclassify its status from a “non-market economy” to a “market economy” in order to avoid high taxes imposed by the US on imports from the country.
| · Non-market economies are designated based on criteria including currency convertibility, wage determination, allowance of foreign investment, state ownership of means of production, and control of resource allocation and pricing by the government. Human rights considerations are also taken into account.
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More about the news
- Despite being a top trading partner of the US and a counterweight to China’s influence, Vietnam has remained on Washington’s list of non-market economies for over 20 years, along with countries such as Russia, China, and former Soviet Union nations.
- The non-market label allows the US to levy anti-dumping duties on imports from designated countries, aimed at counteracting intentionally low export prices that harm domestic industries.
- The level of anti-dumping duties is determined by comparing production costs to those of a third-country market economy, disregarding the importing country’s actual costs.
- Vietnam seeks market economy status due to recent economic reforms and adherence to criteria, with the goal of eliminating anti-dumping duties and enhancing competitiveness in the US market.
- However, challenges include opposition from US industries and concerns in Congress, with the US Commerce Department currently reviewing Vietnam’s status, a process set to conclude by late July.
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