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US removing Vietnam as beneficiary to have minimal effect

Mar '20
Pic: Shutterstock
Pic: Shutterstock
The effect of the removal of Vietnam from the list of nations receiving US preferential trade benefits on the former will be minimal as Vietnam has applied subsidies of 2 per cent to goods in all its countervailing duties (CVD) investigations, according to Le Trieu Dung from the trade remedies department under the Vietnamese ministry of industry and trade (MOIT).

The decision, however, could be problematic in the long run if the US further investigates Vietnamese exports and the subsidies applied is less than 2 per cent, according to a ‘Vietnam Briefing’ document released recently by pan-Asia multi-disciplinary professional services firm Dezan Shira & Associates.

Experts also suggest that the US delisting will have minimal effects on existing duties on Vietnam, though the move means that Vietnam will stop receiving some preferential treatment.

MOIT also said Vietnam’s developing country status with the World Trade Organisation (WTO) remained unchanged and it still enjoyed the GSP.

Vietnam however, will have to be even more careful to deal with origin fraud and trans-shipment as this has been the source of US tariffs on Vietnam in the past. The tariffs were imposed to prevent steel products that originated from China attempting to bypass anti-dumping rules, the document said.

The Vietnamese government, subsequently, issued new regulations related to the origin of exported and imported goods. Most recently, Vietnam issued Resolution 119 in December 2019 to address trans-shipment and origin fraud. The move was in line to satisfy US rules of origin requirements and address the trade surplus.

Vietnam’s exports to the United States have continued to grow. As per WTO data, Vietnam’s total import and export turnover reached $235.5 billion in 2019 and $242.6 billion in 2018. In the first nine months of 2019, exports to the US jumped by 34.8 per cent year on year.

The United States is Vietnam’s largest export market and China is Vietnam’s largest source of imports.

Overall, Vietnam-US trade will likely to continue to increase. However, Vietnam will need to be more careful particularly for industries such as steel, footwear and agricultural products exports to the US that have been growing. If it does not, the United States is likely to impose countervailing duties on products that it deems to harm its domestic industries, the document cautions.

The US recently slimmed down its list of developing and least developed countries, thus removing Vietnam from receiving preferential trade benefits. The move, however, was not directed specifically at Vietnam but included several countries such as China, Hong Kong, India, Indonesia, Malaysia, Thailand, and Singapore among others.

Fibre2Fashion News Desk (DS)

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