Written by David Lowder and David Brunnstrom
WASHINGTON (Reuters) – U.S. President Joe Biden’s efforts to bring Vietnam closer to him as a strategic ally are under attack by union members on Wednesday as the Commerce Department hears testimony on whether to designate the country as a “market economy.” It would be in direct conflict with President Biden’s desire for votes. .
The move is opposed by U.S. steelmakers and Gulf Coast shrimp companies, but supported by retailers and other business groups, and reflects Vietnam’s status as a non-market economy with significant state influence. This would reduce punitive anti-dumping duties imposed on imports from Vietnam.
“Vietnam is already a market economy,” said Ted Osius, chairman of the U.S.-ASEAN Business Council, which supports the upgrade. “It meets important criteria such as currency convertibility and is ready for precise designation.”
The Commerce Department plans to hold a virtual hearing in Washington on Wednesday afternoon to hear arguments from both sides as part of the review, which is expected to be completed in late July.
Vietnam claims to be free of the non-market label because of recent economic reforms, and retaining this designation is bad for the increasingly close two-way relationship that Washington sees as a counterbalance to China. claims.
During Biden’s visit to Hanoi last year, the two countries elevated their relationship to a “comprehensive strategic partnership,” raising Washington’s diplomatic standing in Vietnam to be on par with China and Russia.
Last year, Vietnamese Prime Minister Pham Minh Trinh also told U.S. Treasury Secretary Janet Yellen that abolishing the non-market label befits Vietnam’s status as a “friendly country shoring” destination for the U.S. to diversify supply chains away from China. I asked for
The current designation lumps Vietnam with China, Russia, Belarus, Azerbaijan and nine other countries as non-market economies subject to higher anti-dumping duties.
“American companies recognize Vietnam’s growth potential and are already making significant investments,” said Osius, a former U.S. ambassador to Vietnam.
The Department of Commerce has established fairly narrow criteria for determining market economy status.
These include how convertible a country’s currency is; Its wage rates are the result of free bargaining between labor and management and the permitting of joint ventures and other foreign investments.
Further criteria include whether the government owns or controls the means of production and whether the government controls the allocation of resources and the determination of prices and quantities of production.
Other factors can also be considered.
Duty of lower shrimp
Products from non-market economy countries are subject to higher tariff rates in anti-dumping duty investigations that use third country proxy prices to determine the fair market value of the product.
This year, the U.S. International Trade Commission reimposed anti-dumping duties of 25.76% on frozen farmed shrimp from Vietnam, but only 5.34% on shrimp from Thailand, a market economy country.
The Southern Shrimp Alliance, a group of U.S. shrimp fishermen and processors, is seeking market economy status because of Vietnam’s limited land ownership, weak labor laws, and lower shrimp tariffs that hurt its members. He said he was against it.
Elevating Vietnam faces significant opposition in Congress, with eight U.S. senators and 31 U.S. representatives making similar claims to Commerce Secretary Gina Raimondo.
They also called for consideration of the measure, which would help Chinese state-owned enterprises that invest heavily in Vietnam and allow them to more easily avoid U.S. tariffs on their products.
Roy Hausman, legislative director for the United Steelworkers (USW), said the changes would “erode our nation’s domestic manufacturing base, undermine the resiliency of the U.S. supply chain, and prevent an influx of unfairly traded Chinese products.” “This will strengthen Vietnam’s role as a conduit,” he added.
Biden is pushing hard for union votes in the looming November presidential election, especially from steelworkers in the key battleground state of Pennsylvania.
He has opposed Nippon Steel’s planned takeover of Pittsburgh-based US Steel and has called for a significant increase in Section 301 tariffs on Chinese steel imports.
(Reporting by David Lawder and David Brunnstrom; Writing by David Lawder; Editing by Clarence Fernandez)
