Non-Market Economy Status

Context

Vietnam is putting its case forward for the USA to change its “non-market economy” status to market economy status in the review process.

US Considers Vietnam Market Economy Upgrade

• The US Commerce Department is reviewing Vietnam’s status which is set to end by late July.
• The change in status to the market economy will help Vietnam get rid of the anti-dumping duties, making its products more competitive in the US market.
• Vietnam has been on Washington’s list of non-market economies for more than two decades now.

What is a Non-Market Economy?

The Non-Market economy list includes 12 countries, the are Republic of Armenia; Republic of Azerbaijan; Republic of Belarus ; People’s Republic of China; Georgia; Kyrgyz Republic; Republic of Moldova; Russian Federation; Republic of Tajikistan; Turkmenistan; Republic of Uzbekistan ; Socialist Republic of Vietnam.

• Objective: The Non-Market Economy label allows the US to impose “anti-dumping” and countervailing duties on goods imported from the designated countries. 
• Process: The US determines the duties by relying on a third-market economy country, The US will assess the value of a product to be imported from a non-market economy based on what it is worth in the other country and extrapolate the supposed production cost to a Vietnamese company without considering the company’s own data and cost.
  • Example:  U.S. anti-dumping duties on Vietnamese frozen farmed shrimp are currently 25.76%, while similar duties on shrimp from Thailand, a market economy, are only 5.34%.

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• Factors considered by the USA to designate a country as a non-market economy 
• • If the country’s currency is convertible.
  • If the wage rates are determined by free bargaining between labour and management
  • If  joint ventures or other foreign investments are allowed.
  • State control: If the means of production are owned by the state and the state controls the allocation of resources and price and output decisions. 
  • Other factors like human rights are also considered.

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