Vietnam has been making efforts to meet six criteria for the US to recognize its market economy status. The efforts include conducting economic reforms to meet the criteria prescribed by the US, including currency convertibility, salary and wage negotiations between employees and employers, level of foreign investment in economic activities, and issues related to state and private ownership.

The country has demonstrated its performance in accordance with the above criteria as good or often better than other countries that have been granted the market economy status. Vietnam also intervenes less in state-owned enterprises than India, and is more open to foreign investment than Indonesia, Canada, and the Philippines, cited VNA.

Containers of goods for import and export at Hai Phong Port. (Photo: VNA)

In particular, Nguyen Thi Thu Trang, Director of the Centre for WTO and Integration under the Vietnam Chamber of Commerce and Industry (VCCI), said that winning the US recognition has great significance for manufacturing and export industries, as exports to this market will receive tax reductions. This move can also encourage US companies to diversify their supply chains.

On the other hand, an article by James Borton - a non-resident senior fellow at the Foreign Policy Institute (FPI) of the Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies (SAIS) - stressed that the market status recognition will bring many economic benefits to both countries.

Burgeoning trade flows between the two countries and the White House’s push for the establishment of the partnership agreement on the Indo-Pacific Economic Framework for Prosperity (IPEF). The market status recognition would help Vietnam expand its trade and investment with the US.

The bilateral benefits for US companies derived from the recognition of Vietnam as a market economy include market access and export opportunities, namely in agriculture, machinery, aircraft, and pharmaceutical products, all of which contribute to the development of a supply chain that suits the US’s interests.

A possibility of reduction in trade barriers will follow with the market status recognition, making it easier and cheaper for US businesses to export goods and services to Vietnam, according to Borton.

The US’s recognition of Vietnam as a market economy could further incentivize US companies to diversify their supply chains. Additionally, lower import prices and improved market access could enable US companies to increase their output and production in Vietnam. This offers the potential to generate increased sales revenues and profitability for American companies operating in Vietnam, he wrote. The article is available on geopoliticalmonitor.com.