Vietnam has been pushing the US administration to quickly change its “non-market economy” classification to “market economy”, in a bid to avoid high taxes imposed by the US on the goods imported from the Southeastern country.
- Vietnam has emerged as one of the top trading partners of the US and helped thwart China’s expanding influence in the region, however, it has continued to be on Washington’s list of non-market economies for more than two decades.
About non-market economy
- It is a designation by the US governmnt.
- The US designates a country as a non-market economy based on several factors. These are: if the country’s currency is convertible; if wage rates are determined by free bargaining between labour and management; if joint ventures or other foreign investment are allowed; whether the means of production are owned by the state; and if the state controls the allocation of resources and price and output decisions.
- In total, the list includes 12 non-market economies such as Russia, China, and some countries which used to be a part of the erstwhile Soviet Union.
- The non-market economy label allows the US to impose “anti-dumping” duties on goods imported from designated countries.
Dumping
- Dumping is when a country’s export prices are considered to be intentionally set below domestic prices, thereby inflicting harm to industries in the importing country.
- Anti-dumping duties essentially compensate for the difference between the imported good’s export price and their normal value.
