Vietnam is working on its strategies about how to conduct trade with USA. The move in the context of this trade war between the US and China that seems to be getting fiercer. China will also take steps to address the US claim that there is “transhipment” of Chinese goods through its territory, as well as tighten controls on exports of sensitive items to China.
Vietnam’s response to American worries
Vietnam is increasing its inspections of goods exported from China to the U.S. to prevent heavy tariffs that have affected many other Vietnamese goods. The move follows warnings from U.S. officials such as White House trade adviser Peter Navarro about Chinese products. These products are being exported to the U.S. labelled as “Made in Vietnam” in order to bypass lower tariffs.
Vietnam has negotiated with the U.S. over the past several weeks to establish circumstances which would result in a reduced rate. The 46% tariffs that were initially applied were quickly suspended. And both nations began talks following a meeting between a Vietnam deputy prime minister and US Trade Representative earlier this month. Vietnam is thus seemingly seeking a reduction of the duties to a range from 22% to 28%, or even lower.
However, Vietnamese authorities have not elaborated what measures the government will take. They are saying that they will “combat trade fraud.” An emergency meeting will be convened with trade experts to coordinate efforts to tighten the controls and prevent illegal transshipment. That means a watchful eye from trade ministry and customs officials to draft and enforce tighter regulations and rules.
Balancing Complex Trade Relations
Vietnam stands at an uncertain point in the world trade. The country wants to maintain friendly trading ties with the US, its biggest export market as well as an important security partner. Simultaneously, Vietnam also does not want the situation of the warring bilateral ties with China not to be further aggravated. This is because China is an investment destination as well as a bordering sea country of Vietnam in the southwestern sea area. China Sea.
Domestic trade data revealed that Vietnamese exports to the United States are still commensurate with Chinese imports. In other words, some of the parts used in Vietnam’s shipments to the US may come from China. Even though a lot of the processing happens — and the merchandise is legally exported — by Vietnamese employees, US officers are involved about China exploiting Vietnam as a chip to keep away from tariffs on items without actual Vietnamese value-add.
There are some occasions in which vessels bringing Chinese goods can be spotted first in Vietnamese ports, where they stay temporarily to receive documents guaranteeing Vietnamese origin, before they go on to America. Whether Vietnam can effectively carry out the measures, therefore, remains to be seen; and even the measures if carried out will not address US concerns over transhipment, it is believed.
The Chinese Foreign Ministry has replied saying that “China – Vietnam trade is two-way” and expressed its belief that Vietnam ”will act [to follow] its long-term interests, well control the big positive relationship of the two countries.”
More Strict Control on Exportation of Sensitive Goods
At the same time as addressing the challenge of transhipped goods then responding to US concerns, Vietnam is implementing a mandatory inspection on transportation means carrying specific commodity groups from the US to China via the Vietnamese territory.
Vietnam seeks to strengthen management of dual-use goods, which are goods used for both civilian and military purposes, while exporting, including semiconductors. The draft decree provides for a new declaration and authorization procedures for the import/export of the specified goods. The action comes amid requests from major trading partners to put in place measures to prevent sensitive technology from being transferred to another country without the original exporting nation approving such a transfer.
The US government is restricting access to US advanced chips to the Chinese, and underlining this trend, US national security priorities now include effective AI leadership. Proposed regulations out of Vietnam reflect these measures to limit export of strategically important technologies.
Vietnam highlights its previous shift
Which is also nested in how Vietnam is placing itself in terms of diplomacy and economic activity.
Vietnam conditionally approves Starlink satellite communication service China has increased its low-Earth-orbit satellite launch tempo. This is which factored into the decision, the report said. Some see in the development of capabilities in space a strategic importance.
Another one on the calendar is a trip to Vietnam from the Chinese leader, Xi Jinping. The visit comes ahead of a time when Vietnam’s aviation regulator is set to green light China’s COMAC aircraft. As such, this approval may open some avenues for Vietnamese airlines to lease or buy Chinese planes.
Meanwhile, recently, Vietnamese airlines signed orders loan agreements with the US to buy Boeing. It also indicates that Vietnam is seeking to be more than a second-tier player in the economic and strategic chess game.
Vietnam is a country truly balancing between economic growth and avoiding upsetting too many of their key trading partners (i.e. the US, EU and of course and largest trading partner China too). The balance it strikes between these two opposing objectives will be decisive for the economic future of the country and the stability of the region.
