The newly elevated relationship between Vietnam and the U.S. to a Comprehensive Strategic Partnership not only deepens the two countries’ diplomatic relations, but translates as an opportunity for Washington to upgrade Vietnam’s recognition as a market economy, said James Borton, a non-resident senior fellow at the Foreign Policy Institute at Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies.
In an article published on geopoliticalmonitor.com on Monday, Borton said that market status recognition will bring many economic benefits to both countries.
He wrote that with the 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), market status recognition would help Vietnam expand its trade and investment with the U.S.
The bilateral benefits for U.S. companies derived from 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 U.S.’s interests.
Market-status recognition would also contribute to a reduction in trade barriers, making it easier and cheaper for U.S. businesses to export goods and services to Vietnam, according to Borton.
Furthermore, the U.S.’s recognition of Vietnam as a market economy could further incentivize U.S. companies to diversity their supply chains. Additionally, lower import prices and improved market access could enable U.S. 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
According to Borton, telecommunications, information technology, power generation, transportation infrastructure construction, environmental project management, and technology will continue to offer promising opportunities for U.S. companies.
Vietnam’s efforts in creating a favourable business environment and equality for international investors are also mentioned in the article. The author cited the World Bank’s “Doing Business 2020” report, which placed Vietnam at the commendable rank of 70th out of 190 economies, reflecting its commitment to nurturing favourable conditions for business operations. Furthermore, U.S. News and World Report ranked Vietnam seventh among 78 countries in which to start a business in 2021, up 5 spots from a year earlier.
A total of 72 countries have recognised Vietnam as a market economy, including the UK, Canada, Australia, and Japan