Hanoi signals it will reapply for market upgrade

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Aug 05, 2024 View in browser   By Ari Hawkins With help from Doug Palmer Vietnam's Prime Minister Pham Minh Chinh, U.S. President Joe Biden and U.S. Secretary of State Antony Blinken hold a meeting with CEOs at the Government Office in Hanoi in September 2023. | Photo by Saul Loeb/AFP via Getty Images QUICK FIX — Vietnam’s Ministry of Industry and Trade is preparing next steps after the Biden administration rejected the country’s request for a market upgrade, a decision praised by U.S. lawmakers and domestic industry groups. — More than 300 state legislators are calling on the White House to remove investor-state dispute settlement provisions from international deals, which they say gives too much power to corporations. — Lawmakers are ironing out a renewed legislative push to reform the de minimis provision that allows Chinese and other suppliers to sell low-value goods to the United States duty-free. It’s Monday, August 5. Welcome back to Morning Trade! How did you celebrate National Chocolate Chip Cookie Day? Your host’s favorite in D.C. is Captain Cookie’s Double Chocolate. Try it and thank me later. Send suggestions and trade news to ahawkins@politico.com, gbade@politico.com and dpalmer@politico.com. You can also follow us on X: @_AriHawkins, @GavinBade and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. Driving the day MARKET UPGRADE PUSH NOT OVER: Vietnam expressed its disappointment and is preparing documents to reapply, after the U.S. Department of Commerce determined the country would remain a non-market economy, in a blow to exporters operating in both countries. Vietnam’s Ministry of Industry and Trade “regrets that on August 2, 2024, the U.S. Department of Commerce concluded that Vietnam remains a non-market economy, despite significant improvements in Vietnam's economy in recent years,” according to a translated statement. Its non-market status ranks the country alongside Russia, China, and North Korea. Plans to reapply: According to the state-run Vietnamese news agency Vietnam+, the ministry is studying the U.S. report for the purpose of continuing the “supplementation and completion of the briefs and relevant dossiers to submit to the department to request another review to recognise the market economy status of Vietnam.” An upgrade could have made it more difficult to impose steeper anti-dumping duties on unfairly traded Vietnamese imports. One step back: Vietnam made a formal request last year to be reclassified as a market economy, triggering a 270-day Commerce Department investigation to consider the question. However, lawmakers on both sides of the aisle criticized the proposed move, arguing Vietnam had not made sufficient reforms and was too economically integrated with China. “Vietnam is not a market economy and today’s decision upholds that fact,” said Sen. Bill Cassidy (R-La.), in remarks sent to Morning Trade on Friday. “This is a win for Louisiana shrimpers and catfish farmers and American jobs.” Commerce rationale: “Despite Vietnam’s substantive reforms made over the past 20 years, the extensive government involvement in Vietnam’s economy distorts Vietnamese prices and costs and ultimately render them unusable for the purpose of calculating U.S. antidumping duties," Commerce said, as Doug reports. In a sign of intense interest in the decision, Commerce said the final verdict came after it received and reviewed more than 36,000 pages of comments from U.S. domestic industries, as well as the government of Vietnam during its investigation. Domestic groups said the decision not to upgrade Vietnam’s status would help prevent the country from being used as a conduit to help China evade trade restrictions from Washington. Kevin Dempsey, the president and chief executive officer of the American Iron and Steel Institute, said that granting “market economy status to Vietnam was not justified by the facts – given the significant role of state-owned enterprises in the Vietnamese economy, Vietnam’s role in circumventing U.S. trade law orders on goods from China and other countries,” as well as its currency manipulation and export restrictions. Thomas Beline, a senior official at the Committee to Support U.S. Trade Laws, which advocates for policies that support domestic industry, said: “Commerce’s action to maintain the NME status of Vietnam is both correct and a much-needed finding if we are to prevent China from avoiding existing tariffs by transshipping through Vietnam into the U.S.” Around the World WHITE HOUSE PRESSED ON ISDS: A broad coalition of more than 300 state legislators led by North Carolina state Rep. Pricey Harrison (D) and state Sen. Tim Mathern in North Dakota (D), sent a letter today pressing the White House to remove investor-state dispute settlement (ISDS) provisions from international trade deals. Reminder: The ISDS policy mechanism allows a company to sue a foreign government over a regulation or action that has harmed their investment in the country. It’s long been opposed by Democrats, who say the mechanism gives too much power to corporations. “We appreciate that both the previous administration and your own have agreed with this [National Conference of State Legislatures] position to not include ISDS in new trade agreements,” according to the letter. “But the U.S. still has 50+ trade and investment agreements that contain ISDS, and corporations continue to use this outdated mechanism to challenge public interest policies,” they warn. ON CHINA’S WTO COMPLIANCE: USTR is requesting comments to inform its annual report to Congress on China's compliance with commitments as part of the WTO, according to a Federal Register notice. Comments are due Sept. 10. REGULATORY REVIEW DE MINIMIS DRUM BEAT: Sen. Sherrod Brown (D-Ohio) made another plea Friday for the Biden administration to reform the de minimis tariff provision that allows Chinese and other suppliers to sell low-value goods to the U.S. consumers on a duty-free basis. The call came as Senate Finance Chair Ron Wyden (D-Ore.) is preparing to unveil a bipartisan bill aimed at curbing a flood of imports from China under the program. But Brown and other critics of the program argue that the Biden administration already has ample authority to restrict use of the duty waiver for shipments worth less than $800. Antennas up: White House officials declined to comment on a tip provided to Morning Trade that department deputies had recently met to discuss possible de minimis reforms and that a lower-level interagency policy committee meeting was scheduled this week. Proposed rule expected: Groups such as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Consumer Technology Association also have recently met with the administration to discuss the issue, in anticipation of the Treasury Department issuing a Notice of Proposed Rulemaking in the coming weeks. Treasury has jurisdiction over de minimis, since it involves government revenue, even though the administrative agency, Customs and Border Protection, is located within the Department of Homeland Security. SLOW WALK FORWARD: The Americas Partnership for Economic Prosperity countries agreed during the first in-person trade ministers meeting to shore up labor and environmental considerations as part of the trade track of the Biden-led coalition, USTR said Friday. SPECIAL EVENTS Brian Nelson, the Department of Treasury’s undersecretary for terrorism and financial intelligence, is leaving the agency and joining the presidential campaign of Vice President Kamala Harris, according to Axios. A Treasury spokesperson said on LinkedIn that Nelson is being replaced by the current director of the Office of Foreign Assets Control, Brad Smith, as acting undersecretary. TRADE OVERNIGHT — He’s the rare Trump adviser to survive the first term. He’s poised to be even more influential in a second, reports POLITICO. — Robert Lighthizer’s trade cure for the U.S. focuses heavily on Europe, per POLITICO Pro. — Former national security officials back law to force TikTok sale, per POLITICO Pro. — U.S. expected to propose barring Chinese software in autonomous vehicles, Reuters reports. THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and ahawkins@politico.com. Follow us @POLITICOPro and @Morning_Trade.   Follow us on Twitter Ari Hawkins @_AriHawkins Doug Palmer @tradereporter Gavin Bade @GavinBade Adam Behsudi @ABehsudi Emily Cadei @emilycadei   Follow us

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