Mutual US-Vietnam respect must be utilised in trade

Mutual US-Vietnam respect must be utilised in trade

The United States is carrying out aggressive tariff policies against its major trade partners. Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, spoke with VIR’s Thanh Thu about how these moves could impact Vietnam-US trade and investment ties.

The US has applied very high import taxes on many types of items that are exported there. How might this impact its trade ties with Vietnam?

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi

The United States Trade Representative and the Secretary of Commerce have been directed to propose new reciprocal tariffs on a country-by-country basis. The approach will examine non-reciprocal trade relationships with all US trading partners, including Vietnam. Special attention will be paid to examine the countries with which the United States had the largest trade deficits.

The White House says that new country-specific tariffs will be customised, intended to not only offset tariffs imposed on US products, but to also account for non-tariff trade barriers, unfair subsidies, regulations, value-added taxes, exchange rates and any other policies the US administration determines represent an unfair barrier to trade.

In addition, the White House also issued an order directing a review of trading partners’ digital policies that discriminate against American companies. The order lists digital services taxes that are more burdensome and restrictive on US companies than their own companies, cross-border data flow restrictions, and more. And this is just the beginning of the country’s new trade policy, so people should fasten their seatbelts.

How will current US policies affect investment from that nation into Vietnam?

US companies have contributed significantly to the transformation and growth of Vietnam’s economy, having invested in manufacturing and infrastructure, providing high-quality consumer, agricultural, and industrial goods and services.

American companies and investors bring high-quality products and state-of-the-art tech, services, and business practices to Vietnam. We share an interest in developing a globally competitive workforce, creating quality jobs, and investing in the professional development of our Vietnamese team members. High-quality foreign investors not only help grow Vietnam’s economy, but also help grow the entire ecosystem of local companies and entrepreneurs here.

Policy changes can impact investment flows, but as long as Vietnam keeps working to create a favourable investment climate that is fair, predictable, and has a streamlined regulatory environment that values innovation, US investors will continue to show up here.

Existing investors expanding operations is the best advertisement to pull in new investment, so I hope Vietnamese authorities will look closely at the concerns of US companies already doing business here to ensure that they have the best chance at success.

What do you expect ahead in terms of prospects of trade and investment cooperation?

Through candid dialogue and a strong commitment to succeed by the leadership of both countries, Vietnam and the US are now comprehensive strategic partners.

One of the relationship’s strengths is its multifaceted nature, and our countries now have a strong friendship anchored in mutual respect and work closely in many areas. Trade is the cornerstone of the bilateral relationship and both sides benefit from the trade between our two countries.

In fact, the US is the top customer of Vietnamese exports and has been for many years, and is currently likely to have concerns about the considerable trade surplus that Vietnam has with the United States.

Vietnam’s trade surplus with the United States soared to a record high last year, and Vietnam now has the third-highest surplus that any country has with the United States - behind only China and Mexico. The unbalanced trading relationship is a problem and is likely to complicate Vietnam’s efforts to avoid trade tariffs from the US.

But it is too early to gauge the impact of tariffs. In the past month, Vietnamese officials have repeatedly said they would seek compromises with Washington on trade.

This is likely to include promises of additional aeroplane purchases, boosting Vietnam’s imports from the United States of liquefied natural gas, better market access for American agricultural products, and an adjustment of some regulations to make it easier for US companies to access the Vietnamese market.

What do you think will be the most effective solutions to encourage bilateral trade?

We are entering a challenging period and because the US focuses on trade imbalances, Vietnam should take some necessary actions.

These include purchasing some big-ticket items from the US to help reduce the trade deficit as previously mentioned, creating more transparency concerning the origin of goods and increasing local content, and doing much more to solve burdens and barriers faced by American companies and investors here.

I encourage Vietnamese authorities to clarify elements of law that hinder the efficient deployment of foreign investment, and to ensure that any additional administrative burdens in draft laws and regulations be carefully considered and avoided whenever possible.

VIR