US, Vietnam Nontariff Barriers Hinder TPP Potential, Says Report
The U.S. and Vietnam should both dismantle protectionist barriers that inhibit bilateral trade and investment in order to maximize potential in the Trans-Pacific Partnership (TPP) and other commercial arenas, said the Center for Strategic and International Studies (CSIS) in a recent report. The organization urged Vietnam to avoid introducing new non-tariff barriers, such as a proposed excise tax on carbonated drinks. The proposed 10 percent tax on carbonated drinks would be discriminatory because U.S. firms produce and market carbonated drinks in Vietnam, while Vietnamese companies sell tax-exempt non-carbonated drinks, said CSIS. Recent Vietnamese reforms to customs regulations have also increased import data field requirements nearly four-fold and imposed burdensome increases in "time periods for duties, taxes and penalties," said the organization.
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The U.S., however, should also eliminate trade barriers like the Department of Agriculture Catfish Inspection Program, added CSIS. U.S. industry members, foreign emissaries and members of Congress have criticized the program over recent months, labeling it wasteful and protectionist (see 14063019). “Vietnamese officials estimate it will take the country at least five to seven years to meet the new processing standards required by the United States” in the program, said the report. “They see the new requirements as little more than a thinly veiled attempt to keep Vietnam’s catfish out of the United States and protect U.S. catfish farmers in southern states like Louisiana and Mississippi.”
Although the TPP provides immense opportunity to ramp up many aspects of bilateral trade, the Vietnamese are likely to face obstacles in complying with some mandates in areas like labor and state-owned enterprises, said CSIS. “Progress on restructuring Vietnam’s state-owned enterprises and cleaning up the high percentage of nonperforming loans in the banking system remains painfully slow,” said the report. “The state sector plays a major role in Vietnam’s economy, making up roughly 35 percent of [Gross Domestic Product]. But the government is in the process of trying to reform this sector and has pledged to privatize (called 'equitization' in Vietnam) roughly 430 SOEs in the next two years.” The Vietnamese government is also urging the U.S. to end its status as a nonmarket economy in antidumping proceedings, said the report.