Vietnam should not pin hopes on trade war truce: experts

By Dat Nguyen   December 11, 2018 | 06:51 pm PT
Vietnam should not pin hopes on trade war truce: experts
A truck driver runs past containers at a port in Hai Phong city, Vietnam. Photo by Reuters/Kham
The truce in the U.S.-China trade war will not benefit Vietnam, which should instead focus on consummating trade pacts, experts have opined.

U.S. President Donald Trump and Chinese President Xi Jinping earlier this month agreed to kick the can down the road.

The U.S. will not increase the tariffs slapped on $200 billion worth of Chinese imports from 10 percent to 25 percent for 90 days starting January 1, allowing the two sides to negotiate intellectual property protection, alleged cyber theft, technology transfers, services, and agriculture.

Economist Nguyen Tri Hieu said the 90-day delay could hardly result in any concrete measures to resolve the conflicts between the two countries.

Besides, the arrest of a top executive working for Chinese tech giant Huawei in Canada at the request of the U.S. government could damage the fragile truce, and even worsen the U.S.-China conflict, experts warned.

The U.S. is seeking the extradition of Wanzhou Meng, chief financial officer of the company, after convincing Canada to arrest her on December 1.

Since the 10-percent tariffs the U.S. has already imposed on China are still in place, China could seek to export its goods to the U.S. via Vietnam, making Vietnam a possible target for the same tariffs, Hieu said.

The moves were being made with steel and aluminum going to the U.S. from China to Vietnam.

British newspaper Financial Times quoted Louis Kuijs, head of Asia economics at consultancy Oxford Economics, as saying Vietnam has the fifth largest trade surplus with the U.S. ($38.4 billion last year) and so is "increasingly at risk of being targeted" by Washington.

Le Dang Doanh, a former economic adviser to the Vietnamese government, told VnExpress International that he does not expect the 90-day ceasefire in the trade war to result in any major changes, and Vietnam remains in a difficult and awkward situation.

"When the global economy is weakened because of the trade war, so is Vietnam. The negative consequences to the economy will be great."

The National Center for Socio-Economic Information and Forecast has warned that Vietnam’s GDP could take a 0.03 percentage points hit this year from the trade war, 0.09 percentage points next year and 0.12 percentage points in 2020 and 2021.

They would be equivalent to VND1.65 trillion ($71 million), VND5.3 trillion ($228 million) and VND8 trillion ($344 million) in 2021.

Doanh said that instead of focusing on the trade war, Vietnam should direct its attention to upcoming trade deals with major economies such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Vietnam-EU trade pact. This would help the country stand firm amidst the trade tensions, he added.

Vietnam last month became the seventh country to ratify the CPTPP, which is expected to boost trade by reducing tariffs between it and 10 other countries.

"Most economies in the CPTPP can play a major role in supporting Vietnam’s economy," Doanh said.

The Vietnam-EU trade pact, set to be ratified by the European Parliament early next year, is also expected to reduce Vietnam’s reliance on China and the U.S. by eliminating almost all trade tariffs between Vietnam and EU members.

"These are better alternatives that could help Vietnam survive and thrive after the 90-day truce comes to an end," Hieu said.

Sudhir Shetty, the World Bank’s chief economist for the East Asia and Pacific Region, said at a forum Monday that if the Chinese economy slows down because of the trade war, Vietnam needs to improve its competitiveness and take advantage of the CPTPP and the Vietnam-EU trade pact to stand firm.

The European Parliament is set to ratify the trade deal with the EU early next year. The deal will eliminate almost all tariffs. In Southeast Asia, only Singapore has a similar agreement with the EU.

China is Vietnam’s largest seller of goods while the U.S. is its biggest export market, according to Vietnam Customs.

In the first 10 months of this year Vietnam imported $53.39 billion worth of goods from China, or 27.4 percent of its total imports. China was also Vietnam’s third largest export market, buying goods worth $33.48 billion.

Vietnam exported $39.42 billion worth of goods to the U.S., 23.9 percent of its total exports.

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