World News – AU – Why Vietnam fears Biden as much as Trump does

Vietnam is still one of the few countries in Asia that Joe Biden has not yet won in his election on 3. November congratulated.

But the obvious diplomatic ease shows less about Hanoi’s view of the elected US president than about his desire not to upset the outgoing US President Donald Trump in his final weeks in office.

Last month, the US Trade Representative’s Office (USTR) announced that it had opened an investigation into whether Hanoi had carried out currency manipulation, as well as an investigation into alleged exports of illegal timber.

In September, an investigation by the US Treasury Department concluded that Vietnam had manipulated its currency in connection with the export of vehicle tires. The U.S. Department of Commerce this month imposed a provisional anti-subsidy tariff on Vietnam’s tire exports, valued at around $ 470 million in 2019.

US Secretary of Commerce Wilbur Ross described the move as « an important step forward for the America First trade agenda », a policy driven by the Trump administration’s fixation on reducing the US trade deficit.

Vietnam’s trade surplus with the United States rose from $ 32 billion in 2016, the year before Trump took office, to $ 49 billion. 4 billion in the first nine months of 2020, one of the highest in the world.

Last month, Vietnamese Prime Minister Nguyen Xuan Phuc reportedly told a Trump adviser that the Trump administration “needs to have a more objective view of the reality in Vietnam. ”

Allegations of currency manipulation are « a big problem » for Vietnamese politicians because « they don’t have many options to reduce the trade deficit to a significant level, » says Nguyen Khac Giang, a doctoral student at Victoria University in New Zealand.

« The best Hanoi can do, » he added, « is to have more channels of communication with responsible US agencies, effectively addressing the transshipment problems and potentially buying more suitable US products and investing more in the US USA to call. « Country. ”

Hanoi will now try to keep its head bowed for the next two months in the hope that a Biden administration will reverse any punitive measures Trump imposed as a farewell volley during his dwindling tenure, which may or may not be wishful thinking.

While most analysts anticipate the Biden administration will be less preoccupied with bilateral trade deficits, its senior foreign policy candidates have expressed their support for action against currency manipulation and “overseas fraud [which] poses a threat to American jobs. ”

US National Security Advisor Robert O’Brien, who visited Hanoi last weekend, reportedly told the Vietnamese government to stop diverting Chinese-made products and to buy larger quantities of US goods since early 2017, Washington’s line.

In a press conference, O’Brien appeared to suggest that reducing the trade surplus could be « the basis » for reversing the US tariff decision on Vietnam’s tire exports.

Hanoi has previously rushed to announce deals to import more US-made goods to curb US criticism. Many of the deals were signed on state visits to enable Trump to do the commercial gain he wanted. It is therefore not clear whether old deals allow current US probes to flow into Vietnam’s trading practices.

During Trump’s first year in office, Vietnamese officials saw contracts for US goods and services worth billions of dollars on state visits by Prime Minister Phuc and then-President Tran Dai Quang.

In early 2019, on the sidelines of Trump’s second-round peace talks with North Korea, which Hanoi hosted, the Vietnamese low-cost airline Vietjet agreed to buy another 100 737 MAX aircraft from American aerospace giant Boeing, valued at $ 12 to buy. 7 billion.

The 2017 agreements « bundled all kinds of agreements – already made, projected, and signed during the visit – in an ambiguous timeframe to reach an impressive number that Donald Trump likes, » said Carl Thayer, Professor Emeritus at the University of New South Wales in Australia.

Some of the US goods purchased on those occasions were necessary to Vietnam’s development, « but the need to comfort Trump’s transactional approach is certain to play a large role, » says Giang.

Indeed the $ 12. A $ 7 billion deal to import Boeing’s 737 MAX airplanes later collapsed on security concerns and contributed to Vietnam’s still strong trade surplus with the United States.

Because of his mercury character, Trump was a hard-to-predict leader for Vietnam. Of course, Vietnam has recognized its more assertive policy towards China, which has increasingly threatened Vietnam’s claims in the South China Sea.

Just weeks after Trump praised the Vietnamese government during his peace talks in North Korea in early 2019, he said in an interview with Fox News that Vietnam is the « worst abuser » of US trade, one comment said the Vietnamese diplomat Her US colleagues strive for clarity.

There is also frustration in Hanoi over the Trump administration’s refusal to understand that Washington is, in fact, the architect of Vietnam’s large trade surplus with the United States, which rose from $ 32 billion in 2016 to $ 38. 3 billion in 2017 and then to $ 39. 4 billion in 2018.

But Vietnam’s surplus exploded to $ 55 in 2019. 7 billion, mainly due to the US-China trade war that Trump started the previous year, which prompted manufacturers to shift operations from China to Vietnam to avoid high US tariffs on goods made in China.

Trump’s huge income tax cuts, introduced in 2017, and a significant increase in employment in the US up until the pandemic earlier this year, resulted in increased demand for Vietnamese imports from American consumers as Vietnam becomes a new manufacturing center of technology has been developing since 2017.

The US trade deficit with all countries increased from US $ 490 billion in 2014 to US $ 617 billion in 2019, largely due to « excessive demand and a strong dollar, » according to David Dapice, a senior economist at Harvard University who wrote the East Asia Forum earlier this month.

Furthermore, Dapice argued that given the economic development in the last decade, Vietnam’s currency is actually « overvalued » at the moment, making it difficult to export goods and therefore the opposite of what Hanoi would try to artificially construct. The Vietnamese dong currently has a value of 23. $ 200 against the US dollar.

He added that “neither the trade surplus nor the current account balance or foreign exchange reserves show any signs of significant or increasing [dong] currency manipulation. ”

Other analysts deny this assessment and assume that the US trade agent must have an evidence-based case against Vietnam if he is ready to open a full investigation.

US investigators are more likely to find a malfunction in the export of illegally harvested timber to Vietnam. Total wood exports are around $ 3. 7 billion last year for the Vietnamese economy.

Although Vietnam joined the Voluntary Partnership Agreement with the EU in 2018, a mechanism to ensure that its timber is legally sourced, there have been numerous reports of timber being illegally harvested in neighboring Cambodia and shipped as Vietnamese exports.

Some experts have speculated that US research into the Vietnamese timber industry is really about America’s domestic politics, as North Carolina, a major furniture manufacturing hub, was seen as a battlefield state on the way to the US presidential election.

This has generally been the case with many of the import agreements Vietnam has signed with the US since 2017. « If you look at what Vietnam is actually buying – from cotton to soybeans – most of them come from the states [in the US] that were more or less in favor of Trump, » Giang said.

It remains to be seen whether this will change fundamentally under the Biden government. The prevailing view among Vietnam observers is that the next US president will find Vietnam easier on issues such as currency manipulation and trade surpluses.

The Biden government is likely to « pursue a less aggressive trade policy, which means it can moderate trade with Vietnam and interrupt or cancel the currency manipulation investigation, » said Le Hong Hiep, a research fellow at ISEAS-Yusof Das Ishak Institute in Singapore announced this month to regional media.

Maybe. But Biden didn’t win the US presidential election by a landslide and inherits a deeply divided nation, especially in the states that benefit from Vietnamese shopping. In fact, North Carolina went to Trump, but he only won by 1. 3 percentage points.

In September, Biden’s election as Secretary of State, Antony Blinken, said the Biden government would continue to « use tariffs when needed, but backed by a strategy and plan ». ”

Blinken also vowed to “aggressively enforce American trade laws whenever fraud abroad poses a threat to American jobs. ”

Biden’s appointed National Security Advisor Jake Sullivan, who has argued that anti-currency tampering provisions should be part of US policy, sounds even tougher on trade issues.

In a co-written foreign policy essay in February, Sullivan sounded a bit like Trump when he said America needed a new economic policy on foreign affairs that “must include a laser focus on what improves wages and creates high-paying jobs, the United States States instead of making the world safe for business investment. ”

« Currency manipulation regulations, » he added, « would help not only the American middle class but also the strategic position of the United States by limiting China’s ability to fund efforts like the Belt and Road Initiative (BRI) » Beijing’s trillion-dollar foreign investment project.

According to Thayer of the University of New South Wales, Sullivan’s comments were likely to be against China, but nonetheless “will also be used against Vietnam. ”

Vietnamese officials would likely prefer to communicate with Biden’s transition team, but at the same time don’t want to annoy Trump at a sensitive political moment.

Prime Minister Phuc was the first Southeast Asian leader to speak to Trump after his victory in 2016. This call came a month before Trump’s inauguration. Phuc visited Washington just five months later and was the first Southeast Asian leader to visit the White House.

The ruling Communist Party of Vietnam is set up at the time of Biden’s inauguration on Jan.. Participate in their five-year national congress, where high-ranking officials and politicians deal with the horse trade, on January 1st.

Phuc is asked to assume the party’s leadership role, which may deter him from diplomatic obligations, although he may be able to make better use of his overseas experience if he becomes president instead. The Vietnamese Ministry of Foreign Affairs is expected to undergo a change, and Hanoi’s foreign policy over the next five years will be hotly debated at the National Congress.

If this were a normal change of presidency in America, Vietnamese officials would meanwhile take all measures to communicate with Biden’s new team and to set the tone before his inauguration.

Not only has Hanoi not recognized the victory of the next US president this time, but all diplomatic overtures to Biden’s camp have to wait until after January so that Vietnam does not arouse Trump’s trade fury.

This means that any renewal or resetting of US-Vietnam relations under Biden will begin more slowly than under Trump, potentially having a detrimental effect on Vietnam’s trade and economy in the Trump-controlled interim.

Asia Times Financial is now live. Combine accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world’s first cross-industry Chinese benchmark index for bonds. Now read ATF.

Like many other small files, this website uses so-called cookies to improve and customize your experience. You can find more information about the use of cookies in our Cookies Policy.

Vietnam, Hanoi