„Miracle leap“ of Vietnam – US economic relations

19.05.2016

According to statistics from the General Administration of Customs, in April 2016 Vietnam exported goods worth $3.1 billion to the US, bringing the total export turnover in the first 4 months of the year to $11.45 billion.

Meanwhile, Vietnam imported $734 million of goods from the US in April and $2.47 billion in the first 4 months. Thus, the trade balance still favored Vietnam with $2.4 billion surplus in April and approximately $9 billion in 4 months.Vietnam mainly imported computers, electronic products and components from the US (worth nearly $150 million in April), vehicles and spare parts (worth $173.3 million in April).America was a large import market of Vietnam. In the past four months, Vietnam exported to $3.4 billion of textiles and garments; $1.33 billion footwear; $1.5 billion telephones and components; $407.7 million seafood; $225.2 million cashew; and $143.3 million coffee to the US.

The General Administration of Customs said that in 2015, bilateral trade turnover between Vietnam and the US reached the highest growth rate among the major trade partners of Vietnam.Specifically, the total value of goods traded between the two countries reached $41.3 billion, up 18.2% compared to 2014. In particular, exports reached $33.5 billion, up by 17% and imports $7.79 billion, up 24%. Trade surplus of Vietnam to the US was $25.7 billion.

According to the new figures of the US General Statistic Agency, the two-way trade between Vietnam and the US increased by 24.07%, from $36.32 billion in 2014 to $45.06 billion in 2015. Exports from the US to Vietnam increased by 23.32% while US imports from Vietnam increased by 24.21%. Trade deficit between the US and Vietnam is $30.92 billion (higher than statistics from Vietnam).By the end of 2015, Vietnam ranked 19th among the top trade partners of the US compared to 26th in 2014.Comparing these numbers with those of over 20 years ago, when the two countries began normalizing relations, this is indeed a miraculous leap.The US is the second largest trade partner of Vietnam, behind China, and is the largest trade partner of Vietnam in the Americas region.However, according to the database of the UN Comtrade, in 2015, the USimports from Vietnam accounted for only 1.7% of the total imports of this country, while its export turnover to Vietnam was merely 0.47% of total exports to the world. This shows that the two countries still havechances to improve trade cooperation.

Expectations from high-level visits and TPP

Experts said that in 2017, if nothing changes, the Trans-Pacific Partnership (TPP) with the participation of both the US and Vietnam comes into force, bilateral relations will enter a new chapter.

Negotiation for TPP have been completed and the agreement is awaiting approval of the Congress of member states. Once it is adopted by the Parliament of member countries and comes in effect, the TPP will bring about many opportunities. The tax rate for the majority of exports from Vietnam to the US will fall to 0%. Vietnam’s exportsare expected to increase further and Vietnam could achieve total export revenue of $40 billion from the American market.In the meeting between Ted Osius, the US Ambassador to Vietnam and the former Minister of Industry and Trade Vu Huy Hoang in March 2016, the two sides agreed to focus cooperation on a number of priority fields, including oil and gas exploration and production, clean energy, renewable energy, health, and transportation infrastructure.The Vietnamese Government encourages and supports the US to further promote investment in the fields of science and technology, high technology, and human resource development.In recent years, bilateral cooperation between Vietnam and America has made significant progress. By the end of 2015, investment of the US in Vietnam was estimated at $11.1 billion, ranking 7th among foreign investors in Vietnam, mainly in the fields of processing and manufacturing.There are some signs that American businesses can transfer investments from China to Vietnam due to the advantage of low labor costs in Vietnam.

In a recent interview with the Vietnam News Agency, the Vietnamese Ambassador to the US Pham Quang Vinh said that Vietnam-US two-way trade has soared to $45 billion, a 20-fold increase from 20 years ago.According to Vinh, a highlight of Obama’s upcoming visit to Vietnam (May 22-25) will be the continuation of mutually-beneficial ties on the basis of mutual respect, including respect to each other’s sovereignty, independence and political regime.On the back of the Trans-Pacific Partnership (TPP) deal soon to be enacted, he said two-way trade is to accelerate for sure, adding that the visit will create a driving force for science-technology and education cooperation.

Once the TPP comes into force, he believes that two-way trade will surge in both quantity and quality, which grows around 20 percent per year, and pointed to science, education and people-to-people exchange as promising areas of collaboration.

Source: Vietnam.net