Vietnam's Transition to a Market Economy: The Use of NME Standards in Dumping and Countervailing Investigations: or What Happened to Me On the Way to Rome?

There is no question that Vietnam has made significant progress in its march to revamp its system to respond to and participate actively in the global economy. It has done this by embracing market principles and freeing up its enormous potential to grow and compete. The U.S. government has played an active role in encouraging Vietnam to take these steps under the Bilateral Trade Agreement and as Vietnam moves forward in its effort to accede to the World Trade Organization.Despite what appears to be an environment of predictable certainty for foreign investors in the Vietnamese market, the November 8, 2002 decision by the US Department of Commerce to designate Vietnam a non-market economy (NME) for purposes of U.S. trade remedy laws is inconsistent with its earlier decisions with respect to Russia and other FSU countries.So what happened to Vietnam on the way to Rome? This paper demonstrates the inconsistency between elements of the US Government, some supporting Vietnam's march to economic development while others placed unnecessary constraints in its path. In 2001 Vietnam passed the market test and became a partner in the US-Vietnam BTA. In 2002, with a new US Administration, Vietnam failed the test. On the way to Rome it learned the lesson of time-inconstancy when you are playing in an asymmetric game with a giant. The experience in the 2002 US decision is instructive of the process of Vietnam's accession to the WTO.