On July 21, the Department of Trade Defense ( Ministry of Industry and Trade ) announced that the UK will recognize Vietnam's manufacturing industries operating under market economy conditions. On that basis, the UK will not apply unfavorable regulations to imported goods from Vietnam in the event of trade defense investigations.
The move comes after Britain joined the Comprehensive and Progressive Agreement for Trans -Pacific Partnership (CPTPP) last week.
According to the Trade Remedies Authority, market economy is a concept used by some countries when conducting trade defense investigations on imported goods from other countries.
Determining whether a country has a market economy is often based on an assessment of the degree of state intervention in business decisions of enterprises as well as the degree of state control and intervention in factors of production such as capital and labor.
A country with too much state intervention may not be considered a market economy.
If the exporting country is not considered a market economy, instead of using information on costs and prices of the producing and exporting enterprises themselves to calculate the dumping margin, the importing country will use representative information of enterprises of a third country that is considered to have a market economy.
As a result, dumping margins are often set higher, resulting in much higher trade defense tariffs than in countries considered to be market economies. In some cases, trade defense tariffs on businesses from countries not considered to be market economies can be as high as over 100%.
To date, Vietnam has been recognized as a market economy by 71 countries and territories through various forms, including many important trade partners.
Being recognized as a market economy creates conditions for exported goods to be treated more fairly, have better conditions to penetrate and expand markets, and have more stable production and business activities of enterprises. A stable and transparent environment will attract investment capital, contributing to promoting economic development.
Currently, Vietnamese goods exported to the UK also enjoy tariff advantages under the Vietnam - UK Free Trade Agreement (UKFTA). In 2022, the export turnover of Vietnamese goods to the UK reached 5.2 billion USD, an increase of 9.5% compared to the previous year.
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