JAKARTA (TheInsiderStories) – United States (US) imports from Vietnam are up 34.8 percent in nine months (9M), after a 5.8 percent gain in 2018. Comparatively, in the same period, imports from mainland China to the US shrank 13.4 percent, with tariffs making a sizable dent since the trade war launched July 2018.
America is Vietnam’ second-largest export market behind mainland China, accounting for 18.7 percent of total goods exports but only 2.7 percent of foreign direct investment.
according to Michael Ryan, Associate Director, Comparative Industry Service, IHS Markit, despite forged interests amidst the backdrop of the trade war and Vietnam’ closer integration into the global trading system, neither the US and Vietnam nor the US and Association of Southeast Asian Nations (ASEAN) have secured a free-trade agreement. This is but one of many factors tempering the pace and magnitude of supply-chain diversification.
Another major issue is access to skilled labor, particularly at a time when so many companies are making simultaneous inquiries. This is compounded by difficulties in finding contractors who can design parts to desired specifications and quality standards. Simply, demand is outpacing the current ability to supply.
The splitting of production across countries with different regulatory, labor, tax, environmental, and safety standards has muddled streamlined and established processes. Businesses are faced with long lead times to search out the right facilities, find local business partners, and receive government permits.
New logistical routes must be mapped in a context of infrastructure bottlenecks, including poor roads and congested ports. US regulators need time to assess the safety of new production coming from new sources. Taken in combination, these factors are lengthening the delivery cycle to consumers and point to a drawn-out process of extricating operations from mainland China’s orbit.
Last July, US imposed an import duties of more than 400 percent on steel imports from Vietnam, due to certain products produced in South Korea and Taiwan are sent to Vietnam for processing, before being exported to the US as products of corrosion-resistant steel and rolled steel cold.
The department said several shipping product businesses from the ASEAN country are considered to simply avoid levies in escalating further tensions between the two trading partners. Customs officials have been ordered to collect cash deposits at rates as high as 456.23 percent on imported steel products produced in Vietnam using materials from South Korea and Taiwan.
US – Vietnam trade relations are indeed strong after the country benefited from tensions between President Donald Trump and Chinese President Xi Jinping since March 2018.
So far, Vietnam is trying to reduce its trade surplus with the US and has been cracking down on Chinese producers who are redirecting their goods through Southeast Asian countries to be exported to the US to cut higher tariffs. The US Embassy in Hanoi said this week in talks with authorities and hoped “Vietnam took steps in the near future to deal with our problems constructively.”
In addition to Vietnam, US Customs and Border Protection is also investigating six American companies for allegedly avoiding anti-dumping duties when importing and incorrectly grouping Chinese-made carbon steel pipe fittings through Cambodia, according to the US Embassy in Phnom Penh.
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