09:36 | 02/08/2017 Trade
There are concerns that Vietnam’s exports to the US could be hurt by the growing US protectionism, its withdrawal from the TPP trade deal and Vietnam’s inclusion on a list of countries with which the US runs a trade deficit. However, thus far Vietnam’s exports to the US have remained strong.
Strong export growth to the US
According to the General Statistics Office, the US remained the largest market for Vietnamese exports in the first half of 2017, at US$19.6 billion, up 9.5% annually, lower than the 12.8% growth rate during the same period of 2016.
But the Ministry of Industry and Trade (MOIT) explained that the reason behind the slowdown in growth is a result of slower-than-expected growth in the US economy, therefore Vietnam’s 9.5% growth in exports to the US is a respectable performance.
Vinatex General Director Le Tien Truong said that as the world economy remained unstable and the global textile sector remained fairly subdued, the main importers of garments, including the US, all witnessed a slowdown in their imports.
The MOIT added that a number of sectors saw slower growth in exports to the US but exports in general remained positive because Vietnam has been trying to diversify its export markets. For example, the export revenue of computers and electronic products to the US reached US$1.05 billion in the first half of the year, up slightly at 0.2%. However, during the same period, phone exports increased by a dramatic 45.8%, with shipments to Slovakia, Turkey and Mexico, shooting up by 989.3%, 403.3% and 132.1% respectively.
Seafood revenues to the US also reached just US$638 million, up 0.43%, as Vietnamese exporters are shifting their targets to the EU, Japanese and Chinese markets.
According to the MOIT, the US withdrawal from the TPP dashed the hopes of a stronger trade growth with the world’s largest economy but at this time and in the future, this withdrawal will not have any negative impacts on US investment and trade with Vietnam.
In addition, although Vietnam is on the list of countries with which the US runs a trade deficit, Vietnam is not its main target. In fact, a large part of Vietnam’s equipment, computers and electronic component exports to the US are produced by US companies in Vietnam.
Nevertheless, the largest hurdle for Vietnamese exports to the US is the growing protection in the form of technical barriers, especially stricter requirements on quality and food safety, for instance, regulations on pesticide residues in rice or antibiotic residues in seafood, which have hurt Vietnam’s farming and seafood exports lately.
As such, the MOIT has stated that in the long run, measures are needed to enhance the quality of Vietnamese food products in order to meet safety standards, so that Vietnam can maintain and expand its market share in the US.
Vu Tien Loc, Chairman of the Vietnam Chamber of Industry and Commerce, a body representing Vietnamese enterprises, said that with or without the TPP, the US remains Vietnam’s major trading partner and investor.
Although, at present it is hard to predict the US administration’s attitude towards the Vietnam-US economic relationship, enterprises are anticipating new bilateral and multilateral agreements replacing the TPP, to boost trade and investment between the two sides.
The MOIT has projected that Vietnam’s exports to the US could reach over US$40 billion in 2017 and the US will remain the largest export market of Vietnam.