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Vietnam may soon get market economy status

The Economic Times | 1 October 2009

Vietnam may soon get mkt-economy status

India is all set to recognise Vietnam as a market economy—a system where prices of goods are determined in the market and not by the
government. This clears the last hurdle in the way of India’s free trade agreement (FTA) with all Asean members.

A Cabinet note on the issue circulated by the commerce department to various ministries and departments has not faced any opposition, a commerce department official has said. It is now ready to be submitted to the Union Cabinet for its approval.

“We are hopeful that we will be able to submit the note to the Cabinet by this week and it will be approved soon. Once that happens, the India-Asean FTA will be complete and include all 10 Asean countries,” the official said.
The FTA, which was signed between India and all Asean countries except Vietnam earlier this year, is scheduled to be implemented from January 1, 2010. Vietnam had said it would be party to the agreement only if India gives it market-economy status.

Once Vietnam is given this status, India will have to accept prices supplied by it in all anti-dumping investigations against goods originating from that country.

Anti-dumping investigations happen when a country suspects that the exporting country is selling goods at a price lower than the domestic prices prevailing in its local market. If the domestic prices are found to be lower than export prices, then the importing countries can impose additional duties equivalent to the dumping margin.

At present, India uses third-country prices for calculating dumping margins against imports from Vietnam.

 source: The Economic Times