Vietnam Achieves Trade Balance to Gain US's Trust

Vietnam ranks global third in wooden furniture exports. Photo: Internet

In October 2020, the US Trade Representative (USTR) launched an investigation on Vietnam's timber exports under Section 301 of the 1974 Trade Act. This week, US Trade Representative Katherine Tai has announced an agreement with Vietnam that addresses US concerns in the investigation.

The agreement establishes commitments to keep illegally harvested or trafficked timber out of the supply chain, as well as to safeguard the environment and natural resources. Ambassador Tai noted that the agreement provides a satisfactory resolution of the matter subject to investigation and that no trade action is warranted at this time.

“I commend Vietnam for its commitment to address our concerns regarding the importation and use of timber that is illegally harvested or traded,” said Ambassador Katherine Tai. “With this agreement, Vietnam will provide a model – both for the Indo-Pacific region and globally – for comprehensive enforcement against illegal timber. USTR looks forward to working with Vietnam to deepen collaboration and information exchange, including through a newly created Timber Working Group.”

“Illegal timber in the supply chain damages the global environment and the natural resources on which we all depend, and is unfair to US workers and businesses who avoid such timber,” added Ambassador Tai. “USTR’s first use of Section 301 in this investigation shows the strength of using this tool to address concerns regarding environmental risks or the enforcement of environmental laws,” reported the Vietnam Investment Review.

The USTR opened a so-called section 301 investigation on Vietnam’s wood industry in October last year -- the same law that enabled the nation to levy billions of dollars of tariffs on Chinese imports. The U.S. is the biggest market for Vietnamese wood products, representing an estimated $6.5 billion in 2020, about half of the nation’s total agricultural shipments to the U.S. in 2020, according to the nation’s agriculture ministry. Vietnamese wood-furniture makers’ customers include Walmart Inc. and Ashley Furniture Industries Inc., according to Bloomberg.

Vietnam could achieve trade balance this year

In a regular press conference from the Ministry of Industry and Trade on September 30, deputy head of the Ministry’s Foreign Trade Agency Tran Thanh Hai stated that Vietnam could achieve trade balance, or even a trade surplus this year.

Vietnam earned 27 billion USD from exports in September, down 0.8 percent month-on-month and 0.6 percent year-on-year. It was also the second consecutive month that exports declined from the same period last year. However, the nine-month figure still showed an 18.8 percent increase year on year to an estimated 240.5 billion USD.

Meanwhile, import was estimated at 26.5 billion USD in September, down 3.1 percent monthly, but the nine-month figure hiked by 30.5 percent annually to 242.65 billion USD.

Given such situation, Vietnam ran a trade surplus of 500 million USD in September and a deficit of 2.13 billion USD in nine months of this year.

Tran Thanh Hai, Deputy Head of Foreign Trade Agency, MoIT. Photo: DNHN

According to Hai, the current trade deficit is not a cause for concern, considering that trade deficit dropped to 100 million USD in August after topping 2 billion USD in July, and September saw the return of trade surplus. Vietnam’s exports are in favourable conditions thanks to opportunities from free trade agreements and rising market demand during year’s end, especially for goods of the country’s strength. Therefore, if there is no major change in the pandemic situation, export activities in southern localities are expected to regain speed in the last quarter of the year, helping balance trade, and even bring a trade surplus, reported VNA.

Vietnam's import-export turnover up 24 percent in nine months

Vietnam's international trade continues to increase. Photo: VNA

Vietnam’s trade turnover in the first nine months of this year reached 483.17 billion USD, a year-on-year increase of 24.4 percent, according to the General Statistics Office.

During the period, 31 products recorded an export value of over 1 billion USD each, and accounted for 92.5 percent of the nation’s total export.

The US remained the biggest export market of Vietnam, spending 69.8 billion USD on imports of Vietnamese products, a year-on-year rise of 27.6 percent. China came second with 38.5 billion USD, up 18.3 percent. The EU and ASEAN followed with 28.8 billion USD and 20.6 billion USD, increasing by 11.6 percent and 21.2 percent, respectively.

The import turnover in the nine-month period reached 242.65 billion USD, a hike of 30.5 percent compared to the same period last year, according to VNA.

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