The decision process is set to be finalized next July. If successful, the decision will not only create conditions for Vietnamese exports to the US market, but also contribute to elevating the comprehensive strategic partnership between the two nations.

The move was backed by retailers and other business groups based in the US as it would serve to reduce the punitive anti-dumping duties set on Vietnamese imports because of its current status as a non-market economy with heavy state influence.

At present, the nation is considered to be a "non-market" economy by the US, along with the likes of China, Russia, and 11 other countries, thereby being subject to higher anti-dumping taxes.

"Vietnam is already a market economy," said Ted Osius, head of the U.S.-ASEAN Business Council, which backs the upgrade. "It has met key criteria such as currency convertibility and is ready for an accurate designation,” he added.

"American businesses are already investing significantly in Vietnam as they recognize its growth potential," said Osius, a former US Ambassador to Vietnam.

During US President Joe Biden's visit to Hanoi last year, the two countries elevated ties to a "comprehensive strategic partnership".

Last year saw Vietnamese Prime Minister Pham Minh Chinh also urge US Treasury Secretary Janet Yellen for an end to the non-market label, making it more befitting to the nation’s status as a US "friend-shoring" destination to diversify supply.

The Commerce Department has a fairly narrow set of criteria for determining market economy status. These include the extent to which the country's currency is convertible, its wage rates being a result of free bargaining between labour and management, and permission for joint ventures or other foreign investment.

Further criteria includes whether or not the country’s government owns or controls the means of production, as well as the government’s controls over the allocation of resources and price and output decisions.

It can also consider other factors such as goods from non-market economies being subject to higher tariff rates in anti-dumping duty investigations that used in third-country proxy prices to determine a product's fair market value.

Concerning the Vietnamese economy, Murray Hiebert, senior associate of the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in. Washington, D.C, said that the Vietnamese economy is not without challenges. Despite these issues country has made great strides since the period of subsidized economy.

Hiebert also likened Vietnam to a big magnet attracting foreign investment in the context that US firms are striving to reduce their dependence on China.

In fact, major groups such as Apple and Intel have established large factories and research centres in the country, while the nation is also among the Top 10 trading partners of the US.

During President Biden's visit to Vietnam last year, he pledged to increase semiconductor production and boost digital infrastructure in the country.

Furthermore, the nation is also one of 14 partners in President Biden's Indo-Pacific Economic Framework for Prosperity (IPEF) economic initiative.

Moreover, the country is also a part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in which Vietnam has committed to ensuring and enhancing workers' rights.

In fact, according to Hiebert, many major global economies, including Japan, Australia, the UK, and Canada, have recognized Vietnam as a market economy.

Source: VOV