Ảnh hưởng của chiến tranh thương mại Mỹ Trung đến xuất khẩu hàng hoá Việt Nam sang Mỹ

Đề án chỉ ra các động cơ từ chiến tranh thương mại Mỹ Trung, từ đó phân tích ảnh hưởng lên hoạt động xuất khẩu của Việt Nam sang Mỹ. Bên cạnh đó còn cảnh báo về sự đồng nhất trong mối quan hệ giữa Việt Nam Mỹ và Trung Quốc Mỹ, dẫn đến nguy cơ về các chính sách bảo vệ thương mại của Mỹ đối với Việt Nam

DA NANG UNIVERSITY OF ECONOMICS

INTERNATIONAL BUSINESS FACULTY



SCHEME

IMPACT OF THE U.S – CHINA TRADE DISPUTE ON VIET NAM’S MERCHANDISE EXPORTS TO THE U.S

Instructor: PhD Huynh Thi Dieu Linh

Da Nang, November 2019.

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LIST OF CONTENTS

ABSTRACT 1

CHAPTER 1 INTRODUCTION 2

CHAPTER 2 CONTEXT OF THE U.S – CHINA TRADE DISPUTE 4

2.1 Main reasons 4

2.1.1 The U.S trade deficit with China 4

2.1.2 Intellectual properties rights violation 6

2.1.3 Threatens to global position 8

2.2 Retaliations from both sides – tariff measures 9

CHAPTER 3 ANALYSING IMPACT OF THE U.S – CHINA TRADE DISPUTE ON VIET NAM’S GOOD EXPORTS TO THE U.S .12

3.1 Merchandise exports from Viet Nam to the U.S before 2018 12

3.1.1 Trade relations 12

3.1.2 Merchandise export structure 14

3.1.3 Notices for Vietnamese exporters before 2018 15

3.2 Merchandise exports after 2018 16

3.2.1 Why the U.S – China trade dispute relates to Viet Nam? 16

3.2.2 Changes in merchandise exports structure 2

3.2.3 Issues arised under the impact of the trade dispute 6

CHAPTER 4 CONCLUSION 9

LIMITATIONS 10

REFERENCES 11

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LIST OF CHARTS

Chart 1 Annual U.S trade deficit with China 6

Chart 2 Growth in merchant trade between Viet Nam and the U.S from 2001 to 2017 13

Chart 3 Goods exported structure from Viet Nam to the U.S in 2017 14

Chart 4 The U.S imports value from China before and after the trade dispute initiation 16

Chart 5 Viet Nam export structure to the U.S in 2018 and 2019 (year-to-date value) in US Dollar 3

LIST OF TABLES Table 1 The U.S and China tariff measures 11

Table 2 Growth ranking of merchandise exported from Viet Nam to the U.S in Thousand US Dollars 5

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ABSTRACT

China and the United States are on the brink of tensions with each other on trade issues They take turn to execute measures to cause difficulties for each other to do business not only to themselves but to the other parts of the world Vietnam has tight bounds with both the U.S and China since a very long time so Vietnam is also affected by the trade dispute The United States, who initiated trade tensions with China, has strong ties with Vietnam, especially in economic matters This scheme analyzes the U.S motivations when directly starting the tension with China, thereby looking closely at the impact that Vietnam has on exports to the U.S What do Vietnam's exports

to the U.S gain and lose in such context? and Is the United States targeting Vietnam because of its criticism in the same way that it has aggression against China? This project has studied and found that besides the positive trends in Vietnam's exports to the US, reflected in the mutant trade data in

2018 and until September 2019, it still exists many arised issues may be the driving forces for the U.S tensions with Vietnam The situation between Vietnam and the United States is relatively similar to the relationship between the United States and China earlier, which is partly from a neighbor trying to avoid the loss of trade protectionism that the U.S projected directly to China

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CHAPTER 1 INTRODUCTION

China and the United States have developed their economic relations for the last three decades, while total goods transactions increased significantly from $2 billions USD in 1979 to $579 billions USD in 2016 In spite of such mutual dependence, intensive dispute has also been upraised between the two nations Starting from 1980s, trade balance has been slanting in favor of China (Chen, 2014) Concerns of Americans are due to such trade deficit, together with China’s inappropriate policies against intellectual properties rights (IPR) protection, instinctive creativity and WTO commissions On the other hand, China also criticizes the U.S for irrational trade dispute and exports limitation on advanced – technology products Notwithstanding, the tension was more likely to be kept harmoniously and the two countries concentrates more on constructive progression The dispute has become real actions ever since Donald Trump was elected to be the President (Chunding Li, Chuantian He, Chuangwei Lin, 2018) China and the U.S take turn to execute measures to cause difficulties for each other to do business not only to themselves but to the other parts of the world

Remarkble effects can happen negatively to the economies of the warring parties The consequences may simultaneously affect third parties, more directly to nations that link economically to China and the U.S (Calì, 2018)

Since a very long time, Viet Nam has tight bounds with both the U.S and China They are one of the biggest business partners of Viet Nam in commercial transactions

By 2011, trade volume between Viet Nam and China had been $25 billion USD (Xinhua, 2011) China is predicted to be Viet Nam’s leading trading partner, outstripping the United States by 2030

In 2017, total exports from Viet Nam to the U.S was $41,549,715,000 USD, Vietnam ranked 12th

on the ranking of countries supplying the United States, accounting for 2.0% of imports into the United States

Therefore, being in the same situation of the world, Viet Nam is also suffering from the U.S – China trade dispute Whether exports from Vietnam have changed, positive or negative, when trade tensions between China and the U.S have not signaled to stop? This scheme focuses on analyzing the impact that Vietnam is facing, specifically on exports to the United States Before the trade tensions between the United States and China, exports from Vietnam to the U.S have made great strides, but still faced many barriers that the United States introduced, particularly in the case of

of 2018 Therefore, the given milestones are before and after 2018 By comparing Viet Nam’s export pattern to the U.S between 2 periods, which are before and after 2018, the scheme provides datas and comments of author to the reality, difficulties and challenges of exports from Viet Nam

to the U.S

The chapters are organized as following mentions Firstly, the scheme will review the U.S – China trade tension from 2017 Looking further at the relationship between Vietnam and the United States, the scheme will provide some evidence as a result of previous studies Export characteristics between the two countries before and after the trade war; anh whether the changes in export pattern from Vietnam to the US are due to the impact of the US-China trade war or not are presented Finally, comments are made to assess opportunities as well as challenges arised from such situation

2.1.1 The U.S trade deficit with China

China and the U.S have enlarged their trade relations over the past decades Besides that, sided balance of this trade has been witnessed and concerned by Americans The widely indicated reason for the imbalance is the undervaluation of the Renmibi (RMB)1, which has been fixed against the US dollar, giving the undeserved benefit for Chinese producers (Nicholaas Groenewold, Lei He, 2007) In 2014, business and federal offices in the U.S accused China of undervaluing the RMB and controlling markets to encourage exports Actions to regenerate the U.S.’s annual increasing trade deficic with China were demanded by many U.S politicians, the deficit value was

one-at $250 billion (David D.Hale, Lyric Hughes Hale, 2014) The People’s Bank of China (PboC) claimed to belittle the RMB by closely 4% in August 2015, which was known as the first time in nearly 2 decades of soaring China has risen to be the world’s second biggest economy and its currency, known as the Yuan (CNY – Chinese Yuan Renminbi), has been gradually advanced in price for the past decade The Yuan is not exactly verified by the market law of supply and demand but directed by the Chinese government Paying no attention to such everyday market adjustment,

a reference ratio is set every morning (Graceffo, 2015)

However, on Tuesday, August 11th 2015, the government of China suddenly claimed to depreciate the Yuan to 2% by the end of the day, which was the most significant devaluation of RMB since China applied the up-to-date exchange rate approach in 2014 Following the previous day, the depreciation persisted for the next 2 days, which were August 12th and August 13 th, and leaded to 4.4% drop in total for 3 days (Neil Gough, Keith Bradsher, 2015) The Chinese government permitted their national currency to fluctuate around the fixing percentage with the amplitude of

1 Renmibi, abbreviated as RMB and coded as CNY, is the official currency of People’s Republic of China

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2% (2015) The RMB is tightly fixed to the US Dollar since Chinese adjust the exchange ratio based on the US Dollar The Yuan defintely rises when the US Dollar goes up against other money (Wei, 2015) The PboC has gradually let the RMB to fluctuate more for the past years (2015) The government’s statement to allow more market influences on the Yuan value was made after the August revaluations, which would let the Yuan to fluctuate more briskly (Wei, 2015) Speculations

on the PboC decision in August and long-term influence were various One could be reported was that the RMB had been overestimated for periods and urged to be adjusted reasonably, which was not to blame the government (Inman, Phillip, Martin Farrer, Fergus Ryan, 2015) Another argument for the situation was either evidence of the economy’s uncertainty or incapacity of the leaders to manage it, others assessed the move as a spectacular factor that the government was able to shift the whole econnomy to be market determined (Smith, 2015) Pattern of a lumping economy was also another theory for such currency devaluation by the Chinese government Consumption as well as exports of China seemed to slowdown for the past periods (Mullaney, 2015) In July 2015, exports dropped by 8% and plant production fell as 6.6% short as expected intension (2015) Together with a downturn in the general economy, Chinese stocks have decreased fundamentally throughout the most recent a while, with the Shanghai record dropping 32% of its worth (Inman, Phillip, Martin Farrer, Fergus Ryan, 2015) These numbers urged the government to take actions

in order to steady the economy and a currency adjustment was one such action Products priced in

US Dollar were made more expensive under the impact of the Yuan devaluation, which could lead

to demand reduction of US commodities Analysts were afraid that the RMB adjustment might be motivations for deflation in other economies The term “currency war” were reported to describe the situation when other countries adjusted their own currency to avoid as well as fight back the Yuan devaluation In the meantime, other producers might decrease their prices for international sale, which easily made Chinese to devaluate the Yuan even lower and caused deflation The US Dollar has recently increased against the other currencies The decrease in RMB would onward intensify the situation (Makinen, Julie, Samantha Masunaga, 2015) Therefore, arguments are enough to claim that the Yuan adjustment affects strongly on the U.S (Hu, 2015)

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Chart 1 Annual U.S trade deficit with China2

As Chinese goods imported from the US remained unchanged over the years, the data on exports from China increased steadily year by year, leading to a more serious trade imbalance The data collected for 2018 - the year that trade measures took effect, even reached the highest figure since

2012

2.1.2 Intellectual properties rights violation

In mid-August 2017, Trump asked U.S Trade Representative Robert Lighthizer to investigate China's ability to investigate China's laws, policies, and practices that could harm intellectual property rights or public development of American technology

Previous presidential administrations often fulfilled China's demands for technology transfer in exchange for access to markets, which raised criticism and requestion for a more aggressive response from Washington

On November 20th 2018, the United States issued a statement accusing China of continuing infringement on intellectual property and technology even when the world's two largest economies were in a tariff war The new allegations were made in a 53-page detailed report published by U.S Trade Representative Robert Lighthizer just 10 days before President Donald Trump is scheduled

2 Data from United States Census Bureau

All figures are in billions of US$

Annual U.S Trade Deficit With China

Export Import Balance

Being inefficient to solve the criticism, the U.S government requested WTO to investigate China

in April 2007 with the documents of DS362 - China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights

WTO DS3624 - China – Measures Affecting the Protection and Enforcement of

Intellectual Property Rights – by The U.S (2009)

First claim: Copy right law

As claimed by the U.S., Article 4 in China’s Coyright Law disclaimed preservation

to projects that had been prohibited for communication to public, which was against

Article 9.1 – TRIPS5

Second claim: Customs measures

China’s Customs Laws allowed customs department to dispose optionally

IP-violating commodities extracted at the border and not to depredate them, which was

not relevant to Article 46 and 59 of TRIPS

Third claim: Criminal thresholds

Commodious thresholds of Chinese violators to operate their business were reported

to infringe Article 61 of TRIPS

In response to the United States, China has justified fiercely on its position not to violate the TRIPS Agreement In January 2009, defects in IPRs protection were found to be inconsistent with TRIPS

by the WTO commitee According to the WTO council, China's legal to not protect copyright for works that do not meet TRIPS Agreement is a violation Furthermore, it is unacceptable that

3 USTR – the United States Trade Representative

4 Panel Report, China-Measures Affecting the Protection and Enforcement of Intellectual Property Rights, WT/DS362/R (Jan

26, 2009), available at http://www.wto.org/english/tratop_e/dispu_e/362r_e.pdf

5 The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal

agreement between all the member nations of the World Trade Organization (WTO)

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counterfeit can be sold publicly at auction in China by merely erasing the violating trademarks as the only condition Nonetheless, the council found inadequate provements to conclude that China violated the TRIPS Agreement as the third claim of Americans Both sides accepted the outcome

of the investigation and China gave its promise to execute the recommendations in March 2010 (2009)

Concerns about China's regulations on intellectual property (IP), technology and innovation resulted in the Section 301 Investigation launched by Trump On March 22nd 2018, Donald Trump initialed the paper of Memorandum on Actions by the United States Related to the Section 301 Investigation, which accused China of:

− Using regulations in joint venture, overseas investments and licensing procedures to urge U.S firms to reveal their technology know-how;

− Maintaining inequitable forces to prevent Americans from getting profits for their IP;

− Facilitating businesses that capture large-scale of technology and IP to assist China’s policy

of “Made in China 2025”;

− Conducting cyber intervention to U.S network to get valuable information

2.1.3 Threatens to global position

China has ambition to be the leading nation in technology In 2011, the Chinese State Council first discussed about Made in China 2025 (MIC 2025) project and adopted the whole plan two years later

MIC 2025 is a 10-year plan, inclusive framework purposed at transforming China to a world leading advanced manufacturer As introduced by the Chinese State Council and reported by Scott Kennedy6, the project includes clear principals, goals, tools and sector focus MIC 2025 were made

to transform China’s production to be innovation-driven, to stress quality over quantity, to gain environmental-friendly progress, to optimize the economic design and to foster human resources The program identifies the objective of increasing local content of main elements and substances

to 40% by 2020 and 70% by 2025 to achieve the goal of capturing the highest components of global manufacturing chains The importance of State is pressed by issuing the total project structure, deploying financial instruments and supporting creative manufacturing centers However, MIC

2025 emphasizes the market – driven factors and healthy business environment by relying on

6 Senior Adviser and Trustee Chair in Chinese Business and Economics

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market establishments, reinforcing intellectual properties rights protection and permitting firms to generate their own technology standards (Kennedy, 2015)

In 2017, the United States Chamber of Commerce released the report Made in China 2025: Global

ambitions built on local protections 7, reflecting on China’s execution of the Made in China 2025 (MIC 2025) project

This project aims at 10 industries that the U.S Chamber of Commerce evaluated as unfavorable to global economic competitiveness Being contraditory to the annouced measures to execute MIC

2025, Chinese government seems to overprotect the projected sectors from foreign competition and violate basic IPR protection Particularly, the report listed four facts to clarify the criticism:

− Market access: Chinese governments have been issuing foreign equity restrictions and unreasonable request for joint – ventures, requiring technology know-how to be transfered

to become Chinese firms partners

− Licensing: China’s licensing procedures might be substantial, lumbering and inequitable In telecommunications industry, precondition licenses are required for firms operating in basic

or value – added services, which is inessential as WTO agreements Moreover, the government has equipped such licenses for 29,000 local firms but only 41 foreign firms since 2013

− Laws, Regulations and Standards: Some issued regulations are reported to limit foreign firms to access to China’s market like the National Security Law, The Cyber Security Law, The National Cyber Security Strategy, etc

− Procurement and Bidding: The State involved deepply in some industries via state – owned firms to prevent foreign firms from procurements Examples in medical devices and electric batteries industries were given as evidences

It can be inferred that the U.S is being pessimistic about the project Made in China 2025 Parts of the concern are related to the problem of American firms being appropriated their technical know-how, which can threaten the position of the U.S on global scale

2.2 Retaliations from both sides – tariff measures

Because of the reasons stated earlier, the US government has directly implemented policies to start

a trade war between the two countries In this situation, China immediately implemented other

7 https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf

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policies to respond to unfair trade measures that the US government took The two sides have consistently made allegations as well as tariff and non-tariff trade measures to combat and punish each other

One of the bases for Donald Trump's government to take commercial measures to punish China is Section 301 Sections 301 through 310 of the Commercial Act of 1974, are often known as Section

301, which is known as one of the pricipal regulated actions that the U.S executes their rights under unfair treaties to the U.S exports After 2010, USTR has brought all trade sanctions with WTO members directly to the council for investigation The Trump administration utilizes Section

301 as previous U.S practices Foreign acts and policies that were under the investigation of USTR, concluded as: (1) being incompatible with a trade agreement or (2) being immoderate and violated

to the U.S commerce Course of actions are projected execution following a timetable which determines when to address such measures (M.Morrison, 2019)

After the initial of a Section 301 inspection, USTR is in quest for negotiated agreement with the involved nations If the concerned countries are involved in one organization or trade agreement such as the Uruguay Round or WTO, the specific regulated sanction procedures are required The USTR has a period of 12-18 months to reach a negotiated agreement under Section 301 If not, determinations to retaliate at a relative level to the calculated loss are made by the USTR (M.Morrison, 2019)

Under the impact and policies introduced from section 301 investigation, China also responded, which both included tariff or non-tariff measures

The real deficit begins when on January 22nd 2018, the U.S announced to apply tariffs on solar panels and washing machines imported into the U.S China was one of the countries most affected

by this policy According to statista.com, China accounts for 8% of the countries acting as US solar panels suppliers Besides, washing machines are items that the US has imported from China with

a value of $1.1 billion USD in 2015 Not stopping there, the US continues to impose tariffs on steel and aluminum imported from all other countries And China is also heavily influenced by this tax policy Right after that, series of tax tranches are officially cunducted on the basis of Section 301 and responses from China also emphasized the trade dispute

Country imposing

tariff

Ad Valorem Tariff Rates

Stated Imports Impacted Tariff Actions and Dates

$60 billion

5% and 10% hikes on 24/9/2018; increased to 10%, 20%, and 25% on selective products, effective 1/9/2019

U.S

Tranche 4

Implemented on Annex A on 1/9/2019; on Annex C on 15/12/2019 (postponed)

Table 1 The U.S and China tariff measures8

During the entire process from the first round of tariffs to date, the United States has implemented 25% tax on $250 billion USD of goods imported from China (not including Tranche 4 as the implementation has not been completed) In contrast, on the Chinese side, $110 billion USD of US goods is taxed between 5% and 25% The reason for the lower value of the US goods from China compared with the opposite side comes from one of the reasons leading to this trade war - the issue

of US trade surplus to China The amount of goods imported from the United States to China is much less than that of China exported to the United States In 2018, the import value from the United States was only nearly $120 billion USD while the export value reached $480 billion USD

8 Data from USTR and Chinese Ministry of Finance, aggregated partly by (M.Morrison, 2019)

On February 3rd 1994, an end to the trade restriction on Viet Nam was put by Clinton Viet Nam and the U.S officially restored relations on July 11th 1995 The primary U.S ambassador in Viet Nam was settled two years after (Clinton, 1995)

In 1986, Viet Nam transfered from a central-planned economy to a market-determined socialism

A projected-plan for 30 years was made for the hasty growth of the whole economy after a frozenstiff stage Since then, Viet Nam’s real GDP has been about 6% on average every year On July 13th 2000, a bilateral trade agreement (BTA) was signed, which enabled Viet Nam to enjoy the conditional most favoured nation (MFN) status

A Trade and Investment Framework Agreement (TIFA) established in June 2007 as well as a Council to confer about applying agreements of TIFA, WTO and general regulations between Viet Nam and the U.S Since then, Viet Nam has been striving to narrow the relation gaps The U.S government accepted Viet Nam to join in the Generalized System of Preferences, which encouraged Viet Nam to participate more in commerce between the two nations

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Chart 2 Growth in merchant trade between Viet Nam and the U.S from 2001 to 20179

As can be seen from the chart, trade flows between the United States and Vietnam grew quickly from 2001 to 2017

Year-over-year growth of imports appears to be more even than exports with an average fluctuation margin of $556,350,000 USD Meanwhile, the export value has always sharply increased over the years, with the average fluctuating amplitude of $2,530,251,380 USD

Taking a closer look at exports from Vietnam to the U.S in 2017, with a total export value of

$41,549,715,000 USD, Vietnam ranked 12th on the ranking of countries supplying the United States, accounting for 2.0% of imports into the United States It can be said that, although only building trade relations at the end of the twentieth century, over 20 years, the trade relationship between Vietnam and the United States has had many positive changes (Asian Affairs Specialists, 2018)

9 Data from TradeMap, trade balance is calculated by author

0 5000000