The U.S. Commerce Department said on Wednesday it has delayed a difficult decision on whether to upgrade Vietnam to market economy status by about a week until early August, citing IT disruptions from the CrowdStrike software bug.
A decision on the upgrade that Hanoi has long sought had been due by Friday. The upgrade is opposed by U.S. steelmakers, Gulf Coast shrimpers and honey farmers, but backed by retailers and some other business groups.
It would reduce punitive anti-dumping duties on Vietnamese imports given the country’s current status as a non-market economy marked by heavy state influence.
A Commerce Department memorandum dated Wednesday and seen by Reuters said that “in light of ongoing disruptions to U.S. Department of Commerce … IT resources and platforms” deadlines for final determinations in anti-dumping cases would be extended “by a total of six days.”
A Commerce Department spokesperson said a “small number” of anti-dumping and countervailing duty case filings were disrupted by the recent botched software update by cybersecurity firm CrowdStrike (CRWD.O), opens new tab, which crashed computer systems worldwide.
“Consistent with Department of Commerce actions taken in response to the disruptions resulting from such incidents, deadline extensions in certain AD/CVD cases have been made. The Vietnam non-market economy status case is included among these, and will be made public by Friday, August 2nd.”
PARTY LEADER’S FUNERAL
A July 26 deadline set by Commerce for the Vietnam announcement became awkward after the death last week of Vietnam’s Communist Party leader, Nguyen Phu Trong, because it would have coincided with his state funeral set for Friday.
U.S. Secretary of State Antony Blinken had been due to stop in Vietnam for Friday’s funeral at the start of an Asia tour, but he is now expected to pay his respects to Trong’s family at the weekend.
During his time as party head, Trong pursued a pragmatic foreign policy, including nurturing ties with the United States.
Analysts said that announcing a negative outcome of the Commerce review on the same day as his funeral could have been damaging to ties Washington has worked equally hard to foster in the face of growing strategic competition with China.
Vietnam has long argued it should be freed of the non-market label because of recent economic reforms, and it said that retaining the moniker is bad for increasingly close two-way ties that Washington sees as a counterbalance to China.
Opponents of upgrading Vietnam – one of 12 economies labeled by Washington as non-market, including China, Russia, North Korea and Azerbaijan – argue that Hanoi’s policy commitments have not been matched by concrete actions and it operates as a planned economy governed by the ruling Communist Party.
Alexander Vuving, of the Hawaii-based Inouye Asia-Pacific Center for Security Studies, said it was a “painful” decision for the Biden administration, given its competing desires to court Vietnam and to assuage domestic labor and industry lobbies with the Nov. 5 presidential election fast approaching.
“Trong’s death could put more pressure on the U.S. to court Vietnam in the context of the U.S.-China rivalry,” Vuving said. “The first days of Vietnam’s new leadership is important in setting Vietnam’s future direction.
“The decision will depend much on whether the election concerns weigh more than the great power competition concerns, and whether the White House wants to influence the Commerce Department or to encourage it to make an unbiased decision.”
During a visit by U.S. President Joe Biden to Hanoi last year, the U.S. and Vietnam elevated ties to a comprehensive strategic partnership and U.S. Treasury Secretary Janet Yellen has promoted Vietnam as a “friend-shoring” destination to shift U.S. supply chains away from China.