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Vietnam Scrambles to Avoid Landing in the Next US Trade Dispute

Ralph Jennings

   TAIPEI, TAIWAN - The U.S. government agreed this week to give another
   coast guard vessel to Vietnam so the Southeast Asian country can
   increase its defense against China. But behind that move, Vietnam and
   the United States are struggling over a growing trade deficit that has
   alarmed U.S. officials.

   The U.S. government has complained since June that Americans buy more
   Vietnamese-produced goods compared to what Vietnamese consumers take
   from the United States.

   Vietnam relies heavily on export manufacturing for its economic growth
   of more than 6% per year. The deficit reached about $40 billion in
   2018, which the U.S. Census Bureau calls the fifth largest between the
   United States and another country.

   The diversion of export manufacturing from China, now saddled by U.S.
   tariffs, to Vietnam particularly alarms Washington, analysts say.

   "The concern from the Vietnamese side is that the U.S. could say, 'OK,
   we're going to put tariffs on exports from Vietnam.' That's the fear,"
   said Rajiv Biswas, Asia-Pacific chief economist at market research firm
   IHS Markit.

   "But I think they could avoid that kind of risk by undertaking some
   substantial purchases of big-ticket capital goods from the U.S.," he
   said.

   Vietnamese leaders are looking for ways to satisfy the U.S. government
   and avoid another protracted dispute such as the one Trump launched
   against China in early 2018, country analysts say.

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