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On August 5, 2024, Costa Rica officially recognized Vietnam as a market economy, issuing an announcement and presenting a diplomatic note from the Costa Rican Minister of Foreign Trade, with the agreement of the country’s President. This makes Costa Rica the 73rd country to officially recognize Vietnam’s market economy status, marking a new milestone in Vietnam’s efforts to enhance its position in the international market.
The recognition by Costa Rica signifies strong trust and support for Vietnam’s economic reform process. Since the Renovation period, Vietnam has made continuous efforts to build an open, internationally integrated, and sustainable economy. This recognition is a testament to Vietnam’s achievements in improving its business environment, increasing transparency, and enhancing competition.
Costa Rica, with its stable economy and political system, sees great potential in Vietnam for promoting bilateral trade and investment. Recognizing Vietnam as a market economy will facilitate Costa Rican businesses in expanding their market presence in Vietnam, especially in sectors such as agriculture, tourism, and information technology.
Costa Rica is a member of the World Trade Organization (WTO) and the Organization for Economic Co-operation and Development (OECD), which comprises 38 of the world’s most developed market economies.
With Costa Rica’s recognition of Vietnam as a market economy, any trade remedy investigations by this country against Vietnam (if any) will be conducted in accordance with the regulations applicable to a market economy. When a country is recognized as a market economy, the method for calculating normal value in anti-dumping cases changes. Instead of using substitute values from another country (commonly applied to non-market economies), the value of the product is determined based on the actual sales price or production costs in that country.
This helps Vietnamese businesses more easily demonstrate that they are not dumping or negatively impacting the market of countries like Costa Rica and ensures they are not unfairly treated in cases involving trade remedy measures, such as anti-dumping, countervailing duties, and safeguards.
According to WTO statistics, as of December 31, 2023, Costa Rica had initiated 12 anti-dumping investigations on imported goods from countries such as Brazil, Chile, Mexico, the United States, Nicaragua, El Salvador, Venezuela, and Guatemala.
This is a positive development as Vietnam continues to seek recognition of its market economy status from several trade partners, most notably the United States. Vietnam has actively sought to strengthen trade relations with the USA in recent years. However, despite several extensions, the USA has not yet provided a definitive answer on whether it will recognize Vietnam as a market economy.
Costa Rica’s recognition of Vietnam as a market economy is expected to influence the USA to view Vietnam’s market economy status more positively, accurately reflecting the achievements Vietnam has made in its development and integration into the global economy.
Recognition by countries like Costa Rica and potentially the USA is particularly important as Vietnam accelerates trade liberalization in the international market, amid new challenges and opportunities such as the USA-China trade tensions in 2024. This situation provides Western developed countries with an opportunity to reduce imports from China and enhance cooperation with markets like Vietnam.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for Anti-dumping & countervailing. If you need any advice, please contact us for further information or collaboration.
