Vietnam: Trade war and characteristics of trade war

Vietnam: Trade war and characteristics of trade war

A trade war is a situation in which countries impose restrictive trade measures on each other, primarily through the implementation of protectionist measures like tariffs, quotas, subsidies, or other trade barriers.

The purposes of these measures are usually to protect domestic industries, reduce trade deficits, or exert economic pressure on other countries.

Trade wars are often seen as a short-term solution but can have significant and multifaceted impacts on the economies of the participating countries as well as the global economy.

* Key characteristics of a trade war:

(1) Tariffs and Trade Barriers:

Countries increase import taxes or apply trade restriction measures to reduce imports from abroad.

When a country imposes tariffs on imported goods, the prices of those products increase. This can raise the cost of living for consumers, especially for essential goods or products that are irreplaceable.

(2) Retaliatory Measures:

When one country implements protectionist measures, the other country may retaliate by applying similar measures, leading to a spiraling escalation.

(3) Global Economic Impact:

Trade wars can slow global economic growth, destabilize markets, and affect international supply chains.

When countries face export restrictions to major markets, domestic industries may struggle, leading to reduced production and lower demand for labor, which directly affects unemployment rates and the overall economic health.

(4) Diplomatic and Political Conflicts:

Trade wars often accompany political tensions between the involved nations.

The imposition of retaliatory measures (such as tariffs) can lead to further conflicts, damaging international relations and cooperation in other areas like security, the environment, or other global issues.

Vietnam: Trade war and characteristics of trade war​ (Image from the internet)

What are the exceptions to most favored nation treatment in trade in goods according to regulations?

According to Clause 1, Article 3 of Ordinance 41/2002/PL-UBTVQH10:

Most favored nation treatment in goods trade is treatment not less favorable than the treatment Vietnam gives to imported goods originating from one country compared to similar imported goods originating from a third country, or goods exported to one country compared to similar goods exported to a third country.

Exceptions to the Most Favored Nation treatment in goods trade as per the regulations include:

1. Preferences for members of economic linkage agreements that Vietnam signs or joins;

(2) Preferences for countries sharing a border with Vietnam to facilitate cross-border merchandise exchange on the basis of bilateral agreements;

(3) Preferences for developing and least developed countries;

(4) Preferences under transit goods agreements that Vietnam signs or joins;

(5) Procurement for goods in projects using funding from international organizations or foreign entities and other projects as prescribed by the Government of Vietnam.

(Article 8 of Ordinance 41/2002/PL-UBTVQH10)

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