Thayer Consultancy Background Brief:

ABN # 65 648 097 123

Vietnam-U.S. Economic
Relations Under Biden
Carlyle A. Thayer
November 10, 2020

We request your assessment about the economic prospects of U.S.-Vietnam relations

under a Biden administration.
Q1. In his speech on November 7, Vice President Biden said trade would be one of the
priorities that his Administration would tackle from day one. The Trump
Administration is threatening to impose tariffs on goods imported from Vietnam as a
new front in the US' next trade war. In your assessment, how will the Biden
Administration deal with Vietnam’s large trade surplus?
ANSWER: The Trump Administration will come to an end on 20 January. It is not known
if the Office of the United States Trade Representative (USTR) will complete its two
investigations into allegations that Vietnam manipulated its currency and exported
timber that was illegally obtained. The U.S. Treasury is late in filing its report on
currency manipulators and this report could be completed over the next seventy days.
If the USTR and Treasury conclude that Vietnam manipulated its currency sanctions
they are likely to recommend sanctions.
This issue arose during Secretary of State Pompeo’s recent visit to Vietnam. Vietnam
stressed that an earlier agreement on an Action Plan to address the trade imbalance
should be implemented.
During Pompeo’s visit a number of agreements were reached between American
companies and their Vietnamese counterparts to develop Vietnam’s energy sector by
constructing gas-fired plants and importing billions of dollars’ worth of American LNG
over the coming years. Vietnam has also promised to improve the environment of U.S.
investment.
It should be recalled that Vietnam sought to address Trump Administration concerns
by placing orders for billions of dollars’ worth of Boeing aircraft. Unfortunately, the
safety issues of the Super Max meant these sales did not go through.
In sum, if the Biden Administration decides to address its growing trade imbalance
with Vietnam, they will find that Vietnam will agree to take appropriate action to avoid
the imposition of sanctions.
Q2. The Obama-Biden Administration negotiated with Vietnam and other Asia-Pacific
countries on the Trans-Pacific Partnership trade agreement, but Trump pulled the U.S.
out of it. Do you think the Biden Administration will re-join the trade pact?
 2

ANSWER: It is entirely possible that the Biden Administration will have a look at the
Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The original TPP
agreement was revised to leave open the possibility of addressing U.S. concerns
should the United States decide to re-join.
However, Biden Administration is unlikely to re-join the CPTPP for two reasons. First,
a Republican Senate is highly unlikely to approve this trade treaty. Second, Democrats
are divided on the issue of multilateral trade agreements and will not want to stoke a
contentious issue. The Biden Administration is more likely to seek to negotiate
bilaterally to improve the terms of trade with specific countries than join a multilateral
arrangement.
Q3. Vietnamese leaders are still silent on Biden's win. In your opinion, why have they
not joined other Asian leaders, including Japan, South Korean and India, to
congratulate the U.S. president-elect? How can Vietnam’s leaders ensure that
economic relations with the Biden Administration are amicable?
ANSWER: Vietnam’s leaders were quick to congratulate Donald Trump when he was
elected because it was not controversial. However, Vietnam’s leaders are risk adverse.
Public opinion polls of Vietnamese showed a clear preference for Trump over Biden,
particularly because of Trump’s anti-China stance. Vietnam’s leaders do not want to
act precipitously and be drawn into America’s domestic fray. They are likely to wait
until the courts make their decision and the Electoral College duly elects Joe Biden as
president.
Once the Biden Administration takes office, Vietnam will be quick off the mark to open
contacts and arrange for the exchange of official visits. Vietnam will stress the
importance of the comprehensive partnership agreed by the Obama Administration
(when Biden was Vice President) and enhanced by the Trump Administration. The
Biden Administration will not pursue Trump’s transactional approach to economic
issues.
Vietnam will view the Biden Administration’s re-engagement with multilateral
institutions such as ASEAN as an opportunity to partner with the U.S. on a number of
issues. In other words, Vietnam will provide the U.S. with incentives to resolve trade
issues on a pragmatic basis.

Suggested citation: Carlyle A. Thayer, “Vietnam-U.S. Economic Relations Under

Biden,” Thayer Consultancy Background Brief, November 10, 2020. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.