State by State: Vietnam and New York State Trade
New York State’s US$1.57 billion trade deficit with Vietnam should encourage its residents to pay closer attention to the Southeast Asian ASEAN member. Imports to the state from Vietnam in 2014 were up 10.9 percent from the previous year to reach US$1.721 billion, ranking the country in 17th place as an origin of New York State’s imports. The trade relations are one-sided, but the pace is picking up in New York’s exports growth. The state’s US$151 million in exports to Vietnam in 2014 was up 17.2 percent from 2013, and up 517 percent from 2005.
Vietnam’s Ministry of Industry and Trade reported a US$3.75 billion national trade deficit for the first half of 2015. Trade relations with New York go some way to plugging this gap.
The top five merchandise exports from New York State to Vietnam are manufactured commodities, non-electrical machinery, computer and electronic products, fabricated metal products, and chemicals.
Exports to the ASEAN region as a whole are important for New York. The US$4.11 billion in goods and services exports to ASEAN in 2012, of which most were goods, were approximately three percent of the state’s total exports that year. These exports supported 25,578 jobs in the state in 2014, of which 13,589 were supported directly. In the U.S. as a whole, over 560,000 jobs were supported by exports to ASEAN in 2014.
Tariffs in the TPP
When the Trans-Pacific Partnership negotiations are finalized, New York businesses will be able to take advantage of reductions in tariffs in the multilateral trade bloc including the U.S. and Vietnam. New York may benefit from the reduction in tariffs of its wine exports, which faced a 54 percent rate in 2012. Key tariff rates on imports to New York from Vietnam include those on man made fiber shirts, and women’s synthetic fiber suits, which in 2013 faced rates of 32 percent and 27.5 percent respectively.
Following its World Trade Organization obligations, the U.S. has granted Vietnam Most Favored Nation status, extending the country preferential tariffs.
Relations between New York and Vietnam are deeper than trade alone. Results from the 2010 U.S. Census showed that New York State had 28,764 Vietnamese residents, a 21 percent increase from 2000 and ninth out of 50 states for the number of its Vietnamese population. New York City ranked 10th in a list of cities by Vietnamese population, with 13,387 residents.
The United States Census Bureau has found that Vietnamese residents of the U.S. are close to being on par with other Southeast Asians when it comes to English proficiency – only 33.1 percent reported not speaking English either well or at all, compared to 27 percent of Laotians and 21.7 percent of Thais. In 2010, 1,381,488 Vietnamese residents reported speaking a language other than English at home. Language skills of these New York residents can be an asset to local companies dealing with Vietnam.
High-level dialogue supports closer ties
Ties between the U.S. and Vietnam go right to the top of their respective political systems. On July 7, 2015, Vietnam’s Communist Party Chief Nguyen Phu Trong will meet with President Barack Obama to discuss the TPP and bilateral defense cooperation between the two countries. This historic visit is in celebration of the twentieth anniversary of normalized diplomatic ties.
On a more local level, the U.S. State Securities Commission has taken an active role engaging with U.S. investors in New York to promote the Vietnamese market. An investment promotion conference “My Vietnam – Your Investment Destination” in July in New York City focused on securities policies in the U.S. and Vietnam, and U.S. companies’ experiences operating in Vietnam. Currently, 995 U.S investors in Vietnam hold over one billion shares in its securities market, valued at over VND12 trillion (US$550 million). At the conference, the Ministry of Finance presented new policies and mechanisms in Vietnam’s financial market.
Further Support from Dezan Shira & Associates
Dezan Shira & Associates can service New York-based companies that are looking to further develop their operations in Vietnam. The firm can help companies establish a direct office in the country and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at: firstname.lastname@example.org.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
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