India frees trade with Vietnam

India has granted market economy status to communist-ruled Vietnam,
an important step to ramp up its economic engagement with the
Association of South East Asian Nations (Asean). Industry and trade
officials here said yesterday that the move gave more substance to a
free trade agreement between the two sides. India granted the market
economy status during bilateral talks between Prime Minister Manmohan
Singh and his Vietnamese counterpart Nguyen Tan Dung on the sidelines
of Asean summit in the sea resort of Hua Hin in southern Thailand on
Sunday. The conferring of market economy status by India to Vietnam
came before the World Trade Organisation (WTO) deadline after Hanoi
insisted on it before signing the India-Asean Free Trade Agreement.
In a market economy, prices of goods and services are determined by
demand and supply. With the new move, India will accept prices
prevailing in the Southeast Asian nation as the basis for determining
investigations into complaints of anti-dumping against imported
goods, officials say. India is yet to give such status to China,
another communists-ruled country. Earlier, India used to investigate
dumping cases from Vietnam on the basis of prices prevailing in a
third country. Anti-dumping probe arises when a recipient country
suspects that the exporting nation is supplying goods at abnormally
low prices that will affect the domestic industry of the importing
country and the prices are controlled by the government of the
exporting country. In fact, India had recently imposed anti-dumping
duty on textile imports from Vietnam. Although India-Asean FTA would
have gone into force even without Vietnam signing the document,
India did not want any of the ten- member countries of Asean to remain
out of the deal, Indian officials say. They pointed out that the FTA
between South Korea and Asean did not include Thailand for a long
time. All Asean member-countries, Australia and New Zealand have
already recognised Vietnam as a market economy country, which
registered one of the highest economic growth in the region. Trade
volume between India and Asean stood at $48 billion in 2008 and is
expected to touch the $50- billion mark next year.