NEW DELHI: The government is considering recognising Vietnam as a market economy after Hanoi had insisted that it would be a signatory to the recent India-Asean FTA only if New Delhi gives the trade status where prices of goods and services are determined by the forces of demand and supply.

The commerce department has prepared a Cabinet note on the issue, which is being circulated among other ministries and departments for comments.

“Since Vietnam has decided to link the FTA with its getting market economy status, we feel that we should look at the issue sooner than later. We have prepared a Cabinet note proposing that the status should be granted to the country,” a commerce department official, who did not wish to be named, told ET.

India is under no multilateral obligation to grant Vietnam market economy status at this point as under World Trade Organisation stipulations, all members have to recognise Vietnam as a market economy only by 2018. China, too, has not been given market economy status by India.

Vietnam is the largest producer of cashew nuts with a one-third global share, the largest producer of black pepper accounting for one-third of the world’s market and second largest rice exporter in the world after Thailand.

Once an economy is recognised as a market driven one, prices supplied by the country in all anti-dumping investigations against it have to be accepted as real prices and the investigating country cannot rely on third country prices for the same.

Anti-dumping investigations take place when a country suspects that the exporting country is supplying goods at prices lower than what is existing in their own economies.

In such investigations, prices often play an important role as the dumping margin, and the anti-dumping duty to counter it, is calculated on the basis of prices prevailing in the exporting country’s market.