[CTC] Vietnam Commits To Enacting Labor Reforms Necessary To Comply With TPP

[Arthur Stamoulis]

Inside U.S. Trade - 07/10/2015
Vietnam Commits To Enacting Labor Reforms Necessary To Comply With TPP
Posted: July 09, 2015
Vietnam this week committed to the United States that it will carry out reforms that "may be necessary" to implement obligations it takes on as part of the Trans-Pacific Partnership (TPP), including those related to ensuring its laws and regulations uphold the fundamental labor rights contained in a 1998 International Labor Organization (ILO) declaration.

The commitment came in a U.S.-Vietnam "joint vision statement" released after a July 7 meeting at the White House between President Obama and Vietnamese Communist Party General Secretary Nguyen Phu Trong.

"The United States and Vietnam expect to work in close coordination with the other negotiating parties to conclude the ambitious and comprehensive [TPP] agreement as soon as possible, and to carry out whatever reforms may be necessary to meet the high standards of the TPP agreement, including as necessary with respect to commitments relating to the 1998 ILO Declaration of Fundamental Principles and Rights at work," the statement said.

The U.S. labor proposal in TPP largely reflects the so-called "May 10" template, which requires countries to adopt and maintain in their laws and regulations five fundamental rights contained in the 1998 ILO Declaration. These are: the freedom of association and the effective recognition of the right to collective bargaining; elimination of all forms of forced or compulsory labor; effective abolition of child labor; and the elimination employment and occupational discrimination.

But U.S. labor unions and some congressional Democrats including House Way & Means Committee Ranking Member Sander Levin (D-MI) have argued that complying with these obligations, especially on freedom of association, will be difficult for Vietnam because it is a Communist country with one officially recognized union and does not allow independent unions.

Levin has called for TPP countries such as Vietnam to adopt the legal reforms needed to bring themselves into compliance with the labor chapter before a TPP implementing bill is submitted to Congress.

The Office of the U.S. Trade Representative has long been in talks with Vietnam to develop an action plan to address specific labor issues in the context of TPP, but Levin and other House Democrats say the administration has failed to show it has a clear plan for addressing labor problems in Vietnam and Mexico as part of the negotiations (Inside U.S. Trade, June 5).

In a statement released prior to the Obama-Trong meeting, Levin cast doubt on Vietnam's interest in taking concrete actions to comply with basic labor standards that would be part of TPP.

"Labor reform in Vietnam must mean more than lip service -- it must mean concrete action that complies with basic international standards before, not after, an agreement," Levin said. "It must be made clear during the General Secretary's visit that TPP will require meaningful implementation of international standards so there's a real right of assembly, including the right of workers to choose their representatives and their own organizations at all levels. We met with the General Secretary when I traveled with the delegation to Vietnam in March, and there was no meaningful discussion of any real change."

Levin's office did not respond to a request for further comment following the release of the U.S.-Vietnam joint vision statement.

The joint statement also called for a "balanced" TPP agreement, in a possible reference to Vietnam's demand that the U.S. show flexibility toward it in the negotiations because it has the lowest level of development among participating countries. That was one of the messages Trong conveyed in a July 6 meeting with USTR Michael Froman, according to an informal translation of a readout posted on Trong's website.

"Both countries are committed to a high-quality, balanced TPP agreement that meets the interests of all parties and creates a new long-lasting, mutually beneficial framework for economic and trade cooperation between the United States and Vietnam, while providing a new impetus for regional economic cooperation and contributing to cooperation and prosperity in the Asia-Pacific region," the joint vision statement said.

The statement also a gave a nod to Vietnam's demand that the U.S. recognize it as a market economy for the purposes of trade remedy investigations. "The United States applauds Vietnam's progress in economic reforms and affirms continued support for and constructive engagement with Vietnam, and the United States notes Vietnam's interest in pursuing market economy country status," the statement said.

Trong emphasized this point several times during a July 8 speech to the Center for Strategic and International Studies (CSIS), in which he called for the U.S. to recognize Vietnam as a market economy in the context of TPP, in addition to opening up its market to high-priority Vietnamese goods.

Although Trong did not specify which goods are priorities for Hanoi, Vietnam has made obtaining greater market access for its apparel and footwear exports to the United States as two of its top three priorities in the TPP negotiations, with the other being securing market economy status.

In exchange for this greater access and its treatment as a market economy, Trong said in his CSIS speech, Vietnam is willing to open up its market to more high-tech goods from the U.S. He also said TPP should deal with bringing more U.S. investment into Vietnam.

Being treated as a non-market economy (NME) in trade remedy proceedings can have the effect of driving up the level of antidumping or countervailing duties that are imposed (Inside U.S. Trade, April 12, 2012).

Vietnamese Ambassador to the U.S. Pham Quang Vinh said in March that he hoped the market economy status issue would be resolved upon TPP's conclusion, although prospects for a change in NME status along that timeline were tamped down by his counterpart, U.S. Ambassador to Vietnam Ted Osius (Inside U.S. Trade,March 27).

Revoking NME through a trade deal would be difficult because the U.S. Department of Commerce has its own criteria by which it is supposed make such a decision. The six criteria are currency convertibility; the extent to which wage rates are determined by free bargaining; openness to joint ventures or other forms of foreign investment; the extent of government ownership or control of the means of production; the extent of government control over allocation of resources and over the price and output decision of enterprises; and any other factors the department considers appropriate.

In remarks following the White House meeting, which was also attended by Froman, Trong hinted that the two leaders did indeed discuss some of the key outstanding issues between the two sides in the TPP negotiations, but did not specify what they were.

"In a constructive and candid manner, we also discussed our differences and the way forward, including the Trans-Pacific Partnership, the TPP, as well as the human rights issue," Trong said, speaking through a translator. Obama noted that he and Trong had discussed TPP and its economic potential, but did not indicate any discussion on labor aside from a general discussion of human rights.

In addition to TPP, the meeting covered a range of issues including maritime disputes in the Asia-Pacific region, cultural exchanges, global issues, human rights and freedom of religion. The meeting coincided with the 20th anniversary of the normalization of U.S.-Vietnam relations.

During remarks at a July 7 lunch in honor of Trong, Vice President Joe Biden urged Vietnam to seek quick completion of the TPP negotiations.

"I want to thank you for your efforts so far in this agreement general and urge that we make further progress so we can make sure we cross the finish line," he said, according to a White House pool report. "There's much more to do in a short amount of time."
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