Eu–vietnam free trade agreement: Substantial and procedural guarantees for labour protection in vietnam

Nội dung text: Eu–vietnam free trade agreement: Substantial and procedural guarantees for labour protection in vietnam

1. EU–VIETNAM FREE TRADE AGREEMENT: SUBSTANTIAL AND PROCEDURAL GUARANTEES FOR LABOUR PROTECTION IN VIETNAM Ph.D Nguyen Thi Thuy Hong – Do Viet Hoang Nguyen Thi Anh Tho – Nguyen Thi Thu Thuy1 Abstract: Since August 1st, 2020, the EVFTA Agreement has officially come into force after it has been ratified by the National Assembly of the two Parties. It can be said that EVFTA is one of the new generation Free Trade Agreements that Vietnam has acceded to, with many deep and wide commitments. According to economic experts, EVFTA is expected to bring many favorable opportunities to the economy and society of our country. This article explores the guarantees for labor protection in Vietnam, provided for by the Trade and Sustainable Development Chapter, and assesses their legal force. This research contains substantial guarantees, such as upholding and ratifying standards of the International Labour Organization (ILO), as well as procedural guarantees. The research concludes that both the substantial and procedural guarantees are rather weak and that the success of the chapter on sustainable development will ultimately depend on the goodwill of the Parties. Keywords: Free Trade Agreement, EU–Vietnam, sustainable development, labour protection, external relations, ILO. 1. INTRODUCTION The EU has become the world’s largest economy and the world’s largest trading block thanks to the suppression of internal barriers between Member States and the introduction of uniform market rules in its internal market. Over the years, the EU has adapted to and embraced globalisation by concluding Free Trade Agreements (FTAs) with third countries, in order to favour external trade and to position itself on the world scene. FTAs have been concluded with developed and developing countries alike; especially for the latter, the guarantee of free trade is paired with the promise of economic development and poverty reduction. In parallel to the regional approach followed with the Mercosur countries, the EU had initially been mapped out the conclusion of such FTA for a regional grouping of seven Member States of the Association of Southeast Asian Nations (ASEAN): Singapore, Vietnam, Thailand, Malaysia, Indonesia, Philippines and Myanmar. Negotiations started in 2007, however it was decided quickly after to halt these region–to–region negotiations in favour of bilateral trade agreements between the EU and the ASEAN Member States individually. The EU–ASEAN negotiating directives, previously agreed upon, became the basis for negotiations with individual ASEAN Member States. The EU–Singapore FTA was the first to be finalised, and entered into force on 21st November 2019. The EU–Vietnam FTA is a culminating point in the 30–year relationship between the two entities. After an initial Cooperation Agreement signed in 1995, bilateral cooperation was significantly expanded in the Partnership and Cooperation Agreement (PCA), which was signed in 2012 and entered into force in 2016. Immediately after the signing of the PCA, negotiations started for an EU–Vietnam 1 Sinh viên chuyên ngành Kinh tế quốc tế, Kiểm toán _Đại học Kinh tế quốc dân, Hà Nội. email: hongnt@neu.edu.vn, anhtho181999@gmail.com 828
2. FTA. The European Commission considered this FTA as “the most ambitious and comprehensive one ever concluded with a middle–income country”. Criticism of the Vietnamese regime and the prospect of an FTA came from both official instances and NGO’s alike. In February 2016, the European Ombudsman concluded that the refusal for the European Commission to carry out an a priori human rights impact assessment of the envisaged EU– Vietnam FTA constituted maladministration, given the specific human rights situation in Vietnam. On no less than three occasions (first in June 2016 and then again in December 2017 and November 2018), the European Parliament adopted separate resolutions on Vietnam, voicing its concerns on the wide range of human rights violations perpetrated by its government. Finally, several Vietnamese and international NGOs have written open letters to the European Parliament to urge it to postpone its consent for the FTA until human rights benchmarks are met by the Vietnamese government. Confronted with these concerns, the Commission argued that the provisions of the FTA are “strong, legally binding and enforceable” regarding labour rights, and that both Parties will guarantee their protection. Despite its previous positions, the European Parliament gave on 12 February 2020 its consent for the conclusion of the FTA, clearing the way for its impending entry into force. While criticising certain aspects of it, the European Parliament emphasised that the FTA is an “instrument for development and social progress in Vietnam, supporting the country in its efforts to improve labour rights and enhance protection at work”. Against this backdrop, our insight will assess the safeguards to protect labor standards contained in the FTA Sustainable Development Chapter and assess whether those measures are in line with EU goals. Is promoting high labor standards in EU foreign relations. While other mechanisms such as the conditional provision for violations of human rights and the basic EU law (in particular the EU Fundamental Rights Charter) may also play a role in the protection of labor rights. However, they are not consistent with the Vietnam–EU FTA and will therefore not be analyzed here. The structure of Insight will have two parts. First, we will analyze the basic FTA guarantees for labor protection. Second, we will analyze opportunities and challenges for Vietnamese workers when signing the EVFTA agreement. We conclude with important comments and propose a number of solutions to improve the quality of human resources and labor. 2. THE MAIN ARTICLES IN TSD CHAPTER In the EU–Vietnam FTA, provisions related to social and environmental development can be found in Chapter 13 “Trade and Sustainable Development” (the TSD Chapter). The provision on “Multilateral Labour Standards and Agreements” (Art. 13.4) is of particular interest as it stresses the commitment of both parties to the fundamental rights at work, in accordance with obligations stemming from their participation in the International Labour Organisation (ILO). Four rights are pinpointed: freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation. When comparing with the preliminary text of the EU–Mercosur FTA specifically, of which the Member States are also considered emerging economies, it includes in Art.4 of its TSD Chapter provisions on the respect of standards regarding health and safety at work, compensation for illness or injury and decent wages. These provisions, and especially the two latter, could play an important role in the prevention of a race–to–the–bottom economy and effective protection of labour standards. The absence of such references in the EU–Vietnam FTA lays bare the inconsistency of the Commission’s external trade policy and is questionable regarding the track–record of Vietnam. 829
3. The Commission’s approach has been from the outset to differentiate the general dispute settlement procedure for the FTA and the one for the TSD Chapter, focusing more on incentivising partner countries to work with the Union in a soft approach, through government–to–government consultations and cooperation in joint platforms. To favour such cooperation, the EU–Vietnam TSD Chapter provides, at Art.13.15, for the designation of a contact point within the administration of each Party and the establishment of three different (sets of) bodies with varying responsibilities. Firstly, the Committee on Trade and Sustainable Development (the Committee), which is comprised of senior officials from the relevant administrations of each Party. It is instituted under the auspices of the Trade Committee, established at Art. 17 of the FTA, which possesses a general competence for the oversight of the correct implementation of the FTA. Secondly the agreement foresees the creation of two sets of bodies, the Domestic Advisory Groups (DAG), set up by each Party. These bodies are to be comprised of independent representative organisations, ensuring a balanced representation of stakeholders, such as employers’ and workers’ organisations or business groups. Finally, the Committee must establish, at its first meeting after the entry into force of the Agreement, a Panel of Experts (Art.13.17), comprised of independent individuals with specialised knowledge or expertise in labour and/or environmental law. Furthermore, the dispute resolution mechanism provided for in the TSD Chapter is not integrated in the general dispute settlement procedure set out in Chapter 17. The two procedures are similar, however the latter provides for an arbitration procedure in case of failure to resolve the dispute, and provides for stricter rules on compliance with the final report and a system of remedies in case a Party does not comply. Secondly, the dispute resolution mechanism of the TSD Chapter leaves no room for claims brought by private actors and stakeholders. In contrast, the Investor–State Dispute Settlement (ISDS) mechanism of the Investment Protection Agreement (IPA) allows private investors to bring complaints against the Parties to an international tribunal when they feel that national legislation may have an unjust negative impact on their financial interests. Finally, it needs to be stressed that overly putting faith in a State–to–State dispute resolution procedure enhances the risk of very little litigation, in order not to disrupt diplomatic relations. The TSD conflict resolution procedure is in our opinion not satisfactory, as it lacks involvement of stakeholders, and is subject to the political will of the Parties. 3. SITUATION OF HUMAN RESOURCES IN VIETNAM According to the 2018 Global Competitiveness Report, Vietnam ranked 84/137 countries in the skills of university graduates and 79/134 in innovation capacity; The research outputs are far behind Thailand and Malaysia. 3.1. Shift in using labor groups In 2020, employment in Vietnam will continue to grow. In that, the shift from using simple labor groups to highly skilled groups. This is a positive and inevitable transition according to the trend of economic development. According to FALMI statistics, out of 110,172 turns of people wishing to find jobs in 2020, up to 94.78% of trained workers. In which, university and higher accounted for 66.57%, college accounted for 15.82% and intermediate level only 6.72%. These rates are mainly concentrated in the fields of finance – banking, accounting, IT, business administration, management and operation and marketing – public relations. Demand for job hunting in untrained workers accounts for a very modest proportion. Specifically the rate is 5.22%, primary vocational – technical worker with 5.67%. 830
4. 3.2. The qualifications of human resources are still limited Despite developing rapidly, the quality of human resources is still limited. Skilled labor has not met the needs of the market and integration. In companies, mechanical factories, and positions requiring high technology are often undertaken by foreign workers. Not only that, the gap between vocational education and market demand is still very large. Every year, thousands of students graduate from school. However, enterprises are still in the shortage of labor in many positions. The employee's working status is inconsistent with the profession being trained, as well as with the qualifications and skills trained. The statistics show that 81.1% of the workers have college degrees, 60.4% of the workers have intermediate education, and 23.8% of the workers with university or higher degrees do the jobs. requirement of professional and technical qualifications, skills lower than the professional and technical qualifications to be trained (by diploma/certificate). 4. THE IMPACTS OF EVFTA FOR VIETNAM EVFTA not only brings benefits in terms of number of jobs, but also has the potential to increase workers' wages through more efficient market operations and spillover effects on wages from FDI enterprises. 4.1. Opportunities According to research by the Ministry of Planning and Investment, the EVFTA Agreement is expected to increase jobs by about 146,000 per year, focusing on labor–intensive industries and high export rates to the EU market. The increase in job creation in some industries is expected as follows: textiles and garments increase by 71,300 (in 2025) and 72,600 (in 2030), respectively, compared to 2018 by 1.2%, 2.3% and 2.4.%; The leather and footwear sector has an employment growth rate of 4.3% and 3.8% in 2025 and 2030. Some other sectors that also have a high number of jobs are air transport (1.5% in year 2025), waterway transport (0.9% by 2025). However, some industries will be affected by job reduction such as forestry, mining, and rice production with a decrease of 0.26% to 0.36% per year. EVFTA not only brings benefits in terms of number of jobs, but also has the potential to increase workers' wages through more efficient market operations and spillover effects on wages from FDI enterprises. According to calculations, wages of FDI enterprises will be approximately 1% higher than domestic firms. Besides, EVFTA will help Vietnam reduce poverty faster. Specifically, the Agreement will help increase the rate of people out of poverty by 0.8 million by 2030, equivalent to a reduction in poverty rate of 0.7%. It is also likely to help narrow the gender pay gap by 0.15%, especially for those in the bottom 40% quintile. In addition, since the economies of the EU member states are more developed than Vietnam and are complementary to the Vietnamese economy, imports from the EU countries are largely uncompetitive. Therefore, with a reasonable tax reduction schedule, combined with perfecting the social security system, we can handle the social problems arising from joining EVFTA. In particular, since EVFTA includes environmental protection commitments, the process of opening up, liberalizing trade and attracting investment will be implemented in a more environmentally friendly way, helping us to grow sustainably stronger. In addition, labor commitments include allowing the establishment of employees' organizations in the enterprise or the establishment of a Domestic Advisory Group (DAG) to enforce trade commitments and Sustainable development with the participation of workers' 831
5. representatives, business representatives, scientists and non–governmental organizations in Vietnam can increase pressure on social monitoring in the process implementing the Agreement and thereby posing certain challenges for Vietnam. 4.2. Challenges Besides opportunities for employment as well as socio–economic development, most new jobs require workers to meet very high professional and skill requirements. Therefore, all related parties must join in, deploy synchronously many new solutions to exploit and maximize the strengths of the labor market The EVFTA is a new generation FTA with commitments on labour and environmental standards. Vietnam and the EU have agreed on an action plan with their commitments reaffirming the respect to and effective promotion of the four basic labour standards in line with the International Labour Organisation’s 1998 Declaration on Fundamental Principles and Rights at Work: freedom of association and the effective recognition of the right to collective bargaining, elimination of forced or compulsory labour, abolition of child labour, and elimination of discrimination in respect of employment and occupation. According to VCCI Chairman Vu Tien Loc, new generation FTAs are geared towards more humane and sustainable trade. Although there are no specific labour standards, FTAs contain labour– related provisions on the basis of the ILO’s principles. By cutting the export tariff on goods trade between Vietnam and the EU by up to 99%, EVFTA will bring more opportunities to Vietnamese companies to export to European markets. This is hoped to create more jobs and improve incomes for Vietnamese labourers, especially those in garment and textile, footwear and aquaculture industries. Notably, the EVFTA will also pose challenges and competition for high–quality human resources to Vietnamese enterprises in meeting increasingly stringent requirements of the European market on the quality of goods and services. Through the EVFTA, Vietnam has an opportunity to develop a sustainable and harmonious labour market, bringing benefits to both labourers and businesses. However, the trade pact also brings about challenges to businesses because they have no choice but to make changes to fulfill their commitments. Experts said to fully tap opportunities from the FTA, Vietnamese firms need to make adjustments to their strategies of human resources development. 4.3. Solutions Taking advantage of the employment opportunities offered by the EVFTA Agreement, experts, managers and businesses all think that all stakeholders must join in, join hands to build and improve the environment, working conditions; at the same time, to actively train and supply quality human resources for the labor market. Branches and localities pay attention to education and training development in association with scientific and technological development, invest in the replication and develop high–quality vocational training institutions according to international standards; attracting businesses to participate in vocational training; organize enrollment, vocational training according to the needs of the labor market a) Labor protection equipment Workers at work must use protective equipment or protective equipment such as safety goggles to protect themselves. In addition, with modern technology like now, it is possible to use safe machines, 832
6. equipment and technology instead of unsafe machines and equipment. Use safety mechanisms, equipment, preventive equipment such as boiler safety valve, pressure equipment, aptomat, fuse in electrical equipment When working, must comply with safety distances. regulations, do not violate the safety corridor of high voltage Use signals and preventive signs such as sound, color, light and other safety signs. In addition, there must be maintenance, repair, and preventive testing of machines and equipment. b) Safety measures Business owners must provide safety training and training for employees to raise awareness, understanding and awareness of the importance of labor protection. Organize technological lines, develop processes and instructions for safe operation of labor protection equipment, production rules. Organize work scientifically, arrange reasonable working and rest time. In addition, employees are always conscious to wear protective clothing when working. c) Keep safe Workers must always be conscious of keeping labor safety and safety in the production area. Business owners must provide workers with full labor protection equipment to ensure comfort, and hygiene for employees when working with dirty machinery and equipment. According to statistics, due to poor safety protection for workers, many serious occupational accidents happen every year. Thereby, it can be seen that ensuring labor safety in the factory is very important. Therefore, employees always pay attention to absolutely comply with the labor safety rules in order not to have any unfortunate accidents in the working process. Labor safety of the people working in companies, manufacturing enterprises, and factories, is being paid special attention and paid attention to by the State. d) For government Firstly, continuing to build a list of vocational training equipment, with priority given to focusing on key occupations at the national level; reviewing and editing the issued lists of equipment in the direction of reaching regional countries; apply standards of facilities and training equipment according to regional and international standards. At the same time, reviewing and unifying the criteria and standards for vocational education quality accreditation; building quality assurance mechanisms and regulations; mechanisms, regulations and development of quality assurance and management systems in vocational education institutions. Secondly, actively connecting with businesses and large corporations to link training, additional training, vocational skills training for workers, in which priority is given to training jobs in the labor market. Lastly, issuing regulations on bilateral cooperation between schools and businesses, creating conditions for parties to actively improve the quality of human resources 5. CONCLUSION Overall, while the inclusion of a TSD Chapter is in itself a laudable first step to ensuring labour protection standards in the EU–Vietnam FTA, it lacks serious substantial and procedural guarantees for labour protection in Vietnam. The absence of strong, binding commitments and of safeguards in terms of oversight of the implementation of the TSD Chapter, combined with the risk of Vietnam being exposed to higher levels of unemployment in the short–term, and the inability to react quickly and efficiently in case of non–respect of the TSD Chapter, do not ensure protection of labour standards in Vietnam that would be in conformity with the high level of labour protection that the EU must promote in its external relations. 833
7. Despite the absence of strong formal safeguards, serious violations of labour standards can indeed lead to action on behalf of the European Union. It can be hoped that this practice, along with heightened awareness of the shortcomings of the TSD Chapter, will be translated into formal modifications of future FTAs, allowing for greater protection of labour standards, through more binding provisions and procedures and increased implication of stakeholders, in order to obtain a truly binding and enforceable sustainability policy. REFERENCES 1. Cooperation Agreement between the European Community and the Socialist Republic of Vietnam. 2. European Commission, (2016), Guide to the EU–Vietnam Trade and Investment Agreements. 3. ILO, Revised Vietnamese Labour Code to Help Everyone Gain Fair Shares of Economic Growth, News of 20 November 2019, www.ilo.org. 4. International Labour Organization, (2020), Labour chapter important to EU–Viet Nam free trade deal. 5. M. Bronckers, G. Gruni, Taking the Enforcement of Labour Standards in the EU’s Free Trade Agreements Seriously, in Common Market Law Review, 2019, p. 1597. 6. Minh Vũ, (8/03/2020), Khai thác thị trường lao động Việt Nam sau khi EVFTA có hiệu lực: Tất cả cùng vào cuộc. 7. Thu Trang, (22/05/2020), EVFTA có tác động tới lao động, việc làm, an sinh xã hội như thế nào?. 834