AUSTR ASSESSMENT: VIETNAM GSP AND LABOR REFORM

UNCLAS SECTION 01 OF 03 HANOI 001382

SENSITIVE
SIPDIS

STATE FOR EAP/MLSBROWN
USTR FOR LKARESH, DBELL, AND DBISBEE

E.O. 12958: N/A
TAGS: ECON ETRD ECIN EINT ELAB VM
SUBJECT: AUSTR ASSESSMENT: VIETNAM GSP AND LABOR REFORM

HANOI 00001382 001.2 OF 003



1. (SBU) Summary: AUSTR Lewis Karesh's December 3-7 visit to
Vietnam focused on labor reform, especially freedom of association
and collective bargaining, the statutory requirements for GVN to
receive GSP status. After a series of frank discussions regarding
labor issues, the GVN indicated that such fundamental reforms would
take time, but the GVN was working on them and the National Assembly
would consider reform legislation in 2011 that would meet
international standards and be compliant with GSP requirements. The
GVN also indicated it hopes to obtain GSP status as soon as possible
as part of the broader US-Vietnam relationship and in consideration
of its commitment to labor reform. End Summary

FREEDOM OF ASSOCIATION
--------------


2. (SBU) Karesh had a series of discussions with representatives
from the Ministry of Trade (MOIT),Ministry of Labor (MOLISA),
Ministry of Interior (MOI),Vietnam General Confederation of Labor
(VGCL),Vietnam Chamber of Commerce (VCCI),International Labor
Organization (ILO),the American Chamber of Commerce and NGOs
working on employment issues. It emerged that the GVN has three
potential areas of labor reform and each is the responsibility of a
different government entity: reform of the Labor Code (MOLISA),
reform of Trade Union Law (VGCL),and a general law on associations
(MIA) which would be the most overarching. Karesh clearly conveyed
that in order to be eligible for GSP, the GVN must demonstrate that
it is taking steps towards labor reform including freedom of
association and collective bargaining. The GVN said the National
Assembly would consider labor reforms in 2011 which would meet
international and GSP labor standards and which would be appropriate
for the domestic needs of Vietnam.

STAR PROJECT, NGOS AND THE ILO
--------------


3. (SBU) On December 4, Karesh met with representatives of the STAR
project, a USAID funded governance reform program which had assisted
the GVN with preparations for BTA and WTO membership. In 2008,
MOLISA approached STAR and requested assistance on labor code
reform. MOLISA must present the revised Labor Code to the National
Assembly by 2010 for consideration in 2011. According to STAR,
freedom of association issues are the responsibility of the VGCL who
has not requested any assistance from the STAR project. STAR said
that the National Assembly had requested revision of the labor code,
but that such revisions may not address freedom of association
issues. The revision of the Trade Union law by the VGCL is
occurring as a parallel process but it is not clear yet when they
would present the changes to the National Assembly. STAR noted that
the ILO is also working with MOLISA and VGCL and said the ILO has a
long term time frame and a narrow definition of freedom of
association. Key aspects of the proposed labor code reform would
include improving the ability of MOLISA to enforce laws. Strikes
continue to be a problem in Vietnam and dispute resolution
mechanisms are very important.


4. (SBU) Karesh met with representatives from American and
Vietnamese labor NGOs who support people with disabilities. He
asked about their legal status and general freedom of association of
non-governmental organizations. The representatives said they are
able to work with MOLISA and VGCL on basic issues for people with
disabilities such as workplace access, but they lack a legal
framework for their non-governmental status. Previously the
National Assembly had considered comprehensive Freedom of
Association legislation, but it was withdrawn for further study.
According to the NGO representatives, Vietnam has six mass
organizations organized under the Fatherland Front. These six
organizations including the VGCL, the Women's Union and the Farmer's
Union, are all part of the GVN. While they have representatives from
the national to the grassroots level, they are not independent of
the GVN. The NGO representatives indicated that strikes are legal
only if backed by a union, but that the unions are arms of the
state.


5. (SBU) Karesh met with the ILO who has been working with the VGCL
and MOLISA over the past 5 years. The ILO said they have seen real
progress and dedication from the VGCL to improve its capacity and
were encouraged by the GVN's ratification of ILO Core Conventions.
The ILO said, however, that at the grassroots level the VGCL lacks
the capacity to effectively represent workers and that basic
knowledge of labor relations is lacking at all levels among all the
partners. At the grassroots level, the ILO has not observed any
examples of independent unions forming nor strike leaders becoming
on-going union leaders. In a strike situation, leaders emerge for
that strike at that particular enterprise but they are not linked to
other strikers in other enterprises. The ILO also indicated that
union leaders are appointed rather than elected and that it has not
observed the occurrence of any real collective bargaining. The ILO

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is continuing its capacity building work with the VGCL and MOLISA.


ROUNDTABLE OF REFORM: PART I: LAW OF ASSOCIATIONS - MOI
-------------- --------------


6. (SBU) Karesh participated in detailed discussions at a
roundtable organized by MOIT and attended by MOLISA, VGCL, and MIA.
He asked for updates regarding labor code reform, trade union law
reform and the law of association. The representative from the MIA
said that currently there is no law of associations pending before
the National Assembly; it was withdrawn for further study and
re-drafting and does not have a timeline for submission. This
legislation may not cover the VGCL nor will it focus on labor
issues. He said there is not a current draft available for the US to
review. MIA said that labor issues would be covered by Trade Union
Law and the Labor Code.

ROUNDTABLE OF REFORM: PART II: TRADE UNION LAW - VGCL
-------------- --------------


7. (SBU) MOIT then reviewed the Vietnamese law making process
emphasizing that all legislation must be consistent. No law should
contradict other laws but that sometimes there is overlap which must
be clarified. For example, the official said it is still unclear
whether the law on associations would cover the VGCL or whether it
would be governed by trade union law. He said that Vietnam had
successfully changed its laws to meet WTO standards and would do the
same for GSP. He said that Trade Union law would cover the VGCL and
key worker issues.


8. (SBU) The VGCL representative reviewed the history of trade
unions in Vietnam pointing out that they were formed in 1929 and
from then to 1975 had been responsible for both protecting worker's
rights and helping get independence for the country. Over the
years, the VGCL has undergone profound changes. In a centrally
planned economy, there was no conflict between the needs of the
employers and the needs of the workers. As the economy has opened to
include private and foreign businesses, the dynamics between workers
and employers changed. The Trade Unions are now in transition to
build their capacity to meet increasing needs for worker protection.
The Constitution of Vietnam in Article 10 and the Labor Code
recognize that the VGCL protects workers. Currently the VGCL has
over 6,000,000 workers in over 93,000 grassroots enterprises. The
VGCL is also recognized internationally by trade unions in other
countries. They have a relationship with the AFL-CIO for example.


9. (SBU) GVN representatives said that workers have the right to
decide whether or not to join the VGCL and that no workers are
forced to join. Even if the workers are not VGCL members, the VGCL
will still protect them. The VGCL also recognizes the need for
reform of the Trade Union laws and asked the National Assembly for
this. The National Assembly agreed to amend the Trade Union law and
has tasked the VGCL with drafting the new law. The National
Assembly would like to have the legislation draft by 2010 and would
vote on it in April of 2011. The VGCL just concluded its annual
national conference and will be setting time lines for drafting.
The Labor Code, which is being drafted by MOLISA, and the Trade
Union Law, which is being drafted by the VGCL must be consistent.
The Trade Union Law amendments will include measures to enforce
compliance by employers. The VGCL also has a 5 year target to get
1.5 million new members.

ROUNDTABLE PART III: LABOR CODE REFORM - MOLISA
-------------- --


10. (SBU) MOLISA said they have the lead role in drafting the
legislation for the reform of the Labor Code. The current law is
complicated and difficult to implement. The new Code should help
Vietnam continue to integrate internationally by meeting
international standards such as the UN Convention on People with
Disabilities. MOLISA said they look to the ILO for international
labor standards and have ratified five out of eight of the core ILO
Conventions. MOLISA stated they want to meet the labor requirements
for GSP to continue towards a market economy. All new laws must
meet national and international requirements.

PRIVATE MEETING WITH MOLISA VICE MINISTER: GSP
-------------- -


11. (SBU) In a private meeting, MOLISA Vice Minister Hoa who had
led the MOLISA delegation in the US-Vietnam Labor Dialogue in DC in
October 2008, said that he hoped Karesh understood that while
lacking specific details at this time, the GVN was firmly committed
to Labor Code reform which would be consonant with free market
principles and international standards. Karesh said the GVN had
provided a great deal of helpful information and it was clear that

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the GVN had positive intentions, but it would still be difficult for
USTR to make a determination without a more detailed plan.


12. (SBU) Hoa encouraged Karesh to understand the Vietnamese
context that the Labor Code revision must take place step-by-step
and the revision process has specific procedures. He said that in
the current times of economic difficulty, MOLISA is working to
ensure that workers have employment. He said that MOLISA is working
with the ILO and STAR and the Labor Code will be revised by mid

2009.


13. (SBU) Hoa said that Deputy Prime Minister Hai, who had just
returned from the US, told him that the previous MOLISA visit to the
USA had not been successful and that Hai was conducting internal
meetings to discuss GSP compliance. He said Hai told him that the
US-Vietnam relationship is a strong one and that GSP is an important
issue but not the only one. Hoa said he hoped the US would grant
GSP status because of its importance for bilateral economic and
trade relations. It also would help workers in Vietnam and reflect
the good state of bilateral ties.


BUSINESS VIEWS ON LABOR REFORM
--------------


14. (SBU) Karesh met with the General Director of Ford Vietnam who
is the current Chairman of the American Chamber of Commerce and the
Director General of the Bureau for Employer's Activities in Vietnam
from VCCI. He expressed concerns regarding the number of strikes in
Vietnam and the lack of capacity of dispute resolution mechanisms.
He cited weaknesses in the labor law and in the capacity of the VGCL
to provide effective representation of workers. The Ford
representative gave the example of his own factory in which the
workers had an in-house union which represented them to management.
This organization was effective but it existed only in his plant.
The business representatives said they would appreciate and benefit
from having a better represented work force with which they could
negotiate and settle disputes.


TPP AND LABOR ISSUES: FUNDAMENTALLY LINKED
--------------


15. (SBU) Karesh provided a briefing on labor requirements for TPP
membership to MOIT and MOLISA. He emphasized that Vietnam will need
labor reforms not only to resolve their domestic labor concerns, but
that increasingly trade agreements and partnerships such as TPP will
have labor
components. Karesh said that the GVN will have to meet international
labor standards as part of TPP. MOLISA responded that they support
Labor Code reform, but they are not responsible for the overall
Freedom of Association laws or Trade Union law reform.

COMMENT
--------------


16. (SBU) Comment: The USG has clearly conveyed through multiple
channels that labor reforms regarding freedom of association and
collective bargaining are key requirements to achieve GSP status.
End Comment


17. (SBU) This cable was cleared by AUSTR Lewis Karesh.

MICHALAK