VZCZCXRO9492
RR RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #1382/01 3531038
ZNR UUUUU ZZH
R 181038Z DEC 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8887
INFO RUEHHM/AMCONSUL HO CHI MINH 5405
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

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 
 
HANOI 00001382  002.2 OF 003 
 
 
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 
 
HANOI 00001382  003.2 OF 003 
 
 
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