EU-VIETNAM FREE TRADE AGREEMENT

The EU hopes that its free trade agreement (FTA) and investment protection agreement (IPA) with Vietnam will boost trade and investment; the agreements are also an important stepping stone to the EU’s longer-term goal of a region-to-region EU-Southeast Asia trade deal. Vietnam, a fast-growing and competitive economy whose bilateral trade with the EU has quintupled over the past ten years, is equally keen on the deal, which could potentially bring €15 billion a year of additional exports to the EU by 2035.

Negotiations lasted from 2012 to December 2015. Doubts over the correct ratification procedure have delayed progress, but the European Commission now hopes that the FTA at least will come into effect early in 2020.

Content of the agreement

The European Commission has described the FTA as the most ambitious free trade deal ever concluded with a developing country:

• near complete removal of tariff barriers: elimination of over 99% of customs duties on exports in both directions;
• reduction of non-tariff barriers: Vietnam will align more closely with international standards on motor vehicles and pharmaceuticals. As a result, EU products (which already comply with these standards) will not require additional Vietnamese testing and certification procedures. Vietnam will also simplify and standardize customs procedures;
• EU access to Vietnamese public procurement: EU companies will be able to compete for Vietnamese government contracts (and vice-versa);
• improved access to Vietnamese service markets: the FTA will make it easier for EU companies to operate in the Vietnamese postal, banking, insurance, environmental and other service sectors;
• promoting sustainable development: the FTA includes commitments to implement International Labour Organization core standards (for instance, on freedom to join independent trade unions — potentially a momentous change as Vietnam does not at present have any such unions) and UN conventions (for instance, on combatting climate change and protecting biodiversity);
• investment access: Vietnamese manufacturing sectors such as food, tyres, and construction materials will open up to EU investment;
• investment protection: the IPA establishes an Investment Tribunal and Appeal Tribunal to resolve disputes between EU investors and Vietnamese authorities (and vice-versa).

Status of the procedure to adopt the agreement

The FTA and IPA were initially negotiated as a single text, but in 2018 the EU and Vietnam decided to split them, following the approach chosen for the trade and investment agreements with Singapore. The FTA covers exclusive EU competences, and can therefore be ratified by the EU alone, without involving the Member States. The IPA covers non-direct ('portfolio') investment and investor-state dispute settlement mechanisms: these are shared competences, on which the EU shares decision-making powers with Member States, meaning that the agreement must also be ratified by them. The two texts were signed by the EU and Vietnam in Hanoi on 30 June 2019.

The next step will be for the European Parliament to give its consent. The Parliament’s timetable is as follows:

21 January 2020: INTA Committee vote on the recommendations;

February 2020: vote on the recommendations and consent at the Parliament’s plenary session.

Assuming the Parliament gives its consent in February, the FTA will come into force one month after Vietnam and the EU have notified each other that legal procedures have been completed. The IPA will still have to be ratified by all Member States; judging by the precedent of the EU-Vietnam Partnership and Cooperation Agreement, for which Member State ratification took over three years, this could be quite a lengthy process.

Position of the European Parliament

The draft texts of the INTA Committee outline the economic benefits of the agreements, and recommend that the Parliament consent to them. The opinions of the DEVE and PECH committees, which will also be reflected in the final text, are also generally positive. These documents mention Vietnam’s commitments under the FTA to ratifying fundamental ILO conventions and improving labour rights. On the other hand, the AFET/DROI opinions are much more critical, recommending that the European Parliament only consent to the agreements if Vietnam releases its political prisoners and takes further steps to improve the human rights situation.

Position of Civil Society Organizations

The Vietnamese and international civil society organisations here below would like the European Parliament to postpone its consent to the EU-Vietnam Free Trade Agreement (EVFTA) and Investment Protection Agreement (IPA) until certain human rights benchmarks are met by the Vietnamese government.

1. Actions by Christian for the Abolition of Torture (ACAT)
2. ASEAN Parliamentarians for Human Rights (APHR)
3. Bau Bi Tuong Than Association
4. CIVICUS: World Alliance for Citizen Participation
5. Defend the Defenders (DTD)
6. Human Rights Watch
7. International Commission of Jurists (ICJ)
8. International Federation for Human Rights (FIDH)
9. Legal Initiatives for Vietnam
10. Reporters Without Borders (RSF)
11. Swiss-Vietnam Committee (COSUNAM)
12. The 88 Project
13. Vietnam Association of Independent Journalists
14. Vietnamese Professionals Society (VPS)
15. Viet Tan

In recent years the Vietnamese government has intensified its crackdown on human rights defenders, members of civil society, religious groups and individuals who express opinions deemed critical of the government or otherwise disfavoured. The rights to free expression, opinion, association and assembly remain strictly curtailed and the judiciary is under tight state control, as are the press, civil society, and religious groups. Any expression of dissent is harshly punished by state authorities, either directly or through state-sponsored thugs. Hundreds of human rights, environmental or labour activists, lawyers, religious figures and bloggers have been convicted or otherwise detained for the peaceful exercise of their freedom of expression, in application of a draconian penal code which explicitly criminalises criticising the government.

According to the above civil society organizations, Members of the European Parliament should put the Vietnamese government on notice that they will consider giving their consent to the deals only once a series of human rights concerns have been duly addressed by the state authorities. In particular, MEPs should ask Vietnam to:

• Release all political prisoners and detainees and, pending their release, as an immediate confidence-building measure, allow access to prisoners and detainees by families, legal counsel, and outside observers from the EU as well as international humanitarian and human rights groups; among the most prominent cases are human rights, labour, religious and environmental activists, journalists and bloggers;
• Publicly and unequivocally announce its commitment, with a clear timeline, to repeal or amend articles 109, 116, 117, 118 and 331 of the penal code and articles 74 and 173 of the Criminal Procedure Code, bringing the criminal legislation in conformity with the country’s obligations under the International Covenant on Civil and Political Rights (ICCPR);
• Put an end to the harassment, forced denunciation of faith, arrests, prosecutions, imprisonment, and ill-treatment of people because they are followers of disfavoured religions, and release anyone currently being held for peaceful exercise of their rights to freedom of religion, belief, expression, assembly and association; and ensuring that all domestic legislation addressing religious affairs is brought into conformity with international human rights law;
• Allow the publication of uncensored, independent, privately-run newspapers and magazines; remove filtering, surveillance, and other restrictions on internet usage, and release all people imprisoned or detained for peaceful dissemination of their views over the internet; publicly announce a timeline to revise the Law on Cyber Security and bring it into compliance with international human rights standards;
• Immediately recognise independent labour unions; publicly announce a detailed timeline for the ratification of ILO Conventions No. 87 (Freedom of Association and Protection of the Right to Organize) and No. 105 (Abolition of Forced Labour); and immediately and unconditionally release all persons detained for peaceful activities to promote workers’ rights;
• Accepting outstanding requests for invitations by UN Special Procedures;
• Adopt a de facto moratorium on the death penalty, with a view to progressively abolish it.

Furthermore, MEPs should ask the European Commission to:

• Set up an independent monitoring and complaint mechanism to address the human rights impacts that the EVFTA and the IPA may have and that can be used by affected individuals and communities and their representatives; and
• Specify which Vietnamese independent civil society groups will compose the Domestic Advisory Groups (DAGs) foreseen by the Agreements, and what measures will be in place to ensure that they can exercise their role independently, impartially, thoroughly, and safely.

Position of the European Trade Union Confederation (ETUC)

The ETUC calls for a progressive trade policy putting free trade agreements at the service of priority goals such as decent employment, social cohesion, equality and sustainable development. EU trade policy must therefore ensure full respect of human right, including trade union and workers’ rights, and the environment and must also take account of the development needs of less developed countries. Trade can be a great opportunity only if it creates jobs and boosts sustainable development.

ETUC therefore calls on the European Parliament to oppose the ratification of the EU-Vietnam FTA and IPA until Vietnam has ratified, or defined a binding roadmap to ratify, the fundamental International Labour Organization (ILO) Convention 87 on freedom of association and protection of the right to organize and Convention 105 on the abolition of forced labour, and until the two parties involved in the negotiation have addressed the other concerns outlined below.

Human rights and enforcement concerns

Vietnam is one of the worst countries in the world to be a worker as there is no guarantee of rights. In June 2019, Vietnam ratified the ILO fundamental convention 98 on the right to organize and collective bargaining, it has still to ratify tow out of the eight ILO fundamental conventions, i.e. Convention 87 on freedom of association and protection of the right to organize, and Convention 105 on abolition of forced labour.

Independent trade unions in Vietnam remain effectively outlawed and the national trade union centre, the Vietnam General Confederation of Labour, is not independent of the government and the ruling party. It is not possible to realize the right of meaningful collective bargaining without independent trade unions, freely chosen by the workers through the practical realization of the right to freedom of association.

The ETUC Congress has stated that ratification and implementation of the eight ILO Core Labour Standards as well as compliance with updated ILO Conventions and instruments such as the Forced Labour Protocol and ILO Conventions on health and safety at work must be a pre-condition for entering into EU trade negotiations.

However, if a partner country has not ratified or properly implemented these Conventions, it must demonstrate through a binding roadmap how this will be achieved in a timely manner. ILO up-to-date instruments must be included in all EU trade agreements in a manner that makes them effectively enforceable. Respecting the ILO fundamental conventions is a requirement of the EU’s General System of Preferences system, the EU must not demand less from any trading partners.

The Vietnamese government has announced the ratification of Convention 105 in 2020 and of Convention 87 in 2023. ETUC however calls for a binding roadmap for these ratifications. ETUC also calls for a roadmap on progress towards ratification and full implementation of all up-to-date ILO conventions, particularly those referred to health and safety at work.

Hundreds of independent trade unionists have been arrested in Vietnam and are subjected to violence for peaceful protests. Migrant domestic workers in Vietnam are particularly vulnerable, some being forced to work 18-hour days and are subject to routine abuse. Human Rights Watch has reported that the government has imprisoned dissidents and reports on the government widely undermining freedom of expression. Amnesty International reports that Vietnam has at least 128 prisoners of conscience, with prisoners kept in inhuman conditions. Moreover, the Vietnamese Penal Code effectively prohibits freedom of association. In order to make the penal code coherent with respect of human rights, it needs to be modified.

Furthermore, even if the ILO fundamental conventions are ratified in a few years, the ETUC is concerned that the Trade and Sustainable Development (TSD) chapter of the EU-Vietnam FTA does not contain a mechanism to effectively enforce an obligation to respect these conventions in law and practice. The ETUC has made clear that effective enforcement of TSD chapters must involve an independent body involving trade unions that can trigger investigations into any violations of fundamental ILO standards. Should breaches of standards be found, there must be material penalties as a final consequence. There is also no instrument to hold companies accountable that breach these rights.

Recent developments regarding labour rights in Vietnam

On 20 November 2019, the Vietnamese National Assembly adopted a revised Labour Code. According to ILO, the new labour law improves the legal framework for employment relations, working conditions, and the representation of employers and workers. The most important change in the revised Labour Code is the ability of workers in enterprises to exercise their right to form or join a representative organization of their choosing, which does not have to be affiliated to the Viet Nam General Confederation of Labour.

The ETUC welcomes this important progress and the efforts made by the Vietnamese authorities. The adoption of the amendments to the Labour Code constitutes significant progress for Vietnamese workers and paves the way for the implementation of the remaining ILO fundamental conventions. More needs to be done. Ahead of the vote on consent by the European Parliament, the government should present a clear and credible roadmap for the ratification of the outstanding ILO fundamental conventions. On the Vietnamese Labour Code, it is important that the Government’s decrees for implementing the new provisions do not back-track on progress made to introduce unjustified restrictions such as limiting freedom of association by setting high thresholds or registration formalities for forming a company level union.

Moreover, continued progress towards full possibility of free and independent trade unions needs to be ensured. To achieve this goal, it is crucial to ensure the involvement of independent social partners and civil society in monitoring the process preparing the ratification and eventual implementation of the FTA. In this respect, the composition of the Domestic Advisory Groups (DAG) needs to be balanced and include independent and free labour representatives. Furthermore, the role of the DAGs (both in EU and Vietnam) need to be clearly defined.

An additional tool to promote a satisfactory implementation of the possible FTA would be the setting up of an interparliamentary committee. Finally, the Penal Code should be reformed and brought in conformity with Vietnam’s obligations under the International Covenant on Civil and Political Rights (ICCPR) and with the amended Labour Code.