TRADING OPINIONS: VIETNAM: WHAT NEXT? - PAGE 2

TRADING OPINIONS: VIETNAM: WHAT NEXT? - PAGE 2

Andrew James Samet - 1 | 2 One option on labor would be to build upon the work launched last year during President Clinton's visit, when the Vietnamese Ministry of Labor, Invalids and Social Affairs and the U.S. Department of Labor signed an accord to begin a program of dialogue, cooperation and technical assistance on labor law matters. This accord can be an important foundation to build upon.

In this regard, it is worth noting that Vietnam is at work on various elements of labor law reform (as part of the on-going efforts at economic and structural reform). Draft bills have been submitted to the National Assembly, which is expected to provide its views on the legislation soon. It is expected that the agreed changes will be implemented by early next year.The current proposals come after five years of experience with the new labor code implemented in 1995. The pending changes address a number of labor law matters, including those raised by the private sector relevant to the growth in foreign investment expected to follow approval of the bilateral trade agreement with the U.S.

Among the major proposals are the establishment of an unemployment insurance system, lifting of restrictions on the operation of private employment agencies, modification to the rules and regulations governing individual labor contracts, changes to the wage and bonus setting mechanisms, new health and safety rules, and reforms to labor dispute settlement processes.

The need for changes is also being discussed with regard to the organization of trade unions and collective bargaining. Under current law, all enterprises are required to have a trade union affiliated with the Vietnam General Confederation of Labor, which has the sole authority to negotiate collective bargaining agreements. Nevertheless, 700f foreign-invested enterprise workers do not have such a trade union. Moreover, many members of the business community recognize that the current legal situation raises difficulties hard to overlook in a global economy marked by greater attention to compliance with international labor standards.

Although the results remain uncertain, there is now an important recognition in Vietnam of the relationship between labor law reforms and economic reforms, between the rules to expand trade and the rules to benefit the workforce. Vietnam is now focused on both the importance of entry into the WTO and a close relationship with the ILO.

How and when the Bush Administration will choose to respond to Vietnam remains of no small consequence.

Andrew James Samet is with the law firm of Sandler, Travis and Rosenberg, P.A. He is a former Deputy Under Secretary of Labor for International Affairs in the Clinton Administration, and negotiated the U.S.-Vietnam labor agreement signed last year.

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