Question:
The trade and labor barriers that Vietnam will have to face when signing and ratifying a new-generation FTA like the EVFTA
Answer:
New-generation FTAs with comprehensive coverage offer Vietnam numerous opportunities, but also come with several challenges. Firstly, these new-generation FTAs introduce binding commitments that member countries must enforce, with the most important being the modification and supplementation of domestic legal systems to align with the FTA commitments. Due to the wide scope of these commitments, including non-traditional areas, amending domestic laws encompasses not only laws related to market access for goods and services but also areas such as public procurement, intellectual property rights, labor, and the environment. The process of amending legal frameworks requires time, and if not done in a timely manner, Vietnam may risk breaching its commitments. Specifically, in the area of labor, new-generation FTAs establish standards and regulations regarding labor and acknowledge the connection between labor rights and trade. They recognize the rights of workers to associate freely and engage in collective bargaining, prohibit forced and child labor, and eliminate all forms of discrimination in employment and occupation. While Vietnam already has specific regulations on minimum wages, working hours, occupational safety and health, child labor, and environmental protection, these standards are not always effectively enforced in practice, particularly in certain enterprises. This may result in Vietnam not enjoying preferential import duties from member countries if it fails to meet these standards. The amended Labor Code, adopted during the 8th session of the 14th National Assembly and effective from January 1, 2021, demonstrates significant efforts by the Vietnamese government to prepare for implementing the commitments of new-generation FTAs, including the EVFTA.
