Sweatshops threaten EU trade momentum

Sweatshops threaten EU trade momentum
Trade Commissioner Cecilia Malmström - © EU2016sk

Europe’s Trade Commissioner Cecilia Malmström wants Vietnam to commit to labour reforms before a deal is implemented.

Malmström is running into a formidable obstacle – workers’ rights – as she tries to establish free trade agreements across Asia.

An accord with Vietnam now risks being kicked into the legislative deep freeze because of a political backlash over how the communist one-party state treats its workers.

French President Emmanuel Macron is setting Europe’s more assertive tone. Promising a “Europe that protects”. Macron hopes to hit back at populist parties by showing that the EU can protect its workers against unrestricted free trade and unfair competition from Asian sweatshops.

European Parliament

Currently the European Parliament is pushing Malmström on the issue of Vietnam – an economy of 93 million people.

Bernd Lange, a veteran lawmaker from the Socialists and Democrats group and chair of the assembly’s trade committee, said that if there’s “no progress on human rights and especially on … labour rights, then the deal cannot be ratified by the European Parliament.”

Lange added: “Workers are hires and laid off without any security, working times are not respected and workers who fight for fairer conditions have been fired … it cannot be that we drop all tariffs on such products and make them even cheaper here, without any improvements for the workers there.”

Threat of sanctions

In response to complaints, Malmström is taking a diplomatic, consensus-building approach with Hanoi, Vietnam, whilst avoiding any threat of sanctions from Macron.

On 15 January, the Swedish commissioner sent a letter to Hanoi, asking the government of Vietnam for progress on reform of the labour code. It was also calling for a timetable of the reform whilst raising concerns about human rights.

Malmström’s soft approach is being widely debated throughout Europe, with Brussels looking to expand its trade relations across Asia.

Macron’s trade ‘action plan’ is in line with the previous plan suggested by the then-president of the US, Barack Obama. The former plan would have forbidden Vietnam and Malaysia from joining the partnership until they locked in key reforms of enforcing minimum safety standards.

The action plan put forward by Macron states that should a state breach its commitments to respect freedom of association, or the rights of trade unions to negotiate wages, then the rules “should allow the EU to suspend tariff preferences.”

Labour Code

While Hanoi did not have an official response to Malmström’s letter, one senior Vietnamese official said: “Too many requests on non-trade issues are not a good idea … It’s not so simple to ask a different country to change its labour code.”

Until the European Parliament sees “clear commitment” on a timeline of the reforms, alongside “concrete action,” Lange warned that “the deal will remain in the drawer.

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