US embassy cable - 02HANOI102

UNCLAS SECTION 01 OF 02 HANOI 000102 
 
SIPDIS 
 
STATE FOR DRL DAS JSCARPENTER, DRL/IL GWHITE 
STATE ALSO FOR EAP/BCLTV AND EB/TPP BBOYNTON 
USTR FFOR CMILLER, RALPH IVES AND ELENA BRYANT 
DEPTLABOR FOR ILAB BETSY WHITE 
USDOC FOR 4431/MAC/IEP/OKSA/HPPHO 
EMBASSY PHNOM PENH FOR BRUCE LEVINE 
 
E.O. 12958:N/A 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  00102  01 OF 02  150748Z 
TAGS: ELAB, ETRD, ECON, PHUM, VM, CB, LABOR 
SUBJECT: VIETNAM: SRILA POLASKI BRIEFS GVN OFFICIALS ON 
LABOR PROVISIONS IN THE US-CAMBODIA TEXTILE AGREEMENT 
 
REF: A) HANOI 80; B) HANOI 60 
 
1.  SUMMARY: STATE DEPARTMENT SPECIAL REPRESENTATIVE FOR 
INTERNATIONAL LABOR AFFAIRS (SRILA) SANDRA POLASKI BRIEFED 
VIETNAMESE TRADE AND LABOR OFFICIALS AND INDUSTRY 
REPRESENTATIVES ON THE LABOR PROVISIONS OF THE U.S.-CAMBODIA 
TEXTILE AGREEMENT.  BECAUSE NEITHER THE U.S. NOR VIETNAM HAS 
YET MADE AN INTERNAL DECISION ABOUT THE CONTENTS OF A 
TEXTILES AGREEMENT OR A NEGOTIATING TIMETABLE, MS. POLASKI 
PROVIDED GENERAL INFORMATION ON THE APPROACH THE U.S. USED 
WITH CAMBODIA AND THE SUCCESSFUL RESULTS, IN THE U.S. VIEW, 
FOR BOTH PARTIES.  WHILE THE BRIEFING WAS WELL RECEIVED, 
VICE MINISTER OF TRADE LUONG VAN TU MADE IT CLEAR THAT THE 
GVN CONTINUES TO HAVE DOUBTS ABOUT THE NECESSITY OF A 
TEXTILES AGREEMENT.  HOWEVER, IN A SUBSEQUENT MEETING WITH 
THE AMBASSADOR, THE MINISTER OF TRADE INDICATED THE GVN IS 
PREPARED TO "EXCHANGE VIEWS."  IT IS IMPORTANT TO NOTE THAT 
GVN AGREEMENT TO THE BRIEFING IS ITSELF A SUBTLE CHANGE FROM 
ITS PREVIOUS RELUCTANCE TO DISCUSS POTENTIAL CONNECTIONS 
BETWEEN TRADE AND LABOR ISSUES, INDICATING THAT WHILE THE 
GVN DOES NOT AGREE, IT IS IN A LISTENING MODE.  END SUMMARY 
 
2.  DURING HER VISIT TO HANOI (REF A), DECEMBER 19-22, SRILA 
SANDRA POLASKI BRIEFED VICE MINISTER OF TRADE LUONG VAN TU 
ON THE U.S. EXPERIENCE WITH THE LABOR PROVISIONS OF THE U.S.- 
CAMBODIA TEXTILE AGREEMENT (THE TEXTILE AGREEMENT).  VICE 
MINISTER TU WAS JOINED BY MOT OFFICIALS FROM THE NORTH 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  00102  01 OF 02  150748Z 
AMERICA OFFICE AND THE EXPORT-IMPORT MANAGEMENT DEPARTMENT, 
NGUYEN MANH CUONG, DEPUTY DIRECTOR OF INTERNATIONAL 
RELATIONS DEPARTMENT AT THE MINISTRY OF LABOR, SOCIAL 
AFFAIRS AND INVALIDS (MOLISA) AND MR. NGUYEN XUAN HAO, 
DEPUTY GENERAL SECRETARY OF THE VIETNAM TEXTILE AND APPAREL 
ASSOCIATION (VITAS).  MS. POLASKI WAS JOINED BY ECONOMIC 
COUNSELOR CLAIRE PIERANGELO AND LABOR OFFICER LINDA SPECHT 
(NOTE TAKER). 
 
3.  THE BRIEFING WAS CONDUCTED WITH THE UNDERSTANDING THAT 
IT DID NOT INDICATE A DECISION ON THE PART OF EITHER VIETNAM 
OR THE UNITED STATES ON WHETHER TO NEGOTIATE A TEXTILE 
AGREEMENT OR WHAT SUCH AN AGREEMENT WOULD CONTAIN.  HAVING 
ESTABLISHED THAT UNDERSTANDING, MS. POLASKI FRAMED HER 
BRIEFING IN TERMS OF THE LOGIC AND POTENTIAL BENEFITS TO 
VIETNAM OF INCLUDING LABOR PROVISIONS IN A TEXTILE 
AGREEMENT.  MS. POLASKI INFORMED HER AUDIENCE THAT, UNDER 
ITS TEXTILE AGREEMENT WITH THE U.S., CAMBODIA RECEIVES QUOTA 
BONUSES LINKED TO SUCCESSFUL ENFORCEMENT OF ITS LABOR LAW, 
APPLICATION OF CORE INTERNATIONAL LABOR STANDARDS, AND 
IMPROVEMENTS IN WORKING CONDITIONS.  SHE DID NOT DISCUSS 
SPECIFIC PROVISIONS OF THAT AGREEMENT. 
 
4.  MS. POLASKI REPORTED THAT THE APPROACH ADOPTED IN THE 
CAMBODIA AGREEMENT PRODUCED A "WIN-WIN" SITUATION FOR THE 
PARTIES IN WHICH TRADE POLICY REINFORCES GOOD DOMESTIC LABOR 
POLICY, IN TURN PROVIDING TANGIBLE BENEFITS TO CAMBODIA AND 
CAMBODIAN WORKERS.  FIRST, AS A RESULT OF THE TEXTILE 
AGREEMENT AND QUOTA BONUSES, CAMBODIA'S FIVE-YEAR OLD 
TEXTILE AND APPAREL SECTOR HAD GROWN RAPIDLY AND NOW STANDS 
AT MORE THAN USD 1 BILLION IN TEXTILE AND APPAREL EXPORTS 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  00102  01 OF 02  150748Z 
ANNUALLY.  SHE NOTED THAT CAMBODIA REPORTS IT IS THE FIRST 
LEAST-DEVELOPED COUNTRY TO REACH THAT MARK.  AND WORKERS 
HAVE BENEFITED: THE SECTOR NOW PROVIDES ROUGHLY 200,000 
JOBS, WELL-PAID BY LOCAL STANDARDS.  BUT PERHAPS MORE 
IMPORTANT, THE AGREEMENT HAS PROMOTED QUALITY GROWTH IN THIS 
KEY SECTOR.  THE AGREEMENT PROVIDES FOR MONITORING OF 
FACTORIES BY THE INTERNATIONAL LABOR ORGANIZATION, FUNDED BY 
THE USG, THE CAMBODIAN GOVERNMENT AND THE CAMBODIAN APPAREL 
INDUSTRY.  ACCORDING TO MS. POLASKI, THE EXISTENCE OF A 
CREDIBLE, NEUTRAL REVIEW OF LABOR PRACTICES IN THE APPAREL 
SECTOR HAS ATTRACTED BUYERS AND RETAILERS FROM THE U.S. WHO 
HAVE INVESTED HEAVILY IN THEIR REPUTATIONS AND BRANDS.  SUCH 
BUYERS ARE WILLING TO PAY A PREMIUM FOR GOOD QUALITY 
MERCHANDISE AND QUALITY LABOR RELATIONS, AND CONSEQUENTLY, 
OFFER BETTER CONTRACT TERMS THAN OTHER BUYERS.  SHE ALSO 
NOTED THAT THE AGREEMENT PROMOTED ECONOMIC AND POLITICAL 
STABILITY BY IMPROVING WORKING CONDITIONS AND LABOR 
RELATIONS AND PROVIDING ALTERNATIVES TO STRIKES TO RESOLVE 
LABOR DISPUTES. 
 
5.  VM TU EXPRESSED APPRECIATION FOR THE INFORMATION MS. 
POLASKI PROVIDED.  HE ARGUED, HOWEVER, THAT, AS A LEADER OF 
THE INTERNATIONAL TRADING SYSTEM, THE UNITED STATES' 
PRIORITY SHOULD BE ON LOWERING BARRIERS TO TRADE.  AND ON 
TEXTILES, ANY DECISION BY THE U.S. TO IMPOSE QUOTAS WOULD 
RUN COUNTER TO INTERNATIONAL TRENDS.  ACCORDING TO VM TU, 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ2434 
 
PAGE 01        HANOI  00102  02 OF 02  150748Z 
ACTION DRL-02 
 
INFO  LOG-00   AID-00   CEA-01   CIAE-00  CTME-00  DODE-00  ITCE-00 
      DOTE-00  WHA-00   SRPP-00  EAP-00   EB-00    EXME-00  E-00 
      FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   IO-00    ITC-01   LAB-01   L-00     VCE-00   MOFM-05 
      MOF-01   AC-01    NSAE-00  NSCE-00  OES-01   OIC-02   OMB-01 
      OPIC-01  PC-01    PRS-00   ACE-00   P-00     SP-00    SSO-00 
      SS-00    STR-00   TEST-00  TRSE-00  USIE-00  EPAE-00  PRM-00 
      G-00     NFAT-00  SAS-00   SWCI-00    /019W 
                  ------------------57C4F2  150748Z /38 
R 150737Z JAN 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC 5248 
INFO DEPTLABOR WASHDC 
USDOC WASHDC 
AMEMBASSY PHNOM PENH 
AMCONSUL HO CHI MINH CITY 
 
UNCLAS SECTION 02 OF 02 HANOI 000102 
 
SIPDIS 
 
STATE FOR DRL DAS JSCARPENTER, DRL/IL GWHITE 
STATE ALSO FOR EAP/BCLTV AND EB/TPP BBOYNTON 
USTR FFOR CMILLER, RALPH IVES AND ELENA BRYANT 
DEPTLABOR FOR ILAB BETSY WHITE 
USDOC FOR 4431/MAC/IEP/OKSA/HPPHO 
EMBASSY PHNOM PENH FOR BRUCE LEVINE 
 
 
SEVERAL COUNTRIES, INCLUDING CANADA AND NORWAY HAD 
ELIMINATED QUOTAS ON VIETNAMESE GARMENTS, AND THE EUROPEAN 
UNION WAS CONSIDERING DOING SO.  FURTHERMORE, HE ARGUED, WTO 
MEMBERS HAD AGREED TO PHASE OUT QUOTAS UNDER THE AGREEMENT 
ON TEXTILES AND CLOTHING (ATC) BY JANUARY 2005 AND AGREED AT 
DOHA TO ACCELERATE THIS PHASE-OUT.  THEREFORE, HE REASONED, 
THE UNITED STATES SHOULD NOT IMPOSE QUOTAS WHEN IT WAS IN 
FACT OBLIGATED TO BEGIN PHASING THEM OUT.  (NOTE:  AT DOHA, 
WTO MEMBERS DID AGREED TO CONSIDER PROPOSALS TO ACCELERATE 
REDUCTIONS AND/OR PHASE OUTS OF QUOTAS IN CERTAIN CASES BUT 
DID NOT AGREE TO ACCELERATE PHASE OUT OF THE ENTIRE QUOTA 
SYSTEM UNDER THE ATC.  FURTHERMORE, THE UNITED STATES WOULD 
NOT BE OBLIGATED TO EXTEND THIS TREATMENT TO VIETNAM UNTIL 
IT JOINS THE WTO.  END NOTE) 
 
6.  WITH RESPECT TO LABOR ISSUES, VM TU CLAIMED THAT 
VIETNAM'S LABOR CODE WAS "PROGRESSIVE" AND WORKING 
CONDITIONS HERE COMPARED WELL WITH OTHER COUNTRIES IN THE 
REGION AND THOSE WITH SIMILAR LEVELS OF ECONOMIC 
DEVELOPMENT.  HE REFRAINED FROM COMMENTING FURTHER ON THE 
SUBSTANCE OF MS. POLASKI'S PRESENTATION STATING THAT MOLISA, 
NOT MOT, HAD JURISDICTION AND EXPERTISE OVER LABOR ISSUES. 
 
7.  COMMENT:  DESPITE VM TU'S MISINTERPRETATION OF THE 
RESULTS OF DOHA IN REGARDS TO THE ATC, HIS COMMENTS REFLECT 
THE GVN'S GENERAL DOUBTS AND RELUCTANCE ABOUT A TEXTILE 
AGREEMENT, REGARDLESS OF WHETHER IT INCLUDES LABOR 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  00102  02 OF 02  150748Z 
PROVISIONS OR NOT.  HOWEVER, AS REPORTED REF B, IN A 
SUBSEQUENT CONVERSATION WITH AMBASSADOR BURGHARDT, MINISTER 
OF TRADE VU KHOAN INDICATED A WILLINGNESS TO MEET TO 
"EXCHANGE VIEWS."  NONETHELESS, THE BRIEFING BY MS. POLASKI 
WAS WELL RECEIVED, AND A NUMBER OF WORKING LEVEL 
PARTICIPANTS TOLD LABOR OFFICER THAT THE INFORMATION WAS 
VERY USEFUL.  PRIOR TO THIS, THE GVN OFFICIALS HAVE 
RESPONDED VERY NEGATIVELY TO ANY HINT OF A POTENTIAL 
CONNECTION BETWEEN LABOR AND TEXTILES OR ANY OTHER TRADE 
ISSUE.  THAT THE VIETNAMESE AGREED TO THE BRIEFING INDICATES 
THEY ARE IN A LISTENING MODE, GATHERING INFORMATION THEY 
NEED TO MAKE MORE INFORMED DECISIONS ABOUT HOW TO APPROACH 
US ON THE ISSUE OF TEXTILES AND RESPOND TO U.S. CONCERNS 
ABOUT LABOR CONDITIONS IN THIS SECTOR. 
 
8.  MS. POLAKSI CLEARED ON THIS MESSAGE. 
BURGHARDT 
 
                       UNCLASSIFIED