Thực hiện cam kết về lao động trong NAFTA của mexico và bài học cho việt nam ttta

Vietnam, with its entry in new-aged FTAs, is required to attach more attention to the implementation of labour standards so as to make use of the advantages of it for economic developmen

VIETNAM ACADEMY OF SOCIAL SCIENCES

GRADUATE ACADEMY OF SOCIAL SCIENCES

PHAM THI THU LAN

MEXICO’S IMPLEMENTATION OF NAFTA LABOUR COMMITMENT AND LESSONS LEARNT FOR VIETNAM

Major : International economy

Code : 9 31 01 06

SUMMARY OF DOCTORAL DISSERTATION

HANOI - 2019

The Disertation was completed at

GRADUATE ACADEMY OF SOCIAL SCIENCES

Academic supervisors: 1 Assoc Prof., Dr Nguyen An Ha

2 Assoc Prof., Dr Dang Minh Duc

Commentator 1: Prof., Dr Do Duc Binh

Commentator 2: Assoc Prof., Dr An Như Hải

Commentator 3: Assoc Prof., Dr Trần Thị Lan Hương

The Dissertation is to be defended in the presence of the Board of Examinersat the Graduate Academy of Social Sciences

on date month year 2019

The Dissertation can be found:

National Library Library of Graduate Academy of Social Sciences

LIST OF SCIENTIFIC RESEARCH WORKS

1 Pham Thi Thu Lan (2017), "Why wildcats and will always wildcats strikes

in Vietnam?”, Global Labour Column, No 290

2 Pham Thi Thu Lan (2017), "A few thoughts on renovation of the method of

union operation in the new context ", Labour and Trade Union Review, No 623 and 624, pp.18-19,24

3 Pham Thi Thu Lan (2017), "Bringing labour standards into FTAs:

Economic opportunities and challenges for developing countries",

Labour and Trade Union Review, No 632 pp.10-11

4 Pham Thi Thu Lan (2017), " Some typical cases on complaints of Mexico's

implementation of labour standards and lessons learnt for Vietnam",

Labour and Trade Union Review, No 634, pp.10-11

5 Pham Thi Thu Lan (2017), “Role of trade unions in socio-ecological

transformation in Vietnam””, Quỹ Rosa Luxemburg Bullentin – South East Asia, No 1 - 2017

6 Pham Thi Thu Lan (2018), "Research of labour standards in economic

development and the Mexico case ", Socio-economic Information and Forcast Review, No 147, pp.33-36

7 Pham Thi Thu Lan (2019), “Labour regulations in the North American Free

Trade Agreement and the implementation by Mexico”, Vietnam Social Science Magazin, No 3/2019

8 Pham Thi Thu Lan (2019), “The consequences of low wages – a look at

garment enterprises”, Labour and Trade Union Review, No 650,

March 2019

9 Pham Thi Thu Lan (2019), “Employment in the fourth industrial revolution

and challenges for Vietnamese human resources”, Labour and Trade Union Review, No 651, April 2019

INTRODUCTION

1 The necessity of the Dissertation

The increase of free trade agreements (FTAs) with labour commitment affirms the fact that in the current development trend, the economic aspect and the labour aspect cannot be separated Vietnam, with its entry in new-aged FTAs, is required to attach more attention to the implementation of labour standards so as

to make use of the advantages of it for economic development and, at the same time, not affected by trade sanctions, anti-dumping or trade protection laws of other countries, as well as leaving no social consequences

Vietnam has never had experience in implementing labour commitment, while this fact has been in the world for 25 years and Mexico was the first developing country with NAFTA in 1994 Therefore, it is necessary to study the experience of developing countries The research questions include: What are the comparative advantages that labour standards bring about for countries in today's global economy? How does Mexico implement its labour commitment in NAFTA and does it make use of such comparative advantages of labour standards? What are the current development viewpoints and how can countries to take advantage

of high labour standards for economic development? Why do countries still compete with low labour standards? These are important research questions to help Vietnam envision the process of implementing the labour commitment in a developing country, the problems encountered and how to deal with them so as to make use of opportunities and limit challenges The research questions show the urgency of the research topic for Vietnam, especially when the National Assembly

of Vietnam has agreed to ratify the Trans-Pacific Comprehensive and Progressive Partnership Agreement (CPTPP) in November 2018 and the European Commission approved the Vietnam - European Union Free Trade Agreement (EVFTAs) in October 2018

In addition to complying with commitment in the FTAs, the implementation of labour standards also derives from the internal requirements of Vietnam Despite exceeding the threshold of low-income countries, Vietnam is still a low-middle income country Although many households escape poverty, their income level is still near the poverty line, so the number of near-poor households is still very high The poverty rate is still high Moreover, poverty also means being denied basic rights, social marginalized, unsecured rights such as the right to appropriate living standards, especially food and clothes, housing, social security rights, access to basic services on health, education, clean water, information, the rights to dialogue, negotiation and participation in decision-making on issues related to employment, salary, working conditions Implementing labour standards will help Vietnam achieve its goals of sustainable development and contribute to comprehensive, balanced and inclusive development With requirements of both international integration and domestic

development needs, the Dissertation helps Vietnam envision and choose the appropriate way to go in the coming integration period

1 The purpose and research tasks

Purpose: The Dissertation studies the experience of the first developing

country in the world participating in FTAs with labour commitment to draw lessons for Vietnam in implementing its commitment in CPTPP and EVFTA

Research tasks: (i) systematizing the theoretical basis of the

implementation of labour commitment in FTA, clarifying labour standards and comparative advantages in the framework of FTA commitment, opportunities and challenges for developing countries; (ii) analyzing and evaluating the implementation of the NAFTA labour commitment in Mexico, clarifying the successes and limitations of implementation and pointing out the cause of this situation; (iii) comparing the similarities and differences between Vietnam and Mexico, thereby drawing lessons and recommendations for Vietnam to effectively implement its labour commitment in CPTPP and EVFTA effectively

Research hypothesis: The implementation of labour commitment in

NAFTA has helped Mexico develop both economically and socially during the last 25 years and Mexico continues to benefit from NAFTA in the future

2 The object and scope of research

Object of research: The Dissertation examines the content related to the

implementation of Mexico's labour commitmens in NAFTA

Scope of research: In the field of international economy, the Dissertation

focuses on researching socio-economic aspects of labour, analyzing and assessing the impact of the implementation of labour commitment on the socio-economic aspects of Mexico, and not going in-depth into the political and other aspects Political aspect, if mentioned, is only to clarify points of arguments

Content limit: The implementation of labour commitment in FTAs (object

of research) is different from the implementation of labour standards stipulated in FTAs inside the country The Dissertation still presents the implementation of labour standards of Mexico inside the country just to understand the situation of labour standards of Mexico but does not deeply analyze this area (which belongs

to the internal aspect of the country), as each labour standard is a very broad topic, covering all aspects of implementation related to the implementation viewpoint, the debate and struggle for implementation among parties and labour relations actors, the change of political institutions, the process of building domestic laws and the process of implementing labour standards related to mediation, arbitration, court, labour inspection, handling dispute cases and complaints, domestic lawsuits, ., let alone mentioning corruption and unfair trial, so if in-depth analysis is done, it may go beyond the scope of the Dissertation (i.e beyond the framework of NAFTA)

3 The method and approach

Research methods: The Dissertation uses a combination of research

methods: (i) Studying economics with the theories of free trade and the theories of

macroeconomics, micro economics, so on, economic rules of supply and demand, competition, distribution of income by labour, opportunity costs and efficiency,

specialization, so on; (ii) Retrospective materials, analysis and synthesis of secondary documents, using reliable sources of prestigious scholars; inheriting

existing studies; comparing, evaluating, systematizing arguments and problems, analyzing Mexican cases, drawing facts and drawing scientific conclusions; (iii)

Analysis and comparison with assessing Mexican practices, comparing and

analyzing development trends, forecasting issues and drawing lessons for Vietnam

in choosing the path of development and implementing labour commitment in

FTAs; (iv) Survey and expert interviews to assess practices of Vietnam in

implementation of labour standards, combining retrospective documents with practical surveys, interviewing labour experts and officials of Department of Labour, industry and trade bureaus, enterprise managers, trade unionists and workers

Approaches: The Dissertation uses the following approaches: (i) Historical

approach: considering the origin, the rule and the trend of significance to

understand the issues of labour standards and its link to trade and economic

development; (ii) Systematic approach: analyzing and assessing the issues of

inter-sectoral interaction, finding a link of labour standards with trade liberalization and economic development, between aspects of economics and

international economy and sociology; (iii) Interdisciplinary approach: The

Dissertation uses a combination of methods of social sciences such as economics, international economy, sociology and others to clarify the intertwined issues between labour and economy, and labour - economy - development

4 New scientific contributions of the Dissertation

The Dissertation systematized theoretical basis about implementation of labour commitment in FTAs and comparative advantages of labour standards in the global economy; indicating the downside of economic development with low labour standards; clarifying opportunities challenges to developing countries joining new-aged FTAs in case of not converting to applying high labour standards

The Dissertation analyzed and demonstrated the status of Mexico's implementation of NAFTA labour commitments; assessing good points and bad points; finding the reasons why Mexico (and some other countries) still compete with low labour standards

Grom the reality of Mexico’s implementation, based on the viewpoint of Vietnam implementing labour commitments in new-aged FTAs for inclusive development, the Dissertation analyzed labour practices in Vietnam, compared

similarities and differences between Vietnam and Mexico, drew lessons learnt for Vietnam to well implement labour commitments in order to create comparative advantages for the national economy in the context of new-aged FTAs international economic integration with changed competitive factors, not only competing on prices but also competing on labour standards

For bringing into full play the advantages of labour standards for economic development, the Dissertation makes some recommendations on immediate, practical and feasible solutions for Vietnam to transition to high labour standards

in a sustainable way

6 The theoretical and practical significance of the Dissertation

The Dissertation is of theoretical significance, clarifying the relationship between labour standards and economic efficiency, the relationship between labour standards and competitive advantages, the importance of labour standards

in the global economy through FTAs integration, the importance of choosing viewspoints and models of development in the current period and the need to move from competition using low labour standards to competition using high labour standards

The Dissertation is of practical significance, as a reference for state agencies in the process of policy-making in the field of labour and economy, and choosing a development model for more effective integration in the global economy The Dissertation helps the parties visualize the opportunities and challenges posed by participating in FTAs with labour commitment, selecting ways to implement labour commitment to make the most of the benefits of labour standards and limiting challenges The results of the Dissertation are also documents in teaching and research To a certain extent, the Dissertation contributes the theoretical and practical significance related to political and security aspects

7 Structure of the Dissertation

In addition to the introduction, conclusions and appendices, the Dissertation is structured in 4 chapters Chapter 1: Overview of research works related to the Dissertation topic; Chapter 2: Some basic theoretical and practical issues for implementing labour commitment in FTAs; Chapter 3: Mexico's implementation of labour commitment in NAFTA; Chapter 4: Implications and lessons for Vietnam in implementing labour commitment of new-aged FTAs

Chapter 1: OVERVIEW OF RESEARCH WORKS RELATED TO

THE TOPIC OF THE DISSERTATION

1.1 Research works outside the country

1.2 Reseach works inside the country

1.3 A few comments on the research situation

Overview of reseach works inside and outside the country shows that the research on labour standards is very rich, covering various aspects related to the dissertation topic Firstly, all research works affirmed the importance of labour standards in the current global economy, asserted that trade liberalization was bringing many benefits to the nation but also posing many social problems, and affirmed that high labour standards created comparative advantages for countries and contributed to economic development Secondly, studies confirmed that linking labour to trade through FTAs have become a trend even though there have been protests from some countries, especially developing countries Many problems of employment, wages, informalization, inequality, etc were discovered

in the process of trade liberalization, and the inclusion of labour standards in FTAs with conditions imposed for implementation, showed the importance of labour standards in the current global economy Thirdly, Mexico is the first developing country to implement labour commitment in the FTAs with both opportunities and challenges created in the process, while Vietnam has no experience of implementing the FTA labour commitment, and there has been no specific research on this area in Vietnam

Studies both at home and abroad are numerous, but they have not yet made the reader understand the nature of labour standards as committed in FTAs, resulting in fears of implementation and the assumption that when high labour standards is implemented, it will reduce the competitiveness of businesses They

do not clarify the relationship between labour standards and development perspectives and the importance of labour standards in global competition (or, in other words, they does not clarify the changed competitive factors in the current global economy) They do not synthesize and evaluate the implementation of the NAFTA labour commitment in Mexico (or implementation of labour commitment

in FTAs by developing countries) They also do not analyze the causes why Mexico (and some other countries) still compete on low labour standards The available studies have also not yet summarized the experience of any country in the world to draw lessons for developing countries in implementing labour commitment effectively without leaving behind any consequences These gaps can be understood in practice of some countries, but has not been clearly written

in the research works These are the areas that the Dissertation is focused on

Chapter 2: THEORETICAL BASIS ABOUT IMPLEMENTATION OF LABOUR COMMITMENT IN FREE TRADE AGREEMENTS

2.1 Labour commitment and characteristics of labour standards as

committed in free trade agreements

2.1.1 Concepts

2.1.2 Content of labour commitment in FTAs

The core labour standards are the labour standards on four clusters of rights defined in the eight core ILO conventions and are the main labour commitment in FTAs, namely: (1) Convention No 87 and 98 on the rights to organize, freedom

of association and collective bargaining; (2) Conventions No 29 and 105 on forced labour; (3) Convention No 138 and 182 on minimum working age and elimination of child labour; (4) Conventions No 100 and 111 on non-discrimination on employment and occupation and ensuring equal pay between men and women

In addition to the core labour standards, the labour commitments in FTAs also includes the implementation of a number of other specific labour standards of wages, occupational safety and health and working hours at "acceptable" levels

2.1.3 Characteristics of labour standards as FTAs commitment

Labour standards promoted through FTAs are ILO's core labour standards These labour standards only stipulate fundamental rights, including no child labour and no forced labour, equality at work, ensuring that the industrial relations parties have the rights to establish their own organizations to engage in dialogue, collective bargaining and make decision on workplace issues, thereby creating an enabling environment for making decisions based on negotiations of specific terms and regulations in various enterprises In the case of an enterprise facing difficulties, or at risk of bankruptcy, workers need to understand and share with enterprises to overcome difficulties so as to maintain the survival of the business, and therefore, also maintain the job of workers In case of growth, enterprises need to make a fair and equitable share for employees, compensating for workers for their contributions to business development Core labour standards do not mean that labour costs are too high that the enterprise cannot survive The objective of the dialogue and negotiation mechanism is to find a suitable, win - win solution, to satisfy both parties, and thereby helping create a work environment stable, harmonious and progressive

Labour standards are promoted through a variety of mechanisms: social clauses in the World Trade Organization (WTO), labour commitment in the FTAs, labour standards requirements of export markets, buyers’ requirements for the implementation of corporate social responsibility, discussion in bilateral relations, etc Unilateral measures could be applied by developed countries in its relationship with developing countries, for example, trade protection and dumping lawsuits if countries apply low labour standards to specific items In addition, civil

society organizations and consumer associations could exert pressure at various forums or call for boycott of products of a country, thereby affecting its national interests In fact, there has been a country that was "boycotted" for bad practices

of labour standards (Burma's case in 2000), showing the importance of labour standards in the global economy today

2.2 Labour standards as comparative advantages

The economic theories of Adam Smith, Ricardo and Heckscher-Ohlin all affirm that labour standards create competitive advantages for countries

2.2.1 The relationship between labour standards and economic efficiency

Economic theories and practice of application of labour standards affirm that labour standards bring about economic efficiency Labour standards on wages, working conditions, working hours give employees work motivation and job satisfaction, thereby increasing individual labour productivity Occupational safety and health standards help production reduce the risk of occupational accidents and diseases, thereby saving compensation and remedial costs for employers and reducing the burden on society and the medical system Vocational training helps workers improve their skills, change careers and helps the labour force adapt to changing nature of work, especially during the fourth industrial revolution (I 4.0) that is taking place Unemployment benefits and job protection help workers to accept the risk of losing their jobs for creativity Active labour market policies help create flexibility in labour supply and demand, thereby creating opportunities for workers to work in their professional area to maximize their capability of labour creativity Freedom of association and collective bargaining help reduce labour conflicts and increase coordination between the two sides in production, work together to solve difficulties and share achievements together, helping the economy to adjust faster to economic shocks, increasing the competitiveness of the economy, building trust among parties in labour relations and working together towards a common goal

2.2.2 Advantages and disadvantages of low labour standards

Theoretical base and practice show that low labour standards mean that the rights of workers are not guaranteed, thus resulting in low wages, poor working conditions; labour inspections are ineffective, leading to violations of labour standards; then many problems have arisen in the field of labour Low labour standard creates an only competitive advantage of low labour costs Countries often apply low labour standards to attract FDI and the competition by using low labour standards takes place at the global level over the past two decades, leading

to "a race to the bottom" (cutting labour costs for competition)

Except for the unique advantage as mentioned above, low labour standards have many disadvantages for the country, including: social consequences of high rates of poverty when workers come out of their working age, leaving a burden for the medical and social security system; restraining the development of human

resources due to workers being sucked in and nailed into low-standard labour sectors with low added value, low skills, low wages; workers have to earn a living

to make ends meet so they have to work overtime and become exhausted after a day's work, leaving no time for studying and improving their qualifications, thus creating a paradox of hard work but unable to escape poverty and people are still poor when reaching their old age, hindering the national poverty reduction policy, increasing inequality, discouraging changes in economic structure, failing to ensure the quality of human resources for entering I 4.0

2.2.3 Advantages and disadvantages of high labour standards

High labour standards mean securing workers' rights so that they can participate in workplace decision-making, through dialogues and negotiations, regarding their wages and working conditions, thereby improving wages and working conditions in line with the situation of the enterprise The theory and practice show that high labour standards bring many benefits, including: building credibility and image for enterprises and countries which respect human rights; contributing to the profitability of the enterprise by increasing labour productivity and cost savings in handling problems such as labour accidents, occupational diseases, labour disputes .; creating a labour environment that is respectful, cooperative, harmonious, stable, non-strikes and no spontaneous resistance of workers, thereby attracting investment, creating a social security floor, protecting children, fighting forced labour, creating equality in labour, contributing to minimizing social consequences and social inequality; consistent with global development strategy and sustainable development goals

However, high labour standards has the disadvantage of losing immediate cost-based profits However, it should be noted that high labour standards does not mean high wages and high labour costs beyond the capability-to-pay of enterprises, because the specific wages and working conditions in enterprises are the result of negotiations and collective bargaining in line with the economic capability-to-pay of the employer

Thus, high labour standards or low labour standards all create comparative advantages for the country The choice depends on the country

2.3 Implementation of labour commitment in FTAs

2.3.1 Viewpoints on implementation of labour commitment

Currently, there are two schools of viewpoints on the development model and its relationship with labour standards

First, economic development priority is focused: implementing low labour standards to prioritize economic development first This view takes economic

development as the focus and prioritizing economic development in order to have conditions for social and environmental development This is the viewpoint of most developing countries at present

Second, comprehensive development: implementing high labour standards for a balanced and inclusive development This view considers development to be

for human beings, so it is necessary to balance the interests of all groups in society, balancing the benefits between economists and workers This is the view

of the United Nations through the Sustainable Development Goals (SDG) and the Guidelines Principles on Business and Human Rights (UNGP), of the International Labour Organization (ILO) with the goal of "a peaceful working environment is essential to prosperity”, of the Asia-Pacific Cooperation Forum (APEC) for a world with “no one left behind”, of the Association of Southeast Asian Nations (ASEAN) with the goals of people-centered development

Both of these views are appropriate in certain periods of the country Each country needs a specific strategy and decides to choose the right development perspective in each stage of development The wrong choice will have consequences, which take time, efforts and resources to overcome, leading to the lag of the nation and many problems arise

The selection of the development perspective will determine the viewpoints

and ways of implementing labour commitment in the FTAs: proactive or passive implementation

Proactive implementation: the government actively develops a plan and

specific roadmap, actively builds and enforces laws and supports enterprises to implement laws and take measures to prevent enterprises from violating laws

Passive implementation: the government has no specific roadmap and plan,

do not monitor the implementation, only handling when violations or complaints appear; and even after that, there are no subsequent measures to prevent recurrence, resulting in repeated violations of the same problem

The Dissertation's view is based on a comprehensive and inclusive development perspective to study and draw lessons and propose solutions

2.3.2 Reasons for bringing labour commitment into FTAs

Bringing labour commitment into FTAs comes from developed countries, both by the Government and the employer with the aim of creating a level playing field, fair competition in the global economy, and by Western trade unions and civil society organizations that work for labour rights and human rights to promote improvement of workers' rights through trade mechanisms – an enforcement mechanism that has been shown more effective than mechanisms of other institutions, such as ILO, national laws, global supply chains,

2.3.3 Trends in FTAs with labour commitment

The first FTA that has labour commitment is NAFTA in 1994 By 2005, there were 21 FTAs with labour standards and so far, there are 77 FTAs, covering

136 countries around the world Initially, the FTAs with labour commitment are mainly North - North or North - South agreements, but so far, there have been 16 South - South FTAs The increasing trend of FTAs with labour commitment indicates that labour standards are becoming increasingly important in the global economy

2.2.4 Enforcement mechanism of labour commitment

The labour commitment in FTAs in the world are divided into two groups with two different enforcement mechanisms: conditional or promotional Conditional mechanism is often applied in FTAs with the US involvement with measures of fines or preferential trade cuts, while promotional mechanism is adopted by the European Union using incentives and development aids to encourage implementation of labour standards

2.3.5 Contents of implemention of labour commitment

Implementing entity: the main actor is the government with building

appropriate laws and ensuring compliance of enterprises

Implementation process: The process of implementing labour commitment

depends on the specific provisions of the FTAs for each country regarding the roadmap to revise the law and implement the recommendations of the FTAs parties for each labour standard The content, level and practice of implementing labour standards commitment of different countries are different, so the requirements, recommendations and roadmap for implementation of labour commitment of different countries is also different

Specific measures: 4 points:

- Amending and supplementing the national labour law to conform to the core labour standards (labour standards on rights) as committed in the FTAs;

- Ratifying international labour conventions according to the committed roadmap;

- Establishing appropriate labour mechanisms and institutions to implement labour standards;

- Ensuring labour standards are fully and effectively implemented in practice

2.3.6 Evaluation mechanism for implementation of labour standards and labour commitment

Evaluation on implementation of labour standards

There are many mechanisms to evaluate the labour standards implementation of a country whether it is good or bad: through a consultative mechanism between FTAs member governments, through ILO monitoring mechanisms, through ratings by International Trade Union Confederation (ITUC)

on the implementation of labour standards in countries, through the opinions of non-governmental organizations and civil society, so on

Evaluation criteria of implementation of labour commitment includes:

- Technical criteria: Assess whether the above specific measures are fully

complied with and implemented, for example: regular meetings, situation reports, cooperation, information exchange, resource allocation ; amending the law in accordance with international law; law enforcement of guaranteeing no violations;

or promptly remedy and solve effectively if there is any complaints