March 17, 2009
People don’t go skiing in Vietnam, yet Hanoi imposes taxes 40 per cent on imported ski boots, and Cambodia charges 15 per cent. It has taken the recently signed agreement establishing the ASEAN-Australia-New Zealand Free Trade Area to push Vietnam’s tariff down to zero in 2018, and Cambodia’s in 2020.
The agreement says newer members of the Asociation of South-East Asian Nations, such as Vietnam and Cambodia, should be helped to ease into competition. Fair enough. But who are the ski-boot makers in Vietnam and Cambodia that need protection from imports?
This and other absurdities in the agreement may be amusing, but when you think of workers in sweatshops, it’s hard to be amused.
My group has seen the sweatshop conditions in factories in Vietnam and Malaysia, two of this Agreement’s signatories. Our members in Vietnam include workers who work hard for 40 dollars a week. Many employers pay late, owe a few months’ wages, or make pay deductions then spend them.
In Malaysia last July, we and a Channel Seven TV reporter visited foreign workers at a Nike contract factory. They had borrowed heavily to pay about a year’s wages to job agents to get there. On arrival, they learned the promised attractive work contract was fake. No one could go home, because the agents had handed their passports to the employers. Most stayed and worked to pay off their debts.
This is human trafficking, and Hanoi profits from it. It licenses these agents, then relicenses them after they register under a new name to avoid angry workers’ relatives. Nike has now asked all its contract factories in Malaysia, which employ 20,000 foreign workers, to return their passports, improve accommodation, and pay back the agency fees.
Unethical employers not only have an unfair labor-cost advantage over competitors in Australia, but also get big tariff advantages. Vietnam’s tariff for clothing and footwear is 40 per cent, Australia’s is only 17.5 per cent for clothing and zero for footwear.
As part of the agreement, Australia says Vietnam is a “market economy” for anti-dumping purpose. In Vietnam, state intervention in production is the norm, with huge low-cost or free loans to state-run companies or cronies. The Communist Party monopolises the union system to depress labor costs.
With expedient acquiescence, Australia has foregone the opportunity to reduce Vietnam’s temptation to dump or to put pressure on its export industries to follow international accounting standards.
Why did our trade negotiators agree to these strange things? Their standard answer, “you give and take”, is not persuasive. In negotiations, you give only what you must, so the other side benefits. Vietnam does not benefit much from ski-boot tariffs.
In life, most macro things come down to micros, in this case the officials involved. Perhaps trade departments are overworked and officials are too stressed to care.
Besides, the agreement is so complex that there will always be room to argue. Whatever, the Agreement is not about free nor fair trade. And parts of it are just nonsense.
■ Trung Doan is a founder of the Committee to Protect Vietnamese Workers.
This opinion article was published on the Australian Financial Review on Tuesday 17th March 2009 on page 63.
