Washington: India will face a lower 10 per cent tariff under the Trump administration’s new Section 301 enforcement action on forced labour imports after the United States concluded that New Delhi had adopted a forced labour import prohibition during the course of the investigation, placing it in a more favourable category than dozens of other trading partners.
The Office of the US Trade Representative (USTR) announced on Thursday that, at President Donald Trump’s direction, it is imposing tariffs on imports from 60 economies for failing to impose or effectively enforce bans on goods produced with forced labour. The new duties take effect on July 24 and range from 10 per cent to 12.5 per cent, depending on the status of each country’s forced labour import regime.
India is among 17 economies that will be subject to the lower 10 per cent tariff, alongside Bangladesh, Canada, Indonesia, Malaysia, Mexico, Pakistan, Sri Lanka and the United Kingdom.
According to the USTR, India moved into that category after adopting a forced labour import prohibition following the publication of the agency’s proposed action in June.
“President Trump recognises that decades of moral suasion have not eradicated forced labour from global supply chains. The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” US Trade Representative Jamieson Greer said.
“Today’s action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere. I am encouraged by the trading partners who have moved quickly to adopt forced labour import prohibitions, and look forward to ensuring their effective enforcement,” Greer said.
The action concludes investigations launched on March 12 into 60 economies over what Washington described as failures to prohibit or effectively enforce restrictions on imports made with forced labour. The process included two rounds of public hearings, consultations with more than 45 governments, over 2,100 public comments and testimony from more than 100 witnesses.
The USTR said it determined on June 2 that the acts, policies and practices of all 60 economies were “unreasonable” and burdened or restricted US commerce, making them actionable under Section 301 of the Trade Act of 1974.
Besides India, Cambodia, Guatemala, Honduras, Sri Lanka and Trinidad and Tobago also adopted forced labour import prohibitions after the investigations began. At the same time, Jordan committed to such measures through an Agreement on Reciprocal Trade, according to the Federal Register notice.
Most other investigated economies, including China, Australia, Brazil, Saudi Arabia, the United Arab Emirates, Vietnam and South Africa, will face a 12.5 per cent tariff. The European Union, Japan, South Korea, Switzerland and Taiwan are subject to a different formula that applies tariffs net of existing Most-Favoured-Nation duty rates.
The USTR also announced broad product exemptions covering certain raw materials, products critical to domestic supply chains, pharmaceuticals, semiconductor manufacturing equipment and other goods where tariffs could cause significant economic disruption or fail to advance the policy objective. The agency said additional tariff-rate quotas would be developed for Bangladesh, Cambodia, Indonesia and Malaysia to encourage imports made with U.S. textile and cotton inputs.
A USTR fact sheet said the action covers the top 60 US trading partners accounting for 99.4 per cent of U.S. imports. It described the move as part of President Trump’s effort to eliminate forced labour from global supply chains and encourage trading partners to adopt import bans similar to those enforced by the United States.
Section 301 of the Trade Act gives the US Trade Representative authority to investigate and respond to foreign government practices deemed unreasonable or discriminatory and that burden US commerce. Previous administrations have used the provision in high-profile trade disputes, including investigations involving China, while the current administration has expanded its use to labour-related trade practices.
