CII Urges US to Replace Tariffs with Compliance Cooperation on Labor Issues

Compliance-based cooperation, not tariffs, is effective pathway forward: CII tells USTR

Washington, July 9

Presenting the Confederation of Indian Industry's position during a Section 301 public hearing on Wednesday (local time), Shuchita Sonalika said the proposed 12.5 per cent tariff on Indian imports would fail to achieve its stated objective while disrupting one of the fastest-growing bilateral economic partnerships.

"The US-India bilateral relationship on trade and investment is one of the fastest-growing and high-potential relationships," Sonalika said.

She urged the USTR not to impose tariff or non-tariff measures on Indian industry and instead strengthen cooperation through the existing India-US Trade Policy Forum.

"CII therefore respectfully requests that no tariff or non-tariff measures be imposed on Indian industry and urges the USTR to pursue continued cooperation through the established US India Trade Policy Forum," she said.

According to Sonalika, compliance-based engagement offers a more effective solution than broad trade restrictions.

"We believe compliance-based cooperation, not punitive tariffs, is the most effective pathway forward," she told the hearing.

Her comments came in response to a question from a USTR official, who asked how exempting Indian exports from additional duties would encourage countries under investigation to eliminate unfair labour practices.

Sonalika replied that "compliance and cooperation-based mechanisms would be far more effective than the application of tariffs."

She highlighted CII's ongoing collaboration with the International Labour Organization (ILO) and the United Nations Development Programme (UNDP) on responsible business practices and said Indian industry would welcome deeper engagement with US authorities to strengthen existing compliance systems.

"CII has been working with the International Labor Organization and the UNDP as well on responsible business practices. And we would welcome cooperation with relevant US authorities on enabling further strengthening of our systems," she said.

Sonalika added that Indian companies already maintain comprehensive compliance frameworks, including corporate codes of conduct, supplier codes, ethics policies and environmental, social and governance (ESG) standards.

She also pointed to the Securities and Exchange Board of India's Business Responsibility and Sustainability Reporting (BRSR) framework for the country's top 1,000 listed companies, along with the BRSR Lite framework introduced for small and medium enterprises.

"So we would welcome cooperation along all of these aspects," she said.

Earlier in her testimony, Sonalika said India fully supports the elimination of forced labour from global supply chains but argued that the proposed US tariff was "neither supported in the evidence presented nor likely to advance the stated policy goal."

Instead, she said, the measure would penalise industries that already comply with international labour standards while increasing costs for US manufacturers and disrupting established supply chains.

The CII representative said India already has a comprehensive legal and institutional framework prohibiting forced labour and that exporters operate under rigorous compliance systems driven by multinational buyers, international certification bodies and domestic regulatory requirements.

She argued that these existing safeguards provide a stronger foundation for bilateral cooperation than unilateral tariff measures.

The India-US Trade Policy Forum, established in 2005, serves as the principal bilateral platform for addressing trade and investment issues. It has been revived in recent years as both countries seek to deepen commercial ties while negotiating solutions to market access and regulatory concerns across multiple sectors.

— IANS