India should challenge proposed US section 301 tariffs: Experts
New Delhi, June 3
India should actively challenge the legal basis of the United States' proposed Section 301 tariffs linked to forced labour concerns and use ongoing bilateral trade negotiations to seek relief from any additional duties, trade experts said on Wednesday, reacting to the latest findings of the US Trade Representative.
The USTR has proposed additional tariffs of up to 12.5 per cent on imports from 54 economies, including India, under its Section 301 investigation into forced labour-related concerns. The proposal remains under consultation, with written submissions due by July 6 and a public hearing scheduled for July 7. According to the proposal, the duties could potentially replace or supplement the temporary 10 per cent tariffs imposed under Section 122, which are due to expire on July 24.
Reacting to the development, Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), said the investigation goes beyond the traditional scope of Section 301.
"The investigation is not based on allegations that Indian exports are produced using forced labour. Rather, the USTR action focuses on whether countries prohibit imports made with forced labour in third countries," Srivastava noted, arguing that India should contest the move as an attempt by the US to impose its preferred import-control framework through unilateral trade measures.
He further said India should argue that broad country-wide tariff actions are disproportionate when concerns may be limited to specific products or geographies.
GTRI also viewed the proposed tariffs as part of a wider pressure campaign by Washington ahead of trade negotiations.
"GTRI views the 12.5 per cent tariffs as part of a broader effort by Washington to increase pressure on India through Section 301 investigations and tariffs," Srivastava said, adding that New Delhi should treat the ongoing Bilateral Trade Agreement (BTA) negotiations and Section 301 investigations as separate issues and be prepared to contest any such measures.
Offering a broader legal and strategic perspective, Agneshwar Sen, Trade Policy Leader at EY India, said the USTR's determination should be assessed within the context of the US administration's search for a stronger legal basis to maintain existing tariff levels.
"The US administration has been under increasing pressure to find an alternative to the 10 per cent tariff introduced under Section 122 of the Trade Act on balance-of-payments grounds. That justification has been viewed as legally fragile by the US Court of International Trade and potentially inconsistent with WTO norms. In this context, the 'forced labour' approach provides a comparatively stronger legal basis to sustain, or even raise, equivalent tariff levels," Sen said.
According to Sen, the implications for India could be significant, particularly for labour-intensive export sectors such as textiles, garments, carpets, leather products and brassware, which may face an additional levy under Section 301.
He advised India to submit detailed representations before the July 6 deadline and participate actively in the July 7 hearing process to challenge the conclusions.
"The bilateral trade agreement under discussion provides India with a key opportunity to seek either an exemption from these measures or a calibrated rollback. Negotiating a commitment, at least at a framework level, ensuring the absence of 'forced labour' import restrictions would be a strategically valuable outcome," Sen added.
Experts noted that with the Section 122 tariffs set to lapse on July 24, the coming weeks will be crucial for India-US trade negotiations as both sides attempt to resolve outstanding issues and avoid further escalation in tariff measures.
India and the United States are currently engaged in negotiations for the bilateral trade agreement and resolving market access issues. A US trade delegation is in New Delhi from June 1 to June 4 for negotiating the trade agreement and other trade issues, including tariffs imposed by the United States.
— ANI
Reader Comments
Finally some sensible analysis from experts. The US is just trying to use this as leverage in trade talks. But honestly, we need to clean up our own act too - forced labour allegations, however exaggerated, hurt our global image. Use this as an opportunity to improve compliance and then challenge them legally. 🏛️
What BS! America wants to talk about forced labour when their own companies use child labour in supply chains? This is just another tool to hurt Indian manufacturing. We should retaliate with counter-tariffs on American goods. Enough of this one-sided trade bullying. 🇮🇳 Stand firm, India!
As someone who works in international trade, I see both sides here. The USTR's legal basis may be questionable, but the forced labour concern is genuine in certain sectors. India should challenge the disproportionate nature of country-wide tariffs while demonstrating real progress on labour reforms. Constructive engagement works better than confrontation.
Interesting that the US delegation is in Delhi right now negotiating. Timing is everything! 🇮🇳🤝🇺🇸 This might actually push both sides to finalise the BTA faster. India should leverage the July 6 deadline to get concessions on other tariff issues. Strategic move by our government to keep talking while preparing legal challenges.
Why does the US always find new ways to target Indian exports? First the H1B visa issues, now this forced labour tariff. Our textile industry in Tirupur and leather in Kanpur will take a massive hit. 😠 Hope our trade negotiators are smart enough to call their bluff - this is clearly about protecting American industries, not workers
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